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More rail strikes today and tomorrow

   News / 02 Jun 2023

Published: 02 June 2023

By Suzanne Evans, Director, Political Insight

There are more rail strikes today, as this time some 20,000 train guards and station staff have walked out, meaning only half of all train services will run. Even more trains will be cancelled tomorrow when train drivers take industrial action again.

Manufacturing output fell for a third month in a row in May and new orders declined at the fastest pace in the last four, according to the final reading of the S&P Global/CIPS UK manufacturing Purchasing Managers' Index (PMI). The reading registered 47.1 in May, down from 47.8 in April and further below the 50 threshold that separates growth from contraction. However, there were signs that the worst of the inflation surge may have passed, as manufacturers' average input costs fell in May for the first time since November 2019, and pressures on supply chains eased further, S&P Global said.

The Financial Conduct Authority (FCA) has banned debt advisors from receiving a fee for referring people to debt solution companies after finding some companies were putting fee income above customers' best interests. Citizens Advice said the move was "a big step towards tackling the way some firms prey on and profit from people struggling with debt". The average fee advisors received for an individual voluntary arrangement (IVAs) referral in 2019-2020 was £940, the FCA found, but some packages clearly cost debtors dearly: one homeless client was recommended an IVA costing £6,000, when they could have been debt-free for £90, it said.

Savers deposited a record £17.8bn into banks and building societies in April, nearly all of which went into fixed savings accounts and individual saving accounts, or ISAs, the Bank of England (BoE) says. Some £9bn was pumped into ISAs, the greatest inflow the Bank has recorded, as interest rates improved.

Figures from the BoE also show that net mortgage approvals for house purchases fell from 51,500 in March to 48,700 in April.

British Airways (BA) has been ordered to pay a $1.1m (£877,000) by the US Transportation Department for failing to provide timely refunds for flights to and from America cancelled due to the Covid-19 pandemic. The department received more than 1,200 complaints since March 2020, and said the fine would be "a strong deterrent to future similar unlawful practices" by BA and other airlines. However, the UK flag carrier is being credited $550,000 (£438,793) toward the penalty it has paid out more than $40m in refunds to customers with non-refundable tickets. Since the start of the pandemic more than five million refunds have been issued, BA said, adding that it refuted the claims it had acted unlawfully at any time.

Animal drugmaker Dechra Pharmaceuticals has backed a £4.5bn takeover bid from Swedish investment firm EQT today. The two firms have been in talks over the tie-up since April, but the final offer marks a lower price than initially tabled by EQT after Dechra issued a profit warning in the middle of the talks. If the deal completes, it will be one of the biggest take-private deals in London so far this year, with each Dechra shareholder pocketing 3,875p per share in cash, a premium of about 44% premium to the last closing price before the offer period commenced, City A.M. says. Dechra has grown under the leadership of CEO Ian Page from being a UK veterinary wholesale distribution firm, to a global veterinary pharma business, ranked seventh globally by revenues, with operations in 26 countries and 2,470 employees.

Asos has been relegated out of the FTSE 250 after shares fell to a 12-month low. The fast-fashion firm, valued at over £7bn just over two years ago, now has a valuation closer to £400m. Earlier this month Asos posted a first-half loss of £87.4m.

London-listed BHP – the world’s largest mining company - is facing a $280m bill to make redress to thousands of employees it underpaid for more than a decade in Australia. Since 2010, a number of rostered employees had leave incorrectly deducted on public holidays, the firm said, adding that around 28,500 current and former employees are thought to be affected. Copper producer Oz Minerals, which BHP acquired in May 2023 in a $6.4bn deal, was also affected by a similar issue before being bought; and around 400 former and current employees at Port Hedland, BHP's iron ore exporting port, were entitled to additional allowances, BHP said. Geraldine Slattery, BHP's Australia president, said: "We are sorry to all current and former employees impacted by these errors. This is not good enough and falls short of the standards we expect at BHP. We are working to rectify and remediate these issues, with interest, as quickly as possible”.

The London Stock Exchange Group (LSEG) has appointed a new head of its indexing business FTSE Russell, but Fiona Bassett, who worked previously at asset manager DWS Group and Deutsche Bank, will not relocate to London but will stay in New York, it said.

Inflation in the Eurozone has fallen faster than expected, dropping to 6.1% last month, down from 7% in the previous month, according to eurostat. Analysts had predicted a 6.3% fall. Core inflation – which strips out volatile food and energy price movements – also dropped for the third month in a row to 5.3%, down from 5.5%, also lower than analysts’ forecasts.

Air travel globally increased in April, according to the Geneva-based International Air Transport Association, with total traffic – as measured in revenue passenger kilometres (RPK) - rose 45.8% year-on-year, with an industry load factor of 81.3%. Air traffic is now at 90.5% of pre-Covid levels, while the load factor is just 1.8 percentage points below. Domestic travel increased 42.6% on the year, while international traffic was up 48.0%.

The US Senate approved a deal to suspend the debt ceiling yesterday, avoiding a federal default that could have kicked in on June 6th. 63 senators backed the proposals on Thursday night after the deal secured bipartisan support in the House of Representatives on Wednesday.  President Biden has said he will sign the deal into law as soon as it arrives in the Oval Office. The deal raises the debt ceiling until 2025, ensuring the US Treasury can borrow to pay its debts. It follows days of negotiations between Biden and congressional Republicans, who forced the White House into spending cuts on different issues for the next two years, City A.M. reports.

Sri Lanka's central bank has cut interest rates by 3%. Inflation in the country hit a record high of around 70% in September, but is now coming down as government revenues increase and pressure on the country's balance of payments eases.

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