Today's business and finance round up 16th March 2022
😣Inflation outstrips wage growth ahead of ‘awful April’
16th March 2022
Bite-sized business news from the UK and beyond
Good morning The world’s richest man, Elon Musk, has sold his seven Californian homes for nearly $130m to fulfil his 2020 vow to own no property. With an estimated net worth of over $220bn, the Tesla and SpaceX founder now lives in a modest rental home in Texas. Despite ditching physical assets, Musk is still clinging on to his beloved cryptocurrency investments, calling them a hedge against inflation.
Real pay cut – Inflation outstrips wage growth ahead of ‘awful April’
Unlucky – Camelot loses National Lottery licence after 28 years
ECONOMYInflation outstrips wage growth ahead of ‘awful April’
What’s going on?
Average pay excluding bonuses rose by 3.8% in the three months to January, according to the latest data from the Office of National Statistics. Compared to the 30 year high inflation of 5.5% it means that wages have fallen by 1% in real terms – the steepest drop in almost eight years.
Why is this important?
There’s no way to spin it – UK households are facing a cost of living crisis. The benefits of rising pay have finally been eaten up rising prices. April is set to bring further pain for consumers with a triple whammy of a record energy price cap, higher national insurance contributions and a freezing of income tax thresholds.Inflation expected to rise further this year, peaking at 8% driven by surging food and energy costs. With this being so far from the Bank of England’s target of 2%, interest rates will undoubtedly have to rise as well.All of this has raised concerns that consumer spending will take a hit which could tip the economy into a recession just as it was recovering from the effects of the pandemic.
Let’s end on a positive note. The good news is that unemployment fell to 3.9% in December and there were 1.34m unemployed in the three months to January – lower than the pre-pandemic level for the first time.But unfortunately people in work will feel the pinch in 2022, leaving the government with difficult decisions on how much it will support households struggling to make ends meet.
Other stories to keep you in the loop
Bad move: Wilko apologises for saying staff could come to work if they had Covid
Cooling off: Oil price falls below $100 but petrol hits new high
Closing down: HSBC announces 69 branches to shut across UK
Tit for tat: Russia bans President Joe Biden, Hillary Clinton from entering country
More sanctions: UK bans luxury goods exports to Russia and hikes import tariffs on products
Driving off: Car dealer Inchcape takes £750m hit on Russia exit
Securing supplies: Ocado strikes Polish factory deal as Russian conflict nears the border
LEISURECamelot loses National Lottery licence after 28 yearsCanadian firm Camelot is set to lose the licence to operate the UK National Lottery after 28 years. The government body in charge of awarding the licence has picked Czech rival Allwyn Entertainment as its preferred operator for the next decade starting in 2024.Allwyn is Europe’s biggest lottery operator and runs lotteries in the Czech Republic, Greece, Cyprus, Italy and Austria. Launched in 1994, the National Lottery is one of the world’s largest lotteries and is played by 10m Brits. The revenue generated is used to not only fund prizes – it’s created 6,300 new millionaires – but also goes towards good causes.It’s raised £45bn for 660,000 projects in the arts, sport and heritage across the UK. One of the most high-profile recipients of lottery funding are Team GB Olympic athletes who have won more than 100 gold medals, since 1996 when cash from the scheme began to be channelled into elite sports.So why did Camelot lose the licence after three previous successful bids? The bidding process is clouded in secrecy, but it's thought that after three decades, the government wanted to shake up the lottery with a new operator. Camelot has been criticised for not giving enough back to good causes and not doing enough to curb gambling addictions – areas Allwyn wants to address. The government’s decision leaves Camelot in an awkward position. It’s whole reason for being was to operate the National Lottery but fortunately for the 1,000 employees they will likely transfer over to Allwyn.
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