Business news 25 May 2022

James Salmon, Operations Director.

Grocery prices increase at the fastest pace in 13 years. PM hopes windfall tax will distract from Covid rule-breaking. UK economic growth falls to 15-month low. UK public borrowing falls as economy bounces back from pandemic. Qatar pledges to invest £10bn in UK, blames West for energy crisis .  And lots more business news.

Grocery prices increase at the fastest pace in 13 years
The price of the weekly grocery shop has risen by 7% in the past month, the highest level of inflation in 13 years, according to market research group Kantar. Fraser McKevitt, head of retail and consumer insight at Kantar, said: “People are really feeling the squeeze at the supermarket tills and they’re having to stretch their budgets further to accommodate rising prices.” Despite the price rises, overall supermarket sales fell by 4.4% in the three months to 15 May, as the reopening of bars, cafes and restaurants allowed more people to dine out rather than cook at home. Sales declined at all the big four supermarket chains, with Morrisons hit hardest. The Bradford-based chain’s sales slid 9.5% taking its share of the take-home grocery market to 9.5%, just half a percentage point ahead of Aldi.

Russia wins from Food crisis

Russia’s war against Ukraine has not only deepened the global food crisis, but has also made the invader among the biggest winners of the mess it created. With Ukraine’s grain exports by sea blocked, along with droughts that are hurting wheat crops in other parts of the world, grain prices are at near-record highs and are threatening hunger in parts of the Middle East and North Africa. However, Russia has continued to ship its wheat at the now-higher price, finding willing buyers and raking in more revenues per ton. It is also expecting a bumper wheat crop in the next season. Global wheat prices have risen by more than 50% this year, and the Kremlin has collected $1.9 billion in revenues from wheat export taxes so far this season, according to estimates from agricultural consultant SovEcon.

PM hopes windfall tax will distract from Covid rule-breaking
Boris Johnson is expected to announce major new measures to help with the cost of living on Thursday – the day after a report on Covid rule-breaking in Downing Street is made public. The Treasury has been working on a windfall tax for energy companies and Rishi Sunak is expected to give the green light to the one-off tax, which will be used to help pay to support households most affected by the financial squeeze from soaring energy bills. It had been expected that the plans would be announced after the Platinum Jubilee bank holiday, the Telegraph notes, but Number 10 hopes that by bringing the announcement forward public attention will be steered away from the Sue Gray report. Her findings are expected to be highly damaging, with senior politicians and civil servants named and shamed for flouting Covid rules. Failings in leadership are also set to be detailed by Gray. Shares in some of Britain’s biggest power companies fell sharply yesterday amid concerns over a windfall tax.

UK economic growth falls to 15-month low
The S&P flash PMI for May showed growth in the UK private sector fell to a score of 51.8, down from 58.2 in April and a 15-month low. The month-on-month loss of momentum in May was the fourth-largest on record and exceeded anything seen prior to the pandemic. Some experts said the figures were likely to understate the true scale of Britain’s economic slowdown because they exclude the retail and public sectors. The UK’s services sector barely grew with a PMI reading of 51.8, down from 58.9 previously and far below the 57 forecast by analysts. The manufacturing sector held up a little better with its PMI reading at 54.6, down from April’s 55.8 and below the expected reading of 55. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data “signal a severe slowing in the rate of economic growth in May, with forward-looking indicators hinting that worse is to come.” Businesses cited the cost-of-living crisis, Brexit, rising interest rates, China’s lockdowns and the war in Ukraine as key reasons for the gloomy outlook. The pound fell sharply against the euro and the dollar on the news. PMI data for the Eurozone showed a continued robust growth in May.

Pound tumbles

The Pound tumbled yesterday more than 1% after an index of UK private sector growth unexpectedly slid in May to prompt fears of a recession in the UK. Traders reduced estimates of future interest rate rises and closed currency trades as the pound became the most volatile of major currencies. “

After Governor Bailey’s not-so-hawkish comments yesterday, [yesterday]’s PMI figures underscore the real income shock on the UK economy,” said Geoffrey Yu , a senior foreign-exchange strategist at Bank of New York Mellon, yesterday. “If we had to pick one G-10 central bank most likely to pause soon, it would likely be the BOE.”

S&P Global’s index of private sector growth unexpectedly slumped in May to levels last seen in February 2021, when coronavirus lockdowns were still in place, the firm said Tuesday.

UK public borrowing falls as economy bounces back from pandemic
Government borrowing was £18.6bn last month, according to the Office for National Statistics. The figure was down by £5.6bn from a year ago but is the fourth-highest April figure since records began in 1993. The figure is down slightly on the £19.1bn forecast by the Office for Budget Responsibility. In the fiscal year to March, the public sector borrowed £144.6bn, less than half the borrowing in the previous year, as the economy bounced back from the pandemic. Borrowing fell in April compared with last year because tax receipts increased as the economy grew and the withdrawal of government pandemic support schemes for households and businesses brought down spending. The freezing of tax thresholds over recent years and the hike in NICs also saw tax receipts rise to £70.2bn in April, £9.9bn more than in the same month last year. However, surging inflation is expected to wipe away any recent boost to public finances. Michal Stelmach, senior economist at KPMG UK, said the “good fortune for the Exchequer is likely to run its course in the coming months as the economic outlook worsens and the cost of living crisis intensifies”. The Chancellor Rishi Sunak said: “While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest, which is expected to reach £83bn this year. We must take a balanced and responsible approach to support people now, while also not burdening future generations, and we’re on track to drive public debt down by 2024-25.”

OECD’s tax deal pushed back a year
The OECD has delayed the implementation of its ground-breaking international deal to increase the amount of tax paid by multinationals after it fell significantly behind schedule. Mathias Cormann, the OECD secretary-general, told the World Economic Forum in Davos that there were “difficult discussions under way” and that the agreement would come into force in 2024 at the earliest. The delay is the result of a failure to reach consensus on pillar one of the deal which requires an international treaty and nation states to change their tax rule books. If passed, it would ensure US tech giants paid more of their tax in other countries. Cormann said the second pillar, which in effect sets a minimum corporate tax rate of 15%, could come into force sooner.

Intangible nature of mobile payments leads to overspending
Researchers from the University of Puget Sound in Washington have revealed that people who use mobile payment methods such as Apple Pay, Google Pay and Samsung Pay are more likely to overspend. Participants who used mobile payments had 34% higher odds of spending more than their yearly income than those who used other payment methods, the study found. “Overspending via mobile payment may be linked to the intangible nature of the transaction, coupled with its convenience, which allows the user to detach from the transaction,” the researchers said.

Government owes £236m in tax for off-payroll staff
The Government has been criticised by MPs for “widespread non-compliance” with IR35 rules, which require companies to determine the tax status of freelancers and contractors. Whitehall departments owe HMRC £236m in back-taxes for workers wrongly assessed as self-employed for the tax year 2020-21. The Commons Public Accounts Committee said: “Such widespread non-compliance is not acceptable, particularly as government bodies should be best placed to understand the rules and communicate with HMRC.” However, MPs said rushed implementation of the IR35 rules and “poor guidance” along with no means of appealing a tax status for workers had made the issue worse.

Qatar pledges to invest £10bn in UK, blames West for energy crisis
In an interview with Sky News, Qatar’s energy minister Saad Sherida Al-Kaabi says his country is willing to help the UK with its cost of living crisis but the West needs to understand that its “demonising” of oil and gas companies over the years, and the push for a rapid end to fossil fuel production, has contributed to the current crisis. He said the root causes of the recent increase in gas and energy prices in Europe and beyond could be traced back many years before the Russian invasion of Ukraine. The interview took place as a Qatari delegation, led by the country’s leader, the Emir, met with Boris Johnson to announce a “Strategic Investment Partnership” under which Qatar will invest up to £10bn across the UK. The funds will be channelled through the Qatar Investment Authority over the next five years and targeted at the technology, healthcare, infrastructure and clean energy sectors.


A drop in tech stock and particularly social media companies was sparked as Snap shares dropped 43% after cutting its forecasts and said the economy had worsened faster than expected in the last month.  “We continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,” Chief Executive Officer Evan Spiegel said in a note to staff on Monday. The company will also slow hiring.

Social media companies lost a combined $135 billion in value.

Overnight, DOW rose 0.15%. S&P 500 dropped -0.81%. NASDAQ dropped -2.35%.


Kier Group said it performed ‘well’ in the period to April 30 from January 1, despite inflationary pressures. The company says its order book stood at £8.5 billion on March 31, reflecting an increase of 6.3% from £8.0 billion on December 31.


Glencore has agreed to settle bribery and corruption charges in Britain and America, and pay at least $1.2bn to settle criminal and civil probes, pleading guilty to charges.


Greencore said yesterday it’s “encouraged” by its recent revenue momentum as the world emerges from virus lock-downs, and it has been able to pass on the cost increases that have followed. For the six-month period that ended on March 25, the convenience food maker’s revenue was £770.8 million, up 34% from £557.1 million in the same period a year before and above its pre-pandemic level. In the half year to March 2019, Greencore booked £701.4 million in revenue. Greencore swung to a pretax profit of £1.0 million from a loss of £1.8 million the year before.

Restaurant Group

Restaurant Group said strong trading is helping to offset rising inflation in the year to date, as its expectations for the full year remain unchanged. The Wagamama and Frankie & Benny’s chain owner said like-for-like sales in three of its divisions outperformed comparable 2019 sales, with Wagamama 15% ahead, Pubs 10% and Leisure 6%.

Hill & Smith

Hill & Smith Holdings said sales and demand in 2022 have been strong so far, and its performance is on track to meet full-year expectations. In the four months to April 30, the Solihull, England-based infrastructure company said revenue was 9% ahead year-on-year, driven by pricing actions and ‘robust’ levels of demand across its portfolio.

Marks & Spencer

Marks & Spencer posted strong profits this morning, but warned against upcoming inflationary headwinds. Statutory revenue was up to £10.9bn for the year ending 2 April, while profit before tax jumped to £522.9m for the period. The British firm caveat-ed its results this morning and stated: “The impact of Covid-19 in 2020/21 renders comparisons to the prior year less meaningful”, adding that any comparisons would be made alongside 2019/20.


SSE has reported a 15% boost in profits and a 23% rise in earnings per share, driven by record investment and its extensive portfolio of assets. Profits spiked to £1.54bn, up from £1.33bn. in its latest full year results, while EPS climbed to 95.4p from 78.4p last year. The collective value of investment, capital and acquisitions spiralled from £912m to a record £2.07bn, expanding as part of a £12.5bn strategic investment plan for the next five years.

Warning for millions on tax credits over HMRC scam
HMRC is warning tax credits customers to be aware of scams and fraudsters who imitate the department in an attempt to steal their personal information or money. About 2.1m tax credits customers are expected to renew their annual claims by 31 July 2022 and could be more susceptible to the tactics used by criminals who mimic government messages to make them appear authentic.

KPMG fined £3.4m over failures in Rolls-Royce audit
The Financial Reporting Council (FRC) has fined KPMG £3.4m and issued the firm with a severe reprimand for failures in its audit of Rolls-Royce. The fine was reduced from £4.5m in light of KPMG’s cooperation with the regulator. The British jet engine manufacturer paid £500m to the SFO in 2017 to settle bribery allegations. The charges in the deferred prosecution agreement included false accounting and conspiracy to corrupt. Other payments were made to authorities in the US and Brazil.

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