BUSINESS LIVE: GDP grows 0.2%; Yew Tree ups Aston Martin stake; Severn Trent eyes £1bn


BUSINESS LIVE: GDP grows 0.2%; Yew Tree ups Aston Martin stake; Severn Trent eyes £1bn fundraise

Gross domestic product grew by 0.2 per cent in the second quarter of 2023, in line with expectations, fresh data from the Office for National Statistics shows. The figures confirm that the British economy is now bigger than before the pandemic. 

The FTSE 100 is up 0.9 per cent in afternoon trading. Among the companies with reports and trading updates today are Aston Martin, Severn Trent, Home REIT, Rathbones and Future. Read the Friday 29 September Business Live blog below.

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Macquarie in £636m swoop on waste firm Renewi

A British waste management firm has rejected a ‘borderline hostile’ £636m takeover bid from Australian predator Macquarie.

London-listed Renewi turned down the 775p per share offer yesterday morning, saying it ‘fundamentally undervalues’ the company.

John Lewis forced to sell 12 Waitrose stores to try and raise £150m

John Lewis reportedly plans to sell a dozen of its Waitrose stores in a bid to raise £150million as it battles to turn the business around.

As of next week the John Lewis Partnership, which owns both the department store and supermarket chain, is expected to put 12 supermarkets up for a sale and leaseback scheme, which allows the group to keep its stores but cash in on the value of the property.

Qatar takes Severn Trent stake as group pledges £12.9bn investment

The Qatari sovereign wealth fund has taken a £500million stake in Severn Trent, with the water firm hoping to raise more than £1bn to fund a new investment plan.

Severn Trent, which is responsible for an area covering the Bristol Channel to the Humber, and from mid-Wales to the East Midlands, unveiled a ‘record’ £12.9billion investment programme as it seeks to improve its environmental credentials.

Savers pick fixed-rate bonds over regular savers paying up to 8%

The best headline savings rates on the market are paid by regular saver deals, but people are turning their backs on the products and taking out bonds instead.

Regular saver accounts encourage customers to put a fixed amount aside every month, and interest is normally paid after one year.

MARKET REPORT: Babcock shares fired up to three-year high

Shares in defence group Babcock hit their highest level for more than three years after a bullish update to investors.

In a statement ahead of its AGM, the company said ‘trading has been encouraging’ since the start of the new financial year in April.

‘Resilient’ Diageo shrugs off rising cost pressures

The boss of Guinness maker Diageo struck an upbeat note in the face of ‘ongoing cost pressure’ as well as economic and geopolitical uncertainty.

In one of her first public statements since her predecessor Sir Ivan Menezes died aged 63 in June, Debra Crew – who was appointed on July 1 – said that the company is ‘well-positioned’ to deliver sales growth of 5 per cent to 7 per cent between now and 2025.

Yew Tree ups Aston Martin stake: ‘Vote of confidence’ in luxury carmaker

Victoria Scholar, head of investment at Interactive Investor:

This acts as a vote of confidence in the business, sending shares sharply higher by over 7%, bringing its year-to-date gain to around 80%. However longer-term shares are down by over 90% over the past five years.

‘James Bond’s favourite automaker has suffered a chequered past, surviving several bankruptcies, but shares have revved back into the fast lane this year.

‘In July, Aston Martin’s second quarter results outpaced expectations driven by higher prices and strong demand. Earlier in the year, Chinese automaker Geely announced plans to invest approximately £234 million in the company.

‘Luxury goods have also proven to be resilient amid the cost-of-living crisis amid the growing tranche of ultra-high net worth consumers who are largely shielded from the macro headwinds.’

Market open: FTSE 100 up 0.8%; FTSE 250 adds 1.1%

London-listed stocks are up in early trading after fresh ONS showed Britain’s economic performance since the start of the pandemic had been stronger than previously thought, boosting sentiment.

Consumer staples and discretionary stocks are up with personal goods, retailers and homebuilders shares climbing over 1 per cent each.

Shares in Aston Martin are up nearly 8 per cent after the luxury carmaker said Chairman Lawrence Stroll’s Yew Tree Consortium further raised its stake in the firm by 3.27 per cent to 26.23 per cent.

Severn Trent shares are up 3 per cent after the British water supplier said it would raise £1billion in new equity, including £500million from Qatar’s sovereign wealth fund.

London closes in on New York as top global financial hotspot

London is closing in on New York as the world’s leading financial centre while European rivals such as Frankfurt and Paris do not even make the top ten.

The Big Apple was ranked the top global financial hub for a fifth year in a row – but its lead over the City has shrunk.

Abcam founder slams £4.5bn sale to US conglomerate Danaher

Yew Tree ups Aston Martin stake

Aston Martin chairman Lawrence Stroll’s Yew Tree Consortium has upped its stake in the British luxury carmaker by 3.27 per cent to 26.23 per cent.

Yew Tree, which bought an additional 26 million ordinary shares of the company, was already its largest stakeholder, followed by Saudi Arabia’s Public Investment Fund (PIF) and Chinese automotive firm Geely.

The company has been more upbeat about its outlook more recently and plans to bolster cash and margins by rolling out next-generation sports cars and limited editions in the second half of 2023.

Severn Trent eyes £1bn fundraise as Qatari investment fund takes £500m stake

Water group Severn Trent is planning to raise £1billion in new equity, including £500million from Qatar’s sovereign wealth fund.

Britain’s privatised water sector has faced the fury of politicians, regulators and the general public over the last two years over sewage releases that have polluted rivers and beaches.

The water firm also said it planned £12.9billion in total expenditure across the next five-year regulatory period, and the investment programme is expected to create 7,000 jobs across central England.

The equity increase is expected to represent about 19 per cent of the firm’s issued share capital.

Qatar is currently the third biggest shareholder in Seven Trent with a 4.6 per cent stake, according to LSEG data.

FCA blasts financial adviser after British Steel pension scandal

A ‘dishonest’ financial adviser at the heart of the British Steel pension scandal was yesterday fined and banned from working in the industry.

Darren Reynolds was fined £2.2m by the Financial Conduct Authority after he ‘duped’ savers into leaving gold-plated retirement schemes and placing their money in ‘high-risk investments’.

The regulator said he ‘dishonestly’ advised more than 670 people – including 150 in the British Steel Pension Scheme – with 511 losing £42.3m while he picked up more than £1m in fees.

‘If the UK economy has been running hotter than we thought, it would help to explain some of the persistence in inflation’

Thomas Pugh, economist at RSM UK:

‘The focus of the final data for Q2 is supposed to be what happened last quarter, but it was the revisions for previous quarters and years which stole the show this morning.

‘The combination of the previously announced revisions for 2021 and 2022 combined with a much-improved Q1 (growth went from 0.1% to 0.3%) means that rather than being 0.2% below its pre-pandemic level in Q2 the economy was actually 1.8% bigger! Given the size of the UK economy was about £2.5 trillion in 2022, that adds around £50bn to UK GDP.

‘Admittedly, this would still mean that the UK is still near the back of the G7 pack, but it would be ahead of Germany and the gap between the UK and the rest of the G7 looks significantly smaller.

‘Faster GDP growth during the pandemic doesn’t change anything in the real economy now, but if the UK economy has been running hotter than we thought, it would help to explain some of the persistence in inflation and the tightness of the labour market.

‘However, households were still being cautious in Q2. Real households’ disposable income (RHDI) grew by 1.2% in Q2, but the household saving ratio grew by 9.1% up from 7.9%, meaning that households decided to save most of their extra income. This is a trend that is likely to continue over the next year.

‘Overall, the economy is still likely to eke out some meagre growth in Q3 as fewer strikes and a return to more normal weather boost output in the remaining two months of the quarter.

‘While our baseline view is that the economy will just avoid a recession, we are expecting meagre growth of about 0.1% a quarter over the next year. But there are signs that the economy has weakened recently and it wouldn’t take much to tip us over into a recession.’

GDP grows 0.2% in Q2

Gross domestic product grew by 0.2 per cent in the second quarter of 2023, in line with expectations, the Office for National Statistics has said, confirming that the British economy is now bigger than before the pandemic.





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