BUSINESS LIVE: GDP grows 0.2%; Yew Tree ups Aston Martin stake; Severn Trent eyes £1bn fundraise

Lawrence Stroll’s Yew Tree Consortium has agreed to purchase another 26million ordinary shares in the business, giving it a total holding of 26.23 per cent.

The funding drought has been – and in many ways continues to be – the biggest bugbear of the British growth markets in 2023.

But if events of this week are anything to go by, there could be a glimmer of hope that the era of austerity is coming to an end, at least for the mining segment.

Just before close, the FTSE 100 was 0.30% up at 7,624.39.

Meanwhile, the FTSE 250 was 1.21% higher at 18,316.92.

French billionaire Bernard Arnault and Russian oligarch Nikolai Sarkisov are under investigation for alleged money laundering at a luxury Alpine resort, according to Paris prosecutors.

The probe concerns their activities in Courchevel, a ski resort in the French Alps known for being a playground for the ultra-rich, they said late Thursday.

Craig Erlam, Senior Market Analyst at OANDA, comments on the markets on Friday afternoon:

European stock markets are performing well at the end of the week after spending much of it in the red on the back of fresh interest rate concerns.

A determination to drive home the message that interest rates will stay higher for longer appears to have finally wobbled investors. Today’s HICP inflation figures from the eurozone will have come as a big relief against that backdrop which may explain why we’re ending the week on a high.

A beat at both the headline and core levels puts the eurozone in a promising position, especially with both expected to fall much more over the next couple of months, at which point investors may well start demanding more rate cut debate at the ECB. Not that I think policymakers will even entertain that idea any time soon.

(PA) The owner of restaurant chain TGI Fridays has revealed a drop in earnings as it delays new restaurant openings to 2025 in a bid to save more money.

But Hostmore said it was already benefiting from inflation of food, drink, and utility costs beginning to ease.

The group said it had committed to not opening any new restaurants until at least 2025, which will result in savings of around £15million.

It comes after it shut a loss-making TGI Fridays site, which rebranded to “Fridays” before returning to the TGI Fridays name earlier this year, at Manchester Piccadilly.

Hostmore added that it was weighing up opportunities to shed other restaurants that are losing it money and taking steps to improve the performance of 20 struggling sites.

The business said it was expecting to have made £5.8million in cost savings across the financial year, higher than its £4million target.

In May, it revealed that a small number of head office and supply chain workers would be affected by the cost-saving initiatives.

Hostmore reported a drop in earnings before interest, tax, depreciation and amortisation (EBITDA) to £6.6million over the half-year to July, more than half the £17.8million reported the same time last year.

A British waste management firm has rejected a ‘borderline hostile’ £636m takeover bid from Australian predator Macquarie.

London-listed Renewi turned down the 775p per share offer yesterday morning, saying it ‘fundamentally undervalues’ the company.

John Lewis reportedly plans to sell a dozen of its Waitrose stores in a bid to raise £150million as it battles to turn the business around.

As of next week the John Lewis Partnership, which owns both the department store and supermarket chain, is expected to put 12 supermarkets up for a sale and leaseback scheme, which allows the group to keep its stores but cash in on the value of the property.

The Qatari sovereign wealth fund has taken a £500million stake in Severn Trent, with the water firm hoping to raise more than £1bn to fund a new investment plan.

Severn Trent, which is responsible for an area covering the Bristol Channel to the Humber, and from mid-Wales to the East Midlands, unveiled a ‘record’ £12.9billion investment programme as it seeks to improve its environmental credentials.

The best headline savings rates on the market are paid by regular saver deals, but people are turning their backs on the products and taking out bonds instead.

Regular saver accounts encourage customers to put a fixed amount aside every month, and interest is normally paid after one year.

Shares in defence group Babcock hit their highest level for more than three years after a bullish update to investors.

In a statement ahead of its AGM, the company said ‘trading has been encouraging’ since the start of the new financial year in April.

The boss of Guinness maker Diageo struck an upbeat note in the face of ‘ongoing cost pressure’ as well as economic and geopolitical uncertainty.

In one of her first public statements since her predecessor Sir Ivan Menezes died aged 63 in June, Debra Crew – who was appointed on July 1 – said that the company is ‘well-positioned’ to deliver sales growth of 5 per cent to 7 per cent between now and 2025.

Victoria Scholar, head of investment at Interactive Investor:

‘This acts as a vote of confidence in the business, sending shares sharply higher by over 7%, bringing its year-to-date gain to around 80%. However longer-term shares are down by over 90% over the past five years.

‘James Bond’s favourite automaker has suffered a chequered past, surviving several bankruptcies, but shares have revved back into the fast lane this year.

‘In July, Aston Martin’s second quarter results outpaced expectations driven by higher prices and strong demand. Earlier in the year, Chinese automaker Geely announced plans to invest approximately £234 million in the company.

‘Luxury goods have also proven to be resilient amid the cost-of-living crisis amid the growing tranche of ultra-high net worth consumers who are largely shielded from the macro headwinds.’

London-listed stocks are up in early trading after fresh ONS showed Britain’s economic performance since the start of the pandemic had been stronger than previously thought, boosting sentiment.

Consumer staples and discretionary stocks are up with personal goods, retailers and homebuilders shares climbing over 1 per cent each.

Shares in Aston Martin are up nearly 8 per cent after the luxury carmaker said Chairman Lawrence Stroll’s Yew Tree Consortium further raised its stake in the firm by 3.27 per cent to 26.23 per cent.

Severn Trent shares are up 3 per cent after the British water supplier said it would raise £1billion in new equity, including £500million from Qatar’s sovereign wealth fund.

London is closing in on New York as the world’s leading financial centre while European rivals such as Frankfurt and Paris do not even make the top ten.

The Big Apple was ranked the top global financial hub for a fifth year in a row – but its lead over the City has shrunk.

Aston Martin chairman Lawrence Stroll’s Yew Tree Consortium has upped its stake in the British luxury carmaker by 3.27 per cent to 26.23 per cent.

Yew Tree, which bought an additional 26 million ordinary shares of the company, was already its largest stakeholder, followed by Saudi Arabia’s Public Investment Fund (PIF) and Chinese automotive firm Geely.

The company has been more upbeat about its outlook more recently and plans to bolster cash and margins by rolling out next-generation sports cars and limited editions in the second half of 2023.

Water group Severn Trent is planning to raise £1billion in new equity, including £500million from Qatar’s sovereign wealth fund.

Britain’s privatised water sector has faced the fury of politicians, regulators and the general public over the last two years over sewage releases that have polluted rivers and beaches.

The water firm also said it planned £12.9billion in total expenditure across the next five-year regulatory period, and the investment programme is expected to create 7,000 jobs across central England.

The equity increase is expected to represent about 19 per cent of the firm’s issued share capital.

Qatar is currently the third biggest shareholder in Seven Trent with a 4.6 per cent stake, according to LSEG data.

A ‘dishonest’ financial adviser at the heart of the British Steel pension scandal was yesterday fined and banned from working in the industry.

Darren Reynolds was fined £2.2m by the Financial Conduct Authority after he ‘duped’ savers into leaving gold-plated retirement schemes and placing their money in ‘high-risk investments’.

The regulator said he ‘dishonestly’ advised more than 670 people – including 150 in the British Steel Pension Scheme – with 511 losing £42.3m while he picked up more than £1m in fees.

Thomas Pugh, economist at RSM UK:

‘The focus of the final data for Q2 is supposed to be what happened last quarter, but it was the revisions for previous quarters and years which stole the show this morning.

‘The combination of the previously announced revisions for 2021 and 2022 combined with a much-improved Q1 (growth went from 0.1% to 0.3%) means that rather than being 0.2% below its pre-pandemic level in Q2 the economy was actually 1.8% bigger! Given the size of the UK economy was about £2.5 trillion in 2022, that adds around £50bn to UK GDP.

‘Admittedly, this would still mean that the UK is still near the back of the G7 pack, but it would be ahead of Germany and the gap between the UK and the rest of the G7 looks significantly smaller.

‘Faster GDP growth during the pandemic doesn’t change anything in the real economy now, but if the UK economy has been running hotter than we thought, it would help to explain some of the persistence in inflation and the tightness of the labour market.

‘However, households were still being cautious in Q2. Real households’ disposable income (RHDI) grew by 1.2% in Q2, but the household saving ratio grew by 9.1% up from 7.9%, meaning that households decided to save most of their extra income. This is a trend that is likely to continue over the next year.

‘Overall, the economy is still likely to eke out some meagre growth in Q3 as fewer strikes and a return to more normal weather boost output in the remaining two months of the quarter.

‘While our baseline view is that the economy will just avoid a recession, we are expecting meagre growth of about 0.1% a quarter over the next year. But there are signs that the economy has weakened recently and it wouldn’t take much to tip us over into a recession.’

Gross domestic product grew by 0.2 per cent in the second quarter of 2023, in line with expectations, the Office for National Statistics has said, confirming that the British economy is now bigger than before the pandemic.