Published: 19 October 2022
By Suzanne Evans, Director, Political Insight
Inflation is back up into double digits, having risen to 10.1% in September, matching the 40-year high of July. The Office for National Statistics said food and non-alcoholic beverages prices were the biggest driver of inflation last month, rising by 14.5%, the biggest jump since April 1980. Hotel prices also increased. Chancellor Jeremy Hunt responded saying: “I understand that families across the country are struggling with rising prices and higher energy bills. This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone. We have acted decisively to protect households and businesses from significant rises in their energy bills this winter, with the government’s energy price guarantee holding down peak inflation.”
Energy analyst Cornwall Insight is now forecasting that typical household energy bills could reach £4,347 a year from April, when the new Chancellor Jeremy Hunt now says support to help people with their energy bills will be cut.
Yesterday, Downing Street indicated ministers could ditch their commitment to the pensions triple lock - which means pensions will rise by either average earnings, September’s CPI inflation, or 2.5%, whichever is highest - as Chancellor Jeremy Hunt finds ways to claw back funds. Average earnings most recently hit 5.4%, meaning pensions should rise by 10.1% in April next year if the long-held Conservative Party policy is honoured.
The International Monetary Fund has welcomed the government's U-turn on tax cuts, saying the changes will help "better align fiscal and monetary policy in the fight against inflation". The body had openly criticised the mini-budget, saying the tax cuts planned were likely to increase inequality and fuel inflation.
The BT pension scheme, one of the largest in the UK, lost £11bn in assets before the Bank of England intervened to quieten the bond markets, it has been revealed. However, the scheme's estimated funding position had not worsened as a result of the market moves, it said in its annual report.
The Federation of Small Businesses (FSB) says confidence among British businesses has dropped precipitously. The trade body said its latest confidence index compiled following a survey of its members - fell to -35.9 from -24.7, the worst reading outside of COVID-19 lockdowns. The survey took place from 20th September to 4th October, so covered much of the period since Prime Minister Liz Truss's economic plans published on Sept. 23 led to chaos in the financial markets.
The Competition and Markets Authority (CMA) has again ordered Facebook and Instagram owner Meta to sell gif creation website Giphy – and Meta has agreed. In a “final decision” announced yesterday, the competition watchdog said Meta's $400m takeover could allow it to limit other social media platforms' access to GIFs, making those sites less attractive to users and less competitive. It also said the deal has removed Giphy as a potential challenger in the UK display advertising market. The CMA originally ordered the sale of Giphy in August last year, but Meta appealed to the Competition Appeal Tribunal, and the CMA was forced to reconsider after the tribunal found in Meta's favour on one of six points. Now, following a review, the CMA has stuck to its guns, concluding that Meta’s ownership of Giphy could enable it to push people to Meta-owned sites, which already make up 73% of user time spent on social media in the UK. "We are disappointed by the CMA's decision but accept today's ruling as the final word on the matter," a Meta spokesperson said in a statement. "We will work closely with the CMA on divesting Giphy."
Pubs and clubs are facing the prospect of beer shortages, and fast food firms and restaurants are also facing disruption because of various industrial disputes. Yesterday, the GMB union announced that 93% of its 600 members at Best Food Logistics, which delivers fresh produce, had rejected a 6% pay offer as it was significantly below the rate of inflation and amounted to a real-terms pay cut, and voted to strike. Nadine Houghton, GMB national officer, said: "Best Food's parent companies Booker and Tesco are making incredibly healthy profits and paying large dividends, while leaving these workers crushed by cost of living”. Meanwhile, the Unite union says a strike by some 1,000 drivers at GXO Logistics will "impede the ability of pubs and other venues to replenish their cellars prior to the World Cup". GXO workers deliver to 4,500 pubs in London and south-east England and will take rolling strike action between October 31 and November 4. A ban on overtime working will also come into force from October 24. Workers have rejected a 5% pay offer by the US-based firm, in a deal that included a reduction in sick pay, Unite said. "Once again, a company that is making hundreds of millions in profits is asking workers to take a pay cut…This is a shocking way to treat your workforce," said Unite general secretary Sharon Graham. "GXO can easily afford to pay and Unite is determined to see that they do," she added. Hundreds of workers at AB InBev's Samlesbury brewery in Lancashire have also gone on strike again, for a period of five days, threatening production of Budweiser, Stella Artois, Becks, Boddingtons and Export Pale Ale.
British Airways has struck a deal in principle with the British Airline Pilots' Association (BALPA) to avoid strike action, the Financial Times said yesterday. The IAG-owned carrier's agreement with pilots includes a 4% pay rise this year.
The Advertising Standards Authority (ASA) has banned two HSBC advertisements for being "misleading" about the company's work to tackle climate change. It is the first time the ASA has taken action against a bank for so-called "greenwashing" - branding something as eco-friendly, green or sustainable when this is not the case and misleading consumers into thinking they are helping the planet by choosing those goods or services. The adverts, seen at bus stops in London and Bristol last October in the lead up to the United Nations COP26 climate change summit, outlined HSBC's efforts to plant “2 million trees which will lock in 1.25 million tonnes of carbon over their lifetime" and its aim to provide “up to $1 trillion in financing and investment globally to help our clients transition to net zero". The ASA upheld complaints on the grounds that the ads "omitted significant information about HSBC's contribution to carbon dioxide and greenhouse gas emissions." "Customers... would not expect that HSBC, in making unqualified claims about its environmentally beneficial work, would also be simultaneously involved in the financing of businesses which made significant contributions to carbon dioxide and other greenhouse gas emissions," the regulator said.
Blackrock, the world’s largest asset manager, has told Parliament’s Environmental Audit Committee that it will not stop investing in coal, oil and gas. The Committee is examining the role of financial institutions in the transition to Net Zero, and Blackrock made its comments in a written submission. "BlackRock's role in the transition is as a fiduciary to our clients – it is not to engineer a specific decarbonization outcome in the real economy," it wrote. In answer to the question as to whether it would support a net-zero scenario that called for "no new investment is needed in coal, oil, and gas," BlackRock said: "No." Blackrock has a market value of $85.65 billion, and manages assets worth about $8 trillion.
FTSE 250 listed Asos has posted an 89% drop in 2021-22 profits and forecast a first half loss in its new financial year. The online fashion retailer posted a pre-tax loss of £32m from a profit of £177m and said trading at the start of the new fiscal year had been volatile. The company blamed significant volatility in the macroeconomic environment, as consumers cut spending during the cost of living crisis.
Asda says it will open its first two standalone convenience stores before Christmas, under a new 'Asda Express' brand. The stores, at Sutton Coldfield and Tottenham Hale, in London, will create 37 new jobs. Asda plans to launch 30 more sites, creating 500 new jobs, next year. The stores will stock some 3,000 products, including fresh, ambient and chilled groceries, beers, wines, and spirits, as well as a range of hot and cold 'food for now' options and ready meals. Asda is also in the process of acquiring 132 convenience stores from the Co-op Group. This transaction is expected to complete at the end of this month and will then go through the CMA’s competition review process.
Rolls-Royce yesterday unveiled its first fully electric car – the Spectre model – and announced it would invest millions of pounds expanding its Goodwood manufacturing plant.
UK travel company Jet2 has ordered 35 new Airbus A320neo aircraft, with an option to extend the deal to 71 planes. The list price of the 35 jets - to be delivered between 2028 and 2031 - is $3.9bn, however Jet2 said it had negotiated a significant discount, and would fund the purchase from internal resources and borrowings. Jet2 now has firm orders in place for 98 planes.
One of Britain’s biggest air shows has been permanently cancelled by Sunderland City Council, ostensibly because it is not ‘green.’ Graeme Miller, the Labour leader of the council, told The Telegraph that if the council and the city wanted to be serious about their net zero commitments then the Sunderland Air Show was no longer appropriate. “I can't think of anything that pumps more carbon dioxide in the atmosphere than a bunch of high performance jets,” he said. However, Dr Antony Mullen, leader of the Conservative group on the Council, said Miller and Labour councillors were using climate change as an excuse to distract from cost-cutting and organisational failures, as the air show is subsidised by the council at a cost of around £500.000 each year. “It is an obvious place to make a saving in the council's budget,” Mullen said, adding: "While it would be honest and understandable if this is what the Council had said, we have been given different excuses over the last two years”. The show used to attract more than a million visitors to watch displays by the Red Arrows, the Battle of Britain Memorial Flight and fast jets from across the world, but it has not taken place since 2019, because of Covid-19.
Japan's SoftBank has agreed to sell its entire stake in ecommerce group THG to existing shareholder the Qatar Investment Authority (QIA) and co-founder Matthew Moulding. SoftBank will sell just over 80.62m shares at 39p each, with the final settlement of the sale expected to take place on 20 October. QIA will buy just over 67.8m shares, while Moulding will acquire 12.82m.
North Sea oil and gas producer Ithaca Energy said yesterday that it plans to list on the London Stock Exchange. Ithaca has stakes in six of the top 10 largest fields in the UK Continental Shelf, and said it plans to have a free float of at least 10% of issued share capital and expects that it would be eligible for inclusion in the FTSE UK indices. Ithaca was bought by Israel's Delek in 2017. As part of the IPO, Delek would reduce its current ownership stake in Ithaca but remain as a controlling shareholder.
According to Retail Week, Ikea has increased the prices of some of its furniture by up to 80% over the last year. The magazine highlights, among other examples, the Swedish retail giant’s Jokkmokk dining table and four chairs set, which increased from £99 in 2021 to £179 in October 2022. "We offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible are able to afford them. This remains our focus today and in the future," an Ikea spokesperson told the publication. "However, we are not immune to the macro-economic developments that businesses, retailers and the public are currently facing, from the increased cost of materials and transportation to the war in Ukraine and inflation. It is critical that we are financially resilient for the long term, to ensure our longevity as a business and employer, and we have had to adjust our prices to reflect this increased cost base”.
Parlement Technologies is to sell Parler - its free speech social media platform - to billionaire rapper and fashion designer Kanye West, who has now legally changed his name to Ye. The company, which did not disclose any financials, said Ye was "taking a bold stance against his recent censorship from Big Tech, using his far-reaching talents to further lead the fight to create a truly non-cancellable environment". "In a world where conservative opinions are considered to be controversial we have to make sure we have the right to freely express ourselves," Ye said. The (black) rapper, criticised for wearing a “white lives matter” T-shirt at the Paris Fashion Week, has recently been banned from first Instagram and subsequently Twitter. He was banned by the former after accusing fellow rapper Diddi of being “controlled by Jewish people.” He then responded to that ban by tweeting he would go "death con three on Jewish people", hence the second disbarment.
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