UK economy heading for its biggest contraction “in living memory”

(qlmbusinessnews.com via news.sky.com– Tue, 5th May 2020) London, Uk – –

A closely-watched survey shows an unprecedented slump for the dominant services sector during the first full month of lockdown.

The UK economy is heading for its biggest contraction “in living memory”, according to a report highlighting a slump in activity for the UK's powerhouse services sector.

The IHS Markit/CIPS Purchasing Managers' Index (PMI) for April suggested a contraction in quarterly GDP (gross domestic product) of at least 7%.

But it cautioned that the number would be expected to be far worse because its survey data does not cover large parts of the services economy including retail and activity among the self-employed – among the hardest hit by the COVID-19 crisis.

The sector's PMI reading came in at its weakest level since it first started in 1996, dropping to 13.4 in April from 34.5 in March.

Any reading above 50 represents growth.

A composite reading, that included manufacturing, released almost a fortnight ago laid bare the effects of the lockdown on the UK economy – in place since 23 March – highlighting an unprecedented slump.

Tim Moore, economics director at IHS Markit, said of the latest figures: “April's PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory.

“Historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with the economy falling at a quarterly rate of approximately 7%, but we expect the actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector.

“Just one in five service providers managed to avoid a drop in business activity since March and those hardest hit by social distancing measures and travel restrictions often reported complete stoppages of business operations.”

The toll on the economy is acute because of massive government borrowing to pay for the series of support schemes on offer to businesses and individuals who are currently furloughed during the lockdown.

Government figures released on Monday showed the Job Retention Scheme was paying the bulk of wages due to 6.3 million people at a cost, to date, of £8bn.

Much depends on the timing of an easing in the lockdown – with details expected to be revealed on Sunday by the prime minister.

The Bank of England is due to give an update on its projections for the economy when it delivers its latest Monetary Policy Report this week.

A member of its rate-setting committee, Gertjan Vlieghe, has already suggested the UK could be living through the worst economic slump for several centuries with the recovery from lockdown likely to be U-shaped rather than one resembling a ‘V' – or quick bounce back.

A scenario by the Office for Budget Responsibility has pointed to the possibility of a 35% second quarter contraction in GDP with a leap in unemployment of two million.

Howard Archer, chief economic adviser to the EY ITEM Club, said he did not expect any further stimulus to arise from Thursday's meeting of the Monetary Policy Committee.

He said after the PMI reading: “We expect the economy to contract around 13% quarter-on-quarter in the second quarter on the assumption that there is some lifting of restrictions on activity during the quarter.”

Reporting James Sillars

WeWork co-founder Adam Neumann files a lawsuit against Japan’s SoftBank over $3bn deal

(qlmbusinessnews.com via theguardian.com – – Tue, 5th May 2020) London, Uk – –

Former CEO of office-sharing company accuses Japanese bank of abusing its power.

Adam Neumann, WeWork’s co-founder and former chief executive, has filed a lawsuit against Japan’s SoftBank, accusing it of abusing its power in order to terminate an agreement to buy $3bn (£2.4bn) of stock from him and other early investors in the office-sharing company.

SoftBank, which is run by Japanese billionaire Masayoshi Son who is also WeWork’s biggest investor, announced in early April that it was walking away from the share tender rescue deal hammered out last October to save WeWork from collapse.

It said at the time it had “no choice” but to scrap the rescue deal because WeWork had failed to meet several conditions. It also cited concerns about “multiple, new, and significant pending criminal and civil investigations”.

Neumann would have been the biggest beneficiary of the payouts to minority shareholders, as he was lined up to sell $970m worth of shares.

The lawsuit, filed in a Delaware court, said Softbank and its Vision Fund had let down Neumann and WeWork staff.

“Mr Neumann put his trust in [SoftBank and the Vision Fund] to be stewards of WeWork, which he — and thousands of others — had worked so hard to build,” the lawsuit said.

Neumann had upheld his end of the bargain, according to the filing, while WeWork’s Japanese investors had not.

“The abuses committed by [SoftBank] and SBVF [SoftBank Vision Fund] are so brazen that they have prompted legal action by a special committee of WeWork’s board,” the lawsuit added.

Responding to Neumann’s lawsuit, Rob Townsend, the SoftBank chief legal officer, said: “SoftBank will vigorously defend itself against these meritless claims.”

He added: “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer in which Mr Neumann – the biggest beneficiary – sought to sell nearly $1bn in stock.”

Neumann resigned as chief executive last September from the firm he co-founded in 2010, after scrapping plans for a stock market flotation. Investors balked at the company’s sky-high valuation. It had been valued at $47bn, despite losing $3bn in the past three years, but that valuation was slashed to $8bn by the time of the bailout in October.

SoftBank has been losing money on its investments and last week predicted a wider full-year loss of 900bn yen (£6.8bn). It expects to lose £5.3bn from its investment in WeWork alone.

By Julia Kollewe

UK Finance figures show one in nine mortgage borrowers on payment break

(qlmbusinessnews.com via news.sky.com– Tue, 14th April 2020) London, Uk – –

UK Finance figures showed that around 61,000 mortgage holidays were being granted every day over recent weeks.

One in nine home loans in the UK are now on a mortgage holiday because of measures to support those affected by the coronavirus pandemic, new figures show.

UK Finance, the trade body for Britain's banks and building societies, said lenders had agreed to give repayment breaks to more than 1.2 million mortgage borrowers.

The number of payment holidays in place more than tripled in the two weeks between March 25 and April 8, growing from 392,130 to 1,240,680, the organisation said.

That meant an average of around 61,000 were being granted by lenders every day.

The figures were disclosed after a series of measures to help people facing financial difficulties due to the pandemic – including mortgage holidays – were announced by lenders a month ago.

For the average mortgage holder, the payment break amounts to £260 a month of suspended interest payments.

UK Finance chief executive Stephen Jones said: “The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday, and we stand ready to help more over the coming months.

“We understand that the current crisis is having a significant impact on household finances for people across the country.”

However, Mr Jones said that payment holidays were not the right solution for everyone and borrowers should check with their lenders about the support available and how to apply.

The mortgage holidays are designed to help people struggling to make their payments, for example if they have had a pay cut or their work has temporarily stopped due to COVID-19.

They can request a mortgage payment holiday of up to three months.

Payment holidays are available to customers who are up-to-date on their mortgage payments. They will still owe the money and interest will still accrue.

Homeowners applying for a mortgage payment holiday will need to self-certify that their income has been either directly or indirectly impacted by coronavirus.

UK Finance has said firms will make every effort to ensure payment holidays do not negatively impact on credit files.

It added that telephone lines were extremely busy so customers were advised to look at their lender's website in the first instance.

Borrowers have been urged not to cancel their direct debits before a payment holiday has been agreed, as this will be counted as a missed payment and could impact their credit file.

Banks have been under pressure to act as the coronavirus crisis takes a heavy toll on the economic situation of millions of Britons.

Many have already axed dividends and cut bonuses for top bosses.

But analysis by Sky News last week revealed that banks were raising interest rates on mortgages, defying efforts by the Treasury and Bank of England to ease the burden on households.

John-Paul Ford Rojas

Pound takes a hit as Boris Johnson’s battles coronavirus

(qlmbusinessnews.com via news.sky.com–Tue, 7th April 2020) London, Uk – –

Market experts say the PM's condition will be reflected in sterling's value as he is treated for COVID-19 in intensive care.

The pound has taken a hit against the safe haven dollar on news of Boris Johnson's deterioration as he battles coronavirus in intensive care.

Sterling lost six tenths of a cent against the greenback late on Monday evening when it was confirmed the PM's condition had taken a turn for the worse.

Market analysts warned that the UK currency was likely to be pegged to developments on Mr Johnson's health as Dominic Raab, the foreign secretary, steps up to assume some of his responsibilities.

The pound had been trading at around $1.23 in advance of the Downing Street statement but had recovered most of the ground lost during Asia trading overnight.

Its fortunes were in stark contrast to those of equity markets after the week began with solid gains in Asia and in Europe.

The Dow Jones Industrial Average in New York clawed back almost 8% of value lost since markets first took fright from COVID-19 in February.

Tuesday saw a cautious clawback in Asia, despite that lead from New York, while the FTSE 100 built on the previous session's 3% gain and was a further 3% up, hitting 5,752 going into the afternoon.

Coronavirus: Prime Minister Boris Johnson moved to intensive care after condition worsens

Analysts saw US indices making further strides at the open on Wall Street.

They attribute the rally this week to signs the COVID-19 crisis could be easing in the worst-hit regions of Europe.

Travel-related stocks – worst hit since the rout in values began in February – saw the biggest gains in London with cruise operator Carnival and easyJet both up 20% though still sharply down on the year to date.

Oil firms also staged a recovery on growing investor hopes of an output cut to boost weak prices being agreed by major producing nations.

Cineworld was among companies to update on its fortunes – as all its 787 cinemas closed globally.

It suspended the payment of its latest dividend while bosses said they had agreed to defer pay and bonuses.

But market analysts said the pound was a clear focus given Mr Johnson's condition – marking a new front for its fortunes since the collapse in value witnessed since the Brexit vote in 2016.

Chris Scicluna, head of economic research at Daiwa, said: “Clearly the pound has weakened and that reflects the uncertainty and clarity over how much authority Raab will have.

“From an economic point of view there's unlikely to be much change.

“But if and when there are difficult decisions to be made, the lack of guidance at the top could be concerning.”

Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo, said: “The currency market has remained fairly calm, but there will be more downside for sterling if Johnson's condition worsens.”

By James Sillars

US Senate agree massive economic relief package worth more than $1.8 trillion

(qlmbusinessnews.com via bbc.co.uk – – Wed, 25th Mar 2020) London, Uk – –

US President Donald Trump and the Senate have agreed a massive economic relief package worth more than $1.8 trillion (£1.5tn).

The package includes money to bail out industries that have been affected by the coronavirus crisis.

Republican Senate Majority leader Mitch McConnell described it as a “wartime level of investment” in the economy.

Markets surged in the US on Tuesday in anticipation of a deal, and shares rose in Europe and Asia on Wednesday.

On Wall Street, the Dow Jones jumped by 11.4% on Tuesday – its biggest one-day gain since the Great Depression.

Japan's benchmark Nikkei 225 index closed 8% higher on Wednesday following news of the relief deal.

Markets in Europe were also trading higher, with London's FTSE 100 index up more than 1%.

Full details of the deal agreed in the US will not be published until later on Wednesday. However, it is expected to contain measures to help people pay bills if they are laid off because of the virus, expand unemployment assistance by $250bn and get $350bn in emergency loans to small firms.

Mr McConnell said it would also “stabilise” key industrial sectors and give money to hospitals and other healthcare providers which were having difficulty getting equipment.

“We're going to pass this legislation later today,” Mr McConnell added.

Senate Democratic Leader Chuck Schumer called the package “the largest rescue package in American history”. He said it was a “Marshall Plan” for hospitals. “Help is on the way, big help and quick help.”

Separately on Tuesday, President Trump said he wanted to get the economy up and running again by Easter.

He said he was speaking to the Coronavirus Taskforce about when to open the US for business and that the Easter weekend -12 April – presented a “beautiful time, a beautiful timeline” and that he hoped to be able to open at least some sections of the country.

Reacting to news of the stimulus package, Tom Stevenson, investment director at fund manager Fidelity International, said: “It's good news, but we're not out of the woods yet.

“When markets are falling, you get these big rallies but you shouldn't get stuck on that. They do bounce around in these situations.”

The latest swing in share prices continues a period of unprecedented volatility as markets react wildly to the economic impact of the coronavirus pandemic.

This month alone has seen the Dow having the five biggest daily gains and five biggest falls of its 135-year history.

Many countries are now working on stimulus packages to support their economies, but these plans have received mixed responses from investors.

The US rescue package follows five days of intense negotiations to try to agree a deal that will provide aid for American workers and businesses.

Before it becomes law the deal must get through the Republican-controlled Senate, the Democrat-controlled House of Representatives and be signed by President Trump.

The US central bank, the Federal Reserve has already announced $4tn in extra lending to help stimulate the economy in the face of the coronavirus.

Last week, Treasury Secretary Steve Mnuchin predicted that US unemployment could reach 20%. On Thursday, the Treasury Department will release last week's new jobless claims, and the numbers are expected to be in the millions.

A Goldman Sachs report estimated that the nation's gross domestic product in the second quarter could shrink by 24%, dwarfing the previous 10% record decline in 1958.

Global spread

America is more than midway through a 15-day attempt to slow the spread of the virus through social distancing.

Nearly 19,000 people have died with coronavirus across the planet since it emerged in China's Wuhan province in January, and more than 420,000 infections have been confirmed.

Southern Europe is now at the centre of the pandemic, with Italy and Spain recording hundreds of new deaths every day.

Governments around the world have responded by locking down societies in the hope of slowing the spread of the virus.

RBS Group plans to change its name to NatWest later this year

(qlmbusinessnews.com via bbc.co.uk – – Fri, 14th Feb2020) London, Uk – –

Royal Bank of Scotland (RBS) Group has said it plans to change its name later this year, as it reported a near doubling of annual profits.

The Edinburgh-based bank, which owns RBS, NatWest and Ulster Bank, said it would rename itself as NatWest Group.

The bank reported profits of £3.1bn for 2019, nearly double the £1.6bn seen the year before.

New RBS chief executive Alison Rose called the results the “start of a new era” for the bank.

It is thought that Ms Rose is hoping a rebrand will help shift the lender's image away from its association with the financial crisis.

The bank was rescued by the government in 2008 in the aftermath of the financial crisis at a cost of £45bn and it is still 62% state-owned.

Ms Rose told the BBC's Today programme that the name change would not alter any services for RBS or NatWest customers.

About 80% of the bank's customers are thought to use NatWest. Names of individual NatWest and RBS branches will remain the same.

She also said that the name change would not result in any job cuts across the group.

This is Ms Rose's first set of results for the lender. She became the first woman to lead one of the so-called big four largest UK banks when she was appointed last year.

Analysis: Dharshini David

Crucial questions unanswered

Today's announcement was not just the first set of full-year results unveiled by new chief executive Alison Rose but also the long-awaited unveiling of her strategy.

But many crucial questions remain unanswered, with Ms Rose failing to address recent press reports that claimed job cuts may be in store.

RBS was the subject of a £45bn state bailout during the financial crisis, and remains 62% taxpayer-owned. A 25-year veteran of the bank, Alison Rose is one of the few senior executives left from the pre-crisis era, when former boss Fred Goodwin's overambitious expansion plans left the bank in a perilous state.

More than a decade on, it falls to her to complete the clean-up operation. She says the name change for the parent company marks a new era, but the real challenge is to prove she can get the bank back into a state where the remaining stake can be sold without incurring a hefty loss for taxpayers.

Climate commitment

RBS also announced it was committed to “at least halve the climate impact” of its financing activity by 2030.

It says it will stop lending to coal companies by the end of the decade.

The bank also confirmed it would make its own operations “net carbon zero” by the end of this year.

That follows on from a pledge by Lloyds Banking Group to halve the amount of carbon emissions it finances through personal and business loans by 2030.

A continuity candidate

Ms Rose has been at RBS for more than 25 years, mainly in a number of roles in its investment bank.

She was previously deputy chief executive of NatWest Holdings, and before Ms Rose was appointed chief executive of the RBS group she was head of commercial and private banking.

She worked her way up after joining the bank as a graduate trainee in 1992.

Unlike her predecessor Ross McEwan, she is based solely in London, although the bank has its headquarters in Edinburgh.

Ms Rose is also paid more than her predecessor, with her annual salary set at £1.1m compared with Mr McEwan's £1m.

Shares hit

RBS's share price fell by nearly 5% after its results.

Neil Wilson, chief market analyst at Markets.com, said markets needed “some convincing”, despite the jump in profits.

But he said “it's clear RBS is putting legacy conduct issues behind it and has got the payment protection insurance (PPI) monkey off its back”.

The bank took a £900m charge for mis-sold PPI in 2019, which was at the top end of its expectations.

Mr Wilson added: “Now that the PPI deadline has passed, the bank has much greater visibility of future cash generation.”

How Global Trade Runs on U.S. Dollars

Source:WSJ

Nearly 90% of international transactions in 2019 were in U.S. dollars, giving the U.S. extraordinary power over nearly every entity that imports or exports anything anywhere. Here’s how the global economy runs on the U.S. dollar — and why some countries are trying to chip away at its dominance.

Coronavirus fears cause shares and oil price to fall

(qlmbusinessnews.com via bbc.co.uk – – Mon, 27th Jan 2020) London, Uk – –

Worries over the continued spread of the coronavirus have hit the financial markets, with London's FTSE 100 share index dropping more than 2%.

Airlines and companies with significant sales in China saw some of the biggest share price falls.

The coronavirus has killed 81 people in China with almost 3,000 confirmed ill, while at least 44 cases have been confirmed abroad.

The price of oil also fell, with Brent crude dropping 3% to $58.65 a barrel.

Among the biggest share price declines was luxury clothes maker Burberry, which fell 5.5%. It makes about 16% of its sales in China, one of its fastest-growing markets, and has warned investors that a drop in Chinese spending could spell a decline in its own revenues.

Shares in InterContinental Hotels Group dropped 4.7%. It says China and Hong Kong are a “growing share of our business” and contributes 8% of the firm's profit.

British Airways owner IAG, which also contains Iberia, fell 5.6%, while HSBC Holdings, which takes most of its profit from Asia, fell 3.5%.

Shares across Europe saw similar declines, with the German Dax and French Cac 40 indexes both down by about 2%.

Analysts at research firm Bernstein say Chinese consumers had spent $149bn (£114bn) during the Chinese New Year celebrations last year and that will probably be smaller this year due to travel curbs.

Companies in China have advised staff to work from home in an attempt to slow the spread of the deadly coronavirus.

Businesses are also offering workers longer holidays, as well as telling employees returning from the most affected areas to stay away from work.

Janet Mui, global economist at Cazenove Capital, told the BBC's Today programme that China's economy could suffer as the outbreak has happened over Chinese New Year, when a lot of shopping is done and gifts exchanged.

“If you look at history the most comparable example would be the Sars episode in 2003,” she said.

China's annual growth slumped from 11% to 9% in the wake of that outbreak.

Greggs to pay staff special bonus after success of UK vegan sausage roll

(qlmbusinessnews.com via uk.reuters.com — Wed, 8th Jan 2020) London, UK —

LONDON (Reuters) – British bakery operator Greggs (GRG.L) said will pay staff a special bonus after what the CEO described as a “phenomenal” year that included the launch of a vegan-friendly sausage roll and higher-than-expected profits.

Greggs, present in more than 2,000 stores in Britain, recently also launched a vegan version of its steak bake as more and more Britons try to cut down on meat and dairy.

The company said it would spend 7 million pounds ($9.2 million) on a one-off payment for its 25,000 employees, giving around 19,000 of its longest-serving staff about 300 pounds each.

CEO Roger Whiteside called 2019 “phenomenal” and said Greggs, which already shares 10% of annual profits with staff, was making an extra payout for the first time.

“This is all about the front line getting 300 pounds in their pocket as a thank you at the end of January for their help in delivering what has been an exceptional year,” he said.

Underlying store sales grew 9.2% over the 12 months to 28 December, as it attracted new customers for products including a vegan donut and vegan soups.

In a sign of the fanfare attached to vegan launches, earlier in January, dozens of people were pictured queuing at midnight at a Greggs branch in northern England to be the first to try the vegan steak bake.

“They’re flying off the shelves,” Whiteside said of the steak bake, which is made with meat substitute Quorn.

Annual pretax profit would be “slightly higher” than expectations, it said.

Analysts expect Greggs to post a 24% jump in pretax profit to 111.6 million pounds for 2019, Refinitiv data shows.

Whiteside said there would be headwinds in 2020 however as wage costs and the price of pork both rise.

Shares in Greggs, up 70% in the last year, were down 2% in early trade before moving into positive territory, standing up 0.7% at 0957 GMT.

Future growth would come from more shops at airports, drive-throughs and by expanding its home-delivery business, he said.

Whiteside, a former Marks & Spencer and Ocado executive, has overseen a 405% share price rise since he took over in 2013.

Greggs was founded in 1939 when John Gregg, who had started off delivering eggs and yeast by bicycle, set up a shop.

By Sarah Young

Oil prices have risen sharply after the killing of a top Iranian general in Iraq

(qlmbusinessnews.com via bbc.co.uk – – Fri, 3rd Jan 2020) London, Uk – –

Oil prices have risen sharply after the killing of a top Iranian general in Iraq.

Analysts warned the action could escalate tensions in the region and affect global oil production.

The price of Brent crude jumped by more than 4% to hit $69.50 a barrel at one point, the highest since mid-September.

It came after General Qasem Soleimani was killed in a US drone strike at Baghdad airport, which the Pentagon described as “defensive action”.

The price spike pushed oil stocks on the London stock exchange higher, with BP up 2.7% and Royal Dutch Shell nearly 1.9% higher.

Shares in US oil companies such as Exxon Mobil dropped, however, amid a wider US market fall prompted by weak manufacturing data and concerns about the implications of the Middle East conflict.

At mid-day in New York, the Dow was down about 0.7%, while the S&P 500 was off 0.5% and the Nasdaq was 0.6% lower. The declines followed record highs a day earlier.

“2020 opened on a very positive note,” said Aneeka Gupta of Wisdom Tree. “This event has actually stalled the bullish optimism we've seen.”

Sanctions

Tensions between the US and Iran have been rising since the US pulled out of a nuclear deal between Iran and other countries meant to curb Iran's nuclear programme and prevent it from developing nuclear weapons.

The US also reimposed sanctions on Iran, a move that has hurt the country's economy and severely restricted its oil exports.

This recent strike has sparked new fears of risks to energy supplies in the region.

Several of the world's biggest oil producers can be found in the area, which could be affected if there were a wider military confrontation involving Iran.

As much as a fifth of global supplies pass through the Strait of Hormuz, a narrow passage which provides access to the Gulf.

Caroline Bain, analyst at Capital Economics, said further conflict would likely lead to additional, short-term spikes in oil prices.

But even if tensions subside, the firm expects the cost of oil to move higher this year due to “output restraint, slower growth in US oil production and a gradual pick-up in global economic growth,” she added.

What does this mean for oil markets?

Analysis by Andrew Walker, BBC World Service economics correspondent

The potential disruption to the global oil market from conflict in the Gulf is severe.

The US Energy Information Administration estimates that 21% of oil used in 2018 passed through the Strait of Hormuz, a narrow passage which has Iran on its northern shore.

Some of the biggest producers would be affected if the Strait could not be safely navigated. Saudi Arabia, Iraq, Kuwait, Iran, UAE and Qatar all ship some or all of their exports via the Strait.

Saudi and the UAE have pipelines that bypass the Strait but they have nowhere near the capacity to take all the oil. There is also the possibility of Iranian military action against other countries' oil installations.

Last year there was a drone attack on the Saudi industry. Houthi rebels from Yemen claimed responsibility and they are widely seen as having Iranian backing.

Previous episodes of Middle East conflict have seen higher oil prices which contributed to global economic slowdowns, from the mid-1970s to the early 1990s.

What is different now, and what might moderate the impact, is the presence of the US shale industry, which can respond relatively quickly to supply shortfalls and higher prices.

UK Manufacturers see orders pick-up after no-deal Brexit avoided – CBI

(qlmbusinessnews.com via uk.reuters.com — Tue, 19th Nov 2019) London, UK —

LONDON (Reuters) – British manufacturers saw a pick-up in orders in November albeit from near decade-low levels, helped by the avoidance of a no-deal Brexit at the end of October, a survey by the Confederation of British Industry showed on Tuesday.

The CBI’s monthly orders balance rose to -26 from -37 in October, their highest level since August and stronger than a median forecast of -31 in a Reuters poll of economists.

October’s level of orders was the weakest in nine years.

“While the thick fog of uncertainty from a no-deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy,” Anna Leach, the CBI’s deputy chief economist, said.

“It’s clear that the outlook for the sector remains precarious.”

Export orders picked up after touching their lowest level since the financial crisis of 2008.

Manufacturers expected output to be flat over the next three months, the CBI said.

The European Union has set a new Brexit deadline of Jan. 31 and Prime Minister Boris Johnson has called an election for Dec. 12 in a bid to break the impasse in parliament over the divorce deal he negotiated with Brussels.

Reporting by William Schomberg

BP profits fall amid weak oil prices and hurricane impact

(qlmbusinessnews.com via theguardian.com – – Tue, 29th Oct 2019) London, Uk – –

BP’s profits have fallen sharply as global oil prices tumble amid gloomy forecasts for the global economy.

The oil major reported underlying profits of $2.3bn (£1.76bn) for the last three months on Tuesday morning, compared with $3.8bn in the same months last year.

The decline comes just weeks after BP announced its chief executive Bob Dudley would step down after almost a decade at the helm.

Dudley blamed weaker global oil prices, a string of one-off financial costs and the impact of Hurricane Barry, which dealt a “significant” blow to BP’s oil production in the Gulf of Mexico in July.

Dudley will end his four-decade career at BP early next year and be replaced in February by Bernard Looney, currently head of exploration and production.

The profits from Looney’s business division fell to $2.1bn for the last quarter, from $3.4bn in the same months last year following a fall in the global oil price.

The oil price has slumped to an average of $62 a barrel in the last quarter, from more than $75 a barrel a year ago.

The oil price slide comes a year after the oil major agreed to buy a $10.5bn stake in the US shale boom from BHP Billiton, in a deal seen as a show of confidence that global oil prices would remain at about $70 a barrel.

Brian Gilvary, the BP chief financial officer, told Bloomberg the company was able to get the deal over the line due to higher oil prices over last summer – and he expected oil prices to remain at about $70 a barrel.

There has been growing public opposition in recent months to the fossil fuel giant’s contribution to the climate crisis. Earlier this month the Royal Shakespeare Company ended its sponsorship deal and protesters targeted the National Portrait Gallery over BP’s ongoing support.

An investigation by the Guardian revealed that 20 oil and gas companies – including BP, Shell, Chevron, ExxonMobil and Total – could be directly linked to a third of greenhouse gas emissions since 1965.

The companies are planning to keep increasing their oil production, despite global efforts to avoid a runaway climate crisis by limiting carbon emissions, in large part from US shale reserves.

By Jillian Ambrose

HSBC business restructuring plans fuel fears of job cuts

(qlmbusinessnews.com via bbc.co.uk – – Mon, 28th Oct 2019) London, Uk – –

HSBC is planning to restructure its business after the banking giant said its performance in parts of Europe and the US was “not acceptable”.

Interim chief executive Noel Quinn said plans to improve these divisions were “no longer sufficient” and that it was “accelerating plans to remodel them”.

Earlier this month, the bank, which employs 238,000 people, was reported to be planning up to 10,000 job cuts.

On Monday, Mr Quinn said there was “scope” for potential cuts,

“There is scope throughout the bank to clarify and simplify roles, and to reduce duplication,” he told Reuters. However, Mr Quinn did not provide any further details on potential job cuts.

Mr Quinn took over as HSBC's acting chief executive in August following the shock departure of John Flint.

His remarks came as the bank reported worse-than-expected third-quarter profits.

Europe's largest bank said profit before tax fell 18% to $4.8bn (£3.8bn) in the three months to September, and also warned of a “challenging” environment ahead.

HSBC has been navigating uncertainty arising from Brexit, the US-China trade war and ongoing unrest in Hong Kong.

However, Mr Quinn praised the bank's performance in Asia – the region where it makes most of its profits.

“Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,” said Mr Quinn.

“However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US.”

Analysis: By Dominic Oconnell

HSBC's dual nature – listed in London and Hong Kong and standing astride the trade flows between east and west – has often been a source of comfort for investors, who like a bank that doesn't have all its eggs in one basket.

It has also, however, been a source of discomfort for the bank and its shareholders. A dozen years ago, activist investor Knight Vinke led a campaign against HSBC's board, accusing it of corporate governance failings and urging it to stop spending money on western markets and concentrate on Asia, where there were more and more profitable opportunities for growth.

Fast forward to today and those same themes run through the first financial results from Noel Quinn, the bank's interim chief executive.

Mr Quinn, a battlefield promotion after the abrupt departure of John Flint in August, is clearly making his pitch for the getting the job full-time.

Statements from bank chief executives are normally bland in the extreme, but Mr Quinn pulls no punches, saying performance in the UK, Europe and US was “not acceptable” and that restructuring plans to focus on the Asian operations would be accelerated.

The bank has also warned there will be one-off financial hits in the next quarter to pay for the restructuring – which is likely to be shorthand for big job cuts to come.

The Financial Times reported earlier this year that HSBC would cut as many as 10,000 jobs; given the language in which Mr Quinn has couched his warnings about the bank's performance, that looks a likely outcome.

‘Significant charges'

HSBC said the revenue environment was “more challenging” than in the first half of the year, and predicted “softer” revenue growth than previously anticipated.

It also warned of “significant charges” in the fourth quarter – including those related to restructuring – if the backdrop worsened further.

While HSBC warned earlier this year that profits would be hit by a slowdown in China, the broader region was profitable for the bank in the third quarter.

The bank said profit before tax in Asia rose 4% to $4.7bn in the period, citing “resilience” in Hong Kong.

It follows months of unrest in the territory that have raised concerns about the impact on the economy and the reputation of the Asian financial hub.

Marks & Spencer demoted from the FTSE 100 for the first time

(qlmbusinessnews.com via theguardian.com – – Wed, 4th Sept 2019) London, Uk – –

Exit of founding member of top City share index is latest sign of retailer’s declining fortunes

Marks & Spencer is to be demoted from the FTSE 100 for the first time in the latest sign of the declining fortunes of the retailer, which was a founding member of the leading City share index.

Relegation to the FTSE 250 comes as the company is closing 120 stores as part of an overhaul designed to shore up profits.

M&S’s demotion reflects a share price at nearly a 20-year low as a long-running sales slump at the retailer’s clothing arm is compounded by the high street crisisaffecting rivals including Debenhams and House of Fraser.

The FTSE 100, which was established in 1984, contains the UK’s biggest listed companies by market value, with membership considered a mark of business prestige. The index is reshuffled four times a year according to share price movements, allowing a handful of companies to move up and down.Q&A

Marks & Spencer timeline

Tony Shiret, an analyst at the stockbroker Whitman Howard, said: “It is significant [for M&S] in the sense that it is a fairly objective measure of the diminished scale of the company.”Advertisement

M&S shares closed down 1.5% at 187p, valuing the company at £3.6bn.

A decade ago, M&S was making a £1bn annual profit but the latest figure was below £100m on the back of more than £400m of restructuring costs relating to the revamp being led by the company’s chair, Archie Norman, who is highly regarded for turnarounds during his career including at Asda and ITV.

Losing its FTSE 100 status means M&S shares will no longer be held by the investment funds that only track the index of Britain’s highest-value companies, forcing them to dump the stock. Norman has previously been sanguine on the matter, saying: “When I went to ITV we dropped out of the FTSE 100, the sky didn’t fall in.”

Last year, he told shareholders M&S had bigger problems because it was facing an existential threat as retail shopping moved online. “This business is on a burning platform. We don’t have a God-given right to exist and unless we change and develop this company the way we want to, in decades to come there will be no M&S,” Norman warned.Q&A

What is the FTSE 100 and why does it matter?

Nick Bubb, a retail analyst, said M&S had been in the relegation zone for some time. “M&S has been declining remorselessly for many years, as a result of weak and arrogant management, and stronger, more focused competition [such as Primark]. The problems have mainly been on the clothing side, where M&S tries and fails to be all things to all people in the mid-market,” he said.

M&S – which was founded on a Leeds market stall in 1884 – was late to adapt to the rise in online shopping, hampered by its legacy of 300 clothing stores. Many of the chain’s shops predate the second world war and are no longer in the right place or are the wrong size for their local market.

Norman is putting the company through its biggest shake-up in a generation. He has paid £750m for a 50% share in Ocado’s retail arm and, from autumn next year, M&S products will replace Waitrose-branded goods in shoppers’ deliveries. But investors are split on the merits of the deal, with some arguing the company has taken an expensive route into the fast-growing online grocery market.

But Norman, who is working closely with the company’s chief executive, Steve Rowe, has had his work cut out reviving the M&S clothing business, which remains the country’s biggest in sales terms despite seven years of decline.

In July, M&S sacked its clothing head Jill McDonald after she failed to get a grip on the biggest job in high street fashion. At the time, Rowe – who is now running the business – revealed buying errors meant key products such as jeans had sold out, resulting in the poorest stock levels “I have ever seen in my life”.

With FTSE 100 membership purely a function of market cap size, Bubb said: “Other companies have grown bigger and M&S has got smaller. Life will go on after the exit from the FTSE 100 and in some ways, a lower profile might help M&S.”

By Zoe Wood 

UK firm Just Eat agrees £9bn merger with Takeaway.com

(qlmbusinessnews.com via theguardian.com – – Mon,29th July 2019) London, Uk – –

British firm joins Dutch rival to form one of the world’s biggest online food delivery companies

Just Eat is merging with its Dutch rival Takeaway.com in a £9bn deal that will create one of the world’s biggest online food delivery companies.

The two companies have reached an agreement in principle on the key terms of an all-share deal in which the Amsterdam-based company will acquire Just Eat at 731p a share, valuing the British firm at £5bn.

The combined group had 360m orders worth €7.3bn (£6.6bn) in 2018 and strong positions in the UK, Germany, the Netherlands and Canada.

Shares in Just Eat jumped 25% to 794.28p on the news.

Just Eat shareholders will receive 0.09744 Takaway.com shares for each Just Eat share and will own 52.2% of the combined group. It will be headquartered in Amsterdam and listed on the London Stock Exchange, with a “significant part of its operations” in the UK.

Takeaway.com’s boss, Jitse Groen, is to become chief executive of the new company. It will be chaired by the Just Eat chairman, Mike Evans, while the Takeaway.com chairman, Adriaan Nühn, becomes vice-chairman. The Just Eat chief financial officer, Paul Harrison, will take on the same role for the combined group, and its interim chief executive, Peter Duffy, will leave.

Groen has described the UK as one of the best three markets in Europe, along with the Netherlands and Poland. Takeaway.com was founded in 2000 and operates in 10 European countries as well as Israel and Vietnam but does not have a presence in the UK. The two companies have little geographical overlap apart from Switzerland.

Analysts at Barclays said: “Just Eat shareholders would be getting the best operator in the space to run the business – a notable shift from missed execution from management in the last few years.”

There has been a flurry of deals in the fast-growing online food delivery market, with competition heating up from Uber Eats and Deliveroo. Just Eat bought UK firm HungryHouse in January 2018, and in December Takeaway.com acquired Delivery Hero’s food delivery business in Germany.

The Canaccord analyst Nigel Parson said: “It is a possibility that Delivery Hero could table a rival bid.”

Just Eat has come under pressure from its activist shareholder Cat Rock Capital to merge with Takeaway.com, in which the US hedge fund also holds a stake.

Just Eat gained more than 4 million customers last year across Europe, Canada, Brazil, Australia and New Zealand. Its revenues are expected to top £1bn this year. It made a pretax profit of £101.7m last year, following a £76m loss in 2017. It will publish first-half results on Wednesday.

In 2018, Just Eat had 26.3m customers while Takeaway.com had 14.1m, Just Eat had 221m orders versus Takeaway.com’s 94m; Just Eat’s revenue was £780m versus Takeaway.com’s €232m; and Just Eat’s underlying profit (Ebitda) was £180m versus an adjusted loss of €11m for Takeaway.com.

Launched by five Danish entrepreneurs in 2001, Just Eat originally linked customers to restaurants that handled their own deliveries. Its former chief executive Peter Plumb, who left suddenly in January, upgraded its technology and launched its own delivery service but he came under fire from Cat Rock and other shareholders after his investment drive slowed earnings growth.

By Julia Kollewe

UK may be entering full-blown recession: budget watchdog

(qlmbusinessnews.com via uk.reuters.com — Thur, 18th July 2019) London, UK —

LONDON (Reuters) – Britain might be entering a full-blown recession and a no-deal Brexit could more than double the country’s budget deficit next year, the watchdog for public finances said on Thursday.

The Office for Budget Responsibility said the world’s fifth-biggest economy appeared to have flat-lined or possibly contracted in the second quarter, some of which was probably “pay-back” after Brexit-related stock building in early 2019.

“But surveys were particularly weak in June, suggesting that the pace of growth is likely to remain weak. This raises the risk that the economy may be entering a full-blown recession,” it said in a report on the outlook for the public finances.

A no-deal Brexit would hurt confidence and deter investment and lead to higher trade barriers with the European Union, pushing down the value of the pound and causing the economy to contract by 2% by the end of 2020, the OBR said, referring to forecasts by the International Monetary Fund.

A no-deal Brexit – something the two contenders seeking to be Britain’s next prime minister say they are prepared to do if necessary – could add 30 billion pounds ($37.4 billion) a year to public borrowing by the 2020/21 financial year, the OBR said.

The OBR said the spending and tax cut promises made by Boris Johnson and Jeremy Hunt, one of whom is due to become prime minister next week, would put a strain on the budget.

“The spending control framework seems to be under pressure, with major announcements being made outside fiscal events, and the Conservative leadership making pledges that would prove expensive if pursued,” it said.

Reporting by David Milliken

Bitcoin falls below $10,000 down 30% from last week

(qlmbusinessnews.com via theguardian.com – – Tue, 2nd July, 2019) London, Uk – –

Cryptocurrency climbed to nearly $14,000 on news social network was launching rival

The price of bitcoin has fallen back below $10,000, down 30% from last week’s peak of nearly $14,000.

Continuing its wild ride, the digital currency dropped to $9,717 on Tuesday, down 8.1% on the day. Last Wednesday, the cryptocurrency shot up to $13,879, breaking through the $12,000 and $13,000 levels in less than two hours.

Bitcoin had languished below $6,000 for months, but was galvanised by Facebook’s plans to create a cryptocurrency called Libra next year.Q&A

What is bitcoin and is it a bad investment?

Other digital currencies have also fallen back. Reports that an investor placed a large short order on Sunday, betting that the bitcoin price would go down in coming days, sparked panic among investors.

Bitcoin has seen wild swings in the past, and some analysts say it could rise back to $20,000 again – or fall as low as $3,000. In late 2017, it rose to close to $20,000, before a spectacular collapse in 2018.

The cryptocurrency’s latest gyrations prompted the US economist Nouriel Roubini, a long-time critic, to say that the bitcoin price would eventually fall to zero. He tweeted: “Its true value is negative, not zero, given its toxic externalities! It will get to zero in due time.”

Simon Peters, an analyst at global investment platform eToro, said: “We appear to be in a period of indecision, where the market is figuring out where to go next after its heavy surge and sell-off.”

Investors hope Facebook’s entry into digital currencies will bring greater legitimacy to the sector. Regulators around the world have warned that the move could lead to greater controls and tougher regulation to protect consumers.

Mark Carney, the governor of the Bank of England, cautiously welcomed Libra. He said the central bank would support new entrants into the UK financial system, but warned that Facebook would need to meet the highest regulatory standards.

Bloomberg reported last week that Henry Kravis, the co-founder of the US private equity firm KKR, had become the latest financier to bet on cryptocurrencies. He is investing in a cryptocurrency fund provided by ParaFi Capital. Other high-profile investors include British hedge fund manager Alan Howard, PayPal co-founder Peter Thiel and US hedge fund manager Louis Bacon.

By Julia Kollewe

Markets rally after US and China agreed to restart trade talks

(qlmbusinessnews.com via news.sky.com– Mon, 1st July 2019) London, Uk – –

The FTSE 100 rose by about 1% to reach a two-month high following developments at the G20 summit over the weekend.

Stock markets have rallied after the US and China agreed to restart trade talks, easing fears over the escalation of a damaging dispute between the world's two biggest economies.

The FTSE 100 was around 1% higher, taking the index above the 7,500-mark to its highest level since late April, while European bourses also made strong advances.

That followed gains for Asian markets overnight, after a meeting between Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 meeting over the weekend.

Mr Trump offered concessions including not imposing any new trade tariffs and easing restrictions on Chinese tech company Huawei – which has recently been placed on a US blacklist.

China agreed to make unspecified new purchases of US farm products and to return to the negotiating table.

The developments helped the FTSE turn higher when trading resumed on Monday, led by industrial group Melrose – up by more than 3% – while Asia-focused financial powerhouses Prudential and HSBC also made gains.

An upturn in the oil price – with Brent crude rising 3% to nearly $67 a barrel – also lifted stocks.

The rise came after OPEC and other oil-producing countries looked set to extend supply cuts at a meeting in Vienna.

That helped boost UK-listed BP, up 2%, and Royal Dutch Shell, more than 1% higher.

In Germany – an exporting giant especially susceptible to global trade tensions – the Dax rose by 1.6% in early trading.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: “Trump and Xi gave investors what they wanted at the G20 meeting in Osaka this Saturday: hope.

“A deal is not sealed just yet, but the two countries showed mutual willpower to end the deadlock and move on with the talks.”

By John-Paul Ford Rojas, business reporter

UK sales of houses worth £1m have risen – but London suffers a decline

(qlmbusinessnews.com via news.sky.com– Thur, 27th June 2019) London, Uk – –

The rise in numbers of £1m homes was seen in Scotland, Wales, the Midlands and in the north of England – but London saw a fall

The number of homes worth a million pounds or more that have been sold nationally has reached a record high – despite a fall in London.

In total, the number of sales of houses valued at £1m or more increased by 1% in 2018 to a new high of 14,638 – which is the highest number recorded, according to Lloyds Bank.

The number of homes sold for more than £2m was down though, from 2,530 in 2017 to 2,501 in 2018.

The rise in numbers of £1m homes was seen in Scotland, Wales, the Midlands and in the north of England, according to Lloyds, which analysed Land Registry and Registers of Scotland figures.

However, sales in London and the South East remained relatively flat, despite making up around 80% of the sales for homes worth over £1m.

8,267 million pound homes were sold in London in 2018 – down from 8,308 in 2017.

The capital also saw a 3% fall in the sales of homes worth more than £2m, from 1,946 to 1,886 over the course of a year.

The South East showed no major growth in the sale of million pound homes, with 3,390 being sold, which is only 13 more than than the year before.

In Yorkshire and the Humber, the number of million pound homes sold dramatically fell by 23% year-on-year in 2018, with only 103 sales made.

The south-west of England saw a 1% fall from 676 homes in 2017 to 668 in 2018.

Louise Santaana from Lloyds Bank said: “The high-value property boom the country has experienced over the last decade has decelerated in the past 12 months, which is in line with expectations.

“However, while growth across London and the South East has slowed, there are still a number of property hotspots across the country that would create some value for investors, particularly in the East Midlands.”Sponsored Links

Huawei to cut production by $30bn amid US-led backlash

(qlmbusinessnews.com via bbc.co.uk – – Mon, 17th June 2019) London, Uk – –

Huawei founder Ren Zhengfei has said the Chinese telecoms giant will slash production by $30bn (£23.9bn) over the next two years as a US-led backlash against the firm intensifies.

Speaking at the firm's headquarters, Mr Ren said sales were expected to remain flat at $100bn in 2019 and 2020.

Last month, the US put Huawei on a list of companies that American firms cannot trade with unless they have a licence.

The move marked an escalation in efforts by Washington to block Huawei.

The US argues that the Chinese company – the world's largest maker of telecoms equipment and the second biggest smartphone maker – poses a security risk.

“In the coming two years, the company will cut production by $30bn,” Mr Ren said at a panel discussion at the firm's headquarters in Shenzhen.

However, Mr Ren said the company would “regain [its] vitality” in 2021.

Spending on research and development would not be cut, Mr Ren added, despite the anticipated hit to the firm's finances.

The Huawei founder had previously downplayed the impact of the US restrictions on the Chinese firm.

However, the actions by the US have prompted tech companies around the world to retreat from Huawei.

Google barred Huawei from some updates to the Android operating system, meaning new designs of Huawei smartphones are set to lose access to some Google apps.

Japan's Softbank and KDDI have both said they will not sell Huawei's new handsets for now.

UK-based chip designer ARM told staff it must suspend business with Huawei, according to internal documents obtained by the BBC.

Surveillance fears

Washington's clampdown on Huawei is part of a broader push-back against the company, over worries about using its products in next-generation 5G mobile networks.

Several countries have raised concerns that Huawei equipment could be used by China for surveillance, allegations the company has vehemently denied.

Huawei has said its work does not pose any threats and that it is independent from the Chinese government.

However, some countries have blocked telecoms companies from using Huawei products in 5G mobile networks.

So far the UK has held back from any formal ban.