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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

UK ‘rebounding sharply’; supply bottlenecks hit German firms; travel shares rally – as it happened

A dragon boundary mark and the City of London skyline.
A dragon boundary mark and the City of London skyline. Photograph: Vuk Valcic/SOPA Images/REX/Shutterstock

Closing summary

Time to wrap up.

Hopes are building that the UK economy will grow rapidly this year. Goldman Sachs told clients that it expects the United Kingdom will grow even faster than the US this year. It predicts UK GDP will rise by 7.8% this year as it rebounds strongly from the pandemic.

The EY Item Club predicted the strongest growth since the 1940s, while Deloitte reported that consumer confidence had surged as pandemic restrictions are rolled back.

Travel company shares have been lifted by the prospect of American tourists being able to visit Europe this summer. IAG and easyJet rallied after EC president Ursula von der Leyen told the New York Times that American tourists who have been fully vaccinated against Covid-19 will be able to visit the EU this summer.

Brussels is yet to open discussions with the British government about Covid-19 passports, though:

German companies have reported that supply chain bottlenecks are hitting growth. Business morale in Europe’s largest economy only rose modestly this month, as the Covid-19 pandemic and the scramble to obtain semiconductors hit industry.

US durable goods orders have risen again, signalling that America’s economy continues to recover.

The copper price has hit its highest level since 2011, driven by strong demand, supply worries, and a weaker US dollar.

Resolution Foundation have called for more support for older workers who lose their jobs in the pandemic. It has found that they are offered worse support than younger people, leading to large numbers of over-50s falling out of the workforce for good.

Standard Life Aberdeen has announced it is changing its name to Abrdn – pronounced “Aberdeen” – in a move that prompted immediate criticism of the asset manager’s “ill-thought out” rebranding.

The Edinburgh-based company, which dates back to 1825, said that the vowel-banishing change reflected a “modern, agile, digitally-enabled brand”. The new name, however, was not universally well received on Monday.

“This is ill thought-out, it could be pronounced ‘a burden’,” said Jonathan Gabay, a brand expert.

“They are a financial company. What they do for customers is look at details, getting rid of vowels and letters makes it look like they’ve skipped over the most basic details in their name.”

My colleague Nils Pratley has called for the company to reverse the decision, amid much criticism on social media.

A Guardian investigation has found that solar projects commissioned by the Ministry of Defence, the government’s Coal Authority, United Utilities and some of the UK’s biggest renewable energy developers are using panels made by Chinese solar companies accused of exploiting forced labour camps in Xinjiang province.

Tate & Lyle is in talks to sell a controlling stake in its starches and sweeteners division, a move that would let it focus on its food and beverage division.

Here are more of today’s stories:

Goodnight. GW

Updated

EU in vaccine passport talks with US but not UK

The EU is at an advanced stage of talks with the US over mutually recognising vaccine passports to boost transatlantic tourism this summer, but Brussels is yet to open discussions with the British government, our Brussels bureau chief Daniel Boffey reports:

A spokesperson for the European commission said that while discussions had been held with US officials and the secretary of homeland security, Alejandro Mayorkas, there were “no contacts at present with the UK”.

Boris Johnson has said he wants to allow foreign travel by 17 May and the government is considering introducing vaccine passports for British holidaymakers in line with that target.

But a commission spokesperson said talks had not yet opened between Brussels and London on how to ensure mutual recognition of either side’s documents proving vaccination or a recent negative coronavirus test.

European stock markets also closed higher, with the Stoxx 600 up around 0.25%.

Financial stocks, energy companies and miners rallied (along with travel stocks), lifted by economic recovery hopes and higher commodity prices.

But Germany’s DAX lagged, only up 0.1% after IFO’s business morale index missed forecasts this morning.

European stock markets, April 26 2021
European stock markets at close of play Photograph: Refinitiv

FTSE 100 closes higher

The FTSE 100 has closed at 6963 points, up 24.5 points or 0.35% today.

Rolls-Royce finished nearly 6% higher, the top riser on the index, after Ursula von der Leyen said that American tourists who have been fully vaccinated against Covid-19 will be able to visit the European Union over the summer.

An increase in trans-Atlantic flights would lift demand for Rolls-Royce’s jet-engine servicing.

IAG, which owns British Airways, was up 4.2% at the close.

Other airlines rallied too, with easyJet ending almost 4.3% higher while holiday firm TUI gained 6.6%.

Tate & Lyle closed nearly 6% higher after confirming it was looking to sell a controlling stake its ‘primary products’ division.

Chilian copper maker Antofagasta was also in the top FTSE 100 risers, up 4.3%, after the copper price hit a 10-year high today.

While travel shares are rising, oil is under pressure - with Brent crude down 0.65% today at $65.68 per barrel.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, says the pandemic raging in India, where the virus has brought its healthcare system to its knees amid tragic scenes, pulled oil lower.

That’s a reminder that the growing split between countries whose vaccinations programmes are curbing the pandemic, and the rest, threatens the whole global recovery.

A glimpse of a post crisis future was captured today, where the haves and the have nots will be decided on the speed of vaccination programmes in countries around the world.

Travel stocks soared higher during the London session today as hopes lifted that a big rescue could now be on the cards for the summer season, with the introduction of vaccine passports. Comments in the US media made by European Commission President Ursula von der Leyen indicated that European destinations would be open for inoculated Americans. The prospects of vaccine passports put a spring in the step of IAG, the owner of British Airways and jet engine maker Rolls-Royce which were the top risers on the FTSE 100, helping propel the index into positive territory.

But as US and European citizens hang onto hopes for summer holidays abroad, in India the Covid disaster is accelerating. The crisis, exacerbated by a lack of investment in medical infrastructure, has pulled oil prices lower with weaker demand expected in the country which is the world’s third largest crude importer.

Pledges of help are coming in thick and fast with governments around the world offering oxygen supplies and medical equipment and this show of solidarity may have helped limit losses to some extent. It’s not simply altruistic. There is a fear that further mutant strains of the virus could emerge in India with infections concentrated in highly populous areas. The worry is that new mutations could weaken the effectiveness of vaccines and lead to fresh restrictions in economies which have begun to bounce back from what was hoped to be the worst of the pandemic.

Updated

Commodity prices are continuing to rally too, with copper hitting a 10-year high today.

Sophie Griffiths, market analyst at OANDA, says:

Copper is often considered a good gauge of economic activity, so the rally in copper certainly raises the question of whether this is Dr Copper calling. The recovery trade seems to be increasingly evident through commodities, particularly base metals and lumber.

Airlines rally on trans-Atlantic travel hopes

Back in London, travel stocks are still among the risers, amid hopes that Americans may be able to travel to the EU this summer - if they are fully vaccinated against Covid-19.

British Airways parent company IAG is up 4.7%, while Rolls-Royce (which makes and services jet engines) has gained over 5%.

Holiday operator TUI (+5%) and budget airline easyJet (+4.5%) are among the FTSE 250 risers.

Today’s rally comes after European Commission President Ursula von der Leyen told the New York Times yesterday that American tourists who have been fully vaccinated against Covid-19 will be able to visit the European Union over the summer.

The NYT reported:

“The Americans, as far as I can see, use European Medicines Agency-approved vaccines,” Ursula von der Leyen, president of the European Commission, said Sunday in an interview with The Times in Brussels. “This will enable free movement and the travel to the European Union.

“Because one thing is clear: All 27 member states will accept, unconditionally, all those who are vaccinated with vaccines that are approved by E.M.A.,” she added. The agency, the bloc’s drugs regulator, has approved all three vaccines being used in the United States, namely the Moderna, Pfizer/BioNTech and Johnson & Johnson shots.

More here: E.U. Set to Let Vaccinated U.S. Tourists Visit This Summer

A street sign for Wall Street
A street sign for Wall Street Photograph: Shannon Stapleton/Reuters

Wall Street has opened a little higher, with the main indices all rising slightly:

  • Dow Jones industrial average: up 83 points or 0.25% at 34,127 points
  • S&P 500: up 12 points or 0.3% at 4,193 points
  • Nasdaq Composite: up 50 points or 0.35% at 14,066 points

FxPro senior market analyst Alex Kuptsikevich says:

After a minor shake-up last week, the buying and selling of equities and other risky assets in US dollars returned to the markets.

The S&P500 and Dow Jones 30 futures are cruising near historic highs, having found buyers on the slight dip in the middle of last week.

Nils Pratley: C’mn Abrdn, abndn this clunky new name nonsense

Our City editor Nils Pratley has called on Standard Life Aberdeen to abndn its (much-mocked) rebrand as “Abrdn”.

He points out that this “awkward blur” just jars, and will enrage customers’ spell-checkers. Here’s a flavour:

Stphn Brd, as the asset manager’s chief executive presumably now styles himself, called it “modern, agile and digitally enabled”, but he sounded like a man trying to justify a large bill from the designers to himself. Modern financial firms call themselves things such as Monzo or Revolut, which have a zing about them. In this case, the company had to include a guide to pronunciation. The answer turns out to be Aberdeen, so why bother rinsing out three-quarters of the vowels?

As for the claim to agility, the truth is the opposite. A name that will cause an unfamiliar speaker to pause is clunky. Even Monday, as PwC once wanted to call itself until it succumbed to gales of laughter, was a word. The boast about “digitally enabled” also looks premature as digital technology moves on to voice recognition. What the company means is that domain names for “Aberdeen” in full are taken, which doesn’t qualify as an excuse...

Here’s the full piece:

March’s rise in durable goods orders shows the “continued strength” of the US economy, says Capital Economics’ Andrew Hunter.

The strong rebound in underlying durable goods orders in March, which partly reflects the unwinding of earlier weather-related disruption, indicates that business equipment investment has continued to expand at a rapid pace, taking it even further above pre-pandemic levels.

And with demand being boosted by fiscal stimulus, corporate borrowing costs still low and the manufacturing new orders surveys going from strength to strength, business investment will likely keep expanding at a robust pace this year, he adds.

Here’s some early reaction to the US durable goods orders, from Joseph Brusuelas, chief economist at RSM US.

US durable goods orders rise

Demand for US durable goods rose again last month, but not as much as expected.

New orders for manufactured durable goods increased by 0.5% in March, the U.S. Census Bureau reports - below forecasts of a 2.3% rise.

That follows an upwardly-revised 0.9% drop in February. It means durable goods orders have risen in 10 of the last 11 months, amid the recovery from the shock of the pandemic last year.

The figures are stronger if you strip out the volatile transport sector. Excluding transportation, new durable goods orders increased 1.6%. Excluding defense, new orders increased by 0.5%.

Fabricated metal products, led the increase, with a 3.6% rise in orders.

Standard Life Aberdeen’s CEO, Stephen Bird, has told Sky News that rebranding as Abrdn will help the company run more efficiently.

Supporting one brand, not five, means every pound and dollar spent will go much further, Bird explains here.

He adds that the spoken name ‘Aberdeen’ has high recognition around the world (although, as flagged earlier, that rather assumes people know how to pronounce ‘Abrdn’).

Bird can’t reveal how much the rebranding has cost, but insists:

It’s going to be a lot more efficient, and it was not a lot of money to develop the identity.

The rebranding is still causing a rumpus on social media, including this gem:

PensionBee has made a smooth debut on the London stock market - in a stark contrast to Deliveroo’s stumble.

Shares in the pension consolidation business are up over 6% today at 179p, the first day of unconditional trading. That’s up from the float price of 165p, which valued PensionBee at £365m, showing that the City hasn’t lost its appetite for IPOs.

PensionBee’s target market are people with several small pensions, who are deterred by the hassle of putting them into a single pot.

It helps people track down their old plans and consolidate them, and has more than 81,000 customers who have moved pension assets to, or paid into, one of its investment plans.

Deliveroo, though, is trading near a record low today at 228p, having floated at 390p a month ago - despite doubling its orders during the lockdown.

It emerged last week that hedge fund Odey Asset Management had shorted Deliveroo’s shares.

City investors were deterred from taking part in its IPO due to corporate governance worries, and potential legal challenges over the treatment of its riders.

Updated

Here’s Manuela Finger, partner at the Munich office of law firm Gowling WLG, on the supply chain bottlenecks in Germany (and beyond...):

“Supply chain snags can soon become supply chain crises if the right level of insight is not put in place to prevent potential blockages.

While political and regulatory issues are clearly at play here, this clearly highlights the need for forward thinking and scenario planning to help highlight the importance of backing up supply contracts and arrangements.”

Resolution: Older workers hit by pandemic

A new report from Resolution Foundation today is warning that older workers have been hit hard by the pandemic.

The Covid-19 crisis has led to the biggest annual employment fall for workers over 50 since the 1980s, Resolution shows.

So while there’s rightly been a lot of focus on young people, who bore the brunt of job losses in the last year, older employees also need more support.

It can take longer for them to return to the labour force, often on lower wages, and with an impact on their retirement plans.

My colleague Amelia Hill has the details:

The Resolution Foundation has warned that older people who lost their jobs during the pandemic could receive worse support than younger people, leading to large numbers of over-50s falling out of the workforce for good.

In its report, A U-Shaped Crisis, supported by the Nuffield Foundation, the independent thinktank voiced concerns that Restart, the recently announced support scheme for the long-term unemployed, “carries the risk that older workers receive a lower quality of service than younger workers”.

Resolution have presented the report this morning - here are the key points.

Larry Elliott: Caution needed over bounceback optimism

Our economics editor, Larry Elliott, has a word of caution about the prospect of a strong UK recovery this year as the economy bounces back.

Previous UK booms have a tendency to end in busts....and the bigger the boom the bigger the bust, he wrote yesterday:

It is, of course, perfectly possible that this boom will be different from the others and that the economy will, in due course, settle down to a period of steady, sustainable growth. That, though, is based on a number of key assumptions.

The first is that the desire to spend will persist and is more than a brief spasm of activity that will fizzle out when the novelty wears off. Currently, this doesn’t look all that likely because many consumers have spent the past year paying off their debts and seem confident enough to splash the cash.

A second assumption is that rising bond yields are nothing to worry about. In the US, the country that really counts, the cost of borrowing for the government has been rising as the economy picks up speed. This can be seen either as a natural response to stronger growth or as a precursor of an inflation problem to come.

The third – most important – assumption is that vaccines will tame the coronavirus. Not sufficiently to claim total victory but enough so that something like normal life can be resumed. Economic activity is picking up fastest in advanced countries because they are vaccinating fastest. Even so, there was an air of unreality last week when news of Britain’s spending spree coincided with reports of record Covid-19 cases in India and hospitals running short of oxygen.

None of which is to say that another recession is inevitable or imminent. The consumer spending spree may well continue. Policy may be perfectly calibrated. The housing market may not be a bubble. Rich countries may ensure vaccines arrive in poor countries that badly need them. It would be wise to enjoy the good times while they last, that’s all.

Goldman Sachs: UK economy to grow faster than US this year

The logo of Goldman Sachs.
The logo of Goldman Sachs. Photograph: Andre M Chang/ZUMA Wire/REX/Shutterstock

Goldman Sachs has also predicted the UK economy will grow strongly this year, and even faster than the US.

In a note to clients, the Wall Street bank predicts UK GDP would grow by “a striking” 7.8% this year (even pacier than EY Item Club’s prediction of 6.8% growth today).

Goldman points to April’s PMI survey, which showed private sector growth at eight-year high this month as evidence that the economy is rebounding fast, along with the jump in retail sales in March.

Goldman says:

The UK economy is rebounding sharply from the covid crisis. The April flash PMI was much stronger than expected in the UK, with the services PMI moving sharply further into expansionary territory.

Combined with other recent growth metrics—including a 5.4% jump in March retail sales—our Current Activity Indicator is now running at an annualised pace of 7.1% in April.

Given recent upward revisions to real GDP, our 2021 forecast is now at a striking 7.8% for 2021, above our expectations for the US and sharply above the Bloomberg consensus of 5.5%.

Reuters helpfully points out that Goldman had previously expected Britain’s economy would grow by 7.1% this year, while its forecast for U.S. growth in 2021 stands at 7.2%, helped by U.S. President Joe Biden’s huge fiscal stimulus programme.

IFO: Bottlenecks are putting 'sand in the engine'

Computer chips aren’t the only product in short supply.

Ifo economist Klaus Wohlrabe has told Reuters that a range of products are causing bottlenecks in Germany:

“There are bottlenecks with semiconductors, for example, but also with many other products. There is sand in the engine when it comes to procurement, across almost all industries.”

On Saturday, the Financial Times reported that Volkswagen has warned top managers to brace for a bigger production hit in the second quarter than the first because of the global chip shortage.

Wayne Griffiths, president of VW’s Spanish brand, Seat, said:

We are being told from the suppliers and within the Volkswagen Group that we need to face considerable challenges in the second quarter, probably more challenging than the first quarter.”

Andrew Kenningham at Capital Economics said the Ifo survey showed that Germany’s economy is treading water at the beginning of the second quarter:

Updated

IFO’s report also highlights how Germany’s factory sector is outperforming the services sector, although supply bottlenecks are a growing problem....

In manufacturing, the business climate rose to its highest value since May 2018. Companies reported greatly improved business. The demand situation is still very good. Capacity utilization rose considerably from 81.9 to 86.2 percent. This brings it above its long-run average of 83.5 percent for the first time in almost two years. However, optimism declined with regard to expectations. Fully 45 percent of companies reported bottlenecks in intermediate products – the highest value since 1991.

In the service sector, the business climate indicator fell somewhat following a steep rise in the previous month. Service providers were slightly less satisfied with their current situation. Recent signs of optimism have disappeared again. While the logistics industry is benefiting from the upswing in manufacturing, other industries are still suffering, in particular hospitality and tourism.

IFO survey of German business climate

Chip shortages weigh on German morale

Econonomic optimism in Germany is being held back by the latest wave of Covid-19 infections, and the global shortages of key parts and components such as semiconductors.

The Ifo institute’s latest business climate index has risen slightly this month, to 96.8 from 96.6 in March.

That’s below forecasts of a rise to 97.8, with companies less optimistic about the economic outlook.

Ifo President Clemens Fuest warned that supply chain bottlenecks are hurting Germany’s recovery:

“Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery,”

The global shortage of computer chips forced Jaguar Land Rover to temporarily shut down production at two of its main UK factories last week; clearly Germany’s auto sector faces the same challenges.

IFO says 45% of companies reported bottlenecks in intermediate products – the highest value since 1991.

But......Carsten Brzeski of ING says the German economy could stage a strong rebound in the second half of this year, as the general outlook has ‘clearly improved’:

The vaccination programme is finally getting moving and with the prospect of at least 50% of the adult population having had a first jab before the summer, a more substantial reopening of the economy should not be too far away.

New variants of the virus, however, as currently witnessed in India, could definitely spoil any reopening parties. Add to this potential spillovers from US fiscal stimulus, the implementation of the European Recovery Fund in the second half of the year, a rebound in the construction sector and the fact that the manufacturing sector still has not reached pre-crisis levels, and stronger Ifo readings in the months ahead look highly likely.

In our view, the prospects for the German economy to stage a strong rebound in the second half of the year remain good.

Travel shares rallying

Travel company shares are rising this morning, with airline group IAG up 4% and jet engine-maker Rolls-Royce gaining 4.6%.

But the wider FTSE 100 is slightly lower (down 7 points at 6931). The stronger pound is weighing on multinationals -- such as British American Tobacco (-1.3%), Diageo (-1.2%) and Unilever (-1%). Online grocer Ocado is the top faller FTSE 100 faller, down 1.8%.

The smaller FTSE 250 index, which is more domestically focused, has jumped by 0.4%, with Tate & Lyle still up 6%.

IMI, the UK engineering firm, has jumped 7% after raising its profit guidance and announcing a £200m share buyback plan.

Holiday firm TUI (+4%) and budget airline easyJet (+3.4%), and property firm Hammerson (+3.5%), are among the risers as investors favour ‘value stocks’ which will benefit from the reopening of the economy.

Here’s our news story on Tate & Lyle’s break-up plans:

Copper prices have hit their highest level since 2011 today, lifted by recovery hopes, supply concerns and a weaker US dollar.

Last week, mining unions in Chile (a top copper producer) threatened to take protest action if the government does not drop a bid to block Chileans from drawing down more of their pensions savings early.

Other commodity prices are also hitting highs, points out Bloomberg’s Lisa Abramowicz:

The pound has begun the new week with some small gains.

Sterling is up 0.2% against the euro at €1.1491, having dropped against the euro for much of last week.

It’s also risen back over $1.39 against the dollar, up 0.25% today.

Jeremy Thomson-Cook, chief economist at international business payments firm Equals Money, says sterling should benefit from the relaxation of Covid-19 restrictions.

The dichotomy of rising Covid-19 cases globally but a UK that is enjoying reopened bars, restaurants and shops should continue to work in the pound’s favour should the vaccination program continue to progress, the hospitalisation rate remain low and border controls stay in place to eliminate the risk of further outbreaks.

Tate & Lyle break-up: Analysts react

Here’s Russ Mould, investment director at AJ Bell, on Tate & Lyle’s plan to sell a majority stake in its sweeteners business:

“It is becoming increasingly fashionable to break up large businesses, particularly those with conglomerate structures.

“Private equity companies are sitting on large amounts of cash and they are becoming more creative with deploying those funds to make future returns. Rather than making outright acquisitions, buying parts of businesses can be a good move as it can unlock hidden value.

“These are quite a few companies like Tate & Lyle which have fingers in many pies. While they might be making good money, splitting a business into different parts each with separate management can see a tighter focus and ultimately even stronger gains.

“Tate & Lyle’s potential move to sell a controlling stake in its artificial sweeteners and industrial starches arm could mean it gets a cash injection that can be used to pay down debt and reinvest in the business to make it more competitive, as well as the ability to focus more attention on its food and beverages arm.

“Keeping a minority stake in the sweeteners arm would also mean it benefits from any upside and provides an option to sell that holding at a future date, potentially for an even greater price than if it had sold out completely in one go.”

But splitting the company won’t be easy.

Martin Deboo of Jefferies says “Operational unbundling” is the big challenge for Tate & Lyle, as some of its factories make products for Primary Products (which it wants to sell) and Food & Beverage Solutions (which it is keeping).

There could also be tax implications, he adds, as Tate “sustains a below US standard tax rate due to its ability to offset UK tax losses against US profits.” A joint venture could help limit ‘tax leakage’ here.

But even so:

The principal attractions of such a deal would be that Tate could increase its focus on FBS and might achieve a higher equity rating as consequence of de-consolidation of Primary.

Copywriter Tom Albrighton points out that people are going to struggle to pronounce Abrdn:

Financial advisor Mark Ireland gives a thumbs-down too:

Mr rctn t Abrdn rbrnd

Standard Life Aberdeen’s name change really isn’t going down well this morning.

Few seem impressed by the rebranding to Abrdn, with Shruti Tripathi Chopra of Financial News among the (many) critics on Twitter:

Here’s LBC’s Matthew Thompson:

Risk manager Simon Johnson sums things up with a meme...

Edinburgh-based marketing coach Roger Edwards also isn’t a fan:

Nor is financial planner Jamie Bogle:

On the pronounciation issue....

Oh yes, it’s bad...

Updated

Standard Life Aberdeen changes name to Abrdn (I kd y nt!)

In what I briefly thought was a tardy April Fool’s joke, financial services giant Standard Life Aberdeen is changing its name.... to “Abrdn”.

The new name (pronounced “Aberdeen”, disappointingly) will replace five existing brands, following the merger of Standard Life and Aberdeen Asset Management in 2017.

Abrdn will be part of a “modern, agile, digitally-enabled brand”, the Edinburgh-based firm says.

Stephen Bird, chief executive, explains the logic:

“Our new brand Abrdn builds on our heritage and is modern, dynamic and, most importantly, engaging for all of our client and customer channels. It is a highly-differentiated brand that will create unity across the business, replacing five different brand names that have each been operating independently.

Our new name reflects the clarity of focus that the leadership team are bringing to the business as we seek to deliver sustainable growth.”

This purging of the vowels hasn’t gone down terribly well, judging by these scathing tweets:

Updated

Paula Vennells quits Morrisons and Dunelm boards

Rev Paula Vennells, the former head of the Post Office, has resigned from the boards of the supermarket chain Morrisons and retailer Dunelm after the court of appeal quashed the wrongful convictions of dozens of staff at her former employer.

Vennells, who ran the Post Office between 2012 and 2019, pursued prosecutions against hundreds of subpostmasters, accusing them of theft and false accounting.

The court of appeal quashed the convictions of 39 employees on Friday, saying the Post Office knew there were faults in the Horizon accounting system it used but continued to pursue prosecutions against its employees.

The Horizon Post Office scandal is the most widepread miscarriage of justice in the UK, with hundreds of subpostmasters and postmistresses prosecuted due to software bugs, errors and defects which wrongly showed the money had gone missing.

Vennells has also apologised, saying yesterday she was “truly sorry for the suffering caused to the 39 subpostmasters” whose convictions were overturned last week,”

Education group Pearson has seen strong demand for online learning courses in the pandemic.

Its Global Online Learning division grew underlying sales by 25% in the last quarter, Pearson says this morning, with strong demand for its Virtual Schools product.

But the disruption to education in the last year is hitting other parts of the businesss. Workforce Skills sales fell 8%, as the closure of further education colleges meant vocational BTEC exams were cancelled.

English Language Learning sales also fell (down 4%), reflecting the awful disruption caused by Covid-19 in parts of the world such as Latin America, where the Brazilian variant is devastating communities.

Pearson’s is shifting towards a new digital, consumer-focused strategy, and CEO Andy Bird says the company expects to benefit from improving trading conditions as COVID-19 restrictions ease.

“It’s been a good start to the year for Pearson, delivering 5% sales growth in the quarter.

This is despite a longer period of disruption from COVID-19 in the quarter compared to last year. I’d like to thank colleagues for their ongoing dedication and hard work.

Shares in Pearson are up 2% in early trading.

Shares in Tate & Lyle have jumped 6% in early trading, after the firm confirmed it is in talks to sell a controlling stake in its sweeteners business.

That puts them on top of the FTSE 250 leaderboard.

Tate & Lyle’s share price
Tate & Lyle’s share price over the last two years Photograph: Refinitiv

Updated

Tate & Lyle in talks to sell majority share in sweeteners business

Tate & Lyle, one of the most famous UK food companies, is preparing to break itself up in a push towards towards healthier foods.

The food ingredients maker is seeking a buyer for a controlling stake in its “primary products division” -- which makes and sells artificial sweeteners used in soft drinks and industrial starches.

A deal would let Tate & Lyle focus on its “Food and Beverage Solutions” arm.

In a statement, the company says it is exploring selling a controlling stake in its Primary Products business (which produces the bulk of its sales) to “a new long-term financial partner”.

Tate & Lyle continues to successfully execute its strategy and remains confident in the future growth prospects of the company. However, the Board believes that if a transaction of this nature was completed it would enable Tate & Lyle and the new business to focus their respective strategies and capital allocation priorities and create the opportunity for enhanced shareholder value.

Discussions with potential new partners in the Primary Products business are at an early stage and therefore there can be no certainty that a transaction will be concluded.

The Sunday Telegraph reported that Tate & Lyle has begun a £1.2bn auction for its primary products arm.

The company is most famous for its historic sugar business, which made products such as Lyle’s Golden Syrup, and which it sold back in 2010.

The food and beverage solutions arm makes products which helps major food makers, such as Mondelez and Nestlé, lower the sugar, salt and fat content of their food, as the Financial Times explains:

The company, which is led by chief executive Nick Hampton, believes splitting off its businesses will allow a greater focus on the food and beverage arm, which has higher profit margins, faster revenue growth and alignment with consumer trends for healthier living.

Updated

Introduction: UK set for strong recovery this year

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

Optimism is building that the UK economy is rebounding strongly from the economic shock of Covid-19, and that 2021 could see rapid growth.

This morning, the EY ITEM Club have hiked their forecasts for growth in 2021 to a positively sizzling 6.8%, up from 5% forecast in January. They predict a solid recovery this year, as lockdown restrictions are eased and the rollout of Covid-19 vaccines continues.

That means the UK economy is expected to return to its pre-pandemic size in the second quarter of next year - three months earlier than before - and suffer less long-term economic ‘scarring’.

Unemployment is also expectect to rise less than feared, they say. It’s now forecast it reach 5.8% in the fourth quarter of 2021 – down from the 7.0% peak predicted in January, with the furlough scheme having protected jobs over the last year (unemployment fell to 4.9% last week).

Howard Archer, chief economic advisor to the EY ITEM Club, says the UK economy has proven to be more resilient than seemed possible at the outset of the pandemic.

Businesses and consumers have been innovative and flexible in adjusting to COVID-19 restrictions and, while restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact.

In another boost, figures from Deloitte show that consumers are also more upbeat, raising hopes for a jump in spending this spring and summer as the economy unlocks.

My colleague Richard Partington explains:

Reflecting expectations of accelerated growth as the economy reopens, consumer confidence increased at the fastest rate in a decade in the first three months of 2021, as the roadmap out of lockdown fuelled optimism.

Every measure of confidence – from the state of the economy, to general wellbeing and personal debt levels – increased over the period, according to the Deloitte Consumer Tracker.

“The UK is primed for a sharp snapback in consumer activity,” said Ian Stewart, the chief economist at Deloitte. “High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.”

The government’s decision to extend its furlough support through to the autumn had also boosted sentiment, limiting the rise in unemployment, Stewart said. “The eventual peak in unemployment looks set to be far lower than had been feared, and far lower than following any downturn in the last 30 years.”

Last week, the Treasury reported that City analysts have upgraded their GDP projections for 2021, with households eager to spend the savings which many have accrued during lockdown.

The average forecast for growth this year, they said, was 5.7%, up from 4.7% - the fastest since 1988.
We’ve also seen manufacturing confidence hit its highest level since 1973, while retail sales in March leapt 5.4% - in an early sign that consumers were spending strongly. Firms are reporting stronger demand, with the monthly purchasing managers index hitting the highest level since 2013 on Friday.
A resurgence of the pandemic could, of course, knock things sideways; last week, the markets took a brief dive as the crisis in India escalated. And the UK did suffer a historically bad 2020, with GDP contracting almost 10%.
But if growth does hold firm, then unemployment could peak lower than feared, and the public finances could suffer less damage too. As Paul Dales of Capital Economics put it last week:

Overall, we think a surge in retail sales in April will mark the start of a rapid economic recovery that may mean the extra tax hikes and spending cuts that most fear may not materialise.

The agenda

  • 9am BST: IFO survey of German business confidence
  • 1.30pm BST: US durable goods orders for March
  • 3.30pm BST: Dallas Fed manufacturing index for April

Updated

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