Good morning. Today we're talking about the surprising level of government borrowing, the Big Tech crackdown, Ocado job losses and unpopular opinions from the Bank of England.
Government borrowing surprise
Public sector borrowing was £13.2bn less than expected in the last tax year coming in at £139.2bn, the fourth-highest level on record. The better than expected outcome could mean the chancellor Jeremy Hunt has more scope to cut taxes ahead of the pending election, expected to happen in late 2024. It’s also led to the UK’s credit rating outlook to be upgraded from “negative” to “stable” by ratings agency S&P. The national debt – the historic accumulated gap between the tax revenue and government spending – has jumped by 40% in the past three years driven by government support schemes for Covid and the cost of living crisis, and now stands at £2.53tr or £90,000 per household.
UK tech crackdown
Big Tech firms like Google, Facebook and Amazon will face greater regulation and potential fines of as much as 10% of global sales for practices that hurt consumers, under sweeping new legislation proposed by the UK government. Under the draft bill, the competition authority will get more powers imposing additional obligations to firms classified as having “strategic market status”, that is with market power in at least one digital activity and global sales above £25bn, or UK revenue over £1bn.
Switching humans for robots
Online grocer Ocado plans to shut its Hertfordshire fulfilment centre as it moves towards robotic warehouses, in a move that will affect around 2,300 staff. The site is the company’s oldest and currently handles a fifth of orders. The orders will instead be shifted to a new state-of-the-art automated warehouse in Luton, which is due to open later this year. Ocado said its new robotic warehouses use less energy and can pick well over 200 items an hour, compared with around 150 for its original site.
Bank of England Chief Economist Huw Pill says British people need to accept they are now poorer instead of seeking pay rises to maintain living standards after a jump in inflation. In a podcast interview Pill, who earns £190,000 a year, said some elements of inflation hitting the UK are transitory but that CPI, currently 10.4% wouldn't fall to the target rate of 2% for another two years. Last year the central bank's governor, Andrew Bailey, faced backlash after he made similar comments urging people not to ask for big pay rises, to try and stop prices rising out of control.
Second term: US President Joe Biden has announced he will run for re-election in 2024, setting the stage for a potential rematch with Donald Trump.
Cutting back again: Joules has launched consultations over potential job losses after new owner Next said it is accelerating transition plans.
On the up: Primark has seen a 20% surge in sales to £4.2bn after prices went up and shoppers flocked to city centres.
SK investing: Netflix has announced it will spend $2.5bn on South Korean content in the latest sign of Korean culture’s explosive popularity worldwide.
Sweet prices: KitKat maker Nestle has hiked the prices of its products by almost 10% in the past year to offset a "significant" rise in costs.
Back to the start: Planet Organic’s founder, who established the organic supermarket back in 1995, is returning to spearhead a takeover.
Dramatic withdrawal: First Republic Bank customers pulled more than $100bn from their accounts in the first three months of the year amid concerns about the health of the global banking system.
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