the times | Thursday October 15 2020 2GM 33
Business
market measures to help people into
work, as well as securing a trade deal
with the European Union, the OECD
said.
Britain should invest in digital skills
training as a priority, particularly for
lower earners in the services sector
most at risk of losing their jobs. Higher
levels of training would help this group
to find work in other parts of the eco-
nomy and would limit the risk of long-
term scarring in the workforce.
The OECD is a club of 37 wealthy
nations that includes the world’s lead-
ing economies. Its comments come
after the International Monetary Fund
and Andrew Bailey, governor of the
Bank of England, also warned of the
risk of the Covid-19 pandemic causing
long-term scars for the economy.
The OECD also said that the govern-
ment should step up its investment indigital infrastructure, such as high-
speed broadband, and invest in green
technologies.
Laurence Boone, its chief economist,
said: “Actions taken to address the pan-
demic and decisions made on future
trading relationships will have a lasting
impact on the UK’s economic trajec-
tory for years to come, so they should be
in line with long-term objectives.”
By improving its woeful record on
productivity, the country could sustain
an economic recovery while also man-
aging its ballooning debt, the OECD
said. The government’s fiscal response
to coronavirus will lift the public debt to
140 per cent of GDP next year, its high-
est level in peacetime.
The OECD said that higher taxes
would be required to help to lower debt,
as well as an end to the “triple lock” on
pensions, which indexes pension in-creases to the maximum of earnings
growth, interest rates or 2.5 per cent.
Of the G7 advanced nations, Britain
is forecast to be running the third high-
est deficit in 2025, at 4.4 per cent of
GDP, behind America and France. The
net debt position will be the third best in
the G7, though, behind Germany and
Canada. The UK economy is set to end
the year 10.1 per cent smaller, before re-
bounding by 7.6 per cent next year.
However, Vitor Gaspar, director of
fiscal affairs at the International Mone-
tary Fund, said yesterday that govern-
ments should not prematurely worry
about the public finances because low
interest rates had made high public
debt levels manageable. “We see a one-
off jump up of debt in 2020, then stabili-
sation after 2021 and even a slight
downward trend in 2025,” he said.
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Sept 16 24 Oct 2 12OECD warns against resurgence in Covid and disorderly Brexit
Gurpreet Narwan, Philip Aldrick
Policymakers in Britain must do more
to help people to find jobs in order to
boost productivity and limit the long-
term economic fallout from Covid-19,
according to a report by the Organisa-
tion for Economic Development and
Co-operation.
In its latest forecasts for the UK
economy, the body said that govern-
ment interventions to protect jobs and
incomes would lead to unemployment
averaging 5.3 per cent this year.
Although this is down from an earlier
forecast of 9.1 per cent, the OECD
warned that a resurgence in cases and a
disorderly Brexit could lead to a “pro-
longed period of disruption to activity
and jobs”.
The government must commit to
“additional spending” on active labourALAMYDeloitte
quits as
auditor of
EG Group
Robert Miller
Deloitte has resigned as auditor of
EG Group, the British petrol stations
company whose billionaire owners
have agreed a £6.8 billion takeover of
Asda, amid concerns about its govern-
ance and internal controls.
EG Group, which owns nearly 6,000
petrol stations and reported more than
€20billion of revenue last year, told its
bondholders in a private notice this
week that KPMG had been appointed
as its auditor after Deloitte resigned
with “immediate effect”, according to
the Financial Times. The firm had been
auditing EG Group’s accounts for four
years.
The retailer did not state the reason
for Deloitte’s resignation, but it is
understood that the Big Four account-
ing firm resigned owing to governance
concerns and a view that the group’s
controls had not improved in line with
its growth. Deloitte declined to com-
ment last night.
EG Group said in a statement: “As in
previous years, Deloitte signed a clean
audit for EG Group’s 2019 financial
statements, and there have been no
disagreements on any auditing or
accounting matters. We are pleased to
be working with KPMG going forward,
and remain committed to making
continued progress with our internal
processes, controls and governance.”
EG Group, jointly owned by TDR Cap-
ital, a private equity group, and Mohsin
and Zuber Issa, has grown rapidly in
recent years through debt-funded acqui-
sitions of petrol stations in Europe,
Australia and the United States. This
month the brothers agreed to buy Asda,
Britain’s third largest supermarket chain,
from Walmart, the American retail giant.
Mohsin, 49, and Zuber, 48, said to
have a net worth of £3.56 billion by the
latest Sunday Times Rich List, have set
up a bid vehicle in Jersey that will be the
ultimate parent company of Asda. EG
Group is also under the umbrella of a
Jersey-based vehicle. The island juris-
diction offers tax advantages, including
potentially lower financing costs on the
debt that the bidders are using.
The petrol station group had not
planned to change its auditor this year,
with EG’s annual report published in
July disclosing that Deloitte had been
reappointed to the role. Deloitte gave
the group an unqualified audit for 2019
and did not flag concerns in its report.
EG filed its 2019 accounts later than
planned, however, and had to seek per-
mission from lenders to push back the
deadline for publishing its 2019 results
from the end of May to July 31. The
group blamed this on the “severe dis-
ruptions” caused by the pandemic.
China’s year of the bull
Arturo Di Modica’s bull statue in Shanghai’s Bund area. The value of Chinese equities has
surpassed $10 trillion for the first time since 2015 as the country shrugs off Covid Page 34Britain ‘must do more’
to protect its economy