New figures show sales growth for March rose at its slowest rate so far this year, with UK retail sales falling by 0.4% from 12 months earlier.

It comes as millions are having to deal with higher energy bills and taxes.

The BRC said pressure on people’s finances and the war in Ukraine had “shaken consumer confidence”.

Helen Dickinson, chief executive of the BRC, said customers faced “an enormous challenge this year” around their finances, which was “likely to be reflected in retail spend in the future”.

Small business owners told the BBC they had seen a recent dip in sales compared to previous months at a time when they were also having to grapple with higher operating costs.

Lucy Rushton, owner and founder of the Cheshire Gift Company, said she believed a lot of people were starting to be more prudent with their spending.

“Going into Easter, sales have definitely been lower than they were last year,” she said.

Ms Rushton, who started her business online and stored products in her garage before moving to a warehouse, told the BBC the company’s social media presence had helped with sales from loyal customers.

But she added: “I would be lying if I was not worried looking to the next year.”

Ms Rushton said she and her staff wear thermals to avoid putting the heating on in the company’s warehouse due to high energy costs.

“It is cold in the warehouse [but] I would rather keep my staff in jobs,” she said.

She said higher shipping and packaging costs were having the biggest impact on her profits, but her team had “adapted” and found new ways to get the best value for money without having to pass on big price increases to customers.

‘Clouds on the horizon’
With inflation rising at its fastest rate for 30 years, people in the UK are facing increased pressure from living costs. Fuel, energy and food prices have seen some of the biggest increases.

The rate at which prices rise has been forecast to reach 8.7% in the final three months of 2022, which means households may be forced to cut back.

Bev Logan, who set up her online women’s sportswear business Badass Mother Runners during the first Covid lockdown, said sales had been strong until they “nosedived” in April.

“It’s just a bit weird”, she said. “April hit and things went eerily quiet.

“It’s scary being a small business owner as your bills are going up just like everyone else’s, but your sales are going down. It’s understandable that people have to be careful but it’s a worry for many small businesses.”

—Five reasons why prices and bills are going up
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Don Williams, retail partner at KPMG, said the slower rate of sales in March suggested “clouds on the horizon as household budgets come under pressure from rising costs, an increasing tax burden and competition from holidays”.

“Additionally, retailers are facing their own battle with rising costs and inflation, and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers,” he added.

He said the big question was whether shoppers will reduce their physical and online shopping baskets in turn.

New figures from the BRC-KPMG retail sales monitor showed that total sales increased in March by 3.1%, compared to 13.9% in March 2021.

Beauty and fashion items were popular, as consumers took to town and city centres to shop in the run up to Mother’s Day.

Meanwhile, food sales for the month fell year-on-year and online sales for non-food items also decreased by 29%, compared with growth of 64.7% the year before.

Susan Barratt, chief executive of the Institute of Grocery Distribution, said food and drink sales figures faced tough comparisons to last year, when some lockdown restrictions started to ease.

“Easter was also earlier and we’re yet to see holiday spending ramp up this year,” she pointed out.

Source: https://www.bbc.com/news/business-61072471

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This is according to professional services firm EY.

Data from its latest Financial Services Brexit Tracker points to a rather muted response from firms since the end of the Brexit transition period.

While the number of financial firms that have publicly stated they have moved, or that they intend to move operations, has increased marginally in the last two years, big banks have revised downwards the number of jobs that they anticipate will move out of the UK.

Between January 2020 and December 2021, the number of financial services firms that publicly stated they have moved or plan to move some UK operations or staff, or both, to Europe rose just three percentage points from 41% to 44% (from 92 to 97 out of 222 companies).

Following the declaration of the referendum result in mid-2016, announcements rose steadily from 18% of financial services firms in December 2016 to 41% in January 2020 (39 to 92 companies out of 222).

And some of the largest UK investment banks have revised down the number of roles they will relocate to the continent to serve the needs of clients.

The total number of Brexit-related job relocations from the UK to Europe has fallen from 7,600 in December 2020 to under 7,400 now.

Dublin remains the top choice for operational moves, but Paris has been the biggest beneficiary from staff relocations.

36 financial services firms have announced their intention to relocate UK operations to Dublin, with Luxembourg attracting 29 companies and Frankfurt on 23.

Although Paris was fourth on the list with 21 companies moving operations, 2,800 staff moved from the UK to the French capital. That was followed by Frankfurt with 1,800 jobs relocated and Dublin with 1,200.

“While the majority of operational moves were made well ahead of the 2020 Brexit deadline – and before the pandemic – travel restrictions over the last two years have challenged the practicalities of relocation,” Fidelma Clarke, EY Ireland Financial Services Brexit Lead, pointed out.

“Depending on the trajectory of the Omicron variant and its impact on international travel in the short term, moves that were delayed should pick up over the coming year not least due to regulatory requirements to have senior financial services employees in situ in the firms they lead,” she added.

Simon MacAllister, Partner and Brexit Lead at EY Ireland, said the competing pull of the UK trying to retain its position as a leading global financial hub versus several EU centres trying to build their domestic capital markets would be a feature of the financial services landscape for the foreseeable future.

“This competitive dynamic between markets will play out for many years to come and will ultimately drive better outcomes and a more transparent European financial services market,” he predicted.

“For the EU and the UK to maintain their individual competitive standings on the global financial stage, they must continue to work together, while acknowledging evolving regulatory divergence. As we look to 2022, both markets will continue to navigate the challenges of the pandemic, but their long-term strategic priorities will increasingly differ,” he added.

Source: https://www.rte.ie/news/business/2021/1220/1267670-no-major-moves-by-uk-financial-firms-since-brexit-ey/

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Those negotiations have just started. A three-party coalition will be required and the two smaller parties, the Greens and the Free Democrats (FDP), have begun by talking together bilaterally before engaging with the Social Democrats (SDP), who are now the largest party in the Bundestag. It is not a certainty that a coalition of these three parties will be formed and the FDP, in particular, will want to keep open the possibility of an agreement with the Christian Democrats instead. But initially at any rate the momentum is clearly with the so-called ‘traffic light’ option.

It will be an unusual coalition: partly because it will, for the first time, involve three parties, but also because the party providing the chancellor will represent only around one-quarter of the vote and the two other parties jointly about the same. If the two smaller parties are able to combine together, as they are currently trying to do, their influence will be significantly stronger.

This will have consequences for the new coalition’s position on some foreign policy issues. Both the Greens and the FDP take human rights more seriously than the mercantilist SPD and will wish the next government to be more robust in its criticism of Russia and the People’s Republic of China (PRC). They will not, in either case, go as far as to demand trade boycotts or sanctions, but they will expect Germany to speak up more on the Uyghurs’ plight and perhaps put pressure on German companies with investments in Xinjiang to do more to combat forced labour.

They will however face a dilemma over Nordstream II, the new pipeline bringing Russian gas across the Baltic to Germany, which is about to start operating. Both parties expressed opposition to it during the election campaign albeit without specifying what exactly they would do once it was built. The SPD will be reluctant to see it mothballed, so the chances are that it will go ahead as planned.

But it will not be just Russia and the PRC whose domestic policies will cause difficulties with the new German government. Turkey’s too will come under increased scrutiny, as will those of some of the European Union’s (EU) Central and Eastern European members, notably Hungary and Poland. An SPD/Green/FDP German government will not be shy of linking EU countries’ adherence to the rule of law with the disbursement of EU funds.

There will also be tensions in the field of defence. The FDP is in favour of increasing defence expenditure, while the SDP and the Greens are not. Germany is in theory committed to the North Atlantic Treaty Organisation’s (NATO) target of spending 2% of national income on defence. NATO estimates that Germany will spend 1.53% in 2021; the last government planned to gradually increase this figure. It seems improbable that an SPD/Green/FDP coalition would actually hit 2% –  flat-lining at around 1.5% seems more likely.

More difficult though will be the decision on whether to maintain United States (US) nuclear weapons on German soil; and whether to equip the Tornado replacement aircraft with the capability for delivering free-fall nuclear bombs. Nuclear burden-sharing has been a key element in NATO’s deterrent strategy and if Germany were, as the Greens and some in the SPD want, to try to opt-out of direct involvement in it, this would put additional strain on the transatlantic alliance.

What will not change under any new German government will be a purported enthusiasm for more European defence. There will be frequent calls for a European army, for a European ‘defence union’ and for European ‘strategic autonomy’. But, as in the past, there is unlikely to be much clarity over what these terms mean or what concrete policies would be required to achieve them. This is an area where there has long been a marked contrast between what German politicians say about the EU and how they actually behave within it.

Another issue to be resolved in the coalition negotiations will be who gets what job. For the last 50 years, the German Foreign Minister has been a member of the minority party in a coalition government (there has not been a Christian Democrat one since 1966); for much of this time, the Foreign Minister was also the Vice-Chancellor. But it is not now a priority for either the Greens or the FDP. The latter want above all the Finance Ministry and a veto right over economic policy. The former want the Environment and Transport ministries.

Annalena Baerbock, the Greens’ candidate for the chancellorship, is widely tipped for the Foreign Ministry. But it is her co-party leader Robert Habeck, who is expected to be Environment Minister and Vice-Chancellor. The only former Green Foreign Minister, Joschka Fischer, was a notable success in the role and was personally responsible for getting his party to endorse Germany’s participation in NATO operations in Kosovo and Afghanistan. Whether Baerbock would have the same clout is unclear.

And what of the next German government’s attitude to the United Kingdom (UK)? Initially at any rate it will probably be benign neglect. Interest in Britain in Germany is declining and the commercial relationship is fading: by the end of the year, Britain will not, according to some forecasts, any longer be among Germany’s top ten trading partners. Olaf Scholz as Chancellor is unlikely to find Boris Johnson a congenial partner: their political styles are diametrically opposed and his priorities will be to establish relationships with Emmanuel Macron and Joe Biden. The German government will also be suspicious of any attempt by the UK to use bilateral contacts to bypass the EU.

At the working level however cooperation will continue, including in defence. The British Army retains a small residual presence in Germany in the form of a joint river crossing unit. The German Navy might in due course be tempted by the idea of participating in a British carrier strike group deployment, as the Netherlands is currently doing. But the performance of the British economy will be the key factor in determining the nature of the future UK-German relationship. Fuel shortages and empty supermarket shelves currently dominate German perceptions of Britain. But if the British economic recovery continues and the UK finds a successful role for itself outside the EU, then Germany, for all its regrets about Brexit, will treat Britain as a serious partner.

Sir Paul Lever was Her Majesty’s Ambassador to Germany (1997-2003) and Chair of the Joint Intelligence Committee (1994-1996). His most recent book is Berlin Rules: Europe and the German Way (I.B. Tauris, 2017).

Source: https://www.geostrategy.org.uk/britains-world/more-of-the-same-the-next-german-governments-foreign-policy/

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The U.S. and European Union pledged Wednesday to deepen its alliance for the sake of advancing common priorities like artificial intelligence, trade challenges and the “underpin” to global economies: semiconductors.

“Semiconductors are the material basis for integrated circuits that are essential to modern-day life and underpin our economies,” U.S.-EU Trade and Technology Council said in a joint statement. “As such, semiconductors power virtually every sector of the economy, including energy, healthcare, agriculture, consumer electronics, manufacturing, defense, and transportation.”

The council said the coronavirus pandemic highlighted the need to increase stable and reliable supply chains for the production of semiconductors.

CHINESE SWITCH TO FLASHLIGHTS, GENERATORS AMID POWER CUTS 

Chip shortages began under the Trump administration, when supply chains were affected by the trade war with China. But chip shortages were further exacerbated by an increased demand for electronics on everything from laptops to at-home health care during the pandemic.

“We recognize that the semiconductor supply chain, from raw materials, design and manufacturing to assembly, testing and incorporation into end products, is extremely complex and geographically dispersed,” the council said. “The United States and European Union have some important respective strengths as well as ongoing, significant mutual dependencies, and common external dependencies.”

Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo traveled to Pittsburgh to meet with European Commission Executive Vice Presidents Valdis Dombrovskis and Margrethe Vestager to bolster ties, as relations between the U.S. and Europe have become strained.

EU Internal Market Commissioner Thierry Breton warned last week that there is a growing sense that the U.S.-trans Atlantic relationship is “broken” and suggested it was time to “pause and reset” the partnership.

Breton’s comments came after France was sidelined in a U.S.-U.K. deal with Australia that effectively voided an existing submarine contract with the EU nation.

The commissioner was not present for Wednesday’s council meeting in Pittsburgh, but his social media suggested Breton was working to extend the EU’s reach into the global chip market.

On Wednesday Breton announced on Twitter he was in Japan facilitating an EU-Japan “cooperation” and preparing the “ground for our upcoming EU Chip Act.”

The U.S. similarly has looked to strengthen this alliance with Japan and bolster semiconductor production.

The joint U.S.-EU interest in Japan could signal an increased push to distance themselves from China.

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The council pledged to “stand together” against “unfair behavior of state-owned enterprises,” though the statement did not directly identify China.

“We intend to focus on reducing existing strategic dependencies throughout the supply chain, especially through a diversification of the supply chain and increased investment,” the council said, adding they will “work jointly so that any investment made on our territories is done in full respect of our respective security of supply.”

Source: https://www.foxbusiness.com/politics/us-eu-alliance-global-economies-semiconductors

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Ryanair’s chief executive has told Sky News the UK should scrap its “bizarre” rules governing foreign travel, saying they are holding the country’s economy back.

Michael O’Leary was speaking as the airline revealed 14 new routes from London airports for the looming winter season.

Ryanair said its investment decision was based on expectations that demand for foreign travel would continue to build in the coming months – potentially hitting 11 million passengers in October – following a strong end to the summer holidays and 18 months of COVID-19 disruption.

Mr. O’Leary said in an interview following a news conference in central London that it was clear the UK capital was “empty” of tourists because of rules governing foreign travel, including PCR testing demands, that were putting people off short breaks.

Live COVID updates from across the UK and around the world

He added: “Business is being hampered by this continuously chopping and changing of traffic lights that just cause confusion whereas the rules should be simple: if you’re double-vaccinated no restriction and if you’re not double-vaccinated get tested,” he said.

Mr. O’Leary argued it was a system that EU governments had adopted to help demand rebound.

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Otto English dissects the disadvantages that a free trade agreement between the two countries would bring to the UK

Let me tell you the story of the proposed Australian-UK free trade deal. A tale so mad that once you get to the end of it, you will probably find yourself banging your head against the table in front of you in despair. So perhaps don a bicycle helmet before we proceed.

Ready? Good – let’s go.

Now, you might, very reasonably, think that you have better things to do than to read about the Australian-UK free trade deal. There’s probably a wall of paint somewhere that you would perhaps rather watch dry or a sock drawer to rearrange. But the tale serves as a fascinating and depressing illustration of where the UK is currently at with regards to Brexit, international trade, and international relations and the Government doesn’t really want you to scrutinize things. It wants you to go along with the optics and question nothing.

Let’s deal with the numbers first of all.

Whatever you might have been told – or believed – about the ‘failing EU project’, it is the world’s second-largest economy and still, by far, the UK’s biggest trading partner. In 2019, the UK’s exports to the EU were worth £294 billion and accounted for 43% of all of our outward trade. Since leaving the EU, that figure has dipped, fairly dramatically, but it remains our biggest market and is usefully on our doorstep, so that makes sense.

Unfortunately, all of this poses something of an existential crisis for the Brexiters. Because leaving the EU, after all, was in part about ‘making trade deals with the rest of the world’. And, for some, like the Peruvian-born former Conservative MEP, Daniel Hannan, it was about reconnecting with the neglected Commonwealth and regaining our place as a top player in the world.

And that’s why Australia matters.

British people like Australia. Opinion polls consistently rank it in the top three of Britons’ favourite nations alongside Canada and New Zealand. When you say ‘Australia’ to Brits, they think of warm seas, sandy beaches, barbecues, and nice wine; Kylie Minogue, clean-cut soap operas, and the comedy stylings of Dame Edna Everage. Australia also features the UK’s flag on its flag, has our Queen on its money, and drives on the left. Australians speak our language and many – but by no means all – of them are descended from British settlers. Hannan calls them our “kinsmen”.

Boris Johnson needs a Brexit win – and Australia, a nation so beloved of British people, looks like the obvious candidate. It ticks all the boxes and makes for some great Sun front-page spreads. But there is a problem. Actually, there is a whole Pandora’s box of problems.

No deal can replace the one that the UK had with the EU. That’s not ‘Remoaner’ talk, it is plain and obvious fact. And the Government knows that and its friendly stable of tamed tabloid journalists – who pretend otherwise – know that too. It is essential to both camps that you and I don’t work it out – that we are kept in ignorance and instead cheer ‘huzzah’ for the thin gruel on offer.

The free trade agreement with Australia is about optics and, yes, about tapping into those Hannan-esque yearnings for a world in which Britain headed a great big Empire and was top dog. Daniel Hannan and his fellow travellers believe in something called CANZUK, a fetishist nonsense in which Canada, New Zealand, Australia, and the UK unite in a trade deal and sing Rule, Britannia! – or something.

It is not rooted in logic or economic reality – but in whimsy and fantasy. And, in that, we have the Great British Brexit summed up.

For, at the end of the day, none of this makes sense and none of this benefits any of us. Not even the most credulous Brexit believer. It is the politics of Johnsonism – a philosophy predicated on serving the ego and career of the Prime Minister and his acolytes.

The Government needs a trade deal with Australia because it needs a Brexit win. It needs to fuel the fantasy, much as the Aztecs believed that they needed to fuel the Sun with human sacrifice lest their whole world would fall apart. Logic and sanity play no part as long as it thinks it can get away with it – and the Government believes that it can. Depressingly, I think it’s probably right.

Now: permission to bang your head on that table.

Source: https://bylinetimes.com/2021/05/19/the-uk-australia-trade-deal-a-tale-of-brexit-insanity/

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It has been a gloomy week on the sunlit uplands of sovereign Britain as companies continue to pay dearly for two basic yet common business mistakes – not putting a Cabinet minister’s sister on the board or having Boris Johnson’s mobile phone number.

It’s the kind of carelessness that sees over 220 jobs at a car parts plant near Caerphilly put at risk as German owners Kautex Textron plan to close their site at Ystrad Mynach after 51 years in the town.

A spokesperson admitted: “Brexit, as well as the ongoing economic impact of Covid-19, are the key contributors to this decision”. Mike Payne, GMB senior organizer, said: “From what the company has been telling us, their sales have suffered as companies that they supply their products to are looking more locally to source their products.

“It seems as though we’re seeing more high-skilled well-paid jobs sacrificed at the Brexit altar.”

Seventeen more roles are at risk at Huddersfield bathroom ware firm Grove Plastics after bosses decided to wind down selling to Europe because of cost increases down to red tape. And 40 jobs will go at British Corner Shop, which exports British food and drink brands worldwide, after it gave up on UK distribution to the continent and announced plans for a new centre in the EU.

“We were jumping with joy when Boris announced in late December that there was a deal with the EU and it would be trade as normal,” said chief executive Mark Callaghan. Instead, he continued, “we’ve seen huge disruption, we’ve seen a massive drop in sales, we’ve had to reduce our workforce by 40 people and we’re moving those jobs into the EU, so I wouldn’t say that it’s been successful at all.”

JD Sports became the latest to jump on the drain train when it announced that its next mega distribution warehouse will be on the continent rather than here, to avoid the tariffs now in place on goods that used to flow from East Asia via Britain to Europe.  And, of course, jobs that might have been created in the UK will now be created in whichever JD takes off its trainers.

“I would imagine that the European community are very happy with that but it is disappointing for the UK in many respects,” said chairman Peter Cowgill.

Meanwhile, the person who could help with all of this is consumed with infighting and whether Dominic Cummings’ revelations will end up forcing him to leave Downing Street just as the paste sets on the Lulu Lytle wallpaper.

Our Kipling-quoting prime minister no doubt believes in the mantra: “If you can keep your job when all about you are losing theirs and blaming it on you…”

Source: https://www.theneweuropean.co.uk/brexit-news/brexit-job-losses-boris-johnson-7924774

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Retail investors fled UK equity funds in February to the tune of £1bn ($1.4bn) — a continuation of a trend that was initially triggered by Brexit in 2016.

According to data from the Investment Association, retail investors have withdrawn roughly £18bn from UK funds over the past five years.

The data also showed that global funds and fixed-income funds registered the biggest inflows in February. Alongside this, ESG fund sales slumped by £1bn in a month.

The Investment Association found that sector-wise, global funds fared the best, with net retail sales of £1.2bn.

This was followed by Asia Pacific, excluding Japan, which netted retail sales of £510m.

Laith Khalaf, the financial analyst at AJ Bell, said: “Retail investors still won’t touch UK equity funds with a disinfected bargepole, despite some better performance from the cyclical companies of the FTSE 100, and the success of the UK’s vaccine programme.

“There may well be an element of performance chasing to the long term swing from UK to global funds, which in itself helps to renew the market conditions which precipitated the shift. This self-fulfilling circle of performance and fund flows is virtuous for global investors, and vicious for UK equity fund managers.”

Khalaf notes that the lack of rotation in market leadership means this has been a winning strategy for some time now, and COVID-19 has only exacerbated well-established market trends.

READ MORE: UK to trial COVID passports in April

“There has been some movement back towards cyclical, value-orientated stocks in recent months, but so far it’s been a slight swivel rather than a full-blown rotation. As yet, it’s not long or deep enough to challenge the performance record of global growth funds, but it does serve as a warning sign for those who have weighted their portfolios very heavily to past winners.”

The Investment Association research also showed that savers looked for opportunities in smaller companies, with inflows of £252m into North American Smaller Companies and £142m into UK Smaller Companies.

Tracker funds saw a net retail inflow of £993m in February 2021. Tracker funds under management stood at £251bn as of the end of February. Their overall share of industry funds under management was 17.5%.

Source: https://uk.finance.yahoo.com/news/brexit-retail-investing-funds-ftse-stocks-uk-equities-financial-markets-094435843.html

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