The ONS released data on Uk company profitability yesterday about which they noted:
- The profitability of private non-financial corporations (PNFCs) grew by 0.1 percentage points in Quarter 1 (Jan to Mar) 2023 compared with Quarter 4 (Oct to Dec) 2022, with net rate of return now at 9.9%.
- The profitability of UK continental shelf (UKCS) companies decreased for the second quarter following a continued drop in gas and crude oil prices; the net rate of return for UKCS companies was 5.7% in Quarter 1 2023, 7 percentage points down from the estimate for Quarter 4 2022 (12.7%), this was the lowest value since Quarter 2 (Apr to June) 2021.
- The net rate of return for manufacturing companies increased to 8.8% in Quarter 1 2023, up from 8.4% in Quarter 4 2022.
- The net rate of return for services companies stood at 16.1%, an increase of 0.4 percentage points compared with Quarter 4 2022 (15.7%).
The Bank of England claimed as a result that there was no sign of greedflation as a result. I beg to differ, as I told the Guardian yesterday. There are three reasons for doing so.
First, if during a period of, at best, flat growth profits have risen (as they have) that must be at cost to other parts of the economy, including labour, whose pay we know has fallen.
Second. the treat business as homogenous is absurd. The business sector broadly splits into two, between large and small. The vast majority are small and have had a rough time. A tiny minority by number but not by value are large and have been doing very well. Oil companies, food traders, banks and some retailers have done well from recent events. And they are the drivers of inflation.
Third, that service companies are doing well is another indication that profit is being made when wages are being held.
All three indicate that greedflation is real. The Bank of England is getting a terrible reputation for its inability to read data.
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Gordon Brown falls flat on his backside because surely one of the most important reasons for giving quasi-independence to the Bank of England was that there’d be better and less biased reading of financial data! Instead we’ve continued to get class warfare interpretation. Where’s “Greedy Gammon Panderer” Starmer on this? Missing in action on this despite the General Secretary of the trade union Unite, Sharon Graham, making her feelings known about profiteering this week:-
https://www.theguardian.com/commentisfree/2023/aug/17/inflation-falling-tories-britain-profiteering
While the BoE tackles inflation from outside factors over which it has no control, but makes inflationary interest rate increases because it must do something; the FCA has acquired new powers to fine banks that fail to provide free access to cash. Sky reports that that the Treasury is to publish guidelines within days setting out expectations for banks’ future provision of cash deposit and withdrawal services: “The banking sector is being warned it faces penalties if it does not secure free access to cash for the UK population, including businesses, following waves of branch closures over more than a decade. The legal framework showed that no person or business should be further than three miles away from facilities to withdraw or deposit cash including a cash machine, otherwise known as an ATM”.
Free access to cash, without a bank account or a bank supervising your most basic cash access. Who would ever have thought of such a basic access to practical liberty? I have defended cash against what I think of as peculiarly lazy thinking by the public, whom have been seduced by Big Tech and the Banks and their spiv politicians; into thinking that all that matters about access to money is personal digital convenience. Bank credit isn’t money; which you only find out if your bank fails; and yes, banks fail: but rarely fail to make easy money out of your money. The fact remains, banks are only generally usable by ordinary people, or secure over the long term, because of public subvention. We know that because of their deep endemic failure to manage risk adequately without close regulation.
It seems however, that no matter how bad, incompetent or given to ripping the public off; the banks remain both untouchable and unreformable.
It was a topic on this mornings Wake Up To Money, BBC Radio 5. Some listeners advocated for getting rid of cash to stop crime and the black economy.
My contribution was not used, but I pointed out that most fraud happens electronically nowadays anyway. That the idea of banks, businesses and the Government knowing exactly how everyone spends their money is dystopian. An example I suggested was the recent miscarriage of justice for the guy who was in jail for 17 years. With a fully digital economy, there would undoubtedly be political mileage in depriving incarcerated criminals of their money. This guy would have then suffered erroneously.
Or if a “nanny-state” push for stopping alcoholism – anyone buying alcohol would then be monitored.
In any case, why would you want to pay rent to handle money? Rent in the sense of paying for a card reader and data connection. And 1 contributor pointed out that there are instances of card readers, let alone bank systems, being hacked.
It was also discussed on Nicky Campbell, Radio 5 Live; and it started in the same way you describe on Wake Up To Money; anti-cash: but the weight of both informed contributors and calls gradually changed the balance of opinion, as Campbell acknowledged.
What is lacking in all our economic and monetary public debate is the genuine discussion of the real issues. Everything is overwhelmed by the incoherent, neoliberal, tabloid driven ideology that survives because it feeds on short attention spans and weight of media presence (paid for by the status quo, rip-off rentiers); which only a little real reflection on the issues and problems soon enough reveals that the easy, crude, over-intuitive, casually devised neoliberal answers are unusable, costly and typically disastrous.
Big Tech, Banks and Politicians do not want a free electorate; they want financial prisoners, because they know that financial prisoners are in effect (but hidden and unnoticed) political prisoners. It is a matter of control and knowledge; which are always de facto most effectively and most discreetly dictated by the power of money.
You are correct – most fraud happens electronically nowadays. Why? Because it’s easy pickings for criminals. There are a couple of axioms in the world of systems development & security: ‘no computer is hack-proof’ (yours, mine, the banks’, the government’s – none) and ‘user-convenience comes at a price’ – and that price is security. Next time you’re in a cafe or bar look around and you’ll see someone tapping away at their phone or laptop and using the wifi of the premises. For someone with the technical knowledge and equipment, interception is simple and, if the target is buying or banking online, crucial data can be accessed. Job done!
That’s for “lower-league” scammers, but big-time scammers are interested in corporate, military, government etc targets where large scale data freezing/extraction can be used inter alia for ransom demands. We get to hear about some of their successes, but by no means all. Many hits go unpublicised as the victim can’t afford the adverse publicity it would attract if the word gets out. You can imagine that banks, insurance companies and businesses in the financial world are regular targets. They may have strong security precautions in place, but sometimes they might fall for the simplest of scams. Like the NHS Trust whose Creditor Payments Department got a convincing-looking letter/email from a major supplier notifying a change of bank: “please make future payments to….” You can guess the rest – nobody thought to communicate with the supplier for confirmation and the scammers got away with a huge amount of money before the supplier started chasing their swiftly-increasing overdue receivables. Heads rolled for that.
Simple precaution for all: don’t leave your computer connected to the internet when you take a break. It’s bleeding obvious, but we’re all guilty of it.
Good advice….
I’m reminded of the Paul Simon song “The Boxer” and the line “Still a man hears what he wants to hear/and disrgards the rest..”. Sounds familiar.
John S Warren – totally agree