Last Week In Review: A Financial Roundup
Monday?
National living wage rise ‘ushering in government-directed deals’
The record increase in the national living wage set to take place in April will take Britain into a new era of government-directed pay deals, a leading retailer has warned.
The CEO of Timpson retail group, James Timpson, details how the 9.8% rise that will take the adult rate from ￡10.42 to ￡11.44 per hour, and increases of up to 21% for younger workers, will add ￡10.4 million to Timpson’s wage bill.
The wage hike is part of the government’s goal to reach a minimum rate of two-thirds of average earnings for three million low-paid workers.
The Low Pay Commission, dedicated to researching the impact of the statutory minimum wage, recommends increases in the rate of pay but has said that this year’s rise would challenge sectors such as social care, retail, and hospitality.
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Tuesday?
World Bank forecasts 2024 global growth to slow for third consecutive year
The World Bank has warned that global economic growth is set to slow for the third consecutive year in 2024, marking the worst half-decade performance in 30 years.
Factors such as the COVID-19 pandemic, the war in Ukraine, and rising inflation and interest rates have contributed to this downturn. The forecast predicts global GDP growth of 2.4% in 2024, down from 2.6% in 2023, 3% in 2022, and 6.2% in 2021.
The World Bank suggests that this will make the 2020–2024 period weaker than the years surrounding the 2008–2009 global financial crisis.
The goal of ending extreme poverty by 2030 is now considered out of reach due to the geopolitical conflicts hindering economic activity. Accelerating investment in clean energy and climate change adaptation could boost growth in emerging markets and developing countries, it has been suggested.
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Wednesday?
AI-drive misinformation 'biggest short-term threat to global economy'
2023 saw the rise of artificial intelligence, and this week the World Economic Forum (WEF) highlighted the threat of AI-driven misinformation and disinformation as the most significant short-term risk to the global economy.
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In its annual risks report, which surveys the opinions of 1400 experts, it found that 30% of respondents believed there was a high risk of a global catastrophe. Concerns over the persistent cost of living and disinformation dominated the outlook for 2024.
The top five risks stated in the report include misinformation and disinformation, extreme weather events, societal polarisation, cyber security, and interstate armed conflict. The WEF calls for global collaboration to address these challenges and build a more resilient and sustainable economy for the future.
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Thursday?
UK government rejects calls for banks to pre-fund multibillion-pound deposit guarantee scheme
The UK government has confirmed that it does not currently intend for British banks to pay billions into a deposit guarantee scheme aimed at reducing the burden on taxpayers in case of lender failures.
There were discussions about big banks pre-funding the scheme to bear some of the costs of their potential collapse. However, the Treasury has stated that it aims to avoid imposing additional upfront financial costs on banks. Instead, it plans to expand the powers of the Financial Services Compensation Scheme (FSCS) to introduce a levy to fund the operational costs of a failing smaller bank.
The Bank of England’s Prudential Regulation Authority will regularly review the ￡85,000 deposit limit, which has been in place since 2010. The consultation is open until March 7, seeking feedback from the industry on alternative ways to achieve long-term objectives.
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Friday?
What do Red Sea assaults mean for global trade?
Due to escalating conflicts in the Middle East, many companies have diverted their commercial vessels to alternative shipping routes, with the extended journey potentially costing them millions of dollars.
The strait of Bab al-Mandab, a 20-mile-wide channel that splits Africa and Yemen, is a popular route used by commercial vessels. Egypt’s Suez Canal, accessed by the Bab al-Mandab Strait in the Red Sea, is the quickest sea route between Asia and Europe for the transportation of commercial goods, oil, and liquified natural gas.
Recent attacks on commercial vessels by Houthi rebels targeting ships they believe to be destined for Israel have forced businesses and governments to consider alternative routes and transportation methods.
12% of annual global trade passes through the Red Sea every year, costing c$1 trillion worth of goods. Re-direction of shipments causing delays of up to 10 days could impact organisation costs and consumer pricing significantly according to Head of Supply Chain Research at S&P Global Market Intelligence, Chris Rogers.
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