Why not request our brochure today?      Or give us a call 020 3007 6002

| ES IT
Subscribe
Business

Britain is set to increase public spending by £76bn a year, by the end of the decade

   News / 10 Feb 2022

Published: 10 February 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


Britain's ageing population and more expensive healthcare are set to increase public spending by £76bn a year by the end of the decade, according to a new report by the Resolution Foundation, written in collaboration with LSE and funded by the Nuffield Foundation. The report anticipates a £24bn annual increase in spending on the state pension by 2030, and estimates £52bn more will have to be spent on rising healthcare costs because of new treatments and higher rates of illness. It says a new approach is needed to manage the extra costs, as previous approaches of shrinking defence spending and raising National Insurance (NI) are likely to be exhausted. Higher spending on pensions and health could push the size of the UK state to 44% of GDP by 2030, the foundation warns. The state currently costs around 42% of GDP, having expanded from 38% post-war. A larger state in recent decades has also led and will continue to lead to steep tax rises, the report argues, from 28% of GDP in 1993 to 36% by 2026.
 
Bank of England chief economist Huw Pill has called for a cautious approach to raising interest rates, adding that the outlook remains unclear given uncertainties around wages and energy prices. Yahoo Finance UKreports Pill as saying that it was “better to adopt a more measured and data-dependent approach, which learns from how the economy responds to each step taken, rather than pre-commits to a concept surrounded by uncertainty”. He argued that with the situation as it is today, “a case can be made for a measured rather than activist approach to policy decisions.” "I worry that taking unusually large policy steps may validate a market narrative that bank policy is either foot-to-the-floor on the accelerator, or foot-to-the-floor with the brake," he said, however he refused to rule out interest rate increases. Pill said that if inflationary pressures ease, interest rates could stay lower for longer. But if there are signs of energy prices driving up wage settlements, the bank could tighten policy faster.
 
Rising energy bills and staff wages are pushing most businesses to increase prices for customers, a survey by the British Chambers of Commerce has found. The business lobby group said three in four firms were raising prices due to higher costs, while half of the 1,000 asked were looking to cut spending. It warned the government of a "cost-of-doing-business crisis" and called on the chancellor to help companies.
 
Pay-as-you-go energy customers are already going without gas and electricity in greater numbers ahead of big price rises, Bill Bullen, the chief executive of Utilita says. Bullen told the BBC that typically, at this time of year, about 2 or 3% of these customers would "self-disconnect" when their accounts ran out of money, but that now stands at between 5 and 7%. Such customers typically face a £708 a year increase in their bill from April, a bigger rise than other households, and a "big proportion" would be unable to pay, he said, adding that “It's going to be tough on an awful lot of families". He called for specific help for the seven or eight million households who were going to be especially stretched, rather than the government's plan to "subsidise everyone's energy consumption". Utilita is the leading prepayment energy supplier, with 827,000 customers.
 
Many UK families have cancelled half-term trips to mainland Spain and the Canary Islands because children over 12 must be double vaccinated to enter. Hoteliers in the islands say the restrictions have lost them millions of pounds' worth of trade and are calling on the Spanish government to relax restrictions. Europe's largest tour operator, TUI says Mexico and Turkey are proving popular alternatives. From Friday, people travelling to the UK will no longer need to take any Covid tests if they are fully vaccinated but must still follow rules applicable at their destination. It is thought more than 80 holiday destinations around the world will still require travellers from the UK to take a pre-departure PCR test before entering. Travel agents are having to keep up with a fast-changing international patchwork of restrictions, the BBC says.
 
Seven out of 10 people have potentially been scammed online by misleading practices such as hidden charges, subscription traps and fake reviews, a survey by the Competition and Markets Authority (CMA) has found. 71% of shoppers told the CMA they had come across tactics designed to manipulate them. Of those who had experienced misleading online practices, the biggest concern was about hidden charges (85%), followed by subscription traps (83%), fake reviews (80%), and pressure selling (50%). The CMA has now launched a campaign to help shoppers spot and avoid misleading online practices after becoming “increasingly concerned” about “sneaky” sales tactics. “The Online Rip-Off Tip-Off” campaign is fronted by TV presenter and consumer champion Angellica Bell.
 
Telecoms watchdog Ofcom has reignited fears of higher-priced phones and bills after suggesting it would no longer automatically reject a mega-merger between Vodafone and Three UK. Previously Ofcom has taken the view that a merger between any of the UK’s big four mobile operators should be blocked at all costs. Companies however have been calling on regulators and governments to reduce their control of the industry as they grapple with consistently low returns. Vodafone CEO Nick Read recently branded the UK a "crowded marketplace" that needs consolidation to help spur industry investment in next generation 5G connectivity. Announcing a review of mobile markets and the spectrum, Ofcom said: "Our stance on a potential merger would be informed by the specific circumstances of that particular merger, rather than just the number of competitors."  Levelling-Up Secretary Michael Gove last week said he wanted to blanket most of the country in 5G technology by 2030, to usher in radical technologies from driverless cars to interconnected smart cities, using speeds 100 times faster than 4G downloads. The Government intends to switch off 2G and 3G signals by 2033 to ensure there is enough capacity for the 5G network.
 
Amazon is facing increased regulatory oversight because of the rapid expansion of its grocery business. The Competition and Markets Authorityruled yesterday Amazon and its relevant UK subsidiaries must comply with the Groceries Supply Code of Practice, which applies to retailers with an annual turnover of more than £1bn from grocery sales. Sharecast News says the code was designed to ensure big-ticket retailers treat suppliers fairly, including preventing grocers from changing contracts at short notice and giving ample time if they want to stop using that supplier. All the UK's main supermarket chains are subject to the code. Compliance with the code is managed by the Groceries Code Adjudicator, with whom Amazon said it was looking forward to working.
 
The BBC reports that Jo Whitfield, chief executive of Co-op food, will be taking a four-month unpaid break to help her two sons study for their GCSEs and A-Levels, during which time group chief executive Steve Murrells will take control of the Co-op's food business. She was paid £1.4m in 2020 according to the company's annual report. The opportunity to apply for an unpaid leave of absence is available to all Co-op staff, according to the company.
 
The owner of British Airways (BA) is at risk of a challenge from France and Germany under legacy Brussels rules that would force it to break up, analysts have warned. IAG, the FTSE 100 group whose airlines also include Aer Lingus and Spain’s Iberia, could be forced to spin off BA because of European Union ownership rules, according to HSBC. These regulations require airlines which operate flights between countries in the bloc to be "owned and controlled" from member states. The rules were suspended after the UK left the EU, with both sides agreeing to talks over a new post-Brexit regime, but 13 months of negotiations have yet to yield a resolution. Andrew Lobbenberg, an analyst at HSBC, said that although Spain, Ireland and Hungary would support a relaxation of the rules, Germany and France will likely push for them to be re-introduced as a means for their airlines to gain a commercial advantage over BA for their own carriers, Lufthansa and Air France-KLM.
 
Airport services company John Menzies said yesterday that it had rejected a £469m takeover bid from National Aviation Services, a subsidiary of Kuwait's Agility Public Warehousing. Menzies chairman and chief executive Philipp Joeinig said: "The board of Menzies has unanimously rejected this unsolicited and highly opportunistic proposal, which we believe does not reflect Menzies' true intrinsic business worth or its prospects.”
 
Merger talks between the mutual insurer LV and Royal London have broken down, the companies said yesterday. It is the second time within two months that a deal to buy the 178-year-old firm, originally known as Liverpool Victoria, has collapsed. LV members blocked a board-recommended takeover by the US private equity outfit Bain Capital in December, which would have seen them receive a paltry £100 each.
 
British insurer Legal & General has agreed a pensions buy-in deal totalling around £370 million pounds with London Heathrow's BAA Pension Scheme. Reuters says the buy-in, a form of bulk annuity deal in which an insurer takes on the risk of a company's defined benefit, or final salary, pension scheme, covers more than 1,400 BAA pensioners. It follows a £325 million buy-in in 2018 by L&G for another 1,300 members of the BAA Pension Scheme. Companies are seeking to offload defined benefit schemes from their balance sheets because they are expensive to run. Bulk annuity deals, meanwhile, are providing an increasing source of income for insurers.
 
Regulatory compliance software company Ideagen has announced the acquisition of MailManager for an upfront cash payment of £26.4m plus a deferred conditional earnout payment of up to £2.75m.
 
UK pharmaceutical giant GlaxoSmithKline (GSK) says Covid-related saleshit £1.4bn last year, although pre-tax profits were down by more than a fifth to £5.4bn, despite revenue growing 5% to £34.1bn. The healthcare giant confirmed three major product approvals over the course of 2021 and said it currently has 43 medicines and 21 vaccines in its development pipeline. GSK also confirmed plans to raise billions by spinning off its consumer healthcare business, which includes the Nicorette, Panadol, Sensodyne and Aquafreshbrands, in a London stock market listing this summer. Chief executive Emma Walmsley faces pressure from the the US-based activist hedge fund Elliott Management, which is pushing for the sale of the consumer business, and raised questions over whether Dame Emma is the right person to lead GSK once that unit is spun off. GSK rejected three offers for the division from Unilever as too low - with the last worth £50bn - leading to Unilever abandoning its ambitions.
 
Homebuilder Barratt Developments says it expects to build 250 more homes than its previous annual forecast. In its half year results, the company raised guidance for its full-year home completions for this year to 18,000-18,250, higher than the number delivered in pre-pandemic levels in 2019. Barratt constructed 17,243 homes last year – more than any other listed housebuilder – and wants to get that up to 20,000 over the medium term.
 
Sotheby’s has sold what is believed to be the world’s largest cut diamond, a billion-year-old 555.55 carat black gem named The Enigma. The £3.16m bid was paid in cryptocurrency by buyer Richard Heart, who took to Twitter to tell his 180,000 followers that "as soon as the payment's gone through and possession's been taken" the gem would be renamed the "HEX.com diamond", in reference to the blockchain platform he founded.
 
US investment bank JPMorgan Chase & Co has attempted to evaluate the world's largest cryptocurrency, bitcoin, and has assessed its "fair value" at around 12% below its current price. This is based on bitcoin's volatility in comparison with gold, JPMorgan said. Strategists led by analyst Nikolaos Panigirtzoglou, estimated bitcoin's fair-value level at around $38,000 (£27,996) based on the cryptocurrency being around four times as volatile as gold. They estimated that the fair value would increase to $50,000 in a scenario where the volatility differential narrows to three times. "The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption,” the strategists wrote in a note published on Tuesday.
 
A painting worth £740,000 has been destroyed after a 'bored' security guard defaced the artwork at a Russian gallery, the Daily Mail reports. On his first day on the job, he drew two pairs of eyes with a ballpoint pen onto artist Anna Leporskaya's 'Three Figures' (1932–1934) painting during an abstract art exhibition at the Yeltsin Center in the city of Yekaterinburg, western Russia. The security guard has not been named but is believed to be a 60-year-old who worked for a private security company. He has since been fired and the police have opened a vandalism investigation. The painting was on loan from the State Tretyakov Gallery in Moscow, and the cost of restoring it has been put at RUB 250,000 (£2,470).


Why Media is an award-winning 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. We have offices in London UK, Hertford UK, Finestrat ES & Brescia IT.


Marketing Contact

Name:  Claire White
E-Mail:  claire@whymedia.com
Telephone:  01992 586 507