The UK economy grew a better-than-expected 0.3% in January, figures from the Office for National Statistics showed today.
The improvement from December’s 0.5% decline was driven by a 0.5% increase in the services sector, while both the construction and manufacturing sectors declined.
Meanwhile, the FTSE 100 index is down more than 1% today as traders reacted to last night’s bank-led slump on Wall Street.
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Construction jobs fall to 11-month low despite broad-based GDP growth
The construction sector had its worst month in nearly a year, as “economic uncertainty” and bad weather led to the biggest drop in new projects since the Covid-19 pandemic.
The UK economy slumped in January despite GDP data showing a better-than-expected 0.3% growth, and days after a survey revealed contractors were struggling to fill 2023 order books.
Construction output fell by 1.7% in January, the biggest decline since June, while the total value of building work was £14.84 billion, the lowest since February 2022.
New project output fell 4% in March 2020, the sharpest decrease since COVID-19, with new infrastructure particularly hard hit as work stalled.
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London mortgage holders more exposed as FCA asks lenders to provide support
The Chief City watchdog today called on mortgage lenders to do more to help struggling borrowers as it warned that hundreds of thousands of households were on the verge of financial difficulty in London and the South East with the prospect of extended finance.
More than 350,000 mortgage holders could face difficulties making payments until the end of June, the Financial Conduct Authority said as it released new data on the UK mortgage market. This is in addition to the 200,000 people who are already in “payment shortfall”.
With house prices higher in the capital and surrounding areas, Londoners are more likely to cut back on spending or use savings to meet their mortgage commitments. Borrowers between the ages of 18 and 34 may also be more exposed.
The FCA said it “expects firms to support borrowers in financial difficulty” and has guidance on measures including “extending the term of their mortgages or reducing monthly payments for a temporary period”.
Lenders supported more than 2 million customers last year through budgeting tools, access to loan advice and customized mortgage tolerances.
city note
The week started with laments that London is losing out on the latest tech boom. that its financial markets are dull and unattractive.
Until today, investors were calling for a government bailout of at least one US tech giant – Silicon Valley Bank – to prevent another banking crisis.
Meanwhile, alleged tech darling Vandisco went from hero to zero in about 24 hours.
When it said it would seek to list on the US stock market, it was seen as another sign of London losing ground to New York. It was then revealed that it had uncovered “significant, sophisticated and potentially fraudulent irregularities” that put its entire future in doubt.
Welcome to New York.
In Silicon Valley, a place we’re supposed to be beset with envy, shares of Silicon Valley Bank plunged 60% as investors suddenly decided to cash out.
In the fear and panic, top US banks including the world’s largest lender JPMorgan lost $50 billion in market value.
Is this who we’re supposed to imitate by loosening our rules?
Two things happen every time the city chases the latest craze. First of all, it doesn’t work. Second, that it doesn’t work is a huge relief.
London’s tighter rules for listed firms on the stock market is a good thing, a strength. We have them for a reason and they mostly serve us well. It would be better if London saw itself as a club with stronger entry requirements rather than a cold collar trying to sell timeshares to reluctant investors.
The city has been a major center of finance for centuries. Others will come and go.
Transportation giant FirstGroup on track to beat profit guidance
FirstGroup, owner of South Western Rail, GWR and Avanti, is expected to beat its profit guidance for 2022-23, mostly thanks to a rise in bus passengers.
The transport giant said First Bus passenger volumes had risen to 83% of 2020 equivalent levels, partly as a result of the £2 bus fare cap scheme introduced in England in January 2023.
As a result, the group said its profit for the year would now exceed previous expectations of £137.4 million.
CEO Graham Sutherland said: “I am delighted with the Group’s progress in the second half of our 2023 financial year, driven by increased passenger numbers and improved operational performance in bus and stronger than anticipated demand for our open access operations in rail Is.” ,
CMA expedites Google investigation by combining two investigations into one
Britain’s competition watchdog has stepped up its probe into Google over alleged anti-competitive practices, combining two separate investigations into one.
An investigation into whether Google abused a dominant position through its conduct in ad technology, launched in May last year, is to be merged into its practices in header bidding – the process of auction on ad exchanges .
The CMA said in a statement: “Due to the interweaving of the facts and conduct in the 2 investigations, the CMA has decided to combine them.”
Banking stocks surge, FTSE 100 down 2%
London banking shares were down up to 5% and the FTSE 100 index was down 2% after technology lender Silicon Valley Bank posted a heavy selloff on Wall Street last night.
The S&P 500 banking index fell 6.6% and the top four US lenders together lost more than $50 billion as the California-based bank exposed stress among its customers from persistently high interest rates and high levels of cash.
It sold securities to meet withdrawals and offered $2.25 billion of stock and convertible bonds to shore up its balance sheet, prompting a 60% slide for its shares last night.
The development caused a similar flight from risk on in the UK, with HSBC and Barclays the biggest casualties as their shares fell 5% – 32.4p to 588.7p and 8.1p to 155.4p.
UBS Global Wealth Management said the events strengthened its cautious stance on US financials due to concerns over funding costs. While it does not see this as a systemic issue, no tensions are evident in the interbank funding markets.
UBS said: “The market knee-jerk reaction to this risky event appears overdue in our view. But rising cost of deposits and potential deposit withdrawals are likely to put pressure on sector earnings.
Other shares fell sharply today, including Lloyds Banking Group down 1.8p to 49.65p, while Prudential lost 4%, or 53.5p, to 1226p. Only five defensive-focused stocks made the riser board after the FTSE 100 index fell 150.43 points to 7729.55.
The FTSE 250 index also fell 2%, falling 387.63 points to 19,305.27, led by tech investor Molten Ventures, as Kazoo and Trustpilot backers slumped 12%, or 45p, to 322p.
Shares in FirstGroup bucked the trend, up 1.8p to 107.9p, after lifting profit guidance on the back of a strong improvement in bus passenger numbers.
BP boss offered £10m salary deal
Signs emerged today of big oil bosses cashing in on rising energy prices after BP’s CEO was paid more than £10 million in pay.
Bernard Looney’s remuneration is 172 times the average salary at the company, its annual report showed. This included a salary of £1.4 million, a short-term bonus of £2.4 million and a long-term prize of £6 million.
Looney, who has been CEO since July 2020, has racked up 8.7 million shares, options and share interests since taking the job, which at today’s prices are worth a combined £47.7 million if they were all awarded in due course Are.
It comes just a day after Shell came under fire after it was revealed its outgoing CEO Ben van Burden was in line for a payout of up to £21 million.
BP said the bonus is “based on performance against annual measures and targets set at the start of the year” and reflects the “unique characteristics of the energy sector”.
Billionaires weigh in on Silicon Valley bank crisis as tech companies scramble to raise funds
The tech world’s most famous billionaire investors have weighed in on the crisis at Silicon Valley Bank, amid reports tech companies are scrambling to get money out of the business.
Palantir and PayPal co-founder Peter Thiel has reportedly advised businesses to withdraw their money from SVB as soon as possible, despite the bank’s urgings to remain calm.
Pershing Square’s billionaire CEO, Bill Ackman, has called for a government bailout of the firm, warning its collapse “could destroy an important long-term driver of the economy.”
Shares of the Silicon Valley bank plunged 60% yesterday after reports the firm was grappling with a cash crunch. SVB made a share offering of about $2 billion to strengthen its balance sheet.
Strong start to the year boosts GDP outlook
One-off factors have made the UK economy difficult to read, with growth today at 0.3% in January, offset by weaker sectors such as construction after a 1.7% decline.
However, the overall performance means that there has been an increased likelihood that UK growth in the first quarter could be flat or only slightly negative.
ING economist James Smith said: “This means that the chances of the UK avoiding a full tech recession are increasing – although this is a fairly controversial point, given that if it were to happen, the depth of the recession would probably only Would be in the order of a few tenths of a percentage point.
Amigo…
Credit: www.standard.co.uk /