Connect with us

Published

on

The UK economy shrank at the start of 2025, according to official figures which had been expected to show further meagre growth.

The Office for National Statistics (ONS) said that output declined by 0.1% during the month following the 0.4% growth seen in December.

A growth figure of 0.1% had been tipped by a majority of economists but the ONS noted a slump in manufacturing output.

Money latest: Biggest cuts in fixed rate mortgage deals in almost six months

Its director of economic statistics, Liz McKeown, said: “The economy shrank a little in January but grew in the latest three months as a whole, with the overall picture continuing to be of weak growth.

“The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.

“However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more.”

January’s data marks a fresh blow for the chancellor as the economy faces headwinds on many fronts at a time when her stated priority is securing economic growth.

Looming large for Rachel Reeves is the threat of an adverse business reaction to budget tax hikes she is due to impose from April.

Firms are facing the bulk of the £40bn bill through employer national insurance contributions and are warning of job losses, weaker pay rises and investment, along with possible price hikes, to account for the surge in costs.

Consumer spending power is also set to be tested at the same time as essential bills including those for council tax, water and household energy are due to rise sharply.

Other challenges include the escalating trade war initiated by Donald Trump, which is tipped by economists to dent growth prospects globally.

Ms Reeves is low on ammunition as she prepares a spring statement for MPs later this month, with the welfare bill set to be slashed to avoid breaking her own spending rules.

At the same time, the independent Office for Budget Responsibility is widely expected to downgrade its forecasts for UK growth ahead.

Please use Chrome browser for a more accessible video player

What to expect from the Spring Statement

The chancellor said of the ONS data: “The world has changed and across the globe we are feeling the consequences.

“That’s why we are going further and faster to protect our country, reform our public services and kickstart economic growth to deliver on our Plan for Change.

“And why we are launching the biggest sustained increase in defence spending since the Cold War, fundamentally reshaping the British state to deliver for working people and their families; and taking on the blockers to get Britain building again.”

Read more from Sky News:
Queen sent letter of support to rape survivor Gisele Pelicot

Why is NHS England being abolished – and what is it?

Her Conservative counterpart, Mel Stride, urged her to use the spring statement to change course.

“It is no surprise that growth is down again, following near no growth in the last three months of 2024”, he said.

“After consistently talking Britain down, raising taxes to record highs and crushing business with their extreme employment legislation this government is a growth killer.

“Labour inherited the fastest growing economy in the G7 but since they arrived business confidence has collapsed and jobs are being lost.”

Continue Reading

Business

US-listed Ulta Beauty swoops on high street chain Space NK

Published

on

By

US-listed Ulta Beauty swoops on high street chain Space NK

A New York-listed company with a valuation of more than $21bn is to snap up Space NK, the British high street beauty chain.

Sky News has learnt that Ulta Beauty, which operates close to 1,500 stores, is on the verge of a deal to buy Space NK from existing owner Manzanita Capital.

Ulta Beauty is understood to have registered an acquisition vehicle at Companies House in recent weeks.

Money blog: Top chef reveals thing he hates about customers

The exact price being paid by Ulta was unclear on Thursday morning, although one source said it was likely to be well in excess of £300m.

Manzanita Capital, a private investment firm, engaged bankers at Raymond James to oversee an auction in April 2024.

The firm has owned Space NK for more than 20 years.

More on Retail

Manzanita has also owned the French perfume house Diptyque and Susanne Kaufmann, an Austrian luxury skincare brand.

Read more from Sky News:
Royal Mail to scrap second-class post on some days
Warning a pub a day to close this year

Founded in 1993 by Nicky Kinnaird, Space NK – which is named after her initials – trades from dozens of stores and employs more than 1,000 people.

It specialises in high-end skincare and cosmetics products.

Manzanita previously explored a sale of Space NK in 2018, hiring Goldman Sachs to handle a strategic review, but opted not to proceed with a deal.

None of Ulta, Manzanita, Space NK and Raymond James could be reached for comment.

Continue Reading

Business

Royal Mail to scrap second-class post on Saturdays and some weekdays

Published

on

By

Royal Mail to scrap second-class post on Saturdays and some weekdays

Royal Mail is to be allowed to scrap Saturday second-class stamp deliveries, under a series of reforms proposed by the communications regulator.

From 28 July, Royal Mail will also be allowed to deliver second-class letters on alternate weekdays, Ofcom said.

The post will still be delivered within three working days of collection from Monday to Friday.

Money blog: Top chef reveals thing he hates about customers

The proposals had already been raised by Ofcom after a consultation was announced in 2024, and the scale back was proposed early this year.

Royal Mail had repeatedly failed to meet the so-called universal service obligation to deliver post within set periods of time.

Those delivery targets are now being revised downwards.

More from Money

Rather than having to have 93% of first-class mail delivered the next day, 90% will be legally allowed.

Please use Chrome browser for a more accessible video player

The sale of Royal Mail was approved in December

The target for second-class mail deliveries will be lowered from 98.5% to arrive within three working days to 95%.

A review of stamp prices has also been announced by Ofcom amid concerns over affordability, with a consultation set to be launched next year.

It’s good news for Royal Mail and its new owner, the Czech billionaire Daniel Kretinsky. Ofcom estimates the changes will bring savings of between £250m and £425m.

A welcome change?

Unsurprisingly, the company welcomed the announcement.

“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service,” said Martin Seidenberg, the group chief executive of Royal Mail’s parent company, International Distribution Services.

“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”

Citizens Advice, however, doubted whether services would improve as a result of the changes.

“Today, Ofcom missed a major opportunity to bring about meaningful change,” said Tom MacInnes, the director of policy at Citizens Advice.

“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.”

Acknowledging long delays “where letters have taken weeks to arrive”, Ofcom said it set Royal Mail new enforceable targets so 99% of mail has to be delivered no more than two days late.

Changing habits

Less than a third of letters are sent now than 20 years ago, and it is forecast to fall to about a fifth of the letters previously sent.

According to Ofcom research, people want reliability and affordability more than speedy delivery.

Royal Mail has been loss-making in recent years as revenues fell.

Read more from Sky News:
Greater risk to UK economy from Trump tariffs, BoE warns
What is a wealth tax and how would it work?

In response to Ofcom’s changes, a government spokesperson said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth. With the way people use postal services having changed, it’s right the regulator has looked at this.

“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK”.

Ofcom said it has told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear their experiences implementing the changes.

Continue Reading

Business

A pub a day to close this year, industry body warns as it calls for cut to tax burden

Published

on

By

A pub a day to close this year, industry body warns as it calls for cut to tax burden

An industry body has warned that the equivalent of more than one pub a day is set to close across Great Britain this year.

According to the British Beer and Pub Association (BBPA), an estimated 378 venues will shut down across England, Wales and Scotland.

This would amount to more than 5,600 direct job losses, the industry body warns. It has called for a reduction in the cumulative tax and regulatory burden for the hospitality sector – including cutting business rates and beer duty.

The body – representing members that brew 90% of British beer and own more than 20,000 pubs – said such measures would slow the rate at which bars are closing.

BBPA chief executive Emma McClarkin said that while pubs are trading well, “most of the money that goes into the till goes straight back out in bills and taxes”.

“For many, it’s impossible to make a profit, which all too often leads to pubs turning off the lights for the last time,” she said.

“When a pub closes, it puts people out of a job, deprives communities of their heart and soul, and hurts the local economy.”

She urged the government to “proceed with meaningful business rates reform, mitigate these eye-watering new employment and EPR (extended producer responsibility) costs, and cut beer duty”.

“We’re not asking for special treatment, we just want the sector’s rich potential unleashed,” she added.

Read more:
What is a wealth tax and how would it work in the UK?

Is a comeback on for the British pub?
Horner: Red Bull sacking came as a ‘shock’

The government has said it plans to reform the current business rates system, saying in March that an interim report on the measure would be published this summer.

From April, relief on property tax – that came in following the COVID-19 pandemic – was cut from 75% to 40%, leading to higher bills for hospitality, retail and leisure businesses.

The rate of employer National Insurance Contributions also rose from 13.8% to 15% that month, and the wage threshold was lowered from £9,100 to £5,000, under measures announced by Rachel Reeves in the October budget.

Continue Reading

Trending