Published: 23 May 2023
By Suzanne Evans, Director, Political Insight
UK borrowing now stands at the second highest monthly total for April since records began in 1993, data from The Office for National Statistics (ONS) out today confirms. The Government took on an additional £25.6bn of debt last month, £11.9bn more than for the same month last year, and £3.1bn higher than forecast by the Office for Budget Responsibility in the March Budget. Much of the increase relates to the £4bn cost of cost-of-living subsidies such as the Energy Price Guarantee, as well as a larger benefits bill and increased debt interest payments, which are now close to £10bn, the ONS said. Total public sector debt excluding public sector banks now stands at £2,536.9bn (as at the end of April 2023), some 99.2% of GDP, a debt-to-GDP ratio at levels last seen in the early 1960s. Chancellor Jeremy Hunt said: “It is right we borrowed billions to protect families and businesses against the impacts of the pandemic and Putin’s energy crisis.” He added: “But debt and borrowing remain too high now – which is why it’s one of our priorities to get debt falling.”
Soaring inflation has taken an average of £5,455 from UK households in the past two years, with the UK losing £153bn to rising prices overall, according to Interactive Investor. Brits spent an extra £53bn on household energy, amounting to £1,885 per household on average, over the past two years, the online investment service said, while increased food costs led to additional spend of £1,147 on average, or £32bn collectively.
Last month’s hike in corporation tax from 19% to 25% is likely to prevent companies from investing, according to consultancy BDO which, having canvassed opinion, suggests nearly half of all mid-sized companies intend to postpone spending projects because of the increase.
Manju Malhotra, the CEO of Harvey Nichols, has also warned that the Government’s decision to scrap tax-free shopping for overseas visitors in 2021 is having a significant impact on the wider British economy. Malhotra told The Times that the so-called “tourism Tax” was affecting not just retailers that benefit from international visitors, but the “entire ecosystem of hospitality, hotels and cultural destinations, which are integral to the overall UK economy.”
The amount of time it is taking businesses to hire staff has slimmed to its lowest level in seven years, according to job search engine Adzuna, which monitored over 80m ads and found employers left roles advertised on job boards on average for 37 days over the last year, down from 44 days in the year before.
Junior doctors in England have announced plans to stage more strikes, from 13-17th June, the British Medical Association (BMA) says. The BMA, which represents about 45,000 junior doctors in England, released a statement in which it also threatened more strikes "throughout the summer" if the Government did not change its position. In response, a government statement said: "These will be hugely disruptive for patients and put pressure on other NHS staff," adding talks could resume if the strikes were called off.
Hundreds of thousands of council and school support workers across England and Wales begin voting today on whether to strike over pay, as their union, Unison, says an offer of a flat rate £1,925 was “nowhere near” enough to meet rising prices during the cost-of-living crisis. Unison is calling for an increase of 2% above inflation, arguing that since 2010, the value of local government pay has fallen by 25%. The six-week ballot, which closes in early July, includes refuse collectors, social workers, teaching assistants, librarians and others, working at 4,000 different employers. A separate ballot for Northern Ireland will open in August.
The introduction of a points-based immigration system in 2021, since leaving the European Union, have not incentivised firms to invest more in the recruitment and training of UK-based workers, a report from the Chartered Institute of Personnel Development (CIPD) has concluded. The new scheme was supposed to help attract high-skilled workers to fill staff and skills shortages, but the CIPD said restrictions on employers' ability to hire migrant workers had not encouraged companies to recruit and train UK workers as intended.
According to The British Chamber of Commerce in China, a majority of British companies are taking a "wait and see approach" to new investments in the country, as pessimism hits record levels, Reuters reports. Increasingly strained geopolitical relationships, a slowing global economy, growing talk of self-sufficiency, and shifting investor perceptions were the top challenges clouding the business outlook, the chamber's annual position paper released on Tuesday said. "Seventy percent of companies are saying it is too early to make these long term commitments to the China market," Julian MacCormac, chair of the British Chamber, told reporters in Beijing. 42% of the companies in the Chamber were pessimistic about their prospects in China late last year, a dramatic increase given that the survey had never before elicited a response in double-digits. However, a follow-up, separate survey in April after China removed its Covid curbs found that number had gone down to 8%. Trade between the UK and China was worth £111bn last year, according to the Office for National Statistics, making China our fourth largest trading partner. The British Chamber called on the authorities in China to provide greater clarity on how new regulations will be implemented, particularly in data security and taxation, so that there are fewer "grey areas".
Heathrow Airport’s plans to reduce the impact of noise are “not ambitious enough,” it had been told in a letter written by the London Assembly, which is urging the airport to provide more clarity on the current status of its third runway expansion and make a swift decision on whether it will go ahead. Heathrow’s third runway proposal is currently undergoing an internal review. Mayor Sadiq Khan wants the proposal to be dropped, on the grounds that it will “have a damaging impact on air quality, noise and London’s ability to achieve net-zero carbon by 2030,” but Heathrow argues that “aviation is a force for good – boosting trade, driving investment and tourism and creating jobs across London and the UK.” “We always welcome scrutiny of our approach and will continue to engage with the London Assembly Environment Committee to answer their questions,” it said in response to the letter.
German-owned discount supermarket Lidl may seek a share of any profit made by rival Tesco from its Clubcard discount scheme as a result of copying Lidl's logo, the High Court heard yesterday. Lidl won its case against Britain's largest supermarket, in which it had cited trademark infringements from 2020 when Tesco used a yellow circle against a blue background to promote its discount "Clubcard Prices" scheme. The Judge hearing the case ruled that Tesco had "taken unfair advantage of the distinctive reputation" for low prices held by Lidl's trademarks. Lidl's lawyer Benet Brandreth said in court filings: "Tesco is responsible for around a quarter of the UK's entire supermarket share and Lidl for approximately 7%. Over three years that amounts to many millions of customers and billions of pounds of turnover and profit. If even a fractional percentage of that trade is attributable to the infringement, the resulting sums are huge." Lidl is seeking financial disclosure from Tesco – including revenue and operating profit for Tesco as a whole and from Clubcard holders – to calculate what profit Tesco may have made from infringing its trademark, Reuters says.
Scandal-hit housing investor Home REIT has this morning confirmed the appointment of property giant AEW as its new fund manager, and says it will now sell-off a slew of properties to stabilise its portfolio. City A.M. first revealed AEW would be appointed as fund manager two weeks ago, and now reports AEW will be paid £3m a year to manage Home REIT. The former FTSE 250 social housing provider was rocked by a short seller report last November, and a number of its biggest tenants have since imploded or withheld rent from the firm in protest at the shoddy state of housing it provided. In the five months to the end of April, it collected just £3.4m out of a total £25.9m demanded from tenants.
Logistics firm Wincanton has reported a 30% drop in annual profits to £38.2m because some corporate customers insourced their warehouse and delivery needs to cut costs, however because pre-tax profit rose 6% to £62m to the end of March - a record for the company and slightly ahead of analysts' expectations - Wincanton shares rose almost 7% yesterday.
William Hill owner 888 Holdings has agreed to sell its Latvian business for up to €28.3m (£24.6m). In 2022, the business generated net revenue of £9.1m and EBITDA of £2.5m.
According to Sky News, Mike Ashley's Frasers Group is in advanced talks to buy the stock and intellectual property assets of cycling goods specialist ProBikeKit from online nutrition and beauty retailer THG.
Meta has received a record €1.2bn (£1.04bn) fine for failing to adhere to European Union privacy regulations. The Irish Data Protection Commission announced yesterday that Meta had violated the General Data Protection Regulation (GDPR), by transferring extensive personal information of European Facebook users to the US without adequate safeguards against US data surveillance. This penalty is the heftiest GDPR violation fine issued by the EU to date, according to Reuters.
Chinese-owned video firm TikTok is suing the US state of Montana after it became the first state to ban residents accessing its social media platform. In a statement, TikTok said the ban conflicts with US free speech rights, as enshrined in the First Amendment to the US Constitution. The ban will make it illegal for app stores to offer TikTok, but will not ban people who already have TikTok from using it. It is due to take effect in January 2024. TikTok owner ByteDance has repeatedly denied it is controlled by the Chinese government, however whistle-blowers tell a very different story.
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