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Gross Domestic Product (GDP) figures published this morning show the UK entered recession in 2023. GDP shrank by 0.3% in the last three months of 2023 - October to December. That follows a fall of 0.1% in the previous quarter, July to September. The economy has shrunk by a total of 0.4% over the last two quarters of 2023 - triggering a technical recession. The last time the UK's economy was in recession was 2020, during the pandemic. Liz McKeown, the ONS director of economic statistics, says manufacturing, construction and the wholesale industry were the biggest drags on growth in the fourth quarter of 2023. She said: “Our initial estimate shows the UK economy contracted in the fourth quarter of 2023. While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat. All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery. The latest data showed that health and education performed less well than initially estimated in both October and November. Early indications suggest they both contracted in December. Retail and wholesale were the biggest overall downwards pulls on the economy in December, partially offset by growth in computer programming and manufacturing.”

 

BBC News

The Guardian

The Independent

City lawyers warn that implementing a policy of paying financial crime whistleblowers rewards in the UK won't be straightforward and faces a number of legal and cultural challenges. The head of the UK's Serious Fraud Office (SFO), Nick Ephgrave, has expressed support for the idea, citing the success of the US system. However, lawyers note that the SFO currently cannot offer payments to whistleblowers under existing legislation, and new laws may be required to address confidentiality agreements and protection from retaliation. Lawyers have also raised concerns about the acceptance of evidence obtained through a whistleblower reward system in UK courts. The implementation of such a policy may be more likely if the Labour party is elected into power, writes Maria Ward-Brennan in City A.M. Labour has previously pledged to provide financial rewards to whistleblowers who expose financial crimes.

 

City A.M.

Arrests have been made in London after the City watchdog, the Financial Conduct Authority (FCA), launched an investigation into insider dealing and organised crime groups. The FCA, alongside the police and the National Crime Agency, conducted a major operation resulting in the arrest of three individuals. Several digital devices were seized during the operation. The FCA stated that insider dealing poses a significant threat to the integrity of financial markets and is committed to combatting organised criminal networks involved in this activity. The FCA recently published its Market Watch report, which highlighted the involvement of organised crime groups in suspicious trading.

 

The Times

A British hedge fund trader charged with defrauding Danish tax authorities plans to confess to the crime when his court case comes up later this month, according to his lawyer. Anthony Mark Patterson is charged with participating in a scheme that caused the Danish state to lose over 9bn Danish crowns ($1.3bn). The charges stem from a Danish investigation into a London-based hedge fund, Solo Capital Partners, related to so-called "cum-ex" trading involving double tax reclaims. The main suspect in the case, Sanjay Shah, was extradited to Denmark from Dubai and is currently in detention. Another Briton, Guenther Klar, was recently jailed for six years for defrauding tax authorities in a similar scheme. Patterson's confession is expected to take place in a Copenhagen court this month.

 

Reuters

The Treasury is sticking to its guns with plans to keep a 0.5% stamp duty on shares in place despite a backlash from the City. The charge brings in around £3.3bn every year, but City firms claim the levy has reduced the amount of cash flowing into the market. A Treasury spokesperson said the tax on shares does not damage “the ability of businesses to access capital or impede on London’s position as a global centre for listing companies.” But Charles Hall, the head of research at investment bank Peel Hunt, says this is not the case, adding: “Furthermore it is directly impacting on the valuation of UK equities and stifling UK economic growth. So it’s a fail on all measures and most importantly it actually reduces total tax take.” Meanwhile, the Quoted Companies Alliance, which represents London’s smaller listed companies, said the tax was the highest in Europe and scrapping it for firms at the smaller end of the market would preserve “much of the revenue raised while also liberating smaller, growth stocks – our blue chips of tomorrow.”

 

City AM

The tax loophole that allows drivers of pick-up trucks to save thousands of pounds each year is set to be closed. From July, pick-up trucks such as the Ford Ranger and Nissan Navara will be reclassified as cars rather than vans, eliminating the significant benefit-in-kind (BIK) tax breaks they currently enjoy. Currently, pick-ups weighing over one tonne are classified as commercial vehicles, resulting in lower tax rates. However, under the planned changes, pick-ups will lose their commercial status and be classified as cars. This means that tax will be calculated based on the cost and carbon dioxide emissions of the vehicle, resulting in much higher charges for gas-guzzling pick-ups. Stephanie Sharpe, a tax director with Moore Kingston Smith, warned that the costs for businesses would be "huge." The changes come after a court case brought against HM Revenue & Customs by Coca-Cola, which claimed that certain pick-up trucks should be taxed as commercial vehicles for BIK purposes. The Court of Appeal ruled in favour of HMRC's decision to tax the vehicles as private cars, leading to the rule change.

 

The Daily Telegraph

The Sun

Inflation in the UK remained steady at 4% in January, defying expectations of a modest rise. Lower food prices offset an increase in energy costs, resulting in the better-than-expected reading. The Bank of England has managed to bring down inflation from a four-decade high by raising interest rates, but there are concerns about cutting rates too soon. The bank's latest forecasts show inflation remaining above the target for much of this year and next, but Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the journey back to the target “should now accelerate," with a sizeable fall in energy bills from April and lower food costs likely. However, tax cuts in the upcoming budget could keep the bank's policy tighter for longer, he warned.

 

Herald Scotland

The Times

The Chancellor is considering tightening public spending further in the years ahead in order to free up cash for tax cuts in his March Budget, Treasury insiders have said. "It doesn't look like the Chancellor will have as much space for tax cuts compared to last autumn, so senior folk internally are starting to look at further spending restraint and productivity gains in the future if the numbers move against us again," the FT quoted a Treasury insider as saying.

 

Financial Times

Daily Mail

Up to half a million Southern Water customers are at risk of a data breach following a Russian-linked cyber-attack. The utilities company has admitted that 10% of its 4.7m customers across Kent, Sussex, Hampshire, and the Isle of Wight may have been affected. The cyber-attack, discovered on January 23, was claimed by a Russian hacking group called Black Basta. Southern Water initially denied any impact on its customers or financial systems but later revealed that up to 465,000 customers and 2,000 staff members may have been victims. Southern Water has informed the Information Commissioner's Office and is working with the National Cyber Security Centre.

 

Infosecurity Magazine

The Daily Telegraph

Investment adviser Pirc has expressed concern over the £2.6m package for Virgin Money CEO, David Duffy, stating that it is "not appropriate" compared to the bank's average employee. Pirc is urging investors to vote against two resolutions at Virgin Money's AGM, citing a lack of board-level accountability for sustainability issues. The shareholder adviser is particularly concerned about Duffy's £331,000 bonus, which is 37 times higher than the average Virgin Money worker's salary. Median pay figures suggest an even larger gap. The bank recently reported a 42% drop in annual pre-tax profits.

 

The Guardian

Blackstone, the world's largest private capital firm, has started construction on its new European headquarters in London. The decision to build the headquarters in London is seen as a vote of confidence in the British economy. Rishi Sunak attended the ground-breaking ceremony alongside Stephen Schwarzman, Blackstone's co-founder, and Jane Hartley, US ambassador to the UK. Separately, Blackstone has abandoned plans to sell a 15-storey building in Canary Wharf in the latest signal that confidence in the east London financial district is dwindling.

 

The Times

The Daily Telegraph

Cisco Systems plans to cut 5% of its global workforce to focus on high-growth areas such as artificial intelligence and software. The company expects to bring in annual revenue of $51.5bn to $52.5bn, lower than its previous forecast. Cisco shares fell by 5.5%, and analysts expect demand for its products to remain under pressure. The restructuring program will result in thousands of job cuts, with an estimated charge of $800m.

 

The Times

Virgin Money has agreed to buy Abrdn's stake in its investment platform for £20m, less than a year after it was launched to customers. The high street bank and the investment group decided in 2019 to work together on Virgin Money Investments, expanding the lender's offering beyond traditional retail products, such as savings and loans. Virgin Money Investments was managing assets worth £3.7bn and boasted more than 150,000 customer accounts at the end of last year. Virgin Money plans to move all staff from the investments division into Virgin Money and is not expecting any job losses. Abrdn will continue to provide investment advice for the platform.

 

The Times

Daily Mail

The Independent UK

The board of NatWest Group is preparing to name Paul Thwaite as its next permanent chief executive. The appointment will coincide with the government's mass-market share offering that will reduce the taxpayer's stake in the bank. Thwaite, who took over as interim chief in July, is expected to be ratified as the successor to Dame Alison Rose. NatWest is expected to report its most profitable year since its bailout in 2008, but the bonus pool for 2023 is expected to be slightly lower.

 

Financial Times

The Daily Telegraph

Ofwat, the chief water industry regulator, has warned six water companies that withholding secret data on sewage spills is endangering public trust. The companies have refused to share information on when they start and stop discharging raw sewage into rivers, a practice known as "dry spilling". Ofwat CEO David Black stated that the investigation being conducted by the Environment Agency and Ofwat is not an excuse for the companies to keep the public in the dark. The companies argue that making the information public could prejudice the investigation. However, Black emphasised that customers have a right to see the data. The Information Commissioner's Office is investigating complaints brought by The Times over the refusal to release stop and start times.

 

The Times

Plans to shift derivatives trades away from London have been weakened by lawmakers in Brussels. Analysts predict that rules agreed last week will have no significant impact on the City's clearing business.

 

Financial Times

Volkswagen is considering pulling out of China's Xinjiang region following allegations of human rights abuses. The German car maker is reviewing its joint venture with SAIC after claims that a test track in the Turpan Basin was built using forced labour of Uyghur Muslims. Pictures show Uyghur workers in military uniforms during the track's construction, indicating their involvement in forced labour programs. The company that built the track reportedly noted that workers had their eyes scanned, and the data was shared with local authorities. BASF, another German company, recently pulled out of the region due to similar allegations. Meanwhile, the FT reports that thousands of Porsche, Bentley and Audi cars have been impounded in US ports after a supplier to parent group Volkswagen found a Chinese subcomponent in the vehicles that breached anti-forced labour laws.

 

Financial Times

Financial Times

Reuters

The Daily Telegraph

Germany's Finance Minister, Christian Lindner, has expressed opposition to the EU supply chain initiative, stating that it places too much bureaucratic burden on businesses and is not in the best interest of less developed and low-income countries. Lindner's comments came after a meeting with his Irish counterpart, Michael McGrath, who emphasized the need to consider competitiveness in a challenging global environment. Last week, European Union countries postponed a decision on the proposed law, which would require large companies to determine if their supply chains use forced labour or cause environmental damage. Germany and Italy indicated they would abstain from the issue. Lindner suggested that Germany would be open to considering a new initiative after the European Parliament election in June 2024.

 

Reuters

Hundreds of frontline NHS staff are treating patients despite being under investigation for their part in an alleged “industrial-scale” qualifications fraud. More than 700 nurses are caught up in a potential scandal, which a former head of the Royal College of Nursing (RCN) said could put NHS patients at risk. The scam allegedly involves proxies impersonating nurses and taking a key test in Nigeria, which must be passed for them to become registered and allowed to work in the UK. Nurses coming to work in the UK must be properly qualified, given nurses’ role in administering drugs and intravenous infusions and responding to emergencies such as a cardiac arrest, said Peter Carter, the ex-chief executive of the RCN and ex-chair of three NHS trusts.

 

The Guardian