Marketing Newscast

Inflation has, as predicted, risen back above the Bank of England’s (BoE) 2% target. The latest data from the Office for National Statistics puts the Consumer Prices Index (CPI) at 2.3% in October, after a near-10% rise in energy bills due to Ofgem raising the energy price cap, taking average household gas and electricity bill to £1,568 in England. CPI fell to a three-year low of 1.7% in September. However, a rise in air fares also helped push inflation up. Airfares inflation rebounded from a 5% decline in September to a 6.6% surge in October, the steepest monthly rise in airfares since monthly collection began in 2001. Housing rents and owner-occupied housing costs also contributed; both leapt by 7.4%. The increase in inflation has pushed up the cost of government borrowing; the yield on 10-year UK bonds has risen by more than two basis points to 4.47%. Analysts fear inflation will continue to rise in the wake of Chancellor Rachel Reeves’ tax-hiking Budget which, in layering £25bn in additional costs on businesses, is likely to force up prices, thereby also stemming what had, before the Budget, looked to be a series of forthcoming cuts by the BoE to interest rates. One economist, Thomas Pugh at RSM UK, is warning this morning that inflation will “rebound later this year and into 2025 to around 3%”. He, and others, have now all but ruled out an interest rate cut next month. However, as economist Julian Jessop said on X earlier, there is “no need to panic” because “the Bank of England was already expecting inflation to average 2.4% in Q4 when it cut rates earlier this month”.

Tens of thousands of farmers and their supporters gathered in Westminster yesterday to protest against the Government’s plans to impose Inheritance Tax (IHT) on farms. Real tractors circled the Houses of Parliament sporting union flags, while children rode up to the gates on toy tractors. Protestors held signs reading: “No farmers, no food, no future;” “Bullocks to Reeves;” “Stop the Family Farm Tax:” “Hands off our farms, Robber Reeves;” “The Final Straw;” and “Starmer the Farmer Harmer”. Among those protesting were showbiz personality and farmer Jeremy Clarkson, composer Andrew Lloyd-Webber, Conservative party leader Kemi Badenoch, Reform party leader Nigel Farage. Ministers say the new policy will affect only 500 estates each year and, speaking from the G20 summit in Brazil, Prime Minister Sir Keir Starmer insisted the "vast majority" of farms would be "unaffected" by the Budget changes. However, the National Farmers’ Union (NFU) and the Country Land and Business Association (CLA) estimate up to 70,000 farms worth more than £1m could become liable for IHT which families would not be able to pay without selling up all or part of their farms. NFU president Tom Bradshaw insisted farmers would continue to protest until the Government scraps its proposed agricultural IHT changes. “This will carry on. They cannot have a policy in place which has such disastrous human impacts and think we’re going to go quiet,” he told Sky News. “The membership has never been so united in trying to overturn something in the time that I’ve been farming.” He added the Labour party has "destroyed" a "contract" between farming and the government dating back to World War Two and that, when in opposition, Environment Secretary Steve Reed has assured him that Labour would not change Agricultural Property Relief, which excluded farms completely from IHT. This former pledge was also highlighted by shadow chancellor Mel Stride, who said: “We believe this government doesn’t understand the countryside or farming, [and] broke its promise when it said it would not be imposing IHT on farms. That’s going to have a devastating impact on the farming sector up and down the country with family farms broken up.” The Liberal Democrats also criticised the policy, saying it was "utter rubbish" to say only 500 of the UK's wealthiest farmers' estates would be affected each year. Lib Dem environment spokesman, Tim Farron, who was also at the protest, told the BBC: "The only way that people can pay the inheritance is get rid of the farm - so corporates buy it. It's cruel, it's unfair, it's also incredibly stupid".

The Government has at last published its impact assessment on the removal of the universal Winter Fuel Allowance, and it suggests an additional 50,000 pensioners will be living in relative poverty next year as a result of the cuts. 100,000 more will be in poverty by 2030. Currently the government estimates 1.9m pensioners - around 15% - live in relative poverty. The payment, which was worth £300 to all pensioners, has been removed for all but those in receipt of pension credit. Of those who will still receive it, for many it is also being reduced to as little as £100.

Keir Starmer said yesterday he was relaunching trade talks with India next year, and forming a new economic partnership with Japan. He has met with Indian Prime Minister Narendra Modi and Japan’s Prime Minister Japan Shigeru Ishiba at the G20 summit in Brazil.

The Governor of the Bank of England, Andrew Bailey, told the Treasury Select Committee yesterday that retailers were “right” to warn job cuts could result from Labour’s £40bn Budget tax raid. Yesterday, more than 70 of the UK’s largest supermarket and retail chains wrote to Chancellor Rachel Reeves to warn redundancies and price hikes were “inevitable” because of her decision to increase the minimum wage and attempt to raise £25bn by putting up employer National Insurance contributions (NICs). The measures would cost the sector £7bn in additional costs, the letter, coordinated by the British Retail Consortium (BRC), claimed. Bailey told MPs: “I saw the BRC’s letter and I think they’re right to say, I think there is a risk here that the reduction in employment could be more. Yes, I think that’s a risk.”

Meanwhile, an article in The Telegraph claims Treasury officials called retailers to make the case for Rachel Reeves’s tax raid ahead of the letter sent to her by retailers on Monday. One industry source told the newspaper the Government had been thrown into a “tizzy” by the prospect of a public letter rebuking the Chancellor, and one retailer claimed they were contacted by an official who attempted to explain Labour’s approach to the industry and understand their concerns when it was revealed that a letter was being drafted. When asked whether the Treasury had tried to discourage businesses from signing a BRC letter, the Prime Minister’s spokesman said: “I’m not aware of that”.

Luxury goods retailer Mulberry has hinted at job cuts while saying it plans to streamline and rebuild its struggling brand in a market update yesterday. The business said UK retail sales fell by 14% in the six months to 28^th September, while sales in Asia fell 31%. Group sales overall fell by 17%, and revenue fell 19% to £56.1m, down from £69.7m last year. Although Mulberry cut operating expenses by 16% – or £10m – in the half-year, but this was not enough to offset reduced revenue. It posted an underlying loss of £15.3m.

Lidl UK has returned to profit after a loss-making year in 2023. The German discount supermarket reported a pre-tax profit of £43m in the year to end February 2024, compared with a loss of £76m previously. Annual revenue climbed 6.9% to nearly £11bn. Lidl set up its first shop in the UK in 1994 and now has almost 1,000 shops. The UK’s sixth largest grocer, the chain was among those signing the letter to the Treasury warning job losses were "inevitable" and price rises "a certainty" as a result of the Budget.

A deal for Paris-based private equity group Ardian and Saudi Arabia’s Public Investment Fund (PIF) to acquire respective 22.6% and 15% stakes in Heathrow Airport’s parent company has received approval from the Cabinet Office, City A.M. understands. The £3.3bn contract means Spain’s Ferrovial will sell the majority of its stake in Europe’s busiest airport, after 18 years of ownership, and leaves Heathrow sporting a value of £8.3bn.

London Mayor Sadiq Khan is ditching MTR, the Chinese state-owned operator of the Elizabeth Line. Transport for London said yesterday it would award the contract instead to a joint venture which includes the operator of the Tokyo Metro; British train and bus group Go Ahead; and Japanese conglomerate Sumitomo.

Dunelm has bought Irish soft furnishing chain Homefocus for an undisclosed sum. Homefocus has 13 stores across Ireland and trades online. "The acquisition is an attractive opportunity for Dunelm to connect with more customers by entering a new geography, with a homewares market of more than £1bn," the homewares retailer said.

Ann Summers has secured a £10m loan from Green Street Holdings, an entity controlled by the Gold family, which owns the sex toy and lingerie chain, after another year in which the retailer failed to return a profit.  In the year to July 2023, Ann Summers’ parent company posted another £3.9m of losses despite aa slight increase in turnover from £101, to £104m. The company blames inflation, higher taxes and rents, as well as the cost of living crisis, for its woes.  In addition to the loan from Green Street – taking its total debt to the entity to £12.5m - the chain also took out an £8m rolling credit facility with Secure Trust Bank in November last year, according to its most recent accounts, reported by The Telegraph. Ann Summers began its current incarnation when Jacqueline Gold took over running it from her father in the 1970s, when it had just four shops and, using model inspired by 1980s Tupperware parties, also began selling to small groups of women in their own homes. At its peak, Ann Summers had 140 shops; now it has 85 UK stores and three more in Ireland. Jacqueline died last year, just a few months after the death of her husband and business partner David. The chain is run by her sister Vanessa Gold.

Jaguar is ditching it famous growling big cat logo, it said yesterday, as it launched three new electric models for 2026.  The new logo, which simple features the word ‘Jaguar,’ was described by the British marque as a “powerful celebration of modernism” that “seamlessly blends upper and lowercase characters in visual harmony”. However, the big cat will remain as a “flourish or finishing touch” on vehicles, the carmaker said. Design Week has more and pictures here: https://www.designweek.co.uk/jaguar-attempts-to-pounce-on-the-future-with-major-rebrand/

Staff at The Guardian have voted to go take industrial action in protest over plans to sell The Observer to Tortoise Media, a loss-making startup founded by former BBC News boss James Harding. Almost 93% of 600 National Union of Journalist (NUJ) members at the newspaper voted in favour of industrial action, including strikes. The NUJ is meeting today to decide how it will proceed.