Yahoo Finance Britain's largest oil producer strikes £8.8bn takeover of German rival
The largest oil producer in the North Sea has reached an $11.2bn (£8.8bn) agreement to acquire a German rival in its latest moves to expand from its North Sea roots into a global oil and gas company.
Harbour Energy will buy the upstream assets of oil-and-gas producer Wintershall Dea from chemicals giant BASF and investor LetterOne, which was co-founded by sanctioned Russian businessman Mikhail Fridman.
The deal will see Harbour’s operations expand across Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria, as well as the company’s carbon dioxide capture and storage licences in Europe.
BASF, a majority shareholder in Wintershall Dea, will own 46.5pc of Harbour and will be entitled to nominate two non-executive directors to the latter’s board, as part of the deal. However, it has said it wants to exit the oil and gas industry and so will be disposing of those holdings over coming years
Harbour Energy chief executive Linda Z Cook said: “Today’s announcement marks Harbour’s fourth major acquisition and the most transformational step yet in our journey to build a uniquely positioned, large-scale, geographically diverse independent oil and gas company.”
She said that adding Wintershall’s assets would increase the company’s production, “extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run”.
Shares in Harbour Energy have surged by 17pc.
Read the latest updates below.
06:20 PM GMT
Signing off
Thanks for joining us today. Chris Price will be back in the morning, covering what’s happening in the markets and the world of business. In the meantime, I’ll leave you with some of our latest business stories:
Royal Mail chief warned over claims of ‘disturbing’ delivery failures
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05:16 PM GMT
Annabel's owner Richard Caring explores sale of stake in Ivy restaurants chain
Richard Caring is plotting the sale of a stake in his Ivy restaurant empire, writes Daniel Woolfson:
The billionaire tycoon, who also owns the private member’s club Annabel’s, has hired bankers to explore options for The Ivy Collection, which runs a chain of 30 upmarket restaurants.
It is understood that talks with potential suitors are at an early stage, with no decision made over how much of Mr Caring’s hospitality empire could be sold.
Any potential deal could value The Ivy Collection at around £1bn, as first reported by Sky News.
Mr Caring, one of Britain’s best-known restaurateurs, has been dubbed “the King of Mayfair” based on his record of opening opulent, upscale restaurants, such as Sexy Fish, Scott’s and J Sheekey.
He moved into the restaurant sector in 2005 when he bought The Ivy and Caprice Holdings restaurant group.
After buying The Ivy, which was founded in 1917, Mr Caring opened a private members’ club which quickly became a haunt for celebrities visiting the capital, with the likes of Tom Cruise, Nicole Kidman and Sting among its patrons.
Mr Caring’s Ivy empire has since expanded to 30 restaurants, which includes The Ivy Asia. Separately, he also owns a stake in casual dining chain Bill’s.
The most recent company filings for the parent group of The Ivy Collection show that the business recorded almost £303m of turnover in the year to January 2023.
Mr Caring and HSBC declined to comment.
05:11 PM GMT
Crisis deepens at Hipgnosis as board clashes with founder
The chairman of Hipgnosis has publicly clashed with founder Merck Mercuriadis as the crisis at the troubled music rights firm deepens. James Warrington reports:
Robert Naylor, who took over as chairman of Hipgnosis Songs Fund last month, has criticised Mr Mercuriadis and his investment advisers over “ongoing failures in the financial reporting and control process”.
In a statement today, Mr Naylor pointed to a contract drafting blunder that could have cost the company $21m (£16.6m). The contract has been amended but losses are still expected.
The chairman said shareholders had raised concerns about financial reporting issues at the firm, which comes after the company was last month forced to scrap its dividend.
Hipgnosis said that while it believes it has the financial headroom for next year, this was “qualified” by issues around reporting and controls.
Concerns over Mr Mercuriadis’s conflicts of interest were also raised on Thursday, something Mr Naylor said the company will look to address “in the coming months”.
The management spat comes as a slump in the music rights market sparks concerns about the value of Hipgnosis’s song catalogue, which includes hits by artists such as Justin Bieber, Blondie and Neil Young.
This uncertainty prompted the company to delay its results, which were scheduled to be released earlier this week.
Hipgnosis today said the value of its song portfolio has dropped by more than £200m since April to £2.1bn at the end of September.
But the board warned there was a high degree of uncertainty over this figure and urged investors to use it with caution.
Mr Naylor criticised Mr Mercuriadis for a lack of transparency over the valuation after the founder initially refused to give his opinion.
He also took aim at Mr Mercuruadis for refusing to publish their correspondence on the company’s website, citing confidentiality clauses.
Mr Naylor added: “On behalf of the board, I therefore urge the investment adviser to provide the board with their opinion as to the fair value of the company assets, without caveats, such that we can provide greater certainty and transparency to our shareholders.”
In a statement earlier this week, Mr Mercuriadis’s investment advisers said it would “continue to work in a constructive manner to support the interests of the company and its shareholders”.
05:05 PM GMT
Billionaire easyJet founder receives more than £200,000 after legal battle against ‘brand thief’
The billionaire founder of easyJet has won more than £200,000 from a so-called “brand thief” as the travel tycoon wages a campaign against those he deems to have imitated his brand. Daniel Woolfson has the details:
The owners of the website Easy Live Auction have been ordered to pay easyJet owner Sir Stelios Haji-Ioannou £180,000 in legal costs and £28,000 in damages, after a court upheld a decision that the company had infringed easyGroup’s trademark with a logo used between 2010 and 2019.
The legal victory is part of an aggressive campaign by easyGroup’s billionaire owner Sir Stelios Haji-Ioannou against companies he believes have appropriated its trademarks. The businessman has launched dozens of lawsuits against businesses that use the word ‘easy’ over recent years.
Sir Stelios has previously said his company has allocated a legal budget of £4m per year to protect its trademarks, dubbing those he deems to have encroached on them as “brand thieves”.
He said: “It is a fact of life that brand theft is profitable for brand thieves. There will always be opportunists who want to trade off the back of the reputation of another business rather than invest to build their own.”
In 2022, a high court judge found Easy Live Auction had infringed easyGroup’s trademark with a style of logo but allowed the company to continue trading under its name.
EasyGroup successfully appealed two aspects of that decision, with the judgment handed down on Thursday.
A spokesman for Easy Live Auction said: “EasyGroup claims that it has a monopoly over the word ‘easy’ followed by any descriptive word or words in relation to all business names and goods and services.
“This is despite the fact that many businesses used such a trading style long before the formation of easyJet.
“This decision in no way affects the ability of the business to trade legally as Easy Live Auction and continue to offer its services to auction houses and their customers, using its domain name and registered trademark.”
Greek-Cypriot entrepreneur Sir Stelios founded easyJet in 1995 at the age of 28, initially running flights between London’s Luton airport and Scotland. He and his family own around 15pc of the company. He says he gives the majority of winnings from his trademark lawsuits to his charity.
04:56 PM GMT
Founders reject £1.3bn private equity deal for British Gas smart meter installer
A £1.3bn private equity takeover of a leading UK smart metering business risks being derailed after the company’s founders rejected the deal. Michael Bow reports:
Alan Foy and Steve Timoney, two Scottish engineers who launched Smart Metering Systems (SMS) in Glasgow 25 years ago, have joined forces with the company’s largest investor to halt a planned acquisition by US bidder KKR.
In a joint statement from PrimeStone Capital and the two founders on Thursday, the group said they were “disappointed” with KKR’s 995p cash offer - insisting that they will reject the deal at a shareholder meeting on January 9.
Shares in SMS, which has a long-running contract to install smart meters for British Gas, fell 6pc over fears the deal could fall apart.
However, the group failed to disclose what price they wanted and declined to comment further.
Scuppering the deal is likely to prompt SMS’ shares to fall back to the pre-offer price of 680p, which would hit PrimeStone and the founders.
Primestone and the founders own 18pc of SMS shares, which may be enough to kill the deal if shareholder turnout at the vote is low.
The deal has been structured as a scheme of arrangement, which requires shareholders representing at least 75pc of shares to vote in favour.
Primestone and the founders’ 18pc stake can only derail the deal if turnout falls below a certain threshold.
One option for KKR is to ditch the scheme of arrangement and push for a straight takeover structure, which requires more than 50pc of votes in favour.
KKR declined to comment.
04:53 PM GMT
Footsie closes in the red
Shares in the FTSE 100 closed down 0.26pc today. Vodafone was the biggest riser, up 2.21pc, followed by Anglo American, up 0.88pc. Burberry was the biggest faller, down 4.09pc, followed by Ocado, down 4.03pc.
The mid-cap FTSE 250 index also suffered losses, closing down 0.36pc. Harbour Energy rose 22.95pc after striking a £8.8bn deal to buy a German rival. The next-biggest riser was Carnival, the tour operator which posted a smaller than expected quarterly loss. Darktrade, the cyber security firm, was the biggest faller, down 7.31pc, followed by Tritax EuroBox, which owns European properties used for logisitics, which was down 4.33pc.
04:46 PM GMT
Vodafone shares up on Italy deal speculation
Vodafone shares rose today after a report that Swisscom, which is 51pc owned by the Swiss government, is considering a bid for the British telecoms company’s Italian division.
French billionaire Xavier Niel’s Iliad telecoms company is also understood to be interested in Vodafone Italy, while Three mobile owner CK Hutchison is also considering deals among Italian telecoms firms, according to a Bloomberg report.
Vodafone, Swisscom, Iliad and CK Hutchison have been approached for comment.
04:32 PM GMT
Co-op Bank in exclusive tie-up talks with Coventry Building Society
Coventry Building Society has entered exclusive talks to acquire the Co-operative Bank in a move that would return the 150-year old lender to mutual ownership. Michael Bow reports:
The building society said deepening talks with the Co-op Bank would allow it to conduct due diligence on the bank, which is owned by a group of American hedge funds.
Coventry cautioned that a deal would only be struck if it was in members’ interests.
Adding Co-op Bank’s current accounts and small business lending would create a company with £90bn of assets and help Coventry bulk up to compete with other lenders.
Taking Co-op Bank under its wing would also allow Coventry to return the Manchester-based bank to the mutual status it had when it was founded in 1872.
Coventry, which has 2m members, is the UK’s second largest building society after Nationwide. Combining with Co-op Bank’s 2.5m would allow the combined entity to compete against full service lenders such as Virgin Money.
According to UK Finance figures, Coventry is the eighth largest mortgage lender in the UK with £48bn of outstanding mortgages.
Co-op Bank is 13th with £20bn of mortgages. Combining them would allow Coventry to overtake Virgin Money but remain well off the pace of the next largest, HSBC.
In 2013, Co-op Bank was rescued by a group of hedge funds after a black hole on its balance sheet nearly caused the bank to topple.
04:17 PM GMT
China hits back at US with ban on export of rare-earth processing technology
China has retaliated against US restrictions on the export of artificial intelligence chips and advanced chip manufacturing technology by imposing its own export ban, on rare-earth processing technology.
The East Asian manufacturing powerhouse dominates the supply chain for so-called rare earth elements, 17 essential materials used in creating wind turbines, military hardware and electric vehicles. China’s commerce ministry has reportedly banned the export rare of technology used for rare earth extraction and separation.
The US is leading a drive to reduce China’s stranglehold over the flows of minerals, including rare earths, lithium and cobalt.
03:47 PM GMT
There may be room for tax cuts next year, says Chancellor
The Chancellor, Jeremy Hunt, has suggested that falling interest rates on government debt might give space to deliver tax cuts in the spring.
Speaking to Bloomberg TV, he said the Government would “cut the tax burden if we are able to do so” depending on forecasts from the Office for Budget Responsibility. He said:
If debt interest payments go down then potentially that gives me more headroom and I could use that in lots of different ways but I would never use that in a way that would compromise the battle against inflation. We would like to bring down the tax burden in a way that is responsible if we’re able to do so.
03:42 PM GMT
UK and Switzerland complete post-Brexit deal for City
Jeremy Hunt and his Swiss counterpart, Karin Keller-Sutter, have signed a deal aimed at fuelling trade in financial services.
The Berne Financial Services Agreement is designed to help “frictionless, cross-border provision of financial services” in areas including asset management, banking and investment services. It means that firms based in the City of London will now be able to serve customers in Switzerland while largely following British rules.
Mr Hunt said:
The Berne Financial Services Agreement is a global first and builds on the UK and Switzerland’s strengths as two of the world’s largest financial centres.
It cements open access for financial services between our two nations for decades to come, helping us grow the economy and serving as a blueprint for future agreements with other key trading partners.
03:36 PM GMT
Handing over
I will duck out at this point and leave you in the hands of Alex Singleton, who will keep you up to speed from here.
A quick look at the markets before I dash shows the FTSE 100 remains down 0.3pc while the FTSE 250 has fallen 0.4pc.
Brent crude has fallen 1pc to below $79 a barrel while the pound has gained 0.2pc against the dollar to $1.26.
03:13 PM GMT
US stocks bounce back after profit taking
Wall Street stocks resumed their upward climb following updated US quarterly growth figures.
The Commerce Department estimated US growth at 4.9pc in the third quarter, down from a prior estimate of 5.2pc due to lower consumer spending.
The report comes ahead of Friday’s heavy schedule of economic reports, which includes closely-watched consumer pricing data.
The Dow Jones Industrial Average was last up 0.5 percent at 37,262.57.
The broad-based S&P 500 gained 0.6pc to 4,726.22, while the tech-rich Nasdaq Composite Index jumped 0.7pc to 14,878.32.
Stocks have been rising since late August as traders expect interest rates to be cut next year amid easing inflation.
On Wednesday, the Dow snapped a five-day streak of all-time records in a pullback attributed to profit taking. But stocks were back on the front foot early today.
Among individual companies, Boeing advanced 1.5pc following a report in the Air Current trade publication that China approved the company to deliver 737 MAX planes to Chinese carriers.
02:47 PM GMT
Passengers stranded after wildcat strikes in Channel Tunnel
Travellers’ Christmas holiday plans have been thrown into disarray by the unscheduled strikes in the Channel Tunnel, which have led to the cancellation of several Eurostar services.
Passengers have been crammed into the station after many trains were forced to turn back after the wildcat industrial action began:
02:41 PM GMT
Britain’s largest oil producer seals £8.8bn deal
The largest oil producer in the North Sea has reached an $11.2bn (£8.8bn) agreement to buy up assets that will see its operations expand across Europe, Africa and the Americas.
Harbour Energy will buy the upstream assets of oil-and-gas producer Wintershall from BASF and investor LetterOne.
The deal includes all of its assets in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria.
02:30 PM GMT
Electric car tariffs avoided after UK-EU deal
While we find out more on the strike action, I’ll just give you a quick update on the electric car market.
Tariffs on EVs that had been due to come into force from next year will be avoided after the UK and the EU agreed to extend trade rules, Rishi Sunak has announced.
The Prime Minister said the UK and the EU have decided existing regulations will continue until the end of 2026.
Rules of origin requirements were due to come into force from January 1 following post-Brexit negotiations.
They would have seen tariffs of 10pc imposed on car sales between the UK and the EU if at least 45pc of the vehicle’s value did not originate in the UK or EU.
Mr Sunak said: “We have been listening to concerns of the sector throughout this process and I know this breakthrough will come as a huge relief to the industry.”
02:18 PM GMT
Channel Tunnel strikes spark long queues in London
Passengers are facing long queues in London St Pancras after Eurostar cancelled trains amid strike action in the Channel Tunnel.
01:46 PM GMT
Passengers 'held hostage' by wildcat Channel Tunnel strikes
Yet more passengers are describing the frustration of having their travel plans derailed by the sudden strikes by Channel Tunnel workers:
Held hostage by Eurotunnel staff. Made it all the way to the tunnel, only to be turned back to starting point. Hours and hours sitting on a train for nothing! Unacceptable and soul destroying!
— jocelyne horrocks (@HorrocksT) December 21, 2023
Thanks Eurotunnel staff for calling a strike without warning with people already on trains before Christmas. Hope you feel the sympathy back.
— @algonauta (@algonauta1) December 21, 2023
@Eurostar if we move today’s travel to tomorrow what is even the guarantee that it won’t be the same mess tomorrow ???? Considering the price of the Christmas fares that is unacceptable that every single years there is issues !!
— A.🌙🍯❤️🔥 (@LoveWillBreak) December 21, 2023
01:34 PM GMT
'About time governments do something about these handful of people'
Passengers are venting their fury about the delays to their Christmas travel plans after unexpected strike action cancelled services during the peak festive getaway period.
We’ve still had no official response from Eurotunnel on the disruption.
Out-of-the-blue strike 3 days before Christmas? About time governments do something about these handful of people disrupting the economy for their own benefits @Eurotunnel pic.twitter.com/PCWJlUgKFE
— Vanessa Verron (@vanessavdesign) December 21, 2023
Sitting at Gare Du Nord Paris in queue for @Eurostar train to London. No information being given besides wait for the next announcement. @eurotunnel closed due to strike. @Eurotunneldelay pic.twitter.com/OmKwpAY38E
— E M (@ErinMorse4) December 21, 2023
Looks like @Eurotunnel staff are undertaking industrial action today. My @Eurostar 1256 train is delayed indefinitely
Good thing I dont have a connection to Liverpool, & an overnight ferry to Belfast... oh wait 😂
Meanwhile, the group managing the eurotunnel 👇 💰#eurostar https://t.co/vvar9nOD1o— Bethany Meban (@SolarPowerBeth) December 21, 2023
01:30 PM GMT
Eurotunnel strikes cancel trains heading through Channel Tunnel
Eurostar has cancelled some of its services through the Channel Tunnel today and has issued this update after the unexpected Eurotunnel strikes:
Update: due to unexpected strike action by Eurotunnel staff, services are currently not able to proceed through the Channel Tunnel until mid-afternoon at earliest. Trains held en route 9126, 9018, 9023, 9125 will return to their starting point as are now cancelled. >
— Eurostar (@Eurostar) December 21, 2023
01:28 PM GMT
Inflation can return to 2pc target within six months, say analysts
Inflation could fall below the Bank of England’s target within six months, according to analysts, raising pressure on policymakers to cut interest rates to avoid the risk of plunging Britain into a recession.
The consumer prices index fell faster than expected to 3.9pc in November, official figures revealed on Wednesday, prompting a manic day on markets in which the value of the pound fell and bonds rallied.
Traders are now betting the Bank of England will cut interest rates by one and a quarter percentage points by the end of the year from 15-year highs of 5.25pc to 4pc.
The value of the pound has fallen 0.4pc against the dollar since the inflation data was published, having slumped as much as 0.7pc.
Analysts are predicting that inflation could fall back to target within six months, much faster than the Bank of England’s own prediction that it will do so by the end of 2025.
Joshua Mahony, chief market analyst at Scope Markets, said: “The pound continues to suffer, with the UK inflation report helping to bring forward expectations over the Bank of England easing next year.
“Yesterday’s November inflation report has finally seen markets believe in the ability to swiftly return to the 2pc, which looks likely within the next six-months.”
01:21 PM GMT
Channel Tunnel holiday getaway hit by unexpected strike
An unexpected strike by staff at Eurotunnel has led to cross-Channel rail traffic being suspended, train operator Eurostar has said, threatening the Christmas holiday plans of many travellers.
Eurostar, which operates services through the Channel Tunnel, tweeted:
We’re very sorry to hear that you’re caught up in the disruption today, it’s due to unexpected strike action by Eurotunnel staff.
We would recommend postponing your journey if you can, even if it’s until tomorrow.
On its travel updates page, Eurostar said train traffic to and from London was currently suspended.
Getlink, the French company operating the Channel Tunnel, has not yet responded to requests for comment.
Update: due to unexpected strike action by Eurotunnel staff, services are currently not able to proceed through the Channel Tunnel until mid-afternoon at earliest. Trains held en route 9126, 9018, 9023, 9125 will return to their starting point as are now cancelled. >
— Eurostar (@Eurostar) December 21, 2023
01:15 PM GMT
ABBA Voyage adds £178m to London economy
Thank you for the music, London’s authorities might say, after Swedish pop group ABBA’s digital concert residency raked in £178m in terms of net economic benefit to the capital in its first year.
ABBA Voyage recreates Bjorn Ulvaeus, Benny Andersson, Agnetha Faltskog and Anni-Frid Lyngstad as high-tech, digital versions of themselves from their 1970s heyday, thanks to motion-capture technology.
The show, which has been seen by more than 1 million people, generated a total turnover of 322.6 million pounds in the 12 months since it opened in May 2022, according to an analysis by Sound Diplomacy and RealWorth published on Thursday.
Fans are willing to fork out ever-increasing amounts for concert tickets to see big artists like Taylor Swift and Beyoncé perform live, and in ABBA’s case, virtually live.
A standing ticket for ABBA’s show is priced at just over £100 for some dates next summer, comparable to live concerts by Swift, who brings her record breaking “Eras” tour to Britain next year.
Accompanied by a live band, the avatars, or ABBA-tars, perform some 20 songs during the 90-minute show, featuring the band in their signature glittering outfits.
ABBA, whose members are now in their 70s, worked with an 850-strong team from Industrial Light & Magic, founded by “Star Wars” creator George Lucas, for the project.
01:00 PM GMT
Angola to leave Saudi-led oil cartel after row over production cuts
Angola has said it will leave the Saudi-led Opec cartel of oil-producing nations over a disagreement on production quotas.
The row comes after the oil group’s decision last month to further slash output next year in a bid to prop up falling prices.
Angola’s mineral resources and petroleum minister Diamantino Azevedo told state broadcaster TPA:
Angola has decided to leave.
We think the time has come for our country to be more focused on our goals.
12:19 PM GMT
Wall Street poised to bounce back after sudden falls
US stock indexes have risen in premarket trading, recovering from a broad sell-off on Wall Street on Wednesday as investors clung on to hopes of borrowing costs easing next year.
The three main indexes ended the previous session lower, with the benchmark S&P 500 notching its worst day since late September following a recent rally that saw the index within a percentage of its record closing high hit in early 2022.
Reaching a new closing high would confirm the benchmark index had been in a bull market since closing at the bear market floor in October 2022.
The rally gained steam after policymakers took an unexpected dovish change in tone on monetary policy outlook a week ago, sending yields on the benchmark 10-year US treasury note lower to 3.88pc from the highs it scaled in October.
Despite some push back from Federal Reserve officials, traders still expect at least a 25 basis points rate cut as early as March next year, and a near 100pc chance of a rate cut in May, according to the CME FedWatch Tool.
In premarket trading the Dow Jones Industrial Average was up 0.4pc, the S&P 500 had gained 0.5pc and the Nasdaq 100 was up 0.6pc.
11:55 AM GMT
Pound bounces back after declining inflation triggers steep falls
The pound has rebounded after steep falls following a larger than predicted decline in inflation.
Sterling was last up 0.3pc against the dollar to head back toward $1.27 after falling on Wednesday following data showing inflation eased by more than expected in November.
The pound has dropped 0.1pc against the euro, which is worth 86p.
11:22 AM GMT
Gas prices tick higher amid Red Sea attacks
Gas prices have pushed higher amid the continued tensions in the Red Sea.
Europe’s benchmark contract and its UK equivalent both added as much as 6.1pc as some cargo arrivals were also put at risk by Storm Pia hitting Britain.
Yemeni militants have vowed to continue attacking ships travelling through the Red Sea despite US efforts to set up a taskforce to protect vessels on the vital trade route.
However, gas prices remain down about quarter over the last month as mild weather has subdued demand across the continent.
11:00 AM GMT
Oil dips as US output hits record high
Oil edged downward after three days of gains amid the ongoing threats of Houthi attacks on ships in the Red Sea - one of the world’s most important waterways.
Brent crude, the international benchmark, slipped 0.3pc toward $79 a barrel, while West Texas Intermediate fell 0.3pc to nearly $74.
It comes after Government data on Wednesday showed US crude output hit a new record high of 13.3m barrels a day last week.
However, the ongoing attacks in the Red Sea, which has forced shipping companies to reroute shipments around the south of Africa, kept prices near three-week highs.
10:39 AM GMT
Grieve's Brexit inflation claims 'do not stand up to scrutiny'
Former Attorney General Dominic Grieve has been speaking to broadcasters after the surprise fall in inflation in November to 3.9pc.
He has insisted that Brexit “has fuelled inflation massively” - but his view has been disputed by senior economists:
Dominic Grieve claims here that #Brexit has 'dramatically raised' the cost of UK food... 🤔
In reality, since 2019 #food prices have risen by about the same in the UK as in the euro area, and by slightly less than in the EU as a whole.#badbrexittakes https://t.co/mHnfRyh9TI pic.twitter.com/25byzqYAIp— Julian Jessop (@julianHjessop) December 21, 2023
I like Dominic Grieve (my former MP) & think he speaks a lot of sense - but the evidence that Brexit has fuelled "massive" food price inflation does not stand up to scrutiny. Even though LSE research suggests some additive impacts on EU-UK trade, it looks very much like these are… https://t.co/rpZAvBwllO pic.twitter.com/PFwMxt3Vnk
— Simon French (@shjfrench) December 21, 2023
10:18 AM GMT
Barclays agrees deal to stay at Canary Wharf until 2039
Barclays has reached an agreement that will keep it at Canary Wharf until at least 2039 in a boost to London’s dockland’s financial district after the exit of other high-profile tenants.
Canary Wharf Group announced that Barclays will extend the lease of its UK headquarters at One Churchill Place by five years.
Its chief investment officer John Mulqueen said: “We are delighted Barclays extended its lease at One Churchill Place demonstrating its commitment to Canary Wharf, and investing in the building for the long term.”
Canary Wharf has been hit by a number of high-profile exits, including HSBC which plans to leave its headquarters – nicknamed the “Tower of Doom” – at the end of its tenancy in 2027.
10:04 AM GMT
Twitter back online after UK outage
Social media platform X is back online following a global outage this morning with users briefly unable to see their timelines.
Thousands of people took to the website Downdetector, which tracks online outages, to report issues with the mobile app and website of the platform formerly known as Twitter.
Almost 4,000 outage reports had been made to the site at 6am.
Some users attempting to log into their X accounts found their timelines empty, with the home page displaying only the message: “Welcome to X!”
However, users were still be able to post tweets, with the hashtag #TwitterDown starting to trend on the site within minutes of reports of the outages emerging, although those tweets could not be seen.
The outage lasted around 45 minutes before user timelines began to show as normal.
09:48 AM GMT
Bond yields fall further after inflation surprise
Government borrowing costs have continued to drift lower after the surprisingly large drop in UK inflation on Wednesday triggered a rally in the bond markets.
The yield on the 10-year UK gilt, which moves inversely to prices, has fallen two basis points to 3.49pc - its lowest point since April.
Italy’s benchmark bond yield hit its lowest level in 15 months as the bond market rally continued despite central bank officials’ best attempts to rein in the exuberance.
The Italian 10-year yield fell four basis points to 3.57pc, the lowest since late August 2022.
Meanwhile, Germany’s 10-year bond yield, the benchmark for the eurozone as a whole, was last down three basis points at 1.947%, its lowest in nine months.
Yields have tumbled in November and December as inflation in the US and Europe has fallen sharply and central bankers have said interest rate hikes are almost certainly over.
Lyn Graham-Taylor, rates strategist at Rabobank, said: “It just seems like no one’s been willing to stand in the way of this (rally) and you do wonder is that partly because it’s year-end and no one really wants to get cut out.”
09:32 AM GMT
European Super League handed legal boost by court ruling
The prospects of a future European Super League have been boosted after judges said Uefa rules blocking the formation of such a competition were contrary to EU law.
The Grand Chamber of the European Court of Justice had been asked to decide whether Uefa and Fifa acted against competition law by blocking the formation of the European Super League in 2021 and then seeking to sanction the clubs involved.
The court has ruled that Uefa and Fifa rules granting prior approval for new competitions are contrary to EU law.
A release issued by the court said such rules were “contrary to competition law and the freedom to provide services”.
We have live updates on what the ruling means.
09:23 AM GMT
Smart Metering Systems slumps as £1.3bn takeover in doubt
The founders of British energy infrastructure company Smart Metering Systems have said they plan to vote against its private equity takeover after demanding more money in the deal.
Shares in the business fell as much as 6.8pc as doubts emerged about its £1.3bn takeover by KKR.
The founders of Smart Metering Systems and its largest shareholder PrimeStone said they were “disappointed” with the offer by the private equity house.
08:59 AM GMT
Co-op Bank in merger talks with Coventry Building Society
The Co-operative Bank has entered exclusive talks with Coventry Building Society which could result in a merger of the two lenders.
It comes a month after bosses at the Co-op confirmed the bank was exploring potential opportunities after its recovery from years of turmoil.
08:33 AM GMT
FTSE 100 slumps after Wall Street sell-off
UK stocks slipped in early trading as a recent global rally came to an abrupt halt, with Wall Street indexes closing sharply lower overnight.
The blue-chip FTSE 100 fell 0.3pc, while more domestically-focused FTSE 250 midcap index lost 0.6pc.
Both indexes are on track to snap a three-day wining streak after UK stocks outperformed their European peers on Wednesday following the surprisingly steep drop in inflation to 3.9pc.
Global markets have rallied since last week when the US Federal Reserve hinted it could look at rate cuts next year. All three major US stock indexes closed down over 1pc on Wednesday.
Personal goods and construction and materials were amongst the top sectoral laggards, down over 1pc each.
Shares in British American Tobacco, Halma and United Utilities Group fell between 0.6pc and 2.4pc as their shares traded without the entitlement for dividend.
08:26 AM GMT
Falling inflation will bring down Government borrowing costs, says PwC
Debt interest payments last month surpassed all monthly November figures on record since 1997, at £7.7bn.
However, Divya Sridhar, economist at PwC UK, said the fall in inflation last month to 3.9pc meant that Government borrowing costs would fall next year.
Many payments linked to Government bonds are tied to the retail prices index, an outdated measure of inflation, which fell to 5.3pc in November.
Mr Sridhar said:
Due to lagged index-linked gilts, the fiscal benefits of this fall in inflation rates will be reflected in borrowing figures early next year.
Looking ahead to the new year, falling inflation will provide some relief to public spending through both debt interest payments and inflation-linked social benefits expenditure.
However, tax cuts announced in the Autumn Statement last month will come into play, and sluggish growth will also impact government revenues.
08:05 AM GMT
UK markets fall after government borrowing rises
The FTSE 100 slipped after official figures showed the public finances performed worse than expected in November - and tracking falls in Asia after a lacklustre day on Wall Street.
The UK’s blue chip index has fallen 0.2pc after the open to 7,698.37 while the domestically-focused FTSE 250 has dropped 0.6pc to 19,507.97.
07:54 AM GMT
Chancellor will have wiggle room for pre-election tax cuts, say economists
A sliver of light in the public sector borrowing figures came from tax receipts, which meant the £14.3bn borrowed in November was £900m less than a year ago, even if it was the fourth biggest November deficit since records began in 1993.
UK economist Ashley Webb of the consultancy Capital Economics said the fact the November figure was higher than the £13bn economists had expected will not prevent the Chancellor “from embarking on a pre-election fiscal splash” in the Spring Budget. He said:
The breakdown revealed that the recent trend of buoyant tax receipts continued in November. Total tax receipts of £77.6bn were higher than our forecast of £76.5bn, £3.6bn higher than in November 2022 and the highest November total since records began.
But at £79.6bn, current expenditure was only £1bn lower than a year ago. Within that, debt interest payments of £7.7bn were £100m higher than in November 2022. This was the highest interest payable in any November since records began in 1997.
That means after eight months of the 2023/24 fiscal year, cumulative borrowing was £116.4bn, which was £24.4bn above last year’s equivalent figure of £92.0bn.
For the 2023/24 fiscal year as a whole, we expect borrowing of £120bn (4.4% of GDP), which would be £3.9bn lower than the Office for Budget Responsibility’s (OBR’s) 2023/24 forecast of £123.9bn and £10.5bn lower than total borrowing in 2022/23. That said, if borrowing continues to overshoot in the coming months, total borrowing in 2023/24 may be a bit higher than we expect.
But the recent drop in market interest rate expectations supports our view that interest rates will be lower in 2025 than the OBR predicted in November. As a result, we expect this to give the Chancellor more wiggle room to unveil a further pre-election splash at the Sprint Budget. But this would almost certainly be followed by hefty tax rises in 2025 after the election.
07:39 AM GMT
Public sector debt higher as a percentage of GDP than a year ago
One of the Prime Minister’s five pledges to the British people is on shakier ground after the latest government borrowing figures.
Rishi Sunak said he would “make sure our national debt is falling so that we can secure the future of public services”.
However, public sector net debt excluding public sector banks (debt) reached £2.67trillion at the end of November, making it worth about 97.5pc of annual gross domestic product.
That percentage is 1.8 percentage points higher than in November last year and remains at levels last seen in the early 1960s.
Public sector net debt was £2,671.4 billion at the end of November 2023 and was provisionally estimated at around 97.5% of the UK’s annual gross domestic product.
➡️ https://t.co/sFp3aWhtf1 pic.twitter.com/yUcTlMjw7k— Office for National Statistics (ONS) (@ONS) December 21, 2023
07:28 AM GMT
Twitter down for thousands of users
Thousands of users are experiencing issues with social media platform X, formerly Twitter, according to the website Downdetector.
The site, which tracks online outages, shows thousands of people have taken to the site to report issues with the platform’s app and website.
Almost 4,000 outage reports had been made to Downdetector as of 6am.
Some users attempting to log into their X accounts are finding their timelines are empty, with the home page displaying only the message: “Welcome to X!”
Users appear to still be able to post tweets, as the hashtag #TwitterDown started trending within minutes of reports of the outages emerging.
Billionaire Elon Musk took over the platform in a $44bn deal last autumn.
07:21 AM GMT
We are taking difficult decisions, says Treasury Secretary
After the Government borrowed more than expected last month, Chief Secretary to the Treasury Laura Trott said:
It was right to spend billions protecting people during the pandemic and the energy shock triggered by Putin’s invasion of Ukraine, but we cannot leave our children and grandchildren to pick up the tab.
That’s why the Prime Minister has made reducing debt a top priority.
We are taking difficult decisions in the national interest to control our borrowing needs and improve productivity, so that we deliver the public services people need while keeping inflation down.
07:20 AM GMT
Government borrowing higher than expected in November
The Treasury’s borrowing is on the rise in a blow to Jeremy Hunt’s ambitions to announce tax cuts next year.
The Government has borrowed £24.4bn more in this financial year than it had done so by the same time last year, delivering the Chancellor less room for future tax cuts a day after falling inflation had boosted the Treasury.
Public sector net borrowing excluding banks stood at £116.4bn in the eight months to November, which was the second highest financial year-to-November borrowing on record, according to the Office for National Statistics.
For the month of November, total public sector net borrowing excluding public sector banks was £14.3bn, which was higher than economists’ expectations of £13bn.
However, November borrowing was £900m less than a year ago, although it was the fourth biggest November deficit since records began in 1993.
Meanwhile, the public borrowing figure for October was revised up from £14.9bn to £16bn.
Public sector net debt excluding public sector banks stood at £2.67trillion at the end of November, which was around 97.5pc of the UK’s annual gross domestic product (GDP).
Public sector net borrowing excluding public sector banks was £14.3 billion in November 2023, £0.9 billion less than in November 2022.
It was the fourth highest November borrowing since monthly records began in 1993.
➡️ https://t.co/sFp3aWgVpt pic.twitter.com/sMG33hqrOB— Office for National Statistics (ONS) (@ONS) December 21, 2023
07:17 AM GMT
Good morning
Thanks for joining me. Public sector borrowing was more than expected in November and ahead of last year in a blow to the Chancellor’s ambitions to cut taxes.
Public sector net borrowing excluding banks was £24.4bn higher in the eight months to November than over the same period last year, standing at £116.4bn.
For the month of November, total Treasury borrowing excluding public sector banks was £14.3bn, ahead of economists expectations of £13bn.
5 things to start your day
1) Warner Bros and Paramount plot £30bn Hollywood megamerger | Warner would be expected to dominate the merged business
2) Investors bet rates could start falling by March after surprise drop in inflation | Lower fuel prices and easing food costs helped CPI fall to 3.9pc in November
3) BT scrambles to rip out Huawei tech ahead of New Year’s Eve deadline | Telecoms giant risks hefty fine if it fails to remove kit from ‘core’ networks by Dec 31
4) More lorries to clog motorways after rail freight plans scaled back | Ministers reject move that could have taken 20m lorry journeys off roads
5) Tom Stevenson: My prediction for 2024 is that the FTSE 100 will boom | Recession could arrive in 2024 but with luck, any downturn will be shallow
What happened overnight
Asian shares retreated after Wall Street snapped a long winning streak, while US Treasury yields were near five-month lows amid hopes that Britain’s sharp fall in inflation would be echoed in looming American price data.
Tokyo stocks closed lower after Toyota announced a recall of a million vehicles, and its subsidiary Daihatsu decided to suspend shipments of all models over rigged safety tests.
The benchmark Nikkei 225 index lost 1.6pc, or 535.47 points, to end at 33,140.47, while the broader Topix index fell 1pc, or 23.40 points, to 2,325.98.
Australian shares were down 0.4pc, while China’s blue-chip CSI300 index remained flat. It is on track for a sixth straight weekly loss, which could be its worst weekly performance in 12 years and a record fifth consecutive monthly loss.
Wall Street shares were down on Wednesday after rises fuelled last week by the US Fed chair Jerome Powell, who indicated that interest rate cuts should materialise next week.
The Dow Jones Industrial Average of 30 leading US companies was down 1.3pc at 37,082.00, while the S&P 500 declined 1.5pc to close at 4,698.35. The Nasdaq Composite index was down 1.5pc at 14,777.94.
Yields of US Treasury bonds have been dropping since late October on hopes of interest rate cuts, and they fell again following encouraging UK inflation data. The yield on benchmark 10-year Treasury bonds dropped to 3.85pc from 3.93pc late on Tuesday.
