UK to announce reduced energy support scheme for companies – business live

Luxury carmarker Rolls-Royce has reported a record year for sales, a sign that the world’s wealthiest have not struggled through the cost of living crisis.

Rolls-Royce Motor Cars reports record 6,021 sales in 2022, an 8% increase on 2021’s record of 5,586, and the first in its 118-year history that annual sales have exceeded 6,000.

The value of “bespoke commissions” – from customers seeking to customise their new car – also hit record levels.

Torsten Müller-Ötvös, CEO of Rolls-Royce Motor Cars, says clients are making ever more imaginative and technically demanding requests, adding:

The unrivalled Bespoke creativity and quality achieved by our team here in Goodwood means that on average, our clients are now happy to pay around half a million Euros for their unique motor car.

Rolls-Royce says demand remains “exceptionally strong”, with advance orders secured far into 2023. It launched its first all-electric car, the Spectre, last year, which would set you back over £300,000.

Over 150 new jobs were created at the Goodwood plant, Müller-Ötvös adds, lifting the workforce to two and a half thousand people.

Energy companies have helped to drive the UK’s major share index to its highest level in over three years.

The blue-chip FTSE 100 index jumped as high as 7723 points in early trading, up 0.3%, led by commodity producers. That’s its highest level since July 2019.

BP and Shell are up around 1.4% this morning, having both rallied over 40% during 2022 due to the surge in oil and gas prices. Mining companies Antofagasta and Glencore have gained 2% this morning.

Stock markets are being lifted by China’s decision to reopen its borders, with quarantine requirements for inbound travellers being lifted. Data last Friday showing a slowdown in pay growth in the US has also cheered investors, as it could lead to a slowdown in interest rate rises.

Victoria Scholar, head of investment at interactive investor, says:

“The FTSE 100 is extending gains this morning having hit a three-year high on Friday. Miners like Antofagasta, Glencore and Anglo American are outperforming, thanks to a rally in China overnight as Beijing continues to ease its covid-era restrictions.

European currencies are also strengthening on the back of a weaker US dollar thanks to a pickup in sentiment towards the US economy. Friday’s December US jobs report outpaced analysts’ expectations while wage growth was below forecasts, sparking a rally on Wall Street, lifting the major averages by more than 2% each with US futures pointing to a higher open at lunchtime.

Almost two-thirds of manufacturers in Britain fear blackouts this winter amid the fallout from the energy crisis, according to an industry survey.

Trade body MakeUK said the impact from sky-high energy costs on manufacturers showed no sign of abating, as concern grows about government plans to cut financial support for businesses.

According to a survey of more than 200 senior manufacturing industry bosses by MakeUK and the accountancy firm PwC, almost three-quarters of companies (70%) expect their energy costs to increase this year, with two-thirds saying they expect to cut production or jobs as a result.

The industry group, which represents 20,000 UK manufacturers, said that cutting financial support would exacerbate job losses and reduce factory output, hurting the economy.

More here:

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

New measures to help UK firms cope with soaring energy bills are expected to finally be announced today, but the support is likely to be less generous than the current package.

The new package is due to be announced to MPs today, ahead of the expiry of the present support package at the end of March.

Since the start of October, the unit cost of electricity and gas for non-domestic customers has been capped to help them through the winter – which is expected to have cost over £18bn by the end of March.

Chancellor Jeremy Hunt warned UK businesses last week that the current level of energy bill support for firms is “unsustainably expensive” – a hint that support will be cut from April.

The new scheme is expected to offer a discount to wholesale costs, rather than a fixed energy price, and heavy energy users could get a larger discount. It is expected to run for 12 months, until March 2024.

As Tony Jordan, a senior partner at consultancy Auxilione, explains:

“There is an acceptance that the structure of the commercial energy market is very, very complex.

Energy suppliers simply do not have the data on which industries their customers are in to tailor the support.”

A decision on how to extend the support for businesses had been due before Christmas, but was postponed until the new year, which left businesses facing “an anxious and uncertain” festive period.

The extent of Hunt’s reduction will also be crucial, as our energy correspondent Alex Lawson explained last weekend:

It has been reported that support could be cut by as much as half, potentially pushing up the “government-supported price” beyond £400 per MWh for electricity and £150 per MWh for gas, he says here.

The good news for businesses is that warmer-than-usual winter weather in northern Europe has helped to pull down wholesale energy costs in recent weeks.

But wholesale gas prices are still over double their levels two years ago, despite dropping back from their highs after the Ukraine invasion last year.

Also coming up today

A leading thinktank has warned that British households are only halfway through a two-year cost of living crisis which will wipe over £2,000 off average incomes.

Typical disposable incomes for working-age family households are on track to fall by 3% in this financial year, and by 4% in the year to April 2024, according to the Resolution Foundation.

Resolution’s annual Living Standards Outlook for 2023 finds that only incomes of the very richest will rise, while middle-income households will struggle to make ends meet after an average £2,100 loss.

This income squeeze has fuelled industrial unrest across the UK in recent months, with strikes on the railways, in the civil service and within the NHS.

Ministers are set to hold a series of meetings with union leaders today. Rail minister Huw Merriman will hold talks with railway union bosses, who insist the Government is blocking a deal to end the long-running row over pay, jobs and conditions.

European stock markets are expected to open higher, as investors cling to hopes that the inflation squeeze may have peaked.

The agenda