business news 1 April 2021.
James Salmon, Operations Director.
Economy bouncing back stronger than expected
Revised data from the Office for National Statistics (ONS) shows that Britain’s recovery during the second half of last year was stronger than first estimated, with the figures showing that the economy expanded by 16.9% in Q3 2020 and 1.3% in Q4, marking an increase on initial estimates of 16.1% and 1%. However, the revised numbers also show that GDP shrank by more than had been initially thought in Q2, declining by 19.5% between April and June as opposed to the 19% previously estimated. The ONS said GDP fell by 9.8% in 2020, marking a slight shift on the 9.9% initially estimated. Bank of England figures suggest this was the biggest contraction since 1709. The ONS report also shows that while disposable incomes rose by just 0.1% in 2020, the saving rate – money saved as a share of disposable income – increased from 14.3% in Q3 to 16.1% in Q4.
London business confidence climbs in Q1
A survey by Savanta ComRes and the London Chamber of Commerce and Industry shows that business confidence in London improved during the first three months of 2021. The poll saw 29% of business leaders in Q1 2021 say they expect London’s economic prospects to improve over the coming year – a 9% increase compared to the Q4 2020 survey. The number expecting the capital’s prospects to worsen in 2021 dropped from 60% to 45%. London Chamber of Commerce and Industry CEO Richard Burge said that despite the implications of the pandemic and Brexit on the performance of many businesses, “confidence in the London and UK economy has risen during Q1 2021 – albeit from a low base rate and still in negative territory”.
FTSE 100 dividend yields set to jump 24%
Research from Bowmore Asset Management suggests dividend yields on FTSE 100 shares may rise by 24% this year. The study, which is based on a consensus of analysts’ views, found that dividend yields are set to jump from 2.56% to 3.17% in the next 12 months. While many firms were conservative with dividends amid the coronavirus crisis, companies are expected to start announcing higher payouts as the economy starts to recover. Charles Incledon, client director at Bowmore, said: “With the recent success of the vaccine roll out, the UK economy is now earmarked for a quicker and stronger rebound than was previously expected”.
WFH does not hit productivity
A report by the Chartered Institute of Personnel and Development (CIPD) has found that remote working amid lockdowns did not cause a fall in productivity at 71% of firms, with a third recording an increase. The CIPD poll shows that just under two-thirds of businesses intend to embrace a hybrid working model after the pandemic by combining remote working with time based in the office. Report author Charlotte Gascoigne said: “The pandemic has shifted perceptions even among those who were previously suspicious of homeworking”, noting that the benefits for staff well-being and the potential savings to the employer in regard to office costs will have boosted enthusiasm for remote working.
Deliveroo
The much anticipated initial public offering (IPO) of food delivery giant Deliveroo flopped. First day trading saw the share price slump to 287p from the opening price of 390p. After three weeks of big institutional investors publicly shunning the food delivery firm one-by-one for its bad staff practices, shares slumped on their debut, even after being priced at the lower end of a marketed range.
HMRC in scam warning
HMRC has warned that scammers will target the self-employed ahead of a crucial tax deadline, with taxpayers having until midnight to agree payment plans if they have been struggling to meet their self-assessment bills. A spokesperson for HMRC said criminals take advantage of tax self-assessment and other deadlines to offer “spurious tax refunds or to threaten people with arrest if they don’t immediately pay fictitious tax owed.” They noted that the scams mimic government messages “as a way of appearing authentic and unthreatening”. Fiona Fernie of Blick Rothenberg said that the additional stresses of coronavirus could make people more susceptible, warning: “With people struggling to pay, these kinds of scams are going to be hitting those who are already vulnerable”. Tax scams via phone and email have surged amid the pandemic, with nearly one million suspicious commun ications reported to HMRC in the last year. Ahead of the initial January deadline for tax returns to be filed, phone scams reported to HMRC trebled compared to the previous month, from 10,997 to 33,053, while suspicious text messages jumped from 11,192 to 26,643 and phishing emails rose from 39,564 to 46,210.
House prices dip in March
Data from Nationwide shows that house prices fell 0.2% month-on-month in March when accounting for seasonal factors, compared to a 0.7% rise in February. The slip in prices reflected a dip in demand ahead of the original end of the stamp duty holiday, with the cut-off having been extended from March 31 until June 30 in the Budget. The Nationwide report shows property prices were up 5.7% year-on-year last month, down from a 6.9% rise in February. The average property price was £232,134 in March. Despite the dip in UK house prices recorded last month, Nationwide’s chief economist Robert Gardner said recent signs of economic resilience and the stimulus measures announced in the Budget suggest market activity “is likely to remain buoyant over the next six months”. Howard Archer, chief UK economist for EY Item Club, said the data added to evidence that the market could be “coming off the boil”. He expects prices to remain flat across the coming year.
Next
Next has managed to weather the pandemic storm after expanding its online presence with sales now accounting for nearly half of turnover. The retailer said online sales had been stronger than expected in the first eight weeks of the year and are up 60 per cent on two years ago. As a result Next is raising its central profit guidance by £30m to £700m. Next said it had widened its online customer base by 40 per cent to 8.4m last year with online sales accounting for nearly half of turnover.
Subscriptions surge
Deloitte analysis shows that 47% of households are now signed up to at least one subscription service, with a significant surge in uptake during the pandemic. It also found that 16% of 25-34-year-olds are signed up to three or more schemes.
The American Jobs Plan
President Joe Biden unveiled a $2trn infrastructure plan to overhaul America’s “crumbling” roads, rail lines, utilities and bridges, calling it a “once-in-a-generation investment in America”. To help pay for it, he would raise the corporate tax rate from 21% to 28%. The American Jobs Plan is the first of a two-part legislative package intended to build resilience to climate change and boost an economy stricken by the covid-19 pandemic. The president also said higher spending on infrastructure would mean America’s economy can better compete with China’s.
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