Published: 22 August 2023
By Suzanne Evans, Director, Political Insight
The interest paid on Government debt hit its highest July level on record as government borrowing continued to rise, according to the latest figures from the Office for National Statistics, which reveal the state had to pay £7.7bn in interest in July, £1.5bn more than last July and the highest July level since records began in April 1997. The increase comes as it is also revealed that public borrowing, excluding state-owned banks, was £4.3bn in July, £3.4bn more than in July 2022, and the fifth-highest July borrowing since monthly records began in 1993. However, the amount is less than the £5bn predicted by a Reuters’ poll of economic analysts. In the first four months of the financial year, borrowing stood at £56.6bn, almost £14bn more than in the same period last year, but £11.3bn less than forecast by the Office for Budget Responsibility (OBR). Borrowing for the financial year to date has now reached £56.6bn, according to the ONS. Meanwhile, public sector debt excluding public sector banks was £2,578.9bn at the end of July 2023, around 98.5% of the UK’s GDP, up almost 2% on last year and at levels last seen in the 1960s. The equivalent figure for the end of June 2023 has been revised down to 99.5%, with the latest GDP figures coming in stronger than previously forecast. Chancellor Jeremy Hunt said: "As inflation slows, it's vital that we don't alter our course and continue to act responsibly with the public finances. "Only by sticking to our plan will we halve inflation, grow the economy and reduce debt."
Britain has received a surge in job searches from overseas during the past year, partly reflecting a post-Brexit relaxation in work visa rules for non-European Union nationals, figures from recruitment website Indeed showed on Tuesday. A record 5.5% of searches for British jobs on Indeed's website in June came from potential applicants outside the country, up from 4.4% a year earlier and an average of 3.6% from 2017 to 2019. Pawel Adrjan, Indeed's director of research for Europe, the Middle East and Africa, said the increase showed a growing interest in higher-skilled jobs like software development from non-EU applicants, and a shift from lower-skilled roles European workers had filled before Britain left the EU in January 2020. "The UK Government's new immigration policy is operating as intended," Adrjan said. EU-based job seekers accounted for 1.4% of Indeed's UK job searches in June - down slightly from before Brexit - while non-EU interest has more than doubled to 4.1% of searches. India, Nigeria, South Africa and Pakistan were some of the main origins for searches. Post-Brexit, visa rules were relaxed to no longer require employers to show they were unable to hire a British or EU worker, as long as they were for roles that paid at least £26,200 a year - slightly below Britain's average annual wage - and offered at least the going rate for that type of job.
PLCs could be permitted to withdraw up to £50bn from staff pension schemes if Government plans for a shake-up of the rules goes ahead. Returns on investments in government bonds – known as gilts – have seen workplace pension schemes go from being well in the red to significantly cashed up over the last 24 months, a report in The Times says, citing actuary consultants at Barnett Waddingham who found pensions schemes belonging to the FTSE 350 have a total of £50bn in surplus assets, above the 105% funding required by the Pensions Regulator in case the employer goes bust. Firms including HSBC, Natwest, Sainsbury’s and Tesco are among the FTSE 100 groups that could be beneficiaries, The Times adds. The Department for Work and Pensions opened a consultation in July on whether rules on employers withdrawing surpluses from defined-benefit schemes could be relaxed.
The financial services industry is still a “jewel in Britain’s crown that even the doomsters cannot deny,” City minister Andrew Griffith said yesterday, after it was revealed that jobs in the sector hit a record high, climbing to 1.2m in first quarter of this year, 34,000 more than the end of 2022. Griffith told the Daily Mail: “Our vision for Britain as the most open, innovative and competitive financial centre in the world is bearing fruit”. He added that many of the initiatives the Government has introduced to reinvigorate the City’s capital markets – such as making changes to the stock market listing regime and directing funds from British pension funds into domestic start-ups – would not have been possible if the UK was still in the EU, which was proof that Britain had “seized the opportunities of Brexit”.
Holiday companies and consumer group Which? have written to the Prime Minister requesting that the Civil Aviation Authority (CAA) be given stronger powers to punish air carriers for poor customer service and failing to uphold consumer rights around refunds and cancellations. At the moment, the CAA cannot directly fine an airline, but has to apply to the courts for an enforcement order against them. According to the letter, airlines are “routinely failing what's in their control,” including obligations such as providing passengers with “clear and timely” information when flights are disrupted. Signatories include the CEOs of Riviera Travel, Love Holidays and Thomas Cook, as well as the general counsel of On the Beach and the executive director of the Association of Independent Tour Operators. Rocio Concha, Which? director of policy and advocacy, said: “Thousands of passengers have been subjected to unfair and in some cases unlawful treatment by airlines – and enough is enough. We're calling on the PM to show he is on the side of holidaymakers by giving the aviation regulator the power to issue substantial fines to airlines when they flout the law.” In late June, the Department for Transport said the CAA should be allowed more enforcement powers over the airlines it regulates, but the Government has not released a legislative timetable to pass these reforms.
A survey of 4,000 people by consumer group Which? found high energy bills have put financial, physical and emotional strains on consumers. Nearly nine in 10 (85%) households are trying to cut back on their energy usage, Which? said, and almost half (46%) said they did not turn their heating on when it was cold last winter. This equates to an estimated 13m households nationwide. Meanwhile, four in 10 (37%) of those surveyed worry their ability to recover from illness is worse now than before the cost of living crisis began."I really struggle, we are always cold at home [but] I’m too scared to put the heating on," a woman with an annual household income of less than £15,000 told Which?. “It has had a negative impact in all aspects of my life."
A third of working tenants in England do not have enough savings to pay rent if they lose their job, putting them at risk of losing their home, according to research by Shelter. The housing charity’s survey of more than 2,000 tenants found that 55% had seen their rent go up this year and 37% were struggling to pay, or had already fallen behind, as a result of an increase. 51% of those who were working had a month or less worth of rent put by, Shelter found, including 34% who said they would not be able to afford to pay any rent at all from their reserves. This means that across England 2.2m adults could immediately fall behind on their rent if they lose their job, and 3.2m are one pay cheque away from losing their home, Shelter’s report concluded.
The CEO’s of Britain's largest companies saw their pay jump 16% in 2022, sending their average earnings to 118 times the median UK full-time workers, according to the annual research from the High Pay Centre. The median pay of a FTSE 100 CEO last year hit £3.91m, the highest level since 2017 and 500,000 pounds up on 2021, but not as high as in 2017 when they hit an average of £3.97m. Meanwhile, the ratio of the median CEO's pay to a median UK full-time worker, at 118, was up from 108 times in 2021 and 79 times in 2020, the think tank, which campaigns for fairer pay and a greater voice for workers on company boards, calculated. "At a time when so many households are struggling with living costs, an economic model that prioritises a half a million pound pay rise for executives who are already multi-millionaires is surely going wrong somewhere," said High Pay Centre Director Luke Hildyard. The highest paid CEO last year was AstraZeneca’s Sir Pascal Soriot, who earned £15.3m.
Shoppers are being warned about a spate of fake websites attempting to scam bargain hunters by pretending to offer heavily discounted goods from the collapsed budget chain Wilko. At least 10 fake websites purporting to sell Wilko items at discounted prices – some of which carry the Wilko name in the website address – have sprung up after the retailer’s collapse, the Guardian says. The administrators are trying to get the sites shut down, saying: “We have been made aware of a number of fake Wilko websites which are offering Wilko products at heavily discounted prices. These websites are not genuine and have been set up to scam users, the only legitimate Wilko website is www.wilko.com”.
Waitrose and John Lewis have begun offering free food and soft drinks to the police in the hope their visible presence in the store may help combat thefts from the stores, “even just having a police car parked outside can make people think twice about shoplifting,” Nicki Juniper, head of security at the John Lewis Partnership, said. They will also be able to use the John Lewis staff subsidised canteen; have hot meals for £2 and £3; and use the staff seating areas and bathrooms. “Retailers across the board are seeing a rise in crime,” Juniper added. This isn’t driven by a need to put food on the table, but rather professional shoplifters stealing for greed over need.” Staff have also reported an increase in aggression from shoppers since pre-covid. Retailers have lost £1bn to shoplifting in the past year, according to figures from the industry body the British Retail Consortium, as the number of thefts rose 26% in the past year.
The Competition and Markets Authority (CMA) has cleared Broadcom's $69bn acquisition of VMware. The CMA previously raised concerns about the potential implications the merger could have on competition within the industry, but has now concluded it is unlikely to curtail competition significantly in the UK's server hardware components market. "Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK," Richard Feasey, chair of the independent panel carrying out the phase two inquiry said. "Even if the UK market represents a small proportion of total sales in a merger, the CMA's job is to scrutinise deals like this thoroughly to ensure they don't harm competition in the UK. In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead."
Former Bank of England governor Mark Carney has been named chairman of a new board of directors at US financial information and media firm Bloomberg. Bloomberg's head of product Vlad Kliatchko was also appointed as CEO in the major shakeup of the company's management, the BBC says. Carney has previously worked with Mr Bloomberg on climate-related projects and is expected to continue in his role as chairman of Canadian investment firm Brookfield Asset Management.
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