Key events
Co-op returns to profit despite losing almost £40m to shoplifting
The Co-operative Group has laid bare the impact of shoplifting as it said the cost of crime in its stores soared by almost 20% to £40m in the first half of the year.
The member-owned mutual has spent £18m so far this year on measures to protect staff in its food business, including rolling out body-worn cameras and fortified kiosks.
Despite this, the grocery chain took a hit of £39.5m from theft and fraud in the first six months of 2024 â up 19% on a year earlier â even as it increased campaigning on the problem.
Matt Hood, the managing director of food operations, said:
It isnât going away. The reality is that every day four of our colleagues are attacked, up 34% on 2022, and scarily, a further 115 of my colleagues will be seriously abused, up 37% on two years ago.
High-speed Paris-to-Berlin train to launch in December
A new high-speed train linking Paris and Berlin is to launch in December, operators have announced.
The daytime service will complement a popular night train route between the two capital cities that relaunched last year to much fanfare but has since been beset by technical problems.
The daytime train service, which has been delayed by logistical issues and will take an hour longer than originally announced, will run between Berlin Hauptbahnhof and Paris Gare de LâEst, stopping in Strasbourg, Karlsruhe, and Frankfurt Süd, and will take about eight hours.
The fastest train journey now running between the French and German capitals takes just under nine hours, but requires two or three changes, making for a clunky and often unreliable experience.
âAs long as it takesâ: on the frontline of the Boeing strike, workers brace for a long battle
Workers have manned a picket line outside Boeingâs airplane factory in Renton, Washington, around the clock since tens of thousands walked off the job earlier this month. Almost two weeks into the strike, the largest now under way in the US, nobody knows when it will end.
Orlando, a quality inspector at the aerospace giant, arrived at 3.45am on Saturday, long before dawn. On the outskirts of a city as expensive as Seattle, the cost of living is âalways going upâ, he said. âAnd I guess the biggest part is making sure our wages reflect that.â
When Boeing tabled a new âbest and finalâ offer on Monday, the International Association of Machinists and Aerospace Workers (IAW) declined to put it to a vote ahead of a Friday deadline imposed by the company, complaining it had been âthrown at us without any discussionâ.
Striking workers held up signs and waved to passing cars and trucks. Drivers whizzed by honking horns to show support, occasionally pulling over to chat with workers. A semi-trailer truck let off a loud blast from its horn drowning out all other sounds.
Orlando, 25, was among several workers who declined to give their full name for fear of retaliation when they return to work.
âWe are feeling pretty good, and we feel that we have the strength,â said Maden, 39, a 12-year quality control employee at the Renton facility. He believes the public, by and large, is behind them.
âIt looks like we always want money, but behind the scenes, it is a lot more than that,â Maden said. âI believe that the public is getting more understanding of why we are on strike and what has been done to us.â
Last weekend, workers brought along a portable charcoal barbecue and a poster with the cartoon likeness of Boeingâs former CEO Dave Calhoun grinning and carrying away stacks of $100 bills. âWE MAKE THEM BILLIONS THEY GIVE EACH OTHER MILLIONS,â it read.
Here is our full story on the OECDâs upbeat assessment of the UK and global economy:
âDavos on the Merseyâ: key conference takeaways as Labour tries to woo business
Richard Partington
Meanwhile, the Labour partyâs annual conference carries on in Liverpool, dubbed by some insiders âDavos on the Merseyâ because it is so packed with company executives.
Like last year, the exhibition and conference fringe had sponsored events, lounge areas and advertising from exhibitors including Gatwick, National Grid, Ikea and Specsavers. This year, however, business leaders were looking for clues about how Labour will govern after Julyâs election landslide.
After less than 100 days in power, and a month before the first Labour budget in almost two decades, many still await clarity on a range of policy priorities. But there were some hints of what the government is planning.
Rachel Reeves, the chancellor, dropped the broadest possible hint in her conference speech that the budget, on 30 October, would include a relaxation of the governmentâs self-imposed fiscal rules to prioritise investment in the UK economy.
Reeves told delegates on Monday:
It is time the Treasury moved on from just counting the costs of investment in our economy to recognising the benefits, too.
Sources confirmed she could change the way the governmentâs five-year debt rule is assessed to allow more spending on housing, roads and hospitals.
The chancellor hinted that next monthâs budget would include a relaxation of the governmentâs self-imposed fiscal rules to prioritise investment in the UK economy.
This could involve excluding losses for the Treasury on the Bank of England winding down its crisis-era quantitative easing bond-buying programme, which experts say could open up headroom in the public finances worth up to £15bn.
It could also include moving Labourâs new investment institutions, the National Wealth Fund and GB Energy, off the governmentâs books.
DFS falls to loss, warns of ‘long road to recovery’
The British furniture retailer DFS has fallen to a full-year loss, after it was hit by consumer caution amid high borrowing costs, and Red Sea disruption to shipping, and warned of a âlong road to recoveryâ in the upholstery market.
The retailer, which specialises in sofas, reported a loss before tax of £1.7m, due to ârecord low market demand and Red Sea shipping disruptionâ. This compares with a £29.7m profit in the previous year. Revenues fell by 9.3% to £987m, with orders down by 1.8% year-on-year.
Delays to shipments due to cross the Red Sea â which have been rerouted around the African continent because of attacks on ships by Houthi rebels â were partly to blame.
Many UK consumers have been unable to buy bigger ticket items like new sofas as they have struggled with high interest rates. Those who have ordered were hit by delays.
DFS is expecting âa gradual market recovery over the course of the yearâ.
Tim Stacey, the chief executive, said:
Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return. We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the 2025 financial year.
In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.
It is clear that the upholstery market has a long road to recovery given the 20% decline on pre-pandemic levels that we have seen.
OECD: Global economy ‘turning a corner’
Phillip Inman
The global economy is âturning a cornerâ, according to the latest outlook from the Organisation for Economic Cooperation and Development as it upgraded the UKâs growth forecast for this year to faster than Japan, Italy and Germany.
The OECD ranked Britain joint second among the G7 developed countries behind the US in its latest outlook on the global economy, but the UK is still expected to have the highest inflation in the group.
Describing the UKâs economic growth as ârobustâ, the OECD upgraded its growth for 2024 to 1.1% from a forecast of 0.4% made in May, as the country recovers from a mild recession at the end of last year. The forecast of 1.2% growth in 2025 was maintained.
In the May forecast, the UK was behind all other nations in the informal bloc but is now expected to outpace Japan, Italy and struggling Germany. Britain is now on a par with Canada and France but behind the US.
However, Britons are still expected to face headwinds from rising prices, with inflation expected to increase from 2.2% in August to 2.7% by the end of the year. UK inflation is on course to remain at 2.4% for 2025, rising at the fastest rate in the G7.
Overall, the OECD said that the global economy was âturning a cornerâ and lower inflation and cuts to the cost of borrowing by central banks would support âongoing momentumâ in most major economies. Those conditions will allow the global economy to return to health after the shocks caused by the coronavirus pandemic and Russiaâs invasion of Ukraine, it said.
The OECDâs chief economist, Ãlvaro Pereira, said he was surprised by the strength of the recovery earlier in the year after the UK economy contracted in 2023.
The OECD was among the most pessimistic economic forecasters when it made a judgment in May that low consumer spending and weak business investment would drag on Britainâs growth.
Business investment has remained low, but rising wages and low inflation boosted consumer spending by more than expected.
Back to Rightmoveâs rejection of the third takeover offer from Rupert Murdochâs REA Group, worth £6.1bn, as too low.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
Rightmove is playing hard to get and Rupert Murdochâs REA Group is going to have to up its game again if it has a chance of winning over the board to accept a takeover offer. The bids so far have been rejected out of hand, and even the improved latest offer is considered to materially undervalue the company and its future prospects.
With the UK government pledging to build 1.5m new homes, interest rate cuts eyed and the property market springing into life again, Rightmove clearly sees significant growth opportunities ahead.
Our full story is here:
Panmure Liberum analyst Sean Kealy said:
Itâs hard to see why 759p is a good enough offer to ignore that potential plus the businessâ growth prospects thereon out. On top of which, the structure of the offer is overly complicated â with 55% of it in scrip, which we expect many funds would choose to sell in the event of a deal, thereby complicating the realisation of value by investors.
As a result, we continue to see a low likelihood that a successful deal can be closed, in the absence of some creativity on REAâs part to increase its bid.
The pound slipped today, after trading close to 30-month highs yesterday.
Sterling is worth $1.3378, down 0.25%. The UK fund manager abrdn cautioned against an overly bullish outlook for the pound.
Matthew Amis, investment director at abrdn, said:
While weâve seen bullish forecasts on the pound recently, we are less convinced. These forecasts are based on the view that Bank of England will struggle to get base rates materially lower from here. This contrasts with the US Federal Reserve who seem willing to aggressively cut interest rates. So while the pound reaching $1.40 may be good for holidaymakers, it would not be such good news for mortgage holders.
The US Federal Reserve cut 0.50 percentage points last week, by contrast the Bank of England was pushing back on the market view by telling us to expect âgradualâ cuts. Our view is that the BoE will cut in November, after which that gradual rate of cuts will accelerate.
Between now and November, Rachel Reeves will deliver her first budget, this will be fundamental to how the BoE position itself going into 2025. The UK is currently winning its battle with elevated levels of inflation but isnât out of the woods yet. Reeves needs to be careful not to relight this fire. If she does, the result will be interest rates at higher levels for longer and a stronger pound.
Yesterday, Andrew Bailey, the governor of the Bank of England, said interest rates would fall âgraduallyâ.
In an interview with KentOnline, he said that âinflation has come down a long wayâ â it was 2.2% in August, just above the central bankâs target, having fallen from over 11% in autumn 2022.
Last week, the Bank left interest rates on hold at 5% â but Bailey said he is âvery encouragedâ that inflation will fall.
Sweden’s Riksbank cuts interest rates, flags more cuts
Swedenâs Riksbank has cut interest rates and signalled further reductions in the coming months and early next year, as inflation has fallen below the central bankâs target.
It cut its policy rate by 0.25 percentage points to 3.25%, saying:
Inflationary pressures have fallen over the year and are now assessed to be compatible with an inflation rate of around 2%.
The Riksbank has gradually eased its monetary policy over the year, by both cutting the policy rate and communicating that further cuts can be expected. Low and stable inflation and falling interest rates are contributing to a recovery in the economy.
Headline inflation has continued to fall from a peak of of over 10% in 2022, coming in at 1.2% in September â below the Riksbankâs forecast and its 2% target. It started cutting rates in May, the first easing in eight years, followed by another move in August.
Lower inflation is leading the worldâs oldest central bank, founded in 1668, to reduce borrowing costs at a faster pace than previously flagged, as it explained in todayâs statement:
If the outlook for inflation and economic activity remains unchanged, the policy rate may also be cut at the two remaining monetary policy meetings this year. A cut of 0.5 percentage points is possible at one of these meetings.
Moreover, the forecast indicates one or two further rate cuts during the first half of 2025. The policy rate is thus expected to be cut at a clearly faster pace than was previously communicated, which contributes to stronger economic activity and an inflation rate close to the target.
The oil giant BP is holding a board meeting in India this week, as it scouts for more opportunities in the country.
India, the worldâs third-biggest oil importer, wants to boost its stagnant oil and gas output. The government said in June that Indiaâs top exploration company Oil and Natural Gas Corp was seeking a tie-up with a large global oil firm to boost production from its western offshore Mumbai High fields.
The BP board is on a five-day visit to India, and met Indian oil minister Hardeep Singh Puri yesterday.
The British companyâs chief executive Murray Auchincloss said in a statement:
We see growing business opportunities, including through our world-class partnership with Reliance, producing the countryâs gas and growing our joint retail presence.
BP and Indiaâs Reliance Industries have a fuel stations and convenience stores joint venture that operates under the Jio-bp brand.
Puri, who hosted the BP board at his residence, said on X:
UK, European shares fall as China stimulus boost fades
While Chinese stocks had another day of strong gains on the back of Beijingâs stimulus blitz, shares in London and the rest of Europe have fallen this morning.
The UKâs FTSE 100 index is down 0.17%, or 13 points, at 8,269. Rentokil Initial is the biggest riser, up 3%, following the news that the activist investor Nelson Peltzâs Trian Partners has taken a seat on the struggling pest control companyâs board.
The Dax in Frankfurt fell by nearly 0.5% while the CAC in Paris slipped by 0.4% and the FTSE MIB in Milan was little changed.
Union says Boeing workers ‘not interested’ in 30% pay offer
The union representing 33,000 striking Boeing workers says a survey of its members shows they are ânot interestedâ in the aircraft makerâs latest 30% pay offer.
The International Association of Machinists and Aerospace Workers (IAM), Boeingâs largest union, said in a post on X, formerly known as Twitter:
Our members stand strong, and we remain ready to continue mediated or direct negotiations with Boeing. This has been made clear to both the company and our membership. The only way to resolve this strike is through negotiations, and rest assured, your Union will not bargain through the media.
The survey results from yesterday were overwhelmingly clear, almost as loud as the first offer: members are not interested in the companyâs latest offer that was sent through the media. Many comments expressed that the offer was inadequate and the companyâs decision to bypass the Union was viewed as disrespectful.
Yesterday, the union reacted with anger at what Boeing called its âbest and finalâ pay offer of a 30% rise per four years. It included the reinstatement of a performance bonus, improved retirement benefits and a one-off $6,000 (£4,470) bonus.
The company said the offer was dependent on it being ratified by union members by midnight Pacific time on Friday 27 September.
However, IAM declined to put the offer to a vote, saying the proposal was not negotiated with the union and that it fell short of membersâ demands.
Boeing has said its latest offer, made after unsuccessful federal mediation last week, made significant improvements and addressed demands from the union and employees. âWe first presented the offer to the union and then transparently shared the details with employees,â the company added.
Nelson Peltz’s Trian Partners takes board seat at Rentokil
Nelson Peltzâs Trian Partners has taken a seat on Rentokil Initialâs board, a fortnight after the pest control company issued a profit warning, sending its shares sharply lower.
Today, the shares rose by 2.9%.
Trian, a New York-based hedge fund founded by Nelson Peltz and Peter May, is an activist investor with a 2.3% stake in Rentokil.
Its head of research, Brian Baldwin, will sit on Rentokilâs board as a non-executive director from 1 October, and will also join its nominations and remuneration committees. He has played leadership roles in many of Trianâs investments, and also sits on the board of the UK fund manager Janus Henderson.
Richard Solomons, Rentokilâs chairman, said:
We look forward to working with him to deliver long-term sustainable value for our shareholders and, in particular, executing our plans to integrate the Terminix business and to increase organic growth in our North America operations.
Rentokil became the biggest pest control company in the world with the $6.7bn deal to acquire US rival Terminix agreed in December 2021.
Weaker demand for termite extermination services sent Rentokil shares crashing by 19% on 11 September, after the company warned of lower profits caused by a slowdown in North America.
Co-op Group returns to profit on quick commerce growth
The Co-op Group, which owns Britainâs seventh-biggest supermarket chain, is back in the black, as growth in membership and its quick commerce business offset rising costs.
The Co-op, which is owned by its members, said the number of members had grown by 20% to 5.5 million, putting it on target to reach 8 million by 2030.
The group has a partnership with Uber Direct, allowing shoppers to order groceries on the Co-op website with delivery through the Uber Eatsâ network.
It plans to open 120 new food stores by the end of next year. The 180-year-old group runs almost 2,400 supermarkets as well as funeral, insurance and legal services businesses. Food sales grew by 3.2% while legal services posted 35% revenue growth, the fastest-growing division.
The Co-op made a profit before tax of £58m in the first half of the year, compared with a loss of £33m a year earlier. The group credited lower interest payments and strong Funeralcare investment returns. Revenues rose by £100m to £5.6bn.
Shirine Khoury-Haq, the chief executive, said:
We have delivered a strong performance for the first six months of this year as our strategy starts to gain real momentum. Although the external environment remains challenging, it is testament to the underlying strength of our Co-op that we have outperformed in all our markets while significantly increasing our investments in our colleagues, pricing and in the growth of our businesses.
The dollar has weakened as Chinese monetary stimulus coursed through commodity markets yesterday and gave many emerging markets currencies a lift, said ING analysts led by Chris Turner.
The jury is out on whether this China stimulus story is an enduring one for global currencies. However, evidence of a US slowdown continues to accrue and investors do seem to have shifted to a sell-dollar mindset.
Chinese stimulus was the top story in FX markets yesterday. Metals markets rallied and the currencies of the emerging market commodity exporters in Latin America and South Africa had a good day.
The jury is out on whether this theme can be maintained. For example, were Chinese monetary stimulus backed up with some fiscal stimulus (consumption vouchers?) then we would have a little more confidence that these short-term trends could follow through.
Introduction: Britainâs Rightmove rejects £6.1bn offer from Murdochâs REA; Chinese stocks extend rally
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The British online property portal Rightmove has rejected an improved £6.1bn takeover proposal from billionaire Rupert Murdochâs REA Group, saying it undervalued the company.
The Australian group said on Monday that it had made a third offer for the company, worth £6.1bn. But Rightmove said the increased proposal âcontinues to be unattractive and materially undervalues the company and its future prospectsâ.
REA responded swiftly, saying it was âdisappointedâ by the latest rejection, and âfrustratedâ that the rejections aside, âREA has still had no substantive engagement with Rightmoveâ. It added:
REA urges Rightmove shareholders to encourage the board of directors of Rightmove to engage in constructive discussions with REA to work towards a recommended transaction,
ahead of next Mondayâs âput up or shut upâ deadline.
Chinese stocks have rallied for a second day, fuelled by Beijingâs stimulus, while the rest of Asia is more mixed.
The mainland China CSI 300 index rose by 1.68% following a 4.3% jump the day before, while Hong Kongâs Hang Sing added nearly 1% after Tuesdayâs 4.1% leap. Japanâs Nikkei slipped by 0.26% while South Koreaâs Kospi lost 1%.
The Peopleâs Bank of China launched a blitz of stimulus measures to support its economy, cutting the amount of cash banks must hold on their books, lowering several key interest rates and unveiling more support for the property market.
The news lifted stocks around the world. On Wall Street, the S&P 500 celebrated its 41st record high yesterday.
However, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, cautioned:
The problem is, the stimulus measures will take time to show in the economic data. And more worryingly, they wonât do much to fix the countryâs deepest issues â they wonât reverse local governmentsâ heavy debt burden, Chinaâs aging population, and will hardly boost the demand-led growth. As such long-term investors appreciate the efforts but prefer to watch from a distance for now.
The Agenda
-
8.30am BST: Sweden Riskbank interest rate decision
-
12pm BST: US MBA Mortgage applications
-
3pm BST: US New Home sales for August