Business news 30 November 2021

James Salmon, Operations Director.

Demand for credit surges. Arwen damage could cost insurers £300m. Latest developments amid Omicron uncertainty. Sustainable start-ups raise record £2.3bn Rates rise as freelancers pass on climbing costs. One in five young people in London are jobless.  And more business news.

Demand for credit surges

Data from the Bank of England shows that October saw a surge in credit card borrowing. Consumers borrowed a net additional £706m last month, with new credit card borrowing accounting for £637m of this. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented: “Households set aside into savings accounts in October the smallest sum since the pandemic began, though the emergence of the Omicron variant likely will ensure that they remain cautious over the coming months.”

Arwen damage could cost insurers £300m

The repair bill from Storm Arwen could cost insurers more than £250m, according to PwC. Mohammad Khan, general insurance leader at the firm, said: “Based on the breadth of Storm Arwen and the damage seen so far, we estimate the insurance losses could be between £250m to £300m.” He added: “The majority of claims from storms like Arwen are damaged roofs, damaged outbuildings and damage caused by fallen trees and fences, as well as business losses due to loss of power, so we tend to see a lot of claims but not very many high-value claims.” Mr Khan noted that the average insurance windstorm claim for a home is between £1,000 and £1,500.


The FTSE 100 staged a modest rebound on Monday following Friday’s sell off as confidence returned following remarks by Dr Angelique Coetzee that the Omicron virus, first detected by her on November 18th brought on only mild conditions such as fatigue and body aches with only occasional sore throats and coughs. However, others have said it is too early to tell the virulence of Omicron based on such a small sample and anecdotal evidence.

Stocks are declining again on Tuesday following comments from Moderna’s CEO to the FT that existing vaccines will be less effective at tackling omicron than earlier strains of Covid-19 and it may take months before pharmaceutical companies can manufacture new Omnicron-specific jabs at scale.

The World Health Organisation warned that the Omicron variant of covid-19 posed a “very high” risk, bearing “severe consequences” should it cause infections to surge

Japan has banned all foreigners from entering the country and Australia has put on hold plans to reopen its borders to vaccinated skilled migrants and international students from 1st December. A fortnight delay was necessary according to the PM following the discovery of Omicron. In the UK tighter mask wearing rules come into force today.

Covid-19 Booster Jabs will now be offered to all over 18s the government’s Joint Committee on Vaccinations and Immunisations said. The vaccine advisory body also said gaps between the primary course of the vaccine and booster shots should be reduced from six months to three in order to speed up the roll out.

British Airways said Monday that it has suspended Hong Kong flights after crew members were required to quarantine following a positive covid 19 test among the staff. “We have made the difficult decision to temporarily suspend flights to Hong Kong while we review operational requirements for this route,” said a statement from British Airways

Parties cancelled amid Omicron uncertainty

The Mail looks at how firms are cancelling large Christmas parties as fears mount over the new Omicron coronavirus variant, with a number of businesses opting for smaller departmental gatherings rather than company-wide parties. Hywel Ball, UK chair of EY, said the firm will not be hosting Christmas parties this year, saying: “We used to have big London office parties with thousands [of people] but we’re not doing any of that.” Elsewhere, the FT looks at how the variant has prompted caution among employers, with EY asking staff to wear face coverings when moving around offices.

Pandemic hits tax take from large companies

Analysis by PwC shows that the economic slump driven by the pandemic reduced the tax contribution of Britain’s largest 100 listed and private companies and their employees by almost 8%.

The businesses and their workers generated £77.1bn in tax in the year to the end of March, down from £84.1bn in the previous financial year. The total comprised £24.7bn in taxes on businesses, such as corporation tax, and £52.4bn in worker-related taxes, such as income tax and employee national insurance contributions. Corporation tax accounted for 27% of all taxes paid directly by the 100 firms, while 26.6% came from employers’ national insurance contributions. In regard to taxation of employees, income tax deducted under PAYE accounted for 23.4%. The overall £77.1bn contribution from the large businesses and their employees equated to 11.4% of all government tax receipts, a small increase on the previous year.

The report said that without government support such as the furlough scheme, business rates relief and VAT deferrals, the economy would have taken a far heavier hit from the pandemic. Andrew Packman of PwC said that tax receipts from large companies had proved “remarkably resilient”, adding that this “underlines both the success of the Government’s business support plan and the stability the largest UK companies offer to the economy and wider society.”

Sustainable start-ups raise record £2.3bn

Analysis shows that start-ups which focus on the environment and other sustainable development have benefitted from a surge in investment, raising a record £2.3bn this year. This marks a jump on the £1.71bn recorded last year and £1.57bn raised in 2019. The analysis from data provider Dealroom and the UK’s Digital Economy Council looked at impact start-ups in areas covered by the UN’s 17 Sustainable Development Goals, including health, security, climate change and energy scarcity. The UK has hosted 164 impact finance rounds this year, compared with 58 in Sweden, 75 in France, 99 in Germany and 476 in the US. The report shows that while total investments in the UK hit £2.3bn, businesses in Sweden attracted £3.3bn. German impact start-ups raised £2.4bn, while French impact starts-up brought in £1.42bn. US impact start-ups led the way, raising £20bn in investments.

Rates rise as freelancers pass on climbing costs

Freelancers have increased their rates to an all-time high, with contractors upping daily fees to £537 on average, up from £397 this time last year. The Association of Independent Professionals and the Self Employed (IPSE) has said freelancers’ increased tax bills and lost earnings had to be passed onto consumers. IPSE’s Andrew Chamberlain said tax rule changes have “lumped the self-employed with an extra burden, which needs to be shared and passed on down the chain. They must also cover their own rising costs, as inflation is something that is affecting everyone at the moment.” The analysis shows that professional freelancers – including accountants – now charge £562 per day on average, while managerial freelancers such as property managers and IT experts are typically charging £656 a day.

Staff issues the biggest challenge for hotels

A survey by Deloitte has seen hoteliers identify increasing labour costs and a shortage of staff as the biggest challenges to the sector over the next five years. Soaring staff costs were deemed the biggest issue for 59% of hotel bosses, while 54% pointed to a shortage of skilled labour. Andreas Scriven, head of hospitality and leisure at Deloitte, said: “Like so many industries reliant on skilled workers, hoteliers are looking for more ways to attract and retain talent.” He added: “Some have even turned to ‘golden hello’ financial incentives, demonstrating just how unusual the current climate is.”

One in five young people in London are jobless

Youth unemployment in London has increased by 55% to 105,000 since the start of the pandemic, with more than 21% of those aged 16-24 jobless and seeking work. This figure puts the capital far ahead of other regions, with the West Midlands, the next most affected region, seeing 15% unemployment in this age bracket. Scotland recorded the lowest rate at just 9%. The report also shows that across the country, 42% of the unemployed 16-24 year-olds have been jobless for six months or more.

Robots cut the gender pay gap by taking men’s jobs

Robots are playing a part in closing the pay gap between men and women in some industries as they are taking jobs mostly done by men. Researchers in the US have found that in 741 regions using industrial robots, a “significant” statistical decline in gender pay differences was detected. It was found that every 1.9 additional robots per 1,000 workers cut the income gap 4.2% and evened up the proportion of male and females in the workforce by 2.1%.

Housing market on track to be busiest since 2007

This year is expected to be the busiest in the housing market since 2007, according to Zoopla, with its House Price Index pointing to strong buyer demand. The report also shows that the average property value has risen to £240,000 from £200,000 five years ago. Over the past 12 months, average prices have risen by £15,500, with the South East and South West leading the way by recording growth of more than £22,000. The annual rate of growth for all homes is 6.9%, up from 3.5% in October 2020. This marks a slight drop from the 7% increase recorded in August and September. Zoopla’s report also shows that the stock of new homes for sale is down more than 40% on the five-year average.

House sales down 52%
HMRC data shows that house sales fell by 52% to almost 77,000 in October, with this decline coming after the stamp duty holiday ended on September 30. HMRC pointed to “forestalling” by buyers who pushed through purchases before the end of September in order to meet the cut off for the tax break

Mortgage approvals slip in October
Mortgage approvals fell to their lowest level since July 2020 last month, with the end of the stamp duty holiday prompting a decline in activity. Bank of England figures show that lenders approved 67,199 mortgages in October, down from 71,851 in September and a high of 104,547 recorded in November 2020. With October’s number close to the 66,700 12-month average in the year to February 2020, the Bank noted that the market is returning to its pre-pandemic level. The report also shows that the amount borrowed fell to a net £1.6bn, from £9.3bn in September. “October’s decrease was driven by borrowing brought forward to September to take advantage of stamp duty land tax relief, before it was completely tapered off,” the Bank said. A total of 41,642 remortgages were approved in October, compared with 32,745 in the same period last year. Reflecting on the data, Laura Suter, head of personal finance at AJ Bell, said: “The rush to get transactions through before the stamp duty deadline at the end of September means that some of this fall is likely to be temporary, as October deals were pushed through early.”

Chinese Manufacturing

Factory activity in China picked up in November, for the first time in three months. The official manufacturing purchasing managers’ index rose to 50.1, when analysts had expected 49.

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