Published: 02 September 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
In his final major policy speech as UK prime minister, Boris Johnson has promised £700m for the Sizewell C nuclear power station project in Suffolk. Speaking on energy security yesterday, he said he was “absolutely confident [the project] will get over the line” in the next few weeks “because it would be absolute madness not to". During the speech, he also hit out at the “paralysis over British nuclear energy," labelling the problem as “myopia”. “It is called short-termism. It is a chronic case of politicians not being able to see beyond the political cycle,” he said. He called for continued reduction of Britain’s dependence on foreign fossil fuels, as well as the cost of bills to be brought down by increasing supplies of home-grown energy. “The situation we face today is deeply worrying, but this government has already stepped in to help with billions of pounds in support. And our British energy security strategy is not just about meeting demand today, but many years hence,” he said. “The big decisions this government has made on our energy future will bequeath a United Kingdom where energy is cheap, clean, reliable, and plentiful, and made right here on British soil. A future where families and businesses are never again at the mercy of international markets or foreign despots.” Although the new project will not alleviate current pressure on energy bills, it is key to the UK’s goal to triple nuclear capacity by 2050. Either Liz Truss or Rishi Sunak will take over from Johnson on Monday.
The pound fell again yesterday, pushed by the soaring US dollar to its biggest monthly fall since October 2016. Overall, Sterling shed 4.6% in August, having lost 14% so far this year, as concerns grow about the state of the British economy. Yesterday afternoon it hovered just above $1.15. The news was not much better against the euro, Sky News says. August was sterling's worst month there since May 2021 and yesterday it dropped as low as 86.7p. Michael Hewson, chief markets analyst at CMC Markets, said of the pound's difficulties: "It's not just sterling weakness - it's a dollar strength story. Sterling has its problems, but they are not unique to it - high inflation, surging energy prices and falling disposable incomes."
British manufacturing production and new orders dropped significantly August, with output seeing its largest contraction since the height of the pandemic in May 2020, according to the latest S&P Global/CIPS UK Manufacturing Purchasing Managers' Index (PMI). The index dropped to 47.3 from 52.1 in July - the first time it has dipped below the crucial 50 mark which indicated contraction since the pandemic – as companies experienced a steep downturn in new orders over the month, with interest from both domestic and overseas clients falling heavily. This also led to the supply of new jobs grinding to a halt, and a drop in business optimism, the PMI concluded, as manufacturers cited clients postponing, rescheduling or cancelling agreements due to rising economic uncertainties, recession warnings and component shortages. August’s PMI data "suggests that a recession is developing in the manufacturing sector," Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, told Sky News.
The British Chamber of Commerce (BCC) still expects the UK economy to plunge into recession before the end of the year amid soaring inflation, and has again downgraded its expectations for GDP growth for 2022 to 3.3% from 3.5%, significantly below the 7.4% growth recorded in 2021. The BCC says it expects negative economic growth for Q2, Q3, and Q4 of 2022, three consecutive quarters of contraction, which will signify recession. However, unlike the Bank of England, it believes the economy will grow in 2023, albeit at a very low 0.2%, with a slight increase to 1% in 2024.
Annual house price growth in the UK slowed in August but remained in double digits for the tenth month in a row. House price growth fell to 10% last month, down from 11% in July, although the statistics could be seen as an increase when taking account of seasonal effects on the housing market. “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer inquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels,” said Robert Gardner, Nationwide's chief economist. However, low supplies of new housing have kept prices high, the building society said. Meanwhile, the average price of a house in the UK crept up again in August to £273,751 from £271,209 in July. Average house prices have risen by almost £50,000 in two years.
The Competition and Markets Authority (CMA) has become the first global antitrust regulator to sound the alarm over Microsoft's acquisition of Activision Blizzard, which makes popular gaming series such as Call Of Duty and World Of Warcraft. The CMA says the takeover could restrict competitors' access to Activision Blizzard games and limit competition in the emerging cloud gaming market, hence it requires further investigation. The $68.7bn (£59.4bn) takeover was announced in January, and would make Xbox-maker Microsoft a more powerful rival to Sony and Nintendo. Both companies have been given until 8 September to come up with proposals that would address the CMA’s concerns and, if not satisfied, the UK watchdog will escalate its investigation.
The Competition and Markets Authority has cleared NortonLifeLock'sacquisition of FTSE 100 cybersecurity software developer Avast, agreed last year in a deal worth up to $8.6bn (£6.53bn).
Members of the Rail, Maritime and Transport union (RMT) at Network Rail and 14 train operators have announced strike action on 15th and 17thSeptember. RMT general secretary Mick Lynch said: "Our members have no choice but to continue this strike action,” adding that it will "effectively shut down" the rail network because more than 40,000 workers will walk off the job. In separate disputes, RMT members at Hull Trains and Arriva Rail London will also strike for one day on 15th September. Three days ago, the TSSA union said staff at nine train companies, plus staff at Network Rail, will take part in a 24-hour strike starting at midday on 26th September.
Budget supermarket Iceland is offering a £30 discount to pensioners struggling with the cost of living. The supermarket had already made 40,000 vouchers available in August for those who have reached state pension age, and will now make another 40,000 available after receiving an extra £1m of funding from the Rothesay Foundation for the scheme. Applications for the vouchers close on Friday 16th September and will be handed out on a first-come-first-served basis. To qualify, pensioners must live independently, rely solely on their state pension or other benefits for food and essentials, and live in one of 16 areas in the country identified as the places where the highest numbers of pensioners live in material deprivation. These include only the boroughs of Lambeth and Croydon in Greater London, the Wirral, Glamorgan, Huddersfield, North Wales and Liverpool.
Associated British Ports and Air Products are set to build the UK's first large-scale green hydrogen production facility at the Port of Immingham. The huge investment - likely to be hundreds of millions of pounds - is expected to create 1,400 jobs.
Budget airlines Ryanair and Wizz Air has both reported a jump in August traffic. Ryanair posted a 52% uplift this morning, as passenger numbers grew to 16.9m from 11.1m in August 2021, with planes 96% full. Wizz Air meanwhile, said yesterday that its passenger numbers rose 38.5% year-on-year in August. The central and eastern European airline carried just over 4.96m passengers last month, versus 3.58m in August 2021. The load factor for its planes increased to 90.5% from 83.6%.
Shell CEO Ben van Beurden is preparing to step down next year after nearly a decade at the helm of the energy firm. Reuters cites two company sources saying that Shell's board succession committee - headed by Chairman Andrew Mackenzie - has met several times in recent months to draw up plans for van Beurden's departure and interview potential successors. The shortlist has been narrowed down to Wael Sawan, Shell's head of integrated gas and renewables and Huibert Vigeveno, head of the company's refining operations of downstream. It was also understood that recently-appointed chief financial officer Sinead Gorman and Zoe Yujnovich, head of upstream, are seen as possible successors. Van Beurden joined Shell in 1983 and became CEO in January 2014, has yet to decide on an exact departure date but is expected to leave next year, the sources said.
The US has banned exports of some advanced chips to China, in a move that is likely to hit almost any major tech company running public clouds or advanced artificial intelligence training modules in the country, Reuters reports. Chip designer Nvidia Corp said US officials have told it to stop exporting two top computing chips for AI work to China, and Advanced Micro Devices also said it had received new license requirements stopping one of its advanced AI chips from being exported to China. Chinese Commerce Ministry spokesperson Shu Jueting said yesterday that Beijing opposes the measures as they undermine the rights of Chinese companies and threaten to disrupt global supply chains. Jay Goldberg, CEO of D2D Advisory, a finance and strategy consulting firm, said: "We’re going from blocking certain US companies from supplying to a certain company, as was the case with Huawei, to banning certain US products from selling to China period". The concern is now that Washington will broaden the ban to block contract chipmakers such as Taiwan Semiconductor Manufacturing Co and Samsung from making chips for Chinese chip designers, Jefferies' analysts said in a note. "We are not there yet, and the U.S. will likely evaluate the effectiveness of each incremental step before drastic action is considered," it said. The ban is likely to hit a swathe of Chinese tech companies including such giants as Alibaba Group Holding Ltd, Tencent Holdings Ltd, Baidu Inc, and Huawei Technologies Co Ltd.
The home of John Lennon's mother, dubbed "the House of Sin" by Lennon's aunt Mimi, has been put up for auction. The Liverpool property, on Blomfield Road, played a significant role in the musical development of both Lennon and Paul McCartney and is expected to sell for £250,000. Lennon and McCartney rehearsed at the semi-detached house with Lennon's first band The Quarrymen without fear of noise complaints from Lennon's mother Julia. Paul Fairweather, auctioneer at Omega Auctions, said: "This house is well known to Beatles fans and anyone who has even a passing interest in how the world's most famous musical group came to be. "We saw worldwide interest in our recent sale of George Harrison's childhood home and we expect possibly even greater attention on this property.
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