Published: 03 April 2024
By Suzanne Evans, Director, Political Insight
Shop price inflation has fallen below 2% for the first time since the Bank of England began raising borrowing costs in December 2021. Retail prices rose by 1.3% on average in March compared to a year earlier, according to the British Retail Consortium (BRC), down from 2.5% in February. Food prices dropped 0.3% between February and March, while non-food items were 0.4% cheaper. “The latest figures will fuel hopes that interest rate cuts are imminent,” Tim Wallace, the Telegraph’s Deputy Economics Editor wrote yesterday. Analysts at investment bank Goldman Sachs meanwhile, are predicting a first interest rate cut in June.
Mortgages: Bank of England figures show mortgage approvals rose to 60,400 in February, up from 56,100 in January and the highest level since September 2022. Approvals for remortgaging also increased to 37,700 from 30,900.
Fraud: Britons have lost more than £2.6bn to investment fraud since the start of 2020, according to a Freedom of Information request to the City of London Police’s National Fraud Intelligence Bureau by the Pensions Management Institute (PMI). Between January 2020 and December 2023, investment scammers stole an average of nearly £13m per week from 98,525 victims. The average victim lost £26,773 over the four-year period. In 2023, 26,740 people fell victim to investment fraud – the most victims in one year during the period. Last year saw a total of £527m lost to investment scams, worth an average of more than £1.4m per day.
Scotland is facing a far larger deficit than the rest of the UK because of the decline in North Sea oil and gas revenues prices, the Institute for Fiscal Studies (IFS) is warning. The IFS claims the shortfall between revenues and spending will be around £2,450 greater per person in Scotland than the rest of the UK in 2023-2024; Scotland’s deficit will be £23bn in 2023-2024, equivalent to around £4,100 per person, while in the rest of the UK, the shortfall between revenues and expenditure is around £1,650 per person. The IFS also highlighted how forecasts by the Office for Budget Responsibility for North Sea income have been downgraded three times since November 2022. Oil and gas brought in revenues of £10bn in 2022-23 and are projected to yield a further £5bn in 2023-24, far lower than initial forecasts of £15bn and £20bn respectively. David Phillips, Associate Director of the IFS, said: “What this really means is that it would be very important to see substantial growth in the onshore economy if the Scottish government did not want to have to make quite substantial increases in tax rates or cuts in public spending.” “Oil and gas revenues would need to amount to around £20bn per year in 2028–29 for Scotland’s net fiscal balance per person to match the UK’s,” he added, which would be “more than four times more than what they are forecast to raise in the financial year that is about to end”.
Tax lawyers: Chancellor Jeremy Hunt’s extension to what was already the world’s longest tax code since he took office resulted in law firms posting more vacancies for tax lawyers in February than in any other month over the last two years, according to a report by professional recruiter Search and market data analysts Vacancysoft. In the City, vacancies for this role have surged by 87.5% this year, compared to the same month last year.
City broker Peel Hunt is warning that hundreds of companies could leave the London Stock Exchange over the next four years as large buyers take advantage of low business valuations. The pace of companies leaving the markets is “relentless,” the firm says, and at a time when fewer companies are listing. The number of listed companies on the FTSE Smallcap Index has reduced from 160 at the end of 2018 to 114 at the end of last year, excluding investment trusts. If this trend continues, Peel Hunt says, the last company will leave the index in 2028.
London Underground strike action is planned by ASLEF union members on Monday 8 April. Transport for London (TfL) says if the strikes go ahead, there will be severe disruption across the London Underground network, with little or no service expected. Any services that do run, will not run after 19:00.
Thames Water has called in hired advisers at Teneo, the restructuring firm that worked on the special administration of Bulb Energy, to assist with its imminent financial crisis that could lead to its nationalisation, The Guardian reports. Concerns are growing that the UK’s largest water company, which serves 15m people, could be taken over by the Government in a special administration pact amid a standoff between its shareholders - a consortium of pension funds and foreign states that own Thames Water’s parent company, Kemble, which have declined to give the company a £500m lifeline - and Ofwat, the water industry regulator, with which Thames is in disagreement over fines, dividends and how much it can charge its customers. Estimates put the cost to the taxpayer of renationalising Thames Water as high as £5bn. It has debts in the region of £14bn.
NatWest: The Treasury has suspended a bidding process to run the sale of its stake in NatWest in a move which throws doubt on the structure of the much touted ‘Tell Sid’-style retail deal, City AM reports. The government, which still owns around 30% of the lender after bailing it out during the 2008 financial crisis, has been running a competitive tender process with retail investment firms to manage the sale of a chunk of its remaining stake to the general public. However, those plans are now in limbo after the government wrote to bidders in mid-March saying it had suspended the process and was rethinking its strategy. “This decision reflects our emerging views on the type of set-up and infrastructure required to deliver this complex transaction,” the Treasury wrote, in a letter seen by the newspaper.
Nationwide: The Advertising Standards Authority (ASA) has banned adverts for the building society which starred The Crown actor Dominic West, saying they are misleading. The ASA launched an investigation into the TV, radio and press ads after receiving 281 complainants, including from rival high street lender Santander, for claiming it would not close branches as other banks have been doing. However, Nationwide has recently closed or reduced opening hours at a number of branches, Santander said. In the TV ad that aired last October and November, West plays the role of a fictional bank boss at “A.N.Y. BANK”, mocking customers, expensing a lavish company lunch and planning a branch closure. The ASA said viewers were also likely to miss qualifications within two of the ads that the pledge would be in place until “at least 2026”.
Revolution Bars had its shares suspended from trading yesterday after failing to publish its financial results. AIM-listed Revolution, which runs more than 50 bars and clubs and more than 20 pubs across the UK, is locked in talks with investors in a bid to “actively explore all the strategic options available” to stave off collapse, as announced last week.
RedCat Pub Company meanwhile, has called in the administrators. The pub chain, founded in 2021 by former Greene King boss Rooney Anand has appointed Interpath Advisory to put part of its business – RedCar Leased Pubs - into administration as it disposes of underperforming sites, having previously expanded rapidly, buying sites from rivals to control around 100 pubs and pub hotels. Five sites have closed already, and the firm is exploring releasing another 14 sites. It blames the cost-of-living crisis, inflation, high energy prices and a rising minimum wage and pensions bill. Last year, after more than doubling its number of employees from 110 people to 267, the cost of wages, National Insurance and pensions jumped 70% to £1.76m. The company said the administration is an “isolated action” with no further impact on the RedCat or its Coaching Inn Group estate.
Adnams Brewery is also exploring a sale, Sky News reports. The 134 year-old Suffolk brewery is sounding out prospective buyers for an outright sale as well as contacting prospective investors in the hope of securing a cash injection, with the latter scenario being the preferred option. Adnams says it will also consider the sale of some of its freehold assets from its pub estate, Sky’s source said.
Redx Pharm is the latest company set to leave the London Stock Exchange. The AIM-listed Cheshire-based drugmaker said it is seeking to becoming a private company, saying the AIM is holding back its valuation. Redx also cited share price volatility, access to financing and the high costs and regulatory burdens of maintaining a public company, as factors in the decision.
British Steel has won a multimillion-pound contract to supply approximately 9,500 tonnes of rail track for Egypt’s first fully electrified mainline and freight network, stretching from the Red Sea to the Mediterranean. The network is 410 miles long and will carry trains for passengers and goods up to a maximum speed of 155mph.
Superdry CEO Julian Dunkerton has decided against making an offer for the indebted company, sending its stock 52% lower yesterday. Superdry had been negotiating a £10m loan with one of its existing lenders - the turnaround specialist Hilco - on top of more than £100m of existing debt.
Royal Mail has appointed Emma Gilthorpe, Heathrow Airport’s COO since 2020, as its next boss. She will be the fourth Royal Mail CEO in five years. She replaces current Royal Mail CEO Martin Seidenberg, who took the job on an interim basis alongside his existing position as head of Royal Mail’s parent company International Distribution Services when Simon Thompson left abruptly in May 2023 after a year-long battle over pay and conditions with the Communication Workers Union. Gilthorpe was among the favourites to become the new CEO of Heathrow last year, but that position was given to Thomas Woldbye, the former boss of Copenhagen Airports. She leaves Heathrow amid a backlash over her plans to outsource security roles to ICTS, a third-party supplier.
EVs: The value of secondhand electric cars has tumbled according to research by the AA. The average price of the 20 most popular used electric and hybrid vehicles fell 12% in the three months to March compared with a year ago. Supply of new EVs has also begun to exceed demand as interest in greener cars wanes amid heightened concerns about lengthy charging times and limited driving ranges, the driving body says.
Tesla has posted a drop in quarterly deliveries of its electric vehicles for the first time in four years. The 386,810 vehicles it delivered in the three months to March 31st is a drop of around 20% on the previous quarter and an 8.5% drop on a year ago. Elon Musk’s firm blamed “the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin”.
Billionaires: The world now has 2,781 US dollar billionaires, more than ever before, and an increase of 141 on 2023, according to Forbes’ annual ranking of the world’s richest people. The billionaires are also collectively worth more than ever, with combined assets estimated at $14.2tn – a $2tn increase on 2023 and more than the GDP of every country except the US and China. Their collective wealth has risen by 120% in the past decade. Among those making the list for the first time is singer Taylor Swift. Three Brits made the top 200: hedge fund manager Michael Platt in 104th place ($18bn worth), chemical tycoon Jim Ratcliffe in 111th ($16.5bn) and bagless vacuum cleaner inventor James Dyson in 140th ($13.6bn).
Two stories you may have missed over the Easter holiday….
Russia/Ukraine Insurance battle: Some of London’s major insurance companies have failed in their attempt to prevent multi-billion-pound lawsuits being launched against them by aviation companies moved from the English courts to Russia, City AM reports. Planes were grounded when sanctions followed Russia’s invasion of Ukraine, leaving aircraft leasing companies out of pocket, with planes stuck on Russian territory. However, insurers and reinsurers of the leasing companies declined to pay out, hence the litigation launched at London’s High Court against them. However, the insurance companies – including AIG, AXA, Allianz, Liberty and Lloyd’s of London - argued the cases should be heard in Russia. Mr Justice Henshaw, however, disagreed, saying in his Judgement last week that the aviation firms had “shown strong reasons why the court should decline to stay these proceedings,” and noting that they were “very unlikely to obtain a fair trial in Russia”. Read the full story at https://www.cityam.com/london-
Sam Bankman-Fried, the 32-year old founder of collapsed cryptocurrency exchange FTX, was sentanced on 28th March to 25 years in prison for masterminding a fraud that cost investors, lenders and customers $11bn (£8.7bn). New York Judge Lewis Kaplan said Bankman-Fried had shown “never a word of remorse for the commission of terrible crimes” and “exceptional flexibility with the truth” during the trial. He also noted that Bankman-Fried had attempted to tamper with a witness in the run up to the trial and said of his witness testimony: “I’ve been doing this job for close to 30 years. I’ve never seen a performance like that.” The jury took just four hours to find him guilty on all counts in November. FTX was at one point valued at $32bn, enjoyed celebrity endorsements, and the world’s second biggest cryptocurrency exchange prior to its collapse. Bankman-Fried’s lawyers said he plans to appeal the jury verdict.
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