Daily business and finance update 27th January 2023
UK car industry hits seven decade low
Good morning. A record number of people switched their bank account in the final three months of 2022 driven by cash incentives of up to £200. In total 376,107 switches made the move which is still a tiny proportion of the millions of current accounts in the UK with the average account relationship lasting 17 years.
Big Stories
UK car industry hits seven decade low
The number of cars made in the UK in 2022 was 775,000 - the fewest since 1956, according to figures released by the industry body yesterday. British car production has plunged over 40% since 2019 and every year since the Brexit vote in 2016. The pandemic disrupted global car parts supply chains with chip shortages especially acute and damaging to car manufacturing. But the UK has suffered a series of setbacks including factory closures and the recent demise of Britishvolt, the homegrown battery startup once badged as the key to the country's transition to electric cars.
US economy holds strong
New figures released yesterday showed that the American economy proved unexpectedly resilient in 2022. GDP grew by 2.9% in the final three months of the year, less than the 3.2% expansion over the previous quarter but better than the 2.6% expected by economists. There were concerns that decades-high inflation and rising interest rates could dampen consumer spending, the main driver of growth in the world’s largest economy, and lead to a recession. Although many economists still expect the country to fall into a mild recession later this year.
Asda cuts back
The UK’s third biggest supermarket unveiled restructuring plans that include cutting pay for 4,300 workers and slashing 300 roles. Asda wants to move some overnight restocking shifts to the daytime, putting some night shift manager roles at risk. It also plans to reduce opening times for in-store Post Office branches and to close seven of its in-store pharmacies. Asda says the changes will drive efficiency but plans are likely to face stiff opposition from unions. The news comes as grocers look for ways to retain profits amid rising inflation in food, energy and labour as well as competition from discounters like Aldi and Lidl.
Shell mulls UK retail exit
Yesterday the oil giant announced it’s considering leaving its retail business in the UK in the wake of "tough market conditions". Shell supplies 1.4m homes with energy and about 500,000 with broadband. Retail energy suppliers have struggled over the past year with soaring wholesale prices following the war in Ukraine with more than 30 providers collapsing since 2021. Conversely during that period Shell’s wholesale and business-to-business arms have profited from the rising energy prices helping the company post record profits. A final decision is expected in a few months and an exit could put 2,000 jobs at risk.
Elsewhere...
Expanding pound: Discount retailer Poundland has unveiled plans to open and relocate at least 50 new stores over the next nine months in a move set to create up to 800 jobs.
Drinks up: Guinness maker Diageo has beaten expectations with surging sales and boosted profits as consumers splashed out on higher-priced and premium tipples.
End of an era: Netflix will end free password sharing in UK within months.
Jetting away: Package holiday firm Jet2 has raised its profit expectations amid soaring winter bookings.
Banking profits: TSB’s 5,700 staff and executives are to share a 10% bigger bonus pot this year, after rising interest rates pushed the bank’s annual profits to record highs.
Shutting up: Natwest will close a further 23 branches between April and June this year as the shuttering of its presence on Britain’s high streets picks up pace.
Counting losses: Collapsed crypto exchange FTX’s complete list of creditors was released. It includes Goldman Sachs, Google and Netflix, among thousands of other creditors.
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Number Of The Day
£200m
How much 18 days of postal strikes cost Royal Mail last year.