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The World Bank has warned of a "grim outlook” and a "pronounced slowdown" in global growth

   News / 12 Jan 2022

Published: 12 January 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


The World Bank has warned of a "grim outlook” and a "pronounced slowdown" in global growth as threats from new Covid-19 variants, government aid reductions, and cost of living pressures bite. Its report also pointed to the risks of debt and income inequality, stressing the risk to emerging and developing economies. After a strong rebound in 2021, with estimated growth of 5.5%, the World Bank believes global expansion looks set to decelerate sharply to 4.1% this year - revised down from a previous estimate of 4.3% - and 3.2% in 2023. The report also warned the period ahead will see a widening divergence between richer and poorer nations with all advanced economies expected to have achieved a full recovery in output by 2023, while emerging and developing nations remaining 4% below the pre-pandemic trend. President David Malpass pointed specifically to stimulus programmes in the richest countries as a cause of the worsening divide, as they drove global inflation. He also warned likely interest rate hikes to stem inflation could hurt economic activity, especially in weaker economies. "The problem with rate hikes is it hurts people that need floating rate money... and that's usually new businesses, women-owned businesses, developing country businesses," he said. Global GDP shrank by 3.4% in 2020 because of governments’ pandemic responses.
 
Inflation across the OECD group of 38 mostly developed countries stands at a 25-year high amid soaring food and energy prices. The cost of living scaled to 5.8% in November on an annual basis, driven by energy prices soaring 27.7%, the highest rate since June 1980, while food price inflation hit 5.5%.
 
Productivity in the UK fell in the quarter to September as the government’s furlough scheme wound to an end. New data from the Office for National Statistics (ONS) show output per hour worked declined by 1.4% quarter-on-quarter but was 1.1% above the average level before the pandemic in 2019. Output per worker was 0.6% below pre-Covid levels, despite a rise of 0.3% in the period. Public service productivity was up 0.6% in Quarter 3 (July to September) 2021 compared with the previous quarter, driven by the first fall in public service inputs since before the pandemic. However, it remains 8.1% below the 2019 average level.
 
ServiceNow has been revealed as the UK’s best place to work for in 2022, according to recruitment site Glassdoor. The annual survey listing the 50 top workplaces is based on anonymous employee reviews of their workplaces, including career opportunities, compensation and benefits, culture and values, senior management diversity and inclusion, and work-life balance. Employees at the software firm highlighted the company’s "fantastic culture, potential for opportunities and excellent training". Digital strategies firm AND Digital – a newcomer to the list - came in at number two, followed last year's winner, cloud-based software company Salesforce, publishing house Immediate Media Company, and protein research tool developer Abcam. Tech companies dominated the list with 19 entries, with seven in the top 10. Other newcomers to the list include Indian restaurant chain Dishoom, financial technology company Wise, fitness chain The Gym Group, fashion brand Oliver Bonas, sustainable energy provider Octopus Energy, and low-cost airline Jet2.com.
 
100 of the UK's top firms have signed up to the Confederation of British Industry's (CBI) Change the Race Ratio campaign which aims to increase racial and ethnic participation in business. The latest FTSE-listed companies to pledge their support include security firm BAE Systems, recruiter Bolton Associates, soft drinks maker Britvic, transport operator First Group, real estate services and investment management company JLL, consultancy and construction firm Mace Group, professional services firm Miles Advisory, online payments company Paysafe, and software company Sage. When companies sign up to Change the Race Ratio they commit to taking action to set targets in order to increase racial and ethnic diversity among board members. FTSE 100 companies commit to having at least one racially or ethnically diverse board member by the end of 2021 and those listed on the FTSE 250 pledge to achieve this by the end of 2024.
 
A professional recruitment firm says it is placing graduate lawyers on starting salaries as high as £150,000 amid a shortage of workers. Alan Bannatyne, chief financial officer at Robert Walters, told the BBC people in many UK industries were quitting for better paid jobs amid soaring demand. "15% is the minimum pay rise we're seeing, but some are increasing their salaries by up to 50%," he said. "Unless something significant happens, 2022 should be even better for staff."
 
Small and medium enterprises (SMEs) have been warned of increased risk of scams targeting their companies. According to UK Finance, British businesses lost £59.2m to fraudsters in the first half of 2021, an increase of 35%. “Criminals often attempt to impersonate a chief executive, senior manager, or supplier to try and convince staff to make an urgent payment or to change the existing bank account details held on file,” the trade association said. These scams then result in the victim transferring money to a criminal instead. In a new survey conducted for the Take Five to Stop Fraud campaign, 80% of SMEs said they had received an unsolicited text or email request for money and personal information, and 64% had received unsolicited phone calls.
 
Consumer group Which? has accused UK banks of failing to do enough to protect customers from fraud by leaving them vulnerable to flaws in online security systems. Which? says some banks are not using the latest protections for their websites and are allowing customers to choose insecure passwords for their accounts. Which?, along with security experts 6point6, investigated the online and mobile app security of the 15 largest current account providers in the UK, testing the banks on a range of criteria including encryption and protection, login, and account management and navigation. Metro Bank received the lowest score for online security with an overall score of just 53%. The bank was found to have potential weaknesses in subdomains of its website which could allow cybercriminals to compromise the server. Two security headers were also missing from Metro Bank’s website. These protect customers against a range of cyberattacks by telling the user's browser how to behave when it communicates with the website. Virgin Money was second from bottom with 56%, followed by TSB (59%), Triodos (63%), and First Direct (67%).
 
London was Britain’s most searched for location to buy property at the end of 2021, just ahead of Cornwall which was the most searched for location at the beginning of last year, according to Rightmove analysis of buyer searches in 2021.
 
The Post Office has been unable to contact 126 people who were convicted of crimes based on evidence from the flawed Horizon computer system, the BBC reports. A total of 736 sub-postmasters were prosecuted over the course of 14 years for crimes such as theft and false accounting. Those still to receive information about access to justice represent about one in six of those convicted. Nick Read, Post Office chief executive, said all victims should be compensated. The case is the most widespread miscarriage of justice in the UK, with some serving prison terms and facing humiliation in their communities for crimes they never committed.
 
Centrica chief executive Chris O’Shea has advised consumers the energy crisis may last for two years. Speaking to the BBC, O’Shea said “the market suggests” high gas prices will continue “for the next 18 months to two years”. He said the high demand for gas was partly being driven by a move away from coal and oil. “As we move towards net zero, gas is a big transition fuel…and so as you turn off coal-fired power stations in other countries, there isn’t an abundance of gas that you can just turn on quickly.”
 
Heathrow Airport says 600,000 passengers cancelled flights in December due to concerns surrounding Omicron and fresh Covid-19 restrictions. The UK’s largest airport handled just 19.4 million passengers during 2021, less than a quarter of 2019’s figures, and 12% lower than 2020. Travel to and from the Asia-Pacific region last year slumped 40.3% from a year earlier, while other markets with double-digit reductions included non-EU Europe, a fall of 13.8%, and North America, which dipped 13.6%. Domestic travel bucked the trend, however, with a 21.1% boost in passengers compared with 2020. Heathrow said there was “significant doubt” over the speed at which travel demand will recover in the long-haul in light of the ongoing pandemic. The airport urged the government to remove all testing for full-vaccinated travellers; called for any additional measures to be limited to passengers from high-risk destinations; and allow quarantine at home instead of in a hotel. The International Air Transport Association (IATA) forecasts suggest passenger numbers will not reach pre-pandemic levels until 2025, provided travel restrictions are removed at both ends of a route, and passengers have confidence they will not quickly return.
 
Marks & Spencer was the UK’s fastest-growing food retailer in the run-up to Christmas, according to an independent report. The retailer, which lost out in 2020 because most of its stores are on high streets or in travel hubs which were affected by lockdowns, outpaced discounters Aldi and Lidl with sales growth of more than 9% in the 12 weeks to 26 December, The Guardian reports. The figures were provided by analysts at NielsenIQ and based on a survey of more than 14,500 households. M&S only began selling food online, via Ocado, in August 2020. Lidl, which sells almost no food online, was the next fastest-growing retailer at 8.5% in the three months as it opened eight new stores in December. Aldi, which had claimed to be the UK’s best performer in the run-up to Christmas, was next on 4.8%, helped by new store openings. Nielsen said shoppers had made 27m more visits to grocery retailers in the run-up to Christmas 2021 compared with a year before, while online orders accounted for 11.3% of total grocery sales, down from 12.1% a year earlier.
 
Two of the world’s largest buyout firms, Bain Capital and CVC, have reportedly joined forces to launch a multi-billion pound bid for health and beauty retailer Boots. According to Sky News, other private equity firms are also expected to table offers soon, as part of a process to be run by Goldman Sachs. However, the joint bid has raised concerns due to the role of Dominic Murphy, a senior partner at CVC, who is also a director of Boots' US parent company Walgreens Boots Alliance. Murphy will need to recuse himself from boardroom discussions about the deal to avoid a conflict of interest. He was also an architect of the £11bn takeover of Alliance Boots by KKR, the private equity firm he worked for previously, in 2007. Boots, which axed 4,000 jobs during the height of the pandemic in 2020, has more than 2,000 stores and employs over 50,000 members of staff. It recently restructured its Nottingham head office and store management teams.
 
Family-owned IAE, the UK’s leading manufacturer of livestock handling equipment, stabling, steel fencing and shelters, is building a new factory in Staffordshire as part of a £15 million expansion.


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