Business news - live: UK on track for £50bn budget deficit this year after government obliterates fiscal rules

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The gap between income and expenditure was £7bn higher than in the same period last year (AFP via Getty Images)

The UK's public finances have slipped further into the red after the government borrowed billions more than expected in the first half of the year.

The gap between income and expenditure was £7bn higher than in the same period last year, official figures revealed, leaving the UK on course for an annual deficit of £50bn.

Chancellor Sajid Javid faces a dilemma in his Budget speech next month as the worse-than-expected fiscal situation means he is unlikely to meet the government's self-imposed target of a maximum budget deficit of 2 per cent of GDP.

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Key Points

• Expectations for manufacturing exports drop to worst level in 18 years
• Electric car drivers could get green number plates to allow them to drive in bus lanes
• Just Eat shares soar amid £4.9bn bidding war
   

[22 October 2019 12:45 · ben.chapman]

Travis Perkins halts plumbing and heating sale amid 'unprecedented' uncertainty

(Press Association) Travis Perkins blamed "unprecedented" uncertainty as it put the brakes on the sale of its plumbing and heating business.

The builders' merchant said it was pausing the disposal of the unit, which was put on the market last year, but would continue with plans to demerge DIY chain Wickes from the group.

"Given the current unprecedented level of uncertainty, we have decided to pause the sale process of the plumbing and heating business for the time being," Travis Perkins said in a message to shareholders on Tuesday.

The company set out plans to divest the plumbing business in December last year as it tried to rein in costs.

Analysts at Peel Hunt called the decision to pause the sale "disappointing".

[22 October 2019 13:02 · ben.chapman]

Switzerland files first indictment in Petrobras-Odebrecht corruption scandal

(Bloomberg) Switzerland’s top prosecutor filed its first indictment against an individual in the long-running Petrobras-Odebrecht corruption scandal, charging the unidentified person with bribing foreign public officials and money laundering.

The case against the person of Swiss-Brazilian origin is being run using an accelerated procedure at the Swiss Federal Criminal Court, the Attorney General’s office said in a statement on Tuesday.

While the fast-tracking of this first indictment is a sign of progress, the Swiss probe into how money siphoned from Brazil’s national oil producer ended up in Swiss banks is only just warming up. Swiss prosecutors are investigating around 70 criminal cases including at least two local banks in the course of a probe that has already seen 700 million Swiss francs  seized in the Alpine nation.

[22 October 2019 14:13 · ben.chapman]

Thousands of farmers protest across Germany

(AP) Thousands of farmers are protesting across Germany against stricter environmental and climate protection requirements planned by the government that they say are threatening their livelihood.

The German news agency dpa reported that about 4,000 farmers protested on Tuesday in the western city of Bonn, 500 in Hamburg and thousands more in various places in southern and northern Germany. The farmers blocked traffic with hundreds of tractors for hours.

[22 October 2019 15:16 · ben.chapman]

Bamford buys Northern Ireland's Wrightbus - but no announcement on jobs

Bamford Bus Company has bought troubled Wrightbus, the Northern Ireland bus manufacturer that entered administration last month putting 1,200 jobs in doubt.

Industrialist Jo Bamford will become executive chairman of Wrightbus but has made no firm commitment on jobs at the Ballymena firm.

Mr Bamford said:  “Wrightbus is a proud family business which is part of the fabric of Northern Ireland life and business. I am delighted to acquire such an established and respected brand. We can now start to look to the future and build on the excellent work that Sir William Wright and his family have done to develop the Wrightbus business. 

"We will now begin speaking with customers and suppliers over the coming weeks in order to take a closer look at the financial situation that Wrightbus faces in order to build a viable and sustainable business.” 

[22 October 2019 15:37 · ben.chapman]

Matalan workers resolve pay dispute

(Press Association) A long-running dispute involving hundreds of workers at retailer Matalan has ended after a new pay deal was accepted.

More than 500 members of the GMB union at Matalan's Northern Distribution Centre in Knowsley, Merseyside, had been taking industrial action since August, with some strikers erecting tents outside the warehouse.

The strikes were suspended on Friday after a new pay offer, which has now been accepted by 87% in a ballot.

Neil Holden, GMB senior organiser, said: "This has been an incredibly stressful time for our members. They've been on strike for weeks, worrying about how they will feed their families and pay their rent.

"They sacrificed their wages - which were only just above the minimum wage - to do what's right for them and their colleagues."

[22 October 2019 15:43 · ben.chapman]

Government on track for £50bn budget deficit this year

Responding to today's figures on the public finances, Isabel Stockton, a research economist at the IFS, said: 

"Borrowing over the first half of 2019-20 is running 22% higher than the same period last year. This is driven by strong growth in spending on public services, which is more than enough to outweigh strong growth in receipts of income tax and national insurance contributions.

"Were these trends to persist, that would suggest a deficit this year of £50 billion. Back in March, the OBR had forecast a deficit of less than £30 billion.

"Only just over half of this increase is explained by the new student loan accounting treatment: the March forecast adjusted for this change stands at £41 billion. In next month’s budget, the Chancellor will need to decide how best to respond to this worse-than-expected fiscal situation" 

[22 October 2019 16:26 · ben.chapman]

Gloom in UK manufacturing deepens, with worst outlook for exports in 18 years

British manufacturing continues down a gloomy path with expectations for exports in the year ahead the worst in 18 years, according to the CBI’s quarterly Industrial Trends Survey.

At -44, the October reading for optimism about the general business situation was the weakest since July 2016, returning to the lows that followed the EU referendum. The measure for export prospects came in at -46, the lowest since October 2001.

“Brexit concerns have clearly driven concern about the near-term outlook for exports, with citations of political and economic uncertainty abroad and quota/import licence restrictions spiking to multi-decade highs,” the CBI said.

Investment intentions also worsened, with planned spending on buildings, plants and machinery, and training and retraining posting the sharpest drops since early to mid-2009, when Britain was still reeling from the effects of the financial crisis. 

[22 October 2019 16:38 · ben.chapman]

Just Eat: Second Dutch-based firm makes takeover bid for food-delivery company

A bidding war has broken out over Just Eat as it rejected a £4.9bn takeover offer from investment group Prosus, coming less than three months after the takeaway delivery company announced plans to merge with Takeaway.com.

Prosus, a Dutch-listed arm of South Africa’s internet group Naspers, offered 710p a share in cash for Just Eat. This is almost a fifth higher than the offer from Amsterdam-based Takeaway.com.

Still, the board of Just Eat rejected the overture from Prosus as it “significantly undervalues Just Eat and its attractive assets and prospects”, and recommended that shareholders do the same.

Just Eat is the largest food delivery company in the UK but analysts have criticised its management’s failure to capitalise on its early dominance of the rapidly growing sector, allowing nimbler rivals like Deliveroo to gain ground.

In its statement, aimed at Just Eat shareholders, Prosus said it believes the business will require substantial investment, over and above that planned by the company’s management.

[22 October 2019 16:42 · ben.chapman]

  ↵Energy firms face crackdown after string of suppliers go bust

Energy firms face a new crackdown after a string of company failures this year have left hundreds of thousands of consumers in limbo while they are being switched to a new supplier.

Under plans put forward on Tuesday, energy regulator Ofgem would have the power to demand independent audits of suppliers to ensure their customer service is up to standard and their finances are robust, 

Ofgem would also be allowed to stop fast-growing firms taking on more customers unless they can show they have the capability to serve them all to a decent standard.

The watchdog proposes introducing stricter, ongoing requirements for energy companies to ensure their senior managers are fit to carry out their duties, and a new principle for suppliers to be “open and cooperative” with the regulator.