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New Statesman
27-05-2025
- Business
- New Statesman
Inside Keir Starmer's messy reset
Photo by Tolga Akmen/EPA/Bloomberg The Labour Party, Harold Wilson once observed, is 'like a stagecoach. If you rattle along at great speed everybody is too exhilarated or seasick to cause any trouble. But if you stop, everybody gets out and argues about where to go next.' In some areas, at least, Labour is rattling along. Government officials point to three trade deals in two weeks as evidence of a more 'agile' Britain on the world stage. But Keir Starmer's direction has remained unclear – so everybody is arguing about where to go next. A 'reset' was what aggrieved MPs demanded after Labour's election humbling: a U-turn on the winter fuel payment cuts, the loosening of Rachel Reeves' fiscal rules and higher taxes on the wealthy. When Starmer responded by vowing to go 'further and faster', some were moved to invoke the popular definition of insanity. But the Prime Minister is no longer doing the same thing. The means-testing of winter fuel payments was a policy born in the Treasury – one that cabinet ministers such as Ed Miliband and Liz Kendall grasped immediately would prove toxic. Yet it was Starmer rather than Reeves – away at a G7 meeting in Canada – who announced the U-turn. Though No 10 and the Treasury emphasise that the decision was a joint one, here was a moment rich in symbolism. For MPs it was a reminder of Starmer's other job title: First Lord of the Treasury. The Prime Minister, as Andrew Marr first reported, has also let it be known that abolishing the two-child benefit cap is his 'personal priority'. That stance has prompted reports of tensions between Starmer and his chief of staff Morgan McSweeney who has long been mindful of public support for the policy (and the £2.5bn cost of abolishing it). Sources downplay talk of a rift, noting that the policy is under formal review by the child poverty taskforce (which will report this autumn). But the impression is again of a Prime Minister asserting his authority. 'I don't know where this 'just fucking do it' energy has come from but I like it,' said one Labour MP, recalling Tony Blair's sudden pledge in 2000 to raise health spending to the European average (which so enraged Gordon Brown). Call it a messy reset. At times after entering office, Starmer appeared indifferent or outright hostile to Labour MPs' opinions. Seven lost the whip last July after voting for an SNP amendment backing the abolition of the two-child cap. Critics of the winter fuel cuts – an 'almost suicidal' policy, one new MP told me back in August – were greeted with lectures on fiscal responsibility. Subscribe to The New Statesman today from only £8.99 per month Subscribe No 10's imperial phase continued at the start of this year. The foreign aid budget was reduced by 40 per cent to fund higher defence spending (prompting the resignation of Anneliese Dodds, one of Starmer's original allies, as international development minister). The largest welfare cuts since George Osborne occupied the Treasury in 2015 were announced by Reeves. Tory MPs watched with envy at the decisiveness of a government with a majority larger than any since Blair. But a Downing Street chastened by defeats is now sounding a more emollient tone. 'It's a tough time to be a Labour MP, they're having to decide all the time to take money off somebody and to give it to someone else,' reflects one source. What has changed? A leadership that defined its priority as winning over the country could not remain obstinate as voters revolted. Nor, as welfare rebels threaten to eradicate the government's 165-seat majority, can it remain dismissive of the party (with concessions to prevent defeat anticipated). Labour's 'soft left' – the tribe from which Starmer himself originally hailed – is rediscovering its voice (a development some in No 10 welcome). It was Louise Haigh, the former transport secretary, who led public calls for an 'economic reset' after the local elections. Angela Rayner and Gordon Brown have, in different ways, shown what that could look like. On 3 June, Renewal, the social democratic journal now published by Compass (which helped anoint Ed Miliband in 2010), will hold an event to celebrate its relaunch. Its attendees will be much like the typical Labour member: someone who voted for Starmer in 2020 and is increasingly attracted by Rayner. The Prime Minister, who welcomed conflict with the radical left as a chance to define himself, has baulked at all-out war with the soft left. So another reset is underway. But it remains fraught. When he announced the winter fuel U-turn, Starmer cited an improving economy (GDP growth was 0.7 per cent in the first quarter, the highest of any G7 country). But even if this trend continues – and economists fear it won't – it will do nothing to help cabinet ministers, such as Rayner, locked in fierce disputes with Reeves over the 11 June Spending Review. 'The envelope has been set,' a Treasury source says, confirming that there will be no leeway (unprotected departments were told to model real-terms cuts of between 5.8 per cent and 11.3 per cent). Ministers believe that Reeves will once again need to raise taxes and revise her fiscal rules at the Budget this autumn but the word that the Chancellor so loathes – austerity – will be brandished against her in the coming weeks. Over all this looms a familiar question: what defines Starmer? A winter fuel U-turn seemingly driven by polling rather than values has further muddied the waters. Friends of Starmer reject the charge that he lacks what Tony Blair called an 'irreducible core'. It is, they say, his belief in the dignity of work and the innate worth of every human being (one informed by his parents, and his late brother who had learning difficulties). In opposition he told aides that he wanted to be able to look voters in towns such as Burnley in the eyes in five years' time and tell them that Labour had made 'a genuine difference to your lives'. But in the heat of government, even allies fear this message has been lost. 'We haven't done enough to articulate what Keir's about,' concedes one senior No 10 source. After Brown U-turned on the abolition of the 10p tax rate – an event Labour MPs have recalled in recent weeks – he spoke of how 'it really hurt that suddenly people felt I wasn't on the side of people on middle and modest incomes – because on the side of hard-working families is the only place I've ever wanted to be. And from now on it's the only place I ever will be.' By then, the political damage was done but Brown still conveyed genuine remorse. As Starmer seeks to reset his own premiership, can he find the language he needs to do the same? [See also: Angela Rayner has fired a warning shot at Keir Starmer] Related
New Statesman
25-05-2025
- Politics
- New Statesman
Will the net migration figures save Labour at the polls?
Photo by Tolga Akmen/EPA Unsustainable net migration figure falls to… unsustainable net migration figure. That's how voting Briton will feel about the latest numbers, published on 22 May by the Office for National Statistics. Net migration has halved from 860,000 in the year ending December 2023 to 431,000 in the year ending December 2024, the ONS estimates (though we should allow for a rather large error margin here). The general view, even among the left-leaning, is that Britain has been operating with an inflow of immigrants over and above what is palatable for far too long now. Not one year this century has the median Brit bravely stated: I am happy with these numbers. That's just the mood music. So, will these new numbers help the government as it flounders in the polls? The direction of travel is positive, both when it comes to making good on their manifesto promises and holding off Nigel Farage. But there is a catch. Publishing the numbers draws attention to the net, and serves to remind voters that it is still too high, no matter the positive directional trend. This in turn gives Reform's rhetoric a mental airing. One week of press coverage at the start of June in 2016 about then-high migration numbers was enough to shift the polls from Remain to Leave. Voters care, and are not particularly interested in the nuance. The truth about immigration is that Labour has already lost the argument on net numbers. So what can the party do? It needs to reorient the argument on their terms, rather than aping Nigel Farage in a kind of Reform-lite manner. If they turn to the country and say 'this is happening because we have been too reliant on overseas labour, and we have neglected homegrown workers, so we plan to re-equip and re-empower the domestic workforce' Labour can wrest the conversation away from Reform. Instead, the government has so far been dancing to the Faragista tune on immigration. This only elevates him further. [See more: America's broken commonwealth] Subscribe to The New Statesman today from only £8.99 per month Subscribe Related
Business Mayor
07-05-2025
- Business
- Business Mayor
UK and eurozone construction declines slow; European markets fall ahead of Fed rate decision
Show key events only Please turn on JavaScript to use this feature Barclays' annual meeting today attracted fresh protests from activists opposed to its alleged provision of financial services to Israeli defence firms, forcing the lender to increase security checks on attendees in a bid to reduce disruption seen in previous years. Dozens of protesters gathered outside the event in Westminster, central London, waving Palestine flags and holding banners that accused Barclays of 'arming Israel' and 'banking on genocide'. Reuters saw at least one protester physically ejected from the building shortly before the event was due to begin. The activist was heard to shout 'Free Palestine' as he was escorted out by security. Security staff remove a pro-Palestinian demonstrator from the Barclays annual general meeting at QEII Center in London. The protest was organized by the Palestine Solidarity Campaign, demanding Barclays Bank to stop providing financial services to defence companies supplying the Israeli government. Photograph: Tolga Akmen/EPA As well as bombing Gaza incessantly, the Israeli government has blocked aid and the territory is on the brink of catastrophe after two months of a total blockade by Israel, aid workers say. Share Britain's financial watchdog plans to simplify mortgage rules, and has launched a consultation. The Financial Conduct Authority said: We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage. Doing so will help consumers better navigate their financial lives and support growth, both priorities in our new strategy. This includes making it quicker and easier for consumers to discuss options with a firm, while still having access to advice if they want or need it easier for consumers to reduce their mortgage term, lowering the total cost of borrowing and reducing the risk of repaying into later life easier for consumers to access cheaper products when remortgaging The FCA has introduced Consumer Duty – a set of rules to improve consumer protection which it says sets clearer, up-to-date standards in financial services. The watchdog also said it had reminded firms of flexibility in its rules to help people access a mortgage. In June, it will follow this work with a further public discussion on the future of the mortgage market, including risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life and consumer information needs. Emad Aladhal, director of retail banking said: Our strategy aims to deepen trust and rebalance risk to support growth and improve lives. That's why, with the Consumer Duty now in place to maintain high standards, we want to make it easier, faster and cheaper for borrowers to access and make changes to their mortgage. Share Novo Nordisk's finance chief is sceptical that Donald Trump's executive order to reduce the time it takes to approve pharmaceutical factories in the country will significantly change timelines for the pharma industry. Trump signed an executive order on Monday that aims to reduce the time it takes to approve pharma plants in the United States, as part of new regulations to encourage international drugmakers to shift their operations to the country. Wegovy and Ozempic maker Novo Nordisk's chief financial officer Karsten Munk Knudsen told Reuters that it takes years for a pharmaceutical company to build a factory in compliance with the quality protocols set and enforced by the US Food and Drug Administration (FDA). We would welcome if there are more pragmatic ways through it, but I'm sceptical that it will markedly change timelines in our industry. The trade group PhRMA estimates it takes five to 10 years to build a new pharmaceutical plant in the US. Share Updated at 12.56 CEST Amazon said it has made a 'fundamental leap forward in robotics' after developing a robot with a sense of touch that will be capable of grabbing about three-quarters of the items in its vast warehouses. Vulcan – which launches at the US firm's 'Delivering the Future' event in Dortmund, Germany, on Wednesday and is to be deployed around the world in the next few years – is designed to help humans sort items for storage and then prepare them for delivery as the latest in a suite of robots which have an ever-growing role in the online retailer's extensive operation. Aaron Parness, Amazon's director of robotics, described Vulcan as a fundamental leap forward in robotics. It's not just seeing the world, it's feeling it, enabling capabilities that were impossible for Amazon robots until now. Amazon's Project Vulcan, the new robot which has 'force feedback sensors' on the end of an arm and grabbing tool. Photograph: Amazon/PA The robots will be able to identify objects by touch using AI to work out what they can and can't handle and figuring out how best to pick them up. They will work alongside humans who now stash and retrieve items from shelving units which are manoeuvred to them at picking stations by wheeled robots – of which Amazon now has more than 750,000 in operation. Vulcan will be able to stow items on the upper and lower levels of the shelving units – known as pods – so that humans no longer need to use ladders or bend so often during their work. Robots now operating in Amazon's warehouse are able to shift items around or pick items using suction cups and computer vision. Share Turning to corporate news again… One of the UK's largest planned offshore windfarms has been cancelled by its developer, the Danish wind power company Ørsted, as a result of higher costs and greater risk. The fourth phase of the huge Hornsea windfarm development, located off the Yorkshire coast, was expected to include 180 giant turbines, capable of generating the equivalent of enough green electricity to power 1m homes. However, Ørsted's chief executive, Rasmus Errboe, said in a statement to investors it was discontinuing the development: 'The combination of increased supply chain costs, higher interest rates, and increased execution risk have deteriorated the expected value creation of the project.' As a result, the company expects to incur breakaway costs of between 3.5bn and 4.5bn Danish kroner (£399m-£513m). A support vessel is seen next to a wind turbine at the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool. Photograph: Phil Noble/Reuters Share Updated at 11.51 CEST Joshua Mahony, analyst at Scope Markets, has looked at the moves in financial markets. European markets have kicked off the day in rather uncertain fashion… This comes as traders weigh up the potential for progress between the US and China, with talks due to get underway in Switzerland [at the weekend]. The response to that news has been surprisingly muted, with the Shanghai composite (up 0.8%) providing the one bright spot as domestic Chinese optimism builds. Nonetheless, coming off the back of a one-month period that has seen sharp gains for the DAX (+17%), IBEX (14%), Eurostoxx (13%), FTSE 100 (11%), and CAC (10%), it comes as no surprise that much of the upside of a resumption in US-China trade talks have been baked in. The DAX remains within touching distance of the all-time high of 23,479. In spite of those US-centric concerns, the German economy remains in a more positive position as the new chancellor Friedrich Merz looks to bring forth a new phase of increased spending and a potential resurgence for German business activity. This morning saw German factory orders jump 3.6% for the month of March, representing the strongest monthly increase since December. This growth in demand came particularly from other euro area nations (8%), while domestic (2%) and rest of the world (2.8%) demand also remained healthy. With Mertz now confirmed as chancellor after a second attempt, the economy looks to be in a more stable position as the government seeks to push forward with a plan to ramp up borrowing and spending in a bid to raise growth. Turning to tonight's Federal Reserve meeting, where interest rates are expected to stay unchanged, he said: Looking ahead, today's FOMC [federal open market committee] meeting undoubtedly provides the main event of note, with traders watching out for commentary from [Fed chair Jerome] Powell over the direction of travel for rates in the face of economic uncertainty. The sheer number of unknowns mean that we are highly unlikely to see the Fed cut rates this time around. However, the events of the past week have also seen markets lose confidence over the potential for a June cut, with a pause going from a 33% outside chance to the 70% base case. Nonetheless, traders still expect to see the bank cut rates another 3-4 times this year, and thus the outlook provided by Powell today will likely help inform markets over the direction of travel for rates. The recent better-than-expected jobs and ISM PMI data does ease the pressure on the Fed to act swiftly, and thus there is a hope that Donald Trump can mend the relationship with China before the economy rolls over. Share Updated at 11.46 CEST Retail sales in the eurozone dipped in March, according to official figures. The volume of sales dipped by 0.1% in both the eurozone and the European Union, according to Eurostat, the statistics office. It also released figures for trade with Ukraine that showed the EU had a €18.3bn trade surplus with the war-torn country last year. In 2024, the EU exported €42.8 billion in goods to Ukraine and imported €24.5 billion, resulting in a €18.3 billion trade surplus.🇺🇦↔️ 📈When compared with 2023, this was an increase in exports and imports of 9.4% and 7.0%, respectively. More info 👉 — EU_Eurostat (@EU_Eurostat) May 7, 2025 Share Matthew Pointon, senior commercial real estate economist at Capital Economics, said: The commercial balance was at its lowest since the height of the Covid lockdowns in May 2020. Early signs of a recovery in construction activity in late 2024 have therefore been snuffed out. Elevated interest rates will be partly responsible, but uncertainty caused by the US tariff announcements may also be weighing on activity. Admittedly, UK property is relatively well insulated from the impact, and some sectors may even benefit. Construction costs may also ease if materials that had been destined for the US are rerouted to the UK. But the rise in overall economic uncertainty may cause some developers to delay plans until the outlook becomes clearer. Indeed, the new orders balance saw a small fall to 44.0, from 44.2 in March. Looking ahead, a gradual fall in interest rates should help construction activity later this year. But until the economic outlook becomes more certain, developers are likely to remain cautious. Share Britain's construction industry remains in a downturn, but the pace of decline slowed last month as housebuilding improved somewhat. Construction activity fell for a fourth month, as rising business uncertainty led to delayed decision-making on new projects. There was a steep reduction in total new work and the pace of decline was the second-fastest since May 2020. The headline construction purchasing managers' index from S&P Global edged up to 46.6 in April from 46.4 in March, signalling the slowest decline in output in three months. Any reading below 50 points to contraction. The latest survey indicated further declines in total order books and cutbacks to staffing numbers. Residential work fell at the slowest pace so far this year, with the index at 47.1. Civil engineering remained the weakest area of construction activity in April (43.1), amid a lack of new work to replace completed projects. Commercial work (45.5) decreased for the fourth month running and the pace of decline accelerated to its fastest since May 2020. Construction companies noted that heightened business uncertainty and worries about the broader UK economic outlook had weighed on client demand. Tim Moore, economics director at S&P Global Market Intelligence, said: UK construction companies have endured a bumpy ride since the start of the year as domestic economic headwinds and hesitancy among clients led to a lack of new work to replace completed contracts. Output levels continued to slide in April, but the rate of decline eased to its slowest for three months. This was helped by slower reductions in residential building work and civil engineering activity. Despite a sharp and accelerated fall in input buying, strong cost pressures persisted in April. Overall input price inflation eased only slightly from March's 26-month peak. Survey respondents commented on rising prices paid for a range of raw materials, as well as efforts by suppliers to pass on greater payroll costs. An encouraging development in April was a slight improvement in business activity expectations for the year ahead. Output growth projections improved to the highest level so far this year, with a number of survey respondents citing the prospect of a turnaround in workloads across the residential building segment. Share Denmark's Novo Nordisk has cut its revenue and profit forecasts for this year following disappointing sales of its weight loss drug Wegovy, as US prescriptions tailed off amid fierce competition. Booming sales of Wegovy and the diabetes medication Ozempic – taken by celebrities such as Oprah Winfrey and Kim Kardashian – helped to turn the pharmaceutical firm into Europe's most valuable listed company, worth $615bn at its peak. However, prescriptions in the United States, its biggest market, have not grown since February, even though Novo Nordisk ramped up production of Wegovy to meet demand. Its market value has halved to about $310bn. This is likely to deepen investor concerns that Denmark's biggest company is losing market share to its US rival Eli Lilly, which makes the diabetes and obesity drugs Mounjaro and Zepbound. Hargreaves Lansdown analyst Susannah Streeter said: Obesity drug maker Novo Nordisk looked like a lean profit machine but its sales are turning flabbier as main rival Eli Lily gains more muscle in the space. Wegovy was the first of a new wave of anti-obesity drugs, known as GLP-1s after the gut hormone they mimic, to hit the market in 2023. Sales of the injectable drug totalled 17.36bn Danish kroner between January and March, down by 13% from the previous quarter. This was below the 18.7bn crowns forecast by analysts. Overall revenues rose by 18% and operating profits advanced by 20% at constant exchange rates in the first quarter, but Novo Nordisk said it was being hit by compounding — medications made by pharmacies using the active ingredients of patented drugs. As a result, Novo Nordisk cut its annual forecasts, ending a four-year run of upgrades. The Danish company now expects 13%-21% sales growth this year, down from the 16%-24% range given at the start of the year. Operating profits are expected to rise by 16%-24%, compared to the previous estimate of 19%-27% growth. Analysts are forecasting that sales and operating profit this year will grow by 17.8% and 21.5%. Chief executive Lars Fruergaard Jørgensen said: In the first quarter of 2025, we delivered 18% sales growth and continued to expand the reach of our innovative GLP-1 treatments. However, we have reduced our full-year outlook due to lower than-planned branded GLP-1 penetration, which is impacted by the rapid expansion of compounding in the US. Novo reported first-quarter profits before interest and taxation of 38.79bn crowns, up 22% from a year earlier. An injection pen of Zepbound, Eli Lilly's weight loss drug, and boxes of Wegovy, made by Novo Nordisk. Photograph: Reuters Derren Nathan, head of equity research at Hargreaves Lansdown, explained: Novo Nordisk has lashed out at the controversial US compounding industry in its quarterly update, citing a focus on preventing unlawful formulations of semaglutide, the active ingredient in its weight-loss wonder jab Wegovy. In some cases US compounding pharmacies are allowed to formulate active medical ingredients into non-approved drugs to meet individual requirements or combat shortfalls in supply. Wegovy sales growth in the US was hardly pedestrian,at 39%, but it was international sales that drove most of the 83% uplift, as new markets open up. None of this was enough to prevent a downgrade to full-year guidance. News earlier in the year that the US drugs reglator FDA has declared the shortage of GLP-1 medicines as over is something of a double-edged sword, he said. There's a clampdown on compounders, but question marks remain over its enforcement. The end of the shortage also raises questions about the health of US demand. That's also reflected in Novo's deal last week with a US healthcare provider to provide Wegovy to patients at a discounted rate of $499. There's intense competition too from Eli Lilly, both in injectables and in the race to bring an oral alternative to the market. These challenges have been reflected in a 40% decline in the share price over the last six months. Novo remains a key player in the biggest shift in healthcare treatment of our generation. This could mark an attractive entry point for opportunistic investors, but there's a real job to do to restore market confidence. Competition is set to heat up further, with other drugmakers developing GLP-1 medications, and cheaper generic versions coming onto the market. Sheena Berry, healthcare analyst at Quilter Cheviot, said: Currently, the obesity market is still dominated by Eli Lilly and Novo Nordisk, but there are numerous clinical trials ongoing with competitors looking to enter the space. Share Updated at 10.39 CEST Phillip Inman Global debt has hit a new record high of more than $324tn, fuelled by extra borrowing by Beijing as the Chinese authorities sought to offset the impact of Donald Trump's tariffs with extra public spending. Debt rose by $7.5tn in the first three months of the year, according to figures from the Institute of International Finance (IIF). A modest increase in economic growth across much of Europe, the US and Asia meant that as a share of economic output, or gross domestic product (GDP), global debt edged down to almost 325%, maintaining a modest annual drop since a borrowing peak in 2021. The IIF, which represents 400 of the largest financial companies from more than 60 countries, said that while major industrialised countries either mainted or reduced debt-to-GDP ratios, emerging markets reached an all-time high of 245% in the first quarter of 2025. China's government debt-to-GDP ratio has surged past 90%, up from 60% in 2019. The IIF said one of the greatest sources of rising debt could be found in Washington, where plans by the White House to reduce taxes without cutting spending could send the US debt-to-GDP ratio above 200%. Bank Of England Governor Andrew Bailey (R) speaks with Institute of International Finance President and CEO Timothy Adams (L) during the Institute of International Finance Global Outlook Forum at the Willard InterContinental Washington on April 23, 2025 in Washington, DC. Photograph:In a hard-hitting judgement on the US president's first 100 days, the usually restrained IIF said: US government debt levels are projected to soar over the next several years and could trigger increased market volatility unless new revenues can be sourced to offset planned tax cuts and extensions.' Tax breaks that are still in place from Trump's first period in office could take the debt to GDP ratio to 180%. Further tax cuts could increase that to beyond 200%. The institute said Trump's pledge to lift overtime income and income from tips out of the income tax regime would cost about $1.4tn over the 10-year budget projection to 2034 – 'implying that the U.S. government would need to borrow an additional $7.2tn over 10 years'. The department of government efficiency (Doge) is currently on track to achieve annual government savings of about $160bn, well below the original $2tn annual target. Share The eurozone construction sector remained in decline in April, while the pace of contraction slowed. New orders fell at a slightly slower rate and many firms cut both jobs and purchasing. Price pressures picked up to a 15-month high, although they remained well below the long-run average. Suppliers' delivery times shortened for the second consecutive month. Companies were also pessimistic about the year ahead, with sentiment worsening. The eurozone construction PMI from Hamburg Commercial Bank showed a rise in the headline index to 46 in April from 44.8 in March. Any reading below 50 indicates contraction. Activity has now fallen for three years, though the latest decline was the least pronounced since February 2023. The slower decline largely reflected a softer reduction in Germany, while the contraction in France worsened slightly. Meanwhile, activity in Italy broadly stalled over the month. Norman Liebke, economist at Hamburg Commercial Bank, said: HCOB Economics expects further interest rate cuts by the ECB in the coming months of this year, which would benefit the construction industry. Residential construction may catch up. Although all three sectors contracted in April, residential construction was able to close the gap with the other two sectors – civil engineering and commercial construction. Since the beginning of 2023, residential construction has performed significantly worse. The outlook remains bleak. Orders are falling rapidly and are well below the historical average. Business expectations have declined further, with no signs of improvement in the near future, particularly given the increased geopolitical uncertainties. In view of this difficult situation, construction companies continued to cut jobs in April. Cranes at a building and construction site near the TV tower in Berlin, Germany, 30 April 2025. Photograph: Hannibal Hanschke/EPA Share European stock markets dipped at the open, ahead of the Federal Reserve's meeting later today. The FTSE 100 index in London has lost 18 points, or 0.2%, to 8,578, after its recent record run. The Footsie rose for 16 trading sessions in a row. Germany's Dax and Italy's FTSE MiB are flat to slightly lower while France's CAC has dropped by 0.5%. Traders are waiting nervously for the Fed's rate decision and Fed chair Jerome Powell's press conference. Naeem Aslam, chief investment officer at Zaye Capital Markets, said The anticipation surrounding the Federal Reserve's policy decision is causing investors to tread carefully. While no rate change is expected, market participants are keenly awaiting Chair Jerome Powell's remarks for insights into future monetary policy directions, especially in light of recent strong labor data and persistent inflation concerns. Share In Germany, factory orders jumped more than expected in March, in the run-up to Donald Trump's trade tariff announcements. Orders rose by 3.6% between February and March, according to the federal statistics office, beating analysts' expectations of a 1.3% increase. Stripping out major orders, demand was up by 3.2%. Orders rose across electrical and transport equipment, machinery, automotives and pharmaceuticals. Business surveys from S&P Global also suggest that Germany's factories emerged from a downturn in April, helped by export orders. However, Trump's tariffs against the EU – announced on 2 April, but then paused – have clouded the outlook for Europe's biggest economy. Economists are wondering whether the improvement in performance was due to companies trying to get ahead of the levies. Goldman Sachs analysts said last week that such frontloading may have added 15% to eurozone exports to the US between January and April. Michael Herzum, head of macro and strategy at Union Investment, said, according to Bloomberg News: Don't read too much into this month's increase. Unfortunately the recovery so far is nothing more than a flash in the pan. Unpredictable US economic policy will continue to be a burden for the time being and stands in the way of dynamic growth in 2025. Share Updated at 09.25 CEST Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. China has cut interest rates, and news of trade talks between Beijing and Washington lifted Asian stocks. The People's Bank of China is making a half-point cut to the banks' reserve requirement ratio, its benchmark interest rate, and trimming other interest rates, releasing 1tn yuan into the banking system. Pan Gongsheng, governor of the People's Bank of China, said the move was due to 'uncertainties of global economy, economic fragmentation and trade tensions, which disrupted global industrial supply chains'. Beijing announced the measures amid a damaging trade war with the US. After weeks of rumours over de-escalation between the two countries, markets gave a lukewarm welcome to news that top trade officials are due to meet in Geneva this weekend – the first meeting since Donald Trump launched punitive tariffs against China. China's vice-premier He Lifeng will meet US treasury secretary Scott Bessent on the sidelines of meetings in Switzerland between 9 and 12 May. US trade representative Jamieson Greer will also attend. Japan's Nikkei edged 0.1% lower, while Hong Kong's Hang Seng rose by almost 0.5% and markets in Taiwan, Australia and South Korea were up between 0.1% and 0.55%. In mainland China, the Shanghai Composite rose by nearly 0.5% while the Shenzhen Composite gained 0.16%. Stephen Innes, managing partner at SPI Asset Management, said: That tepid market response speaks volumes. Because let's be honest—this isn't a rates problem, it's a demand problem. China's real economy isn't thirsty for credit, it's paralyzed by weak confidence, property rot, and collapsing export flows. You can lead the horse to water, but you can't make it drink—especially when the water's tainted with deflationary fear and policy fatigue. European stock markets are set for a mixed open, with the UK's FTSE 100 index seen opening slightly lower after its recent strong run while the German and French indices are expected to rise. Traders are cautious ahead of the US Federal Reserve's meeting tonight, where interest rates are expected to be left unchanged. Oil prices are rising again, after yesterday's 4% jump amid signs of higher demand in Europe and China, lower production in the US, tensions in the Middle East, a day after prices fell to a four-year low. Brent crude is 1.1% ahead at $62.86 a barrel while US crude has risen by 1.3% to $59.86 a barrel. The Agenda 8.30am BST: Eurozone HCOB Construction PMI for April 9.30am BST: UK S&P Global Construction PMI for April 10am BST: Eurozone retail sales for March 7pm BST: US Federal Reserve interest rate decision Share Updated at 09.07 CEST READ SOURCE
Business Mayor
30-04-2025
- Business
- Business Mayor
The grass is not always greener on US stock markets
Donald Trump is doing an excellent job of demonstrating that US stock markets don't always outperform European ones. On-off tariff wars, threats to fire the head of the Federal Reserve and general unpredictability have prompted a reappraisal of boring old Europe. The S&P 500 is down 6% this year, versus a gain of 2.5% for FTSE 100 index and a 3% improvement in the pan-European Stoxx Europe 600. The differences aren't enormous but they mark a reversal from recent years. Will that be enough to stop the 'exodus' of UK and other European companies to the supposedly higher-valued and more liquid US markets? The thesis – plodding European versus dynamic US – has been the popular narrative for years as the likes of the plant hire group Ashtead, the plumbing group Ferguson and the Paddy Power-owning Flutter have moved their primary listings to the US. It has become obligatory to describe every departure as 'another blow' to London. Well, here's a 'reality check' report from the New Financial thinktank that ought to be digested by any footloose board of a UK-quoted company that imagines its share price would be higher if only the listing was in the US. It ain't necessarily so. The report identifies 130 European companies, including 51 UK ones, that have moved to the US over the past decade, whether by switching their listing, listing for the first time or merging into a US shell entity. The collection is large, no question – worth $676bn (£504m) in today's money at the time of the moves. On the other hand, it's also just 2% of the number of European companies. Read More Earnings call: Digital Realty posts record Q3 2024 performance The London Stock Exchange. The FTSE 100 index has gained 2.5% this year. Photograph: Tolga Akmen/EPA But the startling finding is the post-switch performance. The analysis shows that 70% of European companies that have moved to the US are trading below their listing price; fewer than a fifth have beaten the S&P 500; and three-quarters have not beaten the European market after their move. The numbers, it should be said, are skewed by the appalling performance of European companies that joined the brief US fad for SPACs, or 'blank cheque' special purpose acquisition companies. Of the 42 firms that took that route, nine went to zero (think Cazoo and the electric van firm Arrival). But even among the mature companies that simply switched their listings, the share price performance amounts to roughly a par score: 44% have performed better than the European market since they moved. Why might that be? Simply because the valuation premium on US markets (about 30% at the last count) doesn't translate at the level of individual companies or sectors. A large chunk of the go-go US rating is accounted for by the massively greater weighting of highly valued and large technology firms. As New Financial puts it: 'US stocks have a higher valuation because they have higher growth and higher return on equity, not because they happen to be listed in the US.' None of which is to say that European firms should never move. For some, it will make sense. Revenue-wise, Ashtead and Ferguson had morphed into US entities. Sweden's Spotify had probably outgrown its home market. Sadly, it was probably commercially reasonable for SoftBank to relist Arm Holdings, the UK's most celebrated tech firm, in the US where it could rub shoulders with the likes of Nvidia. And the US undoubtedly has advantages in biotech. Read More Gamma Intermediate selling 6.4% stake in Italy's Lottomatica The point, though, is that the grass is not always greener, except (from the point of view of executives) when it comes to boardroom pay, which one suspects is a swing factor in some cases. There have been successes – Arm is definitely in that camp – but the overall performance of departers 'suggests that moving is not a panacea', says the report. It is not prescribing complacency and is full of ideas to improve European stock markets by making them less fragmented. But, in the hierarchy of market-related things to worry about, US drift is probably not top of the pile, especially if Trumpian chaos is now deterring corporate tourists. Instead, here is the report's genuinely alarming statistic: 1,000 listed companies in Europe, with a combined value of more than $1tn, have been acquired by private equity and privately held companies in the past decade. The march of private equity still feels like the bigger threat to stock markets.
The Guardian
06-04-2025
- Entertainment
- The Guardian
Stars come out for theatre's Olivier awards 2025
Adrien Brody, his mother Sylvia Plachy, and his girlfriend Georgina Chapman attend the Olivier awards 2025. Brody was nominated for best actor for The Fear of 13 at the Donmar Warehouse Photograph: Dave Benett/(From left) Claire Walker, Kash Bennett and Hannah Essex from the Society of London Theatre Photograph: Tolga Akmen/EPA Celia Imrie chose a red gown for the awards. She won an Olivier in 2005 Photograph: Dave Benett/Photograph: Dave Benett/Myles Frost was nominated for his role in MJ the Musical Photograph: Vianney Le Caer/Rex/Shutterstock Cast members of the musical Titanique, including Jordan Luke Gage, Charlotte Wakefield, Eva Price, Adrianne Langley, Kat Rooney, Rodney Vubya and Rob Houchen Photograph: Dave Benett/Broadcast journalist Ria Hebden Photograph: Tolga Akmen/EPA Lesley Manville was nominated for best actress for Oedipus at Wyndham's theatre Photograph: Dave Benett/British singer Beverley Knight and US singer and actor Billy Porter hosted the awards event Photograph: Tolga Akmen/EPA John Lithgow was nominated for best actor for Giant at the Royal Court Photograph: Tolga Akmen/EPA Jesse Tyler Ferguson and Jane Krakowski helped present the awards Photograph: Vianney Le Caer/Rex/Shutterstock Layton Williams was nominated for best supporting actor in a musical for Titanique at the Criterion theatre Photograph: Ian West/PA Photograph: Vianney Le Caer/Rex/Shutterstock Leigh Lawson and his wife Twiggy Photograph: Tolga Akmen/EPA Tom Hiddleston and Hayley Atwell presented an award together Photograph: Neil Mockford/WireImage Indira Varma was nominated for best actress for Oedipus at the Old Vic Photograph: Tolga Akmen/EPA
