Published: 24 August 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
The euro fell to a fresh two-decade low against the US dollar yesterday, dealt a fresh blow by the fact that wholesale gas prices have risen sharply again as the prospect of three days’ closure for maintenance on the Nord Stream 1 pipeline, the main Russian pipeline to Europe, putting markets on edge. There is now renewed concern that ongoing energy shocks will keep inflation elevated and make a recession in Europe all but certain, Reuters says. The euro is down more than 12% so far this year, and shed almost 3% in August. Sterling recovered some ground yesterday but was not too far off a 2 ½ year low hit earlier at $1.1718. Meanwhile, the FTSE 250 hit a fresh one-month low yesterday, again because of market jitters about a looming gas crisis in Europe and data showing slower-than-expected growth in business activity exacerbated fears of recession. The S&P Global/CIPS Composite Purchasing Managers' Index (PMI) composite flash estimate dropped to 50.9 in August from 52.1 in July, its lowest since February 2021 and close to the 50 level that separates growth from contraction. However, the drop in business activity was roughly in line with expectations.
Energy companies reaping record profits from soaring oil and gas prices have helped global dividend payments to shareholders soar above pre-pandemic levels and to a record quarterly high, according to fund manager Janus Henderson's (JH) latest global dividend report. Oil and gas firms accounted for more than two-fifths of the growth in dividend payments in the three months to the end-June. Banks - freed from pandemic-era restrictions on dividends - were behind a similar share of payout growth. In total, global dividend payments reached $544.8 billion in the second quarter, JH calculated, up 11.3% year-on-year after companies slashed dividends during the time of covid restrictions.
Data released by the Office for National Statistics (ONS) has revealed that the total value of UK manufacturers’ product sales was £400.8 billion in 2021, an increase of £34.5 billion (9%) from £366.4 billion in 2020. However, this remains lower than the 2019 total of £402.2 billion. Food remains the largest division (making up 20% of total sales) and showed the largest value increase, up by £5.5 billion (7%) to £79.5 billion. The manufacture of furniture (£7.8 billion) and the manufacture of wood and wood products (£9.0 billion) showed the largest proportional increases in sales, up by 22% and 21%, respectively. Sales of large petrol vehicles (above 1500cc) showed the largest value increase for any single product in 2021, rising by £3.4 billion (20%) to £20.3 billion. The manufacture of other transport equipment saw sales decline by £1.0 billion (4%) to £25.8 billion, however, mainly because of falling sales within the manufacture of aircraft and spacecraft. The full statistics can be viewed at: https://www.ons.gov.uk/busine
Which? estimates that 1.9 million British households defaulted on at least one mortgage payment or other bill in the last month, up 4.5% from last year. The consumer champion’s consumer insight tracker shows satisfaction with living standards and income has crashed to its lowest point since 2014, even before Ofgem is widely expected to announce a new price cap for October topping £3,500 on Friday, up from £1,971 today. The number of people in financial difficulty has stayed at consistently high levels, Which? said, with six in 10 (59%) consumers saying their household has had to cut back on shopping, dipping into savings or borrowing to cover essential spending in the last month.
73% of UK consumers have been targeted by scams in the past three months with one in every four (26%) falling victim to fraudsters according to information and insights company TransUnion. Popular scams include fake tax rebates that are supposedly from the government (38%), bogus energy companies offering a discount (38%), offers which claim to be from insurance companies promising a cheap deal (37%) and phoney social media competitions offering free holidays (36%). Fake investments are also common, with scammers using sham endorsements to lure people in. More than a third (35%) of consumers have been targeted by false cryptocurrency schemes promoted on social media, with what appear to be testimonials from celebrities. On average, victims lose £581. Total financial losses were £7.9bn since the beginning of May, TransUnion says.
The Financial Conduct Authority (FCA) says it is setting up a new environment, social and governance (ESG) Advisory Committee as part of efforts to meet a government objective for the watchdog's policies to help Britain create a so-called net zero economy by 2050. Part of the remit will be to crack down on potential "greenwashing" or funds exaggerating their climate-friendly credentials, and the FCA is seeking outside experts on whom it can call to advise on policymaking., it said yesterday. Reuters says Britain is the first major economy to make climate disclosures by companies mandatory on a "comply or explain" basis, to give investors better and more comparable information. Experts interested in joining the committee should apply by 16thSept. The new committee’s first meeting is expected later this year.
Figures from HM Revenue and Customs (HMRC) show the number of house sales in July rose 32.9% on last year, with an estimated 110,970 residential homes changing hands, compared to the 83,520 recorded in July 2021. The number of sales was also up 6% on July 2019. That was also 2.6% above the five-year pre-covid July average, making it the busiest July since 2015.
Scottish Power CEO Keith Anderson said yesterday that he had asked the government to back a £100bn loan scheme to allow energy companies to freeze bills for two years. The Armed Forces minister James Heappey said the "eye-watering" sum would not be the best way through a winter of price hikes. Speaking to Sky News' Kay Burley, he said: "I don't think that a universal freezing of everybody's energy bill really helps to get taxpayer's money into the bank accounts of the people who need support the most." Instead, he said both Liz Truss and her Conservative Leadership Contestrival Rishi Sunak had proposed the "better solution" of "more targeted packages" of support to the least well off.
Dozens of people were left stranded for hours inside the Channel Tunnel after a train from Calais to Folkestone appeared to break down yesterday. The BBC has shown footage of Eurotunnel Le Shuttle passengers being evacuated through an emergency service tunnel after having to abandon their vehicles. They were eventually transferred to a replacement train and taken to the Folkestone terminal in Kent. Le Shuttle said the train's alarms went off and this needed to be investigated. "The service tunnel was terrifying," said Sarah Fellows, from Birmingham, told PA news agency after the incident last night.
Gatwick Airport has lifted its passenger forecast for the year following strong demand. The airport now expects 32.8m passengers in 2022, up from a previous forecast of 30.6m. Gatwick also announced the end of its passenger cap, just a week after Heathrow extended its cap to the end of October. "With additional resources across the Gatwick operation in place no further moderation of flying programmes is necessary," the airport said. However, it also warned that continued macroeconomic uncertainty, including inflationary pressures on costs and passenger demand for the winter season may impact its forecast. Passenger demand at Gatwick in the second quarter was at 74.3% of pre-pandemic levels, after all UK travel restrictions were removed, and 59.1% for the half year period.
Ryanair has upped its full-year forecast for passenger numbers after adding more flights to its UK winter schedule in response to cuts by IAG-owned rival British Airways. The Ireland-based airline - Europe's largest airline by passenger numbers – now expects to fly 166.5 million passengers in the year to the end of March, to and from 20 UK airports, up from a previous target of 165 million.
Scotland-based space services company Orbex is hiring an additional fifty staff members over the next six months as the company nears its goal to launch the first vertical rocket from UK soil over the coming months. Richard Lochhead, Scottish Government Employment Minister said: “These jobs will bring us a step closer to achieving our ambition of 20,000 jobs in the Scottish space sector by 2030. Orbex is bringing high-value jobs to Moray while inspiring the study of science and engineering – which will help create future rocket scientists”.
British manufacturer Hill Helicopters has submitted plans to build a new manufacturing plant and global HQ in Cresswell, Staffordshire. The multi-million pound investment is expected to create hundreds of jobs.
Nissan is to stop the production of cylinder heads on site at its plant in Sunderland from early 2024, when the automotive giant’s deal with French firm Renault to build cylinder heads is due to end, but all 250 staff will be redeployed elsewhere, Sky News reports.
Ford said on Monday that it will cut 3,000 jobs to better compete in the electric vehicle market. The move will affect both salaried and contract workers, according to an internal email sent to employees by Bill Ford and CEO Jim Farley and seen by Automotive News. Most of the cuts will be in the US, Canada, and workers at the Ford Business Services operation in India. About 2,000 of the layoffs will be of salaried employees, and 1,000 agency personal. The job cuts follow a restructuring and cost-cutting effort launched in March, in which Ford split its electric vehicles and internal combustion engine vehicles into two units.
France says it will consult its partners in the European Union about ways to regulate private jet emissions after the comings and goings of French billionaires on the fuel-guzzling planes caused a political controversy over the summer. While an outright ban is not on the agenda, government spokesman Olivier Veran said on Tuesday that at a time the government promotes more "sober" energy consumption habits, regulating private jets would send a message that “the same rules apply to all”.
Malaysia's top court has ordered former prime minister Najib Razak to begin a 12-year prison sentence after upholding a guilty conviction on charges related to a multi-billion dollar graft scandal at state fund 1Malaysia Development Berhad. Knocking back Najib's final appeal, the court also denied his request for a stay of sentence, Reuters reports. 1MDB was a sovereign fund set up in 2009 with the help of Malaysian financier Jho Low to promote economic development. Najib, who was prime minister from 2009 to 2018, co-founded the fund and chaired its advisory board until 2016. It raised billions of dollars in bonds for use in investment projects and joint ventures between 2009 and 2013, during which time $4.5 billion was diverted to offshore bank accounts and shell companies, many linked to Low. The US Department of Justice says its investigation was the largest kleptocracy probe ever conducted, and found siphoned funds were used to buy luxury assets and real estate for Low and his associates, including a private jet, a superyacht, hotels, jewellery, and to finance the 2013 Hollywood film The Wolf of Wall Street. The Malaysian authorities say billions more remain unaccounted for. Low, who is currently a fugitive, whereabouts unknown, has been charged in Malaysia and the United States over his central role in the case. He denies wrongdoing. Beijing has denied Malaysia’s claim he is in China.
Twitter Inc’s former security chief Peiter Zatko said in a whistleblower complaint that the social media giant had misled federal regulators about its defences against hackers and spam accounts. In an 84-page complaint to congressional investigators, Zatko - formerly a famed hacker widely known as "Mudge" - alleged Twitter falsely claimed it had a solid security plan, while in fact it was prioritising user growth over reducing spam. He claims executives were eligible to win individual bonuses of as much as $10 million tied to increases in daily users, and nothing explicitly for cutting spam. However, Twitter labelled the complaint a "false narrative." It is nevertheless an embarrassment given that Twitter is battling billionaire Elon Musk in court over his attempt to pull out of a $44-billion deal to buy the company on the grounds it has failed to provide details about the prevalence of bot and spam accounts. Meanwhile, Musk's lawyers have also sent a subpoena to Twitter founder and CEO Jack Dorsey, in the first indication that he personally will be officially involved in the legal fight. A trial is scheduled for Oct. 17.
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