Charlotte Street Partners



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Written by Javier Maquieira, senior associate 
Edited by Iain Gibson, associate partner
9 July 2021

Good morning,

This has been a pandemic of shortages. What began with empty toilet paper aisles and followed with limited vaccine supplies is now giving way to a different kind of shortage: labour. As it happens, despite a relatively high unemployment rate, the UK is currently facing its worst recruitment challenges since the 1990s.
According to a survey published by the British Chambers of Commerce yesterday, 70% of 5,700 businesses polled have struggled to recruit staff in the second quarter of this year – a seven percentage point rise from the previous three months.
The logistics and hospitality sectors are among the hardest hit by bottleneck pressures. In the case of transport and logistics, operators in the haulage industry now find themselves unable to replace EU drivers who returned to their home countries during the pandemic. Although UK ministers are introducing a temporary relaxation of rules on lorry drivers’ hours, the government has been accused of “wallpapering” over what the industry sees as a long-term problem.
Staff shortages in the tourism and hospitality sector have similarly been severed by the sharp fall in the stock of EU workers caused by Covid-19 border controls and post-Brexit immigration rules. In this context, the Scottish government, along with the Scottish Tourism Alliance, has this week launched  a £10,000 recruitment drive campaign to encourage young people to apply their skills to the number of job opportunities available in Scotland.
The fact that many EU nationals have returned home after working in the UK has had a knock-on effect on the economy as a whole, with recruitment issues now spreading beyond low-skilled industries to typically higher-paying sectors such as finance, IT, accounting, and engineering.
As if that wasn’t bad enough for employers, research by data solutions provider Cendex has found that almost 60% of companies are expecting to see an increase in resignations over the next 12 months. This, coupled with sustained labour shortages, could lead employers to push up wages, and eventually cause inflation to increase if businesses raise their prices to accommodate higher wage bills.
The jury’s out on whether labour shortages will result in a permanently tighter jobs market as the economy reopens, the furlough scheme comes to an end, and candidate confidence goes up. What’s certain is that some key sectors, such as tourism and hospitality, will continue to need support to avoid slowing the recovery. 


The UK transport secretary has confirmed that fully vaccinated UK residents returning to England from amber travel list destinations will no longer be required to quarantine from 19 July. However, Grant Shapps said they would still need to pay for Covid-19 tests before and after their return. Travel industry leaders have welcomed the news as a “positive step” but called for the number of countries on the amber list to be expanded.
Haitian authorities have told reporters that a group made up mostly of retired Colombian soldiers was responsible for the assassination of Haiti’s president Jovenel Moïse earlier this week. The hit squad, whose motive is still unclear, included 26 Colombians and two Americans of Haitian origin. Eight of the suspects, including the two Americans, are still on the run.
The Tokyo Olympic Games will finally take place without spectators at venues in and around the capital after a spike in Covid-19 infections. The Japanese prime minister, Yoshihide Suga, said that a state of emergency in Tokyo would be in place from 12 July and run until 22 August, to combat coronavirus.

Business and economy

The chancellor of the exchequer has strongly hinted at the suspension of a predicted eight per cent rise in the state pension next year. Following official forecasts that suggest the link with earnings growth could mean the bumper rise in the amount paid from April 2022, Rishi Sunak said a decision on the pension triple lock would be “based on fairness for pensioners and for taxpayers”.
Lloyds Banking Group’s insurance arm has apologised after the Financial Conduct Authority fined the company £90m for sending out nine million misleading letters about home insurance between 2009 and 2017. In the letters, the bank had claimed that the renewal quotes being offered were a “competitive price”.
Sainsbury’s has announced that it will no longer sell CDs and DVDs as customers increasingly turn to streaming services to watch films and listen to music. The supermarket chain said it will still continue to sell vinyl records in some stores. The decision is another sign that the CD,  sales of which have shrunk in the past decade but were still worth £115m last year, is past its heyday.

Columns of note

Writing ahead of the meeting of G20 finance ministers in Venice this weekend, Gillian Tett explains in the Financial Times five things that the group must do to tackle climate change: collectively embrace a steadily carbon price and tax; demand that China back away from coal; get serious about helping developing nations make the transition to green energy; foster collaborative research into technologies such as carbon capture, hydrogen-based fuels, and battery storage; and mobilise consumers in the climate change fight. The frightening risk now, Tett warns, is that action will be delayed. (£)
In The Guardian, Simon Hattenstone argues that there has been something “fabulously uplifting” about Euro 2020 beyond England’s success and despite the verbiage, crass nationalism, political exploitation, and grotesque product placement. He maintains that the tournament has seen football rediscover its sense of fun, beauty, and solidarity, while helping fans forget the last 16 months of pandemic. Hattenstone concludes that no matter who wins or loses on Sunday, this is something of which fans and players alike should be proud.

Cartoon source: The Telegraph


What happened yesterday?

London stocks closed lower on Thursday amid worries about the economic recovery. The FTSE 100 ended the session down 1.68% at 7,030.66, while sterling was weaker both against the dollar by 0.22% at $1.38 and versus the euro by 0.61% at €1.16.
Across the Atlantic, the US S&P 500 index closed 0.9% lower and the technology-focused Nasdaq Composite dropped 0.7%, after both indices had set records in recent days.
In company news:
B&M European Value Retail was 5.02% lower even after the discount retailer made a strong start to the year, reporting first-quarter UK like-for-like sales up by more than a fifth compared with pre-pandemic levels.
Housebuilder Persimmon slid 4.79% despite saying it was accelerating a capital return to shareholders as strong first-half trading generated revenue of £1.84bn.
WH Smith lost 1.64% even after the retailer said that sales were gradually recovering as Covid-19 restrictions eased.
Deliveroo reversed earlier gains to fall 2.28%, even when the food delivery platform lifted its full-year guidance after a strong second quarter that saw orders grow 88%.
Entain edged up 0.72% after the Ladbrokes owner increased its guidance for full-year earnings following a strong performance from the gambling group in the first half.

What’s happening today?

Federal Bk S
Sainsbury (J)
Scirocco Energy
Subex S

UK economic announcements
(07:00) Industrial Production
(07:00) Index of Services
(07:00) Manufacturing Production
(07:00) Balance of Trade
(07:00) Gross Domestic Product

Int. economic announcements
(15:00) Wholesales Inventories (US)

Source: Financial Times

did you know

A British engineer has recently broken the world record for the tallest stack of M&M’s, totalling five chocolates.

Parliamentary highlights

House of Commons

No business scheduled.

House of Lords 

No business scheduled.

Scottish parliament 

The Scottish parliament is in recess until 30 August but will be recalled on 13 July and 3 August for Covid updates.

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