Published: 14 June 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Stock markets globally plummeted again yesterday as investors continued to be spooked by inflation figures, notably for US consumer prices, and fears of recession. Last week the US government reported inflation had increased to an annual rate 8.6% in May, the most since December 1981, and more than the 8.3% markets had expected. The US S&P500 share index slumped 3.9% overnight, making for a three-day loss of 9% and leaving it 20% below its January peak, confirming a bear market. The tech-dominated Nasdaqmeanwhile plunged 4.7%. The FTSE 100 hit a one-month low, dropping 1.5% to 7205.81. France’s CAC was 2.7% lower on the day and the DAX fell 2.4% in Frankfurt. Japan's Nikkei stock index was down 2% overnight and in Hong Kong, the Hang Seng Index slipped 0.91%, while China's CSI300 Index was off 1.9%, doubling its earlier losses. In Australia, the benchmark ASX200 share index of the top 200 companies lost just over 5.2% within the first quarter an hour of trading, or more than 360 points. A minor rebound pared the losses to about 4.8%.
Bitcoin has plunged more than 10%, dropping below $25,000 to $23,476 (£19,300) for the first time since December 2020. Celsius Network, a major US cryptocurrency lending company, halted trading yesterday, citing "extreme" conditions, a move which compounded losses. Marcus Sotiriou, an analyst at the UK-based crypto broker GlobalBlock, told The Independent that current speculation centred around Celsius being “irresponsible with client funds,” and adding that there were “concerns that if clients try to redeem positions, Celsius will run out of liquid funds to pay them back”. Binance, one of the world's largest cryptocurrency exchanges, also paused bitcoin withdrawals temporarily yesterday, Ether, the second largest token after bitcoin, also tumbled by as much as 16% to $1,177 (£967), its lowest since January 2021.
Bank of England Governor Andrew Bailey has again warned crypto investors they could lose all their money as the assets have no intrinsic value. "If you want to invest in these assets, okay, but be prepared to lose all your money," Bailey told MPs on the Public Accounts Committee yesterday.
Research commissioned and paid for by the British Business Bank, which oversaw the three covid loan schemes which funnelled £78 billion to businesses on behalf of the Government has concluded that the schemes saved between 500,000 and 2.9 million jobs. The report estimated that between 146,000 and 505,000 businesses that took Bounce Back loans might have gone under without the support, up to a third of the total number of businesses on the scheme. Another 5,000 to 21,000 companies that took loans under the Coronavirus Business Interruption Loan Scheme (CBILS) and its sibling programme for larger companies, CLBILS, might also have gone out of business, the report said.
Steve Barclay, Boris Johnson’s chief of staff, has announced that the co-founder of Just Eat has been made the government’s new “cost of living business tsar”. David Buttress has taken the unpaid role to assist companies in developing schemes to help people struggling with rising prices.
Lloyds Bank will pay its employees a £1,000 bonus this summer to help staff cope with the cost-of-living crisis. Britain's largest domestic lender will make the one-off payment in August to 64,182 workers, covering all staff apart from senior executives, according to a memo seen by Sky News.
Britain’s booming pandemic housing market created 36,000 new millionaires last year, as sellers cashed in on rocketing sale prices, The Telegraph reports. The country now boasts 609,000 high-net-worth individuals, an increase of 6.3% in 2021, according to consulting company Capgemini’s annual study of the world’s rich. The combined riches of the UK’s millionaires, meanwhile, grew by 7.4%, reversing the modest declines suffered in 2020 on the back of the pandemic.
British Airways’ ground and cabin staff have backed industrial action in a dispute over pay. 97% of Unite members working for the airline voted for walkouts, and the union will also ballot 500 check-in staff on strikes that could be staged in July when demand is expected to surge. Unite claims BA has restored management pay to pre-pandemic levels but refused to reverse a 10% pay cut imposed on workers during the pandemic. Yesterday, unions representing Ryanair's Spanish cabin staff said there would be six days of strike action later this month and in July, which could disrupt UK flights.
Go Ahead, the company that runs London’s famous red buses is facing two takeover bids from Australia’s Kelsian Group and a consortium of bus firm Kinetic and Spain’s Globalvia. Both have submitted revised offers after their initial bids turned down, the Evening Standard said yesterday. Go Ahead shares were up 12% at 1,350.00p yesterday.
FTSE 250 housebuilder Countryside Partnerships began a formal sale process yesterday, having revealed it had earlier received two unsolicited, non-binding, conditional proposals from Inclusive Capital in relation to a possible offer for the company. Both proposals were rejected on the basis that they "materially undervalued" the company and the board's view of its prospects.
A High Court battle between Tesco and Lidl kicked off yesterday, with the latter accusing the former of “seeking deliberately to ride on the coattails of Lidl’s reputation as a discounter supermarket known for the provision of value” because Tesco’s Clubcard Prices logo is too similar to its own blue and yellow emblem. Like the Lidl logo, Tesco uses a yellow circle on a blue square. A Tesco spokesman said: “We deny and are strongly defending this claim but cannot otherwise comment on an ongoing legal matter.”
Victims of one of Britain’s biggest banking frauds will each be offered £3m compensation packages, according to sources who have spoken to The Guardian. Halifax Bank of Scotland (HBOS) – which is now part of Lloyds Banking Group – was involved in a major fraud at its Reading branch in the early 2000s. A group of its bankers were found by a court to have run an “utterly corrupt scheme” that left hundreds of small business owners “cheated, defeated and penniless”. Lynden Scourfield, a former senior HBOS manager, was sentenced to 11 years and three months in prison after the judge who described him as an “utterly corrupt bank manager” driven by “rapacious greed” and found he had “sold your soul, for sex, for luxury trips with and without your wife – for bling and for swag”. He and five of his partners were jailed in 2017 for a combined 47 years, having drained the bank and small businesses of about £245m and left hundreds of people in severe financial difficulties. About 200 people who ran companies hit by the fraud will be made the payment offer by a panel chaired by the former high court judge Sir David Foskett if they are assessed to have made financial losses as a result of the fraud.
The Financial Times is claiming that the Financial Conduct Authority has put Credit Suisse on a watchlist of companies in need of closer supervision because the bank has not done enough to strengthen its culture, governance, or risk controls. The move follows discussions with Finma, the Swiss regulator, the FT adds. There are currently around 20 companies on the FCA watchlist, including subprime lender Provident Financial.
British Steel has secured planning permission for new £26 million facility at its Skinningrove plant - the steelmaker's largest investment in its special profiles business for more than 30 years.
A consortium comprising Bain Capital and JC Flowers is vying with Centerbridge and Bayview Asset Management in a fight to buy a minority stake in mortgage lender Together Financial Services, Sky News says. Both parties are expected to table final offers next month for a stake of up to 40% in Manchester-based Together, with the whole company likely to be valued in the region of £1.7bn, the broadcaster claims, adding that the sale of the stake is expected to yield a windfall worth hundreds of millions of pounds for Together's founder, Henry Moser.
Volkswagen will face allegations of human-rights violations at a farm it ran during Brazil's military dictatorship today. Brazilian prosecutors have assembled a 90-page dossier they say documents years of atrocities including slave labour, rapes and beatings committed by Volkswagen managers and hired guns at a cattle ranch the company owned in the Amazon rainforest basin in the 1970s and 80s.
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