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Oliver Dowden, the former co-chair of the Conservative party, has called for “intervention of a considerable scale” on soaring UK energy bills. By January, households could be burdened with annual costs of more than £4,200 — another £500 on top of the last estimate.
The chorus of voices urging politicians to step up their efforts swelled this morning as former prime minister Gordon Brown told LBC that the two leadership candidates should agree a package for households with Boris Johnson this week. “It’s not good enough acting in September. These problems amount to a national emergency,” he said. The CBI, Britain’s biggest business lobby group, has also called on Johnson to act now.
This piles significant pressure on Tory leadership frontrunner Liz Truss, who told the Financial Times last week that she would “look at what more can be done” but “in a Conservative way of lowering the tax burden, not giving out handouts”.
The foreign secretary has promised to cut the rise in National Insurance, which her rival Rishi Sunak introduced when he was chancellor, if she becomes prime minister.
Both leadership candidates will continue to be pressed on how they plan to tackle the cost of living crisis, as more signs emerge of the financial strain Britons are under.
In times like these, people with poor credit often turn to community lenders, who can help them with small loans. But now these non-profits are struggling to meet demand and the owner of one provider has said he was forced to decline 90 per cent of applicants. Meanwhile, the number of households vulnerable to loan sharks or illegal lenders has increased from 310,000 in 2010 to 1.08mn in 2022, according to the government’s Illegal Money Lending Team.
But the pawnbroking industry is enjoying a renaissance as cash-strapped households seek small loans secured on their jewellery and watches to help cover bills.
The charitable and voluntary sector has become an integral part of the country’s social safety net, reports public policy editor Peter Foster, but its attempts to plug the gaps are being hampered by dwindling resources as donations slow.
The single biggest cause of despair is soaring energy bills. Energy regulator Ofgem said last week it would now alter its price cap every three months, instead of twice a year, to allow consumers the chance to enjoy smaller bills when wholesale prices drop. In the current climate however, the only likely move is up. Support for a campaign of non-payment is growing.
People with mortgages are facing a further squeeze after the Bank of England increased interest rates by the largest amount in 27 years. The BoE also lifted its forecast for inflation, which it now expects to hit 13 per cent by the end of the year.
As economists debate what type of fiscal or monetary policy can best help against a looming recession, Duncan Weldon, the author of a new book on the British economy, says choosing the right mix is “very much akin to picking out the least crumpled shirt from the laundry basket: the best option is not necessarily a good one”. He concludes:
The country is poorer than it thought it would be. In the short term that is unavoidable. The real policy debate is about how that pain is divided between households, firms and the government’s balance sheet — not how it is avoided.
Latest news
BioNTech and Pfizer will begin clinical trials of vaccines adapted to new Covid variants
A number of multibillion-dollar buyouts that boosted US dealmaking were confirmed today: Pfizer agreed to buy drugmaker Global Blood Therapeutics for about $5bn; US appliance maker Whirlpool agreed to pay $3bn for Emerson Electric’s food waste disposal business Insinkerator; Avalara agreed to be acquired by private equity firm Vista Equity Partners in a deal that valued the cloud-based taxation specialist at $8.4bn, including debt; Digital media company Axios has agreed to sell to Cox Enterprises for $525mn
Greater Manchester and West Midlands mayors seek powers over vocational skills in the regions to tackle widening inequality among adults in England
For up-to-the-minute news updates, visit our live blog
Need to know: the economy
The US Senate passed Joe Biden’s flagship tax and spending bill, known as the Inflation Reduction Act. It contains significant climate change legislation, as well as measures to cut prescription drug prices, and is seen as a major victory for the president ahead of the November midterm elections.
Western capitals are increasingly worried that Turkey might help Russia avoid sanctions after the pledge made by the two countries leaders to expand co-operation on trade and energy.
Latest for the UK and Europe
UK government plans to cut up to 91,000 civil servant jobs will mean public services being slashed and at least $1bn in redundancy payments, according to a review by Boris Johnson’s former chief of staff.
Italians are speculating whether the hand of Moscow hangs over last month’s ousting of prime minister Mario Draghi. Some believe President Vladimir Putin exacted payback for Draghi’s tough stand over Russia’s invasion of Ukraine.
Ireland is benefiting from a €8bn corporate tax windfall after bumper pandemic-boosted revenues from tech and pharma companies. The country’s tax take has soared since 2015, with employment and foreign investment also at record highs.
The European Central Bank is pumping billions of euros into weaker eurozone debt markets to protect them from the effects of its decision to unwind stimulus programmes as it battles to contain inflation.
Global latest
Tensions are still high around Taiwan as China extended its “real war conditions” military exercise. Beijing has also stepped up its propaganda offensive against Taipei. Chief foreign affairs commentator Gideon Rachman warns that the idea of armed conflict over Taiwan is gaining ground in Beijing and Washington.
US banks are busy repositioning themselves to stress their fossil fuel credentials to placate Republican politicians critical of their commitments to the environment and social justice.
Big US oil and gas producers, meanwhile, remain unmoved by politicians’ calls to increase supply. Executives say they are under pressure from Wall Street to return windfalls from soaring prices to investors through dividends and share buybacks, rather than spending heavily to increase production.
Brazilian president Jair Bolsonaro is banking on recent improvements in the economy to boost his chance of re-election in October. A strong rebound in services and falls in unemployment mean the economy is now forecast to grow 1.7 per cent this year, a big improvement from as recently as January when banks predicted a recession.
Need to know: business
China’s Baidu is offering the world’s first commercial human-free robotaxi service in the cities of Chongqing and Wuhan. Baidu is best known as an internet search engine but robotaxis, along with cloud computing, are now said to be its long-term drivers of growth.
Chinese investors are also piling into a more traditional asset: jade. The semi-precious stone has been in short supply for several reasons, including a coup in Myanmar, which produces 70-90 per cent of the world’s supply of jadeite, the rarer of two distinctive stones collectively known as jade.
Something else in short supply is lithium, a key raw material for electric car batteries. Carmakers are rushing to invest in projects to secure new sources but a top producer says the market will stay tight until 2030.
Big Tech, which is already suffering from a range of financial problems, now faces a triple whammy of changes that could affect their business models, writes columnist Rana Foroohar: new EU rules, US listing requirements and internet fragmentation.
It’s plain sailing though for the offshore shipping industry, which has benefited from the steep rise in oil and gas prices. Clarksons, the world’s largest shipbroker, says its index tracking rates paid to lease rigs, subsea vessels and offshore supply vessels are at the highest level in seven years.
Warren Buffett’s Berkshire Hathaway slowed new investment sharply in the second quarter, as the US stock market sell-off drove the conglomerate to a $43.8bn loss. Investors are selling stakes in buyout funds at a record pace.
The pandemic turbocharged demand for industrial warehouse space but, as our Big Read details, this is now cooling rapidly as signs grow that the ecommerce boom is slowing, the global economy is faltering and locals push back against the erection of massive eyesores.
Tensions are increasing between Royal Mail and its workers over plans for its lossmaking UK postal business.
The World of Work
City centres are experiencing a moment of radical change, as physical stores are displaced by online retail and offices remain half empty as employees work from home. FT architecture critic Edwin Heathcote says planners must grasp the opportunity to reimagine our urban areas for the new world of work.
Do young workers have an image problem? As business returns to some sense of normality, columnist Pilita Clark says some managers are starting to tire of pandering to the whims of their younger staff who they see as disengaged, indifferent and even deluded.
Get the latest worldwide picture with our vaccine tracker
Some good news . . .
Coral cover on the northern and central Great Barrier Reef is at its highest since monitoring began 36 years ago. Paul Hardisty, chief executive of the Australian Institute of Marine Science, said the results in the north and central regions were a sign the reef could still recover, although other areas showed it was still vulnerable to disturbances.
Have you spotted some good news stories you’d like to share with FT readers? Please send them to us at disruptedtimes@ft.com.
Source: Economy - ft.com
