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Government borrowing was higher than expected last month

   News / 22 Mar 2022

Published: 22 March 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


Government borrowing was higher than expected last month. The Office for National Statistics (ONS) said interest payments on Government debt jumped from £5.4 billion in February 2021 to £8.2 billion last month, the highest amount for any February since records began in 1997. The ONS said the jump in payments is down to the recent surge in the Retail Prices Index (RPI) measure of inflation, which determines payouts on index-linked gilts. RPI rose to its highest level since March 1991, hitting 7.8% in January, up from 7.5% in December. Inflation for February will be revealed in the Chancellor’s spring statement tomorrow, alongside predictions for inflation by The Office for Budget Responsibility (OBR).
 
The government has pledged to reinstate the state pension ‘triple lock’ next year, meaning pensioners will be in line for a £733 increase. The triple lock, which dictates how much the state pension rises by each year – the higher of inflation, wage growth or 2.5% - was suspended for this year, breaking a Conservative Party manifesto pledge.
 
PM Boris Johnson met with senior energy executives in Downing Street yesterday. Following the meeting ministers indicated that the PM wants to deliver more nuclear power at "warp speed" and for it to be responsible for a quarter of Britain's energy mix by 2050. Ministers are also said to be considering reforming rules to make it more difficult for residents and officials to object to the construction of new nuclear sites. The Telegraph reports that this may mean local people will have their ability to oppose new plants stripped away. Industry bosses apparently also highlighted their concerns about the Environment Agency and Marine Management Organisation wrapping their projects in red tape and slowing them down.
 
The UK arm of Russian gas giant Gazprom could be placed into administration in the coming days because although the company's UK retail operation does not sell gas from its Russian parent company, customers want to end their contracts in protest at Russia's invasion of Ukraine. Bloomberg said the UK government is preparing to step in and temporarily run Gazprom Marketing & Trading Retail Ltd, which supplies thousands of organisations across the UK, including McDonald's, Siemens, hospitals, and councils. Gazprom itself has been sanctioned by the government.
 
Indian agency workers hired to replace P&O Ferries crews in Dover are being paid £1.81 an hour, according to the Rail, Maritime and Transport union (RMT). The union said the low pay was a "shocking exploitation" and "a betrayal of those who have been sacked".
 
Barclays has received a rap over the knuckles for mistakes made when supplying information to price comparison websites. The Competition and Markets Authority (CMA) said the bank had given the wrong data to the website on at least 13 occasions, and laid out a long list of failures between 2018 and 2021. These included over-stating the number of ATMs available to customers, under-reporting overdraft fees, and over-reporting international payment fees. However, because of the voluntary actions taken by Barclays to put matters right, the CMA is not taking any further formal enforcement action at this time.
 
Citizens Advice says it has uncovered a “shocking trend” whereby people from ethnic minority backgrounds are paying hundreds of pounds more for car insurance than white people. As part of a year-long investigation, the charity analysed 18,000 car insurance costs reported by people across England and Wales who came to the legal support charity for debt help in 2021. It found that, on average, people from ethnic minority backgrounds paid £250 a year more than white people – regardless of gender, age and income, and that in postcodes where more than 50% of the population are from ethnic minority backgrounds, there was an “ethnicity penalty” of at least £280 a year. Local risk factors such as the crime rate, deprivation, road traffic accidents and population density could not account for price differences, the charity said.
 
Energy company Shell is said to be reconsidering its decision to pull investment from the Cambo oilfield project on the west coast of Shetland. Development was paused in December after Shell concluded the economic case for investment was “not strong enough”. At the time, the price of crude oilwas under $70 a barrel. Yesterday it hit almost $115 a barrel.  
 
The Royal Mint has found a way to extract gold from electronic waste from everyday items such as mobile phones and laptops, and plans to use it to make commemorative coins. The company intends to build a plant in South Wales to process up to 90 tonnes of UK-sourced circuit boards a week, to general hundreds of kilograms of gold per year. The Mint said the move would “help address a growing environmental issue, support jobs and skills in Britain, and create a new source of high-quality precious metals for the business". The site is expected to be fully operational in 2023.
 
Taxpayer-backed satellite firm OneWeb has announced it will resume launches after a deal with Elon Musk’s SpaceX. OneWeb cancelled a planned launch of 36 broadband satellites earlier this month because it would have used Russian Soyuz rockets and been overseen by the Russian space agency. The firm has now done a deal with SpaceX and the first launch is anticipated later this year. The UK Government took a £400 million stake in OneWeb to rescue it from bankruptcy in July 2020, as part of a consortium with India’s Bharti Global, following a bidding war.
 
B&Q owner Kingfisher has revealed profits soared to almost £1 billion last year as the DIY boom seen throughout the Covid-19 pandemic continued. The DIY store said the extra cash would be handed out to shareholders through dividends and share buybacks, with £550 million returned to investors in total. The company, which also owns DIY stores in France, Poland, Iberia and Romania, and also owns the Screwfix brand, added that since the war in Ukraine started, it has removed Russian and Belarusian products from its shelves.
 
The BP CEO Bernard Looney has been awarded a £4.5 million pay package, almost double what he earned last year. His renumeration includes bonuses of £2.4 million based on the company’s performance last year, in addition to his £1.3 million salary. The FTSE 100 oil and energy company reported its biggest profit in eight years, with earnings of £9.45 billion for 2021 compared with a loss of £4.34 billion the year before.
 
Civil Aviation Authority (CAA) board member Garry Copeland has been forced to quit his non-exec role after breaching conflict of interest rules. A regular audit of CAA board members’ financial interests revealed that Copeland had failed to declare his “few thousand pounds” worth of shares in IAG, the owner of British Airways. His appointment was signed off by Transport Secretary Grant Shapps, industry sources said.
 
Shares in Boeing dipped as sharply as 10% yesterday after one of its 737-800 jets crashed in China, killing all 123 passengers and nine crew on board, making the aircraft manufacturer the biggest faller in the benchmark Dow Jones Industrial Average. However, the shares settled just 3.6% down at the end of the trading day. Sky News says that unverified footage appeared to show a plane falling almost vertically from the sky, but that there is currently little information about what caused the crash.
 
The High Court is due to hear two legal challenges over the use of WhatsAppand other messaging apps such as Signal by government ministers. Campaign groups All the Citizens and the Good Law Project have both brought claims related to the use of the services, arguing that the use of the instant messaging apps - which allow messages to be automatically deleted - for government business is unlawful.
 
The Moscow stock exchange reopened yesterday after closing on 24thFebruary when Russia invaded Ukraine, but only to trade bonds issued by the Russian government.  
 
A court in Moscow has banned Meta-owned companies Facebook and Instagram for what it called “extremist activities” and their refusal to heed Moscow’s requests to remove what they deemed fake news about the military action in Ukraine and calls for protests in Russia. The court did not ban on the Meta-owned messaging service WhatsApp, which has nearly 84 million monthly users. Meta recently changed its hate speech policy to allow posts calling for violence against the Russian military and the country’s president Vladimir Putin.
 
Ghana's central bank announced a huge interest rate hike of 250 basis points yesterday in a move intended to slow rampant inflation. Reuters says The Bank of Ghana raised its main lending rate to 17%, signalling an aggressive stance against the rocketing price of goods from flour to sugar to fuel, and against a depreciating local currency that has dented investor confidence, factors with together threaten to create a debt crisis in one of West Africa's largest economies.
 
The US central bank is prepared to raise interest rates “aggressively” if that is what it takes to stem "much too high" inflation, Federal Reserve Chair Jerome Powell said in a speech to an economics conference yesterday.


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