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ERG to vote against Stormont Brake, and Bank of England expected to hike interest rates again.

   News / 23 Mar 2023

Published: 23 March 2023

By Suzanne Evans, Director, Political Insight

The European Research Group (ERG), the influential group of British Conservatives championing Brexit, yesterday recommended MPs vote against the part of Prime Minister Rishi Sunak's new Windsor Framework Northern Ireland Brexit deal known as the Stormont Brake. Chairman Mark Francois made the announcement to reporters.  

The Government is said to have shelved plans to raise the UK’s state pension age until after the next General Election. The State Pension age is set to rise from 66 to 68 after 2044, but the Financial Times says plans to bring this date forward to 2037-2039, set to be confirmed in May, led Conservative MPs to voice concerns about a possible backlash from middle-aged voters. They urged a delay, saying working voters might resent having to work for longer following Chancellor Jeremy Hunt’s decision to relax tax rules for wealthy pensioners. As Becky O’Connor, director of public affairs at PensionBee told City A.M: “An earlier increase to the State Pension age from 67 to 68 would have gone down like a lead balloon”. The government is now aiming to push any decision to a date after the next general election, which must be carried out no later than January 2025. In France, Emmanuel Macron’s recent push to lift the country’s state pension age from 62 to 64 has led to major backlash that saw nationwide protests and fierce clashes with police. 

US Federal Reserve Chair Jerome Powell announced a 25-basis-point interest rate hike yesterday – the ninth in a row. The Bank of England Monetary Policy Committee will make its decision on interest rates later today.

Average house prices increased by 6.3% in the year to January 2023, down from 9.3% in December 2022, the Office for National Statistics said yesterday. The average UK house price was £290,000 in January 2023, down from £293,000 in December 2022, but still £17,000 higher than the same period a year ago. Average house prices increased over the year to:

 £310,000 in England (6.9%)

 £217,000 in Wales (5.8%)

 £185,000 in Scotland (1.0%)

 £175,000 in Northern Ireland (10.2%)

Private rental prices paid by tenants in the UK also rose by 4.7% in the 12 months to February 2023, up from 4.4% in January 2023, and marking the largest annual percentage change since January 2016. Annual private rent increased by 4.5% in England, 4.2% in Wales and 4.9% in Scotland.

A gauge of British manufacturers' inflation expectations fell to its lowest in two years after output slid again in the three months to March, the Confederation of British Industry's (CBI) says. The CBI's gauge of expected selling prices fell to +25 in March, the lowest since March 2021 and down from +40 in February but still strong in historical terms.

The RMT has called off rail strikes planned for 30th March and 1st April, despite no new or updated pay offers being agreed with The Rail Delivery Group (RDG), which represents train companies. The RMT said the two sides would now hold further talks "with a view to securing a new offer on pay, job security and working conditions" while making it clear the dispute between the train companies and union members had not ended. A RDG spokesperson said: “We are now jointly focused on working constructively towards a settlement to this dispute, which will mean we can do what we have always wanted to do - give our people a pay rise and help secure the long-term future of the railway. A Department for Transport spokesperson said the "positive step" brought both sides closer to ending the dispute.

Amazon raised minimum starting pay by 50p an hour yesterday, taking hourly pay to between £11 and £12. Unions were furious, and called the move an “insult”. A week ago, hundreds of workers at an Amazon warehouse in Coventry went on strike over pay, demanding £15 an hour to cope with the cost-of-living crisis. Amanda Gearing, senior organiser of GMB, the union which represents more than 500 Amazon workers, said: "In response we will be consulting over the next few days and announcing a new wave of action."

Two new freeports are to be created in Wales. Bids from Celtic Freeport, at Milford Haven and Port Talbot, and Anglesey Freeport have been given the green light by the UK and Welsh governments. A third bid, based around Newport and Cardiff Airport, failed. The proposed freeports anticipate bringing 20,000 jobs and investment worth £5bn to the country. Each was chosen to exploit renewable energy opportunities and are expected to contribute to UK net-zero ambitions. Tata Steel, which has a site in Port Talbot, said it was delighted the Celtic Freeport bid was successful, and Neath Port Talbot council leader Steve Hunt said it was "an absolute game changer". The Anglesey Freeport meanwhile, will be based around Holyhead, Rhosgoch, and science park M-Sparc. Anglesey MP Virginia Crosbie said: "The investment and jobs that await freeport status will transform lives and lead to thousands of high-quality jobs so our young do not have to leave." CBI Wales director Ian Price called it a "double boost for the economies and communities in both north and south Wales". To date, eight freeports have been created in England and two announced in Scotland.

The Gambling Commission has fined online operators 32Red and Platinum Gaming with a £7.1m fine for social responsibility and anti-money laundering failures.  “Both operators failed to interact with customers in a way which minimises the risk of them experiencing harms associated with gambling,” Kay Roberts, executive director of the Gambling Commission said.

More than a third of UK flights were delayed last year, according to The Civil Aviation Authority.  Only 63% of flights departed or arrived in the UK within 15 minutes of their scheduled time, down from 75% in 2019, before covid travel restrictions. A spokesperson for Airlines UK, the trade body for UK-registered carriers said "the whole industry knows how important punctuality is for customers. Last year was not representative due to the late unwinding of Covid restrictions which required a very steep ramp up." They added: "Since then, the whole industry has invested huge resources into increased resilience for this summer". Among the 10 busiest UK airports, Glasgow had the highest proportion of cancelled flights at 2.5%, followed by London Heathrow with 1.7% .

Shaftesbury Capital is reportedly facing a shareholder revolt over millions of pounds handed out in executive share awards. According to Sky News, a number of major investors are livid that bosses including CEO Ian Hawksworth saw share grants vest when the merger between Capital & Counties Properties and Shaftesbury completed, creating a West End landlord which owns some of London's landmark shopping and leisure destinations. Hawksworth ran Capco, which was the acquiring entity in the merger despite being smaller, making the vesting of its share awards unusual - and controversial during a cost-of-living crisis. A Shaftesbury Capital spokesman declined to comment to Sky, although a company insider said the vesting of the share awards had been fully disclosed in the deal prospectus. He added that the deal had been supported by 97% of Capco shareholders, although he acknowledged that there had not been a separate vote on remuneration.

Billionaire Richard Branson's cash-strapped Virgin Orbit Holdings Inc is said to be close to clinching a £160m deal with Texan venture capital investor Matthew Brown via a private share placement, according to a Reuters exclusiveThe space startup did not comment on the deal, but said yesterday it would resume operations on 23rd March and prepare for its next mission by recalling some of its employees, sending its shares up 60% in premarket trading. Just two days so, shares plummeted 30% when Sky News claimed Virgin Orbit was working on contingency plans to file for insolvency should it fail to raise new funding.

Investment banks Cenkos Securities and finnCap have agreed to merge in an all-share deal. At market close yesterday, both companies had a market value of around £21.1m. The combined group has more than 210 retained listed or quoted clients and employs more than 230 people. The merger will create the City’s largest investment bank focusing on small cap growth companies.

Fashion brand Superdry has agreed to sell its intellectual property assets in certain countries within Asia Pacific to South Korea's Cowell Fashion Company for around £40m in cash. Superdry expects to receive around £34m net of transaction costs and tax and said it will use the proceeds to increase the strength of its balance sheet, boost liquidity, and fund ongoing working capital requirements, including the implementation of a significant cost-cutting programme.

Insurance company Allianz has won a High Court fight over its refusal to pay out on a claim for damage caused by the disposal of a World War Two bomb. The claim from the University of Exeter related to a controlled explosion in 2021 which caused damage to university halls of residence. Allianz declined the claim, saying that the loss suffered by the university fell within the scope of a "war exclusion" clause. Judge Nigel Bird agreed, saying in his ruling: "The dropping of the bomb is an act of war and so the loss suffered is excluded from cover."

Lloyd's of London swung to a pre-tax loss in 2022 and took writedowns on its fixed-income investments, it said this morning. The pre-tax loss was £800m, compared with a profit of £2.3bn a year earlier. Rising interest rates hitting investments as well as £21bn in payouts for claims related to the Ukraine war and Hurricane Ian were blamed for the loss.

Hurricane Ian has also been blamed for the fact that the global insurance sector suffered natural catastrophe losses in 2022 of more than $100bn (£81bn) for just the fifth time since 1970, according to research from reinsurance company Swiss Re

Builders’ merchant Wickes has reported record sales for 2022. Its 2022 results just posted show revenue grew to 1.8%, setting a record year total of £1,562.4m. Like for Like retail sales were up £3.5% for the year, reaching over 22.8% on a three-year basis. However, adjusted pre-tax profit fell to £75.4m, down 11% on its record 2021 £85m profit. Wickes also said core sales in the first 11 weeks of 2023 were 'moderately' behind the same period last year on lower demand for do-it-yourself products.

Car dealership chain Pendragon, the Nottingham-based motor retailer behind the Evans Halshaw and Stratstone brands, says its profits declined by over a quarter to £45.5m in 2022, down from £61.5m the previous year. It blamed rising inflation and an absence of Covid-related government support for the fall from the previous year’s record high profit. Earnings were also impacted by higher marketing spending related to the relaunch of the CarStore online marketplace and the non-repeat of around £12m in business rates relief received in 2021.

Playtech reported a jump in revenues and earnings on Thursday, driven by especially strong demand in its business to business markets. The FTSE 250 firm, a platform, content and services provider to the online gambling industry, said revenues from continuing operations in the year to 31st December were €1.6bn, up 33% or by 31% on a constant currency basis. Adjusted earnings before tax, interest, depreciation and amortisation rose 28% to €405.6m, which Playtech said was a record.

Chris O’Shea, CEO of British Gas owner Centrica, will receive a pay package worth 4.5m for 2022, the company's annual report showed yesterday. Centrica recently posted record profits of £3.3bn driven by a surge in energy prices. O’Shea’s pay package is comprised of a £1.4m bonus, a £2.3m long-term share bonus, and an annual salary of £790,000.

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