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UK business investment could be boosted by up to £40bn pounds-a-year by 2026

   News / 21 Feb 2022

Published: 21 February 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


UK business investment could be boosted by up to £40bn pounds-a-year by 2026 if the government introduces a permanent successor to the popular super tax deduction scheme, the Confederation of British Industry (CBI) says. The super-deduction allowance currently gives businesses investing in certain types of equipment, like machinery, a 130% tax reduction. It was introduced at the spring Budget last year but is due to expire in March 2023. According to the new CBI report, introducing a new permanent investment deduction scheme will help to sustain business investment throughout 2023 and usher in a 17% rise in business investment over the medium-term. The CBI survey of 325 businesses shows more than half (53%) took advantage of the super deduction, and 24% plan to do so, to increase or accelerate capital investment plans. As part of a five-point economic plan, the business group called on chancellor Rishi Sunak to create a permanent tax deduction for capital spending in his Spring Statement. CBI forecasts the UK will remain the lowest in the G7 for business investment by 2026, if the super deduction expires without a successor. The £25bn super-deduction tax scheme was designed to boost Britain's economy as the country weathers the coronavirus pandemic.
 
The CBI is lining up Brian McBride, the former boss of Amazon UK and a former ASOS chairman, to succeed Lord Bilimoria as its president, Sky Newssays. McBride, who currently chairs the rail ticket booking platform Trainline.com, is also the lead independent director of the Ministry of Defence.
 
The CEO of Virgin Media O2 has warned ministers and regulators that "something has got to change" if Britain is to hit its targets for upgrading to faster 5G mobile. On Friday, the Telegraph reports how Lutz Schuler said the incentives that have spurred the industry into carpeting the nation in gigabit speed broadband were missing for mobile, despite a pledge by Michael Gove, Levelling Up Secretary, to bring widespread 5G coverage by 2030. He echoed concerns from the mobile industry in recent weeks, which has demanded tax breaks, cheaper airwave fees and the ability to carry out industry mergers so they can make the returns needed to increase investment in mobile. Schuler, who became CEO last year following Virgin Media's £31bn merger with mobile operator O2, said the regulator's interventions on broadband have made the market more investment friendly, but the same cannot be said for mobile. He said: “5G is a massive investment: It costs billions. Ofcom has shared that four mobile network operators are sitting on diminishing returns, and if your margin is getting below cost of capital then things have to change. If we don't get it right, then investment in 5G won't happen on time. It is as simple as that."
 
More than 17,000 chain store outlets closed across Britain last year, according to new research. The figures, compiled for the accountancy firm PwC, reflect the rise of online shopping and the impact of the pandemic. However, the data suggests the rate of closures is slowing as more independent firms take on space. "The worst could now be over" said Lisa Hooker, head of consumer markets at PwC.
 
As the country recovers from Storm Eunice, the UK's energy watchdog has issued an initial report on the impact of Storm Arwen last November, which left more than a million homes without power. Sky News reports that Ofgem found that network operators were hard to reach in the aftermath of the storm; many customers waited indefinitely on hold to customer support lines; operators were slow to pay compensation; and potentially gave inaccurate estimations for how long it would take for power to be restored. More than 4,000 homes were still without power some 10 days after Storm Arwen struck. "Looking ahead to the publication of the final report in Spring 2022, we will be undertaking further analysis to establish clear lessons for improvement, including a programme of consumer research exploring the experiences of customers that endured a prolonged outage," Ofgem said in its report. "We will also draw on evidence to determine whether the companies breached any of their statutory obligations or licence conditions, potentially leading to enforcement action."
 
Australian group Macquarie is said to be weighing a bid for a controlling stake in the gas transmission arm of National Grid that could value the unit at over $10bn (£7.3bn). The financial services firm has made an initial non-binding offer for a majority share through its asset management division, Bloombergreported. Citing "people familiar with the matter," the news agency said talks were ongoing and no decisions had been reached yet. The asset was also attracting interest from the likes of pension fund investor APG Asset Management, infrastructure specialist IFM and Canada’s Public Sector Pension Investment board. The business operates 7,000 kilometres of gas transmission pipes across the UK. National Grid, one of Britain's largest gas transmitters, had been looking to offload the gas business to cut its carbon footprint, announcing plans last year to sell the unit as part of its shift to green energy sources.
 
An American investment giant is plotting a £5bn takeover of Motor Fuel Group(MFG), Britain's biggest independent operator of petrol forecourts. Sky Newshas learnt that Fortress Investment Group is drawing up plans to bid for MFG after losing out in a hotly contested auction of Wm Morrison, the supermarket chain, last year. MFG is currently owned by Clayton Dubilier & Rice (CD&R), the private equity firm which eventually bought Morrisons in a deal worth about £7bn.
 
Hammerson is in talks regarding the sale of its Victoria Gate and Victoria Quarter shopping centres for £120m. The commercial property landlord said it was negotiating with "entities" related to Swiss property developer Redical Holdings AG.
 
Despite the rising cost of living, UK consumers have been spending more at the start of the year. According to figures from the Nationwide Building Society (NBS) January spending increased 18% year-on-year, while transactions were up by more than a third (34%). Nationwide customers spent nearly £3.5bn on essential items in January with around 94 million purchases made. Travel spending was up 241% year on year, while spending on utilities jumped by 9% for the same period as energy costs began to bite. Natiowide expects spending to grow in February as "the return to offices boosts" spending in areas like travel, eating and drinking and leisure and recreation.
 
Two in five (39%) shoppers have received a replacement item in their most recent online shop, according to a Which? survey, which found budget supermarket Aldi was the worst offender for substitutions: 49% of respondents said they had received a swopped product in their most recent shop. Aldi was followed closely by Sainsbury’s: 48% had received a substitute item, and Asda, where 58% got a surprise replacement. Which? found some very odd switches: one Aldi customer got a tub of Ben and Jerry's Phish Food ice cream when he had ordered breaded fish fillets. One shopper reported ordering Sainsbury's sponge scourers but instead received a Victoria sponge cake. Another said they had received beef stock instead of brandy butter. At Asda one customer received sausage rolls instead of toilet rolls. Another said they had a pack of Cadbury Creme Eggs substituted with a "box of bog-standard hen’s eggs". A Morrisons shopper found breadsticks exchanged for dog food; a Waitrose order changed shaving cream for tampons; and Tesco gave one customer duck paste instead of the duct tape ordered.
 
Despite plans to close 32 branches, NatWest has announced a swing back to profit in 2021 and increased bonuses by 44%. The bank, majority owned by the UK government, which holds 51% of its shares, said its pre-tax operating profit was £4.3bn last year, up from a loss of £351m in 2020. The bonus pool for NatWest’s bankers has been increased from £200m to £298m.
 
Cineworld has reached a deal to delay final payments to disgruntled former shareholders of its US division Regal. It has received a three-month extension to pay the remaining $79.3m in instalments by June 30. The London-listed movie house chain last September said it would pay $170m to shareholders unhappy with the $23 per share it offered when it bought Regal in 2017. Cineworld took on a huge debt as part of the $3.6bn Regal deal.
 
Bentley Motors has invested more than £3 million doubling the additive manufacturing capacity at its Crewe plant to create 3D printed vehicle components. Last month, the British marque announced plans to invest £2.5 billion transforming the Cheshire site.
 
Aston Martin is creating more than 100 new jobs at its manufacturing plant in St Athan. The major recruitment drive follows the launch of DBX707, its new SUV model, which will enter full production at the South Wales factory later this quarter.
 
Malaysia-based cocoa producer Guan Chong Berhad is set to create 220 jobs at a new factory in Glemsford, Suffolk - its first production facility in the UK. The firm has pledged to invest £62.2 million developing the site.
 
Insulation specialist Kingspan reported a "record" full-year performance on Friday as it announced the acquisition of French roofing solutions business Ondura. In the year to the end of December 2021, trading profit rose 49% to €755m, on revenue of €6.5bn, up 42%. Kingspan said acquisitions contributed 12% to sales growth and 11% to trading profit growth. Kingspan is based in Ireland, trades in over 70 countries worldwide, and has 159 factories employing over 15,000 people.
 
Bloomberg reports that serial dealmaker Chamath Palihapitiya has stepped down as chairman of Richard Branson’s Virgin Galactic Holdings Inc., in an abrupt departure.  Palihapitiya is said to be planning to focus on his other board commitments as the space-tourism company moves from startup phase toward paying flights, and that his resignation did not result from any disagreements with the company. Current director and Chief Investment Officer Evan Lovellwas appointed interim chairman as the company begins a search for a successor. “Chamath was instrumental in the launch of Virgin Galactic as a public company and, as our inaugural chair, his deep and astute insights have been incredibly valuable,” CEO Michael Colglazier said in a statement. “We’ve always known the time would come when he would shift his focus to new projects and pursuits.” Palihapitiya, a former Facebook Inc. executive who has raised billions via blank-check firms, earned a reputation as the “SPAC King” for his use of the investment tool to bring companies public. Virgin Galactic began trading in 2019 through a merger with Palihapitiya’s Social Capital Hedosophia.
 
Howden Joinery said on Friday that chairman Richard Pennycook plans to retire with effect from 17 September. Pennycook was appointed chairman in May 2016, having joined the board in September 2013, initially as a non-executive director and chairman of the Audit committee.
A process is already underway to identify and appoint his successor, the company said.
 
Credit Suisse has hit back after a massive data leak brought to light the hidden wealth of several of the bank’s client. Data on more than 18,000 bank accounts, holding more than $100bn (£73.6bn), was leaked to German newspaper Süddeutsche Zeitung by a whistleblower. The leak included personal, shared and corporate accounts, as well as those opened as far back as the 1940s. Nearly 50 media organisations have spent months poring over the data, the BBC says. The Swiss bank said: "The matters presented are predominantly historical, in some cases dating back as far as the 1940s, and the accounts of these matters are based on partial, inaccurate, or selective information taken out of context", it said.
 
A row over the treatment of pigs by suppliers used by McDonald's has led billionaire Carl Icahn to front two nominations to its board, the BBC reports. Icahn has proposed that Leslie Samuelrich and Maisie Ganzler stand for election at the 2022 annual meeting, a statement by the fast-food giant said. Icahn said the American chain used suppliers that housed pregnant pigs in small crates, in a practice he argued was cruel and ‘obscene”. He had asked all McDonald's pork suppliers in the US to move to "crate-free pork", along timeframes he had set, the company said on Sunday. McDonald's pledged to stop ordering pork from suppliers putting pregnant pigs in crates back in 2012 and said it expected to source 85% to 90% of its pork from these suppliers by the year's end. All of the pork it buys will come from these suppliers by 2024.


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