The Office for National Statistics (ONS) reported that, between June and July, the number of UK workers on payrolls increased by 182,000. However, at 28.9 million, this figure still comes in 201,000 lower than pre-pandemic levels, with around 750,000 jobs lost during the first wave of the coronavirus pandemic. 

The ONS also confirmed that unemployment rates dropped to 4.7% for the three-month period to the end of June where analysts had expected rates to remain flat at 4.8% for the quarter. 

Additionally, the ONS reported a further increase in job vacancies across the UK as companies seek to fill roles following the reopening of the economy. Job vacancies across the country have now risen by more than 290,000 against the previous quarter.  

John Athow, deputy national statistician for economic statistics at ONS, said the statistics body saw no sign of redundancies starting to pick up in its survey data ahead of the furlough scheme starting to wind down. Athow also said that the Insolvency Service figures for July suggested the same. 

Deliveroo revealed a 110% increase in orders across the UK and Ireland compared with the first half of 2020. The food-delivery giant has also announced that it now offers takeaways more UK restaurants than any of its rival services. 

In recent months, Deliveroo has signed up 10,000 new sites and has increased its base by approximately 30% amid a committed push to up its restaurant recruitment. The company is also working to grow its network of on-demand grocery delivery providers as the Covid-19 pandemic has seen a substantial shift in consumer behaviour, with more people now wanting to purchase groceries online for home delivery. 

During the peak of the pandemic, demand for food delivery services boomed as restaurants, pubs, and cafes were forced to close their doors. It was feared that this demand would diminish as these businesses reopened, but so far, this has not been the case. In the second quarter of 2021, Deliveroo’s consumer base reached 7.8 million monthly consumers on average, compared to 3.7 million in the first quarter of 2020. 

Deliveroo’s CEO and founder Will Shu said that although consumer behaviour may moderate as the year continues, the company remains “excited about the opportunity ahead.”

Clayton, Dubilier & Rice (CD&R) now have until 5pm on August 20 to announce its offer for the UK supermarket chain or abandon the proposed takeover altogether. CD&R had previously made an offer of £5.5 billion but the offer was turned away by the Morrisons board. In June, the board said the bid of £5.5 billion significantly undervalued Morrisons and its future prospects. 

Since June, a rival consortium led by private equity company Fortress has overtaken CD&R with a £6.3 billion bid for the UK supermarket chain. On Friday, this offer by Fortress was raised to £6.7 billion as Fortress attempted to deter CD&R from making another offer. 

Originally, CD&R had until 5pm on August 9 to make an offer for Morrisons, however, this deadline has now been extended to August 20 by takeover regulators.

Kid Misso, Vice President of Product Management at Avalara, explains how the latest EU VAT reforms will affect British businesses.

On 1st July, the EU brought in a number of VAT reforms for retailers with “third country” status which signalled a seismic shift in the way British businesses trade with the bloc post-Brexit.

An estimated 26,000 e-commerce sellers will now need to register to pay VAT for the first time via the new Import One Stop Shop (IOSS) system, a new VAT submission which will create a fast-track for quick customs clearance following the new mandate to charge VAT at point-of-sale for consignments not exceeding €150.

The aim of these reforms, which include IOSS, is to boost cross-border online trade and promote trade across the EU’s single market by reducing compliance obligations. The changes also seek to tackle the stubborn €5 billion e-commerce VAT fraud gap, with member states looking to close import loopholes and co-opt online marketplaces into collecting VAT in place of sellers.

But while the reforms will have long term benefits, and ultimately simplify the tax process, the tidal wave of legislation post-Brexit has left many businesses feeling overwhelmed by the practicalities of selling online and internationally. And this is at a time when online shopping is more popular than ever and many businesses have dipped their toes into e-commerce for the very first time.

Small and medium sized businesses in particular are set to face the biggest upheaval. Not only are they lacking the tax consultants and lawyers which e-commerce giants have in their arsenal to help understand the impact of the changes on the business, but they will also be most affected by the removal of VAT exemptions for SMEs and shipments not exceeding €22, which would cover the sale of low-cost items like books.

These businesses will have to quickly get to grips with the upfront admin involved in these changes - from understanding the classification of products sold, to labelling VAT charges on products at the point of sale, and overhauling reporting systems. The shift won’t be easy, and it certainly won’t be cheap: UK e-commerce sellers are facing £180m in additional red tape costs to navigate the reforms. The average business will likely take an £8,000 hit to upgrade their web stores to calculate the VAT due on the sales of their products at the rate applicable to the country where the customer is located and to build the necessary record-keeping ahead of implementing IOSS.

 This will of course be a tough pill to swallow in today’s volatile economic climate when many sellers have been enduring a red tape headache for years. Adjusting to these reforms will also create work that a company may not have core competencies for, requiring a short term investment of time and resources into additional training. And the risks for failure to comply include fines, double duties and the possibility of shipments being blocked before arrival - consequences that will also impact customer experience and seller reputation.

 But these initial growing pains will sow the seeds for expansion. The introduction of the IOSS system means that businesses can now make one single VAT return instead of a possible 27 separate filings in as many as 6 different currencies - and this will open doors to huge growth opportunities with the world’s largest trading bloc.

 Even though the new regulations have already come into effect, there is still time for businesses to get their house in order now IOSS has launched, before the filing deadline on 31st August. But if sellers can get the right solutions and support in place now to set up the processes and knowledge they need to weather the storm, there is real potential for British businesses to become major exporters and lead the world in e-commerce, unhampered by third-country status. 

The RAC has said filling up with petrol will now cost drivers 135.13p per litre. This is the highest price seen since September 2013. On average, filling up a 55-litre vehicle with petrol will now cost £3.08 more than it did at the beginning of June and £11.47 more than it did in July 2020. 

Diesel prices have also jumped, with a litre now costing 137.06p on average, its highest price since 2014. On average, filling a 55-litre vehicle with diesel now costs £2.90 more than it did at the beginning of June and £10.46 more than it did this time last year.

Across the country, the East Midlands comes in as the region with the largest difference in petrol prices from the start of July to the end of July. Consumer inflation is currently on high alert, with the NIESR expecting inflation to reach 3.9% in early 2022.

The National Institute of Economic and Social Research (NIESR) has said that, in early 2022, inflation in the UK is likely to jump to almost double the Bank of England’s target rate. NIESR predicts that inflation would then recede to 2% in 2023, following a bank interest rate hike. If the forecast is correct, this would be the highest rate of inflation seen since 2011. The UK’s growth forecast was also revised for 2022 by 1.1 percentage points up to 6.8%. 

Only London and the West Midlands are predicted to have gross value added of more than 4% higher than pre-pandemic levels. Removing the pandemic from the equation, this is only half the expected growth. 

NIESR’s deputy director Hande Kucuk said that the Bank of England should take a carefully communicated and steady approach to avoid tightening financial conditions that could impact the country’s financial recovery. 

The Chancellor of the Exchequer has written to Prime Minister Boris Johnson warning of the impact that the UK’s strict border controls is having on the country’s economic recovery. 

Last month, England lifted the requirement for fully vaccinated citizens to complete the quarantine period when returning from medium-risk destinations. From 2 August, visitors from the EU and US with the same vaccine status will also be exempt from the quarantine period. However, travellers are still required to take costly tests before departure and soon after arrival. Sunak’s letter to the Prime Minister comes ahead of Thursday’s meeting of ministers to consider changes to the current coronavirus travel restrictions. However, many believe that the restrictions should remain in place to prevent a further increase in cases or the outbreak of a new variant. 

The latest figures from the Monthly Insolvency Statistics report registered that company insolvencies in May 2021 was 1,011, which was 7% higher than the number registered in the same month in the previous year (946 in May 2020).

We are seeing the impact of an activist government supporting businesses across two fronts – financial support and temporary suspension of pre-existing corporate insolvency and governance legislation. 

Insolvency protection extended
In a critical move the Corporate Insolvency and Governance Act 2020 (CIGA 2020), which received assent in June 2020, comprised of eight permanent and temporary measures intended to give struggling businesses a pandemic lifeline.

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021 has extended key measures in different ways:

• The suspension of liability for wrongful trading has been extended until 30 June 2021 for directors who continue to trade a company through the pandemic with uncertainty as to whether their company may avoid future insolvency.
• The prohibition on termination clauses is also extended until 30 June 2021, although small suppliers will remain exempted from obligation to supply.
• The relaxation of entry requirements into new moratorium procedure is also extended, in this instance until 30 September 2021.
• The continuation of restrictions on statutory demands and winding-up petitions until 30 June 2021.

One key measure is continuing with temporary suspension of wrongful trading, which provided company directors with much-needed breathing space. However, on a more cautionary note, they must keep in mind all sources of risk and liability under the Insolvency Act 1986 are unaffected by the Act. For example, directors are still bound by fiduciary duties and fraudulent trading provisions of Section 213, facing sanctions and penalties if they knowingly attempt to defraud company or creditors.

In addition, directors have duties under the Companies Act 2006 and must continue to act and be mindful of the interests of creditors if the likelihood of insolvency increases.

If directors are worried their business is in or expecting financial difficulty, it is crucial that they continue to consider the needs of all key stakeholders and creditors in any decision and maintain ‘good housekeeping’ in the form of board meetings and keeping records of actions taken with an assessment of the reasons for certain decisions.

What does this extension mean?
Overall, temporary suspension of wrongful trading doesn’t change the attention directors should be giving when evaluating their company’s financial position. Directors’ actions will remain subject to scrutiny, making it critical they consider very cautiously whether to continue trading if there is no realistic chance of avoiding insolvency.

The initial extension provisions in relation to filing deadlines no longer applies. The Act had granted automatic extensions for filing deadlines between 27 June 2020 and 5 April 2021 to relieve burdens on companies during the pandemic, allowing them to focus all efforts on continued trading.

Landlords and commercial tenants

The Government has also published a consultation paper seeking responses and evidence from the property industry generally as to how negotiations between commercial landlords and tenants on rescheduling rent liabilities have been handled during lockdown.

The protective measures the Government introduced back in April 2020 were only ever meant to be temporary. This was a lifeline for many but now there is a significant risk for those who relied on this during the pandemic that once those protections are lifted – scheduled for June 2021 - businesses may fail when rent arrears are pursued.

It is hard to envisage the government allowing a cliff edge to come into view when it has spent so long over the past year seeking to protect embattled businesses.

Post-lockdown outlook 
Although easing of lockdown measures is accelerating and businesses are beginning to open, numerous challenges lay ahead, particularly with expected long-term reduction in consumer demand and confidence. Many company directors will likely face challenging decisions whether to continue trading or instigate insolvency processes soon.

There is also pent-up private equity demand and high levels of debt funding. This desire to deploy capital, combined with what we could term a ‘flight to quality’, mixed the optimism as a result of the vaccine programme, as well as near-record levels of corporate liquidity and a strong market for M&A, we could well see a positive market.

If directors are worried their business is in or expecting financial difficulty, it is crucial that they continue to consider the needs of all key stakeholders and creditors in any decision and maintain ‘good housekeeping’ in the form of board meetings and keeping records of actions taken with an assessment of the reasons for certain decisions. Where possible, they should also seek appropriate professional advice.

On Thursday, the British bank exceeded analysts’ expectations by reporting a pre-tax profit of £3.9 billion on a net income of £7.6 billion in the first half of 2021. Analysts had expected to see profits of £3.1 billion on revenues of £7.35 billion. 

In the first six months of 2020, the bank saw losses of £602 million as the UK endured the first wave of the coronavirus pandemic. Like other banks and lenders, Lloyds allowed billions as a buffer to cover a feared surge in bad debt linked to the coronavirus pandemic, but has since unlocked £837 million from the buffer as the situation in the UK appears to improve amid a successful vaccine rollout. This led to a net half-year gain of £656 million on provisions. 

The bank has raised its forecasts for the UK economy and has increased its guidance for performance in 2022, with Lloyds now expecting to deliver a return of equity of 10%. 

Lloyds is the biggest mortgage lender in the UK and has benefited significantly from the property market boom amplified by the stamp duty holiday. The bank reported June as the biggest month for mortgage completions as the end of the stamp duty holiday drove a surge in activity on the property market. So far this year, Lloyd’s has lent £9 billion to first-time buyers. Its mortgage book now stands at an impressive £12.6 billion. 

According to Zoopla’s latest house price index, buyers are now paying an average of £230,700 for a home in the UK. House prices increased by 5.4% in the year to June, although experts at Zoopla have suggested that the figure could begin to fall as the stamp duty holiday and the government’s furlough scheme come to an end. 

Commenting on the situation, Jamie Johnson, CEO of FJP Investment, said: “The property market’s remarkable 12 months is clear for all to see, with Zoopla’s latest house price index underlying just how strong the growth has been. A pandemic-induced “race for space”, coupled with the stamp duty holiday, has obviously driven buyer demand to new highs, which has evidently been compounded by limited supply.

“The question on everyone’s lips is if, or when, the bubble will burst. For me, there is no question it will burst, probably in about a year’s time. But this is not an issue and must be seen in context - it is perfectly normal as markets recalibrate and reset.

"People will always need property, and bricks and mortar will remain an attractive investment in the UK. For now, however, it is a question of timing one’s move, whether that’s as a first-time buyer or someone building a property portfolio. We may see more growth before the market deflates - and it will then rise again. Buyers and sellers must choose when to act and it will be fascinating to see how the rest of 2021 unfolds."

As increasing numbers of people are receiving alerts to stay at home by the NHS covid-19 app after coming into contact with an infected person, the petrol industry is calling for vaccinated workers to be exempt from self-isolation rules to avoid further disruption and profit losses. 

Across England and Wales, some 600,000 people were instructed to self-isolate last week as the Delta variant of the virus continues to tear through the country. This has impacted countless businesses across several sectors, from hospitality, to car manufacturers, to food production, and most recently petrol stations. 

BP, which already reported losses of $5.7 billion during the UK’s third lockdown, has said it is experiencing fuel supply issues due to a shortage of drivers across the entire industry. This has led to a handful of BP’s UK sites having to temporarily close. 

Alpa Bhakta, CEO of Butterfield Mortgages Limited, explains why the appeal of England's capital is not be underestimated. 

Making such bold predictions about the lasting changes that will come about as a result of the Covid-19 crisis is problematic. Since early 2020, consumers and businesses have been confined in what they have been able to do due to health concerns, economic disruption and unprecedented levels of state-sanctioned social distancing measures. These have been truly unique circumstances, which means it is difficult to assert exactly how people will act when the threat from the virus abates. Returning to the initial point, then, I find the assertion that London is in the midst of a “mass exodus” hard to accept. 

The bigger picture

First and foremost, it would be wrong to assume there is a one-way direction of travel, with people and even businesses departing London. After all, people have left London in large numbers for decades. In fact, between 2009 and 2019, it is estimated that about 550,000 more Britons left London than moved to it. However, crucially, the population grew in this period thanks to both the higher birth rate within the Greater London area, and net migration to the city.

From families leaving London to find more spacious homes, to people retiring and looking for a quieter life outside of the city, there are many reasons that people would choose to leave. The rise of remote working, combined with the increased demand for properties that have gardens or spare rooms that can be home offices, might have contributed to more people considering life outside of London during the pandemic, but the numbers are not huge, nor is there nearly enough data suggest this will continue as Covid restrictions ease.

Hamptons’ data shows that London leavers purchased 73,950 homes outside the capital in 2020, which although slightly higher than the past four years, is not striking. The table above highlights that in spite of all that has been said, it was largely in keeping with annual averages.

The draw of being in London remains strong

In a recent interview, Tom Walker, a Schroders fund manager specialising in global cities, said: “The media is focussing on the people who are moving “away” from the city and not on those who are moving to the city, especially younger people.  “So far, the data is telling us that those that are moving away are not moving very far, only to the suburbs. People understand that they cannot be too far from the city, both from a professional and personal point of view.”

It is a view that certainly mirrors our experiences throughout the pandemic. Our existing clients are showing little sign of wanting to sell or leave the capital, while London’s prime property has remained in demand among both domestic and international buyers. Research by Astons, the international experts on real estate, residency and citizenship through investment, has underlined that London remains one of the prime global real estate markets. Meanwhile, figures from Benham and Reeves have found that buyer interest in London’s £2 million-and-above properties has risen throughout 2021. Such data is indicative of London’s lasting appeal, pandemic or no pandemic. There is a long list of reasons that it lures in people from around the globe.

For one, the city is a prominent centre for business and commerce. Neither the pandemic nor Brexit has undermined that fact. Indeed, it recently recovered its place as Europe’s leading trading hub, while the latest Global Financial Centres Index ranked London as the second-best financial centre, behind New York. It boasts several world-leading universities (four in the top 50). Add to this its transparent legal system and strong tradition of rule of law. Then, of course, there are the thousands of cultural sites and activities, as well as the hospitality and leisure venues on offer.

When all these pull factors are combined, it is hard to see an exodus of people from London. People will leave the city - they always have and always will - and the pandemic might result in a slight uptick in these numbers. But the appeal of the capital, well established for centuries, is going to remain for decades to come. 

Alpa Bhakta is the CEO of Butterfield Mortgages Limited. Part of Butterfield and a subsidiary of The Bank of N.T. Butterfield & Son Limited. Butterfield Mortgages Limited is a London-based prime property mortgage provider with a particular focus on the needs of UK and international HNWIs.