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📈 Stamp of Approval: Billionaire Bags Royal Mail

Job Cuts Surge as Firms Tighten Belts

This is Cliff Equity, the UK’s business newsletter that keeps you informed on what’s important in tech, business and finance in less than 5 minutes

In today’s stories:

  • Stamp of Approval: Billionaire Bags Royal Mail

  • Job Cuts Surge as Firms Tighten Belts

  • Cinven Wins Grant Thornton's £1.5bn Jackpot

The summary: Royal Mail’s £3.6bn takeover by a Czech billionaire promises a shake-up of Britain’s iconic postal service, balancing modernisation, union perks, and a fight to keep six-day deliveries alive.

The details:

  • Signed, sealed, delivered—sold! The UK government has approved the £3.6bn sale of Royal Mail’s parent company, IDS, to Czech billionaire Daniel Kretinsky’s EP Group, with "golden share" protections in place to prevent meddling with HQ, tax residency, or ownership without approval.

  • Delivery demands stay intact (for now): EP Group must maintain Royal Mail's Universal Service Obligation (USO)—six days of letter delivery a week—though Ofcom is mulling cost-saving reforms that could trim second-class delivery schedules.

  • Sweetener for the posties: A deal with unions includes a 10% cut of dividends for workers and a monthly employee voice at the boardroom table, but nothing’s settled on USO reforms yet.

  • Profits, parcels, and progress: Kretinsky plans to use the profitable European GLS business and locker investments to turn Royal Mail into a logistics powerhouse, clawing back lost parcel market share while juggling Ofcom fines and a plummeting letter business.

Why it matters: Royal Mail, once the pride of British post, is now in the hands of a Czech billionaire promising to modernise it—think European efficiency meets postbox nostalgia. With letter volumes plummeting and parcels booming, it’s a battle to keep the Universal Service Obligation alive while making the business profitable. Throw in union deals, regulatory scrutiny, and a golden share, and it’s clear the future of your daily deliveries is anything but stamped and sorted.

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The summary: Despite rising costs and job cuts, the UK economy is showing resilience with services ticking up, offering a glimmer of hope amidst manufacturing woes and post-Budget challenges.

The details:

  • Job cuts surge: Private sector firms slashed jobs at the fastest rate since January 2021, thanks to rising employment costs, squeezed margins, and the gloomy post-Budget hangover. Manufacturing took the brunt, with output hitting an 11-month low.

  • Confidence cracks: Business optimism flatlined despite a slight uptick in service sector activity (51.4). Meanwhile, manufacturing fell off a cliff, as new orders dropped for the first time in over a year amid lacklustre consumer spending.

  • Inflation rears its head: Price pressures rose at their quickest rate in nine months, with over half of firms planning to hike prices. Salary growth crawled at its slowest pace since 2021, as redundancies climbed and pay packets shrank.

  • Economy on thin ice: “Triple whammy” woes of stalled growth, slumping employment, and rising inflation have left confidence at a two-year low. The Bank of England's hawkish stance isn’t helping matters for a sterling already facing soft growth prospects.

Why it matters: The UK economy is hobbling into 2024 with businesses shedding jobs faster than a festive jumper in January, all while inflation sneaks back onto the scene like an unwelcome ex. Manufacturing is in the doldrums, consumer spending is drying up, and firms are too cash-strapped to replace lost workers, leaving growth stuck in neutral. It’s a bleak cocktail of rising costs, shrinking confidence, and political grumbles that suggests storm clouds ahead for both wallets and wages.

The summary: Grant Thornton's partners are popping the bubbly after backing a £1.5bn sale to Cinven, marking a major shake-up in the audit world and delivering hefty payouts for all involved.

The details:

  • Grant Thornton cashes in: UK partners at the accountancy firm unanimously voted to sell a majority stake to Cinven, valuing the business at a tidy £1.5bn.

  • Windfall alert: The deal promises hefty payouts for the firm’s 240 partners, making it a no-brainer at the ballot box.

  • Cinven clinches it: The private equity firm beat off rivals like New Mountain Capital, EQT, and Carlyle in a hard-fought bidding war.

  • A comeback story: After a £1.3m fine for audit blunders in 2022, GTUK’s finances are back on track, proving even auditors can learn from their mistakes.

Why it matters: Grant Thornton’s private equity tie-up signals a seismic shift in the traditionally buttoned-up audit world, as cash-rich investors eye a slice of the action. For the firm's partners, it's champagne all around with life-changing payouts, while rivals are left pondering their next move. Meanwhile, Cinven’s bold bid shows there’s serious money to be made, even in an industry once synonymous with spreadsheets and sensible shoes.

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