Winter of discontent? – business news 12 October 2021

James Salmon, Operations Director.

Winter of discontent? Employment figures. Johnson backs plan for industry bailout.  Fuel crisis drags on retail sales. Investors crank up bets on UK interest rate rises. And more business news.

Winter of discontent?

Are we facing a winter of discontent?

With supply disruptions, threatening to undermine the U.K.’s recovery, soaring gas prices causing factory closures and fuel poverty for millions, and rising petrol prices and shortages along with inflation hitting the consumer, there are risks that these recent issues could have a material impact on the path of the economy and lead to inflation being more than a temporary blip. With no end in sight for supply-chain woes, analysts are slashing estimates  and a period of high inflation with little growth – stagflation – could lead to Britain’s economy retaining the deep scars of the pandemic, long into the future.

Industrial gas use is said to have fallen 12% already in response to price rises.

Meanwhile rising inflation and interest rates are estimated to add £15 billion  to the cost of the UK governments debt repayments this coming year, with calls for the Chancellor to boost spending and growth, not tax it out of existence in his coming budget.

Many analysts think a winter of discontent is on the cards.


One thing against the winter of discontent is the surprising strength of the employment market, despite furlough ending.

UK payrolls rose by 207,000 in September to a record 29.2 million, taking us above levels last seen before the pandemic struck, according to the Office for National Statistics.

Unemployment fell to 4.5%!

The figures shows the resilience of the UK economy as economic stimulus measures taper off. With economic stability and growth still at the forefront of the agenda it is therefore more important than ever that small businesses are supported and the growth can continue.

Chancellor of the Exchequer Rishi Sunak said: “As we move to the next stage of our support, it’s encouraging to see our Plan for Jobs working – the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for eight months in a row.

Johnson backs plan for industry bailout

Industries struggling with high gas prices could apply for state-backed bailouts after Boris Johnson backed Business Secretary Kwasi Kwarteng in his push for support for UK industrials.

The Treasury had previously insisted that the Government had no plans to step in but Rishi Sunak is now considering a rescue plan to help the steel industry and other energy-intensive sectors threatened with closure to stop them shutting down over winter when energy prices are expected to remain high. “

This is a problem that industry is facing now,” a senior Whitehall figure said. “There is not a huge amount of time to get this sorted before factories start shutting down and thousands of people face losing their jobs.”

Fuel crisis drags on retail sales

The latest British Retail Consortium-KPMG study of performance in the retail sector shows that total sales increased by 0.6% in September against the same month last year, compared with an average of 3.1% growth for the past three months.

BRC chief executive Helen Dickinson said: “September saw the slowest retail sales growth since January, when the UK was in lockdown. There are signs that consumer confidence is being hit as the fuel shortages, combined with wetter weather, had an impact in the second half of the month.”

Paul Martin, UK head of retail at KPMG, added: “As we run into the crucial Christmas shopping period, retailers continue to face staffing pressures and supply chain issues, with challenges getting product into the UK and getting goods into customers’ hands. This may feed into limited availability of certain products and the spectre of price rises remains as retailers pull out all the strings for Christmas.”

Separate data from Barclaycard showed that September’s spending was 13.3% higher than it was in the same period in 2019, but it was being driven by spending on essential items such as fuel, up by 11.1%, and supermarket shopping, up 14.7%. Barclaycard also found that 90% of British households were concerned that rising prices and costs would negatively affect their finances.


Oil prices continued their rise. On Monday the price of West Texas Intermediate (WTI) crude in the US rose to above $80 a barrel, a seven-year high; Meanwhile over here in London, Brent crude reached a three-year high.

Investors crank up bets on UK interest rate rises
The Bank of England is likely to increase rates in December, investors believe, having increased their bets on Monday after two BoE rate-setters pointed over the weekend to increased risks stemming from rising inflation.

Further tax rises needed to tackle the health and social care crisis
The Institute for Fiscal Studies has warned that the £12bn tax rise is only sufficient to fix the immediate shortfall faced by the health service as it emerges from the Covid pandemic. The IFS said that the health and social care levy – set at 1.25% on top of National Insurance, and due to take effect in April – may need to more than double to 3.15% from as soon as 2025 to raise a further £19bn.

Meanwhile, senor Conservatives have warned Boris Johnson that his “regressive” hike in taxes will not solve the problems in social care but will punish businesses. Conservative former cabinet minister Lord Forsyth of Drumlean said: “I very much welcome the Prime Minister’s determination to fix social care. This [Health and Social Care Levy Bill], however, does not do that.” He added: “What it does do is massively increase the regressive nature of the taxation system because it places the burden on those who have least, not those who have most.”

Other peers also raised concerns over the rise to National Insurance Contributions and the burden it would place on business and those on low pay. Despite the complaints, the House of Lords approved the legislation.

Tories warned over northern support unless business rates cut
Jake Berry, the MP for Rossendale and Darwen, Lancashire, and chair of the influential Northern Research Group of Tory MPs, has warned that unless the Government cuts business rates in the upcoming Budget support for the party in northern towns could disintegrate. “Without a cut in business rates at the Budget we risk losing support in our most marginal seats, including in the north and the Midlands,” Berry said. “Cutting rates would be a huge boost to our local communities and would show quick delivery of the central mission of this Government: levelling up.” Esther McVey MP, chair of the Blue Collar Conservatives, joined the call for business rates to be cut. The MP for Tatton said: “The burden of tax on bricks and mortar retail is too high, and the best single policy to revive our high streets would be to cut business rates. Levelling up must include ensuring taxes come down.”

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