Unemployment rate falls – business news 18 May 2021.
James Salmon, Operations Director.
The unemployment rate falls, labour shortage looms with overseas worker exodus, 2bn spent as restrictions ease, pandemic set to cost £372bn, WFH doubles, small firms missing out on marketing and more.
Unemployment Rate falls
The UK Unemployment Rate unexpectedly fell to 4.8% between January and March, official figures showed this morning. Economists had expected the unemployment rate to hold at 4.9% during the first quarter of the year, given that the country was in lockdown. Meanwhile job vacancies have hit their highest level since the start of the pandemic as the easing of lockdown measures has led employers to start recruiting. In the February-to-April period there were 657,000 vacancies, up about 48,400 on the previous quarter. The ONS said there were “early signs of recovery” in the jobs market but despite the rise in job vacancies over the past 12 months, the level remains almost 128,000 below its pre-pandemic level in the January-to-March quarter of 2020.
Labour shortage looms with overseas worker exodus
Analysis by HR trade body the Chartered Institute of Personnel and Development (CIPD) and recruiter Adecco suggests UK employers are facing a shortage of workers after an exodus of staff caused Brexit and the pandemic. The report says that while many sectors expect a post-lockdown surge in jobs, some are struggling to fill positions. While it was found that 64% of businesses plan to recruit staff in the three months to June – with just 12% expecting to cut jobs – the CIPD has warned that a decline in the number of EU workers may see labour shortages. Meanwhile, the analysis also reveals that basic pay rises are expected to increase from 1% to 2% in the next 12 months.
2bn spent as restrictions ease
Calculations from the Centre for Retail Research and VoucherCodes suggest that around £2bn was spent yesterday as the easing of lockdown restrictions saw hospitality venues allowed to welcome consumers indoors. With people returning to pubs, eateries, shops and attractions, around £2.8m was spent a minute at peak times. Analysis also suggests employers took a £250m hit as people called in sick to enjoy the latest stage of restrictions being lifted. PwC research suggests a single sick day can cost £375 because of the cost of covering the role.
Pandemic set to cost £372bn
Data from the National Audit Office suggests that the UK’s bill for tackling the coronavirus crisis has risen by £100bn since the start of the year and now stands at £372bn. The NAO’s cost tracker found that almost half of the £372bn had been earmarked for support for businesses, including spending on the coronavirus job retention scheme and bounce-back loans. The cost of health and social care marks accounts for the second biggest chunk of the money, with the test-and-trace and vaccine programmes set to cost £97bn. Support for individuals, which includes initiatives such as the self-employment income support scheme, is estimated to be costing the state around £55bn. The NAO estimates that around £172bn of the budgeted £372bn has already been spent, while the remainder includes £92bn of government-guaranteed loans.
Labour and TUC set out work vision
Labour and the Trades Union Congress (TUC) have outlined visions for the future of work, saying that as the country emerges from the pandemic, there is the opportunity to reset the relationship between employers and staff. Shadow Secretary for the Future of Work, Angela Rayner, has criticised the Government for failing to deliver an employment bill that ministers had indicated would secure the rights workers held during the UK’s membership of the EU. She also said there is “an urgent need” for stronger employment rights and protections. Ms Rayner also called for fire and rehire – where staff are forced to accept worse conditions in order to keep their jobs – to be outlawed “without any further delay”. TUC general secretary Frances O’Grady called for broader flexibility in regard to working patterns and for policymakers to “increase and broaden” statutory sick pay.
WFH doubles during the pandemic
Data from the Office for National Statistics shows that 25.9% of workers did their jobs at home at some point last year, up from 12.4% in 2019. The report reveals regional disparities, with 46.4% of London-based staff working at home at some point in 2020, compared with 13.7% in Middlesbrough. On the sectors most likely to work remotely, it was found that 69.2% of those with jobs in information and communication roles have worked at home.
Small firms missing out on marketing
A poll of 500 small business owners for marketing platform Adzooma shows that 42% are unaware of how to market their firm, saying they do not know how to create an online profile. It was also found that 39% do not have a company website and six in ten have not considered using social media to advertise. Around three in ten said they are likely to seek business advice from others, with friends and family often the first port of call. On efforts to better market their services, the poll shows that 35% have set up a website, 33% have a social media profile and 31% use social media advertising.
Couple accused of £3.4m furlough and tax fraud
A multi-millionaire couple have been arrested on suspicion of claiming £3.4m in furlough and tax fraud. The couple were arrested in April and have since been released under investigation, with more than £6m in their bank accounts being frozen by the HMRC.
Government looks to exploit ‘Brexit opportunities’
Lord David Frost has revealed that the Government is setting up a new unit to explore “Brexit opportunities”, saying it will explore matters such as changing financial services regulations. Speaking to the European Scrutiny Committee, he noted reports that ministers are looking at financial services regulations “and seeing what we can do now we are able to move on from EU arrangements”, adding that officials will be “doing this on other areas” too. “We shouldn’t accept we are in the EU’s regulatory orbit … we do need to go our own way of doing things and our own philosophy behind it,” he added.
‘Red Wall’ urges tax breaks for foreign firms
More than 65 Conservative MPs representing seats in former Labour heartlands have called on the Prime Minister to use foreign direct investment to boost growth outside the South East. The “Red Wall” MPs are joined by West Midlands Mayor Andy Street who said northern regions will miss out if policymakers “don’t act and create a more level playing field to secure investment”, adding: “We wouldn’t just be losing out to London, but to other nations, regions and cities across the world.” The call follows a report from think-tank Onward which urges officials to use the UK’s new position outside the EU to offer formal tax incentives for overseas investors to set up in specific regions, and for personal tax breaks for foreign executives whose companies invest in Britain.
EU eyes unified business tax
The European Commission is set to propose a more unified way of taxing companies in the European Union. With the Organisation for Economic Cooperation and Development (OECD) set to agree global rules on where to tax large multinational corporations and at what minimum rate, the Commission will reportedly use the OECD deal to propose more unified rules for business taxation for the 27 EU countries, which currently have 27 different tax systems. The Commission will propose Business in Europe: Framework for Income Taxation, a set of corporate tax rules for the whole of the EU. It hopes the move would ease cross-border investment, cut red tape, combat tax avoidance and support jobs, growth and investment.
FCA announces measures to stop phoenixing
The Financial Conduct Authority has announced proposals that would prevent claims management companies (CMC) from managing Financial Services Compensation Scheme (FSCS) claims where they have a connection to the claim. CMC phoenixing sees individuals from financial services firms go out of business but reappear in connection with CMCs and charge consumers for seeking compensation by lodging a FSCS claim. FSCS data reveals 1,319 claims over a period of about 6 years where phoenixing appeared to have occurred, representing an average of 220 claims per year, with a total of £3.7m paid out per year. Sheldon Mills, executive director of consumers and competition at the FCA, said the proposals will help “increase consumer trust and confidence in financial services firms, CMCs and the redress system.” He added that by stopping CMCs from managing FSCS claims with which they have a relevant connection, the City watchdog will ensure CMCs “are not seeking to profit from past misconduct of individuals connected with the CMC.”
Water works
Water Companies including Severn Trent and Pennon Group will invest £850 million in new environmental projects, the UK industry regulator Ofwat said on Monday. Severn Trent will spend £565 million in plans approved by Ofwat, having originally proposed £730 million Pennon, which owns South West Water, will invest £81 million.
Streaming
AT&T has agreed to combine its WarnerMedia business with Discovery in a deal to create a new streaming giant. The tie-up brings one of Hollywood’s biggest studios and Discovery’s channels under the same ownership. AT&T owns CNN, HBO and Warner Bros, after acquiring many brands in a $108.7bn purchase of Time Warner in 2018.
Meanwhile Amazon has reportedly offered about $9bn to buy Metro-Goldwyn-Mayer (MGM), the hundred year old movie studio behinds uch blockbusters as the James Bond films . MGM is one of the few studios yet to partner with a new-media giant.
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