Published: 22 February 2024
By Suzanne Evans, Director, Political Insight
The International Monetary Fund (IMF) has been slammed by Harriet Baldwin MP, chair of the influential Treasury Select Committee, who said its “outright refusal to let us scrutinise their forecasts of the UK economy in public is infuriating,” given the way in which the body makes “public pronouncements about the UK from their perch in Washington”. The IMF has frequently waded into UK politics, most recently advising Chancellor Jeremy Hunt not to cut taxes in the Budget next month but increase public spending instead. After this, Baldwin’s committee invited both the IMF and the Organisation for Economic Cooperation and Development (OECD) to give evidence to MPs ahead of the Budget, she said, but both refused. “As the IMF is a public body partly funded by the UK as a shareholder, I find this incredible,” she added.
Bank of England policymaker Swati Dhingra has warned that leaving interest rates at their 16-year highs of 5.25% risks “scarring” parts of Britain’s economy and hurting households struggling amid a cost of living crisis. At an event hosted by MNI Connect, she said: "Waiting for lagging indicators of domestic relative price growth to fall sharply before reducing rates comes with a cost of foregone improvements in living standards and a risk of lowering supply capacity for the future". Dhingra was the only member of the Monetary Policy Committee to vote for a cut in interest rates at the Bank’s last meeting earlier this month.
Britain is leaving the 1998 Energy Charter Treaty, following nine EU member states including France, Germany, Spain and the Netherlands which have already done so. The treaty allows energy companies to sue governments over policies that damage their investment, and has in recent years been used to challenge policies that require fossil fuel plants to shut, Reuters explains. "The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely," the minister of state for energy security and net zero, Graham Stuart, said in a statement. "Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero." Withdrawal, will take effect after one year.
Meanwhile, economists appearing before the House of Lords’ Economic Affairs Committee on Tuesday warned that the cost of net zero will be far greater than the public is made to believe, the Telegraph said yesterday. Olivier Blanchard, the former chief economist of the International Monetary Fund, said: “The public does not believe or has not been made to understand that is going to be costly for them. It is going to be costly and that message has to be sent out.” Sir Dieter Helm, an economics professor at Oxford University and former adviser to Boris Johnson, said it was “delusory to think” that the net zero transition would pay for itself. “It’s much, much more expensive than people imagine,” he said.
The first UK banknotes featuring Charles III will be released on 5th June, the Bank of England has said.
Senior civil servant Sarah Munby has written to Business Secretary Kemi Badenoch to deny claims made by former Post Office Chairnam Henry Staunton that she told him to delay compensation payments to victims of the Horizon scandal. "It is not true that I made any instruction, either explicitly or implicitly, to Mr Staunton to in any way delay compensation payments. I did not,” she wrote. “Neither Mr Staunton's note, nor the contemporaneous note that my office made, suggest otherwise,” she added. "In fact, no mention of delaying compensation appears in either note." Munby also denied reports that she told Staunton to "hobble" into the next General Election instead of focusing on long-term issues at the Post Office. Yesterday, Staunton said "the clear message" he had taken away from his conversation with Munby was that some way needed to be found "of avoiding any additional call on the Treasury this side of the election". Badenoch also denied the Post Office chair had been told to stall payments, saying there was "no evidence" to support the claim and accused him of spreading "made-up anecdotes".
British manufacturers raised prices by the most in seven months and orders fell in February, figures from the Confederation of British Industry (CBI) have revealed. The CBI’s monthly order book balance increased to -20 in February from -30 in January, below their long-run average of -13. Expectations for average selling price inflation rose to +17 this month, up from +9 in January, and their strongest since July 2023.
Vauxhall owner Stellantis will make electric vans at its factory in Luton from 2025, helping to secure the future of 1,500 UK jobs at the plant, it says.
Profits at Rolls-Royce more than doubled last year to £1.6bn, the FTSE 100 firm says, with revenue increasing mostly on the back of booming demand for its aircraft engines.
Ineos founder Sir Jim Ratcliffe has warned the EU that its green taxes are driving away investment and risk destroying its €1 trillion (£860bn) chemicals industry. In an open letter to the EU Commission President Ursula von der Leyen, Ratcliffe said Europe was “sleepwalking towards offshoring its industry, jobs, investments, and emissions,” and that soaring energy prices and net zero policies aimed at cutting emissions meant the Continent was “struggling” while the other three key global regions for chemical manufacture - the US, Middle East, and China flourished. The Telegraph reports that in a separate speech at the European Industry Summit on Tuesday, Ratcliffe said: “The cost of gas in Europe is five times more expensive than in America. And electricity is still four times the price in Europe as in America. We in the chemicals world have to pay for that”. He added: “Carbon taxes, … are a burden that manufacturers in Europe have to carry, but they don’t apply to imports. If you look at Ineos today, we’re paying about €150m, but by 2030 that would rise to €2bn. That’s just not sustainable.” He highlighted his first-hand experience of the “flawed European approach,” to reducing carbon emmissions, talking of how Ineos had invested €4bn in a new petrochemicals facility in Antwerp, only for it to have its licence taken away over what it said were “trivial” nitrogen oxide emissions equivalent to a family barbecue. Last autumn, the company announced plans to close its refinery at Grangemouth, which is linked to a petrochemical plant, over rising UK costs. Ineos operates at 194 sites across 29 countries, generates $61bn annually and employs over 26,000 people.
Britain and Europe must work together to resist an onslaught of cheap Chinese electric vehicles (EVs), Luca de Meo, the CEO of Renault has warned in an article written for Autocar magazine. He accused European governments of focusing on “deadlines and fines,” over-regulation, and failing to support industry. In contrast, he said, the US and China backed their homegrown automotive companies with generous subsidies and supportive industrial policies. “With the internal combustion engine, our leadership was undisputed. For a century, we benefited from our expertise with this technology, and it was a barrier to entry for newcomers to the industry,” he wrote, adding: “Today, Europeans find themselves in a position of relative fragility.” “In addition, while the Americans massively stimulate and incentivise the industry and the Chinese organise it through planning, we Europeans regulate, often with no coherence and without any holistic view of our challenges.” China surpassed Japan last year to become the world’s biggest exporter of cars, with more than 460,000 Chinese-made vehicles registered in Europe during the first nine months of 2023.
Lloyds Banking Group has posted a pre-tax profit of £7.5bn for 2023, up 57% from £4.8bn in 2022 and an all-time high for the lender. The group, which owns Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows, also said it has set aside a sum of £450m for potential fines and compensation for motor finance customers. The Financial Conduct Authority is conducting an investigation into historic motor finance commission payments.
London-listed payments company PayPoint has announced a partnership with Royal Mail across its Collect+ network, the UK Out of Home (OOH) parcel pick up, drop off and send service. The multi-year agreement will enable parcel drop off for Royal Mail customers at 5,000 Collect+ stores in communities across the UK by the summer. Martin Seidenberg, Royal Mail’s group Chief Executive of International Distributions Services, said: "As customer preferences have evolved, Royal Mail has already opened up a variety of new ways for customers to access its services, including more online postage options through our website and app, 24/7 drop off at locations like parcel postboxes and collection from home through Royal Mail Parcel Collect."
Aldi says it plans to create some 5,500 jobs in the UK this year as part of plans to continue growing "at speed.” The roles will include in-store positions, such as cleaners, assistants and managers, as well as roles in its distribution centres and head office. Previously, the German discounter said it will open 500 further stores across the UK as part of a £1.4bn investment programme.
The iconic BT Tower in London is to be sold to MCR Hotels for £275m. MCR plans to preserve the BT Tower "as an iconic hotel, securing its place as a London landmark for the future," it said. Completed in 1964, the BT Tower overtook the Millbank Tower to become the tallest structure in London until 1980, when it was surpassed by the NatWest Tower. It was opened for operations in 1965 by Prime Minister Harold Wilson. As well as acting as a hub for the UK's communication networks, the tower was open to the public until 1971, with a restaurant making use of the revolving top floor.
Shares in FTSE 100 miner Glencore dropped sharply yesterday after the firm reported a 50% slump in annual profits for 2023. Full-year adjusted EBITDA totalled $17.10bn for the 12 months to 31st December, down from $34.06bn in 2022.Glencore blamed "the rebalancing and normalisation of international energy trade flows, with coal and LNG, and to a lesser extent, oil prices materially declining". Profits in the metals division were also down 41% on the year at $5.4bn due to lower cobalt, nickel and zinc prices, as well as reduced volumes, while energy earnings sank 55% to $8.5bn on the back of significantly lower coal prices. However, the company said it continues to "enjoy significant financial headroom and strength".
Bytes Group shares also plunged over 18% yesterday after CEO Neil Murphy steeped down with immediate effect after it was revealed he made several trades in the company’s shares without disclosing them. Bytes, a FTSE 250 software firm, has launched an investigation. Murphy, who has worked at the company since 1997, is being replaced on an interim basis by Sam Mudd, an executive director at Bytes and the managing director of Phoenix Software, a subsidiary of Bytes.
A group lawsuit brought initially by 924 students from University College London (UCL) over Covid-19 and strike-related disruptions will proceed to the High Court after settlement talks break down. The students argue the university breached its contract with them between 2018 and 2022 because there was a material difference between what students paid for and what they actually received. Since the case was filed, the number of UCL claimants has increased to around 5,000. City AM says there are similar claims being prepared against more than 80 other UK universities; to date 17 other UK universities have been sent letters before action, including LSE, King’s College London, Imperial College London and the Universities of Manchester, Leeds, Birmingham, Bristol, Warwick and Cardiff.
The Serious Fraud Office (SFO) made four arrests in Merseyside and Greater Manchester yesterday in relation to its investigation into failed property company Signature Group, which collapsed in 2020 owing up to £140m to more than 1,000 domestic and overseas investors who had been promised returns of between 8% and 15%.
Former Deputy Prime Minister and Foreign Secretary Dominic Raab has been hired as a 'senior strategic adviser' ono global affairs at Appian Capital Advisory, a London-based private equity firm specialising in mining sector investments. Raab has already said he plans to quit as an MP come the General Election. It has been reported he will be paid £118,000 a year for the role.
Ed Clarke, the leader of Boeing's troubled 737 Max programme is to leave the company after 18 years. A piece of one of Boeing’s jets blew off during a passenger flight in January; planes are still grounded while an investigation takes place. Boeing said his departure is part of a wider shake-up of the commercial airplane division.
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