BUSINESS LIVE: GDP grows 0.2% in Q3; Apollo to buy TRG; Ofgem to probe energy debt

Just before close, the FTSE 100 was 0.32% up at 7,644.71.

Meanwhile, the FTSE 250 was 0.14% lower at 17,851.17.

House prices are continuing to spiral downwards, according to a survey from the leading membership body for estate agents.

The latest survey by the Royal Institution of Chartered Surveyors (Rics) found that buyer demand is declining, and that there are fewer homes coming to the market.

(PA) – Ikea has promised to pass on cost savings to customers by cutting prices over the next year as pressures in its supply chain start to ease.

The company said that it has a “clear intention” to reduce prices this financial year, ending next August.

“Despite economic and geopolitical instabilities, we remain committed to making a positive difference in our customers’ lives; especially for those with the thinnest wallets,” said UK and Ireland chief executive Peter Jelkeby.

“Knowing that our customers continue to navigate a cost-of-living crisis, we absorbed significant cost increases to mitigate price rises as much as possible, investing in promotions, special offers, and, for the first time, an Easter sale.

“As we see supply chain costs start to ease, we have a clear commitment to lowering prices accordingly – ensuring we remain firmly on the side of the many people.”

It came as the business announced a 11.9% rise in turnover in the last financial year to £2.5billion. Globally, parent company Ingka Group’s retail sales rose 5.7% to €41.7billion (£36billion).

The company said that 38.5% of its UK sales had been made online, up from 35.8% a year earlier.

Mr Jelkeby said: “Over the past 80 years, we have developed our offering, value chain and sales channels, supporting our vision to create a better everyday life for the many people.

“As we look back on the last year and forward to the next 80, we constantly ask ourselves, how what we do today can be done better tomorrow.

“Over the past year, we have made significant investments on this journey to create a more accessible, affordable and sustainable IKEA, to meet the evolving needs of UK households.”

The Bank of England is set for another pause in interest rates next month after weak economic data on Thursday showed the impact of previous hikes.

Talks between Hollywood actors and studios broke down late on Wednesday, ending any hopes that the three-month strike by performers would come to an end anytime soon.

Studio bosses walked away on the grounds that the $800 million more per year SAG-AFTRA proposal meant ‘the gap is too great’.

Households could finally see the return of cheaper fixed-rate energy tariffs after Ofgem confirmed it will scrap a policy that props up high prices.

Today, the energy watchdog said it will end the Market Stabilisation Charge from 31 March 2024.

KPMG has been slapped with a record fine from the accounting regulator over its failure to adequately scrutinise the accounts of collapse outsourcer Carillion.

The Financial Reporting Council (FRC) has levelled a £21million sanction against the ‘Big Four’ consultancy, reduced from £30million due to its cooperation with the probe, and ordered it to pay over £5.3million in costs for the investigation.

Mobico shares fell over 25 per cent on Thursday after the transport firm cut its annual profit forecast and suspended dividends.

The former National Express group has seen high costs dent profitability for longer than anticipated, which has also forced Mobico to put its North American school business up for sale in a bid to boost its bottom line.

(PA) – The UK’s competition watchdog has introduced guidance on how businesses can collaborate on green goals without breaking the law.

The Green Agreements Guidance was published by the Competition and Markets Authority (CMA) on Thursday, following an extensive consultation with the business community.

The advice outlines how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain – known as horizontal agreements.

The CMA set out the key principles which apply, along with practical examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives.

The watchdog also said it does not expect to take enforcement action against agreements that are in line with the guidance.

It also explains how it will generally consider agreements between firms aimed at tackling climate change.

‘I wish there was a magic wand that said abracadabra,’ the new head of the World Bank said when talking about the problem of debts facing developing countries.

The comments from Ajay Banga illustrate some of the seemingly intractable issues facing the great and the good of global finance who have been meeting in Marrakech this week.

Former Barclays boss Jes Staley was today fined £1.8million by the Financial Conduct Authority and banned from the City after ‘recklessly misleading’ the watchdog about his relationship with Jeffrey Epstein.

The FCA said Mr Staley approved a letter sent by Barclays to the regulator which claimed the bank’s former boss did not have a close relationship with financier Mr Epstein, who killed himself in a US prison in 2019.

Ex-Formula One boss Bernie Ecclestone has admitted fraud after failing to declare more than £400 million held in a trust in Singapore to the Government – as he agrees to pay the taxman more than £652million.

The former racing chief, 92, said ‘I plead guilty’ at Southwark Crown Court on today while standing in the well of the court wearing a dark three-piece suit and grey tie. Ecclestone is due to be sentenced later today.

The Financial Conduct Authority have fined former Barclays chief executive Jes Staley more than £1.8million, and issued a total ban on him taking senior management or significant influence functions at a regulated business in connection to his relationship with Jefferey Epstein.

The FCA said: ‘The documentary evidence demonstrates that: (i) the statement that Mr Staley and Mr Epstein did not have a close relationship is false, and (ii) Mr Staley and Mr Epstein were in contact until just before Mr Staley’s appointment as CEO.

‘Therefore, the two statements were clearly misleading and, as they were material to the Authority’s enquiry, they misled the Authority.’

Private investors have outdone the professionals as they held fast to their strategies and defied market volatility, according to new data.

Investors with at least £20,000 in their portfolio have generated a cumulative average return of 8.2 per cent between January 2020 and October 2023, figures from broker Interactive Investor reveal.

Shares in German sandal maker Birkenstock flopped on their much-anticipated Wall Street debut last night.

The 250-year-old shoemaker listed, to great fanfare, on the New York Stock Exchange at $46 a share – giving it a lofty valuation of £7bn.

Russell Pointon, director of consumer at Edison Group:

‘The Restaurant Group’s share price has been on a downward trend for the majority of the last decade due to combination of high-priced M&A, underperformance of some of the brands and obviously the disruption due to the COVID pandemic.

‘Whilst the share price has responded positively to more encouraging trading and management tidying up the portfolio, leading to Restaurant Group being one of the best performers in the sector year-to-date, the proposed offer by Apollo of 65p is roughly half the levels that the share price was trading at prior to COVID, whilst consensus profit estimates for the coming years are heading back to pre-COVID levels of 2017 and 2018.

‘So, it will be interesting to see how the activist shareholders respond to the deal. The fact the share price has moved to a premium to the offer price indicates the market thinks a high offer will be required.’

UK stocks are on the rise this morning tracking a rally in Asian markets, buoyed by easing US Treasury yields and hopes of fresh China stimulus, while Restaurant Group shares have surged nearly 40 per cent on agreeing to a takeover offer.

The FTSE 100 is up, aided by a weaker pound after data showed the UK economy grew in line with expectations in August, but shrank more than initially thought in July.

A vehicle owned by PE firm Apollo Global agreed to buy Wagamama chain owner TRG for £506million in cash. The stock topped the offer price of 65p per share.

Mobico has tumbled 21 per cent to the bottom of the midcap index, after the transport firm lowered its profit forecast for the year and suspended dividends as it grapples with high costs.

Regulators are to probe the proposed £15bn tie-up between Vodafone and Three in the UK.

The Competition and Markets Authority (CMA) has called on rivals – as well as any other affected groups – to air their concerns about the deal.

Tina McKenzie, policy chair of the Federation of Small Businesses:

‘This modest rise in August’s GDP is a relief, coming on the heels of the sharp drop recorded in July.

‘The recovery in services has driven the increase, but this masks concerning falls in production and construction, indicating that there are downward pressures on many sectors.

‘Today’s figures will go some way to allaying fears that the summer was a wash-out for small firms, although our research has consistently found that confidence levels in some sectors – especially consumer-facing ones such as retail and hospitality – have trailed behind the overall results for all sectors.

‘The early September pause in the upward march of the base rate has given small firms a ray of hope that the margin squeeze they’re enduring may ease.

‘As we’ve seen in recent months, growth is volatile and fears of a recession have yet to be fully banished. If this most recent monthly rise is to be sustained, the Government will need to consider how it can promote a trading environment where small firms can flourish.’

Britain’s competition regulator has said television production companies including the BBC, ITV, Hat Trick and Tiger Aspect could have broken competition law in relation to the purchase of services from freelancers.

The Competition and Markets Authority has launched an investigation into the suspected breaches, but added that it had not reached a view as to whether there was sufficient evidence of an infringement.

ITV confirmed that it had received a case initiation notice from the CMA.

‘ITV is committed to complying with competition law and to cooperating with the CMA’s inquiries,’ it said in a statement.

The probe also includes Hartswood Films, Red Planet Pictures and Sister Pictures.

In July the regulator said it was investigating suspected breaches of competition law in relation to the purchase of services from freelancers in sports content by the BBC, BT Group, ITV, Sky UK and others.

Neil Birrell, chief investment officer at Premier Miton Investors:

‘After a poor July, the UK economy bounced back in August. Like a number of other economies, the UK economy continues to confound not just the worst, but most expectations in remaining relatively robust.

‘The Fed has indicated it will proceed carefully on policy and the Bank of England must do the same as it balances the inflation versus growth equation. Recessionary risk remains real, but the damage that could be done by ongoing high inflation is a threat.’

Richard Carter, head of fixed interest research at Quilter Cheviot:

‘This morning’s UK GDP figure provides another small glimmer of hope that the UK could scrape through and avoid a recession, with a slight 0.2% uptick in August following a disappointing 0.6% dip in July (revised down in the latest figures).

‘Just this week the IMF predicted that the UK would be the slowest growing economy across the G7 next year, and though 2024 may prove more difficult, this morning’s figure provides some relief that though economic growth is challenging, it is not yet non-existent for the UK.

‘We have also started to see hints that the pressure of the cost-of-living crisis is beginning to lift for households. Prices remain considerably higher than pre-pandemic periods, but disposable incomes are starting to improve which has provided some much-needed relief to those who have been struggling.

‘The Bank of England’s decision to pause rate hikes has also offered some respite to homeowners and the housing market which have been grappling with high mortgage rates.

‘Though the Bank of England has pressed pause on its rate hiking cycle for now, it still has an incredibly challenging job to do and it may still return to raising rates later in the year or into the next.

‘However, with an election fast approaching the Bank will be keen not to overcorrect and will instead begin to assess what impact its action has had to date.

‘We don’t necessarily see the case for further rate rise and things will continue to bite for consumers as a result of the lag effect of the rate rise. With rates now higher for longer, consumers and businesses will need to adapt to this new environment, one many haven’t faced in their lifetimes.

‘The economy may be holding up for now, but whether or not the UK truly manages to avoid a recession is yet to be seen. The speed of interest rate rises and the impact of the cost-of-living crisis may mean the pain is simply delayed, and 2024 could prove considerably more difficult.’

EasyJet has reached a proposed deal with Airbus to expand its fleet by up to 257 additional aircraft, plotting its growth beyond 2028, with bigger and more fuel efficient planes.

The order comes as the airline forecast annual profit of £440million to £460million and said it would restart its dividend, signalling that its recovery from the pandemic was now in full flow.

‘Our strategy is achieving results and so today we have set out an ambitious roadmap to serve more customers and deliver attractive shareholder returns,’ chief executive Johan Lundgren said.

Regulator Ofgem is considering option to protect energy consumers and the wider market from spiralling levels of debt.

Consumer energy debt now stands at a record £2.6billion, according to Ofgem, as a result of the rise in wholesale energy prices and wider cost of living pressures.

Tim Jarvis, director general for markets at Ofgem, said: ‘We know that households across the country are struggling with wider cost of living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.

‘However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.

‘Ofgem cannot subsidise energy or force businesses to sell it at a loss and suppliers must be in a position to offer high quality services to customers.

‘We must consider the fairest way to maintain a stable energy market and we will do this in consultation with all our partners to ensure we are protecting the most vulnerable households.’

A vehicle owned and managed by private equity giant Apollo Global will acquire Wagamama owner The Restaurant Group for £506million.

Ken Hanna, TRG chair, said: ‘TRG operates a diverse portfolio of some of the UK’s leading hospitality brands.

‘As a result of ongoing positive management actions and the margin accretion plan we announced in March this year, the group has recovered well from the challenges of the pandemic and the cost of living crisis.

‘This is evidenced by the continued strength of our trading performance versus the broader hospitality sector and the share price increasing 55% this year.

‘In addition, the TRG Board and management of TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the Leisure business.

‘The TRG Board continues to have confidence in the plan, but is cognisant of the premium and the certain value of the Apollo offer against the backdrop of a challenging macro-economic environment. As such, the TRG Directors intend to unanimously recommend the offer to TRG Shareholders.’

The British economy grew by 0,2 per cent in the third quarter of 2023, in line with expectations, despite bad weather and industrial action driving a 0.6 per cent slump in July, fresh data from the Office for National Statistics shows.