Marketing Newscast

(Edited 18 February 2025)

Wage growth has rocked far beyond inflation again, dimming hopes for another swift interest rate cut by the Bank of England (BoE). According to figures released by the Office for National Statistics (ONS) this morning, annual regular pay growth averaged 5.9% in the final three months of last year, up from 5.6% previously, a rise that marks the fastest pace since April last year. Total pay growth including bonuses hit 6% in the same period, three times the BoE’s 2% target, and also up from 5.6%, making it the fastest rate since November 2023. “Growth in pay, excluding bonuses, rose for a third consecutive time, with increases in both the private and public sector,” Liz McKeown, director of economic statistics at the ONS said. Employment for the period also rose by 107,000 to 33.86m and the number of payrolled employees rose by 20,682 in January to 30.4m. Unemployment was 4.4pc for the three months ending December, remining pretty steady, despite numerous surveys showing companies intend to make redundancies and limit hiring in response to Chancellor Rachel Reeves’ Budget, which has piled significant additional costs on businesses. This suggests any impact from the Budget is yet to come; most of the new measures announced do not come into force until 1^st April. Commenting on the statistics on X, economist Julian Jessop said: “The measures announced in the Budget have… distorted the labour market. In short, the firms are being forced to pay staff more ahead of the large increases in the national minimum wage in April, but at the cost of hiring freezes and job losses.” Luke Bartholomew, an economist at fund manager Abrdn, said the BoE will not be able to cut rates rapidly while wages keep rising so rapidly. “With pay growth still running well above anything close to consistent with the Bank of England’s inflation target, rate cuts will remain gradual for now,” he told the Telegraph.

Rachel Reeves is being asked to exempt care homes and hospices from the rise in Employer National Insurance Contributions by more than 50 MPs who are warning it will otherwise lead to cuts to frontline care services. According to Nuffield Trust research, the adult social care sector faces a £900m hit from the tax increase from 12.5% to 15% and the reduction in the salary point at which it becomes payable from £9,100 to £5,000. Shadow Business Secretary Andrew Griffith, former Conservative party leader Sir Iain Duncan Smith, and former Labour leader Jeremy Corbyn are amog the MPs calling on the Chancellor to rethink her plans.

The Chancellor will have to either raise taxes by an extra £12bn or cut spending by £6bn a year if she wants to meet Prime Minster Keir Starmer’s ambition of boosting defence spending to 2.5% of GDP, according to left-leaning think-tank The Resolution Foundation. Report author Emily Fry said: “Funding this aspiration is far from straightforward, especially as the public finances are already under strain. Absent a sunnier economic outlook, increasing defence spending by £6bn a year would likely require fresh tax rises or deeper cuts to unprotected departments like transport, housing and justice whose budgets are already stretched.”

The Supreme Court has rejected an application by The Treasury to intervene in the upcoming motor finance mis-selling case. Chancellor Rachel Reeves applied to intervene because of concerns that any resulting fines and compensation payments are likely to run into the tens of billions of pounds, and could trigger a withdrawal of companies from the sector, thereby preventing customers accessing credit to buy cars, with knock-on effects for the British car industry. Speaking at the time of the application, the Treasury said: “We want to see a fair and proportionate judgement that ensures compensation to consumers that is proportionate to the losses they have suffered and allows the motor finance sector to continue playing its role in supporting millions of motorists to own vehicles.” The Supreme Court case follows a Court of Appeal judgment made last October ruling that it was unlawful for lenders not to make clear what commission they charged on motor finance deals, meaning customers could be due compensation. Although only two lenders are involved in this case - merchant bank Close Brothers and South African lender FirstRand – there are clear implications for the wider sector. It is reported that others that tried to get involved in the case, including trade body the Finance Leasing Association, the National Franchise Dealers Association, the Financial Conduct Authority (FCA) and Consumer Voice have also had their applications rejected. The case is set to be heard on 1^st April.

US Energy Secretary Chris Wright said in a speech yesterday that Britain’s goal of hitting net zero by 2050 is “sinister,” “terrible,” and making millions of households poorer. “It’s unachievable by any practical means,” he claimed, adding that the UK’s roll-out of wind farms and solar panels had “not delivered any benefits” but had pushed up electricity prices and made manufacturing unviable. Instead, he argued, net zero is being used as a justification to expand government power and “shrink human freedom”. He called the idea it was going to make the world a better place a “delusion”. “If you make energy more expensive and less reliable, as the United Kingdom has done over the last couple decades, you lower the standard of living of your population, shrink their opportunity set, and you simply export your industry,” he continued. “No one’s going to make an energy-intensive product in the United Kingdom any more. It’s just been displaced somewhere else, where it’s going to be made in a coal-powered factory in China, loaded on a diesel-powered ship to get down the river on a bigger diesel-powered ship, to be unloaded to the docks in London. This is not energy transition. This is lunacy.”

Britain’s first ‘micro’ nuclear reactors are to be built on the site of a former coal-fired power station in south Wales. Four will be installed at the decommissioned Llynfi power station in Bridgend, it has been revealed. The 14-acre project will be run by US firm Last Energy, and the reactors will power data centres, factories, manufacturers and other industrial operations rather than the domestic grid. It will be the first new UK location to house a commercial nuclear power reactor since the Torness nuclear power station in East Lothian was opened in 1978. The micro reactors are smaller than the small modular reactors (SMRs) that UK governments have been hoping to build for the last ten years or so.

Thames Water has secured a £3bn lifeline to keep it afloat till May 2026. The High Court has approved a new loan for Britain’s largest water utility from some of its largest shareholders. Thames is already nearly £20bn in debt, and would have run out of money by the end of March without this new funding, which is it says will give it the breathing space it needs to restructure existing debt and attract more cash from prospective new investors. It also staves off the imminent prospect of the debt-laden company coming under government control. Chairman Sir Adrian Montague said it marked a "significant milestone" for the company and CEO Chris Weston said it "puts our business on a firmer financial footing".

Merlin Entertainments, which runs entertainment venues including Alton Towers, Chessington World of Adventures, the London Eye, Thorpe Park, Legoland and Madame Tussauds, has named Fiona Eastwood as its new CEO. Eastwood has served on an interim basis since November 2024. Eastwood succeeds Scott O’Neil who stepped down after two years in the job.