UK workers ‘anxious’ about return to office

Almost two in five workers in the UK are anxious about returning to the office after working from home during the pandemic, new research shows.

A survey of 1,000 employees by messaging app Slack found that many were concerned that going back to the office would have a negative impact on their work-life balance, Sky News reports.

Nearly half of respondents believe that hybrid working would be best for their mental health but only one in four said they can choose if and when they work in the office.

As well concerns over work-life balance, many are reluctant to return because of the high cost of travel and food when working in the office.

Seven in 10 of those surveyed said that a four-day working week would improve their health and wellbeing.

Chris Mills, of Slack, said it was “positive” to see workers highlighting that hybrid work and technology could play an an important part in their wellbeing.

“To ensure technology continues to be an enabler of healthier workplaces, leaders can also set a good example,” Mills added.

“Building best practices, for instance on how to use features like ‘do not disturb’ and scheduled messages to avoid out of office messaging, can be a great place to start.”

Heathrow Airport’s pandemic losses top £4bn

Passenger numbers are up, but London’s Heathrow Airport will still not make a profit this year.

Revenue for the UK’s biggest airport in the first quarter of 2022 climbed to £516m and adjusted EBITDA turned positive to reach £273m. However, its total pandemic losses have now topped £4.0bn and the airport is not forecasting a return to profit and dividends in 2022.

Heathrow said it is currently seeing a “temporary increase” in demand after pandemic restrictions on travel were lifted, with 9.7 million passengers passing through the airport in the first quarter of 2022.

January and February were weaker than expected due to Omicron-related travel restrictions, but demand grew in March after the unexpectedly quick removal of all UK travel restrictions.

The airport has increased its 2022 passenger forecast from 45.5 million to 52.8 million, which represents a return to 65% of pre-pandemic traffic.

However, demand remains “very volatile” and passenger numbers are expected to drop off significantly after the summer.

“We are already seeing airlines cancelling services into the autumn and the realities of higher fuel costs, lower GDP growth, the war in Ukraine and the ongoing pandemic will drag on demand,” the airport said in a statement.

“We are still in a pandemic with many markets still closed, nearly 80% with testing and vaccination requirements, and another variant of concern could see the return of UK travel restrictions.”

Omicron and rising prices hit consumer-facing businesses in January

The UK is seeing a two-speed recovery from Covid-19, a new report suggests.

Data compiled by IHS Markit and CIPS for the Purchasing Managers’ Index (PMI) shows that a further slowdown in the service sector held back the UK economy at the start of 2022.

The headline seasonally adjusted IHS Markit/CIPS Flash UK Composite Output Index remained above the no-change threshold of 50 in January, standing at 53.4. However, the index was down slightly from 53.6 in December and signalled the slowest rate of output expansion since the recovery from lockdown began last spring.

Hospitality, leisure and travel all struggled due to restrictions related to the Omicron variant, offsetting resilient growth in business and financial services. Manufacturers also outperformed service providers as a sustained turnaround in materials availability led to the fastest rise in production volumes for five months.

The report noted that all types of private sector businesses responding to the monthly survey commented on capacity constraints and rising backlogs of work as a result of staff absences in January.

Input cost inflation also remained high, reflecting stronger cost pressures in the service sector.

Chris Williamson, chief business economist at IHS Markit, said that with inflationary pressures remaining elevated at near-record levels, it adds to the likelihood of the Bank of England raising interest rates again at its upcoming meeting.

In December the Bank of England increased the base rate from the record low of 0.1% to 0.25% as the pace of price increases continued to accelerate.

£1bn support fund for businesses most impacted by Omicron

Businesses in the hospitality and leisure sectors in England will be eligible for one-off cash grants of up to £6,000 per premises, Chancellor Rishi Sunak has announced.

At the same time, another £30m in funding will available through the Culture Recovery Fund to support organisations such as theatres, museums and orchestras through the winter.

It comes after the rapid spread of the Omicron variant of Covid-19 led to a significant drop in trade and bookings.

More than £100m in discretionary funding will also be made available for local authorities to support other businesses.

As part of the latest measures, the devolved administrations will receive around £150m to provide additional support to businesses in Scotland, Wales and Northern Ireland as they see fit.

And the UK government will cover the cost of Statutory Sick Pay for Covid-related absences for small and medium-sized employers across the UK.

Hospitality businesses have seen revenue fall by as much as 60% during a key period for the sector.

Trade association UKHospitality welcomed the new grants and the release of a £1.5bn package to support the supply chain.

“This is a generous package building on existing hospitality support measures to provide an immediate emergency cash injection for those businesses who, through no fault of their own, have seen their most valuable trading period annihilated,” said UKHospitality’s chief executive, Kate Nicholls.

“It will help to secure jobs and business viability in the short term, particularly among small businesses in the sector, and we particularly welcome the boost to funds for the supply chain and event and business catering companies so badly affected by the reintroduction of work from home guidelines.”

New Covid variant prompts change to face mask rules in shops

Shoppers in England will be expected to wear face coverings in shops from Tuesday 30 November to help prevent the spread of the new Covid-19 Omicron variant.

The change in the rules brings England into line with the rest of the UK, where mask wearing in stores is still required.

Face masks will also be mandatory on public transport, and all travellers arriving into the UK will have to take a PCR test on or before day 2 and self isolate until they have received a negative test result.

The British Retail Consortium, which represents the retail industry, asked customers to “respect the rules and be considerate to their fellow shoppers and to hard-working shop staff”.

Paddy Lillis, general secretary of shop workers’ union Usdaw, warned that the fluctuating rules could lead to conflict in stores, BBC News reported.

“There is no reason why, when lifting other Covid restrictions in England, the government could not have kept the requirement to wear a face covering in busy public places, like shops and public transport,” he said.

“This flip-flopping on basic and sensible Covid measures and the different rules across the UK create confusion, reduce compliance and can lead to conflict.”

Asked whether shoppers in England could face fines if they fail to comply with the rules, Health Secretary Sajid Javid told the BBC’s Andrew Marr Show: “It will be a legal requirement by government regulation to wear masks in shops and public transport.”

Lockdown savings ‘likely to be spent slowly’

Many households in the UK put more money aside during lockdown as spending opportunities were reduced. As restrictions curtailed people’s spending on shopping, entertainment and holidays, household savings rose on average.

However, this is unlikely to lead to a temporary consumption boom, according to a new analysis.

The research, funded by the Nuffield Foundation, used both aggregate and household-level data and revealed that:

1. Falls in spending during this recession were primarily in purchases of services rather than durable goods. While purchases of durables are more likely to be postponed rather than cancelled, purchases of services such as meals out and holidays are less likely to increase much next year because less was spent on them last year.

2. Increases in net wealth over the pandemic were more common among higher-income households, who were less likely to experience economic uncertainty and income losses during the pandemic, and so are less likely to change their spending behaviour as the economy recovers.

3. Responses on how individuals would respond to a hypothetical payment of £500 suggest low desire to spend more as incomes increase. On average, only £55 of these payments would be spent over the next three months, indicating that the appetite to spend out of income growth is not unusually high. Richer households were more likely to say they would use the extra funds to add to their savings, while poorer households were more likely to say they would use the funds to reduce their debts.

The researchers noted that consumption growth in the next few months is still likely to be rapid as demand and household saving return to pre-pandemic levels. However, the fact that additional savings accumulated during the pandemic are likely to be drawn down slowly limits the degree to which consumer spending will drive both the recovery and inflation in future.

UK scraps amber list as travel rules simplified

The UK’s traffic light system for international travel has been replaced with just two categories: countries on the red list and everywhere else.

Under the simplified rules, most fully vaccinated travellers and eligible under-18s returning from non-red list countries and territories will no longer have to take a Covid test before setting off for the UK, a day 8 test or enter a 10-day self-isolation period.

And from later in October, fully vaccinated passengers with an approved vaccine and recognised certificate from a country not on the red list will be able to replace their day 2 Covid test with a cheaper lateral flow test, reducing the cost of tests on arrival into England.

Those coming from red list destinations must still pay to quarantine in a hotel for 10 days.

When the red list is updated later this week it may be cut from 54 to as few as nine, with South Africa and Mexico among the places expected to become open to quarantine-free travel, Sky News reports.

The government may also expand the list of countries whose vaccination certificates are recognised by the UK.

“We are accelerating towards a future where travel continues to reopen safely and remains open for good, and today’s rule changes are good news for families, businesses and the travel sector,” said Transport Secretary Grant Shapps.

“Our priority remains to protect public health but, with more than 8 in 10 people now fully vaccinated, we are able to take these steps to lower the cost of testing and help the sector to continue in its recovery.”

Call for windfall tax on ‘excess’ pandemic profits

A new report calls for a one-off windfall tax on companies that made “excess profits” during the pandemic.

Campaign group Tax Justice UK says that a number of companies saw their global profits leap during the last 18 months.

Its report highlights six companies — including outsourcing firm Serco and online clothes retailer Asos — that increased their profit by a total of £16bn. Some saw their profit double, while one company, the Scottish Mortgage Investment Trust, recorded a profit increase of 801% compared to previous years.

The report argues that these companies either benefited from state pandemic spending, or were able to profit from economic changes that were accelerated by Covid.

In response, however, several of the companies named in the report said they did not recognise the figures, and most argued that their relative profits last year were not mainly influenced by patterns of spending in the pandemic, the Guardian reported.

Tax Justice UK called on UK Chancellor Rishi Sunak to introduce a one-off tax on profits made during the pandemic, increase the main rate of corporation tax to 25%, and equalise the taxation of capital gains and income.

It estimates that a windfall tax or “pandemic profit levy” on the global profits of the six highlighted firms alone could raise up to £1.6bn.

“Those who have suffered over the last 18 months should not be asked to pay more, however, it is fair to expect those who have prospered to contribute more to the economic recovery,” the organisation said.

UK economy set for fastest growth in 80 years

The UK economy is predicted to grow strongly over the next few months and return to its pre-pandemic peak by the end of the year, according to a new report.

Thanks to the success of the vaccine rollout and the relaxation of Covid-19 restrictions, the EY ITEM Club now expects GDP to grow by 7.6% in 2021 – the fastest growth since 1941 – followed by 6.5% growth in 2022.

Now that people are returning to working, shopping and socialising, consumer spending is anticipated to rebound strongly. And if households spend some of the £200bn of excess savings built up since early 2020 it would make that rebound even stronger, the EY ITEM Club said.

Support from macroeconomic policy will also underpin a strong expansion this year and next, according to the report. Fiscal policy remains in loosening mode, while the Chancellor may be able to rein back planned future tax rises and spending cuts if the economy recovers more strongly than the Office for Budget Responsibility (OBR) expects. Meanwhile, the Bank of England is predicted to keep the official interest rate at its current record low of 0.1% until late 2022.

Rising inflation and unemployment could affect growth, however.

Consumer price inflation is anticipated to reach a peak of 3.5% in the fourth quarter of 2021, while unemployment is seen rising in the second half of the year, peaking at 5.1% before falling back to 4.6% in 2022.

Shops and pubs forced to close after staff ‘pinged’

Business groups have urged the UK government to allow fully vaccinated people not to self-isolate after being “pinged” by the NHS Covid app.

Shops, factories and pubs across the country have been forced to reduce their hours or temporarily close due to staff shortages caused by people being informed by NHS Test and Trace that they have come into contact with someone who has tested positive for Covid-19.

In the week to 7 July more than 500,000 people in England and Wales were “pinged” by the app, a rise of 46% on the previous week.

Grocery chain Iceland has had to shut some of its stores as 1,000 staff are self-isolating, and pub chain Greene King has closed 33 pubs for the same reason, BBC News reports.

Marks & Spencer has also seen a sharp rise in the number of workers being notified by the NHS app, and said it may have to reduce hours if there are shortages.

Meanwhile, Vauxhall has reduced daily shifts from three to two at its Luton plant because of the number of employees told to self-isolate, and Nissan and Rolls-Royce have warned that staff shortages could affect production.

From 16 August, people who have been fully vaccinated will not have to self-isolate if they are “pinged” by the NHS app. Instead, they will be advised to take PCR test as soon as possible.

Business representatives including the British Retail Consortium and the CBI have said that this change should be brought forward immediately.

“With restrictions being lifted and cases rapidly increasing, we urgently need a surefooted approach from government, creating confidence to secure the recovery,” said CBI president, Lord Karan Bilimoria.

“This starts by immediately ending the self-isolation period of 10 days for people who are double-jabbed and providing a route out of isolation for those not yet fully vaccinated through daily lateral flow tests. Against the backdrop of crippling staff shortages, speed is of the essence.”