Published: 07 November 2023
By Suzanne Evans, Director, Political Insight
The first State Opening of Parliament since the death of Queen Elizabeth II is set to begin at 11:30am today. It will be the first King’s Speech in seven decades. The speech, made by the monarch at the request of the Government, sets out what laws Ministers intend to pass in the next 12 to 18 months. Today’s address is the first to be made under Prime Minister Rishi Sunak, as the last one was 18 months ago, when Boris Johnson was still PM, albeit weeks from being forced to resign. It is also likely to be the last one called in this Parliament, as a General Election is expected next year. Queen Elizabeth II delivered the speech a total of 67 times during her reign. We will have a full round up of the measures announced in tomorrow’s newsletter.
Chancellor Jeremy Hunt will deliver his latest budget in his Autumn Statement in the House of Commons tomorrow lunchtime.
Grocery price inflation has fallen below 10% for the first time since July 2022, market researcher Kantar says. Annual grocery inflation stood at 9.7% in the four weeks to 29th October, down from 11% last mont'. "While the drop ... is positive news and something of a watershed, consumers will still be feeling the pinch," Fraser McKevitt, head of retail and consumer insight at Kantar, said. Grocery inflation, which excludes alcohol, hit a 45-year high of 19.2% in March this year.
British consumer spending grew at the slowest pace in more than a year last month, according to a survey by Barclays, which said spending on its debit and credit cards between 24th September and 24th October was 2.6% higher than a year earlier, the smallest annual increase since September 2022 and down from growth of 4.2% the month before. Adjusted for consumer price inflation - which was 6.7% in September - the volume of goods and services bought by British shoppers fell.
The eurozone looks set to tumble into recession, if a bleak report issued by S&P Global is anything to go by. The purchasing managers’ index of business activity in the single currency bloc fell to 46.5 in October, down from 47.2 in September and well below the 50 cut-off between growth and contraction. It was the weakest reading since November 2020 when Covid-19 restrictions were in place across much of the Continent, the Daily Mail says.
Average UK house prices have risen in October after six consecutive monthly falls, according to the Halifax. The typical UK property price is now £281,974, the mortgage lender said, an increase of 1.1%, or around £3,000, on September. Compared with Halifax figures from a year earlier however, house prices in October are 3.2% lower.
British Steel announced yesterday that 2,000 jobs will be lost at its Scunthorpe plant, with Chinese owner Jingye Group saying its objective was to “enhance the competitiveness of UK-produced steel and ensure a sustainable future for the company”. Jingye is closing the blast furnaces at Scunthorpe facility and will replace them with two electric arc furnaces (EAFs), one in Scunthorpe and the other in Teesside, a move it claims will reduce carbon dioxide emissions by 75% since EAFs can operate on zero-carbon electricity. The new furnaces are expected to be up and running by late 2025. Meanwhile, India-owned Tata Steel is planning to close its two blast furnaces at the Port Talbot works in south Wales, potentially jeopardising up to 3,000 jobs.
Ryanair has criticised plans by Prime Minister Rishi Sunak to crack down on “hidden” airline fees. The Government wants to tackle “drip pricing,” where airlines advertise a low price that excludes seat reservations and luggage, and The King’s Speech today is expected to announce legislation to change how such charges are presented to customers, although not ban them entirely. Ryanair has long been criticised for such tactics, and The Daily Telegraph revealed earlier this year that the airline had raked in £18bn from add-on fees over the past decade. The newspaper notes that a flight from London Luton airport to Alicante on Sunday 12th May next year costs £48.99 on its own, but adding a seat reservation and a larger cabin bag adds at least £9.50 and £17 respectively, bringing the total to £75.49. However, Neil Sorahan, the low-cost airline’s finance chief, told the newspaper: “It’s wrong, first and foremost, to get involved in the pricing strategies of any business, regardless of what sector it’s in”. “I think it’s better if governments stay out of pricing strategies and let supply and demand figure out which way that’s going to go,” he added. Michael O’Leary, Ryanair’s CEo, has argued previously that such fees are “optional and avoidable”.
An undercover investigation by the BBC’s Panorama programme has accused Boohoo of breaking promises to treat suppliers ethically. The AIM-listed retailer vowed to reform unethical practices when, in 2020, it was revealed that factory workers making Boohoo clothes in Leicester were paid less than the minimum wage and working in unsafe conditions. However, reporter Emma Lowther, who worked at BooHoo’s Manchester head office, put forward allegations that staff felt “constant pressure to drive prices lower and lower”. One employee reportedly told her “if you're not getting anywhere [with suppliers] then just say that you can get it cheaper elsewhere”, adding: “I just lie”. A BooHoo spokesman denied it had broken promises or “shied away” from addressing historic supply chain failings. He said: “As the cost of raw materials, freight and energy started to come down, the group asked its suppliers to reflect this in their pricing through discounts of between 1 and 10 per cent, and passed the savings onto customers”. Last year, Boohoo Group had 18m customers and £1.7bn worth of sales. The firm specialises in ‘fast fashion,’ getting the latest styles to customers as cheaply and quickly as possible.
Citigroup is said to be discussing job cuts of at least 10% in several major businesses as part of a sweeping reorganisation known internally as 'Project Bora Bora'. In total, the company employs some 240,000 people. CEO Jane Fraser is looking to simplify the bank by eliminating regional managers outside North America, co-heads, and tech staff with overlapping responsibilities, according to a CNBC report. Some chiefs of staff and chief administrative officers will begin losing jobs this month. Operations staff who supported businesses that have been divested or reorganised were also understood to be at higher risk of layoffs. Citigroup has around 16,500 employees in the UK across offices in London and a large technology and operations centre in Belfast. Citi has already warned of UK job losses, in a memo sent to staff in September, however no numbers were given.
"Big Four" accounting company PricewaterhouseCoopers (PwC) plans to cut around 600 jobs in the UK. "In light of lower than normal attrition rates and subdued growth in parts of the business, we are making targeted voluntary severance offers to some of our people," PwC said in an emailed statement to Reuters, without disclosing the number of employees that would be affected by the move.
More than 1,000 workers at Amazon’s Coventry warehouse are back on strike today. They also plan to strike for the next four days, so up to and including ‘Black Friday,’ a pre-Christmas sale that is one of the busiest shopping days of the year.
Pizza Express owner Wheel Topco (WT) has confirmed that it does not intend to make an offer for The Restaurant Group (TRG), whose outlets include Wagamama and Frankie & Benny’s, because of "market conditions". TRG had received a request for due diligence from WT, having already accepted a £701m offer from private equity firm Apollo Global Management in October.
WeWork has filed for Chapter 11 bankruptcy in the US, a move which will give the firm protection from its creditors and landlords as it attempts to restructure debts estimated to be as high as $50bn. The news was not unexpected; in August, WeWork interim CEO David Tolley said there was "substantial doubt" over the US office-sharing firm’s ability to stay in business, and he warned of "excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility" due to softer demand. WeWork has previously been on the brink of collapse, in 2019, after it failed to carry out an initial public offering, when it bailed out by Japan's SoftBank. When shares in WeWork were suspended yesterday, it was valued at less than $50m, when at one point it had been worth as much as $47bn (£38bn). There are concerns that WeWork’s failure could impact the commercial property market in London, as it is one of the capital’s largest tenants: real estate information firm CoStar says the collapse of the firm could push London’s current vacancy rate up from 9.2% to 10%.
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