Published: 26 January 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
The International Monetary Fund (IMF) yesterday cut 2022 UK growth forecasts from 5% down to 4.7%, believing the British economy is set to grow more slowly than initially forecast because of disruptions related to Omicron and supply constraints, particularly in labour and energy markets. However, the IMF says the UK is still set to be the fastest growing economy in the G7 industrialised nations for a second consecutive year. The IMF also expects UK GDP to come in at 2.3% in 2023, ahead of the 1.9% prediction made in October.
The gradual increase in the state pension age from 65 to 66 has resulted in record high employments levels among 65-year olds, who are now working an additional 1.8 million hours per week, according to research by the Institute for Fiscal Studies (IFS). Around 55,000 more 65-year-olds were in paid work in 2021, as an additional 7% of men and 9% of women stayed in paid work past age 65. The male employment rate at age 65 now stands at 42%, and the female rate at 31%. Both are the highest seen since at least the mid 1970s and, in the case of women, “very likely” to be the highest rate ever in the UK, the IFS says.
The Financial Conduct Authority (FCA) has warned it will crack down on firms in insolvency proceedings that put forward proposals that “unfairly” benefit them at the expense of their customers. The regulator is making it clear to firms seeking to limit their liabilities that they should provide the best possible outcome for customers, including providing the maximum amount of funding possible to meet compensation claims, and that failure to do so could result in the FCA objecting to the firm’s proposals in court. The FCA said it was also prepared to use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.
The Trades Union Congress (TUC) is calling on the government to take "urgent action" to fix public sector pay and prioritise key worker pay in 2022, claiming that many NHS staff and other key workers “are at breaking point". "A toxic mix of stagnating wages, excessive workloads, and a lack of recognition is deepening the staffing crisis in the NHS and other public services and forcing dedicated staff to quit their jobs," the union body said. Median pay in the public sector fell by 2.3% in real terms in November — the equivalent of £60 a month, according to new analysis from the TUC, which claims many key workers are still earning thousands of pounds a year less in real terms than in 2010. It says nurses’ real wages are down more than £2,700 per year and local government care workers are down more than £1,600 a year. The TUC is calling for the national minimum wage to be lifted to at least £10 per hour and for outsourced workers to be paid at least the real living wage or get pay parity with directly employed staff doing the same job.
Airlines and tour operators say they are seeing a noticeable increase in demand since Transport Secretary Grant Shapps announced a relaxation in covid testing rules for international travellers on Monday. Jet2 said it had seen a "notable increase in demand for holidays and flights;" Thomas Cook said bookings were up by about a third; and Ryanair said it had seen a "significant uplift in bookings” following the announcement. From 11th February (in time for half-term) fully-vaccinated arrivals will no longer have to take a coronavirus test.
Global supply chain disruption and shortages caused by the Covid pandemic are set to continue well into 2022, according to a report by digital supply chain experts project44. Average delays on shipping from China to Europe rose to 6 days in December, after falling for months, and delays on routes from China to the west coast of the US have also increased steadily since October.
A £1.9bn merger between rival bus groups Stagecoach and National Expresshas been paused while the competition watchdog investigates the deal, the BBC reports. The tie-up, which involves an all-share takeover by National Express, was agreed in December but the Competition and Markets Authority (CMA) has now served an enforcement order, which stops the companies from combining while it considers the plans. The merger would create a combined fleet of about 40,000 vehicles and a total workforce of around 70,000, with 50 jobs expected to be cut from the head offices, IT and corporate departments of the two firms. Stagecoach said that it and National Express still believed the deal would be a "comprehensive solution to any competition concerns that might arise from their overlapping coach operations".
Royal Mail is planning to cut around 700 management jobs as part of an ongoing restructuring programme to deliver annual savings of around £40m, incurring a cost of £70m for redundancy packages, etc. The firm has had to deal with increased numbers of deliveries during the pandemic while also facing the threat of fines from regulator Ofcom because of severe delays to the service because of staff absences due to covid. In early January, around 15,000 staff were off sick or isolating due to Covid, but Simon Thompson, who took over as chief executive of the delivery firm a year ago, said the situation was now improving. Thompson said the firm had spent more than £340m on overtime, additional temporary staffing and sick pay. The postal service received more than a million complaints last year - its highest level for a decade.
More detail has emerged about layoffs at Unilever. The Telegraph reports the company plans to cut 1,500 management jobs as it abolishes some 15% of senior management roles and 5% of more junior posts as part of a reorganisation first suggested last week. Factory jobs are expected to be safe in the shake-up at Unilever, which employs almost 150,000 people globally.
Gaming software group Playtech is said to be drawing up plans to break up and sell its operations if a £2.7bn takeover by Australian rival Aristocrat is blocked by a collection of Asian-based shareholders. Sky News has learnt that directors of the London-listed company, which has a market value of just under £1.9bn, will pursue separate disposals of the firm’s business-to-business division and Italian consumer arm Snaitech. A Playtech spokeswoman said: "The board reiterates its recommendation that shareholders vote in favour of the offer from Aristocrat.”
FTSE 100-listed investment manager M&G has struck a deal with digital investment specialist Moneyfarm to provide direct investment services to British consumers. M&G Wealth will use Moneyfarm's existing technology, digital capabilities, and investment guidance to back its own branded proposition, in response to “rapid growth” in direct investing in the last five years. Demand for digital investment services has also accelerated, and now accounts for 19% of all UK direct customers, with Moneyfarm being considered one of the "pioneering providers" of this emerging segment of the market, M&G said in a press release.
Greencore, the London-listed sandwich-maker, is facing an investor revolt after paying its top executives large bonuses while refusing to repay millions of pounds of covid-related taxpayer support. Sky News claims that Greencore, which produces 645 million food-to-go items every year, is facing a backlash from the decision to award chief executive Patrick Coveney a bonus of more than €600,000, even after the company cancelled its dividend and tapped investors for additional funding. The vote will be held at Greencore’s annual meeting tomorrow.
The continued growth in pet ownership during lockdowns means Pets at Home is forecasting record sales and profits. The retailer said it had a "record Christmas" with strong growth in sales across its 445 UK stores and its 300 vet and grooming outlets. Sales in the third quarter were up 8.7% on 2020 and 28.1% on 2019. Boss Peter Pritchard told the BBC's Today programme the company had served more pet owners than "ever before" in the 12-week period from 8 October to 30 December 2021. "In the month of December alone we actually also groomed 90,000 dogs, 5,500 dogs on Christmas Eve alone, so it was a very busy Christmas for us," he said.
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