Andy Haldane to quit Bank of England

Andy Haldane 

Andy Haldane

Markets Hub embed test

Markets Hub embed test

06:17 PM

Wrapping up

That is all from us today – here are some of our top stories:

Thank you for following along, as ever, and do join us again bright and early tomorrow.

05:55 PM

LVMH defies the pandemic



Luxury goods multinational LVMH’s first-quarter sales surpassing the level of 2019 as the industry recovers from the pandemic-induced slump.

Revenue at the fashion and leather goods unit jumped 52pc from a year earlier, above analysts’ expectations of a 30pc growth. It was 8pc higher than the same period in 2019. The division has been the key driver for the firm throughout coronavirus, benefiting from the growth of the Dior and Louis Vuitton brands.

First-quarter revenue at the luxury giant rose 30pc just under €14bn euros (£12bn), above expectations of €12.7bn.

“Lockdowns should, intuitively, be bad news for luxury goods. High end cosmetics, perfumes, jewellery and bags are all made to be seen – and it’s difficult to flash your luxury goodies when you’re confined to your home and perhaps a socially distanced restaurant. To make matters worse shops remain shut in many markets, particularly Europe, and tourist numbers are low – disrupting LVMH’s traditional sales to well-heeled tourists,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“However, despite those headwinds LVMH has thrived this quarter. Sales are not only considerably higher than they were a year ago but up on 2019 numbers too. You can point to online strength and a rapid recovery in Asia for some of that, but really it’s testament to the incredible strength of LVMH’s brands. Despite being stuck at home wealthy shoppers still want the thrill that goes with buying a Dior bag or TAG Heuer watch.”

05:30 PM

Ex-BP boss to fight climate change at General Atlantic

Lord Browne

Lord Browne

Lord Browne, the former boss of oil giant BP, has joined the board of US private equity firm General Atlantic, to advise it on environmental, social and governance issues from London “with a particular focus on the path to net zero emissions”, it said in a statement.

Lord Browne was chief executive of BP from 1995 to 2007, where he oversaw its merger with Amoco in 1998.

His role at General Atlantic is to find ways to “invest in climate solutions, and help develop corporate strategies for addressing global climate change”.

05:06 PM

US markets hit record on tech rally

New York’s S&P 500 hit a record high today, while the Nasdaq also jumped as investors flocked to tech stocks. It comes after the US paused its rollout of the J&J vaccination, which sparked fears of a delay in an economic rebound.

J&J’s shares fell more than 2pc to a one-month low.

“A pause in the US on the use of Johnson & Johnson’s Covid-19 vaccine does not materially change the company’s strong financial profile. This is due to the profit-free nature of J&J’s vaccine during the pandemic phase, as well as significant global scale and diversity outside of vaccines,” said Michael Levesque, a Moody’s senior vice president.

“Nevertheless, the development and distribution of Covid-19 vaccines has both social opportunities and social risks related to reputational considerations.”

By early afternoon in New York, the benchmark S&P 500 was up by 0.1pc and the Nasdaq by 0.6pc, while the Dow Jones lost 0.5pc.

High-flying tech names that have flourished during lockdowns, rose. Apple, Microsoft and Amazon gained between 0.4pc and 1.3pc.

04:42 PM

KKR plans to outbid CVC for Toshiba

Private equity firm KKR plans to outbid CVC Capital Partners for Japanese electronics giant Toshiba, reported the Financial Times, while the chairman also plans to take over leadership.

Asset manager Brookfield is also poised to make a proposal, it said. CVC had reportedly offered 5,000 yen (£33) per share, which some say undervalued the company.

Toshiba’s chief executive Nobuaki Kurumatani is under pressure from investors and losing confidence from his own employees. He is expected to step down, according to Nikkei, which said chairman Satoshi Tsunakawa will succeed him.

04:14 PM

Jaguar Land Rover’s sales slump



The new boss of Jaguar Land Rover faces a tougher task reversing the premium car maker’s course after it reported annual sales down by 13.5pc, the third consecutive year of decline.

My colleague Alan Tovey reports:

Britain’s biggest car maker sold 439,588 vehicles worldwide in the year to the end of March as Covid hit demand.

However, China, the world’s largest car market and which accounts for a quarter of all JLR’s sales, bounced back with sales up by a quarter. The US, which represents a quarter off all sales was off by 14pc, while the home UK market, along with Europe and other regions were all more than 20pc lower.

Sales did recover in the final quarter of the year, with China up by 127pc, the US 10pc stronger and other markets halving their declines.

Despite revamps to the Jaguar range, cars with the badge continued to underperform with sales down 30.5pc to 97,669 during the year. This meant the more lucrative Land Rover and Range Rover cars outsold them by a record 3.5 times, with their annual sales down just 7.1pc to 341,919.

Announcing the sales numbers, Felix Brautigam, chief commercial officer, said the recovery in the final three months saw stronger sales of more profitable cars, with less need for incentives to encourage buyers.

Despite the poor showing by Jaguar cars, he said he was “encouraged by the sustained sales performance of XE, XF and F-Type, as customers responded positively to our new designs and comprehensive upgrades.”

04:01 PM

Changing of the guards



Fashion retailer Boohoo has bought a new £72m office on 10 Great Pulteney Street, Soho, within walking distance of iconic shopping hubs including Regent’s Street, Oxford Street, and Carnaby Street.

My colleague Ben Gartside reports:

The new offices will be a short walk from Arcadia’s old headquarters near Tottenham Court Road, with the move signaling the dominance of online retailers in the sector after brick and mortar faced pressure throughout the pandemic. Boohoo has announced it will offer flexible working in the 46,000 square foot office, which has space for 600 staff.

The offices will also be home to Boohoo’s other London based brands which include Karen Millen, Coast, Oasis, Warehouse, and Debenhams. Staff from former Arcadia brands will also work from the office.

Dorothy Perkins, Burton and Wallis were acquired from Arcadia for £25m in February, following the collapse of Phillip Green’s empire.

The Evening Standard has previously reported that Boohoo was searching for up to 80,000 square feet of office space, and had looked at the West End as an option.

Boohoo key facts

Boohoo key facts

03:31 PM

Model railway maker boosted by a return to old hobbies



People cooped up at home by lockdowns have given model railway maker Hornby a boost as they turned to old hobbies to fill the days.

My colleague Alan Tovey reports:

The company, which is also famed for its Airfix models and Scalextric slot racing cars, used a trading update to announce full-year sales were up by 28pc on the previous year.

Early in the first lockdown last spring chief executive Lyndon Davies said customers trying to alleviate boredom were snapping up Hornby’s products at the rate they normally do ahead of Christmas, traditionally the company’s busiest period.

He added that the pandemic continues to cause uncertainty but the company and its suppliers – most of whom are based in China and the Far East – are able cooperate more freely effectively than in the early lockdowns. Annual results will be released in June.

02:55 PM

Egyptian court backs seizure of Ever Given over $ 900m Suez Canal claim



The huge Ever Given container ship that blocked the Suez Canal for six days could be seized by Egyptian courts as the waterway’s operators fight for compensation caused by the disruption.

My colleague Alan Tovey writes:

A court in the Egyptian city of Ismailia has granted a request by the Suez Canal Authority to seize the 200,000 tonne, 1,312ft vessel, local media reported.

The authority, which is based in Ismailia, is reported to be seeking $ 900m in compensation for the disruption caused by the ship running aground in the canal on March 23.

Ahram Gate, a news website run by the Egyptian government, said the court order would help the canal authority reclaim the costs it incurred from the blockage.

Loss of revenue from transit fees, which start at about $ 100,000 per ship, ran to $ 15m a day.

The canal operator is also seeking compensation for repairs to damage caused when the Ever Given hit the right hand-bank of the waterway, along with costs related to dredging and salvage work.

02:21 PM

India set to quadruple its number of Hamleys stores



India’s richest man Mukesh Ambani is preparing to quadruple the number of Hamleys stores in India to more than 500 in three years in a bid to revive its fortunes.

My colleague Mutaz Ahmed reports:

Mr Ambani, who is worth $ 72.9bn according to Forbes, hopes a new emphasis on India will give the 261-year-old toy retailer a new lease of life.

Around 27pc of India’s 1.4bn population are children under 14 and around a fifth of the world’s babies are born in the country.

Mr Mehta said there was significant potential for growth with India accounting for just 1pc of the $ 90bn (£66bn) global toy industry. Hamleys has struggled to compete with online rivals such as Amazon in recent years which have been grabbing market share from traditional toy retailers.

Hamleys posted an £8.6m loss for 2019, its most recent accounts show, while sales fell around 2pc to £47.6m compared with a year earlier.

Mr Ambani bought Hamleys from China’s C Banner International in 2019 through his company Reliance Industries for a reported $ 89m. Hamleys, which was founded in 1760, has around 160 stores across 18 countries, including around 120 in India.

Darshan Mehta, chief executive of Reliance Industries, said: “There is a lot of headroom and India is no way near saturation. We are now mulling how we can roll out stores in newer geographies and newer formats.”

01:58 PM

J&J to ‘proactively’ delay European roll-out

Ursula von der Leyen 

Ursula von der Leyen

Johnson & Johnson said it’s delaying the rollout of its Covid vaccine in Europe after US regulators paused its roll-out pending a review of rare blood clots.

The company is reviewing the cases with European health authorities after US officials suspended the jab after six women suffered a type of brain blood clot similar to that reported as a rare side effect to the AstraZeneca vaccine.

The vaccine is under review in the UK but hasn’t been approved there yet.

About 6.8 million people in the US have received the J&J vaccine.

The incident is another blow to efforts to vaccinate the world and bring the pandemic to a close.

The European Union was relying on the single-dose vaccine to boost its immunisation drive, and deliveries to the 27 member states had just started this week.

The bloc had been expecting some 55 million doses of the J&J vaccine this quarter as it ramps up vaccination efforts.

While the shot is approved in the EU, the inoculation campaign hasn’t started. The EU’s drug regulator last week started a review to assess reports of clots in people who received the J&J vaccine. [via Bloomberg]

01:45 PM

Wall Street opens higher despite J&J vaccine pause

US stocks have opened slightly higher despite the roll-out of the Johnson & Johnson vaccine being paused in the US.

Shares in the pharma giant fell 2.5pc in early trading.

US market data - Bloomberg 

US market data – Bloomberg

01:25 PM

Pound tumbles after Haldane announces departure

Sterling has tumbled from earlier highs following the news of Mr Haldane’s departure. He has worked at Threadneedle Street for three decades.

The Bank said it will advertise for a successor “in due course”.

01:07 PM

Breaking: Andy Haldane to quit Bank of England

Andy Haldane, chief economist at the Bank of England, is set to step down from the Bank in June and become chief executive of the Royal Society of Arts.

01:00 PM

Just Eat aims to take big bite out of Deliveroo’s market share

Just Eat

Just Eat

Just Eat Takeaway claimed it is winning market share from rivals Deliveroo and Uber Eats after its delivery business surged during the latest lockdown.

My colleague Matthew Field reports:

The Anglo-Dutch company said its delivery operations grew by 695pc in the first three months of the year compared with last year, which Just Eat said was “multiple times faster” than the growth rate of its main rivals.

Overall order growth nearly doubled in in the UK, up 96pc, including both its logistics and marketplace businesses.

It comes as Deliveroo announced it was expanding its grocery delivery operations with Sainsbury’s to more than 100 stores in a two-year contract. It makes deliveries in as little as 20 minutes available to about 30pc of the UK population.

Jitse Groen, the Just Eat chief executive, said: “The renaissance of our UK business is apparent.”

After years of battling fast-growing Deliveroo and Uber Eats, Just Eat has aimed to stage a fightback with a vast marketing drive including television advertising featuring rapper Snoop Dogg. It is also launching a new “Scoober” division of 2,000 riders employed as workers, rather than freelance contractors.

12:42 PM

City watchdog seeks ‘ambitious’ access to US market

City of London

City of London

The City watchdog is looking to upgrade its relationship with the US and give British firms permanent access to American securities and derivatives markets post-Brexit.

The Financial Conduct Authority is working with the Commodity Futures Trading Commission about a “permanent footing” for UK trading venues to operate stateside, according to its director of international.

Nausicaa Delfas said: “If granted, this recognition will provide U.K. firms with the certainty they need to conduct their business in the U.S. with confidence.”

The regulator is also in discussions with the Securities and Exchange Commission over access to the US for swap dealers, and the regulator is supporting the UK government’s negotiations with the US on a wider trade agreement.

12:22 PM

Factory closure costs cash printer £13m

Britain's new £50 notes printed by De La Rue will feature computer scientist Alan Turing - Bank of England 

Britain’s new £50 notes printed by De La Rue will feature computer scientist Alan Turing – Bank of England

De La Rue, the company responsible for printing Britain’s banknotes, has revealed it will suffer a £13m blow from closing a plant in the North East.

My colleague Alan Tovey has more below:

De La Rue is taking a £13m hit as it closes down banknote printing operations at its Gateshead plant, which depended on the British passport contract it controversially lost two years ago to make the site feasible.

The asset impairments and depreciation charges on production equipment at the North East England site were revealed in a trading update which chief executive Clive Vacher said drew a line under the passport episode.

“This is a clean-up operation,” said Mr Vacher, who was appointed as chief executive to bring the company back to health after the loss of the £490m contract to a French rival.

Losing the passport contract cost previous chief executive Martin Sutherland his job after he threatened to sue the Government over De La Rue missing out, before backing down.

The Government is effectively De La Rue’s biggest customer as the company has long-term contracts to print currency for the Bank of England.

Investors also agitated for a management clear out in the wake of the contract loss, as the share price collapsed. Philip Rogerson stepped down as chairman in late 2019 after seven years in the role, and was replaced by Kevin Loosemore.

Although printing operations have now finished at Gateshead – which used to employ about 400 staff – about 85 employees remain there working in the company’s security and authentication arms.

The write-downs are on equipment which is to being transferred to De La Rue’s four other plants around the world.

A turnaround plan launched by Mr Vacher is paying off, with the update revealing upgrading profits forecasts, to the top end of the £36m to £37m pencilled in by the City when De La Rue posts full-year numbers on May 26.

Debt was also down significantly, falling by £21m to £53m. De La Rue has also paid back the £400,000 it took in furlough payments.

Shares dipped 1.9pc to 183.2p in the early afternoon.

12:13 PM

India approves Sputnik jab

Russia's Sputnik V vaccine is approved in more than 50 countries - DADO RUVIC /REUTERS 

Russia’s Sputnik V vaccine is approved in more than 50 countries – DADO RUVIC /REUTERS

India has given the green light to Russia’s Sputnik V vaccine, becoming the latest country to use the jab under emergency authorisation.

Europe and the US are the major holdouts, with 50 other countries having given their approval. My colleague Julia Bradshaw has the full story:

India has become the latest nation to approve Russia’s Sputnik V vaccine, joining a list of countries that include the Democratic Republic of Congo, Syria, Venezuela, Belarus and Kazakhstan.

Indian authorities approved the vaccine under emergency use authorisation, based on clinical trials in Russia and additional late-stage trials in India.

Sputnik V’s development has been funded by Russia’s sovereign wealth fund, the Russian Direct Investment Fund. It is not approved in any European countries or in North America.

11:50 AM

Vaccine passports ‘risk violence towards staff’

Punters enjoyed pints outside yesterday as pubs reopened outdoor seating in the first easing of 2021's lockdown - Alberto Pezzali /AP

Punters enjoyed pints outside yesterday as pubs reopened outdoor seating in the first easing of 2021’s lockdown – Alberto Pezzali /AP

The boss of British bar chain Revolution Bars has warned imposing vaccine passports leaves hospitality staff at risk of violence.

Speaking as his company revealed a 75pc year-on-year plunge in revenue in the first half of its financial year, the chief executive said demanding proof of vaccinations would also be disciminatory and difficult to enforce.

My colleague Ben Gartside has the full story below:

Revolution Bars chief executive Rob Pitcher has said that the implementation of vaccine passports could lead to violence towards bar staff implementing the policy.

Mr Pitcher said:”There are some fundamental questions about use of vaccine passports for day to day activity and we’re yet to have answers for. International travel is understandable, but day to day use in a domestic setting is unclear. I struggle with the idea: they’re hard to enforce, they’re discriminatory and there are issues with groups that can’t be vaccinated such as pregnant women.

“I’m concerned about violence towards our team, and it creates flashpoints towards them in a way that is worrying. We’ve seen very sporadic issues [with violence], but largely people understood why Test and Trace and masks were needed to stop the spread, but the lack of a reason why is the danger which presents itself with vaccine passports.”

The potential implementation of vaccine passports for hospitality has been attacked by those in the industry as unworkable and unnecessary. Government ministers including Vaccines Minister Nadhim Zahawi had previously said no such policy would be pursued.

Mr Pitcher also said that if the Government was basing reopening decisions on data, the reopening timetable should be moving at a quicker pace.

“The PM stood up and said all restrictions would fall away by June 21. The data on every measure is better than any previous hopes – It’s hard to justify why the timetable hasn’t been sped up.

“There was a real opportunity to open inside trading well before 17th May. Non-essential retail opened indoors yesterday, and even when hospitality opened indoors last year there wasn’t a spike in cases. It’s very hard to justify why it wouldn’t be brought forward.”

Revolution Bars announced that revenue in the first half of 2021 had dropped 75pc compared to the same period of 2020, due to the heavy financial impact of coronavirus restrictions.

11:26 AM

J&J: ‘No clear relationship between clots and vaccine’

Johnson & Johnson has said its aware of the clotting events, but adds that at present, “there is no clear causal relationship” between clotting and its vaccine.

11:17 AM

NYT: US to pause Johnson & Johnson vaccine

The New York Times is reporting that the US government will pause the roll-out of the Johnson & Johnson vaccine after six cases of blood clots were detected.

This will come as a big blow to many European countries, who have big orders of the J&J jab and could be forced to follow suit,

11:08 AM

JD Sports shares hit record high despite profits dip

My colleague Hannah Boland has a full write-up on JD Sports. She reports:

JD Sports expects profits to rebound strongly as coronavirus restrictions ease and shoppers flock back to the high street.

The FTSE 100 retailer said profits before tax and exceptional items to be between £475m to £500m for the 12 months to January 2022, up from the £421m recorded for the latest financial year.

Such a result would be ahead of pre-pandemic levels. JD Sports posted a pre-tax profit of £438m for the year to January 2020.

Shares in JD Sports hit a record high on the results, up 2.4pc in early trading.

Executive chairman Peter Cowgill said it could be confident on the outlook as “even with the unique circumstances of store closures for a substantial period of the year, the group has retained substantially all of its record profitability from the prior year”.

The results come a day after restrictions eased in England and Wales, allowing JD Sports to reopen stores with queues forming outside some outlets in the early hours.

10:37 AM

Credit Suisse slash bonus pot to limit Archegos hit

Thomas Gottstein

Thomas Gottstein

Credit Suisse slashed the amount of money set aside for employee bonuses by hundreds of millions of dollars and used the savings to limit the financial hit from the implosion of Archegos Capital Management.

Bloomberg has the details:

Cuts to accruals for staff compensation and other one-off items added about $ 600m to underlying profit before tax for the first quarter, which is expected to be just over $ 3.7bn, a person familiar with the matter said, asking for anonymity to discuss internal information.

A spokesperson for Credit Suisse declined to comment on the numbers, which were reported earlier by the Financial Times.

Bonuses are accrued every quarter on a pro-rata basis, so the bank could set aside more in the remainder of the year to make up for the cuts.

Credit Suisse emerged as the big loser in global investment banks’ race to exit trading positions as Archegos collapsed, pushing it into a 900m-franc ($ 975m) pre-tax loss for the quarter and prompting a management shakeup.

The bank, which is also dealing with the collapse of a group of supply chain finance funds, has already said that top management won’t get a bonus for last year.

10:09 AM

Bitcoin hits fresh high

Bitcoin has jumped to an all-time high as the mood in cryptocurrencies turned bullish ahead of Coinbase Global’s initial public offering.

09:51 AM

Small suppliers must be part of 5G network after Huawei, ministers told

Smaller telecoms suppliers must form a key plank of the UK’s 5G mobile phone network once equipment from Huawei is removed, ministers will be told.

My colleague Ben Woods reports:

A taskforce headed by Lord Livingston, the former BT boss, will recommend that smaller equipment manufacturers make up a quarter of the equipment used in 5G networks.

A report by the panel will call for Britain and its Western allies to join forces to forge new standards for mobile technology in response to China’s market-leading position, the Financial Times reported.

It will also recommend that ministers encourage one or two large vendors to compete with Ericsson and Nokia, the two main challengers to Huawei that dominate the market.

UK mobile networks are poised to spend up to £2bn ripping out Huawei kit after Boris Johnson followed America’s lead and blacklisted the company over spying fears.

09:23 AM

Pound rises as economy returns to growth

Sterling has edged back towards $ 1.38 this morning after data showed the UK economy grew 0.4pc in February.

Analysts at ING said:

We expect the pound to show relatively good resilience to any USD rally today. The storm that hit the AstraZeneca vaccine has not derailed the UK vaccination plans, leaving prospects of a sharp recovery in the country intact.

08:57 AM

Reuters appoints first female editor-in-chief

Alessandra Galloni

Alessandra Galloni

Reuters has named Alessandra Galloni as its next editor-in-chief, making her the first woman to be appointed to the role in the news services’ 170-year history.

Ms Galloni, who previously worked at the Wall Street Journal, will start the job on April 19, and replaces Stephen Adler, 66, who ran the newsroom for a decade.

She joined Reuters in 2013 in its Southern Europe bureau and since 2015, she has served as global managing editor, handling news planning.

“She was the standout candidate in an extensive, global search and highly competitive recruitment process, which featured many impressive internal and external candidates,” Reuters President Michael Friedenberg said.

08:32 AM

Goldman Sachs to open Birmingham office

Goldman Sachs

Goldman Sachs

Goldman Sachs has announced plans to open a new office in Birmingham which will open in the third quarter of this year.

The location will be home to several hundred staff members over time but engineering will be the first division to build out to the city.

“Establishing a new office in Birmingham will diversify our UK footprint and give us access to a broad and deep talent pool in the local area. We see tremendous opportunity to enhance our UK presence and continue delivering for our global clients,” Goldman’s Richard Gnodde said.

08:18 AM

Brussels faces soaring costs for Pfizer’s Covid vaccine



Pfizer has increased the cost of its Covid jab for future orders placed by the European Commission by more than 60pc as experts predict vaccine prices will continue to rise.

My colleague Julia Bradshaw reports:

The pharmaceutical company has increased the cost of future Covid jabs sold to the EU from €12 (£10.40) a dose to €19.50, according to the Bulgarian prime minister, Boyko Borissov.

Contracts for 900m jabs at this higher price tag are now being signed, for delivery in 2022 and 2023, Mr Borissov said.

The EU said information on pricing and contracts was confidential, but a Commission official confirmed the EU was drawing up contracts to reserve two billion booster jabs over the next two years.

The bloc was given a rebate on the cost of pre-ordering the Pfizer/BionTech vaccine because it had supported Germany-based BioNTech with funding to develop it.

But analysts warned that governments should expect to set aside more money for future vaccine boosters as the demand for jabs falls over time, causing prices to rise.

07:58 AM

JD Sports opens warehouse in Dublin due to Brexit supply issues

JD Sports 

JD Sports

JD Sports said Brexit red tape has severely tested its operations and it’s opening new warehouses in the European Union to avoid the hassles of customs checks.

The UK sportswear chain said duties and disruptions from customs checks mean it’s no longer enjoying “frictionless” trading.

A new 65,000 square-foot warehouse near Dublin will become operational later this year and it is looking for another site on mainland Europe for an even larger facility.

In February, a spokesman said the sportswear chain was looking at sites in various countries, including the Netherlands and Germany, to meet growing online demand from European consumers.

Before Brexit, both these warehouses would likely have been located in the U.K.

JD Sports already has a warehouse in Belgium but it’s relatively small and primarily used to supply its store network on the continent. The main distribution hub is in Rochdale, England, and it’s this center which is currently used for online orders from European customers [via Bloomberg].

Shares rose 2.4pc to 935p in early trading.

07:42 AM

Babcock writes off £1.7bn



Babcock will take a £1.7bn hit in impairments and charges after new boss David Lockwood announced the results of his review of the embattled defence and engineering business.

My colleague Alan Tovey reports:

Revealing the conclusions of the overhaul of the FTSE 250 business he took the helm of in September, Mr Lockwood also said he would refocus the company on its core aerospace, defence and security activities.

This would mean a slew of disposals, expected to generate at least £400m in the coming year.

The charges and impairments come after a deep examination of Babcock’s contracts and profitability and the vast “vast majority” are expected to be one-offs and not to affect cash.

Babcock will also be restructured as the new boss unveiled a “change to the operating model to simplify the business and reduce layers”. This will entail a one-time cash hit of £40m, which is expected to deliver the same amount in annual savings from next year.

Mr Lockwood’s review also warned that underlying operating profit is likely to be reduced by £30m a year as a result.The unscheduled trading update also included draft annual results, ahead of their scheduled publication on May 26.

They revealed underlying revenue of £4.7bn, down £200m on the previous year, and underlying operating profit of £307m, down from £524m. Impact of the review has not been accounted for in these figures.

Babcock is a major supplier to the Ministry of Defence, depending on the UK military for half its annual revenue with major contracts including maintenance of the Royal Navy and pilot training.

However, it has faced criticism for years over regular downgrades and warnings about profits as contracts underperform and new issues crop up with the business. There had been speculation it could need to raise funds to get itself back on track.

Mr Lockwood added: “The early results from our reviews show significant write-offs and a smaller ongoing reduction in profitability.

“Through self-help actions, we aim to return Babcock to strength without the need for an equity issue. Through our new operating model, the future Babcock will be a better place to work, a better partner to our customers and will be well placed to capture the many opportunities ahead of us.”

07:18 AM

FTSE opens flat

The FTSE 100 has opened flat, again lagging European peers, as the reopening of retail and hospitality fails to boost traders’ optimism.

European market data - Bloomberg 

European market data – Bloomberg

06:56 AM

JD Sports expects pandemic rebound

JD Sports expects profits to rebound strongly as coronavirus restrictions ease after reporting a decline for in the bottom line for the year to January 30.

My colleagues report:

The FTSE 100 retailer said pre-tax profit was £324m for the 12 months, down from £348.5m the previous year, despite a slight rise in revenues to £6.17bn.

Group pre-tax profits for the current year are expected to jump to between £475m and £500m.

JD Sports reopened its stores in England and Wales on Monday, with queues forming outside some outlets in the early hours.

06:48 AM

Manufacturing grows for first time since November

Output from UK’s manufacturers rose for the first time since November in February, following a revision that determined output in the sector slipped in December.

The ONS says:

Seven out of the thirteen manufacturing sub-sectors grew. The largest positive contributions came from the manufacture of transport equipment sector (which grew by 5.4pc) and manufacturing of computer, electronic and optical products (which grew by 9.0pc).

06:37 AM

Consumer-facing services performance still a weak spot

With the UK still in a tight lockdown during February, performance across the services sector remained below pre-pandemic levels.

Consumer-facing services such as hospitality were particularly hard-hit, although it’s remarkable how much better the performance was than during the initial lockdown last spring – testament to how businesses have adapted.

Dean Turner from UBS Wealth Management said:

It is encouraging to see production and the UK’s dominant service sector return to growth following the sharp decline in January, but with restrictions still in place through all of February, the impact continues to be felt in consumer-facing sectors of the economy.

As restrictions were eased, and confidence in the economy opening-up increased last month, we expect to see a further improvement when the data for March is released.

06:27 AM

Still a mountain to climb

Despite the slightly expansion in February, and upwards adjustment to January’s figures, overall GDP is still at levels last seen in 2014:

Still, Capital Economics’ Thomas Pugh says the path looks clear for a recovery from here:

The 0.4pc m/m rise in GDP during February’s Covid-19 lockdown suggests that January was probably the low point of the year as vaccinations and the reopening of the economy will combine to trigger a rapid rebound in activity over the next few months…

…with schools having opened in March and outdoor hospitality and non-essential retail stores opening yesterday, the rises in GDP should be much stronger in the coming months. By early next year, we think the economy will have returned to the pre-pandemic level.

06:17 AM

Can momentum be maintained?

A breakdown of exports by category shows recovery across all sectors, with machinery and transport equipment particularly strong.

A key question from here is whether the recovery can be sustained. Most companies that could adapt to the rules are likely to have done so by February, meaning the group still to be made up is likely to reflect more problematic exports (such as certain types of living organisms).

The reality is some exports are bound to have been lost, but these figures are likely to raise hopes that the drop has been only moderate.

The continued imports depression may take longer to figure out. The ONS has a theory:

It is possible that traders in the EU may have paused exporting to the UK to wait for the new systems to settle in before continuing with trading.

06:09 AM

How will those trade figures be read?

Those trade figures are pretty interesting. Although it’s far from the quick return to normality that some Government figures predicted, the rebound in exports in particular was strong, with companies seemingly quickly getting to grips with new customs arrangements.

It makes the slower recovery in imports all the more interesting – the UK simply imported a lot less from the bloc in the first two months of the year, putting the figures much more in line with imports from the rest of the world.

06:04 AM

Trade with EU shows partial recovery

Trade with the EU picked up on slightly during February, with goods exports rising 46.6pc (or £3.7bn) after a record drop of 42pc (£5.7bn) in January.

Meanwhile, imports of goods rose just 7.3pc (£1.2bn), after a fall of 29.7pc (£6.7bn) in January.

06:02 AM

GDP rose 0.4pc in February

UK GDP rose just 0.4pc in February, falling short of the 0.6pc expected by economists. That’s a pretty smaller gain, but there will be hopes that momentum begins to build through the spring as the economy reopens.

January’s drop was revised from –2.9pc to –2.2pc, a remarkably slim drop given the extent of lockdown.

05:46 AM

Trade data – slightly less heat, slightly more light?

After a record plunge during January, trade with the EU – which will be the most closely-watched section of today’s trade data release – is bound to have recovered somewhat as companies adjusted to new measures.

Trade between the UK and EU buckled in the first month of the year, with exports to the EU plunging 40pc, and imports falling 29pc – the biggest slumps on record.

So how much have things changed? We got a sense of the shift from data released last week:

Trade between the UK and France bounced back towards normal in March as firms adjusted to life after Brexit, according to analysis by French customs officials.Imports from Britain climbed to 107pc of typical levels after taking Covid effects into account, the research found – with exports back at 96pc…

German figures for February also showed a marked improvement. Exports from Germany to the UK were down 12.2pc compared with the same month last year, while imports from Britain fell 26.9pc, up from January falls of 29pc and 56pc respectively.

A partial recovery is probably the best that can be hoped for at this stage – with British Chambers of Commerce research released yesterday saying four in 10 exporters experienced lower sales in the first quarter of the year.

It may take as while longer before we can truly assess the impact Brexit has had on trade with our biggest economic partner, however.

05:37 AM

The only way may be up

Will February’s growth data mark the first step on the UK’s long road back from the pandemic output slump?

After setbacks caused by fresh lockdowns in November and January, economists see growth of about 0.6pc today, offsetting a small amount of the 2.9pc fall the month before.

But Deutsche Bank’s Sanjay Raja says the recovery is now underway, adding “we don’t expect to see another negative print for some time”.

Provided the UK can avoid a new wave that forces yet another lockdown, the Government’s roadmap sets the stage for a slow return to economic normality.

On top of that, many top companies have ambitious spending plans to ride the wave of pent-up demand expected to be released. A study of chief financial officers, released on Monday, found they are more optimistic than at any point in 13 years, and plan to increase spending at the sharpest pace since 2015.

Mr Raja added:

The modest February unwind should give way to an even bigger jump in March, where we see activity ramping up even more as schools reopen and mobility trends up.

Here’s a reminder of the Office for Budget Responsibility’s latest forecasts, which predict output will return to pre-pandemic levels early next year:

Some other forecasters are more upbeat, pointing to the UK’s vaccine rollout success.

05:27 AM

Agenda: A first step on the path to normality

Good morning. We’ve got GDP and trade data this morning.

Both releases should show the UK is on the road to a new normality – with overall output expected to begin recovering as trade with the EU starts to find a post-Brexit level.

The data will look like something of a work in progress – February’s GDP gains are unlikely to fully offset the fall seen during January, while trade is expected to have recovered only partially after a record plunge in the first month of the year.

5 things to start your day

1) Lynch fraud case casts a shadow over £3bn Darktrace float plan: Cybersecurity company admits criminal and civil charges against its founding shareholder “could result in a material adverse effect”.

2) Brussels faces soaring costs for Pfizer’s Covid vaccine: Pfizer has upped the cost of its Covid jab for future orders placed by the EU by over 60pc as experts predict vaccine prices will continue to rise.

3) Investors plough cash into global shares on recovery hopes: Inflows to global equity funds hit $ 576bn since the autumn, surpassing the $ 452bn notched up over the bull run since the financial crisis.

4) Shoppers stay wary as stores finally reopen: Many consumers remained apprehensive about indulging in retail therapy as shops finally reopened after months of hibernation.

5) KPMG picks a safe pair of hands as its new UK boss: After a series of high-profile problems the accounting firm taps Jon Holt, a Yorkshireman who supports Harrogate Town, as its next leader.

What happened overnight

Asian stocks markets were broadly positive Tuesday after China’s exports grew at a strong pace during March and imports rebounded giving investors heart that domestic demand is improving as part of the recovery from the pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan was trading up 0.4pc Tuesday after opening up less than 0.1pc higher.

China’s exports in dollar terms rose by 30.6pc in March from one year earlier while imports jumped 38.1pc compared to the same time last year, figures published this morning showed.

Coming up today

Corporate: JD Sports, JTC (Full year); Revolution Bars, Plus500 (Interim); Xp Power (Trading update)

Economics: Retail sales, industrial and manufacturing production, balance of trade, GDP (UK), Consumer price index (US), trade balance (China)