Key events
All night summits on key policies are one of the weirder EU traditions: there are not many walks of life where it is generally agreed that the only way to get things done is to trap people in a room for hours until they compromise in the small hours.
The wrangle going on at the moment is on the issue du jour: artificial intelligence.
Reuters has some reported some good details from the talks, which have gone on for more than 17 hours without getting to meaty topics such as the use of AI in biometric surveillance, and who can access source code for models.
There is a broken drinks machine, and food and coffee ran out at 2am, Reuters reported. There is, however, “a provisional deal on how to regulate fast-growing generative AI systems such as ChatGPT”.
A press conference has been rescheduled from 7am to 2pm CET, so maybe we will hear more later.
South East Water pays investors £2.3m despite losses increasing
South East Water has paid out £2.3m in dividends to investors even as losses for its half year increased to £18m.
The company, which serves about 2.2m households and businesses in Surrey, Kent, Sussex, Hampshire and Berkshire, is under investigation by Ofwat, the regulator, over poor service to customers.
South East Water’s dividend was lower than the £4.5m paid out a year earlier and the company said it was “lower than Ofwat’s view of what is a reasonable nominal dividend yield”.
At the same time, increased financing costs pushed South East Water’s losses to £18m in the six months to the end of September, up from £13m last year. Customers paid £15m in higher tariffs.
Ofwat last month announced an investigation into South East Water’s possible failures in maintaining the supply to households, after the company blamed increased working from home in the south-east of England for a hosepipe ban.
In a statement reported by PA Media, South East Water’s bosses said:
Unprecedented extreme weather events were the cause of the majority of supply interruptions, but we appreciate that problems experienced by our customers will result in lower levels of customer satisfaction.
We are deeply sorry to customers who have been affected by supply interruptions and continue to work tirelessly to recover. We have 52 teams actively repairing leaks, and 40 technicians proactively looking for them.
The disruption brought extra costs. The company paid £700,000 for bottled water to help customers with no tap water.
Corks are undoubtedly popping* this morning at the London Stock Exchange as English sparkling winemaker Chapel Down – the UK’s largest – lists its shares there.
The company has benefited in recent years from increased interest in wines from the British Isles – not least from the UK government, which has been keen to promote “Brexit juice” as an alternative to European vintages.
Chapel Down already had its shares listed on Acquis, a smaller rival exchange. However, Andrew Carter, the company’s chief executive, said the shift to the LSE’s Alternative Investment Market (Aim) “reflects the maturity of the business and the ambitious growth plan we are committed to delivering in the years ahead.”
Chapel Down says it owns, leases and sources from 1,023 acres of vineyards in south east England, of which 750 acres are fully productive, making it the largest wine producer in the UK. The company sold 1.4m bottles of wine in 2022.
Carter said:
We believe that a move to AIM will attract a wider pool of investors to participate in Chapel Down’s growth as the leading producer in the world’s newest global wine region and as we continue to pursue our well progressed and fully funded plan to double the size of the business in the five years to 2026.
In November we confirmed a record 2023 harvest, with tonnage 86% higher than 2022 and 75% higher than the previous record posted in 2018.
*Thanks to a colleague for this one
Frasers warns over up-market sales, but Sports Direct boosts profits
Sarah Butler
Frasers Group has warned of “softening in the global luxury market” as underlying sales at its up-market division, which includes House of Fraser department stores and the Flannels chain, dived more than 11%.
Michael Murray, the chief executive of Frasers, which also includes Sports Direct, Evans Cycles and gaming retailer Game UK, said sales of luxury goods had been partly affected by the cost of living crisis but said the group would “continue to invest with confidence in our unique proposition, although it is likely that progress will remain subdued for the short to medium term in the face of a softer luxury market.”
Frasers, which is controlled by former Newcastle United owner Mike Ashley who owns more than 72% of its stock, opened 20 more of its Flannels stores, which sell designer casualwear, taking the total to 76. However, it closed five House of Fraser stores, taking the total to 29, half the number the group bought out of administration in 2018.
Murray, the former club promoter and property adviser who took the reins from father-in-law Ashley in May last year, said he was gaining further experience of working in retail by spending time serving at Sports Direct’s Oxford Street flagship in London – which is opposite the group’s base in the capital.
Total sales for the group’s luxury division rose 3.1%, helped by the acquisition of 37 stores and a suite of 15 brands, including former Oasis frontman Liam Gallagher’s Pretty Green and 1980s brand Tessuti, from JD Sports a year ago. The group said it had seen “positive demand due to our unique proposition” despite the softer luxury market.
Total retail sales rose 4% to almost £2.7bn, behind inflation, but pre-tax profits rose 8% as the company boosted profit margins at its Sports Direct chain as a result of better relationships with brands such as Nike, which are now providing the chain with more of their most sought after products.
Europe’s main stock indices have dropped back, following Wall Street and Asian declines.
London’s FTSE 100 is down by 0.4% in the first few minutes of trading, while Germany’s Dax and France’s Cac 40 are both down by 0.2%.
Here are the opening snaps from Reuters:
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EUROPE’S STOXX 600 DOWN 0.2%
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BRITAIN’S FTSE 100 DOWN 0.3%
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FRANCE’S CAC 40 DOWN 0.2%, SPAIN’S IBEX DOWN 0.2%
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EURO STOXX INDEX DOWN 0.2%; EURO ZONE BLUE CHIPS DOWN 0.2%
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GERMANY’S DAX DOWN 0.2%
UK house prices up 0.5% in November; Aldi raises minimum rate to £12 per hour
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
First up this morning: UK house prices rose for the second consecutive month in November, defying a limping economy because of a shortage of homes, according to the latest data from lender Halifax.
The average price of houses tracked by the lender increased by 0.5% in November – or £1,394 in cash terms – to £283,615.
That means that the average is still lower than a year ago, but only by 1%. The chart shows that the pace of annual price drops is slowing:
Kim Kinnaird, director at Halifax Mortgages, said:
Over the last year, despite the wider economic headwinds, property prices have held up better than expected, falling by a relatively modest -1.0% on an annual basis, and still some £40,000 above pre-pandemic levels.
The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers. With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.
However, the economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.
Aldi raises pay for workers to £12 minimum
Aldi has raised the minimum pay for workers in its shops and warehouses to £12 per hour, in a sign of the competition for workers in the UK amid low unemployment.
The new minimum rate increases to £13.55 within the M25 to account for a higher cost of living in London. Store assistants’ pay will rise to £12.95 nationally, and £13.85 within the M25, according to length of service.
Aldi said the change means it is the first supermarket to offer rates in line with the real living wage that was set by the Living Wage Foundation in October this year. The changes will cost £67m annually, Aldi said.
Aldi is the UK’s fourth-largest supermarket after overtaking Morrisons last year for the first time. It has more than 1,000 stores, 11 regional distribution centres and 40,000 workers across Britain.
Giles Hurley, chief executive of Aldi UK and Ireland, said the company was “committed to being the highest-paying supermarket in the sector.”
The agenda
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10am BST: Eurozone GDP third estimate (Q3; previous: 0.2%; consensus: -0.1%)
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1:30pm BST: US initial jobless claims (December; prev.: 218,000; cons.: 222,000)
