GDP grew 0.5% in October, following a fall of 0.6% in September, a partial recovery that is mostly being attributed to the number of working days returning to normal after recovering from the impact of the additional bank holiday for the state funeral of Queen Elizabeth II rather than any real surge in output. Over the last three months as a whole, the economy fell 0.3%, the Office for National Statistics (ONS) said this morning. Darren Morgan, ONS director of economic statistics said: “In particular, car sales rebounded after a very poor September, while the health sector also saw a strong month, with GP appointments, A&E attendance and the Covid-19 autumn booster campaign all driving up the sector. Construction continued its strong trend over the last year and stands at its highest level on record, with new housebuilding driving growth this month. However, over the last three months as a whole the economy shrank, with falls seen across services and manufacturing.” Chancellor Jeremy Hunt said: “While today’s figures show some growth, I want to be honest that there is a tough road ahead. Like the rest of Europe, we are not immune from the aftershocks of Covid-19, Putin’s war and high global gas prices. Our plan has restored economic stability and will help drive down inflation next year, but also lay the foundations for long-term growth through continued record investment in new infrastructure, science and innovation.”
Rating agency Fitch maintained United Kingdom's sovereign debt rating at "AA-" on Friday, citing Prime Minister Rishi Sunak's macroeconomic policy framework, deep capital markets and the sterling's international reserve currency status. The agency affirmed its outlook for the country at "negative", due to high public and external debt, as well as rising energy prices, Reuters reports. The agency also affirmed the Bank of England's rating at "AA-", with a negative outlook.
Chancellor Jeremy Hunt set out on Friday a list of 30 ways in which he plans to reform the UK’s financial services industry, at an event hosted by the Financial Times. The proposed reset had been trailed as "Big Bang 2.0", raising expectations of a big deregulatory push which left banks fearing costly systems changes, Reuters says, however there will be no wholesale dismantling of regulations, rather a review likely to lead to tweaking rules while remaining aligned with global standards. The planned reforms include a review of securitisation and short-selling rules; overhauling prospectuses issued by companies when they list on the London Stock Exchange; and a plan for repealing and reforming rules that were introduced when Britain was in the EU. Other plans include a consultation in coming weeks on a central bank digital currency, a project Prime Minister Rishi Sunak was keen on when he was Chancellor. There will also be a consultation on regulating compilers of ratings on company's environmental, social and governance (ESG) impact; and a response to the consultation on expanding the Investment Manager Exemption to include cryptoassets. Perhaps most significantly however, is the proposed review of rules put in place following the 2008 financial crisis, when the government had to bail out undercapitalised banks. They were required to separate retail and investment banking and "ring fence" their retail arms with a cushion of capital to insulate deposits from a blow up in riskier activities, such as trading derivatives. The stated aim at the time of the introduction in 2019 was to: "increase the stability of the UK financial system and prevent the costs of failing banks falling on taxpayers". Now, it seems such capital requirements may be eased for smaller lenders, after much lobbying by banks for the rule to be axed or for the deposit threshold that triggers it to be raised. "We have to make sure that we don't unlearn the lessons of 2008, but at the same time recognise that banks today have much stronger balance sheets," Hunt said. However Bank of England (BoE) Deputy Governor Sam Woods said in 2020 that he would defend the ring-fencing rules to his "last drop of blood". Victoria Scholar, head of investment at Interactive Investor, said: "Hunt is trying to prove to the financial sector that he is very much pro-business and in favour of the City of London as a key growth engine to the economy. However there is a risk that the Treasury is acting myopically, quickly forgetting the pre-2008 excessive risk taking that ultimately led to the global financial crisis and the introduction of new regulation to prevent another similar catastrophe." "It is important for people not to overplay this - there is no sense of any move back to a pre-financial crisis world," said Jonathan Herbst, a lawyer at Norton Rose Fulbright. The BoE said on Friday it would work with the ministry to ensure a safe and competitive financial system.
At the same event on Friday, Jeremy Hunt said he did not wish to see pay rises for public-sector workers that could reduce the pace at which the government expects double-digit inflation to fall - the Office for Budget Responsibility is forecast a drop back to 3.7% by early 2024. "We know that the thing that is making them (public-sector workers) most angry is the erosion of their pay through inflation, he said, adding: “We just have to be really careful not to agree to pay demands that have the opposite of the intended effect, and lock in high inflation". Hunt declined to comment directly on reports he had intervened to block industry proposals for a more generous pay offer to striking rail workers, which would have needed backing from the Department of Transport.
Britain has signed an agreement aimed at boosting trade and investment with South Carolina, its third such deal with a US state – following agreements with North Carolina and Indiana - the UK junior trade minister, Greg Hands, said on Friday. The memorandums of understanding on trade are not legally binding, but signal that US states are keen to attract British investment, Hands said. Meanwhile, expanding export opportunities was a key priority for UK firms, he added, citing aerospace and technology as promising sectors for expanded trade ties. Britain has signed trade agreements with Japan, Australia and New Zealand since leaving the European Union, and hopes to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. President Joe Biden’s administration has put all comprehensive free trade talks on ice.
British manufacturers expect output to fall by 3.2% next year after a 4.4% decline in 2022, as they are hit by rising raw material prices, borrowing costs and a slide in consumer demand. Stephen Phipson, CEO of Make UK said: "There is simply no sugar-coating the outlook for next year and possibly beyond. These are remarkably challenging times which are testing even the best and most successful of companies to the limit." "The bigger issue is that the UK risks sleepwalking into an acceptance that little or no growth is the norm,” Phipson added. “Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy". The trade body said it wanted a temporary relaxation of immigration controls, lower property taxes and greater tax incentives for training and investment.
Trade body UK Finance is forecasting that British banks and building societies can expect to lend 23% less to home-buyers next year, taking mortgage volumes back to pre-covid level, after a two-year boom that lifted house prices by more than a quarter. UK Finance says gross mortgage lending for house purchase will fall to £131bn in 2023, down from £171bn this year, and a peak of £189bn in 2021, when pandemic-related tax incentives were in force. Lending to buy-to-let landlords was forecast to fall by 27%, and overall residential property sales were likely to drop to 1.01 million next year from 1.27 million in 2022, it added.
Chancellor Jeremy Hunt refused to budge on windfall taxes on the oil and gas sector in a meeting with industry executives on Friday, two sources with knowledge of what was discussed have told Reuters. Hunt rebuffed requests to include a mechanism in the tax to reflect falls in oil and gas prices, although a future revision was not ruled out should prices slump, the sources said. Last month, the Energy Profits Levy (EPL) on oil and gas companies was hiked from 25% to 35%, bringing the total tax rate on the sector to 75%, one of the highest in the world. The Treasury said in a statement that Hunt highlighted the importance of energy security and pointed to investment incentives that are already part of the EPL as well as the possibility of further meetings with the industry. However, one of the sources said the oil and gas industry executives reiterated concerns that the new tax had already curtailed producers' access to capital and risked a flight of capital from the ageing basin at a time when the government is trying to increase Britain's energy security.
All flights have been suspended at Stansted Airport this morning, after it was forced to close its runway due to bad weather. Heathrow and Gatwick airports have also cancelled or delayed flights because of snow, ice and freezing fog.
Clothes retailer M&Co has appointed administrators, having collapsed for a second time in just over two years, thet BBC reports. Financial advisory firm Teneo confirmed it had been brought in on Friday. The Renfrewshire-based company, which used to be known as Mackays, currently employs 1,910 staff in 170 shops across the UK. It last collapsed in 2020 but assets were immediately bought back by the family that built it up. However, the retailer has shut two stores in the last week, in Dorchester in Dorset and Droitwich, Worcestershire. No immediate redundancies have been made and the retailer will continue to trade while administrators explore a potential sale. Gavin Park, one of the joint administrators, said M&Co had experienced a sharp rise in costs like many other retailers which had coincided with a "decline in consumer confidence". He added: "Despite a very loyal customer base, particularly in local markets, and a well-recognised brand, the current economic outlook has placed increasing pressure on the Company's cash position."
The Financial Conduct Authority (FCA) has fined Metro Bank £10m for breaching rules by publishing incorrect information to investors. Metro Bank said in January 2019 it had corrected risk weightings of some of its commercial loan portfolios, wiping hundreds of millions of pounds off its share value and forcing its top bosses to quit. Last week, the bank informed investors it had increased its provision for the fine from £5.3m to £10m in anticipation of the FCA penalty. The bank was also fined £5.4m by the Bank of England's Prudential Regulation Authority last year for failings in its regulatory reporting related to the error.
Home REIT, which has recently been the subject of allegations including that its property portfolio is overvalued, and that it misled owes shareholders redress for "significant losses," says it is carrying out enhanced audit procedures, including a detailed review of the material allegations made against the company and its advisers. The company is continuing to "work constructively" with its auditor to ensure that the full year results for the period to 31st August can be published as soon as practically possible and expects this to be no later than the end of next January.
Britain, Japan, and Italy are merging their next-generation jet fighter projects in a ground-breaking partnership spanning Europe and Asia that is Japan's first major industrial defence collaboration beyond the United States since World War Two. The deal, which Reuters first reported in July, aims to put an advanced front-line fighter into operation by 2035 by combining the British-led Future Combat Air System project, also known as Tempest, with Japan's F-X programme in a venture called the Global Combat Air Programme (GCAP), the three countries said in a statement on Friday. "We are committed to upholding the rules-based, free and open international order, which is more important than ever at a time when these principles are contested, and threats and aggression are increasing," the three countries said in a joint leaders' statement. Prime Minister Rishi Sunak said separately his country needed to stay at the cutting edge of defence technology. "It means we can keep the country safe from the new threats that we face, it also adds billions to our economy and supports tens of thousands of jobs across the country," he said, while visiting an air force base in eastern England. "It's also good for our international reputation". The UK’s BAE Systems PLC, Japan's Mitsubishi Heavy Industries and Italy's Leonardo will lead design of the aircraft, while Britain’s Rolls-Royce PLC, Japan’s IHI Corp and Italy’s Avio Aero will work on the engine. European missile maker MBDA will also join the project, along with avionics manufacturer Mitsubishi Electric Corp. Details including how the project will proceed and where the development will take place are still to be agreed.
Tesco, Britain's biggest retailer, is preparing to start a search for a new chairman. John Allan will have to step down in 2024, having been in post for nine years, meaning he will be ‘timed out’ under
corporate governance rules. The search to fill one of the FTSE-100's most prestigious boardroom posts will be led internally by Byron Grote, the former BP finance chief, who himself is due to step down from the Tesco board next year. Allan, a former president of the CBI who is also a former chairman of Dixons Stores Group - now known as Currys – and has sat on the boards of 3i Group, Royal Mail and Worldpay, declared recently that Labour was the only political party to have set out a credible economic growth plan. He is also in the process of bowing out as chairman of Barratt Developments, the FTSE-100 housebuilder.
Primary Health Properties’ CEO Harry Hyman will retire at its AGM in 2024, having fulfilled his commitment to continue managing the real estate investment trust for a further five years after its merger with fellow healthcare property group Medicx in January 2019.
The US government has blocked Microsoft's $69bn bid to buy Call of Duty maker Activision Blizzard, potentially leaving Bill Gates’ company struggling to attract users to its budding subscription service for accessing games, and less able to meet its strategic goal of better competing against gaming leaders Tencent and PlayStation owner Sony, both of which have criticised the deal. The US Federal Trade Commission, which enforces antitrust law, said that Microsoft had a record of hoarding valuable gaming content. "Microsoft has already shown that it can and will withhold content from its gaming rivals," said Holly Vedova, director of the FTC’s Bureau of Competition. . "Today, we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets." The agency set a hearing before an administrative law judge for August 2023. Microsoft President Brad Smith said the company would fight the FTC. "While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court," he said.
Why Media is a reputable design, marketing, digital communications and PR agency offering tailored solutions to companies on a global scale. We have extensive experience in delivering design and marketing services to a spectrum of companies including professional services, property companies, financial institutions and shopping centres.
Marketing Contact
Name: Claire White
E-Mail: claire@whymedia.com
Telephone: 01992 586 507
