News in brief

21 November 2024: inflation at six-month high after energy bill rise; Ford axes 4,000 jobs in Europe; £500m defence cuts as military equipment scrapped.

 

A rise in energy bills has pushed UK inflation to its highest rate for six months. The inflation rate rose more than expected to 2.3% in the year to October, up from 1.7% in September. Annual gas and electricity bills for a typical household went up by about £149 last month although prices are rising much more slowly than in recent years, City A.M reported.

Ford will cut 4,000 jobs in Europe, becoming the latest carmaker to try to reduce costs. This comes amid slowing growth in electric car sales and competition from China. It will axe 800 jobs in the UK and 2,900 in Germany but UK sites in Dagenham and Halewood will not be affected. The cuts represent about 14% of Ford’s 28,000 workforce in Europe and will be completed by the end of 2027, the Guardian reported.

The UK will cut £500m from the defence budget by scrapping old military equipment early. This is despite warnings that the UK faces "increasing global threats". Ships, drones and helicopters - some more than 50 years old - will be decommissioned ahead of schedule. Some replacements have already been planned. Experts say the cuts indicate that the Ministry of Defence is facing significant funding pressures, the BBC reported.

20 November 2024: retail warns of £7bn cost burden after Budget; US justice department wants Google to sell Chrome; farmers protest against inheritance tax changes.

UK retail bosses have warned of wide-ranging damage from the Autumn Budget on their sector. In a letter coordinated by the British Retail Consortium (BRC), 79 signatories noted “significant concerns” about the impact of the Budget on the industry and its knock-on effect “for inflation, employment and investment”. The BRC estimated the retail sector will pay an extra £7bn in costs next year, with an additional £2.73bn spent on the minimum wage increase, £2bn on the packaging levy, and £2.33 on higher NICs, City A.M reported.

US justice department officials want Google to sell off its Chrome browser to dismantle the monopoly it has over the internet search market. The Department of Justice last month filed court papers saying it was considering enforcing “structural remedies” to prevent Google from using some its products. It will reportedly push for Google, which is owned by Alphabet, to sell the browser, the Guardian reported.

More than 10,000 people protested in London over changes to inheritance tax for farmers announced in the Budget. The government says it will only affect the wealthiest 500 estates each year, but the NFU and the Country Land and Business Association estimated up to 70,000 farms could be affected. From April 2026, inherited agricultural assets worth more than £1m, which were previously exempt, will be liable to the tax at 20%, half the usual rate. Other allowances could mean married couples or civil partners could pass on a farm worth as much as £3m without paying inheritance tax, the BBC reported.

19 November 2024: £955m funding boost for bus services; crackdown on financial transparency of children’s care providers; start-up business fund for Port Talbot steelworkers.

The UK government has earmarked £955m in funding to support bus services until 2026. This included £712m for local authorities to improve bus services and £243m for bus operators – a longstanding grant paid to limit fares and boost the frequency of services. The government says every region in England will benefit from the funding, particularly rural areas which have been previously underserved.

Ofsted will receive new powers to crack down on exploitative children's care providers and increase transparency around their finances. The move follows a rise in local government spending on children in care, from £3.1bn in 2009/10 to £7bn in 2022/23. There are more than 1,500 children in placements, each costing more than £0.5m every year, while the largest 15 private providers make an average of 23% profit. New rules will require key placement providers to share their finances with the government, allowing profiteering to be challenged. There will also be a backstop law, limiting the profit they can make.

Welsh steelworkers can now access a newly-allocated £13m fund from the Tata Steel/Port Talbot Transition Board. This will provide non-repayable grants of up to £10,000 for workers and their families affected by the closure of the blast furnaces, so that they can set up their own businesses. Two more new support schemes targeted directly at firms in the Port Talbot area and businesses in the Tata supply chain will be funded by the next £13m, with non-payable grants of £2,500-£250,000 available.

18 November 2024: health stocks hit after Trump taps RFK Jr for top job; Typhoo Tea faces administration; UK’s first co-operatively owned railway greenlit.

Shares in vaccine makers and healthcare firms around the world have fallen sharply. Investors warn that Donald Trump's choice of Robert F Kennedy Jr as US Health Secretary could pose new challenges to the sector. Kennedy is known as a vaccine sceptic and, if confirmed in the post, has vowed to use it to crack down on “Big Pharma”. In the US, shares in Pfizer and Moderna fell more than 5%, while UK-listed firms AstraZeneca and GSK dropped 2% or more, the BBC reported.

More than 100 jobs are at risk after it emerged that Typhoo Tea is on the verge of collapsing into administration. The Bristol-headquartered business, which can trace its roots back over a century, is lining up EY to oversee the process after filing a a notice of intention to appoint administrators. It made a loss of £37.9m in the year to 30 September, 2023, after trespassers badly damaged its Merseyside factory. Its revenue also fell from £33.6m to £25.3m over the same period, City A.M reported.

The UK’s first co-operatively owned railway service could begin running trains in the south-west of England late next year. The Office of Road and Rail has approved a bid from open-access operator Go-op to run several new services between Swindon, Taunton and Weston-super-Mare, and compete with Great Western Railway on the line. Go-op will be owned and managed by staff and the local community, with all profits invested back into improving the service, the Guardian reported.

15 November 2024: 2024 Code of Audit Practice come into effect; Treasury rejects bid to soften farm tax change; hundreds of carers risk prosecution over benefit overpayments.

The 2024 Code of Audit Practice has this week come into statutory effect. On Wednesday it completed its Parliamentary process and yesterday was published by the Comptroller and Auditor General. Local auditors must comply with the Code of Audit Practice. It is reviewed at least every five years, so the Code that applies will depend on the financial year being audited.

A bid by the department for rural affairs to soften changes to inheritance tax for farms has been rejected by the Treasury. From April 2026, farms worth more than £1m will face an effective inheritance tax rate of 20% - half the usual rate of 40%. The Department for Environment, Food and Rural Affairs suggested softening the policy to exempt older people, possibly those over the age of 80. The April 2026 start for the policy means they may not have time to make use of existing rules to skip inheritance tax by passing on an asset seven years before death. The Treasury dismissed the suggestion, the BBC reported.

More than 250 unpaid carers risk criminal prosecution after falling foul of benefit rules in the past six months. Since April, officials have begun to recoup overpayments debts from more than 15,000 carers, with 50 of them repaying sums of at least £10,000. Draconian rules around breaching earnings limits mean that going just £1 over the weekly limit means individuals must repay the entire benefit. A carer who earned £1 more than the £151 threshold for 52 weeks would pay back not £52 but £4,258.80. Many were unaware they went over the weekly limit. Campaigners and politicians have called on ministers to intervene urgently, the Guardian reported.

14 November 2024: FCA to reshape ‘name and shame’ policy; P&O Ferries spent £47m on layoffs; homebase enters administration with 2,000 jobs at risk.

The Financial Conduct Authority (FCA) is set to “fundamentally reshape” its controversial ‘name and shame’ policy following backlash from the City. Many City figures criticised the policy, arguing that the majority of FCA probes close with no action taken. This means firms could still face reputational damage even if the FCA later decided to close or drop an investigation. The FCA will scrap its plan to inform companies that they are being investigated only one day before it publicly announces a probe, and instead it will give firms 10 days’ notice, the City A.M reported.

P&O Ferries spent more than £47m on sacking hundreds of UK seafarers in 2022. Soon-to-be-published accounts, which are almost 11 months overdue, reveal the financial cost of the company’s actions when it dismissed 786 mainly British ferry workers, replacing them with low-cost agency staff from overseas countries. The document shows the company was forced to increase its overdraft facility with its parent company DP World to £365m, up from £295m. It also sold off one of its vessels in order to raise a further £77m in financing, the Guardian reported.

Homebase has collapsed into administration, putting 2,000 jobs at risk. Its owner Hilco had been looking to sell the struggling retailer, but has not managed to find an outright buyer. The owner of homeware chain The Range is buying up to 70 stores, the brand name and intellectual property, safeguarding about 1,600 jobs. This leaves 49 stores without a buyer, and thousands of jobs at risk in the stores and head office. Administrators Teneo declined to say which stores were at risk of closing at this stage, the BBC reported. 

13 November 2024: unemployment rises as pay growth slows again; FCA fines Metro Bank over financial crime failings; Curzon cinema chain sold for £3.9m.

The UK's unemployment rate has risen, while pay growth continues to slow. The rate of unemployment stood at 4.3% in the three months to September, up from 4% the previous quarter. While wage growth has eased, pay is still rising faster than inflation, which measures the rate of price increases. Excluding bonuses, pay grew at an annual rate of 4.8% between July and September - the lowest in more than two years. The number of vacancies also fell again, the BBC reported.

Metro Bank has been fined nearly £16.7m for failings in its money-laundering controls over four years. The Financial Conduct Authority (FCA) found shortfalls in the bank’s financial crime checks between 2016 and 2020. An estimated 60 million transactions, worth £51bn – which took place on the day a new account was opened or until the account record was updated – were able to pass through the system unchecked. Staff raised the alarm in 2017, however the bank did not fix the problem until years later. Metro would have been fined £23.8m but was given a 30% discount under FCA rules after agreeing to resolve the problems, City A.M reported.

British cinema chain Curzon has been acquired by the US owner of Poundstretcher and Majestic Wine for just £3.9m. Fortress Investment Group bought the chain, which has more than 350 employees at 16 cinemas across the UK. Curzon was put up for auction, along with its distribution arm and streaming platform, after parent company Cohen Media Group was forced to offload assets by a New York state supreme court judge in August, the Guardian reported.  

12 November 2024: Bitcoin surges as Trump-fuelled rally continues; UK public sector pay awards to overtake private sector; homeworkers get 24 more minutes of sleep a day.

Bitcoin has climbed above $82,000 as its record-breaking run continued in the wake of Donald Trump’s re-election as President. The cryptocurrency hit a record high of $82,313 (£63,900) yesterday. It has since given up some of its gains but was still trading 2.1% higher. Bitcoin prices have jumped around 20% since the election, City A.M reported.

Pay awards for public sector workers in Britain are set to overtake the private sector for the first time in four years. October’s budget confirmed above-inflation pay rises for public sector workers and higher taxes on employment. Public sector pay expectations went from the lowest median annual growth rate (2.5%) to the highest (4%) in just one quarter, with even higher awards of 5% expected in the next three months. In contrast, overall and private sector pay awards over the next three months and 12 months are expected to be 3%, the Guardian reported.

Homeworkers are using the time saved by not commuting to stay longer in bed. They got an average of 24 minutes extra "sleep and rest" and spent an additional 15 minutes on things such as exercise, compared to those commuting to work, the Office of National Statistics found. Staff wellbeing is one of the most common reasons businesses give for allowing staff to work from home, despite many scaling back hybrid work offers, the BBC reported.

11 November 2024: businesses warn of £400m in extra costs; UK Bolt drivers to be classed as employees; house prices at record high.

Businesses across the UK are sounding the alarm over rising costs. This comes after the Budget revealed tax hikes of around £40bn. Businesses have warned the move will dramatically increase costs and they will be forced to pass these on to the public. Multiple supermarkets, bar and restaurant chains, outsourcer Serco, BT and the Institute of Economic Affairs are among those already predicting rises that will affect customers, City A.M reported.

Thousands of Bolt drivers have won their legal claim to be classed as employees and could be in line for compensation of more than £200m. An employment tribunal ruled that 15,000 Bolt drivers were not self-employed contractors who ran their own businesses. The compensation owed to the drivers could be worth more than £200m, the Guardian reported.

The average UK house price reached a record high last month. The average price hit £293,999 in October, surpassing a peak of £293,507 that was reached in June 2022. Halifax said it expected prices to continue to rise at a "modest pace" for the next few months. However, it warned mortgage costs could remain "higher for longer" following last week's Budget, the BBC reported. 

8 November 2024: AI assurance market to unlock £6.5bn; Australia plans social media ban for under-16s; Sainsbury’s profits up but warns of price rises.

UK’s AI assurance market is set to grow six-fold by 2035, unlocking more than £6.5bn. Using AI is central to the government’s plans for reforming the country’s public services and wider economy. Around 524 firms currently make up the assurance part of the UK’s AI sector, employing more than 12,000 people and generating more than £1bn. The government is unveiling targeted support for businesses across the country, to help them develop trustworthy AI.

Australia's government says it will introduce "world-leading" legislation to ban children under 16 from social media. Prime Minister Anthony Albanese said the proposed laws, to be tabled in parliament next week, were aimed at mitigating the "harm" social media was inflicting on Australian children. The ban would not apply to those already on social media and would be enforced by the eSafety Commissioner, the BBC reported.

Sainsbury’s profits are up 4.7%, but it has warned of possible price rises as a result of having to pay £140m more next year in national insurance contributions (NICs). Food sales were boosted by a return to the office and fewer people dining out in restaurants. This led to pre-tax profits of £356m for the six months to mid-September. Marks & Spencer also said it could face £60m in extra costs from the NICs rise announced in the Budget, the Guardian reported.

7 November 2024: warning millions will struggle to pay water bill rises; US cancels $1.1bn of Somalia’s debt; FTSE 100 falls as traders digest US election.

Millions of households in England and Wales are predicted to struggle to pay their water bills when prices rise. Water regulator Ofwat said bills would rise by an average of £19 a year between 2025 and 2030 - a 21% increase over that period. A survey of 9,500 households by the Consumer Council for Water found 18% are already struggling with bills and 40% will struggle to afford the rises, the BBC reported.

Somalia has revealed that more than $1.1bn (£860m) of outstanding loans will be cancelled by the US. This sum represents about a quarter of the country’s remaining debt. The announcement is the latest in a series of agreements in which Somalia’s creditors have committed to forgiving its debt obligations. This week, the US and Somalia signed an agreement formalising debt cancellation worth $1.14bn, the Guardian reported.

 The FTSE 100 pared its gains and sterling tumbled on Wednesday. This came as traders digested how Donald Trump’s US presidency will impact the global economy and the UK. London’s blue-chip index was trading down 0.25% at 8,152.02, erasing gains made after Trump won the election. The mid-cap FTSE 250 which is more closely aligned with the health of the UK economy, ticked up 0.26% to 20,422.45 – also scaling back its earlier gains. Sterling plunged 1.3% against the dollar in its largest intraday fall since March 2023, City A.M reported.

6 November 2024: ICAEW member takes lead EY role; government tests new AI chatbot; Netflix Europe offices raided in tax fraud probe.

EY has announced the appointment of ICAEW member Anna Anthony as its next UK & Ireland Regional Managing Partner. Anthony will be responsible for leading EY’s UK & Ireland business of more than 20,000 people, effective from 1 January 2025. She has been an EY Partner for more than 16 years and has been the Managing Partner of UK Financial Services and a member of the EY UK LLP Board since 2021.

The UK government’s generative AI chatbot moves to the next stage of testing this week. It aims to help thousands of small businesses across the country get support and advice through being able to more efficiently search the roughly 700,000 webpages that make up the gov.uk site. The chatbot will use OpenAI’s GPT-4o technology to quickly navigate complex advice or documents and identify and collate the parts that relate to individual users. The results from the trial will determine the next steps which could include potential larger-scale testing.

Netflix offices in Paris and Amsterdam have been raided by French and Dutch authorities as part of an investigation into tax fraud. The investigation was opened in November 2022 and relates to suspicions of "covering up serious tax fraud and off-the-books work", authorities said. The company is also under investigation for tax filings for 2019, 2020 and 2021. Netflix is yet to comment on the raids, the BBC reported. 

5 November 2024: UK fund withdrawals reach largest on record; 1000 UK workers join Labour’s four-day week trial; Sainsbury's to rival Aldi prices in smallest stores.

UK equity fund withdrawals reached their largest on record in October. This came as investors pulled billions out of markets to escape tax rises in the Budget. Investors sold a £2.7bn stake in funds throughout the month in anticipation of Chancellor Rachel Reeves hiking capital gains tax, up from £564m of withdrawals in September. Following the Budget, sell orders dropped 40% overnight as capital gains tax hikes took effect, City A.M reported. One thousand workers in the UK will get extra time off with no loss of pay. This will happen in the first official pilot of the four-day week campaign under the Labour government. The British Society for Immunology and Crate Brewery in Hackney are among the 17 businesses to have joined the latest trial. However, some have opted to test a shorter working week or a nine-day fortnight. The findings will be presented in the summer, the Guardian reported.

Sainsbury’s will match the price of up to 200 Aldi products in its smaller stores in an attempt to win more customers in its convenience stores. Shopping locally for groceries may be handy but people who rely on convenience stores can end up paying far more. Campaigners have criticised retailers for not doing enough to close the price gap with large supermarkets, especially during the cost-of-living crisis.

4 November 2024: US jobs growth drops sharply; UK house price growth slows; Ryanair to cancel 10% of UK flights after tax hike.

Job growth in the US slowed sharply in October as hurricanes and strikes disrupted the economy. Employers added 12,000 jobs last month, much lower than the 223,000 created in September, according to the Labor Department. However, while hiring slowed, the unemployment rate held steady at 4.1%, the BBC reported.

The growth in UK house prices slowed unexpectedly last month. Building society Nationwide’s monthly index showed that annual house prices grew at a rate of 2.4% in October, a slowdown from the near two-year high of 3.2% recorded in September., However, it expects a rush in transactions early next year sparked by changes to stamp duty rules in the budget. The average house in the UK cost £265,738 in October, a 0.1% increase from September, the Guardian reported.

Ryanair has revealed plans to cut flights to and from UK airports by 10% in 2025. The low-cost airline said it is making the move after Labour’s decision to increase the tax on airline tickets in the autumn Budget, adding that airports could see up to five million fewer passengers as a result. Air passenger duty (APD) will rise from the 2026/27 financial year, adding up to £2 to the cost of an economy ticket for a short-haul flight. Private jet users will face a 50% hike in APD, City A.M reported.

1 November 2024: new independent Chair of the Office for Value for Money; US inflation falls to 2.1%; Russia fines Google more than the world’s total GDP.

David Goldstone CBE has been named as independent Chair of the Office for Value for Money. He will advise the Chancellor of the Exchequer and Chief Secretary to the Treasury on decisions for the multi-year Spending Review. In the role, he will assess waste and inefficiency, undertake value for money studies in high-risk areas of cross-departmental spending, and help ensure investment proposals offer value for money.

 The personal consumption expenditures (PCE) price index, used to measure US inflation, rose at an annual rate of 2.1% last month. This is its lowest level since 2021, down from 2.2% in August and in line with economists’ expectations. The PCE index is considered to be a core measure as it strips out volatile food and energy costs. This latest action came after it rose 2.7% in September, in line with recent months, the Guardian reported.

A Russian court has fined Google two undecillion roubles. This is USD $20,000,000,000,000,000,000,000,000,000,000,000. That exceeds both the $2trn Google is worth and the world’s total GDP, estimated at $110trn. The fine reportedly relates to Google’s content restriction of 17 Russian media channels on YouTube, which began in 2020. The country also fined Google £301m for publishing what Russia calls “prohibited” material about the war in Ukraine in 2022. There is almost no press freedom in Russia to discuss the war. The figure is reportedly so high as it doubles each day it is not paid. Google has not responded publicly, the BBC reported.