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The UK economy grew by 4.8% in the second quarter of the year

   NEWS / 12 Aug 2021

Published: 12 August 2021

By Suzanne Evans, Director, Political Insight


The UK economy grew by 4.8% in the second quarter of the year, according to the Office for National Statistics (ONS). The main driver of growth was consumer spending, which rose by 7.3% over the quarter, ahead of expectations. GDP growth in June alone also rose, coming in at 1%, faster than the 0.6% recorded in May, but still some two percentage points below its pre-pandemic peak. Chancellor Rishi Sunak said: "Today's figures show that our economy is on the mend and showing strong signs of recovery, thanks to our Plan for Jobs and successful vaccine programme. "I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people. "With the fastest quarterly growth rate among the G7 economies we have exceeded expectations, and I'm pleased to see the UK bouncing back".
 
Former PM David Cameron is still in the headlines. Now, The Times reports that Illumina, a US firm who first employed him as an advisor in 2017, secured a £123 million genetic-sequencing contract after he lobbied former Health Secretary Matt Hancock to attend a genomics conference co-hosted by the company. The newspaper alleges Hancock had ignored a previous invitation coming directly from the company’s CEO but agreed to attend after receiving Cameron’s letter. Just a week later, Illumina was awarded the multi-million-pound contract without competition. Cameron is also said to have attended a meeting with Vaccines Minister Nadhim Zahawi to discuss Illumina’s work in March and that after this meeting, the company was awarded separate contracts worth up to £870,000. Health Ministers Nadine Dorries, Jo Churchill and Helen Whatley also received lobbying letters from the company, and Lord Bethell – the Tory peer responsible for granting Hancock’s lover access to parliament - told his staff to tell the company that that “we are huge supporters of Illumina”, in response to correspondence in September. A spokesperson for David Cameron said: “As has been made clear on numerous occasions, he has never lobbied the government on behalf of the company or been involved in any contract or commercial discussions.” The Times says that the Department for Health has claimed that any discussion of issues using the contract’s capacity were commercially sensitive. Deputy Leader of the Labour Party Angela Rayner said: ""There is rampant cronyism, sleaze and dodgy lobbying that is polluting our democracy under Boris Johnson and the Conservatives. They hand public money to their mates without a second thought."
 
More than 1.5 million travellers passed through Heathrow Airport in July, a rise of 74%, making it the busiest month since March 2020, just before international travel came to a virtual standstill. This has not stopped the airport joining a growing body of criticism levelled at PCR tests, saying they are still putting limits on economic recovery. Chief operating officer Emma Gilthorpe said the cost of testing in the UK "remains prohibitive for many," adding that VAT on the tests should be scrapped, and cheaper lateral flow tests used for low-risk destinations. "This will keep people safe and will avoid travel becoming the preserve for the wealthy," she said. Although Ministers committed to reducing testing costs over three months ago, the UK still stands as an outlier with Europe slashing their prices and, in some cases, subsiding them. The cost of UK tests is now being investigated by the competition watchdog after Health Secretary Sajid Javid complained about "excessive" pricing and "exploitative practices" among PCR Covid test firms. The airport is also urging the United States to lift its restrictions on travellers from the UK.
 
The International Air Transport Association (IATA) has added Synlab, a medical diagnostics services provider, to its list of authorised COVID-19 testing labs in a bid to improve its COVID passport offering. IATA's Travel Pass is a mobile app that helps users store and manage their verified certifications for COVID-19 tests and vaccinations and provides an 'OK to Travel' status. “Verified COVID-19 testing is critical to restore the freedom to travel for people who are not vaccinated,” said Willie Walsh, IATA's director general.

A legal challenge has been filed against the UK Government’s quarantine hotel policy. London-based firm PGMBM is seeking a judicial review of rules which say passengers must spend 11 nights in quarantine hotels on return from red list countries, despite being fully vaccinated and testing negative for Covid. The firm says this is an "unlawful deprivation of liberty". PGMBM managing partner Tom Goodhead said: "Mandatory hotel quarantine is a fundamental breach of human rights. It has led to the false imprisonment of people who are fully vaccinated and have tested negative...Prisoners are entitled to more liberty than those forced to quarantine in hotels." Today, the cost of staying in a quarantine hotel jumps from £1,750 to £2,285 for single travellers.
 
A year ago, Ofgem announced an investigation into whether PayPoint risked falling foul of competition laws by issuing exclusivity contracts to dominate the market for gas and electricity top-ups between 2009 and 2018.  PayPoint supplies the machines used in local shops and petrol stations to top up the cards and has around 28,000 UK sites on its books. However, Ofgem has now closed the investigation after PayPoint promised to pay £12.5 million into a voluntary fund administered by officials and remove exclusivity clauses in current contracts and any others it signs over the next five years.
 
The Guardian reports that defence and aerospace company Meggitt has received a second takeover offer which values the FTSE 250 manufacturer at £7.1bn. The firm announced yesterday that TransDigm had submitted a 900p-a-share takeover bid, which trumps an 800p-a-share offer last week from a US rival, Parker Hannifin, that valued Meggitt at £6.3bn. The latest offer was nearly double Meggitt’s share price before Parker’s approach and although it is preliminary and non-binding, it could spark a bidding war. However, The Telegraph says the Meggitt board reiterated its recommendation for the lower approach from Parker Hannifin given there is no certainty that TransDigm will make a firm offer.
 
After recording record profits, auditing and consultancy giant PwC handed out a record high in bonuses too, giving £128m to staff last year. The firm has about 22,000 employees in the UK, 3,300 of whom were recruited over the last 12 months.
 
Despite a damaging year, in which it faced newspaper allegations of using slave labour in its UK-based third-party factories, online fashion retailer Boohoo has revealed plans to create 5,000 new jobs in the UK over the next five years. The company said its £500m investment reflected the need to meet growing demand and that plans include the purchase of additional warehouse space and technology to help its operations become more efficient. Earlier in the year, Boohoo bought the Debenhams brand and also took over the Dorothy Perkins, Wallis and Burton names from the failed Arcadia empire owned by Sir Philip Green.
 
Despite having cut some 4,000 in just over a year, now the John Lewis Partnership says it will create 500 new jobs at a new distribution centre for online sales. The owner of the John Lewis department store chain and Waitrose supermarkets said it had signed an agreement with Tesco to lease a one million sq ft site at Fenny Lock in Milton Keynes for 11 years. It said the move reflected "growing customer demand for online orders" which now accounted for more than 60% of total sales - up from 40% pre-pandemic figures.
 
Morrisons will close almost all its 500 shops on Boxing Day to give more than 110,000 staff the day off to reward them for working hard during the pandemic.
 
Reuters reports a Cineworld statement this morning saying it is considering listing either itself or filing a partial listing of its Regal movie chain on Wall Street, in a move to boost liquidity at a time when it is burning through tens of millions of dollars every month. The lion's share of London-listed Cineworld's revenue comes from the US since its purchase of Regal in 2018. Cineworld's pretax losses for the first half ended June narrowed to $576.4 million from $1.64 billion last year.
 
FTSE 100 cyber security company Avast has agreed to a merger with Nasdaq-listed NortonLifeLock, the parent company of Norton antivirus software, in a deal valued at as much as $8.6bn (£6.2bn). The new company, the name of which is yet to be decided, will be listed on the Nasdaq and have headquarters in Avast's native Prague as well as Arizona in the US.
 
Marshmallow Financial Services is finalising a deal that will see it become the latest addition to the ranks of British-based fintech "unicorns". Sky News has learnt that the six-year-old motor insurer is close to unveiling a fundraising that will value it at $1.2bn (£869m). The capital injection, which is understood to be coming largely from existing investors, will catapult Marshmallow into the elite group of UK fintech start-ups worth at least $1bn.
 
Construction of American-owned GE Renewables' new 830,000 sq ft wind turbine blade factory on Teesside will begin next month. The site is expected to create 750 direct jobs and a further 1,500 across the supply chain.
 
Swedish engineering giant Sandvik Coromant is to demolish its existing building and build a new multi-million pound UK headquarters and innovation centre in Halesowen, in the West Midlands. The firm has been based in the town since 1958. In addition to housing company employees, the facility will act as a hub for manufacturing innovation and customer interactions, forming part of the established Sandvik Coromant Center global network, the firm said.
 
Reuters reports that the Gambian government has said that BP has agreed to settle a $29.3 million outstanding commitment to drill an exploration oil well in the West African country, which the company was awarded two years ago. Government spokesperson Ebrima Sankareh said in a statement that BP broke its obligations by failing to drill the well before the initial exploration period expired on 29th July. BP subsequently told the government it would not drill the well due to a change in its corporate strategy towards low carbon energy.
 
Reuters says Royal Dutch Shell is to pay a Nigerian community 45.9 billion naira (£80.4 million) to settle a case over an oil spill that took place more than 50 years ago. The company will pay the Ejama-Ebubu community in Nigeria's Ogoniland the "full and final settlement" to end the case over a spill that took place during the 1967-70 Biafran war. Shell is the most significant international oil major operating in Nigeria and the compay has faced a string of court losses over the past year over oil spills and is in talks with the government to sell its stakes in onshore oilfields.
 
There has been a rise in jobs that advertise working from home compared with before the Covid pandemic, recruitment firm Reed tells the BBC. Prior to the pandemic, 1% of recruitment firm Reed's job vacancies advertised remote working, but this rose to 5% in 2021.
 
Google employees in the US who opt to work from home permanently may get a pay cut, the BBC reports, as the technology giant has developed a pay calculator that lets employees see the effects of working remotely or moving offices. Some remote employees, especially those with a long commute, could have their pay cut without changing address. Google says it has no plans at this time to implement the policy in the UK.
 
The Chinese government has basically said that its crackdown on technology and private education companies is to continue and advance in scope for at least the next five years. The BBC says Beijing has unveiled a five-year, 10-point plan outlining tighter regulation of much of its economy. New rules will be introduced to cover areas including national security, technology, monopolies and "foreign-related rule of law" in the world's second largest economy. It said laws will be strengthened for "important fields" such as science and technological innovation, culture and education. "Internet finance, artificial intelligence, big data, cloud computing etc." will also be reviewed. The document references Chairman Mao as China celebrates the 100th anniversary of the nation's Communist Party. Shares in many Chinese companies listed in the US, Hong Kong and mainland China have fallen sharply as investors' concerns grow over the crackdown. Beijing has already launched anti-monopoly investigations into some of the country's biggest technology firms – including Alibaba, Tencent, Didi Global and Weibo – and acted against a wide range of other businesses.
 
Hackers who stole $610m in cryptocurrencies appear to have begun returning their heist. Poly Network, a blockchain protocol which helps link blockchains together, lost about $267m of Ethereum, $252m of Binance coin and roughly $85m in USDC tokens, after the hackers apparently exploited a vulnerability in Poly Network's systems to make off with the funds. However, after Poly Network posted a letter on Twitter pleading for communication with the hackers and urging them to return the assets, the hackers appear to listen, having returned around $2m so far.


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