The OECD predicts Britain will have inflation running at about 3% at the end of 2022

By Suzanne Evans, Director, Political Insight

The OECD predicts Britain will have inflation running at about 3% at the end of 2022, the highest rate of the advanced economies. Prices in the G20 group of countries will grow faster than pre-pandemic for at least two years, the Paris-based policy forum says, driven by higher commodity prices and shipping costs. However, the OECD expects inflation to fall in the US, France, and Germany. The Bank of England (BoE) has set a 2% inflation target, which has so far been exceeded in May, June, and August. BoE Governor Andrew Bailey has predicted UK inflation will reach 4% by the end of the year.
 
Business Secretary Kwasi Kwarteng has confirmed an agreement with CF Fertilisers to ensure the continued supply of CO2 to UK businesses. The deal will enable the immediate restart of CO2 production at CF’s Billingham plant, because the Government will provide “limited financial support” for the firm’s operating costs for three weeks, “whilst the CO2 market adapts to global gas prices.” CF Fertilisers produces around 60 per cent of UK’s CO2, used primarily by the food sector.
 
The Treasury’s inaugural Green Gilt bond sale raised £10bn yesterday, the highest ever amount reached in a government bond sale. The 12-year bond is intended to help drive progress to net zero and create jobs across the UK. The sale had the largest ever order book for a sovereign green transaction and will be followed by a second issuance later in the year. The aim is for Green Gilts to raise a minimum of £15bn for green government projects like zero-emissions buses, offshore wind, and schemes to decarbonise homes and buildings in this financial year.
 
UK businesses have returned a total £1.3bn of furlough cash to the Treasury since July 2020. Almost £14bn a month was spent on the programme, known officially as the Coronavirus Job Retention Scheme. The repayments were made either through adjustments to claims or the voluntary disclosure service, which will continue into 2022.
 
Despite the end of the stamp duty holiday, and the fact that August is usually a quiet month, HMRC has nevertheless estimated there were 106,150 non-seasonally adjusted UK residential home transactions last month, 24.8% higher than in 2020 and close to levels recorded prior to the coronavirus pandemic - there were 111,600 transactions in August 2019. Yahoo Finance UK says the availability of mortgages for first-time buyers is spurring the market on. "Before the pandemic, you’d have been hard pressed to find a mainstream mortgage lender to lend more than 4.5 times a typical first-time buyer’s income," Jamie Thompson of Manchester-based Jamie Thompson Mortgages. "Today, a first-time buyer can borrow up to 5.5 times their income with a mainstream high street lender. This allows them to massively increase what they can bid on their first house, which not only drives transaction volumes but also supports prices.”
 
A pensions scandal dating back to 1985 which resulted in more than £1bn in state pensions not being paid was the result of “repeated human errors made for years”, the Public Accounts Committee has concluded. The issue relates to the "old" state pension system where married women who had a poor pension could claim a 60% basic state pension based on their husband's record of contributions. The National Audit Office (NAO) says 134,000 pensioners, mostly women, were underpaid because outdated computer systems led to systematic failures. A review is now taking place to trace those affected, but only some women are being fully paid and others will only be able to claim for 12 months of missed payments, the BBC reports. An estimated 40,000 women who were due money have died. Meg Hillier MP, chair of PAC, said: "This is not the first widespread error we have seen in the Department for Work and Pensions (DWP) in recent years. Correcting these errors comes at great cost to the taxpayer…The DWP must provide urgent redress to those affected and take real action to prevent similar errors in future." The DWP is expecting to pay pensioners it can trace a total of £1.05bn, an average of £8,900 per payout. The exercise will cost the taxpayer £25m in staff costs and will not be completed until the end of 2023.
 
A report from The Digital, Culture, Media and Sport Committee (DCMS) has led the Government to ask the competition watchdog to look at the structure of the UK music industry amid concerns musicians are getting "meagre returns" from current streaming systems. Having called major record labels Sony Music, Warner Music and Universal Music to give evidence before MPs, as well as tech giants Spotify, Amazon, Apple and YouTube, DCMS concluded artists are getting "pitiful returns" which threaten the "entire creative ecosystem". Even successful and critically acclaimed musicians are seeing "meagre returns" from their work, its report said, while non-featured performers on songs are being "frozen out altogether". The committee also recommended legislation on equitable remuneration to improve performers' income. The Government said: "This is a complex area and the government takes the concerns of music creators seriously,” hence the referral to the Competition and Markets Authority.
 
MPs on the Public Accounts Committee (PAC) have said they are "increasingly alarmed" about key parts of the HS2 project, saying there is "no clear end in sight" to costs and delays. The committee highlighted a lack of progress at Euston Station in particular. Euston Station is an important part of the first phase of the rail project, both as a London terminus and as a link to other infrastructure such as the London Underground, the BBC says, but PAC claims the Department for Transport (DfT) “has yet is yet to make key decisions on the design and approach to construction there," despite having the necessary planning consents. Without a government decision on the station, the project "will literally run out of time", the committee fears. DfT said it was making significant progress delivering HS2.
 
EasyJet chief commercial officer Sophie Dekkers said the airline was “surprised and delighted” by the UK government’s change in travel policy, announced two days ago, but said it was made too late. She told the Commons’ Transport Select Committee: “In terms of sales over the weekend, they did pick up but not to the extent that we’ve seen in previous announcements because we’ve missed the summer. She urged the Government to go further and scrap the day-two test as “the UK is lagging behind Europe” and “nowhere else in Europe do they have testing like this”. She added that “it doesn’t make sense” that testing requirements were tougher this summer than in 2020 despite the progress on vaccinations. Heathrow chief executive John Holland-Kaye told the hearing that the easing of travel rules is “a step in the right direction” but called for a return to “frictionless travel”.  “We are in a fight for the economic future of this country” he said, adding: “we are not going to win that fight if we’re always playing catch-up with the Europeans.”
 
Virgin Atlantic has reported a 600% surge in flight bookings to the US after the country said it would lift restrictions to allow fully vaccinated passengers from the UK and most European Union countries to travel to the country from early November. British Airways also reported a jump in searches for US flights, having launched a flash sale until midnight on Tuesday, with return deals to New York starting at £320 for travel from January, and Los Angeles from £349 from November.
 
easyJet CEO Johan Lundgren has responded to the boss of Ryanair, Michael O Leary’s claim in the Financial Times last week that easyJet and Wizz Air would need to merge or be taken over as the industry consolidates in the wake of the COVID-19 pandemic. "Complete nonsense," Lundgren told Reuters in an interview. "I would urge anyone who runs an airline to focus on their own business rather than speculate about others, (where) they have no idea about what's going on."
 
Meggitt Plc shareholders have voted in favour of a £6.3 billion buyout by U.S. aerospace firm Parker-Hannifin Corp (PH). Almost all shareholders who cast a ballot backed the takeover at the general meeting, Meggitt said in a filing yesterday. The deal follows a takeover battle lasting several weeks, with TransDigm beating PH’s offer for the company, before bowing out of the race. "We are confident the combination of Meggitt and Parker creates a world class provider of engineered aerospace solutions," said PH CEO Tom Williams in a statement. He added that his company would work with the UK government to agree on the necessary legally binding commitments to finalise the deal. Meggitt is one of the last independent UK-based aerospace suppliers, with customers including Boeing Co., Airbus SE and BAE Systems Plc. The government has said it will increase its scrutiny of defence takeovers after a flurry of mergers and acquisitions activity in the sector.
 
US fantasy sports betting giant DraftKings is proposing a £16.6bn cash and stock bid to take over its UK rival Entain. It is the second approach Entain has received this year: the FTSE 100 company rejected an offer from MGM Resorts that could have been worth over £8 billion. Entain owns Ladbrokesand Coral, and any takeover may jeopardise a joint venture with MGM, called BetMGM, to offer sports betting in the US. Responding to press speculation, Entain said there can be no certainty that any binding offer will be made nor as to the terms of any such offer. Nevertheless, Entain stock jumped 17.6% in afternoon trade in London on the news. DraftKings now has until 19 October to either announce a firm intention to make an offer or walk away.
 
Real Good Food says it will ask its shareholders to approve a proposal to de-list from the London Stock Exchange AIM market to save about £150,000 a year. The cake decoration company has reported an annual loss of almost £3.5m.
 
Having laid off 3,000 staff and shut 30 of its coffee and sandwich shops because of forced store closures and continued restrictions forcing people to work from home, Pret A Manger has recovered to the extent that it now intends to hire the same number of people to implement a post-coronavirus strategy that will see it target sales away from city centre offices.  The plan is to open 200 shops in the next two years, mainly in suburban areas, railways stationsand motorway service areas. UK sales are approaching pre-pandemic levels again, Pret says, after a 58% slump in revenue last year. Pret also says it will expand into five new markets by the end of 2023 to double in size. The chain has almost 400 shops in the UK and 150 more across France, US, Dubai and Hong Kong. Current labour shortages are not deterring the chain: Pret is banking on a 5% pay rise for front-facing staff to entice jobseekers.
 
A good day for Hull: Siemens Gamesa has awarded VolkerFitzpatrick an £82m contract - part of a wider £186m investment - to build two new turbine blade factories at its  site in the city, an investment will more than double capacity and create hundreds of jobs, says @FactoryNOW_ Meanwhile, @Jefferson_MFG says the historic British boiler manufacturer Ideal Heating, founded in 1906, is investing £16 million expanding its site in Hull. The investment is expected to create hundreds of new jobs.
 
AstraZeneca is to invest $360 million (£263.49m) to develop a manufacturing facility in Ireland to produce active pharmaceutical ingredients, the main components of medicines. Reuters reports that the Anglo-Swedish drugmaker, which completed its $39 billion (£28.54bn) purchase of rare disease drugs maker Alexion in July, has a large portfolio of treatments for cancer, heart disease, diabetes and a COVID-19 vaccine, with several drugs under trials.

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