Published: 07 November 2023
By Suzanne Evans, Director, Political Insight
Forecasts by the Government’s financial watchdog that Brexit would cause significant damage to UK-EU trade have failed to materialise and created “a false narrative” in the minds of the public, according to think tank the Institute for Economic Affairs (IEA). Before Britain’s exit from the EU, the Office for Budget Responsibility (OBR) predicted the UK economy would shrink by about 4% in the long run as a consequence of leaving. In reality, the IEA demonstrates, the UK’s trade patterns with the EU have continued in much the same way as before. British exports to EU countries rose 13.5% between 2019 and 2022, before and after Brexit, while exports to non-EU countries grew by 14.3%. Meanwhile, UK services exports rose by 14.8% to EU nations and by 22.1% to non-EU countries. IEA economist Catherine McBride said that although the Covid pandemic response, rising energy prices and so-called rules of origin tariffs had influenced some trading patterns, there was no evidence of overall negative effects attributable to Brexit. “A false narrative that Brexit has harmed UK trade is now firmly entrenched in the British public psyche, but this just isn’t true.,” she said. Business Secretary Kemi Badenoch is expected to reference the IEA’s report in a speech later today to kick off the Government’s International Trade Week. “This is why I just don’t agree with the narrative that Brexit has ‘severely damaged’ our economy, she will say. “Every major country, especially in Europe, has faced significant economic challenges over the last few years. We should stop taking ourselves down, and instead talk ourselves up”.
New licences for oil and gas projects in the North Sea are set to be awarded annually, under Government plans set to be announced in tomorrow’s King’s Speech. There is currently no fixed period between licensing rounds. A spokesperson for the Department for Energy Security and Net Zero said the new policy would relate to offshore production licences, applications for which will continue to be assessed by independent regulator the North Sea Transition Authority (NSTA). According to the trade body Offshore Energies UK, there are just under 300 active oil and gas fields in the North Sea, but more than half of them will have ceased production by 2030, and Conservative Ministers have accepted the need to continue to drill for new sources ahead of Net Zero targets. Labour says it will not allow any new licences to be granted if it wins the next General Election, but will honour any existing licences granted before then.
A mass exodus of childminders and nursery staff risks scuppering Government plans to extend the offer of 30 hours of “free childcare” to children aged between nine months and two years by 2025, the Guardian reports. More than half of all nursery workers surveyed by the Early Education and Childcare Coalition (EECC) said they were considering or planning on leaving the sector in the next 12 months, meaning there were likely to be a “lot of disappointed parents” in areas were staffing issues will mean places are not available. The EECC report – Retention and return: delivering the expansion of early years entitlement in England – estimates that about 180,000 extra children will enter childcare settings by 2025, just as large numbers of staff say they plan to leave because of low pay, lack of career progression and increased workload.” Only 17% of nursery managers will be able to offer the extended “free hours” entitlement because of the recruitment crisis, while 35% said they would limit the number of places they offered unless the government helped out, the report claims. Sarah Ronan, the acting director of the EECC said: “Just because the chancellor says you get 30 free hours – like Oprah handing out free cars – it doesn’t make it a reality. What makes it a reality is having the infrastructure and a well-trained, qualified, well-paid workforce in place”.
Meanwhile, the BBC reports that about 250,000 mothers with young children have left their jobs because of difficulty finding suitable childcare. The broadcaster quotes a Fawcett Society survey of 3,000 working parents of pre-schoolers, conducted jointly with recruitment firm Totaljobs, which found that one in 10 mothers had handed in their notice, while twice that number had considered doing so. Mothers are also facing what The Fawcett Society is calling a "motherhood penalty" because their careers weren't progressing, the survey showed. 41% of the mothers responding said they had turned down a promotion or career development opportunity because they worried it would not fit with childcare arrangements. A high proportion of working fathers - 37% - said they had done the same. Jemima Olchawski, CEO of the Fawcett Society told the broadcaster that a lack of flexible working arrangements and affordable childcare combined with "outdated and toxic attitudes around motherhood" were holding women back. "Women, once they have children, find it's harder to progress or they're forced into part-time or low-paid jobs below their skill levels," she said.
Reuters reports that almost two thirds of UK adults are planning to cut back on spending this Christmas, citing research from Accenture, which is significantly more pessimistic than other recent surveys. Surveys published last month by Deloitte and PwC were more optimistic, with both saying about one third of Britons planned to spend less this Christmas. Accenture’s survey also found that more than half of UK adults were not planning to take advantage of discounts on Black Friday, Cyber Monday or Boxing Day.
British investors have pulled a record £1bn out of ESG funds this year amid a backlash over 'woke' stock-picking, the Daily Mail reports. Apparently 'responsible' investment funds saw a record outflow of £544m in September, bringing the year total to more than £1bn, according to figures from the Investment Association.
Over half a million self-employed workers could face unexpected tax bills because of not-so-well-publicised rule change made by HM Revenue and Customs, the Telegraph says. From 2024, the tax office will expect sole traders to report trading income for the official tax year, which ends on 5th April, and be taxed on profits calculated to that date, rather than reporting and being taxed on profits for their own accounting year end date, which for some 528,000 sole traders and partners is different. HMRC says the new rules will make reporting profits “simpler, fairer and more transparent,” but tax experts are warning that those with a business accounting year ends that does not match the tax year may find themselves facing considerably higher tax bills, as they will include more than a one year period, at an already difficult time for small businesses. However, those impacted will be allowed to spread the extra tax due in January 2025 over five years, Chris Etherington of tax firm RSM said.
There has been a 16% increase in the number of real estate investment companies going bust in the past 12 months, Mazars, the audit, tax and advisory firm has found. There were 738 insolvencies involving such businesses in the year to September 30th, Mazars said, compared with 634 businesses 12 months prior. Insolvencies amongst real estate landlords saw the highest increase, with numbers rising 35% since 2021, while estate agency businesses bankruptcies increased by 11%. Rebecca Dacre, partner at Mazars, said that “more and more businesses in the industry are reaching the end of the road”. She added: “Landlords are in a difficult position, often carrying large amounts of secured debt which leave them with little room to negotiate, especially as the property market downturn impairs the value of the property. Insolvency can be inevitable and within the residential market, will sadly take more and more rental properties off the market and away from prospective tenants”.
Ofcom is said to be drawing up plans for a broadband “supplier of last resort” regime in case higher interest rates lead to the collapse of smaller companies. The telcomms regulator has, it seems, been spurred into action by financial pressures at TalkTalk, Britain’s fourth-biggest provider, although it said its plans are not specific to any individual company. BT CEO Philip Jansen is also warning that the current economic environment is “hugely challenging” for many broadband providers. BT’s Openreach division has been in talks with Ofcom for some time to resolve potential issues, so households and businesses are not left without internet connections. TalkTalk, which has around 4m customers, in currently selling off parts of its business to raise cash to reduce £1.1bn of debt.
Some 20,000 homes in and around Guildford were left without water or faced low water pressure yesterday. Thames water blaming Storm Ciarán for the problems, which affected a Surrey treatment works. The firm set up bottled water stations across the area and tanked water supplies into hospitals.
Two former trampoline park bosses are facing jail after pleading guilty to health and safety offences that caused 11 people to break their backs. David Shuttleworth and Matthew Melling ran Flip Out Chester, an adult trampoline centre featuring 13ft-high tower from which customers jumped into a foam-filled pit. Three people suffered fractured spines on a single day in 2017, and during a seven-week period between December 2016 and February 2017, there were 270 known accidents, sparking concerns at the craze for unregulated trampolining centres. The number of injuries at the site became so severe that medics from the nearby Countess of Chester Hospital called a meeting with the park bosses following a surge in A&E attendances. The firm, which was dissolved last year, was prosecuted after an investigation by Cheshire West and Chester Council. Flip Out Chester is now under new ownership.
Trade union the GMB is calling for a parliamentary inquiry into the collapse of Wilko. The high street company went under in early August, leading to the loss of some 12,500 jobs and the closure of its 398 stores, however £77m in dividends was paid to owners and shareholders in the decade before its collapse. The GMB has written to the House of Commons business and trade select committee to call for an emergency session to hold Wilko bosses to account.
Marks & Spencer says it is set to deliver a record number of store openings this month. Nine openings include six new stores plus three store refurbishment’s, which together total an £80m investment. The stores will also support over 2,200 local jobs, the retailer says. New stores in the Birmingham Bullring, at Lakeside Thurrock and in Manchester’s Trafford Centre are among those opening in November.
The Telegraph reports on a battle for control of Selfridges, saying speculation is mounting over whether Rene Benko’s Signa investment group will have to sell its 50% stake in the iconic British department store to raise funds as it faces a cash crunch. Last week, shareholders in Signa, a retail and property investor, sought to remove Benko and sent in restructuring specialists. Signa’s €23bn (£20bn) empire also includes the Chrysler Building in New York and Berlin’s KaDeWe luxury department store. A bid to shore up the empire by selling the landmark Elbtower development in Hamburg to one of Signa’s own shareholders collapsed, escalating the crisis, the newspaper says. Signa bought Selfridges in December 2021 as part of a joint £4bn deal with Thai retailer Central Group.
Profits at The White Stuff have more than doubled within a year from £2.9m to £7m. The company said sales hit £151.4m in the 12 months to April 29, up 13.3% on the previous year. The High Street chain has 123 stores in the UK, and attracted a record 317,000 new customers over the 12-month period.
Defence secretary Grant Shapps has warned insurance giant Aviva against divesting from defence companies after the insurer wrote to investors last week saying it plans to phase out “certain companies that do not meet our Aviva Baseline Exclusion Policy”, including those involved in coal, weapons, and tobacco. Shapps hit back, telling The Daily Telegraph: “There is nothing remotely unethical about investing in UK defence and a thriving industry is crucial to protect our way of life, particularly at a time of such global uncertainty. It would be immoral for investors to turn away from our defence firms – which help employ more than 200,000 people across the UK – without whom we would not have been able to supply Ukraine with the means to defend its freedom.” In response, an Aviva spokesman then appeared to row back from the letter’s content, telling the Telegraph: “Aviva is a significant investor in UK defence companies, with £600m invested in the sector’s equities, and we have no intention of changing this.” Aviva’s Environmental, Social, and Governance (ESG) exclusion policy says the FTSE 100 firm is opposed to products causing “undue human suffering or fatalities” as they are “fundamentally misaligned” with its “core values”.
GKN Aerospace owner Melrose has signed a new $5bn (£4bn) deal with aircraft engine supplier GE Aerospace. In a statement to the London Stock Exchange, the FTSE 100 company said it anticipates GKN Aerospace sales reaching around $5bn over the 30 year life span of the GEnx engine.
Klarna, the buy now, pay later (BNPL) finance giant is setting up a new British holding company as it clears the path to a stock market flotation that could value it at more than $15bn (£12.1bn), Sky News reports. The Stockholm-based consumer employs about 5,000 people and has 150m customers globally, and could be ready to float within months if market conditions were accommodating, the newscaster claims, adding that despite the establishment of a UK company, Klana is most likely to list in New York.
Ireland’s Ryanair, Europe’s largest budget airline, is to pay its first ever dividend to shareholders after annual profits hit nearly €2.2bn (£1.9bn) after it increased fares by 24% and benefitted from an 11% rise in passenger numbers, to 105.4m. €400m (£347m) of its annual profits will be handed out, Ryanair said.
Sources close to the former Telegraph editor Sir William Lewis say he is likely to drop out of the auction to buy the newspaper group having been appointed CEO of The Washington Post by owner Jeff Bezos. Sir William, who edited the newspaper between 2006 and 2010, was attempting to gather a consortium to bid for Telegraph Media Group in the ongoing auction run by Goldman Sachs on behalf of Lloyds Banking Group. The formal sale process began two weeks ago. Other likely bidders include publisher National World, run by former Local World/Trinity Mirror boss David Montgomery; Belgian group Mediahuis, German media giant Axel Springer; Lord Rothermere’s DMGT, which owns the Mail, Metro, i and New Scientist titles; Sir Paul Marshall, the co-founder of hedge fund Marshall Wace and a major GB News investor; Czech gas tycoon Daniel Kretinsky; ex-Mail Online boss Martin Clarke; and Rupert Murdoch. The Barclay family, which owned the Telegraph until Lloyds wrested control away from them in a move to settle other debts, also wants to buy the firm back but has already had a £1bn offer rejected by the bank.
The boss of Microsoft has made a “humiliating climbdown” just months after attacking Britain for blocking its £60bn takeover of Call of Duty maker Activision Blizzard, the Daily Mail notes. Brad Smith, president of the US giant, hailed the UK as a leading player in science and technology and “an important market for companies around the world”. Seven months ago, however, he declared that “the European Union is a more attractive place to start a business” and added: “The English Channel has never seemed wider”.
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