The pound hit its lowest level of 2021 against the dollar yesterday

By Suzanne Evans, Director, Political Insight

The pound hit its lowest level of 2021 against the dollar yesterday after the UK economy grew at a slower pace than expected in the last quarter. Sterling fell to as low as $1.3364, trading below a key $1.34 support level. It marked its weakest point since December last year, when fears of a no-deal Brexit flooded the market.
 
The Bank of England (BoE) said yesterday that financial institutions that clear and settle transactions will no longer be required to discuss advanced plans to make dividend payouts to shareholders. The measure was first initiated in June last year to ensure firms had enough capital to survive through the pandemic. Yahoo Finance UK reports that Sir Jon Cunliffe, deputy governor of the BoE for Financial Stability, said in a letter to UK financial market infrastructures and specified service providers that “these additional expectations are no longer necessary and have been removed with immediate effect”. Earlier this year, the BoE scrapped remaining curbs on dividends paid by banks as its stress tests revealed that lenders could cope with the fallout from Covid restrictions on the economy. Last year, the central bank told lenders to suspend dividends and share buybacks until the end of 2020, to ensure they had sufficient capital to maintain lending to businesses.
 
A new survey of more than 1,000 UK businesses has shown that the overwhelming majority are hiking prices, as acute shortages of materials and cost pressures mount. The survey, carried out by the British Chambers of Commerce (BCC) found that, when asked if they had seen a change in the price of their goods or services in the past year, 80% of respondents reported increases — with 46% reporting significant increases and 34% reporting slight increases. Vehicle fuel, shipping containers and utilities were cited as the top areas of concern, throwing into focus the impact of skills and commodities shortages for UK firms.  Only 15% reported no change with only 2% reporting any kind of decrease.
 
Areas hit hardest by job losses from decarbonising are missing out on levelling-up funding, according to a new report from the Royal Society for Arts (RSA). The RSA says up to half of the places that will be hit hardest by the move to green jobs are not in the government’s top priority areas for levelling-up funding. He society called for a “Just Transition Fund” that would cost the UK some £1.36 billion to support areas impacted by decline in polluting jobs to avoid a decline in UK communities as seen in the 1980s, adding that ministers should work with local authorities to pilot new transition services through the JobCentre Plus.
 
FTSE 100 company BAE Systems said it had reached a deal to buy Bohemia Interactive Simulations, a developer of advanced military simulation and training software for an undisclosed sum. US-based Bohemia has more than 325 employees globally. The US military as its largest customer, BAE said yesterday. The proposed acquisition is conditional upon receiving certain customary regulatory approvals, it added.
 
Johnson Matthey has announced that Robert MacLeod is to retire as chief executive after nearly eight years in the role. He will step down in February and be succeeded by Liam Condon, who is currently a member of the board of management of Bayer and president of the Crop Science Division, a role he has held for nine years. The FTSE 100 catalytic converter manufacturer has also said it plans to sell its battery materials business, having concluded that the potential returns from the unit will not be adequate to justify further investment, saying rivals were too far ahead in the race for it to capture a slice of the electric car battery market. However, the firm has already invested hundreds of millions of pounds in its attempt to improve battery efficiency, and, with a ban on petrol and diesel cars on the cards, it will need an alternative source of revenue to its core business which will eventually become obsolete.

Mark Hartigan, chief executive of insurer LV=, has defended its potential sale to a US private equity firm. The £530 million takeover by Bain Capital is the "best financial outcome" for members, he said on the BBC Radio 4 Today programme. However, some members and politicians have raised concerns about the sale, which would see the company lose its current status as a mutual, owned by its 1.2 million member-customers. They will be asked to vote on the deal on 10 December. If 75% of voters are in favour of the takeover, another vote will follow on whether the business is fully transferred to Bain Capital, or if the US firm can carry out business under the LV= brand. Speaking to the Daily Mail, shadow business secretary Ed Miliband said: “I am deeply concerned at the details of the proposed takeover and demutualisation of LV by Bain Capital” and urged its members to "make their voices heard during this process". Former Conservative business secretary Lord Heseltine also spoke out against what he described as a "derisory" offer to LV='s members.
If the takeover is approved, £111m will be shared out among the company's members, giving them about £100 each.
 
Norton Motorcycles opens new multi-million-pound factory and global HQ in Solihull, creating 100 jobs. The historic British marque's 73,000 sq ft production facility is capable of building 8,000 motorcycles a year.
 
Japanese conglomerate Toshiba has confirmed plans to split the company into three separate businesses by spinning off its energy and infrastructure unit and its device and storage operation. The company has come under increasing pressure from activist investors to make changes since an accounting scandal and huge losses linked to its US nuclear unit. In 2015, then-chief executive and president Hisao Tanaka resigned after Toshiba overstated profits by more than a $1bn. To avoid bankruptcy, it sold its crown-jewel memory chip business in 2018. In April of this year, British private equity group CVC Capital Partnersmade a $20bn takeover bid for Toshiba which forced the company's chief executive Nobuaki Kurumatani to resign. The rejection of CVC's offer angered some shareholders. In June, a further shareholder revolt saw chairman Osamu Nagayama ousted from his position. Toshiba expects to complete the reorganisation by the second half of 2023.

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