Closing summary
The chief executive of the pharmaceutical company Eli Lilly has said the UK is “probably the worst country in Europe” for drug prices, amid a row between the industry and government.
Dave Ricks said that the UK’s strict pricing regime, allowing it to pay less for drugs than other developed countries, means it would miss out on new drugs being rolled out if it did not raise prices and scrap a rebate scheme.
“Unless that changes I don’t think they will see many new medicines and I don’t think they will see much investment,” the boss of the Mounjaro weight loss drugmaker told the Financial Times. “That’s the UK’s choice, but we react to those choices.”
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Take care! – JK
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UK arrest over cyberattack that hit Heathrow and European airports
A man has been arrested in the UK in connection with the cyber-attack that disrupted flights at London Heathrow and several other European airports last weekend.
The National Crime Agency said it had arrested a man in his 40s in West Sussex as part of an investigation into the incident affecting Collins Aerospace, which provides check-in desk technology for airlines.
The NCA and officers from the organised crime unit arrested the man on Tuesday evening, on suspicion of offences under the Computer Misuse Act. He has been released on conditional bail.
The cyber incident, which was reported last Friday, led to widespread delays and cancellations at a number of airports, with Brussels the worst affected.
BT boss says costs ‘inflicted’ by UK are 10 times those faced by European sector
The chief executive of BT has said telecoms operators in the UK pay as much as 10 times the amount in “government-inflicted costs” than those operating in comparable European countries.
Allison Kirkby said the industry had already hit the “peak” it could handle in costs imposed by the government, and warned that the November budget could be “very difficult” for the chancellor, Rachel Reeves.
“We pay in business rates, energy levies and other costs associated with regulation and compliance 10 times the amount our peers pay in countries like Germany and the Netherlands,” she said, speaking at the Connected Britain conference in London on Wednesday. “So we’re already at peak government-inflicted costs.”
Kirkby, who joined BT’s board in 2019 and took over from Philip Jansen as chief executive at the beginning of last year, was formerly the boss of the Swedish telecoms company Telia.
European car sales trail behind global trends
Sales of cars in Europe have “trailed behind” global trends with overall registrations falling by 2.4% and the EU market down 1.9% in the first half of the year, according to the European industry body – although Türkiye, the EFTA countries, and the UK provided some stability.
The European Automobile Manufacturers Association said global car production grew by 3.5% with almost 38m vehicles manufactured.
Asia dominated with 60% of the market while the EU represented 15.9%.
It noted that European production contracted by 2.6% whereas China’s output “soared by 12.3% on the back of policy support and export gains”.
The report comes a day after Peugeot, Fiat and Vauxhall group Stellantis announced it will pause production at six plants in Europe because of “challenging” markets.
At the end of September it will temporarily halt production at Poissy in France and Pomigliano in Italy for three weeks because of weak market demand in Europe, it said.
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Lego to buy 29 discovery centres from Alton Towers owner
Lego is to buy 29 discovery centres from Merlin, the owner of theme parks including Alton Towers and Chessington, in a £200m deal.
The Danish toymaker is buying the Lego-branded discovery centres – indoor entertainment venues featuring Lego building zones, creative workshops and retail outlets. They are present in nine countries and attract five million visitors a year, as part of a strategy to strengthen control of its brand with consumers.
Lego has expanded its store footprint in recent years, taking the global total to 1,079 branded stores in 54 markets.
Merlin, the world’s second-largest theme park operator after Disney, will continue to operate 11 Legoland parks globally under licence from Lego.
Fiona Eastwood, the chief executive of Merlin, said:
For 20 years, Merlin has partnered with the Lego group. It is now a natural next step for the centres to become part of the Lego group. [This allows] Merlin to strengthen its focus on driving the growth and success of Legoland resorts alongside our other attractions worldwide.
Merlin, which opened its latest Legoland resort in Shanghai in July, owns and operates 130 attractions in 22 countries. The theme park group’s largest investor is a consortium led by the family that controls the Lego empire.
Kirkbi, the private investment company of the family of Kirk Kristiansen, the inheritor of the Lego fortune, owns 50% of Merlin.
The other half is wound by the private equity firm Blackstone and CPPIB, the Canadian pension fund.
The consortium took Merlin private in a £5.9bn deal in 2019.
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On the Beach shares slump after profit downgrade amid later booking trend
Shares in the package holiday company On the Beach slumped by 20%, after the company downgraded its profit outlook following the closure of its business-to-business division, and said that people are waiting longer to book holidays.
On the Beach said annual profit will miss market forecasts. It will wind down its B2B segment ‘Classic Collection,’ which made a small loss in the year, to focus on its consumer business.
The shares fell as much as 20% and are now trading 16% lower.
The company is now expecting profit before tax, excluding that business, to come in between £34.5m and £35.5m in the year to 30 September.
With high food prices and rising concerns over possible tax increases in the November budget, UK households are tightening their spending.
Summer 2026 bookings currently reflect the later booking trend as reported across the market, with bookings being made increasingly closer to the date of departure.
Shaun Morton, the chief executive, struck a cautiously optimistic note.
It remains clear that customers are still prioritising their holidays with our winter 2025 bookings up 12% and we are confident that summer 2026 will continue to build, notwithstanding the later booking patterns.
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European defence stocks rise after Trump remarks
European defence stocks are rising today after Donald Trump’s punchy comments on Ukraine.
Babcock International shares gained by 1.9% while BAE Systems is up by 1.5%, making them the two biggest risers on the FTSE 100 index. Elsewhere in Europe, France’s Thales has gained 1.7%, Germany’s Rheinmetall is up by 1.4%, and Italy’s Leonardo has increased by 2.8%.
Donald Trump said yesterday that he believes Ukraine can regain all the land that it has lost since the 2022 Russian invasion in one of the strongest statements of support he has given Kyiv.
The US president also said he believed Nato aircraft should shoot down Russian aircraft if they entered its airspace, but later qualified his remarks by saying it depended on the circumstances.
Ukraine’s international bonds fell by more than 1 cent. The 2036 bond posted the sharpest declilnes, falling by 1.1 cents to 46.79 cents on the dollar.
German business morale falls unexpectedly
In Germany, business confidence unexpectedly declined this month, according to a closely watched survey, as the economic outlook remains weak.
The Ifo institute said its business climate index fell to 87.7 in September form a revised 88.9 in August. Analysts polled by Reuters had forecast a reading of 89.3.
Economics professor Clemens Fuest, president of the Munich-based institute, said:
Companies were less satisfied with current business, while their expectations clouded noticeably. Prospects for an economic recovery have suffered a setback.
Sentiment in the manufacturing sector declined, with new orders down, while in the service industries, sentiment “deteriorated noticeably” as the outlook indicator fell to its lowest level since February. Business morale worsened most in the transport and logistics sector.
Fuest said that “any glimmers of hope that had emerged among capital goods manufacturers in the previous month have faded”.
In trade, the business climate worsened, driven by more pessimistic expectations, although companies were more positive about the current situation.
In construction, confidence improved following last month’s setback.
JD Sports is one of the biggest fallers on the FTSE 100 index this morning after its disappointing results.
The shares are down by 1.4%, while the wider blue-chip index has fallen by 0.17%, or 16 points, to 9,207.31. Other European stock markets are also slightly down, while gold is hovering near the new all-time high it hit yesterday, up 0.2% at $3,770.29 an ounce.
Russ Mould, investment director at the stockbroker AJ Bell, said:
Markets are having to work out whether sluggish demand at JD Sports, reflected in lower like-for-like sales, is part of a cyclical or structural trend.
A weak economic backdrop is not helpful and while the youthful demographic targeted by the sportswear chain may not be weighed down by costs like servicing a mortgage or nursery fees, they still have less money in their pockets.
If it’s just a case of waiting for a more positive backdrop then shareholders must sit tight, with strong cash generation at least allowing JD Sports to reward patience with dividends and share buybacks.
However, a greater risk might be a waning of the athleisure trend which saw people wearing the same outfits for the gym, relaxing at home and socialising.
This has been supportive for JD Sports over several years, with the company’s offering well positioned to take advantage of it.
A larger than normal second-half weighting is another worry – with the risk that the company ends up having to downgrade guidance if the second half doesn’t make up the shortfall.
The company did address one of the nagging concerns facing investors as it said it didn’t expect to see any meaningful impact from tariffs this year.
AO World CEO: Businesses should be 'turbocharged by government, not disadvantaged'
John Roberts, the founder and chief executive of AO World, an online retailer specialising in electrical goods, has also talked about how tough things are for retailers at the moment.
He told BBC Radio 4’s Today programme that the UK’s employment rights bill, which will make sweeping changes to rights at work and improve pay, will make it even harder for businesses to recruit people, and could force them to lay people off.
Fundamentally, at the end of the day, we have inflation coming through, and we are now feeling that in the costs across businesses, business leaders that I speak to right across the piece are looking at how they can take people out.
One of my phrases that I use a lot is that costs walk into businesses on legs. Those legs have got a lot more expensive. It is much more difficult to recruit people. It’s much less flexible than it has ever been to recruit people.
We should be talking about job creation, not enforcing things that make business leaders think twice about recruiting people… We have to be an absolutely ruthlessly low-cost, efficient, brilliant service model.
It also means that we can’t carry costs that some of our competitors are not carrying, and we should be turbocharged by our UK government, not disadvantaged.
He warned of another recession, although it was not clear whether he meant a recession under the official definition – at least two consecutive quarters of economic contraction.
We’ve lived through a few recessions in the last 25 years. I think we’re heading into another one, and I see that as yet another opportunity, because mediocre businesses tend to really suffer.
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JD Sports reports lower sales and profits, citing 'strained consumer finances'
JD Sports has reported a fall in like-for-like sales and profits across its global business, hurt by lower demand in North America, its biggest market, as it cited “strained consumer finances”.
The UK’s biggest sports retailer said its like-for-like sales, at outlets open at least a year, fell by 2.5% year on year in the six months to 2 August.
North America was the worst hit region, with sales dropping by 3.8% to £2.3bn. In the UK, sales fell by 3.3%, in Europe they slipped by 0.3% and in Asia Pacific they were down by 2.4%.
JD reported a 13.5% fall in adjusted pre-tax profits to £351m, and warned that over the full year like-for-like sales will be down from the previous year.
Régis Schultz, the chief executive, talked of a “tough trading environment” but said JD had gained market share in North America and Europe, and continued to invest in new stores in North America.
In an environment of strained consumer finances and evolving brand product cycles, operating and financial discipline remains a core focus for JD, and we are controlling our costs and cash well.
While we remain cautious on the trading environment for the second half, we expect limited impact from US tariffs this financial year, and our full year profit before tax and adjusting items to be in line with current market expectations.
Updated
Consumer rights champion Martin Lewis is on BBC radio 4’s Today programme right now, and said the way Ofgem has drawn up changes to lower standing charges is “terribly punishing for many older people” .
He said the problem is that the changes are not being made as part of the price cap mechanism, which means energy companies can charge what they like overall for bills – whack up energy unit prices to make up for lower standing charges.
People pay over £300 a year just for the facility of having gas and electricity, it disincentivizes people from cutting their bills. It’s terribly punishing for many older people… Now what this is going to do is this is going to, of course, [lead to] a low standing charge tariff will mean you pay lower standing charges and higher unit rates.
The difference between what Ofgem has come out with and what I was asking it to do is it has not done this within the price cap mechanism. And that is a big problem. The problem with not doing it under the price cap mechanism, that regulated default price, is that it means there is no limit to what firms can charge. So they could wipe the standing charge but increase the unit rate far above what is needed to compensate for it. My proposal of doing it within the standing charge means they could only recover the same costs in the unit rate that they were losing in the standing charge.
The problem is that Ofgem wants to rush the changes through, Lewis said.
I think they wanted to get it done in January, because they said they would, and it would take too long to do it in the price cap
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UK energy suppliers to offer lower standing charges but won't reduce overall bills
Britain’s energy regulator Ofgem has announced plans to require all major suppliers to offer lower standing charges by the end of January, but added this would not reduce overall bills.
Standing charges are daily fixed fees added to the unit prices customers pay for gas and electricity, designed to cover the cost of connecting to the energy system.
Consumer groups have criticised them as unfair because they are paid regardless of how much energy households use.
Suppliers will probably shift the costs currently recovered through standing charges to other areas of bills like higher unit energy prices, Ofgem said.
However, the regulator and the government said the changes would give customers more choice over their energy bills. The UK minister for energy consumers, Martin McCluskey, said:
This proposal will make more tariffs available on the market, giving people more options to pay lower standing charges if that suits their needs.
Martin Lewis, founder of MoneySavingExpert.com, said:
How disappointing! There was a chance to see a proper mandated low standing charge option to benefit many, and while I hope I’m wrong, it looks like Ofgem may be about to somewhat smother it with the pillow of bureaucracy.
I get more complaints about standing charges than anything else in energy bills.
I worry Ofgem has picked an easy route to appease suppliers’ concerns, that doesn’t help the most vulnerable. I suspect if it goes ahead like this, not enough people will switch and they’ll say ‘it wasn’t worth it’. We will robustly be pushing back in response in the consultation.
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Introduction: Eli Lilly calls UK ‘worst country in Europe’ for drug prices; cost of gold rises again
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The boss of Eli Lilly has called the UK “probably the worst country in Europe” for drug prices, echoing remarks from other pharmaceutical executives, after putting a planned London laboratory on hold.
Dave Ricks told the Financial Times in Houston, Texas, that the UK will miss out on new medicines if it doesn’t pay more for them. He called for a contentious rebate scheme to be ended.
The country pays less for drugs than other developed countries, he said.
Unless that changes, I don’t think they will see many new medicines and I don’t think they will see much investment. That’s the UK’s choice, but we react to those choices.
Negotiations between the UK government and industry over the voluntary scheme for branded medicines pricing, access and growth, or VPAG, broke down without an agreement in late August. Under the scheme, companies pay back nearly 23% of their UK revenues to the NHS, a rebate rate that is much higher than comparable rates in the rest of Europe.
Ricks said Lilly “would like to get rid of the clawback scheme called VPAG . . . which charges us for our own success”.
Fellow US drugmaker Merck, known as MSD in Europe, recently ditched a £1bn research centre in London that was under construction, and the UK’s biggest pharmaceutical firm AstraZeneca paused the £200m expansion of its research labs in Cambridge two days later. Ricks said:
They say, ‘Well, why are you cancelling your investments?’ It is not an attractive environment.
Lilly itself has paused a planned London gateway lab, an incubator space for new drugs where biotechs can tap into Lilly’s expertise, part of a £279m investment package in the UK. It is understood that the company will not sign the lease for the building until the commercial environment improves. It has three gateway labs in the US and is building two in China.
In August, Lilly raised the UK price of its blockbuster weight loss injection Mounjaro by as much as 170% for people who buy it privately.
What we had seen is people taking trains from Paris to buy UK Mounjaro. That doesn’t make a tonne of sense for us.
Donald Trump has pushed drug companies to lower their prices in the US, where they have traditionally been much higher than in the rest of the world. Ricks’ remarks came as Lilly announced a new $6.5bn manufacturing facility in Houston.
Ricks said the timing of the investment was not linked to Trump’s 29 September deadline for pharmaceutical companies to make “binding commitments” to lower the country’s drug prices.
Paul Naish, the UK head of market access for the French company Sanofi, told the Guardian recently that Britain was “at a critical point”.
We’ve still got the best universities, we’ve got some of the best scientists in the world, but it’s not a good place to do the development work for medicines. It’s an expensive place to operate, and it’s a terrible place to sell medicines.
In financial markets, the price of gold is rising again, with the precious metal seen as a safe-haven investment in times of turmoil.
Spot gold is trading just below yesterday’s new record high of $3,777.80 an ounce, at $3,772.3, up 0.2% on the day, amid geopolitical uncertainty and expectations of further interest rate cuts from the US Federal Reserve.
The Fed’s chair, Jerome Powell, yesterday pushed back hard against claims the central bank allows politics to drive decisions, in the midst of an extraordinary battle over its independence.
The Agenda
9am BST: Germany Ifo business climate for September
10am BST: UK Treasury gilt 2030 auction
3pm BST: US New Home sales for August
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