After rising during the session to hit a six-month high of €1.173 against the Euro today, the pound is still up on hopes of an orderly Brexit.
The climb followed a Telegraph report that Boris Johnson had secured promises from all his prospective MPs that they would back his Brexit plan.
It is currently 0.50pc higher against the dollar at $1.2968 and 0.25pc up against the euro at €1.1707.
Across the pond, US stocks are broadly flat with the Dow Jones Industrial Average up just 0.04pc and the S&P 500 up 0.01pc. The tech-heavy Nasdaq is 0.06pc lower.
Diamond necklaces and engagement rings boost Boodles
Luxury jeweller Boodles enjoyed a 9pc jump in sales as demand for its diamond necklaces and engagement rings remained strong despite difficulties on the high street.
The firm raked in £77.1m of sales during the year to February 28, as profits soared from £7.3m to £10.9m.
Boodles was founded in 1798 and has seven standalone stores in the UK and Ireland and also sells in Harrods and the Savoy Hotel.
Next crash will hit Europe much harder than financial crisis, warns Moody’s
Europe will be struck by an even larger wave of debt defaults in the next downturn compared to the financial crisis after a surge in junk-rated companies, Moody’s has predicted, my colleague Tom Rees says. He writes:
The credit ratings agency warned that the proportion of B3-rated companies, those graded as “speculative” quality, has doubled in Europe over just three years. The deterioration means the region will see “a much larger number of downgrades and defaults during the next cyclical downturn compared with the crisis in 2008-09”, Moody’s said.
Egor Nikishin, an analyst at Moody’s, said a “less benign part” of the economic cycle would raise doubts about the companies’ debt loads and their ability to generate cash.
A decade of ultra-low interest rates and investors being forced to hunt for stronger returns has led to skyrocketing debt levels, particularly for companies.
Global debt is on course to hit $255 trillion (£197 trillion) by the end of 2019 after already hitting a record high, new research by the Institute of International Finance has revealed.
The binge has been driven by the US and China, which account for a combined 60pc of the latest increase in global debt. It warned that slowing global growth poses a threat to the mountain of debt that has been accumulated since the financial crisis.
Airbus copies birds’ flying formation to reduce fuel consumption
Airbus is turning to nature to cut airliners’ fuel consumption and reduce emissions by emulating the way birds fly in formation.
The pan-European aerospace company unveiled plans for airliners on long-haul flights to fly closely behind each other.
The lead aircraft creates a wake, of which the following aircraft “rides” the upwash, utilising the energy this creates to reduce the amount of fuel it has to burn.
The idea is copied from geese, which fly in “V” formations on longer flights, with the birds behind riding the vortices from those ahead of them.
European stocks mixed
Stocks in Europe closed fairly mixed after reports the mood in Beijing was “pessimistic” in relation to a deal with Washington. It is believed that China are not happy that President Trump is not interested in rolling back on tariffs.
The news hit stocks around Europe but London managed to close slightly up with the FTSE 100 finishing 0.07pc higher to 7,307.70 while the FTSE 250 ended 0.18pc higher to 20,440.50.
In the eurozone, Frankfurt’s DAX and Paris’ CAC fell 0.26pc and 0.16pc respectively.
David Madden of CMC Markets said: “The trade spat has been going on for over one year, and this is the latest hiccup. It is likely that this is a ploy by China, but for now dealers are keen to adopt a more risk-off approach.”
Kylie Jenner sells $600m slice of beauty business to Max Factor owner
Kylie Jenner, the world’s youngest self-made billionaire, has agreed to sell a $600m (£463m) majority stake in Kylie Cosmetics to beauty giant Coty, which hopes the reality star’s brand can boost its struggling sales.
The Kardashian family member will remain the face of the brand, while Coty – whose brands include Rimmel, Covergirl and Max Factor – will take overall responsibility of the business, the companies said on Monday.
The deal values Kylie Cosmetics, which will be renamed Kylie Beauty, at about $1.2bn.
Ms Jenner, 22, started the company in 2015 as a line of lip kits when she was still a teenager, but the brand now sells everything from eyebrow gel to face scrubs and sunscreen.
CBI response to Lib Dem leader’s speech
“It was good to hear commitments from the Liberal Democrats on working with firms to tackle climate change, improve skills and backing business as a force for good.
“Increasing investment in infrastructure will better connect the UK’s regions and nations, close productivity gaps and facilitate a step change in exports.
“The Liberal Democrats recognise the broken business rates system needs fundamental reform. But moving to a land value tax is mired in complexity, and it remains unclear how it would cut overall costs or provide a level playing field. Much more detail will be needed.
“Employee engagement is hugely important, but there are numerous ways to ensure staff views are represented at the highest levels rather than simply asking employees to sit on boards.”
Here’s the Fed statement on the Trump-Powell meeting
“At the President’s invitation, chair Powell met with the President and the Treasury Secretary at the White House to discuss the economy, growth, employment and inflation,” the Fed said in a statement.
“Chair Powell’s comments were consistent with his remarks at his congressional hearings last week. He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.
“Finally, Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”
Good afternoon: Trump meets Jay Powell
Thanks to everyone for following along with Louis today. Looks like President Donald Trump is trying to raise kind of some optimism after fresh skepticism over US-China trade talks.
He has just tweeted that he had a “very good and cordial” meeting with Federal Reserve chairman Jay Powell after they met to discuss interest rates and the economy
Europe drags in the red
Apologies that we’ve been slightly light on the markets themselves today: it’s been a little while since the politicians landed quite so heavily on business’s turf.
The picture across Europe remains downbeat (as indeed it has been all day): it looks like the cycle of optimism slipping into pessimism has come around once again, as a resolution to the trade war seems as far away as ever.
The pound is happy enough however, and pushed up a little further to a fresh six-month high earlier:
FedEx boss challenges New York Times publisher to tax debate
Here’s some news from the Land of the Free (where stock markets have opened downbeat): the disgruntled boss of FedEx challenged the publisher of the New York Times to a public debate over tax.
My colleague Jasmine Cameron-Chileshe reports:
Frederick Smith made the proposal in response to a New York Times front page story published on Sunday alleging that the courier company reduced its tax bill to zero last year.
The report said the company had saved at least $1.6bn after President Trump’s corporate tax cuts reduced its tax rate from 34pc in 2017 to less than zero the following year.
The New York Times article also stated that Mr Smith was the “public face” of the lobbying groups that had pushed for the tax cuts worth $1.5 trillion and that FedEx executives regularly met with House of Representatives and Senate committee staff in a bid to influence the bill.
Mr Smith described the article as “distorted and factually incorrect” in a statement published on the FedEx website, and called on Times publisher A.G Sulzberger and the paper’s business editor take part in a public debate in Washington DC with him and the company’s corporate tax vice-president.
The egg industry’s Brexit fears
While we’re deep in the topic of Brexit and business, here’s a look at a potential repercussion of the UK’s withdrawal from the EU you might have overlooked: its impact on the egg industry.
Our Europe Editor Peter Foster reports:
Domestic producers fear a Brexit free-trade deal could open the floodgates to cheap and risky imports from Ukraine, India, Argentina and the US where battery hens can produce eggs nearly 30pc cheaper than UK farmers following EU animal welfare directives.
Mark Williams, the chief executive of the British Egg Industry Council which represents a UK industry worth £1bn a year, has warned that the Government’s position would “undercut our farmers, and undermine the confidence of consumers.”
Eggs – unlike some other agricultural products like lamb and beef – were left completely unprotected by tarriffs when the government published its updated temporary “no deal” tariff schedules last month, despite intense lobbying from the BEIC.
Peter has put together a big tweet thread on the topic, which you can read here:
Swinson finishes up: Key points
It’s always hard to gauge the mood in the room via a web stream, but the audience’s reaction to Jo Swinson seemed warmed than it had been for the Conservative and Labour leaders earlier in the day.
Some 70pc of the CBI’s members voted remain, so it is possible the Liberal Democrat leader found herself in a Goldilocks spot for this particular audience.
Here are the key takeaways:
- The Liberal Democrats will scrap business rates and replace them with a levy based on land value
- Money saved by cancelling Brexit will be spent on environmental causes and education
- Ms Swinson says Liberal Democrat votes will not put Mr Johnson or Mr Corbyn in Number 10
- She says the Liberal Democrats are offering voters a chance to stop Brexit.
Q: What do you say to businesses that voted leave?
Ms Swinson says she respects others’ views, but says the Liberal Democrats offer voters a remain option in the General Election. She says she wants to get back to a politics where people respect others’ views.
Q: Why should people vote Lib Dem instead of Conservative or Labour?
Ms Swinson says people deserve another option, saying the UK needs a political party that respects facts and makes sure its manifesto pledges add up. This draws a clap for the audience (who seem more enthusiastic about Ms Swinson than they were about either of the previous two leaders).
Q: What three things would you do (other than Brexit) to help business people?
We’re didn’t get three things, but Ms Swinson emphasises once again the need for people to have opportunities to develop their skills in later life (as well as repeating her business rates pledge).
Q: Why are you going against the majority vote from 2016?
Ms Swinson says things have changed since the 2016 vote, saying it is unwise to assume there is a majority for another single form of Brexit.
Q: What are you views on the gender recognition act?
Ms Swinson dodges on what is a potentially thorny question on social policy. She has spoken about her own record on issues of gender equality, and said she fears society may be moving backwards in some regards.
Swinson: Remain windfall would fund spending
Ms Swinson is, as Mr Corbyn did, laying out her party’s business policies in broad strokes.
One notable moment already is that members of the audience broke out into applause when the Liberal Democrat leader repeated her party’s pledge to cancel Brexit on their first day in Government if they win next month’s election.
She says the money saved by remaining the EU can be spent on:
- Better education
- Developing the UK’s renewable energy sector
- Creating a “skills wallet” (i.e. further training) for adults.
Q: Won’t replacing business rates with a tax feed back to businesses anyway?
One of the Liberal Democrats’ key policy is removing business rates entirely, and replacing them with a land levy. Ms Swinson says the party has undertaken careful analysis on the policy (as one might hope), and believes this is the best way to help businesses.
Q: Would there be common ground between you and Labour under a different leader?
Ms Swinson says Liberal Democrat votes will not put Boris Johnson or Jeremy Corbyn into Number 10. She criticises Mr Corbyn strongly over antisemitism, saying she has spoken to Jewish people about the “fear” they feel. She says the party will continue working with other Labour MPs. All in all, a dodge to the question.
Jo Swinson speech set to begin soon…
Like Boris Johnson and Jeremy Corbyn, the Liberal Democrat leader will be trying to make a pitch to the country’s influential business leaders.
Here’s more on Dame Carolyn Fairbairn’s rejection of “sulking” claims in the Telegraph. Lucy Burton reports:
The head of the UK’s leading business lobby group has insisted that her team has not been in a “sulk” over Brexit in an attempt to rebuild links between politics and business.
Dame Carolyn Fairbairn, head of the CBI, was forced to defend the group’s positioning at its annual conference on Monday after Downing Street officials told The Telegraph that the relationship between Government and the CBI had been “downright antagonistic” and that there had been “emotional sulking” since the referendum.
Speaking before Boris Johnson took to the stage, Ms Fairbairn told a packed auditorium: “I don’t think we ever sulked about Brexit. As soon as the referendum was over, we didn’t spend a single day trying to reverse it”.
Arguing that the CBI simply wants the best deal, she then said: “our message to the party leaders here today is let’s not box ourselves in, let’s keep our options open”.
One CBI member at the conference told The Telegraph that she wants the group, which represents around 190,000 businesses, to play a leading role in steering the second phase of Brexit and that “sulking” reflects the exact mood of company bosses. Around 70pc of the CBI’s membership voted remain.
“Why shouldn’t [the CBI] sulk, that’s how we feel,” she said. “Businesses are frustrated and fed up.”
Ben Marlow: This Eddie Stobart rescue plan will find few fans
The “Stobart Saddos” will be tearing up their membership cards.
…writes our chief City Commentator Ben Marlow:
Around 35,000 grown men part with £21.99 every month to be part of the esteemed Eddie Stobart fan club.
That’s £260 a year to worship lorries. Still, at least you get a pin badge, a Christmas calendar, and the “opportunity to name a truck”. And yet here is the nation’s favourite haulier having to accept a £55m Wonga-loan from a mysterious hedge fund so it can keep on trucking.
The deal to rescue stricken haulage group Eddie Stobart, Ben writes, leaves the firm at the mercy of a fund that has already made a fortune from it.
This is the moment Boris Johnson announced a corporate tax cut would be delayed
The BBC’s Andrew Neil notes the abrupt volte-face from the Government:
Full report: Saudi Aramco scraps London investor roadshow
Here’s more on Saudi Aramco scrapping investor roadshows in London for its upcoming float, a day after calling off events in Asia and the United States, to focus on marketing in the Middle East. My colleague Ed Clowes reports:
In the latest blow to the oil company’s plans to go public, Saudi Aramco revealed on Sunday that the listing would value the company at between $1.6 trillion and $1.7 trillion. That is considerably lower than the $2 trillion the kingdom’s powerful Crown Prince Mohammed bin Salman had been seeking.
Just 24 hours later, Saudi Aramco further pared back the international promotion of the sale by cancelling the European leg of its investor meetings, according to reports.
Marketing of the company’s shares will now be limited to the kingdom and the surrounding Gulf countries, including the United Arab Emirates, Kuwait, Oman, and Bahrain.
Here’s more on Aviva
It’s pretty quiet on the markets today, with the FTSE 100 and 250 both grabbing some moderate gains. The biggest blue-chip faller is still NMC Health – here’s more from my colleague Michael O’Dwyer on what’s happened there.
Questions over Aviva’s restructuring strategy as it rules out sale of Singapore business
Growing uncertainty surrounds Aviva’s strategy to turn around its business after the insurer announced on Monday that it will not sell key parts of its Asian business.
The FTSE 100 insurer is due to update investors on Wednesday on new chief executive Maurice Tulloch’s plans to reinvigorate the company and had been widely expected to announce it would offload its Asian unit.
The business was expected to fetch in the region of £2.3bn. But a report by Bloomberg that Japan’s MS&AD Insurance and Canada’s Manulife were competing to buy Aviva’s assets in Singapore and Vietnam forced the British company to announce it would retain the Singaporean business.
The company said: “Following a thorough review of options for the Singapore business, including seeking offers for the business, Aviva has concluded that the best value for shareholders will be achieved by retaining the business.”
Shares sank 4.7pc to 413.9p following the announcement, still well above a trough of 352.3p in early September.
Aviva also confirmed that it will hold on to its Chinese business, a joint venture with Chinese state company COFCO. Justifying the decision, it referred to the “scale of the [Chinese] market, excellent relationship with its partner COFCO and the high growth prospects”.
Both the Singaporean and Chinese businesses delivered double digit growth in operating profit last year. The Singaporean business, in particular, is cash generative, making it an important contributor to Aviva’s shareholder dividend.
Other parts of the company’s Asian operations may be sold, however. The company said it was “continuing to explore strategic options for its operations in Hong Kong, Vietnam and Indonesia, with its respective partners in each country”.
One business owner responds…
Lucy Burton reports:
One small business owner said she thought both Johnson and Corbyn were “pretty terrible” for different reasons and that she felt dispirited for British business. She also pointed to the lack of female delegates at the conference, arguing that diversity still remains a huge issue for UK business.
Telegraph Chief Political Correspondent Christopher Hope adds:
Here’s how the CBI has responded to both speeches
On Boris Johnson, Dame Carolyn Fairbairn said:
Conservative commitments to unblock the pent-up potential of British enterprise will be welcomed by businesses who have faced an ever-growing burden of costs and uncertainty.
Postponing further cuts to corporation tax to invest in public services could work for the country if it is backed by further efforts to the costs of doing business and promote growth.
Reforming business rates has been a key priority for CBI members. This means that we will finally get to grips with a broken system that damages investment and jobs and could breathe new life into our high streets and other sectors.
Business welcomes the Prime Minister’s passion for levelling up opportunities throughout the country through investment in education, infrastructure and technology. But his words must become firm commitments in the Conservatives’ manifesto in order to get the UK economy back on track.
Action at home must be accompanied by the right type of Brexit certainty. That means a new relationship with the EU that maintains frictionless trade, keeps close regulatory alignment and supports our services sector. Unnecessary deadlines and damaging cliff edges should be replaced by taking the time needed to secure a sustainable, ambitious relationship.
And on Jeremy Corbyn, she said:
It’s time to see Labour open the door to real and lasting partnership with business, not stick with outdated ideologies that would close it in their face.
The challenge is not what Labour want to achieve, it’s how. Firms share many of the same ambitions, on skills, climate change, delivering high paid jobs and making sure that the proceeds of growth are felt across the country – but those challenges need a joint response.
Some of Labour’s proposals do open the door to partnership. Greater flexibility on the Apprenticeship Levy is something firms have long asked for. A step up in all forms of vocational training for school leavers and those switching careers offers opportunities and works for the economy.
Reskilling the economy to achieve net zero and adapt for increased automation is critical, and apprenticeships can have a big role to play in this.
But false instincts for mass nationalisations and forcing inclusive ownership schemes onto thriving businesses does little more than frighten off investors from backing the UK, with pensioners and savers having to foot the bill.
A high-growth, fair mixed economy is within our grasp, but only if business is welcomed and supported as a provider of opportunity, not falsely portrayed as the root cause of inequality.
Corbyn finishes up: Key points
Nothing new on the policy front there. Here are the key points on business:
- Labour announces it will create 320,000 ‘green apprenticeships’ if elected
- Jeremy Corbyn tells businesses that privatisation of services has been a “rip-off” for them and the public
- Mr Corbyn says he has “concerns” about the business ethics of some large firms
- In defence of Openreach plans, called internet a “fundamental” right and essential to business
From members of the audience now…
Q: What would Labour to do to support the ‘sharing economy’?
Mr Corbyn focuses on recycling and avoiding food waste, which he says could be achieved by empowering local authorities. He says the UK is bottom of the pile in Europe for recycling, which appears to be untrue.
Q: How will Labour address concerns that it is ‘for the many, not the Jew’?
Mr Corbyn says “racism is a scourge for all of us”. He says he has spent his life fighting racism. He says anti-semites have “no place in a civilised society”. He says the Labour party would focus on education on issues to do with hatred of Jews.
Q: What is Labour’s plan for industrial strategy?
Quite a wide answer again from Mr Corbyn, who has taken this as an opportunity to talk broadly about Labour’s plans for a “fairer” economy in broad terms.
As a side note, the BBC’s Laura Kuenssberg has pointed out Boris Johnson reverse-ferreted on corporation tax in the course of a single morning:
Several questions, all getting answered in one go…
Q: Do you accept that sudden announcements of nationalisations ‘send a chill’ through boardrooms?
Mr Corbyn says that Labour’s plans to nationalise BT Openreach would fulfill business demands for better broadband. He says access to high-quality broadband is a “fundamental” right. He says the plans would start from areas of poor access, and work back towards cities, where connections are typically better currently. He says internet access is essential to business infrastructure.
Q: What FTSE 100 company is a good model for business?
Mr Corbyn says he has “concerns” about global minerals companies, but says he can “absolutely accept” that companies want to improve the environments in which they operate.
Q: Will you renationalise any of the bus network?
Mr Corbyn says that Labour would empower more local authorities to develop bus services in their local areas. He tells the CBI bus access is vital to their workforces. All in all, it’s a dodge on the direct question, but the suggestion is basically: no nationalisation, but increased powers instead.
Q: How would a second referendum get anything done?
Mr Corbyn says there has been demand for many different approaches, but says the policy developed by Labour (which it took a long time to get to), offers either of a continued trade relationship, or remain, which he says would offer a way to “bring people together” and end the Brexit debate. He says he wants to bring uncertainty to an end.
Corbyn: ‘Green industrial revolution’ coming
The Labour leader has just spoken about his apprenticeship plans (see 8:46am post). He says “snobbery” around further education needs to go, in order to re-skill people for a changing economy.
Most of this is strongly echoing Labour’s pre-briefing, with no surprises from the Opposition leader currently.
Corbyn: Your businesses have been ripped off
Mr Corbyn is trying to position Labour’s policies as favourable to businesses, emphasising in particular skills and infrastructure investment as beneficial to businesses.
He says businesses as well as individuals have been victims of “rip-off” services.
The Labour leader says a deal between the Conservatives and the US to carve up the National Health Service is currently being cooked up “in secret”, which he claims would drive up medicine prices.
Corbyn: It is ‘nonsense’ that I am anti-business
Mr Corbyn straight into tackling the elephant in the room. He tells the CBI:
It is sometimes claimed that I am anti-business. This is nonsense.
He tells that assembled business leaders they have “so much to gain from a Labour government”, saying if victorious in next month’s election, the party would deliver on Single Market access and high-speed internet.
Johnson finishes up: Key points
The PM has finished speaking. Here are the four key takeaways (before Mr Corbyn comes on stage):
- Sajid Javid will remain as Chancellor if the Conservatives win
- A 2pc cut to Corporation Tax will be postponed
- Mr Johnson would not commit to keeping Entrepreneurs’ Relief
- The Prime Minister says he is aligned with the CBI on immigration policy
Political Twitter remains quite abuzz over John Allan’s intervention:
After speaking a little longer than John Allan appears to have hoped, Mr Johnson is now taking questions.
He refuses to answer a question about whether Prince Andrew should have apologised during his sensational Newnight interview, saying “nice try”. The audience laughed, but that may not play well given the accusation against the Prince…
Q: Will you guarantee a no-deal Brexit will not occur?
Mr Johnson says nobody expected him to get a Brexit deal, and insists one will be reached.
Q: Are you at odds with the CBI over Brexit?
The Prime Minister says (after Mr Allan whispers in his ear) that the Government and the CBI are in agreement over immigration, which will surprise anyone who heard Dame Carolyn’s comment on Sky yesterday. Here’s a reminder of those:
Mr Johnson dodges another question about Prince Andrew.
Johnson & Donovan
Mr Johnson opens his speech by saying that while UK business today is doing “extraordinary things” – citing how proud he is of the amount of Jason Donovan (Australian) music the country exports to North Korea – it is like a Formula 1 supercar that is “only firing on half its cylinders with so much more natural energy waiting to be unleashed”.
“The country has been held back, let’s be clear, by politics,” he admits, arguing that there is a pent-up tidal wave of investment and Brexit needs to get done.
“With every month of pointless delay it’s costing our country an extra billion pounds for nothing. We need to get Brexit done.”
Johnson speaking now
You can follow along via our live stream, which I have embedded at the top of the blog (refresh the page if you can’t see it). Here’s another embed just in case:
Before she exited the stage, Dame Carolyn gave some comment on the future. Asked what she’d like to see this time next year, she said “in terms of dreams we would all like Brexit uncertainty to be lifted from our economy… I would love us to say ‘the UK is back, here we are, a fantastic place to do business, a fantastic place to live and work.’”
Here’s more from that CBI read…
While we wait for Boris Johnson (for it is he) to speak, here’s more on the CBI itself.
My economically-minded colleagues Russell Lynch and Tom Rees wrote:
The UK’s leading business lobby group claims to speak for 190,000 businesses with seven million staff and, as such, should have an open door to Number 10.
But the organisation has not had a good Brexit. It struggled to make itself heard with a prime minister in Theresa May, distinctly cooler on the corporate world than her predecessors; former director-general and Brexiteer Lord Digby Jones says it has “become too identified with the Remain cause” and complacent over the threat of Jeremy Corbyn.
The CBI’s cause has not been helped either by embarrassing leaks such as the internal email on May’s original Withdrawal Agreement from its head of EU negotiations – herself a former Liberal Democrat organiser – as “not a good deal”, further corroding political trust.
Fairbairn: ‘I don’t think we ever sulked over Brexit’
At the CBI’s conference, Dame Carolyn Fairbairn is taking question from reporters.
She was asked directly about the Telegraph’s long read on the business lobby group, from Saturday: Can the CBI get over its Brexit sulk and get down to business?
Responding (Lucy Burton reports), she said:
I don’t think we ever sulked about Brexit. As soon as the referendum was over, we didn’t spend a single day trying to reverse it
Urging against a no-deal Brexit, she said just before Boris Johnson takes to the stage that “our message to the party leaders here today is ‘let’s not box ourselves in’, let’s keep our options open”.
Saudi Aramco scraps plans for London leg of IPO roadshow
Just in: Saudi Aramco has scrapped plans to visit London on Wednesday as part of its pre-float roadshow according to Bloomberg, an admission of weak international interest.
That decision comes after the state-owned oil mammoth cut back its ambitions for the float, which is expected to take place next month. As I wrote yesterday:
Saudi Arabia has bowed to pressure from international investors by pricing its state oil company at a maximum of $1.7 trillion (£1.3 trillion), significantly short of the $2 trillion price sought by Crown Prince Mohammed bin Salman.
The prospectus was viewed as a concession by the Gulf Kingdom and the Crown Prince, for whom the desired $2bn valuation had been a “virility symbol”, according to local sources.
Saudi Arabia’s wealthy families and institutions will be under pressure to buy in at the higher end of the float range, bankers in the country reporting strong domestic interest. Around a third of the shares listed have been earmarked for individual Saudi investors.
Here’s my report from yesterday:
Before we wade into the trenches of business policy (I have my banana and my cup of tea ready), let’s round up some of the morning’s corporate stories.
Being a Monday, it is not super lively out there: later in the week, we’ll continue to get some of the latecomers of the third-quarter reporting season, but today things are thin on the ground.
Aviva holds on to Singaporean business
Insurance firm Aviva has announced it will keep its Singaporean business, ending months of speculation of a possible sale. In a statement this morning, it said:
Following a thorough review of options for the Singapore business, including seeking offers for the business, Aviva has concluded that the best value for shareholders will be achieved by retaining the business.
Aviva is leading fallers on the FTSE 100 following the announcement:
Sage sells payments wing
Sage Group has confirmed it will sell its Sage Pay unit to Elavon, which is part of US Bancorp, for £232m. Sage said it expects to report a statutory profit on disposal of approximately £180m on completion of the deal.
Diploma raises dividend
Diploma, the FTSE 250-listed technical equipment supplier, raises its dividend after reporting increased sales and profit. Chief executive Johnny Thompson said: “iploma has delivered another strong set of results with double-digit revenue and earnings growth in the year.”
FTSE flat as European markets slip
A moody Monday start for the markets, with European indices slipping slightly while the FTSE stays flat despite a rising pound.
For the last few sessions, there has been a sense that equities have been rising simply out of a sense there isn’t any other direction to move in – might today’s fall be a sign of waning patience?
SpreadEx’s Connor Campbell writes:
Looking ahead to this afternoon and, though the Dow Jones is set to echo the sluggishness of its European counterparts, a 0.2pc increase would be enough to send it above 28050 for the first time in its history. The latest news on the US-China trade deal – basically the only thing that really matters to the American markets for the rest of 2019, unless Trump’s impeachment significantly heats up – is that ‘constructive discussions’ were had over the phone on Saturday morning about each other’s ‘core concerns’.
It is yet another example of optimism-without- concrete action, the kind that arguably places the Dow in something of a dangerous position. The index is seemingly working on the assumption that ‘phase one’ of the agreement will eventually be signed. And though the signals would suggest that should happen, with someone as irascible and capricious as Donald Trump, there is every reason to harbour some substantial doubts.
John Allan: Labour’s nationalisation plans are ‘profoundly unattractive’ for business
Ahead of his opening speech, CBI President John Allan has given an interview to Bloomberg TV. Asked what he is hoping to hear from today’s conference, he said:
I think we want to hear that whoever is elected… whichever party forms the government will actually have a clear plan, a clear strategy to enable future economic growth, which means more jobs, more higher wages.
Asked whether businesses support Boris Johnson’s withdrawal agreement or a second referendum on Brexit (the CBI was firmly pro-remain), Mr Allan said:
I think opinions are divided on that, the CBI has never had an unqualified view that Brexit is the right anwer. What we’ve actually wanted to see is an outcome that actually gave us a really good, close trading relationship with our European neighbours.
He said the passing of the withdrawal agreement bill would not be the “end of the road”, saying he expected a “long negotiation” afterwards. Mr Allan said he believed a “really positive agreement” could be reached by the end of 2020.
Asked whether renationalisation plans were causing nerves.
I think there is a lot of nervousness about renationalisation [and] a lot of concern also that it is unnecessary… why do we have to spend loads of public money doing something that can be done with regulation?
Mr Allan said an “open book” on nationalisation would lead to falling investment. He added that potential expropriations were the “biggest concern” about Labour’s plans, saying:
There are other elements of [Labour’s plans] that are attractive to business, this one is profoundly unattractive
He sounded a note of caution of the Tories’ business rate proposals, saying the overhaul proposed would have to be substantial.
Corbyn shelves climate pledge after union pressure
The responsibility of businesses and Government to work together on tackling climate change looks set to be a key theme today, with Dame Carolyn highlighting it as a priority, and Mr Corbyn putting green issues at the heart of his speech.
However, political correspondent Harry Yorke reported last night that Labour has already shelved a target for the UK to become carbon neutral by 2030 after caving to union barons over the flagship environmental pledge.
The Telegraph has been told that Labour’s manifesto does not commit to a hard deadline but instead promises to make “substantial progress” towards reaching net-zero emissions within a decade.
A draft version of the document, which was drawn up by Mr Corbyn’s policy team last week, had already been watered down due to concerns that a fixed target would be impossible to achieve within 10 years.
However, the policy is understood to have been revised again on Saturday, after one of Labour’s biggest trade union backers demanded that changes be made to the document.
Javid criticises Labour broadband plans
Of course, Labour’s biggest business plans appear to already be out there – including last week’s announcement of plans to part-nationalise BT in order to rollout a free, full-fibre broadband service across the UK.
Over the weekend, Virgin Media boss Lutz Schueler called the plans a “threat to investment”. My colleague Christopher Williams reported over the weekend:
The telecoms industry was blindsided on Thursday night when the shadow chancellor John McDonnell said Labour would renationalise Openreach, BT’s network arm, and spend £20bn to build a national full fibre network that would offer free connection to every household.
Tristia Harrison, the chief executive of TalkTalk, which competes with BT in the consumer broadband market by renting access to the Openreach network at regulated prices, said first became aware of the “extraordinary” proposals was via an interview with Mr McDonnell on BBC news. She was forced to postpone the £200m sale of a full-fibre network that competes with BT in York until after the election, threatening TalkTalk’s efforts to reduce its debts.
This morning, Chancellor Sajid Javid has weighed in, accusing Mr McDonnell and Jeremy Corbyn of being “Marxists bearing gifts”. Writing in City AM, he said:
We will all pay the price for their fantasy economics — it will destroy jobs, burn people’s hard-earned pension funds and set our nation back. Their latest wheeze for “free” broadband is their most audacious con trick yet. It means yet another commitment to seize the private investments of millions of people who own a piece of BT.
It wouldn’t be free. All of us would still have to pay through our taxes, and it could destroy major firms like BT, Virgin Media and Sky in our country.
The day ahead
Although the main focus today will be on the political leaders, the CBI conference is pretty broad, so I’ll try to highlight anything interest that is said.
Currently, guests (including our very own Lucy Burton, who will be reporting on the ground today) may be attending one of several ‘Breakfast Insight Seminars’, which presumably are more focused on the insight than the breakfast.
These are the key events:
- 10am: CBI President John Allan will give the opening address, which will be followed by an interview with Dame Carolyn
- 10:40am: A ‘senior Cabinet minister’ – expected to be Boris Johnson – will give a speech and take questions
- 11:15am: Jeremy Corbyn will do the same
- 2:45pm: Jo Swinson will give her speech
Other topics being covered include workplace wellbeing, social inequality, investment and productivity.
- You can read the full agenda here
What is Labour proposing?
In his speech to the CBI later this morning, Labour leader Jeremy Corbyn will announce reforms to the apprenticeship levy, and policies aimed at tackling climate change.
The party’s flagship proposal will be the creation of new ‘climate apprenticeships’, aimed at developing people’s skills for jobs in the green economy – Labour lists “renewable energy and transport, civil engineers and skilled tradespeople in sustainable construction, designers, welders and fabricators in low carbon industries, and sustainable agriculture and forestry specialists.”
Labour will aim to create 320,000 jobs under the scheme during its first term in government if elected, with aims for 886,000 by 2030.
The proposal constitutes a reform to the Conservatives’ apprenticeship scheme, and will be funded by diverting money paid by businesses through the current Apprenticeship Levy. The changes will also allow businesses to spend their levy funds on a wider range of training types.
Mr Corbyn is expected to say:
Climate Apprenticeships will offer training to school leavers and workers looking to change jobs mid-career, creating the engineers, technicians and construction workers we need to transition to a green economy.
This election is our last chance to tackle the climate emergency. The Tories have failed to invest in our economy, failed to deliver apprenticeships and failed to face up to the climate emergency
Fairbairn: ‘today is a really important day’
Speaking to the BBC’s Today programme this morning, Dame Carolyn said:
I do think today is a really important day… we’ve already seen some of the policy announcements that they’re going to be unveiling, and some of them look very important for business, to get competitiveness going again.
Describing business rates as “fundamentally broken”, she praised policy proposals from the Conservatives to review rates, and Labour’s proposed changes to apprenticeship rules.
She added that business and government need to work together to tackle challenges such as climate change:
We’re also pleased to here that some of the really big issues and challenges of our time, where business and government have to work together are on the table: climate change, and the re-skilling on the population.
Johnson promises four tax cuts
With Boris Johnson, Jeremy Corbyn and Jo Swinson all expected to make speeches at today’s Confederation of British Indsutry conference, we’re likely to hear their most unvarnished appeals for business support.
The Telegraph’s Political Editor Gordon Rayner reports:
Boris Johnson will promise to cut employers’ National Insurance contributions and three other taxes on companies as he lays out the Tories’ credentials as the party of business…
…Meanwhile the Conservatives claim that tighter rules on immigration will result in a £1.3 billion saving to the public purse each year – more than the cost of the tax cuts for business.
Mr Johnson will try to heal the rift between the Government and the corporate world over Brexit by telling the CBI conference in London: “Let’s not beat around the bush, big business didn’t want Brexit.”
That rift – over, among other things, Mr Johnson’s now-famous “f*** business” comment – may not be entirely papered over today, however. One of the biggest potential rifts between the Conservatives and the UK’s businesses is over immigration, plans for which were laid out in detail yesterday.
CBI Director general Carolyn Fairbairn has criticised the current proposals, saying:
When we hear talk about brightest and best, I think that is a worry… it’s not just brightest and best, it’s people at all skill levels across our economy that we need.
So it may not all be smiles and hugs just yet…
Agenda: Laying out their stalls
Good morning. The pound edged closer to $1.30 overnight after Prime Minister Boris Johnson announced that all Conservative election candidates will back his Brexit deal if he wins the December 12 election.
Meanwhile, all eyes in the City will be on the CBI’s annual conference later today as the leaders of the three main political leaders will try to woo the business community four weeks out from the general election.
5 things to start your day
1) Sajid Javid has advocated a radical new tax on landowners in an effort to tackle the UK’s housing crisis, Liam Halligan writes. He first called for the levy in 2017 to fund local developments to break the effective oligopoly in housing. Read what it would mean here.
2) Eddie Stobart could be subject of a rival rescue deal to the one agreed on Friday. Andrew Tinkler, the former boss of Stobart Group, is gathering support for a proposed £75m offer to save the haulier. Could Tinkler make a stunning return to Eddie Stobart?
3) Brexit could pose a serious threat to one sector: Britain’s egg farmers. A free trade deal could see the UK flogged with cheap, unsafe and cruel eggs, the industry has warned. Europe Editor Peter Foster reports.
4) Saudi Aramco has agreed to price its float at around $1.7 trillion. While this will still make it the world’s most valuable publish firm, it is still below what the country’s Crown Prince was hoping for. Read why the Crown Prince has taken a cut to his “virility symbol”.
5) Universal basic income may sound attractive, but despite a long pedigree of economic thinkers backing the idea it is doomed to fail. Here is why.
What happened overnight
Stocks in Asia saw a muted start to the week as investors await fresh developments on the US-China trade front. The pound strengthened as Conservatives backed their leader’s Brexit deal.
US and European stock futures were little changed after a mixed session in Asia. Japanese equities closed with a modest gain, while Hong Kong outperformed, though that market tumbled last week and its resilience is being tested by continuing unrest in the city.
The S&P 500 Index Friday reached another record in a sixth week of gains, the longest run in two years. Ten-year Treasury yields steadied around 1.82%. The yuan dipped after China lowered some borrowing costs.
White House economic adviser Larry Kudlow’s comment that US-China talks were nearing final stages had given markets impetus Friday. The next day, US and Chinese trade negotiators held “constructive discussions” in a phone call to address each side’s core concerns about a phase-one deal, according to the Chinese Commerce Ministry.
Coming up today
Full-year results: Diploma
Interim: Manchester United
Trading statement: DWF
Economics: Rightmove house prices (UK)