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- Daily business and finance update 24thMarch 2023
Daily business and finance update 24thMarch 2023
Central banks keep hiking
Good morning. The city of New York has unveiled an updated version of the iconic “I Heart NY” logo, but native New Yorkers are less than happy about the rebrand with a less than imaginative replacement chosen.
Big Stories
Central banks keep hiking
This week central banks pressed ahead with interest rate rises to bring down stubborn inflation, despite unease about the strength of the banking sector in the wake of the takeover of Credit Suisse and collapse of Silicon Valley Bank. Yesterday the Bank of England followed the US Federal Reserve and Norway’s central bank by also raising rates by another 0.25% to 4.25%, the highest rate in 14 years. Earlier in the week, markets had thought the Bank of England could freeze rates but after Wednesday’s surprising jump in inflation to 10.4%, that position became untenable. On the bright side the UK central bank said it no longer expected a recession this year but growth would still be low. Economists think that yesterday’s hike – the 11th in a row since December 2021 – could be the last before rates begin to fall back down.
Adios Amigo
Lender Amigo Loans is set to wind down and suspending operations after failing to raise enough cash to continue trading. Launched in 2005, the firm specialises in providing credit to people who struggle to borrow from mainstream banks, with friends and family acting as guarantors. Customers would typically borrow at interest rates of around 50%. In 2019 Amigo was investigated by the financial regulator and found to have inadequate affordability checks, this led to thousands of customer complaints and compensation requests. Last month, the regulator said it would have fined the company £73m if Amigo wasn’t is such a poor state.
Covid fraud recovery disappoints
Only 1% of the £1.1bn lost to fraud and error in Covid business grant schemes has so far been recovered, according to the National Audit Office. Since March 2020 the government has paid out £22.6bn in grants to businesses to keep them afloat during the pandemic, it was the second largest Covid support scheme after furlough. The NAO said the “overwhelming majority” of losses happened in the early months of Covid when the business grant scheme did not require pre-payment checks for businesses. In response to the report the government said ““no amount of error and fraud is acceptable, and we are continuing to work hard to recover these funds where possible.”
Consulting cuts
Yesterday tech consultancy giant Accenture announced it would cut 19,000 jobs, or nearly 3% of its workforce, over the next 18 months as it became the latest professional services company to reduce costs amid a gloomy global economy outlook. More than half of the axed roles would be among back-office staff, the company said. Last month, McKinsey said it plans to axe 2,000 jobs after quickly growing headcount over the past decade, while KPMG announced it had cut almost 700 employees from its US advisory practice amid slowing demand. Others, such as EY, are trimming their hiring targets by thousands.
Elsewhere...
Walking out: Junior doctors have intensified their pay dispute with the government by calling a four-day strike next month that NHS bosses fear will force them to cancel up to 250,000 appointments.
Banking on it: About 3% of families in the UK - at least 2.1m people - used a food bank in the year to March 2022.
Big screen ambitions: Apple may be partnering with studios to put more titles in cinemas, a plan that could cost $1bn a year.
Under attack: Tech billionaire Jack Dorsey is facing scrutiny, after a report accuses the payments company he leads of inflating user numbers and catering to criminals.
TikTok vs US: The CEO of TikTok squared off with US legislators in a congressional hearing over the app’s alleged ties to the Chinese government.
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Number Of The Day
1,050,110
People that Canada added to its population in 2022, the first time the country has grown by over 1 million and the fastest expansion of any advanced economy last year.