Published: 19 May 2023
By Suzanne Evans, Director, Political Insight
Prime Minister Rishi Sunak has announced fresh sanctions against Russia, saying Russian diamond imports to the UK are to be banned by the Government, as well as Russian-origin copper, aluminium and nickel imports. Legislation to effect the ban will be introduced later this year. "We believe in democracy, freedom, the rule of law - and it's right that we stand up for those things," Sunak told the BBC. Sunak is currently in Hiroshima, Japan, for the G7 summit, and is hoping other countries will follow suit: The Russian diamond industry was worth $4bn (£3.2bn) in exports in 2021. The Government is also planning to target 86 more people and companies connected to President Vladimir Putin, including people who were "actively undermining the impact of existing sanctions". Since Russia invaded Ukraine, more than 1,500 individuals and entities had had assets worth more than £18bn frozen. More than 60% of Putin's war chest – worth around £275bn - has been "immobilised," Downing Street says. Ukraine's President Volodymyr Zelensky will attend the G7 summit on Sunday.
The Government’s newly formed Department for Science, Innovation and Technology (DSIT) announced £1bn in investment for its semiconductor sector this morning. The strategy aims to strengthen the domestic supply of chips which are used in everything from cars to smartphones and washing machines. £200m will be invested in 2023-25, growing to up to the billion pound level over the next decade. However, several tech bosses were quick to blast the funding, telling City A.M. it is “a drop in the ocean,” especially when compared to investment by other countries. The proposals are “disappointing,” one said, and will leave the UK “very vulnerable”. The USA announced $52.7bn in chip subsidies last year, and an EU chips law proposes to bring about €43bn in investments. Others including Japan, India and South Korea have unveiled their own semiconductor strategies in recent years. The Chair of the House of Commons Business Select Committee, Labour MP Darren Jones, welcomed the strategy and the recognition of the need to invest but also queried the level of investment, saying: "the initial £250m is a very small amount of subsidy compared to other countries".
Business and trade secretary Kemi Badenoch has denied that issues raised in the past few days about the ongoing ability of Britain’s automotive sector to continue making electric vehicles has anything to do with the fact we are no longer in the EU, saying in the House of Commons yesterday that the problem “isn’t to do with Brexit”. Vauxhall’s parent company Stellantis said on Tuesday that it will be unable to keep a commitment to make electric vehicles in the UK without changes to the EU trade deal as a tariff deadline approaches, a concern mirrored by Ford on Wednesday. Badenoch said she had held meetings with her EU trade counterpart in light of the EU–UK Trade and Cooperation Agreement (TCA) “coming into review soon,” and, responding to criticism from shadow business secretary Jonathan Reynolds, added: “He also mentions a lot of systemic issues which are being faced globally … for example, the issue that the automotive industries are talking about is around rules of origin. This is something that the EU are also worried about because the costs of the components have risen. This isn’t to do with Brexit, this is to do with supply chain issues following the pandemic and the war in Russia and Ukraine. I actually have had meetings with my EU trade counterpart, we are discussing these things and looking at how we can review them, especially as the TCA will be coming into review soon.”
Meanwhile, Prime Minister Rishi Sunak has come under fire from several cross-party former business secretaries over his apparent lack of a cohesive industrial strategy. Ex-ministers Greg Clark, Peter Mandelson and Vince Cable told the Financial Times that Sunak was being so “surreptitious” that his strategy for industry was a “guilty secret”. Clark, who was the Conservative business secretary from 2016 to 2019, said: “One of the points of an industrial strategy is you should know what it is. An undercover strategy is self-defeating.” He urged the PM to be “active and activist” on an industrial strategy and to find out why gigafactories are going elsewhere. Labour’s Lord Mandelson said the lack of clear strategy was leaving the UK lagging behind, saying that Sunak’s lack of enthusiasm has left the Government “mired in confusion”. Former Bank of England economist Andy Haldane, who also served as industrial strategy council chairman prior to it being scrapped, also told the FT: “The world is going bananas on industrial strategy. There’s an arms race going on about this right now [and] we can’t even bring ourselves to mouth the words.” MakeUK boss Stephen Phipson said the UK was the only top economy not to have one. Sunak scrapped the Department for Business, Energy and Industrial Strategy earlier this year and, as Chancellor, in 2021 ditched Clark’s industrial strategy in favour of Build Back Better.
Conservative MP David Davis has called for a review of the Government’s role in the investigation and prosecution of traders for rigging Libor ahead of new evidence that is set to be released next week. The Serious Fraud Office (SFO) convicted a total of nine traders for their role in rigging the London Interbank Offered Rate, known as Libor, after the practice came to light in 2012, but on Monday, The Times will begin publishing extracts from a new book by BBC economics correspondent Andy Verity called Rigged, which will throw new light on the scandal. In parliament yesterday, Davis said the book “will show that British and US authorities covered up state involvement in Libor rigging, and the scapegoating of 37 low and middle-ranking bankers, some of whom spent years in jail”. Some state agencies, which he didn’t name, may have misled parliament about the Libor investigations, he added, saying: “I am also greatly concerned that the Treasury Select Committee may have been misled by state agencies about the knowledge and involvement of the state in setting false rates,” Davis said. He said he would refer the matter to both the Metropolitan Police and Treasury Select Committee.
Consumer confidence has risen for the fourth month in a row to its highest since February 2022, despite inflation still being in double digits. Market research firm GfK's headline confidence index rose to -27 in May from -30 in April. Separate research from Lloyds Bank also shows nearly every sector of the UK economy increased its headcount last month, with hiring led by estate agents and software companies, the lender said. Lloyds’ monthly employment survey showed ten of the 14 sectors it tracks took on more staff over the last month.
London has been named the best city brand in the world, according to the new ‘City Index,’ an international league table compiled by Brand Finance. Based on a survey of 15,000 people in 20 countries, London recorded a stronger brand perception than any other city in the study, scoring 84.6 out of 100.
Rising interest rates mean more households are falling into mortgage arrears according to figures from industry body UK Finance. The numbers continued to increase in the first quarter of this year, ticking up more than 2% on the previous quarter to 76,630. Repossessions also jumped 50% in the first quarter, with 750 homeowner mortgaged properties repossessed. In addition, 410 buy-to-let mortgaged properties were taken into possession, 28% higher than the previous quarter. However, UK Finance’s director of economic insight and research Lee Hopley said the figures were still relatively low. “While the number of repossessions increased, it’s important to note that this is from a very low base as historic cases make their way through the courts,” he said, adding: “The total number of possessions remains significantly below the levels seen prior to the pandemic”.
Ovo Energy and Good Energy have been ordered by Ofgem to pay £4m in compensation after overcharging customers during the energy crisis. Errors by both suppliers meant some people were charged above the maximum rates allowed under either the energy price cap or the government’s Energy Price Guarantee scheme. Good Energy overcharged more than 6,900 customers between January 2019 and October 2022, while Ovo overcharged nearly 11,000 customers between October 2022 and March 2023. It was “totally unacceptable” that people were overcharged during an “already so challenging and stressful time,” the energy regulator said. The affected households will receive a combined total of £2.7m from the two companies while an extra £1.25m will go to vulnerable customers in the UK under Ofgem’s voluntary redress fund. The average amount paid to Good Energy customers will be £109 while Ovo customers will receive an average of £181, Ofgem said.
Asda and the GMB union are at loggerheads over what the latter calls “inexcusable” pay cuts. The union is accusing the supermarket of illegal ‘fire and re-hire’ practice, saying it plans to cut the pay of 7,000 low-paid retail workers, threatening them with losing 60p per hour and having their night supplement reduced, or being dismissed, if they refuse the new deal. The GMB claimed Asda was making the move to prepare Asda for a merger with the Issa brothers’ EG Group and to write off debts, thought to be around £11bn. However, the supermarket giant claims it is merely in the middle of a consultation to remove an “anomaly” in the market whereby a small number of stores outside the M25 pay colleagues a legacy location supplement of 60p per hour on top of their existing rate of £11.00 per hour. “This supplement is out of line with the wider retail market” and means “some Asda colleagues in stores that are close together are paid different rates,” the supermarket said. As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead. These discussions are ongoing and no final decision has been taken,” it added. However this cut no ice with GMB organiser Nadine Houghton, who is calling on the Government to step in and stop the merger. She said: “The billionaire Issa Brothers and their business partners the multi-millionaire elite private equity fund managers in TDR Capital are restructuring ASDA in preparation for the debt laden merger they are trying to push through with EG Group. If the business secretary allows this merger to go ahead, she will be responsible for allowing a deal that is bad for workers, bad for consumers and bad for the high street…ASDA’s workers and consumers should not bear the brunt of financial engineering from private equity.” City A.M. said it had approached The Department for Business and Trade for comment, but with no response at the time of going to press.
The GMB union also says 900 of its members employed by the City of London Corporation will strike on 25th May at tourist attractions including Tower Bridge, the Barbican, museums, gardens, parks and markets. The GMB argues that the current cost-of-living crisis is having a “devastating” impact on workers and their families, and that the Corporation has a “them and us” culture that “has to end”. Anna Lee, GMB London region organiser, said: “It is not OK for workers to be using food banks whilst corporation bosses spend thousands of pounds of taxpayers’ money on hospitality – while telling staff there’s no money for pay”. “No one wants to go on strike but our members feel they are not being listened to, now they feel they have no alternative,” she added, calling on the City of London Corporation to “properly value and respect their staff and return to the negotiating table.” A City of London Corporation spokesperson said: “Our 2022-23 pay award gave all full-time employees at least £2,300 extra. In our view, it addressed the challenges staff face in the fairest way possible, while ensuring we met our statutory duty to deliver a balanced budget”. “We appreciate how difficult it is for many people in the current economic climate and our one-off winter payment of £1,000 provided in October gave real, practical support to all our staff to help them cope with the cost-of-living crisis,” it added, stating that the minimum pay increase awarded last year meant the Corporation’s lowest paid staff received an increase of over 12%. “Providing the inflation-matching pay increase demanded by the unions would result in significant cuts to services, including making a considerable number of redundancies,” it warned.
Lloyds’ AGM in Edinburgh yesterday was hit by protests about its flexible working policies and its fossil fuel financing. Chair Robin Budenburg only managed to say “hello and welcome” before climate protestors disrupted the meeting to demand the bank stop fossil fuel funding immediately, citing data suggesting the bank had increased its fossil fuel financing in 2022, Then Budenburg faced arguments from representatives from the Unite union who claimed changes Lloyds is trialling to its hybrid working policies by introducing compressed working arrangements - which mean working the same amount of time over fewer days - disadvantages women, carers and working parents. “Let’s be clear, this is an attack on flexible working”, Unite member Rachel Boothroyd told the board, but Budenburg stressed “no decisions have been taken”. Outcomes would be based on “individual discussions between colleagues and their line managers,” he said. However, the bank did tell staff last month that hybrid workers would have to spend at least two days a week in the office, with “card swipe data” used to monitor their return, albeit with exceptions made for workers with disabilities or long-term health conditions.
Nationwide’s profit jumped nearly 40% in 2022/23, with pre-tax profit coming in at £2.2bn, up from £1.6bn in 2021/22, as a consequence of higher interest rates. As a result, Nationwide has declared its first ‘Fairer Share Payment’, which will see eligible members receive £100 into their current account in June, representing a £340m distribution in total.
Drinks company C&C Group said CEO David Forde had decided to step down as it also announced a €25m hit from problems implementing a system upgrade in its Matthew Clark and Bibendum (MCB) businesses in the UK. Forde will be replaced by CFO Patrick McMahon. C&C, which makes, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland, said it had "encountered significant challenges" in the system changes at MCB, “with a consequent material impact on service and profitability within MCB". C&C Group shares are down almost 17% at the time of writing.
London-listed Speedy Hire said a probe into £20m of missing equipment found no evidence of fraud, but discovered problems with control and accounting procedures. The tools and equipment company launched the investigation in February after discovering missing scaffolding and fencing while preparing for an end of year audit.
FTSE 100 gambling operator Entain is reportedly nearing a deal to buy London-based pricing and analytics company Angstrom Sports. Citing three people familiar with the discussions, Business Insider said the deal could be worth around $200m (£161m), though the terms have not yet been agreed.
And finally: Deutsche Bank has agreed to pay $75m (£60.38m) to settle a lawsuit by women who say they were abused by the late financier Jeffrey Epstein, and accused the German bank of facilitating his sex trafficking. The accord resolves claims in a proposed class action in Manhattan federal court by Epstein’s accusers, and was confirmed by their lawyers late on Wednesday. Court approval is required before the settlement can be finalised. Epstein had been a Deutsche Bank client from 2013 to 2018. He killed himself in August 2019 in jail while awaiting trial for sex trafficking.
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