Published: 23 April 2024
By Suzanne Evans, Director, Political Insight
Government borrowing across the 2024 financial year has come in ahead of official expectations according to figures from the Office for National Statistics (ONS). The government borrowed a total of £120.7bn, £6.6bn more than the Office for Budget Responsibility’s (OBR) March forecasts. It was, however, £7.6bn less than 2023 and around a third of what was borrowed during the covid years. Government borrowing made up 4.4% of UK GDP across the year, 0.6% lower than last year but more than the 3% averaged in the five years before the pandemic. The newly released data included public sector borrowing excluding banks for March 2024, which hit £11.9bn last month, £1.9bn more than economists' predictions of £10bn. ONS deputy director for public sector finances Jessica Barnaby said: “Spending was up about £58bn, with increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs. But with public sector income up £66bn, overall, the deficit still fell”. Ruth Gregory, deputy chief UK economist at Capital Economics, said the figures cast “further doubt on the ability of the government to unveil big tax cuts at another pre-election fiscal event.” A Treasury spokesman said: “We can’t leave future generations to pick up the tab, so we must stick to the plan to get debt falling”.
The World Bank’s chief economist, meanwhile, has said that Britain’s bloated state and high public spending makes it look more like France than America. Speaking to the Telegraph, Indermit Gill said: “The country that used to be the most like the United States in all of Europe was the UK. And you guys decided to go and become a lot more like continental Europe. Take a look at the share of government spending to GDP. You look like France, not like the US.” While Mr Gill did not comment on UK fiscal policy, when asked if the increase in the size of the British state was harmful for the economy, Mr Gill said: “Yes, in terms of growth.” Gill also aid the US was better equipped to deal with shocks because there is more local decision-making and a willingness to let badly performing companies go bust, and because of its system of less generous welfare. “The other thing is I think that there’s enough pressure to get back to work because the safety net is not that deep,” he explained.
Inheritance tax take came in at a record £7.5bn in the last financial year, the latest Government figures show, an increase of £400m increase on last year’s record £7.1bn. The rise is partly due to the freezing of tax thresholds, meaning more people are having to pay inheritance than ever before. Meanwhile…
Inheritance tax is making the housing crisis worse, according to a report by the Building Society Association (BSA), which argues it is incentivising older homeowners to keep living in larger homes they no longer need to capitalise on the main residence relief allowance of £175,000. Paul Broadhead, head mortgages and housing policy at the BSA said: “We want the Government to remove as much tax friction as possible at the point of sale, to improve liquidity in the market and free up more stock… introducing more liquidity into the market allows families to keep moving up and down the [property] ladder and this – in turn – does free up more first-time buyer homes.”
The Financial Conduct Authority (FCA) must drop plans to ‘name and shame’ companies under investigation before they are resolved, The House of Lords Financial Services Regulation Committee said yesterday. The FCA was keen to push ahead with its intention to announce corporate investigations earlier, publish updates, and close inquiries more quickly in an effort to prioritise cases with the most impact and reassure the public that it was “on the case," nut the Committee said this risked having a "disproportionate effect on firms named in investigations, where those firms are subsequently cleared of any wrongdoing". "The FCA has not carried out a cost-benefit analysis of its proposal or even assessed its likely impact. That’s why we’re calling on the regulator to pause implementation until our committee has had a chance to gather evidence and scrutinise its proposal," it said in a statement. The FCA responded saying it has been making wider changes to the way it enforces rules in order to deliver "more impactful deterrence and greater transparency". "Announcing more of our investigations would bring us in line with several other UK regulators," a statement said, adding that regulators like Ofcom, Ofgem and the Competition and Markets Authority announce their investigations.
Grocery price inflation fell for the 14th month in a row in April, partly driven by an increase in supermarkets' promotional activity, the latest data from market researcher Kantar shows. Annual grocery price inflation was 3.2% in the four weeks to 14th April, down from 4.5% in the previous month. However, prices are still rising quickly in markets such as sugar and chocolate confectionery and chilled fruit juices and drinks. Kantar also said items bought on special offer made up 29.3% of supermarket sales, the highest level outside Christmas since June 2021.
Excessive red tape: The regulatory burden placed on businesses is costing more than ever, at least £35bn a year, rising to £57bn when including pensions, a new report from the Centre for Policy Studies (CPS) has found. Despite repeated promises from Government to shrink the regulatory burden, the report, The Future of Regulation, found the cost of regulation under Conservative Governments between 2010-2019 actually rose by some £6bn a year, the equivalent of nearly a 2p increase in Corporation Tax. Researchers looked in-depth at the impact of 3,528 pieces of legislation during that time to reach it conclusions on how much extra businesses are having to fork out, noting that in addition to the annual tally, businesses also face another £39.6bn in one-off costs, or £148bn in one-off costs including pensions. However, the think-tank said it believed its figures could be a “colossal underestimate” because of what it said were “glaring flaws in our regulatory regime” including impact assessments that are “often alarmingly woolly, or riddled with errors” as they are intended to justify decisions already taken. In one example, the MiFID II financial regulations were claimed to deliver a net annual benefit to business of £105.20, rather than the actual net annual cost of £105.2m. In another, the Government claimed that introducing a tax on plastic bags at supermarkets was a ‘deregulatory’ measure, in order to claim £1 billion in regulatory savings across the parliament. Only the Department for Environment, Food and Rural Affairs (Defra) – has a full audit of the regulations it has imposed. It also notes that thousands of EU rules were introduced into law without any costings or impact assessments, and that the promise to reduce the burden of regulation was “fatally undermined by the Treasury’s decision to exempt itself from scrutiny”. The report concludes that the regulatory regime is “simply not fit for purpose” and urges all political parties to commit to taking the impact of regulation as seriously as the impact of tax and spending; to create a new regulatory audit office; to conduct a full audit of UK regulation; and for all regulations to have their impact re-examined five and 10 years after being passed. A government source told City AM: “It’s hard to argue with the findings of this report. Successive governments have been guilty of regulating as a first choice, rather than a last resort – as Kemi Badenoch noted in her speech to TheCityUK last week. But as of January 1 this year we have scrapped over 2,000 EU laws, with many more to come; and started a smarter regulation programme that will reduce the burden on businesses”.
The FTSE 100 set a new record closing price yesterday, rising 1.6% to end the day at 8,023.87. It fell short though, of its all-time intra-day high set last February of 8,047, although hit 8,040 during the trading day. The more domestically focussed midcap FTSE 250 also had a strong day, gaining 1.1% to end at 19,599.39, on the back of renewed interest rate cut hopes in the summer. European and US indices also rose, perhaps on optimism that geopolitical tensions are easing in the Middle East.
Mortgage interest rates have been put up by up to 0.2% for new and existing customers by some lenders as views have changed on when the Bank of England might cut borrowing costs. Barclays, HSBC and NatWest are all increasing some fixed-rate mortgage deals from today. Leeds Building Society and the Co-op are also putting up the rates on some of its fixed deals. According to financial information service Moneyfacts, the average two-year fixed mortgage rate is currently 5.82%, while the average five-year fixed rate is 5.40%.
Train drivers across 16 rail companies in Britain will stage fresh strikes from 7-9th May the ASLEF trade union said yesterday.
Grindr, the gay dating app, is facing a lawsuit in the High Court over an alleged data breach. It is claimed the app shared users’ personal and sensitive data for profit with third party advertising companies, including divulging their HIV status and what dates they were most recently tested for the virus. The claim, brought by Austen Hayes, a legal business that is part of the AIM-listed professional services group Gateley, alleges breach of the Data Protection Agreement (DPA), breach of the General Data Protection Regulation (GDPR), and the misuse of private information. In 2022, the Information Commissioner’s Office issued Grindr with a reprimand after finding that it had infringed the UK GDPR. Grindr was also fined 100m krona (£8.5m) by the Norwegian Data Protection Authority the previous year for illegally disclosing user data to advertising firms. Commenting on the claim, Chaya Hanoomanjee, Austen Hays managing director and leading lawyer said: “Our clients have experienced significant distress over their highly sensitive and private information being shared without their consent, and many have suffered feelings of fear, embarrassment and anxiety as a result.” “Grindr users who think they may be affected by this breach should join the claim so that we can seek redress for them,” she added.
JD Sports Fashion is buying US sports fashion retailer Hibbett for $1.08bn (£878m). Headquartered in Birmingham, Alabama, Nasdaq-listed Hibbett has 1,169 stores in 36 states across the US trading under the Hibbett and City Gear brands. JD Sports said it would pay $87.50 a share in cash for Hibbett stock.
TeamSport, the pan-European go-karting operator, is being sized up by several private equity investors, Sky News reports. Several buyout firms have tabled initial offers for the company, which is expected to fetch more than £150m, among them EMK Capital and Livingbridge. TeamSport is owned by Duke Street, one of the UK's best-known buyout firms and the former owner of Wagamama. It is the largest indoor go-karting operator in the country. Harris Williams, the investment bank, is overseeing the auction.
Iceland CEO Richard Walker collapsed near the finish line while running the London Marathon yesterday. The discount grocer later took to Instagram to say: “St John Ambulance saved my life.” “I collapsed and fell unconscious less than 2 miles before the London Marathon finish line with hyperthermic shock – body temp was 42 and rising,” he added, but came to half an hour after his collapse with “an amazing team of medics, covered in ice with all sorts of things stuck in me”. Walker ran the marathon to support Alzheimer’s Research, raising more than £10,900 in donations. More than 50,000 people ran the 26.2-mile course through the capital, a record participation.
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