UK inflation could “comfortably” be more than 5% next spring

By Suzanne Evans, Director, Political Insight

Bank of England (BoE) deputy governor Ben Broadbent has warned that UK inflation could “comfortably” be more than 5% next spring because of rising retail energy prices and supply chain pressures. In a speech at Leeds University Business School yesterday, he said the inflation hike will come as regulator Ofgem is likely to raise the UK’s price cap in April 2022. UK inflation stood at 4.2% in October - more than double the Bank’s 2% target - soaring to its highest level in 10 years.  
 
Yahoo Finance UK reports that petrol and electricity in the UK is among the most expensive in Europe, with the two utilities costing Brits £120 a week on average. A study, conducted by delivery management firm Urbantz, analysed petrol and electricity prices in 40 European countries. It found that an average 55 litre tank of petrol costs £81, making the UK the 14th most expensive country in Europe for fuel. Electricity meanwhile costs Brits roughly £39 a week. The two utilities combined consume 26% of the average weekly wage in the UK. In Germany and Finland, by comparison, it takes up about 19% of weekly wage.
 
The government's website to find Covid travel tests "is not serving its purpose", and companies with misleading prices are "constantly reappearing" on the website, trade body the Laboratory and Testing Industry Organisation (LTIO) says. Several companies advertising cheaper tests on the government's website show increased rates after clicking through while other providers advertise tests at £20 on the government's list, which do not appear to exist on their own websites, the BBC says. Travellers are also being "exposed to extortionate prices", according to consumer group Which? In August, Health Secretary Sajid Javid asked the Competition and Markets Authority (CMA) to investigate "excessive" pricing and "exploitative practices" among PCR Covid test firms. The CMA made several recommendations, which included setting up a monitoring and enforcement programme for test providers and putting in place rules to prohibit the advertising of "limited quantity" prices, to address so-called "bait pricing", as well as making sure firms include costs such as delivery or administration charges. The government has not yet responded to BBC requests for information on what recommendations have been adopted.
 
The UK construction sector saw its fastest rise in output for four months during November, according to IHS Market’s monthly construction purchasing managers index (PMI), with a reading for the sector coming in at 55.5, up from 54.6 in October. Any score of above 50 indicates growth.
 
UK GDP could be boosted by £270bn if the government improved access to funding for SME manufacturers so they can get their hands on expensive heavy-duty equipment and industrial real estate, a new study by Make UK has found. The report said nearly a third (31%) say they would prioritise investment in developing products and expanding capacity if they could access “appropriate new finance” . “Micro and SME manufacturers account for 99% of all manufacturers in the UK but they are being held back by a lack of access to funding, skills, physical space and exporting,” said Stephen Phipson, CEO of Make UK.
 
The gender pay gap has fallen by "only a tiny amount" since 1995 according to the Institute of Fiscal Studies (IFS) Deaton Review of Inequalities, funded by the Nuffield Foundation, despite the increase in women’s educational attainment over the last quarter of a century. According to the latest report, working-age women in the UK earned 40% less on average than their male peers in 2019. Among those aged between 20 and 55, who are not in education, long-term sick or retired, women in paid work earn 19% less per hour on average, with pay of £13.20 per hour compared to £16.30 for men.
 
1.3 million Londoners would rather quit their job than commute to work, according to a new survey from Totaljobs. More than three quarters (76%) of employees in the capital would be prepared to quit to avoid travelling into the office, Yahoo Finance UK reports.
 
Ride-hailing company Uber has lost a High Court bid to have its business model ruled compatible with London's transport operating laws. The company sought a judgement confirming that individual drivers hold contracts directly with passengers who ride with them, but judges disagreed, stating that customers enter into a contract with Uber. This means Uber - and other ride-hailing companies – can be held liable for anything that goes wrong with the service. Sharecast News says the ruling could fundamentally restructure the private hire industry in London, as almost all 1,832 TfL licensed operators have used this model of operation since the industry first came under regulatory supervision in 2002. The BBC says the ruling could lead to much higher prices for Uber customers as, unlike most private drivers, Uber is a VAT-registered business, so this would oblige the ride-hailing firm to start charging the tax. The ruling also limits the ability of all ride-haling firms to classify workers as independent contractors, which has been used in the past to shield operators from employer liability, legal liability to their customers and for payment of VAT.
 
5,000 members of the union Usdaw will join 1,200 Unite members in striking at Tesco distribution centres unless an agreement can be reached in a row over a proposed 4% annual pay rise.
 
A cyber-attack has hit more than 300 Spar convenience stores across the north of England, the BBC reports, forcing some to close their doors. The attack on Sunday targeted James Hall & Company in Preston, Lancashire, which operates Spar's tills and IT systems. Shops have not been able to take card payments with those remaining open taking cash only. The National Cyber Security Centre and Lancashire Police are investigating.
 
Paragon Banking Group reported record profits in its final results this morning, thanks to strong lending and margin growth, with its underlying profit before tax rising 61.8% to £192.4m. The FTSE 250 personal lender and mortgage provider said its statutory profit before tax was ahead 80.5% to £213.7m for the 12 months ended 30 September.
 
FTSE 250 fund manager Liontrust Asset Management has entered into a conditional sale and purchase agreement for British asset manager Majedie Asset Management for as much as £120m. Majedie had assets under management and advice of £5.8bn as of 30 November.
 
London Stock Exchange Group (LSEG) has agreed to acquire portfolio, margin and capital optimisation and compression services firm Quantile for up to £274m. LSEG said the acquisition would enable it to expand its range of post-trade risk management solutions through trade compression, capital and margin optimisation services, stating Quantile would be complementary to its global OTC Derivatives clearing services, which provide risk management and capital efficiencies to customers.
 
Luxury clothing retailer Ted Baker said yesterday that 77-year-old chairman John Barton had died. EasyJet, which Barton headed up for almost nine years, also said it was "shocked and extremely saddened" to hear of his sudden passing.
 
New York mayor Bill de Blasio has dictated that all New Yorkers must have had covid vaccines or they will not be allowed to work, extending an edict for public sector employees to the private sector. The policy will take effect on 27 December, he said. Some 184,000 businesses will be affected.
 
The boss of US mortgage firm Better.com has fired around 900 of his staff on a single Zoom call. "If you're on this call you're part of the unlucky group being laid off," said Vishal Garg. The call was later uploaded to social media where it was labelled "cold", "harsh" and "a horrible move", especially in the run up to Christmas. "Last time I did [this] I cried," Garg told the staff on the call. "I wish the news were different. I wish we were thriving," he said, but staff performance and productivity, and market changes, lay behind the mass-firing of what he said was 15% of Better.com's workforce. However, the BBC says he did not mention a $750m (£565m) cash infusion the company received from investors last week.
 
Cryptocurrencies were down yesterday morning, after bitcoin’s price fell almost 3% to trade at $48,143 (£36,304), which is almost 30% down from its all-time high of $69,000, which it hit last month. Ethereum, the world's second largest crypto by market cap, was down almost 5%, trading at $4,015 while Solana, seen by many as a competitor to ethereum, was down almost 9%, trading at $182.

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