UK Rag Trade shows steepest sales dip in seven years

(qlmbusinessnews.com via uk.reuters.com – – Mon, 17 Oct, 2016) London, UK – –

Britain's fashion market has suffered its steepest decline in sales since 2009 as consumers increasingly spend their money elsewhere, according to industry data published on Monday.

Retail industry executives including Next's (NXT.L) chief executive, Simon Wolfson, reckon there has been a cyclical move away from spending on clothing back into areas that suffered the most during the economic downturn, such as eating out and travel.

Researcher Kantar Worldpanel said data for the year to Sept. 25 showed that UK fashion has seen four months of consecutive sales decline, with nearly 700 million pounds lost from the value of the market from this time last year.

It said June's decline of 0.1 percent was the first monthly contraction in six years.

“Fashion retailers are still following the same patterns of over-buying and deep discounting and consumers are increasingly reluctant to pay full price,” said Glen Tooke, consumer insight director at Kantar Worldpanel.

“Most recently the decline has been driven by falling frequencies of buying, giving retailers fewer opportunities to encourage shoppers to part with their cash.”

Earlier this month a survey from BDO, the accountancy and business advisory firm, said Britain's fashion retailers suffered a slump in sales in September as unseasonably warm weather deterred sales of autumn and winter collections.

(Reporting by James Davey; Editing by Greg Mahlich)

Nissan CEO Ghosn meets May, after Brexit ultimatum

(qlmbusinessnews.com via uk.reuters.com – – Fri, 14 Oct, 2016) London, UK – –

Two weeks after warning that Nissan (7201.T) could halt new investment in Britain's biggest car plant due to uncertainty over Brexit, Chief Executive Officer Carlos Ghosn met Prime Minister Theresa May on Friday.

Ghosn told reporters at the Paris motor show late last month that future spending on the north of England facility in Sunderland would depend on a guarantee of compensation if Britain's eventual deal with Europe led to tariffs on car exports.

Businesses have been concerned that Britain is headed towards a “hard Brexit”, which would leave it outside the European single market and facing tariffs of up to 10 percent on car exports.

Nissan, which built nearly one third of Britain's 1.6 million cars last year, faces a decision in early 2017 on where to build its next Qashqai sport utility vehicle, prompting Friday's visit.

“The purpose of this meeting… is to ensure both Nissan and the UK government have an aligned way forward that meets the needs of both the company and the country,” a Nissan spokesman said.

“We do not expect any specific agreement to be communicated following this initial introductory meeting of the CEO and the Prime Minister,” he added.

A spokesman for the prime minister said he would not comment on the private meeting.

Ghosn's concerns led other carmakers to warn about the consequences of a hard Brexit, favoured by some Conservatives who wish to impose limits on immigration, a key concern of many voters who backed Brexit.

The chief executive of Britain's biggest automaker Jaguar Land Rover (TAMO.NS) told Reuters that any Brexit deal would have to guarantee a “level playing field”, opening up the possibility that others too would seek financial guarantees.

In September, when asked for a response to Ghosn's comments, a spokeswoman said the government would not give a running commentary of different opinions about Brexit.

But in a speech to the Conservative Party this month, May said the government would do everything it could to encourage, develop and support strategic sectors of the economy such as car manufacturing, financial services and aerospace.

Britain's car industry was a strong supporter of continued membership of the European Union ahead of the June 23 vote, benefiting from unfettered access to the world's biggest trading bloc and its standardised regulations.

The British government has said it will listen to business concerns and protect the economy as its begins formal divorce talks from the European Union by the end of March.

(Additional reporting by Kylie Maclellan; editing by Stephen Addison)

 

Claim against Asda given go-ahead to proceed with equal pay case

(qlmbusinessnews.com via uk.reuters.com – – Fri, 14 Oct, 2016) London, UK – –

Britain's no.3 supermarket chain Asda could be forced to pay out millions of pounds to workers after a group of employees were given the go-ahead to proceed with a claim against the chain, which is owned by Walmart (WMT.N).

An employment judge ruled on Friday that over 7,000 mostly female Asda store workers can compare themselves to higher-paid mostly male colleagues who work in distribution centres, allowing their equal pay claim to proceed through legal channels.

Asda said it maintained its position that the jobs were not comparable, and that it was considering appealing against the ruling.
“We continue to strongly dispute the claims being made against us,” it said in a statement. “We believe that the demands of the jobs are very different and are considering our options for appeal.”

The equal pay case comes as a blow to Asda as it seeks to reverse a dramatic slump in sales, having lagged its peers for two years and lost market share.

Law firm Leigh Day, representing the claimants, said in a statement that Asda could owe workers over 100 million pounds in wages going back to 2002 should the case be found in the claimants' favour.

It added that the ruling was encouraging for other claims it is bringing on behalf of a group of 400 workers from another British supermarket, Sainsbury's (SBRY.L).

(Reporting by Sarah Young; editing by Stephen Addison)

Tesco and Unilever price standoff leaves online shoppers with out Marmite

(qlmbusinessnews.com via bloomberg.com – – Thur, 13 Oct, 2016) London, UK – –

The true cost of Brexit hit home for U.K. shoppers as Unilever’s iconic Marmite spread and a host of other products remained absent from Tesco Plc’s online store Thursday because of a standoff over price increases triggered by the Brexit vote.

Britain’s biggest supermarket chain said Wednesday that it’s “currently experiencing availability issues on a number of Unilever products,” and aims to have the issue resolved soon. Unilever, which reported a decline in third-quarter sales volumes Thursday, told analysts that it was “confident” the issue would be resolved quickly, noting that the U.K. accounts for just 5 percent of its business.
The dispute lays bare the close ties between Tesco and its third-largest supplier, which produces household brands like Hellmann’s mayonnaise and Ben & Jerry’s ice cream and was Tesco Chief Executive Officer Dave Lewis’s longtime employer. Unilever, along with other consumer-product makers like Nestle SA, is facing heightened sourcing costs from a plunge in the pound since the June vote to leave the European Union, yet passing those expenses along to retailers will be difficult with U.K. grocers already locked in fierce competition.
“Tough price negotiations are a constant factor of the relationship between food manufacturers and retailers, and are going to be very tough in the U.K. following the Brexit vote,” Andrew Wood, an analyst at Sanford C. Bernstein, said in a note. “But they rarely break out in public or lead to de-stocking of manufacturer products.”
Top Customers
Tesco is Unilever’s third-biggest customer after Wal-Mart Stores Inc. and Kroger Co., accounting for 2.3 percent of its revenue, according to Bloomberg data.
The Guardian newspaper has reported that Unilever wants to raise prices by about 10 percent because of the fall in sterling. Among Unilever’s brands to exit the Tesco web store were Persil detergent, Flora margarine and more than 100 products in the Dove range of body care. A check of Tesco.com Thursday morning showed the products were still unavailable.
For a Bloomberg Intelligence analysis of the price dispute, click here
“Retailers’ margins are already squeezed,” Justin King, former CEO of J Sainsbury Plc, said at an event hosted by Bloomberg in London on Wednesday. “So there is no room to absorb input price pressures and costs will need to be passed on.”
The Brexit vote has already affected pricing of products ranging from floor coverings to toilet paper. Unilever was among companies that lobbied voters to remain in the European Union, while supermarkets including Tesco took a more neutral stance ahead of the vote in a bid not to alienate either faction of consumers. Sainsbury and Wm. Morrison Supermarkets Plc declined to comment on their relationships with Unilever. Wal-Mart’s Asda unit did not immediately respond to a request for comment.
“The question is whether Sainsbury, Asda, Waitrose and others are taking it on the chin or if they will play hardball too,” Alan Clarke, an economist at Scotiabank in London, said in a note. “What about other suppliers — Unilever is probably not a one-off trying to pass on higher input costs.”
Chocolate, Cheese
Food companies such as KitKat maker Nestle and Swiss dairy concern Emmi AG have both said they will look to raise prices in the U.K. to respond to the plunge in sterling. Nestle is due to report third-quarter sales Oct. 20.
“The margin in the U.K. will be lower next year than this year or last year, that’s for sure,” Emmi Chief Executive Officer Urs Riedener said on Oct. 6. “We’re obliged to push price increases in most of the segments.”

Any dispute between Tesco and Unilever would be particularly touchy for Lewis, the Unilever veteran. Tesco has sought to improve relations with its vendors in the wake of an accounting scandal and criticism from a grocery industry regulator. The tussle also risks damaging Unilever’s reputation as a good corporate citizen, an image that Chief Executive Officer Paul Polman has sought to enhance in recent years.
“This sort of standoff benefits no one,” said Bryan Roberts, an analyst at researcher TCC Global. “Unilever will lose market share by not being in Tesco, and shoppers will feel a huge degree of frustration. A speedy resolution would be in everyone’s best interests.”

Matthew Boyle /Paul Jarvis

Confidence returns to British housing market as prices are set to soar

 

(qlmbusinessnews.com via uk.businessinsider.com – – Thur, 13 Oct, 2016) London, UK – –

Britain's house prices are set to soar as there are more people rushing into the housing market, but not enough people are selling their homes.

According to new data from the Royal Institution of Chartered Surveyors (RICS), there has been a “significant turnaround in new buyer enquiries compared to June”when the EU referendum took place, but there is a slump in people actually putting houses on the market.

This only means one thing — there are too many people looking to buy a home and not enough to go around. Considering this is a key problem for Britain's housing market anyway, because there is a dearth in supply and homes are not being built fast enough, this will elevate prices for some time to come.

“The market does now appear to be settling down following the significant headwinds encountered through the spring and summer. Buyers do appear to be returning, albeit relatively slowly, but the big issue that continues to be highlighted by respondents is the lack of fresh stock on the market,” said Simon Rubinsohn, chief economist at RICS.

“Although this is not a new story, it is a significant one having ramifications for both prices and the level of turnover. Central London remains something of an outlier with contributors telling us this is the one part of the market where there may be further give on prices in the near term. Elsewhere the price trend still seems on the up.”

RICS points out that the number of new instructions being received by estate agents has hit historic lows.

“This drop in new properties coming to the market continues a pattern that extends back to the middle of 2014 with a brief exception around the turn of the year when some vendors saw opportunity linked to the April hike in stamp duty for investors,” said RICS.

And the impact on prices is over the next three months is that, nationally, they will rise. According to RICS' UK Residential Market Survey, 14% more respondents expect to see an increase. RICS says “this is the strongest reading since March and compares with +9% in August.”

By Lianna Brinded

 

UK economy set for £66 billion annual loss without Single Market access

(qlmbusinessnews.com via uk.finance.yahoo.com via uk.businessinsider.com – – Wed, 12 Oct, 2016) London, Uk – –

Britain's government predicts that a “Hard Brexit” — Britain leaving the European Union without access to the Single Market — will cost the UK £66 billion ($81.2 billion) a year in lost tax revenues.

According to “leaked government papers” seen by The Times newspaper, the UK Treasury is warning cabinet ministers that the country's GDP could fall as much as 9.5% because it would have to rely on the World Trade Organisation rules for trading and therefore it would miss out on more favourable trading tariffs that come with being a member of the 28-nation bloc.

The Treasury expects both trade and foreign investment in Britain to be around a fifth lower than it otherwise would have been if the UK relies on WTO rules for trade. This would also have a knock-on negative effect for productivity, hence the huge drop in tax receipts.

The leaked document is apparently a “draft cabinet committee paper, ” which is intended to inform those in charge of negotiating Britain's exit from the EU.

The Times says the drop in tax revenue is the equivalent of 65% of the annual budget for Britain's National Health Service, showing just how huge a loss it would be to the UK.

Britain voted to leave the EU on June 23. Since then, prime minister Theresa May has repeatedly said that “Brexit means Brexit” and pledged to pull the UK out of the 28-nation bloc with the best deal possible. However it is looking like Britain is going to have a “Hard Brexit” no matter what, judging by May and her cabinet's stance on immigration.

Simon Wells and his team of economists at HSBC said in their client note earlier this month that “immigration control appears a higher priority than full Single Market access,” following the PM's speech at the Conservative party conference.

Britain has pretty much been given a choice by EU officials between controlling immigration and access to the Single Market. While no official negotiations can actually start until May triggers Article 50, which officially gives the UK two years to negotiate its exit with EU officials, the UK government's repetition on focusing on immigration instead of access to the Single Market all points to a “Hard Brexit.”

Britain cannot have best of both worlds. Taking greater control of immigration by opting out the Freedom of Movement Act, which allows any EU citizen to enter the country, means that the country will have to relinquish its single market membership — like Turkey.

If the UK wants single market access, it will have to adhere to EU immigration rules — like Norway.

By Lianna Brinded

London 8,400 finance jobs openings chased by 15,000 in September

Qlm referencing: (qlmbusinessnews.com via uk.finance.yahoo.com – – Wed, 12 Oct, 2016) London, Uk – –

The number of new available jobs in the the UK's financial centre fell 5% in September year-on-year to 8,400, according to a survey by Morgan McKinley, while the number of people seeking jobs increased by 15%.
Month-on-month the number of fresh open positions increased by 1% in September, stabilising from a post-Brexit collapse in Luly.
Those who did find new jobs in September got an average of a 18% pay rise.
In July, the survey reported that the number of new City jobs plunged 27% while the number of people seeking them dropped 13%.
“Clearly there’s an ongoing appetite to recruit,” said Hakan Enver, operations director at Morgan McKinley Financial Services, adding: “Given the volatility that we have been facing, two months of positive growth is welcome news.”

Brexit, and the future status of London as the European Union's financial centre, has been the main focus for those entering the City's job market.
Prime minister Theresa May's government has raised the possibility of a so-called “Hard Brexit,” which prioritises control over immigration, as opposed to maintaining some economic links in return for concessions on Freedom of Movement.
Such a move would also lead to the automatic loss of the City of London's EU financial passport. The loss of passporting rights would be devastating to the City of London. The Financial Conduct Authority (FCA) said earlier this year that 5,500 UK companies rely on passporting rights, with a combined turnover of £9 billion.
“Given the number of businesses affected in Britain and across the EU, and the massive contributions made by City workers to the British economy, it’s frankly shocking to see the government take such a dismissive attitude towards passporting,” said Enver.
“Stability is the foundation of business growth, so hopefully the government will right this course. If we are not careful, London will have a massive talent drain to countries such as France, Germany, USA, Japan and Ireland who have already turned on a charm offensive to woo our professional workforce,” he said.

By Ben Moshinsky

UK over 55s sitting on property valued greater than GDP of Italy

(qlmbusinessnews.com via uk.finance.yahoo.com – – Tue, 11 Oct, 2016) London, Uk – –

English people aged over 55 currently hold more housing wealth in their homes than the annual GDP of Italy.

Research by Age Partnership, a retirement income adviser, found that £1.5 trillion of equity is locked up in these homes, compared to Italy’s £1.4 trillion of GDP.

This number is made up of the 39pc of that age group who have no outstanding mortgage, but many more will have significant wealth in their properties meaning this is a conservative estimate.

The over-55 population is due to grow by a third in the next 20 years, meaning that by 2036, not taking into account house price inflation, that number will be £1.9 trillion.

This comes as McCarthy and Stone , the retirement home builder, found that 36pc of people aged over 65 in the UK are looking to downsize into a smaller home, which equates to 4.3m people.

The survey of 3,000 over-65s carried out by YouGov (LSE: YOU.L – news) found that 15.7pc of those looking to move live in the south-east of England, the greatest proportion in the country. This represents £122.6bn of property wealth.

Those in the south-west and north-west of England also have high proportion of over-65s who are considering downsizing, at 10.4pc and 12.1pc respectively.

Many of these people want to move but cannot, as there is a shortage of such homes for older people to downsize into. Due to the scarcity, bungalows command a 16pc premium over houses of the same size with stairs.

The UK’s current market for retirement homes is much smaller than that of other developed countries: only 1pc of the people aged over 60 live in retirement communities, compared with 17pc in the USA, and 13pc in Australia and New Zealand.

Clive Fenton, the chief executive of McCarthy and Stone, said that the Government’s focus on first-time buyers with policies such as Starter Homes “overlooks the chronic under-supply of suitable retirement housing essential to the needs of the UK’s rapidly ageing population.”
He added: “Unfortunately, the UK’s housing stock is woefully unprepared for this demographic shift to the ‘extended middle age’, and this has created a new ‘Generation Stuck’ dilemma.”

McCarthy and Stone said last month that the number of reservations for their homes has fallen since the EU referendum. This is because the second-hand market, on which the buyers rely to sell their homes to downsize, has showed signs of slowing down.

By Isabelle Fraser

UK Economy set for expected third quarter expansion of 0.4 percent – NIESR

(qlmbusinessnews.com via uk.reuters.com – – Fri, 7 Oct, 2016) London, Uk- –

 

 

Economy
Image Money /TaxRebate.org.uk/flickr.com

British economic growth probably slowed in the three months that followed June's Brexit vote, but not by quite as much as the Bank of England expects, a leading think tank said on Friday.

The economy likely grew at a quarterly pace of 0.4 percent in the three months to September, down from the 0.7 percent growth reported for the second quarter, the National Institute of Economic and Social Research (NIESR) said.

Last month the Bank of England predicted growth of 0.3 percent in the third quarter.

“While retail sales have been buoyant in recent months, the production sector has acted as a drag on economic growth,” NIESR research fellow James Warren said.

Industrial output fell unexpectedly in August, according to official data earlier on Friday.

“We estimate that output from the production sector declined by 0.2 per cent in the third quarter of this year,” Warren added.

NIESR had previously suggested Britain faced a 50 percent chance of a recession by the end of 2017 because of the vote to leave the European Union.

((Reporting by Andy Bruce, editing by David Milliken))

The competitiveness of Britain and how it retains a wealthy economy

(qlmbusinessnews.com via uk.finance.yahoo.com — Fri, 30th Sept, 2016) London, Uk —

Earlier in the week the UK economy received its ranking report from the World Economic Forum (WEF) and over the last year it has risen to being the seventh most competitive economy around the globe.
Well that’s good news for jobs and your wealth – especially as the three countries the UK overtook during the last year were the dynamic Hong Kong, the robot futuristic Japan and the regularly lauded Finnish economy. So why has the UK risen up these competitiveness rankings? What can we learn from the six countries even higher up the rankings? And is it all going to go wrong with Brexit?

First the good news. The ranking has gone up because of even more ‘efficient goods and labour markets’, ‘sophisticated business processes’, a ‘high level of digital readiness’ and apparently a ‘partial recovery in the macroeconomic environment’. I am not sure if that wholly reminds me of the UK economy I know and see…but I guess the WEF are the experts.

The three most competitive countries in the world as per this week’s WEF data are Switzerland, Singapore and the United States much to the glee I am sure of the average Brexiteer as you would struggle to name three more dynamic, flexible and global advanced economy countries in the world. The route is clear: rip up regulation, liberate business and don’t be afraid to be inherently global.

And yet…sitting just behind these three countries are Germany, the Netherlands and Sweden, three inherently capitalist with a social edge countries where redistribution is important, taxes can be high and the untethered market is discouraged. You can imagine disappointed Remain voters from late June pointing to these countries and bemoaning the future direction of the UK economy.

If I have learnt anything about economics over the last twenty years it is that you will get a range of different opinions from a range of different economists…and one set of economic criteria or policies generally do not work everywhere – and often the political and social shifting sands change views and opinions over time.

What matters more than anything is ‘buy in’. The day American citizens do not believe they cannot become rich or become President will be the day the amazing economic performance of the United States comes to an end.

Similarly the vision the average Swiss, Singaporean, Swedish or Dutch citizen has about their country’s general direction and values – which all subtly differ from one another. After such a split Brexit vote, this ‘vision thing’ is the key for UK policy makers – and the key is that it has little to do with being in the European Union or not.

The UK is a very international economy and if you invest in the UK markets you are getting inherently global exposures with well over two-thirds of FTSE-100 earnings from outside of this country. That’s why we have those ‘sophisticated business processes’ and flexible and efficient goods and labour markets. UK corporates have no choice but to be competitive with all types of economies around the world – either compete or commercially die.

So no ‘little Englander’, tariff barriers or even defensive postures. If you want to be competitive and rank well in WEF surveys then you have to embrace the world. The UK’s got some natural advantages here but it is not God-given.

In short if you want to stay wealthy then embrace the world – as an individual, investor, employee or entrepreneur. And if we all do this then the UK’s competitiveness ranking will take care of itself irrespective of the increasingly tedious post Brexit vote debate.

By Chris Bailey