LIVEBUSINESS LIVE: UK GDP Grows by 0.2% in Q3; Apollo Set to Acquire TRG; Ofgem Launches Investigation into Energy Debt
By Live Commentary
Updated: 09:59 BST, 12 October 2023
The FTSE 100 is experiencing a 0.7 percent increase in early trading. Today, companies such as TRG, easyJet, Dechra Pharmaceuticals, Hays, and Workspace Group are providing reports and trading updates. Read the Thursday 12 October Business Live blog below.
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CMA to Investigate Potential Breach of Freelance Contracts by BBC and ITV
Britain’s competition watchdog, the Competition and Markets Authority, suspects that several television production companies, including the BBC, ITV, Hat Trick, and Tiger Aspect, may have violated anti-trust rules in their use of freelance contracts. They will be investigated to ensure their compliance with these regulations.
Birkenstock Shares Disappoint on Wall Street Debut
German sandal maker Birkenstock’s shares experienced a lackluster performance during their highly anticipated debut on Wall Street. Despite the buzz surrounding the listing on the New York Stock Exchange at $46 per share, which valued the company at £7 billion, the stock failed to impress investors.
TRG Shares Surge on Takeover Deal
Russell Pointon, Director of Consumer at Edison Group, commented on the recent surge in share price by The Restaurant Group (TRG):
“The Restaurant Group’s share price has been on a downward trend over the last decade due to high-priced mergers and acquisitions, the underperformance of certain brands, and the impact of the COVID pandemic. Although the share price has responded positively to improved trading and portfolio management, making TRG one of the top-performing companies in the sector this year, the proposed offer by Apollo at 65p per share is roughly half of its pre-COVID levels. Despite this, profit estimates for the coming years are projected to return to pre-pandemic levels. It will be interesting to see how activist shareholders respond to the deal. The fact that the share price is trading at a premium to the offer price suggests that the market expects a higher bid.”
CMA to Investigate Vodafone and Three’s £15bn Merger
The Competition and Markets Authority (CMA) will be investigating the proposed £15 billion merger between Vodafone and Three in the UK. The CMA has called on competitors and other relevant parties to voice their concerns regarding the deal.
Market Opens with FTSE 100 and FTSE 250 on the Rise
UK stocks are experiencing gains this morning, following a rally in Asian markets driven by lower US Treasury yields and expectations of additional stimulus measures in China. The FTSE 100 is up, aided by a weaker pound and positive economic data for August. Furthermore, the Restaurant Group’s shares have surged nearly 40 percent after agreeing to a takeover offer.
Mobico Tumbles on Lowered Profit Forecast
Mobico, a transport firm, has seen its shares drop 21 percent as it revised its profit forecast for the year and suspended dividends due to high costs.
CMA to Probe Vodafone and Three’s £15bn Merger
Regulators are set to investigate the proposed £15 billion merger between Vodafone and Three in the UK. The Competition and Markets Authority has extended an invitation to rivals and other affected parties to express their concerns about the deal.
Ofgem Considers Price Cap Adjustment, Leading to Potential Energy Bill Increases
Ofgem, the UK’s energy regulator, is contemplating a one-off price cap adjustment, which could result in higher energy bills for consumers.
UK Economy Sees 0.2% Growth in Q3
The UK economy experienced a slight growth of 0.2 percent in the third quarter of the year, with the service sector leading the way, according to the Office for National Statistics (ONS).
FSB Highlights Volatile Growth and Lingering Recession Fears
Tina McKenzie, Policy Chair of the Federation of Small Businesses, commented on the GDP growth figures:
“The modest rise in August’s GDP is a relief, following the sharp drop recorded in July. The recovery in the services sector is driving this increase, but it masks concerning declines in production and construction, indicating downward pressures on many sectors. Today’s figures will somewhat alleviate fears that the summer was a wash-out for small businesses. However, confidence levels in certain sectors, particularly retail and hospitality, have lagged behind the overall results. The recent pause in the base rate increase offers hope that the margin squeeze on small firms may ease. To sustain this recent rise, the government must consider promoting a favorable trading environment for small businesses.”
CMA Investigates Potential Competition Law Breaches by BBC and ITV
The Competition and Markets Authority has announced an investigation into suspected breaches of competition law by television production companies, including the BBC, ITV, Hat Trick, Tiger Aspect, Hartswood Films, Red Planet Pictures, and Sister Pictures. The investigation is centered around their collaboration and engagement of freelancers.
Next Acquires Fat Face in £100m Deal
Neil Birrell, Chief Investment Officer at Premier Miton Investors, commented on the UK economy’s performance:
“After a poor July, the UK economy bounced back in August. Similar to other economies, the UK has defied expectations and remained relatively strong. The Federal Reserve’s cautious approach to policy and the Bank of England’s need to balance inflation and growth will influence the future. Recession risk remains, but the threat of ongoing high inflation and its impact cannot be ignored.”
GDP Grows by 0.2% in Q3: Hope for Avoiding Recession
Richard Carter, Head of Fixed Interest Research at Quilter Cheviot, addressed the recent GDP figures:
“This morning’s UK GDP figure provides a small glimmer of hope that the UK can avoid a recession. The modest 0.2% increase in August follows the disappointing 0.6% decline in July. The IMF recently predicted that the UK would be the slowest-growing economy among the G7 nations next year, but this figure offers some relief that economic growth is still viable. We have also observed signs of improvement in the cost-of-living crisis, with disposable incomes beginning to rise. The Bank of England’s decision to pause rate hikes has also provided respite for homeowners and the housing market. However, the Bank still faces challenges and may resume rate hikes later on. An upcoming election adds further complications to the situation. Although the UK’s economy may be holding up for now, the impact of interest rate rises and the cost-of-living crisis could mean delayed pain, with 2024 potentially becoming more challenging.”
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