Truss turmoil continues as new chancellor takes the reins

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17th October 2022

Bite-sized business news from the UK and beyond

Good morning As an energy crisis in Europe looms, young activists in Paris are using their parkour moves to switch off wasteful lights that stores leave on all night.

Today's stories

Truss turmoil continues as new chancellor takes the reins
Royal Mail plans 10,000 job cuts

ECONOMY
Truss turmoil continues as new chancellor takes the reins

What happened?
Liz Truss fired Kwasi Kwarteng as chancellor on Friday – replacing him with Jeremy Hunt - and said her government will now allow corporate taxes to rise in April to 25% from 19%—reversing one of her top campaign pledges to cut taxes.

Truss’ first six weeks as PM have been dramatic to put it mildly
The mini budget initially announced in September planned to cut taxes by £45bn without detailing how the government would pay for it. The news had sent the pound falling to a record low against the US dollar and forced the Bank of England to temporarily step in to buy bonds to calm market volatility. Truss's latest decision comes after the government reversed plans to lower taxes on Britain's high earners.

The market chaos is impacting regular people too. Already dealing with soaring inflation and an impending recession, Brits must now contend with higher mortgage costs that have risen along with bond interest rates. 2.4m mortgage rates expire in the remaining part of this year and 2023, the people who have them could see their payments double, or even triple.

Speculation is growing over whether Truss will be turfed by her own party
The Daily Star has gone so far as to launch a live feed measuring whether her time in office will outlast a head of store bought lettuce.

Jeremy Hunt is now the fourth chancellor in four months and in interviews over the weekend he didn’t rule out any further U-turns. The prospect of all the PM’s promises – including not cutting public spending - being overturned has called into question who is really in charge – Liz Truss or Jeremy Hunt.

What next: The chancellor is expected to fast track announcements of many billions of pounds worth of tax and spending measures from his debt plan to today instead of 31 October. Truss will be hoping that it will be credible enough to quell any rebellion in her own party and calm the financial markets. If not, her position could be on even shakier ground.

Other stories to keep you in the loop

Asos troubles deepen as lenders fashion balance sheet talks
Tesco warns public faces hardship in wake of interest rates rise
How the UK became the butt of jokes at the IMF meeting
Waitrose to bring back free hot drinks for loyalty card members
Beyond Meat executive exits after biting incident

DELIVERY
Royal Mail plans 10,000 job cuts

What happened?
On Friday Royal Mail said it will cut 10,000 jobs after projecting a £350m loss in the year to next March that it blamed partly on a series of crippling strikes.

The world has changed since Royal Mail was created as a public service in 1635
The company has suffered from the decline in letter volumes – 20bn sent 20 years ago versus 8bn today – but has benefitted from the rise of online shopping. But it’s been challenged by rival parcel delivery providers that operate with a lower cost base as they employ temporary workers with less generous pay and benefits.

Strikes have heavily disrupted business
Royal Mail workers in the Communication Workers Union (CWU) have been in a long-running dispute over pay and conditions. Last week it announced a fresh round of strikes and if they go ahead would result in up to 21 days of industrial action between September and December. 115,000 out of the 140,000 people Royal Mail employs are expected to strike during the peak periods of Black Friday and the run up to Christmas.

The company wants to make 6,000 roles redundant by next summer with another 4,000 lost through not replacing people when they resign. The aim is to slimdown the organisation so it can compete better with other parcel companies.

The unions don’t think they are to blame
The CWU said Royal Mail’s financial problems were the result of “gross mismanagement and a failed business agenda of ending daily deliveries, a wholesale levelling-down of the terms, pay and conditions of postal workers, and turning Royal Mail into a gig economy style courier.”

Stat of the day

Kwasi Kwarteng, who lasted 38 days on the job, is the second-shortest serving chancellor after Iain Macleod, who died of a heart attack after 30 days in 1970

Interesting links from around the web

Forget quiet quitting, the latest work trend is to 'let it rot'
Home swap holidays: how to stay for free and save thousands
Why Beyoncé holds the key to office culture

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Truss turmoil continues as new chancellor takes the reins

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