Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
As budget week begins, the British government has announced a new investment package to help make the UK “a world leader in manufacturing”.
Worth a combined £360m from government and industry, the funding will support R&D and manufacturing projects in sectors where the UK is – or could be – world-leading, by unlocking investment from the private sector.
It includes almost £200m for aerospace R&D projects, to develop energy-efficient and zero-carbon aircraft technology needed to achieve net zero aviation.
There’s also £73m of joint funding for “cutting-edge automotive R&D projects” for electric vehicle technology, to make them more efficient and competitive.
The Treasury explains:
Supported by more than £36m of government funding awarded through Advanced Propulsion Centre UK (APC) competitions, this includes four projects which are developing technologies for the next generation of battery electric vehicles, making them more efficient and competitive, led by companies including automotive manufacturers YASA and Empel Systems.
[This comes six months after prime minister Rishi Sunak’s green u-turn, when he delayed banning the sale of new petrol and diesel cars by five years to 2035].
The government is also contributing £7.5m to help two pharmaceutical companies to spend £84m to expand their UK plants; Almac, a pharmaceutical company in Northern Ireland produces drugs to treat diseases such as cancer, heart disease and depression, while Ortho Clinical diagnostics of Pencoed, Wales, produces medical testing products.
The Chancellor of the Exchequer, Jeremy Hunt, says the money will help secure jobs and grow the economy:
“We’re sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing, securing the highly skilled jobs of the future and delivering the long-term change our country needs to deliver a brighter future for Britain”.
The economy certainly needs more investment; last summer, the IPPR think tank warned that the UK is bottom of G7 league table for business investment, leaving the country in a growth ‘doom loop’.
Back in the autumn statement last November, the UK announced £4.5bn to increase investment in strategic manufacturing sectors – auto, aero, life sciences and clean energy.
But Labour’s shadow business secretary, Jonathan Reynolds, isn’t impressed by today’s announcement; he says the government is “incapable of providing the long-term stability manufacturing needs to thrive”.
Reynolds added:
“Recycled announcements won’t be enough to turn around the lowest business investment in the G7.”
The funding announcement comes as Hunt puts the finishing touches to Wednesday’s budget, with Tory MPs pushing the chancellor to produce some voter-pleasing tax cuts.
But is 1p, or more, off income tax really what people want, given the state of UK public services?
An opinion poll of almost 5,000 people across Britain released by the Joseph Rowntree Foundation (JRF) this morning shows that almost three-quarters were “very worried” or “fairly worried” about funding for the NHS and other public services, compared with less than half who were concerned about tax on earnings.
JRF are warning Hunt that his budget risks condemning Britain to a second “lost decade” for living standards.
Hunt himself said yesterday he wants to move Britain towards becoming a lower-tax economy, “as and when we can afford it”….
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KPMG has been fined almost £1.5m by the UK’s accounting watchdog for “basic failings” in its audit of advertising company M&C Saatchi plc in 2018.
The Financial Reporting Council (FRC) fined KPMG after concluding it had not conducted the audit with sufficient professional scepticism when assessing “work in progress” credits which had lifted M&C Saatchi’s revenues.
They also failed to properly audit journal entries, or show sufficient “professional scepticism” when assessing whether the ad agency was right to retain rebates which should have been passed back to clients.
The FRC launched its investigation after M&C Saatchi’s discovered accounting errors in 2019, which led to its 2018 profits to be restated. It also released two profit warnings which hammered its share price.
It had decided to fine KPMG £2,250,000, which has been reduced to £146m after it admitted its errors.
Adrian Wilcox, KPMG’s audit engagement partner, has been fined £75,000, reduced to £48,750.
Claudia Mortimore, the FRC’s deputy executive counsel, says:
“KPMG’s audit did not meet the required quality standards in a number of respects amounting to serious audit failings and breaches of audit standards. This included a lack of professional scepticism in certain high-risk areas of the audit and basic failings in journal testing.”
There are reports today that the chancellor could crack down on holiday lets to raise money to fund tax cuts on Wednesday.
Jeremy Hunt could scrap the furnished holiday lets (FHL) regime, which gives tax reliefs on properties being rented out for holiday-goers.
And new data from the Office for National Statistics shows that nearly 2.8m stays in short-term lets were booked in July-September last year, through Airbnb, Booking.com and Expedia Group, or almost 29m ‘guest nights’.
Over 63% of those bookings were made by domestic visitors, with the most guest nights in Cornwall (at 1,586,060), followed by Edinburgh (1,157,180) and Westminster (871,900).
This map shows the situation across the country:
The oil price is rising, slightly, this morning after members of the Opec cartel agreed to extend their production cuts.
OPEC+ members led by Saudi Arabia and Russia agreed on Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter of 2024.
Saudi Arabia is extend its voluntary cut of 1 million barrels per day (bpd) through the end of June, leaving its output at around 9 million bpd.
Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman are also extending their production cuts through the second quarter of this year.
The decision is meant to support “the stability and balance of oil markets”, Opec says.
Russia also announced yesterday it will cut its oil output and exports by an additional 471,000 barrels per day (bpd) in the second quarter of this year.
Brent crude has gained 0.3% to $83.81 per barrel, while US crude is 0.25% higher at $80.18/barrel.
In Turkey, inflation has jumped to a 15-month high of above 67%, adding to pressure on the country’s central bank.
Turkey’s consumer price index (CPI) increased by 67.07% annually in February, up from 64.9% in January, showing prices rising even faster than expected.
On a monthly basis, prices rose by 4.53% in February.
Last month, the central bank left interest rates on hold at 45%, pausing a hiking cycle that had lifted borrowing costs by 3,650 basis points since May 2023. A year ago, rates were down at 8.5%, before a series of hikes to cool inflation.
Over in Japan, investors are celebrating after the country’s Nikkei stock index hit the 40,000 point mark for the first time ever.
The rally pushed the Nikkei to a new a record closing high of 40,109.23, up 198 points or 0.5%.
It comes two weeks after the Nikkei finally rose over the previous all-time high set in 1989, before stocks slumped through the 90s.
The Nikkei has gained almost 20% so far this year, lifted by strong gains in technology firms amid the AI boom. The weakness of the yen is also attracting foreign investors, and helping Japanese exporters sell abroad.
Richard Hunter, head of markets at interactive investor, says:
The Nikkei in Japan meanwhile has been the beneficiary of the exodus from Chinese shares, quite apart from its own currency weakness adding to the attraction, propelling the main index to over 40000 for the first time.
In addition, the strength in tech shares has been an additional feature, while the latest report on GDP implied that growth could actually be revised to positive from negative, which would reverse the previous thought that Japan was actually in a technical recession.
The London stock market has made a quiet start to Budget Week.
The FTSE 100 has dipped by 16 points, or 0.2%, to 7666 points.
Grocery tech firm Ocado are down 4%, having said last week it is in a legal wrangle with Marks & Spencer over a final payment tied to their online joint venture.
Rightmove, the property website, is down 3% after predicting last week that its customer numbers were ‘likely to drop slightly’ as economic uncertainty squeezes estate agents.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, says the FTSE 100 has opened in “lacklustre fashion”, adding:
Speculation over what’s in and what’s out of Jeremy Hunt’s budget is reaching fever pitch, ahead of the big reveal on Wednesday. What appears clear is that the Chancellor has a lot less fiscal room to play with than he hoped, which is why he’s played down speculation about significant tax cuts.
Warnings are coming thick and fast, from the Office of Budget Responsibility and the International Monetary Fund, about the financial irresponsibility of offering big sweeteners. Given the huge borrowing commitments the government already has to honour, it seems unlikely there will be a big fanfare of an income tax giveaway. However, a further cut to National Insurance is still on the cards.
There is though likely to be a good deal of other tinkering by Houdini Hunt, who is set to show a sleight of hand with an array of smaller moves to try and please the voters ahead of the election.
Major carmakers and motoring groups have backed a letter by campaign group FairCharge and Auto Trader calling for the chancellor Jeremy Hunt to cut VAT on public charging for electric cars.
Car manufacturers such as Jaguar Land Rover and Stellantis, the owner of Vauxhall and Peugeot, signed the letter which said that 38% of electric vehicle drivers were unfairly disadvantaged by the VAT.
Those that charge exclusively at home have to pay just 5% VAT on their energy bill compared to the 38% of drivers who do not have home charging, who have to pay 20%.
The letter, which was also supported by the AA and the RAC, said that the difference between home and public charging costs was a barrier for many looking to buy an EV.
Research by AutoTrader found that drivers charging off peak at home save £865 when compared to petrol vehicles, while those that use rapid public chargers could pay £264 more.
Quentin Willson, FairCharge Founder and motoring journalist, said:
“If the Government is serious about wider EV adoption, they must revisit this out-of-date VAT legislation -- written in the early 1990s before the arrival of electric cars -- and make it fit for purpose.”
In a worrying sign for the UK’s financial sector, companies in Canary Wharf have cut their spending with London private taxi and courier company Addison Lee.
Addison Lee’s CEO, Liam Griffin, has told the Financial Times that bookings at its courier business, which he described as a “true measure” of London’s economic activity, have fallen 10% year-on-year in the first two months of 2024.
Griffin says:
“We would consider ourselves the barometer for economic activity in London. It was strong through calendar year 2023 but has definitely softened a little in 2024.”
Today’s newspapers are hot with coverage of Wednesday’s budget.
The Guardian leads with the Joseph Rowntree Foundation’s warning that Jeremy Hunt risks condemning Britain to a second “lost decade” for living standards:
The Times reports that Hunt is drafting plans for up to £9bn worth of tax rises and spending reductions, to allow him to cut national insurance by 2p and still balance the books.
The Mirror says unions representing millions of stretched frontline workers, such as teachers, NHS workers, firefighters, and council staff, say “politically driven tax cuts” are the wrong choice.
But the Express reckons “the nation is asking” if the chancellor will produce a tax cut rabbit from his hat on Wednesday:
While the Financial Times says Hunt will use the budget to cut personal taxes, with aides confirming the chancellor would “love to” cut national insurance or income tax by 2p or more, but only if it was affordable.
The Treasury has been exploring every avenue in its attempt to find a way of putting more money in the pockets of consumers while sticking to its self-imposed rule to cut debt as a share of national income in five years’ time, our economics editor Larry Elliott write.
But, experience suggests this strategy won’t work, he points out:
For a start, the sums involved will be relatively modest. The size of Hunt’s net giveaway on Wednesday is likely to be a maximum of £10bn, which is small beer in the context of a £2.5tn-a-year economy.
The package will be smaller than last November’s autumn statement, which made no difference to the Conservative party’s dire opinion poll ratings.
Plus, the country is not in the same state as 1987, when Nigel Lawson cut taxes in a giveaway budget. More here.
Siemens has announced plans to invest £100m in a new centre for manufacturing in Wiltshire.
The global technology company will use the money to replace its factory in Chippenham, with the new facility on the site expected to be completed by 2026.
The current Chippenham plant is the country’s only factory dedicated to developing rail signalling and control systems, and manufactured the signalling tech being used on the Elizabeth line.
It has also been a key site for the development of railway technology since the Victorian times. Its workload includes providing new digital signalling equipment to modernise the east coast main line from London to Edinburgh.
When operational in 2026, the 800 manufacturing, research and engineering jobs at the present factory will be transferred to the new site without any impact on production.
Joint CEO of Siemens Mobility UK & Ireland, Rob Morris, said:
“This investment is a strong commitment to Chippenham and our country.
“Siemens Mobility’s Chippenham site, along with our 30 sites across the country, has been transforming rail, travel, and transport in Britain – and it will continue to do so with cloud-based rail technology connecting the real and the digital worlds, digitalizing rail.”
Jeremy Hunt has also welcomed Siemens’ decision, calling it “a big boost for Britain’s world-class manufacturing sector”.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
As budget week begins, the British government has announced a new investment package to help make the UK “a world leader in manufacturing”.
Worth a combined £360m from government and industry, the funding will support R&D and manufacturing projects in sectors where the UK is – or could be – world-leading, by unlocking investment from the private sector.
It includes almost £200m for aerospace R&D projects, to develop energy-efficient and zero-carbon aircraft technology needed to achieve net zero aviation.
There’s also £73m of joint funding for “cutting-edge automotive R&D projects” for electric vehicle technology, to make them more efficient and competitive.
The Treasury explains:
Supported by more than £36m of government funding awarded through Advanced Propulsion Centre UK (APC) competitions, this includes four projects which are developing technologies for the next generation of battery electric vehicles, making them more efficient and competitive, led by companies including automotive manufacturers YASA and Empel Systems.
[This comes six months after prime minister Rishi Sunak’s green u-turn, when he delayed banning the sale of new petrol and diesel cars by five years to 2035].
The government is also contributing £7.5m to help two pharmaceutical companies to spend £84m to expand their UK plants; Almac, a pharmaceutical company in Northern Ireland produces drugs to treat diseases such as cancer, heart disease and depression, while Ortho Clinical diagnostics of Pencoed, Wales, produces medical testing products.
The Chancellor of the Exchequer, Jeremy Hunt, says the money will help secure jobs and grow the economy:
“We’re sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing, securing the highly skilled jobs of the future and delivering the long-term change our country needs to deliver a brighter future for Britain”.
The economy certainly needs more investment; last summer, the IPPR think tank warned that the UK is bottom of G7 league table for business investment, leaving the country in a growth ‘doom loop’.
Back in the autumn statement last November, the UK announced £4.5bn to increase investment in strategic manufacturing sectors – auto, aero, life sciences and clean energy.
But Labour’s shadow business secretary, Jonathan Reynolds, isn’t impressed by today’s announcement; he says the government is “incapable of providing the long-term stability manufacturing needs to thrive”.
Reynolds added:
“Recycled announcements won’t be enough to turn around the lowest business investment in the G7.”
The funding announcement comes as Hunt puts the finishing touches to Wednesday’s budget, with Tory MPs pushing the chancellor to produce some voter-pleasing tax cuts.
But is 1p, or more, off income tax really what people want, given the state of UK public services?
An opinion poll of almost 5,000 people across Britain released by the Joseph Rowntree Foundation (JRF) this morning shows that almost three-quarters were “very worried” or “fairly worried” about funding for the NHS and other public services, compared with less than half who were concerned about tax on earnings.
JRF are warning Hunt that his budget risks condemning Britain to a second “lost decade” for living standards.
Hunt himself said yesterday he wants to move Britain towards becoming a lower-tax economy, “as and when we can afford it”….
https://news.google.com/rss/articles/CBMikgFodHRwczovL3d3dy50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDI0L21hci8wNC9qZXJlbXktaHVudC0zNjBtLW1hbnVmYWN0dXJpbmctcmVzZWFyY2gtZnVuZGluZy1wYWNrYWdlLWJ1ZGdldC1ncm93dGgtdGF4LWN1dHMtYnVzaW5lc3MtbGl2ZdIBkgFodHRwczovL2FtcC50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDI0L21hci8wNC9qZXJlbXktaHVudC0zNjBtLW1hbnVmYWN0dXJpbmctcmVzZWFyY2gtZnVuZGluZy1wYWNrYWdlLWJ1ZGdldC1ncm93dGgtdGF4LWN1dHMtYnVzaW5lc3MtbGl2ZQ?oc=5
2024-03-04 07:47:00Z
CBMikgFodHRwczovL3d3dy50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDI0L21hci8wNC9qZXJlbXktaHVudC0zNjBtLW1hbnVmYWN0dXJpbmctcmVzZWFyY2gtZnVuZGluZy1wYWNrYWdlLWJ1ZGdldC1ncm93dGgtdGF4LWN1dHMtYnVzaW5lc3MtbGl2ZdIBkgFodHRwczovL2FtcC50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDI0L21hci8wNC9qZXJlbXktaHVudC0zNjBtLW1hbnVmYWN0dXJpbmctcmVzZWFyY2gtZnVuZGluZy1wYWNrYWdlLWJ1ZGdldC1ncm93dGgtdGF4LWN1dHMtYnVzaW5lc3MtbGl2ZQ
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