UK close to Australian trade deal

Liz Truss

Liz Truss

Workspace tumbled to the bottom of the FTSE 250 after a double-downgrade by Barclays that said there is “too much” optimism being priced in about the positive impact reopening will have on flexible office space providers.

Paul May, an analyst at the bank, said the downturn in London offices that started last year “could be structural rather than cyclical, with permanently lower London-office demand due to work from home”. Analysts noted that since office take-up in London collapsed in 2020, vacancy rates have roughly doubled, now at nearly 11pc, and availability of space is close to a 20-year high. Landlords have, however, generally outperformed.

The bank moved Workspace to an “underweight” rating, from a previous “overweight”, cutting its share price target from 745p to 700p. In its last update in January, Workspace said it had an average of 672 enquiries per month in that quarter compared to 1,001 in the same period a year earlier, though said it had “resilient” customer demand in the latest lockdown. The stock dropped 37.5p to 798.5p.

Rival IWG fell more than 2pc earlier in the day before ending up by a slight 0.1pc, or 0.5p at 357p.

Fresh, positive economic data helped the pound rebound from a sharp fall against the US dollar on Thursday. British retail sales, which rocketed last month as consumers prepared for a partial easing of restrictions, and upbeat purchasing manager index surveys suggested the UK economy may be recovering from its worst slump in 300 years.

Sterling rose 0.07pc against the US dollar to $ 1.384, as the weak greenback continued a disappointing week. It was down 0.4pc against the euro at €1.147.

Concerns over rising coronavirus cases in Asia, however, stemmed equities gains, as well as reports on Thursday evening that President Biden plans to raise taxes on the wealthiest Americans.

Markets pushed ever so slightly into the green with the FTSE 100 virtually flat, up just 0.32 points to 6,938.56. The FTSE 250 rose 7.39 points to 22,372.26.

Leading the way among the top risers on the benchmark, on the back of firmer metal prices, was mining firm Evraz which rose 16.4p to 646.6p and Rio Tinto which gained 114p to £61.19.

Some financial stocks also pushed higher ahead of their first quarter earnings figures next week. Lloyd’s added 0.66p to 42.64p and NatWest gained 2.65p to 194.95p.

Shares of pharmaceutical GlaxoSmithKline fell, however, by 5.8p to £13.42 despite its Jemperli medicine being approved by the US Food and Drug administration. The medication is designed to treat women with endometrial cancer.

Train and bus operator FirstGroup helped buoy the FTSE 250 after it announced the sale of two US units for £3.3bn, a year after putting the businesses up for sale. Shares gained 3.8p to 88.9p.

Elsewhere Harry Potter publisher Bloomsbury Publishing rose 23p to 303p after saying it bought academic imprint Red Globe Press from rival Macmillan Education for £3.7m.

05:14 PM

Wrapping up

That is all from us today – catch up on some of our top stories:

Thank you, as ever, for following along. Have a great weekend!

05:03 PM

Sterling has a strong day

Sterling has had a strong day today, rebounding from a sharp fall on Thursday after strong retail sales and PMI figures were a positive sign for Britain’s economic recovery.

It rose 0.07pc against the US dollar to $ 1.384, as the weak greenback continued a disappointing week ahead of the Fed’s latest rates decision. The pound was down 0.4pc against the euro at €1.147.

04:41 PM

The build up to a UK-Aus deal



Some detail on the goings on behind the scenes in the build up to a UK-Aus deal, from my colleague and former blogger Louis Ashworth:

Talks got off to a shaky start after allies of Ms Truss told the Telegraph that Australian Minister for Trade Dan Tehan was “inexperienced” and said Australia had been “slow to move” on key UK demands since he took up his role in December.

A source close to the Trade Secretary said she planned to put Mr Tehan “in the Locarno Room [in the Foreign Office] in an uncomfortable chair, so he has to deal with her directly for nine hours.”

The attack prompted bemusement in Canberra, with an Australian minister accusing the UK of “sledging” and saying the comments were “just the Brits gobbing off”.

Ms Truss was forced to walk back the comments, texting Mr Tehan to say she hoped for a productive discussion.

In an article for the Telegraph on Thursday, Mr Tehan said “as Britain now seeks to forge a new path, free from the shackles of Europe, Australia stands ready again to be a willing partner.”

He said he was aiming to raise post-Brexit import quotas on Australian food, calling for a “truly liberalising FTA”. The issue is contentious due to concerns that increased imports could undercut British farmers.

Australia is seen as a key supporter of Britain’s efforts to join the CPTPP. Laying out its plans for a free trade agreement last year, the Department for International Trade called Australia a “like-minded and key ally”.

04:30 PM

UK close to Australian trade deal



The UK and Australia have agreed to most of a free-trade agreement, with a deal between the countries now expected in June.

In a statement, International Trade Secretary Liz Truss said: “We have made major breakthroughs over the past few days and an agreement is now in sight.

“We will spend the next few weeks ironing out details and resolving outstanding issues, with a view to reaching a deal by June.”

Since its exit from the European Union, the UK has been carving out new trade deals globally. An agreement with Australia – the UK’s 20th largest trading partner – has been one of its top priorities. It is expected to boost Britain’s economy by between 0.01pc and 0.02pc over 15 years.

The Government is also in talks with the US and New Zealand, and hopes to join an 11-country pact – called the CPTPP – which counts Singapore, Malaysia and Japan among its members.

04:09 PM

Biden confirms G7 and NATO as first foreign trip



Joe Biden has confirmed he will attend the G7 summit in Cornwall, and a NATO meeting in Brussels in June. It will be his first foreign trip as US President.

In a statement, White House press secretary Jen Psaki said: “This trip will highlight his commitment to restoring our alliances, revitalizing the transatlantic relationship, and working in close cooperation with our allies and multilateral partners to address global challenges and better secure America’s interests”.

Ms Psaki said the G7 talks will focus on “public health, economic recovery, and climate change, and demonstrate solidarity and shared values among major democracies,” and Biden will hold bilateral meetings with other leaders, including Boris Johnson.

It makes him the second consecutive US leader to forgo the modern tradition of making Canada the first foreign visit. Donald Trump traveled to Saudi Arabia, Israel, Italy, the Vatican and Belgium on his first trip. Joe Biden hosted Canadian Prime Minister Justin Trudeau for his first virtual summit earlier this week.

03:42 PM

US markets edge higher after a rise in factory activity

Wall St

Wall St

Looking across the pond for a moment, US markets are edging higher today after a rise in factory activity in April gave traders confidence over a swifter economic recovery. Tech and energy stocks are leading the charge.

IHS Markit said flash US manufacturing PMI increased to 60.6 in the first half of this month, the highest reading since the series started in May 2007. A figure above 50 indicates expansion.

Gains for the Dow Jones’ were lesser as shares in American Express and Honeywell fell. The former is due to it reporting a slump in credit card spending and lower quarterly revenue; the latter comes after it missed revenue estimates for its biggest business area – its aerospace division.

Here’s how things stand just before midday in New York:

  • S&P 500: +1pc

  • Dow Jones: +0.5pc

  • Nasdaq: +1.3pc

The S&P 500 and Dow Jones are on track for weekly declines, to follow four consecutive weeks of gains, as worries mount over tax hikes and a resurgence in global coronavirus cases. Meanwhile, investors are taking in news President Biden plans to raise taxes on the wealthiest Americans.

03:22 PM

Bitcoin fund dives in value

As Bitcoin heads for its worst week in almost two months (see 2:37pm post), the largest bitcoin fund has dived in value.

Grayscale Bitcoin Trust, a $ 35bn fund, has lost about a fifth of its value since last Friday, according to Bloomberg’s calculations, to trade at a record discount to the value of the digital assets it holds. The tumble has widened the gap between the share price and the underlying value of its holdings to about negative 19pc of Thursday’s closing prices.

03:11 PM

Owners of Suez’s Ever Given appeal arrest

Ever Given

Ever Given

An Egyptian court will hear an appeal over the arrest of the Ever Given that blocked the Suez Canal after the waterway’s operator claimed almost $ 1bn in damages.

My colleague Alan Tovey reports:

The owners of the 220,000-tonne cargo ship that closed the canal for six days last month have filed the case, arguing that reasons for the ship being impounded were not valid. They also questioned whether the arrest was correct because of the impact on the Ever Given’s cargo.

The appeal, to be heard on May 4, also says there is a “lack of supporting evidence for the Suez Canal Authority’s (SCA) very significant claim”. Ever Given is owned by Japan’s Shoei Kisen Kaisha, and is insured by UK P&I Club against third-party liabilities.

On April 14, a court in Egyptian city of Ismailia ordered Ever Given and her 25 crew be arrested after the vessel’s owner and insurers declined to agree $ 916m claim by the SCA, which included $ 300m for a “salvage bonus” and $ 300m for the “loss of reputation” the SCA.

The ship’s operators and insurers said they had tried to negotiate a lower claim that was “carefully considered and generous” but the SCA would not accept it.

Announcing the appeal, UK P&I said they and their fellow plaintiffs “will continue to negotiate in good faith with the SCA to reach an amicable resolution”.

They added: “Despite the sincere efforts of the Ever Given’s owners and insurers, it has not been possible to resolve this matter without the continued involvement of the Egyptian Courts.”

02:54 PM

Company updates

A round up of some company news today:

  • Bloomsbury Publishing has bought academic imprint Red Globe Press from rival Macmillan Education for £3.7m. The deal involves a £2.1m up-front payment and another £1.6m on formal completion, subject to assignment of some contracts. Bloomsbury said: “Red Globe Press aligns well with our existing academic publishing and provides a gateway to new and attractive academic publishing areas.”

  • Pepco, the owner of Poundland, plans to open its first Pepco-branded store in Alicante, Spain, later this month as it pushes forward with expansion plans ahead of a potential stock market float. The group plans to open another 10 Spanish stores by September, creating more than 100 jobs.

  • GlaxoSmithKline‘s Jemperli medication has been approved by the US Food and Drug administration. It is designed to treat women with recurrent or advanced endometrial cancer. Around 60,000 women are diagnosed with endometrial cancer in America each year, and around one in four develop an advanced or recurrent form of the disease.

  • Photo-Me, the picture booth operator, has issued a profit upgrade after a trading increase in Japan due to a rise in applications for photo identification cards on the back of the government scheme to promote more applications. Revenues are now expected to hit between £190m and £200m, compared with £175m previously.

02:33 PM

Extinction Rebellion protestors cleared over Shell building damage



Six Extinction Rebellion protesters have been cleared of causing criminal damage to Shell’s London headquarters despite the judge directing jurors they had no defence in law.

PA has the details:

Two of the group’s co-founders Simon Bramwell, 49, and Ian Bray, 53, were acquitted on Friday alongside Jane Augsburger, 55, Senan Clifford, 60, David Lambert, 62, and James “Sid” Saunders, 41, after a trial at Southwark Crown Court.

The six, who represented themselves, were also cleared of individual counts of having an article with intent to destroy or damage property, while a seventh protester, Katerina Hasapopoulous, 43, earlier pleaded guilty to criminal damage.

Prosecutor Diana Wilson told jurors each of the defendants deliberately sprayed graffiti or smashed windows at the Shell building in Belvedere Road, central London, on April 15 2019.

The protest, which saw activists pour fake oil, glue themselves to windows and doors, break glass, climb onto a roof and spray graffiti, was part of wider Extinction Rebellion demonstrations across the capital.

Ms Wilson said that while some protesters stood outside the building holding banners or speaking through megaphones, “these defendants went further”, adding: “The seven involved caused significant damage.”

All those who stood trial explained they had targeted the Shell building because the oil giant was directly contributing to climate change, thereby causing serious injury and death, and argued it was a “necessary” and “proportionate” response to the harm being caused.

02:02 PM

Norway urges banks not to abandon physical cash

As much of the world slowly starts to abandon physical cash in favour of cards, smart payments and online transfers (as well as the exploration of digital currencies), Norway’s government is making sure its banks don’t stop providing notes and coins.

According to a statement reported by Bloomberg, the Finance Ministry has told the Financial Supervisory Authority (FSA) in Oslo to put together a plan that makes sure banks will continue to offer cash services. It comes after a survey by the FSA found a number of Norwegian banks say they aren’t responsible for offering cash services.

Calculations by Norges Bank show bank notes and coins are only used in 3-4pc of transactions in Norway, marking the lowest level of cash usage in the world.

Neighbouring country Sweden has also sounded the alarm over a concern for a complete disappearance of paper money. Both central banks are exploring digital currencies.

01:37 PM

Bitcoin takes another tumble

Over in cryptoland, Bitcoin is headed for its worst week in almost two months as a proposed capital-gains tax increase for wealthy Americans intensified the volatility whiplashing the world’s largest cryptocurrency.

A fresh bout of selling on Friday drove Bitcoin down as much as 7.9pc to $ 47,525 – below its 100-day moving average. Wall Street analysts warn of further losses for the notoriously volatile currency, which hit a record high of $ 64,870 on April 14 ahead of Coinbase’s listing, before succumbing to an unexplained weekend swoon.

This week’s almost 20pc rout marks the worst period for Bitcoin since it tumbled amid a wider slump in risk assets at the end of February.

01:14 PM

Germany approves budget

German MPs approved a debt-financed €60bn (£52bn) supplementary budget on Friday to boost aid for businesses and healthcare during the pandemic, which would lift annual new borrowing to a record high, Reuters reports.

The government of Chancellor Angela Merkel’s conservatives and their Social Democrat (SPD) coalition partners had the two-thirds majority in parliament needed to temporarily suspend constitutionally enshrined limits on borrowing.

The plan will translate into net borrowing this year rising to just over €240bn.

Finance minister Olaf Scholz defended the plans in a speech and repeated his pledge to cushion the economy during a third wave of the coronavirus with generous fiscal support.

“We will keep this up until the end,” said Mr Scholz. “Because after the pandemic we want a full speed (recovery).”

12:56 PM

Ford shutdown

Ford is shutting down its Merseyside plant for at least a month and cutting shifts at a Dagenham engine factory as the car industry is roiled by a global shortage of microchips, Alan Tovey writes.

The US behemoth will temporarily halt work at its Halewood facility – which employs 700 staff who make engines for vehicles including the bestselling Fiesta and Focus cars – with production set to stop on May 10.

Work at the company’s Dagenham site in East London is also being sharply reduced in cuts that will affect 1,200 staff.

More than half of British automotive production has now been scaled back at some point in the past few months due to the crisis, with similar action at Jaguar Land Rover, Honda and Nissan.

One senior source at a UK car manufacturer said: “The lack of supplies means we are managing production on a day-to-day basis.”

Carmakers around the world are fighting to get their hands on the microchips essential for running modern vehicles, with stocks not likely to recover until September at the earliest.

12:47 PM

FirstGroup leads the FTSE 250

FirstGroup shares are up 7pc after its deal to sell off two US businesses today, making it the biggest riser on the FTSE 250. My colleague Ben Marlow has shared his thoughts on the long-gestating deal:

In the case of troubled transport giant FirstGroup, it’s not too much of a stretch to say that a pair of antagonistic shareholders have proven instrumental in keeping thousands of buses on Britain’s roads.

Without American hedge fund Coast Capital and tycoon Robert Tchenguiz steering from the back seats, FirstGroup boss Matthew Gregory would have persisted with a muddled break-up strategy that would have left it looking like a North American transport operator driven thousands of miles away in the UK.

Instead, following intense and sustained pressure, Gregory, to his credit, performed an abrupt u-turn, agreeing to all but exit the US market and refocus efforts on its UK bus and train operations.

Read more of Ben’s City Intelligence column here. And sign up to his daily newsletter, if you haven’t already.

12:30 PM

April looks ‘encouraging’

Here’s a bit more on the retail sales data out this morning. Andrew Goodwin at Oxford Economics says consumers were eager to start spending again and he predicted GDP growth of 7.2pc this year.

“Retail sales surged in March, even though many physical stores remained closed, while the reopening of nonessential stores and outdoor hospitality in England on April 12 appears to have generated a surge in spending over the past couple of weeks,” he says.

“Early evidence for April has been encouraging and appears to back our call that the rebound in activity in the second quarter will be very strong, echoing the experience of last summer.” Read Tim Wallace’s report here.

11:57 AM

Replace Merkel with Greens leader say German business leaders

Annalena Baerbock

Annalena Baerbock

The Greens candidate for German chancellor is the surprise winner of a poll of business leaders, signalling potential upheaval for the country’s long-standing political and economic consensus.

My colleague Louis Ashworth reports:

Annalena Baerbock received 26.5pc support in a survey of 1,500 German managers – nearly double the 14.3pc support for Armin Laschet, the candidate from Angela Merkel’s ruling conservatives.

Ms Baerbock, a 40-year-old with no government experience, has called for an overhaul of Europe’s biggest economy to focus on investment in sustainable technology.

The results of the survey for WirtschaftsWoche magazine is the latest sign that voters have become frustrated with the ruling Christian Democratic Union party ahead of September’s election.

The CDU has been wracked by a messy succession process and criticised for its handling of the Covid-19 pandemic.

Christian Lindner, from the classical-liberal Free Democrats, received 16.2pc support despite not being an official candidate, while finance minister Olaf Scholz was backed by 10.5pc of respondents – almost third of whom were undecided.

11:36 AM

‘Lessons should and will be learnt to ensure this never happens again’

The PM weighs in on the Court of Appeal’s decision to quash the convictions of 39 postmasters:

11:14 AM

Mitsubishi Motors to cut production due to the chip shortage



Mitsubishi Motors will cut production by as many as 16,000 cars globally next month due to the chip shortage, according to a company spokesperson, the latest automaker to succumb to the malaise that’s gripped the world’s automobile industry.

Bloomberg has the details:

The Japanese automaker produced 90,745 units globally in January and 88,754 cars in February, according to its website, so that trim represents almost one-fifth of total output. Mitsubishi said in March that it would reduce its domestic output of vehicles by 4,000 to 5,000 units that month and was reviewing its production plans for April.

The list of carmakers idling factories around the world over the global semiconductor shortage is growing, a sign the supply-chain challenge is only intensifying. Jaguar Land Rover Automotive Plc on Thursday said it will halt production at some plants in the U.K. while French manufacturer Renault SA said the bottleneck’s effects could last beyond this quarter. German parts maker Robert Bosch GmbH warned the auto industry will probably have to deal with an “unsatisfactory situation for many months to come.”

Surging demand for electronic equipment during the pandemic overwhelmed chip suppliers as their products were sought for devices like mobile phones and gaming consoles. Winter storms in Texas and a fire at Renesas Electronics Corp.’s automotive chip plant in Japan exacerbated the situation this year.

10:46 AM

Office shares tumble after Barclays says downturn could be ‘structural’

Shares in Workspace have tumbled after Barclays double-downgraded the company’s rating, saying there is too much optimism about the impact reopening will have on office space providers.

Paul May, an analyst at the bank, said the downturn in London offices that started last year “could be structural rather than cyclical, with permanently lower London-office demand due to work from home.”

The stock dropped more than 4pc to 800p in early trading, making it the biggest faller on the FTSE 250. Rival IWG also fell more than 2pc on the warning.

10:15 AM

Thirty-nine postmasters convicted of theft have convictions quashed

Post Office

Post Office

Thirty-nine former subpostmasters who were convicted of theft, fraud and false accounting because of the Post Office’s defective Horizon accounting system have had their names cleared by the Court of Appeal.

Announcing the court’s ruling, Lord Justice Holroyde said the Post Office “knew there were serious issues about the reliability of Horizon” and had a “clear duty to investigate” the system’s defects.

But the Post Office “consistently asserted that Horizon was robust and reliable”, and “effectively steamrolled over any subpostmaster who sought to challenge its accuracy”, the judge added.

10:04 AM

Sky News: ‘Red Knights’ demand Glazers loosen Manchester United grip after Super League row



Sticking with football. Two of the City figures who led an attempt to prise Manchester United from the Glazer family’s control a decade ago have urged them to loosen their grip in the wake of the ESL debacle, Sky News is reporting.

Lord O’Neill and the hedge fund manager Sir Paul Marshall have written to Joel Glazer, the Manchester United co-chairman, to demand a string of immediate corporate governance reforms.

In the letter, which was sent on Friday morning and has been seen by Sky News, the pair told Mr Glazer that his family should scrap the New York-listed club’s dual-class share structure and introduce a single class of voting stock.

09:46 AM

JP Morgan breaks silence on ESL deal



JP Morgan, the Wall Street giant which agreed to underwrite the now defunct European Super League, has finally issued a statement about its involvement in the deal. Don’t hold your breath for an apology, however.

A spokesman says:

We clearly misjudged how this deal would be viewed by the wider football community and how it might impact them in the future. We will learn from this

09:31 AM

Eurozone recovery gathers pace but trails UK



The eurozone’s economic expansion gathered pace this month, with the services sector returning to growth and a closely-watched gauge of activity hitting a nine-month high.

My colleague Louis Ashworth reports:

The bloc’s ‘flash’ purchasing managers’ index reading came in at 53.7, the highest since last summer. Any reading above 50 indicates growth compared to the previous month.

Manufacturing continued to experience a boom with a reading of 63.4 – the highest since the PMI series began in 1997, according to researchers at IHS Markit. Services rose to 50.3, marking a slim expansion.

The figure may put pressure on European Central Bank president Christine Lagarde to rein in its stimulus efforts.

Overall output has now climbed two months in a row, following a four-month streak of declines as rising caseloads and a botched vaccine rollout hindered the bloc’s economic performance at the start of 2021.

But the figures suggest the eurozone economy will bounce back strongly in the second quarter, after likely entering a double-dip recession at the start of the year.

ING economist Bert Colijn said the readings showed the bloc’s underlying economic strength after a period of challenging conditions.

09:11 AM

‘Signs of hope in abundance’

Duncan Brock, group director at CIPS which helps compile the study, says:

There were signs of hope in abundance in April for the UK economy as private-sector businesses forged ahead confidently, lifted by strong rises in output, orders and jobs.

The energy behind pipelines of new work came mainly from domestic clients as lockdown limitations were reduced. Export orders remained flattened under the weight of Brexit-related trade frictions, ongoing business uncertainty and travel restrictions.

Service providers primarily enjoyed a bumper expansion of activity and the strongest since August 2014 as consumers also became more confident in their spending habits driven by vaccinations and safer premises.

As firms prepared for strong summer trade, job seekers felt the warmth of the spring sunshine, with recruitment drives leading to the fastest job creation since August 2017.

08:56 AM

Private sector grows at fastest pace since 2013

Beer garden 

Beer garden

The private sector is growing at its fastest pace since 2013, according to new data from the first weeks of April.

The closely-followed IHS Markit/CIPS Flash UK Composite PMI report came in at 60, up from a reading of 56.4 last month.

The reading is the highest in 89 months and means the sector is expanding as any score above 50 is considered growth.

08:46 AM

Public borrowing in charts

08:39 AM

‘Investor sentiment remains fragile as FTSE falls’

So far this week the FTSE 100 has lost 1.4pc. Commenting on this morning’s drop, AJ Bell investment director Russ Mould, says:

Consumer sentiment may be surging in the UK as Covid restrictions are lifted but investor sentiment remains pretty fragile after Tuesday’s big sell-off.

Friday’s market open was the latest reminder that the FTSE 100 is in no way a proxy for the UK economy. In fact, in the short-term good news for the UK can be bad news for the index as a rise in the pound against other currencies hits the relative value of its constituents’ overseas earnings.

The rollout of vaccines has been impressive in the UK, but the situation globally is decidedly patchy, causing understandable nervousness in the markets.

Also, the Biden administration’s latest tax proposals – which look set to include big hikes in capital gains tax – saw US stocks take a tumble overnight.

08:20 AM

Climate activists target Lloyd’s of London



Extinction Rebellion were out again this morning…

They dumped fake coal outside Lloyd’s of London’s headquarters, targeting the world’s largest insurance market in a protest against the industry’s backing for major fossil fuel mining projects.

“The dumped coal highlighted Lloyd’s support for the most polluting projects – tar sands and coal mines,” notably Adani Enterprises’ giant Carmichael thermal coal mine in Australia, Extinction Rebellion said in a statement.

08:08 AM

FirstGroup sells North American arms for £3.3bn

FirstGroup has agreed to sell its North American arms for £3.3bn, marking a victory for activist investors that have long-clamoured for the transport group to be broken up.

My colleague Oliver Gill reports:

EQT Infrastructure has agreed to buy First Student and First Transit, the FTSE 250 operator announced this morning.

FirstGroup has been subject to a battle with its biggest shareholder Coast Capital Management for more than a year.

The US investment firm masterminded the ousting of chairman Wolfhart Hauser in 2019, before persuading the FirstGroup board to prioritise the sale of its prized North American operations. First Student is the biggest provider of student buses in North America.

First Transport carries around 350 million passengers a year across 300 locations.

FirstGroup chairman David Martin, the former boss of rival transport group Arriva that was drafted in to oversee the company’s break-up, said the deal “enables FirstGroup to address its long-standing liabilities, make a substantial contribution to its UK Bus and Group pension schemes and return value to shareholders, while ensuring the ongoing business has the appropriate financial strength and flexibility to deliver on its goals”.

07:20 AM

FTSE retreats after two day rally

City of London 

City of London

The FTSE 100 has opened in the red following a two day rally. Its European peers have also declined.

  • FTSE 100 -0.3pc

  • DAX -0.3pc

  • CAC 40 -0.1pc

07:13 AM

Prospects of ‘going out out’ boosts clothing sales

Commenting on the retail sales figures, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says:

After the bleak mid-winter, March brought a spring in the step for retail sales, as shoppers looked forward to restrictions easing. After months of languishing in loungewear shoppers sought out new styles eyeing the chance to go ‘out out’ once more.

It seems making advance table bookings for April, prompted the filling of digital shopping baskets in March with spring fashions, leading to a 10.9pc growth in spending at textile, clothing and footwear stores. Medical goods retailers saw a surge in sales growth of 29.4pc. Older people have been splurging on mobility equipment, as the vaccine programmes gave them the confidence to venture out and about once more after a long year of isolation.

06:43 AM

Retail performance ‘better than expected’

Lisa Hooker, consumer markets leader at PwC, says March’s retail sales are “better than expected, with both an improvement on February’s already positive performance”. “This has occurred even with non-essential stores closed across the country and against the comparison of grocery stockpiling at the start of the first lockdown last March.” She adds:

Looking more closely at different categories of stores, there were improvements across the board, with grocery stores benefitting from the continued closure of hospitality and the lack of product shortages and empty shelves they experienced last year.

Meanwhile other categories have been helped by both increased online penetration (still 35pc of overall sales, compared with 20pc last January), as well as consumer sentiment that is at its highest level since before the Global Financial Crisis, according to PwC’s latest research.

06:34 AM

Retail sales bounce up

There’s another big ONS release this morning, on retail sales, which may give us an idea of where the economy is going. Retail sales volumes continued to recover last month, jumping 5.4pc compared with February as shoppers prepared for lockdown restrictions to ease, according to the ONS.

Sales volumes at clothing retailers were strongest – up 17.5pc – followed closely by other non-food retailers up 13.4pc. Petrol stations also saw strong growth of 11.1pc, reflecting the easing of travel restrictions.

The ONS added that the proportion of cash spent by shoppers online fell between February and March as more customers switched back to stores that were open.

06:24 AM

Deficit at 14.5pc

The huge sums that the Government has borrowed during the Covid-19 crisis have pushed the deficit to its highest point since the end of the Second World War, according to new figures.

The Office for National Statistics said that public sector net borrowing – the Government’s deficit – reached £303.1bn in the financial year to the end of March.

This was 14.5pc of gross domestic product (GDP), the highest level since 1946, when the deficit hit 15.2pc of GDP.

It is a rise from a deficit of £57bn in the tax year ending March 2020.

It pushed public sector net debt up to £2,141.7bn, which is 97.7pc of GDP – the biggest proportion since the early 1960s.

06:19 AM

Record borrowing

Good morning. Government borrowing hit £303.1bn in the year ending March, or 14.5pc of gross domestic product (GDP), the highest level since the end of the Second World War, the Office for National Statistics said.

Meanwhile retail sales rebounded 5.4pc in March compared to the month before.

5 things to start your day

1) Chip pioneer chooses UK for $ 4.5bn market debut: Alphawave’s decision lifts the City after Deliveroo flop and will be watched for evidence of British investors’ appetite for tech firms.

2) Northern Ireland protocol could force UK to follow EU rules, lawyer claims: James Webber of Shearman and Sterling told MPs the proposed system is “completely unworkable” and akin to an “unexploded ordnance”.

3) Last relative of John Lewis founder to depart with £1.5m payoff: Finance director Patrick Lewis has worked for the employee-owned retailer for more than a quarter of a century.

4) Crispin Odey’s hedge fund bets against Deliveroo: The reveleation of the fund’s position is the first sign that short-sellers are targeting the company following its disastrous float last month.

5) Chuka Umunna in line of fire after JP Morgan’s spectacular own goal: Chuka Umunna could hardly have walked into a bigger storm in the first 10 days as JP Morgan’s head of “doing the right thing”.

What happened overnight

A key gauge of Asian shares rose on Friday, supported by gains in China and a decision by the European Central Bank to maintain stimulus, while investors largely shrugged off the impact of a possible US capital gains tax hike.

MSCI’s broadest index of Asia-Pacific shares outside Japan shook off early small losses to rise 0.3pc.

Chinese blue-chip shares rose 0.93pc, supported by consumer staples, health care and financial firms. Hong Kong’s Hang Seng rose 0.93pc and Seoul’s Kospi added 0.1pc.

Japan’s Nikkei stock index slid 0.7pc.

Coming up today

Corporate: None

Economics: Economics Retail sales (UK), consumer confidence (UK), manufacturing and services PMI (UK); composite, manufacturing and services PMI (EU, US)