Nearly 50,000 companies face collapse as ‘debt storm’ hits

Begbies Traynor said it has 'serious concerns' over construction and real estate businesses

Begbies Traynor said it has ‘serious concerns’ over construction and real estate businesses – Heather Yates/Bloomberg

Tens of thousands of businesses are on the brink of collapse as higher borrowing costs and taxes pile pressure on the economy.

Nearly 50,000 companies are on the edge of failure as they grapple with a “double whammy” of steeper interest rates and consumer gloom, new figures from a leading insolvency practice show.

Hikes to corporation tax and the National Living Wage are also adding to costs for debt-laden businesses.

Begbies Traynor’s Red Flag Alert warned that 47,477 companies were in “critical” financial distress at the end of 2023, an increase of 10,000 since September.

The 26pc surge from the third quarter is the second consecutive period where critical financial distress has grown by more than a quarter.

Many companies on the list are expected to go bust, leaving workers unemployed and creditors out of pocket.

Begbies Traynor partner Julie Palmer said: “Any company which is consumer facing is feeling the effects of the cost of living crisis and the days of cheap money are over.

“Consumer confidence is very low and they’re having to pay more for their debt. It’s going to be a hard year.  It’s a double whammy.”

Companies who borrowed to stay afloat during Covid are also having to repay their bounceback loans, compounding to the financial distress, Ms Palmer said.

The Bank of England base rate interest rates of 5.25pc have increased the cost of servicing debts taken out when borrowing costs were at historic lows.

The Bank of England began raising interest rates in 2021 from an historic low of 0.1pc and rates have hit a 16 year high.

Inga West, a restructuring lawyer at Ashurst, said it was unsurprising businesses were feeling the stress.

She said: “For smaller businesses, this could mean the end of the road.

“Larger businesses often have a few more options open to them. But with interest rates set to remain fairly high for a while, making it difficult for a business to borrow its way out of trouble, they are likely to need both operational as well as financial restructurings.”

All of the 22 sectors tracked by Begbies showed an increase in critical financial distress, with construction and real estate sectors the hardest hit.

London and the south east are bearing the brunt of the problems, with more than 22,000 companies in a critical condition at the year end.

The Midlands is the next worst region with around 6,000 facing distress and around 5,000 in the north west.

Between 17,000 and 25,000 companies enter insolvency every year on average, meaning the UK could see a doubling in the number of insolvencies if all “critical” firms go under.

In addition to companies dubbed “critical”, Begbies said 539,900 UK businesses were now in ‘significant’ financial distress, 13pc higher than last quarter.

A series of rate cuts may provide some much needed relief for under-fire firms.

Money markets are predicting about a 60pc chance that policymakers will begin cutting interest rates in May, with a first cut priced-in by June at the latest.

The market expects at least four cuts of a quarter of a percentage point this year as economists predict inflation could fall below the Bank of England’s 2pc target by April.

Ms Palmer said some of the rate pressure may ease but the environment was likely to stay.  “Interest rates are unlikely to gallop any further and will likely come down if anything,” she said.

There are no clear figures on how much debt UK corporates have taken but the Bank of England has warned of a £1.8 trillion credit market which developed in the low rate environment.

Businesses are also facing higher burdens on their costs from government policy. Chancellor Jeremy Hunt unveiled plans to hike the minimum wage by £1 an hour to £11.44 from April while corporation tax has also been hiked to 25pc from 19pc.

Companies like Currys have blamed such policies for loading costs onto “overburdened” retailers.

Read the latest updates below.

06:11 PM GMT

Signing off

Thanks for joining us today. I’ll leave you with news from our economics editor that men work less since Covid – while women put in more hours. Szu Ping Chan reports:

Men have been working an hour less each week since lockdown in a blow to Rishi Sunak’s efforts to boost the economy.

Men worked an average of 35.3 hours per week in 2022, according to new data published by the Office for National Statistics (ONS) – roughly an hour less than in 2019, and more than three hours less than in 1998.

By contrast, women slightly increased their average weekly hours from 27.4 in 2019 to 27.9 hours in 2022. This was not enough to make up for the reduction in men’s hours, with the overall effect equivalent to losing 310,000 people from the workforce.

The figures are a blow to the Prime Minister’s plans to improve Britain’s economic performance following a decade-long slump in productivity that has depressed real wages and reduced the tax take.

Statisticians also revealed generational differences in trends related to the number of hours worked.

Find out what’s driving the changes…

06:07 PM GMT

Footsie closes in the green

The FTSE 100 was up 0.35pc today, led by rises in betting group Entain, up 4.71pc and housebuilder Persimmon, up 3.27pc. The biggest fallers were mining company Glencore, down 3.49pc, and Endeavour Mining, which recently parted company with its chief executive, down 3.33pc.

In the FTSE 250, heat treatment business Bodycote was the biggest riser, up 6.71pc, followed by engineering firm John Wood, up 4.63pc. Wizz Air fell by 3.32pc, followed by Fidelity China Special Situations, down 2.41pc.

05:46 PM GMT

Gas bills could drop by more than £300 from April

Analysts are predicting that energy bills could fall by more than £300 a year from April as a result.

Cornwall Insight has forecast that average bills will fall by 16pc, and could reach their lowest since Russia’s invasion of Ukraine. The forecaster predicts that Ofgem’s price cap, the average annual bill for a typical household in Britain, will fall from the current £1,928 to £1,620 from April, £40 lower than it predicted in December.

Craig Lowrey, principal consultant at Cornwall Insight, said:

Concerns that events in the Red Sea would lead to a spike in energy bills have so far proved premature, and households can breathe a sigh of relief that prices are still forecast to fall.

But Mr Lowrey said that the price cuts could be short-lived if the UK does not reduce its reliance on importanted energy:

Whether we can achieve long-term reductions in the UK’s energy costs will hinge on breaking free from the volatility of imported energy prices.

To make a real and lasting impact, we need to commit to a sustained transition to homegrown renewable energy sources, reducing our reliance on the volatile international energy market.

Madsen Pirie of the Adam Smith Institute warned that short-term price cuts did not reduce the need for the Government to push forward with new power stations.

He said:

We’ve procrastinated too long on new nuclear plants and a surge in wind energy during a storm will not protect households from our lack of base-load energy production.

04:46 PM GMT

Fried chicken chain backed by Asda investors to create 2,000 jobs

A fried chicken chain controlled by the private equity firm behind Asda is to create 2,000 jobs as it ramps up a major expansion across Britain.

The UK franchise operator of Popeyes is planning to open 30 branches this year, from Aberdeen to Swansea, after Asda investor TDR Capital took a stake in the business.

Internationally, the brand is owned by the group behind Burger King, Restaurant Brands International. There are over 4,000 Popeyes restaurants internationally and the brand has been in Britain since late 2021, where it already employs 2,300 workers.

04:35 PM GMT

Government to take longer to repeal EU laws

Britain will retain thousands of EU laws for at least the next two years, the Government said today, setting new targets for the delayed process of removing EU law from the statute book after Brexit.

Britain had originally aimed to remove all retained EU laws by the end of 2023. In May, the Government dropped that plan, instead proposing the revocation of around 600 of the EU laws remaining by the end of 2023.

Today, the Government has said it will “revoke or reform approximately 500 instruments” in 2024 and that it hoped to have reviewed or repealed over half of such laws by June 2026.

“The Government is on track to reform or revoke over half of the entire stock of [retained EU laws] accrued in the more than 40 years that the UK was a member of the EU by June 2026,” the Government said in a report.

04:14 PM GMT

Virgin Wines to launch its own English sparkling wine

Virgin Wines (whose results we covered this morning) is set to launch its own English sparkling wine in a bid to cash in on demand for homegrown fizz, writes Daniel Woolfson:

Demand for English wine has skyrocketed over the last decade as higher temperatures have made parts of the country prime territory for producing wines that are said to rival Champagne and other prominent French regions.

Jay Wright, chief executive at Virgin Wines, said: “It’s obviously still a very, very small percentage of sales. But it’s growing very, very quickly.”

The wines will launch in March.

It comes as Virgin Wines has been battling to cut costs and increase profitability after a plunge in profits in the wake of the pandemic, as shoppers returned to the high street and costs soared.

Pickers harvest Chardonnay grapes at one of the best-known English wine producers, Chapel Down

Pickers harvest Chardonnay grapes at one of the best-known English wine producers, Chapel Down – Toby Melville/Reuters

04:07 PM GMT

Sky boss departs after securing Premier League deal

The UK boss of Sky is stepping down after securing the broadcaster’s biggest-ever package of Premier League rights, writes James Warrington:

Stephen van Rooyen, who took over the top job in 2016, will leave the company at the end of February.

It comes after Sky last month inked a four-year deal to show at least 215 live Premier League games each season.

That marks an increase of almost 100 matches per season after Sky won four of the five available TV rights packages in a deal worth £6.7bn.

The deal capped off a lengthy tenure for Mr van Rooyen, who joined Sky in 2006 as director of product management.

As UK chief executive, he oversaw the company’s expansion beyond its traditional satellite TV business into new areas including mobile and broadband.

More recently, he oversaw the launch of Sky Glass, a streaming-focused TV that removes the need for a satellite dish or set-top box.

Mr van Rooyen’s tenure also included the $39bn sale of Sky to US media giant Comcast, which outbid Rupert Murdoch in a 2018 auction.

His departure comes at a difficult time for Sky, which is grappling to find its place in the streaming market while facing tough competition from telecoms rivals.

In 2022 Comcast wrote down the value of Sky by $8.6bn amid declining sales.

Stephen Van Rooyen speaking in London at the launch of Sky Glass

Stephen Van Rooyen speaking in London at the launch of Sky Glass – Matt Crossick/PA

03:58 PM GMT

Telegraph readers on why so many companies face collapse

Many readers have commented (at the bottom of this page) on the report that nearly 50,000 companies were in critical financial distress at the end of last year. Here’s a small selection:

Anthony Smith writes:

If a few percentage points and still very low interest rates is all that it takes to kill off a company then the company does not deserve to exist.

Far better for the economy if the capital tied up in that company is recycled and used in a much more productive company.

That is one of the answers to our productivity problem.

People these days forget that one of the things that keeps capitalism strong is the destructive side, with failing enterprises allowed to fail.

M J Scrivens says:

Tripling energy costs under the net zero lunacy must be responsible for a lot of this.

Andrew Cowles writes:

The cost of living has affected all of us, including businesses. There has been wage pressure, a doubling (or more) of energy costs … insurance premiums (up 80pc since Covid) etc. What was a feasible business a couple of years ago may no longer be, regardless of debt.

Think of your local high street, footfall down for years. Maybe it’s just not worth it. They’re unlikely to carry any debt other than 30 day payment terms and the owner’s personal mortgage.

J Hollow writes:

Around the time of the big upheaval in 2008 many insolvency practitioners were stating that there were over 200,000 zombie companies and that they should be wound up.

The resources released by that could then be used to greater effect in the economy.

That may well be correct but there is very often a human cost to this unfortunately.

Nick Thompson says:

If businesses cannot sustain themselves at these interest rates they don’t deserve any sympathy. These are still historically low rates!

03:47 PM GMT

Inflation crisis to hold back ad market this year, warns Sir Martin Sorrell

Shares in Sir Martin Sorrell’s advertising group S4 Capital are down 5.28pc in trading today – after an initial rise – following a trading update being issued to investors.

As we reportered this morning, it expects a slump in revenues and margins amid “cautious spending” from clients. Our reporter James Warrington has more:

The inflation crisis will hold back the advertising market again this year, Sir Martin Sorrell has warned.

The ad tycoon said 2024 would continue to be challenging after rising inflation and a wider economic slowdown prompted brands to slash their budgets last year.

However, he said the downturn would not be as severe as borrowing costs start to ease.

Sir Martin said: “While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year’s level given interest rates are likely to fall over time.”

Sir Martin, who founded S4 following his acrimonious departure from WPP, has said 2024 will be a “year of efficiency” as he attempts to turn around the agency’s ailing share price.

The company has expanded rapidly in recent years but recently embarked on a round of job cuts in an effort to reduce costs.

S4 said profitability improved in the second half of the year thanks to the cost-cutting plan.

The company said it expected improved performance in its content division but warned of a tougher outlook for the tech sector. S4 specialise in digital advertising services and is heavily reliant on major tech clients such as Amazon and Google.

Sir Martin Sorrell, pictured at the World Economic Forum in Davos in 2018

Sir Martin Sorrell, pictured at the World Economic Forum in Davos in 2018 – Bloomberg/Jason Alden

03:37 PM GMT

West End hit by slowdown as tourist tax drives away customers

London’s West End has been hit by a spending slowdown as the Government’s tourist tax weighs on demand among shoppers. Our retail editor, Hannah Boland, reports:

The shopping district was busier over November and December compared to last year, according to new figures from the New West End Company, with footfall up 3pc year-on-year and 5pc in December.

However, spending slipped 1pc over the festive period, as a greater number of shoppers opted against buying in stores.

The New West End Company blamed the dip on cost of living pressures and the lack of VAT-free shopping.

Dee Corsi, chief executive of New West End Company, said it was “imperative” that visitors are incentivised to spend in the UK, as she warned that the tourist tax was acting as a deterrent.

It comes as the Treasury is considering whether to reintroduce tax-free shopping for tourists.

Rishi Sunak axed the policy while Chancellor following Brexit, although Jeremy Hunt has vowed to look again at the scheme ahead of the spring budget.

It follows a string of warnings from luxury giants which have said London is losing out to rival cities in Europe such as Paris and Milan.

Luxury companies have cautioned that it is not only foreign shoppers who are cutting back, as they claim that British customers are also heading abroad to buy designer brands.

UK shoppers can claim back VAT on their shopping when visiting EU countries.

Shoppers in the West End of London, 2022

Shoppers in the West End of London, 2022 – Mike Kemp/Getty Images

03:34 PM GMT

Prime Minister ‘would not countenance’ scrapping Saturday post

Downing Street appears to have ruled out allowing Royal Mail to scrap Saturday deliveries ahead of an imminent review of the postal service by Ofcom.

International Distributions Services, the FTSE 250 business which owns Royal Mail, says that the requirement to deliver letters on Saturdays is “simply not sustainable”.

But Downing Street said the Government “would not countenance” enabling Royal Mail to ditch its six-day-a-week letter postal service.

The Prime Minister’s official spokesman said:

Obviously Ofcom has a role here and is reviewing the future of Royal Mail.

But the Prime Minister’s strong view is that Saturday deliveries provide flexibility and convenience that are important for businesses and particularly publishers and the Prime Minister would not countenance seeing Saturday deliveries scrapped.

So I think we’ll see exactly what the outcomes are.

But given the importance of these deliveries, particularly to businesses, it’s not something we would countenance.

Mailbags being moved at the Royal Mail Distribution centre in Glasgow

Mailbags being moved at the Royal Mail Distribution centre in Glasgow – Andy Buchanan/AFP

03:33 PM GMT

Handing over

I’m heading off now and Alex Singleton will be providing you with live updates for the rest of the day.

I’ll leave you with this image of farmer Guy Singh-Watson, who has placed 49 scarecrows outside the Houses of Parliament today as part of his campaign to force the Britain’s supermarkets to adopt fairer practices towards British farmers:

Guy Singh-Watson founded Riverford and has launched the˜Get Fair About Farming campaign as nearly half of fruit and veg farmers fear closure within 12 months

Guy Singh-Watson founded Riverford and has launched the˜Get Fair About Farming campaign as nearly half of fruit and veg farmers fear closure within 12 months – David Parry/PA Wire

03:20 PM GMT

Agribusiness trader shares plunge after accounting investigation

Shares in commodity trader Archer Daniels Midland (ADM) plunged on Wall Street after an accounting investigation was launched.

The top financial executive at the agribusiness trading giant has been placed on administrative leave as the company postponed the release of its annual and quarterly financial reports.

ADM shares dropped as much as 19.4pc in its biggest one-day drop since Black Monday after it said that an investigation had been launched in response to a voluntary document request by the US regulator the Securities and Exchange Commission.

Chief financial officer Vikram Luthar was placed on leave, effective immediately. The company said late Sunday that it is cooperating with the SEC.

Lead director Terry Crews said:

The board takes these matters very seriously.

Pending the outcome of the investigation, the board determined that it was advisable to place Mr Luthar on administrative leave.

ADM named Ismael Roig as interim chief financial officer as it adjusted its earnings expectations for the year, down from $7 per share to more than $6.90.

02:59 PM GMT

Musk visits Auschwitz after anti-Semitism row

Elon Musk visited Auschwitz today as he tries to address accusations he has allowed anti-Semitic messages on his social media platform X, formerly known as Twitter.

The Tesla boss visited the most notorious site of the horrors of the Holocaust ahead of an appearance later at a conference on antisemitism organised by the European Jewish Association in the nearby Polish city of Krakow.

The billionaire has faced accusations from the Anti-Defamation League, a prominent Jewish civil rights organisation, and others of tolerating anti-Semitic messages on his social network since purchasing it in 2022.

He sparked an outcry in November, including from the White House, when he responded on X to a user who accused Jews of hating white people and professing indifference to antisemitism by posting, “You have said the actual truth.”

He later apologised for the comment, calling it the “dumbest” post that he has ever made.

Several big brands, including Disney and IBM, stopped advertising on X last year after liberal advocacy group Media Matters said that their ads were appearing alongside pro-Nazi content and white nationalist posts.

Tesla chief executive Elon Musk visits the  Auschwitz-Birkenau concentration camp

Tesla chief executive Elon Musk visits the Auschwitz-Birkenau concentration camp – AP Photo/Andrzej Rudiak

Mr Musk was given a private tour of the site with European Jewish Association chairman Rabbi Menachem Margolin, centre left, The Daily Wire editor-in-chief Ben Shapiro and Holocaust survivor Gidon Lev, left

Mr Musk was given a private tour of the site with European Jewish Association chairman Rabbi Menachem Margolin, centre left, The Daily Wire editor-in-chief Ben Shapiro and Holocaust survivor Gidon Lev, left – European Jewish Association/Yoav Dudkevitch/Reuters

02:37 PM GMT

S&P 500 hits new record as Wall Street opens

The S&P 500 surged to a fresh intraday record high after trading began on Wall Street as markets were swept up by excitement over AI.

The benchmark US stock index jumped 0.5pc to 4,863.67, beating the intraday record set on Friday.

The Dow Jones Industrial Average rose 0.3pc to 37,994.43 while the tech-heavy Nasdaq Composite jumped 0.7pc to 15,412.03.

02:17 PM GMT

Auditing regulator publishes watered-down rules for City directors

Britain’s auditing watchdog has published a new set of governance rules for company directors, which have been watered down from the originally proposed changes in a bid to safeguard UK competitiveness.

The Financial Reporting Council (FRC) has unveiled revisions to the UK corporate governance code, which applies to companies with a premium listing on the London Stock Exchange.

The most significant change is that directors will be required to annually sign off on the effectiveness of their companies’ internal controls.

The watchdog made a small number of further revisions but they come as a fraction of the 18 proposals originally set out in its consultation last May.

FRC chief executive Richard Moriarty, who joined the council in October, has already announced that he planned to drop most of the earlier proposals in November, which was seen as a major row back on its earlier aims to overhaul the governance code.

He put part of the decision down to the FRC’s need to balance “supporting UK economic growth and competitiveness”, as well as to boost trust in governance, following on from responses to its consultation over the summer.

The new measures will require directors to describe how they have have monitored and reviewed the effective of their systems and declare the effectiveness of controls they deem materially important.

02:02 PM GMT

Thames Water issues £750m of bonds as it fights to shore up finances

Thames Water is reshuffling its £14.7bn debt pile, it has been reported, as it seeks to reorganise its beleaguered finances.

The struggling utility company, which last year close to an emergency nationalisation, has issued as much as £750m of long-term bonds, according to Bloomberg News.

The company was last month forced to scrap its pledge to become net zero by 2030 as it battles mounting pressure on its finances.

Weeks earlier it had warned lenders about the risks surrounding a £2.5bn investment package to shore up its long-term future.

Thames Water has reportedly issued as much as £750m of bonds as it tries to shore up its finances

Thames Water has reportedly issued as much as £750m of bonds as it tries to shore up its finances – REUTERS/Toby Melville

01:40 PM GMT

No 10 ducks question on Sunak’s view of BBC impartiality

Downing Street declined to say whether Rishi Sunak believes the BBC is biased but denied the Government is pursuing an agenda against the corporation.

The Prime Minister’s official spokesman said: “It’s for Ofcom to hold the BBC to account against its responsibilities in the charter.”

Asked whether it was right to say the Government was pursuing an agenda against the BBC, the official said: “No. As I say… this is rightly about ensuring the BBC is able to continue to thrive long into the future.”

Downing Street denied Mr Sunak misspoke when he said all elements of the media industry should be subject to the same impartiality rules.

Asked whether the Prime Minister would like to see newspapers subject to the same impartiality rules as broadcasters, Mr Sunak’s official spokesman said:

I think you’re getting into the semantics of which regulator oversees which section of the media.

Asked whether the Prime Minister misspoke, the official said: “No… he was making a general point about the importance of the media landscape.”

01:12 PM GMT

Maersk bypasses Red Sea ports amid attacks

Shipping giant Maersk has announced it will no longer call at two key Red Sea ports as the tensions in the vital shipping route continue.

The Danish company said port calls at Jeddah in Saudi Arabia and Salalah in Oman on its ME2 service would be “paused until further notice”.

Little has happened to the price of oil after the announcement Maersk will bypass the ports as it reroutes ships around the southern tip of Africa to avoid attacks from Houthi rebels in the Red Sea.

Brent crude was little changed despite the tensions continuing, with the price of a barrel at more than $78. US-produced West Texas Intermediate was trading 0.3pc higher at more than $73.

12:47 PM GMT

Hunt will still be Chancellor at election, says Sunak

Jeremy Hunt will still be Chancellor at the time of the general election expected later this year, Rishi Sunak has said.

The Prime Minister said his Mr Hunt was doing a “fantastic job” at managing the economy after mounting speculation ahead of the spring Budget about how long he will last in the post.

Asked on a visit to Buckinghamshire whether Mr Hunt would remain in his position at the time of the election, Mr Sunak told broadcasters: “Yes, and I’ve said that multiple times, it’s not new information.”

He added: “We’d like to do more when it is responsible to do so, but as we saw with the latest inflation data, inflation doesn’t fall in a straight line, it isn’t a given, there’s still work to do, and that’s why it’s important we stick to the plan so we can build a society where everyone’s hard work is rewarded.”

Reports last year suggested Mr Hunt would stay for the autumn statement and the Budget but that there was a question mark over his longer-term future in the role.

Mr Sunak has until January 2025 to hold an election but has said he is working towards a vote in the second half of 2024.

Rishi Sunak speaks during a TV interview in front of a painted back drop of a stormy sky created by students at the National Film and Television school in Beaconsfield

Rishi Sunak speaks during a TV interview in front of a painted back drop of a stormy sky created by students at the National Film and Television school in Beaconsfield – Richard Pohle/AP

12:12 PM GMT

Wall Street poised to push for new record highs

US stock indexes are expected to rise further when markets open after the S&P 500 closed last week by hitting a new reocrd high.

The benchmark US index was boosted by a rally in chip stocks following bullish forecasts from Taiwan’s TSMC and Super Micro Computer last week.

Heavyweight technology stocks steered the S&P 500 to a record high of 4,842.07 points and an all-time closing high of 4,839.81 points on Friday, confirming a bull market since its October 2022 closing low.

Nvidia and Advanced Micro Devices gained 0.7pc and 0.8pc, respectively, in premarket trading, after hitting their highest levels on Friday, while Marvell Technology , Qualcomm and Micron Technology climbed around 1pc each.

Markets will wait to see if the rally can be fuelled further when the Fed’s preferred gauge of inflation – personal consumption expenditure (PCE) data – is published later this week.

In premarket trading, the Dow Jones Industrial Average was up 0.2pc, the S&P 500 had risen 0.3pc and the Nasdaq 100 had gained 0.6pc.

Traders on the floor of the New York Stock Exchange on Friday as the S&P 500 hit a new record high

Traders on the floor of the New York Stock Exchange on Friday as the S&P 500 hit a new record high – Spencer Platt/Getty Images

11:47 AM GMT

Lagarde rated as ‘poor’ by her own staff at ECB

Christine Lagarde is not the right person to lead the European Central Bank as she has used the role to boost her political agenda, a staff survey has reportedly shown, as the eurozone economy grapples with record high interest rates.

The ECB president, who has just returned from meeting the world’s business and political elites at the World Economic Forum in Davos, was given a damning review by more than half the respondents of a trade union survey, seen by Politico.

Her performance during the first half of her eight year term was rated as “very poor” or “poor” by 50.6pc of respondents to the survey of more than 1,100 of the ECB’s roughly 4,500 staff.

Many comments suggested there was widespread unhappiness about her wading too deeply into politics and using the ECB to boost her personal agenda, Politico reported.

It comes as businesses and households in the eurozone grapple with interest rates at record highs, which the ECB is expected to keep at 4pc when it meets on Thursday.

European Central Bank president Christine Lagarde was rated 'poor' or 'very poor' by 50.6pc of respondents to a trade union survey

European Central Bank president Christine Lagarde was rated ‘poor’ or ‘very poor’ by 50.6pc of respondents to a trade union survey – REUTERS/Denis Balibouse

11:26 AM GMT

Fewer property millionaires as Covid-era ‘race for space’ ends

There were around 60,000 fewer property millionaires across Britain by the end of 2023 than a year earlier, analysis suggests.

About 670,100 homes have a value of £1m or more, according to Savills.

The total number of property millionaires fell by 8.3pc (60,260) during the year to the end of 2023, with higher mortgage costs and tougher housing market conditions having an impact.

But the total is still up by 28pc (146,490) compared with 2019 – before the impacts of the pandemic prompted a “race for space” with more people working from home and buying properties in more rural locations.

Britain’s £1m home market is now valued at £1.32trillion, down from £1.43trillion in 2022, researchers said.

Lucian Cook, head of residential research at Savills said:

The race for space and dash to the countryside from mid-2020 drove a sharp increase in the number of £1m homes outside of London and other urban settings.

However, increased mortgage costs and a rebalancing of demand back to city living have meant about 30px of those whose homes crossed the £1m threshold, have, for the time being at least, become aspiring million pound homeowners once again.

11:02 AM GMT

Barclays cuts mortgage rates in ‘unprecedented battle’ between lenders

Barclays has become the latest major lender to up the ante in the mortgage market, shaving up to 0.5 percentage points off fixed rates.

The cuts reduce its two-year fixed rate deals to as low as 4.34pc in a move universally welcomed by mortgage advisers.

Justin Moy, managing director at EHF Mortgages, called it a “barnstorming challenge” to the rest of the market, while Ranald Mitchell, director at Charwin Private Clients, said it would trigger a response from competitors in an “unprecedented battle for business unlike anything any of us have ever seen”.

Read on for everything you need to know about remortgaging in 2024.

10:42 AM GMT

Men working less since pandemic while women put in more hours

Men are working fewer hours than they did before the pandemic, official figures show, as employers struggle to fill historically high job vacancies.

The number of average weekly hours worked by men has dropped significantly, from 38.6 in 1998 to 35.3 in 2022, a total of 3.3 hours per week, according to the Office for National Statistics.

In comparison, average weekly hours for women have trended upwards from 26.5 in 1998 to 27.9 in 2022, a total increase of 1.4 hours per week.

Compared with before the pandemic in 2019, average weekly hours for men were 0.9 lower in 2022 while women’s hours were 0.5 higher in 2022 than in 2019.

The figures come as the total estimated number of job vacancies remains 133,000 higher than pre-pandemic levels, although they have fallen for a record 18 times in a row in ONS reports.

10:20 AM GMT

Eurozone debt hits €12.7trillion

Government debt across the eurozone increased by about €110bn to €12.7trillion (£10.9trillion) in the third quarter of last year, official figures show.

Debt stood at 89.9pc of GDP across the single currency union over the period, down from 90.3pc the previous month.

Greece had the highest debt to GDP ratio at 165.5pc but managed to reduce this by 1.6 percentage points.

UK public sector debt stood at about £2.7trillion in the three months to November, which was about 97.5pc of GDP.

10:04 AM GMT

Royal Mail risks terminal decline, warn card makers

Britain is “sleepwalking” towards the loss of six days-a-week post, card makers have claimed, as Royal Mail lobbies for the axing of Saturday letter deliveries.

Luke Barr and Tim Wallace have the details:

The Greeting Card Association (GCA) has written to ministers and regulator Ofcom warning that the “beloved” Royal Mail risked falling into “terminal decline”.

David Falkner, chief executive of Cardology and a leading member of the GCA, warned that customers have “lost faith” in Royal Mail after late deliveries became the norm and said customers are being forced to spend more on first-class post to ensure safe delivery.

Businesses have also lost confidence and are having to “pay for services above and beyond what we actually need”.

Read the latest on Royal Mail’s push to end of Saturday deliveries.

09:40 AM GMT

Gas prices drop as Storm Isha boosts wind power

Gas prices have slumped to a six-month low as Storm Isha drove a surge in wind energy production.

Europe’s benchmark contract has fallen as much as 6.4pc to less than €27 per megawatt hour, its lowest level since July.

The UK equivalent has dropped 6.7pc towards 65p per therm. Prices stood at more than 136p per therm in October.

It comes as hurricane-force winds brought by Storm Isha cause huge travel disruption but also triggered a boost in renewable energy production.

Wind power is meeting more than 51pc of Britain’s energy needs at present, with gas at around 21pc.

Gas prices had already been driven lower after a mild winter across Europe kept storage levels high, with stocks already having been driven up to record levels following the previous year’s energy crisis.

Commuters have faced heavy disruption from Storm Isha, which caused this tree branch to fall onto a car in Belfast overnight

Commuters have faced heavy disruption from Storm Isha, which caused this tree branch to fall onto a car in Belfast overnight – Liam McBurney/PA Wire

09:19 AM GMT

‘Not appropriate’ for BBC to have ‘armoury’ to prosecute licence fee dodgers, says minister

Culture Secretary Lucy Frazer said it is not appropriate for the BBC to have “criminal tools in its armoury” to prosecute people for not paying their TV licence fee.

Asked about a series of cases brought against people by TV licensing, Ms Frazer told Times Radio: “I don’t think it’s appropriate for the BBC to have criminal tools in its armoury in relation to prosecutions.”

Ms Frazer has said she will look at the prosecutions in an upcoming review.

Asked whether she thought there would still be a licence fee enforced by the Government in 10 years time, she said: “It’s something that we need to look at and that’s why I’ve launched a review into the funding of the BBC.”

09:05 AM GMT

Pound steady ahead of ECB interest rate decision

The pound was little changed ahead of an interest rate decision by the European Central Bank (ECB) later this week.

Sterling was down 0.1pc against the dollar at just under $1.27 and flat against the euro, which is worth less than 86p.

The pound fell last week after official figures on Friday showed that retail sales fell by the most in three years.

However, persistent inflation and the view that the Bank of England is unlikely to cut rates as quickly as the ECB or the US Federal Reserve have kept it relatively strong.

Market analysts think the ECB will make five interest rate cuts this year, although it is expected to keep them on hold at its next policy meeting on Thursday.

08:45 AM GMT

UK stocks rise after Wall Street hits record

Britain’s main stock indexes climbed in early trading after a record-setting rally on Wall Street in the previous session, which helped outweigh concerns about a slowing British economy and persistent inflation.

The blue-chip FTSE 100 has climbed 0.3pc, while the domestically-focused FTSE 250 rose 0.7pc.

Wall Street’s benchmark S&P 500 hit an all-time high on Friday, fuelled by optimism around artificial intelligence (AI), driving technology stocks higher across the globe.

Both the UK indexes marked their third consecutive weekly decline on Friday, after a stronger-than-expected inflation reading and slump in December retail sales raised concerns about a potential recession and complicated the outlook for interest rates.

Compass Group edged down 0.4pc after the catering giant said it had agreed to buy rival CH&CO for an initial enterprise value of £475m.

Martin Sorrell’s digital advertising group S4 Capital climbed as much as 8.9pc, after the company issued fourth-quarter trading update that was in-line with the its previous forecast.

08:36 AM GMT

Thousands of companies on ‘edge of collapse’ as cheap money era ends

There was a surge in the number of companies in critical financial distress at the end of last year as business grappled with higher interest rates and the end of “cheap money”.

Some 47,477 firms were on the “edge of collapse” in the final three months of last year, an increase of 25.9pc on the previous quarter, according to the latest Red Flag Alert report from insolvency specialist Begbies Traynor.

The surge marked the second consecutive three-month period where critical financial distress has grown by about a quarter.

the report showed that all of the 22 sectors assessed saw an increase in critical financial distress, but the construction and real estate sectors were among the hardest hit.

Julie Palmer, partner at Begbies Traynor, said:

After a difficult year for British businesses that was characterised by high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs, we are now seeing this perfect storm impacting every corner of the economy.

Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances.

08:23 AM GMT

S4 Capital warns about ‘client caution’ over advertising

Sir Martin Sorrell’s S4 Capital has confirmed it expects a slump in revenues and margins amid “cautious spending” from clients in advertising and marketing.

The digital ad agency said like-for-like net revenue would decline by about 4pc when it reports its full year results for 2023, while its underlying profit margin would be in the range of 10pc to 11pc.

Net debt is expected to be towards the lower end of the guided range of £180m to £220m.

Executive chairman Sir Martin Sorrell said:

After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments.

Our client relationships remain strong and we have also managed costs tightly.

While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year’s level given interest rates are likely to fall over time.

S4 Capital’s shares have risen 8.4pc in early trading.

Sir Martin Sorrel is executive chairman of ad agency S4 Capital

Sir Martin Sorrel is executive chairman of ad agency S4 Capital – Hollie Adams/Bloomberg

08:04 AM GMT

UK markets open higher

Stock markets in London have opened higher after a record finish on Wall Street ended last week as major tech stocks pushed the S&P 500 to a new all-time high.

The FTSE 100 gained 0.4pc after markets opened to 7,490.84 while the FTSE 250 has risen 0.5pc to 18,973.02.

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07:56 AM GMT

Compass seals £475m takeover of Kew Gardens caterer

Catering business Compass Group has agreed a £475m takeover of a rival which provides hospitality to venues such as Kew Gardens and the Royal Opera house

FTSE 100-listed Compass is the largest food service contractor in Europe, employing more than 550,000 people in 35 countries and with a market capitalisation of £37bn.

It has agreed to buy CH&CO, which generates annual revenues of about £450m and has worked with football clubs including Charlton Athletic and Southampton.

Compass chief executive Dominic Blakemore said:

CH&CO is a highly regarded food service business in our industry. This proposed acquisition combines the best of the two companies: our shared passion for people, great food, and focus on sustainability.

With CH&CO’s strong brand identity and a broad geographic reach, we would be able to further enhance our customer proposition, helping us capitalise on the significant growth potential in the market.

CH&CO boss Bill Toner added: “The prospect of joining a leading global provider of food services offers huge potential for us and our clients.”

CH&CO provides catering for Kew Gardens

CH&CO provides catering for Kew Gardens – Kit Fanner – On Location Events

07:40 AM GMT

Virgin Wines sales rise despite ‘subdued’ consumers

Virgin Wines has revealed an increase in sales over the past half-year despite pressure from the “subdued consumer economic landscape”.

The direct-to-consumer wine retailer reported that total revenue increased by 2pc to £34.3m over the six months to December 29, compared with the same period last year.

The company added that it saw a “significant improvement” in profitability after improvements in its warehouse operations and reductions to delivery and logistics costs.

Underlying profits – known as ebitda – increased more than doubled to £1.8m.

Chief executive Jay Wright said:

We are pleased with our performance through the first half of our financial year, particularly our strong profitability despite the challenging trading environment, with ebitda (earnings before interest, tax, depreciation and amortisation) representing over 5pc of revenue.

Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfilment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period.

Virgin Wines more than doubled its ebitda to £1.8m

Virgin Wines more than doubled its ebitda to £1.8m

07:33 AM GMT

Check Boeing door plugs, regulator tells airlines

Airlines have been told by regulators to inspect the door plugs on another class of Boeing jet following the mid-air blowout on an Alaska Airlines flight earlier this month.

The US Federal Aviation Administration (FAA) late Sunday said companies operating Boeing 737-900ER jets should make sure equipment was properly secured.

The recommendation follows some operators reporting unspecified issues with bolts upon inspections.

The 737-900ER is not part of the newer MAX fleet but has the same door plug design that allows for the addition of an extra emergency exit door when carriers opt to install more seats.

The FAA issued a “Safety Alert for Operators” disclosing some airlines have conducted additional inspections on the 737-900ER mid-exit door plugs “and have noted findings with bolts during the maintenance inspections.”

A Boeing spokesman said: “We fully support the FAA and our customers in this action.”

In contrast to the MAX 9 that experienced the door-plug issue, Boeing 737-900ER aircraft have over 11 million hours of operation and 3.9 million flight cycles. The FAA said the door plug “has not been an issue with this model”.

Both United Airlines and Alaska Airlines – which are the only carriers operating the MAX 9, said they had begun inspections of the door plugs on their 737-900ER fleets.

Delta Air Lines, which also operates the 900ER, said it had “elected to take proactive measures to inspect our 737-900ER fleet” and does not anticipate any operational impacts.

Globally, the three US carriers operate the vast majority of the 737-900ERs with the door plugs.

The FAA said on Sunday that MAX 9 planes – the model which suffered the mid-air blowout earlier this month – will remain grounded until it “is satisfied they are safe to return to service.”

Alaska Airlines and United Airlines are the only two US carriers that use the aircraft and have had to cancel thousands of flights this month while the aircraft are grounded.

The fuselage plug area of Alaska Airlines Boeing 737-9 MAX which was forced to make an emergency landing after a mid-air blowout

The fuselage plug area of Alaska Airlines Boeing 737-9 MAX which was forced to make an emergency landing after a mid-air blowout – NTSB

07:22 AM GMT

Good morning

Thanks for joining me. Airlines have been told to inspect another type of Boeing aircraft after the dramatic mid-air blowout earlier this month.

The US Federal Aviation Administration told airlines to examine the door plugs of Boeing 737-900ER planes “to ensure the door is properly secured”.

Boeing said it “fully supports the FAA and our customers in this action.”

5 things to start your day

1) Labour’s North Sea drilling ban will bring forward rig closures, warns Enquest chief | Oil executive argues plans will cost jobs and increase dependency on imported energy

2) Help to Buy revival will only fuel house price inflation, Hunt warned | Jeremy Hunt is also exploring plans to introduce a 99pc mortgage to let first-time buyers onto the property ladder with just a 1pc deposit

3) Record number of female chief executive departures blamed on ‘tall poppy syndrome’ | Female chief executives are much more likely to quit their jobs as a result of personal reasons, and are also more likely to be fired

4) Unloved London stock market to beat US and EU in 2024, City predicts | Comparatively cheap UK stocks are poised for a comeback amid falling inflation

5) House prices and economy to get boost from easing inflation | Falling interest rates and an end to the energy price shock to drive growth

What happened overnight

Shares were mixed in Asian markets after Wall Street returned to record heights on Friday, while Hong Kong’s benchmark dropped nearly 3pc, hovering near a 15-month low.

The benchmark Nikkei 225 index added 1.6pc, or 583.68 points, to 36,546.95, while the broader Topix index rose 1.4pc, or 34.89 points, to 2,544.92.

The Bank of Japan started a two-day policy meeting on Monday, and was expected to keep its ultra-low interest rates unchanged.

The Hang Seng in Hong Kong lost 2.8pc to 14,877.50. The index has shrunk more than 10pc this year, its worst start to a year since 2016. The Shanghai Composite index was down 2.5pc at 2,760.73.

China’s commercial banks kept their loan prime rate unchanged Monday amid downward pressure on the yuan, disappointing investors who anticipated measures to stimulate the economy. Last week, the People’s Bank of China surprised markets by keeping its medium-term lending facility rate unchanged.

In South Korea, the Kospi fell 0.4pc to 2,476.14. Australia’s S&P/ASX 200 advanced 0.8pc to 7,476.60. In Bangkok, the SET was down 0.6pc, while in Taiwan the Taiex gained 0.8pc.

On Friday, the S&P 500 rallied 1.2pc to its record of 4,839.81. The Dow Jones Industrial Average set its own record a month earlier, and it gained 1.1pc to 37,863.80. The Nasdaq composite jumped 1.7pc to 15,310.97.

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