Closing summary
Rail firms have announced plans for the mass closure of England’s ticket offices to “modernise” the railway, ramping up the battle with unions and infuriating disability and passenger groups.
The move, pushed by the government to save costs, was confirmed by the industry body, the Rail Delivery Group. Train operators told staff on Wednesday morning of proposals to shut down almost all of the 1,007 remaining offices, bar at the busiest stations, within three years.
The RDG said ticket office staff would move on to station platforms and concourses in “new and engaging roles”. However, many fear job losses, with any guarantees offered over compulsory redundancies in pay talks set to expire at the end of next year.
The RMT union called it “a savage attack on railway workers, their families and the travelling public” and claimed operators had issued statutory redundancy notices affecting hundreds of staff.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Take care – JK
The Commons business and trade committee has written to Asda co-owner Mohsin Issa asking him to clarify remarks made by the supermarket’s chief commercial officer on fuel pricing, and fire-and-rehire tactics.
The chair of the cross-party committee, Darren Jones, wrote that MPs are “concerned about apparent discrepancies” between Kris Comerford’s evidence on fuel pricing and a Competition and Markets Authority market study published this week.
During his session in front of the committee, Comerford claimed that Asda’s fuel pricing strategy policy had not changed, but the CMA found “a significant weakening of competitive pricing” from Asda.
Asked if Asda were still using fire-and-rehire tactics – when an employer fires an employee and offers them a new, potentially less favourable contract – Comerford said they were “not something that Asda employs.”
However, letters from Asda and the GMB union also published today make the accuracy of this statement unclear. GMB told the ccommittee that Asda had issued the threat of using fire and rehire that Asda characterised as ‘dismiss and reengage’ as ‘a last resort’ in its own letter.
Jones has asked Issa to appear before the committee to discuss these concerns on 19 July.
Savills: 70% of central London properties sold this year bought with cash
More than 70% of “prime central London” properties sold so far this year have been bought entirely in cash, according to a report by estate agents Savills that fuels concerns that rich overseas buyers are snapping up properties at the expense of working Londoners.
A total of 71% of prime central London – an estate agent term for an area that stretches from Chelsea to Camden and Notting Hill to Westminster – have been bought mortgage-free in the seven months from January. That compares with about 35% for the UK as a whole.
It comes as soaring inflation has led the Bank of England to push interest rates to a 13-year high of 5%, which has in turn led banks to raise mortgage rates, making large home loans increasingly difficult to afford.
JPMorgan sees risk of 7% rates and 'hard landing'
JPMorgan sees a risk that the Bank of England will have to raise interest rates as high as 7% and trigger a “hard landing” in the economy to bring inflation down.
JPMorgan economist Allan Monks says his central forecast is that rates will peak at 5.75% by November, but there is a risk that “elevated inflation expectations could require the Bank of England to take rates up to 7%”. Inflation unexpectedly rose to 7.9% in May, from 7.8% in April. Monks wrote in a note:
We see 5.75% peak rates by November, but absent an adverse global growth shock, rates could go higher
Delaying a necessary tightening risks more ultimately needing to be delivered...
...as an increasingly domestic inflation problem risks becoming more entrenched
We use two metrics to show how rates could reach 7% under some scenarios: A battle to control inflation expectations and delayed tightening is already pushing the bar higher
He added:
A break in behaviour, or hard landing, looks increasingly likely at some point over the next year if inflation is to be brought under control in the UK. The main question is whether the BoE will get some help from external sources in delivering this adjustment, or whether it will have to do all the heavy lifting itself.
Financial markets are currently pricing in a peak in interest rates of around 6.25% by March.
In other corporate news, the family-owned food giant Mars has struck a deal to buy Kevin’s Natural Foods, which makes sauces and entrée kits.
The American snackmaker is reportedly paying nearly $800m for the health food brand, Reuters reported. Shaid Shah, global president at Mars Food & Nutrition, said:
We are trying to deliver on a mission we have to enable more healthier and more flavourful diets for consumers worldwide, while Kevin’s is trying to empower the busiest people to eat clean without sacrificing flavours.
Leicester City FC has been fined £880,000 by the UK’s competition watchdog after admitting restricting online sales of its football kit with JD Sports.
The Competition and Markets Authority (CMA) said Leicester City and JD had both admitted that they broke competition law.
The companies had a deal in which JD agreed not to sell Leicester kit for the 2018-19 season and then said it would apply a delivery charge to all orders of Leicester City-branded clothing for the following two seasons in order not to undercut the club’s own online store. During that period JD was offering free online delivery for all orders of more than £70.
JD was not fined by the CMA as it reported the illegal conduct and admitted its participation.
Here is our full story on Crispin Odey:
The UK’s financial regulator is investigating whether Crispin Odey, the hedge fund manager facing allegations of sexual misconduct, is a “fit and proper person” to work in financial services.
The Financial Conduct Authority (FCA) has told MPs it was investigating claims that Odey, who was forced out of his firm Odey Asset Management (OAM) by its board last month, dismissed the firm’s executive committee “for an improper purpose”.
Rail firms have announced plans for the mass closure of England’s ticket offices amid opposition from rail unions and concern voiced by disability and passenger groups.
The move, pushed by the government to save costs, was confirmed by the industry body, the Rail Delivery Group (RDG). Train operators told staff on Wednesday morning of proposals to shut down almost all of the 1,007 remaining offices, except the busiest stations, within three years.
It is not yet known how many jobs will be lost, though the RDG said ticket office staff would move on to station platforms and concourses in “new and engaging roles”.
We want to hear from people who will be affected by the planned closures. How do you feel about the change? What will it mean for you?
You can share your thoughts on plans to close railway ticket offices by messaging us on WhatsApp at +447766780300, or by filing in the form on the link below.
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A senior police officer has been appointed head of the UK’s Serious Fraud Office (SFO), the agency which investigates major cases of bribery and corruption.
Nick Ephgrave, who was an assistant commissioner at London’s police force, the Metropolitan Police Service, will replace Lisa Osofsky, who has led the SFO for the last five years. He will take up the job at the end of September.
Osofsky, a former US federal prosecutor, said:
As an experienced criminal justice leader, he will take forward our fight and help ensure we continue delivering for victims and the public.
The SFO has tackled some of Britain’s biggest fraud cases, including a recent high-profile case involving Swiss commodity trader Glencore. However, the agency has also been criticised in recent years over its resources and criminal disclosure rules.
Chip wars: how semiconductors became a flashpoint in the US-China relationship
As US Treasury secretary Janet Yellen heads to Beijing in an attempt to steady economic ties, high on the agenda will be how to navigate the growing chip war between China and the US.
Despite diplomatic overtures from both sides, the competition in advanced technology between the two superpowers shows no sign of letting up.
On Monday, Beijing set a hostile tone for Yellen’s trip as it set export restrictions on two minerals that the US says are essential to the production of semiconductors and other advanced technology. Chinese state media tabloid the Global Times said on Wednesday: “There’s no reason for China to continue exhausting its own mineral resources, only to be blocked from pursuing technological development...”.
The measures came as the Biden administration reportedly prepares to expand its own restrictions on the sale of advanced microchips to China.
What is the US worried about?
Washington’s concerns are twofold. The first is that China’s People’s Liberation Army (PLA) could surpass the US military in terms of overall power. The second is that it could use US technology to do so.
Rail firms unveil plans for mass closure of England’s ticket offices to ‘modernise’ railway
Rail firms have announced plans for the mass closure of England’s ticket offices to “modernise” the railway, ramping up the battle with unions and infuriating disability and passenger groups.
The move, pushed by the government to save costs, was confirmed by the industry body, the Rail Delivery Group. Train operators told staff on Wednesday morning of proposals to shut down almost all of the 1,007 remaining offices, bar at the busiest stations, within three years.
The RDG said ticket office staff would move on to station platforms and concourses in “new and engaging roles”. However, many fear job losses, with any guarantees offered over compulsory redundancies in pay talks set to expire at the end of next year.
Labour has warned that “rushed” plans could worsen the “managed decline of our rail network”, while transport campaigners said it would put more vulnerable people off rail travel.
However, the industry argues that only 12% of tickets are now bought at offices, down from 82% in 1995, with moves continuing to expand contactless payments and online purchasing.
Updated
Here is our full story on AO World:
AO World has said inflationary pressures are easing, as the UK online electrical goods company bounced back to profitability after a big restructure, including “significant” job cuts.
The founder and chief executive of the company, which sells kitchen appliances, mobile phones, TVs and laptops for home delivery, said inflationary pressures had “levelled out” over the last year.
“Over the last 12 months we have seen inflationary pressures reducing dramatically and very much levelled out as things like shipping prices have returned to more normal levels and supply chains have returned to a more normal situation,” John Roberts told BBC Radio 4’s Today programme. “From our point of view, the internet is about as price transparent as it gets.”
Water companies to seek big bill rises – Ofwat
Water companies will be seeking big bill rises as they face huge infrastructure investment demands, the chief executive of the water regulator, Ofwat, has said.
David Black denied that the water industry was badly regulated and defended Ofwat’s role in an industry saddled with debt and facing public anger over poor performance, high dividends, executive pay and sewage pollution.
Black said the £60bn of debt taken on by privatised water firms, including struggling Thames Water, which has the highest gearing in the industry, was “their issue to sort out”.
UK business growth slows as interest rates rise
In the UK, business growth slowed sharply last month with inflationary pressures slowing, as higher interest rates held back demand, according to a UK survey.
The S&P Global/CIPS purchasing managers’ index (PMI) for UK services dropped to 53.7 in June from May’s 55.2, in line with a preliminary estimate.
While this was comfortably above the 50 level which separates growth from contraction, it was the lowest reading in the dominant services industry since March and the biggest month-on-month fall since last August.
The composite PMI, which includes manufacturing, also fell to a three-month low and was in line with the flash estimate at 52.8.
Tim Moore, economics director at S&P Global Market Intelligence, said:
The service sector showed renewed signs of fragility in June as rising interest rates and concerns about the UK economic outlook took their toll on customer demand.
Survey respondents typically cited more cautious decision-making among clients and a loss of momentum for spending on consumer services. Higher borrowing costs were also reported as contributing to more subdued business conditions in June, partly due to weaker spending in the construction and real estate sectors.
Despite another slowdown in service sector growth, the latest survey indicated that labour market conditions remained relatively strong. Job creation reached a nine-month high as an improvement in candidate availability allowed firms to backfill vacancies and rebuild business capacity.
The Bank of England unexpectedly raised its main interest rate by a half point to 5% last month, the highest since 2008, after inflation held at 8.7% in May. Governor Andrew Bailey said there were signs that inflation could be slow to ease.
Some economists think the central bank’s rate rises will push Britain into recession later this year, after the economy eked out just 0.1% growth in the three months to the end of April, according to official figures.
The PMI surveys showed input cost inflation slowed to the lowest level since May 2021 but remained above pre-pandemic levels. “Widespread increases in salary payments offset falling fuel bills and energy prices,” Moore said.
Businesses also hired staff at a faster rate, taking on the most since last September.
Eurozone business activity shrinks as price pressures ease
In the eurozone, business activity moved into negative territory last month as service industries worsened, and the decline in factory output deepened, a survey has shown.
HCOB’s final reading for the composite purchasing managers’ index (PMI), compiled by S&P Global and seen as a good gauge of overall economic health, fell to 49.9 in June from May’s 52.8.
It was below the 50 mark that divides growth from contraction for the first time since December, and below a preliminary reading of 50.3.
Manufacturing activity contracted faster than initially thought and the PMI for the services sector dropped to 52.0 from 55.1, weaker than the 52.4 flash reading.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said:
All major euro countries have again lost considerable momentum. The slowdown in business activity growth was accompanied by a weaker rise in new business, lower price increases and a decline in business expectations.
In better news, pricing pressures eased considerably in June, with the output prices index in the overall composite survey falling to 53.8 from 56.4, its lowest since March 2021.
This will be welcomed by policymakers at the European Central Bank, who have failed to get inflation anywhere near their 2% target despite hiking interest rates aggressively.
They raised borrowing costs to their highest level in 22 years last month and indicated that owing to stubbornly high inflation (5.5% in June), another rate rise on 27 July is very likely, with further hikes looming thereafter.
Producer prices fell for a fifth month in May, according to official figures from the EU’s statistics office, Eurostat. Prices at the factory gate in the 20 countries sharing the euro fell 1.5% year-on-year in May. They are an early indicator of consumer price inflation.
Updated
UK new car sales up 26%; industry calls for VAT cut on electric vehicle charging
The number of new cars sold in the UK rose nearly 26% in June year-on-year as more people and businesses went electric, and the industry called for a VAT cut on electric vehicle charging.
Some 177,266 vehicles were registered in June, according to the Society of Motor Manufacturers and Traders. It is the 11th consecutive month of growth, as carmakers gradually recover from the pandemic-induced supply chain shortages that held back production for much of the previous two years.
Growth was mainly driven by companies rebuilding their fleets, with large fleet registrations up nearly 38% to 92,699, reflecting a normalisation.
Battery electric vehicles were particularly in demand, with sales up 39% to 31,700, while petrol car sales rose only 22.7%. Hybrids and plug-in hybrid sales were also strong, up 40% and 65.5% respectively. Diesel registrations fell by 13.5%.
Mike Hawes, SMMT chief executive, said:
The new car market is growing back and growing green, as the attractions of electric cars become apparent to more drivers. But meeting our climate goals means we have to move even faster.
Most electric vehicle owners enjoy the convenience and cost saving of charging at home but those that do not have a driveway or designated parking space must pay four times as much in tax for the same amount of energy. This is unfair and risks delaying greater uptake, so cutting VAT on public EV charging will help make owning an EV fairer and attractive to even more people.
Updated
City watchdog investigates whether Crispin Odey is 'fit and proper person' to work in finance
The City watchdog has revealed it is investigating whether hedge fund manager Crispin Odey is a “fit and proper person” to work in financial services, as part of “intensive” oversight of the scandal-hit firm he founded.
Odey’s £3.5bn hedge fund was broken up a month ago, a week after the multimillionaire Conservative and Brexit donor was accused of sexual misconduct by junior female members of staff and ousted.
In a letter to the Treasury Committee, the chief executive of the Financial Conduct Authority (FCA), Nikhil Rathi, confirmed an ongoing investigation into Odey and his firm Odey Asset Management (OAM), which began in 2021.
He said the FCA probe into Odey is focused on “allegations that he dismissed OAM’s executive committee for an improper purpose” and whether he is a “fit and proper person” to work in financial services.
He added that the regulator is also looking at whether he “failed to comply with the FCA’s conduct rules relating to integrity and acting with due skill, care and diligence”.
“It’s not happening.”
This is the blunt assessment of the success of efforts to turn Canary Wharf into a shopping and leisure destination. “Mondays and Fridays are dead,” says the frank shop worker. “This shop used to take a fair bit before Covid but now everything’s changed.”
(I went to talk to shop workers and food places last week and had a look around Canary Wharf.)
It’s a verdict that appears to be shared by other tenants in the vast east London financial hub. HSBC’s decision to leave its “tower of doom” in the docklands and move back to the City of London after more than two decades has dealt a hammer blow to Canary Wharf’s standing as a global financial centre.
The move has left onlookers examining landlord Canary Wharf Group (CWG)’s plans raise the appeal of the former wasteland, at a time when hybrid working has reduced the throng of office workers descending on the area each day.
HSBC will ditch its 45-floor skyscraper at 8 Canada Square when the lease expires in 2027 and move to an office near St Paul’s Cathedral that’s roughly half the size, following in the footsteps of other companies such as the law firm Clifford Chance.
AO World boss: Inflationary pressures have reduced 'dramatically'
The boss of the electrical retailer AO World said inflationary pressures have reduced “dramatically,” as the company swung back into the black.
The retailer, which is based in Bolton and sells household appliances like fridges, also announced a “significant reduction in headcount” but declined to give further details.
AO World reported a pre-tax profit of £8m in the year to 31 March, against a loss of £11m the previous year. Mike Ashley’s Frasers Group has become its biggest shareholder.
John Roberts, the founder and chief executive, said:
The macro economic situation and the inflationary pressures that households are dealing with are clearly going to have an issue.
The core category that we sell, we do major domestic appliances is much more resilient. When your fridge breaks, then you’re likely to buy a new one and we still have full employment [in the economy].
Because of the energy crisis, what we are seeing is customers are moving much more to energy efficient products where they tend to invest more into them. We are seeing customers spending more on an average product basis over the last couple of years.
He dodged the question whether the company would raise its prices further.
Over the last 12 months we’ve seen inflationary pressures reducing dramatically. It’s very much levelled out as shipping prices have returned to more normal levels and supply chains have returned to a normal situation.
Ofwat boss says 'hard lessons' to learn from water crisis as he defends watchdog's role
David Black, chief executive of Ofwat, has defended the water watchdog’s role in the water crisis. It has allowed Thames Water and other companies take on huge amounts of debt totalling £60bn.
He said generally it is fine to use debt financing to fund infrastructure investments, but when a company goes too far, they need to sort out their problems.
Talking about Thames Water, he said:
Their performance needs dramatic improvement and we do think they need to sort out their finances. It is their responsibility to do that. That’s what we’ll be holding them account to do. We are here to protect customers and we will continue to do that.
He claimed that customers don’t pay more for water and wastewater despite the company’s ballooning debt, which has reached around £14bn. Most this was piled on when Thames was owned by Australia’s Macquarie, a major infrastructure investor.
We’ve set price controls which set an efficient return on capital and that protects customers’ interests.
We received new powers in the Environment Act 2021 to change company licences and we’ve used those powers to amend those licences.
He said water companies had taken on debt to invest £190bn in infrastructure in recent years.
It is about the level of investment in the sector which has changed and the level of investment has been funded by debt. In one sense that is fine, the level of debt in the sector is responsible. A prudent company should use debt financing.
It’s a question of whether they’ve gone too far.
The views on debt levels are varied.
Numbers of 60% are consistent with prudent financial management.
Where companies have gone beyond, that is their issue to to sort it out.
The privatisation – when we were set up we weren’t given those powers. At that point there wasn’t a question of levels of debt that companies were taking on.
What we’ve seen is some companies go too far. We saw the same in the banking sector, there are some hard lessons to learn.
But we have got the arrangements in place to protect customers.
Black condemned the “excessive” dividends paid by Thames Water to shareholders in the past, and the “excessive” executive pay packages.
It is right to say that the dividend levels were excessive, which is why we’ve introduced the new powers to prevent this from happening…
The excesses of executive pay also anger me. We’ve taken action to protect customers from paying for these pay packages.
Q: This is not a well regulated industry?
Black said he “completely disagreed,” adding:
Companies make mistakes. In any sector you get poor-performing businesses. The question is are customers going to pay for that.
Q: Are higher water bills coming?
We expect companies will request increases in bills at the next price review to fund larger investment programmes and those investments will deliver improvements to the environment.
Thames Water is now trying to persuade its investors, a clutch of pension funds and sovereign wealth funds, to stump up more cash for the business.
Q: They are reluctant, are they?
Yes.
The company has been in crisis talks with ministers and Ofwat to discuss the option of putting it into a special administration.
The provisions are there to impose a special administration. That’s the backstop option, but we are still a long way from that position.
Black said the company has until the early part of next year to get shareholders to inject more equity into the business. He noted that Thames Water has £4.2bn of cash in the bank and access to credit.
Updated
Introduction: Train companies to begin process of closing hundreds of ticket offices in England
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hundreds of rail ticket offices are set to be closed across England, with details of the plans to be released today.
Train companies are expected to confirm a public consultation on the mass closure of ticket kiosks over the next three years. The majority of nearly 1,000 remaining ticket offices are to be shut under the plans, and a 21 days public consultation kicks off today. The RMT union has said it will fight the plans.
The industry says that only 12% of tickets are sold at station kiosks on average, compared with 85% in 1995, as people buy more tickets online or at machines. But rail users argue that the rail ticketing system is “mind-bogglingly complicated”.
Stewart Palmer of Railfuture which represents rail users, has been talking about the planned closures on BBC radio 4’s Today programme. He noted that we don’t have the details yet.
The question is not whether that person sits behind a glass screen or whether the person can be doing other things as well. Most rail users want members of staff available on the stations for help, advice, security and lots of other reasons, and they also want those people to be able to sell them a ticket.
One of the root causes of this issue is that the present ticketing system on the rail network in Britain is mind-bogglingly complicated. This consultation appears to me to be putting the cart before the horse.
The root cause of the problem is that people want versatile, knowledgeable staff, not necessarily behind a glass screen, but they also want to know that they are buying the right product at the right price.
The Agenda
8.15am BST: Spain Services and Composite PMIs (final) for June
8.45am BST: Italy Services and Composite PMIs
8.50am BST: France Services and Composite PMIs
8.55am BST: Germany Services and Composite PMIs
9am BST: Eurozone Services and Composite PMIs
9.30am BST: UK Services and Composite PMIs (final) for June
3pm BST: US Factory orders for May
7pm BST: US Federal Reserve minutes
Updated
