The UK government reported a budget surplus of £15.4 billion in January, falling short of economists’ forecasts of £21 billion and the £19 billion predicted by the Office for Budget Responsibility (OBR). Despite January typically seeing a boost from self-assessment tax payments, the lower-than-expected figure has increased total borrowing for the financial year to £118.2 billion—over £11 billion more than the previous year.

The government’s debt-to-GDP ratio now stands at 95.3 per cent, a level last observed in the 1960s. With the OBR set to release updated forecasts on March 26, there are concerns that the government may struggle to meet its goal of reducing the debt ratio by 2029. This could lead to potential spending cuts or tax hikes in the autumn budget.

Reduced debt-servicing costs helped boost January’s surplus, dropping from £9 billion in December to £6.5 billion. However, this was partially offset by a £6 billion one-off expense related to the government’s repurchase of military housing from private firm Annington.

Darren Jones, chief secretary to the Treasury, emphasized the government’s commitment to “economic stability and meeting our non-negotiable fiscal rules.” He also noted that a comprehensive spending review—the first of its kind in 17 years—is underway to ensure that public funds are used efficiently and aligned with national priorities.

Lloyds Banking Group has reported a 20% decline in annual pre-tax profits for 2024, falling short of market expectations due to rising costs and a significant charge linked to the ongoing motor finance commission scandal.

The FTSE 100 lender posted profits of £5.97 billion, down from £7.5 billion in 2023 and below analysts’ forecasts of £6.4 billion. The bank’s income was affected by a lower net interest margin—the difference between interest earned on loans and the cost of funding—amid falling interest rates.

A key factor in the profit drop was an additional £700 million provision related to potential compensation for customers impacted by undisclosed or partially disclosed commissions on car loans. This charge brings Lloyds’ total provision for the issue to £1.15 billion. The case stems from a Court of Appeal ruling involving consumers Wrench, Johnson, and Hopcraft, who challenged lenders’ responsibility when credit brokers, such as car dealerships, fail to fully disclose commission details.

Chief Executive Charlie Nunn stated that the extra provision was a response to the appeal court’s decision, which went beyond the scope of the Financial Conduct Authority’s (FCA) initial review into motor finance commissions. Nunn acknowledged that “significant uncertainty” remains regarding the final financial impact of the scandal.

Despite these challenges, Lloyds reported growth in key areas. Loans and advances to customers increased by £10.2 billion over the year, reaching £459.9 billion, driven by a £6.1 billion rise in UK mortgages. Customer deposits also grew by £11.3 billion to £482.7 billion, reflecting solid consumer confidence in the UK’s largest high street bank.

The bank also noted an improving economic outlook, supported by recent growth in house prices and a more favourable assessment of risks such as inflation and interest rate volatility.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, commented that the additional provision had “clouded” what was otherwise a strong fourth quarter. However, Britzman highlighted that Lloyds had successfully improved its loan quality throughout the year, defying concerns that borrowers might struggle under the pressure of persistent inflation.

Despite the profit shortfall, Lloyds’ share price has risen by more than 40% over the past year, reflecting broader optimism within the banking sector and the company’s consistent performance outside the motor finance charge.

A Cambridge-based electric bike start-up has secured £1.2 million in new investment as it looks to ramp up production and take on established brands like Brompton in the competitive folding e-bike market.

Flit, founded in 2016 by Alex Murray, a cycling enthusiast, and Dave Henderson, a former Jaguar Land Rover engineer, has seen demand outstrip supply, with customers currently facing waiting times of up to four months.

New Investment to Drive Growth

The latest funding round was led by ACF Investors and Cambridge Angels, attracting high-profile backers, including Tony Purnell, former head of technical development at British Cycling and an ex-team principal for Jaguar and Red Bull’s Formula One teams.

Flit first gained recognition in 2020 when it received a £214,000 grant from Innovate UK. The funding helped the company develop a pioneering bonding technique for bike frames, eliminating the need for welding. According to Murray, this process results in a lighter and stronger frame by removing the risk of distortion seen in welded components.

The company’s flagship M2 model, which weighs just 14kg, is designed for urban commuters, offering a compact and efficient folding mechanism.

Challenging Brompton’s Market Dominance

Flit’s founders believe their innovative approach to manufacturing and design can help them challenge market leader Brompton, which recently reported a difficult trading year and forecast a pre-tax profit of just £4,602 for 2024.

Unlike many competitors that outsource assembly overseas, Flit manufactures its bikes in Cambridge, ensuring greater control over quality and production.

“Not only did [the bonding process] improve our product, but it also re-imagined how we manufacture,” Murray explained. “We’re hands-on in the factory, which ensures we fully master and control the process. And being in a city that loves bikes puts us close to our core community.”

While raw aluminium and some components are imported, the entire assembly process takes place in Cambridge.

Scaling Up to Meet Demand

With demand growing, Flit’s next focus is on scaling production and reducing waiting times.

“Our next step is to scale up to meet demand,” said Murray. “We want to keep innovating and expanding our presence in the urban cycling market.”

As commuters continue to seek sustainable transport alternatives, Flit hopes its lightweight, locally manufactured e-bikes will carve out a strong position in the expanding micromobility sector.