Displaying items by tag: finance
UK businesses, hospitals, schools and charities will have their energy bills cut by half their predicted level under a support package that fixes wholesale gas and electricity prices for six months from 1 October, shielding businesses from crippling costs. The scheme will be reviewed after three months and possibly extended for vulnerable businesses. Government officials have not said how much the package will cost taxpayers: Cornwall Insight estimates £25bn. Energy-intensive industries, like steel manufacturing, could close because of energy costs surging after Russia's invasion. Household bills would be limited to £2,500 annually until 2024 under a separate scheme. Business analyst Simon Jack said few businesses plan with only a six-month time horizon. There will be some whose plans to cut production, close premises and let staff go will not change in spite of this intervention. Retail and hospitality organisations see this as giving them a fighting chance over the commercially crucial Christmas trading period.
The Bank of England has raised interest rates to 2.25%, the highest level for 14 years. This will make it more expensive to borrow, which should - theoretically - encourage people to borrow less and spend less. It should also spur people to save more. However, there is also a risk that it can drag on growth, harming the economy. The bank's monetary policy committee, which sets rates, believes that the economy is already shrinking, which would officially push the UK into recession. The Bank of England has also warned that the government’s energy price freeze will push up inflation in the medium term. With energy bills rising less sharply, households will have more money to spend on other goods and services (although some people are already having to skip meals due to rising bills).
Ofgem says a typical household gas and electricity bill will rise to £3,549 a year from October. Save the Children warned the rise could put young people's health at risk, with families unable to afford to heat their homes. Money expert Martin Lewis predicted grave consequences without more state help. Liz Truss has ‘ruled out’ further direct support for everybody to help cover the costs of surging energy bills, and was not considering further support like the £400 payment that all households will receive this winter. Rishi Sunak says the government must provide some direct support to everyone. Ovo Energy has proposed a ten-point plan for the Government to subsidise soaring gas and electricity bills so that the poorest households get the most support. A key proposal is for energy firms to borrow from a government-backed fund to subsidise bills.
The UK chancellor Nadhim Zahawi visited the USA for cost-of-living talks during what could be his final week in the job. The two candidates for PM have signalled they will offer more help when elected, though neither has given details. Mr Zahawi insists he has been working tirelessly to come up with proposals for either leadership candidate to bring in more support. The chancellor met banking chiefs in New York to discuss co-operating on financial services, before heading to Washington DC to discuss support for Ukraine, the global economic outlook, and energy security. He said that global pressures must be overcome through global efforts.
Companies were forced to give bribes to cajole employees to return to the office last year: free breakfast, ice cream and even popcorn to workers who came in. Now bribes are replaced with stern summons issued to workers still wanting to stay at home. Apple’s chief executive ordered every employee to return to the office three days a week from September. That is the latest in similar demands issued by other companies, who all feel that office life improves productivity. But efforts to lure staff back may not be necessary when the country plunges into recession. Experts and City professionals are now saying workers are keen to get back in front of managers to save their jobs as a crisis looms. However, as the harsh reality of the cost-of-living crisis hits, they will still have to escort some of their colleagues to the door anyway.
Public finances are under pressure from a predicted recession. Both PM candidates agree that people will need help with the cost of living this autumn, but tax cuts will only bring relief to taxpayers. Cutting health and social care levies gives no money to pensioners or anyone earning less than £12,570. The new prime minister will not start the job for another four weeks. The candidates are coming under increasing pressure to spell out their plans. Gordon Brown recently said an emergency budget was urgently needed and that Boris Johnson, Ms Truss and Mr Sunak must agree on one now. A financial time bomb will explode with the October energy price cap. Loughborough University’s Prof Hirsch said, ‘It is urgent for the next prime minister to ensure families have enough to live through this crisis and beyond.’ Some will be £1,600 worse off per year. On 11 August government ministers met with energy giants, focusing on how energy companies can alleviate pressure on consumers: see
The Bank of England has raised interest rates to 1.75%, the biggest rise in 25 years, as it predicts an even higher peak in inflation of 13%. It fears inflationary pressures are becoming ‘more persistent and broadening’. Many companies have been successfully raising prices which will push up consumer costs in the shops. The latest rise in gas prices has led to another significant deterioration in the financial outlook as the UK is now projected to enter recession. The bank has forecast that the UK economy will start shrinking in the fourth quarter of this year, and then keep contracting through next year. That would be the longest recession since after the 2008 financial crisis. The bank also points to the UK’s ‘tight’ labour market - a signal that it is worried about a wage-price spiral, as workers seek pay rises to help with the worst cost of living crisis in decades.
Sanctioned Russian oligarchs from Putin's inner circle have exploited a UK secrecy loophole left open by the Government. They use a type of company which does not need to identify its real owners known as an English Limited Partnerships (ELP). ELPs are also linked to fraud, terrorism and money laundering. Since 2017 over 4,500 have been set up to dodge anti-money laundering laws which require the real owners to be disclosed. Pray for the UK Economic Crime Programme, police and government to make ELPs illegal. Meanwhile Shell Plc has given employees a ‘Special Recognition Award’, equivalent to 8% of their annual salary, after recording profits for a second consecutive quarter thanks to soaring oil and gas prices and legally strong refining margins. The one-time payment will be made to most of Shell’s 82,000 employees. Shell said the award was not a response to the rising cost of living. See
Sats results show year 6 standards in reading, writing and maths have slipped in England since the pandemic. 59% of pupils met the expected level. The government says the Sats results were as expected due to the pandemic and there is ‘more work to do’ to help pupils catch up. By 2030 it wants 90% of children leaving primary school to have the expected standards in reading, writing and maths. Unions said further investment in schools and teaching staff was needed to achieve that target. The government said it values the work teachers up and down the country are putting into education recovery. £5bn has been allocated to help pupils catch up and children struggling in English and maths will ‘receive the right evidence-based targeted support to get them back on track’. The education unions and former advisor Sir Kevan Collins said the recovery fund falls short of what was required - around £15bn.
The UK could be heading for a recession. The economy contracted by 0.1% in March, and higher prices are ‘really beginning to bite’, the Office for National Statistics said. People are spending less in shops and cutting down on car journeys; the impact of higher energy bills in April has also yet to be seen. Many price rises are just starting to hit households now. Last week the Bank of England forecast that inflation could reach more than 10% by the end of the year. It warned the UK faces a ‘sharp economic slowdown’. The chancellor has threatened to hit energy companies with a one-off ‘windfall’ tax if they don't invest enough in new projects. Opposition parties want to tax the soaring profits of oil and gas firms to help families grappling with rising bills. Treasury officials have been ordered to examine a potential tax, and Boris Johnson said the Government would have to look at the windfall proposal if not enough investment was made.