11th October 2022
Bite-sized business news from the UK and beyond
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Today's stories
Bank of England extends emergency measures
Speedy delivery apps in takeover talks
ECONOMYBank of England extends emergency measures
What happened?Yesterday the Bank of England said it would be extending its emergency support for bond markets and pension funds.How did we get here?Two weeks ago the government’s announced a £45bn package of unfunded tax cuts as part of a plan to boost the economy, but the level of government borrowing required spooked investors who were unconvinced that it was sustainable.What followed was days of financial market turmoil with the pound dropping to a record low and a sharp fall in the value of government bonds and an increase in their interest rates or yield.This had serious impacts on pension funds – which invest heavily in bonds – with huge wholes created in their balance sheets from the drop in bond values.The Bank of England then stepped in, pledging to buy government bonds to shore up the market as they were concerned a collapse in the bond market cold threaten the stability of the entire UK financial system.It said it would buy up to £65bn bonds, with a limit of £5bn a day, yesterday it doubled the limit to £10bn and confirmed the intervention would end this Friday.Has the Bank’s actions calmed the markets?Before the mini-budget, the yield on government borrowing over a 30-year period stood at about 3.7%. After the mini-budget it jumped to 5.1% until the Bank's intervention pushed the rate back down. However, in recent days it has crept back up again to around 4.5%.Elsewhere yesterday…The chancellor Kwasi Kwarteng bowed to pressure by announcing he would bring forward the publication of his debt cutting plan by three weeks to 31st October. The government is hoping that the release of the financial forecasts will reassure international investors that it has a grip on how to manage the economy.
Other stories to keep you in the loop
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STARTUPSSpeedy delivery apps in takeover talks
What happened?Yesterday Bloomberg reported that grocery delivery app Getir is in talks to buy rival Gorillas.The market for quick grocery delivery has ballooned since the start of the pandemicIstanbul based Getir and Berlin founded Gorillas are just two of the apps that have launched in the UK in the past two years. Other startups like Zapp and Jiffy alongside takeaway pioneers Ubereats and Deliveroo have all started to deliver shopping in under half an hour.Analysts estimate the global grocery delivery market is worth a whopping $10tr so it’s no surprise the market is so crowded. To deliver goods so quickly, these firms rely on hundreds of dark stores – small fulfilment centres based in local neighbourhoods – which means they need huge amounts of funding.Many delivery startups are loss making so smaller players are being acquired by larger, better funded rivalsFounded in 2015, the Getir operates in nine countries and 81 cities across the UK, US and Europe. In March it raised $768m taking its valuation to $11.8bn, making it one of Europe’s few ‘decacorns’ - a private, venture-backed company worth more than $10bn.The company has been operating in the UK since last year and has expanded quickly, spreading to nine cities and buying rival Weezy in November. The potential takeover would give Getir scale in the key UK and German markets and come at a critical time for GorillasGorillas has had a troubled 2022 with rumours circulating for some time that it was shopping for a buyer . In May it announced it would be laying off 300 employees and exiting Italy, Spain, Denmark and Belgium in a bid to save cash and get to profitability.
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