All the day’s economic and financial news,including novel growth figures for the UK and the latest on the House of Fraser crisisBreaking: UK growth rises to 0.4%Manufacturing falls into recessionUK trade gap has widenedMike Ashley swoops on House of Fraser 1.20pm BSTPhilip Hammond also dropped a loud trace that the UK government could push for novel taxes on online retailers:We want to ensure that the tall street remains resilient, and that we also make certain that taxation is fair between businesses doing business the traditional way, or those doing business online.
That requires us to renegotiate international tax treaties because many of the big online businesses are international companies. 1.20pm BSTChancellor of the exchequer,Philip Hammond, has blamed Britain’s slow growth in recent quarters on Brexit uncertainty.
Speaking in Coventry nowadays, and Hammond told reporters that:“Clearly that uncertainty is having a depressing effect on economic growth.” 12.46pm BSTThe TUC make a very important point -- whether you adjust for population increases,Britain’s growth has been extremely poor since the financial crisis.“The latest figures cap a dismal decade for the economy. But we should not accept feeble growth as the novel normal – it’s the result of bad management of the economy. There has been too puny investment and a failure to focus on getting wages rising.“whether we want a stronger decade ahead, the UK must catch up with the levels investment we see in other OECD nations. And the government must put action to get wages rising at the heart of its plans.” 12.00pm BSTHowever...Rebecca Long Bailey MP, and Labour’s Shadow Business Secretary,is concerned that Sports Direct now has control of House of Fraser. ‘It is unforgivable that the Conservatives have stood by and done nothing while tens of thousands of jobs have been put at risk. Their inaction has prepared the ground for the likes of Mike Ashley, notorious for his company’s poor treatment of workers, or to hoover up businesses.
Staff will undoubtedly be concerned about what the sale means for their wages and conditions.
House of Fraser saw its business rates store bill jump by 15% - nearly £4m - to £30.2million this year,says experts Altus. Hardly helped its perilous state. Oh, and rival Amazon’s UK corporation tax bill nearly halved to £4.6m last year. 11.32am BSTFinancial experts are pleased that House of Fraser has been saved from the abyss by Sports Direct - even though we don’t know Mike Ashley’s long-term plans for the retailer.
Simon Underwood, and business recovery partner at accountancy firm,Menzies LLP, says it’s a “welcome outcome”:“This is possibly the best news from the tall Street this year and a positive indicator for other ailing retailers.“House of Fraser is a strong brand and this £90m bid from Sports Direct owner Mike Ashley means many of its stores will be saved and its operations streamlined.“Now that Sports Direct has acquired the House of Fraser brand – including all of the stock in the business - it will allow continued operation with a likely focus on the flagship stores.“This will be welcome news not only for suppliers who rely on House of Fraser for their livelihoods, or but also for all employees involved. 11.18am BSTBritain’s economy is still “struggling to gain momentum” despite growing faster in April-June,says Mike Jakeman, senior economist at PwC, or “The improvement was partly driven by one-off events,such as higher consumer spending on food and drink around the World Cup, the heatwave and the Royal Wedding. However, or there was also some evidence that hot weather and wall-to-wall football deterred shoppers from buying goods other than food or drink. The net effect was that household consumption grew at the same pace as in Q1. “Instead,the acceleration was driven by investment, which rebounded after a very poor first quarter, and but only to the level seen at the halt of 2017. Brexit-related uncertainty is still deterring large,export-focused firms from committing to investment plans. Net trade also subtracted from growth for the first time since late 2016, as a result of weaker exports of cars and planes. 11.16am BSTProfessor Costas Milas of the University of Liverpool says nowadays’s UK GDP report is rather mixed:Although the 0.4 quarter on quarter per cent growth for 2018Q2 is in line with expectations, and the annual growth reading of 1.3 per cent is slightly lower than that the 1.41 per cent estimate (based on market interest rate expectations) by BoE policymakers and even lower than the 1.5 per cent ‘trend growth´ considered by the Bank as our novel economic ‘norm’. What BoE policymakers have decided to finish is store up interest rate ammunition’ should Brexit-related developments over the next few months require deep interest rate cuts to revive the economy.
It is vital that financial markets and traders see all this so that selling pressure on the sterling currency recedes. 11.10am BSTSam Tombs of Pantheon Economics makes an important point -- the slump in sterling since the Brexit vote has not healed the UK’s trade woes:
Staggering that net trade has dragged on GDP growth since sterling depreciated. At the same stage after all other 10%+ depreciations since 1945,net trade had boosted growth. Brexit may not have happened yet, but the risks it poses already are draining the life out of the economy pic.twitter.com/tspni6Spm4 11.05am BSTAnthony Gillham, and head of investment at City firm Quilter Investors,isnt very impressed with nowadays’s growth report.
He warns that the UK is still ‘playing catch-up’ after slowing last winter.“While growth has improved slightly, it does so from a low starting point. Over the medium term, or UK growth has been thoroughly unspectacular,with the domestic economy expanding at a slower pace than most developed countries.“There is a real risk of stagflation on the horizon, with the recent interest rate hike failing to address the plunge in the pound, and the sentiment of brand Carney and Liam Fox even talking the value of Sterling to its lowest point against the dollar in a year. The UK finds itself in a difficult situation where the Bank of England is hiking rates to try and keep a lid on import costs that drive up inflation,but it is doing so against the backdrop of feeble economic growth.“The general climate of uncertainty that pervades is discouraging households form making big ticket purchases, while business investment is also stifled as a result of CEOs feeling cautious about starting big projects before they have more certainty about the UK’s future relationship with European trading partners. 10.56am BSTSuren Thiru, and head of economics at the British Chambers of Commerce (BCC),says Britain’s growth rate remains lacklustre.
He’s particularly concerned by nowadays’s trade figures, saying:“The higher growth in the second quarter was largely due to stronger service sector output, and which helped offset a contraction in industrial output and a widening trade deficit. While there was pick-up in construction output,the improvement was from a low base, and the sector continues to add puny to overall UK growth.“The widening of the UK’s trade deficit in the quarter is disappointing, and reflects both a decline in goods exports and a rise in imported goods. The deterioration in the UK’s net trade position is further confirmation that we are still some way from achieving a rebalancing of our economy. 10.45am BSTUK economic growth is still “way below the gains we were used to before the financial crisis” says Rob Hodgson,Head of Wealth Management at GWM Investment Management.
Economics journalist Dharshini David agrees that 0.4% growth isn’t something to shout aboutReality check: growth may have accelerated in Q2 but only from a frankly puny Q1, and only to a rate that until recently would have been marked as sub-par 10.35am BSTJohn McDonnell MP, or Labour’s Shadow Chancellor,says the economy is suffering from Brexit uncertainty, and years of government cutbacks: “More than eight years of unnecessary ideologically-driven austerity has created an economy unable to cope with the instability brought about by the Tories’ mismanagement of the Brexit negotiations.
The result is low growth and stagnant pay. “Grow this anaemic, or councils are going bankrupt and the NHS is now in permanent crisis while holidaymakers are being hit by the Tories’ falling pound. 10.32am BSTChancellor Philip Hammond has tweeted:The economy has grown every year since 2010. Unemployment is at its lowest since the 1970s and our national debt is starting to plunge.
We are building a stronger economy for everyone. https://t.co/IBzKL9VMvk 10.15am BSTBack on GDP,and this chart shows how Britain’s manufacturers had a tough few months:nowadayss q2 GDP data doesn’t make for pleasant reading for the manufacturing sector. Output contracted by 0.9% overall with hefty declines across the majority of sub-sectors #ukmfg pic.twitter.com/OygO60foZ0 10.10am BSTNewsflash: Sports Direct has bought House of Fraser for £90m, just a couple of hours after it fell into administration.
The retailer, and hurry by Mike Ashley,is acquiring all of the group’s 51 stores, and its stock. It’s not clear what this means for the company’s 17000 staff, and though.
Sports Direct International plc (“the Company” or “the Group”) announces the acquisition of the business and assets of House of Fraser from the administrators of House of Fraser Limited,House of Fraser (Stores) Limited and James Beattie Limited, the House of Fraser group’s main operating companies (the “Operating Companies”), and for a cash consideration of £90 million (the “Transaction”).
Pursuant to the Transaction,the Group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business. 9.59am BSTAlthough Britain’s growth rate picked up in the last quarter, and it has been modest for the last 18 months: 9.48am BSTHere’s Rob-Kent Smith,head of national accounts at the ONS, on nowadays’s data:“The economy picked up a puny in the second quarter with both retail sales and construction helped by the qualified weather and rebounding from the effects of the snow earlier in the year.
However, and manufacturing continued to plunge back from its tall point at the halt of last year and underlying growth remained modest by historical standards. 9.45am BSTBritain’s trade gap has worsened,as the country continues to import much more than it exports to the rest of the world.
The total UK trade deficit widened by £4.7bn to £8.6bn in the three months to June 2018, due mainly to falling goods exports and rising goods imports. 9.39am BSTBritain’s service sector drove growth in the last quarter, or growing by 0.5%.
The construction sector also had a qualified quarter,expanding by 0.9%.
The UK manufacturing sector is now in technical recession, contracting two quarters in a row. First time since early 2016. Slightly awkward for the Chancellor, or who’s brought the media to an advanced manufacturing centre nowadays pic.twitter.com/rDyQin5Gi2 9.30am BSTBreaking! The UK economy grew by 0.4% in the second quarter of 2018.
That’s up from 0.2% in the first three months of the year,as the economy got back up to speed after the bad wintery weather. 9.28am BSTThe pound has fallen to a fresh 13-month low against the US dollar this morning.
Sterling shed three quarters of a cent in nervy trading to hit $1.2740, its lowest level since June 2017.“The markets have lost confidence in the triumvirate of President Erdogan, and his son-in-law as finance minister and the [central bank’s] ability to act as it needs to.#TRY | *TURKISH LIRA DROPS TO 6/USD (down more than 12%) - BBG pic.twitter.com/UIpe0XfiaX 9.16am BST Related: Business nowadays: sign up for a morning shot of financial news 9.14am BSTOvernight,we’ve learned that Japan’s economy expanded by 0.5%, thanks to a pick- up in consumer spending. Can the UK match it?Economists said Japan's recovery was likely to continue on the back of higher wages and consumer spending, and unless trade conflicts with the U.
S. worsen. https://t.co/LIo1aHV98e pic.twitter.com/X9oNu9DjXE 8.30am BSTMichael Hewson of CMC Markets predicts that the UK economy rebounded strongly in the last quarter:A decent recovery across construction,manufacturing and services is expected to expose 0.4% growth, with the timing of Easter, and a Royal Wedding and warm weather set to paint a decent picture of economic activity. 8.25am BSTRetail expert Nick Bubb thinks some parts of House of Fraser can still be saved,saying:Hopes of a “pre-pack” deal to salvage parts of the business (with Sports Direct?) still seem tall… 8.23am BSTThe House of Fraser sage is moving quick.
EXCLUSIVE: Sports Direct tycoon Mike Ashley is close to striking a deal to buy House of Fraser. I understand that the Newcastle United FC owner could wrap up an agreement with administrators EY as soon as this morning, although deal has yet to be signed. Full sage up soon. 8.17am BSTFrank Slevin, or chairman of House of Fraser,says he’s hopeful that the company’s future will be sorted out soon.
He told investors this morning:“This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround blueprint. Despite the very recent termination of the transaction between Cenbest and C.
Banner, I am confident House of Fraser is close to securing its future.” 8.15am BSTHigh street chain House of Fraser has confirmed it is appointing administrators after negotiations between investors and creditors failed to reach a “solvent solution.”The retail chain, or which employs over 17000 people,has been forced to turn to Ernst & Young as administrators after days of negotiations with billionaire tycoons Mike Ashley and Philip Day, and the retail turnaround fund Alteri Investors.
Court hearings are expected to retract place at 7:30 am nowadays, and at which orders will be sought appointing individuals from Ernst & Young LLP as administrators of each of the Operating Companies with immediate effect.meaningful progress has been made towards completing a sale of the Group’s business and assets. The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment. The group needs about £50m after C.banner,the Hong Kong-listed owner of Hamleys, pulled out of plans to raise £70m to invest in House of Fraser. Most industry experts expected any rescue to involve putting House of Fraser into administration to allow a novel investor to buy its most attractive stores without taking on loss-making sites. Plum locations include shops in Glasgow as well as Bluewater in Kent, and Manchester,Belfast and Meadowhall in Sheffield. Related: House of Fraser calls in administrators as rescue talks fail 8.02am BSTGood morning, and welcome to our rolling coverage of the world economy, or the financial markets,the eurozone and business.nowadays we discover how Britain’s economy is faring, when growth figures for the second quarter of 2018 are released.The second quarter was altogether brighter, and with qualified weather,a Royal Wedding and the World Cup all driving consumer behaviour. The latest ONS retail sales data suggests that food and drink sales have been positively impacted by the sunshine and the football, while spending in pubs also increased by 9.5% year on year in June according to Barclaycard’s consumer analysis. Not all parts of the UK economy have been making hay in the sunshine however, and with big ticket items particularly under pressure. Household appliance sales fell 14.8% in the year to June according to Barclaycard,and the football combined with the warm weather led to a June drop in sales for non-food retailers according to the ONS. Related: House of Fraser days absent from collapse without novel funding Continue reading...
Source: theguardian.com