UK economy returns to growth

The UK’s economy returned to growth in January, according to the latest data from the Office for National Statistics (ONS).

The economy grew by 0.2% during the first month of 2024 following a fall in output during the previous month.

The economy was boosted by stronger sales in shops and online and more construction activity in January.

The ONS said the services sector led the bounce back after retailers struggled to draw in shoppers in December.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: ‘Today’s data, showing an estimated 0.1% decline in GDP in the three months to January, is further evidence that the UK economy remains in a precarious state.

‘However, estimated growth of 0.2% in January may indicate the 2023 technical recession is over.

‘Businesses are clear about the factors that are holding back growth – high inflation, high interest rates, skills shortages, a lack of infrastructure investment and trade barriers with the EU.

‘Last week’s Budget saw some positive measures for businesses, including an increase to the VAT registration threshold. However, the statement was not a game changer and the UK stills lacks a clear industrial strategy to unlock long-term growth.’

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BCC warns there are ‘uncertain times ahead’ for global trade

Responding to trade data for November 2023 published recently by the Office for National Statistics (ONS), the British Chambers of Commerce (BCC) has warned that there are ‘uncertain times’ ahead in regard to global trade.

The ONS’s data showed a decline in UK trade in goods for both imports and exports. It attributed the decline to a fall in trade flows with the rest of the world.

According to the ONS, overall goods import volumes fell by 3.8% in November, whilst overall goods export volumes fell by 2.8%. Regarding services, the ONS found that import and export values fell slightly.

Commenting on the data, William Bain, Head of Trade Policy at the BCC, said: ‘The positives are there was a pick-up in some export sectors in goods trade with the EU, particularly in automotive sales. Services also remained steady for a further month, with only very small declines. But other indicators for November were weak, particularly on imports.?

‘Looking ahead the picture is only likely to worsen as the effects of the disruption to shipping in the Red Sea, and through the Suez Canal, begin to be fully felt.’ 

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UK economy ‘grew faster since start of Covid pandemic than originally thought’

Data published by the Office for National Statistics (ONS) has revealed that the UK economy grew at a faster rate since the beginning of the Covid-19 pandemic than experts had anticipated.

Revised ONS data shows that the UK saw faster economic growth than either Germany or France since the end of 2019.

The UK economy grew by 1.8% since the start of the pandemic, according to the ONS, which previously predicted that it would contract by 0.2%.

Experts have warned, however, that the UK is still being adversely affected by ‘lacklustre growth’.

Commenting on the findings, Chancellor Jeremy Hunt said: ‘We know that the British economy recovered faster from the pandemic than anyone previously thought and data… once again proves the doubters wrong.

‘We were among the fastest countries in the G7 to recover from the pandemic and since 2020 we have grown faster than France and Germany.’

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UK inflation rate falls to 6.7%

The UK rate of inflation fell to 6.7% in the year to August 2023, data published by the Office for National Statistics (ONS) has revealed.

The fall surprised economists, who expected inflation to rise. The Consumer Prices Index (CPI) fell from 6.8% in July to 6.7% in August. The latest figures mean that the cost of living is now at its lowest level in a year and a half.

Slowing food prices helped drive the fall, the ONS found, particularly prices for eggs, milk and cheese. The fall in inflation could help ease the pressure on the Bank of England in regard to its imminent interest rates decision.

Responding to the latest inflation figures, Chancellor Jeremy Hunt stated that the fall shows the government’s plan to reduce inflation is working. However, he also admitted that inflation is ‘still too high’, and that the government is committed to its plan to halve it in order to ease pressure on UK households and businesses.

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Government slow to recover over £1 billion Covid grant fraud

The government has been slow to recover losses of £1.1 billion from fraud and error in Covid grant schemes, according to MPs in the Public Accounts Committee (PAC).

The latest PAC report found after spending £22.6 billion on business support schemes during the pandemic, the government had only recovered £20.9 million of the estimated £1.1 billion in fraud and error losses by May 2023.

The Department for Business and Trade (DBT) said it would take until the end of 2025 to recover the losses from fraudulent claims and estimated that it would cost between £400 million and £500 million to check the veracity of every claim.

The Covid grant scheme ran for two years from March 2020 to March 2022, and local authorities handled applications from businesses.

PAC Chair, Dame Meg Hillier MP, said: ‘The government must not wait for the conclusions of the Covid inquiry to learn the lessons laid out in this report. Never again should a national emergency find policy being written as we go along, without firm planning and good local data, with local authorities not properly funded to work in partnership on the support required.

‘The next emergency must find the government rigorously prepared with an understanding of the optimal means to support businesses through difficult times.

‘The lack of planning from government also meant that a door was left wide open in these schemes to fraudsters who took shameful financial advantage of schemes that were designed with national solidarity in mind.’

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Half a million pound pay rise given to FTSE 100 CEOs, research shows

Research carried out by the High Pay Centre has revealed that median FTSE 100 CEO pay rose from £3.38 million in 2021 to £3.91 million in 2022.

The High Pay Centre stated that median CEO pay is now 118 times that of the average UK full-time worker. The latest figure represents the highest level of median pay since 2017, and is a 16% increase on the median FTSE 100 CEO pay recorded in 2021.

The data also showed that FTSE 350 firms spent more than one billion on executive pay, with 570 executives taking home pay totalling £1.33 billion. The High Pay Centre said that ‘it is not desirable or sensible for companies… to prioritise a half a million pound pay rise for executives who are already multi-millionaires’ at a time when many UK households are struggling with the cost-of-living crisis.

Commenting on the research, Paul Nowak, General Secretary of the Trades Union Congress (TUC), said: ‘While millions of families have seen their budgets shredded by the cost-of-living crisis, City directors have enjoyed bumper pay rises.

‘This is why workers must be given seats on company boards to inject some much-needed common sense and restraint.

‘We need an economy that delivers better living standards for all – not just those at the top.’

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HMRC collects record CGT receipts totalling £16.7 billion

Data published recently by HMRC has revealed that it collected a record £16.7 billion in Capital Gains Tax (CGT) in the 2021/22 tax year.

The data showed that the number of individuals paying CGT rose by 20% to 394,000 – double the figure recorded a decade ago.

According to HMRC, 214,000 people paid CGT on gains of up to £25,000. Experts have warned that changes to the Annual Exemption Allowance (AEA) will make the tax take from CGT ‘more stark’ – the AEA fell from £12,300 in the 2022/23 tax year to £6,000 in April 2023, and is set to fall again to £3,000 from April 2024.

HMRC said that 45% of CGT came from those who made gains of £5 million or more. In the 2021/22 tax year, 45% of gains for CGT-liable individuals came from the 12% of people with taxable incomes above £150,000.

Meanwhile, 7% of CGT came from CGT disposals that qualified for Business Asset Disposal Relief (BADR). This was claimed by 47,000 individuals on £12.6 billion of gains in 2021/22, generating a total tax charge of £1.2 billion.

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Rapid scam response scheme prevented over £55 million of fraud, data shows

Data published by trade association UK Finance has revealed that the Banking Protocol rapid scam response scheme prevented over £55 million in fraud in 2022.

Developed by UK Finance, Trading Standards and local police forces, the Banking Protocol is a UK-wide scheme under which bank and building society workers are trained to spot warning signs that individuals may be falling victim to a financial scam.

Since the Protocol was established in 2016, £258.2 million in fraud has been prevented and 1,202 arrests have been made.

Those assisted by the Banking Protocol are offered ongoing support to help them avoid falling victim to scams in the future.

‘The Banking Protocol continues to help prevent people falling victim to fraud and prevents millions of pounds getting into the hands of criminals,’ said Ben Donaldson, Managing Director of Economic Crime at UK Finance.

‘This is a brilliant demonstration of collaboration between the police and the banking sector and it will continue to be an important part of the industry’s efforts to prevent fraud.’

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Government debt reaching 100% of GDP creates ‘tough economic inheritance’

Think tank the Resolution Foundation has warned that government net debt hitting 100% of GDP creates a ‘tough economic inheritance’ for the next government.

Data published recently by the Office for National Statistics (ONS) revealed that higher tax receipts drove better than expected borrowing, meaning that borrowing was lower in June than experts had anticipated.

Borrowing in June reached £18.5 billion – £27 billion below the forecast produced in March by the Office for Budget Responsibility (OBR). The improved borrowing figures were partly fueled by higher tax receipts and a reduction in spending on measures to support UK businesses and households during the cost-of-living crisis.

The ONS data showed that government borrowing is now £7.5 billion lower than forecast for the year to date.

Commenting on the issue, Cara Pacitti, Senior Economist at the Resolution Foundation, said: ‘Better than expected borrowing in June, driven by higher tax receipts, caps a largely positive set of recent economic data, with inflation falling faster than expected last month.

‘But the bigger picture is one of the public finances being under severe strain, with net debt hitting 100% of GDP, and the rising cost of servicing debt squeezing out other priorities for spending.’

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UK inflation rate falls to 7.9%

Data published by the Office for National Statistics (ONS) has revealed that the UK rate of inflation fell to 7.9% in the year to June.

The inflation rate is currently at its lowest annual rate since March 2022, the ONS said.

Price rises have slowed by more than experts anticipated. According to the ONS, falling fuel prices helped the rate of inflation to drop, and food prices rose less quickly when compared to June 2022.

Core inflation also fell from 7.1% to 6.9%, the data showed.

Grant Fitzner, Chief Economist at the ONS, said: ‘It is a large drop but let’s forget that last month we saw no change at all in headline inflation so in some ways what we are seeing this morning is catching up with the falls we’ve seen in other similar countries.

‘We are falling as we have seen in other countries, but it still looks like we may have the highest rate of inflation in the G7, so still some way go.’

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