Consumer spending recovers – business news 11 May 2021.
James Salmon, Operations Director.
Consumer spending recovers,house prices, sterling, Natwest, Heathrow, Morrisons, Apple, Provident Financial and other business news we thought would interest our members and visitors.
consumer spending recovers to pre-pandemic levels
Consumer spending recovers to levels last seen before the pandemic as it rises 0.4% in April compared with the same period in 2019, up from a 7.2% contraction in March and the first expansion this year, according to Barclaycard.
Raheel Ahmed, head of consumer products at the company, pointed to the reopening of non-essential stores and older people booking holidays as two of the chief reasons for the uptick.
Separate figures from KPMG and the British Retail Consortium showed retail sales up 7.3% in April, compared with the same month in 2019. Paul Martin, UK head of retail at KPMG, said that retailers “will be delighted with the way the reopening of the high street was greeted by shoppers eager to get into stores and engage once more with physical shopping”.
House Prices
House Prices have climbed about £20,000 in the last year, the Halifax says, as the buying frenzy prompted by the stamp duty holiday continues. Prices are up 8.2% in the last 12 months, the highest annual growth rate for five years, it said.
Sterling
Sterling rose against the US dollar and Euro yesterday in response to the Scottish election results last night where the SNP failed to secure a majority on its own. The result suggests that whilst the political balance remains on the SNP’s side , wider support from the Scottish public on the issue of independence is more finely balanced. Stocks on the FTSE 100 that rely on foreign earnings fell as a result. The reduced risk of Scottish independence, optimism over the UK economy opening and wobbles in the US all led to a strengthening of sterling, analysts said. Meanwhile US tech stocks plunged yesterday and the ripples will likely hit London today.
Natwest
The UK Government raised £1.1 billion from the sale of 580 million shares in NatWest. The placing price was 190p, a 3.6% discount to Monday’s closing price of 197p. The sale means the UK government now holds a 54.8% stake in NatWest, down from 59.8% previously.
Heathrow
Heathrow Airport has called for an expansion to the travel green list in the next government review in three weeks’ time, including the United States, to boost trade and reunite friends and family. The number of passengers passing through Heathrow Airport was down by 92.1 per cent in April, compared to pre-pandemic figures.
Morrisons
Morrisons said its first-quarter sales had risen 5.3%, putting it on track to meet its annual earnings guidance. Like-for-like sales for the 14 weeks to 9 May rose 4.7%, while like-for-like sales excluding fuel sales rose 2.7%.
Apple
Apple is facing a legal case in London over claims it overcharged nearly 20 million U.K. customers for App Store purchases. Apple’s 30% standard fee is “excessive” and “unlawful,” the claimants said in a press release. The claim, filed at London’s Competition Appeal Tribunal on Monday, calls for the U.S. Tech giant to compensate U.K. iPhone and iPad users for years of alleged overcharging. Apple has described the case as “meritless.”
Top bosses agree to put profit second
The wellbeing of staff, local communities and broader society will be placed higher on the boardroom agenda, according to a pledge made by the CEOs of 14 major companies, including Capita, Unilever and PwC. A not-for-profit group called the Purposeful Company says it has brought together leaders from FTSE100 companies and large accountancy firms to demonstrate that having a purpose beyond a simple profit motive “brings strategic clarity, operational discipline around what’s material to stakeholders and more meaningful work for employees”. The bosses of EY, NHS England, NatWest, Barclays and Hogan Lowells are among the others to have signed up. Clare Chapman, head of Acas and co-chair of the Purposeful Company, said: “This is a moment to be seized. The more purposeful companies, the greater the chance of success in building a stronger and fairer economy and addressing the climate crisis.”
Provident Financial withdraws from doorstep lending
Provident Financial has announced it is withdrawing from doorstep lending after 140 years, putting 2,100 jobs at risk. The move comes amid scrutiny of the high-cost loans industry by the Financial Conduct Authority and a flood of customer complaints. Provident’s boss Malcolm Le May believes that illegal lending could rise if regulated firms are driven out of the high-cost loans industry en masse. Sacha Romanovitch, the former boss of Grant Thornton who is now head of the organisation Fair4All Finance, agrees: “People who can’t access mainstream credit will still need loans, whether that’s for a cooker, a washing machine or new school uniforms. Going without is a tough option to face, so there’s a real risk the gap Provident leaves in the market will be exploited by loan sharks.”
Nearly 50,000 Filipino front companies rip off NICs
A BBC investigation has found that more than 48,000 umbrella companies have been created in the past five years designed to exploit the Government’s Employment Allowance – an annual discount of £4,000 per company on National Insurance contributions. The companies are originally incorporated with a British director, the BBC found. These directors then resign and are replaced with a director resident in the Philippines, making it harder for HMRC to pursue the companies which are then used to employ workers in the UK. The report points to one example where a Covid test worker was hired through an agency to work for G4S but the agency subcontracted to a mini-umbrella company (MUC). Jo Maugham, a tax QC and the founder of the campaigning group the Good Law Project, said: “It’s not as though this is some tiny piece of tax avoidance […] This is industrial scale tax abuse” He continued: “I mean it’s really absolutely extraordinary, hundreds of millions of pounds if not billions of pounds is likely to have been lost due to HMRC’s apparent disinclination to tackle this abuse.”
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