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The country is being battered by strikes this morning

   News / 21 Jun 2022

Published: 21 June 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight

The country is being battered by strikes this morning as railway workers begin a three-day walkout. Around 40,000 members of the Rail, Maritime and Transport (RMT) union at Network Rail and 13 train operators will strike today, Tuesday and Thursday, after last-ditch talks aimed at resolving disputes based on pay and conditions failed. Just one in five trains will be running on strike days, primarily on main lines and only for around 11 hours. London Underground workers are also striking today.  
The BBC reports Tony Matharu, who owns the Blue Orchid Hotels Group, as saying the rail strikes have cost the chain - which has several hotels in London - more than £500,000 in cancelled bookings. The uncertainty caused by the strikes has led customers to cancel, even if their train is still running, Matharus says, as many people are worried they may not be able to get home again. While some may rebook, others who had been travelling for specific events that are not being rescheduled will not, he said, adding that the hospitality industry can "ill afford" such losses after the impact of Covid. "It could prove fatal for some of those trying to recover after two ruinous years," he told the broadcaster.
Criminal barristers, meanwhile, have voted to strike for 14 days between 27th June and 22nd July. The Criminal Bar Association (CBA), which represents criminal lawyers in England and Wales, claims their members have suffered an average decrease in earnings of 28% since 2006 when taking inflation into account. The body is accusing the government of refusing to engage in negotiations "aimed at finding a fair settlement" to their demands, which include an immediate 15% increase in fees. "Without immediate action to halt the exodus of criminal barristers from our ranks, the record backlog that has crippled our courts will continue to inflict misery upon victims and defendants alike, and the public will be betrayed, the CBA said.
Heathrow asked airlines to cancel 10% of their flights yesterday because of a baggage backlog. Virgin Atlantic, Flybe, Air France, Air Canada, TAP Portugal, Loganair, British Airways, Delta Air Lines, Brussels Airlines, Scandinavian Airlines, Aer Lingus, ITA Airlines, Eurowings, Lufthansa, KLM and Bulgaria Air are known to have complied with the request, which led to some 30 flights being grounded, and around 5,000 passengers stranded. Over the weekend, problems with the baggage system left hundreds of travellers waiting for around three hours to retrieve their luggage, with no explanation from staff. A Heathrow spokesperson said: "We apologise unreservedly for the disruption passengers have faced over the course of this weekend. The technical issues affecting baggage systems have led to us making the decision to request airlines operating in Terminals 2 and 3 to consolidate their schedules on Monday 20th June.
EasyJet has announced plans to cut yet more flights over the busy summer period, continuing to blame staff shortages in ground handling and at airports,as well as air traffic control delays for increased turnaround times, delayed flights and cancellations. Sky News says it is thought EasyJet could cancel up to 10,000 of 160,000 flights on sale for July, August and September. Although CEO Johan Lundgren said the airline had not decided how many cancellations there might be during those months, Easyjet has already confirmed it will be introducing flight caps in the next few months in order to cope, by only running 90% of a normal service, Yahoo Finance UK says. EasyJet had previously expected to run about 97% of its pre-Covid flights between July and September. The airline has apologised to customers for failing to "deliver the service they have come to expect from us".
A similar system of flight caps has also been introduced by Amsterdam's Schiphol airport, however, the CEO of aviation services company Swissport is now threatening legal action, having recruited workers based on original schedules. “We recruited enough people for the summer schedule and they cut the schedules, so we now have too many people,” said CEO Warwick Brady. “We are going to have a cost overhang because they are cutting.”
The Bank of England (BoE) has pressed ahead with scrapping rules introduced in the wake of the financial crisis that tested whether borrowers could afford their mortgages in the event of rapid interest rate rises. Introduced in 2014, the test specifies a stress interest rate for lenders when assessing prospective borrowers’ ability to repay a mortgage, Yahoo Finance UK reports. However, following a review of the market, the BoE said yesterday that the mortgage affordability test recommendation would be withdrawn from August. The Bank will however maintain a cap on the number of borrowers who are allowed to hold loans more than four and a half times their annual income, also known as the loan-to-income (LTI) flow limit.
Chancellor Rishi Sunak has been urged to reject plans for a new online sales tax. The proposed 2% levy on businesses’ internet sales would be passed straight on to shoppers by the vast majority of retailers, according to the Centre for Policy Studies(CPS) and the Coalition for a Digital Economy, which would mean Britain’s poorest households could see their annual spending rise by £76 a year as prices rise, while the average household would be faced with £175 in extra costs. The CPS says this would harm household finances without giving any serious support to the high street businesses which are meant to be the beneficiary of the policy, and add to inflation just as families are already reeling from the fastest price rises in 40 years. “My hope is that they wouldn’t be silly enough to introduce a new consumer tax at a time like this,” said Tom Clougherty, the CPS Head of Tax.
Food bills are set to rise by £380 this year, according to an update by research company Kantar. Back in April, the firm predicted the cost of the average annual supermarket shop would go up by £280 in 2022. The upward revision shows "just how sharp price increases have been recently and the impact inflation is having on the sector", Kantar said. The survey also showed grocery prices rose by 8.3% over the past four weeks, the highest rate in 13 years. The Office for National Statistics will publish the May inflation figures tomorrow.
New research from Lloyds Bank suggests tourism and recreation firms - which includes pubs, hotels, restaurants, and leisure facilities - are not fully passing on rising costs to customers despite soaring inflation. The Lloyds latest UK Sector Tracker showed that for the second consecutive month, cost inflation was highest in this area, and such businesses are most likely to be having their margins squeezed tightly. Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “Recently, the gap between input costs and prices charged was widest for manufacturers, primarily reflecting the impact of the pandemic on international supply chains and stronger relative consumer demand for goods than services. The reversal of this trend evidences both changing spending habits and that service providers are becoming more concerned about the potential fragility of customer demand.” The report also shows that the number of UK sectors reporting a fall in output doubled in May to six out of 14, compared to three in April, as inflation continued to drive down demand for goods and services.
Some 14,000 staff at Rolls Royce will be offered a £2,000 one-off payment to help with the rising cost of living in the UK. The payment will start to be rolled out to 3,000 staff in their August pay. The remaining 11,000 unionised staff are waiting for union approval of the amount. The payments is for junior management and shop floor staff, mainly based at its Derby and Bristol sites, the engineering firm said.
Ocado said this morning that it has raised around £575m in a share placing to fund its expansion. The online supermarket also raised an additional £3m selling shares to management and in an offer to retail investors, Sharecast News says.
TopHat has announced plans to build Europe's largest modular housing factory in Corby, Northamptonshire. Capable of producing more than 4,000 homes per year, the Goldman Sachs-backed firm's huge investment is expected to create 1,000 British jobs.
Primark owner Associated British Foods has announced it will trial a click and collect service on children's products at the fashion business. A range of about 2,000 clothing, accessories and lifestyle products will feature in the trial taking place in up to 25 stores in the northwest of England towards the end of the year. Until now, Primark has resisted selling its products online, the BBC says, quoting retail analyst Catherine Shuttleworth who described Primark's move as a "very big deal", adding: "Covid showed the risk of having a store-only estate".
Marks & Spencer is to appoint Alex Freudmann as Head of Food. He replaces Stuart Machin who was promoted earlier this year to become M&S's CEO. Freudmann is leaving his role as managing director of Dan Murphy's, one of Australia's biggest beer, wine and spirits retailers, but worked previously in a buying role for Tesco until 2009. He has also held a senior job at Coles, an Australian retail giant.

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