Published: 13 July 2023
By Suzanne Evans, Director, Political Insight
The UK economy failed to grow in the three months to May, the latest Office for National Statistics (ONS) data shows, putting back into focus the threat of recession. This morning the official statistics body reported that GDP fell by 0.1% in May 2023. Services were completely flat with no growth or decline; production fell by 0.6%; and construction fell by 0.2%. However, it should be noted that the extra bank holiday for the King’s coronation – plus the two usual May bank holidays - played a part in declining GDP, as it meant one fewer working day than usual. An increase in leisure spending because of the extra holiday was not enough to offset the GDP contraction, but the general consensus from analysts this morning is that the dip could have been worse and is not such bad news. As Capital Economics’ chief economist Paul Dales told the BBC: "Our sense is that underlying activity is still growing, albeit at a snail's pace". Chancellor Jeremy Hunt said: "While an extra bank holiday had an impact on growth in May, high inflation remains a drag anchor on economic growth. The best way to get growth going again and ease the pressure on families is to bring inflation down as quickly as possible. Our plan will work, but we must stick to it."
Ofwat CEO David Black told MPs on the Environment Food and Rural Affairs Committee yesterday that the regulator is “ready to employ” a special administration regime for Thames Water if it fails to secure the investment it needs. However, both he and Ofwat Chair Ian Coucher played down the prospect of any imminent breakdown for the utility: Coucher said it was “unlikely”, and Black said a special administration regime “won’t be needed.”
Airport drop-off charges for drivers have increased by almost a third at UK airports over the past year, according to the RAC. The biggest hike in so-called ‘kiss and fly’ charges are at Southampton and Belfast airports, the motoring body found. The Airports Operator Association, which represents airports in the UK, told the BBC the increased revenue helped "keep charges to airlines lower" and helped "maximise the range of flights that can be offered to all passengers."
Blockchain analytics platform Chainalysis says crypto crime is significantly down in 2023, and that scammers are stealing less money. Crypto inflows to known illicit entities are down 65% when compared to 2022, and almost $3.3bn (£2.54bn) less had been taken by June 2023 than in June 2022, Chainalysis said in a mid-year report. However, the total taken by scams in the first six months of the year was still an eye-watering $1bn, hence “the persistent scourge of ransomware demonstrates the need to remain vigilant,” the report concluded.
Top executives at Channel 4 have “declined to take a pay rise this year” and have “deferred indefinitely taking a retention bonus” to stay “in line” with staff who are battling the cost-of-living crisis amid a “tough downturn” in the advertising market for the channel. CEO Alex Mahon said yesterday when releasing the broadcaster’s annual report that it had to “significantly” tighten the reins for the second half of 2022 as a consequence of “fairly extreme economic conditions largely down to the outbreak of war in Ukraine”.
The controversial takeover by Microsoft of videogame maker Activision Blizzard, blocked by US regulators and the UK’s Competition and Markets Authority (CMA) is now likely to be back on again, after a US judge on Tuesday rejected the Biden administration's contention that the deal would hurt consumers by giving Xbox game console-maker Microsoft exclusive access to games including the best-selling Call of Duty. Shortly thereafter, the CMA said it was open to proposals to restructure the $69bn deal “which could lead to a new merger investigation.” “The CMA is prepared to engage with [both parties] on this basis,” it added, a statement being viewed by some observers as a green light for an amended deal to be done.
The survival of fintech firm Fiinu was left hanging by a thread yesterday after it confirmed that it had not secured enough funding to resubmit its application for a banking licence, City A.M. reports this morning. Shares in the AIM-listed digital lender, which offers short-term credit to customers, were trading 66% down on the news. CEO Chris Sweeney said: “The current general capital, and market specific conditions, are increasingly challenging for a business at Fiinu’s current stage of development.” Total cash raised by UK fintech firms slumped to $2.9bn (£2.23bn) in the first six months of the year, down 37% on the second half of 2022, according to new figures from industry body Innovate Finance.
Barratt Developments, Britain's largest homebuilder, said this morning it would build around 20% fewer homes this year because rising mortgage rates and stubborn inflation is driving buyers away. The FTSE 100-listed firm said it expected to build between 13,250 to 14,250 units in the year ending June 30, 2024, down from the 17,206 homes in the year before, and a 20% with delivery at the mid-point of the range.
Babcock has been awarded a £50m 12-month contract by the UK Ministry of Defence to provide urgent operational support to armoured vehicles supplied to the Ukrainian military. The FTSE 250 defence contractor’s CEO, David Lockwood, said: "Through the relentless commitment of our teams, and supply chain partners, we will support land defence assets and equipment that Ukrainian troops can have the utmost confidence in. Their mission is our mission”.
Watches of Switzerland posted a 23% increase in full-year profits before tax to £155m, as group sales increased 19% over the year to £1.54bn. The US performed especially well, the FTSE 250 company said.
Domino's Pizza has Andrew Rennie as CEO from 7th August. He has a long history with the Sydney-listed Domino's Pizza Enterprises, with roles including CEO of France and Belgium from 2006 to 2010, COO and then CEO of its Australia and New Zealand business from 2010 to 2013, and CEO of its European business from 2014 to 2020.
Is the UK energy market about to be shaken up by a bold challenger in the form of Elon Musk’s Tesla? That is the question being asked this morning following a Daily Telegraph report on the fact Tesla posted a job advert for a head of operations “with a healthy scepticism of the status quo” to manage the company’s entry into the UK’s domestic market. Tesla Electric already supplies electricity to customers that own Tesla products such as cars or batteries elsewhere in the world, and the ad claimed the firm can “support the transition of the entire electricity grid to 100 per cent renewables.” Tesla applied for and was granted an electricity generating licence by Ofgem in 2020. However, the service Tesla provides elsewhere would not be permitted under UK regulations, as a universal service obligation means companies can’t act as a retailer without offering a tariff to everyone, so Tesla would need a product for customers not using its products.
A former human resources boss at Twitter has accused the company of failing to pay roughly $500m (£385m) in severance pay owed to former staff of the company. Courtney McMillian, who was the social media site's former "head of total rewards", has made the claim in a class-action lawsuit., saying that Twitter owner Elon Musk knew about the severance plan before he sacked thousands of staff but balked at the “expense”.
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