the times | Wednesday June 8 2022 35
Business
Mehreen Khan Economics Editor
The global economy is at risk of falling
into a 1970s-style “stagflation” trap, the
World Bank warned as it slashed its
growth forecasts and raised the alarm
over growing sovereign debt defaults.
In its first economic outlook since the
war in Ukraine, it said Russia’s invasion,
surging energy prices and a slowdown
in China would “hammer” economic
growth in the years to come.
It slashed its global growth forecast
from a 4.1 per cent GDP projection
made in January to 2.9 per cent this
year, down from 5.7 per cent GDP
growth in 2021 when the global econ-
omy rebounded from lockdowns.
“For many countries, recession will
be hard to avoid,” David Malpass, the
World Bank’s president, said, adding
that on a per capita basis many
countries could fall into zero growth
territory if downside risks emerged.
“The danger of stagflation is con-
siderable today,” the bank, which is
based in Washington, said. “Between
2021 and 2024, global growth is projec-
ted to have slowed by 2.7 percentage
points — more than twice the
deceleration between 1976 and 1979.
“Subdued growth will likely persist
throughout the decade because of weak
investment in most of the world. With
inflation now running at multi-decade
highs in many countries and supply
expected to grow slowly, there is a risk
that inflation will remain higher for
longer than currently anticipated.”
The eurozone’s 19 countries suffered
the biggest growth downgrade since
January’s forecast, with projections
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$119.54 (-0.16)May 5 13 23 31 May 6 16 24 Jun 2 May 9 17 25 Jun 2 May 9 17 25 Jun 2 May 9 17 25 Jun 2 May 9 17 25 Jun 2Dow Jones
32,862.51 (-53.27)Cazoo is to cut 15 per cent of its work-
force and will reduce its marketing
spending to save more than £200 mil-
lion as it becomes the latest casualty of
the economic slowdown.
About 750 jobs will go from the
online car retailer’s 5,000 staff in Brit-
ain and Europe. Non-core recruitment
also has been frozen to protect profits
from a cooling car market and it is shut-
Biffa deal
could still
end in bin
over tax bill
Robert Lea Industrial EditorBiffa, Britain’s last big independent
binman, looks set to fall to a £1.36 billion
takeover offer from an American
private equity firm.
The company said yesterday that it
had been speaking to Energy Capital
Partners for some time about a poten-
tial takeover. After a few false starts, the
two parties appeared to have agreed a
price of 445p a share, which Biffa said
— depending on final due diligence —
was an offer it would recommend to
shareholders.
The price is pitched at a level that has
proved beyond Biffa’s shares since they
were floated on the stock market in late
2016 at 180p and is a 37 per cent
premium to where the stock closed on
Monday night — a boon for investors
who took shares in the company at
200p in a fundraising during the depths
of the Covid-19 pandemic.
A potential poison pill to the deal has
emerged, however, because the waste
management company has been forced
to admit that a present investigation by
HM Revenue & Customs into whether
it has been paying its landfill taxes
correctly has left it with a potential tax
bill and possible fines of £153 million.
The company said that the Energy
Capital Partners bid approach had
taken the HMRC inquiry into account,
and added: “The board of Biffa has con-
cluded that should a firm offer be made
on the same financial terms as the pro-
posal, it would be minded to re-
commend it to Biffa shareholders.”
Yesterday the company’s shares rose
88½p, or 27.2 per cent, to 413½p, indi-
cating some doubt about whether the
deal would go ahead, at least at the
stated price.
Biffa, known for its signature scarlet
dustcarts, is the largest bin-collection
and recycling company in Britain
outside the market leaders Veolia and
Suez, both of France. The business is
Continued on page 38, col 1KEN MCKAY/ITV/REX/SHUTTERSTOCKWorld Bank slashes its global growth forecasts
Stagf lation
risk to world
economy
dropping by 1.9 percentage points to a
2.5 per cent GDP expansion this year.
US economic growth would fall to
2.5 per cent this year, after 5.7 per cent
growth in 2021, according to the bank’s
forecasts.
“There should be a reduction in the
bond holdings of major central banks,
which would then free up capital for
small businesses and developing
countries through the banking system,”
Malpass, who was nominated by
President Trump, said.
The US Federal Reserve began
shrinking its balance sheet this year,
with the European Central Bank likely
to confirm the end of its era of mass
quantitative easing this month. The
Bank of England has said it will begin
active bond sales should market
conditions permit later in the year.
The World Bank, which has a focus
on developing nations, said the poorest
countries were already facing the brunt
of a global downturn that risked caus-
ing chronic food shortages in regions
such as sub-Saharan Africa that relied
on grain imports from Ukraine.
The bank called on richer countries
to provide sweeping debt relief to low-
income nations, a process that has
stalled in the past year amid disputes
among wealthy creditors, including
China and India.
In a comparison with the stagflation
of the 1970s, the World Bank noted key
differences in today’s high energy
prices. The present oil price rises are
still not of the magnitude of 50 years
ago and the world economy has robust
independent central banks with strong
inflation mandates, it said.Wear it well Trinny Woodall’s make-up brand was rated one of the top female-led
firms in a JP Morgan study that reveals women’s struggle to raise equity Page 41between 70,000 and 80,000 vehicles
for the year and revenue of up to
£1.5 billion. That is down from a previ-
ous target of 100,000 sales generatingCazoo to ditch 750 staff and cut advertising as online car sales fall
Simon Freeman ting two of its ten vehicle preparation
sites in the UK and one of its twenty-
one customer support centres.
Alex Chesterman, founder and chief
executive, said measures to prioritise
cash preservation over growth were
necessary to shield the company from a
“perfect storm” of rising living costs and
waning consumer confidence.
In a presentation to investors yester-
day, Cazoo reduced its near-term
growth outlook to forecast sales of
£2 billion. It expects to break even in the
UK by the end of next year.
The company went public in New
York in August, 18 months after launch-
ing, with an $8 billion price tag. Since
November its share price has tumbled
from the $10 float price to $1.28.
Ian McMahon, a partner at UHY
Hacker Young, said: “The online-only
model is based on having lower costs
than a bricks-and-mortar dealership
could. However, a lot of them havespent so much on customer acquisition
and advertising that their costs are, per
unit, comparable to those of a tradi-
tional used car dealership.
“There is a risk that some of the
online dealers may have built up used
car stock at just the wrong time. Some
may find that they bought cars at the
top of the market over the last year and
are now having to sell them as values
soften again. That’s only going to put
more pressure on their margins.”Cazoo share price2021 2022 024681012$14