The UK economy expanded far less than expected during August, despite a boost from the government’s Eat Out to Help Out scheme and staycations.
Output rose by 2.1 per cent compared to July, the Office for National Statistics said on Friday. The increase was the fourth consecutive month of growth. But analysts polled by Reuters had expected the economy to expand by 4.6 per cent. The services sector — and in particular accommodation and food services — accounted for most of the monthly growth as the government eased lockdown restrictions.
The economy was still much smaller by August than in February, before the start of the pandemic. Despite growth of 6.4 per cent in July, 9.1 per cent in June and 2.7 per cent in May, the level of output is still 9.2 per cent below where it was in February as a result of the spectacular falls in March and April.
The London Stock Exchange Group has confirmed the terms of a deal to sell Borsa Italiana to rival Euronext which values the LSE’s Italian assets — including the Milan stock exchange — at €4.3bn excluding debt. The sale is conditional on the European competition authorities requiring the LSE to offload Borsa Italiana as a condition of regulatory clearance for its $27bn mega-acquisition of data and trading provider Refinitiv.
British Land is resuming its dividend after suspending the shareholder payout because of plummeting rent collection rates earlier in the pandemic. The landlord said it had now collected 74 per cent of rent for the June quarter, and 69 per cent of the rent for its latest September quarter. But despite 86 per cent of British Land’s stores now being open, only 50 per cent of retailers have paid up and there has been an increase in retailer insolvency measures since April. Offices meanwhile remain empty: physical occupancy was only 18 per cent of pre-Covid levels by mid-September.
Interdealer broker TP Icap has finalised a deal to buy Liquidnet, a US equities trading business, for between $575m and $700m and launched a $425m rights issue to fund it. TP Icap said the deal was a “transformational opportunity” to diversify its business mix. For more see last week’s Lombard column here.
Fund manager Lindsell Train has taken a stake in Experian, the world’s largest credit data company, as part of an unusual flurry of activity for hands-off portfolio manager Nick Train. Mr Train, popular with retail investors, has been expanding his bets on technology stocks with exposure to data and analytics: he is invested in publishing and events group Relx and the LSE. More here.
Also out on Friday is an update from public transport operator Stagecoach, which said that despite revenues still being down between 40 per cent and 50 per cent on last year, it still expected to avoid significant operating losses thanks to government support. And gold miner Petropavlovsk has cut its production targets, partly because of logistical issues linked to Covid-19.
Beyond the Square Mile
Morgan Stanley has agreed to pay $7bn in cash and shares to buy one of America’s oldest fund houses Eaton Vance. The deal will create one of the world’s largest fund managers with assets of $1.2tn and allow Morgan Stanley Investment Management to compete more effectively with passive fund houses BlackRock and Vanguard. The $7bn half-cash half-stock deal comes just days after Morgan Stanley closed a $13bn deal to buy online brokerage ETrade.
IBM has revealed plans to shed a core part of its giant services business, which accounts for around a quarter of its revenue. IBM’s shares rose 8 per cent on the news the company plans to demerge its managed infrastructure services unit that has become a drag on the company’s growth. Arvind Krishna, chief executive officer, said IBM would be more able to invest in the cloud and AI business once the spin-off was completed. Last year it bought open-source software company Red Hat for $34bn in the first step towards overhauling its strategy.
Can Amazon upend the luxury sector? Last month the ecommerce giant unveiled its long-awaited foray into luxury goods but the response from the industry was a collective shrug. Instead of its usual utilitarian look, the app it launched tries to conjure up a luxury ethos with a gold logo against a cream-coloured background but it only has a single brand: dressmaker Oscar de la Renta. One investor in the industry said: “If you don’t have Gucci, Saint Laurent, Prada and Dior, then it’s hard to be a real destination for luxury shoppers.” Our Paris correspondent Leila Abboud investigates whether Amazon can challenge the entrenched interests of the luxury goods business.
Essential comment before you go
The boast this week from a Silicon Valley start-up that it can produce whisky in days rather than decades should not worry the traditional makers of the spirit. What they offer is romance and tradition not steel drums and chemistry.
There have been too many false starts at TalkTalk. It remains a price-taking underdog offering budget pay TV and broadband in a market full of megatons arming for a full-fibre future. Shareholders should at least talktalk about accepting a private equity bid.
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