#HereForBusiness: News Roundup – 31/03/2023
31 March 2023
Food inflation reached record highs, a study found that work-related stress costs the UK economy billions, and the government unveiled its new energy and net zero plan.
Here are this week’s main business stories:
- UK food inflation hit 17.5 percent year-on-year in March – above the headline inflation rate of 10.4 percent and an all-time high. According to figures published by analytics firm Kantar, the average annual grocery bill increased by £837 to £5,617. Soaring inflation also led UK households to spend 12 percent more on essentials last month than they did in February 2022. Figures from building society Nationwide indicated that people spent 34 percent more on utility bills and 17 percent more on mortgage payments, with 38 percent of those relying on credit cards to cover the costs, as well as to pay for foodstuffs, public transport, and childcare. Perhaps unsurprisingly, all this has left consumer finances in a precarious state. Legal & General’s (L&G) most recent Rebuilding Britain Index (RBI) found that 95 percent of households with one or more people in work suffered a cut in real wages over the past year. The figure rises to 99 percent for households with an income below £20,000. The result of this squeeze has been significant: 47 percent of households are concerned about falling behind on rent or mortgage payments, while 54 percent have had to cut back on day-today spending.
- To add to the gloom, the number of available rental properties in the UK decreased by a third in the past 18 months, driving up rents for new tenants by an average of 11 percent in the process. Data compiled by property website Zoopla revealed that the mean number of rental listings posted by letting agents currently stands at 10, compared to 16 before September 2021. In addition, the data showed that demand for rented homes has recently jumped to 50 percent above normal levels. Mortgage lending also dropped to the lowest level since the summer of 2021 in February. Bank of England statistics indicated that net mortgage lending to individuals decreased from £2 billion to £0.7 billion, though net mortgage approvals for house purchases increased from 39,600 to 43,500 month-on-month. Meanwhile, the ‘effective’ interest rate on newly drawn mortgages rose by 0.36 percent to 4.2 percent.
- In somewhat brighter news, UK retail sales unexpectedly increased by 1.2 percent month-on-month in February, figures from the Office for National Statistics (ONS) showed. While record double digit inflation continued to put pressure on consumer budgets, forcing households to cut back on luxuries such as takeaways and eating out, they spent more money at supermarkets and discount department stores.
- After a relatively quiet few days on the industrial relations front, the Public and Commercial Services Union (PCS) announced on Tuesday that 130,000 UK civil servants will strike on 28 April in a long-running disagreement over pay, pensions, and conditions. Elsewhere, postal workers who are members of the Communication Workers Union (CWU) are poised to down tools next month after failing to reach a settlement with Royal Mail. Staying with employment, a recent survey of 30,000 adults across 16 nations found that work-related mental health issues cost the UK economy £28 billion a year. The research by insurance firm AXA also suggested that Britain was the most impacted of the evaluated countries. More than 20 percent of UK respondents said they were “struggling”, compared to 17 percent in the United States, 14 percent in Japan and Ireland, and 5 percent in Thailand. A further 25 percent described themselves as “languishing”, meaning that over 50 percent of Britons were in a state of emotional distress.
- Small to medium-sized enterprises (SMEs) in rural areas are falling behind their urban counterparts, a report by the British Chamber of Commerce (BCC) and technology firm Xero said. 79 percent of rural SMEs reported being dissatisfied with public transport provision, compared to just over half in retail parks and 42 percent in towns, villages, and high streets.
- Ministers outlined proposals on Thursday for the UK to become less dependent on overseas fossil fuels, cut carbon emissions, and lower energy bills. The ‘Powering Up Britain’ strategy aims to deliver the cheapest electricity in Europe by 2035 through investment in renewable and nuclear power. The 1,000-page plan includes dozens of new measures to this end, including £240 million in funding for hydrogen initiatives, looser planning laws for onshore and offshore wind and solar, and increased support for the nuclear industry. On the same day, the government announced that it will not bring forward the date the state pension age will rise to 68. The rise was originally supposed to take place in 2044, but a 2017 government review proposed this could be brought forward to 2037.
- Finally, the International Monetary Fund (IMF) warned that ongoing chaos in the banking sector threatens the global economy. Commenting after the collapse of Silicon Valley Bank and the brokered takeover of Credit Suisse, IMF chief Kristalina Georgieva argued rising interest rates were putting significant pressure on banks’ balance sheets.
If you run a small or medium-sized business in Greater Manchester and want to understand how the present and future economic climate might impact your operations and revenue, GC Business Growth Hub’s #HereForBusiness package provides practical guidance and expert advice on a range of topics to help you manage the increasing cost of doing business.
Find out more by browsing our resources, from events, blog posts, and factsheets to news updates and webinars.
If you have any questions, get in touch now.
--
#HereForBusiness is funded by the UK government through the UK Shared Prosperity Fund.