Business news 12 May 2022

James Salmon, Operations Director.

Economy shrinks! Chancellor prepares new support package for UK households. Leveling Up failing. Increasing risk of UK recession. Pressure on Johnson to cut taxes increases.  And more business news.

Economy shrinks!

The UK Economy shrank in March as households began to feel the impact of rising prices and cut down on spending. The economy contracted by 0.1% in March after no growth in February, the Office for National Statistics said. In the first three months of the year the economy grew by 0.8%, which was driven by hospitality and travel industries recovering from pandemic restrictions.

Chancellor prepares new support package for UK households
Rishi Sunak could make a statement in August on how the Government will support households struggling with rising prices, sources say. The Chancellor has also ordered staff to examine plans for a potential windfall tax on oil and gas giants after BP chief Bernard Looney said his firm’s investment plans would not be affected by a windfall tax. One insider said that a one-off levy was a “no-brainer if the chief executives themselves are saying they have no problem with it.” A Treasury source said if oil and gas firms failed to bring forward significant extra investment then “nothing is off the table.”

Leveling Up failing

The PM’s Leveling Up plan is failing according to new research that shows things are in fat going backwards.   The salary gap is in fact widening in 9 out of 10 constituencies, home affordability is getting worse nearly everywhere and public spending per head has fallen behind the capital in every region of England.

Former Bank of England officials warn of increasing risk of UK recession
Three former members of the Bank of England’s Monetary Policy Committee have told MPs the only way the Bank can rein in inflation without triggering a recession is by moving more aggressively with interest rate rises now. Their comments follow a warning from the National Institute of Economic and Social Research that rates will need to rise to 2.5% and stay there until the middle of the decade in order to bring inflation under control. On Wednesday the National Institute for Economic and Social Research, a think-tank, predicted that Britain’s GDP would fall in the third and fourth quarters of 2022—meaning recession.

Pressure on Johnson to cut taxes increases
Tory backbenchers are keeping up the pressure on Boris Johnson to cut taxes as the cost-of-living crisis squeezes household budgets. After the PM told MPs who attended a garden party in Downing Street that he thought cutting taxes was the way to address the crisis, Jake Berry, the chairman of the Northern Research Group of MPs, said it was “now or never” for Mr Johnson to act. Stephen Crabb and Mel Stride were among other Tories calling for new measures to be announced swiftly. But the Treasury has downplayed talk of tax cuts anytime soon with officials saying fresh tax and spending measures are unlikely until Rishi Sunak’s autumn Budget, when details of the next expected rise in fuel bills are known. Finally, Robert Shrimsley opines in the FT that tax cuts are the only tactic left for Boris Johnson, but as the pressure mounts he wonders whether the PM can hold his nerve until the autumn.

Tui hopes for profits after demand recovers
Anglo-German holiday giant Tui reported a sixfold rise in revenues to £3.8bn for the six months to the end of March. The firm still lost £605m but this was less than half the £1.3bn lost in the same period 12 months earlier. CEO Fritz Joussen was optimistic the company would become profitable again in the current financial year with demand for travel remaining high. But Julie Palmer, a partner at Begbies Traynor, said: “With inflation already at a rate not seen in decades, holidaymakers are facing eye-watering prices for foreign trips when household finances are under severe pressure. This, coupled with staffing shortages across the industry and some lengthy delays at airports, may persuade cash-strapped vacationers to think twice about a trip to the sun.”

P&O rival backs UK plans to force ferries to pay minimum wage
Danish ferry operator DFDS has expressed its support for UK plans to force ferry operators to pay workers the minimum wage; CEO Torben Carlsen argues the economics of running cross-Channel services was becoming unsustainable.

IPO plans delayed amid market turmoil
There has been a major slowdown in IPO activity this year with prospective floats delayed over concerns about market turmoil. IPO numbers globally plunged 37% in the first quarter of 2022, according to EY, while cash raised tumbled 51% compared to the first quarter of 2021. EY’s UK IPO lead Scott McCubbin said, however, that he thinks “activity will recover as the market becomes more certain.”

Apple falls from top spot

The Tech sell off and the rising oil price has meant that Apple has lost its position as the worlds most valuable company – a position it has held for over 2 years – to Saudi Arabian oil giant Aramco!

Vodafone & Three

The FT has reported that Vodafone are looking to merge their UK business with rival Three.


BT Group has agreed to form a new sports joint venture with Warner Bros Discovery in the UK and Ireland. The telecoms giant confirmed the deal as it also reported that trading is “on the right track” despite a dip in revenues for the past year. In February, BT said it was in exclusive negotiations with the US media giant after completing a lengthy review of its BT Sport operation

Balfour Beatty

Balfour Beatty has announced it is “well positioned for 2022 and beyond” as trading continues to be in line with expectations. The group said its book order was at £15.6bn at the end of March and included a £530m construction project in Maryland, US. Between January and April, Balfour Beatty’s average net cash balance increased to £800m, £10m more compared with December, but it is expected to normalise once the £150m share buyback programme is over.


Superdry has posted an 8 per cent increase in group revenue after customers returned to the stores post-pandemic. In the 12 months ended 23 April, Superdry’s revenue increased to £600m, driven by a 59.8 per cent growth in store revenue. Proceedings derived by Superdry’s e-commerce business, on the other hand, went down 24 per cent year-on-year – a sign that post-pandemic customers want to go back to clothes shopping in person.

UK plans endorsement mechanism for global ESG reporting rules
The UK Government said on Wednesday that it will “create a mechanism” to vet and approve ESG reporting standards being written by the new International Sustainability Standards Board. A consultation will be launched over the use of sustainability reporting standards later this year, Debbie Crawshawe, accounting expert at the Department for Business, Energy and Industrial Strategy, told an online meeting hosted by the Financial Reporting Council.

BBC heads for High Court over pension bill
The BBC has launched a review of its pension scheme and will seek clarity from the High Court on its options to “reduce the burden on the licence fee”. In an email to employees, the BBC said that the cost of its legacy pension pot, known as the defined benefit scheme, had increased from 15% to 42% of pensionable salaries over the past decade. It pays an average of £182m a year into pensions, £147m of which is into the defined benefit scheme. The remaining £35m is paid into the newer defined contribution scheme, introduced in 2011.

ETF assets will surpass $20tn by 2026, PwC predicts
A report form PwC estimates that assets managed by exchange traded funds globally could grow to more than $20tn by 2026.

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