Market Loop - UK economy flatlines

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15th August 2022

Bite-sized business news from the UK and beyond

Good morning The London restaurant owned by Salt Bae, the Turkish social media chef who went viral for posting videos of his flamboyant style of seasoning steaks, recorded £7m in revenues from its first four months. Nusr-Et received mostly negative reviews when it opened in Knightsbridge last year with £1,500 steaks, but figures released over the weekend shows it’s one of most profitable restaurants in the city.

Today's stories

UK economy flatlines
Saudi oil giant record profit

ECONOMY
UK economy flatlines

What happened?
On Friday data from the Office for National Statistics showed that the UK economy shrank by 0.1% in the three months to June partly due to the extra Jubilee bank holiday.

How did we get here?
The ONS said that the decrease in economic output was mainly due to a slowdown in the services sector, especially in healthcare as the NHS track and trace tailed off. The construction industry dropped in June after seven straight months of growth. And the travel sector was also hit in a month of flight delays and cancellations.

The ONS said that while celebrations of the Queen’s 70th Jubilee boosted hotels, bars, hairdressers and outdoor events this wasn’t enough to offset the blow of having two fewer working days in June because of the four day weekend.

So are we in a recession?
Technically no, that only happens after two back-to-back quarters of negative growth and between January and March economic output grew by 0.8%.

But the Bank of England has predicted that the economy will enter its longest recession since the Global Financial Crisis in 2008 this autumn.

Inflation hit a 40-year high of 9.4% in July and is expected to continue rising in the coming months.

Further sharp rises in food and energy prices are forecast to reduce household disposable incomes and thereby weaken consumer demand implying a very difficult road ahead for Brits.

Other stories to keep you in the loop

Labour to call for energy price cap freeze this autumn
Rail fares in England to rise below inflation rate
Johnson & Johnson to end global sales of talc-based baby powder
Peloton to slash 780 jobs and hike prices in push to turn profit
Meditation app Calm sacks one-fifth of staff
PwC scraps 2:1 entry requirement for graduates
Trainer reseller Kick Game sprints towards £150m sale
Former Deutsche Bank CEO dies at 59 after outliving diagnosis by 4 years

ENERGY
Saudi oil giant record profit

On Sunday Aramco, Saudi Arabia’s state-owned oil giant, announced a 90% jump in profits for the three months to June of $48.4bn. The quarterly profits from world’s biggest oil firm is thought to be one of largest in history.

Like its counterparts in Europe and America, 2022 has been a good year for Aramco. The surge in energy prices, first from the post lockdown boom in demand and now from the uncertainty in supply due to the war in Ukraine, has benefitted oil and gas producers with huge profits. Oil prices have increased from around $70 a barrel from the start of the year to over $120 this summer.

Aramco is 98% owned by the Saudi Arabian government which means the state will receive most of the $19bn dividend payout.

In July the UK’s Shell reported nearly £10bn in profit between April and June, a record for the FTSE 100 firm. Meanwhile, BP’s profits tripled to almost £7bn in the second quarter, prompting it to give billions of pounds to shareholders.

Saudi Arabia is the leader of OPEC+ - a group of the world’s biggest oil-producing countries – which has been under pressure from western countries to boost output to ease high prices. In response to the pressure earlier this month it agreed to one of the smallest increases in production in its history.

Stat of the day

So far in 2022, there have been 745 wildfires in the UK - more than a 200% increase from the total figure of 247 for all of last year

Interesting links from around the web

Why is Salman Rushdie so controversial?
5 ways to make work friends when you work from home
5 beginner tips for getting into art collecting

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Market Loop - UK economy flatlines

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