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Bank of England chief economist Huw Pill has said he expects inflation to start falling next year

   News / 01 Dec 2022

Published: 01 December 2022

By Suzanne Evans, Director, Political Insight

Bank of England chief economist Huw Pill has said he expects inflation to start falling next year, assuming natural gas prices stabilise and then start to drop. “We are expecting to see headline inflation tail off in the second half of next year, in fact quite rapidly, on account of those base effects,” Pill told a conference organised by accountancy body ICAEW. Pill also said the central Bank has "more to do" on raising interest rates to control inflation, but probably not by as much as previously expected. Meanwhile, eurozone inflation eased far more than expected in November, raising hopes that sky-high price growth is now past its peak and bolstering the case for a slowdown in European Central Bank rate hikes next month. Consumer prices in the 19 countries sharing the euro grew by 10.0% this month after a 10.6% increase in October, coming in below expectations for 10.4% in a Reuters poll of analysts. In the US, Federal Reserve Chair Jerome Powell indicated the pace of its interest rate hikes could be scaled back as soon as December, despite cautioning the fight against inflation was far from over.

The government says it will trial the use of low Earth orbit satellites to provide high-speed internet connections to remote homes and businesses, initially using equipment supplied by Elon Musk's Starlink system because of the “readiness and availability of its technology". The trial will also consider the viability of using satellite technology to connect "very hard to reach" locations, the less than 1% of sites which are too difficult to upgrade via expensive physical cables such as small islands or mountainous areas. Digital Minister Michelle Donelan said: “High-speed broadband beamed to earth from space could be the answer to the connectivity issues suffered by people in premises stuck in the digital slow lane". Musk's SpaceX rocket company activated Starlink, a largely consumer-based service with hundreds of thousands of internet users, over Ukraine after Russia's invasion in February, Reuters says. It has since provided Kyiv with thousands of terminals, allowing Ukrainians to hook up to the internet in places out of reach of the domestic system. The government is also holding discussions with other providers such as British satellite company OneWeb.

The government has also pledged £12m to support innovative projects ranging from testing delivery drone flights in Scotland, to developing new tech that could reduce the backlog of court cases, Yahoo Finance reports. The Regulators’ Pioneer Fund is supporting 24 regulator and local authority led projects across the UK.

Ministers are looking to strengthen Britain’s cybersecurity laws by updating 2018 regulations designed to ensure companies providing critical services improved their cyber security, to bring outsourced IT services such as security monitoring and digital billing under their scope. "The services we rely on for healthcare, water, energy and computing must not be brought to a standstill by criminals and hostile states," Cyber Minister Julia Lopez said. The Digital Media Culture and Sport department said the regulatory changes would be made as soon as parliamentary time allowed and would apply to "critical service providers, like energy companies and the NHS, as well as important digital services like providers of cloud computing and online search engines."

The Nationwide building society says UK house prices saw their biggest monthly fall for more than two years in November. Prices fell 1.4% from October, leading to a “sharp slowdown” in annual house price growth, dropping to 4.4% from 7.2% in October.

The lender added the housing market looked set to "remain subdued" in the coming months.

The GMB trade union said yesterday that more than 10,000 of its members who are ambulance workers in England and Wales have voted in favour of taking industrial action. The Unite and Unison trade unions also said their ambulance service members had backed walkouts, with Unite saying it had balloted 3,000 staff, including paramedics and emergency call handlers, and they had voted to strike in the run up to Christmas. "No one in the NHS takes strike action lightly, today shows just how desperate they are," GMB National Secretary Rachel Harrison said. "This is as much about unsafe staffing levels and patient safety as it is about pay ... Something has to change or the service as we know it will collapse." Health Secretary Steve Barclay said he regretted that some NHS staff would be walking out as the country approached "a challenging winter". "Our priority is keeping patients safe during any strikes and the NHS has tried and tested plans to minimise disruption and ensure emergency services continue to operate," he said in a statement.

Security staff at international rail service Eurostar have also voted to strike for four days in the run up to Christmas. Aroound 100 members of the National Union of Rail, Maritime and Transport Workers (RMT) working for the firm, which runs passenger rail services linking London to Paris and other European capitals, will walk out on 16, 18, 22 and 23 December.

The High Court settled on 20th December as the transfer date for Octopus Energy's planned takeover of collapsed energy retailer Bulb yesterday, despite British GasScottish Power and E.on, lodging last-minute bids challenging the legality of the sale. Mr Justice Zacaroli said the "only obstacle" to the sale going through as planned at this stage was a judicial review of the sale launched by Octopus’s competitors, but he said a different division of the High Court should be considering them. Bulb has been operated by the Department for Business, Energy and Industrial Strategy at an expected cost of £6.5bn while the government sought a buyer.

British Gas is launching an energy reduction plan for this winter which involves paying customers for every unit of electricity they save compared to their normal usage. The ‘Peak Save’ plan will run between December and March and could save customers £100 this winter, the firm says.  

Home REIT yesterday published a full response to a scathing short-selling report from Viceroy Research which saw its shares slide 20% last week. The FTSE 250 company addressed five allegations raised by Viceroy, saying it was "completely confident" in the integrity of the business it was operating, its financial soundness, and the beneficial impact it was having in reducing homelessness in the UK. To rebuff the allegation that tenants "do not appear to be paying rent" which would impact investment property valuations, Home REIT said its rent was ultimately supported by central government funding and the statutory duties of local authorities to house homeless people. There were no overdue arrears at 31st August, it said, supporting independent portfolio valuations carried out by Knight Frank. Further detailed responses tackled allegations regarding the company's financials; the quality of its tenants and their legal qualifications to receive exempt housing benefit; the possibility for fraudulent activity within its external management fee structure; and the value of its property portfolio. The board said the statements made by Viceroy had "misunderstood" the process by which the company acquired its assets, "misinterpreted" figures derived from underlying special purpose vehicles, and relied on "misleading" HM Land Registry data. "This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value," said Home REIT chair Lynne Fennah. "It is with deep frustration that the board is having to spend time and resources responding to these baseless and misleading allegations." For full details, see https://otp.tools.investis.com/clients/uk/home_reit_plc1/rns/regulatory-story.aspx?cid=2604&newsid=1648105

Interpath Advisory, the administrator to collapsed fashion retailer Joules is reportedly on the brink of a rescue deal with the South African owner of Phase Eight. According to Sky News, The Foschini Group (TFG) is close to securing an agreement to buy the majority of Joules' stores and assets. However, around a quarter of Joules' 132 shops would still be closed, with the loss of "several hundred" jobs, in such an event, Sky said. TFG, which also owns Hobbs and Whistles, had been in discussions with Joules for several weeks about investing in the business prior to it calling in administrators this month. Joules had also been in talks with Next about a strategic investment earlier in the year, but the two sides were unable to agree the terms of a deal.

Marks & Spencer has acquired the intellectual property of fashion marketplace Thread, which recently went into administration, as part of an effort to drive revenue growth from personalised services. According to the Times, the deal will be a "pre-pack administration", meaning a buyer for the business will be in place prior to the firm declaring insolvency. The acquisition is said to include source codes and algorithms developed by Thread, which will be integrated into M&S' website so it can suggest new clothes for users based on style, size, and budget. M&S will also hire 30 of Thread's former data scientists, software engineers and creative teams in order to head up the integration, including Kieran O'Neill and Ben Phillips, who founded Thread in 2012.

Swedish fashion retailer Hennes & Mauritz (H&M) said yesterday it will axe 1,500 jobs as part of a wider cost-cutting programme first announced in September, which is expected to generate annual savings of Swedish krona 2bn (£158m) from the second half of 2023. The firm currently employs around 155,000 people worldwide and also owns Cos&OtherStories and Monki, among other brands.

HSBC is to close a further 114 UK branches – over a quarter of its surviving sites - saying that because of a huge increase in online banking, use of its branch network has fallen by 65% in the past five years, meaning some branches now serve fewer than 250 customers a week. The bank will be left with 327 branches following the closures in April 2023.

The Financial Conduct Authority (FCA) has fined a UK subsidiary of Swiss private bank Julius Baer £18m for “failing to conduct its business with integrity”. Julius Baer International (JBI) said in a statement that it has paid the sum, and apologised for the events leading up to the penalty, which involved a corrupt relationship between a bank employee and the bankrupt Russian oil firm Yukos Group. Although concerns over potential fraud were raised internally in 2012, JBI did not inform the FCA until 2014, the regulator said. "There were obvious signs that the relationships here were corrupt, which senior individuals saw and ignored. These weaknesses create the circumstances in which financial crime of the most serious kind can flourish," Mark Steward, FCA executive director of Enforcement and Market Oversight, said. The FCA has also banned three former employees over finder's arrangements affecting one of its clients, however they are appealing the decision.

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