Published: 11 October 2022
By Suzanne Evans, Director, Political Insight
Chancellor Kwasi Kwarteng has named the date on which he will publish the government's spending plans in a letter to Mel Stride, the chair of the Treasury Select Committee. Having originally said the Office for Budget Responsibility's economic forecasts would be published on 23rd November, pressure for him to bring that forward means they will now be revealed on 31st October. Stride tweeted: "Having pressed so hard on this I strongly welcome the decision.” He added: “If this lands well with markets then [the Bank of England's Monetary Policy Committee] meeting on 3 November may result in small rise in interest rates. Critical to millions of mortgage holders."
The Bank of England has announced new measures aimed at ensuring an "orderly end" to its emergency bond buying scheme which was introduced to stop a collapse of some pension funds. On 28th September, the Bank stepped in to buy government bonds because of its concern over "a material risk to UK financial stability". It said it would buy up to £65bn bonds, with a limit of £5bn a day. So far, the Bank has bought only around £5bn bonds in total under the programme, however yesterday it doubled the daily limit to £10bn. Before the mini-budget, which triggered the move, the yield on government borrowing over a 30-year period stood at around 3.7%. After the mini-budget it jumped to 5.1% until the Bank's intervention pushed the rate back down. However, in recent days it has risen back up to around 4.5%.
The government has named experienced official James Bowler as the new permanent secretary to the Treasury. He replaces Tom Scholar whose departure shortly after Kwasi Kwarteng became finance minister contributed to a drop in confidence among investors since Liz Truss took over as prime minister, Reuters says. Last week, newspapers reported that Truss wanted someone new to the Treasury to take the department's top job, but yesterday the Financial Times said she had changed her mind about appointing an outsider because she wanted to calm financial markets.
Bowler has served as an adviser to two previous Chancellors, Gordon Brown and Alistair Darling, and also later advised Brown and David Cameron when they were prime ministers.
Chancellor Kwasi Kwarteng either needs to make £62bn of spending cuts or tax rises to stop public debt growing ever-larger as a share of the economy, left-wing think-tank The Institute for Fiscal Studies said in a report released this morning. Government borrowing looks set to hit £194bn in the current financial year and be £103bn in 2026-27, £71bn more than government forecasters predicted in March, it said.
UK unemployment has fallen unexpectedly to its lowest since 1974 as people drop out of the workforce at a record rate. The jobless rate fell to 3.5% in the three months to August, according to the Office for National Statistics (ONS). The UK employment rate for June to August 2022 was 75.5%, 1% lower than before the pandemic. However, the economic inactivity rate increased by 0.6 percentage points to 21.7% in June to August 2022. This increase was largely driven by those aged 50 to 64 years and those aged 16 to 24 years, the ONS says, mostly because they are long-term sick or students. The numbers of those economically inactive because they are long-term sick increased are now at a record high.
A survey of more than 2,200 firms by the British Chambers of Commerce (BCC) shows that 28% of small and medium sized (SMEs) exporters have seen a "worrying decline" in export growth following five consecutive quarters of flat activity. 22% reported an increase in overseas sales. The BCC's quarterly Trade Confidence Outlook for the third quarter of 2022 also found that 73% of manufacturing exporters expect to raise prices in the next year, close to record highs. Almost nine out of 10 (89%) firms in the sector cited raw materials as their biggest cost pressure, with 80% citing utilities and 75% citing labour costs. "Small and medium sized businesses are the ones who have been really facing the pain of the current difficult international trading conditions," William Bain, head of trade policy at the BCC, said. "They are much more exposed to the combination of supply chain disruption, soaring prices, and the impact of Brexit red tape and compliance costs, than larger companies," he added, while urging the government to take "decisive action" to reduce some of the "removable" Brexit red tape costs for traders.
Data from Barclaycard suggests the cost-of-living crisis is affecting consumer spending, as although it grew last month, it did so at a rate that lagged well behind inflation. Barclaycard said spending on its credit and debit cards rose 1.8% year-on-year in September, the weakest reading since February 2021 and far behind the annual 9.9% increase in consumer prices in August. Nine out of ten people the company surveyed in the last week of September said they were concerned by rising household energy bills and were therefore cutting back on discretionary spending, with a knock-on effect for hospitality and retail.
The government has ended a pay dispute with criminal barristers which has ended strike action. The Criminal Barristers Association (CBA), which has more than 2,000 members and represents barristers in England and Wales, said roughly 57% of trial lawyers balloted on the government's pay offer had accepted it. They had walked out indefinitely on 5th September, refusing to take on new cases, after weeks of intermittent strike action over the summer. The sector will now receive a £54m investment and criminal barristers will get a 15% fee rise for the vast majority of cases currently in the Crown Court.
London's Ambulance Service will ballot its members on whether to carrying out strike action over a pay dispute, the GMB union said yesterday.
The Competition and Markets Authority (CMA) has provisionally cleared Morrisons' takeover of convenience retailer McColl's. Last month, the competition watchdog pinpointed 35 locations where it said there was potential for reduced competition between McColl's, Morrisons and Motor Fuel Group, which owns the supermarket chain and, in mitigation, Morrisons has offered to sell 28 convenience stores - 26 stores in England, and one each in Scotland and Wales. Morrisons agreed in May to rescue McColl's from administration in a £190m deal. Sorcha O'Carroll, CMA senior director of mergers, said: "Our preliminary view is that the sale of these stores will preserve competition in these local areas and prevent consumers from losing out due to this deal, at a time when shoppers are already facing rising prices. If, after reviewing the responses to our consultation, we conclude that the competition issues have been addressed, the deal will be cleared."
The FTSE 100’s Frasers Group is reported to have bought collapsed Australian luxury footwear and streetwear retailer Sneakerboy for an undisclosed sum. The Australian Financial Review cited multiple sources as saying that staff members have been informed about the sale of Sneakerboy, which has been run by insolvency firm Hamilton Murphy since it collapsed in July.
Sky News understands that Elder, a healthcare platform which helps pensioners continue living in their own homes, has secured a £20m funding boost from IPF Partners, a Luxembourg-based healthcare-focused investor, to expand its services. Elder has 4,000 professional carers registered on its platform, and was founded by Peter Dowds in 2015. It connects carers, older people and their families, and says it has helped deliver more than 10 million hours of care across the UK since its launch.
Quilter CEO Paul Feeney is stepping down from his role at the FTSE 250 wealth management company on 31st October, after being with the company since 1998. He will be succeeded by Steven Levin, who has led Quilter's Affluent segment since its formation.
Paypal has denied reports that it has updated its terms and conditions to express an intention to fine people for spreading incorrect information. The payments firm told Bloomberg: "An Acceptable Use Policy (AUP) notice recently went out in error that included incorrect information. PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. We’re sorry for the confusion this has caused”. The ‘incorrect’ document PayPal now claims was a mistake, said the firm may 'subject you to damages, including liquidated damages of $2,500.00 US dollars per violation, which may be debited directly from your PayPal account(s) as outlined in the User Agreement.' Paypal came under fire last month for shutting down the accounts of organisations promoting free speech without warning, leading to boycotts.
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