UK economy defying the ‘moaners and groaners’, Legal & General chief says
Legal & General boss Sir Nigel Wilson decried the levels of “moaning and groaning” about a UK economy that has proved more resilient than expected over the past 18 months.
He told the Standard there were still plenty of reasons for optimism, despite higher interest rates slowing growth. The economy has outperformed most of last year’s forecasts, with organisations like the Bank of England and IMF no longer expecting a recession this year.
“The economy has been much more resilient than anybody had expected 18 months ago, and yet people are still moaning and groaning,” he said.
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The rest is Lineker: he strikes gold as a podcast mogul
He shoots, and inevitably, he scores. While most of us are happy being competent at one job, Gary Lineker has completed a hat-trick of career triumphs this month. First he was a feared striker and captain of the England football team, then one of the country’s most admired sports presenters as the anchor for Match of the Day. Now Lineker is fast making his name as a media mogul, as content made by his company Goalhanger Podcasts dominate the charts.
Lineker himself is the star of his latest offering, The Rest is Football, exchanging footie banter with fellow ex-pros Alan Shearer and Micah Richards. It quickly became the UK’s most listened-to podcast on its debut last week. But the former Spurs and Leicester star isn’t just the master of ceremonies this time — he co-founded and owns a third share of the firm that produces it.
Goalhanger Podcasts was only created at the start of 2022 but has enjoyed a stratospheric rise since. Even before this latest show, it could boast 17 and a half million downloads per month, largely due to the success of its two flagships, The Rest is History and The Rest is Politics. They have gained an army of loyal fans with a novel format: having seasoned professionals discuss their specialist subjects.
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FTSE 100 down more than 1%, Ocado shares up after M&S update
Rate rise fears today weakened London shares to leave the FTSE 100 index down 1.3% or 98.63 points at a one-month low of 7,408.52.
The downbeat tone was set early on after China revealed below par growth in industrial output and retail sales to continue the run of disappointing July figures.
A move by the People’s Bank of China cutting its medium-term lending facility rate failed to have an impact as Hong Kong’s Hang Seng index closed a further 0.8% lower.
The flight from risk in European markets accelerated after record UK wage growth fuelled bets on more interest rate rises and heightened stagflation fears.
Among those hard hit, warehouse group Segro declined 2% or 17p to 714.6p and the Piccadilly Lights owner Land Securities dropped 10.4p to 612.4p.
Their falls erased some of July’s recovery, when an end appeared to be in sight for the rate rises that have made the property sector much less appealing compared with other investments.
Defensive stocks from the utilities industry also felt the rate rise pressure as Severn Trent weakened 2% or 43p to 2354p and United Utilities lost 14.4p to 960.8p.
A shortened FTSE 100 risers board was dominated by beneficiaries from the read-across after today’s profits upgrade by Marks & Spencer.
They included M&S’s joint venture partner Ocado, which lifted 3.8p to 800p, while signs of resilient trading conditions helped Next shares add 26p to 6994p and discounter B&M European Value Retail by 4.6p to 558.6p.
The FTSE 250 index fell 0.5% or 89.68 points to 18,671.75, a performance that included falls of 3.8p to 314p by British Land and 0.6p to 25.54p for shopping centre owner Hammerson.
The economic uncertainty meant no result-day bounce for pipework supplier Genuit, even though it forecast full-year profits towards the top end of City forecasts. Shares were 2.5p lower at 300p.
Grocery price inflation slows for fifth month in a row
Grocery price inflation slowed down at the second fastest rate since records began over the past month but shoppers still face higher prices across “every supermarket shelf”, figures show.
Analysts at Kantar reported price inflation across grocery shops at 12.7% for the four weeks to August 6, dropping from 14.9% over the previous month.
It is the fifth consecutive decline in the rate of price rises since the figure peaked at 17.5% in March.
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Will Bank of England look at signs of wage growth slowing?
Simon French, chief economist at Panmure Gordon, says the latest wage data should not necessarily push expectations for interest rates any higher.
He said that it’s July payroll statistics that will be new to the Bank, and those show a decline in wage growth.
Ignore the LFS wage data this morning – we knew this was going to be hot based on the UK payroll data last month – it’s the new data from July payroll data that is new info for the BoE. Significant pullback in wage inflation from almost 10% to 7.8% pic.twitter.com/n4VdA6xtC9
— Simon French (@shjfrench) August 15, 2023
Pandora UK: Bringing back VAT-free shopping could bring boost to retail sector
The UK boss of Pandora, the world’s largest jewellery brand, has said bringing back VAT-free shopping could offer a significant boost to the retail sector and the economy as a whole.
Rasmus Brix is general manager for the UK & Ireland at Pandora, which has over 200 shops in the UK, including 13 in London.
He told the Evening Standard that such a move (reinstating VAT-free shopping) could help “to offset some of the disruption we’re seeing on high streets as a result of the weather, cost of living crisis and ongoing train strikes”.
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M&S shares rally, L&G leads latest FTSE 100 decline
Marks & Spencer shares are 8% or 17.1p higher after today’s upgrade to 2023/24 profit guidance, meaning the widely-held stock is at its highest level since January 2022 at 221.8p.
The retailer was joined on the FTSE 250 risers board by construction materials supplier Genuit, which rose 3.5p to 306p after forecasting full-year profits towards the top end of CIty forecasts.
Annuities business Just fell 0.7p to 81.3p despite being “highly confident” of comfortably exceeding its 15% operating profit growth target for the full year.
The UK-focused FTSE 250 index fell 89.58 points to 18,671.85, while London’s top flight slid 1% or 76.52 points to 7430.63.
Big fallers included Legal & General, which lost 2% or 5.3p to 227.8p on the back of half-year results. Next benefited from the M&S update with a gain of 42p to 7010p.
FTSE opens lower on rate expectations
The FTSE 100 has opened lower as unexpectedly high wage growth raised expectations of more interest rate rises.
Here’s a look at your key market data.
‘Labour market shifting to new ground’
Kate Shoesmith, Recrutment and Employment Confederation deputy chief executive, said: “This is a labour market shifting to new ground and will be one the Bank of England and government will closely monitor because of the direct impact it is having on the economy. The unemployment rate is marginally above most predictions and we’re getting a sense of a loosening jobs market – where the demand for talent in certain sectors remains high, while there is a fall back in demand in other key sectors.
“These issues are deeply intertwined. For example, it’s particularly concerning to see the record high of economically inactive people because of long-term sickness, meanwhile, we continue to see significant problems recruiting and retaining staff in the health and care sectors. We need a fundamental rethink of the models of work in the NHS and beyond.
“The labour market remains tight enough to continue to put pressure on employers by pushing up pay, with the highest regular annual growth rate we have seen since comparable records began in 2001 – but much of this will be down to recent pay deals negotiated and is one to watch closely. Pay is important, but it is not the only thing employers should consider. Today’s workers weigh pay against the whole package, such as flexible working, training, annual leave – and even whether the corporate culture aligns to their personal values. This is why our Overcoming Shortages report last year stressed to employers the importance of working conditions and getting the offer right.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the latest jobs figures suggest the economy could be stuck in a world of stagflation, with fast price rises but little to no growth.
She said: ‘’The blast of cold air from higher interest rates is being felt in the labour market, with unemployment ticking up but the risk is that the growth in wages will continue to fan the fires of inflation.
“With the highest annual wage growth recorded in June since records began in 2001, another rate hike from the Bank of England looks bolted on in September. The pound has crept upwards on expectation that rates will rise again but significant gains are set to be limited given the challenges ahead of the UK economy. Sterling rose by 0.28% immediately after the jobs data was released, rising to $1.272 and also strengthening against the euro, before losing some ground.
“The picture painted by these jobs numbers is adding up to be a stagflation scenario, with prospects of growth slim while inflation risks staying stubborn. Industrial disputes between NHS workers and the government are not helping the inflation battle. The number of people inactive because of long-term sickness has increased to a record high, and with painful waits for treatment not set to be cured any time soon, the fight for labour is set to continue.
“With real wages moving back into positive territory for the first time and surpassing the headline inflation rate, consumer spending is expected to stay more upbeat, which bodes better for companies selling discretionary goods – items we might want but we don’t necessarily need.”