Britain recorded its biggest fall in output in more than 300 years

By Suzanne Evans, Director, Political Insight

Britain recorded its biggest fall in output in more than 300 years in 2020 when it faced the brunt of the Covid-19 pandemic, as well as a larger decline than any other major economy, updated official figures showed on Monday. GDP fell by 11.0% in 2020, the Office for National Statistics (ONS) said, a bigger drop than any of the ONS's previous estimates and the largest fall since 1709, according to historical data hosted by the Bank of England. The ONS's initial estimates had already suggested that in 2020 Britain suffered its biggest fall in output since the "Great Frost" of 1709. But more recently the ONS had revised down the scale of the fall to 9.3%, the largest since just after World War One. Even before the latest revisions Britain's economic slump was the largest in the G7, and the latest downward revision makes it greater than Spain's, which recorded a 10.8% fall in output. However the ONS cautioned against direct comparisons with other countries as most - with the exception of the United States - had not yet undertaken the same type of in-depth revisions as Britain had. The downward revision in GDP reflected lower contributions from healthcare and retailers than previously thought, the ONS said. The ONS will publish updated growth figures for 2021 and the first half of 2022 on 30th September.

Economists at US investment bank Citigroup have upped their prediction for consumer price inflation (CPI) in the UK again, forecasting a rate of 18%. Many of this morning’s front pages cover the story, and the fact Citi also suggests interest rates will have to reach 7% to stop price increases becoming embedded. Just five days ago, Citi said UK inflation would likely peak around 15% in the first three months of next year, having previously forecast it would peak at just below 12%. Official figures put CPI at 10.1% in July.

Strikes at Felixstowe, the UK's largest container port, could see Britain lose out on nearly £700m in trade and "severely disrupt" the supply chain, according to The Daily Mail. Some 1900 dockers at the port started an eight-day walkout on Sunday, and plan to continue their strike until 28th August. Felixstowe handles about 4 million containers a year from 2,000 ships, and accounts for almost one half of the UK's total incoming shipping freight, the newspaper says. As a result of the industrial action, Maersk, one of the world's largest container shipping groups, has already diverted three ships to alternative ports in Europe - and fears are growing that Britain could miss out on even more shipping to the Continent. Meanwhile, Flexport, a freight platform, estimated that it could take 24 days to catch up after the strike. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, told Yahoo Finance: "The Port of Felixstowe is an essential lynchpin in the UK’s trade operations, and an eight-day strike is likely to result in interrupted supplies for supermarkets as well as exports. However, a port source told the Daily Mail that the strikes will be an 'inconvenience not a catastrophe', and claimed that the supply chain was used to disruption following the pandemic. “Disruption is the new normal. The supply chain has moved from 'just in time to just in case',” he added. Unite Union members voted to strike despite the Port of Felixstowe offering workers an eight per cent average pay rise, with those on lower salaries getting almost 10 per cent. The port management claims the union did not consult employees on the offer of a pay deal, having balloted them on the first industrial action to hit the port since 1989.

Criminal barristers have voted to go on an indefinite, uninterrupted strike in England and Wales from 5th September, delaying thousands of cases, and leaving victims and the accused waiting longer for justice. The Criminal Bar Association (CBA) is asking for a 25% rise in pay for legal aid work, having rejected the government's 15% pay offer, saying it would not kick in immediately or apply to existing cases. Kirsty Brimelow QC, vice-chair of the Criminal Bar Association, said the strike action was a last resort. She told BBC Breakfast: "Barristers have had to endure collapses in their income and cuts and underfunding so that their income has decreased over 28% since around 2006." A solution to the dispute would be an "injection of money" into the cases barristers were working on, she added., saying it would “cost the government only £1.1m per month". "Currently, it's costing much more for the courts to sit empty," she added. Justice Minister Sarah Dines said the decision by barristers was "irresponsible". "The escalation of strike action is wholly unjustified considering we are increasing criminal barristers' fees by 15%, which will see the typical barrister earn around £7,000 more a year," she said.

Water companies are facing mounting criticism from environmental campaigners and politicians over sewage being pumped on to British beaches, the BBC reports. Water companies are allowed to release sewage into rivers and streams after extreme weather, such as torrential rain, and when they are operating close to full capacity, to protect properties from flooding and sewage from backing up into streets and homes, and there are currently more than 20 beaches and swimming spots in England and Wales where pollution warnings are in place after heavy rain overwhelmed sewers. While Downing Street condemned the industry for not reducing sewage discharge and putting shareholders before customers, saying ministers expected water companies "to take urgent action on this issue or face fines".  The government said firms had already faced legal action from regulators, saying the Environment Agency'sprosecutions against water and sewage companies since 2015 had resulted in fines of more than £137m. Last year Southern Water was fined a record £90m for "deliberately" dumping billions of litres of raw sewage into the sea, which the company said was the result of "negligence". A Downing Street spokesperson added that since the industry was privatised in 1989, the equivalent of £5bn had been invested to upgrade water infrastructure. However, the Labour party said ministers had not done enough and environmental campaigner Fergal Sharkey told BBC Breakfast: "I'm afraid what you're looking at is simply the result of 30 years of underinvestment by the water industry, 30 years of profiteering, 30 years of regulatory failure, and 30 years of a vacuum of political oversight and government failing to take proper control for this industry."

Tests on more than 60 CBD products found the majority contained illegal substances, the BBC reports. Kent Scientific Services (KSS), a laboratory run by Kent County Council, has been carrying out testing on behalf of several local authorities and found 44 out of 61 samples (72%) contained one or more of the psychoactive elements of cannabis, which are supposed to be removed before sale. KSS head Mark Rolfe said: "The issue with this is that people don't know what they are consuming." One product was tested after a member of the public consumed it and then failed a workplace drugs test, having "never touched drugs in his life," he said. Other samples contained "significantly less" CBD than claimed on the pack, while another two products did not claim to contain CBD but its presence was found. The Food Standards Agency (FSA) has allowed about 6,000 CBD products to be marketed in the UK, pending final approval. Linden Jack, deputy director of the FSA, said: "This survey highlights the importance of the work we are doing to bring this growing industry into compliance. "We have asked to see the complete set of sampling results so we can work with local authorities to ensure that those CBD products that should not be on sale are removed from shelves."

The pay of the FTSE 100 CEOs surged by 39% in 2021, from £2.46m to a median of £3.4m, according to research by the High Pay Centre and the Trades Union Congress (TUC). The jump in executive pay means the average UK CEO now collects 109 times that paid to the average British worker, up from 79 times in 2020. The highest paid FTSE 100 executive was Sébastien de Montessus, chief executive of the London-listed African gold mining company, Endeavour Mining (EDV.L), who received £16.8m — 539 times as much as a median UK full-time worker. The second highest paid was Pascal Soriot, head of the pharmaceutical company AstraZeneca, on £13.8m; while the third highest paid boss was Albert Manifold, CEO of construction company CRH, with overall compensation of £11.7m. Only one woman featured in the 10 highest paid CEOs list — Emma Walmsley, CEO of pharmaceutical company GSK. However, the highest paid FTSE 250 CEO, Frederic Vecchioli of Safestore, was paid more than any FTSE 100 boss, taking home £17.06m.

Oil prices slumped yesterday amid recession worries that interest rate hikes by the US Federal Reserve will hurt an already-weak global economy and knock fuel demand, Yahoo Finance says. Brent crude fell as much as 1.8% to $94.94 (£80.43) a barrel in early trade on Monday, while US light crude dipped 2% to $89.

British Airways says it will cut roughly 10,000 short-haul flights to and from Heathrow Airport between late October and March to minimise disruption over the winter. Some long-haul flights will also be affected, the airline said. BA will also cut a dozen round-trips per day - totalling 629 flights - until the end of October, meaning it expects to operate an average of 290 round-trips per day from London Heathrow over the winter. John Strickland, an aviation consultant, told the BBC that the amount of flights cut appeared to be a "very negligible amount in the context of what they would plan to operate". "At this point they are likely to inconvenience very few people and I wouldn't expect any noticeable impact on price," he said. British Airways, the largest operator at Heathrow, suspended sales of tickets on short-haul flights from the airport for two weeks earlier this month to avoid exceeding its share of the airport's current 100,000 per day passenger limit. This cap had been due to end on 11 September but was recently extended until 29 October. Announcing the extension, Heathrow said that the cap had worked, resulting in fewer last minute cancellations and delays, and better baggage delivery.

BT Group said this morning that the that the Secretary of State for Business, Energy and Industrial Strategy will not be taking any action over French billionaire and Altice owner Patrick Drahi's stake in the telecoms group. Drahi increased his stake in BT in December 2021 to 18% from 12.1% throughAltice, making him the biggest shareholder and prompting the government to review the investment on the grounds of national security.

Vodafone is selling its Hungarian business for 715 billion forints (£1.53 billion) in cash to local IT company 4iG and the Hungarian state, Reuters reports, adding that the move will consolidate the hold of Prime Minister Viktor Orban's government over the telecoms sector. The deal — which does not include Vodafone's shared services business VOIS — is expected to create Hungary's second largest telecoms operator. 4iG will hold a majority 51% stake while the Hungarian state will hold 49%. "The Hungarian Government has a clear strategy to build a Hungarian owned national champion in the (Information and Communications Technology) sector," Vodafone Chief Executive Nick Read said in a statement. The sale is expected to be completed by the end of 2022.

Nearly 700 doctors are likely to leave the Welsh NHS as a result of a recent 4.5% pay rise for consultants, junior doctors and GPs, the British Medical Association claims, according to survey it ran. Half of the 1,397 respondents said they could leave and most felt morale had dropped. Doctors also warned the NHS is "close to collapse" with an overwhelming number of respondents saying they were exhausted and burnt out. Dr Iona Collins, chairwoman of the BMA's Welsh Council, said the findings resonated with what she was hearing from colleagues across Wales. "Doctors' take-home pay has reduced over several years, making the NHS an increasingly unattractive employer," she said, adding that it was easy to understand why many senior doctors were retiring early, younger doctors moving abroad, and many vacancies remained unfilled. A Welsh government spokeswoman said it had accepted the NHS pay review body's advice and was limited on how far it could go.: "In announcing our pay award for the NHS workforce in Wales, we made clear that without additional funding from the UK government, there are limits to how far we can go to address these concerns in Wales. We continue to press the UK government to provide additional funding necessary for fair pay rises for public sector workers," she said. BMA Cymru representatives are due to meet with Health Minister Eluned Morgan next month.

Meanwhile, a separate British Medical Association survey has found that 60% of medical students are being forced to cut down on the basics, with a similar amount (53%) having to work during term time to pay bills and keep themselves from going hungry. Omolara Akinawonnu, co-chair of the BMA's Medical Students Committee said: "We see students cutting back on essentials such as food and heating, but we know there are heavy costs associated with medicine, cost of travelling, cost of parking, scrubs and various other things associated with doing a medical degree. That's only going to be exacerbated because of the cost of living crisis”. She added that this may stop students from considering a career as a clinician or in the wider industry. "I think medicine has made great strides in order to widen access. "We've seen an increase in the number of medical students with low socioeconomic backgrounds and from state schools in particular applying to do medicine and we don't want to see a reverse of that because of these findings."

Bin strikes will continue as planned across Scotland after the GMB and Unite unions rejected an increased pay offer from Local authorities. An original offer of 3.5% has gone up to 5%, but the unions queried "insignificant detail" on how it affects lowest paid workers. Rubbish has been piling up in Edinburgh in the first in a series planned across Scotland. The strike in the city is due to last for 12 days until 30 August - the day after the end of its International and Fringe festivals.

Former Formula 1 chief Bernie Ecclestone yesterday pleaded ‘not guilty’ at Westminster Magistrates Court to a charge of fraud over an alleged failure to declare some $650m in overseas assets. The 91-year-old is accused of failing to declare a trust in Singapore with a bank account containing funds that at the time would have been worth more than £400m. The charge was brought against him in July following an investigation by HM Revenue and Customs. Ecclestone was granted unconditional bail ahead of his next appearance at Southwark Crown Court on 19 September during the hearing, which lasted about five minutes. Ecclestone ran Formula 1 for over 40 years, from the late 1970s until January 2017. He was removed as its chief executive when US giant Liberty Media completed its $8bn (£6.4bn) takeover of the sport.

A tea company is being ordered to stop taking legal action in Kenya to block a lawsuit in Scotland, the BBC reports. Last month, James Finlay Kenya Ltd(JFK) won a temporary injunction from a court in Nairobi, which prevented more than 1,000 former workers from pursuing a class action suit for damages at Scotland's supreme civil court, the Court of Session, but now a Court of Session judge has ruled that JFK should be told to halt action in Kenya. The workers claim they suffered musculoskeletal injuries while working for Aberdeen-registered JFK at its farms in the Kericho region of Kenya. Judge Lord Braid said the workers' lawyers had put forward a "strong prima facie case" that JFK's actions had been "vexatious and oppressive". However, he also accepted that: "The group proceedings cannot continue for so long as the Kenyan anti-suit injunction remains in place". "That in itself will cause prejudice to the group members,” he added. “To quote the oft used phrase, justice delayed is justice denied…There is at the very least a serious doubt as to whether the group members would be able to bring substantive damages claims in Kenya." JFK's argument that Scottish courts do not have jurisdiction over Kenyan work injury claims will be heard at the Court of Session at a later date.

Sony PlayStation is being sued for £5bn in the UK over allegations it "ripped off its customers", the BBC reports. The group legal action, filed at the Competition Appeal Tribunal and led by consumer rights champion Alex Neill, alleges that Sony PlayStation abused its position as the market leader to impose terms and conditions on games' developers and publishers, including a 30% commission on every digital game or in-game purchase made through the online PlayStation Store. This, it is claimed, breached competition law, and imposed unfair terms and conditions on games' developers and publishers, leading to overpriced games and in-game purchases. Nine million customers were therefore "unwittingly overcharged" for digital gaming purchases by up to a total of £5bn over the past six years, according to the claim.

Amazon is reportedly among the bidders for US healthcare company Signify Health. The Wall Street Journal cited people familiar with the matter as saying that Amazon is joining the likes of CVS Health Corp and UnitedHealth Groupin an auction for the home-health-services provider, which is for sale in an auction that sources said could value it at more than $8bn (£6.81bn). Signify currently has a market value of around $5bn (£4.25bn), boosted since the WSJ first reported on the possibility of a deal early this month.

The People's Bank of China (PBOC) has lowered its five-year loan prime rate by 1.5%, matching its biggest cut on record and reducing it to 4.2%. The move will cut the mortgage rate to support the crisis-hit property market. Some building projects have ground to a halt in the country as lockdowns due to the country's strict zero-Covid policies affect the economy, and hundreds of Chinese citizens stopped paying their mortgages on down payments on uncompleted homes after construction stalled. China’s central bank also lowered the one-year loan prime rate, which is usually used to determine corporate loans, from 3.7% to 3.65%. Iris Pang, Greater China chief economist at ING Bank, said in a note yesterday that the moves are part of a wider effort to shore up the real estate industry." “At the same time, some local governments have started to lend to property developers to continue the construction of uncompleted homes," she said. "The two measures together should reduce the concern of existing home mortgage borrowers".

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