Published: 15 July 2021
By Suzanne Evans, Director, Political Insight
The rate of inflation rose again in June, outstripping economists’ predictions and passing the Bank of England’s stated target of 2%. The Office for National Statistics (ONS) said the consumer prices index (CPI) measure rose by 2.5% in the 12 months leading up to June 2021, the highest rate for nearly three years, largely driven by increases in transport costs. One of the drivers of the increase is that prices this year are being measured against the depressed prices of last year, when the country was in lockdown, making the difference seem larger. The prices for food, second-hand cars, clothing, eating and drinking out, and motor fuel all rose in 2021 as lockdown restrictions slowly eased, but mostly fell in 2020, resulting in the largest upward contributions to the change in the inflation rate between May and June 2021.
Coming as it did less than 24 hours after US inflation reached a 30-year high, the UK inflation data fuelled a run on global markets. Stock prices have plummeted all week on fears inflation could be pointing to an overheating economy rather than just a temporary blip caused by post-pandemic reopening. The FTSE 100 fell 0.7% at open yesterday, although rallied later to close 0.2% down. The pound rose meanwhile, as Forex traders reasoned the overshoot will increase pressure on the Bank of England to raise interest rates. Sterling was up 0.1% against the euro to €1.1741 an hour after the data came out yesterday, and the pound was up 0.2% against the dollar to trade at $1.3845. Rising inflation has also seemed to trigger a cryptocurrency selloff.
Although unemployment is still 1% higher than before lockdowns began last year, official figures show there are more job vacancies available now than there were before the pandemic. The number of open jobs between April to June 2021 was 77,500 above its pre-pandemic level in January to March 2020, according to the Official for National Statistics (ONS). There were 862,000 job vacancies between April and June, the ONS said. This is the first time it has been this high in 15 months. The number of payroll workers remains 206,000 below pre-pandemic levels at 28.9 million.
The government wants to ban the sale of new diesel and petrol heavy goods vehicles (HGVs) by 2040 as part of its ambitions to reach net zero carbon by 2050. The move comes in anticipation of November's United Nations Climate Change Conference (COP26) and is part of a new "greenprint" published by the government which aims to decarbonise all modes of domestic transport. The HGV ban is subject to a consultation and “represents a world-leading pledge to phase out all polluting road vehicles within the next two decades”, the government said. It had earlier said it wants to stop the sale of new diesel and petrol cars and vans by 2030, but that now appears to have postponed to 2035. The UK hopes to create a net zero rail network by 2050, ensure net zero domestic aviation emissions by 2040 and also transition to green shipping. Transport secretary Grant Shapps said: “It’s not about stopping people doing things: it’s about doing the same things differently. We will still fly on holiday, but in more efficient aircraft, using sustainable fuel. We will still drive, but increasingly in zero emission cars”. The government believes the production of zero emission road vehicles has the potential to support tens of thousands of jobs worth up to £9.7bn gross value added in 2050.
Meanwhile, Ministers have abandoned plans to set out their low-carbon heating strategy before the summer recess following disagreements inside government. According to Sky News, the 'heat and buildings strategy' was due for publication next week, but a Whitehall standoff has ensued over the cost of the plans. Boilers and heating in buildings are one of the biggest contributors to UK emissions but there is heated debate as to how to best incentivise the public to change to low-carbon alternatives, such as heat pumps and hydrogen boilers, and what subsidies the Treasury will have to pay to avoid a backlash over the costs for low and middle earners.
House prices are still rising, with new Office for National Statistics data showing a 10% average nationwide price increase in the year to May. However, London prices grew by just 5.2% in the 12 months to May. Across the country, average house prices hit £255,000, a small monthly increase of 0.9% in the month to May 2021. Prices have nearly returned to the record UK average house price seen in March 2021 of £256,000.
Rightmove’s Quarterly Rental Trends Tracker, based on over 470,000 properties, reveals that the average rent in the UK outside London hit £1,000 per month in June for the first time. Eight out of 10 of some of the biggest city centres saw higher rents in June 2021 than a year before. The online home search agency added that tenants are struggling with a lack of properties as more renters move back into the city as lockdown restrictions ease. “At the start of this year the impact that tenants leaving cities had on rents was clear to see, but with restrictions continuing to lift we’re seeing signs of the city centre comeback," said Rightmove’s director of property data, Tim Bannister. “Tenants across Britain are being faced with low stock and record rents in many areas, likely fuelled by some tenants signing longer leases last year and also perhaps by a rush of people who chose to move back in with family last year, who are now making plans to rent again and in many cases starting to think about their new daily commute," he added.
The BBC has discovered that some of Britain's biggest high street banks are refusing to give mortgages to self-employed people who received government grants during the pandemic. Mortgage brokers say those working in sectors like entertainment, hospitality and travel are the worst affected, and that many lenders are not accepting mortgage applications from people on furlough. "I almost feel like I am being treated like a bankrupt, in some way, that I am being penalised for something that wasn't my fault," 49-year-old hospitality worker Lisa Harding said. "Furlough has been brilliant in that it has protected my job. But I didn't expect to come out of the other side - with a deposit, no debt, a perfect credit rating, all of the things that should make me an ideal first-time buyer - only to find out that banks just will not lend to me at all".
The Financial Conduct Authority (FCA) says it will not block Provident Financial's controversial compensation plan for aggrieved doorstep lendingcustomers, despite having "serious concerns" about the scheme. Sharecast News reports that the subprime lender wants court approval for a scheme of arrangement which will cap compensation payouts, despite the FCA saying the scheme was "inconsistent with its rules, principles and objectives". It called the £50m Provident Financial has allocated to the scheme a "potentially arbitrary figure" and noted that while the firm could contribute more, it had decided not to do so. "The FCA's key concern is that consumers are being offered significantly less than the full amount of redress they are owed," and that creditors are left with a 'take it or leave it' choice between “a very low recovery under the scheme, or a lower figure, if any, in an insolvency." The scheme will now be put before creditors in a meeting on 19 July and if approved, a court hearing to formalise the scheme will take place on 30 July.
AstraZeneca said yesterday that its proposed $39bn acquisition of US drug developer Alexion is expected to close on 21 July, after receiving clearance from the UK Competition and Markets Authority.
The John Lewis Partnership has outlined plans to cut another 1,000 roles across its remaining 34 department stores and 331 Waitrose shops. A spokesperson for the company told Yahoo Finance UK: “We have announced to our partners our intention to simplify our management structures…which will allow us to reinvest in what matters most to our customers.” In September last year, John Lewis scrapped its staff bonus for the first time since 1953 as it reported a £635m annual loss, having already announced the closure of eight John Lewis stores and the loss of 1,300 jobs. In March of this year the partnership announced another eight department stores would be closed, leading to 1,465 job losses.
The CEO of Upper Crust owner SSP Group has said he will step down at the end of the year. Simon Smith confirmed he is leaving the role for a new opportunity at an unnamed private equity-backed business. SSP, which also operates the Ritazza coffee shops brand, said he will continue with his existing responsibilities and support an orderly transition as the group searches for his successor. Smith joined the group in 2014 as head of its UK and Ireland business, before becoming chief executive in 2019. His tenure at the London-listed company has coincided with its most challenging trading period after its railway station and airport sites were hammered by the pandemic and ensuing restrictions, says PA Media. The group cut around 5,000 jobs last year following the impact of the first lockdown.
Sainsbury’s, Selfridges and Waterstones have said they will encourage customers continue to wear face masks in their stores after they stop being legally required on Monday. Sainsbury’s said it will also keep Perspex screens between customers and staff at checkouts, hand sanitiser stations in stores and maintain thorough hygiene procedures, including deep cleaning overnight. However, the supermarket will gradually remove screens between self-service checkouts and checkout queues from stores in England. Simon Roberts, chief executive, said the decision follows feedback from staff and customers, with the majority responding that they wanted face coverings to remain in place.
Kanabo, the first cannabis business to float on the London Stock Exchange, is ready to ship the UK’s first medical cannabis product in the form of vaping cartridges as it moves one step closer to establishing the country as Europe's medical marijuana hub. CEO Avihu Tamir told Yahoo Finance UK that the formulation, which will be available is for patients who use cannabis for pain management, is a great alternative for those trying to withdraw from opioids. The company is also hoping to launch a formula that can be used for mental health issues, especially for those using drugs such as Xanex and Valium. The first order is expected to arrive to the UK next week and will be distributed under the brand name NOIDECS. The cartridges can only be used with Kanabo's VapePod device, which costs about £50 and will only be available to patients of the LYPHE Group, with whom Kanabo has partnered. Their UK ecosystem includes The Medical Cannabis Clinic and Dispensary Green.
David Beckham's management company is in talks to buy out the former England captain's consumer products licensing joint venture, a move that would give him greater control of a lucrative array of commercial endorsements, Sky News has learnt. David Beckham Ventures Limited is in the early stages of negotiations with Global Brands Group, a Hong Kong-listed company, to take full or majority ownership of Seven Global. The discussions are at an early stage and only got under way in the last week, according to people close to the situation, who estimate the cost of the buyout to be some £29m.
Following 16 months of remote working, travel agent Tui UK says that henceforth around 3,000 usually office-based staff will have to come in just one day a month, and it will be up to them how little or often they choose to be in beyond that. "The pandemic has allowed us as an organisation to take a step back and make necessary changes to the way we work, communicate and collaborate," said Andrew Flintham, managing director of TUI UK & Ireland. "We believe that this move to a permanent flexible way of working will enhance our culture and organisational productivity, as well as allowing our people to have a great work-life balance." The company has created a new position of workspace director to help adapt to the flexible approach to working, installing Belinda Vazquez in the post. She said: “At Tui we embrace the concept that work is something we do, not somewhere we go”.
Ryanair yesterday lost a challenge against EU-approved state aid for Austrian Airlines, ending its run of successful cases brought as governments propped up their national flag carriers during the pandemic, Reuters reports. Europe's biggest budget airline has launched 16 lawsuits against the European Commission for allowing billions of euros in state aid for individual airlines and has had success with cases against German charter airlines Condor, KLM and TAP. However, yesterday the Luxembourg-based General Court, Europe's second highest, said: "The aid granted by Austria to Austrian Airlines in order to compensate it for the damage resulting from the cancellation or rescheduling of its flights due to the COVID-19 pandemic is compatible with the internal market…that aid, having been deducted from the subsidies granted, in the same context, by Germany to the Lufthansa group, which also includes Austrian Airlines, does not constitute overcompensation in favour of that group." Ryanair said it would appeal to the EU Court of Justice (CJEU), Europe's highest court. Challenges Ryanair has made against aid for SAS, Finnair and Air France have been thrown out.
A Dutch court said yesterday that the owners of new cars made by Volkswagen Group with software meant to rig diesel engine emissions tests were entitled to compensation of €3,000, and that owners of a second-hand car should get 1,500 euros. The ruling – which can still be appealed by the German automaker – covers some 150,000 VW, Audi, Seat and Skodamodels. The verdict is the latest in a string of fines for Volkswagen since it admitted in 2015 to using fraudulent software to make diesel engines appear cleaner than they were.
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