US inflation rose 6.8% in the year to November

By Suzanne Evans, Director, Political Insight

US inflation rose 6.8% in the year to November.
 
The British Chambers of Commerce has written to Chancellor Rishi Sunak to request a return to charging a reduced 5% rate of VAT for hospitality and tourism businesses, 100% business rates relief for the retail sector, and grant funding to help the hardest hit firms. Director Shevaun Haviland warned in the letter that retail and hospitality businesses are the most exposed to the new measures but are not being sufficiently supported by the government. She wrote: "It is simply not good enough for the government to say at this juncture that 'enough support has been provided' and leave it at that". Retail, events, and hospitality firms had "strained every sinew" to get to this point, she added, but now "face being hamstrung during this crucial festive period through no fault of their own".
 
One in three UK small owner-managed businesses are planning to lay off workers now that the government's furlough scheme is over, Yahoo Finance UK reports, adding that they are considering shedding almost half (45%) of their workforce in the next six months. The data comes from a survey of 442 owner-managed businesses by accounting and advisory network network Moore UK. Those that are in London are more likely than those in any other part of the UK to be planning redundancies, with 42% considering laying off staff. The report said this reflects the effects of the pandemic on the finances of restaurants, hotels and pubs, which make up a significant part of London’s economy. While a wave of redundancies did not materialise at the end of furlough on 30 September, many businesses are now waiting to see whether layoffs become necessary over the coming months, said Maureen Penfold, Moore UK chair. “The UK is far from out of the woods when it comes to redundancies,” she said.
 
2021 was a record year for mortgage lending amid the stamp duty holiday and people moving away from cities as remote working became the norm, new data reveals. UK Finance estimates gross mortgage lending overall will peak this year at £316bn, up 31% on 2020, then moderate to £281bn in 2022. It expects it to then increase to £313bn in 2023. UK Finance expects total house purchase transactions to reach 1.5 million in 2021, about 47% higher than last year and the highest number since before the financial crisis. A report from last month showed mortgage approvals for house purchase fell to 67,200 in October from 71,900 in September, following the withdrawal of the stamp duty holiday at the end of September, says Yahoo Finance UK.
 
New analysis by left-of-centre think tank The New Economics Foundation says that while the richest 5% are better off by £3,300 a year since 2019, half of UK families have seen their disposable incomes shrink by £110 in the past two years. Single parents were the worst affected families across all regions. Those in Yorkshire and the Humber and the north west and Merseyside saw their incomes fall by around 15 times as much as those in London.
 
Families are facing a "double-whammy" of rising bills next year, as council tax across much of England is set to increase at the same time as National Insurance, according to BBC research. Two-thirds of councils in England that responded to a BBC survey said they were considering a rise in council tax to help fund services. Many other councils said they were unable to rule it out. Ministers are likely to confirm councils can increase tax by 2%, with an additional 1% allowed for the councils which have responsibility for social care, the broadcaster says. The Institute for Fiscal Studies has calculated that a 2.8% rise would add an average of around £40 to household bills from next April.
 
The Bank of England (BoE) has brought in new risk assessment rules to review global equity finance businesses after the $10bn (£7.6bn) collapse of New-York based Archegos, Yahoo Finance UK reports. The little-known hedge fund collapsed in March this year, after large, risky bets it had made, funded by several lenders, went bad, leaving banks exposed to huge losses. “Following this significant event, the Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA), and other global regulators have reviewed and assessed firms’ equity finance businesses, including for those who were counterparties to Archegos, focusing in particular on counterparty risk management,” the BoE said on Friday. “Our observations include weaknesses in the holistic management of risk across business units; narrow focus of onboarding arrangements and inadequate re-assessment of client relationships thereafter; ineffective and inconsistent margining approaches; and an absence of comprehensive limit frameworks.” The BoE said businesses should review all their equity finance business, risk management practices and controls. This should cover all major prime brokerage activity, including fixed income and derivative prime brokerage services, it said. The new business findings need to be reported to the PRA and the FCA together with detailed plans for remediation by the end of March next year. The US Federal Reserve announced similar concerns to US banks in a letter on Friday.
 
Oil and gas imports have soared by almost a quarter in recent months, the Evening Standard said on Friday. Figures from the Office for National Statistics show fuel imports from non-EU countries spiked 23.8% to £1 billion in October, largely driven by an increase in shipments of gas from Norway. Last month it was reported that the government had approached Qatar about becoming the UK’s supplier of last resort of gas, meaning Qatar would agree to supply Britain if other sources became squeezed. More than 20 UK energy companies have gone bust in a little over 12 weeks after a record rise in energy market prices, including the biggest, Bulb Energy, which was unable to raise funds from investors to keep supplying its 1.7 million customers.
 
Octopus Energy has raised $300m (£226m) of investment to value the power supplier at $5bn (£3.77bn), the Guardian reports. A long-term tie-up with Canada Pension Plan (CPP) Investment Board is the second big investment in Octopus Energy since the start of the energy crisis, during which dozens of smaller rivals have folded: three months ago, Octopus secured up to $600m (£438m) from an investment fund set up by former US vice-president Al Gore. This latest equity investment backs founder Greg Jackson’s plan to bring a “digital revolution” to the energy industry and will help fund a global expansion target of reaching 100 million worldwide customers. The energy startup has reached the $5bn mark a little over 18 months after it first reached “unicorn status” with a $1bn (£750m) valuation in spring 2020, five years after it was founded in 2016.
 
Shareholders in oil giant Shell have overwhelmingly voted to switch its headquarters from the Netherlands to the UK, ending the company's dual share structure. "Royal Dutch" will also be dropped from the company’s name in the move, planned for early 2022. The proposals required approval by 75% of shareholder votes cast, however a preliminary tally showed 99% of shareholders supported the change. The Anglo-Dutch energy giant has been registered in the Netherlands for tax purposes since 2005, and currently has its worldwide headquarters in The Hague.
 
The BBC claims Royal Mail is experiencing absence levels almost double those seen in 2018 because of sickness and increased demand in the run-up to Christmas. "The combination of people off with stress or Covid, combined with increased demand to send goods by post and the build-up to Christmas, had led us here," a source claimed. Royal Mail responded by confirming there are currently 21 offices listed as experiencing delays out of 1,200 delivery offices around the country.
 
Members of LV= have rejected selling the insurance mutual to US private equity firm Bain Capital for £530m. LV= chief executive Mark Hartigan had said that for the business to survive it needed to demutualise but some LV= members had been unhappy about the proposals and the size of payouts on offer. The takeover would have seen LV= losing its mutual status, with members given £100 each as part of the deal. Although 69% of a possible 1.1 million voting members were in favour of the transaction, 75% approval was needed for the sale to pass.
 
Heathrow airport on Friday said passenger numbers were 60% lower in November than before the coronavirus pandemic and there were now "high cancellations" among business travellers. From last week, all travellers arriving in the UK were forced to take a pre-departure Covid test, as well as a post-flight test, and 11 African countries were added to the ‘red’ travel list. Heathrow said the reintroduced curbs were a new blow to travel confidence and forecast it would take several years for passenger numbers to return to pre-pandemic levels. Heathrow expects next year to see just 45 million passengers, compared to a record 81 million in 2019, when it ranked as Europe's busiest hub.
 
Football clubs have potentially made hundreds of millions of pounds selling controversial crypto "fan tokens" according to analysis commissioned by BBC News. The broadcaster estimates more than £262m has been spent on the virtual currencies, as so far, across the five major European leagues, 24 different clubs have launched or are considering fan tokens, including eight Premier League sides. Most offer tokens akin to a club-specific crypto-currency - virtual coins can be bought and sold and their value rise and fall depending on supply and demand. Some clubs, such as Manchester City, also sell digital collectibles known as NFTs (non-fungible tokens). Most of the clubs offering fan tokens have signed up to a company called Socios that organises the initial sale and subsequent trading of the virtual coins - but other platforms, including Binance and Bitci, are growing too. Socios told the BBC it had sold $270m-300m worth of coins through its app. It would not say how much money goes directly to clubs.
 
McDonald's has opened its first UK net zero carbon restaurant in Market Drayton, Shropshire. The wind turbine and solar panel-powered building uses recycled IT equipment and household goods as cladding, signs are made from used coffee beans, and insulation is provided by sheep wool. The fast-food company said it would be used as a "blueprint" for other sites and work has started to roll it out. It is the first restaurant in the UK due to be verified as net zero emissions for construction using the UK Green Building Council's (UKGBC's) net zero carbon buildings framework.
 
In a message shared recently with clients, JPMorgan Chase global research leader Marko Kolanovic has said it is the bank’s view that “2022 will be the year of a full global recovery, an end of the pandemic, and a return to normal economic and market conditions we had prior to the COVID-19 outbreak.”
 
The British-American visual media creator Getty Images, which provides stock and news photos, is to become a publicly listed company again via a $4.8bn (£3.62bn) SPAC merger with CC Capital and Neuberger Berman. Its common stock will be listed on the New York Stock Exchange. Founded in 1995, Getty was taken private in 2008 by buyout firm Hellman & Friedman in a $2.4bn (£1.81bn) deal.

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