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Official figures have raised fears of a deepening public sector drag on the the UK’s economic recovery from recession.

Data from the Office for National Statistics (ONS) showed that productivity in the public sector, dominated by education and healthcare, deteriorated between the third and fourth quarters of 2023.

It measured a 1.0% decline over the period, leaving the figure 2.3% lower than a year ago and even further away from recovering pre-pandemic levels.

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The gap was put at 6.8%.

Public sector productivity measures the volume of services delivered against the volume of inputs – like salaries and government funding – that are needed to maintain those services.

While the sector has witnessed hits from the impacts of strikes since the end of the COVID crisis, the NHS has struggled to deal with a worsening backlog in many key waiting lists.

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Rows over funding have been exacerbated by record levels of long-term sickness.

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UK’s economy has ‘turned corner’

The official jobless rate stands at just over 4% – around 1.4 million people.

However, the numbers judged to be economically inactive due to poor health are nearing double that sum.

The Office for Budget Responsibility has estimated that the issue has added around £16bn to annual government borrowing bills.

Pressures have been reflected in ONS data, with output in both the health and education sectors falling during the fourth quarter of the year – contributing to the country’s recession.

That was despite rising inputs over the period.

Back in March, chancellor Jeremy Hunt used his budget to announce a Public Sector Productivity Plan – with an emphasis on improving technology in the National Health Service (NHS).

Figures next week are widely expected to confirm the end of the recession, with overall output returning to growth during the first quarter of the year.

Recent private sector surveys have painted a rosy picture for the dominant services sector, which accounts for almost 80% of overall output, despite continued pressure on budgets from the impact of higher inflation and interest rates to help cure the price problem.

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£4.7bn spent on EU border checks but some costs ‘unnecessary’ and timetable unclear, says new National Audit Office report

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£4.7bn spent on EU border checks but some costs 'unnecessary' and timetable unclear, says new National Audit Office report

Traders are facing increased costs and more paperwork due to Brexit border controls, according to a new report from the independent public spending watchdog.

The government is estimated to have spent £4.7bn so far but some of that spending was not necessary, the National Audit Office (NAO) has said.

Despite the UK voting to leave the European Union in 2016 – and officially exiting in 2020 – many border control checks are yet to be implemented.

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It is “not clear” when the checks will be fully in place, said Parliament’s spending authority in its trade border report, and there is no timetable for government to achieve its “world’s most effective border” target.

This lack of certainty, as well as “repeated delays” in bringing in import controls, resulted in spending on infrastructure and staff that was “ultimately not needed”, according to the NAO.

Those delays and the associated uncertainty have also impacted businesses by adding extra cost and admin burdens, the watchdog added.

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Late policy announcements have reduced the ability of businesses and ports to prepare for changes, the report said.

After five delays, the first phase of border barriers – requiring additional certification – came into force on 31 January this year, with a second phase having started on 30 April when physical checks were introduced at ports.

A third phase, requiring safety and security declarations, is scheduled for 31 October. These phases are partial import controls.

‘Increased biosecurity risk’

The UK is at “increased biosecurity risk” due to the phased implementation approach and having lost access to EU surveillance and alert systems after Brexit, the NAO said.

There is reduced awareness of “impending dangers”, such as African Swine Fever, it added.

Customs declaration work borne by businesses had been estimated to cost organisations a collective £7.5bn, according to HM Revenue and Customs (HMRC) figures in 2019, which the NAO notes has not been updated despite 39m customs declarations being made on goods moving between Britain and the EU in 2022.

The government’s £4.7bn figure is an estimate of post-Brexit border management and does not factor in the full, eventual cost.

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Strategy ‘lacks clear timetable’

It has not specified when a full regime will be in place but said it intends to introduce most of the remaining import controls during 2024.

The NAO said the 2025 UK border strategy “lacks a clear timetable” and cross-government delivery plan, with individual departments leading and implementing different parts.

It added that annual reports on progress will not be published until 2025 “at the earliest”, despite the government saying in its border strategy in 2020 that it would publish yearly progress reports.

The NAO recommended full border controls operate at all ports “as soon as possible”.

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Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

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Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

Sajid Javid, the former chancellor of the exchequer, has been approached about taking a role at Shein, the online fashion giant which is progressing plans for London’s biggest stock market float for years.

Sky News has learnt that Mr Javid is among a number of senior City figures who have held talks with Donald Tang, Shein’s executive chairman, in recent weeks.

City sources said that if the appointment of Mr Javid proceeded, it could see him either join Shein’s board or become an adviser to the Chinese-founded company.

They added that Baroness Fairhead, the former BBC Trust chair, was also on a list of candidates drawn up by headhunters advising Shein.

One person close to the company said the identities of those being approached reflected both the seriousness with which Shein was taking the issue of corporate governance and the extent of its focus on a London listing.

Since leaving the government, Mr Javid has taken a role with Centricus, an investment firm which tried unsuccessfully to structure an offer for Chelsea Football Club in 2022.

A spokesman for him, who had insisted that Mr Javid would stand for re-election in his Bromsgrove seat a week before publicly announcing the opposite, did not respond to a request for comment from Sky News.

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In recent weeks, several reports have repeated Sky News’ revelation that Shein has turned its attention to a London flotation amid difficulties in securing approval from US regulators.

An initial public offering would be likely to value Shein at around £50bn or more.

Paris is also understood to have been considered by the company as a possible listing venue.

Earlier this year, Jeremy Hunt, the chancellor, held talks with Donald Tang, Shein’s executive chairman, to persuade the company to commit to what would be one of London’s biggest-ever corporate flotations.

The meeting between Mr Hunt and Mr Tang underlined the importance that British officials are attaching to the idea of trumping the US in an effort to land the Shein IPO.

If it proceeded, Shein could become the London Stock Exchange’s second-largest IPO in history, behind the 2011 stock market debut of Glencore International, the commodities trading and mining group.

Mr Tang has also met executives from the LSE as well as more junior ministers as part of its IPO preparations.

Shein filed documents for a New York listing last year, but has grown concerned that its application may be rejected by the US Securities and Exchange Commission.

Goldman Sachs, JP Morgan and Morgan Stanley are advising on the deal.

Based in Singapore, Shein has become one of the world’s largest online fashion retailers, although its growth has not been untroubled amid mounting concerns about labour standards.

Last year, Sky News revealed that Shein was in talks to buy the British fashion brand Missguided from Mike Ashley’s Frasers Group.

While the transaction itself was worth only a modest sum, retail analysts said that it could pave the way for Shein to build a more meaningful profile in the UK, potentially through a broader collaboration with Frasers.

Founded in China in 2012, Shein was valued at over $100bn last year, at which point it was worth more than H&M and Zara’s parent company, Inditex, combined.

The company’s valuation was slashed to $66bn as part of a share sale last year.

Shein operates in more than 150 countries.

It has also struck an agreement with SPARC Group, a joint venture between the Ted Baker-owner ABG and Simon Property Group, a US shopping mall operator.

Under that deal, SPARC’s Forever 21 fashion brand gained distribution on the Shein platform, which boasts 150m users globally.

Shein acquired a one-third stake in SPARC Group, while SPARC Group also took an undisclosed minority interest in Shein.

The LSE’s efforts to court Shein come during a challenging period for the City as a listing venue for large multinationals, with ARM Holdings, the UK-based chip designer, opting to float in New York rather than London.

Other companies, such as the gambling operator Flutter Entertainment and drug company Indivior, are planning to shift their primary listings to the US, citing higher valuations and more liquid markets.

In recent weeks, however, London has landed the prospective IPOs of Raspberry Pi, the personal computer maker, and AOTI, a medical technology provider.

Mr Hunt last week hosted a summit at Dorneywood attended by technology companies looking at listing in the UK.

Shein declined to comment.

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Record profits at Ryanair after costs rise – but ticket price cuts could be on the way

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Record profits at Ryanair after costs rise - but ticket price cuts could be on the way

Ryanair has reported another year of record profits and passenger numbers.

The average fare at the airline, which is Europe’s largest by passenger numbers, was 21% more expensive than 12 months earlier, its annual results showed.

But the company suggested a cut in ticket prices could be on the way after this summer when prices will either be the same or more expensive than last year.

Annual profits reached €1.92bn (£1.64bn), surpassing the previous record of €1.45bn (£1.26bn) made in the year ending March 2018.

Passenger numbers also outpaced previous all-time highs and are now well above pre-pandemic numbers at 184 million – a rise of 23% on the pre-COVID year of 2019.

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Ticket prices

Those passengers paid fares costing an average of 21% more than the year up to March 2023 but Ryanair’s chief executive Michael O’Leary said if the company has to cut fares to have planes 94% full next April, May and June “then so be it”.

While demand is “strong” for summer flights and its summer schedule will operate over 200 new routes, the low-cost carrier said it remained “cautiously optimistic that peak summer 2024 fares will be flat to modestly ahead of last summer”.

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Boeing headwinds

The passenger increase has come despite Boeing‘s delays in delivering new planes to the airline.

Ryanair had staked a large part of its financial success on expansion through 300 new 737 MAX 10 aircraft.

But the plane manufacturer has been beset by delays amid regulatory and media scrutiny of safety at its manufacturing sites after a door blew off an Alaska Airlines Boeing 737 MAX 9 jet.

There’s a risk those delays “could slip further”, Mr O’Leary said.

But Ryanair said it would receive “modest compensation” from Boeing for the delays.

The no-frills carrier also said its fuel bill rose 32% to €5.14bn (£4.4bn).

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