It’s not been a great week for the Prime Minister, but then again apart from being able to celebrate the success of the return of government in Northern Ireland, we in the NTI newsroom are struggling to recall the last time he had a good week. This morning (Friday 16 February) Rishi Sunak woke to news of two more by-election losses.
Rishi (noticeably no longer called Dishy) has also had to deal with the news that the UK is now in a technical recession (when the economy shrinks for two consecutive quarters). The figures released yesterday show the economy shrank by 0.3% (a figure bigger than expected) between October and December, having already done so in Q3 (by 0.1%)
Over the whole of last year, the economy’s graph has flatlined with the economy growing by 0.1%. Shadow chancellor Rachel Reeves was quick to twist the knife saying the latest figures showed that Mr Sunak's pledge to grow the economy was "in tatters".
Some solace for the PM could be found as the UK is not alone in facing economic pressure. The European Union narrowly avoided recession in the second half of 2023 while Japan confirmed its economy had contracted for a second quarter.
The Office for National Statistics (ONS) said there were a number of areas where economy faltered at the end of the year. Shoppers spent less in December after taking advantage of Black Friday sales in November, the health sector was affected by strike action by junior doctors while attendance levels at schools dropped by 1%.
Further news from the ONS may also be high on the list advisors are placing on Rishi’s reading list. Shop sales rebounded in January as shoppers filled cupboards emptied in Christmas week with food and took advantage of new year bargains. The ONS said that the value of goods people bought in January went up 3.9%, compared to the 3.4% increase in the volume of products they purchased.
"Sales increased across nearly all retail sectors and it was a particularly strong month for supermarkets," said Heather Bovill, deputy director for surveys and economic indicators at the ONS. "Household goods stores, sports shops and department store retailers were among those reporting robust trading due to January sales promotions."
More good news. NatWest has revealed today its highest yearly profit for 26 years, with a pre-tax profit of £6.2bn which was higher than expected. This is good news for all of us as the taxpayer still owns 35% of the bank following the £46bn bailout during the financial crisis, and these results come at a good time as the chancellor announced last year a plan to sell some of the shares.
The bank said that its pre-tax profits for 2023 were up 20% on the year before and it announced a share buyback of £300m. It did however sound a note of caution as while higher interest rates have lifted revenues, it also predicted a tough economic picture could impact its future earnings. Let’s hope the bank has learnt its lessons from 2008.
Another significant set of financial results this week came from British Gas, who reported its profits for 2023 increased 10-fold to £750m, having been £72m in 2022. These results relate to the energy retailer arm of the business, and not the wholesale provider part. Those numbers (for Centrica) fell 17% to £2.8bn
Consultancy Cornwall Insight has predicted a 15% drop in the energy price cap, which would see the “typical” annual bill fall by £293 a year to £1,635 - the lowest in more than two years. We will find out if the prediction is correct next week (Friday 23 February) when Ofgem makes its announcement. The price cap affects 29 million households in England, Wales and Scotland.
We conclude our round-up with the insolvency statistics for January 2024. The number of registered company insolvencies in January 2024 was 1,769, 5% higher than January 2023 which saw 1,685. This figure contained 1,294 CVLs, 339 Compulsory Liquidations, 120 Administrations and 16 CVAs. Fans of Receiverships will again be disappointed with none recorded in the month. The figure of 1,769 does not (for reasons known only to the Insolvency Service) include 3 Moratorium appointments.
This data shows CVL numbers were lower than in January 2023, while Compulsory Liquidation and Administration numbers were higher than last year.
For individuals, the total number of insolvencies in January 2024 was 8,089, 4% higher than in the same month in the previous year when there were 7,756. As has been the case for a long time, the largest number was 4,528 IVAs although the gap is decreasing as this represents a fall of 16%, whilst DROs rose 60% to 2,793 and Bankruptcies rose 20% to 768.
The Bankruptcies were made up of 606 debtor applications and 162 creditor petitions. Debtor applications were 17% higher and creditor petitions 31% higher than in January 2023, although numbers remained below their pre-2020 levels.