Sunday newspaper round-up: Austerity spat, post-Brexit trade, lipstick effect, Barclays

Alexander Bueso Sharecast | 16 Jul, 2017 16:32 - Updated: 16:32 | | |

sundays

Philip Hammond has declared that public-sector workers are “overpaid”, as a bitter cabinet war erupted over austerity. At a heated cabinet meeting, the chancellor refused to lift the 1% cap on wages for public-sector workers on the grounds that they earn more than those in the private sector, along with generous taxpayer-funded pensions. - Sunday Times

Iceland's foreign minister has opened the door for Britain to rejoin a European trade club that would put it on a fast track to sign dozens of ready made deals after Brexit. Gudlaugur Thór Thórdarson said he had spoken to Boris Johnson, the foreign secretary about the UK joining the European Free Trade Assocation (EFTA) at a meeting before June’s general election.- Sunday Telegraph

Want to know where the economy is heading? Then read my lips. The boss of John Lewis has pointed to a return of “the lipstick effect” – when a rise in sales of beauty products heralds a consumer squeeze as tough times encourage households to hold off on buying big ticket household items but for this to lead to squeezed consumers treating themselves. - Observer

The influential EY Item Club will tomorrow slash its forecast for UK economic growth amid rising fears over weakening consumer spending coupled with the squeeze on real wages. However, the organisation is also set to raise its predictions for growth in future years because it now believes the UK will stay in the European Union for longer than anticipated in the wake of the referendum. - Mail on Sunday

Barclays is battling investor pressure to pursue a spin-off of its high street operations from the bank’s investment banking arm. It is understood that about a fifth of its shareholder base favours a full split that would leave the two divisions with separate stock market listings. - Sunday Telegraph

British families are signing up for a lifetime of debt with almost one in seven borrowers now taking out mortgages of 35 years or more, official figures show. Rapid house price growth has ­encouraged borrowers to sign longer mortgage deals as a way of reducing monthly payments and easing affordability pressures. - Sunday Telegraph

HM Treasury has bowed to pressure to ease the financial burden of business rates on struggling firms and will introduce measures to save them billions of pounds. In a major policy decision the Treasury has now pledged to base future rises on a lower measure of inflation. 'We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course,' said a Treasury spokesperson. - Mail on Sunday

The first production run from a vast new factory outside Leeds began this week – with timber delivered at one end, and just a week later a fully furnished one-bed flat popping out the other. Legal & General Homes is promising to build thousands of flats and houses a year at the revolutionary, and highly secretive, factory, and delivered around the country on the back of trucks. Is this the solution to the housing crisis – or a new age of soulless prefabs for rabbit hutch Britain? - Observer

The boss of the Serious Fraud Office has promised to carry out a 'thorough examination' of bribery allegations in Formula 1 following a tip-off by Damian Collins MP. While F1 geared up for its flagship event, the British Grand Prix at Silverstone, in Northamptonshire, in London SFO director David Green is considering whether the Concorde Implementation Agreement, which underpins F1, broke the Bribery Act. - Mail on Sunday

The HS2 high-speed rail line will cost more than £400m per mile, making it the most expensive railway in the world, according to new calculations for the government. The estimate, commissioned by the Department for Transport (DfT), was produced by Michael Byng, the expert who devised the standard method used by Network Rail to cost its projects. - Sunday Times

The influence of overseas drugs giants in the UK healthcare system could come under scrutiny after it emerged that foreign firms are the driving force behind a judicial review challenge to new NHS drug pricing powers. Senior industry sources said this week’s action had divided the £60bn life sciences industry, with some of the world’s biggest pharmaceutical manufacturers blamed for controversially beating a path to the High Court, with its sole two British board members, the FTSE 100 duo GSK and AstraZeneca, understood to dislike the changes but are opposed to legal action.

Pascal Soriot will remain at FTSE 100 pharmaceuticals firm AstraZeneca, sources said on Friday, rebuffing rumours that he was planning a move to rival Israeli drugs giant Teva Pharmaceuticals. Mr Soriot will host a call with analysts on AstraZeneca's second-quarter earnings at the end of the month as planned, AstraZeneca said. - Sunday Telegraph

Unilever is locked in a £2bn battle to buy Reckitt Benckiser’s food business with a pack of food giants. Reckitt is rushing to offload the unwanted food division after receiving a series of knockout bids in recent weeks with binding offers expected in the next few weeks. - Sunday Times

Just one in five Commons select committees that scrutinise the Government is chaired by someone who voted for Brexit, new analysis has revealed. The MPs who head up the Brexit, Treasury, business and trade committees all voted to stay in the European Union last year. - Sunday Telegraph

Bosses are calling for a freeze in the minimum wage amid the latest signs that Brexit fears are holding back investment by businesses. Increases in the national living wage — currently £7.50 an hour for workers aged 25 and over but set to rise to about £8.75 by 2020 under Conservative plans — could prevent firms from growing or lead to job losses, according to the British Chambers of Commerce (BCC). - Sunday Times

Hedge funds are betting on further falls in the shares of the embattled construction company Carillion after a torrid week in which its stock crashed more than 70%, with more than 28% of shares on loan by the close of the week. Blackrock and Marshall Wace are among the funds keeping sizeable positions against the company to make it the most-shorted stock on the market, despite speculation that the company could be targeted by overseas bidders. - Sunday Times

…It has emerged that the Government is rapidly severing links with big UK outsourcers, cutting off a vital source of revenue and exacerbating the damage to Carillion's fragile balance sheet. Carillion is one of the biggest casualties of a public procurement blitz that has resulted in Whitehall reducing its reliance on large outsourcers to less than 5pc of the total public sector contracts awarded in the last 12 months. - Sunday Telegraph

An activist investor has raised questions about the sprawling transatlantic operations of FirstGroup, fuelling speculation that it is planning to push for a break-up of the giant bus and rail operator. It is understood that Canadian fund West Face Capital believes that the company’s UK roots are suppressing the true value of its extensive North American coach and bus operations. - Sunday Telegraph

Billionaire Mike Ashley is facing renewed calls to draft in executive heavyweights to help run his £3billion empire as the City braces for a profits collapse. Discount retailer Sports Direct, which has been criticised for using zero-hours staff contracts, was last summer forced to confess that it had not insured itself against a sudden drop in sterling.- Mail on Sunday

Chris Howard, the man who is director of bullion at the government-owned Royal Mint, charged £45,000 of expenses to the taxpayer on top of the £123,000 he earnt last year, even deciding that a 50p packet of chewing gum and 45p packet of tissues were too much of a cost to bear himself. A freedom of information inquiry has lifted the lid on his expenses and revealed that he spent £15,000 last year staying in some of the world’s most luxurious hotels, inlcuding at 11.31am ordering a $14 Bloody Mary while on a business trip to Las Vegas and 41 minutes later a Slightly Hung Over cocktail for $15. - Sunday Times

National Grid has handed its new boss a £497,000 relocation allowance — to work in London rather than Warwick. John Pettigrew pocketed the cash after taking over as chief executive of the power transmission network in April last year. - Sunday Times

Members of Nationwide Building Society have been urged to reject a £3.4million pay deal for new boss Joe Garner. The Building Societies Members Association, a body which campaigns for better democratic procedures at mutual organisations, said it had advised its members to vote against all the motions being put at Thursday's annual meeting. - Mail on Sunday

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