REIFICATION

Retailers play in the metaverse as Meta shares plummet

Retailers are already spending — and making — money in the metaverse. But can a virtual shopping experience ever be as fun?


German grocery chain Kaufland recently built an island in the social video game 'Animal Crossing: New Horizons'

The numbers were all too real for a company betting on the power of imagination.

Share prices of Facebook owner Meta fell into a freefall late Wednesday after the company reported poorer-than-expected earnings results for the last quarter of 2021.

The newly rebranded "metaverse first" company has been spending heavily on its metaverse ambitions as Facebook's user growth has slowed and its core advertising business has taken a hit.

As the latest figures show, shifting gears will be risky and expensive, and CEO Mark Zuckerberg has said his vision of the metaverse is still at least a decade away from reality. But that hasn't stopped retailers from experimenting with a concept that some say will be the next generation of the internet — and just as lucrative.

Primed by gaming

Loosely defined, the metaverse refers to the idea of virtual, interconnected worlds underpinned by virtual reality and blockchain technologies, where people can meet for work and play. Many of the concepts behind this idea have existed for years in the gaming realm, including the idea that people will spend money on digital goods.

"There is vast empirical evidence from gaming, where people spend tons of money for all these not functional, but just aesthetic, add-ons," Thorsten Hennig-Thurau, professor of marketing and media at Münster University and academic director of the XRLab@MCM, which focuses on metaverse research, told DW. "These are layers that you put on your avatar, customized to match your personality. That's relevant, and I think, for brands, that's good."

Brands seem to agree. In one form or another, retailers including Walmart, Ralph Lauren, Nike, Adidas and more have already hopped on the metaverse bandwagon.

"The metaverse is currently one of the most exciting developments in the digital sector and offers interesting platforms for Adidas," Stefan Pursche, press officer at Adidas, told DW in an email. "Our goal is to make our brand visible there and to get in touch with our consumers."

A similar logic drove German grocery chain Kaufland to develop a branded island within the social video game Animal Crossing: New Horizons.

"We reach our respective target groups best where they already are," Kaufland spokeswoman Annegret Adam told DW. "More and more people are moving into virtual worlds, with the gaming world receiving a lot of attention, especially from the generation born around the turn of the millennium."

Different approaches

Kaufland has approached the metaverse from a marketing and exposure angle, using Animal Crossing as a way to engage with younger consumers.

"[We thought] it would be a great way to show people Kaufland's sustainability strategy while gamers are playing," Helge Ruff, CEO of OneTwoSocial, the digital marketing agency that developed the idea, told DW. "So we built a Kaufland supermarket on an Animal Crossing Island called KaufIsland with lots of things to explore."

Meanwhile, some retailers are already selling goods within the metaverse. In December, Adidas sold out 30,000 nonfungible tokens (NFTs) of "virtual wearables" for avatars used in the blockchain-based gaming world The Sandbox. Customers also received a matching hoodie, tracksuit and beanie to wear themselves in the real world.

Researchers were already seeing this digital double developing as a retail trend, particularly in Asia, said Hennig-Thurau.

"That makes sense from a branding perspective, from an identity perspective," he said. "Because I want to match with the avatar, the person I am in the metaverse. When we meet in the metaverse, I want you to recognize me, to find me attractive in the same way you do in the physical world."
A new type of shopping mall

There is also a lot of interest in recreating within the metaverse the physical experience of shopping in a store. In January, rumors emerged that Swedish fashion giant H&M would be opening a location in the metaverse. The company denied the report, but the excitement it ignited on social media will have caught retailers' attention.

Pulling this off would not be without hurdles. An immersive shopping experience will require customers to use a VR headset, an expensive piece of technology that most people don't own yet. Images also still aren't photorealistic enough, said Hennig-Thurau, and forget about trying on items like you would in a real store. In this way, it would not be unlike online shopping as we currently know it, except that in the metaverse, your friends could put on their own headsets and join you.

"It's going to be a social experience, like shopping with a friend," said Hennig-Thurau. "That's something that I believe has the biggest value for many consumers."

Convincing consumers

The trick for retailers will be understanding if and how the metaverse can provide added value to customers.

A digital land grab is already playing out in The Sandbox, Decentraland and a few other three-dimensional virtual worlds that investors are betting will play a major role in the future of the metaverse. Virtual real estate sales on these platforms reached over half a billion dollars in 2021, according to data firm Metametric Solutions. French supermarket giant Carrefour announced this week that it had bought land in The Sandbox.

In contrast to beloved metaverse-style video games such as Animal Crossing or Roblox, with their clear branding and target demographics, these other platforms are meant to pull in investors looking to build and monetize projects of their own.

"The questions [investors] should ask themselves is: Will there ever be people there? Will there ever be demand? Or will the people go elsewhere?" Hennig-Thurau said. "Maybe they should consider going where the people are. ... When we talk about bubbles in the history of the internet, they always happen when companies convince investors that their world will be the next big thing, but they never convince the consumers."

Edited by: Hardy Graupner

 Meta's market value just dropped by more than most companies are worth

By Clare Duffy, CNN Business
 February 4, 2022


New York (CNN Business)Meta Platforms, the company formerly known as Facebook, just had its worst trading day in its history as a public company.

The company's shares closed down more than 26% Thursday, shaving off nearly $240 billion from its market value, after a rough earnings report released after trading hours on Wednesday.

Not only did Meta (FB) report a rare and worse-than-expected profit decline during the final three months of last year, it laid out a series of challenges to its core advertising business and revealed for the first time just how much money it's losing on its shift to the metaverse. The company also reported a slight-but-striking decline in daily active Facebook users in the United States and Canada from the prior quarter.

The eye-popping drop in value is a reminder of just how massive the tech giant really is. Meta's market cap has now declined by an amount that is greater than the total valuation of most public companies.

Meta shares plummet 20% after posting rare profit decline

Meta's lost market value is more than the total market cap of companies like Oracle and Cisco and nearly as much as the total value of Disney. Put bluntly, Meta just saw its market value decline by more than most public companies are worth.

It's also a tough day for Meta CEO Mark Zuckerberg, who is by far the company's largest individual shareholder. Zuckerberg owned more than 398 million Meta shares, or 14.2% of the company's total outstanding shares, according to an SEC filing from February 2021, the most recent filing available.
As Meta's share price plummeted Thursday, the value of Zuckerberg's stake in the company dropped by more than $30 billion.

Facebook’s stock crash points to a rocky path ahead as it goes all in on the metaverse

February 3, 2022

Illustration by The New York Times

By Kara Swisher

At some point, the jig is up for almost every highflying tech company (consider that Cisco was, for a time in 2000, the world’s most valuable company). That’s usually because executives put on blinders to one constant rule of innovation I’ve observed: The young devour the old.

So, are the worrisome quarterly results posted Wednesday by the outfit formerly known as Facebook an early sign of that? That seemed to be Wall Street’s conclusion, which until now has showered the social networking giant with unquestioning love, but nonetheless shaved more than $250 billion off its market value, or 26 percent, the largest one-day dollar drop for a U.S. company in history.

That’s quite the indictment, since the money crowd has stuck beside the company despite a roiling series of controversies in the 18 years since its founding. Privacy violations, foreign interference, harmful impacts on teenage girls, data breaches, voluminous disinformation and misinformation, and the hosting of citizens charged with seditious conspiracy have made the company into the singular villain of this digital age. It has even supplanted the ire that was once aimed at Microsoft (ironically, seen today as the “good” tech company).

But until now, none of these myriad sins have seemed to matter to investors, who have cheered on Facebook’s digital advertising dominance that has yielded astonishing profits.

It posted $10.3 billion in profits in the fourth quarter, an 8 percent dip, despite a 20 percent sales gain to $33.7 billion. But those profits were a disappointment, dragged down in part by $10 billion in 2021 spending on its Reality Labs unit, which makes its virtual reality glasses and similar products. That’s serious money to throw at something, but it looks to be just the tip of Meta’s spear in the battle to dominate the still vaporous metaverse. Mark Zuckerberg has clearly decided to go all in on what he views as the battleground for the future.

There are other troubling signs, including the meteoric rise of TikTok and the impact of Apple’s ad tracking changes that have hurt Facebook’s ability to hoover up users’ personal data in service of targeted ads.

While the Apple challenge and the metaverse spending are certainly troubling, what we might be seeing is the market’s tiring of co-founder Zuckerberg at the helm, even as more exciting and energetic rivals come into play. Even Microsoft seems more relevant and vibrant, including its recent and very deft plan to snap up Activision, a move Meta wouldn’t dare make due to regulatory scrutiny.

So Facebook is forced to be creative on its own, not always its strongest suit given how it is known for ham-handedly shoplifting ideas from others.

Indeed, Zuckerberg did not sound much like Caesar Augustus — the techie’s favored Roman emperor — in his earnings call with investors: “Although our direction is clear, it seems that our path ahead is not quite perfectly defined.” You’d imagine $10 billion would buy a better map.

Thus, right on schedule, the company is trying to soften up Washington influencers for its next act, the metaverse. According to a report by Bloomberg, Meta is focused on think tanks and nonprofits, especially those that lean libertarian or free market, to presumably convince them that what happened back in web2 will not be an issue in web3, the supposed next phase of the internet.

Narrator: It will be in issue.

Meta gives funding to a lot of these organizations, of course, a kind of soft way to influence. It spent $20 million on lobbying alone last year — more than five times the amount in 2012 — which is more than triple Apple’s spending and roughly double Alphabet and Microsoft’s. Amazon was the only tech company to surpass Meta, with about $20.5 million in lobbying spending.

Given the increasing bipartisan furor with the company, it makes sense. As Neil Chilson of Stand Together, a nonprofit associated with Charles Koch, put it: “There’s a lot of scrutiny on them, and they are trying to move into a new space and bring the temperature down at the same time.”

Ya think? In a “Sway” interview I did recently, former Disney C.E.O. and Chairman Bob Iger noted the dangers of the metaverse: “There’s been enough said and criticized about toxic behavior in internet 2.0; Twitter, Facebook, you name it. Imagine what can happen when you have a much more compelling and immersive and, I’ll call it, collective of people or avatars of people in that environment, and what kind of toxic behavior could happen.”

“Something Disney is going to have to consider as it talks about creating a metaverse for themselves is moderating and monitoring behavior,” he said.

So it appears Zuckerberg is right about one thing about Meta’s direction: It’s going to be a bumpy ride.

UPDATES

Facebook Loses Users For The First Time Ever

By Tyler Lee, on 02/03/2022

Facebook has been around for a very long time now, but what you might not have realized is that over the years, the company’s user base has only grown, at least until now where it appears that for the first time ever, Facebook has experienced its first-ever loss in daily active users.

According to Facebook’s Q4 earnings report, the company revealed that it had about 1.929 billion daily active users. This is versus the 1.93 billion that they had recorded in the previous quarter. Sure, the drop in users is marginal, but like we said, this is the first time this has happened to the social media platform.

That being said, realistically we expect that throughout the days, weeks, and months, Facebook probably loses and gains users, but for the most part the company has gained more than they have lost. According to Facebook’s parent company Meta, “Any future declines in the size of our active user base may adversely impact our ability to deliver ad impressions and, in turn, our financial performance.”

This doesn’t necessarily mean that Facebook is in trouble, but rather it would suggest that maybe they have run out of people around the world to add to their service. While 1.929 billion is only about a quarter of the world’s population, keep in mind that not everyone in the world wants or needs to use Facebook, plus there are countries such as China, home to 1.4 billion people, where Facebook is banned.

It's the beginning of the end of Facebook

David Pierce and the Source Code team

February 3, 2022

Image: Roman Martyniuk/Unsplash

Good morning! Facebook is shrinking for the first time, and the news sent its stock prices tumbling after hours. It wasn’t the only stock that cratered yesterday, either.

Down and to the right

Facebook is dying. The signs have been out there for a while, of course: slowing growth around the world, an increased focus on Instagram and WhatsApp and Messenger and then a hard pivot toward the metaverse, including a whole-ass name change so that Meta's potential might not be brought down by Facebook. But all we saw until now was slow growth, not decline.

Facebook users have now declined for the first time ever, Meta announced on its earnings call yesterday. The numbers are still ludicrous, obviously — 1.929 billion people still log on to the Facebook app every day, and Meta turned nearly $40 billion in profit last year, so don't pour one out for the blue app just yet — but the number is down about a half a million users from the previous three months.

Meta's overall product portfolio — which includes WhatsApp and Instagram — was up a hair, to 2.82 billion per day. But it's pretty clear that after nearly two decades of literally unprecedented growth, Facebook's flagship app has plateaued.

The largest culprit is almost certainly that there just aren't enough people in the world for Facebook to grow forever. No wonder Mark Zuckerberg is so interested in appealing to youths.

Meta's stock has dropped about 20% since the earnings call. Big price swings have come for Meta before, but this one's particularly problematic: Zuckerberg needs time, money and patience to pull off his metaverse play, and he may not have as much of any of the three as he thought.

Facebook is playing with both hands tied behind its back right now. TikTok is a formidable competitor, but Facebook can't even buy a GIF company without getting antitrust scrutiny. Apple's privacy moves continue to hurt, too: “The accuracy of our ads targeting decreased, which increased the cost of driving outcomes,” Sheryl Sandberg said on the earnings call, and Zuckerberg added that the company has had to rebuild "a lot of our ads infrastructure." Ultimately, CFO Dave Wehner said, that could cost the company about $10 billion in lost revenue — which is about as much as Meta lost on all its metaverse projects last year.

Reels is the bright spot, at least until the metaverse becomes a thing. Zuckerberg underscored how important Reels is to the company as it tries to take on TikTok, and called it "our fastest-growing content format by far."

That's the other shift that's becoming clear: While Meta shifts to the metaverse, its social apps are becoming entertainment apps. Adam Mosseri said as much last year, but the change is already upon us.

Meta has been the most interesting company in earnings season so far. The sun rises, Big Tech makes money. But here are a few things we've learned from the other companies reporting:

Google's ad business is doing just fine. Some think it's actually benefiting from Apple's privacy push, as advertisers look for a new way to reach and target people. In general, there are few companies better positioned than Alphabet — which is increasingly vertically integrated, controls multiple massive properties and holds vast quantities of first-party data — for the next few years.

TikTok is the future of everything. Sundar Pichai said that Shorts is growing fast, even as YouTube's momentum fell short of expectations (partly thanks to TikTok). If you're not in the vertical-video game, you're apparently nowhere.

Streaming services may be headed for a slowdown. Netflix's subscriber growth has slowed recently, as has Spotify's. Both may be running up against the same sort of total-addressable-market ceiling Facebook is, and they won't be the only ones.

Spotify led its earnings call with the Joe Rogan controversy, in case you're wondering whether Spotify's actually worried about the blowback there.

Supply chain problems hurt everyone, but the chip shortage continues to be good to chip companies. Qualcomm had a big quarter, as did AMD, and both predicted even better things to come. And Apple, which definitely counts as a chip company at this point, was optimistic as well.

Absolutely everybody is in the creator business now. You can hardly tune in to an earnings call without a CEO talking about how they're building tools for creators, helping creators monetize, giving creators new ways to make content. Why? Because creators bring audiences more reliably and cheaply than any other mechanism. If you're in the content biz, it's as simple as that.

This year, it seems, is going to be a year full of transition. The ad market continues to change; the supply chain should improve eventually; the digital transformations of so many industries continue apace; regulation is coming; the (hopefully, please, seriously) end of the pandemic will bring a sweep of change in everyone's lives. Even the biggest companies won't be immune to the change. But all that money they keep making will surely help.

— David Pierce (email | twitter)

$230 billion? Facebook's stock plunge brings big losses for Mark Zuckerberg, 

Meta – and maybe you

Mike Snider
USA TODAY

REAL OR AVATAR?

Shares of the social media giant were down more than 26% Thursday.

The New York State Common Retirement Fund lost $470 million.

The California Public Employees Retirement System lost $440 million.

Facebook's parent company, Meta Platforms, just did a face plant on Wall Street.

Shares of the social media giant were down more than 26% Thursday, the first day of trading after Meta reported a decline in profit and users during the last three months of 2021 – and most tellingly, forecast revenue declines in the current quarter.

Meta's market value fell more than $230 billion to a market capitalization of about $661 billion. The company's market cap had been $898.5 billion early Thursday.

The loss is the largest one-day decline in U.S. history, The Wall Street Journal reported.

Last summer, when the company was still known as Facebook, the company became only the fifth U.S. company to achieve a market value surpassing $1 trillion – the others being Apple, Microsoft, Amazon and Google parent Alphabet.

STOCKS SLIDE:  Facebook parent company Meta plunges, other tech stocks also stumble

FACEBOOK: Network is losing users for the first time ever and shares in Meta have fallen off a cliff

Meta Platforms' shares closed Thursday at $237.76, down about 26%. The stock price was up more than 1% in aftermarket trading to $240.60.

Shares of Meta, which will change its trading symbol on Nasdaq from "FB" to "META" in the first half of this year, are down nearly 30% so far this year.

Facebook co-founder and Meta CEO Mark Zuckerberg personally lost nearly $32 billion Zuckerberg is the largest individual Meta shareholder, with more than 374.8 million shares, or about 12.5% of total shares outstanding, according to S&P Global Market Intelligence.

Zuckerberg's shares had been valued at $121 billion before the market opened Thursday. When the markets closed, his holdings were worth $89.1 billion.

Zuckerberg, who has been No. 7 on Bloomberg's Billionaires, had already seen a decline of $4.9 billion in 2022.

 
Meta stock plummets, what some lost

Many of the top Meta shareholders who took losses, too, on Thursday will be familiar as many Americans have investments including 401(k) plans with them:

The Vanguard Group, which holds 182.9 million shares, , saw its value drop to about $43.5 billion from $59 billion.

BlackRock (nearly 155.9 million shares): down to $37.1 billion from about $50.4 billion.

Capital Research and Management Co. (Capitol Group/American Funds; nearly 137 million shares): about $44.3 billion from about $32.6 billion

FMR LLC (Fidelity Investments; 123.8 million shares): about $29.4 billion from about $40 billion.

UBS Asset Management (20 million shares): about $4.8 billion from about $6.5 billion.

Fisher Investments (7.6 million shares): about $1.8 billion from about $2.5 billion

California Public Employees Retirement System (5.7 million): $1.36 billion from $1.8 billion.

New York State Common Retirement Fund (5.47 million): $1.3 billion from $1.77 billion.

Sheryl Sandberg, Meta COO (1.42 million shares): $337.6 million from $458.7 million.

North Carolina Department of State Treasurer (1 million): 237.8 million from $323 million.

Marc Andreessen, Meta independent director (44,434 shares): $10.6 million from $14.4 million.

Peter Thiel, Meta independent director (12,947 shares): $3 million from $4.2 million.
Facebook faces 'unprecedented' competition

During Wednesday's earnings report, Meta reported that Facebook's daily active users had fallen for the first time: 1.929 billion daily active users compared to 1.93 billion in the previous quarter.

Zuckerberg said competition from other social media platforms including viral video-sharing app Tiktok is "having an impact on our business."

Zuckerberg echoed that sentiment during an all-hands virtual meeting, saying the company faced an “unprecedented level of competition," Bloomberg reported, citing a person who attended but was not authorized to speak publicly about it,

He also said the company's weak revenue forecast for the current quarter triggered the historic stock decline, Bloomberg reported.

That forecast of slowed revenue growth "was a headline grabber and not in a good way," wrote Michael Nathanson of investment research firm MoffettNathanson in a note to investors Thursday

Afghan women say they wouldn't be afforded the same rights as a pregnant 

NZ journalist under the Taliban

By South Asia correspondent Avani Dias and Som Patidar
Posted Wed 2 Feb 2022 

Charlotte Bellis speaking to Taliban officials in Kabul in September 2021.

(Instagram: @charlottebellis)

Afghan women are accusing the Taliban of using a pregnant New Zealand journalist as a publicity tool to show the world they can offer women rights.

Key points:

Afghan women were surprised by the Taliban's support for a New Zealand journalist
Charlotte Bellis was offered "safe haven" by the Taliban after being rejected from NZ quarantine

Other Afghan women have been raped, tortured and murdered, experts say

Charlotte Bellis wrote a column on Sunday saying she had been rejected by New Zealand's strict hotel quarantine system and was living in Afghanistan, where the Taliban had offered her "safe haven".

Bellis was working in Qatar, where extramarital sex is illegal, when she discovered she was pregnant with her partner and realised she had to leave.

When she was unable to go home to New Zealand, she briefly moved to her partner's native Belgium, but couldn't stay long because she wasn't a resident.

She said the only other place the couple had visas to live was Afghanistan.

"When the Taliban offers you — a pregnant, unmarried woman — safe haven, you know your situation is messed up," she wrote.

It made international headlines, but the news prompted scepticism in online groups of Afghan women, Kabul resident Sodaba Noorai said.

Ms Noorai said Afghan women "were surprised" when they heard the news that senior Taliban contacts had told the journalist she would be fine if she returned to Afghanistan.

On Tuesday, the New Zealand government offered Bellis a hotel quarantine place, four days after she released her article.

"[Afghan women] were surprised the Taliban can treat women in a good manner and know how to respect them," Ms Noorai said.

"The Taliban is trying to convey the message that they know about human rights, especially women's rights.

"But in reality their treatment of Afghan women is different to their support and respect for this New Zealand woman."

Ms Noorai said pregnant Afghan women had been killed by the Taliban for not being married.

Witnesses claim pregnant former Afghan policewoman Banu Negar was shot dead by Taliban militants in September, but the regime has denied the incident.

"This is a double standard where they treat a white, Western woman in a way to show the world that they are behaving like a civilised government," Pittsburgh University Afghan researcher Dr Omar Sadr said.

"But with respect to the people of Afghanistan and the women of Afghanistan, the Taliban behave totally differently.

Afghan women protested in December over Taliban restrictions on them

.(Reuters: Ali Khara)

"At the moment, Afghan women are degraded as second-class citizens, deprived of fundamental human rights where their protesting is brutally suppressed.

"They are killed, tortured, and in some cases even raped."
Many women live in fear under Taliban rule

It has been almost six months since the militant group took over Afghanistan, and its treatment of women has become a central point of concern for the international community.

Women say they live in fear, while others have been killed after protesting against the country's new rulers.

Afghan activist Rahimi, whose last name has been withheld for security reasons, said she had gone into hiding with her sisters because she was worried she would be arrested and tortured by the Taliban for attending protests over human rights.

Rahimi says she is afraid of the Taliban's violence.(Supplied)

"I no longer have a job so I'm in a bad economic situation, I attended many demonstrations for achieving our rights and my life is in danger by the Taliban," she said.

"We're afraid of their violence, their rape, their killing and murder, so we're scared in our house.


"I have a request for the international community — don't ignore the actions of the Taliban because of this case of this New Zealand journalist."

Taliban negotiators travelled to Oslo, Norway last week, the regime's first official overseas delegation since returning to power in August.

US and European diplomats reportedly offered humanitarian aid in exchange for an improvement in human rights.

The Taliban is calling for almost $10 billion in assets frozen by the US and other Western countries to be released, as more than half of Afghans are now facing extreme levels of hunger.

The severity of the nation's current food crisis is something not seen in over 20 years.(Reuters: Ali Khara)

"It is fundamental that we hold the Taliban accountable by their policies and actions on the ground rather than what they do in exceptional cases like Charlotte's," Dr Sadr said.

But women like Ms Noorai have urged the international community to stand firm until all women in Afghanistan, not just foreigners, are given basic rights.

"Our message is to not recognise the Taliban until they really change themselves and treat us properly."

Millions in UK face fuel poverty despite Sunak support, say experts


Chancellor’s intervention unlikely to offset impact of rising energy bills on low-income households

Richard Partington and Patrick Butler
Thu 3 Feb 2022 18.20 GMT

Millions of UK households are expected to be dragged into fuel poverty for the first time despite the support announced by Rishi Sunak to soften the blow from soaring energy bills.

Several charities warned that the chancellor his plan was badly targeted and offered too little support for those most in need. The scale of the shock to low-income households would drive hunger, rent arrears, and ill health, and pile extra demand on to already stretched food banks and homeless shelters, they said.


How the UK energy price cap is calculated – and how it affects your bill

Read more

The Resolution Foundation thinktank said cases of fuel stress – where energy bills in a household exceed 10% of disposable income – would double to 5 million in April despite the steps announced by Sunak on Thursday.

The Treasury’s intervention was designed to ease the pressure of a £700 increase in the regulated energy price cap to nearly £2,000 a year.

Without the chancellor’s plan – which offers most consumers £350 of relief on their bills – fuel stress would have trebled to more than 6 million, the thintank said. However, it criticised Sunak’s decision to favour a moderate amount of help for a large number of people, rather than deeper support for those most in need.

“The government’s package of measures might cushion the blow for some but it’s not enough to protect people who already need a food bank,” said Garry Lemon, the policy director at the Trussell Trust food bank network. He called for the planned 3.1% rise in benefits from April to be doubled to 7%.

Almost all families in the poorest tenth of households in Britain face spending more than 10% of their disposable income on heating and electricity bills, according to the IPPR thinktankMeanwhile, it estimates 44% of those in Britain with the highest household incomes – the top 10% – would in effect get a tax cut from Sunak’s measures.

Dame Clare Moriarty, the chief executive of Citizens Advice, said: “Even before these price hikes kick in, we’re seeing record numbers of people needing crisis support like food vouchers … If the government is serious about helping families facing the desperate choice between heating and eating it should use the benefits system.”

Pressure on incomes will build over the coming months after the Bank of England increased interest rates from 0.25% to 0.5%, in a development designed to tackle soaring inflationary pressures but that will probably drive up household costs in the short-term.

The Bank’s economists are forecasting inflation will peak at 7.25% in April, up from 5.4% at present. Along with the rising cost of a weekly shop, British households will also face higher borrowing costs on mortgages and credit cards. The government also plans an increase in national insurance contributions in April – the same month as the energy price rise.

Tony Syme, a macroeconomics expert at the University of Salford Business School, said: “The increase in interest rates will have minimal effect on inflation and will only exacerbate the cost of living crisis. Higher housing costs will be passed on to homeowners through increased mortgage rates and on to renters as landlords pass on their increased costs of borrowing.”

“These energy crisis measures are woefully inadequate and will leave those on the lowest incomes and in the least efficient homes in deep peril,” said Adam Scorer, the chief executive of charity National Energy Action. “We needed deep, targeted support for the most vulnerable. We have shallow, broad measures for all. That simply does not work.”

Although the chancellor announced a £150m hardship grant for English councils to help struggling families, critics said the dismantling of the local welfare system over the past decade meant many authorities lacked the resources and expertise to deliver meaningful crisis support.

“Budget cuts mean 32 English councils have closed their crisis schemes leaving 13 million people in England without this support. These local authorities no longer have the infrastructure or processes in place to direct additional government funding to those most in need of help,” said Claire Donovan, of End Furniture Poverty.

Bank of England warns families face biggest fall in living standards in 30 years

Millions of people face an eye-watering £700 hike in their energy bills, as Chancellor Rishi Sunak announced support for households. Picture: Alamy

By Sophie Barnett@sophhbarnett

3 February 2022

The Bank of England has warned families will face the biggest fall in living standards in the last three decades as energy costs spiral, interest rates soar and the cost of living stretches even further.

On Thursday, energy regulator Ofgem confirmed the energy price cap will rise by £693 per year to £1,971, with millions of people facing an eye-watering £700 hike in their energy bills come April.

Ofgem said the 54 per cent increase was forced by a record increase in global gas prices, and it is expected to affect 22 million customers when it comes into effect.

Following the cap hike, the Bank of England has announced another increase in interest rates from 0.25% to 0.5%.

It also said it expects Consumer Price Index (CPI) inflation, which rose to a near 30-year high of 5.4% in December, to move close to 6% in February and March.

It then expects this to peak at 7.25% in April, following increases to energy prices, before decreasing.

It has warned that families are about to suffer the biggest fall in living standards since comparable records began three decades ago.

Read more: Energy bills soar by £693 and interest rates double as support branded 'sticking plaster'

Single mum Lowri Williams only has £41 to her name once all her bills are paid out each month

New forecasts by The Bank of England show that disposable incomes will shrink by 2% this year, and by another 0.5% in 2023.

That would be the biggest annual reduction in spending power since at least 1990.

Read more: Millions pushed into poverty in energy crisis, warns plumber who helps families for free

With many expected to be plunged into fuel poverty as a result of the rise in energy bills, Chancellor Rishi Sunak has announced support for households of up to £350 to "take the sting out" of the hike.

The support offered will be split into three categories - £200 discounts on bills, a £150 council tax rebate for those with properties in bands A-D, and giving local authorities a discretionary fund of £150 million to "help those lower income households" who may live in higher council tax properties, or who are exempt altogether.

Bank governor Andrew Bailey said the Chancellor's support measures would help take some of the pressure off households.

In response to concerns that the back-to-rate rises come at the worst time for households, he said: "If we don't take this action, it would be even worse.

"I know it's a hard message."

£200 discount will be automatically applied to electric bills

Despite acknowledging the cost-of-living crunch, Boris Johnson insisted the rise in National Insurance had to go ahead in April to address the "colossal" NHS backlog.

"We have got to put in the money to fix it - nine million more scans, 50,000 more nurses, building the hospital capacity that we need - it's the number one priority of the British people and we've got to fund it," he said.

The tax rise was "not what anybody wants to do, it's not what Rishi (Sunak) wants to do, it's not what I want to do, but we have got to do it".

Rachel Reeves MP, Labour's Shadow Chancellor of the Exchequer, said the Government's proposals will be "of little comfort to many".

Read more: Energy price cap rise: Sunak to hold press conference as energy bills rocket - LIVE

The government will give people a £150 council tax rebate this April

"The Chancellor wants to load costs on taxpayers with a buy now, pay later scheme – while Labour will keep bills low with a windfall tax on North Sea oil and gas producers with booming profits," Ms Reeves said.

“In the midst of a cost of living crisis, the Government’s proposals will leave families in Britain paying hundreds of pounds more as a result of the breathtaking rise in energy prices. It will be of little comfort to many.

“Labour would raise money to keep bills low through a one-off windfall tax on oil and gas profits, to support all households, with households typically getting £200 off their bills.

“Labour’s plan will get £600 to the lowest income households while the Conservatives will only give them £350.

“The Conservatives don’t have an answer to the cost of living crisis because they are the cost of living crisis.”

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Energy price cap jump will drive inflation beyond 7% as cost of living crisis deepens - and experts question whether BofE intervention can help

The Bank of England now believes CPI could hit 7.25% by April 

• Energy costs have been a key driver of inflation and rate cap hike deepens issue
• Inflation is not expected to return to the 2% target until Q1 2024

By MIKE SHEEN FOR THIS IS MONEY 

PUBLISHED: 08:25 EST, 3 February 2022 

 

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Thursday's greater-than-expected rise in the domestic energy price cap will push consumer price inflation even higher than the Bank of England had initially forecast, deepening the cost of living crisis gripping households across Britain.

A record price cap rise of 54 per cent to £1,971 on a typical default tariff in April, announced by Ofgem, will drive the inflation rate to 7.25 per cent during the same month, the BoE warns, and will not return to its 2 per cent target until the first quarter of 2024.

Inflation is already at a 30-year high of 5.7 per cent and the scale of price rises now forecast by the central bank has not been seen since 1991 when the rate hit 7.5 per cent.

It leaves experts doubting how the Government's latest intervention, or even BoE interest rate hikes, could halt the current pace of price rises.

Energy costs have had a significant impact on the forecast rate of inflation 

Soaring energy prices have been a key driver of inflation in recent months. 

Office for National Statistics data shows that housing and household services contributed the most of any economic segment to December inflation growth, as a result of rising gas and electricity costs.

The situation could worsen still, as analysts at Cornwall Insight forecast the potential for the default rate to hit £2,300 by October 2022.

Laura Suter, head of personal finance at AJ Bell, said the BoE is 'firmly pointing the finger at energy costs for [the] spike in inflation' but there are concerns that it's latest rate hike will do little to solve the dilemma.

She added: 'Once again commentators will be pondering the impact that interest rate rises will have on limiting inflation, when the biggest contributor is wholesale energy prices – which couldn't give a hoot about the UK's base rate.'

Senior personal finance Analyst at Hargreaves Lansdown Sarah Coles said that while the government's £200 discount and council tax rebate, announced by the Chancellor, 'will take some of the pain out of the rise', consumers are still going to be paying hundreds of pounds more for energy.'

She added: 'When this feeds into inflation figures in April it's going to send it even higher, and it's likely to peak between 6 per cent and 7 per cent. It means the horrible hikes in the cost of living are far from over.'

The wholesale prices that suppliers typically face when buying gas or electricity to supply their customers - the cost of suppliers purchasing wholesale energy is the largest component of a customer's bill and can account for up to 40% of it

The BoE is now forecasting inflation to fall back to 5.2 per cent in the first three months of 2023, before falling to 2.1 per cent an 1.6 per cent in the first quarter of 2024 and 2025 respectively.

Head of investment at interactive investor Victoria Scholar said: '[Energy] is contributing to the cost of living crisis at a time when inflation is affecting the price of products across the board, squeezing households and businesses by eroding purchasing power and driving up costs.

'After the energy price cap rose in October, consumer prices for gas rose by 17.1 per cent with 12-month gas inflation above 28 per cent, the highest level since early 2009.

'With UK gas prices skyrocketing to around seven times the price a year ago, this looks set to be a critical inflationary pressure as price levels look set to surpass 6 per cent this year before coming back down towards the end of the year.

'As a result, the Bank of England is on the right track, by leading the global pack of central banks in terms of its tightening path with around three rate hikes pencilled in for 2022 taking the base rate to around 1 per cent.

'Whether that monetary tightening will be enough to offset rising energy pressures and spiralling inflation is yet to be seen.'

UN experts urge US to stop tribe evicting members

By AFP

PUBLISHED: 3 February 2022 |

Nooksack territory extends around Mount Baker in Washingon state

UN human rights experts on Thursday urged the United States to step in and prevent a Native American tribe from evicting dozens of members from its tribal land.

The special rapporteurs want the US government to prevent the Nooksack Tribal Council from forcing 63 people, who identify as members of the community, from houses on land in northwest Washington state.

The case illustrates the complex relationship between the United States and the hundreds of indigenous tribal nations within its borders.

"We are... concerned that the forced evictions will deny them the possibility of enjoying their own culture and of using their own language in community with others," said a statement signed by Balakrishnan Rajagopal and Francisco Cali Tzay.

The pair said the families´ homes were constructed by the tribe on land owned by the US Government, using federal funds.

"Many are elderly, women and children -- some with disabilities and chronic diseases -- and have lived in their homes for over a decade.

"The imminent evictions will significantly impact the health of some of the vulnerable during the Covid-19 pandemic."

The Seattle Times reported that the Nooksack government has been trying to expel around 300 of its 2,000 members for several years.

The paper said tribal council chairman Ross Cline Sr. has previously said the "Nooksack 306" were erroneously registered as members of the tribe in the 1980s, but cannot prove their lineage.

The evictions are therefore simply a matter of the tribe simply enforcing its rules, he has said.

Gabriel Galanda, a lawyer for the 21 families threatened with eviction, told AFP the disenrollment and subsequent eviction attempts are misguided.

"They claim that an ancestor did not appear on the 1942 federal census document and therefore, they do not belong to this tribe," he said.

"Whereas all historical, genealogical, anthropological, and indigenous history and information says otherwise."

Galanda said tribal courts have ruled the disenrollment is illegitimate, but the tribal council has disregarded the rulings.

"They have now shut down that tribal court so that my clients... cannot go there to get any relief. That's why we went to the United Nations."

Galanda said he hoped President Joe Biden's federal government would bring pressure to bear on the tribe, even if it cannot technically overrule the tribal government.

"They can sue the tribe to compel it... They can withhold federal monies, much like the United Nations might withhold economic support... So they have legal and diplomatic means to stop the evictions."

The relationship between the United States and the tribal nations that live within its borders is complicated, and fraught by history.

Generally they are recognized as "dependent domestic nations," and have their own police and judicial systems that have jurisdiction over members of the tribe on tribal lands.