Business news 26 April 2023

James Salmon, Operations Director.

BoE chief economist: People ‘need to accept’ they’re poorer. London retains green finance crown. Tax-free shopping, Amazon, Unipart, LVMH, Primark, Premier Inn, GSK, tax, borrowings, CBI and more business news.

BoE chief economist: People ‘need to accept’ they’re poorer
Huw Pill, the Bank of England’s chief economist, has said people “need to accept” that they will be “worse off” if inflation is to be tackled. Speaking on the Beyond Unprecedented podcast, he said households had shown a “reluctance to accept” that inflation would lead to a decline in living standards, adding that workers would need to stop asking for pay rises to ensure prices can start falling. Mr Pill said there is a need for people to “stop trying to maintain their real spending power by bidding up prices,” whether through higher wages or passing costs on to customers. He added that there was a “reluctance to accept” that everyone is worse off and “we all have to take our share.” Laurence Turner, head of research and policy at GMB union, said it is “staggeringly crass for one of the best-paid public officials to tell working people they should accept poverty wages during the worst cost of living crisis in living memory,” while Paul Nowak, general secretary of the Trades Union Congress, said working people “don’t need lectures” but rather a pay rise. Tina McKenzie, policy chair at the Federation for Small Businesses, said small firms will be “rightly angered by these tone-deaf comments from Mr Pill as they struggle with inflation that is still sky-high.”

London retains green finance crown
London has been named the world’s number one centre for green finance, taking top spot for the fourth year running. The City outdid its rivals in most categories on think-tank Z/Yen’s Global Green Finance Index (GGFI). It came out top for its talent pool, built infrastructure and quality of life but fell behind New York in terms of its regulatory environment. While London’s professional services firms and policy environment were deemed to be the most supportive for green finance, New York’s capital markets were thought to be more liquid. New York was named second in the ranking of the world’s leading green financial centres, followed by Stockholm, Geneva and Luxembourg. On the future of green finance, 86% of respondents thought London would improve in the coming years, ahead of New York (84%) and close to the 87% scored by Los Angeles and Amsterdam. Z/Yen Group looked at 150 indicators and surveyed 633 financial professionals to compile the GGFI.

Business bosses urge ministers to restore tax-free shopping
Business bosses from across the retail, hospitality and tourism sectors have called for tax-free shopping for overseas tourists to be reinstated. The corporate leaders have written to the Chancellor, voicing concern that the removal of VAT-free shopping for international visitors is driving tourists away from London and to rival European cities. Former Chancellor Sajid Javid has also suggested that restoring VAT-free shopping could boost the economy as it may generate more income than it would cost. Former Cabinet minister Priti Patel has urged the Chancellor to look at the policy, saying: “Britain should be open for business and bringing back tax-free shopping will attract tourists to spend money here,” while former Tourism Minister Tracey Crouch said there is “clear, unarguable evidence that visitors who used to spend their money in the UK are now travelling to Europe.” Research suggests that bringing back tax-free shopping would deliver a £4.1bn boost to GDP and support 78,000 jobs. While the Treasury claims it would cost £2bn in lost taxes, experts estimate there would a net gain to the Exchequer of at least £350m a year.

Amazon staff in Coventry vote for union

The GMB union says it has enrolled a majority of workers at Amazon’s Coventry warehouse  and has written to the company asking to be recognised. Amazon says it “respects its employees’ rights to choose to join or not join a labour union”.

Unipart considering move to US

John Neil, boss of major UK manufacturer  Unipart, said he wanted to invest in Britain but UK companies could not “compete on a level playing field” and is considering a move to the US where the US government is offering major subsidies. Based in Oxford and employing over 8000 staff, Mr Neil said America’s Inflation Reduction Act (IRA) was offering firms a “completely game changing set of incentives and fiscal support” that was hard to ignore.  Regarding the UK he said,  “For us to invest we need to understand what Britain’s strategy is and what our regulatory framework is going to be. And we’re not clear about any of that.”


LVMH became the first European company toreach a $500 billion valuation. The luxury-goods titan has benefited from a strengthened customer base as the rich get richer, a recovering middle class in China, and the strengthening of the euro against the dollar. Earlier this month LVMH broke into the ranks of the world’s ten biggest companies and its chairman, Bernerd Arnault has overtaken Musk as the worlds richest man . LVMH shares have climbed 32.9% so far this year.


Associated British Foods reported “very good” retail footfall and a better-than-expected margin at Primark in the 24 weeks ended March 4. During the half, pretax profit climbed to £644 million from £635 million the year prior. Revenue from continuing operations jumped 21% to £9.56 billion from £7.88 billion. CEO George Weston said the period was marked by “extreme and volatile” inflation in all its business. He noted the company has taken “considerable” action to mitigate costs, however, through operational cost savings & pricing.

Premier Inn

Whitbread delivered a “fantastic” set of results as market demand recovered, Chief Executive Dominic Paul said. In the financial year that ended March 2, pretax profit totalled £374.9 million, multiplied from £58.2 million the year before. Whitbread said this was above pre-pandemic levels, driven primarily by its Premier Inn UK division. Revenue surged to £2.63 billion from £1.70 billion.


GSK said its sales performance in the first quarter of 2023 reflected lower Covid-19 solution sales compared to the previous year. When excluding this Covid-19-related business, sales grew 10% at constant exchange rates. In the quarter, turnover totaled £6.95 billion, down from £7.19 billion the previous year. Pretax profit was £1.91 billion, down from £2.29 billion the year prior.

First Republic

The embattled US bank revealed it had lost billions in deposits, falling 41% to $104 billion and earnings slumped. Shares  plummeted  49%. The bank valued at $22 billion at the beginning of March has fallen to $1.5 billion.

Ministers warned that tax traps are crushing incentives to work
Experts say high marginal rates of tax are hitting incentives to work, with swathes of graduates facing a 55% tax trap. Economists and policy experts have warned the Treasury Committee over the impact of cliff edges in the tax and benefits system where small pay rises mean the loss of benefits or an increase in tax. Tom Clougherty of the Centre for Policy Studies said a 60% tax trap that kicks in once a worker earns between £100,000 and £125,140 is a “particularly nasty policy.” Mr Clougherty said that graduates with an income between £27,295 and £50,270 face a marginal tax rate of 55%, once income tax, NI contributions, student loan repayments and pension contributions are factored in. Helen Miller of the Institute for Fiscal Studies told the Committee it was “inexcusable” that the tapering of the personal allowance would leave a parent with two children earning between £99,000 and £130,000 worse off if they took a pay rise. She added it was “bizarre” that the threshold at which parents lose their right to child benefit had been frozen at £50,000.

Government borrowed less than expected last year
The Government borrowed less than expected last year, with the difference between spending and tax income estimated at £139.2bn in the year to March 31. The amount borrowed last year was equivalent to 5.5% of the value of the UK economy, with this the highest percentage since 2014, excluding the pandemic. However, it comes in lower than the £152bn predicted by the Office for Budget Responsibility (OBR) at March’s Budget. Office for National Statistics (ONS) data shows that the Government borrowed £21.5bn in March, the second-highest March figure since records began in 1993. Public sector debt hit £2.53trn in the financial year to the end of March, with total debt now at 99.6% of GDP. The ONS said public sector net debt at the end of March was £2.53trn – equivalent to around 99.6% of the value of the UK economy. Chancellor Jeremy Hunt said the Government has a “clear plan to get debt falling,” adding that he plans to get debt down as a share of GDP within five years’ time. Yael Selfin, chief economist at KPMG, said: “The way things are at the moment it doesn’t look like he will meet that target but it wouldn’t be the first time a Chancellor doesn’t meet a target.” Martin Beck, chief economic adviser to the EY Item Club, commented: “The Government’s room for manoeuvre on fiscal policy will be determined by whether the OBR is able to maintain its much more bullish view on medium-term growth compared to the position taken by the other official forecaster – the Bank of England.”

Tax take hits record £786.6bn
The tax burden hit a record £786.6bn last year, with data from HMRC showing that the tax take rose by 9.9% year-on-year in 2022/23. Receipts from inheritance tax hit a record £7.1bn, having climbed by £1bn. Official forecasts suggest that the 40% IHT will earn the Treasury £38bn over the next five years, with the annual tax take expected to reach £8.4bn by 2027/28. Revenue from income tax and National Insurance increased by £40.2bn to £378.2bn, with wage inflation pushing more people into higher tax bands. Income tax alone accounted for £246.8bn of the total. Capital gains tax receipts rose to £18bn from £15bn in 2021/22, while stamp duty receipts rose by £700m to hit £19.3bn. Overall tax revenue as a proportion of GDP hit 31.4% in 2022/23 compared to 27.3% two decades ago. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “There’s no getting away from the fact our tax burden is growing as a series of threshold freezes and cuts kick in.” She added: “We’ve seen receipts for taxes such as inheritance tax, income tax and National Insurance on the rise and recent cuts to capital gains tax thresholds will further boost future receipts.” Former Business Secretary Jacob Rees-Mogg commented: “Taxes are higher than they need to be, stifling growth because of incompetent forecasters,” while ex-Cabinet Minister John Redwood said: “We cannot afford not to cut taxes.”

CBI is finished, says Morrissey
Helena Morrissey, who campaigns for female inclusion within company management, says the Confederation of British Industry (CBI) is “finished” after it admitted failing to fire staff who sexually harassed female workers. While a number of staff at the lobby group have been dismissed over the misconduct, Baroness Morrissey said the actions were “too little, too late.” Asked on the BBC’s Today Programme whether she thought the CBI as an organisation is finished, she said: “I do I’m afraid.” Baroness Morrissey, a fund manager who chairs AJ Bell, added: “I think that losing trust is so quick, easy to do and then regaining it is so difficult.” A number of CBI members have withdrawn from the group, while others have paused their engagement with the lobby group. Baroness Morrissey has criticised firms who have yet to publicly leave the CBI. Elsewhere, Baroness Lane-Fox, president of the British Chambers of Commerce, commented: “Who couldn’t have massive empathy for the poor people that are working in the CBI right now? It has been an absolute roller-coaster.”

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