Britain hails economic revival as France and Germany stumble
In This Article:
Britain’s dominant services sector expanded at its fastest pace in eight months as France and Germany’s companies slumped, according to closely-watched surveys.
The S&P Global UK Services purchasing managers’ index (PMI) - a key monthly barometer of the sector’s performance - rose to 54.3 in January, up from 53.4 in December.
It was above the 50 mark separating growth from contraction for the third consecutive month.
Tim Moore, economics director at S&P Global, said: “The revival in UK service sector performance gained momentum at the start of 2024, with output growth accelerating to its fastest for eight months amid stronger business and consumer spending.”
However, it was a different story in Europe. France’s services businesses are in their longest downturn for more than a decade, with its PMI showing a decline for the eighth consecutive month.
Germany’s services sector PMI worsened to a five-month low.
Norman Liebke, economist at Hamburg at Hamburg Commercial Bank, said “the best we can say for the first quarter is that we expect a stagnation of the French economy” while his colleague Dr Cyrus de la Rubia said Germany’s sector was “firmly entrenched in inflationary territory”.
Read the latest updates below.
06:17 PM GMT
Signing off
Thanks for joining us today. Chris Price will be back in the morning with all the latest as markets open in London. But, in the meantime, I’ll leave you with three of our latest business stories, along with a pic from a major agricultural market that took place today in Sterling:
05:58 PM GMT
Russia's answer to Google is sold - with a 50pc discount
A Dutch company that owns Russia’s equivalent of Google is selling up at a steep discount to a consortium that includes its Russian management team.
Yandex, which has more than 65pc of the search engine market in Russia, is selling its Russian business but is keeping its artificial intelligence businesses, which are based outside of the country.
The price, Rub475bn (￡4.2bn), reflects a 50pc discount that the Russian government imposes on companies from “unfriendly” countries as a condition of selling business in Russia, according to a statement from Nasdaq-listed Yandex on Monday.
John Boynton, chairman of Yandex, said: “We believe that we have found the best possible solution for our shareholders, our teams and our users in these extraordinary circumstances.”
04:58 PM GMT
Footsie closes down
The FTSE 100 fell 0.04pc today. The biggest riser was Ocado, up 3.56pc, while GSK followed not far behind, closing up 3.19pc. The biggest faller was JD Sports, down 5.27pc, followed by telecoms firm Airtel Africa, down 4.40pc.
Meanwhile, the FTSE 250 dropped 0.80pc. The biggest riser was Helios Towers, which runs telecoms infrastructure in Africa and the Middle East. It added 4.41pc. Auction Technology added 3.84pc. The biggest faller was Harbour Energy, down 4.55pc, followed by Ithaca Energy, down 4.42pc.
04:48 PM GMT
Planning rules costing ￡138.5bn in growth, say economists
Planning rules that prevent existing cities from becoming more dense could be costing ￡138.5bn a year in lost economic growth, a report from the Adam Smith Institute has claimed.
The research, which has been endorsed by the former housing minister Sir Brandon Lewis, argues for regulations to be liberalised on the height, width, space and density of current buildings, allowing them to go up to 8 floors tall.
“By increasing the number of homes in this way, and reducing their price, the UK could seriously boost its economic growth, as more workers are able to afford to live in our most productive cities, and we have more money to spend on everyday goods and services,” the institute said.
Maxwell Marlow, director of research at the think tank, added:
These figures are a stark reminder of just how damaging our excessively restrictive planning system has been for the UK’s growth prospects.
04:38 PM GMT
'Mixed messages' about cars causing headaches for German manufacturers
German exports fell sharply in December on weaker demand from eurozone countries. Susannah Streeter, head of money and markets at brokers Hargreaves Lansdown, explains what’s going on:
As interest rates have been ramped up across Europe in response to rampant inflation, demand for goods from Germany’s key industries has faltered significantly, with exports to the EU falling 5.5pc. China’s fragility amid its property woes and a drop in confidence has also been hindering Germany’s manufacturers, with German exports to the region dropping 7.9pc.
04:22 PM GMT
Carney raises $10bn to back net zero projects
Mark Carney has raised $10bn for an eco-friendly investment fund, as the former Bank of England governor seeks to boost funding for net zero projects. Tim Wallace reports:
His new fund has already bought a renewable energy company which runs on-shore wind farms in Scotland and the north of England, and is building solar projects across the country.
04:17 PM GMT
Dollar jumps to highest level in nearly three months
The dollar climbed to its highest in almost three months against other major currencies on Monday as traders clawed back bets the US Federal Reserve would aggressively cut interest rates this year after new economic data further diminished those odds.
US services sector growth picked up in January as new orders increased and employment rebounded, suggesting economic growth momentum from the fourth quarter spilled over into the new year.
The data added to Friday’s blockbuster US jobs report that far exceeded expectations and forced the market to readjust its outlook for rate cuts, the dollar’s strength and how high Treasury yields, which act to bolster the US currency, can go.
The dollar index, which tracks the greenback against six other major currencies, rose to 104.59, its highest since Nov. 14, and was last up 0.53pc at 104.58.
The two-year Treasury yield was last up 10 basis points at 4.478pc, after jumping 18 basis points on Friday.
The euro fell to its lowest since Nov 14 at $1.0721 and was last down 0.60pc at $1.0727.
Jane Foley, head of foreign exchange strategy at Rabobank, said a weak euro zone economy was also likely weighing on the euro:
We have stagnation in Germany. I think we’re going into a period when it’s going to be really hard for the euro to make significant gains.
04:04 PM GMT
Anglo American to cut costs in South Africa
The world’s largest producer of platinum is reviewing its cost base in South Africa, its chief executive has said, as the country’s Minerals Council warns that 4,000 and 7,000 jobs across platinum mining companies are at risk.
Duncan Wanblad, the Anglo American boss, told a conference in Cape Town that declining ore grades and sharply increased input costs meant that margins could “evaporate quickly”. He added:
What matters is the industry’s and government’s ability to navigate these challenges to ensure that the industry does survive and prosper - yes with smaller direct workforces, and this is a reality that the industry is contending with right now.
Anglo American as a whole aims to cut capital expenditure by $1.8 billion by 2026, after reporting lower profits and returns for the first half of the financial year.
03:55 PM GMT
Investors punishing companies more than usual for missing analysts’ estimates
Companies that have been missing analysts’ estimates for earnings during this quarter’s reporting season have been seeing their stocks get punished even more than usual, according to analaysts at Bank of America.
Rroughly half the companies in the S&P 500 having reported their latest quarterly results, including most of the market’s most influential. Estee Lauder jumped 14pc after it reported better revenue and profit than analysts expected. McDonald’s, meanwhile, fell 3.6pc despite reporting stronger profit than expected. Its revenue for the latest quarter fell just short of forecasts.
Adam Vettese, an analyst at investment platform eToro, said:
Not only did revenue come up slightly short of expectations, but there’s an underperformance in same-store sales growth. A year ago we had growth of 10.9pc, but expectations for this most recent quarter were for a much more modest 4.7pc – unfortunately, McDonald’s missed even that low bar, delivering just 3.4pc, with stores in the Middle East dragging on the global figure.
03:47 PM GMT
The Kremlin has a ￡200m London buy-to-let property empire
Homes owned by the Russian state risk being seized in wake of unprecedented legal battle. Mark Hollingsworth has the details:
At first glance, the imposing ￡35m Victorian Grade-II-listed mansion on Holland Park in the heart of affluent west London does not stand out. But in fact the three storey, six bedroom white stucco house has a secret history. For the past 60 years, it has been a London residency for Russian intelligence officers and diplomats.
03:42 PM GMT
Stock markets down after Fed warns of 'danger of moving too soon'
Stock market indexes have mostly fallen around the world today after comments by US Federal Reserve chairman Jerome Powell shattered any remaining hopes for a March interest rate reduction.
The drops on Wall Street and continental Europe - as well as here in Britain - follow American indexes receiving an upward boost last week after strong earnings reports from Facebook-owner Meta and Amazon.
“There has been a little giveback for the broader market this morning, as market participants deliberate over stretched valuations, rising rates, and budding scepticism about the market rally continuing largely unabated,” said market analyst Patrick O’Hare at Briefing.com.
But he noted that the dip “hardly suggests there is a rush to sell stocks”, with investors rather “waiting on a more precise temperature reading in today’s price action.”
In an interview broadcast yesterday, Jerome Powell said the bank wants to see more data before beginning to cut interest rates.
The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading”, he told the CBS news programme 60 Minutes.
“The prudent thing to do is to... just give it some time and see that the data continue to confirm that inflation is moving down to two percent in a sustainable way,” he added.
03:33 PM GMT
Handing over
I’ll take my leave at this point and Alex Singleton will make sure the most important updates will be posted here into the evening.
I’ve just got time to show you this mountain of clothes in front of the Brandenburg gate, where Greenpeace is highlighting the pollution of the environment caused by fast fashion clothes during Berlin Fashion Week.
03:13 PM GMT
US services sector grows for 13th consecutive month
The services sector in the US continues to grow at a steady pace in a further sign interest rate cuts are likely to be further away.
The Institute for Supply Management (ISM) Services PMI reached 53.4pc in January - meaning the sector has grown in 43 of the last 44 months. The lone exception came in December 2022.
Anthony Nieves, chair of the ISM survey committee, said:
The overall growth rate increase in January is attributable to faster growth of the new orders, employment, and supplier deliveries indexes.
Here is some of the analyst reaction:
02:58 PM GMT
Estée Lauder to cull up to 3,000 jobs in giant restructure
Estée Lauder has said it will cut as many as 3,000 jobs as part of a huge restructuring plan.
The beauty giant’s shares jumped as much as 19pc, the most since November 2011, in New York trading.
The owner of the Ordinary and Clinique brands has a global staff of around 62,000 and said Monday that it is axing 3pc to 50pc of those jobs.
The changes will lead to restructuring charges of between $500m and $700m (￡398m to ￡558m).
However, it said the restructure would deliver operating profit of $1.1bn to $1.4bn, up from previous guidance of $800m to $1bn.
02:53 PM GMT
Snapchat owner to cut more than 500 staff
The owner of Snapchat said it would lay off about 10pc of its employees as the wave of job cuts across the US tech sector continues.
Snap said the reduction, equivalent to about 500 staff, would cost it between $55m to $75m (￡43m to ￡60m) in severance related payments.
Most of the cuts will take place in the first quarter of the year, the company said.
Snap said the reduction in its headcount aimed to “best position our business to executive on our highest priorities”.
Tech companies have been battling a reduction in advertising revenues and realigning their businesses to adopt AI.
It comes as Google announced last month that it is cutting hundreds of jobs, while games developer Unity has also announced plans to reduce 25pc of staff, a move that hits 1,800 employees.
02:36 PM GMT
Wall Street slumps as Fed pushes back against early rate cuts
US stock markets have begun the week on the backfoot after Fed chairman Jerome Powell poured cold water on hopes of interest rate cuts in March.
The Dow Jones Industrial Average was down 0.4pc after the open to 38,506.44, while the S&P 500 had fallen 0.2pc to 4,947.93.
The tech-heavy Nasdaq Composite was down 0.1pc to 15,619.71.
02:31 PM GMT
Trains poorer than 10 years ago, says Burnham
Train services in the North have got poorer in the 10 years since the Northern Powerhouse was promised, Greater Manchester mayor Andy Burnham said as he joined other leaders to call for a different approach to transport.
Speaking at the Transport for the North annual conference in Liverpool, Mr Burnham said to transform the rail network they needed to do “something different to what we did in the last decade”.
He said:
It’s 10 years this year since George Osborne came to Manchester and promised a Northern Powerhouse. That was going to mean HS2, HS3, as it was then called, now Northern Powerhouse Rail, better everyday services on the existing network.
In October last year, Prime Minister Rishi Sunak cancelled the plan to extend HS2 between the West Midlands and Manchester amid spiralling costs.
Last week, Mr Burnham and his West Midlands counterpart Andy Street met Transport Secretary Mark Harper to discuss privately funded alternatives to a scrapped section of HS2 between Birmingham and Manchester.
02:13 PM GMT
Bond woes deepen
Bonds have continued their slumped, with the yield on the benchmark 10-year UK gilt rising 10 basis points at one point to 4.02pc.
The 10-year US Treasuries also rose 10 basis points to 4.12pc. Yields move inversely to prices.
Markets are reducing bets on interest rate cuts by the US Federal Reserve in March, with the first cut not expected until May.
02:00 PM GMT
Pound slump deepens as markets slash bets on rate cuts
The pound has fallen even further against the dollar as worries grow about the possibility that the Federal Reserve might not start cutting interest until later in the year.
In an interview recorded for the CBS news program “60 Minutes” broadcast, Federal Reserve chairman Jerome Powell said that the central bank remains on track to cut interest rates three times this year, but probably not beginning until May.
Powell’s comments largely echoed remarks he gave at a news conference Wednesday, after the Fed decided to keep its key interest rate steady at about 5.25pc to 5.5pc, a 23-year high.
The pound was last down 0.6pc to $1.25.
01:54 PM GMT
Savers warned to act quickly on rates after biggest monthly fall in a decade
Savers have been warned to act quickly after the average deal on fixed-rate accounts experienced its largest month-on-month fall in a decade.
Our money reporter Madeleine Ross has the latest:
January saw the largest drop in average fixed savings rates in more than 10 years, as the Bank of England edges closer towards a rate cut.
Read how the trend is also evident for longer-term bonds.
01:40 PM GMT
Former Clifford Chance lawyer cleared of insider trading
A former lawyer at Clifford Chance has been cleared of insider dealing over allegations he used confidential information to buy shares in listed companies.
Suhail Zina was standing trial alongside his brother Mohammed Zina, a former Goldman Sachs analyst, accused of using confidential information to make more than ￡140,000 from shares in six companies, including Arm Holdings and Punch Taverns.
The pair were each charged with six counts of insider dealing and three counts of fraud relating to loans obtained from Tesco Bank, which prosecutors said were used to buy the shares but which they said were to be for home improvements.
Suhail Zina had pleaded not guilty and was acquitted of all nine counts at London’s Southwark Crown Court on Friday, the Financial Conduct Authority (FCA), which brought the prosecution, said.
The trial of Mohammed Zina, who was employed by Goldman Sachs International in its conflicts resolution group in London, continues.
An FCA spokesman said:
We can confirm that the case against Suhail Zina on all counts is not proceeding.
01:16 PM GMT
McDonald's sales hit by Israel-Hamas war
McDonald’s endured a bumpy end to the year as the fast-food giant lost sales in many markets due to the Israel-Hamas war.
Global same-store sales – or sales at restaurants open at least a year – rose 3.4pc in the three months to December, well below the 4.7pc increase that Wall Street was expecting.
Customers in the Middle East were angered after McDonald’s Israel – which is operated by a local franchisee -- announced in October it was providing free meals to Israeli soldiers.
In response, some franchisees, like McDonald’s Oman, announced donations to relief efforts in Gaza.
Last month, McDonald’s president and chief executive Chris Kempczinski warned that “misinformation” in the Middle East and elsewhere was hurting sales. In addition to customer boycotts, McDonald’s has had to temporarily limit store hours or close some locations due to protests.
It was an unexpected end to an otherwise strong year for the burger giant, which said global sale-store sales rose 9pc in 2023.
Shares of McDonald’s slipped 1pc in premarket trading.
01:01 PM GMT
French bank Societe Generale to axe nearly 1,000 jobs
French banking group Societe Generale has announced plans to slash 947 jobs at its head office as part of a cost-cutting programme.
The group’s new chief executive Slawomir Krupa presented in September a strategic roadmap that included reducing costs by €1.7bn (￡1.5bn) by 2026 compared to 2022.
Societe Generale said Monday that 5pc of its head office staff would be cut as part of organisational changes “to simplify its operations and structurally improve its operational efficiency”.
The job reductions will be carried out “through internal transfers, end-of-year support or voluntary departures”, the bank added.
12:52 PM GMT
Wall Street on track for tepid start to the week
US stock indexes dipped in premarket trading as investors turned cautious on the timing of interest rate cuts while awaiting more quarterly reports from corporate America.
In a gloomy start to the week, two-year Treasury yields jumped to a one-month high at 4.4pc after Federal Reserve chairman Jerome Powell said in an interview that he wanted to wait to be a little more confident that inflation was sustainably falling before moving interest rates lower.
Traders now expect a 64pc chance that at least a 25 basis point rate cut could be delivered in May and a near 100pc chance in June, as per the CME FedWatch Tool.
Investors also took a breather from a recent bull-market run on Wall Street that saw the benchmark S&P 500 index and the blue-chips Dow Jones Industrial Average end at record high levels on Friday, boosted by solid results from Meta and Amazon.
Results are now in from nearly half of the S&P 500 firms and fourth-quarter earnings estimate is improving sharply, with about 80pc of the reports so far beating analysts’ expectations, according to LSEG data on Friday.
In premarket trading, the Dow Jones Industrial Average and S&P 500 were down 0.1pc, while the Nasdaq 100 was flat.
12:36 PM GMT
Revolution Beauty founder to pay ￡2.9m after accounting scandal
Revolution Beauty’s co-founder has agreed to pay ￡2.9m to settle claims over his involvement in an accounting scandal which forced its shares to be suspended for 10 months.
Our retail editor Hannah Boland has the latest:
Adam Minto, the former chief executive of Revolution Beauty, will pay ￡483,333 every year for the next six years as part of the settlement.
12:02 PM GMT
Naked Wines hires new boss after staff layoffs
Naked Wines has appointed a new boss after its former chief executive left the troubled alcohol seller.
Weeks after the company revealed it was cutting jobs, it has chosen Rodrigo Maza, who has been its UK managing director since September, to fill the top position after Nick Devlin stepped down with immediate effect in November.
His departure came on the same day the business warned on profits, saying that earnings would be up to one sixth of its previous forecast.
Founder and chairman Rowan Gormley, who has been running the business since then, blamed the poor outcomes on Mr Devlin “splitting his time across both the role of CEO and US president”.
The company said that while its UK and Australia businesses had been meeting expectations, its US arm was falling behind.
In January the business announced that it would cut around 50 jobs as part of a plan to cut costs by ￡7m.
Mr Maza said: “The value that Naked delivers to its customers and winemakers is clear and provides a solid foundation to build on.”
Naked Wine shares have risen 1pc today.
11:36 AM GMT
Oil slumps as hopes of early US interest rate cut fade
Oil prices have fallen after the Chairman of the Federal Reserve dashed hopes of interest rate cuts in March.
Brent crude fell 0.6pc below $77 a barrel as Jerome Powell’s comments pushed the value of the dollar to its strongest level against the pound in nearly two months.
Mr Powell told CBS that regarding interest rates, the “danger of moving too soon is that the job’s not quite done”.
A stronger dollar makes commodities priced in the currency less appealing.
US-produced West Texas Intermediate was down 0.7pc below $72 a barrel.
11:18 AM GMT
National security investigation launched into ￡15bn merger of Vodafone and Three
Vodafone has said it is cooperating with a national security review into its planned ￡15bn merger with Chinese-owned rival Three.
Our media reporter James Warrington has the details:
The telecoms giant last year agreed to merge with Three in a deal that will create the UK’s largest mobile network with more than 27m customers.
Read on for more on other regulatory investigations faced by Vodafone and its latest results.
11:03 AM GMT
Pound slumps as Fed douses hopes of March rate cuts
The pound dropped to its lowest level against the dollar in one and a half months after the Chairman of the US Federal Reserve pushed back against hopes of interest rate cuts in March.
Sterling fell as much as 0.4pc to $1.25 after Jerome Powell told CBS’s 60 Minutes on Sunday that the “danger of moving too soon is that the job’s not quite done”.
The chance of a quarter-point cut in March fell to almost 10pc after Mr Powell’s comments. Just four weeks ago, a move by then was considered a near certainty by investors.
Bonds have slumped as a result, with the yield on the benchmark 10-year UK gilt rising four basis points to 3.96pc, while 10-year US Treasuries rose six basis points to 4.08pc. Yields move inversely to prices.
10:47 AM GMT
Gas prices falls despite impending cold snap
Wholesale gas prices remain subdued despite incoming colder weather and the tensions in the Middle East.
Europe’s benchmark contract has fallen 2.2pc - having earlier risen as much as 4.8pc - as the Continent remains well stocked after a mild winter.
Even a series of unexpected cuts to supplies from Norway over the weekend has failed to drive prices higher.
The UK equivalent contract has fallen 1.8pc.
10:28 AM GMT
Deepfake video call tricks finance worker out of ￡20m
A finance worker was tricked into paying ￡20m to scammers by a “deepfake” video call featuring AI copies of his co-workers, police in Hong Kong have said.
Our technology editor James Titcomb has the details:
The employee transferred the money to the criminals after they used artificial intelligence software to imitate the worker’s superiors, including his UK-based chief financial officer.
Read on for more after Hong Kong police made the case public.
10:17 AM GMT
UK inflation to be worst in G7, warns OECD
Britain will experience the highest inflation of the world’s G7 advanced economies this year despite the cost of living rising at a far slower pace, according to new forecasts.
The Organisation for Economic Co-operation and Development (OECD) revised down its predictions for headline UK inflation to average at 2.8pc in 2024 and 2.4pc in 2025, from the 2.9pc and 2.5pc forecast respectively in November.
It added in its latest outlook that inflation is projected to be back to target across most G20 countries by the end of next year.
But the UK predictions would still see the UK suffer the highest level of inflation of all the G7 countries, above Canada at 2.6pc, France at 2.7pc, Germany at 2.6pc, Italy at 1.8pc, Japan at 2.6pc and the United States at 2.2pc.
The OECD also warned over the risk to inflation globally from geopolitical tensions, “particularly if the conflict in the Middle East were to disrupt energy markets”.
It downgraded its UK growth forecast for 2023 to 0.3pc from 0.5pc previously predicted in November, but held firm on its forecasts for gross domestic product (GDP) to expand by 0.7pc in 2024 and 1.2pc in 2025.
10:08 AM GMT
US deal to provide 5pc of UK gas demand
A US gas producer has agreed a 16-year deal to supply the equivalent of up to 5pc of Britain’s average demand for the fuel.
Venture Global has signed a long-term deal beginning in 2029 to send three million tonnes of liquified natural gas (LNG) every year to the Isle of Grain facility in Kent.
The deal, which is Venture’s first investment in infrastructure outside the US, secures the future of the UK site, which is Europe’s largest LNG import terminal, into the mid 2040s.
It comes as Europe’s market for gas realigns after the energy shock triggered by Russia’s invasion of Ukraine in 2022.
Grain LNG will soon have enough capacity to service about a third of the UK’s gas demand - and serve as a “gateway to the broader European market”, according to Venture chief executive Mike Sabel.
Katie Jackson, president of National Grid Ventures, said:
LNG imports play a critical role in making sure the whole of the UK has the gas it needs, when it needs it, providing a flexible and reliable supply of gas to heat peoples’ homes.
09:45 AM GMT
Services sector grows amid stronger consumer spending
Britain’s services sector grew at its fastest pace in eight months as consumers became more confident amid hopes of interest rate cuts, a closely-watched survey showed.
The S&P Global UK Services purchasing managers’ index (PMI) rose to 54.3 in January, up from 53.4 in December and above the 50 mark separating growth from contraction for the third consecutive month.
Tim Moore, economics director at S&P Global, said:
The revival in UK service sector performance gained momentum at the start of 2024, with output growth accelerating to its fastest for eight months amid stronger business and consumer spending.
09:31 AM GMT
CBI settles legal case with former director-general
The Confederation of British Industry (CBI) said it has settled a legal case brought by its former director-general, Tony Danker, after he was dismissed last year following complaints about his behaviour.
Mr Danker was sacked as a scandal erupted at the business lobbying group following an investigation into his conduct towards staff.
He was dismissed as entirely separate allegations emerged - not involving Mr Danker - that a woman was raped at a staff party.
More than a dozen allegations against male bosses at the CBI were made, including instances of attempted sexual assault, the sending of explicit images to junior female staff, inappropriate touching, sexualised remarks, the propositioning of female colleagues while drunk and widespread cocaine use.
The CBI said:
The CBI has today settled legal action brought against the organisation by Tony Danker after his dismissal in April 2023.
09:12 AM GMT
Millionth battery car hits the road in Britain
Britain’s one millionth battery electric vehicle hit the road last month as manufacturers deliver increasing numbers of zero-emissions models.
Some 20,935 EVs were registered during January, an increase of 21pc on the previous year and taking the total since 2002 to 1,001,677.
It comes as he new car market grew 8.2pc for the month, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
The first month of the year saw 142,876 new cars registered, an uplift of 10,882 units on the previous January and the best performance for the month since 2020. It was the 18th consecutive month of growth.
09:04 AM GMT
Corporate insolvencies slipped last week
The latest figures from the Gazette show corporate insolvencies fell slightly last week.
At least 597 companies filed for insolvency in the week to February 2, which was down 11pc on the same week the previous year.
Some 23 administrators were appointed in the UK during the week, down 23pc on the same week a year earlier.
08:56 AM GMT
UK markets climb ahead of services sector figures
The FTSE 100 index has started the week on a strong note ahead of key economic data later today.
The blue-chip FTSE 100 was up 0.4pc, while the mid-cap FTSE 250 index climbed 0.2pc.
Shares in personal goods companies - including Watches of Switzerland, Burberry and Dr Martens - climbed 2.6pc.
Both UK services purchasing managers index (PMI) figures later will be on investors’ radar for more clues on economic strength and the trajectory of interest rate cuts.
Meanwhile, data from the Office for National Statistics showed Britain’s unemployment rate was much lower last year than previously thought, fuelling caution over early rate cuts.
In corporate news, shares of CMC Markets have gained 12.7pc after the online trading platform announced about 200 layoffs, representing 17pc of its overall staff.
Shares of Vodafone fell as much as 2.1pc after traders assessed data that showed service revenue growth in Germany slowed sharply in the third quarter.
08:46 AM GMT
Samsung chairman cleared of fraud and stock manipulation
Samsung Electronics chairman Jay Y Lee has been found not guilty of accounting fraud and stock manipulation by a Seoul court in a case about a 2015 merger that prosecutors said was designed to cement his control of the tech giant.
Lee, 55, and other former executives were accused of engineering a merger between two Samsung affiliates - Samsung C&T and Cheil Industries - in a way that rode roughshod over the interests of minority shareholders.
Prior to the merger, the Lee family and related entities controlled Cheil but not Samsung C&T which was a major shareholder in Samsung Electronics - the crown jewel in the Samsung conglomerate.
Prosecutors had sought a five-year jail term. Lee denied wrongdoing, arguing that he and other executives acted on the belief the merger would benefit shareholders.
The panel of three judges at the Seoul Central District Court said that the merger decision was reached by the boards of the two companies after their consideration and review.
Judge Park Jeong-je told a packed courtroom, using Lee’s Korean name: “It cannot be concluded that the sole purpose was to strengthen management rights of defendant Lee Jae-yong and ease his succession within the Samsung Group.”
All 14 defendants were acquitted.
08:34 AM GMT
CMC Markets to axe 200 jobs amid slump in deals
Online trading platform CMC Markets has said it plans to cut 200 jobs worldwide as part of aims to slash costs by ￡21m a year.
The London-headquartered company founded by Tory peer Lord Peter Cruddas said it was cutting its workforce by about 17pc.
It comes after a slump in deals last year, which has prompted investment banks to cut jobs and sparked a consolidation among City brokerages.
CMC - which provides online trading and investing - said it was making savings by merging its support teams, streamlining reporting lines and automating processes.
It said: “The group continues to focus on driving efficiencies and making structural savings across its global operations.”
Its shares gained 9.9pc in early trading.
08:27 AM GMT
Unemployment lower than first thought, data show
Britain’s rate of unemployment was lower than first thought in the three months to November, according to official figures.
The Office for National Statistics (ONS) said changes to the way that it gathers information on the UK labour force has seen it revise the unemployment rate down to 3.9pc for the quarter, from the 4.2pc previous estimate.
It has also revised up the inactivity rate to 21.9pc in the three months to November, from the 20.8pc recorded previously.
The changes follow an overhaul to the ONS labour force survey after low responses meant the data was too unreliable.
Official figures have been estimating employment and unemployment rates since July last year, extrapolating from previous figures by using separate government tax records and data on unemployment benefit claims.
Using these estimates, the rate of unemployment has remained unchanged at 4.2pc since the three months to June 2023.
Corrections to previous data has also seen the ONS revise down the rate of unemployment to 4pc in the three months to October and 4.1pc in the three months to September, from 4.2pc in each quarter.
In a more worrying sign for Britain’s jobs market, the inactivity rate has been worse than originally estimated for some time, having been revised higher dating back to at least April to June last year.
08:07 AM GMT
Business energy bills raise new inflation fears
Four in five businesses expect to increase their prices over the next two years in response to higher energy costs, a survey showed.
Research by PwC showed 81pc of companies plan to up their prices, while 70pc think they will be less competitive over the period.
Over the last two years, 77pc of businesses said high energy costs had already driven up the price of their products and services, at least moderately, while 67pc blamed energy costs for negatively impacting profits and margins.
A quarter believe Government support on energy costs is “essential for survival”.
Chancellor Jeremy Hunt offered taxpayer money to businesses to cope with the energy shock caused by the war in Ukraine during the winter of 2022-2023 but opted not to do so this year as bills declined rapidly.
Vicky Parker, sector leader at PwC UK, said:
Government support has provided a helpful and much needed short-term buffer, but has allowed transformational thinking to become less of a priority for businesses.
08:03 AM GMT
UK markets mixed as Fed chairman pushes against rate cuts
UK markets were mixed to start the week after the chairman of the US Federal Reserve pushed back on hopes of interest rate cuts in March during a US television interview.
The UK’s blue-chip index was up 0.3pc to 7,634.98 while the midcap FTSE 250 was down 0.1pc to 19,154.25.
It came after Jerome Powell told CBS show 60 minutes that the “danger of moving too soon is that the job’s not quite done”.
07:58 AM GMT
Britain ‘faces record insolvencies’ after years of ultra-cheap debt
Britain faces its highest level of corporate insolvencies on record this year as businesses crumble under the pressure of higher interest rates.
Around 33,000 companies will go under this year, according to the Centre for Economics and Business Research (CEBR), many of which will never have recovered from the impact of the pandemic.
The consultancy increased its estimate for insolvencies from 28,000 as it warned the retail and hospitality sectors “have nearly caught up with construction in terms of insolvency numbers in 2023”.
It said the figures would be a new record since 2013, where comparable statistics are available, although it added that its own analysis suggests insolvencies would have been higher in the 1990s.
As well as the pandemic hit, companies are grappling with increased borrowing costs after the Bank of England raised interest rates to 5.25pc to bring down inflation, which surged after the Covid years.
Deputy chairman Douglas McWilliams said: “The companies going bust in 2024 and 2025 are largely ones that got into financial trouble in the Covid years and have never really escaped.”
He added: “Our model takes account of the outlook for the commercial property sector, which is currently in tougher straits than we thought previously and is likely to push harder for rent recovery.”
Rob Russell, partner, DLA Piper, said: “This is the tip of the iceberg with increased stress forecast in 2024.”
He added: “After a year of rising base rates and input costs, it is no surprise that this has precipitated a jump in corporate insolvency numbers.”
07:33 AM GMT
Asda to convert Co-op and EG Group sites into branded convenience stores
Asda plans to relaunch 110 stores in the UK under its own banner in February as part of its goal to reach 1,000 shops across the country.
Asda, previously owned by Walmart, will convert 109 Co-op and EG Group convenience sites to Asda Express stores as part of a multimillion-pound investment.
The business said it wants to become the second largest grocery retailer in the UK.
Asda plans to turn all 470 convenience sites acquired from the Co-op and EG Group into Express stores by the end of March.
Asda purchased 132 fuel forecourts and convenience stores from Co-op and EG in August 2022 for ￡438m. The acquisition was approved in June 2023 after Asda agreed to sell 13 sites to meet competition requirements.
The supermarket had converted 259 locations by the end of January.
Since its acquisition by the Issa brothers and TDR Capital in 2021, Asda has been expanding into the rapidly growing ￡40bn convenience and ￡60bn food-to-go markets.
It comes after it emerged one of the billionaire brothers, Zuber Issa, is attempting to offload his stake in the debt-laden supermarket as he seeks a retreat to their original business running petrol stations and takeaways.
07:28 AM GMT
Vodafone in 'active discussions' over Italian business despite rejecting ￡9bn merger
Vodafone has said it is in talks to sell its Italian business days after it emerged it had rejected an offer by billionaire telecoms tycoon Xavier Niel to merge their Italian operations in a €10.5bn (￡9bn) deal.
Chief executive Margherita Della Valle said the company is “in active discussions in Italy” after last week shunning Mr Niel’s Iliad Group, which had tabled a proposal to combine their Italian businesses.
In a trading update, Vodafone revealed revenues slipped by 2.3pc in the third quarter to €11.3bn (￡9.7bn), although organic service revenue grew 4.7pc, ahead of analyst estimates of 4.3pc.
It said it remains on track for an underlying annual profit of €13.3bn (￡11.4bn).
Ms Della Valle said:
We maintained good service revenue momentum in the third quarter across both Europe and Africa, supported by a further acceleration of Vodafone Business, with our Cloud and Internet of Things services growing over 20pc.
07:09 AM GMT
Good morning
Thanks for joining me. Higher energy costs will force four in five businesses to put up their prices over the next two years, a survey showed.
While 81pc of businesses expect to hike prices, some 70pc fear they will be less competitive over the next two years, according to research by PwC.
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3) ‘Rivals would obliterate The Telegraph if the UAE interfered’ | Opinion, Sir Michael Ellis
4) Jeremy Hunt paves way for of hated tourist tax | Impact on British retailers to be reviewed ahead of March Budget
5) Farfetch founder ‘destroyed its value’ to rush through takeover | José Neves accused of offloading retailer at expense of shareholders
What happened overnight
China stocks slumped for a sixth straight session, with small-cap companies leading the plunge, as investor pessimism worsened on the lack of a clear signal for policy support.
The blue-chip CSI300 Index tumbled as much as 2.1pc to refresh a five-year low, while the Shanghai Composite Index slumped as much as 3.5pc, after tumbling 6.2pc last week.
The Hong Kong market remained relatively stable, with the Hang Seng benchmark down only 0.2pc.
Tokyo stocks closed higher as Japanese exporters benefited from a weaker yen.
The benchmark Nikkei 225 index rose 0.5pc, or 196.14 points, to 36,354.16, while the broader Topix index added 0.7pc, or 17.03 points, to 2,556.71.
There were also losses in Sydney, Seoul, Singapore and Wellington.
But Tokyo rose as the dollar rallied against the yen to boost exporters.