Business news 21 April 2023
James Salmon, Operations Director.
UK consumer confidence rises to highest level since Ukraine invasion. Retail sales decline. Green Energy and North sea producers hit out at windfall tax. A ban on all exports to Russia? And more business news.
UK consumer confidence rises to highest level since Ukraine invasion
Consumer confidence recovered further in April, rising to its highest level since February 2022. Confidence rose by six points to -30, with an improvement in all areas measured in the index by market intelligence company GfK. “There’s a sudden flowering of optimism with big improvements across the board,” said Joe Staton, client strategy director at GfK., who explained that consumers may have built price rises into their expectations and now felt “more stoic and less desperate because maybe things aren’t as bad as they could be”. People said they were more likely than in previous months to spend on big-ticket items. However, Linda Ellett, UK head of consumer markets, retail and leisure at KPMG, said people’s appetite for buying expensive items “will be dependent on whether and when essential costs stabilise or fall.”
Bank of England
Silvana Tenreyro said some of her fellow BOE officials are like a “fool in the shower” who gets scalded by being too impatient for the water to warm up. The MPC dove, whose term ends after two more meetings, said rates are already too high and was speaking out against hawkish colleagues.
Retail sales decline
UK Retail Sales declined by more than expected in March, according to data from the Office for National Statistics. Retail sales volume is estimated to have fallen 0.9% in March from the month before, following a 1.1% rise in February. February’s monthly rise was revised down from an increase of 1.2%, the ONS said. Markets expected retail sales volume to fall 0.5% in March on a monthly basis.
Eire & Brexit
Irish Prime Minister Leo Varadkar said he hoped the UK will one day seek a closer relationship with the European Union, although rejoining the bloc as a full member remains “a remote prospect.” “Brexit will never just be done and will require constant negotiations, constant alterations to the relationship” he added.
Green Energy
The UK is to join with several European Union nations in pledging to scale up production of renewable energy in the North Sea as it continues its efforts to fix its relations with European neighbours. The government will sign a declaration promising to accelerate the building of offshore wind projects, including so-called energy islands. Norway is the only other non-EU nation that will sign the declaration.
North Sea industry hits out at windfall tax
The North Sea Transition Authority (NSTA) has calculated that annual crude oil production will more than halve over the current decade, with gas production also forecast to fall dramatically. capital expenditure is also expected to fall while decommissioning costs rise. The falling rates of production follow Chancellor Jeremy Hunt hiking the windfall tax from 25 to 35% last November, and extending its duration to 2028. Mark Lappin, member of Brindex, the UK association for independent North Sea operators, blamed stringent taxes and the instability of the UK’s investment regime for the further downgrades in production. “We need a state of stability and we need to be able to plan for our projects and if the tax levels are particularly high, that will clearly affect investment.”
A ban on all exports to Russia?
The US and some other western allies of Ukraine’s key allies have reportedly suggested an outright ban on most exports to Russia. G-7 officials are reported to have discussed the proposal with G-7 leaders to discuss it when they meet next month in Japan.
SpaceX
SpaceX launched the most powerful rocket ever built, the Starship system, planned to take humans to the moon or even Mars. The rocket fulfilled the ambition of successfully taking off from the launch pad but, the booster failed to separate from the spaceship at about 40km up. The un-manned craft then experienced what SpaceX called “rapid, unscheduled disassembly” or as us non-rocket scientists would say, it blew up!
IFS: State pension age ‘will hit 70 by 2050’
A major report from the Institute for Fiscal Studies has warned that the Government could be forced to increase the state pension age to 70 by 2050 to balance public finances. The state pension age will increase from 66 to 67 by 2028 and is legislated to rise again in the mid-2040s to 68. However, Britain’s ageing population means a rise to 70 by 2050 will likely be needed to maintain the proportion of people still in work, the IFS said. Just 24% of the adult population was aged 65 or over in 2020, it found. However, this is forecast to rise to 31% in 2050 and 34% in 2070, placing huge pressure on public finances unless the retirement age is raised. Sir Steve Webb, a former pensions minister, said that a state pension age of 70 would be “draconian”. “These rigid rules do not work for real human beings,” he said.
Thousands of young people without capacity have savings locked away
Tens of millions of pounds belonging to about 80,000 young people without capacity to make financial decisions could be locked in trust funds, according to a report by Renaissance Legal. Between 2002 and 2011 millions of children were given between £250 and £500 through the then-Labour government’s Child Trust Fund scheme. Families could then add their own contributions to help the savings pot grow. But parents or guardians of children with limited capacity must apply to access the money through the Court of Protection. Those who do manage to gain access have to become a deputy, burdening them with a lifelong legal duty to account for every penny spent. By 2029, when all of the accounts mature, there could be up to £210m locked away in Child Trust Funds that families have been unable to access. The Ministry of Justice considered proposals to change the process but decided in February to keep the process as it is, in order to “protect against fraud and abuse”.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.