Thames Water gets backing from three-quarter of creditors; markets eye US inflation – business live | Business

In lighter news, here’s a round-up of this year’s top Christmas toys.

A “fart blaster” with a repertoire of 15 sounds that blasts “fog fart rings” and a waddling mother duck are among the toys destined to appear on Christmas lists as experts predict a “record-breaking” year for sales.

At £30, the Despicable Me 4 spin-off toy promises to be a talking point on Christmas Day. It comes with two scents: banana and “fart”. Mercifully, on a day when the nation eats Brussels sprouts, the latter smells more like burnt popcorn.

With the cost of living crisis in the background of yet another year’s celebrations, the Toy Retailers Association’s annual DreamToys list of the 20 “hottest toys” includes 14 under £50. Compiled by an independent panel it provides a crib sheet for shoppers seeking both value for money and play value.

Whereas previous lists included sets costing well over £100, this year’s priciest is FurReal’s interactive pet monkey, Peanut, at £80. Paul Reader, the chair of the selection committee, said it was “very conscious” of the level of disposable income people had.

Parents are spending a little bit more on toys but not looking for one iconic item.

At the COP29 climate summit, the mood is gloomy.

There is “no sign” of the transition away from burning fossil fuels that was pledged by the world’s nations a year ago, with 2024 on track to set another new record for global carbon emissions.

The new data, released at the UN’s Cop29 climate conference in Azerbaijan, indicates that the planet-heating emissions from coal, oil and gas will rise by 0.8% in 2024. In stark contrast, emissions have to fall by 43% by 2030 for the world to have any chance of keeping to the 1.5C temperature target and limiting “increasingly dramatic” climate impacts on people around the globe.

The world’s nations agreed at Cop28 in Dubai in 2023 to “transition away” from fossil fuels, a decision hailed as a landmark given that none of the previous 27 summits had called for restrictions on the primary cause of global heating. On Monday, the Cop28 president, Sultan Al Jaber, told the summit in Baku:

History will judge us by our actions, not by our words.

The Post Office plans to close 115 branches and says about 2,000 jobs are at risk as part of a plan that will see post office operator pay increase by £250m over the next five years.

The Post Office confirmed today that it is seeking to offload 115 branches that it centrally owns, known as crown post offices, but said it expects to maintain the total network at 11,500 branches across the UK.

The plans come against the backdrop of the public inquiry into the Horizon IT scandal, described as one of the worst miscarriages of justice in UK history.

The move puts approximately 1,000 jobs at risk although the Post Office expects that all the branches will be refranchised to new owners over the next five years.

About 2,000 branches are operated by partners such as Tesco, WHSmith and Morrisons and about 9,000 are operated by independent subpostmasters that have a contract with the Post Office.

The Post Office is also “streamlining” its central operations with speculation that this will lead to about 1,000 further job cuts.

The plans also include increasing post office branch owner remuneration by £250m annually by 2030, with up to £120m in additional remuneration by the end of the first year of the five-year plan, a 30% increase in revenue share.

“The Post Office has a 360-year history of public service and today we want to secure that service for the future by learning from past mistakes and moving forward for the benefit of all postmasters,” said Nigel Railton, the chair of the Post Office. “We can, and will, restore pride in working for a business with a legacy of service, rather than one of scandal.”

Britain’s financial watchdog is pressing the Supreme Court to speed up a decision to permit lenders to appeal a crucial judgment that may pave the way for a multi-billion pound consumer compensation scheme linked to car finance commissions.

The Financial Conduct Authority (FCA) said it would also consult on extending the time firms have to respond to complaints from borrowers, after the Court of Appeal in October ruled it was unlawful for car dealers to receive a commission from banks providing motor finance without obtaining the customer’s informed consent.

It is the latest twist in a slow-burning probe into banks’ sales practices in past years that analysts estimate could cost the industry up to £16bn, in what could become Britain’s costliest consumer banking scandal since the payment protection insurance (PPI) scandal.

Since the October judgment, the FCA said it has undertaken extensive industry engagement and found that firms are likely to receive a high volume of complaints.

A complaint extension would allow them to prevent “disorderly, inconsistent and inefficient outcomes” for consumers making complaints, motor finance firms and the market, the watchdog said.

The FCA is investigating whether there was widespread misconduct related to discretionary commission arrangements, or DCAs, before they were banned in 2021.

It wants to uncover whether consumers have lost out and what compensation they should get. It urged firms today to consider whether they should make financial provisions for resolving complaints.

As part of its review, the FCA already granted motor finance firms and consumers more time to handle or make complaints where a DCA was involved.

The FTSE index of UK banks rose by 0.77% this morning, outperforming the broader FTSE 100 index which is up by 0.3%. Lloyds Banking Group shares rose by 1.7%.

The growing scrutiny has weighed heavily on some lenders’ share prices this year, with Close Brothers, which is heavily involved in car finance, slumping by 75%. It is down by 0.6% today.

Analysts at Jefferies said yesterday that redress could cost Lloyds £2.5bn if the bank is required to repay all commissions from 2007-2020. Lloyds has already set aside £450m.

Grocery sales growth slowed across the UK last month as shoppers save their cash ahead of Christmas, and wait for Black Friday promotions, according to industry figures.

Market researchers NIQ said UK supermarket sales rose by 4% in the four weeks to 2 November, down from the 4.7% growth in September.

Mike Watkins, NIQ’s UK head of retailer and business insight, said:

Shoppers so far have been cautious and it’s evident that they are saving on grocery essentials to be able to afford treats and indulgences.

He said the UK has “a polarised consumer” – with half of households still feeling pressure on their finances.

Sales volumes of clothes and other general merchandise fell by 5.5%.

Yesterday, retail analysts Kantar said October was the biggest grocery sales month so far this year, with sales increasing by 2.3% year-on-year to £11.6bn.

Just Eat sells Grubhub to NY restaurant chain Wonder

Joanna Partridge

The takeaway delivery firm Just Eat Takeaway is selling Grubhub to delivery-focused restaurant chain Wonder in a deal valued at $650m (£510m) – just four years after buying the US-app in a multi-billion dollar tie-up following the the first Covid lockdowns.

Netherlands-based Just Eat, which is Europe’s largest meal delivery firm, had been looking to offload its US unit since as early as 2022, as the pandemic boost faded and it grappled with tough competition.

Wonder is a New York City-based chain of fast casual restaurants, led by former Walmart executive and serial entrepreneur Marc Lore.

The deal is expected to close in the first quarter of 2025, provided it receives the usual regulatory approvals, and Just Eat said it would retain no material liabilities associated with Grubhub.

Just Eat bought Grubhub in a $7.3bn deal agreed in June 2020, which was aimed at creating the world’s largest food delivery service outside China. The tie-up was aimed at giving Just Eat access to the lucrative food delivery market in the US, with the combined business able to serve customers in 25 countries.

At the time, Uber was reportedly also holding talks with Grubhub, as the food delivery sector boomed during the pandemic.

However, Just Eat executives came under pressure from investors after the boost from pandemic-era food deliveries began to fade as economies reopened following pandemic lockdowns, and its shares began to slide. Just Eat shares are trading some 90% lower than at their peak, reached in October 2020.

Another utility, the power generator and network operator SSE, has reported a 26% increase in first-half profits, lifted by a strong performance of its electricity networks and renewables businesses.

Its chief executive of more than 11 years, Alistair Phillips-Davies, will stand down next year, and will remain in post until a successor is appointed.

He said:

We are encouraged by the increasing attractiveness of our main markets and our alignment with the new UK government’s mission to achieve clean power by 2030.

The Perth-based company posted an adjusted pre-tax profit of £714.5m for the six months to 30 September, and stuck to its annual profit forecast.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said:

SSE’s powering along nicely and should continue thanks to the foundations built by group CEO Alistair Philips-Davies. But after 11 years in the power seat, he’s announced his intention to step down once a successor is found.

Turning to business performance, and climate-focused investors will be pleased to hear that renewable energy output rose 45% in the first half. The uplift was helped by increased capacity, higher prices and an easy comparative period as last year’s performance was held back by unfavourable weather conditions.

Efforts to plant itself at the heart of the clean energy transition have continued at pace, with £1.3bn of investment in the first half. Turbo-charging focus on renewables is a bold and admirable move, but the shift comes with a hefty dose of risk – they’re not always reliable. To some degree, they’re always at the mercy of Mother Nature. That’s why more flexible gas-fired plants are still part of the energy mix and can help plug the shortfall in energy output when the wind doesn’t blow in SSE’s favour. These assets were loss-making in the first half, but as consumers fire up the heating over winter months, profits are set to warm up over the second half.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Thames Water has obtained support from three-quarters of its creditors for an emergency funding deal, which would give it a £3bn lifeline.

Britain’s biggest water company said today that creditors holding more than 75% of its Class A debt – the least risky class of bonds in its debt pile – agreed to the deal.

The 75% threshold is the minimum needed for the plan to be approved by a UK court. Thames Water is aiming for a court date on 17 December.

The debt-laden utility hailed this as an “important milestone” and is hoping more bondholders will take part.

Under the plan, Thames Water would initially get £1.5bn of funding with an annual interest rate of 9.75%, which the company says will keep it going until next October.

Asian shares are down again, amid a strong dollar and concerns over the incoming Trump administration’s trade policies. Today, traders await key inflation data from the United States, which could be key to the Federal Reserve’s next interest rate decision.

Japan’s Nikkei is down by 1.6% while Hong Kong’s Hang Seng index has slipped by 0.1% and South Korea’s Kospi slid by 2.6%.

Over the past week, we’ve seen ‘Trump trades’ – traders betting on big government spending, lower taxes and higher tariffs once Donald Trump takes office. The dollar has jumped and Treasury yields rocketed since last week’s election.

Markets are now seeing a 62% chance of an interest rate cut at the Fed’s next meeting in December, down from 77% a week ago and 84% a month ago, according to CME Group.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explained:

US yields pushed higher and the dollar rally gained further momentum yesterday, as investors continued to surf on the idea that Donald Trump’s pro-growth policies and tariffs would boost inflation in the US and limit the Federal Reserve’s capacity to ease the monetary policy as much as previously anticipated. The US 2-year yield, for example, which best captures the rate expectations, is up by 85bp since the September dip, we could see a similar jump in the US 10-year yield.

The CPI [consumer price index] data has regained importance since Donald Trump was re-elected president of the US. Jobs data remains crucial for the Fed’s policy path, as the last thing the Fed wants is to panic and lose control of the situation, but the Fed’s victory over inflation looks more vulnerable today than it did a month ago. And that’s supportive of the US dollar.

Of course, October figures won’t tell much about the Trump effect on consumer prices. We must wait a few months before we start seeing the impact of Trump on numbers. But the higher the numbers, the lower the December cut expectations. And I sense that today’s numbers may not sooth the doves’ nerves: the US headline inflation is expected to have climbed from 2.4% to 2.6%, while core inflation is seen steady near 3.3% – still significantly above the Fed’s 2% policy target.

The Agenda

• Noon GMT: US MBA mortgage applications for last week

• 1.30pm GMT: US inflation for October (forecast: 2.6%, previous: 2.4%)