Published: 29 October 2021
Location: London, UK
Christine Lagarde, president of the European Central Bank (ECB), said yesterday that the period of higher inflation will last longer than expected but slow over the course of next year. Meanwhile, the bank will maintain its current interest rates and emergency bond buying programme. The ECB foresees inflation at 2.2% in 2021, 1.7% in 2022, and 1.5% in 2023 — below its 2% target. However, inflation in the eurozone hit 3.4% in September, climbing to a 13-year high. In Germany, Europe’s largest economy, consumer price inflation accelerated at an unprecedented pace of 4.6% in October, up from 4.1% in the previous month, the highest level since inflation was first recorded across the eurozone in January 1997. Annual inflation has hit 5.5% in Spain.
US economic growth slowed sharply in the third quarter of the year. The economy expanded at an annualised rate of just 2% in the three months to September - down from 6.7% in the previous quarter.
France yesterday detained a British scallop trawler in the port of Le Havre and fined another UK fishing vessel, in the latest post-Brexit row over fishing waters. The UK government has accused France of moving towards a breach of international law and promised an "appropriate and calibrated response".
Analysis of chancellor Rishi Sunak's Budget by the Resolution Foundationconcludes it signals the government is setting the stage for the "end of low tax conservatism" as it contrasts to the stated pledge of a high wage economy made by prime minister Boris Johnson and contradicts low tax plans favoured by most Tory MPs. Projections by the think-tank suggest that by 2026-27 tax as a share of the economy will be at its highest level since 1950, amounting to a £3,000 increase per household since Johnson became PM. This estimate assesses the combined impact of polices announced by the chancellor — including those concerning universal credit, reduced alcohol and fuel duties, and higher council tax, income tax and national insurance— which will deliver a 2.8% income boost to the poorest fifth of households by the middle of the decade, but an income hit of 2% to middle income households, and a 3.1% to the richest fifth of households. Alongside this, the reduction in the taper rate in universal credit will bring an additional 380,000 families into the benefits system next year, the Resolution Foundation concludes.
Millions of people are set to be worse off next year amid spiralling costs and tax rises, says The Institute for Fiscal Studies (IFS). The economic think tank said that inflation and higher taxes on incomes would negate small wage increases for middle earners. Low-income households will also feel "real pain" as the cost of living is set to increase faster than benefit payments, it said. On Wednesday, the independent Office for Budget Responsibility (OBR) warned that the cost of living could rise at its fastest rate for 30 years.
Consensus is growing that the Bank of England will raise interest rates at next week's meeting. Capital Economics said yesterday that it expects the Monetary Policy Committee to raise rates from 0.10% to 0.25% at the meeting on Thursday 4 November, and raise rates to 0.50% in February, if not December.
The number of UK businesses that closed in the third quarter of the year climbed 50% above levels recorded a year ago. According to the latest figures from the Office for National Statistics (ONS), the largest increases in closures were in the transport and storage (up 101%), and business administration and support services (up 66%) industries. All 16 of the main industrial groups showed an increase in closures, however, with 100,835 businesses closing overall in the past year, as labour shortages and supply chain disruptions took their toll. The ONS counts business closures as firms removed from the Inter-Departmental Business Register (IDBR) either if its turnover and employment are zero for several periods, or if the ONS is notified that the business has ceased trading through an administrative source. Commenting, the ONS did however stress that “it is likely that business closures in Q3 2020 were low in part because of the help provided to businesses by the government throughout the coronavirus pandemic in the UK”.
British car production saw a year-on-year fall of 41.5% in September – the worst performance since September 1982 - as the industry continued to be plagued by global supply chain issues and semiconductor chip shortages which have forced temporary factory closures. Yahoo Finance UK reports the latest figures from the Society of Motor Manufacturers and Traders (SMMT), which show 67,169 units left factory gates in September, marking a third consecutive month of output declines.
More than one million UK households may have fallen victim to a scam known as "brushing" after receiving mystery Amazon parcels they didn't order, Sky News reports. Consumer group Which? believes third-party sellers are exploiting Amazon's search ranking system - which favours items with high sales volumes and good reviews - by sending items to unsuspecting people and then falsely logging it as a genuine purchase. The watchdog, which surveyed 1,839 UK adults between 13 and 17 August, found 4% of respondents - or, scaled up nationally, an estimated 1.1 million people - said they or someone in their household had received such a package. 63% said they kept them, 28% threw them away and 16% gave them away.
The Competition and Markets Authority said yesterday it is to being an initial investigation into the completed acquisition of Bristol Water by Pennon Groupunder the Water Industry Act 1991, with a 22 December deadline for a decision as to whether to progress the investigation further.
John Lewis has been forced to pull its controversial home insurance advert after the Financial Conduct Authority found it was "potentially misleading". The ad features a young boy dressed up in girl’s clothes and wearing make-up smashing up his family home while strutting around to a Stevie Nicks song. John Lewis tweeted to say it had withdrawn the advert and clarified that its accidental damage cover was available only as an add-on to its new home contents insurance product and that policies only covered accidental, not deliberate, damage.
Lloyds Banking Group doubled its profits in the three months to September, the Guardian reports. The group, which owns Halifax and is the UK’s largest mortgage lender, benefited from an increase in demand for larger homes linked to the pandemic “race for space”, and last-ditch efforts by consumers to take advantage of the stamp duty holiday, which finished last month after reducing at the end of June. There was a £2.7bn net increase in its home loans in the quarter, bringing mortgage lending to £15.3bn over the nine months to September – the strongest rise in that measure at the bank in more than a decade. That then contributed to a 96% rise in pre-tax profits to £2bn in the third quarter compared with £1bn a year earlier.
Tesco products can now be bought on the grocery delivery app Gorillas, as the two companies trial a partnership across five locations in the UK, Sky Newssays. Gorillas, a German start-up that this month secured £1bn in funding to grow its business, promises to deliver to customers a selection of fresh foods, bottled drinks, and household items in only 10 minutes. The company, founded last year, is competing with the likes of Getir, Zapp, and Weezy for a share on the market.
Toys ‘R’ Us is making a comeback. The last of its stores closed in the UK in 2018, blaming the advance of online retail, but now parent company WHP Global is shepherding a British re-launch that it says will include both a bricks-and-mortar and online offering, following a successful reopening in Australia. Worldwide, Toys 'R' Us has more than 900 stores and e-commerce sites across 25 countries generating over $2bn (£1.45bn) a year in sales. Online sales to UK shoppers will restart over the next few months, initially from existing operations in Australia, whilst it works to establish local teams, offices, and logistics facilities during 2022 and 2023, Yahoo Finance UK reports. A relaunch has also been touted for the US market.
Acquisition vehicle Summerway Capital has agreed to buy Vertigrow Technology, a medicinal cannabis producer, for £80m to take the business public and expand it. Vertigrow grows cannabis for medicinal products to treat pain and has a licence from the UK government to legally grow the plant for this purpose. Its facility could supply up to 50,000 patients and generate revenue of £90m per annum with earnings before interest, tax, depreciation, and amortisation margins of about 50%. Vertigrow also has a majority stake in a potential private pain clinic business that, on approval, would carry out the only authorised medicinal cannabis trial of its type in the UK, Summerway said. After the deal completes, James Short, Vertigrow's founder and chief executive, will join Summerway's board as CEO.
Anglo-Dutch oil giant Royal Dutch Shell has hit back against an activist hedge fund Third Point’s call for the company to break up into multiple companies to improve performance, reported here yesterday. Shell Chief Executive Ben van Beurden told reporters that Shell's strategy is coherent, well understood by a majority of its shareholders, and that its businesses operate better together than apart.
British bus manufacturer Mellor is set to build a new multi-million-pound factory in Scarborough. 100 people will be based at the 54,000 sq ft production facility when it is fully operational.
Ryanair has promised to start refunding customers for cancelled flights within five working days, following criticism of its pandemic reimbursements policy, which led to an investigation by the Competition and Markets Authority (later dropped) into whether consumers had been treated fairly. At the start of lockdowns, the Dublin-based carrier (and some other airlines) refused to refund customers who were unable to travel if their flight went ahead. It later emerged those who had pursued chargeback refunds via their credit card company were unable to board new flights, unless they returned the money. Other customers were issued with flight vouchers instead of refunds, often with expiry dates too early for them to use. Ryanair’s new commitment on refunds exceeds those required by EU law, which states passengers should be reimbursed within seven days, unless there are extenuating circumstances.
Facebook has renamed itself as Meta because the Facebook name is "so tightly linked to one product that it can't possibly represent everything that we're doing today, let alone in the future," founder Mark Zuckerberg said yesterday. The move will bring together all Facebook’s different apps and technologies, including Instagram, Messenger, its Quest VR headset and its Horizon VRplatform, to create what Zuckerberg calls a "metaverse business". Last week the technology powerhouse announced plans to hire 10,000 people across the EU to help bring this idea to fruition. ‘The metaverse’ is a concept taken from the 1992 sci-fi novel Snow Crash and describes a virtual reality version of the internet where people live as avatars in a digital representation of the real world. Zuckerberg expects his metaverse to reach a billion people within the next decade.
“If you're a fan wanting to express your devotion to the hit Korean Netflix show Squid Game - well, there's a cryptocurrency for that,” says the BBC news website. Squid, which was trading around 1 cent on Tuesday, reached $2.34 (£1.70) on Friday - a more than twenty-fold jump. Its market capitalisation, or total volume in the market, is $184m (£133m). The dystopian series - which tells the story of a group of people forced to play deadly children's games for money - has become a viral sensation. Squid is what is known as a "play-to-earn" cryptocurrency, where people buy tokens to play in online games where they can earn more tokens. These can then be exchanged for other cryptocurrencies or fiat money. In the case of Squid, many buyers will be gamers looking to play in an online game of the program, which begins in November, the Beeb said.
Why Media is a reputable design, marketing, digital communications and PR agency offering tailored solutions to companies on a global scale. We have extensive experience in delivering design and marketing services to a spectrum of companies including professional services, property companies, financial institutions and shopping centres.