Published: 30 June 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Bank of England governor Andrew Bailey has said policymakers “have the option” of acting more forcefully to “rein in inflation” if necessary. Speaking at the European Central Bank’s (ECB) conference in Sintra, Portugal, on Wednesday, he said he did not rule out raising interest rates again next month, by 50 basis points. He also said it was now “very clear” that the UK’s economy was at a turning point and starting to slowdown, and that soaring inflation will hit Britain harder than any other major economy. “Britain faces a faster and steeper downturn than other rich countries as households are battered by a “very large national real income shock,” he warned. The BoE expects inflation to surpass 11%.
UK business confidence has slumped to a 15-month low in June according to the Lloyds Bank business barometer, which fell 10 points during the month to 28%, the lowest level since March 2021 when the economy emerged from the second wave of Covid-19. However, the level of confidence for June is equivalent to the barometer’s long-term average of 28% and consistent with some historic GDP growth and the continued relative stability of business confidence around the long-term average, Lloyds said. Close to half (49%) of all firms reported stronger trading prospects, while 15% (up from 13%) were less positive, leading to an overall 8-point fall to 34%, back to its March level. The report also found that some 49% of businesses (down from 56% in April) were more optimistic about the economy, while 27% were less optimistic about the economy, up from 23%. More than half (56%) of businesses said they would have to increase their prices because of inflation.
Shevaun Haviland, director-general of the British Chamber of Commerce (BCC), will today tell the BCC’s annual conference that the Government needs to "get its house in order" to "save the economy" as firms struggle with higher prices. Rising material costs, supply chain issues and worker shortages is creating a "perfect storm", she will say and that Ministers need to act by the time of the Autumn Budget as businesses are “on limited time". Haviland will also ask the government to work in partnership with the BCC “to develop a long-term economic strategy for growth." The government has responded saying it was supporting businesses to "navigate the months ahead". A Treasury spokesperson told the BBC the government had "cut taxes for hundreds of thousands of businesses" by increasing the employment allowance, cutting fuel duty and introducing a 50% business rates relief for eligible high street businesses while freezing the business rates multiplier to prevent rate rises, a move worth £4.6m over the next five years.
The Government has extended tariffs placed on steel imports that were due to expire for another two years. International Trade Secretary Anne-Marie Trevelyan said the plans departed from the UK's "international legal obligations" under World Trade Organization rules, but was essential as it was in the "national interest" to protect steel makers. The decision was made due to "global disruptions" to energy markets and supply chains, she said, and that abandoning the controls – which put a strict quota on the amount of steel that can be imported from abroad without tariffs being imposed - could substantially, harm British manufacturers. UK Steel has previously said ending the import controls could cause as much as £150m a year in damage, the BBC reports, adding that British steel producers – who employ 34,000 people and turnover £2bn annually - are under pressure from soaring energy prices.
The government is expected to cap maximum stakes for online casinos when it publishes its long-awaited White Paper on gambling, The Times said yesterday. According to the newspaper, the government - which is seeking to address gambling addiction - will announce maximum stakes of between £2 and £5 for online casinos, a ban on free bets and VIP packages for people who incur heavy loses and "non-intrusive" affordability checks. A new ombudsman will also be set up, and the Gambling Commission, the regulator, will be given new powers and additional funding via an increase in the fees paid by the industry. However, plans to ban gambling firms from sponsoring Premier League football teams have been dropped, as has a proposed mandatory levy that would fund research and treatment of gambling addiction, The Times said. A spokesperson for the Department for Digital, Culture, Media & Sport said the White Paper would be published as part of a review of gambling legislation "in the coming weeks" and declined to comment on The Times article.
Bereaved middle class families are having to hand over an extra £154,400 to the Treasury because inheritance tax thresholds that were frozen at £325,000 in 2009 will remain frozen for a total of 13 years, analysis by law firm JMW Solicitors reveals. Had the £650,000 tax-free allowance for married couples kept pace with inflation, it would be worth £1,036,000 today, JMW says. The freeze means an additional £386,000 is exposed to the punishing 40% charge, a real-terms loss of £154,400.
BT has requested an extension to the government's deadline for removing Huawei equipment from its network. BT, which says the removal of the soon-to-be-banned Chinese equipment from its core network where personal data is processed will cost it £500m, has lodged a request with the Department for Digital, Culture, Media and Sport. Telecoms operators in the UK were given until next January to remove all Huawei equipment from the most sensitive core networks and reduce use in non-core parts of the network to 35%, Sharecast News reports. "We are continuing to work towards the January 2023 deadline for that work to happen in our core, but have requested a necessary, short extension, to reflect significant Covid-driven impacts to the programme over the past two years," BT said. A further ban, on the use of Huawei equipment in the introduction of the UK's 5G network, must be complied with by 2027.
Ofgem has unveiled a £20bn-plus plan to overhaul and upgrade regional electricity networks and ramp-up local energy grid capacity by building greener and more reliable power grids to prevent power outages. The regulator insists energy bills will not go up as a result, as the costs will be met from investors and cost savings, rather than consumers. Customers currently pay around £100 a year via their energy bills to help meet the costs of running and maintaining the local power grids, and Ofgem CEO Jonathan Brearley, insists this will remain “roughly the same”. Ofgem’s proposals include £2.7bn worth of upfront funding to boost grid capacity.
Royal Mail workers who are members of Unite have voted 86% to strike. Some 2,400 managers working across 1,000 delivery offices could now walk out over job cuts. Royal Mail said there were "no grounds" for a strike and claims about additional job losses were "not true". Unite said the dates of proposed strikes would be announced in the coming days. The result of a ballot of Royal Mail workers who are members of the Communication Workers Union is expected on 19 July.
Kraft Heinz has stopped supplying Tesco in a dispute over pricing. According to The Grocer magazine, some Heinz products are therefore no longer available in Tesco stores. Heinz says it has to put up prices because production costs are rising, but Tesco says the hikes are “unjustifiable”. Both sides say they are confident the dispute will be resolved.
Halifax has lowered the deposit needed to buy a new build house. The minimum amount now required to secure a mortgage from 1st July is now just 5%, a fall from the current level of 10%. Based on the UK’s average house price of £289,099, that means the minimum deposit needed could now be as low as £4,000, Yahoo Finance UK reports.
Nissan is recruiting for 300 new roles - including in manufacturing, engineering and maintenance - at its North East factory in order to accelerate plans for its electric vehicle production. The Sunderland plant is preparing two new eco-friendly versions of its popular crossover vehicles – the Juke and the new Qashqai.
Electric vehicle (EV) battery startup Britishvolt has signed a deal with South Korean battery materials firm Posco Chemical designed to secure the supply of cathode and anode materials, the two companies said this morning. They have signed a memorandum of understanding and are working on a longer-term agreement, which "paves the way to providing Britishvolt with a secure supply of active battery materials as we start to ramp up pilot production", Britishvolt CEO Orral Nadjari said in a statement. Britishvolt is working with British sports carmakers Aston Martin and Lotus to develop high-performance EV batteries, having secured UK government backing for a battery plant project in northern England which has secured £1.7 billion pounds in private funding.
The first hydrogen and electric-powered lorry to be mass-produced in the UK has been unveiled, The Independent says. Start-up firm Tevva, based in Thurrock, Essex, has added a hydrogen fuel cell system to its battery-electric HGV design. The hydrogen tops up the battery, enabling the vehicle to carry heavier loads over longer distances. The 7.5-tonne hydrogen electric truck can be driven for up to 310 miles, according to Tevva.
Independent hospital group Spire Healthcare says it has signed a new four-year contract with Bupa to provide services to its UK health insurance customers. The contract will run through to March 2026 with agreed pricing including inflationary mechanisms.
Premier Inn owner Whitbread has named Dominic Paul as its next CEO, succeeding outgoing CEO Alison Brittain. Paul will join the group from Domino's Pizza in early January 2023 as a result of Brittain's decision to retire from full-time executive life at the end of the 2023 financial year.
Amazon has restricted search results related to LGBT people and issues on its website in the United Arab Emirates (UAE) after being threatened with penalties by the UAE government, according to the New York Times. Homosexuality is illegal in the UAE, which is one of 69 countries in the world where being gay is criminalised. "As a company, we remain committed to diversity, equity and inclusion, and we believe that the rights of LGBTQ+ people must be protected," an Amazon spokesperson told the BBC, but added that “we must also comply with the local laws and regulations of the countries in which we operate".
Unilever has reversed an earlier decision to stop selling Ben & Jerry's ice cream throughout Israel and the occupied West Bank. Last year, it said sales in Israeli settlements were "inconsistent with our values" but the firm will now sell its ice cream in the West Bank and East Jerusalem, using Hebrew and Arabic names. The decision comes after legal action from its Israeli licensee American Quality Products (AQP) and its owner Avi Zinger, who was seeking damages from the UK-based consumer goods giant because of the withdrawal. There was also pressure against the withdrawal from shareholders, including activist investor Nelson Peltz, and politicians in the United States.
Accounting giant Ernst & Young has been fined a record $100m by US regulators after its audit staff cheated on an ethics exam and misled investigators. The Securities and Exchange Commission (SEC) said EY's audit professionals cheated on exams required to obtain and maintain Certified Public Accountant (CPA) licenses over many years and then hid evidence of the misconduct during an SEC investigation. Individual staff could still face charges, the SEC added.
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