2nd August 2021
Good morning How is it August already? Anyhow the government is teaming up with a host of companies to roll out discounts on pizzas, cinema tickets and more, in a bid to encourage the under-30s to get vaccinated. Vaccine take-up has been far lower for 18-30-year olds than any other age group so far, 68% have had one dose compared to 89% in the wider population.
- Monzo under investigation as losses widen
- Missing – 100k lorry drivers
Friday's market moves
FTSE 100 -0.7% 7,032
FTSE 250 -0.4% 22,948
UK markets ended the week down but were up in July following a busy week of mostly positive company results.
Monzo under investigation as losses widen
What’s going on?
On Friday, digital bank Monzo released a double whammy of bad news in its results for the 12 months to February.
Firstly it announced it was under investigation by the UK financial watchdog the FCA. And secondly it made an even bigger loss than the previous year at £130m.
Why is this important?
Monzo is one of the UK’s largest app-based banks and has grown to over 5m customers since launching six years ago.
In May the FCA told Monzo it had started an investigation into compliance related to financial crime regulation. Monzo said it was cooperating with the investigation, which was in its early stages but could lead to civil and criminal charges.
This follows last year when hundreds of its customers complained that they couldn’t access their accounts without explanation.
Monzo is known for its hot coral banking card and spend-tracking data, however, like other many fintechs it has struggled to become profitable.
During the pandemic Monzo also experienced another setback as customers reduced overall spending and going on holidays overseas. Previously these were key revenue streams.
In even more worrying news the bank’s auditors warned – for the second year running - that the ongoing losses puts its future at risk. Monzo said its target is to reach profitability in 2022.
On the positive side Monzo reported that customer numbers had jumped 23% in the year driven mostly by word of mouth. Deposits in customer accounts had increased by 124% to £3.1bn, on average, they’re holding £600 in their accounts, a 68% increase from the year before. And the company also confirmed that its continuing with plans to expand into the US.
Missing – 100k lorry drivers
The UK is in the middle of a lorry driver shortage that could have knock on effects on supermarket supplies. That’s according to the Road Haulage Association (RHA) who says that 100,000 lorry drivers are needed to avoid supply chains failing.
The issue has been brewing for some time because of a number of drivers (pun intended):
- During the pandemic many drivers have gone back to their native countries and many have not returned.
- The driver population is ageing and therefore retiring.
- Lorry training takes many months and there is a major backlog of tests that were put on hold during the pandemic.
- Drivers are not on the approved list of skilled workers eligible for a special visa post Brexit so recruiting from Europe is difficult.
The shortage is pushing up driver wages. Industry sources say that drivers from agencies who were receiving £350 a day in January are now making around £800 a day.
Supermarkets are offering higher wages to attract more drivers. Yesterday there were reports that Aldi has increased wages for lorry drivers. And last month Tesco announced it’s giving a £1,000 bonus to drivers who join before the end of September.
The higher driver costs are being passed on to supermarket suppliers and could soon leak into shop prices.
The RHA has called on the government to do more to tackle the issue.
The Department for Transport recently announced measures to streamline the process for new drivers to gain their licence but said it had no plans to introduce a short-term visa for drivers. Instead the government is encouraging employers to invest in domestic workforce instead of relying on foreign labour.
Stat of the day
Singapore hands out the most cash to Olympic medallists: £205k for bronze, £266k for silver and £533k for gold
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