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.
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.
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.
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.
Next weighs move for stricken cosmetics chain The Body Shop
Next has approached administrators to The Body Shop about a potential deal to purchase parts of the stricken cosmetics chain.
Sky News has learnt that executives from the UK fashion retailing giant have contacted FRP Advisory to express an interest in acquiring assets as part of any sale process it decides to launch.
There were doubts this weekend, however, that FRP, which was appointed to handle the insolvency of The Body Shop in the UK earlier this month, would elect to run a conventional auction, with one source suggesting that contact between FRP and Next had already stalled.
Next is understood to have been monitoring The Body Shop for some time, but people close to the FTSE-100 company confirmed that it had expressed an interest in assembling a deal.
The retailer, run by Lord Wolfson, has become one of the most prolific buyers of distressed retail businesses in Britain in recent years.
Among the brands it has acquired are Fat Face, Joules and the online furniture retailer, Made.com.
It has also snapped up Cath Kidston and JoJo Maman Bebe, the maternity wear retailer, while it has struck partnerships with Victoria’s Secret and Gap.
One obstacle to any deal with The Body Shop may lie in the fact that its brand and intellectual property (IP) assets are not part of the administration process.
It is understood that Aurelius, which has only owned The Body Shop since 1 January, is financing the rest of the business, and as part of that has secured major assets including stock and IP.
FRP is expected to decide whether to launch an auction within weeks, with a sale of the restructured business in its new form back to Aurelius a possibility.
If Next did pursue a purchase of the chain, it would be unlikely to retain many, if any, of The Body Shop’s British stores.
This week, FRP announced the closure of nearly half of its 198 UK stores, with seven shutting immediately.
“Following the earlier sale of loss-making businesses in much of mainland Europe and parts of Asia, and to support a simplified business, The Body Shop will also restructure roles in its head office,” the administrators said on Tuesday.
Hundreds of jobs will be lost from the store closures and a downsizing of its head office that will leave roughly 400 people employed there.
“This swift action will help re-energise The Body Shop’s iconic brand and provide it with the best platform to achieve its ambition to be a modern, dynamic beauty brand that is able to return to profitability and compete for the long term,” FRP added.
Sky News’ revelation that Aurelius was preparing to appoint administrators sparked a vigorous debate about why the brand founded by the late Dame Anita Roddick and her husband Gordon nearly 50 years ago had faltered.
‘Mismanaged for years’
Aurelius bought the business from Natura, a Brazilian company, late last year and rapidly discovered that it had insufficient working capital and that it was trading even more poorly than anticipated.
One retail executive suggested there were serious questions for Natura to answer, saying: “This company did not fail in the last six weeks, it has been underinvested in and mismanaged for years.”
The Body Shop’s businesses across most of Europe and parts of Asia have already been offloaded to a family office following the company’s acquisition by Aurelius in a deal it said was valued at £207m.
At the time of the deal, The Body Shop employed about 10,000 people, and operated roughly 3,000 stores in 70 countries.
Although it has struggled for profitable growth for years, it has retained a prominent presence on British high streets.
The Roddicks were prominent champions of environmental causes, a positioning which helped it gain an edge over rival retailers during the 1980s and ’90s.
Listen and subscribe to The Ian King Business Podcast here.
Its opposition to the animal testing of cosmetics was also unusual in the decades immediately after it was founded.
Its distinctiveness has, however, been diminished in recent years by the emergence of competitors which have also put sustainability at the heart of their businesses while more effectively targeting younger consumers.
Dame Anita died in 2007.
Natura was reported to have paid more than $1bn to buy The Body Shop in 2017.
It was owned by L’Oreal, the cosmetics giant, prior to its sale to Natura.
Next, FRP and Aurelius declined to comment.
Worst airlines for customer satisfaction revealed
The worst airlines for customer satisfaction have been revealed
The UK’s flag carrier airline, British Airways, ranked among the worst airlines in the survey.
BA’s customer score for long-haul flights was the joint third lowest out of 17 carriers analysed by Which?, at 59%.
The airline received just two stars out of five for boarding experience and value for money, and achieved three stars for the other six categories assessed.
For short-haul flights, British Airways’ score was 56%, which was the fifth lowest among 22 airlines.
At the other end of the spectrum, the best airline for long-haul flights was Singapore Airlines (83%) and for short-haul Jet2.com (81%) took the top spot.
The worst performers in the long-haul ranking were Lufthansa (56%), Air Canada (58%), American Airlines (59%) and British Airways.
Wizz Air (44%) was ranked bottom for short-haul flights for the second year in a row, followed by Ryanair (47%), Iberia (49%) and Vueling (53%).
Which? said the standard of service last year often “fell well short of the mark”, with many passengers struggling to get support when they needed it.
UK air fares reached record highs in 2023.
Rory Boland, editor of magazine Which? Travel, said: “Air fares have soared in recent years, and the bare minimum passengers should expect in return for their hard-earned cash is a reliable service, with friendly, easy to access customer support when they are let down.
“While the likes of Jet2 continue to excel in this regard, our survey shows that passengers of many airlines are sadly being shortchanged – with high rates of last minute cancellations, abysmal customer service and sneaky extra fees for luggage hiking up the final price.”
A British Airways spokesperson said: “We always work hard to get our customers to where they need to be on time.
“We apologise to customers for any disruption they’ve faced during these challenging periods and again thank them for their understanding.”
Marion Geoffroy, UK managing director at Wizz Air, said: “We do not consider the findings of this report to be representative or the methodology used to be transparent.
“Only 124 Wizz Air passengers were surveyed, while Which? spoke to several thousand people who had flown with some of our competitors.”
The survey of Which? members was conducted in October last year and relates to more than 10,000 flights with customer scores based on overall satisfaction and the likelihood to recommend an airliner to a friend.
Energy price cap to fall but bills to include ‘temporary’ charge to help tackle record debt
The energy price cap is to fall by £20 a month, the industry regulator has announced, but households are to face an additional “temporary” charge to help suppliers support struggling customers with record levels of debt.
Ofgem confirmed a 12% price cap reduction will take effect from 1 April, taking the annual energy bill for a typical household paying by direct debit for gas and electricity to £1,690.
The current level, in place from January to March, is £1,928.
The fall reflects lower wholesale prices, with natural gas costs over the peak winter season falling across Europe due to higher stockpiles.
A mild winter has been a factor in the drop.
The adjustment by Ofgem, while some relief for household budgets squeezed by the tough economy, still leaves the cap more than 50% up on pre-crisis levels.
The regulator confirmed alongside the cap figure that it was taking action to tackle a record £3.1bn in bill arrears, though prepayment meter customers would not be affected.
“To address this challenge in the short-term, Ofgem will allow a temporary additional payment of £28 per year (equivalent to £2.33 per month) to make sure suppliers have sufficient funds to support customers who are struggling”, its statement said.
“This will be added to the bills of customers who pay by direct debit or standard credit and is partly offset by the termination of an allowance worth £11 per year that covered debt costs related to the COVID pandemic.”
Ofgem said its wider action would include further closing the gap between the higher charges that prepayment meter customers pay and what most other households face.
It said those on prepayment meters would save around £49 per year while direct debit customers would pay £10 per year more.
The watchdog said the new figures, taken together, meant bills would still fall to their lowest level since Russia’s invasion of Ukraine in February 2022.
Russia’s vast gas supplies to the continent were shut down shortly after its military action began, forcing a scramble for replacement volumes.
Much of the void has been filled by additional supplies from Norway and heightened shipments of liquefied natural gas (LNG).
Market experts have warned that a return to pre-crisis energy prices is unlikely to occur given the new realities over the source of supply hampered, in the short term at least, by attacks on shipping in the Red Sea that have forced LNG cargos to make longer journeys.
The trend of higher prices has led to questions over whether the price cap, initially introduced to prevent rip-off charges, has become a barrier to competition. Ofgem is working with the government to address the cap’s future.
It is now utilised by the vast majority of homes in the wake of the supplier crisis that began in 2021 that saw dozens of operators collapse, including Bulb.
Fixed deals have been hard to come by ever since but there are some that have undercut the price cap.
Research for professional services firm KPMG, released separately on Friday, suggested 48% of households believed the price cap was a barrier to fixed-term offers by suppliers.
A third of respondents said they no longer shopped around because of the cap.
Price comparison site uSwitch said Ofgem’s wider action on elements of the price cap bill should help improve the volume of offers.
Its director of regulation, Richard Neudegg, said: “Consumers have been patiently waiting for better tariff choices, and many are desperate to take advantage of cheaper rates.
“If you are on a standard variable tariff, now is the time to start keeping an eye out for deals.
“The end of the Market Stabilisation Charge also on 1st April will be a positive step, taking out an unnecessary premium on deals.
“However, Ofgem’s decision to extend the Ban on Acquisition-only Tariffs for another year is a gamble.
“Although this could be cut to six months, while it’s in play, fixed deals risk being more expensive than they would otherwise be, at a time when customers are finally hoping to lock in some certainty.”
Sports1 year ago
‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
Sports11 months ago
MLB Rank 2023: Ranking baseball’s top 100 players
Environment9 months ago
Japan and South Korea have a lot at stake in a free and open South China Sea
Sports2 years ago
Team Europe easily wins 4th straight Laver Cup
Environment1 year ago
Game-changing Lectric XPedition launched as affordable electric cargo bike
Technology3 years ago
Game consoles were once banned in China. Now Chinese developers want a slice of the $49 billion pie
Politics2 years ago
Have the last few wobbly weeks seen a turning point for Johnson as PM?
Environment10 months ago
Tesla advances Powerwall pilot project with German electric company