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Eurozone consumer confidence rises to one-year high
Consumer confidence across Europe has improved for the fourth month running, as hopes build that a painful recession can be avoided.
The European Commission’s gauge of consumer morale across the European Union rose to -20.6 this month, up by 1.5 percentage points. In the euroarea, it increased to -19.0, from -20.7 in January.
The increase comes as energy prices fell back across Europe, thanks to a mild winter and successful efforts to stockpile gas last summer and autumn.
These are the highest readings in a year, but they are still at levels normally associated with shrinking consumption, points out ING economist Bert Colijn.
Britain’s financial watchdog is seeking views on what regulatory change might help the UK’s asset management industry innovate in the post-Brexit world.
The Financial Conduct Authority has launched a consultation on how it could help the UK’s asset management industry innovate, better support investors and boost competition.
Camille Blackburn, Director of Wholesale Buy-Side at the FCA, explains:
‘The UK has an opportunity to update and improve the UK regime for asset management.
‘We want to hear from a wide range of voices about how we can enhance the existing standards and what we should prioritise to bring the most benefits to consumers, firms and the wider global economy.
‘Given the UK’s leading role as a centre for asset management, we want to make sure our rules are fit for the future. We want a UK wholesale market which supports the economy and is open to innovation, while remaining consistent with high standards of consumer protection and market integrity.’
There are more details here.
With Wall Street closed for Presidents’ Day, European markets have been rather subdued.
In London, the FTSE 100 index is up 13 points or 0.17% at 8018, with mining companies among the top risers.
Michael Hewson of CMC Markets says:
We’ve seen resilience in the basic resource sector on the back of firmer metals prices with copper and aluminium prices getting a tailwind from optimism over a reopening of the Chinese economy and a pickup in economic activity.
Anglo American and Rio Tinto are amongst the better performers on the back of firmer iron ore, aluminium and copper prices.
Oil prices are also slightly firmer on the back of a weaker US dollar.
Germany’s DAX is slightly higher, up 0.07%, while France’s CAC has now slipped into the red, down 0.1%.
Tesco supermarket workers to get 7% pay rise
Sarah Butler
Tesco is to increase hourly pay for shop floor staff by 7% to a minimum of £11.02 an hour, in its third pay rise in a year.
The increase, which comes in from April, puts the UK’s biggest retailer slightly ahead of the best-paying grocers – Aldi and Lidl.
Tesco said staff would also continue to receive free food and a discount of up to £1,500 a year off their shopping.
WIN 🚨👏 | @UsdawUnion workers at Tesco have secured a 7% pay increase taking the basic pay to over £11 per hour.
— Trades Union Congress (@The_TUC) February 20, 2023
Workers in London boroughs will receive a higher pay rise – 8.4% or 93p per hour, taking their hourly rate to £11.95.
Tesco’s move comes a week after Asda announced a 10% pay increase for its hourly-paid store workers from July.
Sarah Butler
UK households ordered 12% less takeaway food in January than a year before, while the sector also faced more competition from restaurants and cafes after the lifting of pandemic restrictions, my colleague Sarah Butler reports.
Despite the fall in the number of items ordered as customers tried to rein in spending amid the cost of living crisis, spending fell by just 2% as inflation pushed up the cost of each dish, according to the Hospitality at Home spending tracker by analysts at CGA and NielsenQ.
Karl Chessell, CGA’s director for hospitality operators and food in Europe, said the decline in sales would put pressure on takeaway restaurant’s profits in an already tough market where costs from labour, food prices and energy are on the rise.
Property experts have been digesting Rightmove’s report this morning, showing that UK house asking prices flatlined in February (up £14 during the month).
That left prices 3.9% higher than a year before, as explained in the introduction
Pete Mugleston, MD and mortgage expert at www.onlinemortgageadvisor.co.uk, says Rightmove’s data indicates that the housing market is recovering, albeit very slowly.
Mugleston explains:
While to many onlookers it might feel like the market has stagnated, these figures, at the very least, show that things are moving in the right direction. Following months of volatility and decreased demand, it’s unsurprising that sellers are listing their properties at a more cautious price than they were a year ago.
“Alongside the fact that demand for homes is increasing, I think that we are beginning to see a positive shift in the property market. That being said, we have a long road ahead of us; I expect that it will take one to two years for prices to fully recover from this period of inflation and uncertainty. In the meantime, my advice to sellers is to seek a fair and realistic valuation, in order to have the best chance possible of selling your property. If you’re a prospective buyer and need a mortgage, it’s vital that you work with an experienced mortgage broker to ensure that you’re getting the best mortgage deal possible for your financial situation and the current economic climate.”
AVG ASKING PRICES across the UK remained unchanged in Feb potentially indicating seller “restraint” or realism that the wind has changed. Meanwhile buyers lick their index finger & hold it aloft to test the direction & speed as demand inc 11% in the last 2 wks @rightmove pic.twitter.com/Rjogb56zey
— Emma Fildes (@emmafildes) February 20, 2023
Montfort Real Estate warns that the monthly data could be “worse than it seems”:
Rightmove’s index only records asking prices and isn’t seasonally adjusted, meaning that little change from January to February may be worse than it seems – particularly as prices usually rise at the start of a calendar year as more homes enter the market and sellers try to bid up in expectation of higher demand.
A monthly change this small is in fact the lowest figure recorded for February since Rightmove’s index began.
Jasper Jolly
BrewDog has said it plans to brew in China as part of a deal with Budweiser China to expand sales in the world’s biggest market for beer.
Budweiser China would start brewing BrewDog’s Punk IPA, Hazy Jane and Elvis Juice beers by the end of March at its Putian craft brewery near the south-east coast, the companies announced on Monday.
BrewDog is focusing on international expansion after a difficult few years in the UK. The company, headquartered in Ellon, Aberdeenshire, lost its status as a ethically certified B Corp in December after complaints over its treatment of workers. BrewDog apologised to employees in 2021 after a group wrote an open letter accusing the company of creating a “culture of fear” within the business.
More here:
Consumer credit report firm Experian says it is “very pleased” with the outcome of an appeal it brought against the Information Commissioner’s Office (ICO), over its handling of personal information.
The ruling, by the First-Tier Tribunal (Information Rights), comes after the ICO ruled in autumn 2020 that Experian has been sharing the personal information of millions of people without consent and must stop doing to.
According to the ICO, the Tribunal found, in support of the ICO, that Experian had not processed the personal data of over 5 million individuals transparently, fairly or lawfully because it failed to notify them that it was processing their data for direct marketing purposes.
However, it rejected the ICO’s view that Experian’s privacy notice was not transparent, that using credit reference data for direct marketing purposes was unfair, or that Experian did not properly assess its lawful basis.
Privacy groups had warned that credit reference agencies such as Experian were conducting a significant amount of “invisible” processing of data, which people did not know was happening.
Jose Luiz Rossi, managing director for Experian UK and Ireland, said today’s decision by the First-Tier Tribunal “substantially overturns” the ICO’s enforcement notice issued against Experian in 2020, adding:
“It represents a welcome development for the consumers, small businesses and charities across the UK that rely on the services provided by Experian.
“The Tribunal found, in contrast to the ICO’s enforcement notice, that the vast majority of our practices meet GDPR (General Data Protection Regulation), requirements, including the transparency that we provide consumers through our credit reference agency information notice and our consumer information portal. We are very pleased with this outcome.
Experian’s appeal against the ICO has finally been published by the IRT.
Not a good result for the ICO.
The IRT suggests that if people had received an Art 14 notice from Experian, they would likely have either:
• Put it “in the bin”.
• Experienced confusion or distress. pic.twitter.com/pQEUr0NXBq— Robert Bateman (@RobertJBateman) February 20, 2023
Jasper Jolly
Darktrace has hired EY to conduct an independent review of its finances as it tries to defend itself against a hedge fund that alleges questionable marketing, sales and accounting practices at the cybersecurity company.
The FTSE 250 company said the accountancy firm EY would provide “additional independent third-party review of its key financial processes and controls”, in a statement to the stock market on Monday.
A New York-based hedge fund, Quintessential Capital Management (QCM), has bet against Darktrace, taking a short position on shares. It accused Darktrace last month of a series of questionable and aggressive marketing, sales and accounting practices in a 69-page report.
QCM alleged that:
“After a careful analysis, we are deeply sceptical about the validity of Darktrace’s financial statements and fear that sales, margins and growth rates may be overstated and close to a sharp correction.”
Darktrace strenuously denied the allegations. Poppy Gustafsson, its chief executive and co-founder, published a lengthy response saying that the company was run with “the greatest integrity” and had “world class” technology.
Gordon Hurst, the chair of the Darktrace board, said:
“The board believes fully in the robustness of Darktrace’s financial processes and controls. As a sign of that confidence, we have commissioned this independent third-party review by EY. We look forward to the outcome of this review.”
Here’s the full story:
In the City, new listing rules designed by the UK’s financial regulator to attract overseas giants to London have flopped, Financial News (FN) are reporting.
The Financial Conduct Authority introduced a new premium listing category for sovereign-controlled companies in July 2018 in a bid to lure state-backed enterprises from across the globe to float in London.
The rules lessened the burden on reporting related-party transactions, allowed smaller free floats and exempted governments from having to enter into a controlling shareholder agreement with issuers.
But a Freedom of Information Act request made by FN shows no entities sought admission to the category, nor are there any outstanding applications.
An FCA spokesperson said:
“Through our listing regime review, we are currently considering how the listing regime can be adapted to ensure the value of listing is easier to understand, to promote broader access to listing for a wider range of companies and to empower investor decision-making.”
The Treasury was approached for comment. The London Stock Exchange declined to comment. Here’s the full story.
UK households, and taxpayers, should benefit from the easing in energy prices too.
Investec has lowered its forecasts for the UK’s household energy price cap, following the easing in wholesale gas prices.
It now predicts that Ofgem’s cap on average energy costs will drop to £3,322 per year for an average household for April-June, down from £4,279 at present.
Currently, though, the government is capping bills at a level where an average family would pay £2,500 per year. That limit will rise to £3,000 in April, with the public purse continuing to cover the difference with the Ofgem cap.
In July, though, Investec predicts Ofgem’s cap will drop again to £2,165, giving households a reduction of over £800 per year. It could then increase a little to £2,190 for the October to December quarter.
Looking ahead, the Bundesbank warns that is no sign, yet, of a ‘major improvement’ to Germany’s economic outlook.
It predicts that economic output is likely to be lower again in the first quarter of 2023 than in the previous quarter, which would put Germany into a technical recession.
But the easing of the gas crisis will help the economy, the Bundesbank predicts, saying:
On the one hand, a gas shortage is no longer to be expected. In addition, the electricity and gas price brakes are mitigating the increase in energy costs for households and enterprises.
Tensions in the energy markets and uncertainty have eased considerably. This is likely to benefit primarily business investment, but also industrial production.
But on the other hand, industrial production started out from a depressed level in 2023 following the marked decline in December 2022.
So there could be a gradual pick-up over the remainder of the year, the central bank suggests:
All in all, from today’s perspective, Germany’s economic output is likely to decline slightly on average in 2023 but perform a little better than expected in the December projection.
Germany’s inflation rate is likely to fall further in the coming months, the Bundesbank predicts.
It warns, though, that underlying inflationary pressures may only ebb slowly:
For instance, the sharp rise in energy prices in the previous year will no longer impact the calculation of the rate in March. However, the underlying pressure on prices is likely to decline only tentatively from an exceptionally high level over the next few months.
German economic outlook is “somewhat brighter’, says Bundesbank
Germany’s economic prospects are improving, the country’s central bank believes, as energy prices ease and the global economy picks up.
The Bundesbank, in its latest monthly report, says that the economic outlook for Germany was “somewhat brighter”, despite persistent high inflationary pressures.
The Bundesbank predicts that the end of the zero-COVID policy in China is likely to pave the way for a global economic recovery, saying:
The global economy continued to see only moderate growth in the final quarter of 2022 owing to various headwinds. The main factors behind this slowdown were high inflation rates, the continued tightening of monetary policy in many industrial countries and the European energy crisis due to Russia’s war on Ukraine…..
At the turn of the year, sentiment amongst entrepreneurs and consumers worldwide brightened slightly, with recessionary fears receding somewhat. This is likely to have been helped by the distinct easing of the European energy crisis.
Germany’s economy shrank by 0.2% in the final quarter of last year, a smaller fall than expected.
The Bundesbank says today this is “milder than anticipated”, thanks to easing supply chain problems and the fall in European energy prices, which hit 18-month lows last week.
14. European gas prices have fallen sharply:
” European gas spot prices fell by around 50% [in Q4 2022] due to the high filling level of storage facilities driven by mild weather and the prospect of increasing LNG importing capacity in Europe.” – $OMV pic.twitter.com/0pGWzSMvv4
— The Transcript (@TheTranscript_) February 19, 2023
The Bundesbank is encouraged that employment rose in the fourth quarter of 2022, despite the fall in GDP.
It says:
Despite the recessionary outlook and sharp increase in the minimum wage, robust labour market developments were already anticipated. The short-term outlook is also more favourable at present than it was just a few months ago.
Shipping and logistics group A.P. Moller-Maersk is close to completing its exit from Russia , after agreeing to sell its two logistics sites in the country to IG Finance Development Limited.
Maersk has agreed to sell an inland depot in Novorossiysk, which handles commercial cargo such as grains from railway wagons to sea containers, and a chilled and frozen warehouse in St. Petersburg.
This follows Maersk’s decision in March 2022 to discontinue activities in Russia, after the Ukraine invasion a year ago this week.
Karsten Kildahl, Maersk’s chief commercial officer, says:
We are pleased to have found a new owner of our two logistics sites in Russia and thereby execute on our decision to divest all our assets in the country.
Throughout the divestment process, we have as a company felt a strong responsibility towards the remaining 50 employees at the two sites, and we are happy that they will be offered employment as part of the new setup.
Maersk still needs to sell four tug boats under its Svitzer brand, a process that is ongoing, a spokesperson told Reuters.
Europe’s construction sector contracted at the end of last year, new figures from stats body Eurostat shows.
Production across the eurozone’s construction sector declined by 2.5% month-on-month in December, and was down 2% in the wider European Union.
Year-on-year, construction production was down 1.3% in the euro area and by 0.4% in the EU.
Activity in the eurozone’s civil engineering sector decreased by 4.0% during December, while building construction dropped by 2.3%.