Bank of England likely to delay interest rate rise

The Bank of England has been put under pressure to delay raising interest rates, according to the Guardian.

The move comes after figures for manufacturing and consumer credit indicated weakness in the UK economy. The Bank of England had been widely expected to approve a further interest rate increase until the figures were released on Friday.

A snapshot of economic performance by the Chartered Institute of Procurement and Supply together with information company Markit indicated that the economy slowed in the first quarter of 2018 and continued to slow in the second quarter.

CIPS/Markit fell from 54.9 in March to 53.9 in April, the weakest rate of expansion in 17 months. Any figure above 50 indicates growth in manufacturing output.

Data from the Bank of England indicated a drop in consumer demand for unsecured borrowing. According to monthly money and credit statistics, lending to consumers stood at £300m in March, the smallest increase since November 2012 and well below the six-monthly average of £1.5bn.

The slowdown in consumer borrowing follows a tightening of rules by the Financial conduct Authority, which aimed to restrict the growth rate of consumer borrowing. This had been rising at 10% or more on average between 2014 and 2017. In March, the rate fell from 9.4% to 8.6%.

Rate of working mothers up 50% in four decades

The proportion of UK mothers of working age in employment has risen by almost 50% since the 1970s, according to the Institute for Fiscal Studies (IFS).

As reported by BBC News, a report from the IFS found that there has been a “huge change in working patterns” in the last four decades. Women are now much more likely to continue in paid employment after having children.

Researchers said that employment levels among partners of high-earning men has been most pronounced. In 1975, only 50% of mothers aged 25-54 were in paid work. In 2015, the figure was 72%.

Maternal employment has increased the most among women with children of pre-school or primary-school age, and among single mothers. Researchers said that the trend to have children later and opting for cohabitation rather than marriage has contributed to the change.

Three quarters of all women aged 25-54 are in paid work in the UK, up from 60% in 1977. Growth in female employment has been faster across the UK than in London. In 1975, the capital had the highest proportion of women in employment at 63%. The level is now 74%, joint lowest along with Northern Ireland.

The research comes amid controversy about the gender pay gap in the UK. A BBC analysis of pay information in April 2018 found that 78% of companies pay men more than women.

Barra Roantree, a research economist at the IFS, said: “Employment rates for working-age women in the UK have increased dramatically over the past four decades, particularly for those with young children.

“With the earnings of women increasingly important for these families, understanding the reasons behind persistent differences in the wages of men and women is all the more important.”

 

Britain goes three days without coal-powered electricity

Britain has gone three days without electricity generated from coal, the longest period since the 1880s that the nation has been without the fuel source, according to BBC News.

From Saturday morning at 1000 BST until Tuesday afternoon, the UK was coal-free, beating the previous record of 55 coal-free hours set just a few days earlier.

Power generated by gas and wind were the largest sources for users in England and Wales.

The government has pledged to phase out the use of fossil fuel for generating power by 2025. In 2017, coal accounted for 7% of the UK’s power mix, according to official figures. April 2018 saw the UK go for the first full day without coal power since the 1800s.

However, energy experts have warned that coal is largely being replaced by gas, another fossil fuel, rather than renewable sources.

Andrew Crossland of the Durham Energy Institute said: “As a country we consumer nearly eight times more gas than coal.” Gas provides around 40% of energy for the nation’s electricity.

In 2017 wind energy produced more electricity than gas generation on just two days, while renewable sources produced more than fossil fuels on only 23 days of the year.

Crossland said current progress is “nowhere near enough” to meet the UK’s commitments of reducing greenhouse gas emissions by 80% compared with 1990 levels by 2050.

Brexit fears dent confidence in financial sector

Brexit has had a stronger impact on Britain’s financial sector than the global financial crisis, according to a survey reported by Reuters.

Although the financial crisis sent some of the world’s biggest banks into collapse and plunged economies into recession, a quarterly poll by CBI and PwC found that optimism in the sector is at levels not since 2007-2009 and that declines in optimism have been more sustained than at that time.

The low levels of optimism were in spite of growing business volumes and growing employment in the quarter ending March 2018, and firms reporting that they plan to recruit more staff in the next quarter.

Rain Newton-Smith, chief economist at CBI said: “Financial services firms have performed well over the last three months, with business volumes and employment on the up and beating expectations. But there is no escaping the elephant in the room.”

An agreement between the UK and EU to put a transition period in place has quelled concerns in the sector somewhat, but it is still unclear how Brexit will impact access to EU markets from 2020.

PwC head of financial services Andrew Kail said firms were struggling with strong competition, changing consumer behaviour, rapid technological change, new regulation and increased costs. Kail said: “Collectively, it is denting confidence about the future.”

IFS report: ‘very small’ impact of tariff cuts post-Brexit

A report from the Institute for Fiscal Studies (IFS) has said consumers may see prices fall by up to 1.2% if Britain decides to abolish all tariffs following Brexit, according to BBC News.

However, the think tank said any gains would be very small and were based on ‘optimistic’ assumptions. Consumers have already seen a 2% increase in prices since the EU referendum due to a weaker pound.

The IFS also said new EU trade barriers could cause extra costs for consumers in the UK, which would offset any gains from cutting tariffs.

The report says: “We estimate that complete abolition of all tariffs would reduce prices faced by households by about 0.7-1.2%. This could have additional positive economic benefits inn the long run but could also be very damaging for some UK industries in the short run.”

Tariffs are paid on imports to a country, usually in a bid to protect key sectors such as farming and manufacturing from foreign competition. Cutting all tariffs would increase competition from companies abroad, resulting in UK job losses. However in the long term it is likely that prices for consumers would fall.

The IFS suggests that only reducing tariffs on products that are not produced in the UK in high quantities, such as olives and oranges, could help to avoid economic damage.

Paul Johnson, director of IFS said: “If we leave the customs union, we can come to our own trade deals with other countries, we can reduce tariffs. But even if we reduce that as much as possible, the effect on prices will be really quite small relative to what is still a big cost of leaving the customs union because it would make trade with the rest of Europe so much more expensive.”

The report found that average tariffs on UK imports within the EU customs union are around 2.8%.

Only 10% claim National Insurance top up for relatives providing childcare

Up to 90,000 older people are missing out on a top-up added to State Pensions, according to BBC News.

The Adult Specified Childcare Credit is available for those who look after young children and is worth up to £230 a year in retirement. The credit is applicable to those who look after the children of relatives.

In the year ending September 2017, 9,485 applications for the credit were made. That is a marked increase on the figure for the previous year, following a government campaign to improve uptake.

Insurers Royal London have calculated that around 90% of those eligible for the credits are failing to claim them.

The credits are available to family members caring for a child under 12, where the child’s main carer or parent is in paid employment. The credit helps to make up an individual’s National Insurance record for gaps in contributions. Workers now need 35 years of National Insurance contributions to qualify for a state pension.

Unilever HQ to move to Rotterdam

Unilever has announced that it will move its headquarters from London to the Dutch city of Rotterdam, according to BBC News.

The international giant said having a single legal entity in the Netherlands would enable it to become ‘more agile’ and stressed that the decision was ‘not about Brexit.’

The Anglo-Dutch company has been headquartered in the Uk since 1930, when British soap manufacturers Lever Brothers merged with the Dutch margarine makers Unie. Since then, the company has become one of the world’s best known brands.

Unilever said it would reorganise its business around three divisions of beauty and personal care, home care and foods and refreshment. The beauty and personal care and home care divisions will be based in London while foods and refreshment move to Rotterdam.

Unilever employs 3,100 people in the Netherlands and 7,300 people in the UK. The company has said no jobs will be lost during the move, but some staff may transfer as the shake up means senior figures will move to the UK from the US and Singapore.

In recent months there has been speculation that Unilever would make the move. Dutch Prime Minister Mark Rutte, a former Unilever employee, proposed a tax change that would benefit Anglo-Dutch multinationals.

Unilever is run as a single company but it has two parent companies, one based in London and one in Rotterdam. Each has different shareholders, stock listings, annual meetings and regulatory environments.

Ofgem rule change for energy network company investments

New rules from energy regulator Ofgem could see UK consumers save £5bn on bills over five years, according to BBC News.

The energy watchdog wants to reduce the amount customers pay towards improving energy networks through their bills. The plans could save consumers around £15-25 each year.

The plans, which are scheduled to come into force in 2021, will cut profitability of energy network companies.

National Grid runs the UK’s main energy infrastructure. IT said it would continue working with Ofgem “to achieve the best outcomes for all stakeholders.” National Grid said that Ofgem was taking its key concerns, such as long-term investment in critical infrastructure, into consideration.

Since 1990 energy network companies have invested around £100bn into local and national grid infrastructure. As a result, power cuts have been reduced by around 50% since 2001. According to Ofgem, the cost of transporting electricity around Britain has fallen by around 17% since the mid-1990s, when calculated by the retail price index measure of inflation.

The regulator has said energy network companies need to begin consulting more closely with customers about business plans, to ensure that customers want and are willing to pay for changes. Ofgem also promoted the use of modern technology to optimise performance of grids, sharing the resulting savings with customers.

The changes come after a 2017 report by Citizens Advice which claimed the energy network companies had made £7.5bn in ‘unjustified’ profits.

UK economy sees weak growth in Q4 2017

The UK economy saw lower growth than anticipated in Q4 2017, according to official figures reported by BBC News.

The Office for National Statistics (ONS) found that GDP grew by 0.4% in October to December, whereas growth of 0.5% had been anticipated. The lower figure was due to slower growth in production industries, according to the ONS.

Across 2017 the UK economy grew 1.7%, which was also lower than predictions and the worst performance since 2012. The ONS had predicted growth of 1.8% for 2017.

In 2017 household spending grew 1.8%, the slowest annual growth rate since 2012. A key factor in this slowdown was inflation in retail prices. Another factor was the closure of the Forties pipeline system for much of December 2017, which cost the economy around £20m a day in lost economic activity according to Oil and Gas UK.

Chris Williamson, IHS Markit’s chief economist, said some parts of the UK economy appeared ‘worryingly weak’ towards the end of last year, with the construction industry in recession, stagnant business investment and only small increases in household spending.

The UK’s year-on-year growth in Q4 2017 was 1.4%, the lowest among the world’s wealthy nations. The UK is also experiencing slower growth than the Eurozone.

ECJ clarifies rules on pregnant workers’ rights

The European Court of Justice (ECJ) has ruled that firms are able to sack pregnant women as part of general cuts to staffing without breaching rules on protecting pregnant women, according to BBC News.

The ECJ held that Spanish bank Bankia was entitled to dismiss employee Jessica Porras in 2013 as the dismissal was not connected to her pregnancy.

EU Directive 92/85 bans dismissing a pregnant worker from the start of pregnancy to the end of maternity leave. However, there are exceptions for national laws where a dismissal is not connected to pregnancy.

The High Court of Catalonia asked the ECJ to clarify the rules on pregnant workers’ rights following Ms Porras’ appeal against a court ruling in Mataro near Barcelona.

Under EU rules, an employer must give written reasons for making a collective redundancy and inform the pregnant employee of the criteria for choosing who will be dismissed.

The ECJ found that Bankia had met its obligations by consulting workers’ representatives about the forthcoming job cuts and had sent Ms Porras a letter outlining the reasons. The ECJ found Ms Porras had been given a low score in an assessment.