Business news 28 June 2022

James Salmon, Operations Director.

Big pay rises will only make inflation worse . PM hints at assistance. Bank of England workers to demand a pay rise.  Solar power company warns against windfall tax.  Large UK businesses owe £2.7bn in unpaid VAT. And more business news.

Big pay rises will only make inflation worse – Clarke
With pay demands spreading across the public sector, the chief secretary to the Treasury, Simon Clarke, has said hikes should be limited to 3% to avoid fuelling inflation. Doctors are calling for pay increases of up to 30% – a figure Clarke says is “wildly excessive” while rail workers are selfish to strike and the unions are more concerned about undermining the Government than the interests of their own members. In an interview with the Times, Clarke explains: “The public finances are very stretched, we’re carrying an £83bn debt interest payment this year and if we want to come through this as quickly as we can, that just means we can’t tolerate wildly excessive public sector pay claims.” Clarke is loyal to the PM declaring Boris Johnson the “most effective electoral asset the Conservative Party has had in the last 30 years” and predicts that voters will eventually respect the unpopular decisions being made: “This is why people elect Conservative governments in the end – in part, it’s because we are responsible and it doesn’t always mean playing the easy tunes.”

PM hints at assistance

PM Boris Johnson hinted the government is considering further financial assistance for those struggling with their energy bills amid concerns that the sudden rise in costs is creating economic hardship.

Bank of England workers to demand a pay rise
Unite is consulting staff at the Bank of England this summer about securing a “decent pay rise” to cushion the blow of soaring living costs. Threadneedle Street workers received a 1.5% increase this year, far below the 9.1% rate of inflation reached in May. The union’s regional officer Steve O’Donnell refused to be drawn on how big an increase it will ask for but did not rule out demanding an inflation-matching raise. A dispute over pay would be extremely embarrassing for the Bank’s governor, Andrew Bailey, who has been accused of failing to recognise the signs ahead of the inflationary crisis the UK finds itself in. He has also urged “restraint in pay bargaining” otherwise inflation can get out of control. The position was supported by Treasury minister Simon Clarke who earlier this month said: “We have to be very careful at this point about preventing inflation from becoming a self-fulfilling prophecy.”

Solar power company warns against windfall tax
Europe’s largest solar developer, Lightsource BP, has become the latest energy firm to warn that introducing a windfall tax on electricity generators would deter investment and push up energy bills. Tara Reale, head of business development for UK and Ireland at Lightsource BP, said: “A windfall tax on power generators would send the wrong signal at the wrong time, creating investment uncertainty and adding greater risk to new projects. The more renewable energy projects we bring online, the more secure and affordable power will be for consumers.” The comments come after Germany’s RWE, the second biggest electricity generator in Britain, said it would “reconsider” its £15bn investment plans if the Chancellor imposed a windfall tax.

Large UK businesses owe £2.7bn in unpaid VAT
Analysis by Thomson Reuters indicates that just over 200 of the UK’s biggest companies have underpaid VAT by an average of £13.4m each, leaving HMRC £2.7bn short. The report said that the £13.4m figure relates to “tax under consideration”, which is an estimate of the amount of VAT HMRC believes has gone unpaid, prior to full tax investigations being completed. The study warned that businesses should expect HMRC to increase the number of tax investigations after the authority received an additional £292m to tackle underpayment of tax in last year’s autumn budget. “The Government has beefed up HMRC’s tax compliance capabilities and will be expecting results. Large corporates, which HMRC views as underpaying VAT, are likely to be a high priority target for investigation,” Jas Sandhu Dade, head of corporates Europe at Thomson Reuters, said.


Heathrow has been told to cut passenger charges for airlines each year until 2026 by the Civil Aviation Authority. The regulator said the reduction in charges reflected the recent rebound in passenger numbers, but would still allow the airport to invest.

Royal Mail

115,000 postal workers are being balloted over a strike over pay.


Wise Group, the specialist FX account provider declined 10p in response to an FCA probe of its founder CEO Kristo Kaarmann after he was fined by HMRC, an event that took place apparently a year ago. Wise has posted a buoyant yearly profit as the online money transfer’s billionaire co-founder faces a City watchdog investigation into his tax affairs. In results for the year ended 31 March, the London-listed fintech said gross profit had leapt 43 per cent to £371.9m. The firm made its debut on the London Stock Exchange last July in a record direct listing with a market value of £8bn.


Oil Prices rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly while political unrest in Libya and Ecuador added to those supply concerns.

Credit Suisse

In the first case of its kind, the swiss bank Credit Suiss was found guilty in a criminal case for failing to prevent money laundering by Bulgarian drug traffickers.

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