Published: 14 February 2023
By Suzanne Evans, Director, Political Insight
The Office for National Statistics (ONS) has published its latest labour market data. The headline indicators show that between October and December last year employment was 75.6%; unemployment was 3.7%; and economic inactivity was 21.4%. The ONS also said the number of employees on payroll continued to grow in January 2022 and is now 1.03m above its pre-covid level. However, actual weekly hours worked dropped to 1.036 billion in October to December 2022, down 2.9m on the previous 3 months. This is 16.6m below pre-covid levels. After taking inflation into account, average pay including bonuses fell by 3.1% in the year to October to December 2022, or by 2.5% excluding bonuses. There were 1.134m job vacancies on average across November 2022 to January 2023, 76,000 fewer than in the previous quarter, with employers continuing to cite economic pressures. Finally, the ONS flash estimate of productivity for October to December 2022 suggests output per hour was 0.1% lower than a year previously, but up 1.9% on pre-covid levels.
The Treasury is today setting out draft legislation and launching a public consultation into regulating "buy now pay later" (BNPL) credit, having expressed concerns that the sector could lead customers to rack up unacceptable levels of debt without the affordability checks now proposed. BNPL companies, which typically offer on-the-spot interest-free short-term loans on retail sales, are largely unregulated at present. However, in February 2022, The Financial Conduct Authority (FCA) told BNPL operators Clearpay, Klarna, Laybuy and Openpay to change their contracts after identifying potential harm to customers, using consumer rights laws pending the new legislation. Now, the proposal is to give the FCA powers to authorise operators and their activities; withdraw firms’ authorisation to operate in the UK if necessary; and give consumers a new right to take complaints to the Financial Ombudsman Service. Andrew Griffith, Economic Secretary to The Treasury said in a statement: "People should be able to access affordable credit, but with clear protections in place". Once the FCA has been given its new powers, it will consult on detailed rules for the sector, such as mandatory affordability checks, licensing of operators, and fair marketing. The BNPL sector nearly quadrupled in 2020 to £2.7bn.
Environment Secretary Therese Coffey is reportedly backing away from plans introduced by her predecessor Ranil Jayawardena to levy water companies with fines of up to £250m for spilling sewage into rivers and seas. She wants to look at a “range of options”, sources told The Times, while insisting the £250m proposal remained on the table. Coffey’s Department for the Environment, Food and Rural Affairs (Defra) said water companies “must be held to account” for poor performance and record fines totalling £101 million were handed out in 2021. The newspaper quoted her allies as saying that she wants to “make sure that fines are proportionate and easy to enforce” and she will “look at the evidence with a fresh pair of eyes and do what is most effective”.
The British Chambers of Commerce (BCC) has told the Government it should make childcare more affordable to help ease the country’s labour shortages, suggesting Chancellor Jeremy Hunt should set out plans to help “cash strapped” parents pay for childcare in the forthcoming Spring Budget. The small business trade body also called for new funding to help businesses become greener; lower taxes for start-ups; and greater momentum on the UK’s post-Brexit Solvency II reforms.
Jonathan Haskel, a member of the Bank of England's monetary policy committee, has said Brexit is to blame for productivity slowdown in the UK. Speaking to website newsletter The Overshoot, Heskel claimed leaving the EU has dealt the economy a "productivity penalty" of £29bn, or £1,000 per household. A wave of investment "stopped in its tracks" in 2016 following the vote to leave, he claimed. The Treasury said it did not recognise Haskel's figures, and the BoE declined to comment.
Some 16% of people worked from home exclusively and 28% reported both working from home and travelling to work between September and January, according to the Office for National Statistics (ONS). The data also showed that workers in London are more likely to work flexibly than anywhere else in the country. Four in 10 residents in the capital have a hybrid working pattern, both working from home and travelling into the office. The east of England saw the second highest levels of hybrid working at 30%. Before covid lockdowns, only around one in eight working adults reported working from home.
The number of mortgage deals available has surpassed 4,000 for the first time in six months according to financial information website Moneyfacts.co.uk, which counts the number of mortgage products at the start of each month. 4,341 deals were available on 1st February, it said, compared with 3,643 products at the start of January. There were only 2,258 deals available by 1st October 2022, as so many mortgage deals vanished from the market amid market turmoil in the days following former Prime Minister Liz Truss and Chancellor Kwasi Kwarteng’s so-called ‘mini-budget.’
Britain’s top banks are set to unveil record profits in the next two weeks after sharp interest rate hikes boosted the lenders’ coffers last year. The big five FTSE 100 banks – Barclays, HSBC, Lloyds, NatWest and Standard Chartered – could post cumulative pre-tax profits of £37.4bn as they reveal their earnings for 2022, analysts at AJ Bell said. “If that forecast is accurate… then the quintet would put up a performance four per cent higher than in 2021 and exceed the pre-financial crisis high of £35.7bn generated in 2007,” Russ Mould, investment director at AJ Bell, told City A.M.
NatWest bank has agreed to buy 85% of workplace savings and pensions fintech business Cushon for £144m, to enable it to expand into the workplace savings space. The remaining 15% of Cushon will be retained by the company's management.
Liberty Global has purchased a 4.9% stake in rival Vodafone, financed through roughly £225m of equity funding, but has ruled out a possible offer for the telecoms provider, saying it made the purchase because it believes Vodafone shares are undervalued. French billionaire Xavier Niel picked up a 2.5% stake in Vodafone in September, and United Arab Emirates-based e& has recently accumulated a 13% stake in the operator.
FTSE 250 gambling software development company Playtech has made a CAD12.25m (£7.58m) strategic investment in NorthStar Gaming, an Ontario-based online casino and sportsbook operator. Subject to completion of the deal, Playtech will own around 16% of the Toronto Stock Exchange-listed entity, and will also hold warrants giving it the right to further increase its stake beyond 20%. Playtech has also agreed to extend its commercial arrangements with NorthStar.
Shares in British cinema chain Cineworld ended the day nearly 18% up yesterday after a Sky News reports suggested that rival chain Vue International has lined up financial backing from funds managed by Barings and Farallon Capital Management to launch a takeover bid. London-listed Cineworld filed for Chapter 11 bankruptcy protection in the US last year and is now running a formal auction of its assets. Cineworld shares are still some 90% down off their 12-month high.
Fulcrum Metals has gained admission to the AIM market on the London Stock Exchange, following a successful £3m fundraiser. Dealings in its shares began at 8am today under the ticker FMET, with a placing price of 17.5p per share. The multi-commodity minerals exploration company now has an estimated market capitalisation of £8.7m.
Bloomberg yesterday cited sources familiar with the matter as saying that a consortium of Qatari investors is preparing to submit an initial bid for English Premier League football club Manchester United by the end of the week.
Princess Yachts, Britain's biggest luxury yacht builder, is reportedly being sold to new private equity backers 15 years after it last changed hands. According to Sky News, the Plymouth-based company – owned currently by goods-focused private equity firm L Catterton - is being sold to KPS Capital Partners, a US-based investor which specialises in owning manufacturing businesses. Sources told Sky said a deal could be struck as soon as this week. The yacht-builder was founded in 1965, and distributes through a 50-strong global network. It is said to have a robust order book and roughly £300m in annual revenue.
The biggest tenant of property investor Home REIT is looking to offload its leases to other housing providers after warning it can no longer pay rent to the firm, City A.M. has learned. Lotus Sanctuary – which Home REIT says makes up 12.2% of its rental income – told staff last week that the firm was struggling to secure so-called exempt housing status on many of its properties, a prerequisite for guaranteeing housing benefit payments, which was choking off its cash flow and meant it has so far accumulated “substantial debt” of £2.7m. The news is a further blow to Home REIT, which in the past few months has seen its top tenants withhold rental payments. In January, City A.M. revealed that the Big Help group and its sister charities, which cumulatively make up nearly a fifth of its rent, were withholding rent in protest at the state of the housing it provided. Another charity, Noble Tree Foundation, has also withheld rent from the firm in protest at a lack of promised refurbishments and rental support. Some 35% of Home REIT’s total rental income is now in jeopardy, the newspaper says.
Around 1,800 London bus drivers employed by Abellio have accepted an 18% pay increase in a long-running dispute that involved more than 20 days of strike action, their trade union Unite said yesterday. Under the deal, drivers with over two years' service will be paid £18 an hour, equating to a pay increase of 18% on the basic rate, Unite said.
Amazon workers at a warehouse in Coventry have announced a series of strikes on 28th February, 2nd March, and from 13-17th March in long-running dispute over pay. The GMB union said more than 350 staff will walk out again, having already become the first Amazon workers in the UK to strike as part of their campaign for a pay rate of £15 an hour. Union senior organiser Amanda Gearing said the "unprecedented" strikes showed the anger among the Coventry workers. "They work for one of the richest companies in the world, yet they have to work round the clock to keep themselves afloat. It's sickening that Amazon workers in Coventry will earn just 8p above the national minimum wage in April 2023." Jeff Bezos, Amazon’s CEO and founder, is worth $121bn, according to the latest Bloomberg billionaires index, making him the third richest man in the world.
Courier firm DX Group has confirmed a rival company has launched a legal case accusing it of corporate espionage, saying it received a claim from Tuffnell Parcels Express "in relation to confidential competitor information being obtained by DX in the past.". The statement followed a Sunday Times report which said some DX staff, who formerly worked at Tuffnells, were offered bribes to obtain corporate information such as daily customer service reports. DX Group said it "intends to defend its position robustly".
European countries have forked out over £700bn (to shield businesses and households from soaring gas prices since the start of the energy crisis, according to the latest research from Bruegel. The think tank has calculated that since September 2021, the EU has now earmarked or spent €681bn (£601bn) in energy crisis spending, while the UK has allocated €103bn (£91bn) and Norway just over €8bn (£7bn). Germany was by far the biggest spender, splashing out nearly €270bn (£238bn) since September 2021.
The former boss of Wirecard appeared in a Munich court yesterday to deny all wrongdoing over the collapse of the payments company and accuse other managers of scheming behind his back. Markus Braun expressed his "deepest regret" over Wirecard's demise but said he had no knowledge of any forgery or embezzlement and believed he was running a healthy business. He described the discovery of a €1.9bn (£1.68bn) hole in Wirecard's balance sheet as a "day of pain" for shareholders and employees. Austrian-born Braun and two other ex-Wirecard managers, Oliver Bellenhaus and Stephan von Erffa, are on trial on charges including market manipulation and fraud. They face up to 15 years each in prison if found guilty as charged of being in a gang that invented vast sums of phantom revenues through bogus transactions with partner companies to mislead creditors and investors. Braun has been in custody since the 2020 collapse of Wirecard, which shook Germany's business establishment, putting politicians who backed it and regulators who took years to investigate allegations against the firm under intense scrutiny, Reuters says. Former chief operating officer Jan Marsalek remains an international fugitive on Europe's most wanted list, his whereabouts are unknown. The hearing is Germany's biggest post-war fraud trial.
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