Financial news took a back seat this past week as the headlines were dominated by rows over political corruption and the continuing debate on climate peril surrounding COP26. But while protesters were gluing themselves to ScottishPower’s headquarters in Glasgow, signs continued to emerge that the economic recovery from the pandemic is coming rather unstuck.
Labour shortages and supply chain chaos remained dominant underlying themes across the piece, with variety discount retailer B&M declaring that it is well-stocked for Christmas after deliberately taking delivery of imported merchandise earlier than normal. Joining the queue was Marks & Spencer chief executive Steve Rowe, who used the occasion of a rare profit upgrade to reassure that the group will have “everything that customers need” in the run-up to the festive season.
Wednesday’s half-year results potentially looked the start of a revival for M&S, whose clothing business has been struggling long since before the pandemic. The company upped its full-year earnings outlook by more than 40 per cent in only its second profit upgrade this century, the first having been just three months earlier in July.
That said, Mr Rowe cautioned that the supply situation is “definitely not” perfect. And like UK businesses of virtually every size and flavour, he noted that cost pressures brought about by Brexit and the pandemic will lead to higher prices for consumers.
Taylor Wimpey was singing a similar tune on Thursday when it said in its trading update that rising house prices are “fully offsetting” increased building costs. This is for the moment good news for the UK’s third-largest housebuilder, but if house prices keep rising at that sort of pace it could choke off demand across the sector.
As Business Editor Ian McConnell observed, rock-bottom interest rates that have been necessary to support the economy have also fuelled surging house prices, crushing the home ownership aspirations of the young and those on middle to low incomes. This is one of many reasons why decisions on benchmark UK interest rates have become controversial again.
“Dangers lie in waiting too long and having to raise rates higher than might otherwise have been needed to quell inflation, and in acting too quickly and choking off recovery,” he wrote. “But it is plain tough times lie ahead for savers and borrowers.”
In the here and now, figures this past week from the Office for National Statistics showed that economic growth slowed sharply in the third quarter, with output still 2.1% adrift of pre-pandemic levels. The decline from 5.5% in the second quarter to 1.3% in the three months to September meant the UK regained its unenviable status as the laggard of the G7 nations.
One bright bit of news was highlighted by Deputy Business Editor Scott Wright, who welcomed the huge boost to be expected after travel between the UK and US fully reopened at the start of this week. After more than 19 months of dramatically reduced access to suppress the spread of Covid, fully-vaccinated UK citizens may once again enter the United States, providing a further boost to the aviation sector, Scottish tourism and firms doing business in the valuable North American market.
And yet at the same time activists in Glasgow were denouncing climate damage fuelled by the aviation industry. Oh, the irony.
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