News in brief
24 November 2020: Grant Thornton hit with lawsuit over Patisserie Valerie audit; cross-party group lobby for funds for workers in areas near airports; Prime Minister publishes COVID Winter Plan.
Grant Thornton has been hit with a legal claim by the liquidators of Patisserie Valerie, for damages during its role as auditor of the cake chain. High Court filings show that FRP Advisory has launched a lawsuit against Grant Thornton as the auditor awaits the findings of a regulatory investigation into its role in the firm’s collapse. FRP hired law firm Mishcon de Reya earlier this year to explore legal proceedings against the auditor, Yahoo Finance reported.
A cross-party group of leaders around Gatwick and Heathrow airports are to request an ‘aviation communities fund’. The group, made up of national and local politicians, will this week lobby the government for emergency funds which it says are needed to tackle the impact of COVID-19 on workers whose livelihoods rely on airports. The aviation industry has been identified as one of the business sectors hardest hit by the pandemic. It has cost the local economy of Hounslow near Heathrow Airport a total of £1bn over three years, the Guardian reported.
Gyms and non-essential shops in all parts of England will be allowed to reopen when lockdown ends next month, the Prime Minister has announced. Boris Johnson told the Commons that the three-tiered regional measures will return from 2 December, but he added that each tier will be toughened. Spectators will be allowed to return to some sporting events, and weddings and collective worship will resume. Regions will not find out which tier they are in until Thursday, the BBC reported.
23 November 2020: HMRC sees 75% rise in email attacks; one in seven UK companies at risk of collapse; G20 to call for suspended debt repayments; public sector borrowing hits £22.3bn in October; Peacocks and Jaeger fall into administration.
HMRC has reported a staggering 75% surge in email attacks during the COVID-19 pandemic. Around 367,520 reports of phishing email attacks have been made during 2020, with data indicating a sharp rise in incidents after the UK went into its first lockdown in March. It also reported 199,621 cases of phone scams, and a further 58,921 reports of SMS scams, Business Matters reported.
Around one in seven UK companies say they are at risk of collapse, according to a new report from the Office for National Statistics. The study saw 14% of UK companies say they have “low or no confidence” that they will survive the next three months. While 40% had moderate confidence that their business would survive the next three months, another 40% had high confidence of making it through the period. Pessimism was most apparent among hotels and restaurants where 34% of businesses said they would struggle to make it through the next 12 weeks. It was also found that across all industries, 7% of businesses expect to temporarily or permanently close a site in the next fortnight, the BBC reported.
At this weekend’s G20 meeting in Riyadh, global economy leaders are expected to call on private lenders to suspend debt repayments. Doing this would free up funds for struggling developing countries to spend on combating COVID-19. The G20 already agreed to suspend government-to-government repayments under the Debt Suspension Service Initiative, to which 43 countries have signed up, the Guardian reported.
Public sector net borrowing in the UK hit an estimated £22.3bn in October as the country’s debt pile grows due to the economic effects of COVID-19. This is the sixth-highest borrowing since monthly records began in 1993. The Office for National Statistics figures showed that public sector net debt stood at £2.076trn by the end of October – 100.8% of GDP – while borrowing for the first seven months of the financial year is estimated to have been £214.9bn, Sky News reported.
Retailers Peacocks and Jaeger have fallen into administration, with owner Edinburgh Woollen Mill Group failing to find a buyer for the fashion chains. While no redundancies have been announced and no stores have closed, the collapse puts more than 4,700 jobs and almost 500 shops at risk. Tony Wright of FRP Advisory said that administrators are in advanced discussions with potential buyers and “working hard to secure a future for both businesses," the BBC reported.
20 November 2020: TSS launches survey on trade changes; HMRC starts post-payment Eat Out to Help Out checks; Comparethemarket.com fined £17.9m for illegal insurers clauses.
The Trader Support Service has launched a short survey for traders and businesses. It intends to aid understanding of how traders and users are preparing for changes to the way goods move between Great Britain and Northern Ireland from 1 January 2021. Within the survey, there is also free training material available to help traders prepare for the end of the transition period.
HMRC is beginning to write to selected Eat Out to Help Out claimants to ask them to check their claims. These post-payment compliance checks aim to to recover money paid out incorrectly. Claimants have 60 days to respond or else face a formal compliance check conducted by HMRC. This could include having to pay statutory interest and penalties, the Revenue announced.
The Competition Market Authority (CMA) has fined Comparethemarket.com £17.9m for breaking competition law. The watchdog determined that clauses in the price comparison site’s contracts illegally prevented home insurers from offering lower prices on other platforms. This meant the site kept some prices for home insurance artificially high and denied customers the best deals, the Guardian reported.
19 November 2020: higher food and clothing costs push up UK inflation rates; new trade and environment initiatives launched at WTO; Brexit may hamper the UK’s COVID-19 recovery.
Rises in the cost of clothing and food pushed UK inflation higher-than-expected last month. The inflation rate, which tracks the prices of goods and services, jumped to 0.7% in October from 0.5% in September, the latest figures from the Office of National Statistics revealed. Analysts had expected the rate to remain flat. Capital Economics said food price inflation could continue to rise in November, the BBC reported.
New initiatives have been launched to intensify discussions on trade and the environment at the World Trade Organisation (WTO). The first initiative, Communication on Trade and Environmental Sustainability, is supported by 26 nations and focuses on promoting transparency and information sharing. It will explore new technologies and green financing. The second, an open-ended dialogue on environmentally sustainable plastics trade, is supported by seven countries and explores the environmental, health and economic costs of plastics pollution, with the option of trade dimension as a solution, the WTO announced.
Brexit could hamper the UK’s economic recovery from COVID-19, according to KPMG forecasts. The economy is not expected to reach pre-COVID levels until late 2022, the Big Four firm said, with manufacturing sectors the hardest hit by Brexit. Uncertainty and loss of access to the EU market for the UK’s financial services sector could lead to 10% lower output at the end of 2021 than in Q4 2019, City A.M reported.
18 November 2020: PwC to sell fintech unit; pandemic caused loss of 660,000 UK hospitality jobs in 2020; Elon Musk to become world’s third-richest person.
Big Four firm PwC plans to sell its fintech unit amid mounting scrutiny relating to potential conflicts of interest within the sector. The unit automates regulatory risk analysis for around 10 major London-based finance firms. It is set to be acquired by its management and rebranded as LikeZero in a deal backed by UK-based private equity firms Souter Investments and Manfield Partners, Finance Monthly reported.
The COVID-19 pandemic has led to the loss of about 660,000 jobs in the UK's hospitality sector this year, the industry's trade body has told MPs. Employment in the hospitality sector is down 20% while revenue is down 40% compared with last year. UK Hospitality chief Kate Nicholls called for pubs and restaurants to be able to open with as few restrictions as safely possible in December, the BBC reported.
Elon Musk is set to overtake Mark Zuckerberg as the third-richest person in the world. Shares in Musk’s electric car company, Tesla, jumped 13% following its selection to join the S&P 500 index of leading US companies. This is estimated to have increased his fortune by about $15bn (£11.4bn) to about $117.5bn, according to The Guardian.
17 November 2020: call for three-year EY ban from public contract bidding; Arcadia seeks £30m funding from lenders; Chancellor considers motorists charge.
Spotlight on Corruption is calling on the government to ban EY from bidding on public contracts for three years. The anti-corruption campaign group cited several alleged instances of misconduct on part of the Big Four firm, including the fact it is currently under investigation by the Financial Reporting Council for its audits of NMC Health and London Capital Finance, The Guardian reported.
Topshop owner Arcadia is in talks with lenders, aiming to secure around £30m in funding following the second coronavirus lockdown. Arcadia employs about 15,000 people, having announced roughly 500 head office job cuts earlier this year. It began approaching lenders after its Christmas-trading plans were slashed by the latest lockdown, Sky News reported.
Plans to charge motorists to use the UK’s roads are being considered by Chancellor Rishi Sunak in a bid to claw back £40bn in tax revenues lost by switching to electric cars. The proposal comes in light of Prime Minister Boris Johnson’s plan to ban the sale of new petrol and diesel cars from 2030, which will significantly reduce government revenue from fuel duty, City A.M reported.
16 November 2020: building societies slash business lending; FCA to censure Carillion; Ticketmaster fined £1.25m for data breach; Bank of England urges insurers to stress-test assumptions; Black Friday to drive up CO2 emissions.
Building societies have slashed their business lending by a third in the five years, according to new figures from BDO. City AM reports that the amount of money lent by the UK’s biggest building societies has dropped from £11.8bn in 2015/16 to just £7.9bn last year.
The FCA intends to censure Carillion and some of its executive directors after finding they “recklessly misled” markets and investors over the deteriorating state of its finances before the company collapsed into liquidation two years ago, reports the Guardian.
Ticketmaster has been fined £1.25m for losing more than a million British customers' payment card details in a data breach in 2018. Sky News writes that the Information Commissioner's Office found the data breach - which included names, payment card numbers, expiry dates and CVV numbers - potentially affected 9.4m of the company's customers, including 1.5m in the UK.
Insurers risk being optimistic in estimating losses from coronavirus-related claims and should stress-test their underlying assumptions, the Bank of England has warned. In a letter to insurers, the bank set out its findings from a review across the general insurance sector on reserving, managing exposures and dealing with uncertainty over contracts in light of COVID-19.
The Black Friday shopping event will create a surge in vehicle emissions, according to a new report. The BBC covers a report from price comparison website Money.co.uk which states that this year’s Black Friday, expected to be the biggest ever, will cause carbon dioxide emissions to spike.