England’s final Covid lockdown easing – business news 5 July 2021.
Boris Johnson to set out England’s final Covid lockdown easing, financial cliff edge as Covid support winds down, make our city centres buzz again, UK recovery may slip behind eurozone, Morrisons, Oil , Ransomware and lots more.
James Salmon, Operations Director.
Boris Johnson to set out England’s final Covid lockdown easing
Prime Minister Boris Johnson is preparing to detail the final step of England’s roadmap out of lockdown. He is expected to announce the next steps on social distancing, face coverings and working from home, as well as on care home visits, during a No 10 news conference today. Mr Johnson said as we “learn to live with this virus, we must… exercise judgement when going about our lives”. Downing Street confirmed that step four would go ahead on July 19th only if the Government’s “four tests” for easing curbs had been met. The verdict on those tests – on the jab rollout, vaccine effectiveness, hospital admissions, and new virus variants – would only be confirmed on 12 July following a review of the latest data, No 10 said.
Businesses face financial cliff edge as UK Covid support winds down
Bankers have been raising the alarm over a debt time-bomb as government support for businesses ends but firms struggle to repay their loans, cover wages and rates, having wiped out reserves amid subdued trading.
Businesses appeal to Johnson: Make our city centres buzz again
Business leaders are urging ministers to “set the country clearly on the path to recovery” by encouraging people to return to the office. In a letter to Boris Johnson organised by lobby group London First, more than 50 leaders said they needed to know what the end of Covid restrictions would mean in practice and that working from home should no longer be the default when COVID-19 restrictions end, scheduled for July 19th. “At this critical moment, we believe that it is essential that the Government is unambiguous in its communications that when the ‘stage four’ restrictions lift, public transport is safe, offices are safe, and work-from-home is no longer the default,” it said. “Employers can then move forward with plans for new ways of working, considering the needs of their staff, clients and customers.” The letter added: “Employers, employees and businesses are counting the days until our city centres begin to buzz again.”
Economists: UK recovery may slip behind eurozone
Economists at HSBC believe eurozone countries could emerge from the pandemic in a better state than they went into it, while Britain could face more “scarring” from the crisis. HSBC’s analysis suggests that eurozone economies will end 2022 with GDP around 0.4% below the level pre-pandemic forecasts had suggested while Britain’s economy will be 2.6% below estimates made before the coronavirus outbreak. While the UK is expected to return to its pre-pandemic GDP by the end of 2021 – outpacing much of the continent – factors including Brexit will slow efforts to deliver growth. Meanwhile, eurozone economies will see long-term growth rates boosted by €750bn of investment planned under the EU’s Next Generation fund.
Morrisons
Wm Morrison Supermarkets received takeover interest from a third private equity group on Monday, with Apollo Global Management Inc the latest to size up the Bradford-based grocer. Apollo’s declaration of interest comes after Morrisons on Saturday accepted a takeover offer from a consortium of investment groups, following its rejection of another private equity bid last month.
Oil
The United Arab Emirates blocked an OPEC+ deal that cartel leaders Russia and Saudi Arabia hashed out to increase output, demanding better terms for itself.
Ransomware
The Russian ransomware gang REvil has been accused of attacking the global software supply chain. The group is said to be behind hacks on at least 20 managed-service providers, which offer IT services to small- and medium-sized businesses. More than 1,000 businesses have already been impacted, a figure that’s expected to grow, according to cybersecurity firm Huntress Labs
Higher-rate taxpayers more likely to fall into the red
Analysis by Hargreaves Lansdown suggests that higher-rate taxpayers are more likely to become overdrawn than basic-rate taxpayers. A survey of 2,000 people found that while 14% of higher-rate and additional rate taxpayers’ finances go into the red for at least half the month, among basic-rate taxpayers the rate was only 9%. The poll looked at how regularly respondents were either overdrawn or owed more on a credit card than they held in their bank account. The study also found that people aged 18-34 are more than twice as likely to be overdrawn than those aged 55 and over. There was no real gender divide in regard to who was more likely to fall into the red.
Hospitality bosses warn of staff shortages
Hospitality bosses have warned of a shortfall of almost 200,000 workers, with industry leaders warning that there are not enough young Britons to fill the vacancies. It is estimated that there are around 188,000 job vacancies at hospitality firms – about 9% of the industry – with this coming despite unemployment standing at 1.6m in April and with 2.4m people on furlough at the end of May. Restaurateur David Moore suggests that “the problem goes back to education in the UK”, saying that with increasing numbers going to university, “they are churned out into the big bad world” at 21 or 22 “and have big expectations for a career”. He adds that the UK does not have “the sense that hospitality is a sensible career choice” and the most enthusiastic young workers “do tend to be European”.
Raw materials inflation threatens infrastructure boom
Hopes for a boom in construction flowing from the Prime Minister’s pledge to initiate an “infrastructure revolution” could be dampened as building material costs rocket, bringing delays and an increase in contingencies. Jan Crosby, head of infrastructure and construction at KPMG, said: “Things being procured in the shorter term will have higher cost in and probably higher contingencies in as well because there’s the volatility and no one quite knows where things will end up.” Boris Johnson last year promised to “build, build, build” as part of a “New Deal” to upgrade Britain’s infrastructure.
US Jobs
US Jobs Growth picked up speed in June as the economic reopening continued, official figures showed on Friday. Employers created a larger-than-expected 850,000 jobs last month, driven by new posts in bars and restaurants, retail and education. Despite the boost in hiring, the unemployment rate was little changed at 5.9%, the US Bureau of Labor Statistics said. US June non-farm payrolls rose 850k with average hourly earnings rising 0.3% in data that was seen as above consensus of 700k
Vaccinated travel
German Chancellor Angela Merkel said that double jabbed Britons should be able to have a holiday in Europe without quarantine “in the foreseeable future” and that travel restrictions are being reviewed. The Chancellor acknowledged that the delta strain is spreading rapidly in Germany as well
One-in-four UK financial services workers want to work from home full-time
According to a new survey from Accenture, almost one-in-four of the UK’s financial services workforce wants to work at home permanently post-pandemic. The survey found that 24% of the country’s 1m financial services workers “would prefer to work entirely from home once a full return to office is possible”, while 69% said they wanted to work two days or less in the office. Only 8% of respondents said they wanted to go back to five days a week in the office when the working from home advice and social distancing restrictions are dropped. Laura O’Sullivan, UK and Ireland banking strategy lead at Accenture, said: “As financial services firms develop their future working from home policies, the findings of this research signal loud and clear that the majority of employees at all levels want the pre-pandemic routine to be a thing of the past.” The British Chambers of Commerce has called for “businesses to have access to clear guidance, information and best practice resources” to help them “embrace the broadest range of remote, workplace and flexible working options as we emerge from the pandemic”.
Sunak’s City plan could deliver a golden age for UK finance
The City is “scrambling back to business”, with staff set to return to offices and business having picked up in recent months. H1 marked the best six months for company flotations for six years as 49 companies were brought to market and £9bn was raised, while London regained top spot in European equity trading from Amsterdam. Looking ahead, “plans sketched out” by Chancellor Rishi Sunak aim to “set UK finance free from European regulation”. Welcomed is Mr Sunak’s “huge strategic decision” to focus less on trying to get UK financial services access to Europe and more on exploring how the UK can utilise new freedoms. If the plans are done well, it “could usher in a new golden age for UK finance – and massive benefits for the UK economy.”
Labour reveals economic vision
Labour has announced a new post-Brexit economic vision for the UK. Shadow Chancellor Rachel Reeves said that Labour would ensure far more public contracts were awarded to British businesses, as opposed to handing them to overseas firms, while there would be an emphasis on securing more high-skilled UK jobs for the future in the green, financial technology, digital media and film sectors, and other industries. Ms Reeves said: “As we recover from the pandemic, we have a chance to seize new opportunities and shape a new future for Britain”. She added: “Labour will get our economy firing on all cylinders by giving people new skills for the jobs of the future … bringing security and resilience back to our economy and public services.” TUC general secretary Frances O’Grady welcomed the plans, saying: “We need to build a fairer and more resilient economy as we emerge from this pandemic.”
Consumers hit by Financial Ombudsman delays
The Sunday Telegraph reports that the Financial Ombudsman Service (FOS) is failing to address thousands of consumer complaints in a timely manner. While the FOS aims to resolve disputes within 90 days, more than two thirds of consumers with complaints in the system have been kept waiting for more than three months. This means 113,000 out of 166,000 complaints have seen delays. While almost 62,000 people with open cases have been waiting for more than six months for their cases to be resolved, close to 17,000 have been waiting for more than a year and nearly 4,000 have been waiting more than two years for a decision from the ombudsman. An FOS spokesman said: “We are sorry customers have experienced delays in our complaints handling across the service. Over the past year this has been due to the significant increase in the number of complaints we received during the pandemic, which was up 60% on the previous year.”
Smaller firms the big investment winner
Analysis by AJ Bell shows that smaller companies in the UK have been the investment winner in the first six months of 2021, with the UK’s FTSE Small Cap index climbing 19.4% in the period, outpacing growth in major markets. It was shown that the FTSE 100 posted a total return of 10.9% in the first half of the year, short of the 14% seen in the S&P 500. The report also found that investors in UK smaller company funds saw the best sector returns, with the average fund up 20%. AJ Bell financial analyst Laith Khalaf said: “The Footsie is still playing second fiddle to the US stock market despite the rally in value stocks which make up such a big slug of UK plc,” adding that the UK Smaller Companies market has been the “real stand out winner of the year to date” having “enjoyed an incredibly hot streak of performance”.
Returns deliver online bargains
Millions of items returned by customers are auctioned off or sold at large discounts, Louise Eccles in the Sunday Times reveals. John Pye Auctions, which deals with retailers including John Lewis, auctioned off 12m items at up to 90% discount last year, with around 4.8m of these goods returned by customers. Charles Wheeler, managing director of Trade-Secret.co.uk, which buys returned goods, cancelled orders and excess stock and sells them cheaper than the original price, said returns of online purchases had “gone through the roof” during lockdown, saying: “Around 60% to 70% of the stock we get in is returns”. KPMG analysis shows 46% of consumers have ordered deliveries knowing they would send at least one item back. It is estimated that returns cost British retailers £7bn a year.
Work from home guidance set to be scrapped
The Mail’s John Stevens said on Saturday that ministers are set to scrap guidance advising people to work from home where possible when the remaining lockdown restrictions are lifted on July 19 – but will leave it to employers to decide how and when staff return to offices. He cites a Cabinet source who believes some people will opt to work from home, noting that “a rush back to the cities” is unlikely as July and August “are always quiet anyway”. Mr Stevens says the Government’s stance may not be well received among some senior Conservatives who have called on the Prime Minister to tell staff to return to offices in a bid to boost the economy and reinvigorate town and city centres. Former Tory leader Sir Iain Duncan Smith has urged ministers to encourage people back to their workplaces, commenting: “Instead of saying ‘work from home if you can’, they should say ‘work from the office if you can’.”
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