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Latest figures from the Insolvency Service reveal that February saw the highest number of compulsory liquidations in over a decade, with 393 companies forced to close. This surge comes as businesses brace for rising taxes and employment costs, with David Hudson from FRP noting that both companies and consumers are “cutting their cloth, which is ultimately driving down demand.” Overall, while the total number of company closures fell by 7% year-on-year to 2,035, that figure includes firms that have chosen to shutter, rather than being forced to stop trading. The construction sector was particularly hard hit, accounting for 17% of insolvencies. Kelly Boorman at RSM UK said the industry is “already under-resourced, and the increase to labour costs will squeeze margins.” As the Bank of England maintains high interest rates, Giuseppe Parla at Menzies warns the UK may face further business collapses in the coming months.

 

London Evening Standard

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City leaders are urging regulators to exclude investment trusts from upcoming rule changes, warning of potential harm to the struggling sector. The Financial Conduct Authority (FCA) is set to replace the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation with a new framework for Consumer Composite Investments (CCIs). Baroness Bowles of Berkhamsted and Baroness Altmann, representing industry leaders, warned the FCA's approach could lead to "unintended consequences" as investment trusts are already subject to rigorous regulations.

 

Daily Mail

Swiss politicians have endorsed a report advocating stricter banking regulations and enhanced supervisory authority, nearly two years after the collapse of Credit Suisse. The Swiss government, central bank, and Financial Market Supervisory Authority (Finma) facilitated UBS's £2.5bn takeover of Credit Suisse in March 2023. Following a parliamentary inquiry into the crisis management by Swiss authorities, MPs approved proposals concerning bonuses, capital, and Finma's powers. This will empower the Federal Council to further tighten banking regulations, addressing concerns over UBS's size relative to the Swiss economy.

 

The Daily Telegraph

The Financial Reporting Council (FRC) has initiated an investigation into MHA's audit of ISG Limited for the year ended 31 December 2022. The construction company collapsed into administration last September with a reported £1.1bn worth of debt. BDO had been ISG’s auditor up until 2022, when it resigned and MHA was appointed in its place. Administrators at EY said they expected to recoup just £35m for creditors. The inquiry comes shortly after MHA, previously known as MacIntyre Hudson, announced plans to expand via a listing on the London Stock Exchange.

 

Bloomberg Law

Financial Times

The Times

City AM

Ministers have announced that companies with over 250 employees will be required to disclose whether their white workers earn more than their ethnic minority counterparts. The initiative aims to address pay disparities and is part of a Labour manifesto pledge. Unions have praised the move as a significant step towards achieving pay parity. However, businesses have expressed concerns about the additional regulatory burden amid rising costs. The Office for National Statistics reported that in 2022, black workers earned approximately 6% less than white employees. Asian or Asian British employees, meanwhile, earned about 3% more than white employees. Gender pay reporting has been mandatory since 2018, but critics say it is a crude tool that can lead to perverse outcomes. For instance, a reluctance to employ women in lower paid positions or positive discrimination that unfairly penalises men applying for higher-paid jobs.

 

The Times

Britain's top fintech leaders convened with Chancellor Rachel Reeves at a financial summit on Tuesday. The meeting, attended by executives from Revolut, Stripe, Wise, and Zilch, was part of the Innovate Finance's Unicorn Council initiative, which seeks to provide policy recommendations to maintain the UK's fintech leadership. Janine Hirt, Chief Executive of Innovate Finance, said: “The continued success of the UK fintech sector is fundamental to driving growth across the country.” Speaking after the meeting, Reeves said: “We are taking action to make our rulebook more competitive to support growth, the number one mission for our Plan for Change, and have asked the FCA to reform the regulatory structure around capital markets to make it work better for UK firms.”

 

City AM

Britain's manufacturing sector is facing significant decline as soaring energy prices drive down investment. According to the EY Item Club, energy costs in the UK are four times higher than in the US and 50% more than in France and Germany. Peter Arnold, UK chief economist at EY, said the high energy costs were the result of running down fossil fuels without a reliable replacement. Northern regions of England will be held back by the industrial decline, EY said, adding: "New investments in renewable energy are yet to, and may never fully, replace the lost activity and employment."

 

The Daily Telegraph

The CBI has urged the government to allocate £30bn for research and development by the end of the decade as part of the Chancellor’s efforts to enhance the UK's competitiveness with high-innovation economies such as the United States. The CBI argues that raising R&D investment would "send a strong signal to attract domestic and foreign investment." In 2022, UK government spending on R&D reached £15.5bn, and is expected to have reached £20bn in 2023 when the latest figures are released next month. Louise Hellem, chief economist at the CBI, said: "For [Labour's] growth mission to succeed, government must inject business with a serious confidence boost.”

 

The Times

Lloyds has initiated a significant overhaul of its IT division, impacting approximately 6,000 employees as it aims to modernise its digital banking services. Following a review of technology and engineering roles, staff were informed of their positions, with most being offered new roles, although some may require relocation or new skills. The bank says it is focused on acquiring the necessary engineering and technology expertise to facilitate its strategic transformation towards a more digital-centric model. Despite some redundancies, Lloyds is creating a net total of 1,200 new roles in areas such as software engineering and data, alongside over 1,000 live vacancies in the UK. Separately, Lloyds has apologised after mistakenly sending a customer hundreds of pages of information about other clients’ investments. A branch representative said the incident had happened due to “human error.”

 

Daily Mail

Financial Times

Volkswagen-owned Audi plans to reduce its workforce in Germany by up to 7,500 positions by 2029, representing approximately 14% of its German staff. The cuts will not impact factory workers. Audio CEO Gernot Döllner said: “Audi must become faster, more agile and more efficient.” The decision is part of a broader strategy by Volkswagen CEO Oliver Blume, who is implementing spending cuts across the group to improve competitiveness. Last year, Audi's deliveries fell by 12%, particularly in challenging markets like China. Audi confirmed that the job reductions will occur without any firings, and the company plans to invest around €8bn  in its German operations during this period.

 

Luxembourg Times

Paul Thwaite, the CEO of UK lender NatWest, says high valuations have made it tougher for the bank to pursue growth in its wealth management business via takeovers. There is growing speculation that NatWest is seeking to bulk up its business through deals. Thwaite said any new acquisitions had to meet "a very high bar" financially, strategically and operationally. "On wealth specifically, the punch line here is that the multiples make it very difficult . . . One would love to have exposure to the dynamics of a bigger wealth business, the demographics, the capital-light income and how that helps distributions. That is why it is in our minds. But we cannot be seduced by that if the economics do not make sense."

 

Zawya EN

Rio Tinto has reaffirmed its commitment to its dual-listed structure, urging shareholders to reject a resolution proposed by London-based hedge fund Palliser Capital to review the firm's two listings in London and Sydney. Rio Tinto warned that unification could be detrimental to both the company and its shareholders. While Palliser and over 100 shareholders advocate for a single listing in Australia to enhance share prices, Australian shareholders oppose this move, fearing it would diminish value.

 

Reuters

Thames Water has received six takeover offers and hopes to secure a deal by the end of June. The utility, which is grappling with debts exceeding £19bn, is attempting to avoid nationalisation. Earlier this week, it successfully countered an effort by secondary creditors and Lib Dem MP Charlie Maynard to block a £3bn emergency loan crucial for its survival. The company said: “Most proposals are conditional on further, and varying, regulatory support.” Among the bidders are Covalis, KKR, and Castle Water.

 

City AM

Daily Express

Daily Mail

The Guardian

The Public Accounts Committee has urged immediate action to tackle delays in independent assessments of council finances, revealing that unreliable data has led to overstated income and debt by £34.4bn and £31.7bn respectively. The Whole of Government Accounts (WGA) 2022-23 report highlights that only 10% of local authorities submitted reliable data, hindering the government's ability to monitor financial health. The committee has called for the government to outline a plan within six months to address the missing data as councils face increasing pressures from rising populations and demand for services.

 

The Independent UK

Demis Hassabis, Co-Founder and CEO of Google DeepMind, underscored the need for Britain to leverage its strengths in artificial intelligence during a recent summit in Paris. He said: "It's more important than ever that we are at the forefront of these technologies as a country, both economically but also geopolitically to influence how these technologies end up getting deployed and used around the world." Hassabis said Britain's top universities and talent pool put it at technology's cutting edge. Separately, Oracle has said it plans to invest $5bn in Britain over the next five years to meet growing demand for its cloud services.

 

U.S. News

Lithuanian prosecutors have accused Russia of orchestrating an arson attack on an Ikea store in Vilnius, labelling it “an act of terrorism.” Prosecutor Arturas Urbelis described it as "an act of terrorism with serious consequences.” The attack, which occurred on May 9th 2024, is believed to have been financed by Russian military structures. The prosecutors indicated that the attacks aimed to “intimidate” Lithuania and pressure it to withdraw support for Ukraine. 

 

The Moscow Times