Business news 26 January 2022

James Salmon, Operations Director.

IMF warns of multiple challenges to global economic recovery. UK banks push back over fraud worries in Covid loans. Lower public borrowing gives Sunak room to stall NICs rise.  And more business news.

IMF warns of multiple challenges to global economic recovery
The IMF has predicted that the UK economy will grow more slowly than expected this year as it recovers from the Covid pandemic. The forecast for UK growth in 2022 was cut to 4.7% from 5% in the IMF’s latest world economic outlook. However, this will be the fastest in the G7 industrialised nations. The IMF sharply downgraded its forecasts for the US and China, citing high energy prices and new Covid curbs among its reasons. Overall, the IMF now expects global growth to go from 5.9% in 2021 to 4.4% in 2022, half a percentage point lower for this year than in its last prediction in October 2021. “The global economy enters 2022 in a weaker position than previously expected,” said the IMF report. The outlook would be even worse, the IMF added, if central banks have to take firmer action to quell inflation or geopolitical tensions in Ukraine intensify.

UK banks push back over fraud worries in Covid loans
Banks have reacted with horror at claims from former Treasury minister Lord Agnew of “woeful” oversight of the coronavirus loans scheme, fearing their reputation could be unfairly tarnished over accusations that they handed out billions to fraudsters. Banks were encouraged to lend swiftly to small companies via a 100% state guarantee on their losses underwritten by the taxpayer. Lord Agnew said £1bn had already been paid out to banks under the guarantee but payments should be halted until there was clarity on what lenders were doing to tackle fraud. One senior UK bank executive told the FT: “I am beyond words. People were working every hour God sent to find solutions.” The banker added that if cool heads do not prevail, meetings with the Treasury and the FCA were fully minuted and will show the pressure banks were under to push the loans out the door.

FCA to clamp down on compensation dodgers
The Financial Conduct Authority is to clamp down on financial firms using schemes of arrangement or other restructuring plans to shield themselves from liabilities to consumers, particularly redress orders. The regulator said that firms seeking to cap their liabilities should provide “the best possible outcome for customers…Failure to do so could result in the FCA objecting to the firm’s proposals in court. The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.” Company directors seen to be repeatedly “phoenixing” could be banned under fitness and propriety tests. The move comes after firms including Amigo Holdings and Provident Financial attempted to walk away from some of their liabilities. The Times’ Alistair Osborne says the stance is welcome but wonders if this isn’t another case of the regulator slamming the stable door after the horse has bolted.

Lower public borrowing gives Sunak room to stall NICs rise
Fresh data from the Office for National Statistics show UK public borrowing was £12.9bn lower than official forecasts in the financial year to December, leading experts to argue that the Chancellor now has the fiscal room needed to cancel the hike in National Insurance Contributions planned for April. Public sector net borrowing was estimated to have been £147bn, nearly half of that in the same period the previous year. “This fiscal room for manoeuvre makes it inevitable that the Chancellor will set out a plan to deal with the cost of living crunch,” said James Smith, research director at the Resolution Foundation. However, due to a rise in the retail prices index, the Government paid £8.1bn in debt interest in December, 200% higher than the £2.7bn bill in the previous year. Net borrowing came in at £16.8bn for the month, broadly in line with Office for Budget Responsibility projections. Total public sector debt, excluding bailouts for banks, was £2.34trn at the end of December, roughly 96% of GDP. Meanwhile, Business Secretary Kwasi Kwarteng has reportedly raised concerns with the Chancellor about the 1.25% increase in NICs, with his allies saying he has warned Rishi Sunak against going through with it. Separately, the FT cites KPMG senior economist Michal Stelmach who points out that the UK is one of only a few countries in Europe that has not introduced any support measures to shield vulnerable groups from higher prices, after inflation rose to a 30-year high in December.


Sage Group said its first-quarter revenue rose 5%, putting it on track to meet its annual guidance. Revenue for the three months through December increased to £458 million, up from £435 million year-on-year.

Pets at Home

Pets at Home upgraded its annual profit guidance after its third-quarter revenue grew 5.8% year-on-year. Underlying pre-tax profit for the year through March, excluding any potential impact from accounting changes, was now expected to rise to at least £140 million.


Swiss researchers have said they have identified two specific antibodies which suffers of long covid have low levels of. And Pfizer and BioNTech have started a clinical trial of a Omicron specific vaccine which could be available by March.

Boost for City as companies look to expand in UK
A poll conducted by EY has found that 87% of senior decision-makers at international banks, insurers and asset managers planned to expand their operations in the UK or to establish a first operation here. This marks the highest figure since the Brexit referendum in 2016. Anna Anthony, head of financial services at EY, said: “It’s encouraging that such a high proportion of global financial services firms are currently looking to grow their business in the UK. This is testament to the stability and resilience of the mature UK market, which continues to ably withstand the material challenges and uncertainty of both the pandemic and Brexit.”

Wolseley owner Corbin & King forced into administration
Corbin & King, the owner of trendy haunts such as London’s Wolseley restaurant, has been forced into administration by its majority shareholder, the Thai hotel operator, Minor, which has hired FRP Advisory to oversee a recapitalisation of the group. Minor chief executive Dillip Rajakarier took aim at Jeremy King, chief executive of Corbin & King and one of its co-founders, saying: “Contrary to the picture that Mr King is trying to paint, the business is insolvent and is in strong need of further financial support.” According to reports, Mr King had been speaking to US-based Knighthead Capital Management for months over a cash injection worth tens of millions of pounds. Mr King said: “There is absolutely no need to go into administration – we are trading extremely well and all suppliers, staff et cetera continue to be paid. It is a power play for the holding company – and we plan to buy it out of administration.” Minor holds a 74% stake in the business.

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