Published: 11 October 2021
Location: London, UK
136 countries have agreed to enforce a corporate tax rate of at least 15% in a historic deal to “ensure big companies pay a fairer share of tax,” it was revealed on Saturday. The move follows concern about multinational companies re-routing profits through low tax jurisdictions. Chancellor Rishi Sunak said the deal would "upgrade the global tax system for the modern age". "We now have a clear path to a fairer tax system, where large global players pay their fair share wherever they do business," he said. The Organisation for Economic Cooperation and Development (OECD), an intergovernmental organisation, has led talks on a minimum rate for a decade. Ireland, Hungary and Estonia - all of which have corporate tax rates below 15% - at first resisted the plan but are now on board. Kenya, Nigeria, Pakistan and Sri Lanka have not yet signed up.
The Bank of England (BoE) warned markets could “correct sharply” if traders start to worry about economic growth prospects from Covid-19, inflation or interest rates. On Friday, the BoE’s Financial Policy Committee (FPC) said risk-taking remained elevated in a number of financial markets, relative to historic levels. Stock indexes have climbed amid hopes for a strong recovery after the pandemic, but inflation concerns are growing because of supply chain disruptions and surging prices, says Yahoo Finance UK. “Asset valuations could correct sharply if, for example, market participants re‐evaluate the prospects for growth, inflation or interest rates,” the BoE said in a statement. “There are signs of continued loosening in underwriting standards and increased risk-taking in some investment banking businesses.” However, the report said the UK banking system is sufficiently resilient to potential shocks.
Data from the Office for National Statistics (ONS) reveals that 10% of businesses increased their prices in early September, on average, up from 8% in mid-August and 4% in late December last year. However, a larger number of manufacturers (25%) were doing so, as were firms involved in wholesale and retail sales and vehicle repair (23%). Among companies classed as providing "other service activities" - ranging from professional associations and computer repair to dry cleaning and hair dressing - 22% increased prices. The figures came as the Bank of England's new chief economist said the "magnitude and duration" of the recent upturn in inflation was proving greater than expected. Latest official data shows consumer price inflation running at 3.2% in August, a nine-year high, and it is expected to top 4% later this year.
Eight million Brits have been unable to purchase essential food supplies in the last two weeks, according to the further statistics released following the latest Office for National Statistics (ONS) Opinions and Lifestyle survey. Analysis of responses from 3,326 adults between 22 September and 3 October suggested one in six UK adults (17% of those surveyed) said they could not buy required goods because of ongoing supply chain disruptions, while almost a quarter (23%) said they were unable to buy non-essential food items. 57% said everything they needed had been available to buy, while one in seven (15%) said they could not buy fuel.
Former Tesco boss Dave Lewis is to advise the government on the supply chain crisis that has led to shortages of petrol and other products. Sir Dave left the supermarket giant in September last year after helping mend its fortunes following a major accounting scandal. He has been appointed until the end of the year and will start work in his new role today.
On Friday The Petrol Retailers Association called for an independent inquiry into continuing supply problems. "The recovery is simply not happening quickly enough. We are into our 15th day of the crisis," said chairman Brian Madderson. The call was to make sure motorists are “protected from such acute fuel shortages in the future," he explained. He claimed a return to normal fuel levels has been "blighted by the current inept prioritisation policy. There is three times the capacity at filling stations per head of population in the rest of the UK compared to London and the South East".
Business Secretary Kwasi Kwarteng says he is "convinced" the UK will not suffer gas shortages in the coming months - and insists a price cap on consumers' energy bills "will not be moved" this winter. Speaking to the Trevor Phillips On Sunday show on Sky News, Kwarteng said he was "convinced we will have full energy supply" despite soaring wholesale gas prices around the world, but stopped short of offering a full guarantee that there would not be disruption. He went on to claim he was in talks with Chancellor Rishi Sunak's team on possible further support for businesses facing higher bills - but a Treasury source later told Sky News they are "not involved in any talks" and added that it wasn't the first time Kwarteng "has made things up in interviews".
National Grid (NG) has warned the UK faces a greater threat of blackouts this winter. The company runs Britain’s electricity infrastructure, which uses around a quarter of the country’s gas demand. NG said it will be able to get enough gas to see it through the winter period but cut its forecast for a buffer supply. The country is facing electricity supply constraints after NG was forced to shut down a major power cable importing electricity from France after a serious fire last month, a facility that not expected to be up and running again until March next year.
The Offshore Petroleum Regulator for Environment and Decommissioning(OPRED) has rejected Royal Dutch Shell's plans to develop the Jackdaw gasfield in the North Sea, OPRED refused to approve the environmental statement for the field's development, although it is unclear on what grounds. "We’re disappointed by the decision and are considering the implications," a Shell spokesperson told Reuters. The decision comes as Britain suffers an energy crisis due to soaring wholesale gas and oil prices and just days ahead of the COP26 climate conference which the UK is hosting in Glasgow.
Sky News claimed yesterday that Pure Planet may become the latest UK energy supplier to fold as a result of the surging prices and supply shortages rocking the natural gas market. The company, 24% of which is owned by BP Plc, is said to be in talks with the Ofgem about adding its customers to the supplier-of-last-resort process, under which the regulator appoints a new provider among stronger energy companies. Sky, which did not say how it obtained the information, also claimed BP has decided to discontinue supplying the company with gas. Pure Planet has fewer than 125,000 customers. Last week, Ofgem said it was starting a fund to provide emergency credit for customers who can’t pay their energy bills after wholesale gas prices hit record highs.
The Institute for Fiscal Studies (IFS) is warning that government spending plans mean Council Tax may have to rise by up to 5% a year for the next three years if local services are to be kept at pre-pandemic levels. The economic think tank also warned this is just one element of a rise in the cost of living. Extra cost pressures and demand across the board are likely to see bills also rise by up to 5% through to 2024/25, it said.
The boss of Kraft Heinz told the BBC yesterday that we will all have to get used to higher food prices. Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries because unlike in previous years, inflation was "across the board". "We are raising prices, where necessary, around the world," he said. The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation.
UK construction industry growth slowed in September because of continued material and labour shortages. According to the IHS Markit and CIPSconstruction PMI index, output growth eased for the third consecutive month, with a rapid drop in sub-contractor availability over the period, combined with the steepest rise in sub-contractor charges since the monthly survey began in 1997. The shortages included bricklayers, drivers, groundworkers, joiners, plumbers and many other skilled trades. The index fell to 52.6 last month, down from 55.2 in August, the lowest reading since January. A Reuters poll of economists had predicted growth of 54. Any reading over 50 indicates growth.
Last week the government pared the travel ‘red’ list down to seven countries, 47 fewer than previously, and abolished the ‘amber’ list, rolling it into the ‘green’ list. Colombia, the Dominican Republic, Ecuador, Haiti, Panama, Peru and Venezuela are now the only countries remaining on the red-list, which means they are still considered ‘high risk’ for covid-19. Travellers from these countries are forced to quarantine in a government-approved hotel for 14 days upon arrival at a cost of £2,500 + each. Rules were further relaxed for fully vaccinated travellers arriving back in the UK from other countries, although all passengers are still required to take a PCR test on day 2 of their return. Airline stocks rose on Friday following the news.
The Competition and Markets Authority (CMA) has dropped its investigation into whether British Airways and Ryanair broke the law by failing to offer customers refunds when they couldn’t legally take their flights because of pandemic restrictions. During lockdowns, when non-essential travel was banned, British Airways, which is owned by IAG, only offered vouchers or rebooking, while Ryanair only gave the option to rebook. CMA launched its investigation in June citing concerns that failing to offer refunds might have breached consumer law, but now says the time a protracted court battle would take, coupled with the uncertainty of winning, due to a “lack of clarity in the law [which] makes it insufficiently certain that it would be able to secure refunds for customers”, means it can no longer justify the expense pursuing the case. CMA also said, however, that is though the airlines should have given customers their money back.
A low-cost short haul operation run by British Airways out of Gatwick Airportis potentially back on again after the Spanish-owned airline reached an agreement with pilots. Pilots’ union Balpa said its members had approved a revised offer on pay and working hours after an initial proposal was rejected last month. However, BA still has to reach agreements with other parties, including cabin crew.
Tour operator TUI is planning to raise €1.1bn (£940m) by selling new stock in a bid to reduce its travel lockdown debt pile. In a statement last week, the Anglo-German company said the share sale will enable it to decrease its draw on a state-backed rescue loan to zero. TUI has taken on loans of more than €4bn, as well as being bailed out multiple times by the German government, Yahoo Finance UK reports. Meanwhile, all TUI flights and holidays to the Canary Island of La Palma remain halted because of the eruption of the Cumbre Vieja volcano which has turned "much more aggressive".
The BBC reports that Liberty Steel has secured a £50m cash injection which it says will safeguard 660 jobs at its plant in Rotherham. The deal is part of a wider restructure of GFG Alliance, Liberty's owner, which was forced to seek funding when its key lender, Greensill Capital, collapsed.
GFG Alliance said the cash would allow the Rotherham plant to reopen this month after being closed since the spring.
The break-up of what was once one of Britain's biggest outsourcers will near its conclusion this week when the former jewel in Interserve's crown is sold to a French industrial group. Sky News has learnt that Altrad Group has agreed to buy RMD Kwikform, Interserve's global equipment services arm, in a deal expected to cost Altrad more than £140m. At its peak – before its brief collapse into administration in 2016 - Interserve employed more than 45,000 people in the UK.
The UK’s new car market has recorded its weakest September since 1998, despite this being the month when new car registrations usually surge due to the semi-annual number plate change introduced in 1999. The Society of Motor Manufacturers and Traders (SMMT) says semi-conductor supply chain issues prevented orders from being fulfilled. The 215,312 new cars registered last month represents a 34.4% fall on the same time last year, when covid restrictions were significantly curtailing economic activity, and down 44.7% on the pre-pandemic ten-year average. “This is a desperately disappointing September and further evidence of the ongoing impact of the COVID pandemic on the sector,” said Mike Hawes, SMMT CEO.
Retail footfall was down in September, a fall attributed to fuel shortages. Visits to shopping malls were especially affected, dropping 35.6% when compared to pre-covid 2019, according to data from the British Retail Consortium (BRC) and Sensormatic. Total UK footfall decreased by 16.8% in September, when compared to 2019 before the pandemic hit. Footfall on high streets was also down 22.6%, although this was 2.2 percentage points above last month's rate.
US private equity group Clayton, Dubilier & Rice (CD&R) has won the auction for UK supermarket chains Morrisons with a £7bn bid. The Takeover Panel revealed last week that CD&R offered 287p a share, against a rival bid from Fortress, for 286p per share. Morrisons chair Andrew Higginson said the final offer from CD&R "represents excellent value for shareholders while at the same time protecting the fundamental character of Morrisons for all stakeholders".
Asda says it will extend its pilot one-hour express delivery service to 96 stores. Customers can order anything from the supermarket’s online range of about 30,000 grocery products and have it delivered to them within the house – provided they are willing to pay a flat delivery fee of £8.50 and live within a three-mile radius of a selected store. There is no minimum spend requirement, but the maximum number of items that can be ordered is 70. The fast delivery service was trialled at four Asda stores back in June and “has exceeded expectations, with the number of initial orders higher than projected”, the company said.
Ocado has invested £10m in driverless delivery start-up backed by Richard Branson. The online delivery company announced the move on Wednesday, saying its investment in Wayve would help pave the way for driverless food deliveries in "complex urban environments." The startup has raised more than $58m to date, and is backed by Eclipse Ventures, Balderton Capital and prominent technology leaders such as Rosemary Leith and Yann LeCun as well as Branson.
Amazon opened its first British non-food '4-star' store at the Bluewater shopping centre near Dartford in Kent on Wednesday last week. Around 2,000 products rated four-star or above on the tech giant’s website will be on sale at the new shop, with stock changing regularly depending on what is selling well online. The store also has a tech section dedicated to Amazon's own devices such as its Kindle e-Readers, Fire tablets, and smart speakers. The first 4-star store opened in New York in 2018. Amazon now has 30 stores operating in the US.
NatWest bank pleaded guilty to failing to prevent money laundering on Thursday last week. It is the first UK bank to admit such an offence after charges were brought to Westminster Magistrates' Court by the Financial Conduct Authority (FCA). The case has now been referred to the Southwark Crown Court for sentencing and although no individual at the bank has been charged, the resulting fine is likely to be significant. The case relates to collapsed Bradford-based gold dealership Fowler Oldfield, which was closed down following a police raid in 2016, according to Reuters. The gold dealer indicated an annual revenue of £15m per year, however the firm deposited around £365m in its UK Nat West account over five years, £264m of which was in cash.
Newcastle United has been taken over by a Saudi Arabian-backed fund, ending retail tycoon Mike Ashley’s 14 years as club owner. The Sports Directboss bought the club for £134m in 2007 and the Premier League has now approved a £305m bid from Public Investment Fund (PIF), one of the world’s largest sovereign wealth funds, following assurances that the Saudi state would not be in control. Mohammed bin Salman, the Crown Prince of Saudi Arabia, is a chair of PIF. He is believed by Western intelligence agencies to have ordered the murder of journalist Jamal Khashoggi in 2018. PIF will provide 80% of funds for the deal as the lead partner in a consortium with PCP Capita Partners and RB Sports & Media. Amnesty International UK said it was "an extremely bitter blow” and suggested ownership of English football clubs was now being used to ‘sportswash’ human rights abuses. The takeover now makes Newcastle one of the richest clubs in the world.
Former Airbus chief technology officer Grazia Vittadini is to succeed Paul Stein as CEO of engine maker Rolls-Royce. Stein steps down next year after nearly 12 years.
Financial markets are braced for more bad news this morning as Chinese property market giant Evergrande Group looks set to miss a fresh round of scheduled debt repayments to the tune of $148m. Evergrande missed two payment deadlines worth $131m last month and has more than $300bn in debt liabilities. The troubles besetting Evergrande, which has remained silent on its obligations to foreign bondholders – totalling some $20bn - have sent shockwaves across global markets amid signs that the government in Beijing may be prepared to see some failures in China’s massive property sector, according to the Guardian this morning. Trading in shares of Evergrande, as well as its Evergrande Property Services Group unit, has been halted since 4 October pending a major deal announcement.
The price of Bitcoin is up again, hovering around the $50,000 (£36,851) mark after Gary Gensler, chair of the US Securities and Exchange Commissionsaid America would not follow China’s lead in banning digital tokens. “Our approach is really quite different,” Bloomberg reported Gensler as saying.
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