The Business: Friday March 7 2014
Company news, markets and financial talking points, available from 8am Monday to Friday
George Osborne is facing a black hole in public finances of more than £20bn, claims the Financial Times. The figure, which is based on official government economic models, indicates that Osborne should no longer rely on an economic recovery to eliminate part of the budget defecit. The estimates come less than two weeks before Budget day. They pose difficult questions for politicians and the Bank of England.
The Bank of England has kept rates at 0.5% on the fifth anniversary of the ultra-loose money policy, says The Independent. It is the first rate decision since the bank amended its “forward guidance” policy that linked borrowing rates to unemployment figures. Howard Archer, chief economist at IHS Global Insight, said: “The Bank of England clearly wants to nurture recovery and not to risk choking it off by raising interest rates too early or too fast.”
John Lewis is handing a £2,000 bonus to thousands of staff after it exceeded £10bn in sales for the first time, reports the Daily Mail. John Lewis Partnership announced all its 90,000 staff at John Lewis and Waitrose would receive bonuses worth 15% of salary as they shared £202.5m, which works out at around eight weeks’ pay. However, the staff bonus was down from 17% of salary last year as the group set aside more money to repay its £840m pension deficit.
Britain’s largest insurer took a £120m hit from UK storms and flooding – but says its turnaround is still on track with a 6% rise in annual profits to £2bn. Aviva says storms reduced profits by £60m in December and it faces a further £60m of claims from the flooding in January and February. Chief executive Mark Wilson said: “We had a reasonable year … We must guard against complacency and there is still a lot to do.”
Waitrose is considering adding services including wine tasting and dry cleaning to its stores in a bid to fend off competition from the likes of Lidl and Aldi. The Daily Telegraph reports that Waitrose is promising a “very British” counter-offensive against the German stores, which will involve more “hospitality”. The retail chain currently has 305 stores, including 42 ‘little Waitrose’ outlets. It intends to open a further 38 branches this year.
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