Jan 31, 2023
Grim IMF Forecast Puts UK at Bottom of G-7: The London Rush
(Bloomberg) -- If bad news comes in threes, then it seems the UK has gotten its dose for the week out of the way. A trio of grim stories stand out this morning, with the cost of Brexit to the UK economy estimated at £100 billion a year; the IMF forecasting the country will be the only G-7 economy in recession this year, and Britain tumbling down a global corruption ranking after a string of scandals. In corporate news, tobacco company BAT has joined the growing band of companies shaking up their management and corporate structures.
Here’s the key business news from London this morning:
In the City
British American Tobacco Plc: The tobacco company will overhaul its board and management structure in an effort to “fuel growth” and “increase focus.”
- The company will cut the number of regions from four to three, and trim the number of business units to 12 from 16
Pets at Home Group Plc: The pet store chain raised its full year pretax profit guidance after consumer revenue hit a record in the third quarter.
- It seems, even in tough economic times, people still want to treat their pets, the company’s CEO said, citing growing sales of accessories as well as a strong performance of the Christmas range
ITM Power Plc: The maker of materials and technology for hydrogen power expects to make an Ebitda loss of up to £95 million in 2023 after it had to defer revenue until the next financial year.
- Chairman Roger Bone said the company said the company underestimated the competencies and capabilities required to scale its business, which led to unrealistic targets and “an unacceptable financial performance”
Cnooc Ltd.: The Chinese oil giant paused a planned sale of its UK North Sea portfolio, which could have been valued at as much as $3 billion, after initial offers failed to meet the company’s expectations, people familiar with the matter told Bloomberg.
- Cnooc is the operator of Buzzard, one of the UK’s highest-producing oil fields
Britain faces the bleakest two years of any major industrial nation with a recession in 2023 and the slowest growth of peers in 2024, the International Monetary Fund predicts.
That’s as Brexit is costing the UK economy £100 billion a year, with the effects spanning everything from business investment to the ability of companies to hire workers. Meanwhile, a look at Bloomberg UK’s Levelling Up Scorecard shows how constituencies that voted Leave have yet to see many of the promised economic benefits.
The UK slipped down a global corruption ranking, with watchdog Transparency International describing public trust as “worryingly low” after a string of political and public spending scandals. The group also highlighted a lack of progress in Russia, Brazil and Qatar.
In Case You Missed It
A push to reduce carbon emissions in the UK is helping to boost industry and jobs outside of London.
Traders are turning more bullish on the pound on hopes the UK and the European Union will strike a post-Brexit trading deal for Northern Ireland.
Unilever Plc’s incoming chief Hein Schumacher will have to contend with floundering growth, a bureaucratic culture and accusations that the maker of Dove soap and Ben & Jerry’s ice cream has become too obsessed with the so-called “social purpose” of the consumer products it sells.
Telecommunication firm Vodafone Group Plc, commodities trader Glencore Plc and drugmaker GSK Plc are among the companies set to update the market tomorrow.
GSK appears to be on track to “at least meet” its 2022 guidance, according to Bloomberg Intelligence analysts John Murphy and Sam Fazeli, citing the strength of its shingles vaccine and an improving product mix. Regulatory approvals could help boost sentiment, but potential litigation tied to the Zantac heartburn drug is still proving to be a headache. GSK scored a crucial win in US court cases last year, but BI litigation analyst Holly Froum sees lawsuits continuing to pose a risk. As for the 2023 outlook, estimates compiled by Bloomberg show adjusted diluted EPS growing by about 9%, though still falling short of pre-pandemic levels.
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