EDP business review of the year: how businesses faced the economic challenges in the first half of 2012

Paul Adcock. Picture by Sonya Brown Paul Adcock. Picture by Sonya Brown

Wednesday, January 2, 2013
10:07 AM

Business writer BEN WOODS takes a look back over the first six months of the year at what was happening in the business world, both locally and nationally.

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Richard Branson visits the Virgin Money Lounge in Norwich. Picture: Denise BradleyRichard Branson visits the Virgin Money Lounge in Norwich. Picture: Denise Bradley

• January

The plight of Britain’s high street was in sharp focus after mixed updates on festive trading and the collapse of some well-known retail names.

Tesco saw billions of pounds wiped from its value after the supermarket admitted it messed up its pricing strategy in a “disappointing” Christmas.

Clinton Cards: Dominic Lipinski/PA WireClinton Cards: Dominic Lipinski/PA Wire

And Peacocks, right, which traded from 563 stores and 48 concessions, collapsed into administration in the biggest retail failure since Wool-worths, placing 9,600 jobs in jeopardy.

Lingerie chain La Senza also collapsed into administration, triggering 1,300 redundancies and the closure of more than 100 outlets.

Royal Bank of Scotland chief executive Stephen Hester bowed to intense political and media pressure by waiving his annual bonus worth almost £1m. The pay award was embarrassing for the government with Labour pointing to David Cameron’s pledges to clamp down on executive pay and London mayor Boris Johnson claiming it was “absolutely bewildering” that a state-backed bank should pay out so much. Pressure intensified on Mr Hester after the bank’s chairman, Sir Philip Hampton, announced he would waive his payout.

Ex-banker Fred Goodwin’s, below, disgrace was completed when he was humiliatingly stripped of his knighthood. The award was “cancelled and annulled” by the Queen after a key committee found he had brought the honours system into “disrepute”.

Barclays Bank.  Photo credit should read: Dave Thompson/PA WireBarclays Bank. Photo credit should read: Dave Thompson/PA Wire

In Norfolk, Sir Richard Branson said he wanted to create an “ethical” bank during a visit to Norwich’s first Virgin Money lounge.

The billionaire tycoon said companies like Virgin had a responsibility to lend to small businesses in a bid to create new jobs across the country.

Meanwhile, Norfolk engineering company Warren Services heralded its success in January after sweeping up an export contract worth almost £1m.

The contract with UK manufacturer Johnston Sweepers hoped to create 10 jobs as the Thetford-based company looked to create brush parts for 250 road sweepers to be exported to eastern Europe.

Chancellor of the Exchequer George Osborne, leaves No 11 Downing Street in central London. Nick Ansell/PA WireChancellor of the Exchequer George Osborne, leaves No 11 Downing Street in central London. Nick Ansell/PA Wire

• February

Rob Mears, MD of Bernard Matthews, at Great Witchingham hall.  Photo: Bill SmithRob Mears, MD of Bernard Matthews, at Great Witchingham hall. Photo: Bill Smith

The Treasury closed two tax loopholes after Barclays tried to avoid paying more than £500m in “highly abusive” dodges. It was the first time the current government had clawed back revenues retrospectively and the changes in the laws should ensure billions of pounds of tax are paid in the future. It came as Barclays was accused of ignoring anger over bonuses and running “business as usual” after it revealed a £1.5bn pot for investment bankers.

Britain’s payday lenders faced an investigation by the consumer watchdog amid fears they prey on those in financial trouble. The Office of Fair Trading said it would carry out spot checks of 50 major lenders and look into concerns that people are being given loans without the proper checks being carried out. It said it would investigate whether firms target people unsuitable for credit and are rolling over loans so that the charges escalate and they become unaffordable.

A rescue deal with Edinburgh Woollen Mill helped save 388 Peacocks shops and more than 6,000 jobs, but administrators from KPMG were forced to close 224 stores with immediate effect, leading to 3,100 redundancies.

Directors of a Norfolk poultry firm Banham Group vowed to refund cuts to staff wages, which were made to safeguard jobs during a difficult trading period for the firm.

The announcement came just a week before Norwich-based Bayer CropScience revealed it would invest nearly £10m in new facilities as its German owners looked to sell the company.

• March

The motor industry was given a huge boost when Japanese car giant Nissan announced plans to build a new model in the UK under a £125m investment programme, creating 2,000 jobs.

The vehicle will be built at the Sunderland plant from mid-2013 in a project supported by a £9.3m grant from the government and described by business secretary Vince Cable as a “resounding win”.

Chancellor George Osborne was accused of imposing a £1bn “granny tax” on pensioners as he used his Budget to cut the 50p top rate for Britain’s wealthiest earners and lift thousands of low-paid workers out of taxation altogether. But it was the decision to charge VAT on hot food served by shops and supermarkets, including Greggs, which caused the biggest furore, sparking a consumer campaign in an effort to overturn the “pasty tax”.

Almost half the stores run by retailer Game were closed, triggering 2,104 job losses, after administrators from PwC were appointed to run the business. The remainder stayed open in order to attract a buyer.

The new boss of John Lewis’ flagship store in Norwich, Isabel Macdonald, unveiled a blueprint to connect with customers and grow the store’s online business as she confirmed the retailer’s commitment to the city.

Norfolk businessman Paul Adcock revealed he was counting the cost of a scheme designed to help firms ride out spikes in interest rates after racking up £175,000 in bank charges.

The managing director of Watton-based electrical retailer Adcocks said he was considering legal action against his bank Barclays after signing up to the so-called interest rate derivative scheme, promoted as a means of protecting business borrowers from spikes in interest rates.

Meanwhile, turkey giant Bernard Matthews revealed that it would invest an extra £10m in its UK business just a year after the group recorded a loss of £6.6m.

• April

The FTSE 100 Index fell heavily during the month as fears over Spain’s ability to keep on top of its spiralling debts reignited the eurozone debt crisis.

Banks were hardest hit amid their exposure to Spanish lending as yields on the country’s debt moved closer to the 7pc that forced Greece, Ireland and Portugal to seek financial help from the EU.

The pound also hit a 22-month high against the euro, helped by the UK being seen as a safe haven for investors’ money.

Supermarket giant Tesco said it would pump £1bn into revitalising its business after conceding its UK stores were jaded and under-staffed.

Pressure on the government’s economic strategy intensified after shock figures showed Britain’s faltering economy was back in recession.

Mothercare said it will close another 111 UK stores over the next three years in a move impacting 730 jobs. The mothers-to-be, babies and children’s group revealed plans to cut the number of stores in the UK from 311 to 200 following months of weak trade.

Moves were made to open up the lucrative Chinese market to business in Norfolk and Suffolk when a major deal was struck with Chinese officials.

A delegation from Norfolk, Suffolk and Essex signed a memorandum of understanding with officials in Jiangsu Province to promote links between the two areas, while a separate deal was signed in Shanghai, which hoped to give Norfolk firms access to 340,000 small and medium-sized businesses in the area.

• May

Shareholders claimed another high-profile scalp after Britain’s biggest insurer announced the abrupt exit of its chief executive.

Andrew Moss’ decision to stand down came a week after investors voiced their discontent over the company’s performance by staging a massive protest vote against Aviva’s annual pay report.

Facebook co-creator Mark Zuckerberg pocketed more than a billion US dollars after one of the biggest US stock market flotations.

Overseas demand for British-built vehicles such as BMW’s Mini and Nissan’s Qashqai drove the UK’s first trade surplus in cars since 1976.

The turnaround follows significant investment in the UK from car manufacturers – £4bn in 18 months –including contracts to build new models and improved facilities.

Vauxhall said the next generation of its Astra model will be built at its Ellesmere Port site, creating 700 direct jobs and 3,000 positions in firms which supply the plant with parts and services.

More than 8,000 jobs were at risk after Clinton Cards, the UK’s biggest specialist cards retailer with 628 Clintons and 139 Birthdays stores, collapsed into administration after failing to find a buyer for the business.

Family-run businesses in Norfolk had reported to be facing a “succession squeeze” caused by a double whammy of rising graduate unemployment and a struggle to raise funds to secure the retirement plans of the older generation.

Research by Norwich-based Social Marketing East highlighted the pressures which family firms are under particularly during the economic uncertainty.

• June

There were mounting calls for an inquiry into banking culture and practices after Britain’s biggest lenders were embroiled in fresh controversy over rigging key interest rates, as well as further evidence of mis-selling.

Barclays was fined £290m by UK and US regulators for manipulating the Libor rate at which banks lend to each other, while it also emerged that business customers were sold complex financial products, called interest rate swaps, even though they did not fully grasp the downside risks. Bank of England governor Sir Mervyn King launched a scathing attack, demanding a “real change in culture”.

Bank customers flooded Twitter with angry messages after they found themselves without access to cash or unable to pay bills due to an IT fiasco affecting NatWest, RBS and Ulster Bank accounts lasting several days.

The largest pharmacy chain in the United States swooped on high street chemist Boots as part of a shock £10 billion takeover deal.

Norfolk turkey giant Bernard Matthews revealed it would be launching a community wind power co-operative which, it hoped, would help cut its carbon footprint and support a raft of community initiatives as well as giving local people a stake in the new venture.

Under the plan, the firm was looking to construct 50m-high single wind turbines on land it owns at six sites in Norfolk and Lincolnshire, at a capital cost of £7.5m, which will be owned by the proposed co-operative.

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