Published: 13 January 2023
By Suzanne Evans, Director, Political Insight
The economy grew in November, with GDP increasing 0.1%, official figures show. A Reuters poll of economists had predicted a 0.2% fall in GDP. The Office for National Statistics (ONS) says services were up 0.2%; manufacturing was down 0.5%; and construction stayed flat. Darren Morgan, director of economic statistics at the ONS, said that “increases in telecommunications and computer programming” helped “push the economy forward,” and that “pubs and bars also did well as people went out to watch World Cup games”. However, “this was partially offset by further falls in some manufacturing industries, including the often-erratic pharmaceutical industry, as well as falls in transport and postal, partially due to the impact of strikes,” he said. He also told the BBC Radio 4 Today programme: "Interestingly, employment agencies did reasonably well and perhaps that reflects those businesses seeking support to fill the vacancies they have which we know from our labour market figures has been an issue in certain sectors." In the three months to November, the economy still shrank by 0.3%, mainly, the ONS says, because of businesses shuttering on the extra Bank Holiday to mark Queen Elizabeth II's funeral in September. However today’s statistics have dulled the prospect of recession. Morgan noted that if GDP falls by 0.6% or more in December, that would mean the economy contracted in the fourth quarter of 2022, the second quarterly contraction in a row, a technical recession.
Responding to the latest economic data, Chancellor Jeremy Hunt said: "We have a clear plan to halve inflation this year - an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world. To support families through this tough patch, we will provide an average of £3,500 support for every household over this year and next - but the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again”.
The FTSE 100 pushed above 7,800 for the first time since May 2018 yesterday, closing on a record high of 7,806. At the time of writing this morning, it stands at 7,833.2.
The Bank of England (BoE) is not at the point in its interest rate-rising cycle where it needs to worry about the risk of over-tightening, Monetary Policy Committee member Catherine Mann said yesterday in a Q&A session following a lecture at Alliance Manchester Business School. "You have a lot of different ways of looking at it. My reading is we're not there yet," she said. The BoE raised its main interest rate to 3.5% in December from 3%; Mann voted for a bigger increase to 3.75%.
Energy bills are forecast to fall below £2,500 as gas prices continue to drop because of warmer weather this winter than expected. Investec analysis said that the energy price cap is now forecast to fall to £2,478 in July, over £150 below its most recent estimate on 4th January. Investec also predicted that energy bills will fall to £3,317 in April, then drop to £2,478 in July, before falling again to £2,546 in October.
Nicholas Lyons, the new Lord Mayor of the City of London, will say in a speech later today that London is being wrongly portrayed as a "villain" that is "sucking the life and wealth out of regions like an evil fairy godmother," and damaging the economic progress of the rest of the UK, when in fact it is one of the most unequal places in Britain and needs "levelling up" as much as anywhere else. London warrants investment and support to sustain its "huge contribution" to the UK's prosperity, he will argue, while expressing his concerns about policies he perceives to be punishing the capital. The Government has responded to advance sight of his speech saying the capital "has received more than £250m through various levelling-up fund to benefit community projects across the region".
The University and College Union (UCU) has announced a new wave of 18 strike days across 150 British universities in February and March, which could involve 70,000 academics and university support staff. The UCU said a pay offer worth between 4-5% made during talks with employers this week was not enough. However the University employers, the Universities and Colleges Employers Association (UCEA), which represents university employers, says the offer made is worth up to 7%, with a minimum of 5% for anyone earning up to £51,000.
Teacher strikes are to go ahead in Scotland on Monday after a meeting between unions, councils and the Scottish Government failed to result in an improved pay deal offer. Teaching unions have rejected a 5% pay increase, arguing for 10%. The latest offer includes rises of up to 6.85% for the lowest-paid staff.
Mortgage costs for first-time home-buyers in Britain have risen to their highest since 2008 because of raised interest rates over the past year, the Nationwide Building Society says. The average monthly mortgage payment for a new first-time buyer in the final quarter of 2022 was equivalent to 39% of a single full-time salary after tax, up from 34% the quarter before, it said.
Consumer group Which? has found that so-called “Smart” appliances could stop working properly, lose features and functionality, or pose a security risk after just two years because manufacturers are failing to provide vital tech updates. Which? highlighted how products such as expensive dishwashers, TVs, and washing machines, which might normally be expected to last more than a decade, “hardly even came close to matching their expected lifespan” and are therefore fast “being abandoned" by brands, leaving consumers without access to repairs or software updates. The same is true for popular smart TVs, smartphones, inkjet printers, smartwatches and fitness trackers, Which? said. Rocio Concha, Which? director of policy and advocacy, said: "It's unfair for manufacturers to sell expensive products that should last for many years and then abandon them. This means the product could lose the features that justified the hefty price tag, and potentially create a security risk or add to the electrical waste mountain if it has to be replaced”. A smart dishwasher, for example, costs around £300 more than a convential one, Which? said.
Liberty Steel’s plans to mothball three factories in West Bromwich, Newport and Treder, and cut production at its Rotherham plant has put 440 jobs at risk. The company blames high energy costs and foreign imports, which it claims are making its operations "unviable". It has been forced to "refocus" its business to adapt to "challenging market realities," it said. Alun Davies, national officer at steelmakers' union Community, said the announcement of possible job losses was a “devastating body blow” to staff who "couldn't have done more" to support the company through its recent struggles”. Labour MP Stephen Kinnock, who chairs the All Party Parliamentary Group on Steel, told the BBC: "We all simply must wake up to the importance of the steel industry and its workers. The world will use more steel in the decades ahead than we do today, and in the age of Putin's invasion and China's aggression we desperately need steelmaking capacity here in Britain." Liberty is part of billionaire metals tycoon's Sanjeev Gupta's GFG Alliance. The company said it hopes to restart production at the idled plants "when the market and operating conditions allow".
International food giant Nestle is cutting 94 jobs at its Dolce Gusto factory in Hatton, due to a "significant drop in demand" for Nescafe Dolce Gusto products.
Sky News reports that cards and stationery retailer Paperchase is up for sale again, just four months after it was taken over in August by retail investor Steve Curtis. Sky claims a new auction is being organised by accountancy firm PricewaterhouseCoopers (PwC), and that an insolvency process may be required to expedite a transaction. Permira Credit, the previous owner, had invested in Paperchase's digital offering as well as new shop openings and executive recruitment since its brush with administration. Paperchase currently trades from about 100 stores.
Gambling firm 888 Holdings’ revenue fell 15% during the year as controls in the UK to protect gamblers took effect, although retail sales were up 54%. 888 also announced its CFO Yariv Dafna was stepping down, to leave at the end of March, and reported a 3% fall in group revenues for 2022.
Broadcaster ITV says its new streaming service ITVX delivered a 55% increase in its streaming hours in its first month, boosted by the World Cup, and that advertisers were responding well to the platform. "Excluding the football, our underlying streaming viewing during the month was up 29% year on year and we continue to see strong year on year growth in January," ITV's CEO Carolyn McCall said in a statement issued this morning.
Aldi is stopping the wine and spirits delivery service later this month and will end ‘Specialbuys’ deliveries by the autumn. Aldi is cutting its online operations to focus on opening new stores, according to The Sunnewspaper. Aldi’s click & collect service for groceries, which it launched in 2020 and is available from over 200 stores, will remain in place.
The Gym Group CEO Richard Darwin has stepped down after more than seven years at the company, which operates 229 low-cost gyms across the UK. Founder and chair John Treharne is to take over as executive chair until a permanent replacement is found. Meanwhile, the group posted a 14.3% increase in total year-end membership, to 821,000. Revenues for the year to 31st December 2022 jumped 63.1% to £172.9m, or by 12.9% compared to 2019. Average revenue per member per month in the second half of the year was £18.30, up 4.8% on the first half. It opened 28 new sites in 2022, but warned that the rate of expansion was set to slow on account of the “current difficult macroeconomic environment and consumer behaviour,” Treharne said.
Subway is in the early stages of exploring a sale of its business, a source told Reuters on Wednesday. The Wall Street Journal first reported that a possible sale could value the sandwich chain at more than $10 billion. Subway is one of the world's largest quick-service restaurant brands, and has more than 37,000 restaurants in over 100 countries. Known for its foot-long sandwiches, the company has been owned by its two founding families for more than five decades. The company declined to comment on the reports.
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