Published: 29 June 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
The Government has unveiled emergency plans to cut off gas supplies to Europe if the Russian energy crisis deepens. Shutting down the so-called interconnector pipelines to the Netherlands and Belgium would be among the early measures under the plan, which could be triggered by National Grid if supplies fall further in the coming months, the Financial Times reports. European gas companies are warning such a move would undermine a push for international cooperation in the face of Putin’s aggression and would exacerbate the energy crisis on the continent. The supply cut-off would be part of a four-stage emergency plan that could also include rationing gas to large industrial users and urging households to reduce consumption. The Government said it was “fully confident” about the security of energy supply heading into the winter, adding that a gas emergency was “extremely unlikely”.
Morgan Stanley has now revised its forecasts to predict a recession in the eurozone in the fourth quarter of this year, citing the impact of lower gas flows from Russia as well as stubbornly high inflation.
A new government campaign asking businesses to cut prices to help with living costs has been branded a "slap in the face" for small firms. The Federation of Small Businesses (FSB) said asking struggling companies to "soak up additional costs just isn't realistic". Martin McTague, national chair of the FSB, said most small firms were "well beyond the point of being able to absorb extra costs without passing them on, which is often a last resort". "It's a slap in the face for government to spend the extra tax it is raising from businesses on state-run marketing campaigns - doubtless focused on big businesses with corporate offers that can now be rebranded as helping the cost of living crisis, and so boost their sales," he told the BBC. The ad campaign – which has yet to be formally named and announced - was proposed by David Buttress, the government's new cost of living tsar, but a government source has confirmed to the broadcaster that businesses will not be handed any subsidies or funding in order to cut prices.
Transport Secretary Grant Shapps has said that rail strikes could be "easily settled" by modernising "antiquated" working practices. Speaking to the BBC, he said outdated practices "had to end" for a resolution to be possible. “We want to upgrade our railways, make them digital-fit for the 21st century. We also simultaneously need the working practices to come out of the 20th century - we can't have a digital railway, and sort of steam age working practices going alongside of it," he said. By way of example, he referenced how two vans often have to be sent to a maintenance job “when only one van is required." However, the RMT said Shapps was "talking complete nonsense" and that sending several vans "is both a safety and engineering standards issue.” "It would be pointless sending staff to a location without their gear, equipment and tools which is why the vehicles and associated equipment are sent to site" in more than one van, a statement said. In his broadcast interview, Shapps also described calls for him to intervene to settle the ongoing dispute between the RMT transport union and rail employers as a "red herring" and a "stunt". He didn't, and shouldn't, interfere with the detail of negotiations between the RMT and the industry, he said, saying employers were "the only people who could settle this strike". Thousands of members of the RMT who work for Network Rail and 13 train companies walked out on Tuesday, Thursday and Saturday last week, after rejecting a 3% pay offer. Network Rail says higher pay would be possible if modernised working practices were accepted, however that would lead to 1,800 job losses that could likely be achieved through voluntary redundancy. The RMT is demanding a guarantee of no compulsory redundancies.
The Climate Change Committee (CCC) says the Government needs to find ways to cover the “significant hole” in the public finances left by the loss of fuel duty and other taxes when petrol and diesel cars are replaced by electric models. The CCC is suggesting electric cars be fitted with tracking devices to allow for a pay-per-mile road taxation system, saying that could be “a simple charge per mile driven, which could be levied based on annual odometer checks, to more sophisticated schemes that vary the charge based on the time of day or the location/type of road being used, based on vehicle tracking technologies.” The CCC said the government needed to explore the policy now so it is ready to be implemented this decade and avoid a situation where drivers “begin to assume that EV driving will always be tax free”. The sale of new petrol and diesel cars is set to be banned in 2030. The CCC’s report also calls for the cost of renewable projects to be shifted from electricity bills into general taxation, a move it says could cut energy bills by £90.
Broadband providers have agreed to improve their cheapest deals and social tariffs, under new plans to help ease the cost of living. BT Group, Openreach, Virgin Media O2, Vodafone, Three, TalkTalk and Sky all committed to a number of measures to support vulnerable customers at a summit in Downing Street. These include allowing customers who are struggling with their bills to be able to move to a cheaper deal without facing a penalty and giving manageable payment plans to struggling customers. Nadine Dorries, digital secretary, said: “Families across the country face increased anxiety about keeping up with bills, so today I agreed with broadband and mobile industry bosses what more can be done to support people during this difficult time. I’m pleased to report the industry is listening and has signed up to new commitments offering customers struggling with the cost of living help to stay connected.”
A growing number of UK businesses are suffering from slower growth and shrinking trade because of skill shortages, according to the Open University’s annual Business Barometer report, conducted in partnership with the British Chambers of Commerce(BCC). The research suggests more than two-thirds (68%) of small to medium-sized enterprises are struggling with depleted staff numbers. This figure rose to 86% for large organisations. The report revealed the shortage had a knock-on effect on company performance, with 78% of firms saying they had seen reduced output, profitability, or growth, while 28% of businesses stated that they have had to turn down work as a result of staffing problems. Employee wellbeing has also taken a significant hit, with 72% of organisations surveyed saying that the workloads had risen as a result. This was compared to the 56% of companies feeling this way at the same time last year.
Grocery volumes eased in June according to the latest data from NielsenIQ. Although total till grocery sales at UK supermarkets rose 1.5% in the four weeks to 18 June, helped in part by the warm weather and Platinum Jubilee celebrations, volume sales fell 5.5% in the same period, with Neilsen attributing this to shoppers looking to manage their basket spend. The data also suggested that shoppers were seeking out cheaper alternatives, with sales of frozen poultry up 12%, dry pasta ahead 31% and canned meat up 9%. In contrast, sales of beers, wine and spirits fell 9.7%, while general merchandise eased 6.1% as discretionary spending was reduced. Mike Watkins, NielsenIQ's UK head of retailer and business insight, said: "Shoppers are starting to make different choices in how to compensate for the rising cost of living. For some households the way to save money is to buy cheaper products.” He added: “For one in four households, this goes further and includes monitoring the overall cost of their shopping basket. For the 15% of households who now consider themselves to be 'strugglers', almost a quarter of this cohort will stop buying certain products altogether."
Shop prices have hit their highest rate of inflation since 2008 this month, driven by the rapidly rising cost of food and soaring supply chain costs. The British Retail Consortium aid that average prices among its members in early June were 3.1% higher than a year earlier, the fastest price increase pace in 14 years and higher than May’s 2.8% rise. Food inflation jumped to 5.6% in June, up from 4.3% in May, driven by fresh food prices up 6.2% on June last year – the highest inflation rate since May 2009.
According to a new report from Scottish Widows, more than a third (35%) of Brits are planning to cut back on non-essential leisure activities and holiday spending, while nearly a quarter (24%) have already dipped into their savings. Some 81% of adults surveyed said they were now concerned about making ends meet thanks to soaring inflation and the rising cost of living, which has seen energy bills, fuel and food costs rise. In addition to this, three-quarters of people said they needed to take action to cope with the financial pressures. The survey was carried out across Britain involving more than 5,000 people in May.
People are buying fewer scratch cards than before the pandemic as living costs soar, the boss of Camelot has said. The outgoing UK National Lottery operator announced a drop in annual sales of £283.2m to £8.1bn in the year to March 31st 2022, driven primarily by a £240m fall in sales of National Lottery Instants. CEO Nigel Railton said there had been a "slight bubble" around scratch cards during the pandemic which has now "reversed". The firm said it was seeing signs that players had "tightened their belts".
A total of over £1.3bn was stolen through fraud and scams in 2021, according to UK Finance. Unauthorised and fraudulent losses across payment cards, remote banking and cheques totalled £730.4m. In these cases, the account holder themselves does not provide authorisation and the transaction is carried out by a criminal using the victim’s card details without their knowledge. Meanwhile, authorised push payment (APP) fraud cost victims £583.2m, with nearly 40% of APP losses due to impersonation scams (where the fraudster impersonates someone to trick you into handing over information). There were 195,996 incidents of APP scams last year. Victims only managed to recover £271.2m as banks will not always reimburse clients, depending on the type of scam.
Controversial sub-prime lender Amigo has set out plans to return to the market after a two-year hiatus. It suspended guarantor lending in March 2020 in order to work through a backlog of allegedly mis-sold unaffordable loans. Amigo now plans to provide new loan products under a different brand, RewardRate, by February next year. RewardRate will offer two lending products, a personal loan and a guarantor loan, providing cheaper credit to those who pay back on time. Borrowers will have the opportunity to reduce their annual interest rate by up to 15 percentage points. Amigo is planning to offer a personal loan that starts with a 49.9% annual percentage rate, while the guarantor loan begins at 39.9%. Although the Financial Conduct Authority has given the firm the green light to resume trading, the details will still have to be approved by the financial watchdog.
The owner of Boots, the US-based Walgreens Boots Alliance, said this morning that it has decided to abandon the sale of the UK-based chemist chain as it hasn't been able to attract an adequate offer due to “instability in financial markets.”
German-owned Knauf is set to open new multi-million pound factory in Newport, South Wales. The firm also recently announced plans to invest £45 million expanding capacity at its two UK glass mineral wool plants in St Helens and Cwmbran.
Airbnb has permanently banned parties and events at homes on its platform, after a temporary measure during the pandemic proved popular with hosts, the BBC reports. Originally, the rule was introduced as a public health measure during the Covid-19 pandemic, but now, as the number of complaints about parties dropped 44% since the measure was introduced, the San Francisco-headquartered firm says the restriction has “developed into a bedrock community policy to support our hosts and their neighbours." However, Airbnb did also say that exceptions to the global ban may be made for "speciality and traditional hospitality venues" in the future. The holiday let firm has also removed a 16-person limit on how many people can stay at homes, again introduced because of concerns over the spread of Covid-19. “Several types of larger homes are capable of comfortably and safely housing more than 16 people - from castles in Europe to vineyards in the US to large beachfront villas in the Caribbean".
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