21st October 2022
Bite-sized business news from the UK and beyond
- Market reacts to Truss departure
- Amazon enters UK price comparison market
Market reacts to Truss departure
There was a positive but mild reaction in the financial markets after Liz Truss resigned as prime minister yesterday.
A brief recap of the Liz Truss six week era
Her tenure started with almost two weeks of mourning for the death of the queen, then she and her then chancellor Kwasi Kwarteng announced £45bn of unfunded tax cuts in the infamous “mini” budget that was ultimately her downfall.
She believed it would supercharge the country to create a high growth low tax economy. But investors – who the government relies on to fund its spending – were unconvinced. The fallout then led to Kwarteng’s departure, before Jeremy Hunt then became chancellor only to reverse most of the mini budget policies.
The financial impact of the Truss government has been sharp
During her tenure, the FTSE 100 lost 6% at its lowest, whilst the pound sunk to a record low of $1.07. The government bond market was thrown into disarray as investors viewed the UK as a riskier investment and the Bank of England was forced to step in to stabilise pension funds.
Yesterday’s announcement saw the pound rally to over $1.13, the FTSE 100 closed up 0.3%. and interest on government bonds fell slightly.
Zooming out: There are fears that weeks of political chaos has damaged the country’s reputation and credibility on the world stage that will live on long after Liz Truss leaves Downing Street. Some international investors have commented that the UK is becoming ‘uninvestable’ which would have real negative impacts for the country’s growth prospects.
Other stories to keep you in the loop
- Tory leadership race: Who could replace Liz Truss as prime minister?
- Millions forced to skip meals as cost of living crisis deepens, poll reveals
- Six in 10 UK adults struggling to keep up with bills
- National Grid to pay households more to use off-peak power
- Ovo Energy makes eleventh hour bid to snatch Bulb from rival Octopus
- HSBC climate change adverts banned by UK watchdog
- Amazon facing £900m lawsuit for ‘pushing customers to pay more’
- Uber looks to boost revenue with new advertising division
- Twitter moves to reassure staff as report claims Musk wants 75% of workers axed
Amazon enters UK price comparison market
This week Amazon launched an insurance price comparison service for UK customers. The ecommerce giant is aiming to disrupt a market dominated by established incumbents like Go Compare and Compare The Market.
From humble beginnings Amazon has expanded in all directions
Since founding as an online bookstore in 1994 the company now sells pretty much everything, as well as a operates a streaming platform, cloud computing service and artificial intelligence arm. Its next frontier is to move into financial services.
It already offers online payments, credit cards, gift cards and a "buy now, pay later" partnership with Barclays in the UK. In insurance, it offers extended warranties for some products purchased through its online store.
The UK has long been one of the world's most active markets for price comparison sites, unlike the US where most insurance is bought directly.
Amazon is starting small but has big ambitions
The company is partnering with only three insurers — Ageas, Co-op and LV — with more to come next year. The rollout will be slow with the price comparison service only available to a few UK Amazon account holders for now, and it will focus on home insurance but says this is ‘just the beginning’ meaning it could expand into other financial products.
Zooming out: Amazon isn’t the first big tech firm to move into UK price comparison. In 2016 Google launched a car insurance, mortgages and credit card comparison service but relegated the project to the Google Graveyard after just one year.
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