Business news 18 January 2022
James Salmon, Operations Director.
Construction firm collapses are building up. News on climate change, unemployment, levelling up, inflation, covid, BBc the four day week, flexi-work, and more business news.
Construction firm collapses are building up
Do you have exposure to the construction industry?
The latest official insolvency data shows that between August and October, 797 construction firms went bust. This is up by more than a fifth compared to the previous three months, with the sector being hit by rising costs, supply chain disruption and labour shortages.
Rebecca Dacre at Mazars warns: “Building contractors are being hit from all sides. Supply chain chaos, spiralling inflation and a vanishing pool of workers are combining to ramp up the financial pressure on them. For some the burden is too much and this is pushing them under.”
Climate change could cost economy up to £20bn a year by 2050
Climate change will cost the UK economy up to £20bn a year by 2050, according to the Government’s third five-yearly Climate Change Risk Assessment report, with it also warning that at least 1% a year will be wiped off the UK’s economy by 2045 if global temperatures are allowed to rise by 2C.
The Analysis suggests “stronger or different” action is needed to reduce costs, saying that making adaptations to reduce the harmful impacts of climate change on the environment now would prove far cheaper than more “costly remedial actions” to repair damage in the future. The study adds that “early adaptation investments” can deliver up to £10 in economic benefits for every £1 spent.
Unemployment
The unemployment rate dropped from 4.5 per cent to 4.1 per cent between September and November 2021, according to the Office for National Statistics, with the labour market continuing to show strong signs of recovery last winter. Overall, unemployment dropped by 184,000 as the number of people on the country’s payroll increased to 30 million. The current rate of unemployment is now only 0.1 percentage points higher than before the pandemic.
KPMG economist: More funds needed for levelling-up
Yael Selfin, chief economist at KPMG, says more funding is required to improve regional growth as the UK’s economic recovery slows. Writing in the Times, she says: “A broader ‘levelling up’ of the UK economy will need further initiatives and investment, which could take a decade or more for any big changes to be embedded.” Ms Selfin says initiatives to attract new private investment will need to be accompanied by measures “to address some of the structural features of regional labour markets.” With KPMG’s regional economic outlook report saying the establishment of eight freeports will help to improve growth in their surrounding areas, Ms Selfin notes that “the full impact on growth is unlikely to be felt before the middle of this decade, however, and will crucially depend on the successful implementation of these initiatives.”
Inflation could hit 30-year high, experts warn
Economists believe that the cost of living could be set to hit its highest level in thirty years, with price rises and soaring energy bills driving up inflation. Sanjay Raja, Deutsche Bank’s senior economist, expects inflation to hit 5.3%, a rate that would mark the highest reading for the consumer price index since March 1992. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, believes inflation will hit household budgets, with this driving a reduction in spending that could slow economic growth. Meanwhile, Yael Selfin, chief economist at KPMG, believes inflation could prompt three interest rate rises in 2021, marking ” a shift towards a significantly tighter monetary policy stance”.
Covid
Moderna said it hoped to launch a combined covid-19 and seasonal flu jab next year. Meanwhile Israel saida fourth dose of the Pfizedr vaccine had little impact on preventing an Omicron infection.
BBC
The government has announced it will freeze the licence fee for two years. Then it will rise in line with inflation for four years. The Conservative party has long criticised the public service broadcaster for perceived left wing criticism. A Labour spokeswoman said the freeze was “cultural vandalism”.
5G
American Airlines warned of catastrophic problems from the launch of 5G services which it says interfere with older planes.
Oil
Oil jumped to 7 year highs as geopolitical tensions rose (Yemen’s Houthi group attacked the United Arab Emirates, escalating hostilities between the Iran-aligned group and a Saudi Arabian-led coalition) and demand rose with the concern over omicron easing.
Firms trial four-day working week
A six-month pilot scheme has been launched that will see staff at participating companies and organisations work a four-day week but see no reduction in pay. The programme is based on the 100:80:100 model – 100% pay while working 80% of the time in exchange for at least 100% productivity. Researchers will measure the impact on productivity, as well as on staff wellbeing, and the impact on the environment and gender equality. The trial has been organised by 4 Day Week Global in partnership with think-tank Autonomy, the 4 Day Week UK Campaign and researchers at Cambridge University, Oxford University and Boston College. The US, Ireland, Canada, Australia and New Zealand are conducting similar trials run by 4 Day Week Global, while the Scottish and Spanish governments have also launched trials of the four-day working week.
Flexi-work court cases increase by over 50%
Research from law firm GQ Littler has found that an increasing number of employees are taking their employer to court over flexible working requests being refused. Employment tribunal decisions related to flexible working have risen by more than 50% in the past year, hitting 193. Figures show 127 tribunal decisions related to the mixture of remote and office-based working were recorded in 2019/2020. GQ Littler partner Sophie Vanhegan said: “The rise in cases relating to flexible working, suggests this is becoming a battleground within some businesses.” She suggested that employees may begin to “vote with their feet” should employers use “heavy-handed” approaches to flexible working.
Recruitment in financial services reaches pre-pandemic levels
A new report from Morgan McKinley has found that there was a 40% increase in the number of jobs available in the City in the final three months of 2021 compared to the same period in 2019 and a 118% jump when compared with the end of 2020. Last year there were a total of 32,331 financial services jobs created in London, a 118% increase from the previous year. The report also found that financial workers were also keen to look for new opportunities, with a 34% increase in job seekers compared to pre-pandemic levels. The average salary increase of moving from one job to another was 19% in Q4.
House prices up £852 in a month
Average property prices have increased £852 in a month, according to Rightmove, with the 0.3% increase coming as estate agents experience their busiest ever January. The property website said the average asking price for a home in Britain is now £341,019. The price of starter homes has also risen, with first-time buyers paying an average of £214,176 – 1.4% more than the previous month. The latest figures also show significant regional variation. House prices in the majority of areas have fallen slightly but high growth in a few areas has a driven a national rise. The analysis also shows that the number of buyers enquiring about homes is 15% higher than this time last year, while the number of homes available for sale has hit a record low of 12 per estate agency branch.
Premier League contributes £7.6bn to the UK economy
Analysis by EY shows that the Premier League generated £7.6bn for the UK economy in the 2019/20 season. The report reveals that 3.2bn global viewers watched top flight English matches, while 528,000 people travelled to the UK to watch games, despite the pandemic having an impact on the later stages of the season.
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