Business live: Record fall in British exports to US

Times

a day ago

UK exports to the US recorded their largest monthly fall on record in April after President Trump announced his 'liberation day' tariffs, Mehreen Khan writes.
British goods exports to America fell by £2 billion in April, the steepest decline since records began in 1997, official statistics showed.
Trump announced a 10 per cent minimum tariff on the UK on April 2, along with a raft of levies on more than 120 other economies. The tariffs were then paused for 90 days a week later. The White House also said it would impose a 25 per cent tax on UK cars, steel and aluminium imports.
Exports to the US had expanded in each of the first three months of the year as firms tried to front-run the impending tariffs.
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The FTSE 100 is trading up just 2.7 points, or 0.03 per cent, at 8,867.08, with investors digesting President Trump's new tariff announcement and rising tensions in the Middle East over Iran's nuclear programme.
Halma, the technology and engineering group, is the biggest riser after reporting a 13 per cent rise in annual pre-tax profits on strong revenue growth. A 0.5 per cent rise in the gold price to $3,372.55 an ounce on geopolitical concerns lifted precious metal miners Endeavour and Fresnillo. BP and Shell are higher on concerns about US talks on Sunday with oil producer Iran.
Airlines, leisure and base metal miners were all lower.
Pepco has sold Poundland to the investment firm Gordon Brothers for a 'nominal' sum.
The discount chain was put up for sale in March by Pepco, the Warsaw-listed company behind the Poundland and Dealz brands, after sales slowed in what Pepco said was an 'increasingly challenging UK retail landscape'.
Gordon Brothers, the former owner of Laura Ashley, had been frontrunners to take control of the retailer.
Poundland currently employs around 16,000 staff across over 800 stores across the UK, Isle of Man and Ireland. All stores, colleagues, assets and liabilities of the Poundland business will to Gordon Brothers.
Pepco expects to obtain a minority investment interest in the chain, 'subject to the proposed restructuring of Poundland being sanctioned by the High Court in England'.
The economy still grew by 0.7 per cent on a rolling three-month measure despite the contraction in April, Mehreen Khan, Economics Editor, writes. This was in line with projections.
The ONS said the dominant services sector, which accounted for around three quarters of total GDP, fell by 0.4 per cent on the month, driving the underperformance.
Output in production, which included manufacturing, contracted by 0.6 per cent, while the smaller construction industry was the best-performing part of the economy, recording growth of 0.9 per cent.
Companies cited the economic uncertainty generated by US tariffs, announced on April 2, and the impact of the rise in payroll taxes at the beginning of the month, the ONS said.
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The chancellor has started a 'war on the private sector', Kemi Badenoch has said.
The Conservative leader said that businesses are having to downsize because of Rachel Reeves's policies, such as the national insurance increase.
Badenoch refused to commit to reversing the hike, saying that she 'would not have made the mistake in the first place'.
'Uncertainty about tariffs' had contributed to a fall in GDP in April, the month President Trump announced sweeping levies on imports to the United States, Rachel Reeves has said.
'We know that April was a challenging month', the chancellor said.
'There was a huge uncertainty about tariffs, and one of the things if you dig into those GDP numbers today is exports weakening and also production weakening because of that uncertainty in the world around tariffs.'
She added that the figures for April were 'disappointing but also perhaps not entirely unexpected, given the uncertainty that is out there in the world at the moment'.
A senior adviser at Oxford Economics has said the economy is likely to stay 'sluggish' for the rest of the year.
Michael Saunders, a former member of the Bank of England's monetary policy committee, told the Radio 4 Today programme: 'The level of interest rates is still quite high, monetary policy is still quite tight, global trade uncertainty is high and that's hitting exports from many countries around the world and the government is tightening fiscal policy.
'Public spending is going up but taxes are going up even more, so the net effect is to reduce demand, and you can see that reflected — that vacancies are falling, job growth is slowing and unemployment is rising.
'The chancellor said the UK was the fastest growing economy in the quarter among the G7 but I don't think that's going to be the case for the year as a whole.'
Yael Selfin, chief economist at KPMG: 'The UK economy lost steam in April amidst global trade disruptions. While the recently announced trade deals offer businesses a degree of policy certainty, tariffs on UK exports to the US are higher than their pre-April levels. This is expected to act as a headwind for UK trade in the medium term.'
Paul Dales, chief UK economist at Capital Economics: 'This won't prompt the Bank of England to cut interest rates next Thursday. But it is one more piece of news pointing to another cut in August.'
Rachel Reeves did not rule out further tax rises, despite previously saying there would be no more increases to income tax, VAT or national insurance during this parliament.
'We've drawn a line under the mismanagement from the previous governments,' the chancellor said.
She said her actions in the budget were 'necessary' and all the additional spending set out in the review had been costed.
'This government is not increasing taxes on working people,' Reeves said.
The chancellor conceded that 'not everybody in all parts of the country is feeling' the effects of growth, but said her budget measures were beginning to have an impact.
Referring to the increase in the minimum wage, Rachel Reeves told Sky News: 'Putting more money in the pockets of the poorest is beginning to be felt.'
Rachel Reeves admitted the GDP figures were 'clearly disappointing' but insisted her spending review would help deliver growth.
'Our number one mission is delivering growth to put more money in people's pockets through our Plan for Change and while these numbers are clearly disappointing, I'm determined to deliver on that mission,' she said.
'In yesterday's spending review we set out how we'll deliver jobs and growth, whether that's improving city region transport, a record investment in affordable homes or funding Sizewell C nuclear power station. We're investing in Britain's renewal to make working people better off.'
The Financial Reporting Council (FRC) has fined the firm £1.25 million following an investigation of its audit of Carr's Group 2021 accounts. KPMG partner Nick Plumb has been fined £70,000, discounted for admissions, early disposal and exceptional cooperation to £38,675.
The FRC said that KPMG and Plumb breached ethical standards when it relied on the work of 'Firm X', which audited one of Carr's subsidiaries, despite 'Firm X' providing tax and accountancy services to the subsidiary and having held the audit role for more than five years.
Sales at Tesco beat quarterly sales expectations in the UK despite operating in what it called an 'intensely competitive' market, Isabella Fish, Retail Editor, writes.
Like-for-like sales at the UK's largest supermarket rose 5.1 per cent to £12.3 billion in the first quarter, driven by its Aldi price match scheme and Clubcard deals. Analysts had forecast sales growth of around 4.6 per cent in its UK division. The grocer maintained its profit guidance.
Ken Murphy, chief executive, said the company continued to see market share gains in UK, adding that the market 'remains intensely competitive'. In April, he warned of a mounting price war among UK supermarkets, forcing the country's largest grocer to double down on cost cuts and lower its profit forecast for the year.
UK economic growth slowed sharply at the start of the second quarter.
Month-on-month gross domestic product (GDP) shrank 0.3 per cent in April, data from the Office for National Statistics (ONS) showed. City economists had expected the economy to contract by 0.1 per cent.
Liz McKeown, ONS director of economic statistics, said: 'The economy contracted in April, with services and manufacturing both falling. However, over the last three months as a whole, GDP still grew, with signs that some activity may have been brought forward from April to earlier in the year.'
The loss of momentum was expected after the economy was boosted in the first three months of the year by front-running of exports to the US ahead of President Trump's 'Liberation day' trade tariffs on April 2.
The FTSE 100 is set to open down more than 35 points after a fresh tariff salvo from President Trump and rising tensions in the Middle East offset hopes of a US-China trade truce.
Ahead of his July 8 deadline on tariffs, Trump said he would send out letters outlining the terms of trade to dozens of countries, which they could embrace or reject.
Trump also said the US was moving staff out of the Middle East, which could be a 'dangerous place', ahead of talks with Iran over its nuclear activity.
Tokyo's Nikkei 225 was down 0.6 per cent, Hong Kong's Hang Seng fell 0.7 per cent and China's SSE Composite was flat. The dollar weakened, and the gold price rose.
• Wall Street cautiously welcomed President Trump's declaration of a 'done' deal between the United States and China over raw materials exports after two days of negotiations in London.• Gold overtook the euro to become the second-largest global reserve asset after the dollar last year, according to the European Central Bank, amid rising geopolitical risks and concerns around sanctions.• US private equity group KKR has moved ahead again in the race to own hundreds of doctors' surgeries after increasing its offer for Assura, the NHS landlord, to £1.7 billion.• WSP Global, one of the world's largest consultancy firms, has agreed to buy Ricardo, a smaller London-listed engineering consultancy, for £281 million, delivering a windfall for an activist shareholder that had been seeking to oust the chairman.• Hybrid working has become a 'new normal' for white-collar professionals, but the ability to split time between work and the office is not being enjoyed equally. Younger and older workers and those who live in deprived areas are less likely to do so, the Office for National Statistics has found.• WPP, the UK's largest advertising group, has suffered a new blow after losing a $1.7 billion global media planning and buying contract for Mars to Publicis, its French rival.