Published: 09 February 2023
By Suzanne Evans, Director, Political Insight
Trade Minister Kemi Badenoch is in Mexico today to seek a bilateral trade deal as well. She is also hoping to showcase the benefits to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) of British membership. Mexico is already a member. "I'm here to push progress on two significant post-Brexit wins that will not only benefit British businesses, but also show what the UK has to offer CPTPP countries," she said in a statement.
The cost of Covid-era loan losses to the taxpayer could total £11bn, according to figures released by the British Business Bank yesterday. Of the £77bn issued across three different loan schemes, £4.4bn has been paid out to cover defaults, arrears and fraud resulting from the loans while a further £1.8bn has been claimed, without yet being settled. The former Department for Business, Energy and Industrial Strategy has previously told the Treasury Committee that losses could total £17bn. Bounce-back loans made up the majority of the loans, with £46.6bn spent on paying out zero interest loans of up to £50,000 to small and medium enterprises on a six-year basis.
“Systematic problems” at HMRC are “acting as a drag on the UK’s economic growth,” according to Institute of Chartered Accountants in England and Wales CEO Michael Izza, who has highlighted “unacceptable” delays caused by backlogs which “need to be addressed promptly”. The trade body chief is now calling on the Government to set up an “cross-sector” emergency taskforce to tackle problems at the “overlooked and overstretched” tax authority, noting that taxpayers and accountants have been forced to wait for up to a year for responses on matters such as registering a new business for VAT. The delays are threatening the country’s growth, Izza said. HMRC has cut its customer service workforce by 6,000 people over the past five years; staffing levels now sit at 19,500, down from 25,500.
Brits are turning to buy-now pay-later (BNPL) products to fund online spending amid a cost of living squeeze that is eroding their disposable income rapidly, exclusive research shared with City A.M. reveals. Nearly £1 in every £8 spent online last month was sourced from BNPL providers, according to research by Adobe Analytics, up from just over 10% in the same month last year, signalling shoppers are responding to their spending power being eaten up by inflation by using firms like Klarna and Zilch, the newspaper says.
The latest Royal Institution of Chartered Surveyors (RICS) house price balance survey shows widespread price falls in the British housing market last month, as the gap between the percentage of surveyors seeing rises and falls in house prices fell to -47, the lowest since April 2009, from -42 in December. The RICS measure of interest from buyers also fell to -47, its lowest since October last year. Meanwhile, homebuilders Bellway and Redrow have flagged market challenges: Bellway said it would build fewer homes this fiscal year than last, as the company's half-year bookings rate fell 31.7 per cent. Redrow, meanwhile, has posted a 5% decline in profit for the six months to 1st January 2023, although the firm also said early indications for the rest of the year were better than expected.
Firefighters have postponed strike action to vote on an improved pay offer, the Fire Brigades Union said this morning. The new pay offer is for a 7% rise, backdated to July last year, and for another 5% increase from 1st July.
Drax Group has insisted the UK's electricity supply will not be affected by a nine-day strike by workers who are members of the Unite union. The strike days are set to take place on 20th and 27th February and then continue through March and April. Workers have rejected an 8% pay offer, arguing that with inflation at record highs, the offer represents a real terms pay cut. The FTSE 250-listed Drax can generate around 7% of the UK's electricity when fully operational. Unite warned on Wednesday that industrial action would "close Drax down", leading to possible power cuts, buta Drax spokesperson told Reuters: "In the event of industrial action, Drax has robust plans in place to ensure the power station continues to safely generate renewable electricity for millions of homes and businesses”.
EV campaign group FairCharge and the RAC are calling for the electricity wholesale price to be decoupled from gas to reduce the cost of charging electrical vehicles (EVs). Currently, energy bills are being pushed to record highs not by the cost of electricity itself but because the price is coupled with the global wholesale cost of gas, which has soared, Yahoo Finance explains, and this in turn has dented enthusiasm for switching to electric cars because of the much higher charging costs. However, FairCharge and the RAC argue that if gas and electricity prices were to be decoupled the growing share of electricity generated from cheaper renewable sources would over time determine the price more often, bringing down energy costs for businesses, consumers and EV drivers as well as encouraging more people to switch to EVs in the run-up to 2030 when the sale of new petrol and diesel cars is set to come to an end.
An investigation by The Competition and Markets Authority (CMA) has concluded that the £60billion takeover of Call of Duty maker Activision Blizzard by Microsoft is in doubt because it “could harm gamers” by resulting in higher prices, less choice or less innovation in the video game industry. However, Activision Blizzard CEO Bobby Kotick said blocking the deal would see a ‘fragile’ UK Government miss a post-Brexit chance to create up to 5,000 jobs. ‘The CMA is not really using independent thought, or thinking about how this would positively impact the UK,’ he told the Financial Times. Microsoft deputy general counsel Rima Alaily, meanwhile, promised it would guarantee Call Of Duty access to rivals for a decade. The CMA said it would consider responses from the companies involved and other interested parties before it issues its final report by April 26. The deal is also being scrutinised in the US and European Union.
ClientEarth, an environmental law charity turned activist Shell investor, said yesterday that it had filed a High Court claim alleging Shell's eleven directors have failed to manage the "material and foreseeable" risks posed to the company by climate change, and that they are breaking company law. Shell has rejected the allegations, saying its climate targets were ambitious and on track and that its directors complied with their legal duties and acted in the company's best interests.
Fuller Smith & Turner has told City A.M. it is suing insurance giants Aviva and Liberty Mutual in a dispute over a “in relation to a claim under our business interruption insurance” but has refused to comment further. The pub group’s lawsuit follows a surge in business interruption claims in relation to the forced closure of hospitality businesses under the government’s covid policies. Insurers, reluctant to pay out on business interruption policies, declaring force majeure, later faced a wave of lawsuits after the Supreme Court ruled in favour of policyholders in January 2021. Insurers have since paid out more than £1bn to companies that closed during lockdowns, Financial Conduct Authority figures show.
FTSE 100 miner Anglo American said yesterday it has agreed to buy a 9.9% minority interest in Canada Nickel, which owns the Crawford nickel project in Ontario, for an undisclosed sum. The Crawford project is one of the largest undeveloped, bulk tonnage nickel sulphide resources in the world, it said.
British American Tobacco says it expects to complete the sale of its Russian business to its local partner in 2023, as it exits the country where it controlled almost a quarter of the market before Moscow's invasion of Ukraine. BAT will also transfer its Belarusian business this year.
Disney has announced a sweeping restructuring under recently reinstated CEO Bob Iger, cutting 7,000 jobs as part of an effort to save $5.5 billion in costs and make its streaming business profitable. Ebay, meanwhile, has become the latest online giant to slim down its workforce, announcing plans to sack 500 staff or roughly 4 per cent of its headcount. Tech firms have slashed 100,000 jobs this year so far, the Daily Mail says.
A wrong answer given by Google's artificial intelligence bot rival to ChatGPT caused £100billion to be wiped from its value yesterday. Shares in parent company Alphabet fell as much as 9% when its new chatbot Bard showed inaccurate information on a promotional advert on Twitter. The bot was asked about what to tell a nine-year-old about the James Webb Space Telescope and its discoveries. Bard said Webb was the first to take pictures of a planet outside of earth's solar system. However, astronomers were quick to point out that event actually occurred in 2004, and was achieved by the European Very Large Telescope.
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