Business news 10 March 2022
James Salmon, Operations Director.
Ukraine. Businesses groups appeal for relief. Russia on brink of credit default, warns Fitch. Pay soars on candidate shortage. UK anti-fraud minister attacks ‘Dad’s Army’ Covid loan recovery . And more business news.
Ukraine
Risk sentiment seemed to improve drastically yesterday. There are talks that both Russia and Ukraine are softening their tone, which might give an exit for Russia abandoning the invasion eventually. Brent fell to £122 and Gold fell $55 while stock markets bounced as traders picked up cheap looking shares. The S&P index closed 2.6% higher and the Nasdaq rose by 3.6%. Then overnight the Russians bombed a children’s hospital and sentiments changed. Experts still predict oil could hit $200 a barrel as sanctions on Russian oil hit. Meanwhile other producers are being pressured to up production to replace the lost Russian energy stocks.
Businesses groups appeal for relief
The Confederation of British Industry will today ask the Government to implement major policy changes around energy, supply chains and cybersecurity, and help companies to invest. Tony Danker, director-general of the CBI, said it was clear that the UK and other western economies “now need to confront the economic consequences of unwinding from Russia”. He added: “This most obviously includes energy independence, significant cost inflation flowing from energy and other commodity costs, anticipated cybersecurity attacks, and dampening climate for investment.” Additionally, the Federation of Small Businesses said that help with energy bills for small businesses is going to be “critical”. It is calling for business rates discounts to offset higher energy costs.
Russia on brink of credit default, warns Fitch
Russia’s sovereign debt has been downgraded from B to C by Fitch, placing it in a “near default” category. A default would cost Pimco billions of dollars as the California-based asset manager has bet at least $1bn that Russia would pay its creditors while also holding $1.5bn of its sovereign debt. Jennifer McKeown, of Capital Economics, said that although Russia’s limited international debt obligations mean “losses by foreign investors in Russia look manageable”, because “the aggregate data conceal large exposures by individual institutions” contagion remains a possibility, with vulnerabilities greatest in Europe. In an effort to steady its economy, Russia has suspended the sale of foreign currencies until September.
Pay soars on candidate shortage
Research by KPMG and the Recruitment and Employment Confederation (REC) has found pay increases are being fuelled by intense competition for workers. Salaries for temp pay also increased, said the report, based on a survey of 400 recruitment agencies. REC chief executive Neil Carberry said: “Candidate availability has now been dropping for a year, which shows the scale of the labour shortage the UK faces.”
UK anti-fraud minister attacks ‘Dad’s Army’ Covid loan recovery
Former counter-fraud minister Lord Theodore Agnew has derided government attempts to stop fraud in its Covid loan scheme as a “Dad’s Army operation” and warned that the Treasury now faces an “avalanche” of claims from banks over the government guarantees in the flagship £47bn bounce back loans scheme (BBLS). “These are going to start hitting the Treasury in industrial quantities in the next few weeks,” he told the House of Commons Treasury select committee. Unfortunately, state guarantees mean it will likely be difficult to persuade banks to take greater responsibility for tracking down fraudsters, Lord Agnew added, although lenders had a moral duty to do so.
Labour calls for windfall tax on energy company profits
Boris Johnson has rejected a call from Labour leader Sir Keir Starmer to levy a windfall tax on the profits of energy companies, arguing such a move would only drive up costs for consumers and hinder companies’ ability to do what is required to free itself the country from its reliance on Russian hydrocarbons. Sir Keir said a tax on profits could be used to bring down household energy bills. Separately, rural homes reliant on heating oil have seen prices double in two weeks.
Prices of second-hand EVs climb
Owners of electric vehicles are taking advantage of skyrocketing oil prices, charging well over market value for their used battery-powered cars. Jamie Hamilton, automotive director and head of electric vehicles at Deloitte, said: “There is no sign of EV sales slowing down and, with both petrol and diesel tipping past £1.50 per litre this week, some consumers will likely be considering the savings they could be making by switching to electric sooner rather than later.”
Cameron urges Sunak to cut taxes
Former Tory PM David Cameron has urged Chancellor Rishi Sunak to cut taxes rather than raise them as the British people face soaring living costs. National insurance for employers and employees is due to rise by a combined 2.5 percentage points next month and petrol prices broke through the £2-a-litre barrier at some London forecourts. Cameron told Andrew Marr on LBC radio that the Chancellor should “keep the cost of government down” and limit taxes. That way you can help people through the cost of living crisis, he said, adding: “I think that’s important.”
Amazon
Amazon have announced a 20-1 stock split and plans to but $10 billion of its own shares. Shares gained 9% on the news.
Balfour Beatty
Balfour Beatty’s results have exceeded expectations and prompted a £150m share buyback programme, the company said today. In the year ended 31 December, the company’s profits soared 286.3 per cent to £197m, while gains from earnings-based businesses went up to £181m, exceeding analysts’ expectations.
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