Business news 10 December 2021
James Salmon, Operations Director.
UK GDP .Ministers rule out further business support under new Covid restrictions. Conservative MPs threaten to rebel over Plan B. City firms take more flexible approach to WFH guidance. Omicron restrictions wreck Sunak’s tax plans. MPs call for online sales tax to save the High Street.
UK GDP
The UK economy grew 0.1% over October 2021 slowing from 0.6% growth seen in September, missing estimates by 0.4%.
Ministers rule out further business support under new Covid restrictions
Ministers have rejected pleas for financial support for companies, including hospitality and retail businesses that face losing crucial sales over the Christmas period due to the imposition of Covid restrictions. The response comes after pub and hospitality bosses have urged the Government to reintroduce tax cuts, furlough and business grants amid fears that Plan B restrictions will deliver a “devastating” blow to the industry. Meanwhile, Paul Dales, at Capital Economics, says the measures could knock up to 0.5 percentage points from GDP in the month of December. He warns this could still be enough to cause the economy to contract that month – based on a pre-Omicron prediction that GDP would rise by 0.2% – with growth potentially swamped by the negative effects of the new wave of restrictions.
Health Secretary Sajid Javid said new Covid-19 rules will ‘buy time’ against the Omicron variant amid a credible risk of a crisis for the NHS.
Conservative MPs threaten to rebel over Plan B
Following an open revolt by Conservative backbenchers after Boris Johnson argued for a conversation about mandatory vaccinations, the Health Secretary has come out and declared the idea “unethical” and impractical. One Whitehall insider told the Telegraph: “You would think it was only people like [Nazi doctor] Josef Mengele who would champion injecting people against their will. This is fascist nonsense and should be shunned by any freedom-loving man or woman in this country.” Meanwhile, the Government may have to rely on Labour to push through Plan B Covid rules as dozens of Tory MPs threaten to rebel against the measures. Backbencher Marcus Fysh said that the latest curbs are an “utter disgrace”, while former chief whip Mark Harper has questioned whether the Government has the moral authority to impose the limits. Mr Harper said the evidence on the spread of Omicron, which has yet to hospitalise a single person in the UK, simply “doesn’t support the introduction of these measures.” Leading figures are now calling for the PM’s resignation, including Lord Sugar who called Mr Johnson “mental” adding in a tweet: “Correct me if I am wrong but I have not heard of anyone who had to go to hospital with this new strain let alone die. Small BIZ will collapse”. Finally, Sir Richard Dearlove, the former head of MI6, has said Britain’s universities have been infiltrated by malign Chinese communist party influences colouring the response to Covid by academics.
City firms take more flexible approach to WFH guidance
After Boris Johnson issued his Plan B “work from home” guidance on Wednesday, employers have issued an array of instructions to staff, with many taking a more flexible approach than in the early months of 2020. PwC and the Slaughter and May are among the large businesses that will allow workers to continue to travel to the office if they have mental health needs, or if they are unable to work from home, as well as for business-critical reasons. “As always we will follow government guidelines, but there’s no denying this will be a challenge for some sectors,” said Kevin Ellis, PwC’s chairman and senior partner. The majority of our people had returned to the office two to three days a week. It’s the busy season for audit and there’s also lots of deal activity that benefits from some in person meetings.”
Elsewhere, KPMG told workers that only business-critical meetings should take place in person, and only at “Covid-secure KPMG offices or client sites”. EY and Deloitte said they have asked staff to comply with the guidance, though their offices are still open for employees who need them. “We ask anyone who comes into our offices to wear a face mask and to have taken a lateral flow test within 48 hours of coming in,” a Deloitte spokesperson said. The City of London Corporation said the restrictions were a disappointment to business in the Square Mile. “We will urge City businesses, workers and residents to follow the new rules,” said Catherine McGuinness, the City’s policy chair. “But we also ask the Government to set out a clear roadmap to normality early in the new year and base all decisions on data. We need to find ways to live with the virus which allows the economy to prosper,” she said.
Omicron restrictions wreck Sunak’s tax plans
The Institute for Fiscal Studies (IFS) has warned that Boris Johnson’s move to implement Plan B Covid measures will stymie a return to growth and limit the Chancellor’s chances of cutting taxes and reducing borrowing. Ben Zaranko, of the IFS, said: “With a full and complete recovery, he might have been able to cancel tax rises or implement tax cuts – the Chancellor had hinted at that. But anything that worsens the economic outlook makes that more difficult to achieve. That is the unfortunate position he might be in.” Yael Selfin, chief economist at KPMG, expects the economic recovery to withstand current restrictions but slow if the Government’s stance hardens further. She said: “It is looking like there will be further restrictions, probably in the New Year.”
MPs call for online sales tax to save the High Street
A report from the Commons Levelling-Up Select Committee has called on the Government to introduce an online sales tax arguing that it should be used to reduce the business rates paid by bricks-and-mortar retailers, which have suffered reduced footfall during the pandemic. Ministers should also push ahead with a sweeping review of neglected town and city centres post pandemic, MPs said.
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