Business news 11 April 2022

James Salmon, Operations Director.

Cost of living crisis is bringing us close to civil unrest. New data will reveal further cost of living pain. Labour market grows at fastest pace in two years. As many as 40,000 civil service jobs face the axe.  And more business news.

Cost of living crisis is bringing us close to civil unrest

Britain stands on the brink of riots due to the mounting cost-of-living crisis, money-saving expert Martin Lewis has warned.

The founder of the MoneySavingExpert website told the Sunday Telegraph: “We need to keep people fed. We need to keep them warm. If we get this wrong right now, then we get to the point where we start to risk civil unrest. When breadwinners cannot provide, anger brews and civil unrest brews – and I do not think we are very far off. I get all these messages from people tearing their hair out. They don’t know how to make things add up.”

According to the latest UK economic outlook report from PwC households are set to be £900 worse off this year as living standards plummet. The lowest earners face a £1,300 blow to finances and the hit could be higher if the Ukraine crisis keeps escalating. Lewis says: “It is not an exaggeration to say that there are people we have to prevent freezing or starving.”

New data will reveal further cost of living pain

Official figures will this week show wages are failing to keep pace with inflation, the Times reported on Saturday, contributing to a fall in overall living standards. GDP figures will cover February but are not expected to reflect the impact of the conflict in Ukraine.

KPMG expects growth to have slowed to 0.3% in February after exceeding pre-pandemic levels in January, when monthly growth reached 0.8%. The firm expects inflation to have risen to 6.6% last month, up from a 30-year high of 6.2% in February. Yael Selfin, chief economist, said: “We’re looking at something around negative 1.4% [real wage growth] for private sector regular pay excluding bonuses, more than negative 1.2 [drop] in January.”

Elsewhere, Martin Beck, chief economic adviser to the EY Item Club, said GDP figures for February would be “old news” as they would not pick up the period since the onset of the war, adding that growth would probably have slowed to 0.3%.

Labour market grows at fastest pace in two years

Employment growth in the UK returned to pre-pandemic levels in March, according to the latest jobs report from BDO. Its index, which measures business sentiment among senior managers, rose for a fifth consecutive month to a reading of 112.74 last month – a two-point increase compared with February.

Kaley Crossthwaite, a partner at BDO, said: “The labour market has shown resilience throughout the pandemic and then continued growth as restrictions have gradually lifted. While it’s reassuring to see employment return to near pre-pandemic levels, this strong form could come to an end as the cost of living crisis, rising inflation and wider geopolitical matters distract businesses from growth and place pressure on the employment index.”

As many as 40,000 civil service jobs face the axe
The Telegraph reports on plans to reduce the civil service headcount by some 40,000 staff as the Treasury prepares to trim the public payroll. Jobs created in response to the pandemic and Brexit face the axe first with a source saying the cutbacks will affect staff working on the “bureaucratic aspects” of the responses, rather than frontline staff. Simon Clarke, Chief Secretary to the Treasury, said last month that increases in civil service headcount had become “impossible to justify long-term and something we’re determined to reverse”.


UK GDP has been revised to 1% in Q1 from 1.1% previous estimate.


The Ukrainian economy is predicted to have fallen 45.1% as a result of the war while Russia’s GDP has taken a hit of 11.2% according to the World Bank.


CEO Elon Musk has declined an offer to join the Twitter board. Over the weekend he tweeted ‘Is Twitter dying’.


Shanghai reported a new record of over 26k  cases as officials introduce new restrictions in other cities including Guangzhou.


President Emmanuel Macron won the first round of the French presidential election with 27% of the vote – a larger margin that expected and will enter the second round against Marine Le Pen who got 24%, a re-rerun of the 2017 election.

Britain should scrap non-dom tax status
An editorial in the Economist calls for the UK to scrap non-dom status, arguing that only a small number of people would be discouraged from settling in the UK as a result while evidence suggests those who have ceased to claim non-dom status do not flee the country afterwards. Non-dom status is an anomaly in what is a progressive tax system, the piece continues, noting that since non-doms do not have to tell British authorities where they pay tax on their foreign assets, overseas income can be channelled to tax havens instead.

Chancellor’s wife to pay UK tax on all income
Akshata Murty, the wife of the Chancellor Rishi Sunak, has said she will start paying UK tax on all her worldwide income following a backlash over her non-domicile status. In a statement, Ms Murty said that while the arrangement was legal, she understood the “British sense of fairness” and would from now on pay UK tax on “all my worldwide income, including dividends and capital gains, wherever in the world that income arises”. Despite her decision on tax, as an Indian Ms Murty will retain her non-domiciled status indefinitely. Richard Murphy, a tax expert, said this means she might still be able to avoid UK capital gains tax and inheritance tax, adding: “This is a massive tax advantage: her potential inheritance tax bill is thought to be as much as £280m on her shares in Infosys, which are estimated to be worth £700m.” Murty has received £11.6m in dividends from her shares in Infosys in the past tax year. Experts said her non-domicile status means she has avoided up to £20m in UK tax.

Rishi Sunak calls for probe into his financial declarations
The Chancellor has asked Boris Johnson to launch a review into his financial interests to establish whether his dealings had been properly disclosed. The move comes after intense criticism over his wife’s “non dom” tax status and questions over his investments. Rishi Sunak said in a letter to the Prime Minister that he was confident an independent review “will find all relevant information was appropriately declared.” Meanwhile, the Health Secretary has admitted that he held non-dom status for six years while earning up to £3m a year as a banker. He also said that he made money from an offshore trust which he collapsed when he became a minister. Sajid Javid said he disclosed the information because he wanted to be more open about his finances given the “heightened public interest” in the subject.

We can change how we tax the income of the super-rich
Writing in the Times, Paul Johnson, the director of the Institute for Fiscal Studies, says Britons should be grateful for the super-rich, many of whom were born abroad but work in the UK, primarily in financial services, and pay enormous sums in tax. However, research notes that income from self-employment and business ownership makes up almost a third of the income of the top 0.1%. That kind of income is much less heavily taxed than ordinary earnings, especially when it can be rolled up into capital gains. Johnson concludes: “It is time to sort out the taxation of this type of income and ensure that rentiers, partners in professional firms and those set up as business owners are at least taxed on the same basis as the rest of us.”

Boris Becker found guilty of four charges under Insolvency Act
Six-time Grand Slam champion Boris Becker has been found guilty of four charges under the Insolvency Act relating to his 2017 bankruptcy. Becker was declared bankrupt over an unpaid loan of more than £3m on his estate in Mallorca, Spain. He was accused of hiding millions of pounds worth of assets, including two Wimbledon trophies, to avoid paying his debts. Becker, who was acquitted of a further 20 counts, was bailed ahead of sentencing on April 29th.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.