Andrew Bailey urges 2m to return to jobs market – Telegraph.co.uk

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Andrew Bailey has begged 2m sidelined workers to return to the jobs market as he warned that severe staff shortages are holding back Britain’s economic revival.

Britain needs millions of people to come back to the workforce to fill huge vacancies created since society reopened, the Bank of England Governor said.

He warned that payments and mobility data suggests the post-lockdown surge in growth is levelling off and added that companies are desperate for workers to fill empty roles.

Around 2m people were made unemployed during Covid, are currently on furlough or have left the labour market, he said – about 6pc of the total workforce.

Speaking to MPs on the Treasury Select Committee, Mr Bailey said: “Really we need that 6pc to come back as much as possible actually, a lot of them to come back actually.

“In many ways now the concern is getting jobs filled, we have got a high level of vacancies in this country at the moment.”

Vacancies in the UK have surged to record levels of more than 1m after a massive increase in demand following the end of the last lockdown.

Business groups warned this week that staffing shortages could last two years, while wages are picking up as businesses fight for workers.

Goldman Sachs estimated today that underlying wage growth had hit 5pc over the summer, threatening to put more upward pressure on inflation.

The Governor admitted that the major worker shortages in a range of occupations, notably HGV drivers, could mean that inflation is more sustained than the Bank hopes.

While Mr Bailey argued that inflationary pressures from commodity prices and supply chain disruption will ease, he conceded he has “a bit more concern about persistence in the labour market story”.

The Bank recently delivered a huge upgrade to its inflation forecasts as worries over prices build. It expects inflation to peak at 4pc by the end of the year before falling back to the Bank’s 2pc target. However, the rate-setters admit there is still a risk of high inflation becoming entrenched. 

Grilled by Treasury Committee chair Mel Stride on the changes to the inflation forecasts, Mr Bailey blamed supply bottlenecks and a shift towards consumers buying goods rather than services during the pandemic.

He said: “There is this underlying story of imbalanced demand, which we thought by now would be well on its way to correcting itself… It’s the persistence of Covid.”

Mr Bailey said the high vaccination rates in Britain mean a winter wave of Covid will have less impact.

However, he admitted that he has been briefed by the Government’s chief medical officer Chris Whitty ahead of the winter on Covid and the potential for a bad flu season.

His comments came as stock markets were rattled by concerns of economic recoveries waning. Housebuilders finished bottom of the FTSE 100 leaderboard with the blue-chip index sinking 0.8pc to close at 7,095.53 points. Britain’s builders were hit by concerns of an economic slowdown as taxes are hiked by the government.

Wrapping up

Novavax kicks off trial for combined Covid and flu jab

Vaccine developer Novavax has initiated an early-stage study to test its combined flu and COVID-19 vaccine.

As Reuters reports:

The trial, to be conducted in Australia, will enroll 640 healthy adults between the ages of 50 and 70 years and who have either been previously infected with the coronavirus or given an authorized COVID-19 vaccine at least eight weeks prior to the study.

Participants will receive a combination of the company’s COVID-19 vaccine candidate, NVX-CoV2373, and its Influenza shot NanoFlu along with an adjuvant or vaccine booster.

“Combination of these two vaccines…may lead to greater efficiencies for the healthcare system and achieve high levels of protection against COVID-19 and influenza with a single regimen,” Gregory Glenn, President of Research and Development at Novavax, said in a statement.

It comes weeks after the Telegraph reported that the UK’s mega vaccine factory would also be looking into a combined flu and Covid jab.

Matthew Duchars, the chief executive of the £215m Vaccine Manufacturing & Innovation Centre (VMIC), said that the facility will be evaluating whether a single-jab model would work in a bid to cut down on manufacturing time and make roll-outs easier.

British investors will be forced to sell, Ryanair warns


Credit:
Jason Cairnduff/Reuters

Britons who bought shares in Ryanair this year will have to start selling their holdings in the wake of Brexit.

The Irish carrier said it had started the process to sell around one million shares which were bought by non-EU nationals since January 1, most of whom were Brits. It has appointed a broker to begin the forced sale of the shares.

Ryanair has rules stopping non-EU nationals buying stakes in the company.  

The company said: “As a result of Brexit, ordinary shares in the company which have been acquired by or on behalf of UK nationals (like all other non-EU nationals) since January 1 2021 have been treated as ‘Restricted Shares’ and such non-EU national investors have been issued with Restricted Share Notices by the company requiring them to dispose of their interests in such Restricted Shares to EU nationals.”

Treasury Committee hearing ends 

The Treasury Committee has wrapped up its hearing with top Bank of England figures.

Governor Andrew Bailey issued a stark warning that the UK’s economic recovery was levelling out, and raised the prospect of upcoming interest rate rises.

Repayment of Covid loans ‘higher than expected’

The repayment of Covid loans has been higher than banks expected, Bailey says.

But the governor points out that terms have been set so that now is the “less taxing” period for repayment.

He adds that debt servicing costs for companies have also increased very little, largely thanks to the low interest rates on government loans.

But he acknowledges that there are some risks to SMEs in servicing the cost of their debts.

Bailey: Some ‘flattening out’ of UK’s recovery

There has been some flattening out in the rate of the UK’s economy recovery from the pandemic, Bailey says.

He says that while the economic impact of Covid has “attenuated a lot”, there has been a recent slowdown in the recovery.

Bailey points to the spread of delta variant as a likely cause, particularly during the so-called pingdemic earlier in the summer.

FTSE closes lower amid recovery jitters

Stepping away from the committee hearing for a minute, the FTSE 100 closed down 0.75 per cent at 7,095 points.

European and US stocks have all lagged today amid worries about economic recovery and the prospect of central banks winding down their stimulus measures.

MPC split over Bank’s forward guidance

Bailey reveals that the Monetary Policy Committee was split over the question of whether its forward guidance had been met.

In November the bank said it “did not intend to tighten monetary policy at least until there was clear evidence that significant progress was being made in eliminating spare capacity and achieving the 2pc inflation target sustainably”.

Bailey says there were two views in the MPC’s latest meeting, with some members arguing the guidance had been met but there wasn’t sufficient progress to take action on policy, while others believed the guidance hadn’t yet been met.

There were eight people in the meeting and it was “four all”, he says.

Bailey: ‘Reasonable’ chance of interest rates rise

It’s reasonable to think there will be some increase in UK interest rates in the next few years, Bailey says.

But he adds that the forecast acceleration in inflation is unlikely to be persistent.

That said, the governor warns the UK was “some way off” returning to pre-Covid economic activity.

Bank of England flags inflation risks

Here’s some more from my colleague Tom Rees:

Treasury Committee chair Mel Stride is grilling governor Andrew Bailey on the huge upgrades in the Bank of England’s inflation forecasts. The Bank now predicts inflation will hit 4pc by the end of the year compared to a much more benign 2.5pc forecast earlier in the year. 

Bailey says supply bottlenecks and a shift towards consumers buying goods rather than services during the pandemic is to blame.

“There is an underlying imbalance demand, which we thought would be well on its way to correcting itself… It’s the persistence of Covid.”

The Governor does not expect high price rises to stick around but warns the labour market shortages are a risk for inflation.

Bailey: ‘More concern’ about labour market shortages

The Bank governor is largely confident that commodity prices and supply bottleneck issues will resolve themselves naturally.

But he casts a more cautious tone over the lasting impact of shortages in the labour market.

We think as the furlough scheme comes to an end this should cause a supply of labour to come onto the market, so it should correct itself.

[But] for me I have a bit more concern about persistence in the labour market.

Bailey: ‘More concern’ about labour market shortages

The Bank governor is largely confident that commodity prices and supply bottleneck issues will resolve themselves naturally.

But he casts a more cautious tone over the lasting impact of shortages in the labour market.

We think as the furlough scheme comes to an end this should cause a supply of labour to come onto the market, so it should correct itself.

[But] for me I have a bit more concern about persistence in the labour market.

Bailey: We thought demand imbalance would be resolved by now

Asked about forecasts that inflation will rise 4pc this year – above targets of 2pc – Bailey said the Bank of England had not expected the pandemic-induced imbalance of demand between goods and services to last this long.

“There’s this underlying story of imbalanced demand which we thought would by now have been well on the way to correcting itself,” he said.

Bailey said the main reason for this miscalculation was the persistence of Covid.

Andrew Bailey: Committee hearing begins

And we’re off! Andrew Bailey is in the hot seat for this afternoon’s Treasury Committee hearing.

Updates to follow…

Ryanair blames Brexit as 1m investor shares sold


Credit:
REUTERS/Jason Cairnduff/File Photo

Ryanair is forcing investors who aren’t EU citizens to sell any shares purchased after 1 January due to rules linked to Brexit.

Bloomberg has the details:

Non-EU citizens have been barred from buying stock in the Irish discount airline since the UK left the bloc at the start of the year. When such purchases have been made, Ryanair has restricted the shares and told the owners to dispose of them, the company said in a statement Wednesday. 

Some haven’t complied, and as a result, Ryanair said it’s initiated the forced sale of about 1m ordinary shares. The company said it may have to do further sales “from time to time” to stay within EU rules. The current investors will receive the proceeds. 

Ryanair instituted ownership restrictions on non-EU members, including a voting-rights suspension, last year as Brexit approached. Britons who already owned shares of the Dublin-based company were allowed to keep their holdings, but no further purchases were permitted.

Until the split, British citizens were counted as EU-based under rules that require companies to be majority owned and controlled by members of the bloc.

US stocks stumble ahead of Fed report

Wall Street edged lower this afternoon as investors showed caution over the latest Covid trends and a potential shift in monetary policy.

US stocks have been under pressure since a disappointing jobs report for August on Friday sparked fears that the delta variant of coronavirus could hamper economic recovery.

The benchmark S&P 500 was trading 0.05pc lower at 4,517 points, while the Dow Jones slipped 0.1pc to 35,066. The tech-heavy Nasdaq dropped 0.49pc to 15,299 points.

Investors are looking ahead to a report later today from the Federal Reserve updating economic conditions around the country that could shed light on the US central bank’s timetable for scaling back stimulus, which is expected to start by the year end.

Meanwhile, jitters were also being felt on the other side of the Atlantic, with the FTSE 100 0.52pc in the red at 7,112 points. The pan-European Stoxx 50 was trading 0.80pc lower at 4,191 points.

In Europe, investors are focused on whether the ECB will this week opt to scale back its bond purchase programme.

Alok Sharma wraps up ‘constructive’ climate talks with China

Alok Sharma, the UK’s COP26 president, has concluded “constructive” talks with China’s special representative for climate, the government has said.

The former business secretary travelled to China two months before the UK hosts the key UN climate summit to meet Xie Zhenhua.

Sharma stressed the need for action on reducing carbon emissions through the use of coal, as well as overseas coal financing and deforestation, according to a government statement.

The pair also discussed the opportunity for China to build on its position as the world’s biggest investor in renewable energy and the largest market for zero-emission vehicles.

ECB ‘should not flinch’ over more stimulus

ECB president Christine Lagarde

Credit:
Olivier Matthys/Pool 

Katharina Utermöhl, senior economist at Euler Hermes, says the ECB should maintain its current level of stimulus at tomorrow’s monetary policy meeting, saying a paring back of support would be a‘significant and unnecessary gamble’.

Despite the roaring return of inflation in the past couple of months, the ECB should not flinch in terms of current levels of stimulus. While the Eurozone’s inflation peak is likely still ahead, it should top out below +3.5pc year-on-year before the end of 2021 – far below the exceptional inflation rates seen in the US.

With ongoing supply challenges and a fresh rise in Covid-19 cases potentially clipping the wings of the industrial recovery, heightened uncertainty about the strength of the recovery, particularly at the turn of 2021/22, would justify prolonged policy support, which the ECB can well afford.

“Indeed, slowing the pace of its pandemic emergency purchase programme (PEPP) at this point would represent a significant and unnecessary gamble on how the pandemic, the global economy and yields – and in turn US monetary policy – will develop over the next quarter.”

UK power prices hit record high as gas crunch bites

UK power prices have surged to a record high for a second time this week as the global gas shortage puts a squeeze on suppliers.

An auction for power tomorrow cleared at £277.30 per megawatt-hour, up more than 100pc from today’s prices.

A global drying up of supplies has already sent prices soaring, while the problem has been compounded in the UK by a series of power plant outages and lower wind.

My colleague Rachel Millard has more details:

Low wind output and global gas supply shortages have led to record gas and power prices in the UK. Households and manufacturers are now braced for higher energy costs for as long as two to three years, while they wait for demand for gas to cool and new supplies to come on-stream.

But there are growing fears that not all energy companies supplying those households and businesses will even make it through the winter.

Suppliers are battling surging wholesale costs while being constrained by the price cap on energy bills, limiting the amount they can pass on to consumers. It follows years of flux in the retail market, which has seen a string of small suppliers enter – offering cut-price tariffs that often leave them vulnerable to higher costs. More than 20 have gone bust over the past five years.

In a possible foreshadowing of what’s to come, on Tuesday, PfP Energy and Moneyplus Energy both announced they were ceasing trade, affecting about 89,000 domestic customers and 5,000 business customers in total.

UK power prices hit record high as gas crunch bites

UK power prices have surged to a record high for a second time this week as the global gas shortage puts a squeeze on suppliers.

An auction for power tomorrow cleared at £277.30 per megawatt-hour, up more than 100pc from today’s prices.

A global drying up of supplies has already sent prices soaring, while the problem has been compounded in the UK by a series of power plant outages and lower wind.

My colleague Rachel Millard has more details:

Low wind output and global gas supply shortages have led to record gas and power prices in the UK. Households and manufacturers are now braced for higher energy costs for as long as two to three years, while they wait for demand for gas to cool and new supplies to come on-stream.

But there are growing fears that not all energy companies supplying those households and businesses will even make it through the winter.

Suppliers are battling surging wholesale costs while being constrained by the price cap on energy bills, limiting the amount they can pass on to consumers. It follows years of flux in the retail market, which has seen a string of small suppliers enter – offering cut-price tariffs that often leave them vulnerable to higher costs. More than 20 have gone bust over the past five years.

In a possible foreshadowing of what’s to come, on Tuesday, PfP Energy and Moneyplus Energy both announced they were ceasing trade, affecting about 89,000 domestic customers and 5,000 business customers in total.

UK watchdog slams government’s green homes plan


Credit:
Yui Mok/PA Wire

The UK’s plan to cut carbon emissions from home heating fell far short of targets to spark a green recovery from the pandemic, the spending watchdog said today.

The National Audit Office’s (NAO) damning assessment comes as the country prepares to host the crucial COP26 climate summit in Glasgow in November.

Bloomberg has more details:

Curbing emissions from home heating is a key part of reaching the UK’s net zero target. The Green Homes Grant Voucher Scheme, which ran from September 2020 to March 2021, offered British homeowners as much as £5,000 funding, or £10,000 for low-income households, for the installation of energy efficient improvements.

However, failures in rolling out the program mean it will help just 8pc of the 600,000 homes that it initially aimed to reach, according to a report by the NAO. It will also undershoot its green jobs target, creating just 5,600 of the 82,500 roles that were initially touted, the report said.

“The aim to achieve immediate economic stimulus through the Green Homes Grant voucher scheme meant that it was rushed,” said Gareth Davies, head of the NAO. “As a result, its benefits for carbon reduction were significantly reduced and ultimately, it did not create the number of jobs government had hoped for.” 

With roughly 20pc of the UK’s greenhouse gas emissions coming from buildings, the failure of the grant programme highlights how crucial detailed policy design will be to actually realise Britain’s ambitious goals to address climate change.

As the UK prepares to deliver a home and buildings strategy any replacement for the Green Homes Grant will need to avoid the pitfalls of last year’s model. 

“Lessons must be learned from these costly mistakes,” said Doug Parr, policy director at Greenpeace UK. “It’s essential, not just to deliver warmer homes that are cheaper to run, but also to slash emissions and tackle the climate crisis.”

Facebook: CMA’s Giphy remedy is ‘without precedent’

Here’s some more on the row brewing between Facebook and the CMA over its Giphy deal:

In its response the tech giant takes particular umbrage at what it describes as the CMA’s ‘reconstitution, then sale’ order.

As part of its preliminary findings, the watchdog said Facebook may have to take a number of measures to rebuild (or reconstitute) Giphy before selling it off.

These include rebuilding its management team, restoring its sales and partnerships functions and ensuring it has the employees and IP it needs to compete as a standalone business.

Facebook says this remedy is “disproportionate, without precedent and unsustainable in light of less intrusive, equally effective and less costly remedies”.

The tech giant argues that a sale to a suitable buyer without this reconstitution would resolve all the CMA’s concerns at a much lower cost. It adds that it’s unaware of any previous deal where a buyer has been ordered to rebuild a business.

In a final – and heavily-redacted – parting shot, Facebook adds that prior to the deal Giphy was not a “standalone, viable business”, but rather a “loss-making” one.

Wall Street set to open flat on fears over slowing growth

US stocks are set to open flat this afternoon as the spread of the delta Covid variant and uncertainty over the Fed’s plan for tightening monetary policy weigh on investors.

Futures for the benchmark S&P 500 were down 0.047pc, while the Dow Jones was 0.060pc lower. The tech-heavy Nasdaq was set to tick up a marginal 0.010pc.

US stocks have come under pressure in recent days as investors have turned increasingly cautious following Friday’s weak August payrolls data and uncertainty over the Fed’s tapering.

“The big question is the uncertainty around the level of economic growth slowdown, tapering and the potential of escalating inflation,” said Sam Stovall, chief investment strategist at CFRA.

“Investors are thinking they don’t want to be highly exposed towards potential growth sectors, instead the interest remains towards the safety of tech stocks.”

DS Smith leads FTSE fallers with biggest drop in two months

Packaging group DS Smith is the biggest laggard on the FTSE 100 today as the company reversed yesterday’s gains.

Shares slid 2.55pc – their biggest fall in two months – to 450.1p from 462.3p.

The decline marks a pullback from gains of 2.8pc in the previous session after DS Smith said the ongoing ecommerce boom was continuing to drive up demand for its products.

But its stock has made significant gains over the last year, with shares up 1.4pc in the last five days and 6.4pc over the last 30 days.

Facebook: CMA’s Giphy sale order is “grossly unreasonable”


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REUTERS/Dado Ruvic/Illustration/File Photo

Facebook has hit out at the Competition and Markets Authority (CMA) over a probe into its $400m takeover of Giphy, arguing that the regulator had failed to show the deal will harm competition.

Last month the CMA provisionally concluded that the deal would negatively impact competition between social media platforms and warned it could force Facebook to sell Giphy in its entirety.

In its response published today, the tech giant said the sale order was “grossly unreasonable and disproportionate” and that the watchdog had failed to show a substantial lessening of competition.

It argued that no remedies were required for the deal, while also hitting out at the CMA for failing to provide alternatives that would be “far less intrusive and equally effective”.

Mishcon de Reya to launch $150m litigation funding arm

London law firm Mishcon de Reya is set to launch a $150m litigation finance venture to help fund lawsuits for its clients.

It has teamed up with Harbour, one of the world’s largest legal funders, to set up the venture, dubbed MDR Solutions I.

Harbour has already committed around $200m to cases in which Mishcon was representing the claimant, including suits against RBS, BT and Hiscox.

Mishcon, which is famous for high-profile clients including Princess Diana, said the new venture will operate separately from the law firm and will be responsible for assessing and investing in prospective cases.

“For some time, we have been assessing the litigation funding market and exploring potential opportunities,” said executive chair Kevin Gold.

“Creating a strategic partnership with Harbour enables us to deliver on our objectives with one of the most respected litigation funders in the world. We hope that MDR Solutions I is the first of a series of similar ventures in the future.”

Earlier this year Mishcon unveiled plans for an initial public offering in London before the end of the year – a move that could make it the largest listed law firm in the UK.

FTSE lags on economic growth worries

The FTSE 100 continues to lag this afternoon as economic growth worries weigh on investors.

The blue-chip index is down 0.38pc at 7,122 points in early afternoon trading.

Concerns about supply chain troubles continue to hamper the blue-chip index, with real estate developer Landsec dropping 3.19pc.

Housebuilders Taylor Wimpey and Persimmon are close behind with falls of 2.50pc and 2.08pc respectively, while manufacturer Melrose is down 2.01pc.

There’s some upward momentum from B&M, which is up 6.73pc after lifting its profit forecast in a surprise trading update this morning. Smiths Group is also up 2.78pc after agreeing to sell its medical division for $2.4bn.

Cathay Pacific fires staff who refused Covid vaccine

Cathay Pacific has sacked a “small number” of cabin crew who refused to receive a Covid-19 vaccine and did not provide proof of any medical exemption.

Bloomberg reports:

The Hong Kong-based carrier in June asked flight crew to be fully inoculated by the end of August or face having their employment reviewed, the South China Morning Post reported at the time. All of Cathay’s flights since 1 September have been with fully vaccinated crew, the airline said in a statement Wednesday. 

“It’s clear to us all now that Covid-19 is a terrible virus and that keeping our customers, communities, and families safe is of the utmost importance,” Cathay said. “Border controls around the world have dramatically reduced our ability to operate with unvaccinated aircrew.”

Airlines elsewhere have required staff to get vaccinated or are considering such a move. Among them, Qantas Airways stated last month that front-line employees including cabin crew, pilots and airport workers would need to be inoculated by 15 November, while United Airlines became the first major US carrier to impose a vaccine mandate.

Viagogo gets green light to sell StubHub’s non-US business

Demand for tickets to see top artists such as Stormzy is set to surge as live events resume

Credit:
Yui Mok/PA Wire

UK regulators have approved a buyer for the non-US parts of StubHub’s business after forcing new owner Viagogo to offload chunks of the company’s operations to satisfy competition concerns.

In February the Competition and Markets Authority (CMA) ordered Viagogo to sell all of StubHub’s operations outside North America – including the UK – after concluding a merger between the two companies would push up prices in the secondary ticketing market.

The decision came a year after London-based Viagogo agreed a $4.1bn deal to buy its rival from eBay.

In a statement today Viagogo vice president of business development Cris Miller said:

We are pleased to confirm a buyer for StubHub International has been approved by the UK Competition and Markets Authority. This brings to an end the investigation into the much-anticipated merger of Viagogo and StubHub North America, which is now cleared to proceed.

We appreciate the CMA’s role in bringing the merger to this conclusion and we look forward to sharing more details about the integration of the two businesses with our loyal customers and partners very soon.

As the live events industry emerges from the coronavirus pandemic, robust competition in the ticketing market is needed more than ever and Viagogo will continue to take its essential role in the live events industry very seriously.

Viagogo and StubHub will always remain committed to working with regulators while providing safe and secure platforms for people to buy and sell tickets to events all over the world.

Dunelm shareholders set for £132m payout

More details on Dunelm, which has announced plans to hand £132m to shareholders after strong online trading drove the retailer to a bumper year of profits.

PA reports:

Homewares chain Dunelm has announced plans to hand a £132m payout to shareholders after profits soared despite the pandemic closing stores.

But bosses at the firm said there are still no plans to hand back any of the £22m saved from the Government’s business rates holiday.

The company pointed out it has already repaid the money claimed under the furlough scheme, and has not made any claims under the various grants some retailers have been entitled to.

Its decision comes as the boss also said prices have started to rise as a result of inflationary pressures hitting supply chains and that Dunelm has been offering incentives to HGV drivers to keep trucks moving.

On business rates, chief executive Nick Wilkinson told the PA news agency: “We’ve looked at it in the round. It’s a complicated area and we’ve really considered what’s the right thing to do here. We’re taking a balanced approach.

“We repaid the CJRS (coronavirus job retention scheme) money which we took out in lockdown one. It was a scheme that allowed us to keep going and stay focused.

“We self-funded 8,000 store colleagues on full pay when the stores were closed to customers, we’re not taking advantage of local grants, which were given to non-essential retailers.”

He added: “The business rates relief was applied to all retailers, essential and non-essential. Different retailers will make different choices about what’s the right balance to take and we think as a business that was closed for a third of the year, this is a balanced position.”

Morrisons to report results ahead of takeover auction

There’ll be even more attention on Morrisons tomorrow when the supermarket chain reports results ahead of a dramatic auction process to determine its buyer.

Morrisons is expected to post a 0.42pc decline in comparable sales excluding fuel for its first half, according to Bloomberg consensus. For the second quarter, the drop is predicted at 3.4pc.

Estimates for revenue stand at £8.98bn, while adjusted pre-tax profit is set to come in at £212.8m.

Morrisons today confirmed it is in talks to kick off an auction process as rival US private equity firms Clayton, Dubilier & Rice (CD&R) and Fortress compete to win the takeover battle.

Shares climbed to 291.2p today, eclipsing the value of the current highest bid of 285p per share from CD&R.

Selco launches lorry driver training academy

Buildings material supplier Selco has launched a new training academy in a bid to tackle a dearth of lorry drivers across the country.

Selco will offer the training to its own staff and said it aims to create dozens of newly-qualified HGV drivers by next May.

The company itself is suffering from a shortage of more than 20 drivers. It is hoping the programme will help address its own recruitment issues as well as those in the wider haulage sector.

Marc Lucock, human resources director at Selco, said: “No industry or business is immune from the shortage and at Selco we currently have more than 20 vacancies to fill, and that number is rising.

“We wanted to be proactive, not only to fill our vacancies but also play a very small part in helping to address the national shortage.”

British quantum firm Arqit soars on US debut

Arqit will beam signals down from a network of low earth orbit satellites, generating keys that can be used by smartphones

London-based quantum encryption company Arqit surged by more than a third on a bumper first day of trading in the US.

The company, whose low-orbit satellites will generate encryption codes to protect against quantum computer attacks, went public via a $1.4bn Spac merger.

Its stock jumped more than 35pc to $11.30 per share on its first day of dealings on the Nasdaq.

Arqit counts BT, Babcock, the European Space Agency and the UK government among its customers and plans to launch its first satellite in 2023 in conjunction with Virgin Orbit.

Lower discounting helps B&M lift profit forecasts

Discount retailer B&M has hiked its profit forecasts after delivering better-than-expected margins.

The FTSE 100 chain said revenues in the year so far had been in line with expectations, but that profits made on goods were higher than expected.

B&M said its pre-tax profit for the half year was now expected to be between £275m and £285m – ahead of current analyst forecasts of £235m. 

Shares in B&M rose 5.44pc following the surprise update.

While the company said it was well positioned for its key trading quarter ahead of Christmas, it warned that “trading patterns and strength of customer demand remain highly uncertain” for the rest of the year.

IFS: NHS to swallow most of the extra social care funding

Meanwhile, the Institute for Fiscal Studies has warned that the NHS could swallow nearly all of the three-year £36bn tax raised by the social care levy.

Whitehall plans to funnel this money into the NHS in the near-term and social care longer term could be derailed, the research body warns, pointing to historic rises in NHS funding requirements.

Before the pandemic, NHS England funding was due to grow at a  rate of 3.9pc between 2018 and 2023. Now it is set to grow at 3.9pc from 2018 to 2024. That means there is little extra virus-related spending planned for after 2023-24.

“The experience of the past 40 years shows that NHS spending plans are almost always topped up,” The IFS said. “If history repeats itself, the ‘temporary’ increases in NHS funding announced this week could end up permanently swallowing up the money raised by the tax rise.”

 

Social care levy broken down

Boris Johnson has hiked National Insurance contributions by 1.25 percentage points

No doubt many of us are still digesting yesterday’s sharp tax rises – the Government’s attempt to fund the NHS’s Covid backlog as well as finance a reform of the social care system.

Here are some great articles to help you digest the news:

​City of London faces fresh threat from £600m dividend raid

National Insurance tax calculator: how much more you will pay

1m working pensioners face paying National Insurance for first time

Triple lock scrapped – here’s how much you will lose

 

Morrisons share price pushes above value of highest bid

Morrisons’ shares remain up around 0.5pc this morning at 292.7p after the supermarket chain confirmed it would decide its new owner via an auction process.

Investors clearly feel the auction will lead to a higher offer, with the share price way above the highest current bid of 285p a share, coming from suitor CD&R.

Rival Fortress said this morning that it “continues to consider its options”. 

The Takeover Panel’s standard auction structure is bidding over a five-day period. However, if all parties are in agreement a different structure can be used – for example bidding over just one day.

Shareholders are set to vote on the takeovers offers in the week beginning October 18.

Last month, the Takeover Panel set up an auction of British inhaler company Vectura for suitors Philip Morris International and US private equity firm Carlyle. However, in the event Carlyle decided not to raise its offer.

Biffa holds guidance despite driver shortages


Credit:
Chris Gibson / Alamy Stock Photo

Rubbish collector Biffa has stuck to its guidance for the full year despite grappling with the impact of driver shortages and supply chain troubles.

A host of businesses, including Ikea, Wetherspoons and McDonalds, have struggled with a shortage of HGV lorry drivers due to a range of issues including Covid and Brexit.

Production challenges have also sparked a supply chain squeeze and caused further problems for companies.

Biffa today said it was working hard to mitigate the impact of these problems and said its full-year outlook remained in line with expectations.

Group net revenue in the five months to August were 12pc higher than the same period in 2019, and 3pc higher excluding acquisitions.

Smiths Group sells medical division for $2.4bn

Smiths Group has agreed to sell its medical business to US-based ICU Medical, usurping an earlier deal agreed with a private equity bidder.

The FTSE 100 engineering group said the ICU offer values Smiths Medical at $2.7bn, plus an additional $0.1bn conditional on the future share price performance of the merged company.

After debt and liabilities, the takeover is valued at $2.4bn. Smiths Group said this was $0.4bn more than the offer agreed with TA Associates last month.

Smiths added it expects to receive initial net proceeds of $1.85bn – around $50m more than under the terms of the private equity deal.

Shares jumped 4.29pc following the announcement, sending the company to the top of the FTSE 100 risers.

Chief executive Paul Keel said:

Delivering on our commitment to maximise value, the ICU Transaction provides both a higher value for Smiths’ shareholders, as well as future value creation through our 10pc holding of the enlarged combined group and a potential $0.1bn additional contingent consideration. 

We are focused on concluding this superior transaction and on driving Smiths Group forward, delivering on our significant potential as a leading industrial technology group united by shared purpose, business characteristics and a common operating model.

FTSE risers and fallers

It’s been a sluggish open for the FTSE 100, which is trading down around 0.8pc after doubts over economic recovery weighed on both Wall Street and Asian stocks.

Asset manager M&G is the biggest faller on the blue-chip index this morning, sliding 2.23pc after markets opened. B&Q owner Kingfisher is down 1.87pc, while Informa and Weir Group both slipped around 1.6pc.

It’s been a better start for engineering giant Smiths Group, which has gained 4.15pc after agreeing to sell its medical division to ICU Medical for $2.4bn. Premier Inn owner Whitbread is up 0.92 per cent while Rolls-Royce has gained 0.72pc.

Supply chain woes puncture Halfords’ cycling sales


Credit:
Jason Alden/Bloomberg

Halfords has warned of the ongoing impact of supply chain troubles as cycling sales tumbled by more than a quarter from pandemic highs.

The retailer said sales in its bicycle division dropped 26pc in the 20 weeks to 20 August compared to the same period last year.

While cycling sales grew strongly in the first half of the period, Halfords said supply chain woes had impacted the availability of bikes — in particular adult models — and slammed the brakes on its growth.

It warned that disruption was expected to continue “for some time”. Shares slid almost 3.5pc.

Halfords added that its autocentres and mobile expert vans had struggled with hiring difficulties as staff were forced to isolate during the so-called pingdemic, sparking a further hit to sales.

But the challenges were offset by sharp growth in the company’s retail motoring business as more Brits opted for staycations during the pandemic.

Overall, sales were up 10.5pc over the period.

 Dunelm shares jump as digital push pays off

Dunelm is set to beat profit expectations for the full year as a surge in online sales helped to offset the impact of store closures.

The home furnishings retailer grew its digital sales 115pc in the year to 26 June thanks to a ramping up of its online operations and a major expansion of its Click & Collect offer.

The digital push helped mitigate repeated lockdowns and drove up overall sales by more than a quarter to £1.3bn. Pre-tax profit soared 45pc to £157.8m.

As a result, Dunelm said it expected full-year profit to be modestly ahead of analyst forecasts.

The company announced a final dividend of 23p, taking the final dividend to 35p. It also announced a special dividend of 65p after its payout was cut last year.

Shares in Dunelm jumped 8pc in early trading, leading the FTSE 250 risers.

Chief executive Nick Wilkinson said: 

The digital investments we had made enabled us to rapidly adapt to the changing environment and deliver strong growth and an improved customer experience. We are emerging from the pandemic as a stronger and better business, having transitioned from being a physical retailer with digital aspirations to being a proven, digital first, multichannel retailer.

Morrisons gears up for takeover auction

Morrisons is up for grabs in a bidding war between private equity giants CD&R and Fortress

Credit:
ANDY RAIN/EPA-EFE/Shutterstock

Morrisons is in talks to launch a dramatic takeover auction as two US private equity rivals circle the British supermarket chain.

The company last month agreed terms of a £7bn offer from Clayton, Dubilier & Rice (CD&R), topping an earlier bid by Softbank-owned Fortress Investment Group.

But neither suitor has declared their bid final, meaning a bidding war could continue.

In a statement today Morrisons said it was in talks with both bidders and the Takeover Panel to launch an auction procedure to settle the takeover.

A general meeting to approve the CD&R offer has been scheduled for the week beginning 18 October, with a meeting to vote on Fortress’ bid adjourned until the same date.

The supermarket said any auction would take place before this meeting, on a date to be announced by the Takeover Panel.

Following the auction, Morrisons said it expected to proceed with one of the two offers, depending on which one the board recommended to shareholders. CD&R’s latest offer is worth 285p per share, while Fortress’ stands at 272p per share.

Morrisons’ share price inched 0.6pc higher to 292.7p in early trading.

FTSE 100 sinks 0.8pc

The FTSE has dropped 0.78pc as trading opened, falling to 7,092 points – worse than expected after US markets stalled yesterday and Asian stocks fell overnight amid fears of a weaker recovery.

The FTSE 250 dropped 0.55pc to 23,963 points.

Japan’s Nikkei on track for three-decade high

Japan’s Prime Minister Yoshihide Suga will not seek reelection

Credit:
BEHROUZ MEHRI/POOL/EPA-EFE/Shutterstock

The Nikkei’s overnight rise of 0.7pc means it has climbed around 5pc since Friday’s announcement by Prime Minister Yoshihide Suga that he will stand down, putting it on track for a three-decade high.

Investors are pushing the index up in anticipation of a successor ready to loosen the purse strings to fuel the country’s economic recovery from the pandemic.

On Wednesday, one of the front-runners, Fumio Kishida, pledged to push for trillions of yen in investment if he takes the post.

Traders were also buoyed by a better than expected 1.9pc climb in GDP for the second quarter, though that was nowhere near enough to offset a 4.2pc plunge at the start of the year.

FTSE to open lower after Asian stocks edge lower

Good morning.

The FTSE 10 is set to drop by around 0.34pc when it opens today as fallout from Friday’s huge miss on US jobs growth continues to reverberate around global markets.

Goldman Sachs downgraded its economic outlook for the US, pushing down Asian stocks overnight, though Japan’s Nikkei climbed 0.7pc on the back of a better than expected 1.9pc rise in GDP.

Jeffrey Halley, a senior market analyst at trading platform Oanda, said: “The uninspiring Wall Street performance and falling commodity prices are weighing on Asian markets.”

Europe is on track for a weaker open as a result.

Meanwhile Bitcoin plunged 12pc to $46,265 after El Salvador adopted the cryptocurrency as legal tender.

Later we should get more details on how the housing market is performing following the end of the stamp duty holiday for most buyers later this morning, when RICS publishes its monthly survey.

It will follow Halifax data yesterday that showed house prices soared to a record high in the UK in July as more Brits went on the hunt for space after months of working from home.

5 things to start your day 

1) City of London faces fresh threat from £600m dividend raid The tax on dividend income will rise from 7.5pc to 8.75pc next April as part of a blitz on savers, workers and businesses aimed at raising £36bn over the next three years to plug a post-pandemic backlog in the NHS and reform social care. It deals a further blow to the Square Mile as London fights against hostility from Brussels and seeks to keep pace with New York.

2) Johnson’s National Insurance raid threatens 130,000 jobs The 1.25pc National Insurance rise – branded as a health and social care levy and greeted with outrage across the political spectrum – breaks a 2019 election manifesto pledge in an effort to slash waiting times as the NHS reels from the fallout after Covid.

3) Ofcom eyes break with Brussels rules to boost broadband firms Ofcom has opened a consultation on relaxing the enforcement of rules which force operators to treat all internet traffic equally, as part of a post-Brexit overhaul of red tape. The watchdog said this could ease demands on Britain’s internet infrastructure as more people use the web to work from home.

4) Two energy suppliers go bust after surge in power prices Almost 94,000 energy customers have been left in limbo after two suppliers went bust in the wake of soaring wholesale power costs, raising questions about the resilience of the industry. PfP Energy – which has around 80,000 domestic customers and 5,000 business customers – is ceasing to trade, as is MoneyPlus Energy, which has around 9,000 domestic customers. 

5) Sturgeon drags Scotland to the left with plan for universal income​ Setting out her policy programme after agreeing a coalition deal with the Green Party, the First Minister confirmed plans to trial a four-day working week, plough an extra £2.5bn into health spending and work to develop a minimum income guarantee.

What happened overnight 

Stocks were mixed in Asia on Wednesday after Wall Street closed mostly lower as traders returned from the Labor Day holiday.

Japan’s growth for April-June was revised up to an annual pace of 1.pc from a preliminary estimate of 1.3pc.

Strong trade data from China on Tuesday failed to counter the dampening impact of a weak US jobs report last week.

Japan’s Nikkei 225 index rose 0.5pc to 30,061.71, while the Hang Seng in Hong Kong climbed 0.7pc to 26,533.40 before falling to end the session in the red. The Shanghai Composite index added 0.3pc to 3,688.27. In Seoul, the Kospi lost 0.3pc to 3,178.63. Australia’s S&P/ASX 200 lost 0.3pc to 7,506.30, and benchmarks declined in Taiwan and Singapore.

Coming up today

  • Corporate: Dunelm (Full year); Bakkavor, Inspecs, Vietnam Ent Inv, Impact Healthcare (Interim); Biffa, Halfords (Trading update)
  • Economics: RICS housing survey (UK)

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