Published: 13 June 2023
By Suzanne Evans, Director, Political Insight
British wages have increased almost at the highest rate on record, but inflation is still sharply eroding their finances, data from the Office for National Statistics (ONS) shows. The average worker in the UK received a 7.2% wage increase in the three months to April, only 0.1% short of the 7.3% jump in the middle of the covid pandemic. Including bonuses, wages grew 6.5 per cent, also among the fastest increases on record. However, the ONS concludes that over the same period, real incomes when adjusted for the effect of inflation, actually fell 2.3%, meaning that for 18 months in a row, households have seen their income fall on average. Chancellor Jeremy Hunt said in response to the data: “Rising prices are continuing to eat into people’s pay cheques – so we must stick to our plan to halve inflation this year to boost living standards.”
Meanwhile, separate statistics from Incomes Data Research (IDR) suggest major British employers agreed pay increases averaging 5.6% in the three months to April, reflecting high consumer price inflation and an increase in the minimum wage. The firm said the median pay settlement was the highest in records dating back to 2005 and up from 5% in the three months to the end of March.
The ONS has also released the latest employment data for May this morning. A record 33.1m people are now in work, a 250,000 increase the three months to April. A record 30m are on company payrolls, a rise of 23,000 last month. Employment is now 1.016m above its pre-covid level. Overall employment is 76%; unemployment is 3.8%; and economic inactivity stands at 21%.
The data above has inevitably raised expectations that the Bank of England will respond by raising interest rates again, as the economy is not cooling as the central bank hopes. "For the Bank of England, wage growth is a big problem – it is simply at too high a level to allow inflation to hit the 2% target," Hussain Mehdi, macro and investment strategist at HSBC Asset Management, told Reuters.
Economic headwinds including soaring interest rates, and falling consumer confidence, mean banks are no longer prioritising environmental sustainability because they are too busy concentrating on their bottom lines, according to a survey of 150 UK banking executives conducted by Censuswide. Only 29% reported currently offsetting through carbon credit schemes, down from 50% last year. The number of banks with an executive at board level overseeing sustainability strategy has also decreased from 83% last year to 54% now. A UK Finance spokesperson said: “The banking and finance sector takes the issues of environmental sustainability and the transition to Net Zero very seriously.”
Dan McGrail, CEO of industry body Renewable UK, has called on Chancellor Jeremy Hunt to offer a more robust response to subsidy schemes unveiled in the EU and US. He said: “Recent developments such as the Inflation Reduction Act in the USA and the EU’s Green Industrial Deal have increased competition for investment…We must double down on our efforts to support and accelerate offshore wind development, and I’d encourage the Chancellor to bring forward new measures in the autumn budget to incentivise manufacturing investment into the UK that might otherwise go overseas.”
Rishi Khosla, the boss of digital lender Oaknorth is calling on the Government to open Britain’s borders to more immigrants, saying a lack of talent is threatening to choke off growth in the UK fintech sector. Speaking at London Tech Week, Khosla said his bank had itself been dogged by hiring troubles and advocated a Canadian-style “express entry” system for tech workers. The Canadian scheme takes in around 111,000 immigrant workers each year. Oaknorth was founded by Khosla and Joel Perlman and is now one of the country’s best-known challenger lenders with over 800 staff and a valuation of $2.8bn in 2019.
Ministers will not intervene to rescue Revolut’s faltering application for a UK banking licence, the Daily Mail has been told. The payments app has been hailed by Chancellor Jeremy Hunt as a ‘shining example’ of Britain’s ‘world-beating fintech sector’ but more than three months after declaring an announcement on its banking licence was imminent, it looks no closer to being achieved. A well-placed government source has now told the newspaper: ‘Not everybody who applies for the licence gets one. Ministers have no role.’ Revolut’s application for a banking licence is being scrutinised by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
A survey by Which? has found that two in three shoppers – 67% - feel ripped off because they believe supermarket giants are charging much higher prices in their small convenience stores. Nearly half (45%) said they struggle to find affordable food in convenience stores. Trust in supermarkets is also now at a nine-year low, the consumer publication says. The Competition & Markets Authority (CMA) is currently investigating whether there is any evidence of profiteering, or so-called ‘greedflation,” on groceries.
Easyjet said it had to cancel 54 flights due to take-off from Gatwick Airport on Sunday and 55 yesterday because of thunderstorms and poor weather conditions across the UK and Europe. Over 15,000 passengers were affected.
A series of summer strikes at Heathrow Airport by over 2,000 security workers has been called off, the Unite union said yesterday, following an improved pay offer. “Following extensive negotiations last week, a new offer was put forward by HAL (Heathrow Airports Ltd). Members will now be balloted on the latest offer and they will decide whether or not it meets their expectations," Unite's regional co-ordinating officer Wayne King said in a statement.
Logistics firm Tuffnells Parcels Express has collapsed into administration with the loss of around 2,000 jobs. Its transport hubs and 33 depots are closed until further notice, and all deliveries have been suspended. The Sheffield-based business has appointed Interpath Advisory as administrators after running out of cash. Interpath said the company, one of the UK's most recognisable logistics companies which provides delivery services to over 4,000 businesses across the UK under it's The Big Green Parcel Machine brand, had run out of cash as a consequence of covid restrictions, the high cost inflation, and stiff competition in the sector.
A covid lockdown boom in equities trading which stood trading platform CMC Markets in good stead has now tailed off dramatically, meaning the platform has today announced profits fell 43% to £52.5m in the year to the end of March. Although trading net revenues at the firm rose 1% to £233m in the year, it noted a 9% fall in active trading clients “largely driven by the cohort onboarded during the ‘meme stock’ period in the first calendar quarter of 2021,” and an 11% fall in active investing clients as they sat out of the market amid extreme volatility triggered by war in Ukraine and soaring inflation, CMC said in a statement. The FTSE 250 firm is run by Conservative peer Lord Cruddas.
FTSE 100 miner Glencore has offered to buy Teck Resources' steelmaking coal business as a standalone unit, having been rebuffed in its attempts to buy the whole company. Teck said it was engaging with Glencore to discuss the potential coal deal but noted Glencore's was just "one of a number" of proposals under consideration.
Oxford Instruments has posted a 54% rise in annual profits, driven by strong order growth. Pre-tax profit for the FTSE 250 scientific products provider in the year to 31st March came in at £73.5m, up from £47.6m a year earlier. Orders grew 21% to £511.6m and the reported order book of £319.6m, was up 19.2% on a constant currency basis. Revenue increased 21.1% at £444.7m, driven by volume, but partially constrained by supply chain disruption and export licence refusals, the company said.
Scottish and Southern Energy Networks (SSEN) Transmission will invest £10bn in networks in Scotland to enable the connection of up to 11 gigawatts of offshore wind projects, it said this morning. The company's Pathway to 2030 Programme will include investment in several new onshore and sub-sea transmission links as part of a wider upgrade of the electricity transmission network across Britain to meet climate change and energy security targets.
The Brasserie Blanc restaurant chain, bought last year by private equity group Alchemy Partners, is to rename the chain as Heartwood Collection and expand into the pubs with rooms market. It currently operates 20 pubs and 14 Brasserie Blanc restaurants across the UK, and plans to increase that to some 60 sites with up to 500 bedrooms by 2027. The groups said the move will create around 1,500 further jobs countrywide.
FTSE 100 miner Rio Tinto says Ivan Vella, CEO of its aluminium division will leave at the end of the year after accepting a new position outside the company.
Melissa Quinn, the departing boss of Spaceport Cornwall has hit out at sexist behaviour in the “very male-dominated industry”. “I could write a book about some of the ridiculous stuff that has been said to me,” the Daily Mail reports, adding that “from time to time” the job “got ugly” hence it was a “personal decision to step out of the limelight in Cornwall”. Quinn, who oversaw the first ever space launch from UK soil in January, - which ended in failure when the Virgin Orbit rocket suffered what was described as an ‘anomaly’ - is leaving after nearly ten years at the firm. She has been appointed general manager of US-based space data and tracking company Seradata.
JPMorgan Chase & Co has announced an agreement in principle to settle a legal claim brought against it by a victim of sex offender Jeffrey Epstein. The suit alleges the bank benefited knowingly from the abuse she and others suffered by ignoring warning signs because Epstein was a wealthy client who could introduce other wealthy people to the US bank’s private banking and investment arms. Epstein banked with JPMorgan Chase from 1998 to 2013, despite his 2006 arrest on prostitution-related charges and a related guilty plea two years later. Reports suggest up to 100 women could seek damages from the bank, with the value of settlements estimated at $290m. A previous agreement in a similar lawsuit against Deutsche Bank was resolved for a reported $75m. Litigation has also been brought against the bank by the government of the US Virgin Islands, where Epstein maintained a lavish private island home. This lawsuit is still pending. A spokesman for the Islands said the US territory would continue its claim against the bank “to ensure full accountability for JPMorgan’s violations of law and prevent the bank from assisting and profiting from human trafficking in the future”. Meanwhile, JPMorgan Chase is itself suing its former CEO Jes Staley, whom it accuses of hiding Epstein’s crimes to keep him as a client, however Staley denies this. JP Morgan Chase said in a statement: “We all now understand that Epstein’s behavior was monstrous, and we believe this settlement is in the best interest of all parties, especially the survivors, who suffered unimaginable abuse at the hands of this man”. It added: “Any association with him was a mistake and we regret it. We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes”. Epstein died in prison in New York in August 2019 while awaiting trial for sex trafficking. His death was ruled a suicide.
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