Pound shrugs off Johnson’s no-deal threat

Boris Johnson
Boris Johnson said businesses should prepare for no deal, but refused to rule out further talks Credit:  UK Parliament/Jessica Taylor

Wrap-up

Time to wrap up. Here are some of the day’s top stories:

Thanks for following along today. We’ll be back on Monday!

Market moves

A decent end to the week looks all but guaranteed, with a fair bit of yesterday’s losses clawed back.

Truss: UK signs continuity trade deal with Ivory Coast

Admittedly, not one of our heavyweight global trade partners: 

Full report: John Lewis looks for a more affordable future

My colleague Laura Onita has a full write-up on this morning’s John Lewis plans (see 8:12am update). She writes:

Dame Sharon White, chairman of the mutual, said: “We’ve seen five years of change in the past five months... our plan means the partnership will thrive for the next century, as it has the last.” 

John Lewis declined to say if there will be more job losses or store closures as it plans to save £300m a year by 2022 by simplifying the business and reviewing agreements with suppliers. 

Analysis: The Brexit trade talks are far from over

Our Brussels correspondent James Crisp has read between the lines of the latest Brexit tit-for-that, and says a deal is still in the offing. He writes:

Strip back the rhetoric and the Prime Minister simply repeated the UK’s negotiating positions, and called on the EU to move closer to them. This is just as he has done before and doubtless will again. 

Wall Street opens in the green 

US stocks open higher following better-than-expected retail sales figures.

Credit: Bloomberg 

PM’s Spokesman: Trade talks are over 

 Boris Johnson's spokesman has said trade talks with the EU “are over”.

US retail sales continue to climb

US retail sales rose 1.9pc in September – extending strong gains that have been one of the few truly ‘v-shaped’ recoveries across any gauge. That’s much stronger than the 0.8pc gain expected.

Pret plans another 400 job cuts

Pret a Manger has said it plans to shut six more shops and cut around another 400 jobs after its recovery slowed in the face of recently tightened restrictions and rising case numbers.

My colleagues report:

In August, the coffee and sandwich chain axed 2,800 roles as part of a restructuring which saw it close 30 sites.

It said it has seen “consistent sales growth” in the four months since reopening sites but this has “slowed since the end of September”.

The chain blamed the UK’s worsening coronavirus infection rates and “the impact on trade in the City of London” for the latest closures.

Wall Street set for small rise

With just over an hour until the US open, US stock futures are pointing toward moderate gains. The S&P 500 is set to climb 0.4pc.

Women and lower-paid workers take biggest blow from home working

Women and lower paid workers suffered the biggest blow to productivity from the national lockdown, according to new research.

My colleague Russell Lynch reports:

The findings from the Centre for Economic Policy Research underline the economic and social damage wrought by the pandemic and the resultant set-back to the Government’s “levelling up” agenda. 

The researchers said that women and lower-income earners – more concentrated in the sectors where working from home is difficult – “report lower productivity at home on average”. 

In contrast the sectors showing the biggest productivity increases included more male-dominated jobs in IT and finance sectors, requiring less face-to-face interaction.

European car sales rise for first time this year

European automotive trade group ACEA reported that September saw the first bloc-wide increase in new car sales of the year.

Registrations of new cars climbed 3.1pc to 933,987 across the EU, though the region remains heavily down on a year-to-date basis.

In the first nine months of the year, a total of 8.567m new cars were sold, about 29pc off on the same point in 2019.

Ursula von der Leyen: Talks continue

The European Commission president tweets:

Tesco chair warns Brexit could cause food shortages

Tesco chairman John Allan Credit: Geoff Pugh

The chairman of Tesco has warned of short-term fresh food shortages after the Brexit transition period concludes at the end of the year. 

My colleague Simon Foy reports:

John Allan said: “We can’t rule out the possibility that if there is dislocation at the ports of entry to the UK there will be some shortages of some items of fresh food, at least for a short time.”Speaking to Bloomberg TV, he added that there is no need for consumers to panic or stockpile items as any disruption will “normalise quickly”. “The nation’s supply chain for food will continue but there may be some things we have to learn to live without for a few weeks, possibly a few months,” he said.

Frost and Barnier will hold talks later today – Bloomberg

Citing an EU official, Bloomberg says the UK’s chief negotiator David Frost will meet with his EU counterpart Michel Barnier later today.

The pound is now trading flat on the day.

EU assumes talks will continue – Reuters

The EU assumes trade talks will continue in London next week, Reuters reports. 

Boris Johnson will hold a press conference this afternoon, my colleague Gordon Rayner tweets – but it’s likely to be more focused on Covid-19 restrictions:

Johnson’s key quotes

Boris Johnson’s latest comments, made in a pooled TV interview, inject something of a new sense of urgency, but the PM is evidently trying to shift blame onto the EU – while once again reneging on his promise to walk away if the desired terms cannot be met. 

In short, it’s more brinkmanship, and the relatively limited movement in the pound reflects traders’ belief that this process is far from over.

Here are some key quotes from Johnson:

It’s clear from the summit that after 45 years of membership, they are not willing, unless there’s some fundamental change of approach, to offer this country the same terms as Canada
Now is the time for our businesses to get ready and for our hauliers to get ready
I have concluded we should get ready for Jan. 1 with arrangements that are more like Australia’s

Follow Johnson’s comments live

You can follow updates on Boris Johnson’s comments here:

Johnson: EU abandoned idea of a free trade deal

The PM has claimed that the EU has abandoned the idea of a free trade deal, claiming the bloc has not been talking talks seriously.

He says the UK should prepare for an ‘Australia-style’ deal, which is code for no deal, but adds he is willing to continue talks if there is a “fundamental change of approach” from the EU.

The pound has dropped sharply in response to Mr Johnson’s words, wiping off the day’s gains.

Johnson: Unless EU changes approach, we go for no-deal

Boris Johnson’s has said the UK should prepare for there to be no new trade deal with the EU, following the European Council’s statement yesterday.

Market moves

After cooling gains slightly earlier this morning, European stock markets have shifted upwards once again:

Liberty Steel eyes Thyssenkrupp for expansion plans

Acquisitive industrials entrepreneur Sanjeev Gupta is trying to further expand his GFG Alliance empire with a bid for Thyssenkrupp’s steel business.

My colleague Alan Tovey reports:

A combination of his UK-headquartered business and Germany’s larger Thyssenkrupp would create a European steel powerhouse by bringing together the region's fourth and second largest steel producers, respectively.

The non-binding indicative offer by GFG’s Liberty Steel arm gave no indication of price or terms.  

Liberty said a tie-up would create a “strong group well positioned to tackle the challenges faced by the European steel industry”.

Google buys Hertfordshire plot for potential data centre – City AM

Google has bought up a plot of land north of London that could eventually accomodate its first UK data centre, City A.M. reports.

The paper says:

The firm’s data centres house thousands of servers and drives, and provide the infrastructure for Google’s services across the world.

City A.M. understands that the plot, in Broxbourne in Hertfordshire, would comfortably accommodate a data plant. No other Google infrastructure would require a site as large. 

BA fined £20m over data breach

British Airways has been fined £20m by the Information Commissioner's Office (ICO) over a 2018 data breach which saw the personal details of 400,000 of its customers accessed by hackers.

My colleague James Cook reports:

Elizabeth Denham, the Information Commissioner, said: “People entrusted their personal details to BA and BA failed to take adequate measures to keep those details secure.

“Their failure to act was unacceptable and affected hundreds of thousands of people, which may have caused some anxiety and distress as a result. That’s why we have issued BA with a £20m fine – our biggest to date.

“When organisations take poor decisions around people’s personal data, that can have a real impact on people’s lives. The law now gives us the tools to encourage businesses to make better decisions about data, including investing in up-to-date security.”

The £20m fine is significantly lower than the initial £183m figure which was estimated following the breach. British Airways wrote in its interim results in August that it expected to pay around £20m as a penalty for the hack.

RTE’s Connelly: EU looking at energies/fisheries trade-off to break talks deadlock

Irish broadcaster RTE’s Tony Connelly tweets: 

Man Group rises after client cash rises at fastest rate since 2018

Investors piled into Man Group at the fastest pace in two years, sending shares in the world’s biggest publicly-traded hedge fund jumping higher.

The FTSE 250-listed group reported net inflows of $1.7bn for the three months to the end of September, smashing estimates of just $300m and marking its best quarterly inflows since late 2018.

It funds under management stood at $113.1bn at the end of the period, up from $108.3bn at the end of June. The strong performance is in contrast to many rival hedge funds, which have struggled over recent months.

Chief executive Luke Ellis said:

We are pleased to report good performance in the third quarter and strong growth in funds under management.  This was driven by robust net inflows into alternatives as anticipated, as well as performance gains across both alternative and long-only strategies.  Engagement with clients remains good, although there is increasing uncertainty due to upcoming political events and current Covid-19 trends.

Man said it is pushing ahead with a $100m share buyback programme at the “maximum permitted pace”.

Credit Suisse’s Haley Tam said the results would be “well received”.

Big Four consultancy fees drop amid new rules on conflicts

The UK’s top accounting firms – PwC, Deloitte, EY and KPMG – saw a sharp decline in fees for non-audit work at audit clients as restrictions on the sector tighten.

The Big Four took 20.8pc less in fees for consultancy from clients who they also audit, according to figures released by regulator the Financial Reporting Council.

New rules that took effect in March 2019 put a 70pc cap on fees for additional services – such as tax advice or management consultancy – that auditors offer to their clients.

Credit: FRC

The Big Four have faced criticism in the past over allegations they use audit as a ‘loss leader’ to secure this type of lucrative additional work, creating conflicts of interest in the process.

The firms saw their fee income continue to increase, rising 7.1pc over the year. Accountancy firms outside of the Big Four saw fees decline 0.1pc.

The Big Four maintained their grip on the FTSE 100 over 2018/19, with no other firms acting as auditors to London’s top listed companies. Smaller rivals Grant Thornton and BDO gained more of a foothold in the FTSE 250, however, where they held 10 contracts.

The FRC’s David Rule said:

Improving choice and resilience in the market also remains a major focus ahead of wider government reform and planned operational separation of the audit practices of the Big Four.

Peacocks and Edinburgh Woollen Mill plan 600 job cuts as 50 stores close

Retail mogul Philip Day Credit: John Wellings

Retail tycoon Philip Day has fired the starting gun on the restructuring of Edinburgh Woolen Mill by shutting 50 stores and culling 600 jobs.

My colleague Laura Onita reports:

The majority of the redundancies are understood to be at EWM and the Peacocks chains, affecting mainly shop floor staff, in a last-ditch effort to secure the future of the business. 

Last week EWM said it was close to collapse if it did not sell some or part of the business. It has already told property owners that up to 150 branches could shut this month, and has today informed them that 50 will close for good.  

Mr Day has amassed a stable of brands over the years, including Jaeger and Austin Reed, which have 1,100 branches between them. Only three years ago the retail tycoon was planning to open a new department store chain. 

EWM is poised to appoint FRP Advisory as its administrator next week. Mr Day has put himself in a strong position to salvage parts of his struggling retail empire after he extended a loan in return for security over its assets.

Department for International Trade creates new advisory group for trade unions

International trade secretary Liz Truss has created a new trade union advisory group to seek workers’ input on the UK’s trade policy.

The creation of the group, which will be launched at an event in Whitehall today, is part of “a major drive to ramp up engagement on trade policy with key stakeholders”, the DIT said.

It has also refreshed and expanded the membership of its Strategic Trade Advisory Group (STAG), its main policy advisory group, to include new civil society representatives.

Ms Truss said:

I want our trade policy to benefit workers, the environment, business and families, and for every person and company in the country to feel fully engaged as we become an independent trading nation once again.

The trade union advisory group’s first meeting will take place today. Its membership will include:

  • TUC president Frances O’Grady
  • Prospect general secretary Mike Clancy
  • British Medical Association deputy chair Dr David Wrigley
  • RMT general secretary Mick Cash

The TUC’s Paul Novak will join STAG.

Serco rises after boosting sales forecast

Serco chief executive Rupert Soames Credit: Luke MacGregor/Bloomberg

Serco shares have popped higher this morning, after the outsourcer raised its sales forecast following “strong revenue growth”.

The FTSE 250 group expects revenue of around £3.9bn for the full year, representing organic growth of around 15pc – up on a previous forecast of 9pc growth.

It said:

All of our regions worldwide are performing better than we expected and have increased their forecasts for 2020.  In both group and in the divisions, effective cost control and the ability of our systems to respond efficiently to increased demand has helped increase margins.

Serco said it expects “the uncertainties of 2020 will persist into 2021”, adding its broad outlook for next year is not “materially different” to previous estimates.

Royal Bank of Canada’s Andrew Brooke said Serco’s management “has worked very hard to build a platform with the right operational, back-office and risk management capabilities”, and that the group is now starting to feel the benefits after five difficult years. he added:

The business is now in much better shape, and new contract and rebid momentum has been strong. 

Money round-up

Here are some of the day’s top stories from the Telegraph Money team:

Lookers expects ‘material’ underlying first-half loss

Car dealership group Lookers warned it expects to report a “material” underlying pretax loss for the first half of the year.

It said the temporary closure of many locations had a “significant impact on financial performance” during the first half, but that trading in the third quarter had been “significantly ahead of last year”, which would largely offset that loss.

Lookers’ net debt stood at approximately £22.5m at the end of September, which it said was “substantially lower” than last year.

Shares in the company were suspended in July after it uncovered a potential fraud. It still has yet to finalise annual accounts that were due in March.

It said it was still working with auditors to get the final accounts and its first-half results sorted, saying both are expected to be published in November.

Chief executive officer Mark Raban said:

Our decisive self-help measures, combined with better than expected trading in Q3 and strong support from our brand partners, have helped the Group emerge from lockdown in a strong position.

Superdry chief financial officer steps down suddenly

Nick Gresham has stepped down as chief financial officer of fashion retailer Superdry with immediate effect, after just over a year at the company.

Superdry said a search for his replacement will begin, with interim arrangements put in place in the meantime. No reason was given for his departure.

Chief executive Julian Dunkerton said:

Nick joined Superdry at a time of significant change and challenge in the business. He has played an important role in putting the Company in a stronger position than it was before he joined and helped to steer Superdry through the impact of the Covid pandemic.

Shares pop higher

European shares have popped higher at the open, clawing back a chunk of yesterday’s big losses. 

Credit: Bloomberg TV

John Lewis sets out plans for £400m in profit within five years

John Lewis boss Dame Sharon White Credit: Handout

John Lewis Partnership has set out “bold plans” to reach more customers and hit £400m in profit within five years.

The group, which encompasses both John Lewis and Waitrose, wants the retailers to be “the go-to brands for customers who want quality, value and sustainability”.

Here are some of its key points:

  • Waitrose will aim to grow its delivery capacity beyond 250,000 a week, up from 55,000 at the start of the pandemic
  • It will expand a partnership with Deliveroo, with 25 more shops set to tie up with the delivery business (bringing the total to 30)
  • It aims to be net zero carbon by 2035
  • Once it expects to pass £200m in profit, it will pay staff the voluntary Real Living Wage
  • The group is setting aside £1bn to improve its shops and online business
  • It plans to save £300m a year by 2022 by “making our operations and head offices simpler and more efficient”, which sounds a lot like job cuts

JLP chair Dame Sharon White said:

We’ve seen five years of change in the past five months and Waitrose and John Lewis have responded with great agility. Our plan means the John Lewis Partnership will thrive for the next century, as it has the last.

We’re adapting successfully to how customers want to shop today, while showing the Partnership is improving lives and building a more sustainable future. We’ll share our success with our customers, Partners - who own the business - and our communities.

Pound continues to fall

Sterling extended a downwards shift overnight, with investors worldwide flooding towards the dollar against a backdrop of rising cases.

Once again, Brexit sentiment is likely to be a big factor in the currency’s movement today, with Boris Johnson – having once again buckled on an ultimatum he set – due to respond to the EU’s latest call for compromise later today.

Tim Martin slams Government as Wetherspoons makes loss

Wetherspoons boss Tim martin (left) with Boris Johnson in happier times for the pair Credit: Luke MacGregor/Bloomberg

JD Wetherspoon boss Tim Martin has hit out at the Government’s “erratic” handling of the pandemic, while praising the soft-touch approach adopted by Sweden, as the pub chain swung into the red.

My colleague Simon Foy reports:

The pub group sunk to a £105m pre-tax loss after sales declined from £1.82 billion to £1.26 billion for the year to July 26. 

The company’s chairman also said it was unfair that pubs have been treated harsher than supermarkets during the crisis, and called for “tax equality” among supermarkets, pubs and restaurants.

Agenda: FTSE set to climb 

Good morning. The FTSE is set to open higher following a sharp decline on Thursday as European governments reimpose tighter lockdown restrictions.

The pound will also be in focus today as negotiations between the UK and EU to secure a Brexit deal lose momentum – again. 

5 things to start your day 

1) Government pays BA and Virgin £70m to fly PPE from China: British Airways handed £46m between May and July, while Virgin Atlantic has been paid £27m since April to fly protective gear to the UK.

2) Issa brothers to update EG Group bondholders in wake of Deloitte resignation: The billionaire brothers buying Asda will speak to bondholders in their petrol station empire EG Group today, after its auditor suddenly quit.

3) Bosses plead for more support as London hit with tier 2 measures: Pub chiefs are begging for urgent support to help them through winter after London was plunged back into lockdown.

4) Challenger banks scramble to fill business account void: Challenger banks have spotted a chance to grab more market share as larger rivals pull up the drawbridge on pandemic lending to new business customers.

5) Counting the cost of London’s latest lockdown: As the capital prepares for Tier 2 lockdown, what can the fate of other cities and regions tell us about prospects for London’s businesses?

What happened overnight 

Asian shares were mixed on Friday as investors weighed concerns about the US presidential election and an economic stimulus package, on top of fears of flaring outbreaks of coronavirus.

Investors are also looking ahead to the release of data on the Chinese economy next week.

Shares rose in Japan and China but fell in South Korea and Australia.

Japan’s benchmark Nikkei 225 inched up less than 0.1pc by midday to 23,523.37. Australia’s S&P/ASX 200 shed 0.2pc to 6,196.10. South Korea's Kospi declined 0.6pc to 2,346.88. Hong Kong's Hang Seng gained 0.9pc to 24,363.70, while the Shanghai Composite was unchanged at 3,332.05.

Coming up today

Interim results Rio Tinto

Full-year JD Wetherspoon 

Trading statement Jupiter Fund Management, Man Group

Economics Retail sales, consumer sentiment (US)