Lock-down drives shift in work models – business news 21 May 2021.
James Salmon, Operations Director.
Lock-down drives shift in work models, women hit hardest, opting for the hybrid model, consumer confidence returns, factory output rebounds, Great British Railways, retail and lots more.
Lock-down drives shift in work models
Recruiters say the shift toward home-working driven by coronavirus lock-downs is prompting a move away from City jobs. Lorraine Twist of recruiter Hays says that some professionals have already moved out of London but have retained their positions and are working remotely. However, Hays predicts most firms will move from a remote model to a hybrid one, with Ms Twist saying staff who have relocated may face a long commute several days a week or look to move to a more local position. Michiel Willems in City AM notes ways some firms have already adapted working models, with BDO asking staff where they would like to work post-pandemic; KPMG saying it expects staff to spend four days every fortnight in the office; PwC asking staff to be in the office two to three days a week; and Deloitte saying it will look to go down the hybrid working route. Deloitte research shows that 23% of UK workers are hoping to work from home all, or almost all, of the time once lockdown restrictions have lifted.
Remote working has hit women hardest
As staff start to return to offices as restrictions ease, research by Vodafone suggests that nearly half of all women who leave the workplace for over a year suffer from a loss of confidence. It was found that more than a third of staff have seen their confidence in their abilities dip after a year of primarily remote working, with 42% of women saying their confidence has been hit compared with 24% of men. The report also found that 45% of women struggled with balancing work and caring responsibilities, while the rate is just 30% among men. The poll saw 31% of women returning to work and 25% of men say they found it hard to adjust following the extended break from the workplace. A separate poll from Deloitte shows that female professionals have been left feeling burned out by childcare and domestic chores during the pandemic.
Professional services staff opt for hybrid model
Research from French Duncan suggests a majority of professional services staff see a hybrid model as the optimum working arrangement in the future. The firm said 97% of staff have responded “positively” in regard to how they have coped with remote working. While a hybrid model of three days at home and two in the office was the most desired, with 39% saying it was their preference, 20% preferred two days at home and three in the office. The poll saw 34% of staff select Friday as the best day for home working, while 50% said they were “flexible” when it came to which days were preferred to work at home or in the office. Managing partner Graeme Finnie said: “What’s clear from the results is that a hybrid model of staff working locations is necessary – that there are numerous benefits to most in being able to work both remotely and in the office.”
Easing of restrictions lifts UK consumer confidence to pre-pandemic level
Research firm GfK says UK consumer confidence has hit pre-pandemic levels, with an index measuring opinion on personal finances and wider economic prospects climbing six points to -9 in May.
Factory output rebounds
Factory output grew this month at the fastest rate since December 2018, with the CBI’s monthly industrial trends survey showing that total order books hit their highest level since December 2017 and were reported to be “above normal” for the first time since February 2019. Output increased in 12 of 17 subsectors monitored, with chemicals producers, electronic engineering firms and metal factories reporting the strongest growth. The survey, which is based on the responses of 272 manufacturers, also found that factory bosses are facing higher commodity costs, with supply chains struggling to cope with rising demand, prompting an expectation that prices will rise. Howard Archer, chief economic advisor to the EY Item Club, said: “The CBI survey was healthy, and supported the view that the economy is heading towards a robust second-quarter rebound as it benefits from the easing of restrictions.”
Great British Railways
The UK Government announced its much-lauded plan to reform the UK’s railways. Complete with pledges to “fix the broken system” and deliver a better service “for the passenger”, the white paper presents a vision of the country’s rail network that is a clear break from the current franchise model. Central to the paper is the creation of a new body, Great British Railways, which will absorb existing organisations such as Network Rail.
Retail
UK Retail Sales jumped 9.2% in April according to Office for National Statistics data compared with March as covid 19 lockdown restrictions eased and most retailers could reopen. Compared with April 2020 – at the height of the first lock-down – sales were up 43% and still up 9.9% compared with the last month of trading before the pandemic hit
Kingfisher
DIY store chain operator Kingfisher yesterday raised its profit guidance as the covid-19 pandemic-spurred demand for home-improvement projects continues. Kingfisher said it delivered strong sales growth in the first quarter, with positive momentum continuing into the second quarter. For the three months to end of April Kingfisher reported total group sales of £3.45 billion, up 64% on a like-for-like basis, supported by strong demand in the UK and France as well as continued e-commerce sales progress.
Fevered tree
Fevertree Drinks said performance remained strong in the first 4 months of the year, adding that demand was expected to switch to on-trade from off-trade as restrictions ease, and gin lovers returned to drinking in venues rather than they living rooms.
EasyJet
EasyJet said it is waiting to take advantage of pent-up demand for travel abroad as covid-19 restrictions are eased, after trading continued to be hurt by the pandemic. On Monday, travellers were able to finally leave the UK and go on holiday to a select number of locations. Passenger numbers dropped by 89% and capacity was cut by 85% in response. Despite the disappointing results, easyJet said first-half results were in line with expectations. Cash burn was better than expected for the quarter at £38 million per week and the airline has £2.9 billion in total liquidity to last it through the ongoing uncertainty.
New EU VAT rules to hit SMEs
Tax consultancy Avalara warns that UK firms will be hit by EU reforms removing VAT exemptions for SMEs, calculating that ecommerce businesses are facing additional red tape that could cost £180m. This stems from am EU overhaul of the treatment of sales taxes on products from outside the bloc.
Is a house price crash on the cards?
The Telegraph’s Melissa Lawford considers the climate for the property sector, asking whether the market is overheated and on track for a crash as official figures show annual house price growth hit 10.2% in March – the highest rate of growth recorded since August 2007. Kay Neufeld of the Centre for Economics and Business Research (CEBR) believes the current level of activity “is not sustainable”, saying people have bought forward sales due to the stamp duty holiday. The CEBR has forecast a 5.5% dip in prices in Q4, pulling down the full-year increase to 3.4%. Tarrant Parsons of the Royal Institution of Chartered Surveyors believes an imbalance between demand and supply is pushing prices up, forecasting growth of 12% to 13% by June. Ms Lawford says there are “many warning signs that the market is overheating”, with the house price to earnings ratio at a new high. Andrew Wishart of Capital Economics reflects: “The last time valuations were that lofty, house prices fell by a fifth.”
Cunliffe: Market surge may continue
Bank of England policymaker Jon Cunliffe says that while a surge in housing demand seen in recent months is likely to cool when government incentives such as the stamp duty holiday come to an end, more persistent drivers might keep the market strong. In a speech to the Law Society, the Bank’s deputy governor said there may be “some reasons to believe that the recent increase in demand for housing, and perhaps the composition of that demand… reflects some more persistent drivers, and that the market will not fall back to its pre-pandemic decade performance when the tax incentives have gone.”
Labour urges Sunak to back US’ global tax plan
Labour is urging Rishi Sunak to agree to Joe Biden’s plan for a minimum business tax rate, calling for ministers to review the effects of the US President’s proposed 15% minimum on global business tax for OECD countries. While the Chancellor is reportedly not in favour of the plan, Shadow Treasury minister James Murray believes it “will bring in billions of pounds in extra tax benefitting Britain, while stopping huge multinationals and online giants from undercutting our businesses”. He added: “By making sure they pay their fair share in Britain, we can level the playing field for our brilliant businesses, and build an economy fit for the future”. Mr Sunak has reportedly suggested he would only support a minimum tax rate if it came with broader reforms that force large US tech companies to pay more tax overseas
The Biden administration proposed that a minimum global corporate-tax rate be set at 15%. America put forward the plan during the latest round of tax negotiations at the OECD. Mr Biden plans to raise America’s corporate-tax rate from 21% to 28%.
WeWork
WeWork lost $2.1bn in the first three months of 2021, four times as much as in 2020. Lock-downs last year wiped out the market for renting and sharing office space. A pay-off for Adam Neumann, its erratic co-founder, also hit the p/l. Before an IPO attempt in 2019 the firm was valued at $47bn. Documents prepared for a second attempt value it at just $9bn.
Begbies Traynor revises up earnings expectations pointing to increased insolvencies
Insolvency specialist Begbies Traynor has revised up its earnings expectations, saying revenue for its 2021 financial year was expected to be £83.7m, up from £70.5m in 2020. Adjusted profit before tax was revised up to £11.5m, an increase on 2020’s £9.2m. Executive chairman Ric Traynor said: “We expect our results for the full year will be comfortably ahead of market expectations”. He noted that Begbies Traynor expects the number of insolvencies to increase as Government support measures are removed. Figures show corporate insolvencies decreased by 34% in the year to the end of March.
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