Published: 31 January 2023
By Suzanne Evans, Director, Political Insight
The IMF is predicting Britain will be the sole G7 nation to see its economy contract in 2023, predicting output to shrink by 0.6%. Previously, the IMF said it thought the UK economy would grow by 0.3%, with a 4.1% gain over 2022. However, it now cites tighter fiscal policy as a key factor in the sharp downgrade, as well as rising interest rates and soaring energy bills. However, the IMF also said that after the Chancellor’s Autumn Statement it thinks the UK economy is now "on the right track". Meanwhile, the IMF is predicting global growth to fall from 3.4% in 2022 to 2.9% in 2023, and then rise to 3.1% in 2024.
Prime Minister Rishi Sunak said yesterday that taxes should not go up any further. "I don't want to put any of your taxes up," he said in response to a question from a nurse about pay during an event. "Figuring out how to pay for these things is part of my job and ... where we are with taxes at the moment, we can't put them up anymore, right, and we need to be getting them down. So that's what constrains me on one end." The Office for Budget Responsibility has forecast the tax burden is on course to reach 37.1% of GDP in five years' time, its highest sustained level since World War Two, up from 33.1% in the 2019-20 tax year.
The first reading of the Strikes (Minimum Service Levels) Bill was backed by a majority of MPs in the House of Commons yesterday, passing by 315 votes to 246. The Bill aims to enforce minimum service levels for the NHS, education, fire and rescue, border security, and nuclear decommissioning sectors, and provides for the sacking of employees working in those sectors if they refuse to work during industrial action. Labour’s Deputy leader Angela Rayner said the bill would give Grant Shapps, Secretary of State for Business, Energy and Industrial Strategy, the power to threaten key workers with the sack "on his whim". "Riddled with holes, this bill gives sweeping powers to a power-hungry secretary of state," she told the Commons. Conservative MP Jacob Rees-Mogg also raised concerns, saying the Bill was "badly written" and vague. In particular, he criticised the so-called "Henry VIII clause" which would allow ministers to amend the legislation after it has become law without full parliamentary scrutiny. "On what basis can any government claim to have the power to amend legislation that has not yet been passed?” he asked. However, the former business minister said he supported the aims of the legislation and would not vote against it but hoped it would be amended in the House of Lords. Unions have also criticised the bill as an attack on the right to strike and have threatened legal action if it passes. Business Minister Kevin Hollinrake though, said the measures were "proportionate and sensible" and that there was a need “to maintain a reasonable balance between the ability to strike and the ability to keep the lives and livelihoods of the British public safe".
Strikes by more than 500,000 workers across seven trade unions are taking place tomorrow. The industrial action involves teachers, train and bus drivers, civil servants and university staff all walking out in separate disputes over pay, jobs and conditions. Wednesday 1st February is set to be the biggest day of strikes since 2011 when a National Day of Action was held by public sector unions over pensions. Healthcare staff, including nurses and ambulance workers are also taking coordinated action on 6th February for the first time, in what is set to be the biggest day of action across the NHS.
Firefighters across the UK have now voted for strike action in their row over pay, however The Fire Brigades Union (FBU) says it will not announce any strike dates until after a meeting with employers scheduled for 8th February. The union says that since 2010, its members have experienced a 12% drop in real terms earnings, and that over the same period, about one in five firefighter jobs have been cut. Of the 73% of union members who voted, 88% of staff voted to take industrial action. In a separate ballot, control room staff in the north-west of England also agreed to the proposed walkouts, with the earliest likely date for a strike being 23rd February, the BBC reports. If the strike goes ahead, it will be the first nationwide walkout over pay in 20 years.
More details have emerged of the deal struck by Michael Gove, The Secretary of State for Levelling Up, Housing and Communities, to help resolve the national cladding crisis exposed by the 2017 Grenfell Towerdisaster, as reported by Sky News on Friday. It seems the government wants developers to sign a contract committing them to pay to fix buildings which have been classed as unsafe – some £2bn in total - and that it plans to bring in new legislation by the spring to give ministers the power to stop builders which don't sign the contract from working in the housing market. “There will be nowhere to hide for those who fail to step up to their responsibilities - I will not hesitate to act and they will face significant consequences," Gove said in a statement yesterday. It added that they will not be able to develop properties and will not receive building control approval.
Michael Gove has also announced that the Government is planning to scrap leasehold laws that prevent some flat owners from buying the freehold of their properties, and make it easier for leaseholders of flats to bring their buildings into a common ownership model, so they can avoid paying costly ground rents and management fees on their properties.
House price growth slowed to 6.5% for the year in the final three months of 2022, according to Zoopla, as demand for properties plummeted 50% from October to the end of December. It marked a slowdown compared to the 8.3% growth recorded in 2021, according to the property portal, as higher mortgage rates impacted buyers' decisions. Buyer demand in January this year is down 23% compared to the five-year average, it added.
Investors enjoyed a bumper year of dividends in 2022 as payouts jumped by almost a tenth, the Daily Mail reports. Dividends among London-listed firms totalled £94.3billion for the year, 8% higher than in 2021, as Covid restrictions eased, and companies reinstated dividend payments. Much of the increase was driven by a resurgence of payouts from big banks, which have been boosted by rising interest rates, and there was also a surge in payments from oil firms, which have made huge profits off the back of rising energy prices, the newspaper said yesterday.
Minimum unit pricing (MUP) of alcohol has had little economic impact on Scotland's drinks industry, a report commissioned by Public Health Scotland (PHS) has found. A minimum charge of 50p on each unit of alcohol has been in force in the country since 2018. The research, carried out by Frontier Economics, did find the policy lowered the volume sold of certain types of alcohol, but concluded the economic impact on businesses was largely offset by the higher value of sales – a previous report found that in supermarkets the average price of a unit of alcohol increased by 18%, with ciders and own brand spirits seeing the biggest increases. The report said there were no reports of store closures or job losses directly related to MUP. Another previous study for PHS found little evidence that people with the worst alcohol dependence had changed their behaviour.
Research by consumer behaviour analyst Kantar shows people are cutting back on video streaming services as the cost of living bites. Kantar said the number of paid-for video streaming subscriptions in the UK fell by two million last year, from 30.5 million to 28.5 million. Although demand had picked up again at Christmas, people were "quickly looking to cut back again,” Kantar said, with more than one in 10 consumers planning to cancel one or more subscriptions in the first three months of this year.
Sky News said yesterday that it understands Paperchase is close to collapsing into administration again, as hopes of a solvent rescue deal have faded. The high street stationery retailer was put up for sale just four months after its most recent change of ownership, having been taken over in August by Steve Curtis, an experienced retail investor who has been involved with Tie Rack and Jigsaw. Paperchase also went into administration in January 2021. It currently trades from about 100 stores, and it is unclear how many stores and jobs might be put at risk by another administration process, Sky said. A Paperchase spokesman declined to comment.
Lidl is to invest a further £2bn in British food suppliers, the German discounter announced yesterday. In 2019, Lidl said it planned to spend £15bn on the UK food industry between 2020 and 2025, but that figure is now expected to reach £17bn, reflecting its rapid growth, with £4bn set to be invested in the country's food industry this year. Two-thirds of Lidl's core produce is sourced from the UK, it said, while nearly £500m worth of exports from its British suppliers went to other Lidl markets in 2022, including over £50m of British cheese.
Barclays says it will launch at least ten “banking pods” and work with local councils and communities to open 70 local sites across the UK in places such as town halls and libraries to offer “a way of remaining in places where there is no longer enough demand to support a traditional branch". In addition, six electric vehicle (EV) banking vans will be added to the existing fleet of 10, stretching Barclays’ reach to help customers in remote locations. Each Barclays Local site will also offer free digital skills workshops and fraud and scams awareness events for the community.
Share in gambling company 888 ended the day more than 27% down yesterday after it announced that CEO Itai Pazner was quitting immediate effect, and that its VIP accounts in the Middle East were being suspended, following an internal review concluding that 'certain best practices have not been followed' in relation to anti-money laundering and 'know-your-client' processes. Executive chair Lord Mendelsohn will take over as CEO until a permanent replacement is found. CFO Yariv Dafna also announced his departure earlier this month after just two-and-a-half years in the role. Last year, 888 was fined £9.4m by the Gambling Commission for social responsibility and money laundering failings.
Arrival, the UK start-up focusing on development of commercial electric vehicles, is to cut its workforce by half as part of plans to reduce costs focus on building its operations in the United States, where the US Government’s Inflation Reduction Act is offering sweeteners to green energy initiatives. The cuts will leave it with 800 employees globally, it said, without giving details on where the bulk of the job losses would fall. Currently most of its teams are in the UK and in Georgia. In its report on the move, Sky News says the US incentives have placed western governments and the European Union (EU) “under huge pressure to follow suit or lose green investment”. The EU is arguing that the $369bn (£298bn) package of subsidies break World Trade Organisation rules on the grounds that the Act discriminates against imported goods. Arrival says it has appointed financial advisors Teneo to assist in "evaluating strategic alternatives, including opportunities to raise additional capital, optimise its balance sheet, and improve liquidity."
Shell is to combine its oil and gas production division with its liquified natural gas (LNG) business as part of an overhaul by new CEO Wael Sawan. The energy giant also confirmed it will reduce the size of its executive committee to seven from nine members in an effort to 'simplify the organisation further and improve performance'.
Hunter Boot, maker of the famous royal warrant-holding green wellies, is hoping to secure millions of pounds of fresh working capital, while progressing parallel talks about a sale, Sky News has learnt. The broadcaster says Hunter's owners have received several proposals from parties including Gordon Brothers, a specialist in financing often-troubled retailers, to provide around £8m in financing to the business. Sources said Hunter is also still in talks with Wells Fargo, the American banking giant which is its existing principal lender. However, a person close to the company insisted earlier today: "There isn't a scenario where the business runs out of money." The company was saved in 2020 through a £16.5m capital injection, part of which came from Pall Mall Legacy, a fund backed by Goldman Sachs and Three Hills Capital Partners, an existing shareholder. A spokesman for Hunter declined to comment this morning.
Australia's Flight Centre Travel Group Ltd is looking to raise A$180m (£102.92m) to buy British travel business Scott Dunn for A$211m (£120.65m). The company said earlier that it had agreed a deal to buy the business, which specialises in tailor-made luxury travel, as it is confident of a sustained rebound in global travel after covid restrictions.
The private equity backer of Matchesfashion, the online upmarket fashion retailer which sells brands including Gucci, Prada and Valentino, is pumping tens of millions of pounds of new funding into the business as it seeks a revival under its new management team, Sky News says. Apax Partners, the London-based buyout firm which acquired Matchesfasion in 2017, has agreed to inject £60m into the firm, split between £40m in equity and £20m in debt, with the latter element expected to be finalised in the short term. Current CEO Nick Beighton, the former ASOS boss, was appointed last summer, the latest in a string of CEOs to be hired by Apax during its five-plus years of ownership.
JD Sports Fashion said yesterday that it was hit by a cyber-attack in which the data of around 10m customers may have been accessed. The incident relates to some online orders between November 2018 and October 2020 and the affected brands are JD, Size?, Millets, Blacks, Scotts and MilletSport. JD said the affected data is "limited", as it does not hold full payment card data, and has no reason to believe that account passwords were accessed.
FTSE 100 FMCG retailer Unilever has appointed Hein Schumacher to replace Alan Jope as CEO from July in a move welcomed by investors, including board member and activist shareholder Nelson Peltz. Schumacher rejoined Unilever in October last year as non-executive director, having previously worked at the firm more than 20 years ago. He is currently CEO of Dutch dairy business FrieslandCampina, and has also worked for retailer Royal Ahold NV and packaged food maker H.J. Heinzin the United States, Europe and Asia.
And finally…. It seems the buyer of an original Mr Blobby costume has had second thoughts about his £62,000 purchase, pulling out of the sale less than an hour after he placed the winning bid om eBay, despite bidding 10 times. Under eBay's terms and conditions, winning an auction is a commitment to buy an item, but the selling platform cannot enforce this by law. Since, other sellers have appeared keen to cash in on Mr Blobby's mini revival, the BBC says, as other costumes have since popped up on eBay for high prices, including one listed for £15,000. At the time of writing, it had no bids.
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