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If you want a sensible document with some interesting and well-reasoned ideas for what we ought to do about the UK economy (and some brilliant charts), you could hardly do better than read the Resolution Foundation’s book/report on the topic, Ending Stagnation.

It’s a thick tome with plenty of analysis about the problems facing this country – low earnings growth, weak productivity, high inequality and so on – and a bit about our strengths too. And it synthesises much of what you might call the “Whitehall view” about what needs to be done to try to kickstart growth in the economy.

So it suggests raising benefits, lifting public investment, removing some of the countless allowances which allow people to avoid taxes, improving statutory sick pay and trying to lift cities outside London.

It’s a useful checklist, even if much of it will be vaguely familiar to anyone who has followed the economic debate in recent years.

Weak productivity is one of Britain’s biggest problems. If our bang-for-buck (which is ultimately what productivity is a measure of) had been stronger in recent years, then a lot of issues we’re currently plagued with – from high public debt to weak income growth – could have been solved.

And while there’s a good chance this document becomes a sort of Bible, which both Labour and the Conservative Party borrow from, as they seek to construct their policy manifestos ahead of the coming general election – it is not for nothing that both Chancellor Jeremy Hunt and Labour leader Sir Keir Starmer both appeared at the launch event.

Chancellor of the exchequer Jeremy Hunt speaking at the Resolution Foundation conference at the QEII Centre in central London. Picture date: Monday December 4, 2023.
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Chancellor Jeremy Hunt speaks at the Resolution Foundation conference in London

Both parties want this election to be fought on economic grounds.

Both parties want the British public to know that they want to increase Britain’s economic growth rate. Indeed, Starmer has even pledged that under Labour, UK per capita growth will outpace the rest of the G7 in the coming years – an ambitious promise, though it’s unclear how he or anyone could achieve it.

And that’s because while there are some obvious ingredients for economic growth, it’s a fiendishly difficult thing to generate, or for that matter to understand.

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Starmer: ‘This is an age of insecurity’

Reservations about the report

Economists still debate why the US has a perennial productivity advantage over so many of its rich world counterparts. Is it tax policy? Does it come down to investment incentives, to the existence of strong markets, or to something else completely unquantifiable? The short answer is no-one knows for sure.

But if you’re after a decent handbook of some of the most plausible policies for boosting that growth rate, you could hardly do better than the Resolution Foundation’s tome – with a few reservations.

The first is that, this being a left-leaning thinktank, the solutions do incline towards higher taxes. Others will have different views.

Second, while the report suggests government should be investing more and mentions the need for more housebuilding in passing, it could put even more emphasis on the desperate deterioration of Britain’s physical infrastructure.

Third, and most problematic, one of the most important of all economic factors barely crops up in the report at all: energy. Britain has some of the developed world’s highest energy costs.

This is at least part of the explanation for weak productivity and investment in recent years. Bringing down wholesale energy costs would make an enormous difference in boosting activity in this country – not just for manufacturing firms but also for everyone else.

This comes back to something else. It’s tempting, since Britain’s stagnation began at the time of the financial crisis, to assume that it must all be related to what happened in the square mile back in 2008. And this is almost certainly a large part of the explanation.

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However, something else happened around then too: Britain went from being a net oil and gas exporter, able to enjoy a large and constant stream of public and private revenues from the North Sea, to being a net importer. It’s going way too far to blame this watershed shift for everything, but it’s equally odd that it isn’t mentioned even once in the Resolution Foundation document.

It all matters, even the boring stuff we mostly ignore. This new document is a fascinating blueprint on some of the things we could do to get this country going again.

But it’s just the beginning of the conversation – not the end of it.

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Hovis and Kingsmill-owners in talks about historic bread merger

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Hovis and Kingsmill-owners in talks about historic bread merger

The owners of Hovis and Kingsmill, two of Britain’s leading bread producers, are in talks about a historic merger amid a decades-long decline in the sale of supermarket loaves.

Sky News has learnt that Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, and Hovis, which is owned by investment firm Endless, have been involved in prolonged discussions about a combination of the two businesses.

City sources said this weekend that the talks were ongoing, but that there was no certainty that a deal would be finalised.

Bankers are said to be working with both sides on the talks about a transaction.

A deal could be structured as an acquisition of Hovis by ABF, according to analysts, although details about the mechanics of a merger or the valuations attached to the two businesses were unclear this weekend.

ABF is also said to be exploring other options for the future of Allied Bakeries which do not include a deal with Hovis.

If completed, a merger would unite two of Britain’s best-known ambient food brands, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning strength of man.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair the bread industry’s financial health in recent decades.

The impact of the war in Ukraine on wheat and flour prices has been among the factors increasing inflationary pressures on bread producers, according to the most recent set of accounts for Hovis filed at Companies House last year.

The overall UK bakery market is said to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

The principal obstacle facing a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis would reside in its consequences for competition in the UK market.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector in the UK, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group a larger share of that segment of the market, although one source said Warburtons’ overall turnover would remain larger because of the breadth of its product range.

Nevertheless, reducing the number of major supermarket bread suppliers from three to two would be a test of the Competition and Markets Authority’s approach to such industry-reshaping mergers at a time when the watchdog is under intense government scrutiny.

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In January, the government removed the CMA chairman, Marcus Bokkerink, as part of a push to reorient Britain’s economic regulators around growth-focused objectives.

An industry insider suggested that a joint venture involving the distribution networks of Hovis and Kingsmill was a possible, although less likely, alternative to a full-blown merger of the companies.

They added that a combined group could benefit from up to £50m of cost savings from such a tie-up.

In its interim results announcement this week, ABF said the performance of Allied Bakeries had continued to struggle.

“Allied Bakeries continues to face a very challenging market,” it said.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025.”

In a separate presentation to analysts, ABF described the losses at Allied as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Allied also owns Speedibake, an own-label bread manufacturer.

Hovis has been owned by Endless, a prominent investor in British businesses, since 2020, having previously been owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites and its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF and Endless both declined to comment.

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Struggling Aston Martin steers into fresh pay controversy

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Struggling Aston Martin steers into fresh pay controversy

Aston Martin is steering a path towards a twin-pronged pay row with shareholders as it grapples with the impact of President Trump’s tariffs on car manufacturers.

Sky News can reveal that the influential proxy voting adviser ISS is urging investors to vote against both of Aston Martin Lagonda Global Holdings’ remuneration votes at next week’s annual general meeting.

The pay policy vote, which is binding on the company, has attracted opposition from ISS because it proposes significant increases to potential bonus awards to Adrian Hallmark, the company’s new chief executive.

“Concerns are raised regarding the increased bonus maximums, which are built upon competitively[1]positioned salary levels and do not appear appropriate given the company’s recent performance,” ISS said in a report to clients.

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Aston Martin is also facing a meaningful vote against its pay report for last year – which is on an advisory basis only – because of the salaries awarded to Mr Hallmark and other executive directors.

The company’s shares have nearly halved in the last year, and it now has a market value of little more than £660m.

Despite the ISS recommendation, Aston Martin will win the vote by virtue of chairman Lawrence Stroll’s 33% shareholding.

The luxury car manufacturer has had a torrid time as a public company and now faces the headwinds of President Trump’s tariffs blitz.

This week it said it would limit exports to the US to offset the impact of the policy.

Aston Martin did not respond to a request for comment ahead of next Wednesday’s AGM.

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Financial wellbeing platform Mintago lands £6m funding boost

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Financial wellbeing platform Mintago lands £6m funding boost

A financial wellbeing platform which counts the alcohol-free beer producer Lucky Saint among its clients has landed a £6m funding injection from a syndicate of well-known investors.

Sky News understands that Mintago, which was founded in 2019, will announce in the coming days that Guinness Ventures has jointly led the Series A round alongside Seed X Liechtenstein and Social Impact Enterprises.

Mintago, which also counts car rental firm Avis and Northumbrian Police among its customers, aims to help employees save and manage their money more effectively.

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A number of the start-up’s current investors, Love Ventures and Truesight Ventures, are also understood to have reinvested as part of the fundraising.

MINTAGO
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The company, which counts Lucky Saint and Avis among its users, has finalised a Series A funding round

The company was set up by Chieu Cao and Daniel Conti, and claims to offer more salary sacrifice schemes than any other UK provider.

It also provides independent financial advice, a service for finding lost pension pots, retail discounts and GP services.

“We realised that organisations are crying out for the same help we provide their staff,” Mr Conti said.

“The benefits of providing that support impact everyone.

“When a company improves their salary sacrifice benefits engagement, they can save thousands in National Insurance Contributions, but their employees save too, easing the strain on their finances.”

The new capital will be used to develop additional products using artificial intelligence, according to the company.

“Mintago is enabling its customers to become truly people-centric organisations by giving them the tools to support their employees’ financial wellbeing,” Mathias Jaeggi, a partner at Seed X Liechtenstein, said.

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