Published: 13 March 2024
By Suzanne Evans, Director, Political Insight
The UK’s recession has proved short lived; it is over already. GDP grew by 0.2% in January, according to data released by the Office for National Statistics (ONS) this morning, meaning it lasted just six months: the final three months of 2023 saw a 0.3% decline, following on from a 0.1% contraction in the previous three months, which counted officially as a technical recession. Expansion of 0.2% in the services sector was the main driver of growth that has taken Britain out of recession, offsetting a 0.2% fall in production. Human, health and social activity also saw an expansion of 0.6%, while construction output increased by 1.1%.
Legislation to quash the convictions of those wrongly accused in the Post Office Horizon scandal will be introduced to the House of Commons today. There will be a blanket exoneration of anyone prosecuted by the Post Office or the Crown Prosecution Service for relevant offences including fraud and false accounting in connection with the use of Horizon software between 1996 and 2018. This includes where the employees and family members of postmasters were also prosecuted. Those affected will also be offered an interim compensation payment, with the option of an immediate fixed and final offer of £600,000. Others who suffered because of Horizon’s failures but were not convicted will be offered a £75,000 fixed sum payment. Those who have already settled for less will have their redress topped up to these levels, while those who don’t choose these routes will be assessed via the standard process, for which the Government said there is no limit to compensation. The Department for Business and Trade (DBT) will be responsible for rolling out the redress scheme. Postal affairs minister Kevin Hollinrake said: “Postmasters have been fighting for justice for years, and I hope today’s legislation is the light at the end of the tunnel they have waited for. It is only right that postmasters have access to swift and fair compensation”. Prime Minister Rishi Sunak said the proposed law, titled the Post Office (Horizon System) Offences Bill, “marks an important step forward in finally clearing their names”. “We owe it to the victims of this scandal who have had their lives and livelihoods callously torn apart, to deliver the justice they’ve fought so long and hard for, and to ensure nothing like this ever happens again,” he said. To date, approximately £179m has already been paid to over 2,800 claimants.
Trade Secretary Kemi Badenoch is set to sign a trade cooperation pact with Texas today, the eighth such deal with a US state. A full trade deal with the USA continues to prove elusive. “UK firms now have access to states with a combined GDP of £5.3tn – equivalent to a quarter of the US economy,” Badenoch said. If Texas were a country, it would have the ninth largest GDP in the world, making this the UK’s most economically significant trade pact with a US state to date. The deal will not allow for free trade without tariff barriers, but will provide help for businesses by recognising UK qualifications and address state-level regulatory issues. Key sectors benefitting will be energy, life sciences, and professional services, the Department for Business and Trade said. The UK is already Texas’ 8th largest international goods export market, and total trade in goods was worth £14.7bn in 2023. The top products being exported from the UK to Texas include nuclear equipment, aircraft, and pharmaceutical products. The deal makes the UK the ninth largest trade partner for Texas.
The proportion of UK mortgages in arrears has risen to its highest level since 2016. The value of outstanding mortgage balances with arrears increased by 9.2% between October and December on the previous quarter to £20.3bn, 50.3% higher than a year earlier, according to Bank of England data collected from some 340 regulated mortgage lenders. The proportion of mortgages in arrears of all mortgages rose from 1.12% to 1.23% in the quarter.
Nord Stream AG, the operator of the Nord Stream 1 and 2 pipelines which transport gas under the Baltic Sea from Russia to Germany, has launched a €400m (£341m) lawsuit at the High Court in London against two insurers. The claims against Lloyd’s of London subsidiary Lloyd’s Insurance Company and speciality risk insurer Arch Insurance relate to the sabotage of the pipelines in September 2022, when explosions ripped through the multi-billion dollar pipelines, sending gas prices rocketing. Nord Stream AG, a consortium headquartered in Switzerland, is majority owned by the Russian state-owned gas company Gazprom. It is said to have instructed City-based law firm Herbert Smith Freehills to issue the claims for allegedly failing to pay for the damage to the pipelines after the explosions. The parties’ particulars of claim documents estimate the costs of repair to be between €1.2bn and €1.35bn. Lloyd’s and Arch are yet to file their defence. No culprit for the sabotage has been established, however Russia, which has denied the accusation, is the prime suspect. Danish police recently closed an investigation into suspected “sabotage” of the pipes, saying there was not enough evidence to bring a criminal case.
There is good and bad news from Metro Bank this morning. The good news is that the challenger bank has posted its first annual profit since 2018; the bad that it is cutting 1,000 jobs and ending its trademark seven-day branch model to cut costs. Metro made a pre-tax profit of £30.5m for 2023, up from a £70.7m loss a year earlier. When it launched in 2010, Metro was the UK’s first new high street lender in 150 years.
Morrisons has posted a £1.1bn pre-tax loss for last year, mostly as a consequence of growing debt, which incurred £735m in interest payments, 23% higher than the £593m incurred in 2022. Morrisons was acquired by Clayton, Dubilier & Rice (CD&R) for £10bn in 2021.
Sky News reports that Entain, the FTSE-100 gambling group which owns Ladbrokes and Coral, has hired bankers from Oakvale Capital to prepare a sale of PartyPoker, the once-giant online poker operator, which analysts say could now be worth as little as £150m.
Three people have been arrested as part of an investigation into a care home scandal that saw investor cash spent on supercars, yachts and a private jet, The Telegraph reports. The scandal centres on property developer Carlauren Group, which collapsed into administration in 2019. Carlauren raised £76m from private investors who were promised annual returns of 10% for investing in a scheme to convert properties into luxury care homes. Yesterday, the Serious Fraud Office (SFO) announced a new investigation into Carlauren’s collapse, claiming that much oof the money was instead used by directors to fund their own luxury lifestyles, which included the purchase of two Lamborghinis, a McLaren 570GT and a Hawker XS800 private jet, that were not integral to the business. Founder Sean Murray has already been banned from being a company director for 10 years from December 2022. Carlauren’s collapse in 2019 left 600 investors with losses and forced some elderly residents to vacate their homes. Insolvency experts at Duff & Phelps and Quantuma were later appointed to investigate and locate £50m of funds missing from the property developer’s accounts. The business had only around £6,000 of cash in the bank at the time of its collapse.
Starling Bank has appointed Raman Bhatia, the current boss of energy firm Ovo, as its new CEO. He will succeed John Mountain, who has been interim CEO since founder Anne Boden stepped back last year. Bhatia was previously head of Digital Bank for HSBC's retail banking and wealth management business in the UK and Europe. Starling said he brings "a wealth of consumer tech and fintech expertise" to the bank.
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