Business news 22 February 2022

James Salmon, Operations Director.

Johnson announces “living with covid”. PMIs show UK economic recovery accelerating. Ukraine and markets. Four in 10 people ‘not confident using numbers’. Sunak urged to rethink pensions tax.  And more business news.

Johnson announces “living with covid”  
Boris Johnson said the U.K. must learn to live with coronavirus as he ended pandemic rules in England. The PM outlined his plan for “living with COVID” telling the House of Commons it was now time to move away from government restrictions to personal responsibility. The PM said that because immunity levels were so high, the remaining pandemic restrictions can be lifted. The legal requirement for people who test positive for coronavirus to self-isolate will be removed from Thursday and contact tracing will also come to an end. From 24th March Covid provisions attached to statutory sick pay will be removed and guidance on workplace safety that been changed for COVID will be updated. Free symptomatic and asymptomatic testing will end in England from 1st April but the most vulnerable will still be able to access free tests.

Responding to the changes, the British Chambers of Commerce said: “Access to free testing is key to managing workplace sickness and maintaining consumer confidence,” adding: “If the government is to remove this, companies must still be able to access tests on a cost-effective basis.” The views were echoed by Matthew Fell, a policy director at the Confederation of British Industry, and unions raised concerns that the low-paid will not be able to afford tests and may come under pressure from employers to work when ill with Covid. Finally, fourth jabs will start being offered to those aged 75 and over from next month, with a further rollout of vaccines expected later this year.

Ukraine & Markets

Sentiment has turned bearish again on the actions of the Russian Bear as Valdimir Putin declared recognition of independence of the breakaway regions of eastern Ukraine, and ordered troops to enter the regions as “peacekeepers”, which is seen as a step closer to imminent invasion. Russia’s recognition of Donetsk and Luhansk violates the Minsk accords. In his speech, Putin questioned whether Ukraine was legitimately an independent state. Coordinated sanctions on Russia are expected shortly from the US, UK, France and Germany. It seems that further escalation is now inevitable. Oil and gold surged.

PMIs show UK economic recovery accelerating
UK business activity expanded in February as business fought off rising costs and the Omicron wave retreated. The flash IHS Markit/CIPS composite Purchasing Managers’ Index (PMI) found private sector output picked up at the fastest pace since June with spending on travel, leisure and entertainment cited as the key driver. Output growth in the services sector exceeded that seen in the manufacturing industry, but supply disruption was easing leading to a swift rise in output volumes. Price pressures continue, however, cutting into profits and leading analysts to suspect this could prompt the Bank of England to raise interest rates next month to 0.75%. IHS Markit added that exports continue to struggle with Brexit reportedly adding to UK trading headwinds. “The UK economy is rebounding from Omicron at a fair clip,” says Gabriella Dickens, Senior UK Economist at Pantheon Macroeconomics. “The forward-looking components of Markit’s survey suggest growth will remain brisk over the coming months.”

Four in 10 people ‘not confident using numbers’
Some 40% of people do not feel confident about using numbers in their everyday lives, while 20% would avoid jobs that involve using numbers often, according to research published by the Association of British Insurers. More than a third of those polled (37%) said that having easier access to online numeracy tools would help them, and 25% feel that clearer explanations would increase their confidence in dealing with numbers. The ABI has teamed up with Plain Numbers to help people better understand customer communications. Plain Numbers works with firms to help their staff present and explain numbers clearly and simply to help improve customer understanding. Firms that have signed up so far include Aviva, Direct Line Group, Royal London, RSA and Standard Life.

Sunak urged to rethink pensions tax
The Express reports that the Daily Telegraph has joined the paper in campaigning against the Chancellor’s decision to freeze the amount of pension you can build up before the pensions lifetime allowance kicks in. The Telegraph says the 55% tax is “extortionate” and another 500,000 taxpayers will be caught out from April, when the threshold for paying the charge is frozen again. The LTA used to stand at £1.8m but has been repeatedly slashed to £1,073,100. More than 1.6m already pay and their numbers will steadily grow as stock markets and pension values rise. Pete Glancy, head of policy at pensions experts Scottish Widows, says deterring people from saving into pensions reduces revenue for the Treasury in the long term. “It’s a lose-lose policy and it needs to be reviewed,” Glancy says.

UK private businesses urged to raise boardroom gender parity
A government-backed body has said FTSE 350 companies will be expected to increase women’s representation to at least 40% of both boards and leadership teams by the end of 2025. The FTSE Women Leaders Review, which replaces the former Hampton-Alexander review, has also set a voluntary goal for companies to have a woman in at least one of four key positions: board chair, senior independent director, chief executive and or finance director. Female representation on boards currently stands at an average of 39.1% across the FTSE 100, 36.8% across the FTSE 250 and 37.6% for the FTSE 350. But now the target will apply also to the largest 50 private companies in the UK by sales. Denise Wilson, chief executive of the review team, said UK boardrooms had undergone a “revolutionary change” in the last 10 years, and that the latest recommendations were a final push to “make sure we achieve gender balance”. Co-sponsor of the report, KPMG, said that that the “need to maintain momentum and continually challenge remains”. Chair of KPMG in the UK, Bina Mehta said it is “important” to ensure that the “overflowing pipeline” of “well-qualified and capable” women translates into more women “chairs, senior independent directors, chief executives and chief finance operators

House prices see biggest monthly rise for 20 years
The average property price has soared by nearly £8,000 in the space of a month, according to Rightmove. The £7,785 jump this February is the biggest month-on-month increase in cash terms recorded by the online property portal in more than 20 years of its reporting. It means the average asking price across Britain now stands at a record £348,804 – a rise of nearly £40,000 in the two years since the pandemic started, compared with just over £9,000 in the previous two years. The average asking price for a home is 9.5% higher than a year ago, marking the highest annual rate of growth since September 2014.

Businessman with Britain’s best man cave loses tax appeal
Graham Wildin, the millionaire accountant and businessman ordered to demolish the huge sports and leisure complex he built in his garden, has lost an appeal against tax and VAT bills totalling almost £300,000. Wildin claimed that the costs of building ‘Britain’s best man cave’ at the back of his home in Gloucestershire were tax deductible because it was to be part of a holiday let business. However, his claim has been rejected by a tax tribunal which found that his purpose was not to offer the facilities for outside use but to keep them “for the private enjoyment of his immediate family circle.”


HSBC said it would launch a $1 billion share buyback programme after the banking group reported a rise in profit, underpinned by lower than expected credit losses amid improving economic conditions. For the year ended 31 December 2021, pre-tax profit was up $10.1 billion to $18.9 billion, while revenue was down 2% to $49.6 billion.

Smith & Nephew

Smith & Nephew said annual profit more than doubled, though its revenue growth slowed in the fourth quarter amid global supply chain challenges and the spread of Omicron. The company also announced that chief executive Roland Diggelmann was standing down and would be replaced by Deepak Nath from 1 April.

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