Business news 7 March 2023
James Salmon, Operations Director.
UK consumers cut back on spending in February. Manufacturing body blasts economic mismanagement. WANdisco stokes more fear of exodus to New York. Labour pledges to provide stability in business taxation. Shapps told to overhaul Ofgem powers amid energy squeeze. And more business news.
UK consumers cut back on spending in February
According to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor, UK retail sales were up 5.2% in February against an increase of 6.7% last year. Food sales increased by 8.3% over the three months to February and non-food sales were up 3.2%. Online non-food sales fell by 3.1% against a decline of 28.4% last February. BRC chief executive Helen Dickinson said: “While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.” However: “The economic backdrop means retailers face volatile trading conditions. Many consumers will be concerned as they prepare for further energy price and tax rises in April.” Paul Martin, UK head of retail at KPMG, said: “With overall inflation running at around 10%, and food inflation sitting nearer 20%, total sales growth for February of just 5% will be eating hard into retail margins and masking the true state of the sector’s health.” Meanwhile, separate figures from Barclays show consumer spending grew just 5.9% year-on-year in February as Britons continue to cut back on non-essential spending.
Manufacturing body blasts economic mismanagement
Stephen Phipson, the CEO of Make UK, will today launch an attack on government “mismanagement” of the economy and the UK’s post-Brexit relationship with the European Union. Phipson will reportedly criticise the Government’s failure to embrace a coherent industrial strategy, leading to indecision over the introduction of British-built small nuclear reactors and the failure to attract gigafactories to the UK for the transition to net zero.
WANdisco stokes more fear of exodus to New York
Concerns over the future of London as a listing destination continue to bubble away with news that software firm WANdisco is considering a dual listing in New York providing more cause for hand-wringing. Mark Austin, partner at Freshfields and the author of the Austin Review of the UK’s secondary markets, said London needed to act fast in order not to fall behind. “We are already in the process of meaningfully reforming our relevant law and regulation and discussions are now also gaining momentum in relation to the changes we need to make to market practice,” Austin added. EY’s IPO lead Scott McCubbin said a shallower pool of capital in the UK was one of the fundamental issues still attracting firms to New York. “Whilst much has been debated about the regulatory environment in London, it’s valuation not regulation which is one of the key differences between London and the New York stock exchange,” McCubbin added.
Labour pledges to provide stability in business taxation
The Shadow Chancellor will set out Labour’s plans for a review of business taxes today. Rachel Reeves will tell the Make UK Conference in central London that the review would consider how to affordably use the tax system to support investment. Labour backs the planned rise in corporation tax to 25% and will also argue that Britain should be in “lock step” with G7 nations on the rate of the business tax, and investment should be incentivised “through targeted allowances” to promote growth. Rachel Reeves will say: “In recent years, corporation tax has gone up and down like a yo-yo while the government has papered over the cracks with short-term fixes like the super-deduction. It’s no wonder businesses are unable to plan and our investment rates are cratering. Stop-go tax policy is only a sticking plaster.” Her speech comes amid news that Chancellor Jeremy Hunt is sticking with his pledge to increase corporation tax despite pleas from business groups.
Shapps told to overhaul Ofgem powers amid energy squeeze
The chief executive of UK Hospitality, Kate Nicholls, has warned the energy secretary that the industry regulator needs to be handed powers urgently to tackle the treatment of business customers by suppliers. Nicholls told Grant Shapps in a letter that Ofgem should be allowed to tackle suppliers’ handling of business customers’ ancillary energy costs. “In particular we need to see Ofgem take action on non-commodity, service and access charges as well as security deposits and terms of supply which had the potential to undermine government support,” she said. “Due to a severe lack of competition in the market most hospitality businesses were forced to accept very high prices fixed for at least a year,” the letter said. “Consequently, half the businesses in our sector will be locked in at extortionate prices as energy support is significantly reduced from April. This could have a potentially terminal impact on thousands of businesses that are simply unable to afford their bills.”
CBI boss Tony Danker to step aside amid conduct probe
The director-general of the Confederation of British Industry has stepped back after the organisation started an investigation into claims about his conduct at work. It is understood that the complaint involves a female employee who claims Mr Danker sent her unsolicited messages over a period of more than a year, as well as unwanted verbal remarks. The CBI probed separate allegations in January but decided a more recent complaint required escalation. The business lobby group has hired law firm Fox Williams to conduct an independent investigation into the claims. “The CBI takes all matters of workplace conduct extremely seriously but it is important to stress that, until this investigation is complete, any new allegations remain unproven and it would be inappropriate to comment further at this stage,” it said in a statement.
House Prices
Halifax says UK House Prices rose faster than expected last month, but underlying activity points to a general downward trajectory. UK house prices rose 1.1% in February from the month before, after a 0.2% rise in January from December. They rose 2.1% annually in February, with the rate of growth unchanged from the previous two months.
Energy
National Grid Plc has warned of low power supplies today and calls in coal plants emergency supply. In a rare warning that power supply will be tighttoday they have asked coal plants to stand by, as a snowy cold snap strains the system. The shortfall is as much as 980 megawatts, bigger than the current contingency requirement of 700 megawatts.
Facebook
Meta Platforms Inc., the owner of Facebook and Instagram, is reportedly planning cuts of thousands of employees as soon as this week.
Greggs
Greggs reported total sales were up 23% to £1.51 billion in 2022 from £1.23 billion in 2021. Pretax profit edged up 1.9% to £148.3 million from £145.6 million.
John Wood
John Wood said it has received a fourth proposal for a cash takeover offer from Apollo Global Management worth 237 pence per share. “The board believes this latest proposal continues to undervalue the group and is therefore minded to reject. The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo,” John Wood said.
Gas Giant
The 27 EU nations are banding together to form a buying cartel and drive down prices of energy from the US, Africa and the Middle East.
Government hires new menopause tsar
The Government has hired a recruitment expert to improve support at work for women going through the menopause. Helen Tomlinson, head of talent at HR giant Adecco, was announced yesterday as the first Menopause Employment Champion. Her voluntary role will involve encouraging bosses to help female staff going through the menopause and so stop them leaving the workforce early. “Less than a quarter of UK businesses have a menopause policy, but as I take on this role, I am determined that my generation of women in work will break the menopause taboo and have confidence that their health is valued.” Tomlinson said.
UK gender pay gap widens, driven by high childcare costs
A new report from PwC reveals that the UK’s gender pay gap has widened as sharp increases in the cost of childcare hamper women’s employment outcomes. PwC’s Women in Work index shows the nation’s average pay gap widened by 2.4 percentage points to 14.4% in 2021, meaning the gap between what the average man and the average women earns in hourly pay has got bigger. With childcare costs rising faster than pay increases, Larice Stielow, senior economist at PwC, says: “The motherhood penalty is now the most significant driver of the gender pay gap and, in the UK, women are being hit even harder by the rising cost of living and increasing cost of childcare. With this and the gap in free childcare provision between ages one and three, more women are being priced out of work. For many it is more affordable to leave work than remain in employment and pay for childcare, especially for families at lower income levels.”
Post-Brexit financial reforms increase risks for insurers
The Governor of the Bank of England, Andrew Bailey, has warned that financial reforms intended to bolster the City in the post-Brexit landscape will increase the risk of insurance firms going bust and potentially leave taxpayers with a multi-billion pound bill. Mr Bailey said that relaxing Solvency II capital buffer rules will free up £14bn over a one-year period but increase the probability of an insurer failing from 0.5% to 0.6% – an increase of 20%.
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