News in brief

The US economy expanded at an annual rate of 2.8% over the three months to June. It was lifted by brisk consumer spending. The pace was faster than expected, but still marked a slowdown from 2023 with economists remaining concerned. Unemployment, at 4.1%, is low but rising. Growth has slowed from the boom that came as the economy reopened after Covid-19. While price inflation has subsided, economic discontent remains elevated as households grapple with a 20% leap in prices since 2021 and high borrowing costs, the BBC reported.

A greener economy could bring millions of jobs to some of the largest countries in Africa. Around 3.3 million jobs could be generated across the continent by 2030. Forecasting Green Jobs in Africa predicted 60% of the roles, mainly in the renewable energy sector, will be skilled or white-collar positions. The report predicted more than a fifth of the jobs expected from the green transition over the next six years, the Guardian reported.

The Financial Conduct Authority (FCA) has laid out a shake-up of the UK’s prospectus regime. This comes as part of a sweeping package of reforms designed to boost the country’s capital markets. The FCA said it will look to slash the amount of paperwork companies are required to draw up when raising money on the public markets by overhauling the current prospectus regime. The practice of ‘bundling’ payments for research and trade execution will also be reintroduced, City A.M reported.

26 July 2024: FCA makes first crypto-related sting; no 1p and 2p coins to be made this year; UK secures seabed land deal to boost windfarms.

Crypto company CB Payments Limited (CBPL) has been slapped with a £3.5m fine after the Financial Conduct Authority (FCA) made its first-ever crypto sting. Action against CBPL was taken under the Electronic Money Regulations 2011, the first time the FCA has ever taken enforcement action using the powers. This came after CBPL provided crypto services to over 13,000 high-risk customers despite the FCA flagging “significant weaknesses and gaps” in its financial crime control network, City A.M reported.

No new 1p and 2p coins are being ordered by the Treasury from The Royal Mint this year. This is a sign of the declining use of cash, after reports found 39% of adults are living largely cashless lives. Following a regular review, officials decided there were already enough of the coins in circulation. An estimated 27 billion coins are in circulation in the UK, the BBC reported. 

British seabed owned by the Crown Estate will be used to help build wind farms in plans aimed at making the UK more self-reliant for energy. This is the first big announcement by Great British Energy, Labour's new publicly owned energy company. The firm's aim is to increase renewable energy projects, boosted by £8.3bn in state funding, paid for by a windfall tax on oil and gas giants. Energy Secretary Ed Miliband claimed the initiative would "lead to lower bills" for households, the BBC reported.

25 July 2024: UK growth set to continue as manufacturing PMI rises; cash-only spending sees surprise jump; UK ice-cream prices soar 30%.

The economy’s strong performance so far in 2024 looks set to continue due to the continued recovery of the manufacturing sector. S&P’s Flash Purchasing Manager’s Index came in at 52.7, up from 52.3 last month and slightly higher than the 52.6 expected by economists. Expansions have now been recorded in each of the past nine months, with the index averaging 53.0 in 2024 so far.

The price of big-brand ice-creams has risen more than 30% in two years, despite home-brands becoming more popular. Price rises at brands including Solero, Cornetto, Fab and Feast come amid the rising cost of ingredients and energy. Consumer group Which? found a pack of Cornetto strawberry ice-cream cones rose 38% to £3.55 between 2022 and 2024. Meanwhile, a blind taste test of similar Asda and Lidl own-label packs found they were tastier and around £1.50 cheaper, the Guardian reported.

The number of people mainly using cash for day-to-day spending hit a four year high during the cost-of-living crisis. Some 1.5 million adults mainly used cash in 2023, marking the first rise since 2019. However, the UK Finance research also highlighted an age divide, with 72% of 18 to 24-year-olds commonly using digital wallets to make contactless payments. Only 27% of 45 to 54-year-olds used this payment method regularly, falling to just 8% among the over-65s.

24 July 2024: EY upgrades forecasts for UK economy; Council to cut funding for mental health centres; Government reveals plan to tackle economic inactivity.

EY is the latest firm to increase its forecasts for the economy. The Big Four firm now expects GDP to grow 1.1% this year, up from a previous estimate of 0.7%. It forecast that falling inflation would help deliver a substantial boost to household incomes over the coming years even as wage growth slows.

Funding for mental health wellbeing services in Hampshire is set to be slashed. This is despite charity concerns over the knock-on effects on waiting lists. The Hampshire County Council said it faced "very difficult decisions" in dealing with its £132m predicted financial shortfall for 2025/26. From the end of January 2025, the funding will be reduced from £1,281,777 to £625,000, the BBC reported.

The UK government has released a Pathways to Work white paper focussed on tackling economic inactivity. Work and Pensions Secretary Liz Kendall set out the plans to reverse dire labour market inheritance and reach an 80% employment rate target. These include creation of the Labour Market Advisory Board, a new group of external experts who will provide labour market insight and advice to drive change throughout the system.

23 July 2024: Ryanair set to slash summer fares as profits drop; BT fined £17m over emergency call failure; financial distress among UK businesses soars.

Ryanair says it expects summer fares will be much lower than last year. Profits fell 46% to €401m (£338m) in the three months to 30 June when compared with a year ago. Average passenger fares fell by 15% in the period, and the carrier said it would have to offer more discounts in the coming months, the BBC reported.

BT has been fined more than £17m for missing 14,000 emergency calls. This happened after technical faults caused the emergency call handling service to be disrupted for nearly 11 hours last summer, the Guardian reported. An Ofcom investigation report said the handling of the network fault was a “catastrophic failure”.

The number of firms facing ‘significant’ financial distress has increased sharply over the past year. Begbies Traynor’s Red Flag Alert found the figure jumped by nearly 10% in the second quarter, to 601,950. This was driven by firms in the travel & tourism sector, which recorded a 20% increase in distress. Hotels and accommodation saw a 16% increase in distress, while bars and restaurants saw a 12% increase, City A.M reported.

22 July 2024: HMRC cracks down on employer nursery fee schemes; consumer confidence hits highest level in three years; CMA clears Nationwide-Virgin Money deal; government debt highest since 1962.

HMRC says several commercial schemes are exploiting tax exemption aimed at employers who provide nursery places for staff. The schemes which allow employees to pay the nursery fees out of their pre-tax salary, resulting in them saving up t £10,000 a year on income tax and national insurance. HMRC believes the schemes do not meet its rules, meaning working parents could be hit with unexpected tax bills as it crackdown on the practice, the Guardian reported.

Consumer confidence has risen to its highest level in three years. This is a tentative sign that the economy is leaving the cost-of-living crisis behind, Deloitte research shows. The Big Four firm found that sentiment grew 6.8% year-on-year, boosted by a significant improvement in sentiment towards household disposable income. However, price levels remain about 20% higher than in 2021, slowing consumer spending.

A tie-up between Nationwide and Virgin Money has got the greenlight from The Competition and Markets Authority. This would be the UK’s biggest banking deal to close in the final quarter of this year. The £2.9bn merger will create the country’s second biggest mortgage lender after Lloyds Banking Group, and marks one of the biggest shake-ups in the UK retail banking market since 2008, City A.M reported.

The UK's national debt has reached its highest level since 1962. The total stock of government debt was worth 99.5% of the value of the economy in June, exceeding the highs reached during the coronavirus pandemic for the first time. Data from the Office for National Statistics also showed that the amount the government borrowed was more than expected in June.