One in six people are estimated to be over the age of 65 by 2050. As the world’s aging population battles boredom and loneliness, some retirees are finding second careers to keep occupied. CNBC’s Uptin Saiidi met one couple in South Korea going back to work as Airbnb hosts.
Beyond Meat, Impossible Foods, and other traditional food companies are all betting the rise of meatless alternatives could permanently change the way people look at meat. But are they right? WSJ’s Akane Otani explains.
As global beer sales have stalled, major brewers such as AB InBev and Carlsberg are flocking to China. WSJ's Steven Russolillo in Hong Kong tests their strategies, sipping the beers specially crafted to win over Chinese drinkers.
British start up Audio Analytic is like the Shazaam for real world sounds. Its AI technology is put to use in smart home devices that can detect sounds like a window breaking or a smoke alarm going off.
The technology will take active measures to protect your home by alerting your phone or turning on your lights to scare away burglars. Bloomberg's Hello World Host Ashlee Vance visits the Cambridge start up to meet with its founder and CEO and a cute baby that was gracious enough to help demo the app.
(qlmbusinessnews.com via theguardian.com – – Fri, 13th 2019) London, Uk – –
Boss Tim Martin dismisses worst-case scenario document for no-deal Brexit as ‘bollocks’
The boss of JD Wetherspoon has claimed consumers are in a good mood despite political turmoil as he lauded rising sales at the pub chain and dismissed the government’s Yellowhammer papers as “bollocks”.
Tim Martin, an ardent Brexiter who has long supported a no-deal exit from the EU, said consumers were proving resilient in the current political environment as wage growth, low interest rates and rising employment levels have kept spirits high.
“About two or three years ago … the main anxiety was that consumers were overspending and credit card debt was going up and so on. I haven’t read those headlines so much recently,” he said.
“Household income is at or near record levels, there’s record employment and interest rates are low. So I think people are in a good mood. There’s a fair bit of political turmoil but I wouldn’t say it’s having a massive effect on people going out.”
It came as the pub chain reported a 7.4% rise in sales to £1.8bn for the year to July, compared with £1.7bn a year earlier. However, the same wage growth that underpinned consumer sentiment dragged on pre-tax profit, with a higher wage bill at Wetherspoon contributing to a 4.5% fall in profits to £102.5m. Pub improvements, involving kitchen upgrades, maintenance and the creation of new beer gardens, also increased costs.
Martin said the new financial year got off to a strong start, with like-for-like sales over the six weeks to 8 September up 5.9%. He insisted the pub chain would do well over the next year despite warnings over the impact of a no-deal Brexit.
Earlier this week, the government was forced to release documents outlining its worst-case scenario “planning assumptions” for a no-deal Brexit. The Operation Yellowhammer papers revealed that no deal could result in rising food and fuel prices, public disorder and disruptions to supplies of medicine.
“Yellowhammer is bollocks,” Martin told the Guardian.
“I’m hoping … that we leave on 31 October without a deal. I think that will be better for the country because we can eliminate tariffs on non-EU imports, which push up prices in the shops, so we can reduce shop prices, we can avoid the payment of £39bn [to the EU], or most of it, and can regain control of fishing. But most importantly we can increase the level of democracy – and I think democracy and prosperity are very closely linked.”
(qlmbusinessnews.com via news.sky.com– Wed, 12 Sept 2019) London, Uk – –
Prime Minister Boris Johnson says the £1.3bn contract for at least five ships will help “bring shipbuilding home”.
Aerospace and defence company Babcock has been chosen as the preferred bidder for a new fleet of Royal Navy frigates.
The government has committed to buying at least five of the warships, as well as hoping to sell them to other governments, with the first ship expected to begin sea trials in 2023.
The £1.3bn Type 31 contract will see the ships built exclusively in the UK, with different elements being fabricated and assembled at various British shipyards.
It will guarantee at least 2,500 jobs across the country, including 150 new technical apprenticeships.
The fleet will be based on Babcock's Arrowhead 140 design at an average cost of £250m per ship.
Babcock chief executive Archie Bethel said it was a “modern warship that will meet the maritime threats of today and tomorrow with British ingenuity and engineering at its core”.
The ships will be fitted with the world-leading Sea Ceptor missile system, as well as being able to operate a Merlin or Wildcat helicopter.
Prime Minister Boris Johnson, who will mark the announcement by visiting a ship on the Thames later on Thursday, said: “The UK is an outward-looking island nation, and we need a shipbuilding industry and Royal Navy that reflect the importance of the seas to our security and prosperity.
“This is an industry with a deep and visceral connection to so many parts of the UK and to the union itself.
“My government will do all it can to develop this aspect of our heritage and the men and women who make up its workforce – from apprentices embarking on a long career, to those families who have worked in shipyards for generations.
“I look forward to the restoration of British influence and excellence across the world's oceans.
“I am convinced that by working together we will see a renaissance in this industry which is so much part of our island story – so let's bring shipbuilding home.”
The frigate-building programme is part of a wider plan to breathe new life into the UK shipbuilding industry.
To that end, Mr Johnson has named Defence Secretary Ben Wallace as the new shipbuilding tsar.
Mr Wallace said: “These mighty ships will form the next generation of the Royal Navy fleet.
“The Type 31 frigates will be a fast, agile and versatile warship, projecting power and influence across the globe.
“The ships will be vital to the Royal Navy's mission to keeping peace, providing life-saving humanitarian aid and safeguarding the economy across the world from the North Atlantic, to the Gulf, and in the Asia Pacific.”
(qlmbusinessnews.com via news.sky.com– Wed, 12th Sept 2019) London, Uk – –
The impact of a no-deal Brexit would be “significant and difficult to mitigate”, the company said.
John Lewis has posted losses of £25.9m for the first half of the year, blaming the shifting retail landscape and ongoing concerns over Brexit.
With trading conditions already less than favourable, John Lewis said in its half-year results that if the UK were to leave the EU without a deal, the effect would be “significant”, and it would “not be possible to mitigate that impact”.
John Lewis Partnership chairman Sir Charlie Mayfield said that the UK's exit from the EU continued to “weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period”. He added that John Lewis had been preparing for Brexit by increasing its foreign currency hedging and stockpiling where possible.
Sir Charlie said that he expected retail conditions to remain tough throughout 2019 – although he said the second half of the year was typically stronger for the retailer.
Commenting on these difficult trading conditions, the chairman said that the face of UK retail was changing rapdily.
“The re-drawing of the UK retail landscape continues apace,” he said.
These headwinds drove the compnany's revenues down by 1.4%, from £4.8bn to £4.7bn, for the first half of the year to 27 July.
In March, John Lewis Partnership – which owns John Lewis and Waitrose – said that staff bonuses at the two companies had been slashed to the lowest level in 66 years after a “challenging” year in which underlying profits fell 45%.
At Waitrose, despite a weak grocery market, the company said it had a good trading performance, with only a “marginal decline in like-for-like sales”, and continued improvement in gross margins.
It also said it had seen strong online grocery sales growth of 10.7%, a figure “well ahead of the market”.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 11th Sept 2019) London, Uk – –
California lawmakers have passed a bill that paves the way for gig economy workers to get holiday and sick pay.
Assembly Bill 5, as its known, will affect companies such as Uber and Lyft, which depend on those working in the gig economy.
Some estimates suggest costs for those firms would increase by 30% if they have to treat workers as employees.
But opponents of the bill say it will hurt those people who want to work flexible hours.
Assembly Bill 5 would put into law a decision by the state's supreme court last year. Then, judges ruled that workers should be considered employees under state law if they are integral to a company's business or it tells them what to do.
US democratic presidential hopefuls Elizabeth Warren, Bernie Sanders and Kamala Harris have all come out in support of the bill.
But Uber and Lyft have both proposed a referendum on the decision. In a statement after the bill was passed, Lyft said: “We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need.”
Analysis: By David Lee
The business models of gig economy companies are already under strain – Uber lost more than $5bn in the last quarter alone. Some estimates suggest that having to treat workers as employees, rather than independent contractors, could increase costs by as much as 30%.
Uber and rival ridesharing service Lyft joined forces to push back again the bill. They suggested a guaranteed minimum wage of $21 per hour instead of the sweeping changes the bill would bring.
But that pledge wasn't enough to sway California's Senate, and the state's governor Gavin Newsom is expected to soon sign the bill into law. That paves the way for California's 1 million gig workers to gain added rights next year.
(qlmbusinessnews.com via theguardian.com – – Wed, 11th Sept 2019) London, Uk – –
Company improves offer to rival after its first approach was rejected in May
Bovis Homes has revived talks to buy Galliford Try’s housing businesses after improving its potential bid to almost £1.1bn and adding cash to the proposed deal.
The companies have agreed basic terms of a transaction that would more than double Bovis’s housebuilding and enlarge its affordable homes operation. Bovis, the smallest of Britain’s major housebuilders, would be building 10,000 homes a year, from a projected 4,000 this year, and would gain sites in new areas such as Yorkshire and Bristol. It plans to keep the Bovis and Galliford’s Linden Homes brands.
Bovis expects to pay Galliford £675m in shares based on its closing share price on Monday plus £300m in cash. It would also take on £100m of Galliford’s debt and its pension scheme, which has a small surplus. The two companies hope to seal a deal and get it approved by shareholders before Christmas.
The deal would leave Galliford as a construction and infrastructure business concentrating on bigger projects such as the Aberdeen bypass.
Galliford rejected an all-share approach from Bovis in May that valued the businesses at £1.05bn including debt. The revised proposal is £25m higher puts the value at £1.075and offers Galliford shareholders a large chunk of cash.
Bovis said it planned to raise the cash by selling shares worth 9.99% of its existing share capital as well as using existing funds and raising more debt. Bovis rejected a bid from Galliford in 2017 and hired its rival’s former boss Greg Fitzgerald as its chief executive after a damaging scandal over poorly built homes. The turnaround was declared complete when Bovis reported record profits in February.
Bovis would also gain an established affordable homes business with an order book of more than £1bn to expand its own division, which it launched this year and works in partnership with housing associations. It is a more stable business, while private housebuilding is reliant on the ups and downs of the economic cycle, and is more vulnerable to a no-deal Brexit.
The government announced a £3bn programme in March to fund the building of 30,000 affordable homes by providing Treasury backing to housing associations.
Analysts at Jefferies said: “We see the rationale for the deal as the opportunity to buy inexpensive assets well known by the current CEO, bringing Bovis larger market share, speeding up the development of Bovis’s partnership business as well as the potential for cost savings. However, we believe the market will question the timing of such a large deal at this stage in the cycle given all the political and economic uncertainties.”
Bovis shares dropped 4% to £10.16 by lunchtime, while Galliford Try shares initially jumped 20% to 737.5p and later traded 9% higher.
(qlmbusinessnews.com via news.sky.com– Tue, 10th Sept 2019) London, Uk – –
JD updates on its Brexit preparations but says it has no plans to significantly cut back its store estate as rivals struggle.
JD Sports has reported a 10% leap in like-for-like sales in the UK during the first half of its financial year, in defiance of the struggles facing the wider high street.
The sports fashion chain credited investment in its store and online offering for the performance across the six months to 3 August.
The wider group, which includes a gym chain and overseas store brands, recorded a 47% surge in revenues to £2.72bn with underlying profits growing by 37% to £235.2m.
On a pre-tax profit basis, which takes one-off costs into account, earnings were 6% higher at almost £130m.
JD Sports executive chairman Peter Cowgill said: “Against a backdrop of widely-reported retail challenges in the UK, it is extremely encouraging that JD has delivered like-for-like sales growth of more than 10% with an improved conversion reflecting consumers' increasingly positive reaction to our elevated multi-channel proposition where a unique and constantly evolving sports and fashion premium brand offer is presented in a vibrant retail theatre with innovative digital technology.”
The results were consistent as far as investors were concerned.
Shares – up 83% in the year to date – were more than 4% higher when trading began on Tuesday.
The company said it was raising its dividend by 3.7% and was on track to deliver on the mid-range of full-year expectations despite the potential for disruption, should the UK leave the EU without a deal on 31 October.
JD said it was planning to open a warehouse in Belgium next year, earlier than initially planned, to assist its logistical operations.
It has proved another difficult year for the wider retail sector with fierce rival Sports Direct facing a series of challenges including a £605m tax claim – ironically from authorities in Belgium.
While JD acknowledged the struggles facing UK retailers, a combination of weak consumer confidence from political and economic uncertainty and higher costs, it said it had no current plans to reduce Its UK store portfolio, which includes Blacks and Go Outdoors.
It said: “We are very aware of the financial benefit that other retailers appear to get when they downsize their estates and, whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our leases.”
(qlmbusinessnews.com via uk.reuters.com — Tue , 10th Sept 2019) London, UK —
TOKYO (Reuters) – SoftBank Group (9984.T), a leading shareholder in the holding company of U.S. office-sharing startup WeWork, has urged it to shelve a planned IPO on concerns over the valuation, the Financial Times reported on Monday.
A SoftBank spokeswoman declined to comment on the report, which cited sources familiar with the matter.
Investor scepticism has already forced money-losing The We Company to consider slashing its IPO valuation to a little more than $20 billion, sources told Reuters last week. That followed weak initial trading at other startups including SoftBank-backed Uber Technologies Inc (UBER.N).
While SoftBank and its $100 billion Vision Fund emphasize their long-term investing credentials, founder and CEO Masayoshi Son has set out an ambitious IPO pipeline for tech investments spanning ride-hailing, fintech and health startups.
Putting The We Company’s offering on hold would disrupt that schedule at a time when SoftBank is seeking funds from investors for a second Vision Fund.
SoftBank made a follow-up investment in We Company, one of its biggest tech bets, at a $47 billion valuation earlier this year – a number widely treated with scepticism by analysts.
Sanford C. Bernstein analyst Chris Lane said that if The We Company halts the IPO, SoftBank could come up with an alternative funding plan for the startup, which he estimates needs $9 billion in funding to become cash-flow positive.
SoftBank “have got an important voice, but more importantly they have money … (The We Company) will have to listen to them,” said Lane, who values the office space-sharing firm at $23 billion.
Tech conglomerate SoftBank has burned through much of the $100 billion raised by its first Vision Fund in just two years, recording big paper gains on internal revaluations of its tech investments.
Vision Fund defends its valuation techniques, which include cash-flow analysis, recent transactions and comparison with peers to underpin its numbers.
At the end of June the fund recorded the value of $71 billion invested in 83 investments as having grown by $20 billion. Since then the share price of portfolio companies Uber and Slack (WORK.N) have both fallen by around a third.
SoftBank says many investments receive a vote of confidence as third parties come in as co-investors or by making follow-on investments at the same or higher valuations.
In the case of The We Company’s $47 billion valuation, if a tech company shelves an IPO due to a lower valuation than expected, investors are generally expected to take that fall into account when appraising their stakes.
Reporting by Sam Nussey and Tim Kelly in Tokyo, Julie Zhu in Hong Kong and Bharath Manjesh in Bengalurus
(qlmbusinessnews.com via bbc.co.uk – – Mon, 9th Sept 2019) London, Uk – –
British Airways pilots have begun a two-day strike in an ongoing dispute over pay and conditions.
Tens of thousands of passengers have been told not to go to airports, with the airline cancelling some 1,700 flights due to the disruption.
The pilots' union Balpa said BA management's cost-cuts and “dumbing down” of the brand had eroded confidence in the airline.
But BA chief Alex Cruz said investment in the operator had never been so big.
Both sides say they are willing to hold further talks, but no date has been set. The pilots are currently scheduled to stage another strike on 27 September.
Balpa's general secretary, Brian Strutton, said: “It is time to get back to the negotiating table and put together a serious offer that will end this dispute.”
But he told the BBC that while BA says publicly it is willing to talk, “in private they say they are not going to negotiate”. And although the headline dispute is about pay, he said there was also deep resentment about the airline's direction.
“BA has lost the trust and confidence of pilots because of cost-cutting and the dumbing down of the brand… management want to squeeze every last penny out of customers and staff,” Mr Strutton said.
Mr Cruz defended the airline against Mr Strutton's claim, saying it had never in its history embarked on such a big investment programme in services and training. He said the airline was “ready and willing” to return to talks with Balpa.
It is the first time BA pilots have walked out and the action could cost the airline up to £40m a day. Some 4,000 pilots are involved in the strike.
By Katie Prescott, Business reporter
It's unlikely that passengers will see that much disruption at airports – most of the real problems have happened over the past few weeks as people have rushed to make other travel arrangements, rebook their flights or apply for refunds.
In terms of the negotiations, both sides say that they are open to talks but neither has responded to the other, underlining just how acrimonious their relationship has become.
Ostensibly this is about pay, but there's also underlying discontent among pilots with the company's strategy. Some say they don't like British Airways' cost-cutting drive and they want to see more of the benefits of their bumper profits.
But industry insiders say BA has made those profits because they have cut costs. And that airlines are expensive and unpredictable beasts to run, in thrall to a fluctuating oil price (jet fuel accounts for a quarter of their operating costs) and random acts such as drones in the air.
If they don't come to an agreement in the next few weeks, another strike is scheduled for 27 September. The result of the pilots' union ballot allows strike action until the start of next year, but Balpa says it hopes to resolve the situation well before then.
How did we get here?
Pilots previously rejected a pay increase worth 11.5% over three years, which was proposed by the airline in July.
Balpa says that its members have taken lower pay rises and made sacrifices during more stringent times for the airline in recent years. The union insists that now that BA's financial performance has improved – its parent company IAG reported a 9% rise in profits last year – they should see a greater share of the profits.
BA says its pilots already receive “world-class” salaries. The airline believes the pay offer is “fair and generous”, and that if it is good enough for BA cabin crew, ground staff and engineers – whose unions, Unite and the GMB, have both accepted it – it should be good enough for pilots, too.
The airline says once the 11.5% pay deal has fully taken effect in three years' time, some BA captains could be taking home more than £200,000 a year, allowances included.
Two weeks ago, BA informed some customers they would have to re-book their flights next week due to the planned industrial action.
Unfortunately, due to “human error” the airline mistakenly sent emails to some customers whose flights were not actually affected, throwing BA's customer service operations into a tailspin over the bank holiday weekend.
On Friday, BA said the “vast majority” of affected customers had now either accepted a refund or rebooked, either on alternative dates or with other airlines.
What rights do passengers have if their flight is affected?
BA advice says you can request a full refund, rebook your flight for another time in the next 355 days, or use the value of your fare to fly to a different destination.
If your flight has been cancelled due to a strike, the Civil Aviation Authority sayspassengers also have a legal right to a replacement flight at BA's expense to get you to your destination, even if this means travelling with a different airline.
Most affected passengers would already have been in contact with BA, but they may not have considered additional costs, such as airport parking. They are advised to keep receipts for these extra costs, and BA said it would look at refunding them on a case-by-case basis.
The cost of separate hotel or accommodation bookings that cannot be used may need to be claimed from travel insurance.
(qlmbusinessnews.com via theguardian.com – – Mon, 9th Sept 2019) London, Uk – –
Bank says in run-up to deadline it was receiving 800,000 inquiries a week
Lloyds Banking Group will incur a further charge of up to £1.8bn to cover claims relating to mis-sold payment protection insurance after being hit by a surge in claims last month.
Lloyds said the last-minute rush was bigger than expected, and has prompted it to make another PPI charge of between £1.2bn and £1.8bn. At the top end, this is double the £900m charge taken by Royal Bank of Scotland last week, which also saw a last-minute surge in claims. CYBG, which owns the Clydesdale and Yorkshire banks and Virgin Money, also warned last week that it faced a potential bill of £450m for new claims.
The latest charge takes Lloyds’s total compensation bill to nearly £22bn – by far the largest of all the banks. In total, the five major high street banks have set aside more than £40bn to compensate people who purchased often worthless cover in what has become the UK’s largest mis-selling scandal.
Since Lloyds started taking claims in 2011, it has typically received 70,000 PPI information requests a week, but this soared to 600,000 to 800,000 a week in the final weeks before the 29 August deadline.
Lloyds said the number was “higher than expected, with a significant spike in the final days before the deadline expired”.
In light of this, the bank has decided to suspend the remainder of its 2019 share buyback programme, leaving £600m of the £1.75bn programme unused. Lloyds expects capital growth, and its return on equity, to be below its previous guidance, with the final outcome dependent on the actual PPI charge taken.
The latest provision comes on top of £550m in PPI charges taken in the second quarter, which pushed down Lloyds’s pretax profits by 7% to £2.9bn for the six months to the end of June.
Volkswagen is one of the world’s largest automakers. It houses brands such as Audi, Porsche, and Bentley. But perhaps its best-known vehicle is the Volkswagen Beetle. Over its entire lifespan, Volkswagen sold over 22.5 million of all three versions of the Beetle. But in July of 2019, production one of the most iconic and important cars of all time came to an end.
Fauzia Abdur-Rahman has been serving Jamaican food in the South Bronx from her cart Fauzia's Heavenly Delights, right outside the courthouse, for the last 25 years. The menu changes every day, but there are always two meat options, a fish option and three vegetarian options.
With the help of her daughter and husband, Fauzia makes her famous jerk chicken three times a week, and finishes it with her homemade jerk sauce that she makes with pimiento and scotch bonnet peppers, plus a host of other ingredients.
(qlmbusinessnews.com via uk.reuters.com — Fri, 6th Sept 2019) London, UK —
LONDON (Reuters) – The number of workers hired for permanent jobs via recruitment agencies in Britain fell at the fastest pace in more than three years in August as the Brexit crisis deepened, a survey showed on Friday.
The Recruitment and Employment Confederation and KPMG said hiring of temporary workers rose but remained close to its slowest pace in 75 months while permanent placements fell for the sixth month in a row as employers postponed hiring.
“Brexit uncertainty continues to take its toll on the jobs market,” James Stewart, vice chair at KPMG, said.
Prime Minister Boris Johnson, who took office in July, has said he will take Britain out of the European Union on Oct. 31 without a transition deal to smooth the economic shock, unless Brussels gives in to his demands for concessions.
But this week, lawmakers rushed to approve a bill which would require Johnson to ask for an extension of the Brexit deadline, prompting him to demand an early election.
“The first priority should be avoiding a damaging no-deal Brexit and giving some stability back to British businesses, so they can drive the prosperity of the whole country,” REC Chief Executive Neil Carberry said.
August saw the smallest increase in job vacancies since January 2012, the survey showed.
Starting salaries of permanent staff rose at the weakest pace since December 2016 as a squeeze on candidates eased – the availability of staff fell at the most moderate pace for over two-and-a-half years.
Britain’s labour market has strengthened since the Brexit referendum in 2016, bringing unemployment down to its lowest rate in more than 40 years and pushing up pay. The Bank of England is watching pay growth closely as it tries to work out what to do next with interest rates.
(qlmbusinessnews.com via bbc.co.uk – – Fri, 6th Sept 2019) London, Uk – –
TripAdvisor has hit back at allegations that it is failing to stop a flood of fake reviews that artificially boost hotel ratings.
The travel review site has come under fire from consumer group Which? over what it calls “hugely suspicious” patterns of comments from contributors.
But James Kay, a UK director of TripAdvisor, said the site went after fake reviews “very aggressively”.
“We are doing this more than any other platform out there,” he told the BBC.
Mr Kay was speaking in response to a Which? Travel survey that looked at 250,000 TripAdvisor reviews for the top 10 ranked hotels in 10 popular tourist destinations worldwide.
Which? said it had reported 15 of those 100 hotels to TripAdvisor as having “blatant hallmarks” of fake reviews.
It said that in the case of one hotel in Jordan, TripAdvisor subsequently removed 730 of its five-star reviews.
Naomi Leach of Which? Travel accused TripAdvisor of a “failure to stop fake reviews and take strong action against hotels that abuse the system”.
“Platforms like TripAdvisor should be more responsible for the information presented to consumers.”
But TripAdvisor's Mr Kay said the site had already taken action against the reviews in question, independently of the Which? investigation.
“This is something we do every day,” he said. “We have fraud detection tools that are far more sophisticated than those used by Which?”
Mr Kay said its investigators were always on the lookout for suspicious patterns of reviews.
In Italy, he added, TripAdvisor had assisted a prosecution that sent one fake reviewer to jail.
Under an EU directive that has been in force in the UK since 2008, hotel staff who post favourable reviews of their establishment on travel information websites such as TripAdvisor are committing a crime.
Any firm breaking the rules may face prosecution, stiff fines and possibly even jail terms for its staff.
(qlmbusinessnews.com via bbc.co.uk – – Thur, 5th Sept 2019) London, Uk – –
The Bank of England updates analysis on the potential impact of a no-deal Brexit on the economy as Mark Carney goes before MPs.
The negative impact of a no-deal Brexit will not be as severe as originally thought because of improved planning by the government, businesses and the financial sector, the Bank of England has said.
Governor Mark Carney told the Treasury select committee that the Bank now believes GDP will fall by 5.5% in the worst-case scenario following a no-deal Brexit – less than the 8% contraction it predicted in last November.
The Bank's revised assessment of the possible scenarios also says unemployment could increase by 7% and inflation may peak at 5.25% if the UK leaves the European Union without a deal.
While he warned that there would still be an economic impact, with food bills likely to rise, Mr Carney said preparations for no-deal since the end of last year had informed the improved picture.
These include work undertaken at Dover and Calais to reduce disruption to cross-Channel trade, the government's proposed tariff regime, and work to reduce disruption in the financial markets.
In a letter to the committee, Mr Carney said: “Advancements In preparations for a No Deal No Transition scenario mean that the Bank's assessment of a worst case No Deal No Transition scenarios has become less severe.”
Giving evidence to the committee, he said that while risks of economic disruption remain, the work undertaken to reduce delays at Dover and Calais had been significant.
These include the automatic registration of UK companies to trade with the EU, simplified customs procedures and a temporary waiver on security checks at the border.
The government's own assessment of disruption, set out in the Operation Yellowhammer documents leaked last month, is that between 40% and 60% of freight trade will be disrupted, less than the 75% previously predicted.
Mr Carney said the Bank's forecast was based on less than half of freight being disrupted, with every 5% of freight traffic processed equating to about 0.25% of GDP.
The announcement of a no-deal tariff regime that would see 87% of imports by value eligible for a tariff-free increase, and work to reduce disruption to UK and European derivative markets, has also improved the worst-case scenario.
Mr Carney said: “There's real progress on the ground, there's real progress in the financial system and that has some positive knock on effect on confidence on financial markets as a whole. All of that adds up to 2.5% to 3% of GDP that we would not otherwise lose.”
“It is likely that food bills will rise in the event of a no-deal Brexit, that is almost exclusively because of the exchange rate impact. Movements are quickly translated onto the shop shelf, and domestic prices, imperfect substitutes, also increase. That impact has lessened because of the new tariff regime the government has put in place.”
(qlmbusinessnews.com via uk.businessinsider.com – – Thur, 5th Sept 2018) London, Uk – –
Biggest UK housebuilder benefits from help to buy but warns of slow growth this year
Britain’s biggest housebuilder has shrugged off the tough housing market to report record annual profits of £910m, although it warned sales growth this year would be slower than expected.
Barratt reported an 8.9% rise in pre-tax profits to £909.8m for the year to 30 June, with sales surging to an 11-year high and margins improving. It announced a special dividend of 17.3p a share.
The company, the UK’s largest housebuilder by sales, sold 17,856 new homes last year, up from 17,579 the previous year. Sales in London were flat but rose outside the capital and in Scotland. The average selling price dropped to £274,400 from £288,900 as the company continued to shift away from central London to focus on the outer boroughs and areas such as Milton Keynes.Advertisement
Barratt has benefited from the government’s help-to-buy scheme, which accounted for 40% of sales. Its rival Persimmon, another major beneficiary of the taxpayer-funded programme, caused outrage in February when it made a profit of £1.09bn in 2018, the biggest ever made by a UK housebuilder, with nearly half of its sales coming from help to buy.
David Thomas, Barratt’s chief executive, said government schemes aimed at helping first-time buyers had been “enormously helpful to the market”. The first, Home Buy Direct, was launched by the Labour government in 2009, followed by FirstBuy in 2011 and help to buy in 2013, in which the government provides a guaranteed interest-free loan to homebuyers. Housebuilders have also benefited from affordable mortgages at a time of low interest rates.
Housebuilding collapsed during the financial crisis but has recovered, to 165,090 in England last year, although it is still far below the levels needed to solve Britain’s housing crisis.
The new-build housing market has been remarkably resilient, despite the increasing threat of a no-deal Brexit, and Thomas was sanguine about the outlook.
“If you look at the period over the last three years since the referendum, customer demand has been very strong, there is lots of eligibility, including help to buy,” he said. “So far we’ve not seen a reduction in consumer appetite.”
He welcomed the extension of the help-to-buy programme until 2023 and expressed confidence that lenders would fill the gap with affordable mortgages thereafter.
The housing market has been dragged down by Brexit uncertainty, which has deterred many from buying and selling and led to falling house prices in London and south-east England.
Barratt is forecasting that sales volumes will grow by 3% this year, the bottom end of its targeted 3% to 5% range. It has a forward order book of just below £3bn, down from £3.05bn this time last year. Shares in the company fell 5% initially, and later traded down 3.5% at 600p. City analysts are predicting pre-tax profits of about £880m this year, down from last year.
The company’s gross margin rose to 22.8% from 20.7% last year. The firm has reduced costs by cutting the number of house types it offers from more than 200 in 2016, to about 20 for Barratt, and 20 for its upmarket David Wilson brand. It has also changed the design, for example by reducing the pitch of its roofs to save money.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 4th Sept 2019) London, Uk – –
Chancellor Sajid Javid is set to unveil the government's spending plans for the coming year on Wednesday.
The statement will set departmental budgets for just one year rather than the usual three years, due to uncertainty over the impact of Brexit.
Mr Javid will announce a further £2bn of Brexit funding for the government, as well as confirm additional funds for health, schools and the police.
The extra spending will be funded by borrowing rather than tax rises.
Independent think-tank the Institute for Government (IFG) says the government is likely to favour vote-winning measures ahead of a “potentially imminent” election.
But it argues the government should be prioritising other areas of spending, such as social care and prisons which it says are the services most in need of extra money.
Here we look at each of the public services, and which needs the most funding, according to the IFG's report.
It has graded services, according to need based on which are able to keep up with demand: amber for some concerns and red for significant concerns.
What has already been announced? Theresa May's government announced that annual funding would rise by £20 billion by 2023. Boris Johnson also announced a one-off injection of £1.8bn, but not all of that is agreed to be new money.
Spending on hospitals and GP services in England has risen since 2009-10, although more slowly than in the past.
IFG estimates suggest that the workload of GPs has risen faster than spending, meaning they have had to do more for less.
Despite practices increasing the number of telephone consultations and pooling resources, patients have been waiting longer for appointments.
This suggests that GPs, despite becoming more efficient, have not been able to keep up with demand.
However, the amount of work hospitals do has risen faster.
While hospitals have made efficiencies, hospitals have not been able to keep pace with the growing cost and demand for care, according to the IFG.
The result has been financial deficits and longer waiting times for treatment.
Analysis: By Nick Tiggle
The frontline of the NHS knows what its budget is until 2023-24: it was given a five-year settlement last summer.
The rises, an average of 3.4% a year, are generous compared to what the rest of the public sector can expect and reflect the fact the health service is constantly among the top priorities for voters and facing rising demand from the ageing population.
But there are still question marks around more than £13bn of funding that goes to things like staff training, buildings and healthy lifestyle initiatives, such as stop smoking.
What has already been announced? The government has announced that funding will rise by £2.6bn in 2020-21, £4.8bn in 2021-22 and £7.1bn in 2022-23.
Schools in England have not faced the same financial pressures as many other public services, according to the IFG.
However, after a rise in spending per pupil in most years since 2009-10, since 2014-15 the growth in pupil numbers has outpaced spending growth, meaning the per-pupil spending has fallen in both primary and secondary schools.
On top of this, schools have increasingly been paying for services that would have been previously provided by local authorities – such as educational psychology and extra support for special educational needs – following cuts to local authority budgets.
There are also signs that this increased workload is putting pressure on the workforce, with schools finding it harder to recruit and retain teachers, the IFG says.
But overall, schools have become more productive, it adds, with more pupils per teacher and pupil attainment increasing – particularly in primary schools.
Analysis: By Branwen Jeffreys
School funding in England had become a political headache and vote loser for the government, with both headteachers and parents campaigning. Rising costs such as national insurance and teachers pensions, as well as running costs such as utility bills, have contributed to an 8% real terms reduction in money spent in schools since 2010.
The extra money promised for 5-to-16 year-olds' education will almost reverse that squeeze by 2023. But that leaves financial pressures in England in other areas such as early years, and despite some extra cash for colleges educating 16-19 year-olds, an historic legacy under many governments of relative underfunding of further education.
What has already been announced? The government has promised 20,000 extra police officers over three years at a likely cost of £0.5 billion next year but has not yet confirmed how this will be funded.
Spending on the police in England and Wales has fallen sharply since 2009-10, says the IFG.
The number of police officers has also declined, with total police reserves now 9% lower in real terms than they were in 2009-10.
“Victim-reported crime has fallen over this period, but police-recorded crime has increased,” the IFG says.
“Overall police performance – as judged by inspection reports – has improved, although other indicators – such as public confidence in the police and the length of time taken to bring charges – have deteriorated.
“There is evidence that the police are struggling to maintain performance with current levels of spending.”
Analysis: By Dominic Casciani
The strength of policing reached a record high at the end of the Labour government that left office in 2010 – and then fell back by 21,000 as older officers left and cuts restricted recruitment.
The prime minister's pledge to re-recruit 20,000 officers in the coming three years is a huge task, because natural loss means forces may need to recruit more than double that number to hit the target.
What has already been announced? £0.1 billion pledged to boost security; promise of 10,000 extra prison places, but funding arrangements unclear
Prisons have experienced large spending cuts and a reduction in staff numbers since 2009-10.
This means prison safety has declined dramatically since 2012-13, according to the IFG.
Violence has risen and prisoners are less likely to have access to learning and development activities.
The 2016 Autumn Statement saw an injection of extra cash to tackle these safety issues and spending has risen again recently.
As a result, staff numbers are starting to rise again.
The IFG hailed a pilot programme to curb violence and drug use in 10 prisons, undertaken last year by the then Prisons Minister, Rory Stewart.
“This was largely successful, but replicating it across the whole prison system will require extra spending in every future year,” the IFG says.
Analysis: Dominic Casciani
The Ministry of Justice was one of the first big spending departments to settle with the Treasury in 2010, when the then Chancellor, George Osborne, demanded major cuts to public spending. Today, it has 25% fewer staff than back then.
The departure of experienced prison officers under the cuts coincided with a rise in smuggling of new psychoactive drugs into jails, leading to an increase in violence that the remaining prison officers struggled to control.
Adult social care
What has already been announced? In a Sunday Times interview, Boris Johnson said he would give councils £1bn for adult social care, but no formal announcement has yet been made.
Spending on adult social care in England fell between 2010-11 and 2014-15, but has since seen a rise.
The number of adults receiving publicly funded care packages has decreased, according to the IFG, even though an ageing population would suggest that demand is increasing.
Local authorities, responsible for providing adult social care, have driven down the price of care commissioned from private and voluntary sector providers following cuts to funding.
However, this has not enabled them to meet demand, the IFG says, and unpaid care – such as by family, friends or neighbours – has partially filled the gap.
In his first speech from Downing Street, Boris Johnson promised to “fix the crisis in social care once and for all”.
However, the IFG says there are no signs that plans to do so will be unveiled in the Spending Review.
Analysis: By Nick Tiggle
Not only has adult social care lost out in terms of funding, the long-awaited reform of the system has also been dodged.
Care services for the elderly and disabled simply do not have the profile of the NHS, although that is beginning to change a little as the problems worsen. But the challenge remains what to do about money.
Only the poorest and neediest get support from the state. But that means four-fifths of older people who need care go without, rely on family and friends or pay for it themselves.
Each of the areas covered by the IFG's report are devolved: the governments in Scotland, Wales and Northern Ireland run their own services.
So announcements on Wednesday will effect England (or England and Wales for policing and justice).
The devolved governments will receive extra money proportionate to the increases in spending, but they will decide how that money is spent.
Since 2010, the Westminster parliament has increased health spending faster and cut education and local government spending faster than the devolved governments.