7th October 2021
Good morning Soaring energy prices continue to make the headlines. Yesterday, in the latest turn of events, Russian President Vladimir Putin said that the country would boost gas supplies to Europe after UK wholesale gas prices hit a new high. Putin’s comments appeared to calm the market after gas prices had risen a whopping 37% in 24 hours.
- Every little helps – Tesco delivers smashing results
- Build back better – Boris Johnson lays out economic vision
Tesco delivers smashing results
What’s going on?
Tesco reported a strong set of numbers for the six months to August. Britain’s biggest supermarket doubled profits to £1.1bn whilst revenues grew 3% to £27.3bn.
Why is this important?
A combination of Euro 2020 football tournament and more domestic holidays amid ongoing travel restrictions was behind Tesco’s performance.
Despite the lifting of lockdown measures the online business continued to grow and customers stuck to big shops and large supermarkets as Covid concerns remained.
Supply chain issues have plagued many retailers this year but so far Tesco has been relatively immune. That’s thanks to its enormous scale and distribution network. It’s one of only three retailers that use a significant amount of rail freight at a time when the lack of lorry drivers is causing supply shortages across the country.
Tesco expects that the strength in its supply chain leaves it well placed ahead of the crucial Christmas period. It’s secured 10% more turkeys than last year which is handy as sales of frozen birds are already running ahead as customers shop early to get ahead of the festive rush.
The strong start to the year prompted Tesco to upgrade its profit outlook and announce a £500m programme to buyback shares from investors.
Tesco has faced several challenges over the past decade including increased competition from discount retailers, an accounting scandal and the sale of parts of its international business.
Yesterday’s strong results may mark a turning point and investors seemed to agree with shares rising 6% - the top performer on the FTSE 100.
Boris Johnson lays out economic vision
Yesterday Boris Johnson vowed to “unleash the spirit” of the UK in his key note speech at the Conservative Party conference.
The Prime Minister set out a vision to transform the country into a “high pay, high skill and high productivity” economy as part of his “levelling up” agenda.
The content was full of optimism and heavy on jokes but largely light on specific economic policies.
He said the impact of pandemic on public finances justified the upcoming rise in national insurance to pay for the NHS and social care. But ultimately he said he believed in a low tax economy.
Johnson faced criticism for failing to directly tackle the series of crises facing the country including petrol shortages, soaring energy bills and supply shortages in supermarkets and retailers.
He had said earlier in the week that he wasn’t concerned by rising prices and supply issues calling it the "stresses and strains" of a post-Covid recovery.
But if these problems continue and create a winter of discontent then the government may have to take a more proactive approach.
Stat of the day
As a result of the pandemic global airlines will lose around $201bn
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