Published: 20 January 2023
By Suzanne Evans, Director, Political Insight
Labour leader Sir Keir Starmer addressed the World Economic Forum annual meeting in Davos yesterday, telling assembled politicians and business leaders that the UK "desperately" needs change. "Last year in 2022, we burned through three prime ministers… they are not the conditions of certainty, of stability, needed for investment into the United Kingdom," he said. Starmer also criticised Prime Minister Rishi Sunak and Chancellor Jeremy Hunt for not showing up to the Davos meeting, and claimed there has been a "massive decline" in foreign investment under the Conservative government, which the Labour party wants to turn around. He was also critical of the Brexit deal secured by former Prime Minister Boris Johnson, saying it was “not a good deal.” Touching too on the collapse of Britishvolt, which had planned a giant factory on a site in Northumberland to build electric car batteries, Starmer blamed the failure on a lack of government backing, saying a strategic five or ten-year plan is needed to save the British car industry. Under a Labour government, there would be no investment in new oil and gas fields in Britain, the opposition leader also said, in stark contrast to current energy policy, which has seen the Conservative government just kick off a new licensing round for oil and gas exploration licenses - under Rishi Sunak’s premiership, Britain has refrained from joining international clubs of countries promising to ban new oil and gas field developments. Meanwhile, Shadow Chancellor Rachel Reeves said at a fringe meeting in Davos that, if elected, Labour would work "to clear up the mess" left behind by Britain's “hard exit” from the EU. Although Labour has ruled out seeking to re-enter the EU's single market, Reeves said it would aim to conclude a veterinary deal with Brussels and improve arrangements for professional and financial services, including by securing mutual recognition of professional qualifications between Britain and the EU.
The European Central Bank will continue raising interest rates and leave them in restrictive territory for as long as it takes to bring down inflation to its 2% target, ECB President Christine Lagarde said at the 2023 World Economic Forum gathering in Davos yesterday.
Asked about the outlook for inflation by Wales's Western Mail newspaper, Bank of England (BoE) Governor Andrew Bailey said: "There is more optimism now that we are sort of going to get through the next year with an easier path there" and noted that markets were now expecting BoE rates to rise no higher than around 4.5%. “I am not endorsing 4.5%, but what you may have noticed in December is that we did not include the comment that we made in November about the market being in our view rather out of line," he said in the interview for the newspaper’s Business Live website. Before its November rate decision, markets expected BoE rates to peak as high as 6%. Inflation hit a 41-year high of 11.1% in October, and dropped to 10.5% in December.
Retail sales volumes fell by 1.0% in December 2022, following a fall of 0.5% in November, the Office for National Statistics (ONS) says. In terms of value, spending was down by a month-on-month 1.2% from November. "Retail sales dropped again in December with feedback suggesting consumers cut back on their Christmas shopping due to affordability concerns," Heather Bovill, the ONS's deputy director for surveys and economic indicators, said. Retail sales are currently 1.7% below their pre-Covid level.
Consumer confidence has fallen for the first time in three months in January according to market research firm GfK, returning near to historic lows. GfK’s measure of confidence – which results from a survey of 2,000 people in early January - declined 3 points to -45, the third lowest reading since records started in 1974. The index usually rises in January. "With inflation continuing to swallow up pay rises, and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good," Joe Staton, GfK's client strategy director, said.
The Times reports this morning that Chancellor Jeremy Hunt wants to extend a 5p cut in the price of petrol and diesel for another year in his spring budget, and that he is facing pressure to freeze fuel duty for another year. If he presses ahead with the measures, they will cost the Treasury £6bn, the Times says.
Leading British entrepreneur Sir James Dyson has accused the Government of having a "stupid" and "short-sighted" approach to the economy and business, saying “growth” had "become a dirty word" during Prime Minister Rishi Sunak's premiership. Writing in the Daily Telegraph, Dyson urged the government to "incentivise private innovation and demonstrate its ambition for growth". He added that the government believed it could "impose tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box", a belief he described “as short-sighted as it is stupid”. “In the global economy, companies will simply choose to transfer jobs and invest elsewhere," he warned.
Hauliers caught at the Channel ports with illegal immigrants hiding in their vehicles will face a fivefold increase in fines from 13th February, when lorry drivers will be fined £10,000 per stowaway, up from the current £2,000 limit. The government said it was targeting "negligence rather than criminality", and wanted drivers to ensure vehicles were adequately secured. Rod McKenzie from the Road Haulage Association said the increased fines were "desperately unfair on the vast majority of lorry drivers, just doing their job". "There may be a tiny minority who are prepared to take backhanders from criminal gangs, and we'd support the government cracking down on them," he said, but adding, after highlighting ways in which migrants could enter lorries without drivers being aware, that: “This is an unjust fine system where you're hitting everyone."
The closely-watched Royal Institution of Chartered Surveyors' (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, registered the most widespread falls in 13 years last month. The index slumped to -42 in December, down from -26 the previous month. Prices fell across all English regions with East Anglia and the South East reporting the sharpest net balance of declines, RICS said.
Train operating companies said yesterday they had made a "best and final" pay offer to the RMT rail union, in an effort to end a long-running dispute that has led to months of disruptive railway strikes. The Rail Delivery Group(RDG), which represents the companies, said the proposal set out a minimum pay increase of 9% over two years, comprised of a 5% increase for 2022 and 4% for 2023. Staff paid below a certain threshold will receive a guaranteed £1750 in the first year, it added. "This is a fair offer that gives RMT members a significant uplift over the next two years - weighted particularly for those on lower incomes who we know are most feeling the squeeze – while allowing the railway to innovate and adapt to new travel patterns," RDG chair Steve Montgomery said in a statement.
West End theatre performers are ready to strike if their demands for a 17% pay increase are not met, trade union Equity says. Other demands made of the Society of London Theatre include a five-day rehearsal week as opposed to the current six days, and an increase in holiday entitlement from 28 days to 34. These demands come after Equity said that two-thirds of its members had considered leaving the industry in the past three years, and 45% had a second job - many because their pay does not cover their living expenses. More than half of West End performers receive the existing union-agreed minimum wage, which is £629.41 a week, the BBC says.
Asda and Morrisons have settled a multi-million pound lawsuit against Mastercard over fees charged to retailers when customers use a debit or credit card to shop, ending the prospect of a five-week trial that was due to begin on 30th January. The two supermarket companies reached an agreement with the global payments processor and withdrew their cases on Tuesday, according to an order published by the Competition Appeal Tribunal. The terms of the settlement are confidential. "We're pleased to have settled and will continue to work with Asda and Morrisons on convenient, safe and secure electronic payments in their stores," a spokesperson for Mastercard said in a statement. In 2020, the Supreme Court ruled the fees charged by Mastercard and its rival Visa were an unlawful restriction of competition.
More than 500 workers have lost their jobs at fruit and juice firm Orchard House Foods, in Corby, Northamptonshire. It has gone into administration because of "challenging trading conditions". Lee Barron, TUC Midlands Regional Secretary, said workers were sacked "with no prior negotiation or warning". More than 480 Gateshead workers also lost their jobs in August, when the firm relocated work to its Corby HQ. Orchard House firm supplied brands such as Marks & Spencer, Morrisons, Pret A Manger, Sainsbury'sand Tesco, the BBC says.
Premier Foods is planning to close its factory in Knighton, Staffordshire, putting some 300 jobs at risk. The maker of Mr Kipling cakes and OXO cubes said the site makes mainly non-branded powdered beverages, so is not aligned to the group's branded growth model strategy and is marginally unprofitable at trading profit.
Yum Brands Inc says a ransomware attack impacted certain information technology systems of the company which led to the closure of nearly 300 restaurants in the UK for the day on Wednesday. Yum, which also owns the Pizza Hut, Taco Bell and KFC chains, did not specify which restaurants were impacted by the attack.
Deliveroo orders in the UK and Ireland surpassed the £1bn mark for the first time in the last three months of 2022, although the increase was driven by price inflation rather than total order numbers, which fell 2% across the group in the same time period. Gross transaction value (GTV), a measure of the size of total orders, climbed 9% to £1.03bn in the UK and Irish market, with customers paying £25.40 on average for an order - 9% more than the average £23.40 paid in the same three months of 2021. The British meal delivery company now expects to become profitable, having broken even in the second half of 2022.
More than 1,200 jobs and hundreds of trainee roles are to be created, and £100 million will be invested, at British shipyards after the British-led Team Resolute consortium was awarded a £1.6 billion contract to build three naval support ships. Team Resolute, comprising Harland & Wolff, BMT and Navantia UK, will deliver three Fleet Solid Support ships for the Royal Fleet Auxiliary (RFA). Around 900 of the jobs will be created, and £77m invested, at Harland & Wolff’s Belfast and Appledore shipyards.
Argos is to close all of its 34 stores in the Republic of Ireland in June. The decision, expected to affect 580 workers, was made after "a period of careful consideration," Argos said, adding that the "investment required to develop and modernise the Irish part of its business was not viable and that the money would be better invested in other parts of its business". The catalogue store said it will propose "an enhanced redundancy package that goes well beyond its statutory obligations".
EG Group is reportedly planning a £1bn sale of part of its US petrol forecourt empire as it looks to reduce its multibillion-pound debt pile. According to Sky News, the company, which also owns Asda, any transactions are likely to be structured as sale-and-leaseback deals, however Sky said a source close to the company insisted that no firm decisions had been taken about any specific transaction. EG has operations in 10 countries, including Australia, and an international property empire said to be worth roughly $10bn.
German lender Commerzbank is suing ‘big four’ accounting firm EY over the €200m (£178.42m) in losses it incurred as a consequence of the collapse of payments company Wirecard. For years, EY was the firm that audited and certified Wirecard's books, even as journalists and investors raised questions about its finances. A Commerzbank spokesperson said the case had been filed in a Frankfurt court in recent weeks. EY responded by saying that "claims against EY for damages do not hold up". The bank's suit is one of a number against EY regarding Wirecard.
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