RATES OF ATTRITION
Bank of England boss says the Budget risks job losses and interest rates staying higher for longer
Plus, Mulberry is cutting a quarter of its head office jobs
THE BANK OF ENGLAND governor yesterday said the Budget risked job losses and interest rates staying higher for longer.
Andrew Bailey told MPs the Bank would take a “gradual” approach to further interest rate cuts while it watches how companies react to Labour’s £25billion tax raid on businesses.
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Catherine Mann, of the Bank’s rate-setting committee, said she had favoured rates staying high as she was concerned the Budget could lead to higher inflation.
Figures out today are expected to confirm that inflation will creep a little higher than the Bank’s 2 per cent “golden target”.
Mr Bailey said he expected companies to react to the extra costs in employers’ National Insurance Contributions by increasing prices, cutting staff, reducing wage increases or having lower profits.
Retailers face £7billion of extra costs, which has prompted 80 of the biggest firms, including Tesco, Marks & Spencer, Sainsbury’s, Next and Jd Sports, to write to the Chancellor to warn of job losses.
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The Office for Budget Responsibility forecast the Budget could mean 50,000 job losses.
Mr Bailey said he agreed with the retailers, adding: “There is a risk here that the reduction in employment could be more.”
He also said he could not “jump to conclusions” about the impact of US President-elect Donald Trump’s tariff threats on the UK but added: “Fragmenting the world economy is not a good thing.”
Last week he called for closer trade relations with the EU.
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MULBERRY STAFF PACK BAGS
MULBERRY is cutting a quarter of its head office jobs after its new chief executive said the handbag- maker needs to be “leaner”.
Mulberry’s sales have slumped by a fifth over the past six months while its losses have widened to £15.7million.
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Andrea Baldo, who joined three months ago from Scandi brand Ganni, said there was a “clear need to reprioritise and rebuild”.
He plans to cut costs further while also widening Mulberry’s appeal after its bags became increasingly unaffordable.
Shares in the firm fell by another 11 per cent yesterday, valuing the business at £74million.
Last month majority shareholder Christina Ong killed off a £111million takeover from Mike Ashley’s Frasers Group, which owns more than a third of Mulberry.
CAR CRISIS TALKS
THE car industry is revving up for crisis talks with the Government today over its strict electric vehicle quotas.
Bosses from Vauxhall’s owner Stellantis, Nissan And Jaguar Land Rover will meet with Business Secretary Jonathan Reynolds and Transport Minister Louise Haigh for a roundtable in Westminster.
Stellantis has warned about shutting down UK electric car production unless the Government boosts incentives.
Ms Haigh has said she would not relax EV targets but has hinted at “flexibility”.
TALE OF THE VAPE
VAPE sales have surged by a quarter at Imperial Brands, maker of Rizla and Golden Virginia tobacco.
Declining ciggie sales have prompted the firm to invest heavily in alternatives such as vapes and nicotine pouches.
It said sales of its “next- generation” products had shot up by 26.4 per cent to £335million.
Vapes only account for a fraction of its £8.1billion total revenues as falling cigarette sales were offset by a 7.8 per cent rise in prices of its tobacco products.
SOUTHERN WATER has been dealt another credit rating blow, after Fitch downgraded it to one notch above junk amid fears it could default.
It is over £6billion in debt and has asked to hike customer bills by 84 per cent over the next five years
BUILDING NEW RIDE OF GAME
MINECRAFT fans will soon be able to enjoy the building-block video game in real life after the owner of Alton Towers struck a deal to create a new UK attraction.
Merlin Entertainments, which also owns Legoland, Peppa Pig World and Madame Tussauds, has struck an £85million deal with Mojang Studios, the creator of Minecraft.
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Merlin said two attractions will be launching in the US and the UK between 2026 and 2027 but kept schtum on the exact locations.
It is planning a Minecraft-themed ride, accommodation, shops and restaurants.
Merlin boss Scott O’Neil said: “Minecraft is the best-selling video game of all time, and this world-first will see fans experience its thrill and creativity in real life, at theme parks and city centre attractions in leading tourist destinations.”
PERRIER SELL-OFF
KITKAT-maker Nestlé is spinning off its drinks business, which includes Perrier and San Pellegrino water, as part of a turnaround plan.
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New boss Laurent Freixe, who has been with Nestle for 40 years, unveiled a strategy yesterday to slash £2.2billion of costs and drive growth.
He said he would use some of the cost-savings to boost marketing spending and win back customers.