Marketing Newscast

(Edited 08 January 2025)

Chancellor Rachel Reeves has a cushion of just £1bn left before she faces a “nasty choice” between initiating more tax rises, spending cuts, or breaking her fiscal rule to balance the books by the end of this parliament, according to Capital Economics. Because borrowing costs have risen to their highest level since 1998, £8.9bn of the £9.9bn headroom to balance her budget has been wiped out, the think-tank claims. The yield on 30-year UK bonds - the return the Government promises to buyers of its debt - rose to 5.22% today for the first time in more than a quarter of a century.

Economists Ruth Gregory and Alex Kerr said: “There is a significant chance that the Office for Budget Responsibility (OBR) will judge that the Chancellor, Rachel Reeves, is on course to miss her main fiscal rule when it revises its forecasts on March 26^th. “To maintain fiscal credibility, this may mean that Reeves is forced to tighten fiscal policy further.” They added: “In recent years, the fiscal headroom has never been this low. It would only take a further 0.06 percentage point increase in market interest rate expectations and 20-year gilt yields to wipe it out altogether.” This, Capital Economics said, is before the OBR factors in the recent weakness in economic activity. A Treasury spokesman said: “We are not going to pre-empt the OBR’s forecast; however, no one should be under any doubt of the Chancellor’s commitment to economic stability and sound public finances. That is why meeting the fiscal rules is non-negotiable. The Chancellor has been clear that she would not repeat the likes of October Budget [which introduced a record-breaking £40bn in tax hikes] [1] and is now focused on rooting out waste in public spending through the Spending Review and growing the economy.”

Bangladesh’s anti-money laundering agency has requested the banking records of UK City minister Tulip Siddiq as part of a probe into allegations that her family embezzled billions from major infrastructure deals in the country, the political Website Guido Fawkes has revealed. Siddiq, whose ministerial brief includes tackling financial corruption, is accused of helping to arrange a deal with Russia for a nuclear power plant in Bangladesh over a decade ago, in which £1bn was allegedly siphoned into private bank accounts. The Bangladesh Financial Intelligence Unit has now ordered banks in the country to share transactions for all accounts linked to the family of Tulip’s aunt Sheikh Hasina who was deposed last year amid claims of fraud and serious human rights abuses, as part of a wide-ranging investigation into whether the family embezzled billions via several infrastructure deals. Yesterday, Siddiq referred herself to the Government’s standards watchdog over her role in the probe and reports by the Financial Times that she was gifted the free use of properties connected to her aunt’s Awami League party.

China-based fast fashion retailer Shein, which is hoping to list on the London Stock Exchange, was accused yesterday of behaviour that “bordered on contempt” when a representative appeared before the House of Commons’ Business and Trade Select Committee as part of its Make Work Pay: Employment Rights Bill inquiry. Yinan Zhu, Shein’s London-based general counsel for EMEA, refused repeatedly to answer questions over supply chain practices - which are said to involve forced and child labour – saying that was outside of her direct remit. She said much the same regarding the proposed London IPO, and also refused to answer questions about whether Shein uses Chinese cotton in its products. There have been allegations that Shein sources cotton from Xinjiang province in China, where human rights groups allege the region’s Uyghur Muslim minority are persecuted and conscripted for forced labour. Committee chair Liam Byrne said: “For a company which is seeking to float on the London Stock Exchange, the committee has been pretty horrified by the lack of evidence that you have provided today”. He added: “You’ve given us almost zero confidence in the integrity of your supply chains. You can’t even tell us what your products are made from. You can’t tell us much about the conditions which workers have to work in, and the reluctance to answer basic questions has frankly bordered on contempt of the committee.” Asked about Shein’s supplier code of conduct which refers to setting working hours “responsibly”, Zhu said it was “not for me to judge” on what constituted “appropriate” working hours, a comment which angered MPs. “What we’re saying is you are the general counsel for Europe, the Middle East and the whole of Africa, so I probably would say it is appropriate,” said Joshua Reynolds. Initially, Shein wanted to list on Wall Street, but experienced resistance from Washington because of concerns about its data and supply chain practices, reasons why the London Stock Exchange and financial regulators in the UK are now being lobbied to block Shein listing here.

Asda suffered its worst Christmas sales since 2015, it has been revealed. The supermarket lost 5.8% in sales on its last year, according to retail analysts Kantar, making it the only major supermarket to perform worse than in 2023. Spending at Asda fell to £4.59bn in the 12 weeks to December 29^th 2024, down from £4.87bn a year earlier. The sales’ dip also means Asda’s market share fell to 12.5% in December, down from 13.5% a year earlier. Currently Britain’s third-largest supermarket – but increasingly challenged to that position by German rival Aldi – Asda has been struggling since it was taken over by private equity giant TDR Capital and brothers Mohsin and Zuber Issa in February 2021, the former of whom stepped down from the board in September last year.

Adrian Sainsbury has stepped down as group CEO and executive director at Close Brothers Group, health following a period of medical leave. He is expected to make a full recovery. Mike Morgan has been appointed to the post, subject to regulatory approval. He has been fulfilling the role of interim chief executive while Sainsbury was on leave.

Some overseas news…

McDonald’s is rolling back its diversity targets following a US Supreme Court ruling on positive discrimination on American university campuses, The Telegraph reports. The fast food giant said it would abandon targets for achieving diverse representation in senior roles and change the name of its diversity team to become the Global Inclusion Team. It will also scrap requirements for suppliers to comply with so-called diversity, equity and inclusion (DEI) goals and will stop taking part in external surveys that measure corporate diversity, the newspaper says. The Supreme Court decision effectively banned race-based “affirmative action” in university admissions, which were being used to increase the number of students from ethnic minority groups. Walmart, the world’s largest retailer, also dropped its diversity initiatives in November amid an “anti-woke” backlash across corporate America, while tractor-maker John Deere and Harley-Davidson have also watered down diversity schemes. President elect Donald Trump has threatened a crackdown on DEI, saying last year that he had compiled a list of “woke companies” that could be published “for the world to see”.

Yesterday, in a video that quickly went viral, Meta founder Mark Zuckerberg appeared to discover a new-found passion for free speech, announcing that so-called ‘fact checkers’ on Facebook would be scrapped to “restore free expression” on the social network. They will be replaced with a system of “community notes, similar to X”, he said. This move too looks like a response to a new regime at the White House; it follows the departure from Facebook of former Deputy Prime Minister and Liberal Democrat leader Sir Nick Clegg, who, as the tech giant’s head of global affairs, led a crackdown on ‘hate speech’ and was instrumental in the decision to ban Donald Trump from the platform. In a dramatic volte-face, Zuckerberg said in his video: “Fact-checkers have just been too politically biased and have destroyed more trust than they have created.” He admitted that “what started as a movement to be more inclusive has increasingly been used to shut down opinions,” and promised that Facebook would “get rid of a bunch of restrictions” on topics including gender and immigration. Later, a Meta spokesman said: “There is no change to how we treat content that encourages suicide, self-injury and eating disorders. We will continue to use our automated systems to scan for that high-severity content.”

And finally, rival photo agencies Getty Images Holdings and Shutterstock are merging in a $3.7bn (£2.97bn) deal. Shares in both US companies soared on the news. In a joint statement, the Wall Street firms said the deal would create a content library with "greater depth and breadth for the benefit of customers [and] expanded opportunities for its contributor community". The new company will continue to trade on the New York Stock Exchange under the Getty name. Annual combined profts are expected to be between $569m and $574m on revenues of between $1.98bn and $1.99bn. Annual cost savings are forecast to be $100m- $200m by year three.