Big Four firm KPMG LLP missed multiple red flags when it audited the financial statements of Carillion PLC, the liquidators of the defunct construction and outsourcing firm said, the Wall Street Journal reported. U.K. government officials sued KPMG seeking in January £1.3 billion—equivalent to around $1.55 billion—and claiming the audit firm failed to spot misstatements that would have led the company’s management to take different actions.
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More than two out of every five (41%) established small and medium businesses (those with between 10 and 100 employees) across the UK expect to shut their doors permanently, be forced to conduct mass redundancies or close locations within the next 12 months, the Business Leader reported. And more than one in three (39%) fear their business will be fatally or critically impacted by any forthcoming recession, while a similar number (43%) say they will have to borrow money just to keep their business afloat or refinance existing debt (37%).
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Britain's 'highly concentrated' consumer credit ratings market used for obtaining loans is not working well, and a new industry body to help improve the quality of scores is needed, the Financial Conduct Authority said on Tuesday, Reuters reported. Experian, Equifax and TransUnion make up almost all of the Britain's 800 million pound ($946.32 million) credit reference agencies (CRAs) sector. Switching between them is difficult, the FCA said in an interim report, which found no competition concerns that require immediate action.
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Nexo is being sued in London by a family of fintech entrepreneurs who allege that it froze their ability to withdraw up to £107 million ($126 million) of their assets and then intimidated them into selling it all to the crypto lender at a 60% discount, Decrypt.com reported. According to a report by City AM, brothers Jason and Owen and cousin Shane Morton together held millions of Nexo’s NEXO token, along with tens of millions in Bitcoin and other cryptocurrencies. They claim to have first aired concerns about Nexo’s compliance and transparency in December 2020.
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The implosion of cryptocurrency exchange FTX shows the need to bring the crypto world within the regulatory framework, Bank of England Deputy Governor Jon Cunliffe said on Monday, Reuters reported. FTX, which has filed for U.S. bankruptcy court protection, has said it owes its 50 biggest creditors nearly $3.1 billion.
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British Prime Minister Rishi Sunak pushed back on Monday against calls from companies to improve trade ties with the European Union and liberalise immigration to help boost growth, saying Brexit had already benefited the country, Reuters reported. Sunak told business leaders at a Confederation of British Industry (CBI) conference he was "unequivocal" that Britain should pursue its own agenda on regulation and migration.
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Investors are slowly coming to terms with the sheer size of the UK government’s borrowing needs over the next few years and it doesn’t look pretty, Bloomberg News reported. Net gilt supply in the next fiscal year is likely headed for an all-time record, according to bank estimates. For Citigroup Inc. strategists, the increase means the market needs to find twice as much new private cash to absorb it as it has over the last eight years combined.
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The end of the era of cheap money has revived a rare phenomenon in UK real estate: valuations are dropping even as rents rise, Bloomberg News reported. Landlords including Land Securities Group Plc, British Land Co., and Great Portland Estates Plc reported rising rents for their offices, warehouses and even stores this week but it wasn’t enough to prevent them writing down valuations. Its a reflection of the degree to which the sector is being battered by rising interest rates, which have overwhelmed the typical interaction of supply and demand.
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Superdry Plc is seeking to tap investment funds to repay banks on a loan due in January as the cost of living crisis hits consumer spending, Bloomberg News reported. The London-listed clothing company has been sounding out potential new investors to replace an asset-backed facility worth £70 million ($83 million), according to people familiar with the matter, who asked not to be named because the talks are private. The company said that it’s in “positive ongoing discussions with lenders” when contacted by Bloomberg News, reiterating what it said in a quarterly report published last month.
The U.K. government announced sweeping tax increases and spending cuts on Thursday, becoming the first major Western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies, the Wall Street Journal reported. The measures mark a second major shift in U.K. economic policy in just a matter of months, after previous British Prime Minister Liz Truss spooked financial markets by pledging to jump-start growth with tax cuts funded by more borrowing.
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