Business news 10 November 2021
James Salmon, Operations Director.
NIESR warns of stagnation risk from supply-chain problems. UK Grocery Sales inflation hits 14 month high. BoE to consult on digital pound. And more business news.
NIESR warns of stagnation risk from supply-chain problems
The National Institute of Economic and Social Research (NIESR) has warned that persistent supply-chain bottlenecks risked stagnating Britain’s economy in the years ahead. The think tank predicts that inflation would reach around 5% next year and last longer than the Bank of England expects. Britain’s economy was set to grow by 6.9% in 2021 and by 4.7% in 2022, as it recovers from the COVID-19 pandemic, before slowing sharply to 1.7% in 2023 and 1.3% in 2024, NIESR said.
UK Grocery Sales inflation hits 14 month high
The latest data from Kantar reveals like-for-like grocery inflation rose to 2.1% in October – the highest since August last year.
Retailers are resorting to price hikes to offset higher costs of transport, fuel, energy, stock and wages, which is seeing the cost of living rise sharply. Meanwhile, the British Retail Consortium-KPMG Retail Sales Monitor reported that on a total basis sales increased by 1.3% in October.
UK Grocery Sales slipped over the past quarter, but remained ahead of pre-pandemic levels, the data from Kantar showed. In the 12 weeks ended Oct 31, UK grocery sales fell by 1.9% to £28.90 billion from £29.45 billion in the same period the year before. This, however, remained 7.3% higher from the same period in 2019, before the onset of the pandemic.
BoE to consult on digital pound
HM Treasury and The Bank of England have launched a joint consultation on the launch of a digital currency backed by the UK’s central bank. Economic Secretary to the Treasury, John Glen, said: “This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK. I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.”
Marks & Spencer
Marks & Spencer swung to a first-half profit after demand recovered following an easing of lock-downs. Pre-tax profit for the six months through September amounted to £187.3 million, compared to a year-on-year loss of £87.6 million and above a profit two years’ earlier of £158.8 million. Revenue jumped 25% to £5.11 billion and was up 5% on the period two years’ prior, before the pandemic hit.
ITV
ITV touted record advertising revenue for 2021 after reporting a rise in revenue in the first nine months of the year, led by strong performance in its studios devision. Total external revenue was up 28% at £2,381 million year-on-year, and up 8% compared to 2019. ITV studios revenue was up 32% at £1,193 million, and up 6% compared to 2019.
JD Wetherspoon
JD Wetherspoon reported a fall in sales in the first 15 weeks of its fiscal year compared with the same period of 2010 as food and drink volumes continue to be affected by the pandemic. For the first 15 weeks of the financial year, like-for-like sales fell 8.9% lower compared with the same period in 2019.Still, this was an improvement following a 17.8% drop in sales in the last 10 weeks of the previous financial year.
Halfords
Halfords upgraded its outlook on full-year performance after profit grew by more than a third in the first half of the year. For FY2022, the company increased its underlying pre-tax guidance to between £80 million and £90 million, up from £75 million previously, citing good sales momentum and the easing of supply chain disruption.
COP26
The world is currently set to hit 2.4 degrees centigrade above pre-industrial levels by 2100 according to the Climate Action Tracker, way above the 1.5 degree target.
Covid
The WHO has warned that the world is facing a shortage of up to 2 billion syringes with use during the pandemic exceeding manufacturing capacity and stocks dwindling.
General Electric
The historic giant conglomerate, General Electric, has announced it is going to split into three seperate entities over the next couple of years, splitting out into Healthcare, energy and aviation.
Business organisations welcome retreat on governance reform
The Institute of Directors has welcomed the anticipated climbdown on audit and governance reforms, with its director of policy and corporate governance Roger Barker saying putting a new legal requirement on directors would have created an unwanted burden on already strained companies and deter qualified candidates from joining boards. He added: “Even if the Government decides to pull back from creating a new statutory obligation for directors around internal controls, this is still a key issue for which boards are ultimately responsible.”
Watering down the reforms will be a blow to auditors, however, who have argued that ultimate responsibility for corporate scandals should lie with company management. One senior accountant said: “A cornerstone of the reform was that all actors would be on stage but now some actors have left the stage. It doesn’t deal with the core issues.” A Whitehall source said: “We need to strike the right balance between strengthening our corporate governance regime – which is in dire need of reform – and ensuring burdens on business are minimised as we recover from the pandemic. The Business Secretary has been clear we can’t stick with the existing rulebook which failed to prevent large company failures, with jobs being lost and the taxpayer picking up the tab.”
Property market still favours vendors says Rightmove
Rightmove says it is still a sellers’ market, with Grays in Essex named as the top spot for vendors and coastal areas also in high demand. A surge in house prices in the last 18 months has been driven to a considerable extent by high demand from buyers which has been unmatched by the number of homes on the market.
Also in the 10 areas with the highest proportion of listings with offers accepted were Eastleigh, Redditch, Yeovil, Hythe, Gosport, Corby, Fareham, and Bognor Regis. The areas with listings least likely to be the subject of offers are primarily in London. Tim Bannister, Rightmove’s director of property data, said: “Sellers have had a better chance this year than at any time over the past decade of finding a buyer for their home.”
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