Published: 12 April 2024
By Suzanne Evans, Director, Political Insight
Fake postage stamps are coming from China, an in-depth Telegraph report claims this morning. Apparently, highly convincing forgeries from the Communist country are flooding into the country, meaning letters sent with stamps bought from apparently legitimate stores are later flagged by Royal Mail scanning software as fraudulent. Recipients are then forced to pay £5 to collect them. Security experts and MPs are describing the mass forgery as an “act of economic warfare” done with the “tacit approval” of the Chinese Communist Party, and akin to “printing counterfeit money”. The Telegraph says it has identified four major Chinese suppliers offering to print up to one million counterfeit Royal Mail stamps a week for as little as 4p each, and deliver them to Britain within days. These forgeries are then bought unwittingly by small retailers from wholesalers in bulk, online retail giants such as Amazon and eBay, or from fake websites that mimic the official Royal Mail store. South Thanet MP Craig Mackinlay accidentally bought counterfeit stamps on Amazon last year which were “virtually perfect except for the barcode”. He said he had raised the “serious matter” with the National Crime Agency and Trading Standards but “received woeful responses”. Former Conservative party leader Sir Iain Duncan Smith called for a criminal investigation and said forging stamps needed to be treated with the same severity as counterfeiting money and urged a firmer stand against China “because the more this goes on, the more it undermines the very nature of law and order in the UK.” Alan Mendoza, founder of national security think-tank the Henry Jackson Society, said: “It is inconceivable that a large-scale counterfeit operation like this could be occurring without the knowledge and therefore tacit approval of the Chinese Communist Party given its strict control over the Chinese economy. As such, it’s an obvious form of economic warfare and should be called out for what it is with economic repercussions for China if it does not rein it in.” China is also believed to be behind a rise in counterfeit stamps that have infiltrated the United States Postal Service (USPS). The USPS now reserves the right to open and destroy any post that has been sent using counterfeit postage. The Royal Mail introduced barcode stamps in 2022 in an effort to put a stop to earlier forgeries that were costing the postal service tens of millions of pounds every year, and despite this latest wave of forgeries, stamp fraud has since fallen by 90%. A spokesman said: “We are working hard to remove counterfeit stamps from circulation. We regularly monitor online marketplaces to detect suspicious activity, such as sales of heavily discounted stamps and work closely with retailers and law enforcement agencies to identify those who produce counterfeit stamps”.
Import duties on 126 items including car parts, chemicals, metals, flowers, leather and fruit juice has been suspended from today until June 2026, all of them goods which are not produced in sufficient quantities in Britain. Minister for Trade Policy Greg Hands said the move was in response to the needs of business, and that 245 applications for duty suspensions had been considered. "From automotives to food and drink, we're helping businesses to reduce import costs and remain competitive," Hands said in a statement to Reuters. Analysis by specialist credit insurance firm Allianz Trade said the removal of tariffs on the goods would reduce inflation by 0.6% and cut import costs by close to £7bn. The scheme is compliant with the World Trade Organization's (WTO) Most Favored (sic) Nation status and means the removal of tariffs applies equally, regardless of where the goods have come from.
US inflation came in hotter than expected for a third consecutive month in March, making the likelihood of imminent interest rate cuts both there and here far less likely. Data from the Bureau of Labor Statistics showed a Consumer price index (CPI) rise on February’s 3.2% to 3.5%. Core inflation – which strips out volatile components such as food and energy – remained at 3.8%. “This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip,” Seema Shah, chief global strategist at Principal Asset Management said. US inflation peaked at over 9% in January 2022. Also working against the possibility of an early interest rate cut are las week’s figures showing the US labour market added 303,000 jobs, well ahead of the 214,000 expected by economists. Paul Ashworth, Chief North America Economist at Capital Economics, told City A.M. the figures “pretty much kill off hopes of a June rate cut,” a statement echoed by Bank of England policymaker Megan Green, a member of the Bank’s nine-member monetary policy committee (MPC) interest setting team, who said financial markets were betting “in the wrong direction” when they judged how quickly the central bank would make its first rate cut. She too said there are a “way off” because the underlying causes of inflation in the UK remain persistent, hence rates will need to stay higher for longer than expected.
Small and medium sized businesses (SMEs) showed no signs of significant growth in the first quarter of 2024, according to the British Chambers of Commerce (BCC), which conducts a quarterly survey of its members. David Bharier, head of research at the BCC said it was “further evidence that the UK economy is trapped in a low-to-no growth state,” although 56% of firms questioned said they expected revenues to increase over the next 12 months. Bharier added that “lack of investment among most SMEs” is also, however, a real concern. “Inflation, skills shortages, and an almost endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at the government level, have led to paralysis for many businesses,” he said. The BBC’s survey also revealed that 46% of BCC member companies plan to raise their prices over the coming year as they struggle with high wage bills.
House prices: A closely watched survey conducted by the Royal Institution of Chartered Surveyors (Rics) suggests house prices across the UK will return to growth within the next 12 months. Property prices stabilised in March after months of decline amid the impact of higher interest rates and the cost of living crisis, the Rics says. There was an 8% increase in new buyer enquiries in March, he sharpest increase since February 2022, while 13% of respondents noticed a pickup in new instructions last month. The survey indicates that house prices “have stabilised at the headline level, with forward-looking metrics suggesting that an upward trend may emerge later in the year,” the industry body added.
The Advertising Standards Agency (ASA) used Artificial Intelligence (AI) to sift through 3m online ads last year, it has been revealed, and is set to review 10m this year. The ASA’s Active Ad Monitoring system sweeps the internet and social media and then returns intelligence on potential breaches of its code, City AM’s Jess Jones explains. The regulator embedded the system into its strategy in 2023, and is now said to be “heavily reliant on it to detect irresponsible adverts that break its rules”. It is increasingly being used to detect “irresponsible” adverts for vapes, gambling, cosmetic surgery procedures abroad and inaccurate climate change claims, however the ASA says the technology is “always checked by humans and is only there to help enhance their work and make their lives easier”. The watchdog also said in its annual report that it received over 39,000 complaints last year, up 16% from 2022, about more than 25,000 ads. Online advertising and television advertising were the top two most complained about forms of media, rising 14% and 19% respectively. Some 27,378 ads were amended or withdrawn in 2023 as a result of the ASA’s intervention.
A record number of 43,325 complaints was received by the ASA in 2021.
Wealthy foreigners are being told to “get out while they still can” because of the Labour Party’s promised crackdown on non-doms. Jon Elphick, international tax adviser at Mark Davies & Associates told The Telegraph Labour’s plans risk encouraging “ultra-high net worth clients who would be paying a lot of tax” to relocate,” he added. Shadow Chancellor Rachel Reeves said this week that Labour will close a loophole that gives non-doms – who live in Britain but avoid paying UK tax on money they make overseas – have until April next year to put overseas funds into a trust. After that, their wealth will not be exempt from inheritance tax. Labour hopes to raise £430m from the change, but Elphick said his clients are saying they simply will not stay in Britain. “One Israeli client last week said they had had enough of how the tax system had changed and as a result will move, probably to Monaco, Switzerland or Dubai,” he said. “This is someone who pays £13m of income tax and capital gains tax a year in Britain and they’ve done this for 15 years”. Simon Goldring, of Excello Law, shared his concerns, saying: “My clients are not happy. You’re faced with a stark choice: stay in the UK and get taxed, or leave. Some are having their financial structure totally destroyed. It’s a case of get out while you still can.” The Office for Budget Responsibility expects 10-20% of non-doms to leave the UK because of the tax raid.
Heathrow airport says a new £10 charge for some non-British travellers who just change to a connecting flight at the hub, has been a “huge blow,” despite reporting a second consecutive month of record passenger traffic. CEO Thomas Woldbye called on the Government to “exempt airside transit passengers from the new Electronic Travel Authorisation (ETA) scheme to avoid encouraging passengers to spend and do business elsewhere.” The ETA charge, plus a wait of up to three days for an online permit, was first introduced for Qatari nationals in November, and Heathrow says 19,000 fewer Qatari passengers have passed through since then. Bahrain, Kuwait, Oman, the United Arab Emirates, Saudi Arabia, and Jordan were added on 1st February, and the Home Office is planning to roll it out across the board. In an interview with City A.M. in November, Virgin Atlantic chief Shai Weiss also described the policy as “short-sighted,” and British Airways CEO Sean Doyle has hinted that he thinks the introduction of the ETA will make the airline industry uncompetitive. A Home Office spokesperson said: “We are introducing an Electronic Travel Authorisation scheme to enhance border security by increasing our knowledge about those seeking to come to the UK and preventing the arrival of those who pose a threat. Requiring transit passengers to obtain an ETA will stop people who may use connecting flights to avoid gaining permission to travel to the UK.” Around 6.7m passengers passed through Heathrow in March, up 8% on the previous year, bringing the total number of passengers using the airport so far this year to 18.5m.
Asda has been forced to share draft financial results with investors after its auditor failed to sign off company accounts, The Telegraph reveals. The supermarket’s bosses took the unusual decision to share a private presentation with lenders late last month, during which Asda revealed unaudited profits of £248m from revenues of £25.6bn for 2023, the newspaper says. Despite swinging to a profit after a £112m loss in 2022, earnings were dented by £441m of finance costs borne from the retailer’s £4.2bn debt pile. Last summer, EY quit as the company’s auditor after one of its former partners starting a romantic relationship with billionaire co-owner Mohsin Issa, and was replaced by KPMG. The supermarket is also losing grocery market share; it now has just 13.8% of the sector, down from 14.8% in early 2021, according to retail analysts Kantar. Asda is not expected to publish its accounts until later this month, it is understood.
Lloyds Banking Group is preparing to make job cuts in its risk management division after an internal review found two-thirds of Lloyds’ executives thought risk management was impeding progress, and fewer than half of workforce believed “intelligent risk-taking” was encouraged. The news, revealed by the Financial Times, is evidenced by a memo sent to the Group last month by chief risk officer Stephen Shelley, who wrote: “We know people are frustrated by time-consuming processes and ingrained ways of working that impede our ability to be competitive and leave us lagging behind our peers”. He added that the Bank was “resetting our approach to risk and controls” following the review, focussing initially on “non-financial risks” and introducing a new model to allow it to “move at greater pace” on its group strategy.
Poundstretcher is being sold to Fortress Investment Group, which also owns Majestic Wine and Punch Pubs, Sky News has learnt. The price Fortress is paying current owner Aziz Tayub for the discount retail chain is unclear. Poundstretcher trades from more than 320 stores across the country; is based in Leicester; and employs approximately 4,000 people. It was established in 1981 and sells food, toiletries, garden products and homeware brands.
Ted Baker's American licensing partner OSL has indicated it too it could take control of the British arm of the fashion brand, joining Next and Mike Ashley's Frasers Group in a potential takeover bid that is being handled by administrators Teneo. Sky News says OSL is the current frontrunner. Two days ago, Teneo said 15 stores would close with the loss of more than 200 jobs, a move Sky says it understands is necessary to assist the administrators in salvaging a future for the remainder of the business.
Marshmallows: Some marshmallows - the tiny ones and the ‘meta-sized’ ones - are not sweets, but food, the Upper Tax Tribunal has ruled, meaning they will continue to attract a zero rate of VAT. However, ‘normal-sized’ marshmallows will continue to be taxed at the current standard 20% rate. The case ends a long-running legal dispute between HMRC and the London-based wholesaler of American sweets and treats, Innovative Bites. HMRC had already accepted that tiny marshmallows are food, being cooking ingredients, but argued the giant ones are confectionery and ought therefore to be standard rated. Innovative Bites disagreed, and sued at the First Tier Tribunal argued successfully that ‘mega marshmallows’ are indeed food, because they are sold and purchased as a product specifically for roasting. In making its decision, the Tribunal considered the marketing, the packaging, the size of the product, the positioning in supermarkets and the seasonal fluctuation in sales. HMRC appealed, but the decision of the Upper Tribunal has finalised the matter. Last year, Walkers tried to argue that its Sensations Poppadoms should be zero-rated for VAT as they were designed to complement Indian meals. However, the Tribunal ruled they ‘are similar to potato crisps’ and therefore are not eligible to be zero-rated.
The UK’s National Air Traffic Service (NATS) has appointed former Rolls-Royce CEO Warren East as its new Chair. Warren East led Rolls-Royce for seven years until 2022, in a period which saw it grapple with an international bribery scandal and narrowly avoid bankruptcy during the pandemic, City AM says. He also spent nearly two decades with ARM, the British chip designer. NATs had a major computer system outage last August, which disrupted hundreds of thousands of British passengers.
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