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Rachel Reeves may need to implement further tax increases next year following a growth downgrade that has left Britain on the brink of recession. Paul Johnson, director of the Institute for Fiscal Studies, warned that the Chancellor could face "coming back for more" tax rises in the autumn due to a revised economic growth estimate of zero for the third quarter of 2024. The economy also shrank by 0.1% in October, raising fears of two consecutive quarters of negative growth. Living standards have declined, with GDP per capita falling by 0.2% compared to the previous year. Johnson cautioned that higher inflation could complicate Reeves' efforts to manage borrowing costs, indicating that "it's going to be an incredibly tight spending review next year." Meanwhile, Sir Keir Starmer has warned that economic prosperity “won’t happen overnight” as the Prime Minister failed to rule out having to raise taxes further to balance the books.

 

The Daily Telegraph

The Times

Daily Express

Daily Mail

The Sun

Business confidence in the UK has fallen to its lowest level in 2024, dropping two points to 39%, according to the latest Lloyds Business Barometer. Despite this decline, 55% of businesses expressed optimism about the broader economy, with nearly two-thirds anticipating stronger output. However, 19% of respondents plan to reduce their workforce, the highest figure in nine months. Additionally, 64% of companies expect to raise prices, complicating efforts to curb inflation. Paul Kempster, managing director for relationship management at Lloyds, said: “Although overall confidence dipped this month, we're still optimistic that firms' trading prospects will return to the levels seen earlier this year.”

 

City AM

The British Retail Consortium (BRC) has warned that 2025 may be challenging for UK retailers after consumer confidence in the economy dropped significantly in December. BRC-Opinium data reveals economic expectations fell to -27, down from -19 in November, while personal spending expectations in retail slid to -3, marking a 6-point decline. Helen Dickinson, BRC's chief executive, highlighted the risk of a "New Year spending squeeze" coinciding with January sales. Retailers face low demand and an additional £7bn in industry costs from the 2025 Budget, potentially forcing price hikes, store closures, or hiring freezes. She urged the government to ensure that proposed business rates reform does not increase costs for retailers.

 

Drapers

The Daily Telegraph

The Retail Bulletin

Italy is requiring UniCredit to fully disclose the terms of its proposed takeover of Banco BPM under "golden power" rules, which are designed to scrutinise investments in strategic sectors. Sources indicate that the government has denied UniCredit's request for a preliminary assessment of the deal, suggesting a prolonged approval process for its €10bn all-share unsolicited offer. This delay could bolster BPM's defences against the bid. 

 

Reuters

Activist investor Julian Treger has urged the House of Lords to conduct an inquiry into the UK Takeover Panel's “structural failings” after being sanctioned in a landmark case.

 

Financial Times

Aviva has announced its acquisition of Direct Line for £3.7bn, a move that will create one of the largest motor insurers in the UK. The deal, which involves a payment of 275p per share, represents a 73.3% premium over Direct Line's previous closing price. However, the merger is expected to lead to approximately 2,000 job cuts as Aviva aims to achieve £125m in cost savings.

 

Financial Times

The Daily Telegraph

The Times

Quiz Clothing, the fast-fashion retailer with 60 UK stores, has announced plans to delist from London’s junior AIM stock market in a bid to stabilise its operations. Shareholders will vote on the proposal at a meeting scheduled for January. The company stated that the decision to exit AIM aligns with the "best interests of the company and its shareholders." Founder Tarak Ramzan, along with major investors Tajveer and Amraj Gill, have signalled their support for the move.

 

Daily Mail

Private equity funds in Europe are becoming increasingly cautious about acquisitions, focusing on exit strategies before making new purchases. Nestor Paz-Galindo, head of EMEA global banking at UBS, observed: "In the last cycle, funds have done very well on the entry, very well on the execution, but the exit, that has been more difficult." The market is seeing fewer bidders for asset sales, and processes are taking longer. As funds face pressure to deploy unspent capital and sell long-held assets, the resale of companies is proving challenging.

 

Reuters

Petrofac has announced a binding agreement with key financial creditors to implement a comprehensive restructuring plan, which includes $325m in new funding and converting approximately $772m of existing debt into equity. Despite a challenging period marked by increased losses, with a net loss of $208m in the first half of the year, the London-listed firm says it is “progressing well” with its “refreshed strategy”.

 

Reuters

Deloitte is set to reduce its spending on staff travel and expenses in the UK by over 50% as part of "firmwide cost management measures" due to "challenging market conditions." An email from Sarah Humphreys, chief operating officer of the tax and legal division, indicated that these cuts are "limited" and "temporary," aimed at maintaining partner profits during a slowdown in the professional services sector. The firm has already made over 1,000 redundancies since September 2023 and is reviewing various costs, including recruitment agency fees and bad debts. Richard Houston, Deloitte's UK senior partner and chief executive, stressed the need to "carefully consider our cost base and make some difficult choices." Despite the downturn, Deloitte's 749 UK equity partners earned an average of over £1m for the year ending May 2024.

 

Business Insider

Financial Times

EY has been accused of facilitating a fraudulent scheme involving Brooge Energy, a UAE oil storage company, in a lawsuit filed in the Southern District of New York. Shareholders allege that EY played a "pivotal role in a years long scheme" to defraud investors during a 2019 SPAC transaction, which initially valued Brooge at over $1bn. Following the revelation of fraud, Brooge's shares plummeted by 99%. The lawsuit claims EY failed to detect clear signs of fraud and assisted in a "round-tripping scheme" to conceal falsified revenues. Neil Richardson, an investor involved in the lawsuit, stated: "This is an astonishing story of brazen, long-running, egregious fraud." EY has denied the allegations, asserting that responsibility lies with Brooge's principal shareholders and senior officers. The US Securities and Exchange Commission previously charged Brooge with using "false invoices" to inflate revenues by up to 80%.

 

Bloomberg Law

Financial Times

Palestinian victims of the Gaza conflict are pursuing legal action against BP, alleging the company is violating its human rights commitments by operating the Baku-Tbilisi-Ceyhan pipeline, which supplies 28% of Israel's crude oil. The claimants assert that BP's actions contribute to Israel's military operations – running its large fleet of fighter jets, tanks and other military vehicles. The legal letter demands BP cease its oil supply to Israel and provide full disclosure of relevant documents. Tayab Ali, head of international law at Bindmans, said: “This legal action marks a new phase in accountability for those that are complicit in alleged war crimes.” The claimants seek justice for the suffering caused by the conflict, which has resulted in over 42,000 deaths.

 

The Guardian

The Times

Yodel is embroiled in a High Court dispute with entrepreneur Jacob Corlett following the collapse of a proposed merger with his start-up, Shift. Chief executive Mike Hancox has initiated legal action against Corlett, who briefly joined Yodel's board earlier this year. The failed deal has led to counterclaims from Corlett's backers, who are seeking compensation for lost fees. Yodel, which has struggled with capacity issues and poor customer satisfaction, recently secured an £85m lifeline from new investors after the merger fell through. The company reported a loss of £160m on revenues of £809m for the 18 months to December 2022.

 

The Daily Telegraph

M&G is suing Royal London over its purchase of the mutual’s financial adviser platform, claiming that some client pension money had been invested in “inappropriately risky” products before the deal.

 

Financial Times

Managers at Royal Mail have been ordering staff to record fake deliveries in order to preserve their bonuses, according to the Telegraph. Postal workers told the paper they had been told to scan some items as “inaccessible” even if they never attempted to deliver the item. This means the customer is sent a message to say that the delivery was attempted and another attempt will be made the following day. Justin Madders, the minister for postal services, said he was “disturbed” by the reports and called on Royal Mail and Ofcom to investigate.

 

The Daily Telegraph

Unions are calling for more focus on safety after data revealed that dozens of Amazon workers in the UK have suffered serious injuries over recent years, including blindings and amputations.

 

Financial Times

The Brighton i360 observation tower has closed resulting in 109 job losses just before Christmas. The tower, which opened in 2016, was unable to repay £51m owed to Brighton & Hove City Council, which financed its construction through the Public Works Loan Board. The pandemic significantly reduced visitor numbers, and additional attractions further impacted ticket sales. The council plans to conduct an independent audit to review the original loan decision.

 

Daily Mail