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UK Edition
6th November 2024
 
THE HOT STORY
Cost of long-term sickness could derail economy
The Office for Budget Responsibility (OBR) has warned that Britain's poor health could result in a £100bn "triple whammy" to public finances. The budget watchdog says this would come from increased NHS and benefits spending, as well as a reduction in the tax base due to a million fewer workers. Long-term sickness, with claims at a record 2.8m, is contributing significantly to the problem, with one in 12 working-age people on incapacity benefits. The OBR highlighted that spending on sickness benefits could rise from £65bn to over £100bn by the end of the parliament, while half of universal credit claims are expected to be for ill-health, up from a third. The OBR also stressed that addressing the issue is critical for the UK's fiscal sustainability, with effective job support potentially offsetting some costs by reducing reliance on benefits. Richard Hughes, head of the OBR, told the Lords economic affairs committee that the health of the nation had “really big” implications for spending.
HEALTH & WELLBEING
Climate change fuels mental health crisis
The UK Health Security Agency has warned that climate change is exacerbating Britain's mental health crisis, with extreme weather events like heatwaves and floods directly impacting health and increasing "psychological distress." The agency is preparing a report on the connections between climate change and mental health, focusing on vulnerable groups and potential interventions. Currently, nearly 9.3m working-age individuals are economically inactive, with 2.75m citing long-term sickness as the reason, a rise attributed largely to poor mental health. The NHS saw a record 3.8m patients treated for mental health issues in 2023.
Trainee lawyers face 70-hour weeks
London's trainee lawyers are increasingly working 70-hour weeks, particularly at US firms, according to a survey by Legal Cheek. These firms dominate the working hours rankings, with junior solicitors averaging 67.5 hours over a five-day week, often extending to weekends. While US firms require at least 2,000 billable hours annually, top UK firms typically expect around 1,800. Junior lawyers working at the London offices of US firms Gibson Dunn and Paul Weiss are paid £180,000 from the day they qualified. The competition has led to a 50% increase in pay for junior ranks at UK firms over the past five years.
WORKFORCE
Jobless rate set to rise amid NI increase
Experts have warned that the increase in employers' national insurance contributions (NICs), introduced by Chancellor Rachel Reeves in the recent budget, is likely to lead to a rise in unemployment. The National Institute of Economic and Social Research (NIESR) has criticised the move, labelling it a "tax on jobs." Professor Stephen Millard, NIESR deputy director for macroeconomic modelling and forecasting, said that the NICs rise will "reduce job creation over the coming years." Additionally, NIESR suggests the Chancellor should have raised income tax for the wealthiest and unfrozen income tax thresholds to better support lower-income families.
London Underground strikes called off after ‘improved’ pay offer
Major strikes planned on the London Underground this week and next have been called off after last-minute talks between union leaders and the UK capital’s transport authority.
WORKPLACE
Asda orders staff back to office
Asda is implementing a new policy requiring over 5,000 head office employees to return to the office at least three days a week, effective January 2025. The decision follows a significant decline in sales, with the supermarket's market share dropping from 14.6% to 12.6% since its £6.8bn sale to the Issa brothers and TDR Capital in February 2021. Lord Rose, interim chief executive, said: "Change is never easy and is unsettling, but the executive team believe it is necessary to enter 2025 in a stronger position." The company is also cutting several head office jobs to streamline operations and align with competitors like Tesco and Aldi.
HSBC already fears new downsized London HQ will prove too small
HSBC is preparing to relocate from its long-time Canary Wharf base in East London to a refurbished building on Newgate Street in the City, aiming to reduce its office space by 40%. The new site will offer 570,000 sq ft, significantly less than its current offices. However, management is reportedly considering leasing additional space nearby due to concerns about potential shortages.
TECHNOLOGY
UK government launches new AI safety platform for businesses
The UK government has launched a platform to help businesses assess and mitigate the risks posed by AI technologies, bringing together guidance and resources to aid impact assessments and evaluations.
LEGAL
Hearing begins over equal pay claims
An employment tribunal in Glasgow has held its first hearing over the case of three Glasgow City Council home care workers who have refused previous equal pay offers after claiming that the council, trade unions and lawyers had not been transparent over how those settlements were calculated. The Daily Record notes that the council has settled almost 19,000 claims to date, and that thousands of women accepted offers from which almost 7% had been deducted in legal fees, despite union members being entitled to free representation.
Gender pay gap on the rise, warns STUC
New research by the Scottish Trades Union Congress (STUC), based on Office for National Statistics figures, reveals that Scotland's mean gender pay gap rose from 6.4% in 2023 to 8.3% in 2024 - with women seeing their pay rise by an average of 74p per hour over the year, against a £1 average increase for men. STUC general secretary Roz Foyer said it is "simply staggering and scandalous that, despite progress having been made, the gender pay gap in Scotland has risen by 30%. Women can now expect to take home an inexcusable £3,000 less than their male counterparts." She added: "With the gap growing more in the public sector than the private sector . . . it confirms entirely what trade unions have long been calling for: public sector workers deserve better pay."
STRATEGY
US employers rethink plans after NICs raid
The UK has been made less attractive to US businesses looking to invest in Britain due to Labour’s increase National Insurance (NI) costs, according to the chief executive of British American Business. Duncan Edwards said: “For the UK leaders of American-owned companies looking to get more investment from their head office, their task has definitely just become more difficult as the costs of doing business in the UK will rise. Coupled with the Employment Rights Bill, this will make the UK less attractive for big American employers.”
ECONOMY
Service sector growth stalls
Output from Britain's service industries expanded at its slowest rate in nearly a year last month, with the S&P Global/Chartered Institute of Procurement and Supply final purchasing managers' index for the £1.7trn sector dropping from 52.4 to 52.0 in October on an index where a reading above 50 points to growth. Tim Moore, economics director at S&P Global Market Intelligence, attributed the slowdown to "heightened business uncertainty" ahead of the Budget, adding that the "wait for clarity" on government policy ahead of the Budget "was widely reported to have weighed on business confidence and spending." Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said the slowdown would give the Bank of England's monetary policy committee "further confidence" to cut interest rates, while Matt Swannell, chief economic adviser to the EY Item Club, said the data was not "a major cause for concern."
INTERNATIONAL
German auto parts manufacturer Schaeffler to cut thousands of jobs
German auto parts maker Schaeffler is to cut thousands of jobs in Europe as part of a restructuring program that is aimed at boosting the firm's competitiveness. The company said the measures would precipitate around 4,700 job losses across Europe, including 2,800 in Germany. Schaeffler currently employs around 120,000 workers. The company said the move could deliver savings of about €290m ($315.5m) annually by the end of 2029. It estimates that the restructuring program will incur a one-time cost of €580m.
Michelin to close two French factories
Michelin is to cut around 1,250 jobs with the closure of two French factories. A consumer shift in Europe toward low-cost tyres, mainly from Asia, has hampered its passenger car, light truck and truck tyre premium segments, the company said. Michelin said it planned to close its sites in Cholet and Vannes by early 2026 at the latest. The company employs 132,500 staff, according to its website, and said it would create as many new jobs as are lost in the restructuring process.
 


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