News in brief

Marco Amitrano has been elected Alliance Senior Partner for PwC UK and Middle East. This will be effective from 1 July 2024 for four years. He is currently Managing Partner and Head of Clients and Markets at PwC UK. Additionally, he has been a partner at the firm since 2005 and on the Management Board since 2016.

Consumer confidence is bouncing back in the UK, with people predicting a brighter financial future for the first time since August 2021. Natwest found more consumers expect their position to be better in 12 months’ time. Its economic forecast suggests inflation will fall to 2.5% by the end of this year. Headline consumer price inflation is still above the Bank of England’s 2% target at 3.2% but has fallen sharply from a peak of 11.1% in October 2022, the Guardian reported.

The US economy grew by less than forecast in the first three months of this year. However, inflation gathered pace and could delay an interest rate cut. Official figures revealed the economy expanded at an annualised rate of 1.6%, far below expectations and the growth seen in the final months of 2023. Inflation is yet to fall back to the Federal Reserve's 2% target. Economic growth has slowed from 3.4% growth in the final three months of last year to 1.6%, the BBC reported.

26 April 2024: London banking hub property value falls; G20 MPs call for 2% wealth tax; Sainsbury's in store sales surge.

The developer and manager of Canary Wharf in East London has reported a 14.7% annual fall in the value of its property holdings to £6.8bn. Profit before tax also declined from £39.9m to £27m, marking the third year since the pandemic where this figure slipped. Commercial property values have also been bruised by rising interest rates and continued hybrid working trends post-pandemic, City A.M reported.

G20 ministers are calling on the world’s 3,000 billionaires to pay a minimum 2% tax on their fast-growing wealth. This would raise £250bn a year for the global fight against poverty, inequality and global heating, ministers from Brazil, Germany, South Africa and Spain argue. They are calling for more countries to join their campaign. The annual sum raised is estimate to be enough to cover the estimated cost of damage caused by all of last year’s extreme weather events, the Guardian reported.

Sainsbury's says shoppers are returning to its stores as the surge in online shopping seen during the Covid pandemic continues to unwind. Online sales have fallen from 20% during the pandemic to 13%. More than 87% of all food sales occur in physical stores. Shoppers have also begun to buy more premium products, the BBC reported.

25 April 2024: National Park Authorities governance reviewed; pensioners fear income tax payments; CMA scrutinises big tech firm’s AI use.

Audit Wales has reviewed the governance model for National Park Authorities (NPAs) and how it is implemented. The report noted uncertainty over the extent to which members are held accountable for their contribution to the governance of NPAs. It found that despite being a remunerated role, NPAs cannot demonstrate the value for money provided through members’ contributions. This raises questions as to the suitability of NPAs’ governance model and the government has been called on for responsive action.

Charities are reporting heightened concern among pensioners who fear being dragged into paying income tax. The state pension rose by 8.5% in early April, but the knock on effect is that hundreds of thousands of pensioners on lower incomes have been drawn into paying income tax. Most pensioners will pay more tax this year as a result, owing to frozen tax thresholds, the BBC reported.

The Competition and Markets Authority (CMA) has stepped up its scrutiny of big tech involvement in artificial intelligence start-ups. It is examining Microsoft’s investment in the French firm Mistral and the hiring of DeepMind co-founder Mustafa Suleyman as head of the US company’s new AI division. The watchdog is also scrutinising Amazon’s $4bn (£3.2bn) investment in the US AI firm Anthropic, the Guardian reported.

24 April 2024: NAO reviews value of government’s childcare reform; connectivity outages cost London businesses £6bn; US reveal $7bn solar investment.

The National Audit Office (NAO) has released a value and financial risk review of the government’s Early Years and Childcare Reform Programme. The Department for Education (DfE) launched the programme to extend entitlements alongside wraparound childcare for primary‑aged school children. The report found that DfE and Treasury worked quickly to consider ways to expand entitlements but noted the timetable had been set with significant uncertainties around feasibility, costs and benefits.

London businesses have lost almost £6bn over the past year due to connectivity outages. Some 60% of businesses in the capital reported one or more losses of service over the last 12 months, with nearly 30% hit at least three times. The total cost to the London economy was £5.7bn and this number rose to £17.6bn for the whole of the UK. For businesses based in London, the average loss was £18,620, City A.M reported.

US president Joe Biden marked Earth Day by announcing a $7bn investment in solar energy projects nationwide. Funded by last year’s $369bn Inflation Reduction Act, it aims to benefit hundreds of thousands of mostly low-income families who currently spend up to 30% of their income on energy. This follows climate measures advanced by the US last week, which included restricting oil and gas leases on 13m acres in Alaska and finalizing a federal land management rule, the Guardian reported.

23 April 2024: services export growth fails to prevent widening UK trade deficit; Thames Water bills may rise to £627 a year; banks hike mortgage rates.

The UK’s balance of trade has deteriorated since 2010 despite striking growth in exports from its services sector. The UK’s trade balance has widened from 0.2% of GDP in 2010 to -2.2% in the final quarter of last year, meaning imports now comfortably outweigh exports. Economists have also flagged a widening trade deficit with the EU, which fell from -1.1% of GDP in 2010 to -4.5% at the end of last year, City A.M reported.

Thames Water could raise bills to as much as £627 a year to pay to fix its leaky network. This comes after promising to invest up to £3bn more over the next five years. It updated its spending plans for 2025 to 2030 after discussions with industry regulator Ofwat. Thames Water warned bills could rise up to 44% under its most ambitious spending plans, the Guardian reported.

Some of the UK's biggest banks are raising mortgage rates as expectations of when the Bank of England will cut interest rates are pushed back. Barclays, HSBC and NatWest are all increasing some costs on fixed-rate mortgage deals from Tuesday. Mortgage rates have risen over the past few weeks as views have changed on when the Bank might cut borrowing costs. The Bank is now not expected to cut its benchmark rate as early or as often as previously thought, the BBC reported.

22 April 2024: Russia bans British business figures over sanction work; Tesla recalls nearly all Cybertrucks; Building society and Co-op Bank agree takeover terms.

The Russian Government has announced new “personal sanctions” on British government agencies, IT sector and legal services market. The list included three employees of law firm Fieldfisher, director general Joanna Crellin of the Department for Business and Trade, and former prime minister Boris Johnstone, City A.M reported. The Russian Ministry accused the British government of continuing an “aggressive anti-Russia course.”

Tesla is recalling all 3,878 Cybertrucks it has shipped since the vehicle was released in late 2023. This comes following reports on Friday of a faulty accelerator pedal, which could lead the vehicle to speed up unintentionally. The vehicles will be repaired at no cost to the owners, however this is a major blow to Tesla. The company’s shares fell nearly 3% on Friday, adding to its five-session losing streak during which the stock lost about 14%, the Guardian reported.

Coventry Building Society has agreed a potential takeover of The Co-operative Bank in a deal worth up to £780m. The acquisition, which would see the building society take on the bank’s three million customers, would make it the UK’s seventh largest lender with assets of around £89bn. The deal is subject to the two firms agreeing a contract and gaining approval from financial services regulators, the BBC reported.

19 April 2024: Tesla lays off more than 10% of its workforce; private health insurance market grows £385m in a year; value of homes under offer best since Brexit.

Tesla will lay off more than 10% of its global electric vehicle workforce. The world's largest vehicle-maker by market value had 140,473 employees globally as of December, according to its latest annual report. “It must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle,” owner Elon Musk told employees. The laid off employees were subsequently locked out of their emails, the BBC reported.

Britain’s health cover market has grown by £385m in a year. This came as the NHS crisis prompted more people to seek out private medical treatment and demand for dental insurance increased. The total health cover market grew 6.1% to £6.7bn in 2022 – the most recent published records. About 4.2 million people were subscribed to medical cover schemes. Including dependants on the policies, and 7.3 million people were covered. This is the highest number since 2008, the Guardian reported.

Estate agent Foxtons said improved market conditions helped drive housing sales revenue by 17% in the first quarter of the year. It hit £9.5m, up from £8.1m in the same period the year before. The value of the under-offer pipeline was 34% higher in March than in 2023 and 12% higher than in 2022, the highest value since the 2016 Brexit vote. Financial services revenue rose 16% to £2.3m in the first quarter. Overall, the group reported revenue of £35.7m in the period, up 9% compared to the same period in 2023, City A.M reported.

18 April 2024: £2bn lost after pension providers shutter; rail passenger payouts for delays hit £100m a year; UK inflation falls as some food prices drop.

Almost £2bn has been lost from UK pension pots in the last five years. This is because the authorised financial providers and advisers managing them have gone out of business, with £800m unable to be refunded. Over 43,000 claims have been made against companies who have gone bust and left people without a pension since 2019. However, refunds are limited to pensions protected by compensation rules, and often capped at £85,000. This means investors were left with up to £800m in lost pension funds, City A.M reported.

Compensation paid to passengers for train delays in Britain has reached record levels. Annual payouts have surpassed £100m and the number of claims for delayed or cancelled trains continues to grow. Payouts to passengers for disrupted journeys reached £101.3m in the year to April 2023 – up by 155% from £39m in 2021/22. The Office of Rail and Road forecasts the financial hit will be much higher again in 2023/24, the Guardian reported. 

Inflation has fallen to its lowest level in two-and-a-half years, driven largely by slowing food price rises. Prices rose by 3.2% in the year to March, down from 3.4% the month before. The cost of some items including meat, crumpets, chocolate biscuits, furniture and household items fell. However, petrol and diesel prices rose. While the overall rate of inflation has dropped, goods in the shops are still much more expensive than they were two years ago, the BBC reported.