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Firms are increasingly putting up prices as they pass on soaring costs, according to new figures that are likely to add to fears of a squeeze on household budgets.

Data from the Office for National Statistics (ONS) found 10% of businesses increased their prices in early September, up from 8% in mid-August and 4% in late December last year.

The figures came as the Bank of England’s new chief economist said the “magnitude and duration” of the recent upturn in inflation was proving greater than expected.

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Energy bills look set to rise further

Meanwhile new data published on Thursday showed global food prices at a ten-year peak.

It all adds to a cocktail of financial worries for consumers with energy bills looking set to climb further and experts warning of a possible 5% rise in council taxes.

Regulator Ofgem acknowledged that if wholesale gas prices – which this week hit record levels – remain high the price cap on energy bills affecting millions of households, which has only just gone up by 12%, will need to go up again.

Businesses are experiencing surging costs thanks to a series of factors including supply chain strains – such as those caused by a shortage of HGV drivers – as well as recruitment difficulties and wage hikes and the rising global prices of commodities and energy.

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The latest data from the ONS, recorded at the start of September, showed 29% of businesses had seen the prices of materials, goods or services bought in the last two weeks increase by more than their normal price fluctuations.

Figures also showed that while 10% of all businesses were passing higher prices on to customers, a larger number of manufacturers (25%) were doing so, as were firms involved in wholesale and retail sales and vehicle repair (23%).

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Labour shortage squeezes food supply chain

Among companies classed as providing “other service activities” – ranging from professional associations and computer repair to dry cleaning and hair dressing – 22% increased prices.

Latest official data shows consumer price inflation running at 3.2% in August, a nine-year high, and the Bank of England expects it to top 4% later this year.

The broad background to the price spiral is a sudden jolt to higher demand as pandemic restrictions ease which has left supply struggling to keep up.

In answers to a series of questions from MPs published on Thursday, BoE chief economist Huw Pill said that as the pandemic recedes and “the level of composition of global demand and supply normalise” these price pressures should ease.

“But the magnitude and duration of the transient inflation spike is proving greater than expected,” he added.

Elsewhere, an index published by the Rome-based Food and Agricultural Organisation (FAO), which tracks prices for the most globally-traded food commodities, recorded an average of 130 points last month, the highest since September 2011.

The upturn was driven by cereals and vegetable oils and meant that on a year-on-year basis, prices were up by 32.8%.

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August: BoE governor: Inflation issue will be ‘temporary’

Earlier, the Institute for Fiscal Studies (IFS), a respected economic think-tank, warned that council tax may have to rise by up to 5% a year as local authorities continue to contend with pandemic-related spending pressures and the government’s new social care policies.

At the same time, analysis by experts at Cornwall Insight suggests that the energy price cap – which affects 15 million households – could go up by another 30% when it is reviewed again next year, thanks to soaring wholesale gas prices.

Separately, a report from the National Grid showed the margin of electricity supply would be tighter this winter than a year ago – while expressing confidence that there was enough capacity to keep the lights on.

However, the grid is likely to have to utilise market alerts calling for some power stations to ramp up tight supply.

Such “margin notices”, which were also used last winter, tend to push wholesale prices up though they are now already close to levels seen at such times of stress.

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Barclays fined £40m over ‘reckless’ financial crisis capital raising

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Barclays fined £40m over 'reckless' financial crisis capital raising

Barclays has been fined £40m over capital raising that averted its need for taxpayer aid during the 2008 financial crisis.

The Financial Conduct Authority (FCA) found that the bank should have disclosed more details to the stock market about the £11.8bn in funding, from Qatari and other sovereign investors, that it had previously described as “reckless” and lacking integrity.

The penalty followed a protracted investigation that began in 2013 but was held up by criminal proceedings brought by the Serious Fraud Office that led to the acquittal of all defendants charged, including Barclays.

A decision by the bank not to refer the FCA’s enforcement case to an Upper Tribunal meant that the watchdog’s planned fine could be imposed.

Its regulatory action concerned Barclays’ navigation of the events of 2008 when the-then Labour government took huge stakes in major lenders, including Lloyds and RBS – now NatWest – to prevent a collapse of the banking system.

The FCA said of its action: “The events in 2008 were of national importance as banks sought emergency recapitalisation.

“The FCA has a primary objective to ensure market integrity. Banks should treat their obligations to the market and shareholders seriously.”

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Barclays was yet to comment.

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‘When you hit profits, you hit growth’: Businesses criticise biggest budget tax increase in decades

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'When you hit profits, you hit growth': Businesses criticise biggest budget tax increase in decades

Tax rises announced during the recent budget will hit businesses rather than encourage growth, the head of one of the UK’s most prominent business groups will warn on Monday.

The Confederation of British Industry (CBI) has joined a choir of voices opposing Chancellor Rachel Reeves’s fiscal measures, which the Labour Party claims are needed to plug a £22bn “black hole” left by 14 years of Tory government.

Labour put growth at the heart of their campaigning during the last general election, but business believe the £40bn tax rises announced last month – the largest such increase at a budget since John Major’s government in 1993 – will stifle investment.

Rain Newton-Smith, who heads the CBI, is expected to say at the group’s annual conference in London that “too many businesses are having to compromise on their plans for growth”.

She will say: “Across the board, in so many sectors, margins are being squeezed and profits are being hit by a tough trading environment that just got tougher.

“And here’s the rub, profits aren’t just extra money for companies to stuff in a pillowcase. Profits are investment.”

Ms Newton-Smith will add: “When you hit profits, you hit competitiveness, you hit investment, you hit growth.”

The Office for Budget Responsibility (OBR), which monitors the government’s spending plans and performance, has previously said most of the burden from the tax increase will be passed on to workers through lower wages, and consumers through higher prices.

Last week, dozens of retail bosses signed a letter to the chancellor warning of dire consequences for the economy and jobs if she pushes ahead with budget plans.

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Up to 79 signatories joined British Retail Consortium’s (BRC’s) scathing response to the fiscal announcement, which claimed Labour’s tax rises would increase their costs by £7bn next year alone.

It warned that higher costs, from measures such as higher employer National Insurance contributions and National Living Wage increases next year, would be passed on to shoppers and hit employment and investment.

The letter, backed by the UK boss of the country’s largest retailer Tesco, said: “The sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

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From October: ‘Raising taxes was not an easy decision’

‘Businesses will now have to make a choice’

A few days after the budget, Chancellor Reeves admitted she was “wrong” to say higher taxes were not needed during the election campaign – as she warned businesses may have to make less money or pay staff less to cover a tax increase.

But she claimed the previous government had “hid” the “huge black hole” in finances and she only discovered the extent of it once her party was voted in.

She told Sky News’ Sunday Morning With Trevor Phillips: “Yes, businesses will now have to make a choice, whether they will absorb that through efficiency and productivity gains, whether it will be through lower profits or perhaps through lower wage growth.”

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ITV back in spotlight as suitors screen potential bids

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ITV back in spotlight as suitors screen potential bids

Potential suitors have again begun circling ITV, Britain’s biggest terrestrial commercial broadcaster, after a prolonged period of share price weakness and renewed questions about its long-term strategic destiny.

Sky News has learnt that a number of possible bidders for parts or all of the company, whose biggest shows include Love Island, have in recent weeks held early-stage discussions about teaming up to pursue a potential transaction.

TV industry sources said this weekend that CVC Capital Partners and a major European broadcaster – thought to be France’s Groupe TF1 – were among those which had been starting to study the merits of a potential offer.

The sources added that RedBird Capital-owned All3Media and Mediawan, which is backed by the private equity giant KKR, were also on the list of potential suitors for the ITV Studios production arm.

One cautioned this weekend that none of the work on potential bids was at a sufficiently advanced stage to require disclosure under the UK’s stock market disclosure rules, and suggested that ITV’s board – chaired by Andrew Cosslett – had not received any recent unsolicited approaches.

That meant that the prospects of any formal approach materialising was highly uncertain.

The person added, however, that Dame Carolyn McCall, ITV’s long-serving chief executive, had been discussing with the company’s financial advisers the merits of a demerger or other form of separation of its two main business units.

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Its main banking advisers are Goldman Sachs, Morgan Stanley and Robey Warshaw.

ITV’s shares are languishing at just 65.5p, giving the whole company a market capitalisation of £2.51bn.

The stock rose more than 5% on Friday amid vague market chatter about a possible takeover bid.

Bankers and analysts believe that ITV Studios, which made Disney+’s hit show, Rivals, would be worth more than the entire company’s market capitalisation in a break-up of ITV.

People close to the situation said that under one possible plan being studied, CVC could be interested in acquiring ITV Studios, with a European broadcast partner taking over its broadcasting arm, including the ITVX streaming platform.

“At the right price, it would make sense if CVC wanted the undervalued production business, with TF1 wanting an English language streaming service in ITVX, along with the cashflows of the declining channels,” one broadcasting industry veteran said this weekend.

“They would only get the assets, though, in a deal worth double the current share price.”

Takeover speculation about ITV, which competes with Sky News’ parent company, has been a recurring theme since the company was created from the merger of Carlton and Granada more than 20 years ago.

ITV said this month that it would seek additional cost savings of £20m this year as it continued to deal with the fallout from last year’s strikes by Hollywood writers and actors.

It added that revenues at the Studios arm would decline over the current financial year, with advertising revenues sharply lower in the fourth quarter than in the same period a year earlier because of the tough comparison with 2023’s Rugby World Cup.

Allies of Dame Carolyn, who has run ITV since 2018, argue that she has transformed ITV, diversifying further into production and overhauling its digital capabilities.

The majority of ITV’s revenue now comes from profitable and growing areas, including ITVX and the Studios arm, they said.

By 2026, those areas are expected to account for more than two-thirds of the group’s sales.

This year, its production arm was responsible for the most-viewed drama of the year on any channel or platform, Mr Bates versus The Post Office.

In its third-quarter update earlier this month, Dame Carolyn said the company’s “good strategic progress has continued in the first nine months of 2024 driven by strong execution and industry-leading creativity”.

“ITV Studios is performing well despite the expected impact of both the writer’s strike and a softer market from free-to-air broadcasters.”

She said the unit would achieve record profits this year.

ITV and CVC declined to comment, while TF1, RedBird and Mediawan did not respond to requests for comment.

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