Economics
Interest rates The Times Monetary Policy Committee voted narrowly by 5
to 4 to recommend that the Bank of England should hold interest rates today.
A majority of the panel of experts said that evidence of a slowdown in the
economy was not yet sufficient to justify a further cut after the reduction
in December, while inflation risks persisted.
UK economy Britain’s reliance on the financial sector as an engine for
the economy has left it more exposed than most developed nations to fallout
from turmoil in the money markets and from the global credit squeeze, the
World Economic Forum said. Challenges to global prospects this year from a
slate of economic and political risks are the most severe that the world has
faced in a decade, with dangers from global financial upheavals the most
immediate and acute threat, according to the forum.
Sterling continued to come under heavy pressure on the currency
markets, sliding to a new record low against the euro, which almost breached
the 75p barrier before closing in London at 74.91p. Against the dollar,
sterling shed 1.5 cents to end the day at $1.9583, its lowest since late
March.
Eurozone economy Growth in the 13-nation eurozone bloc in the third
quarter was revised up in official figures to 0.8 per cent, from the
previously estimated 0.7 per cent. The annual pace of expansion in Q3 was
2.7 per cent. A stronger than previously reported showing by the French and
Belgian economies was the main reason for the upgrade to GDP.
German industrial output, exports and retail sales all fell during
November. Industrial output dropped by 0.9 per cent, weaker exports fell by
0.5 per cent, while a broad measure of retail sales fell by 1.5 per cent,
adding to worries over the prospects for Europe’s largest economy.
Banking
& finance
Banco Espirito Santo, the Portuguese bank, said that it has no
intention of increasing its stake in, or making a bid for, Evolution Group,
the broker, denying press reports that the alliance between the companies
could result in a bid by the bank.
Bank borrowing The cost of borrowing between banks has continued to
ease as liquidity problems showed signs of improvement. Three-month Libor, a
key indication of banks’ willingness to lend to each other over the medium
term, dropped to 5.68 per cent, from 5.73 per cent.
Standard Life Investments said that it is hoping to sell the London
headquarters of Bloomberg, the media group, a key asset in one of the UK
investment manager’s main funds. John Charcol, one of the UK’s largest
mortgage brokers, has been put up for sale, it was reported last night. The
business is owned by shareholders including the private equity investor Jon
Moulton, and is believed to have a price tag of £50 million.
John Charcol, one of the UK’s largest mortgage brokers, has been put up
for sale, it was reported last night. The business is owned by shareholders
including the private equity investor Jon Moulton, and is believed to have a
price tag of £50 million.
Insurers have pledged to honour more life insurance, critical illness
and income protection policies by paying out even when medical information
was not supplied in full.
Capital gains tax The Government’s scrapping of taper relief on capital
gains tax came under fierce attack as the Conservatives and business leaders
said that the Chancellor was keeping businesses in the dark.
Paternoster Mark Wood, the chief executive of Paternoster, predicted
that the pensions buyout market will double during 2008 after his specialist
insurer took on more than £1.4 billion of final salary schemes last year – a
more than twelvefold increase on the previous year.
Construction
& property
Persimmon, the housebuilder, reported a 14 per cent reduction in
forward sales for early 2008, blaming challenging market conditions. It said
that forward sales into 2008 were £603 million, down from £701 million last
year.
Rok, the construction company, said trading for 2007 is expected to be
in line with market expectations and significantly ahead of the group’s
results for 2006.
Taylor Wimpey Contractors working for the Bryant Homes division of
Taylor Wimpey have been told they will be paid 5 per cent less than
previously agreed as the housebuilder attempts to cut costs. Bryant Homes
added that it could take longer to pay its bills. At present Bryant aims to
settle invoices within a month.
Consumer
Goods
Diageo, the drinks group, said that it saw no reason to adjust its
full-year operating profit target of 9 per cent despite a more uncertain
general trading environment. It added that it is taking part in the Absolut
vodka auction process although it does not regard it as a “must-have” brand.
Engineering
Airbus, the European plane-maker which is a unit of EADS, the aerospace
group, said that AWAS, the Irish leasing company, has signed a contract to
buy 75 A320 jets. Airbus added that the order is its first in 2008.
Health
The Royal Pharmaceutical Society of Great Britain has launched its
“internet pharmacy logo” which will be displayed by online pharmacies
registered with the RPSGB to help the public to avoid buying substandard or
counterfeit drugs from unregistered outfits. All pharmacies across Britain
must be registered with the RPSGB.
Alliance Pharma, said trading in the year to December 31 had been in
line with market expectations, with full-year turnover rising by 6 per cent
to $18.2 million (£9.2 million), compared with last year.
Industrials
ArcelorMittal, the steel maker, has agreed to buy Unicon, the
Venezuelan welded steel pipe maker, for an undisclosed amount. Unicon
supplies the oil and gas industry and employs 2,445 people in Venezuela.
Rexam, the world’s largest maker of beverage cans, said the Russian
Competition Authority has cleared its acquisition of Rostar, the Russian
drinks can maker.
Royal DSM, the Dutch chemicals company, said that it will invest nearly
€15 million (£11.2 million) in the construction of a new plant for the
production of wet polyesters and other speciality resins in Meppen, Germany.
Leisure
Restaurant Group, owner of the Chiquito, Garfunkel’s and Frankie &
Benny's chains, saw its shares lose nearly a third of their value after it
revealed a slowdown in sales and warned of a quieter 2008 for the leisure
sector. The company blamed a tighter consumer market for sales growth of 1
per cent in the final quarter of last year, compared with 7 per cent in
2006. Its shares closed down 31.9 per cent, or 55¾p, at 119p.
Arena Leisure, the British race-course operator, said that it expects
to report full-year pretax profits of about £6 million, in line with market
expectations, and added that the current year had started well.
Cheese Cake Factory, Japan’s biggest chain of cheesecake restaurants,
has collapsed with debts of 1.3 billion yen (£6 million), because the price
that it pays for cheese has almost doubled in a year.
Hakkasan and Yauatcha, the Michelin-starred Chinese restaurants owned
by Alan Yau, who founded the Wagamama Japanese food chain, have been sold
for $60 million (£30.5 million) to Tasameem, the property arm of the Abu
Dhabi Investment Authority.
Media
Centaur Media, the specialist business publishing and information
company, said it expects a “double digit” profits growth and margins
improvement in the first half, with revenues about 5 per cent ahead of the
previous year.
Publicis Groupe, the French advertising company, said that its
ZenithOptimedia agency has been awarded the media budget of L’Oréal, the
cosmetics group, in France.
Mecom, the European newspaper group founded by David Montgomery, the
former Mirror Group chief, has released a statement to th City to reassure
investors shaken by yesterday’s 30 per cent share plunge. Mecom revealed the
likely level of this year’s depreciation and interest charges, which were
omitted from yesterday’s trading update.
ITV, the commercial broadcaster, announced that it has hired Peter
Iacono, a senior executive from Sony Pictures, to run ITV Worldwide, the
division responsible for selling its programmes to other countries, so as to
boost business in other markets. I
Natural
resources
BP, the oil and gas group, saw more than £4 billion wiped off its
market value after Merrill Lynch, BP’s house broker, cut its fourth-quarter
profit forecasts by 25 per cent, or $1.5 billion (£759 million), triggering
the biggest one-day fall in its shares since March 2003.
Retailing
Greggs, Britain’s biggest bakery chain, reported a 5.6 per cent rise in
like-for-like sales for the four weeks to Janaury 5, but gave warning that
it faced “significant” cost pressure from the rising price of wheat and
coffee.
Marks & Spencer, the high street retailer, saw more than £1.6
billion wiped off its market value as it reported its worst Christmas for
two years and gave warning of a “serious softening” on the high street.
Shares in M&S fell by 19 per cent, or 94½p, to 409p as the group dashed
hopes that it may have survived the spending slowdown and instead said
trading may not improve until spring 2009.
JJB Sports, the retailer, said that it will pay a partial refund to
customers who were overcharged for replica football shirts bought between
2000 and 2001. It follows legal action by Which?, the consumer group, on
behalf of fans who were overcharged for the shirts.
Select Retail, the fashion chain, has been saved from collapse in a
deal that secures the jobs of more than 1,800 staff. Nigel Fisher, the
founder and managing director, said that a Turkish investor had taken a 70
per cent stake in the business for £13 million.
Support
services
Alfred McAlpine, the support services company, said that it has won a
number of civil engineering contracts worth more than £150 million in its
project services/ infrastructure services division.
Amec, the international engineering and project management company,
said that it has agreed terms for the sale of its tool and equipment hire
business to Speedy Hire for £12.5 million.
Technology
Computacenter, the computer services company, said its annual profits
will be slightly ahead of market expectations, helped by an improvement in
its UK business and record profits in Germany.
Apple The European Commission said it will not take further action
against Apple and leading record companies in an antitrust investigation
over the pricing of songs on the US group’s iTunes online music store.
Bang & Olufsen, the Danish stereo and television maker, reported a
37 per cent fall in first-half pretax profits and cut its full-year outlook
as retail sales slowed, pushing its shares down by 20 per cent.
Telecoms
Gateway Telecommunications said that its broadcast services subsidiary
has raised $60 million (£30.4 million) in loans to accelerate the launch of
GTV, its pan-African pay-television service. The service is available in 12
countries across Africa at present.
Transport
FirstGroup, the bus and train operator, said that it is attempting to
tackle poor performance at its First Great Western UK rail franchise as it
reported third-quarter trading in line with expectations.
Ryanair, the Irish low-cost airline, will start five new routes from
Bournemouth from April and base one aircraft there, creating its 24th
European base.
British Airways said that it is launching a new airline in a direct
attack on Air France, offering flights from Paris and Brussels to New York.
The new carrier is to be named OpenSkies and will be launched in June with a
single Boeing 757 aircraft from the BA fleet.
Eurostar ticket sales have increased by a fifth since the cross-Channel
train service moved to St Pancras in North London and started running at
186mph. The introduction of faster London to Paris and London to Brussels
services in the last six weeks of the year helped the train operator to
carry a record number of passengers in 2007, up by 5.1 per cent to 8.26
million. I
Utilities
Suez Environnement, the French water and waste management unit spun off
as part of the Suez-Gaz de France utilities merger, has been valued at
between €16.7 billion (£12.4 billion) and €20.6 billion, according to
reports.
