business news 16 June 2021.

James Salmon, Operations Director.

Inflation jumps but recovery still on track despite delay in lifting restrictions.  Record rise in workers on payrolls. Small firms attract record investment and more.


Inflation jumped in May due to rising clothing and fuel prices, pushing it ahead of the Bank of England’s target, the Office for National Statistics said this morning. The Consumer Prices Index rose to 2.1% in May, up from 1.5% in April, beating economists’ forecast of a rise to 1.8%. The largest annual upward contribution to inflation has come from transport costs, according to the ONS.

“Inflation has risen sharply in recent months and will rise further as the impact of higher commodities prices feed through the supply chain,” said Jack Leslie, senior economist at the Resolution Foundation, a think tank. “But U.K. inflationary pressures are different — and nowhere as near as large – as those causing fierce debate in the U.S.”

The pound climbed as much as 0.3% making the currency look like its on course to erase all its post-Brexit losses by the end of the year.

Recovery remains on track, despite delay in lifting restrictions

Analysts do not think the extension to lockdown restrictions announced by the Prime Minister on Monday will derail Britain’s economic recovery from the pandemic.

JPMorgan economist Allan Monks, who is expecting UK GDP to grow by 8.1% this year, said: “Economically, we expect the measures to have a fairly small impact”, noting that confidence and  mobility have recovered significantly, even with the current restrictions in place, while parts of the economy less directly affected by government measures “have already been normalising rapidly.”

Lee Hardman, an economist at MUFG bank, said he expects the delay to the economy fully reopening to have “a limited impact”, suggesting that many of the lockdown measures that have been holding back the economy have already been eased.

With Bank of England economist Andy Haldane having said that the UK economy is going “gangbusters”, the Standard’s Jim Armitage says investors are confident this momentum should carry the country through the delay.

Record rise in workers on payrolls

Office for National Statistics (ONS) data show that May saw a record rise in the number of workers on payrolls, with the 28.5m total 197,000 higher than that recorded in April. This marks the steepest climb since records began in 2014.

ONS figures also show that the unemployment rate fell to 4.7% in the three months to April, down from the 4.8% seen in the three months to March.

Sam Beckett, ONS head of economic statistics, noted that while the number of employees on payrolls “grew strongly” last month, it remains 553,000 down on pre-pandemic levels. He went on to say that early estimates suggest the job vacancy rate has surpassed the level recorded before the pandemic hit, while the redundancy rate remains “subdued” and the number of employees on furlough has continued to decline.

Reflecting on the report, Yael Selfin, chief economist at KPMG, said there could be “increasing challenges to add staff in the coming months, even as the economy’s full reopening is postponed”.

The reopening of the economy has injected momentum into the U.K. labor market, which should mean employment continues to recover over the summer despite the delay to the final stage of lockdown easing in England. Key to the outlook for the Bank of England will be how the market responds to the ending of the furlough scheme in September

Red Tape

Prime Minister Boris Johnson said the U.K. must end “burdensome” red tape built up during almost five decades as a member of the European Union if the country is to reach its full potential outside the bloc

Small firms attract record investment

Figures from the British Business Bank and Beauhurst show that investment in UK small businesses hit a record high last year, with equity investment up 9% to £8.8bn. SMEs continued to draw investment in Q1 2021, with £4.5bn raised in the first three months of the year.

British Business Bank chief executive Catherine Lewis La Torre said that while the pandemic hit investment earlier in 2020, “there was this big boost in the latter half of the year as confidence started to return.” The British Business Bank said it supported around 21% of all equity deals that were announced last year, up from 10% in 2019.

Smaller firms fail to hit boardroom diversity target

Analysis by Women on Boards UK has found that just 48% of the 261 listed firms outside of the FTSE 350 have met targets for women in the boardroom. This compares to 65% of FTSE 350 firms. While almost half fall short of the target of having at least a third of board roles held by women, 54% still have no female top bosses while among the FTSE 350, just 8% have all-male executive leadership teams. The Women on Boards UK report also revealed a gender pay cap, at 20.2% on average across the FTSE 350 and 17% for the remainder of the FTSE All-Share – both higher than the 13.7% national average. The research also revealed that only 3% of board members in listed firms outside of the FTSE 350 are “directors of colour”, with these distributed across just 16% of companies.

WFH shift could cost 6m jobs

A report from the Tony Blair Institute for Global Change warns that that close to 6m jobs could be moved abroad if the shift toward work-from-home continues, arguing that that remote working has “begun to loosen the binds” that previously tied roles to specific places. According to the research, 5.9m jobs – 18% of the UK workforce – could be lost offshore. In a foreword to the report, former Prime Minister Mr Blair said: “On the one hand, there is a risk that employers decide that ‘Anywhere Jobs’ can be done as easily by those working abroad. On the other hand, if Britain takes the necessary measures of preparation to facilitate such working here, we could attract jobs from abroad.”

More people expect prices to climb

A Building Societies Association poll has found that 50% of people expect house prices to climb in the next 12 months. This marks a jump on the 25% who said the same when asked in December. The survey also found that 30% of people think now is a good time to buy a property, down from 37% who thought so in March. When quizzed, those who said they are likely to move or get onto the property ladder in the next six months identified location as their key priority. Among those considering a move, 51% said it would be to reduce their mortgage payments, compared with 37% in December. Respondents identified raising a deposit as the biggest barrier to buying a property, with it cited by 59%


Newcastle based housebuilder Bellway reported strong forward sales and record land investments as UK house prices soar. They reported a “robust” forward sales position, with its order book rising by 21% from a year before to £1.89 billion as of early June, representing 6,763 homes – the highest number in at least two years. During the period from February 1 to June 6, an average of 239 reservations were made per week, up 51% from a year before. Despite a reduced number of work-in-progress properties from January 31, Bellway still expects to complete around 10,000 homes this year, bringing the total back in line with pre-Covid levels.

Trading down under

Britain has agreed a new free trade deal with Australia, its first bilateral agreement since Brexit. In a joint press conference, Prime Minister Boris Johnson and Australian counterpart Scott Morrison unveiled a deal they described as the “gold standard” and a “win-win”.

The agreement will allow see reduced tariffs on imports, with a 15-year transition period and quotas. Though full details have yet to be outlined, official estimates say the agreement could add £500m to British economic output over the long term.

International Trade Secretary Liz Truss said the deal paves the way for the UK to join the 11 country strong Comprehensive and Progressive Trans-Pacific Partnership, while Mr Johnson said it “opens fantastic opportunities for British businesses and consumers”.

Just Eat Takeaway

Just Eat said it had completed the acquisition of Grubhub in an all-share combination.The transaction represented Just Eat’s entry into online food delivery in the United States and ‘builds on the strategic rationale for the company’s merger with Just Eat,’ the company said.

Nothing to cry about

Boohoo reported a jump in revenue in the first quarter of the year, led by strong UK and US growth. For the three months to 31 May 2021, revenue increased 32% to £486.1 million year-on-year. UK and USA revenue were up 50% and 43% to £274.6 million and £131.9 million respectively, offsetting weakness in the rest of Europe and rest of world markets.


Oil Prices reached their highest in more than two years in afternoon trading yesterday, boosted by expectations demand will recover rapidly in the second half of 2021.

Treasury calls for more EU co-operation on financial services

The Treasury has called for greater engagement between the EU and the UK government on the future of financial services. Katharine Braddick, the Treasury’s director of financial services, said both sides need to “get on” with outlining the post-Brexit relationship between the UK and EU on financial services. She said that the Treasury is eager for the EU to officially sign off on a Memorandum of Understanding that has been agreed in-principle and sets out how UK and EU financial services regulators will co-operate and share information. Ms Braddick added that this would provide a “reliable, transparent and understandable footing” for co-operation on financial services.

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