Business news 8 February 2023
James Salmon, Operations Director.
Hiring confidence returns, with caution. Civil servants set to strike on Budget day. Interest rates to fall soon? UK shoppers rein in spending. Covid loans, Bing, Cyberattacks, house prices and more business news.
Hiring confidence returns, with caution
Fears of an economic downturn discouraged companies from hiring workers into permanent positions at the beginning of the year, the latest jobs report from the Recruitment and Employment Confederation (REC) and KPMG shows. Permanent placements fell for a fourth consecutive month but the pace of decline slowed. Temporary hires rose at their fastest rate since September. The survey also found that the number of vacancies for permanent and temporary jobs continued to grow in January. Neil Carberry, chief executive of the trade body, said that the growth reflected activity that may have been delayed from the autumn, but it was also a sign of firms “feeling confident to hire, even if they are leaning more to temporary hiring than normal in this uncertain environment.” Claire Warnes, partner for skills and productivity at KPMG UK, said: “January saw permanent vacancies rise at a quicker pace for the first time in nine months, with the rate of demand growth the strongest since last October, giving recruiters, employers and job hunters a reason to be cautiously optimistic for the year ahead.”
Civil servants set to strike on Budget day
Roughly 100,000 civil servants are set to strike on the day the Chancellor unveils the Spring Budget, the Public and Commercial Services union has said. Mark Serwotka, general secretary of the PCS, said members would walk out on 15 March as part of an ongoing row with the Government over pay and conditions. PCS members were “suffering a completely unacceptable decline in their pay,” Serwotka explained. The Government has previously offered civil servants a 2% to 3% pay rise, but union bosses have been calling for a rise of 10%.
Blanchflower: Interest rates will soon fall
Danny Blanchflower, a former Bank of England (BoE) rate setter, suggests the fall in house prices will force down interest rates. The economist said he believes the central bank should have cut interest rates at last week’s meeting instead of backing the 10th consecutive increase. The worst effects of the rate rises haven’t been felt yet, he adds.
Households struggle
One-in-four UK households won’t be able to pay energy and food costs even though the economy may just avoid a recession this year, the National Institute of Economic and Social Research said.
UK shoppers rein in spending
Retailers have warned that British consumers sharply cut their spending in January as the cost of living crisis damaged household finances amid growing concern over the impact of high inflation on the economy. The British Retail Consortium (BRC) said sales growth slowed last month despite retailers offering steep discounts in the January sales, with households reining in their spending in the face of soaring costs for energy, food and other basic essentials. Total sales rose by 4.2% in January compared with a year earlier, down from December’s annual growth rate of 6.9%.
British banks paid £4.4bn to cover Covid loan scheme losses
Data published on Tuesday showed banks had been paid £4.4bn of taxpayers’ money to cover default and fraud on the £77bn in state-guaranteed loans made to struggling businesses during the pandemic. Of the £77bn worth of emergency taxpayer-backed funding provided across three pandemic loan schemes, at least £11bn is in arrears or defaulted. Some £640m worth of facilities were marked as “suspected fraud”. The report, which covers the period to the end of December, will add to concerns about the scale of taxpayer losses on the schemes. The latest release covers the £46.6bn bounce back loan scheme and the £25.9bn coronavirus business interruption loan scheme (CBILs), both of which were aimed at small and medium-sized companies, and a £4.5bn version of CBILs aimed at large businesses.
Bing
Microsoft unveiled an AI-enhanced version of its Bing search engine, powered by the same technology behind ChatGPT, the chatbot created by Microsoft-backed OpenAI.
Cyberattack seriously damages engineering group
FTSE 250 engineering group Morgan Advanced Materials has said a cyberattack last month would weaken profits and increase its costs. The Berkshire-based company said the disruption would reduce adjusted operating profit by between 10 and 15%, and that some of its manufacturing sites continued to use manual processes. The company has also been forced to delay publication of its results for last year, with the company’s auditors, PwC, prevented from gaining access to all the necessary systems following the attack.
House prices unchanged in January
The latest figures from Halifax show house price growth in January was unchanged month-on-month, following monthly decreases of 1.3% in December and 2.4% in November. The annual rate of house price growth slowed to 1.9% last month, the weakest increase in three years. The average UK house price is now more than £12,000 below a peak in August, though it still remains some £5,000 higher than in January 2022. Kim Kinnaird, at Halifax Mortgages, said the trend of higher borrowing costs hitting demand was likely to continue in 2023. “For those looking to get on or up the housing ladder, confidence may improve beyond the near term,” she said. Tom Bill, head of UK residential research at Knight Frank, commented: “As budgets adjust to higher rates, we think prices will fall by 5% this year but offers are still exceeding the asking price in some areas. Unemployment remains low and inflation appears to have peaked, so you wouldn’t rule out the housing market surprising on the upside as it did during the pandemic.”
Barratt Developments
The housebuilder reported strong growth in its half-year ended December 31, with revenue rising 24% year-on-year to £2.78 billion from £2.25 billion. Pretax profit rose 16% to £501.5 million from £432.6 million, despite operating margin narrowing to 17.8% from 19.3%. Total home completions rose 6.9% to 8,626. Barratt said the strong half-year was due to its “significant” forward order book at the end of June.
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