China will suffer a hit of around $20 trillion (£15 trillion) to its GDP by 2050 as the world shifts to clean sources of energy, analysts have said.
A report by Wood Mackenzie predicted China will feel more than a quarter of the total $75 trillion – or 2pc – impact on the global economy over the next 30 years. The US will suffer around 12pc, while Europe and India will account for 11pc and 7pc respectively.
The report found that efforts to invest in technology like solar and wind farms will cause a loss of jobs and tax revenues in fossil fuel production in the short term.
However, the economic benefits of the transition and limiting the rise in global temperatures to 1.5 degree Celsius should start to show after 2035 and the GDP hit will be recouped before the end of the century, the report said.
01:03 PM
Amazon to open clothing store in LA
Amazon has unveiled plans to open a clothes shop in Los Angeles, marking its latest foray into brick-and-mortar retailing.
The Amazon Style boutique will use AI to recommend purchases to customers as they shop, Amazon said. It will stock a range of women’s and men’s clothing, shoes and accessories.
Using an app, shoppers will be able to send items to a fitting room or directly to a pickup counter.
Having established its dominant position in the ecommerce market, Amazon is increasingly looking to mark its territory on the high street.
The Amazon Style concept follows the launch of a chain of bookshops in 2015, Amazon Go checkout-free supermarkets and Amazon Fresh stores. Jeff Bezos’ company also acquired Whole Foods Market in 2017.
12:49 PM
Inflation tsunami threatens Rishi Sunak’s No 10 dreams
Chancellor Rishi Sunak’s political career has soared like a rocket in the past two years. But the mounting cost of living crisis engulfing British households is threatening to bring his leadership ambitions crashing down to earth, writes Russell Lynch.
Read his full analysis here.
12:34 PM
Wincanton surges on profit upgrade
Wincanton is among the biggest risers today after the logistics group lifted its profit forecasts for the full year.
The logistics group said profit would exceed current expectations thanks to a 15pc rise in revenue in the third quarter and greater confidence over its ability to mitigate higher costs.
Wincanton hailed strong trading in its peak period for grocery and consumer deliveries, with the firm delivering 25m cases of food and drink in the week before Christmas.
It’s now poised to begin a five-year contract with Primark to deliver goods to all its UK stores.
Shares jumped 12.5pc.
12:21 PM
US futures rise with corporate results in focus
US futures have picked up as the global sell-off in bonds eased and investor turned their attention to a string of major corporate earnings.
Futures tracking the S&P 500 and Dow Jones rose 0.6pc and 0.4pc respectively, while the tech-heavy Nasdaq jumped 0.9pc.
Treasury yields fell this morning, though they remain higher for the week amid concerns about high inflation and the prospect of interest rate rises by the Federal Reserve.
Investors will be looking to US employment data this afternoon as well as Netflix quarterly earnings due later.
12:13 PM
BT to hike prices 9.4pc as inflation bites
After Wednesday’s grim inflation data, we’re starting to see the impact of higher prices filter down to consumers.
BT has announced its lifting its prices by 9.4pc from April as it grapples with higher costs.
Nick Lane at BT said: “Price rises are never popular, but are sometimes a necessary part of business, if we’re to keep up with the rising costs we face and ensure we can continue to deliver a brilliant network experience as customers usage of data grows month on month.
“We’ve thought long and hard about how we make sure that any pricing changes are predictable, clear, and not unfairly focused on our existing customers, but reflected in our new prices too.”
BT said the 9.4pc rise, which equates to an average monthly increase of £3.50, was in line with its new policy of a single annual increase in charges reflecting the consumer price index.
Last month the CPI rose to 5.4pc – its highest since 1992.
11:47 AM
Two-thirds of adults hit by cost-of-living crisis
Two-thirds of British adults have seen their cost of living jump over the last month as energy bills soared and higher costs filtered down to supermarket shelves.
A survey by the ONS found that 66pc of adults surveyed had experienced higher household costs. Of these, 87pc reported increasing food shop prices, while 79pc cited rising energy bills.
The poll – carried out between January 6 to 16 – showed nearly three-quarters had also experienced a higher cost of living due to rising fuel prices.
It comes after official figures on Wednesday showed that inflation soared to a near 30-year high of 5.4% in December.
11:31 AM
Gas prices fall further as China ships in supplies
Natural gas prices have fallen for a second day as China kicked off one of its biggest ever sales of liquified natural gas, helping to ease concerns over supply.
Benchmark European prices dropped as much as 8.1pc, while the UK equivalent lost as much as 6.9pc.
Two of China’s biggest state-owned gas importers have offered to sell dozens of cargoes for delivery until November. It could help ease pressure caused by low inventories and curbed supplies from Russia.
It comes even as geopolitical tensions mount about a potential Russian invasion of Ukraine, which threatens to roil gas markets further.
US President Joe Biden said he expects Russia will “move in” on its neighbour but could avoid a full-blown war.
11:15 AM
Wickes sales fall as traders hit by omicron
Wickes has reported a fall in sales at the end of last year as the spread of omicron and higher numbers of self-isolating staff took their toll.
The home improvement retailer said its Do It For Me business, which pays traders to complete home improvement jobs, was hit by “a higher incidence of Covid disruption and self-isolation ahead of the holiday period”.
This dragged down total like-for-like sales by 5pc over the fourth quarter compared to the same period in 2020, though they were still 14pc above pre-pandemic levels.
Wickes its core DIY business was buoyed by a “strong performance in local trade” over the three month period, as home renovations continued to bolster order books for tradespeople. Like-for-like sales across last year were up 13.3pc on 2020.
10:47 AM
HS2 supplier to raise £5.5m in London listing
A construction company supplying workers for the HS2 rail project is looking to raise £5.5m through a stock market listing in London.
Hercules said it would use the funding to cash in on booming demand and expand its services, including scaling up its operations to supply labour to the northern section of the HS2 rail project from London to Birmingham.
The listing on the junior Aim market is also set to raise £4.5m for Hercules’ existing shareholder through the partial sale of its stake.
Brusk Korkmaz, chief executive of Hercules, said:
Our proven and rapid delivery track-record has led to our work with our long-standing partner, Balfour Beatty, on HS2; this is expected to significantly step-change our growth in the next 12 months and beyond.
The demand for skilled labour is higher than ever before due to the multi-billion infrastructure commitments made by the UK government and we are experiencing unprecedented demand for our services.
Therefore, having identified multiple exciting growth opportunities, and proven the fast-growth and profitable nature of our business model, we believe that this is the right time to pursue an AIM listing. We are excited at the prospect of welcoming investors to our growth journey.
10:38 AM
Fidelity joins back-to-office push
Fidelity International has become the latest financial firm to encourage its staff back to the office after the Government announced the lifting of Plan B restrictions.
Anne Richards, chief executive of Fidelity, told Bloomberg TV: “We will be encouraging more people to come into the office but we are very much observing the same kind of sensible protocols because omicron, yes, it looks like it’s under control, case numbers are falling but we’re not through it yet.”
The asset manager’s offices have been open for skeleton staff throughout the pandemic, but Ms Richards said she was looking forward to a return to the City from next week.
It comes after Citi told its employees in London they were expected back in the office at least three days a week.
10:25 AM
M&S urges Boris Johnson to end Northern Ireland border checks
Marks & Spencer has written to Boris Johnson urging him to use new technology to end physical border checks in Northern Ireland, writes Laura Onita.
In a joint letter with major suppliers, the retailer argued that frictionless trade could be achieved with software that would remove the need for further certificates on goods in transit.
It also called for foreign lorry drivers to be given visas lasting up to three years, and said that a scheme for seasonal farming workers should be overhauled so they can remain in Britain for up to 12 months.
M&S has been one of the most vocal corporate critics of border disruption in Northern Ireland in the wake of Brexit after struggling to get English goods across the Irish Sea.
Signed by Stuart Machin, M&S’s joint chief operating officer and managing director of food, the letter said: “We need a long-term sustainable solution for goods movements into Northern Ireland.
“We do not want to see Northern Ireland becoming increasingly reliant on goods from overseas at the expense of British manufacturers.
“We believe a solution can be achieved by using technology that can clearly show product from GB that moves to Northern Ireland, stays in Northern Ireland.”
10:12 AM
Activity picks up ahead of Plan B ending
Key measures of real-time activity picked up in mid-January, showing positive signs the economy is bouncing back ahead of the scraping of Plan B measures.
Diner numbers rose five percentage points in the week to January 17 from the previous week, hitting 93pc of the equivalent pre-Covid level in 2019.
Overall retail footfall rose 2pc to hit 79pc of 2019 levels, while credit and debit card purchases picked up two percentage points.
Meanwhile, the average count of traffic camera activity for pedestrians and cyclists in London rose 12pc week on week, showing people were getting back out and about.
But in an indication of how omicron hit businesses, a net 6pc of firms reported lower turnover in December – the highest proportion reporting a monthly fall since April 2020.
A net 6% of firms reported decreasing turnover in December 2021, compared to the previous month, according to data from @HMRCgovuk VAT returns.
This is the highest proportion reporting a fall in monthly turnover since April 2020 https://t.co/H9yTqRmsYJ
— Office for National Statistics (ONS) (@ONS) January 20, 2022
09:47 AM
SMF: Rishi Sunak should give £300 cost-of-living bonus
Rishi Sunak should shun over-complicated solutions to the cost-of-living crisis and simply hand over cash to millions of households.
That’s according to the Social Market Foundation (SMF), which said the Chancellor should “just write millions of cheques” to people facing a financial squeeze from surging energy bills.
Dr Aveek Bhattacharya, chief economist at the SMF, said cash payments of up to £500 would be the best answer, allowing households to decide how to spend the money.
Households where no-one is a higher-rate taxpayer should get a cheque for £300, with an additional £200 for those on Universal Credit or legacy benefits, he said.
The economist said other proposals, such as cutting VAT on fuel and giving loans to energy companies, were all flawed as they would encourage consumption. Instead, he favoured simple cash payments modelled on pandemic stimulus cheques in the US.
09:40 AM
Citi asks London staff to return to office
Citigroup has asked its London staff to get back to the office for a at least three days a week – an early sign that banks will push for a return to work after restrictions are eased.
Boris Johnson yesterday announced the easing of Plan B measures next week, including the requirement to work from home where possible.
In an internal email seen by Bloomberg, Citi bosses said: “We are now free to gather in our offices, without restriction, where we are better able to generate the energy and collaborative spirit on which Citi thrives.
“Everyone is expected to be in the office at least three days per week.”
The US bank said it will continue to offer flexible working, adding that protective measures remained in place and staff should continue to test every Monday, Wednesday and Friday. Staff will also be asked to wear face masks when using lifts.
09:30 AM
Restaurant offers £91,000 for head chef as kitchen crisis bites
Good chefs have always been in high demand but Covid means they are now scarcer than ever, scattered across the world rather than in Britain.
Now, with a labour shortage setting in, salaries are surging. One Soho restaurant is advertising pay of £91,000 for a head chef, plus on-site dining of up to £6,000 per year.
Tim Wallace tucks into the details here.
09:26 AM
Expert reaction: Higher rates are on the way
Matthew Ryan, analyst at Ebury, says another interest rate hike is “all but confirmed”.
All yesterday’s data has done is confirm the market’s suspicion that the Bank of England will need to raise interest rates at a rather aggressive pace this year. Futures are now placing a near certainty of a hike in February, with 110 basis points priced in before the end of the year.
BoE governor Andrew Bailey continued to stubbornly call some of the aspects of inflation ‘transitory’ during his speech yesterday, although he did raise concerns about tightness in the UK labour market and warn that the bank will do everything it can to control inflation.
While Bailey has already proved himself to be a worthy successor to Mark Carney ‘unreliable boyfriend’ mantra, this rhetoric ought to all but confirm that another hike is on the way when the Monetary Policy Committee next convenes early next month.
09:20 AM
Pound holds near 23-month high against euro
Sterling has held close to a 23-month high against the euro as expectations of further interest rate rises continue to prop up the currency.
Money markets are pricing in more than 100 basis points in interest rate rises in 2022 and an 87pc chance of a 25 bps increase next month. Figures released yesterday showing inflation surged to its highest since 1992 has only fuelled this sentiment.
Meanwhile, Boris Johnson’s fight for survival amid controversy over lockdown parties in Downing Street has done little to dampen the mood.
The pound was flat at 83.33p per euro, just off the 23-month high hit yesterday. Against the dollar, it’s also flat at $1.3630.
09:11 AM
Hong Kong shares surge after China cuts policy rates
Hong Kong shares posted their biggest gains in six months this morning after China cut a set of key policy rates and lending benchmarks to prop up the slowing economy.
The Hang Seng index rallied 3.4pc, with embattled tech and property stocks leading the way.
China further reduced bank lending costs today in the latest move to boost its stuttering economy, which was battered in the second half of last year by lockdowns as well as a sharp slowdown in the crucial property market.
The central bank said it had lowered the one-year loan prime rate to 3.7pc, from 3.8pc in December. It follows a surprise reduction last month, which was the first in 20 months.
The People’s Bank of China also lowered the rate on its one-year policy loans on Monday, just as data was released showing economic growth eased in the final quarter of 2021.
The moves boosted hopes for embattled property firms, which have been pushed into a crisis by hefty debts. Tech stocks also benefited as lower borrowing costs look set to fuel growth.
09:01 AM
Deliveroo jumps as order growth holds up
Shares in Deliveroo jumped as much as 6.1pc – their biggest rise since August – after the value of orders grew faster than expected in the final three months of the year.
Deliveroo said fourth-quarter transaction value rose 70pc as demand for deliveries held up even after restrictions eased.
Still, analysts at Jefferies described the update as a “mixed bag”, with international sales missing expectations in the fourth quarter.
The numbers also helped drag up rival Just Eat Takeaway, which gained 1pc in early trading.
08:50 AM
Revolution Bars slams restrictions as party bookings bounce back
Revolution Bars has hit out at the Government for its “overly cautious” response to omicron, but said it was counting on the office party making a comeback early this year.
The chain said Plan B measures had sparked a “substantial loss of trade” in the run-up to Christmas, with pre-booked revenue tumbling 39pc in the last six weeks of the year.
However, the total number of bookings over the same period was up 19pc as younger punters shrugged off the virus and headed out anyway.
Revolution added that many of the corporate parties had been rebooked for early in 2022, indicating a bounce back in consumer confidence.
Shares fell 0.9pc following the update.
08:39 AM
FTSE risers and fallers
After a positive start to trading, the FTSE 100 has fallen back to edge up only marginally.
There’s mixed sentiment on the markets as Asian markets mostly rose, whereas Wall Street suffered further losses amid inflation gloom.
Unilever is among the biggest risers on the blue-chip index, gaining 1.3pc after it said it wouldn’t raise its offer for GSK’s consumer health arm. Burberry also extended its gains with a 1.9pc rise amid a rebound in demand for luxury goods.
Primark owner Associated British Foods is the biggest laggard, dropping 2pc after it announced 400 job cuts and said omicron had held back sales.
The domestically-focused FTSE 250 rose 0.2pc, with telecoms group Spirent jumping 5.2pc after beating profit expectations.
08:29 AM
Entain lifts profit outlook as betting shops bounce back
Entain has said its full-year profits will come in ahead of expectations as the lifting of restrictions helped sales at its high street shops bounce back.
The Ladbrokes and Coral owner said earnings before interest, tax, depreciation and amortisation would come in at between £875m and £885m – ahead of its previous forecasts.
Brick-and-mortar revenues bounced back strongly in the final three months of the year, rising 60pc on the previous three months. Online growth fell back slightly in the fourth quarter due to tighter regulation in Germany and the Netherlands.
Over the full year, however, online grew 12pc, while retail shrank 3pc. Entain yesterday released a bullish update on its joint venture with casino operator MGM, which is expected to turn a profit by next year.
Speculation is swirling around Entain as a potential takeover target after Draftkings and MGM walked away from a deal for the company last year.
Chief executive Jette Nygaard-Andersen said expansion in new markets “will enable us to at least treble the size of our business”.
Read our interview with Entain’s boss: Ladbrokes owner considers returning £102m of furlough cash
08:16 AM
Superdry ‘on track’ as it ditches discounts
Elsewhere in the world of retail, Superdry has said its turnaround plan is on track thanks to improved online profitability and fewer discounts.
The retailer said better margins had helped to offset the impact of restrictions and lower footfall in the run-up to Christmas.
Superdry said its underlying pre-tax loss narrowed 74pc to £2.8m in the six months to October. The chain’s performance since the end of the first half has also been promising with sales over Christmas up by 20pc, the retailer said, adding it’s on track to meet its full-year profit target.
But co-founder Julian Dunkerton, who returned to the business in 2019 following a boardroom battle, said the brand would increase some of its prices to help offset rising costs.
08:01 AM
FTSE 100 opens higher
The FTSE 100 has gained ground at the open, building on yesterday’s gains even after some eye-watering inflation figures.
The blue-chip index rose 0.3pc to 7,610 points.
08:00 AM
Deliveroo orders hold up despite lockdown easing
Deliveroo’s orders remained strong in the final three months of the year, suggesting an easing of lockdown measures hasn’t dampened demand for takeaways.
The company said customers placed an average of 3.4 orders per month in the fourth quarter. That’s above pre-Covid levels and even higher than the 3.2 orders that were being placed at the height of lockdown in 2020.
Deliveroo said gross transaction value – its main metric – surged 70pc in 2021 to £6.6bn, which was at the top end of expectations. Order numbers jumped by almost three-quarters to 301m.
Will Shu, founder and chief executive of Deliveroo, said:
We finished 2021 with a strong fourth-quarter performance, and our full year gross transaction value growth of 70pc in constant currency was at the top end of the previously-upgraded guidance we provided.
I’d like to thank the Deliveroo team, our restaurant and grocery partners and our riders for their focus and commitment in what has been another extraordinary year.
07:51 AM
Expert reaction: Primark rues lack of online presence
Richard Lim, chief executive of Retail Economics, says Primark’s decision not to move into ecommerce has hurt sales.
A strong boost on last year’s heavily restricted sales period is great news for the retailer, but there’s a sober tone to these results.
In the final run-up to Christmas, the retailer was dealt a significant blow as many consumers chose the safety of their homes instead of venturing out onto the high street to avoid catching omicron before the big day.
Consumers are now well versed in switching online and as case numbers rose, their self-imposed restrictions were accompanied with a shift to alternative brands that could offer what they wanted.
With no transactional website to lean on, Primark was left frustrated as vital sales were mopped up by their competitors.
07:48 AM
ABF bolsters revenue with price rises
Overall, ABF’s revenue grew strongly in the last quarter, up 16pc on the same period last year.
It’s grocery, sugar, agriculture and ingredients divisions posted a revenue rise of 6pc on last year. Sugar benefited from higher prices in Europe and ingredients from a recovery in volumes after last year’s Covid levels.
ABF said all its businesses had suffered from higher costs in raw materials, commodities, supply chain and energy.
But it mitigated much of this by slashing costs and overheads, as well as ramping up its prices.
The FTSE 100 firm said supply chain troubles had eased since the summer, though it was still suffering from some port delays and it expected longer shipping times to continue for some time.
07:38 AM
Primark takes omicron sales hit
Good morning.
There’s a trading update this morning from Associated British Foods (ABF), the company behind an eclectic mix of offerings including grocery brands, sugar and Primark.
The FTSE 100 firm revealed Primark had suffered a hit to sales in its latest quarter as the omicron variant kept shoppers away from stores.
While sales were up by more than a third year on year – when lockdown closed shops entirely – they still lagged behind pre-Covid levels.
Still, ABF said trading had improved in recent weeks and held its outlook for the full year.
5 things to start your day
1) Architect of energy price cap says it has ‘destroyed the market’ and must be scrapped Stephen Littlechild argues price cap has acted as ‘a bull in a china shop’
2) Restaurant offers £91,000 for head chef as kitchen crisis bites Salaries for chef have jumped by as much as 30pc as employers struggle to fill vacancies
3) British Airways cancels US flights over 5G safety fears Lufthansa, Emirates, Japan Airlines, ANA and Air India also axe services as aircraft face potential interference from new mobile networks
4) Unilever rules out raising £50bn Glaxo bid after ‘torrent of criticism’ Credibility of chief executive Alan Jope called into question following disastrous reaction from shareholders in Marmite maker
5) The AA ends sick pay for unvaccinated workers forced to self-isolate after Covid contact Breakdown service becomes latest employer to crack down on unjabbed workers after Next, Ikea, Ocado and Morrisons
What happened overnight
Markets mostly rose on Thursday in Asia as investors tentatively returned to buying after recent losses. Hong Kong gained 1.9pc thanks to a rally in tech giants including Alibaba, Meituan, Tencent and JD.com, while property firms also enjoyed healthy gains. Tokyo, Singapore, Seoul, Bangkok and Jakarta also rose but Sydney, Wellington and Taipei dipped.
Coming up today
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Corporate: Superdry (Interim results); Associated British Foods, Workspace Group, Premier Foods, CMC Markets, AJ Bell, Ibstock, Entain, Hochschild Mining, Kier Group, Deliveroo (Trading update)
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Economics: RICS house price balance (UK), interest rate decision (China), consumer price index (EU), jobless claims (US), Philadelphia Fed Manufacturing Survey (US)
