Published: 12 September 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Shortly before the death of HM Queen Elizabeth II was announced on Thursday last week, Prime Minister Liz Truss unveiled her plan to tackle the current energy crisis:
- The unit price of gas and electricity will be capped to bring the typical average UK energy bill to £2,500 annually until 2024
- Prices for businesses will also be capped, but only for six months, whereafter further support will be targeted at "vulnerable industries"
- A joint scheme will be launched with the Bank of England to provide emergency support to struggling UK energy firms
- The government will compensate energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they will be allowed to charge customers
- Green levies - which add around £150 to bills each year – will be scrapped
- The previously announced £400 energy bill discount will go ahead
- A new round of oil and gas licensing will begin as early as this week to boost production in the North Sea
- The current ban on fracking for shale gas will be lifted "where there is local support for it"
- The government will seek to negotiate lower-priced long-term contracts with renewable and nuclear power companies
- There will be no additional windfall taxes on gas and oil company profits
- There will be a review to ensure the UK is meeting its Net Zero 2050 target in "an economically-efficient way", given the altered economic landscape
The energy price cap - the highest amount suppliers are allowed to charge households for every unit of energy they use - had been due to rise to £3,549 for a typical household from October. The support scheme could cost up to £150bn, but Truss refused to clarify the figure, saying "extraordinary times call for extraordinary measures". The intervention will be funded by government borrowing. Downing Street said the price cap would boost economic growth and curb inflation by as much as 5%.
The Bank of England has delayed its upcoming interest rate decision by a week following the death of Queen Elizabeth II. Monetary policy committee(MPC) members will now vote on rates on Thursday 22 September, instead of 15 September as expected. The general consensus is that the MPC is likely to raise interest rates again. The new chancellor Kwasi Kwarteng is rumoured to be presenting his fiscal plans on 21st September.
The UK economy grew by 0.2% in July, according to figures released this morning by the Office for National Statistics (ONS). This marks a return to growth after the economy shrank by 0.6% in June. However, “looking at the broader picture, GDP was flat in the three months to July compared with the previous three months,” the ONS said. Services were the main driver in the rise in GDP, growing by 0.4% in July 2022, after a fall of 0.5% in June 2022. Within that figure, information and communication made the largest contribution, growing by 1.5%. Production fell by 0.3% after a fall of 0.9% in June 2022; this was mainly because of a fall of 3.4% in electricity, gas, steam, and air conditioning supply, the ONS said. Construction also fell in July 2022 by 0.8%, after a fall of 1.4% in June 2022; the decrease in monthly construction output in July 2022 came solely from repair and maintenance, which fell 2.6%. The ONS said the smaller overall growth than expected may have occurred because people cut back on electricity use following the surge in prices this year." According to anecdotal evidence from the Department for Business, Energy and Industrial Strategy (BEIS), demand for electricity was 2.3% lower than seen in July 2021,” the ONS said, adding that "that there may be some signs of changes in consumer behaviour and lower demand in response to increased prices”. Monthly GDP is now estimated to be 1.1% above its pre-coronavirus level of February 2020.
The ONS has also published its latest trade figures this morning. Total imports of goods, excluding precious metals, decreased by £0.5 billion (0.9%) in July 2022 because of a £0.4 billion (1.5%) fall in imports from non-EU countries, while imports from EU countries decreased by £0.1 billion (0.3%).
Total exports of goods, excluding precious metals, increased by £2.1 billion (6.7%) in July 2022, driven by a £1.3 billion (7.9%) increase in exports to EU countries, while exports to non-EU countries increased by £0.8 billion (5.4%). The increase in exports to EU countries in July 2022 was primarily driven by higher exports of fuels, and machinery and transport equipment, which increased by £0.8 billion and £0.4 billion respectively. The total trade in goods and services deficit, excluding precious metals, widened by £1.2 billion to £27.0 billion in the three months to July 2022 compared with the three months to April 2022. Removing the effect of inflation, the total trade deficit, excluding precious metals, narrowed by £2.0 billion to £20.8 billion in the three months to July 2022.
The Competition and Markets Authority (CMA) said on Thursday that Morrisons' takeover of convenience store retailer McColl's could lead to higher prices. The watchdog said the merger raises competition concerns in 35 areas, where McColl's or MFG convenience stores will face reduced competition if the deal is allowed to go ahead as planned. Morrisons now has until this coming Thursday to offer proposals to the CMA to address the competition concerns identified.
The Competition and Markets Authority (CMA) has provisionally cleared the London Stock Exchange's £274m acquisition of technology firm Quantile Group. Quantile provides portfolio, margin and capital optimisation and compression services for the global financial services market. However, this is not the CMA's final decision, and it has invited any interested parties to make submissions on its provisional findings by Friday 30 September.
Royal Mail denied on Thursday rumours that it is talks about a possible takeover. "We are aware that in recent media interviews, Dave Ward, the General Secretary of the CWU has indicated that we are in 'secret talks' with a private equity investment group, he believes, regarding a takeover of Royal Mail," it said. "The company wishes to make clear that this is not true. We are involved in no such talks." Ward had claimed that the company's bosses should be investigated for corporate corruption over "secret talks" to potentially break up and sell the group to Luxembourg-based Vesa Equity Investment.
Norwegian-owned Sundollitt is set to open new multi-million pound factory in Corby, Northamptonshire. The 59,000 sq ft production facility is the specialist polystyrene manufacturer's largest single investment in the UK.
Insulation and roofing supplier SIG said on Thursday that Grafton boss Gavin Slark will succeed Steve Francis as chief executive on 1 February 2023. Francis will be employed by SIG until 8 March and has agreed to remain available as a consultant until 30 April to complete an orderly handover to Slark. SIG noted that Slark has a long track record of success in the pan-European construction distribution industry, having been CEO of Grafton for 11 years. Prior to that, he held a number of roles with BSS, including as CEO from 2006 to 2011.
Government contractor Serco says CEO Rupert Soames would retire in September 2023 and step down from the board at the end of this December 2022. He will be succeeded by Mark Irwin, who is currently the CEO of the company's UK & Europe Division. Anthony Kirby will move from his role as group chief operating officer to become chief executive of Serco's UK & Europe business.
Shares in London-listed Cineworld rose as much as 11% on Friday after a US court granted it access to $785m (£677m) in funding. The world's second-largest cinema chain filed for Chapter 11 bankruptcy in America this week to help it restructure $9bn of debt. The company, which owns brands such as Picturehouse and Regal, said the court decision will now allow it to meet ongoing obligations and pay staff wages. Yahoo Finance explains that chapter 11 bankruptcies are different to other forms of declaring that a business has gone bankrupt, as they mean the company will be able to hold on to all its assets and trade as normal for the time being. Cineworld said that the Chapter 11 restructuring process was expected to significantly reduce debt and strengthen the balance sheet and liquidity position. It plans to emerge from bankruptcy in the first three months of next year.
US President Joe Biden’s administration is said to be planning to broaden curbs on shipments of US semiconductors used for artificial intelligence and chipmaking tools, Reuters reports. The news agency’s sources say The Commerce Department intends to publish new regulations forbidding three US companies - KLA Corp, Lam Research Corp, and Applied Materials Inc.from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless they obtain Commerce Department licenses.
Swiss Re, the world’s largest reinsurer, has said that global geopolitical tensions, macroeconomic developments and climate change have heightened demand for risk protection and will lead to increased premiums. Reuters reports that Swiss Re plans to grow its natural catastrophe portfolio, where the market is forecast to grow to $48 billion from $35 billion in the next four years. "On top of impacts from Covid-19 and increasing losses from natural catastrophes, the re-insurance industry is now confronted with issues like inflation, risk of recession and geopolitical tensions," said Moses Ojeisekhoba, chief executive officer reinsurance, in a statement. Companies were increasingly insuring themselves to deal with the riskier environment, he added, noting that the company expects a $33 billion increase in commercial premium volumes in the period from 2022 to 2026.
The Bank of England has delayed its upcoming interest rate decision by a week following the death of Queen Elizabeth II. Monetary policy committee(MPC) members will now vote on rates on Thursday 22 September, instead of 15 September as expected. The general consensus is that the MPC is likely to raise interest rates again. The new chancellor Kwasi Kwarteng is rumoured to be presenting his fiscal plans on 21st September.
The UK economy grew by 0.2% in July, according to figures released this morning by the Office for National Statistics (ONS). This marks a return to growth after the economy shrank by 0.6% in June. However, “looking at the broader picture, GDP was flat in the three months to July compared with the previous three months,” the ONS said. Services were the main driver in the rise in GDP, growing by 0.4% in July 2022, after a fall of 0.5% in June 2022. Within that figure, information and communication made the largest contribution, growing by 1.5%. Production fell by 0.3% after a fall of 0.9% in June 2022; this was mainly because of a fall of 3.4% in electricity, gas, steam, and air conditioning supply, the ONS said. Construction also fell in July 2022 by 0.8%, after a fall of 1.4% in June 2022; the decrease in monthly construction output in July 2022 came solely from repair and maintenance, which fell 2.6%. The ONS said the smaller overall growth than expected may have occurred because people cut back on electricity use following the surge in prices this year." According to anecdotal evidence from the Department for Business, Energy and Industrial Strategy (BEIS), demand for electricity was 2.3% lower than seen in July 2021,” the ONS said, adding that "that there may be some signs of changes in consumer behaviour and lower demand in response to increased prices”. Monthly GDP is now estimated to be 1.1% above its pre-coronavirus level of February 2020.
The ONS has also published its latest trade figures this morning. Total imports of goods, excluding precious metals, decreased by £0.5 billion (0.9%) in July 2022 because of a £0.4 billion (1.5%) fall in imports from non-EU countries, while imports from EU countries decreased by £0.1 billion (0.3%).
Total exports of goods, excluding precious metals, increased by £2.1 billion (6.7%) in July 2022, driven by a £1.3 billion (7.9%) increase in exports to EU countries, while exports to non-EU countries increased by £0.8 billion (5.4%). The increase in exports to EU countries in July 2022 was primarily driven by higher exports of fuels, and machinery and transport equipment, which increased by £0.8 billion and £0.4 billion respectively. The total trade in goods and services deficit, excluding precious metals, widened by £1.2 billion to £27.0 billion in the three months to July 2022 compared with the three months to April 2022. Removing the effect of inflation, the total trade deficit, excluding precious metals, narrowed by £2.0 billion to £20.8 billion in the three months to July 2022.
The Competition and Markets Authority (CMA) said on Thursday that Morrisons' takeover of convenience store retailer McColl's could lead to higher prices. The watchdog said the merger raises competition concerns in 35 areas, where McColl's or MFG convenience stores will face reduced competition if the deal is allowed to go ahead as planned. Morrisons now has until this coming Thursday to offer proposals to the CMA to address the competition concerns identified.
The Competition and Markets Authority (CMA) has provisionally cleared the London Stock Exchange's £274m acquisition of technology firm Quantile Group. Quantile provides portfolio, margin and capital optimisation and compression services for the global financial services market. However, this is not the CMA's final decision, and it has invited any interested parties to make submissions on its provisional findings by Friday 30 September.
Royal Mail denied on Thursday rumours that it is talks about a possible takeover. "We are aware that in recent media interviews, Dave Ward, the General Secretary of the CWU has indicated that we are in 'secret talks' with a private equity investment group, he believes, regarding a takeover of Royal Mail," it said. "The company wishes to make clear that this is not true. We are involved in no such talks." Ward had claimed that the company's bosses should be investigated for corporate corruption over "secret talks" to potentially break up and sell the group to Luxembourg-based Vesa Equity Investment.
Norwegian-owned Sundollitt is set to open new multi-million pound factory in Corby, Northamptonshire. The 59,000 sq ft production facility is the specialist polystyrene manufacturer's largest single investment in the UK.
Insulation and roofing supplier SIG said on Thursday that Grafton boss Gavin Slark will succeed Steve Francis as chief executive on 1 February 2023. Francis will be employed by SIG until 8 March and has agreed to remain available as a consultant until 30 April to complete an orderly handover to Slark. SIG noted that Slark has a long track record of success in the pan-European construction distribution industry, having been CEO of Grafton for 11 years. Prior to that, he held a number of roles with BSS, including as CEO from 2006 to 2011.
Government contractor Serco says CEO Rupert Soames would retire in September 2023 and step down from the board at the end of this December 2022. He will be succeeded by Mark Irwin, who is currently the CEO of the company's UK & Europe Division. Anthony Kirby will move from his role as group chief operating officer to become chief executive of Serco's UK & Europe business.
Shares in London-listed Cineworld rose as much as 11% on Friday after a US court granted it access to $785m (£677m) in funding. The world's second-largest cinema chain filed for Chapter 11 bankruptcy in America this week to help it restructure $9bn of debt. The company, which owns brands such as Picturehouse and Regal, said the court decision will now allow it to meet ongoing obligations and pay staff wages. Yahoo Finance explains that chapter 11 bankruptcies are different to other forms of declaring that a business has gone bankrupt, as they mean the company will be able to hold on to all its assets and trade as normal for the time being. Cineworld said that the Chapter 11 restructuring process was expected to significantly reduce debt and strengthen the balance sheet and liquidity position. It plans to emerge from bankruptcy in the first three months of next year.
US President Joe Biden’s administration is said to be planning to broaden curbs on shipments of US semiconductors used for artificial intelligence and chipmaking tools, Reuters reports. The news agency’s sources say The Commerce Department intends to publish new regulations forbidding three US companies - KLA Corp, Lam Research Corp, and Applied Materials Inc.from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless they obtain Commerce Department licenses.
Swiss Re, the world’s largest reinsurer, has said that global geopolitical tensions, macroeconomic developments and climate change have heightened demand for risk protection and will lead to increased premiums. Reuters reports that Swiss Re plans to grow its natural catastrophe portfolio, where the market is forecast to grow to $48 billion from $35 billion in the next four years. "On top of impacts from Covid-19 and increasing losses from natural catastrophes, the re-insurance industry is now confronted with issues like inflation, risk of recession and geopolitical tensions," said Moses Ojeisekhoba, chief executive officer reinsurance, in a statement. Companies were increasingly insuring themselves to deal with the riskier environment, he added, noting that the company expects a $33 billion increase in commercial premium volumes in the period from 2022 to 2026.
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