71% of UK households have saved money during lockdown
A survey by price comparison specialists money.co.uk has found that 71% of UK households have managed to save money during lockdown – slashing spending by an average of £2,879 each across the 13 weeks that Brits were told to stay at home during the peak of the pandemic.
The average weekly saving of £221.50 was achieved by frugal Brits cutting back on their spending habits, with the largest savings being made on buying clothes (£34.39p/w), running the car (£34.14p/w) and eating meals out (£33.57p/w).
With the majority of UK employees either furloughed or working from home, appetite for new wardrobe items understandably plummeted, and fuel demand sank to record lows. The restaurant industry was also hit hard by the government’s decision to close all “non-essential” businesses, and Brits were forced to turn to delivery giants instead to get their food fix.
Alcohol spending was down £27 p/w as pubs and bars shut their doors to customers from March, while the beauty industry ground to a halt when hairdressers and spas joined the quarantine, saving the average Brit £25 p/w on haircuts and manicures. The closure of high street coffee stores also saw a weekly £21 in savings, as keen caffeine drinkers worked from home rather than in the office.
A distinct regional disparity in saving habits during the lockdown emerges from money.co.uk’s findings, with Londoners managing to save the most on clothing and alcohol, at £39p/w and £44p/w respectively. The West Midlands saved £36.38p/w on eating meals out, and those living in the North-East saved a lofty £37.69p/w on running the family car. Outside England, the Welsh racked up savings of £21.46p/w on cosmetics and grooming products.
Salman Haqqi, money.co.uk personal finance expert, commented on the firm’s findings:
“During lockdown, many people have cut back on their spending on non-essential items. The savings have largely been made by households cutting back on the amount of cash they spend on items like alcohol, cigarettes, clothes, make-up, cosmetics and grooming products, meals out, haircuts and beauty treatments, plus shop bought lunches and takeaway coffees.
“They’ve also spent less because may are not having to use their car to travel to work and have also cut back on other outgoings like sports and gym memberships”.
The survey concludes with an estimate that UK households could save a whopping £8,638 by the end of 2020 if they continue their lockdown spending cuts. Haqqi added:
“Almost 8 out of 10 householders we surveyed (79%) say they aim to continue to save as much as possible even though the lockdown is easing. The biggest opportunity to save money, according to our study, is in cutting back on going for meals out. More than a third of the 2,000 people we surveyed said that would be the top priority for continuing to save money”.
Savvy smart meter owners saved almost £270m during lockdown
A report by SWNS Digital has revealed that UK smart meter owners have managed to save a combined total of almost £270 million on energy consumption alone since 23 March.
Across a study of 2,000 smart meter-owning Brits, each household estimated a £39.50 reduction in energy fees during the last three months of lockdown. This amounts to total savings of £268.6 million for the 1 in 4 UK homes that have a smart meter – over 21 million have already been installed across the country.
While installation was put on hold during the peak of the pandemic, the UK government has once again begun to push ahead with its plans to offer smart meters to every home and small business by 2025 – a deadline originally set for 2020, which has recently been delayed even further due to the disruption of the coronavirus crisis.
A recent statement by UK Minister for Climate Change, Lord Callanan, read:
“Smart meters are playing an important role in helping the UK deliver a cleaner and more efficient energy system, with the added benefit of also saving tens of billions of pounds in the process.
“By allowing households to conveniently track their energy use, and prepayment customers to more easily top-up credit, we are working with industry to safely install even more across the country in a way that keeps consumers and suppliers safe.
“Since lockdown restrictions started easing, engineers have begun undertaking non-emergency installations of smart meters again in accordance with published guidance on safe working in other people’s homes”.
The government has estimated that the cost of installing smart meters across the UK could reach a hefty £11 billion, but is expected to be offset by more than £17 billion in energy savings.
The Department for Business, Energy & Industrial Strategy (BEIS) has estimated that smart meters could save Brits up to £250 per year, and potentially slash carbon emissions by 45 million tonnes – the equivalent of 26 million less cars on the road for an entire year.
In addition, the SWNS’s report found that 56% of smart meter owning Brits have adopted other money-saving methods to cut costs during the pandemic, including upcycling furniture and meal planning for the week ahead.
31% said that they believed lockdown has offered them a unique opportunity to build on their savings. 3 in 10 also stated that they have learned to be more resourceful in response to supermarket shelves left bare due to panic-buying, and with more than 1 in 4 UK employees furloughed and on a reduced income.
Bill Bullen – CEO of Utilita, the UK’s leading Pay-As-You-Go energy firm – which carried out the research, commented:
“One thing which is clear from this research is that the majority of smart meter owners are both frugal with their money and smart with their spending, having adopted a number of methods to save cash. These simple tricks mean owners can have a little more disposable income to enjoy.
“But I’m deeply concerned that tens of millions of consumers without smart meters are completely in the dark over their household energy usage.
“Sadly, there is still a lot of education that needs to be done by suppliers and government. The advantages of smart meters are not widely known, which means Brits are missing out on the financial and environmental benefits”.
Boohoo: Shares recover but will it survive the wider backlash?
After Boohoo promised to improve factory conditions, shares in the retailer rebounded over 27%.
The company said on Wednesday that they plan to invest £10m into improving the factories in Leicester, where almost half of their clothes are made.
Since the news of the poor working conditions of the factories broke, including suggestions from an undercover Sunday Times reporter employees were paid only £3.50 an hour, almost £2bn was wiped from the group’s value.
“This week a number of serious allegations have been made about the treatment of people working in the garment industry in Leicester,” said a spokesperson for Boohoo.
“As one of a number of retailers that source products in the area, boohoo wants to reiterate that it does not and will not condone any incidence of mistreatment of employees and of non-compliance with our strict supplier code of conduct.
“Boohoo remains committed to supporting UK manufacturing and is determined to drive up standards where this is required.
“Where help and support for improvement is required we have and will continue to provide it, to ensure that everyone working to produce clothing in Leicester is properly remunerated, at least the National Minimum Wage, fairly treated and safe at work.”
For many years, Boohoo has remained low on the supply chain transparency index of the world’s 250 largest fashion brands. Whilst 40% of clothing is made in Leicester, the remaining is in factories in Bangladesh and Morocco.
Despite a huge backlash on social media, many analysts do not think that the retailer’s profits are threatened.
John Stevenson at Peel Hunt said: “The company operates on a cost-plus model. If costs rise they will increase prices. If a £7 dress suddenly costs £8, will demand disappear? I doubt it.”
And despite Boohoo being removed from websites including Asos and Very.co.uk, the dent made to Boohoo is likely to remain minimal. Revenue from third-party sites accounted for 4% of the total figure last year.
Thursday saw shares rise to 286p, however, remaining lower than the prior Friday’s closing price of 390.5p.
Boohoo (LON: BOO) shares are trading up 4.31% at 298.44 (0832GMT) on Thursday.
US weekly jobless claims better than expected at 1.3 million
The number of Americans applying for unemployment benefits reached 1.314 million in the week ending 4 July 2020 – a grim total compared to the mere 209,000 applications this time last year – according to statistics released by the U.S. Labor Department on Thursday. The figures do, however, come in at fewer than the expected 1.39 million.
The numbers come as a stark reminder of the depth of the economic impact of the coronavirus crisis. Unemployment benefit claims in the US have now soared to a record 32.9 million, alongside fresh record-high daily coronavirus cases peaking at 62,000.
Meanwhile President Donald Trump has maintained his stance that his administration’s handling of the pandemic has been his “best work”.
Although dropping from an eye-watering peak of 6 million weekly unemployment claims at the height of the pandemic in April, the total number has stagnated above 1 million each week since lockdowns were first implemented across the US. Today’s figures represent a decrease of 99,000 on the week prior, and notably less than the 1.39 million predicted by economists surveyed by Dow Jones.
Last month, the Labor Department reported that 4.8 million jobs had been regained in June – the highest monthly gain since the pandemic began – bringing the unemployment rate down to 11.1% from its 13.3% peak during May.
The good news may well be threatened by a resurgence in virus cases in a number of US states, forcing the likes of Texas and California to reverse their reopening measures. The US has reported 130,000 coronavirus-related deaths in the last week, with American infectious diseases expert Dr Anthony Fauci warning that states and cities may have reopened too quickly.
Meanwhile, it has been a bad day for US stocks so far. The Dow Jones (INDEXDJX:.DJI) opened 170 points lower on the bell this morning, but has since plummeted by 502.85 points to a disappointing 25,564.43 at GMT-4 11:04 09/07/20. The NASDAQ (NASDAQ:NDAQ) has also sank 1.39% and the S&P 500 (INDEXSP:.INX) is down 1.21%, reflecting the overall pessimistic sentiment looming over American markets on Thursday.
Boots announces plans to axe 4,000 jobs and 48 stores
High street beauty and pharmacy staple Boots – owned by Walgreens Boots Alliance Inc (NASDAQ:WBA) – has announced plans to axe 4,000 jobs and 48 stores nationwide as it attempts to mitigate the “significant impact” of the coronavirus pandemic.
The move is expected to affect around 7% of the company’s workforce, with staff at its Nottingham support office first on the line for redundancies. Deputy and assistant managers, beauty advisers and customer adviser roles across the UK’s 2,465 branches are also reportedly at risk.
A total of 48 stores are set to be shut, following a 72% dive in sales in Boots opticians and a 48% drop in Boots pharmacy stores during the peak of the pandemic. Despite being allowed to continue trading as a “non-essential retailer”, the record drop in consumer spending has nonetheless hit the Walgreens subsidiary hard.
With its profitable fragrance counters shut over hygiene concerns, and with more than 100 of its larger stores on the high street, stations and airports shut during the lockdown as employees were encouraged to work from home, Boots kept its doors open with limited services throughout the pandemic – recording a sore 84% drop in footfall across its UK stores in April.
The company also witnessed a drop in sales at its pharmacy counters, likely a reflection of a nationwide fall in GP appointments and hospital admissions as coronavirus patients understandably became the NHS’s main priority.
Nevertheless, the record surge in online shopping has boosted Boots’ quarterly performance, with the company noting a whopping 78% increase in online purchases during the lockdown. Like many of its high street cousins, the firm has announced that its digital success during the pandemic has inspired it to invest more into its online services in the future.
Commenting on Boots’ Thursday announcement, UK Managing Director Sebastian James stated:
“The proposals announced today are decisive actions to accelerate our transformation plan, allow Boots to continue its vital role as part of the UK health system, and ensure profitable long-term growth. In doing this, we are building a stronger and more modern Boots for our customers, patients and colleagues.
“I am so very grateful to all our colleagues for their dedication during the last few challenging months. They have stepped forward to support their communities, our customers and the NHS during this time, and I am extremely proud to be serving alongside them.
“We recognise that today’s proposals will be very difficult for the remarkable people who make up the heart of our business, and we will do everything in our power to provide the fullest support during this time”.
Investor insight
On the back of Boots’ disappointing news, the share price at parent company Walgreens Boots Alliance is expected to see a significant drop of around 4.42% to $40.42 ahead of Wall Street’s opening this afternoon. Last year, the firm recorded the worst annual performance in the Dow Jones Industrial Average of 2019.Rolls-Royce shares tumble as company seeks £2bn loan
A press release by British engineering giant Rolls-Royce Holding plc (LON:RR) published on Thursday has outlined the company’s £2 billion loan withdrawal to help see it through the tail-end of the coronavirus crisis. Shares at the company have plummeted by more than 8% on the back of the news.
Covid-19’s long shadow
Rolls-Royce has warned that the impact of the pandemic is set to plague the firm’s performance for years to come. The company – which famously designs engines for the Boeing 787 and Airbus 350 – found the majority of its fleet grounded after worldwide lockdown measures were implemented back in March. The firm was hit especially hard by the lack of long-haul flights, which make up the bulk of the jets whose engines Rolls-Royce manufactures. Total flying hours reportedly fell by 75% in the second quarter, while a recovery to pre-crisis levels is expected to be relatively slow as cautious holidaymakers put their plans on hold over fears of a second wave. Following a challenging few months for the aviation industry, Rolls-Royce revealed that it had been forced to seek out a £2 billion loan in order to see it through the pandemic – after it burned through £3 billion in the first half of 2020. Although the company has managed to save £300 million since it launched a cost-cutting drive in April, and is apparently on track to reach £1 billion in savings overall by the end of the year, Rolls-Royce is considering restructuring its business model as it plans to restore free cash flow to “at least” £750 million by 2022. It has since emerged that more than 3,000 Rolls-Royce employees have expressed interest in voluntary redundancies across its UK sites. Around 1,500 jobs are expected to be axed at the company’s Derby headquarters alone by the end of the year, as well as another 700 at the firm’s Renfrewshire site in Scotland. The company announced plans to cut 9,000 jobs worldwide back in May to offset the collapse in aviation demand. John Payne, who has worked for Rolls-Royce for 40 years, said earlier this year: “Derby will be decimated, there are some good engineers there. It will hit hard this. It is heartbreaking but as the old saying goes, it is what it is”.A ‘historic shock’ to the industry
CEO Warren East commented on the FTSE 100 company’s announcement: “These are exceptional times. The COVID-19 pandemic has created a historic shock in civil aviation which will take several years to recover. We started this year with positive momentum and strong liquidity and acted swiftly to conserve cash and cut costs to protect Rolls-Royce during the pandemic. “We are taking steps to resize our Civil Aerospace business to adapt to lower medium-term demand from customers and help secure our future. This means we have had to take the very difficult decision to lose people who have helped us become the company we are and who have been proud to work for Rolls-Royce. “It is my first priority to treat everyone – whether they are leaving or staying – with dignity and respect. We will take the lessons of how we have dealt with this unprecedented challenge with us and position ourselves to emerge as an even stronger company in the future”.Investor insight
The Rolls-Royce share price has tumbled 8.7% to 262.76p at BST 09:52 09/07/20, adding to an overall drop of 58% since the start of the year, but recovered marginally to 6.32% or 269.60p just before Thursday lunchtime.Ofgem reveals £25bn green investment plan
Ofgem has revealed a new £25bn green investment plan, which will see a drop in household energy bills.
The energy regulator announced the five-year plan, which is pushing for “a greener, fairer energy system for consumers”.
Under this new plan, the rate of return for network companies will be halved meaning that more income will be directed towards improvements instead of profits.
“We are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for around £25bn of investment needed to drive a clean, green and resilient recovery,” said Jonathan Brearley, the regulator’s chief executive.
“Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change.”
Households should see energy bills drop by £20 a year in 2021 and save a total of £3.3bn over the next five years.
The announcement has led to mixed opinions. Citizens Advice welcomed the move, with the chief executive, Dame Gillian Guy saying: “Ofgem has struck the right balance between shareholder returns and value for money for energy customers, while making sure networks can continue to attract investment.”
However, the National Grid was less convinced.
“This proposal leaves us concerned as to our ability to deliver resilient and reliable networks, and jeopardises the delivery of the energy transition and the green recovery,” it said.
Ofgem is also focusing heavily on making green energy more mainstream, pushing the UK to net-zero carbon targets. Earlier this year, the regulator revealed a nine-point manifesto to prioritise climate change.
The plan included points on supporting low-carbon home heating and a crackdown on “greenwash” energy deals.
United Airlines set to furlough 36,000 staff
United Airlines (NASDAQ: UAL) has warned that they could furlough as many as 36,000 members of staff.
As a consequence of the Coronavirus pandemic, the airline said on Thursday that they planned to cut almost half of their global workforce as demand for travel remains weak.
Of the 36,000 members of staff who are expected to be furloughed, 15,000 of these will be flight attendants, 11,000 customer service employees, 5,500 maintenance employees, and 2,250 pilots.
The airline told employees: “The reality is that United simply cannot continue at our current payroll level past Oct. 1 in an environment where travel demand is so depressed. And involuntary furloughs come as a last resort, after months of companywide cost-cutting and capital raising.”
The sector will come under many challenges following the Coronavirus pandemic, with global airlines expected to lose $84bn this year.
The Association of Flight Attendants-CWA union said in response to the news from United Airlines: “The United Airlines projected furlough numbers are a gut punch, but they are also the most honest assessment we’ve seen on the state of the industry.”
The US airline industry has agreed not to cut jobs until 30 September, thanks to the $50bn (£40bn) offered by the US government to support the sector. Of this $50bn, United Airlines is receiving $5bn to protect staff until October.
Uber launches commuter boat service on the Thames
Uber has announced to launch a commuter boat service with the Thames Clipper.
Taking to the water, passengers will be able to book tickets via the Uber app and board using a QR code.
The contract between Thames Clipper and the ride-hailing app will launch over the summer and is expected to last three years. Despite the partnership with Uber, customers will still be able to use Oyster cards for the journey.
“In our 22nd year of operation it is key that we continue to support London and its commuters with the ease of lockdown and return to work. The new partnership will allow us to link the two travel modes of river and road, providing Londoners and visitors with even more options to commute, visit, explore and enjoy our city by river,” said the Thames Clipper chief executive, Sean Collins.
Journeys on the boats from Putney to Woolwich and are expected to see a growth in popularity as commuters wish to avoid crowded forms of travel.
“Many Londoners are looking for new ways to travel around the city, particularly when they start commuting back to work,” explained Jamie Heywood, Uber’s regional general manager for northern and eastern Europe.
Since closing, the boating service has reopened with reduced seating and required use of face masks.
Uber was hit hard during the pandemic, with April seeing global bookings fall by 80%. In June the app made it mandatory for drivers and passengers to wear face masks.
Green Homes Grant: £2bn insulation scheme could support over 100k jobs
As part of the government’s ‘mini budget’ on Wednesday, Chancellor Rishi Sunak confirmed pundits’ predictions by announcing a ‘Green Package’, the bulk of which came in the form of a £2 billion home insulation scheme.
The scheme, under the ‘Green Homes Grant’ will see the government pay at least two thirds of the cost of energy-efficient home improvements. The Treasury expects the scheme to support in excess of 100,000 jobs, as demand for home improvements rises with the government grant being put in place.
Consumers can expect to see the scheme online from September, with details of accredited local suppliers and applications for the recommended energy efficiency measures.
Speaking on the insulation scheme announcement, Ringley Managing Director, Mary-Anne Bowring commented:
“This is a vital policy that will make homes greener and cheaper to run and so today’s vouchers for home insulation are welcome news.”
“The UK’s housing stock is some of the oldest in Europe and this is not just bad for the environment but bad for our health too, with too many properties suffering from problems with damp and cold.
“It is important the government’s voucher scheme covers renters, especially as homes in the private rented sector tend to be older.”
Chris Holmes, Investment Adviser for environmental asset company, JLEN (LON:JLEN), added:
“It is encouraging to see the green economy being so prominent in the government’s budget today. Arguably, the impacts of climate change could be much greater than the current economic crisis we face – coastal flooding, extreme weather, drought and forest fires could severely disrupt agriculture, infrastructure and livelihoods.”
It is worth noting for anyone looking to participate in the new scheme, previous initiatives of a similar ilk have had their flaws. While true to the discounts being promised, both the government’s solar panel and double glazing schemes didn’t offer much by way of savings, because the government subsidies were only available to those using certain companies.
In fact, these approved companies were at times expensive enough that it proved more fruitful to look elsewhere and forgo the discount. We aren’t assuming that history will repeat itself, but its worth bearing in mind.
Looking to the future, and suggesting additional ways to further job creation in the property sector in earnest, Mrs Bowring added:
“Additional financial support to retrofit outdated homes, stamp duty cuts across the board – including landlords – and government pledge to remove all dangerous cladding no matter what the cost would create hundreds if not thousands of jobs, kickstart the housing market and raise the quality of our homes.”