Debenhams launches pre-Christmas fire sale as liquidation looms

Debenhams

Debenhams is set to be liquidated, with 12,000 jobs at risk, after the collapse of Sir Philip Green’s retail empire Arcadia prompted JD Sports to abandon its bid for the department store.

In a statement on Tuesday, Debenhams said its administrators had not been able to find a “deliverable proposal” to sell the company, and will “commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business”.

Minutes earlier, JD said it had terminated takeover talks following Arcadia’s collapse.

Debenhams’ future was put at risk once again after the owner of brands including Topshop and Burton – one of its biggest concession holders – called in administrators on Monday.

There is now set to be a bidding war that will shape the future of Britain’s ailing legacy fashion retail companies – and the high street itself.

Wrapping up

Debenhams' Oxford Street store in 2007

Pressure mounts on the Greens over pensions

Pressure is rising for Sir Philip Green to reveal details of any loans he may be due to recover from Arcadia as it goes through administration. He is also being called to use his personal wealth to help staff who face a major blow to their retirement income.

My colleague Laura Onita reports:

Topshop owner Arcadia's pension fund has an estimated shortfall of £350m, meaning that now the company has collapsed its members are likely to be placed into the Pension Protection Fund lifeboat.
As a result, as many as 10,000 savers will lose up to 20pc of their expected retirement income.
Sadiq Khan, the Mayor of London, said: “Having extracted so much wealth from Arcadia, “[Sir] Philip and [Lady] Tina Green owe a moral debt to its workers, and should have to meet the cost of the pension shortfall”.

Comment: The world’s central banks have set us up for a catastrophic fall 

Our assistant editor and economic commentator, Jeremy Warner, says a spending sprees by central banks to keep economies liquid will cost us in the long run when interest rates rise.

Sign up to The Telegraph's Economic Intelligence newsletter to get exclusive insight from two of the UK’s leading economic commentators – Ambrose Evans-Pritchard and Jeremy Warner – delivered direct to your inbox every Tuesday.

Blackberry surges most ever on Amazon collaboration

BlackBerry has surged the most ever after it signed a multiyear agreement with Amazon Web Services to develop and market its “Intelligent Vehicle Data Platform” called IVY, reported Bloomberg.

The news agency has more:

IVY is a cloud-connected software platform that aims to let automakers read vehicle sensor data, improving the performance of cloud-connected vehicles, according to a joint statement, it said.
Sales of BlackBerry’s QNX, its software platform for cars, could get a boost from IVY, according to Bloomberg Intelligence analyst John Butler. 
The Amazon.com unit has made an aggressive push in recent years to get automakers to use its cloud-computing tools as the digital plumbing behind their connected cars, or for their manufacturing efforts. Customers include Volkswagen and Toyota.

Blackberry's shares were up 38pc in mid-afternoon trading in New York on Thursday.

Biden introduces Yellen and economic team

Joe Biden's nominee for Treasury Secretary, Janet Yellen, spoke today at an event in Delaware, where the president-elect introduced his economic team.

She said:

  • Urgent action is needed to prevent self-reinforcing economic downturn. 
"It's an American tragedy and it's essential that we move with urgency. Inaction will produce a self-reinforcing downturn, causing yet more devastation"
  • There is a need to address deeper structural problems including racial, gender disparities
  • Covid has had a disproportionate impact on the most needy
  • She pledges to rebuild the American dream

 

Lockdown 2.0 and a double-dip - how bad will it be? 

The economy took another hit in November as the UK went into lockdown 2.0, but some rare good news: this time around the impact will be far less severe.

My colleague Tom Rees reports: 

Economists believe the hit to GDP in November was far less painful than the first national lockdown - around three-fifths of the size.
Not only is the lockdown shorter in length but the economic pain appears to have been limited with factories and building sites open, the streets busier and confidence on the up. 

Caffe Nero rescue plan faces legal challenge 

Caffè Nero’s landlords have backed a rescue deal that will allow the struggling coffee shop chain to renegotiate rents with landlords and shut stores.

My colleague Hannah Uttley reports:

The company voluntary arrangement was approved by more than 90pc of creditors voting on the proposals, just a day after  Caffe Nero rejected an “unsolicited” takeover bid by the  Issa brothers, the billionaire owners of petrol forecourt operator EG Group.
Caffè Nero said it has modified the CVA proposals so that if there is a sale to Mohsin and Zuber Issa in the next six months, landlords and other creditors owed money due to the pandemic will have their arrears paid in full.

The undignified demise of Debenhams 

The collapse of Debenhams is bringing the curtain down on 242 years of high street history. Once a retail pioneer, it lost its way before the pandemic accelerated its decline, writes Julia Bradshaw.

Read more here on the rise and fall of one of Britain's biggest names in retail.

Customers outside Debenhams in Manchester waiting for the doors to open at the start of the January sales in 1975

European markets start December on a high

European shares had a positive first day of trading for the month of December, after record-breaking gains in November. Optimism around a coronavirus vaccine took hold, strengthening the case for an economic recovery.

Pfizer and BioNTech are seeking emergency approval from the European regulator of their vaccine candidate, while Moderna announced it would ask the regulator to recommend conditional approval for its shot.

London led the charges:

  • London's FTSE 100: + 1.9pc to 6,384.73
  • Paris' Cac 40: +1.14pc to 5,581.64
  • Frankfurt's DAX: +0.7pc to 13,382.30

Watch: the public react to Debenhams going into administration

Independent brewers say £1,000 December grant is a 'derisory gesture'

James Calder, chief executive of the Society of Independent Brewers, said:

"Today’s £1,000 grant is a derisory gesture for wet led pubs that have struggled throughout this crisis. During the Christmas period many of these pubs would expect to take £1000 in a couple of hours."

He added:

  • Pubs didn't benefit from hospitality VAT cuts
  • There was nothing for small breweries who rely heavily on wet pubs for sales, and lost 80pc of income during coronavirus
"The Prime Minister should follow the examples we have seen in Northern Ireland, where business rates holidays have been extended to businesses like breweries and support for wet led pubs provided, and in Wales which includes financial support for those who have lost sales."
"The Government needs to urgently rethink its support measures for struggling small brewers and provide full financial grants, business rates holidays and end the proposed changes to Small Breweries Relief to help the sector."

Almost 300,000 jobs lost since the pandemic

According to calculations by Press Association - including yet to be confirmed thousands of job losses from Debenhams winding up operations plus those at risk from rival Arcadia Group's administration - there have been a total 277,185 job losses or potential redundancies by British employers since the start of the pandemic.

Some other major contributors:

  • HSBC: 35,000 worldwide
  • Shell: 9,000 worldwide
  • Marks & Spencer: 7,000
  • Sainsbury;s 3,500
  • Pret A Manger: 2,800
  • WH Smith: 1,500
  • John Lewis: 1,500
  • Mitchells & Butlers: 1,300

Debenhams launches pre-Christmas fire sale as liquidation looms

Debenhams has launched a pre-Christmas fire sale of up to 70pc off all of its stock, after calling in liquidators. Some 12,000 are at risk.

The department store will open its 124 locations tomorrow, as lockdown eases, marking the beginning of the end after 242 years of trading.

Comment: Brexit pales beside Europe’s culture and debt wars 

ICYMI: Our economic commentator Ambrose Evans-Pritchard has argued the EU will destroy itself from within if it continues to force its headstrong ideology on members: 

It was Europe’s handling of the fiscal compact in 2012 that set the course for Brexit. The EU swatted away modest UK demands for City safeguard clauses. It then circumvented a British veto.
Europe’s leaders  rammed through the compact outside the EU treaties by “intergovernmental” means. They subjected the British Prime Minister to a torrent of invective for good measure. David Cameron’s referendum pledge was the consequence.
Brussels claimed the compact was vitally needed to bolster monetary union. What it really meant was that Germany and the northern creditor bloc wanted intrusive budgetary surveillance powers to bring southern Europe to heel.
  • Read the rest of Ambrose's column here

Sign up to The Telegraph's Economic Intelligence newsletter to get exclusive insight from two of the UK’s leading economic commentators – Ambrose Evans-Pritchard and Jeremy Warner – delivered direct to your inbox every Tuesday.

Handover

Time for me to hand over to my colleague Louise Moon, who will steer the blog onwards. Thanks for following along today!

Market moves

With about an hour left until the European close, markets are solidly higher, marking a strong start to December.

Airbnb targets $35bn float

A woman talks on the phone at the Airbnb office headquarters in San Francisco Credit: REUTERS/Gabrielle Lurie/File Photo

Airbnb is planning to raise as much as $2.6bn (£1.95bn) in a long-awaited float as it brings one of the busiest years ever for the US stock market to a close with a flurry of listings. 

My colleague Matthew Field reports:

The home-renting business, which suffered at the start of the coronavirus pandemic after a collapse in travel, has come back strongly as staycations picked up again even as major hotel chains continued to suffer.

Airbnb is targeting a $35bn valuation in the float, higher than the $18bn it raised at earlier this year. It will sell around 52 million shares at $44 to $50, according to a US filing with the Securities Exchange Commission. 

The rental business, founded by Brian Chesky in 2008, saw its valuation slashed from $31bn earlier this year as it raised $2bn in debt and other financing as it sought to stay afloat during the pandemic.

Despite the lofty valuation, Airbnb is still losing hundreds of millions of dollars each year.

Wall Street rises solidly at open

US stocks have opened solidly higher amid a widespread global rally. 

Credit: Bloomberg TV

City Intelligence: Sir Philip Green still has a chance for salvation

Our Chief City Commentator Ben Marlow has been writing about the Arcadia pension fund and promises from politicians to hold Sir Philip Green to account:

Posturing politicians have quickly taken to the airwaves and social media, promising to force Green to cover any shortfall in the pension scheme, but the reality is the Government doesn’t have a leg to stand on this time. 

Whereas The Pensions Regulator was able to chase Green when he offloaded BHS to serial bankrupt Dominic Chappell, this time it has no such powers. So technically Green can walk away.

Of course that doesn’t mean a man with a private jet, a yacht and a still sizeable fortune, doesn’t have a moral duty to do what’s right. But it is an unfortunate fact that there is no legal recourse for him to do the right thing this time around.

Money round-up

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

How much is Sir Philip Green actually worth?

Sir Philip Green’s super-yacht, Lionheart Credit: DFGRI/The Mega Agency

Known for their penchant for super-yachts and a champagne lifestyle, Monaco-based Sir Philip Green and his wife Lady Green’s fortune was once one of the largest in Britain. But as their famous Arcadia brands fall by the wayside, what has happened to the couple's billions?

My colleague Will Kirkman reports:

Their current fortune is pegged at £930m by the Sunday Times rich list, putting them 154th on the list, although other reports have valued this higher.

While their exact worth is unclear there’s little doubt their vast fortune has waned. Sir Philip became a millionaire at 33 by buying the Jean Jeanie chain for £65,000 and selling it a short time later for £3m.

Money and Pensions Service: Debenhams staff should call us if they need help

The Money and Pensions Service, an arms-length governmental body sponsored by the Department for Work and Pensions, has said Debenhams staff should get in contact if they have questions about their pay and holiday entitlement, as well as the state of their pension pots.

Nick Hill, one of its customary advisory managers, said:

This is clearly a difficult time for all sectors, including retailers and following the news about Arcadia last night there will now be thousands of Debenhams staff who will understandably be very concerned about their jobs, pensions and overall financial security as a result of this news. Staff should check what they’re entitled to from their employer, including redundancy and holiday pay, and to consider that they may need to review their wider financial situation.

For any questions about how to handle your mortgages, debts or other money worries please visit the Money Advice Service website for free guidance.

Before making any decisions about pensions, particularly at a stressful time, we would urge people to talk to our experts who will be happy to help. Your pension rights will depend on the scheme you’re in. If you’re unclear how you might be affected, call our pension specialists for free on 0800 111 3797.

If you are a Debenhams customer, you should keep up any payments to store branded credit cards or buy now pay later schemes. Any missed payments will still have a negative impact on your credit rating.

Topshop’s Oxford Street flagship could be swept up by creditors

People pass Topshop’s flagship store on Oxford Street yesterday Credit: REUTERS/Simon Dawson

An interesting tidbit from Bloomberg’s report of the collapse of Arcadia and Debenhams: Topshop’s flagship store of Oxford Street was put up as collateral for a £310m loan from Apollo Global Management, who helped the group finance last year. The news service adds:

The subsidiary that owns that property has hired KPMG as administrators to assess options for the 100,000 square-foot site, which used to welcome 400,000 customers a week before the pandemic.

Round-up

Many companies are highly leveraged after being forced to shut up shop Credit: Jeff J Mitchell/Getty Images

Here are some of the day’s top stories from the Telegraph Business desk:

Sunak: Arcadia/Debenhams situation ‘deeply worrying’

Speaking in the House of Commons, Chancellor Rishi Sunak has said the Government stands ready to support employees if needed, echoing comments made by business secretary Alok Sharma. Mr Sunak told MPs:

The news about Arcadia and indeed Debenhams will be deeply worrying for employees and their families and the government stands ready to support them…

With regard to the various things that are ongoing, there are negotiations between various parties and the companies at the moment, particularly with regard to pensions, and it wouldn’t be right for me to comment specifically on those, but rest assured that we keep an eye on the situation.

Ad industry forecast for boom

The UK’s advertising industry is poised to roar back to life next year, surging 12pc to £24bn as Covid vaccines boost the economy. 

My colleague Ben Woods reports:

The rebound will mark a reprieve from this year's pandemic-induced plunge in ad spending, marking the worst performance from the sector in at least a decade. 

Forecasts from GroupM, the media buying agency owned by WPP, expect total advertising spending to fall 4.4pc to £21bn in 2020 as the crisis takes its toll. 

It said the vaccines will put the UK economy on track to achieve “normalcy” by the middle of next year, but expects businesses to be left exposed as government support tapers off and Brexit uncertainty rises at the start of 2021. 

Debenhams and Arcadia collapse: key consumer questions answered

Important consumer news following the collapse of Arcadia, and Debenhams’ closure: For those who have vouchers or gift cards, you are not guaranteed to get your money back as a company can refuse to honour these once it has gone into administration.

My colleague Jessica Beard writes:

This is because administrators view customers with vouchers and gift cards as "creditors": people who are owed money by the businesses. Voucher holders will have to get in line with other creditors and customers tend to be at the back of the queue behind the taxman, banks and suppliers.

If you have already bought goods and need to return them, you should do this while the stores are trading otherwise the situation becomes more complicated.

You can read a full breakdown of all the key questions you might have here:

TUC: Government must step in to help retailers

The Trades Union Congress has called on the Government to step in and prevent the loss of thousands of high street jobs. General secretary Frances O’Grady said:

The government must not watch from the side lines as thousands of high street jobs are lost. We need urgent and targeted action to save livelihoods in badly-hit industries – like retail – before it’s too late. Unions stand ready to work with ministers and employers on sector-by-sector recovery plans.

On support for staff who lose their jobs, she added:

The government must do all it can to help those who lose their jobs get back on their feet. That means investing in creating decent jobs across the country and boosting universal credit.

Full report: Debenhams set to close as JD pulls the plug

My colleague Laura Onita has a full report up on the retail rollercoaster of the past few days, including JD Sports’ decision to ditch Debenhams. She writes:

The added uncertainty around Arcadia’s future was part of the reason why the sportswear chain ended discussions. The brands are Debenhams’ largest concession holder. 

However, its top brass were also spooked by the drop in the share price in response to a prospective takeover bid. The stock was down 11pc last week but rose 2.8pc on Tuesday.

Restructuring specialists at Hilco will begin selling as much stock as possible to pay Debenhams' creditors. The goods are estimated to be worth £300m. 

‘I thought Philip Green would put off our customers’

Fashion retail expert Jane Shepherdson Credit:  John Nguyen/JNVisuals

In case you missed it, former Topshop brand director Jane Shepherdson wrote for our Style section yesterday about what happened when Sir Philip Green took over Arcadia:

As well as adding to our design credentials, we wanted our customers to experience the best service and in-store theatre on the high street too. We trained up style advisors and offered VIP styling sessions either in store or even at home. We had a team of guys on scooters delivering purchases within the hour to customers within the M25, way before online became the preferred way to shop…

Green was not part of this culture. In our view, he didn’t understand the mind of a teenage fashionista and we felt that it was imperative to keep his intervention to a minimum in order to continue our success. 

Will Mike Ashley make a fresh move for Debenhams?

Mr Green (left) and Mr Ashley are long-time rivals

With Debenhams’ assets once again up for sale, all eyes are on Sports Direct tycoon Mike Ashley, who has made no secret of his desire to take the ailing department store under his Frasers Group retail umbrella.

As my colleague Ben Marlow wrote in his City Intelligence column yesterday:

Fittingly Mike Ashley has positioned himself as the only saviour of either Arcadia or Debenhams, and therefore the only saviour of both. In his quest to exert the same sort of influence over the retail sector that Green once commanded with as much fear as he did respect, Ashley has morphed into something resembling a high street undertaker-cum-doctor,  swooping on dead or dying chains at every possibility.

With JD Sports swiftly backing away from a deal to buy Debenhams as the future of its biggest concession-holder has become increasingly uncertain, Ashley has moved into pole position in negotiations. It is the latest chapter in a long courtship of a failing department store outfit that has already cost shareholders £150m.

What’s next for Arcadia and its staff – key questions answered

The Press Association has put together a handy guide to the key questions over Arcadia’s collapse, and what the next steps are for the group, its creditors, and its staff:

Stock clearing starts tomorrow?

The BBC’s Emma Simpson again on Debenhams’ collapse: 

Debenhams’ statement in full

Here’s the full statement from Debenhams:

Debenhams confirms that its administrators, FRP Advisory, have concluded the initial sale process that was part of their assessment of options for the UK business in administration.  Those options included a sale of all or part of the UK business; a further restructure of Debenhams’ operations to go forward on a standalone basis; or the orderly wind-down of the Debenhams business.

The sale process has not resulted in a deliverable proposal.  Given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain. The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business.

Debenhams will continue to trade through its 124 UK stores and online to clear its current and contracted stocks. On conclusion of this process, if no alternative offers have been received, the UK operations will close. This does not impact Magasin du Nord in Denmark, which continues to operate independently.

Geoff Rowley of FRP Advisory, joint administrator to Debenhams and Partner at FRP, added:

All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached. The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.

We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading. We would also like to thank the landlords, suppliers and partners who have continued to work with Debenhams through this turbulent period and can reassure them that all contractual obligations entered into in the administration period will be met in full.

Debenhams ‘wind-up’: snap reaction

Here’s some snap reaction to developments at Debenhams:

Retail advisor Steve Dresser tweets: 

Richard Lim, from consultancy Retail Economics, added:

We can not overstate the significance of this collapse given the vast property portfolio, number of jobs impacted and the reverberations felt across the industry. 

In a week that has seen the collapse of the Arcadia Group, this is a truly devastating week for the high street. This puts up to 25,000 jobs at risk in just a couple of days. 

The reality is that Debenhams has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The impact of the pandemic has accelerated its demise but underlying issues within the business were the root cause.

The BBC’s Simon Jack says Arcadia sources are trying to distance the group from Debenhams’ liquidation:

Debenhams is set to be liquidated, with 12,000 jobs at risk, after the collapse of Sir Philip Green’s retail empire Arcadia prompted JD Sports to abandon its bid for the department store. In a statement on Tuesday, Debenhams said its administrators had not been able to find a “deliverable proposal” to sell the company, and will “commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business”. Minutes earlier, JD said it had terminated takeover talks following Arcadia’s collapse. Debenhams’ future was put at risk once again after the owner of brands including Topshop and Burton – one of its biggest concession holders – called in administrators on Monday. There is now set to be a bidding war that will shape the future of Britain’s ailing legacy fashion retail companies – and the high street itself.

Debenhams confirms closures

Debenhams has now confirmed that its store will close, saying administrators FRP Advisory were unable to find a “deliverable proposal” in its sale process.

Here are some key points, via Bloomberg:

  • Given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain
  • Administrators therefore “regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business”
  • Debenhams will continue to trade through its 124 UK stores and online to clear its current and contracted stocks; on conclusion of this process, if no alternative offers have been received, the UK operations will close

Liquidation could mean 12,000 jobs are lost

The BBC’s Simon Jack says Debenhams’ move into liquidation, rather than administration, means 12,000 jobs will be lost:

BBC’s Simpson: Debenhams set to enter liquidation

The BBC’s Emma Simpson says Debenhams has told staff the chain will close and go into liquidation following JD Sports’ decision to abandon takeover talks:

Sharma: Government ‘stands ready’ to help workers affected be Arcadia collapse

As 23,000 jobs hang in the balance, it’s worth noting this Twitter thread by business secretary Alok Sharma, from late last night:

We’ve updated our full report on the situation:

JD Sports terminates talks with Debenhams administrators

Just in: JD Sports has, as was widely expected, pulled out of talks over buying stricken department store Debenhams following Arcadia’s collapse.

In a brief statement, the FTSE 100 group said it: “confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated”.

As my colleague Laura Onita reported yesterday:

Most of Arcadia’s brands have concessions in Debenhams stores, with sales by the fashion business accounting for about 5pc of Debenhams’ revenues. JD Sports’ share price fell 11pc last week in response to a prospective deal, and it is thought this response from investors has also spooked management.

French, German and Eurozone readings broadly unchanged

The manufacturing PMIs for France, Germany and the eurozone as a whole were all roughly in line with the ‘flash’ estimates released last month:

  • France: 49.6 (est. 49.1)
  • Germany: 57.8 (est. 57.9)
  • Eurozone: 53.8 (est. 53.6)

As my colleague Tom Rees wrote then:

Economists are expecting a second but smaller decline in output over the fourth quarter after governments rushed to contain surging infections. New restrictions have been focused on the services sector, meaning factories have continued growing.

We’ll have the final reading for Britain’s factories at half past.

Italian manufacturing activity continues to rise

In contrast to Spain (see 8:28am update), activity in Italy’s manufacturing sector continued to rise during November according to the latest purchasing managers’ index data.

IHS Markit’s gauge gave a reading of 51.5 – moderately lower than the 52 expected by economists, but still clear of the growth threshold at 50.

The group said:

Latest PMI data signalled a further improvement in the health of the Italian manufacturing sector. The recovery lost momentum, however, as output growth slowed amid a renewed fall in order book volumes, linked to stricter Covid-19-related measures.

Lewis Cooper, one of its economists, added:

Output growth eased to a marginal pace amid a renewed decline in total new orders, linked by panellists to stricter lockdown measures.

Nonetheless, firms continued to increase staff numbers during November, attributed to greater production requirements and expectations of a surge in demand once restrictions are loosened.

Grafton buys StairBox for £44m

Builders’ merchant Grafton has bought AVC Ltd., better known as Stairbox, a wooden staircase specialist, for £44m.

The payment will be on a cash basis, with no extra debt incurred and £4m of the total deferred until November 2022.

FTSE 250-listed Grafton said:

StairBox has an impressive track record of growth, a scalable operating model and the capacity to develop organically under the leadership of its experienced management team that will remain with the business.   

It added StairBox has revenues of £19.5m and adjusted operating profit of £6.1m for the year ended 31st March 2020.

Gavin Slark, Grafton’s chief executive, said:

The acquisition of StairBox is in line with our strategy of acquiring specialist high quality businesses with attractive returns. We are delighted with this acquisition opportunity and the skills and experience that the management team under the leadership of Alex Hancock will bring to the group.

Spain’s manufacturing sector returns to contraction

Spanish factory activity declined last month amid a downturn in demand, with companies cutting staff numbers as orders dried up according to the latest purchasing managers’ index data.

Spain’s manufacturing gauge came in at a reading of 49.8, where a score below 50 indicates a slowdown compared to the previous month.

IHS Markit, which gathered the data, said:

A drop in new orders was the primary reason behind November’s fall in the PMI. Amid widespread reports that Covid-19 was having an adverse impact on demand, especially in sectors such as tourism and hospitality, new orders declined at the sharpest rate since May. New export orders were also lower, falling for the first time in three months.

Paul Smith, its economics director, added:

 With increasingly positive news about vaccine developments, confidence about conditions in a year’s time is however building, and once the pandemic is brought fully under control, manufacturers are confident that activity and demand will increase.

Pound tops $1.34 for first time since early September

Amid a broader rally for risky assets than has caused the dollar to soften, the pound has hit $1.34 for the first time since early September:

FTSE rises as stock rally returns

The FTSE 100 opened moderately higher as European indices shook off their muted opening to the week.

Credit: Bloomberg TV

Pets at Home sells five specialist practices for £100m

Retailers Pets at Home has sold five of its specialist referral practices to Linnaeus Group for a “cash consideration of up to £100m”.

The FTSE 250 group said the disposal is part of its continued focus on retailing and its First Opinion veterinary business. Linnaeus, part of Mars Veterinary Health, runs over 150 clinic across the UK.

The sale includes the assets and operations of:

  • Dick White Referrals in Cambridgeshire
  • Anderson Moores in Hampshire
  • Northwest Veterinary Specialists in Cheshire
  • Eye Vet in Cheshire
  • Veterinary Specialists Scotland in Livingston, Scotland

It consists of a £80m cash payment upon completion, and a further consideration of £20m based on “certain financial milestones” being met in the future. The sale is expected to complete in the first quarter of 2021.

Pets at Home chief executive Peter Pritchard said:

For our shareholders, the disposal proceeds provide the group with additional resource to accelerate growth across our customer-focused pet care platform.

House prices rise to new high – Nationwide

UK average house prices prices rose to a new record of £229,721, up 0.9pc from October’s levels, according to the latest house price index from Nationwide.

The rise, which represents a 6.5pc increase over 12 months, is the fastest annual growth since January 2015.

Nationwide’s Robert Gardner said:

The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.

Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward. 

Horta-Osório heads to Credit Suisse

A day after his replacement at Lloyds was announced, Credit Suisse has said it intends to name Portuguese banker António Horta-Osório as its new chairman.

Bloomberg reports:

Shareholders will vote on the 56-year-old’s nomination at the bank’s next annual general meeting on April 30, Credit Suisse said. He will succeed Urs Rohner, who is departing after reaching his term limit.

Mr Horta-Osorio, a native of Portugal, is one of the UK’s best known executives and the longest serving boss of a major bank in Britain. His pay package often stoked controversy even as he steered Lloyds to profitability and full private ownership after a bailout during the financial crisis.

Agenda: Retail risk as thousands of jobs hang in the balance

Good morning. Thousands of Arcadia employees are waiting to learn more about their fate after the chain fell into administration. Fears are growing that JD Sports will pull out of a rescue deal for Debenhams, which is already in administration and is home to scores of Arcadia concessions. 

Elsewhere, Asian markets rose overnight, while outgoing Lloyds boss António Horta-Osório is to become chairman of Credit Suisse.

5 things to start your day 

1) Philip Green's retail empire Arcadia collapses into administration: The crash, likely to start a bidding war, leaves thousands of pension savers at risk of a hit to retirement incomes and puts 13,000 jobs at risk.

2) Caffè Nero rejects takeover offer from billionaire Issa Brothers: A spokesperson said the Issa brothers' offer would result in an outcome for the struggling coffee chain that is "far inferior" to the CVA proposals.

3) Blue-chip firms suffer highest tax burden in a decade: As profitability fell in a slowing global economy, total tax rates for the year to March 31 reached its highest level since 2010, found PwC.

4) S&P Global buys London-based IHS Markit in $44bn deal: British financial data behemoth IHS Markit is being snapped up by US rival S&P Global for $44bn in the biggest US-UK deal for seven years.

5)  Big Tech's grip on the world could trigger the next financial crash: If a tech giant was forced to exit a market, shockwaves would be felt globally. The so-called 'Big Five' have become intertwined in public life.

What happened overnight 

Asian share markets began the new month with a bang on Tuesday, buoyed by the prospect of a Covid-19 vaccine fuelling a global economic recovery, buoyant Chinese factory activity and expectations of continuing fiscal and monetary support.

MSCI's broadest index of Asia-Pacific shares outside Japan added 1.08pc after closing the month 9pc higher, the best November since 2001.

China's blue-chip CSI300 index jumped to be 1.56pc higher on Tuesday, after a business survey showed on Tuesday activity in China's factory sector accelerated at the fastest pace in a decade in November.

Japan's Nikkei was up 1.34pc while South Korea was up 1.5pc. Australia's S&P/ASX 200 was 1pc higher after Australia's central bank said the country's economy would need fiscal and monetary support "for some time" while noting the run of better news.

Coming up today

Corporate: Iomart, Monks Investment Trust (Interim results); Gooch & Housego, Hyve, Topps Tiles (Full year)

Economics: Final manufacturing PMI (UK, Japan, China, eurozone, US)