'Profiteering epidemic'

Bank of England governor accused of failing to acknowledge depth of profiteering crisis

Reading time: 5 min

Bank of England governor Andrew Bailey has finally acknowledged the role that rising prices is playing in soaring inflation — but Unite warned that Bailey is still failing to recognise the depth of the profiteering crisis.

Last week, Bailey warned that businesses that set prices above inflation will risk embedding higher prices into the economy.

“I would say to people who are setting prices – please understand if we get inflation embedded, interest rates will have to go up further and higher inflation really benefits nobody,” Bailey said, adding, “It hurts people and it particularly hurts the least well off in society”.

Unite has long criticised the Bank of England governor for blaming rising inflation on workers seeking higher wages – this is the first time he has publicly acknowledged the role that businesses setting higher prices has played in the inflationary crisis.

Bailey’s comments came after the Monetary Policy Committee of the Bank of England again raised interest rates last week, amid a surprise jump in inflation this month.

Responding to Bailey’s comments, Unite general secretary Sharon Graham said, “Andrew Bailey’s lacklustre acknowledgement of the role price rises are having on inflation is a step forward after years of targeting workers.

“However, the Governor of the Bank of England is still refusing to acknowledge the depth of the crisis,” she added. “The UK is in the grip of a profiteering epidemic – it is greedflation, not workers’ wages, that is fuelling the cost of living crisis.

“The profits of Britain’s biggest firms have spiked 89 per cent: to claim that there is no evidence of excessive profiteering just isn’t credible,” Graham went on to say. “Policy makers seem determined to remain prisoners of a broken economy. They need to wake up.”

Earlier this month, Unite published a new report on profiteering, which has shown that the profits of the 350 largest companies in the UK have soared by 89 per cent in 2022 from pre-pandemic levels in 2019.

Unite’s latest research comes after a similar report Unite published last year which showed that 2021 profit margins of the same top 350 companies jumped 73% compared to 2019.

The latest research reveals a profiteering crisis that continues unabated, with some of the UK’s most profitable industries driving the cost of living crisis.

These include the ‘big 8’ shipping firms, whose profits have soared an astonishing 20,650 per cent since 2019; oil refineries whose profits per barrel have increased by 366 per cent; agribusinesses whose profits have likewise skyrocketed by 255 per cent; and the ‘big 4’ energy firms whose profits have shot up by 84 per cent.

Unite’s new profiteering report has also shown that the UK’s biggest supermarkets – Tesco, Sainsbury’s and Asda, which together sell over half of the UK’s groceries – made combined profits of £3.2bn in 2021, nearly double pre-pandemic levels.

Other large companies that dominate industries such as food manufacturing, energy networks, oil and gas, transport logistics, ports and manufacturing, among others, all saw profits soar compared to 2019.

A separate analysis from Unite published last week showed how the UK’s biggest banks are cashing in through interest rate rises.

The research revealed that the ‘big 4’ banks — Barclays, HSBC, Lloyds and NatWest – made an extra £7bn from net interest income, which is the extra money banks make by raising interest rates for borrowers and not passing it on in raised interest rates for savers’ deposits.

The big 4 banks’ overall profits have risen substantially since pre-pandemic levels in 2019 — by 42 per cent – as they posted combined profits of £33bn in 2022.

Across the economy, financial sector profits have risen nearly three times as quickly as workers’ income – more than 14 per cent compared to just under 5 per cent — since the Bank of England’s rate rises began in late 2021. Unite is continuing to organise and win fair pay for workers across the finance sector.

Commenting the day the Monetary Policy Committee again raised interest rates, Unite general secretary Sharon Graham said, “Unite’s research shows how the banks have already made billions in extra profit from interest rate rises. Banks treat these rises as a licence to pick the pockets of householders across Britain. 

“Unbridled profiteering is taking billions of pounds away from workers and communities and putting it into the hands of corporate Britain,” she added. “Last year, the profits of the big four banks soared to an eye watering £33 billion.  Politicians need to wake up. It’s only by taking on runaway profiteering that we can end the cost of living crisis.”

By Hajera Blagg