Connect with us

Published

on

A delay to the lifting of COVID-19 restrictions later this month would “materially” hamper Britain’s economic recovery, a leading business group has warned.

The British Chambers of Commerce (BCC) has predicted that a consumer spending surge will see GDP grow by 6.8% this year – but said it would reassess the forecast if restrictions are extended.

It comes as doubts are cast over the 21 June lockdown lifting date with ministers stressing caution amid a rise in the number of cases of the Delta coronavirus variant.

Please use Chrome browser for a more accessible video player

‘Thank goodness’ for recovery – but longer term relatively weak, says BoE governor

Suren Thiru, head of economics at the BCC, said: “The squeeze on activity and the damage to confidence from a marked delay to the full lifting of restrictions or further restrictions to combat COVID variants would materially slow the recovery.”

Official figures on Wednesday showed another 7,540 coronavirus infections were recorded in the latest 24-hour period – the most since 26 February.

The Prime Minister said it was clear that case numbers were going up and the government would be looking at whether the level of vaccine protection had been built up by enough “for us to go ahead to the next stage”.

Britain’s economy suffered its biggest decline for three centuries last year with GDP shrinking by nearly 10%.

More from Business

Forecasters including the Bank of England expect it will bounce back this year with the strongest annual growth since the Second World War.

The BCC’s latest report predicted a “historically robust short-term outlook” for the UK economy, driven by the strongest growth in spending since 1988.

Boris Johnson warned of the affect measures could have on trade. File pic
Image:
Trade is expected to drag on the recovery

Mr Thiru said: “The UK economy is in a temporary sweet spot with the boost from the release of pent-up demand, if restrictions ease as planned, and ongoing government support expected to drive a substantial summer revival in economic activity, underpinned by the rapid vaccine rollout.”

Even in this scenario, the recovery is expected to be “uneven”, with manufacturing returning to pre-pandemic levels later this year but hard-hit sectors such as catering and hospitality needing until the middle of 2023 to get back onto their feet.

Trade is also expected to drag on growth in the short-term as a result of post-Brexit disruption and a weak outlook for the eurozone economy weighing on EU demand for UK goods and services.

The BCC forecast predicted quarterly growth at its strongest over the second and third quarters of this year and the overall economy returning to pre-pandemic levels at the start of 2022.

But it said this “assumes that the UK government’s roadmap out of lockdown restrictions proceeds as currently planned”, adding that “another scenario would lead to revisions in the next forecast”.

Continue Reading

Business

CBI kicks off search for successor to ‘saviour’ Soames

Published

on

By

CBI kicks off search for successor to 'saviour' Soames

The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.

Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.

Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.

Money latest: Has bond market calmed after chancellor’s tears?

The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.

One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.

“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.

More from Money

Rupert Soames
Image:
Rupert Soames. Pic: Reuters

Read more:
Starmer could be ousted as PM ‘within months’
Reeves’s tears a hard watch but reminder of her challenges

Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.

Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.

Egon Zehnder International is handling the search for the CBI.

“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.

“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”

Continue Reading

Business

Ryanair and easyJet cancel hundreds of flights over air traffic control strike

Published

on

By

Ryanair and easyJet cancel hundreds of flights over air traffic control strike

Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.

Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.

EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.

Money latest: Bond market fires warning shot at Downing St

The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.

The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.

Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.

More from Money

Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.

He described the latest action as “recreational”.

Michael O'Leary. Pic: Reuters
Image:
Michael O’Leary. Pic: Reuters

“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.

“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.

“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”

Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.

“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.

Continue Reading

Business

How markets reacted to uncertainty over Rachel Reeves’s future

Published

on

By

How markets reacted to uncertainty over Rachel Reeves's future

The pound fell and state borrowing costs rose during a period of uncertainty over the chancellor’s future on Wednesday.

During Prime Minister’s Questions, Sir Keir Starmer declined to guarantee whether a visibly emotional Rachel Reeves would remain chancellor until the next election following the government’s welfare bill U-turn.

Money blog: Cash in your pocket set to change

Following his remarks, the value of the pound dropped and government borrowing costs rose, via the interest rate on both 10 and 30-year bonds.

Although market fluctuations are common, there was a reaction following Sir Keir’s comments in the Commons – signalling concern among investors of potential changes within the Treasury.

Please use Chrome browser for a more accessible video player

PM refuses to rule out tax rises

Sterling dropped to a week-long low, hitting $1.35 for the first time since 24 June. The level, however, is still significantly higher than the vast majority of the past year, having come off the near four-year peak reached yesterday.

While a drop against the euro, took the pound to €1.15, a rate not seen since mid-April in the aftermath of President Donald Trump’s tariff announcements.

More on Rachel Reeves

Read more:
No 10 backs Reeves and says she is ‘going nowhere’
Analysis: Emotional Reeves a painful watch

Meanwhile, the interest rate investors charge to lend money to the government, called the gilt yield, rose on both long-term (30-year) and ten-year bonds.

The UK’s benchmark 10-year gilt yield – so-called for the gilt edges that historically lined the paper they were printed on – rose to 4.67%, a high last recorded on 9 June.

And 30-year gilt yields hit 5.45%, a level not seen since 29 May.

Follow The World
Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

Both eased back in the hours following – as a spokesperson for the prime minister attempted to quell speculation about the chancellor’s future.

Sky News understands the prime minister made clear to the chancellor that she has his “complete support” and remains integral to his project.

Ms Reeves has committed to self-imposed rules to reduce debt and balance the budget. Speculation around her future led investors to question the government’s commitment to balancing the books – and how they would do that.

The questions over her future came after the government scrapped the core money-saving component of its welfare bill, which had been intended to reduce spending in order to meet fiscal rules.

Continue Reading

Trending