Government borrowing in April fell from a year earlier but still remains higher than pre-Covid levels

By Suzanne Evans, Director, Political Insight

Government borrowing in April fell from a year earlier but still remains higher than pre-Covid levels, the BBC reports. Borrowing was £18.6bn, down £5.6bn from a year earlier. However, it was also the fourth-highest April borrowing since monthly records began, and was £7.9bn higher than in April 2019, before the pandemic. The figures were slightly lower than forecast by the Office for Budget Responsibility which predicted borrowing of £19.1bn. Tax revenuesrose by £5.5bn to £50.2bn in April, the Office for National Statistics (ONS) said, with last month seeing the first contributions from the increase to National Insurance. Interest payments on government borrowing were £4.4bn in April. Although this is down on £4.9bn last year, payments are likely to rise because they are linked to inflation rates.
 
While stocks rallied in Europe and on Wall Street yesterday, Asian marketsare still in retreat because of the impact of China's ongoing Covid restrictions and its impact on supply chains and the wider global economy. Despite an announcement from Beijing on measures to stimulate the economy (China plans to deliver more than 140 billion yuan ($21 billion) in additional tax rebates, bringing the total amount of tax relief this year to 2.64 trillion yuan), the lack of a covid exit strategy in the world’s second largest economy has led investment banks UBS Group and JPMorgan Chase to cut their China economic growth forecasts. Yesterday, UBS cut its 2022 GDP growth forecast to 3% percent from 4.2%, while on Monday, JPMorgan reduced its forecast to 3.7% from 4.3%.
 
European Central Bank President Christine Lagarde said yesterday that policymakers are likely to lift the eurozone deposit rate out of negative territory by the end of September. Eurozone finance ministers also agreed to gradually shift fiscal policies from supportive this year to neutral in 2023, the chairman of the ministers Paschal Donohoe told a news conference. Eurozone countries have been supporting their economies with public money since 2020, when the COVID-19 pandemic plunged the 19 countries sharing the euro, and the global economy, into a deep recession, Reuters reports. But with the return of growth and with inflation at record highs, blanket stimulation of the economy no longer made sense the ministers said, focusing more on targeted and selective support, where needed. However, the European Commission will also keep EU borrowing limits suspended for another year to give governments room to deal with the fallout of the war in Ukraine, if necessary. Economics Commissioner Paolo Gentiloni said the war meant eurozone growth was likely to be 2.7% this year, rather than the 4.0% predicted.
 
The European Commission and EU governments are not doing enough to prevent fraud and corruption, the bloc's auditors said yesterday because the EU’s blacklisting system was not vigorous enough. Nearly all 448 entities barred by the EU in 2020 were excluded because of bankruptcy, which would have prevented them from getting EU money anyway, auditors said. Only two were blacklisted for corruption or fraud, and EU member states, who in practice hand out most of the bloc's funding, are currently not obliged to set up blacklisting systems at all. "Blacklisting is not used effectively to prevent EU funds from being paid out to individuals, businesses or public organisations involved in illegal acts such as fraud and corruption," the auditors said. In 2020, the EU anti-fraud office OLAF recommended the recovery of about 300 million euros of EU funds that were misspent.
 
Oil prices could climb further, increasing the threat to the global economy, the head of the International Energy Agency (IEA) said yesterday, speaking at Davos. In an interview with Bloomberg, Fatih Birol described oil prices as being "very high", and said Europe still buys substantial amounts of money from Moscow, despite working on a Russia crude import ban. "We may see prices even going higher, being much more volatile and becoming a major risk for recession for the global economy," he said. This morning, however, oil prices are down, with analysts citing concerns over a possible recession and China's dogged pursuit of a zero-covid policy. Brent crude futures for July slid 61 cents, or 0.5%, to $112.81 a barrel by 4am, while West Texas Intermediatefutures for July delivery dropped 55 cents, or 0.5%, to $109.74 a barrel. Both benchmarks fell by more than $1 earlier in the session, Reuters says.
 
31 companies servicing UK-based oil and gas operators have written an open letter to Prime Minister Boris Johnson calling for an end to speculation about windfall taxes on their industry, to fund support for customers facing higher energy bills. For months, government ministers appear to have been at loggerheads over the issue, as the Opposition has consistently called for their introduction. The letter, issued today by trade body Offshore Energies UK(OEUK), which represents more than 400 companies in the sector, warns against introducing a windfall tax given that the industry is only in the early days of a post-pandemic recovery - having suffered significant losses in recent downturns - and that it will not sustainably help consumers. OEUK also wrote that it will “do nothing to address the cyclical nature of an energy system linked to global supply and demand, with the UK becoming much less attractive to investors who will look elsewhere for the long-term stability they require to progress major energy projects,” the letter said, adding that “the ramifications of any halt in investment will be felt throughout the supply chain, through jobs, and the communities this industry supports, both directly and indirectly. OEUK CEO Deirdre Michie added: “After significant downturns which saw the offshore energy industry lose thousands of jobs, we need to encourage investment in cleaner energies and the sector which supports it.
 
OEUK CEO Deirdre Mitchie is to make a speech at the organisation’s annual conference today, in which she will argue that environmental activists could undermine the country’s energy security and hinder its efforts to reach net zero. “Damaging” protests, legal action and publicity stunts by organisations including Extinction Rebellion, Just Stop Oil and Greenpeace deter investment in the North Sea and set back the UK’s efforts to cut emissions, she will say, adding that if such pressure groups were “to get their way”, it would make the UK more dependent on other countries for oil and gas [and] “destroy tens of thousands of other jobs…and here is the irony: it would actually increase global emissions as we would have to import fuels with a higher carbon footprint rather than use what we have produced locally.” Hence it is preferable to “instead choose to invest in the oil and gas resources in our own back yard,” her speech says. Mitchie will also highlight the fact that carbon emissions are driven by a country’s infrastructure, not by the source of its fuels. Just Stop Oil told PA Media that it was “beyond ironic that Offshore Energies UK seeks to blame climate activists for the UK Government’s energy security failure, when they represent the very industry that has lobbied governments for decades to delay climate action and kept us dependent on toxic oil and gas”. “Such actions will soon be viewed as criminal and those who have undertaken them will be prosecuted” the group added.
 
The world is facing an oil supply crunch, with most companies afraid to invest in the sector as they face green energy pressures, the head of Saudi Aramco told Reuters, adding it cannot expand production capacity any faster than promised.
 
Ofcom is apparently drawing up contingency plans with BT in case smaller broadband suppliers - so-called 'alt-nets', fall into bankruptcy because of runaway inflation. More than 150 BT challengers backed with billions of pounds of private investment have entered the market to try and capitalise on the upgrade to ultrafast speeds, but now concerns are mounting that the fierce levels of competition will begin pushing some firms to the brink, as they struggle to compete with the might of BT's Openreach and Virgin Media O2, The Telegraph says.
 
More than eight out of 10 people who had to work from home during the pandemic are planning to carry out hybrid working in future, according to figures from the Office for National Statistics (ONS). Around 78% of those who worked from home to some extent said that their work-life balance was improved, while 53% cited fewer distractions, 52% said they completed their work more quickly, and 47% said their overall wellbeing was better. However, 48% said the main disadvantage was a difficulty in working with others.
 
Almost one in five UK workers say they are likely to change jobs in the next 12 months as they seek better pay and job satisfaction, a survey by PwCsuggests. The accounting giant said workers were starting to "assert their power" at a time when many bosses are struggling to recruit and found younger and highly skilled workers were most likely to be unhappy in their jobs or seeking a raise. Some 60% also said they would prefer to work fully or mostly from home.
 
Bank of England Governor Andrew Bailey says he will continue to let staff work from home, despite wanting more staff in the office, because otherwise it could struggle to recruit. Hybrid working arrangements have become a key benefit, given how tight the jobs market is, he said. Last week The Telegraphrevealed Bank officials have been setting interest rates over video link.
 
Oxfam has released a report claiming that over the past two years, someone has become a billionaire every 30 hours. Research completed to write Profiting from Pain found that between March 2020 and March 2022, some 573 people became a new billionaire. Oxfam says the pandemic is “set to drive the biggest systemic increase in income inequality ever seen,” as for every new billionaire created, nearly one million people could be pushed into extreme poverty in 2022. To solve the problem Oxfam is suggesting a “one-off solidarity tax” on billionaires’ increased wealth during the pandemic and a permanent wealth tax of 2% on wealth above $5 million (£398 million) and 5% on wealth above $1 billion (£795 million).
 
The Financial Ombudsman Service says it has cut a backlog of consumer complaints about firms to around a third of the level at the start of last year. It now has just over 37,000 unallocated cases, down from around 90,000 previously. Complaints to the service piled up during the coronavirus pandemic.
 
Pet insurers processed a record 1.03 million claims last year, a total that included 764,000 claims for dogs and 225,000 claims for cats. The increase reflects veterinary practices being able to open their doors to non-emergencies again following pandemic shutdowns, as well as people getting new pets during the lockdowns, the Association of British Insurers said.
 
The Crown Estate and the Duke of Westminster’s property business, Grosvenor Group, are lobbying for an overhaul of listed building rules that would allow them to install heat pumps and other green energy upgrades such as double glazing and insulation to premises with protected status. At present, such upgrades require listed building consent, which can take eight weeks to complete using a process that varies hugely between different councils and can cost thousands of pounds in consultancy fees, The Telegraph says.
 
Amazon has started installing cameras with artificial intelligence to monitor delivery drivers, a technology imported from the US and meant to prevent accidents, but which has been slammed by privacy campaigners.  Two cameras inside each delivery van, one looking out on to the road and the other inside the cabin, are meant to detect dangerous behaviour including hard braking, speeding and driver distraction and will send “voice alerts” if they breach these standards, The Telegraph says. Silkie Carlo, director of Big Brother Watch, called the roll out “excessive, intrusive and creepy worker surveillance” that is bad for workers’ rights and awful for privacy in our country.” She said: “Amazon has a terrible track record of intensely monitoring their lowest wage earners using Orwellian, often highly inaccurate, spying technologies, and then using that data to their disadvantage.” She said the rollout of the scheme should be put on hold.
 
Clearview AI, a facial recognition company used on a “free trial” basis by the Metropolitan Police, North Yorkshire, Northamptonshire, Suffolk, and Surrey police, as well as the Ministry of Defence and the National Crime Agency has been fined £7.5m after breaking data protection laws. The firm harvested images from social media accounts without the owner's knowledge or permission and used them to train its computer algorithms to recognise faces, a business model Information Commissioner John Edwards branded as "unacceptable". He ordered Clearview to stop taking photos from sites including Facebook and Twitter and instructed them to delete pictures of faces of UK residents from its servers. Edwards said: " “People expect that their personal information will be respected, regardless of where in the world their data is being used.” Clearview’s database has more than 20 billion faces and its service is not only used to identify people, but it can also track their movements too.  
 
B&Q owner Kingfisher has reported a slump in sales that could indicate the lockdown DIY boom is over, the Evening Standard said last night. Like for like sales fell 5.4% in the first quarter. Although CEO Thierry Garnier is confident enough about the future to launch a £300 million share buyback, saying demand is resilient and the company is on track to hit profit targets for the year of £770 million, hedge funds are aggressively betting against the company, as they expect it to fall further. The stock is one of the most “shorted” in the FTSE 100.
 
A British digital insurer which competes with the likes of Direct Line Group has secured backing from Ingka Group, the world's biggest IKEA franchise, as part of a £16.5m funding round. Sky News understands that London-based Urban Jungle, launched by Jimmy Williams and Greg Smyth in 2017, will announce this week that it has doubled the amount it has raised from investors during its four-and-a-half-year existence. The firm positions itself as a "fair" provider of insurance cover and claims to have an industry-leading record at detecting fraud which helps it to reduce the cost of cover. It has amassed 100,000 home insurance customers since its launch.
 
British fashion brand Ted Baker said yesterday it has selected a preferred bidder to take its sale process forward, although the firm added that there is no certainty that an offer will be made, and that the board could terminate a weeks-long process of "confirmatory due diligence" at any time. US private equity firm Sycamore Partners has dropped out of the takeover process after making three bids which Ted Baker said "significantly undervalued" the company.
 
Ocado Group is to buy US robotics startup Myrmex in which it currently owns a minority stake for €10.2m (£8m). Ocado will use its "frame loading" system to fill customer orders from Ocado warehouses to cut its wages bill.
 
Starbucks said yesterday that it is to make a complete exit from Russia,shuttering all its 130 cafes in the country, after 15 years in business there.
 
Samsung Group yesterday unveiled plans for a huge $356 billion investment programme over the next five years, an increase of 36% on earlier plans announced last year.  The company is South Korea's largest conglomerate and the world’s biggest smartphone maker. It has a turnover equivalent to a fifth of the country’s GDP. 80,000 new jobs are to be created "primarily in core businesses including semiconductors and biopharmaceuticals,” the company said in a statement. Most of the money will be spent in South Korea, however President Joe Biden toured Samsung Electronics' massive Pyeongtaek semiconductor factory last week, pushing the line that South Korea and the US need to work to "keep our supply chains resilient, reliable and secure".  Samsung employs about 20,000 people within the US and the tech giant is building a new semiconductor plant in Texas.
 
Vacation rental firm Airbnb Inc is closing down all listings in mainland Chinafrom July 30, joining a long list of Western internet platforms that have opted out of the China market, and losing 1% of all revenue, Reuters reports. The company made the announcement in a letter posted to its official WeChataccount addressed to its Chinese users without elaborating on the reasons behind the decision. Chinese users would still be allowed to book listings and experiences abroad, Airbnb said.
 
Facebook founder Mark Zuckerberg is being sued by the US District of Columbia which is seeking to hold him personally liable for the Cambridge Analytica scandal that breached millions of people's personal data. The political consultancy was accused in 2018 of illegally harvesting the personal data of as many as 87 million Facebook users.
 
Eva Peron is back on Argentina's currency, six years after the mythic former first lady - who died 70 years ago - was replaced by an Andean deer, AFPreports. The Central Bank of Argentina has released a new series of 100, 200, 500 and 1,000 peso notes which, according to a press release, "mark the return of historical heroes and heroines" to the South American country's paper money.

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