26th January 2022
Bite-sized business news from the UK and beyond
Good morning According to the Institute of Customer Service, Covid has made Brits complain more than ever before, with 1 in 8 of us having issues with a company in the past year.
- Going down – UK growth forecasts trimmed
- Downsizing – Royal Mail and Unilever announce job cuts
UK growth forecasts trimmed
What’s going on?
In its latest set of economic forecasts, the International Monetary Fund (IMF), has downgraded 2022 UK growth by 0.3% to 4.7% blaming ongoing supply chain issues and Omicron restrictions.
Why is this important?
The IMF - an international body that acts as a short term lender for countries facing financial difficulties - regularly updates its estimates on how it thinks countries are performing and flags any concerns it has on global growth.
Since its last update in October it’s trimmed forecasts not only for the UK but for the rest of the world.
Global growth forecasts for 2022 edged down 0.5% to 4.4%. Germany fell by 0.8% to 3.8% and China’s growth forecast reduced by 0.8% to 4.8%. The US had the biggest chop of 1.2% to 4.0%,
These changes may seem too small to be a big deal but the IMF issued stark warnings for the year ahead:
- UK households may need extra government support to help pay their energy bills as wages fail to keep up with 30-year high inflation.
- A conflict between Russia and Ukraine could see energy prices surge even higher and keeping inflation at elevated levels for longer.
- The expected rise in interest rates in the US and elsewhere to curb inflation will lead to a correction in the stock market.
- Global supply chain disruption and the spread of Omicron will put a dampener on output and economic activity.
After showing some post-pandemic bounce, the global economy is looking a little worse for wear with 2022 set to be one with many challenges.
The IMF estimates that due to Covid-19 the global economy would be $13.8tr smaller by 2024 than it would have been had its pre-pandemic trend continued.
At 4.7%, the UK is forecast to grow faster than any other country in the group of seven advanced nations (G7). But that’s after the British economy shrank 10% in 2020– more than any other G7 country.
Royal Mail and Unilever announce job cuts
Yesterday two of Britain’s biggest private sector employers announced they would be downsizing their workforces.
Royal Mail – which employs 140,000 people - announced plans to lay off 700 of its 8,000 managers in a bid to streamline operations and save £40m a year.
The latest cuts are in addition to the 2,000 outlined almost two years ago.
The news came as it announced that parcel volumes fell 7% in the last three months of 2021. The rise in online shopping during the pandemic has undoubtedly helped Royal Mail’s performance since 2020 but the reopening of the high street has led to more in person shopping and therefore less demand for its services.
The company also said that the festive period was impacted by staff absences due to Covid. At the peak earlier this month 15,000 employees were ill or isolating leading to slower deliveries in some areas.
Unilever - which employs 149,000 worldwide including 6,000 in the UK and Ireland – announced it would remove 1,500 managers to simplify its organisational structure.
The consumer goods giant has had a tumultuous start to the year, from losing out on buying GlaxoSmithKline’s consumer business for £50bn to being publicly chastised by investors for poor management.
News of the downsizing is seen as a way of showing the company is on the right track despite recent events.
Stat of the day
Bob Dylan has sold his entire back catalogue of music in a deal worth around $200m
Other stories to keep you in the loop
- UK toy sales fell last year amid supply disruption
- Surging inflation pushes cost of servicing govt debt to December record of £8.1bn
- Holiday bookings jump as UK Covid travel tests axed
- Oil prices rebound as fears of Russian invasion rise
- Boohoo opens first UK factory
- Nvidia’s $40bn take-over of chipmaker Arm from SoftBank ‘on brink’ amid backlash
- Rapid delivery app Getir aims to create 6,000 UK jobs this year
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