BUSINESS LIVE: BoE holds base rate at 5.25%; Nationwide and Virgin Money deal formalised; Next profits jump

Pieter Staelens, managing director at CVC Credit:

‘The Bank are right to hold rates at their current levels.

‘While the latest data is positive, we still see a number of inflationary pressures on the horizon – including ongoing conflicts, geo-political flux and labour shortages – so we’re not out of the woods just yet. Headline inflation is definitely coming down, but core CPI remains too high for the BoE to be comfortable in cutting rates.

‘We’ve learnt how quickly the inflation picture can change, and the Bank should hold off on cuts until they’ve more visibility on achieving their 2% target.’

Marion Amiot, senior European economist at S&P Global Ratings:

‘The Bank Of England will need to see a lot more moderation in wages and services prices before it starts cutting rates. We don’t expect that to be before August as the labor market remains tight.

‘While vacancies are falling, the workforce is barely expanding, supporting pay increases that are well above productivity gains and the 2% inflation target.’

The Bank of England’s Monetary Policy Committee has voted to keep base rate on hold at its current level of 5.25 per cent by a margin of 8-1.

It is the fifth consecutive pause, with the first cut forecast to come this summer.

One MPC member voted to cut the rate today by 25 basis points to 5 per cent.

Ascential shares rose on Thursday after the events group unveiled a capital return of £850million to shareholders after beating analysts’ forecasts for last year.

The capital return, which will be delivered through a combination of tender offer, special dividend and on-market buyback programmes, is funded by the £1.2billion disposal of Digital Commerce and WGSN completed since the year-end.

Direct Line has brought back its dividend despite posting a huge increase in losses, as its new boss attempts to reassure investors with a cost-cutting programme and a ‘comprehensive strategy review’.

The insurer proposed a 4p per share dividend on Thursday, having been forced to scrap its final annual payout after a 2022 loss, which the group said was feasible because of its ‘strong capital position’, and ‘good performance’ in its home, commercial and rescue units.

Nationwide members look set to miss out on a vote over the building society’s £2.9billion Virgin Money takeover, as the pair formalised the deal on Thursday.

GKN Automotive owner Dowlais Group saw its shares fall on Thursday after revealing it expects a slight decline in global light vehicle production and its current order book this year.

Dowlais, which spun-off from aerospace company Melrose Industries last April, reported adjusted revenue of £5.49billion for the year ending 31 December, against £5.25billion in 2022.

Nationwide members look set to miss out on a vote over the building society’s £2.9billion Virgin Money takeover, as the pair formalised the deal on Thursday.

Under the terms of the acquisition, Nationwide will pay Virgin Money’s shareholders 220 pence per share, a 40 per cent premium on the latter’s average closing share price in the three months to 6 March.

But the deal ‘will not be subject to any condition relating to the passing of a resolution by Nationwide’s members’, the pair said, with the mutual’s board having ‘determined that no such member approval is required’.

Jeremy Hunt was dealt a blow today as government borrowing for February came in higher than expected.

Public sector net borrowing was £8.4billion last month, significantly above the £6billion analysts had pencilled in.

How often in recent times have you tried to telephone a company or organisation and been fobbed off with an automated message stating, ‘we’re facing high call volumes right now,’ or some variant?

And then the cherry on top, ‘why don’t you head online with your query.’

Next selling prices for shoppers have dropped 2 per cent over the last year, with prices set to fall a further 0.5 per cent in the second half of 2024, according to the retailer.

The FTSE 100 high street giant saw its pre-tax profit rise by 5 per cent to £918million last year, as total sales for the year to January 2024 increased by 6 per cent to £5.8billion.

Customers are suffering from ‘shameless and shameful’ treatment by banks as they close branches and replace them with inadequate ‘hubs’ and other facilities, it was claimed yesterday.

Furious MPs attacked bank bosses over the strategy which means customers are left having to use the pop-up sites in unusual locations including a garden centre and even a public lavatory.

Disgraced crypto fraudster Sam Bankman-Fried has argued plans to put him behind bars for half a century amount to a ‘death-in-prison sentence’ and paint him as a ‘depraved super-villain’.

The co-founder of now-defunct FTX will be sentenced on Thursday next week after he was convicted of seven charges of fraud and conspiracy by a New York jury in November.

London-listed stocks have opened strongly this morning, tracking global gains in the wake of the Federal Reserve confirmation that it expects three rate this year, as investor focus turns to the Bank of England’s monetary policy update at midday.

The Fed kept borrowing costs unchanged on Wednesday and projected as many as three interest rate cuts this year, soothing investors’ nerves about high interest rates and sending US stocks to close higher.

Focus now pivots to the BoE’s interest rate verdict, due at 12pm, where it is widely expected to hold rates at 5.25 per cent, a day after data showed inflation fell to its lowest in almost two-and-a-half years.

Traders are pricing in around 70 basis points of rate cuts from the central bank this year. The pound is inching higher ahead of the decision.

The embattled boss of Disney continues to win high-profile support as a power struggle at one of the world’s best-known companies reaches its crescendo.

Chief executive Bob Iger’s running of the entertainment giant is under heavy fire from activist investors including billionaire Nelson Peltz, whose daughter Nicola is married to David and Victoria Beckham’s eldest son Brooklyn.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Next continues to deliver against a tough retail backdrop, with growing momentum on sales and cashflow management. The group’s strong balance sheet means Next is a beneficiary as other brands struggle in the current environment, and we have seen that play out in recent years with its acquisition of a range of well-known peers.

‘These deals have often proven earnings accretive and have broadened wider sales for Next – the potential acquisition of The Body Shop very much falls under this category and would offer a different proposition to add to its portfolio of businesses.

‘Next’s management team appears to be optimistic about the year ahead and, with a clear strategy based on three growth pillars, it would take a brave person to bet against them.’

Britain is getting on top of its inflation problem. Headline inflation, at 3.4 per cent, is down, core prices (which exclude energy and food) are dropping sharply, service sector costs are in retreat and some fresh food prices are falling.

All of this before the Bank of England’s monetary squeeze has had enough time to work.

Next has kept its guidance for sales and profit in the current year after reporting a slightly better than expected 5 per cent rise in profit for 2023-24.

The group, which is often considered a useful gauge of how British consumers are faring, expects a pre-tax profit of £960million in 2024-25 on full-price sales up 2.5 per cent.

For the year to 27 January it made a profit on the same basis of £918million, versus guidance of £915million, on total sales up 5.9 per cent to £5.84billion.

‘On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties,’ Next said.

The group said it did not currently anticipate any material adverse impact from stock delays due to disruption to shipments through the Suez Canal

Nationwide and Virgin Money has formalised an agreement for the mutual’s £2.9billion takeover of the lender.

The deal will require the support of 75 per cent of Virgin Money shareholders, the pair said, having secured the agreement of 14.7 per cent of investors so far.

But it was confirmed that Nationwide members will not get a vote on the deal, despite recent pressure on the mutual.

Nationwide said: ‘The circumstances in which the approval of Nationwide’s members would be required in relation to the Acquisition are set out under the Building Societies Act 1986.

‘Having taken appropriate legal and financial advice, the Nationwide Board has determined that no such member approval is required.Accordingly, the Acquisition will not be subject to any condition relating to the passing of a resolution by Nationwide’s members to approve the Acquisition.’

The City watchdog has accused retirement advice firms of ‘not even getting the basics right’ in a scathing report that found some put clients’ futures at risk.

The Financial Conduct Authority (FCA) has written to chief executives, asking them to review and improve retirement income advice services.

The Bank of England will at midday publish its decision on the direction of interest rates, with markets expecting the Monetary Policy Committee to keep base rate on hold at its current level of 5.25 per cent.