A late PS. The pound has recovered more ground after Boris Johnson and Ursula Von der Leyen agreed to meet in person later this week to discuss the Brexit negotiations.
Following a 90-minute phone conversation, the UK PM and European Commission president agreed to an 11th-hour attempt to break the impasse in the deal talks, raising hopes of agreement on a trade and security deal.
In a joint statement, Johnson and Von der Leyen said:
“As agreed on Saturday, we took stock today of the ongoing negotiations.
We agreed that the conditions for finalising an agreement are not there, due to the remaining significant differences on three critical issues: level playing field, governance and fisheries.
“We asked our chief negotiators and their teams to prepare an overview of the remaining differences to be discussed in a physical meeting in Brussels in the coming days.”
This has pushed the pound back to $1.34, down just half a cent today, having slumped over two cents this morning.
Updated
Summary
So, with the pound clawing back its losses (at least for the moment....) it’s time to wrap up.
Here’s today’s main stories:
You can keep up with all the Brexit developments in our Politics Live blog:
Goodnight. GW
Reuters has spotted that today was the FTSE 250 index’s worst session in six weeks.
That pulled the mid-sized company index down from its highest level since February.
Here’s the details:
UK’s domestically-exposed stock index pulled back on Monday from its highest level in 10 months on fears that Britain will stage a disorderly exit from the European Union, with banks and real estate taking a sharp beating.
The mid-cap FTSE 250 ended 1.25% lower, logging its worst day in about six weeks, as negotiators entered last ditch efforts to bridge stubborn differences over a post-Brexit trade deal to avoid a messy divorce at the end of the month.
Updated
Pound recovers some losses
The pound is recovering some of its losses in late trading, after the UK appeared to offer an olive branch to Brussels.
London has confirmed that it will remove controversial clauses from its Brexit legislation which breach the Withdrawal Agreement, if discussions over implementing last year’s divorce deal are successful.
Our Politics Liveblogger Andrew Sparrow explains all:
The government has formally offered to withdraw or deactivate the clauses in the internal market bill that would enable it to over-ride parts of the Brexit withdrawal agreement if a trade deal is agreed this week. It has said so in a statement released.
It says:
Discussions [on a trade deal] continue to progress and final decisions are expected in the coming days. If the solutions being considered in those discussions are agreed, the UK government would be prepared to remove clause 44 of the UK internal market bill, concerning export declarations. The UK government would also be prepared to deactivate clauses 45 and 47, concerning state aid, such that they could be used only when consistent with the United Kingdom’s rights and obligations under international law.
This has pulled the pound back from its earlier lows.
Sterling is now down around three-quarters of a cent at $1.3365, having plunged two cents (on track for its worst day in three months) this morning.
This doesn’t solve the outstanding issues in the talks, but it does perhaps improve the mood.
This move doesn't make all of the problems of getting a deal magically disappear, but it may shift the mood a bit which was getting very glum indeed
— Laura Kuenssberg (@bbclaurak) December 7, 2020
Wednesday has emerged as the new deadline for the Brexit negotiations.
Our Brussels bureau chief Daniel Boffey explains:
The EU’s chief negotiator, Michel Barnier, has set a new deadline for the Brexit negotiations, warning that the talks will not go beyond Wednesday.
During briefings to MEPs and EU ambassadors in Brussels, Barnier said the negotiation was “not far from the very endgame”, and talks are expected to continue into midweek but no further.
Last-minute Brexit deal vital for UK economy, government told
Business leaders and unions have been heaping renewed pressure on the government to strike a last-minute Brexit agreement, saying the UK economy is ill-equipped for a disruptive no-deal scenario.
My colleague Richard Partington has the details:
Minette Batters, the president of the National Farmers’ Union, said reaching a deal was critical for protecting farmers’ access to the EU, which is the UK’s biggest market where 70% of agricultural food exports are sold.
“It is critically important that both the UK and EU continue to negotiate on a free trade agreement and prioritise securing a tariff-free, quota-free deal as soon as possible,” she said.
“There will be significant disruption for British food and farming if there is no deal at the end of the transition period.”
Company bosses said there were still big outstanding issues. Stephen Phipson, the chief executive of the manufacturers’ organisation Make UK, said industry would never have foreseen it would be in this position, with manufacturing companies still unable in very large part to prepare....
Updated
Worries that the UK and the EU will not agree to a trade deal has soured sentiment in the markets today, says David Madden of CMC Markets UK.
When markets closed on Friday there was a sense of cautious optimism doing the rounds as Ireland’s Foreign Affairs Minister, Simon Coveney, said negotiations were at the ‘very end’.
Over the weekend, Micheál Martin, the Irish premier, said the chance of a deal was 50-50. The situation is tense.
One report claimed that if no progress is not made today, then talks would end, while another claimed the EU are content to keep negotiating until Wednesday. The result has been a decline in the equity markets – the DAX 30, the CAC 40 and the FTSE 250 are all in the red.
London stock market close
After a day overshadowed by Brexit, the FTSE 100 index of blue-chip shares has closed virtually flat.
The Footsie gained 5 points or 0.08% to 6555 points, having hit a new nine-month high earlier in the session.
The weak pound propped up multinational companies, as their overseas earning are worth more, in sterling terms, when the pound falls
Top risers included classic defensive stocks, including British American Tobacco (+4.7%) and its rival Imperial Brands (+3.4%), along with packaging companies Smurfit Kappa (+2.5%) and DS Smith (+2%).
But UK-focused companies had a rougher day, with housebuilders Berkeley Group (-7.2%) and Persimmon (-5.3%) leading the FTSE 100 fallers.
Lloyds Bank also weakened, down 4.3%, with Premier Inns owner Whitbread losing 4%.
European markets had an underwhelming session too, with the German DAX down 0.22% and France’s CAC off 0.75%.
The smaller FTSE 250 fell 1.25%. It contains medium-sized companies and is more representative of the UK economy than the FTSE 100.
Davos shifts to Singapore
Singapore is the new Switzerland, at least for the global elite.
Next year’s World Economic Forum has been rescheduled to Singapore, in May, rather than its usual home in the Davos ski resort in January.
WEF had already been delayed until May, and provisionally moved to Lucerne-Bürgenstock in Switzerland - but now the Forum has decided that, for safety reasons, it must take place further afield.
WEF says the Singapore gathering will be the first global leadership event to address the “worldwide recovery from the pandemic”
As Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, puts it:
“A global leadership summit is of crucial importance to address how we can recover together,”
“The Special Annual Meeting 2021 will be a place for leaders from business, government and civil society to meet in person for the first time since the start of the global pandemic. Public-private cooperation is needed more than ever to rebuild trust and address the fault lines that emerged in 2020.”
With the Paris Air Show cancelled for next year, it shows that Europe won’t be fully back to normal for some months, even with successful vaccine rollouts.
While this decision is pandemic-related, it also sends a clear signal to the West: Go east if you want to feel the political-economic heartbeat of the future. https://t.co/ZApqelEGkD
— Martin Speer (@martin_speer) December 7, 2020
Thomas Pugh, UK Economist at Capital Economics, reckons the prospects of a UK-EU free trade deal have dropped from 60%, to “probably closer to 50:50 now”.
Even if the thorny issue of fishing quotas is resolved, he thinks the question of a level-playing field, and the deal’s governance, are “arguably more complicated to work out than fishing”.
In a note to clients, Pugh also points out that there’ll still be some disruption at the UK-EU borders in January, even if we get a deal to avoid tariffs and quotas (as we’re already seeing at the ports).
Plus, the differences between a deal and no deal aren’t as big as in 2016, or even March 2019 (the original Brexit date), Pugh explains:
That’s partly because leaving the EU’s Single Market and Customs Union makes this Brexit a relatively “hard” one. But it’s mostly because a lot of arrangements are now in place.
Indeed, the Withdrawal Agreement laid down the terms of the break-up, both the UK and the EU have made progress in granting financial services equivalence and the UK has replicated the bulk of the trade deals it had with non-EU countries via the EU.
Plus, there are different shades of no-deal. A “cooperative” one, in which both sides work together to limit disruption, would be less of a shock than an “uncooperative” one (in which the UK doesn’t stick to the Withdrawal Agreement, and the EU launches legal proceedings).
He also warns that there’s more downside risk to the pound -- it might rise back to $1.35 (last week’s 30-month highs) if a deal is reached, or plunge to $1.15 in a no-deal.
More (for clients) here.
Brexit is going to get a lot of airtime over the next few hours, days and weeks. But most of the coverage about a deal or no deal misses five key points.https://t.co/8yDWd74oAX
— Capital Economics UK (@CapEconUK) December 7, 2020
The US stock market is open, and the Dow Jones industrial average has dipped slightly from last week’s record.
The Dow is down 67 points, or 0.2%, at 30,151.
The broader S&P 500 is also down 0.2%, or 7 points, at 3,691.
But the tech-focused Nasdaq index has hit a new all-time high, up 18 points or 0.15% at 12,483.
Wall Street is set for a soft open today, having ended last week at record highs.
US Opening Calls:#DOW 30121 -0.31%#SPX 3688 -0.31%#NASDAQ 12530 +0.02%#RUSSELL 1885 -0.20%#FANG 5848 -0.12%#IGOpeningCall
— IGSquawk (@IGSquawk) December 7, 2020
Summary
A quick recap of the main events.
Mike Ashley’s Frasers Group is in rescue talks with the administrators of Debenhams. A deal could potentially save some of the 12,000 jobs at risk across the retailer - although Frasers warns that there’s ‘no certainty’ of agreement.
The pound is suffering its worst day in three months as Brexit trade deal talks go down to the wire, with no breakthrough yet.
Sterling’s weakness helped to push the FTSE 100 index up to a new nine-month high, although shares in banks and building firms are down.
DIY chain Kingfisher is repaying the £130m of business rates relief it received this year, having kept trading while many other firms were forced to shut.
The Paris Air Show won’t take place next year due to the pandemic.
UK house prices have risen at their fastest rate in over four years, due to demand for larger houses in more rural areas and the rush to take advantage of the stamp duty holiday.
Updated
Here’s our news story on Mike Ashley’s possible Debenham’s rescue:
Fashion chain Ted Baker has added to the high street’s woes, reporting widening first-half losses and saying it had laid off 953 people after Covid-19 lockdowns and other restrictions.
Its pretax loss ballooned to £86.4m in the 28 weeks to 8 August, from £23m a year earlier. Revenues almost halved to £169.5m.
As the UK and EU remain stuck in Brexit negotiations, David Wolffe, Ted Baker’s chief financial officer, warned of the impact of a no-deal Brexit.
There is material risk to our future profit if the UK is not successful in signing new trade agreements with the EU and other markets in which we operate
The main operational risk remains the flow of goods into the UK through the port, Wolffe added.
Building firms are already warning that gridlock at UK ports is holding up crucial deliveries, with Brexit stockpiling and pandemic disruption both creating serious congestion.
Updated
Back in the markets, the pound is still sharply lower, down over one and a half cents at $1.327.
That’s a slight recovery on this morning’s slump, but still puts sterling on track for its worst day in three months.
Investors remain concerned that the UK and EU negotiators still haven’t resolved their differences over crucial trade talk issues (including fishing rights in UK waters and fair competition rules for business).
James Cleverly, the Foreign Office minister, has said this morning that a trade deal with the EU was “nearly there” and that a deal is “possible”.
He also argued that the UK side “hold all the cards” in the negotiation, and that “a few small but significant concessions” from the EU could get the deal done.
That followed reports that EU negotiator Michel Barnier had given EU diplomats a “very gloomy” assessment of progress in the UK-EU trade talks.
Our Politics Live blog has all the details:
The latest word is that Boris Johnson and Ursula von der Leyen will speak at 4pm UK time.
NEW: Phone call between @BorisJohnson and @vonderleyen will take place at 1600UK/1700CET
— Adam Parsons (@adamparsons) December 7, 2020
Stephen Innes, chief global markets strategist at axi, says the Brexit cliff-hanger is sending a wave of jitters through the currency markets.
Brexit talks are at loggerheads. With the EU summit starting Thursday and the UK government intent on pressing ahead with two key pieces of legislation in the commons that run counter to the Withdrawal Agreement before that, it could be a fraught few days.
Whether the EU side would allow this last window of opportunity to be used by extending the talks beyond Monday in such a scenario remains an open question.
Updated
Halifax: UK house prices rise at fastest since 2016
UK house prices are rising at their fastest pace in over four years as the pandemic drives some families to move into larger houses away from the city.
Mortgage lender Halifax has reported that prices jumped 7.6% in the last year, lifting the average price to just over £253,000. That’s the strongest annual growth since June 2016.
Price rose by 1.2% in November alone, adding around £3,000 to the average property.
According to Halifax’s data, the average property price has risen by more than £15,000 since June – or 6.5%, which is the strongest five-monthly gain since 2004.
Russell Galley, managing director at Halifax, explains how Covid-19 is driving the market:
With mortgage approvals at a 13-year high, the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future.
The current stamp duty holiday is also pushing up demand. Galley points out that the recent price rises actually outstrip the saving since chancellor Rishi Sunak temporarily suspended stamp duty on properties up to £500k.
As the March deadline for the stamp duty holiday approaches, properties sold to home-movers recorded a much higher rate of annual house price inflation (+7.9%) than first-time buyers (+5.8%).
It is interesting to note that the stamp duty saving of £2,500 on a home costing £250,000 is now far outweighed by the average increase in property prices since July.
Updated
AJ Bell investment director Russ Mould warns that some store closures are inevitable even if Mike Ashley pulls off a late deal for Debenhams.
Mould also predicts that Ashley will push for rent cuts – as Debenhams collapse was partly caused by being trapped in expensive, long-term leases by its former private equity owners:
To no great surprise retail kingpin Mike Ashley’s Frasers Group is in for Debenhams at the 11th hour.
Ashley has been the great dealmaker of the high street in recent years and after JD Sports pulled out of its own deal for the department store it felt almost inevitable he would throw his hat into the ring.
Having acquired another ailing chain in House of Fraser in 2018, you can see what Ashley’s playbook is likely to be with some store closures a relative certainty, perhaps even more so given House of Fraser and Debenhams stores will often sit cheek by jowl. He will also look to drive a hard bargain with landlords.
Ashley might be interested in some of Debenhams’ in-house brands which he might then be able to sell in other outlets.
The queues outside Debenhams since lockdown was lifted in England suggest the wider Debenhams name still resonates with shoppers although there was also likely an element of opportunistic bargain hunters inspired what they expected to be a big closing down sale.
If the brand had that much appeal Debenhams arguably wouldn’t be in the mess it is now. It failed to adapt to the changing retail landscape and was left looking sluggish by its rivals.
Obstacles to a deal remain, time is short and Frasers itself acknowledges the Arcadia administration process as an obstacle given it is/was the main concession holder in Debenhams stores.
What seems likely is that the recent consolidation and failures in retail will not be the end of the story with the weaker players facing a big reckoning after a desperate attempt to salvage Christmas.
Updated
Paris Air Show 2021 cancelled amid pandemic
The organisers of the Paris Air Show, the biggest event in the global aviation calendar, have announced its cancellation in 2021 because of the coronavirus pandemic.
The show had been scheduled to take place between 21 and 27 June 2021, and its website was advertising opportunities to exhibit up until Monday morning. The next show will take place in June 2023, the show’s organisers said.
The Paris air show is the latest in a long line of trade fairs and shows that have been cancelled because of the pandemic, including the biggest motor shows. The UK’s Farnborough air show in July 2020 was hastily reorganised to run online (Farnborough alternates with Paris and runs in even-numbered years).
The global aviation industry has been particularly badly hit by the pandemic, forcing airlines and aerospace companies to drastically cut spending.
Orders for new planes – usually a key feature of behind-the-scenes talks at air shows – have slumped to record lows, with demand not expected to recover to 2019 levels for four or five years.
The Paris organisers said their decision was “inevitable” because of the large number of visitors the show attracts. Those exhibitors who have signed up will be fully refunded.
Patrick Daher, the chairman of aerospace company Daher Group who also chaired the air show, said:
We are obviously disappointed not to be able to hold the 2021 edition of the Paris Air Show. After many months of all trade show activities being suspended throughout the world, the entire international aerospace and defence community was very much looking forward to being able to meet.
We have already started work to ensure that the 2023 edition celebrates the resurgence of the aerospace industry on an international scale.
Updated
The pound’s weakness has helped to push the FTSE 100 up to a new nine-month high.
The blue-chip index of top shares in London is up 18 points or 0.3% at 6,568 points, the highest since early March.
It’s lifted by multinationals such as British American Tobacco (+3.9%), Vodafone (+2.5%), and distribution firm Bunzl (+2%).
However, the smaller FTSE 250 index (which contains more UK-focused companies), is down 0.75%.
Other markets are softer this morning, with Germany’s DAX down 0.5% and France’s CAC losing 0.85%
As well as the Brexit talks, investors are digesting reports that the United States is preparing to impose sanctions on at least a dozen Chinese officials, for disqualifying elected opposition legislators in Hong Kong.
The Covid-19 pandemic continues to rage in America too. More than 23 million people in Southern California are now under the harshest lockdowns in the United States, as Covid-19 cases hit record levels in the country’s most populous state.
Updated
Shares in UK-focused companies are also falling this morning, as Brexit worries ripple through the City.
Housebuilders Berkeley Group (-6.3%), Persimmon (-5%) and Barratt Development (-4.4%) are the leading fallers on the FTSE 100.
They’re followed by property firms Land Securities (-3.9%) and British Land (-3.5), hotel group Whitbread (-3.4%), and Lloyds Banking Group (-3.6%).
Here’s Ranko Berich, head of market analysis at Monex Europe, on the pound’s weakness this morning:
Sterling remains firmly on the Brexit headline merry-go-round, and this morning is selling off after assorted anonymously sourced reports indicating that the threat of no-deal Brexit is looming large in the market’s mind for the umpteenth time.
The Sun newspaper – hardly an impartial outlet on this topic – is reporting that Boris Johnson is set to walk away from trade negotiations as early as this morning. The UK may indeed be just about to withdraw from negotiations, but equally, this morning’s Sun story could also be part of a bid by Boris Johnson to sell an incoming deal as a hard-won breakthrough, or indeed a negotiating tactic. For now, the added uncertainty has been enough to send sterling reeling to its lowest levels against the euro since October, and significantly raise bets in fixed income markets for negative rates from the Bank of England.
As always, our view remains that a narrow trade deal covering goods is the likeliest outcome, but this morning’s news does not raise our confidence – or the market’s – in this scenario. Should talks collapse this morning’s losses are likely only the beginning for sterling, which we believe is likely to see a further negative shock in the order of 3-8% from current levels.
Updated
Ricardo Evangelista, senior analyst at ActivTrades, says the markets are getting anxious about the Brexit trade deal talks...
The Pound is under pressure versus both the euro and the dollar, losing more than 1% to both currencies during early Monday trading.
The markets are showing signs of nervousness, as the talks between the EU and the UK continue with both camps’ positions remaining far apart on the issue of the so-called level playing field. As time begins to run out, the base case scenario for the majority of investors is still that an agreement will be reached before time runs out.
However, the clock is ticking and every day that passes without an agreement being reached increases the pressure and raises the stakes, forcing investors to start factoring in the possibility of there being no deal in place by December 31, at the end of the transition period.
The pound has also dropped sharply against the euro this morning.
Sterling’s down 1.2% at €1.095, its lowest in over six weeks.
Pound hit by Brexit trade deal fears
Sterling has slumped this morning amid fears that Britain and the European Union will fail to reach a free trade deal.
The pound has tumbled by two cents against the US dollar to $1.323, a hefty slide, as negotiators began a last effort to overcome their differences on several key issues.
Back on Friday, the pound hit its highest level against the US dollar since May 2018, on hopes that negotiators were close to a breakthrough.
But the failure to reach agreement over the weekend on issues such as the level playing field between the two sides, and fishing rights, is worrying investors this morning, knocking sterling back to a two-week low.
Michel Barnier, EU chief negotiator, briefed ambassadors from the 27 EU member states on the situation this morning - one diplomat told Reuters that he was very downbeat.
Reuters says:
The diplomat, who was at the briefing, said Barnier told the envoys that differences between the EU and London persisted on the three main issues that have long divided them, and that the ball was now in British Prime Minister Boris Johnson’s court.
Ireland’s foreign minister has also warned that no progress was made yesterday, ahead of a crucial European Council meeting on Thursday.
BREAKING: Ireland’s foreign minister Simon Coveney says EU chief negotiator Michel Barnier has given a “very gloomy, downbeat” assessment of the prospects for a deal to EU ambassadors
— Tony Connelly (@tconnellyRTE) December 7, 2020
Coveney told @rtenews "there really was no progress made yesterday, so we've got to try to make a breakthrough at some point today"
— Tony Connelly (@tconnellyRTE) December 7, 2020
Our Politics Live blog has all the details:
Games Workshop continues to defy the crisis on the high street.
The hobby group, which sells Warhammer fantasy figurines to a loyal fanbase, has swelled its sales and profits again.
Games Workshop racked up sales of £185m in the last six months, up from £148m a year earlier. That’s lifted its earnings to at least £90m before tax, up from £59m.
It says:
We are delighted with the global team performance in the first half given the back drop of major projects and some government restrictions.
It’s also paying a dividend of 60p per share, helping to push its share price up 4% to £102.70 this morning (up over 65% this year).
Games Workshop has been booming for several years now, with customers keen to buy products like Blood Angels Death Company Intercessors (£27.50) and Kraken-eater Mega-Gargant (£120) to compete in a tabletop conflict.
The company is now worth over £3bn, with new, simpler rules and better engagement with its fan base paying off.
As the FT explained in September:
What pulled Games Workshop shares out of their rut was the arrival of Kevin Rountree as chief executive in 2015. The company had previously been at war with its best customers, firing off reams of cease-and-desist letters to internet fan sites for breach of copyright.
Mr Rountree rebuilt bridges with the community, having recognised the marketing value of social media.
Or as we wrote last year, Games Workshop succeeded by “ruthlessly recruiting followers, and creating vast, fascinating worlds that diehard players never want to leave.”
Updated
Professor John Colley, associate dean of Warwick Business School, says Mike Ashley will be hoping to take the profitable parts of Debenhams, through these last-minute rescue talks.
Mike Ashley has learnt the best way to buy a business is out of administration as there is no debt and all contracts can be renegotiated. This is ideal as his real strength is negotiating efficient and low cost supply chains.
Administrations also mean the buyer can take the profitable parts and leave the rest. For Debenhams, Mike has waited for ‘last shout’ – that is the announcement of liquidation – to get the best deal. The good news is it is likely some stores and jobs will be retained.
If he is successful Debenhams is likely to take on the same feel and appearance as his House of Fraser stores, lacking in soul, with cut down ranges and much reduced floor space. However, that is much better that the alternative - major closures and hollowed out town centres.
Updated
Kingfisher to return £130m business rates relief
In other retail news, DIY chain Kingfisher has joined the ranks of companies repaying their business rates relief.
Kingfisher, which owns B&Q, is waiving £130m of property tax relief. This takes the amount handed back in the last few days to over £2bn, since Tesco created a domino effect by deciding to return £585m of relief.
Kingfisher enjoyed a sales boom this summer after the first wave of Covid-19, as people looked to improve their homes to make remote working and studying easier.
Last month, it reported that business was still strong, with sales up 17% in August-October.
So, like the supermarkets and retailers such as B&M and Pets at Home, Kingfisher has now concluded that it can’t justify keeping the money (which was awarded by ministers back in March as part of Covid-19 relief efforts).
Andy Cosslett, Chairman of Kingfisher, hopes the money will be used to help those struggling in the pandemic, saying:
Kingfisher is in a sound financial position with continuing positive trading momentum, due to both strong consumer demand and the benefits of our strategy.
We are pleased that we are in a position to do this, and hope that the money can now be redeployed by the government and local authorities where it is needed most.”
Retail analyst Nick Bubb says it’s “extraordinary” that Mike Ashley is “still pursuing his dream of buying the bankrupt Debenhams”.
If Ashley did pull it off, Debenhams would join House of Fraser, Sports Direct, Game Group, Evans Cycles and Jack Wills within the Frasers empire.
Frasers reportedly bid £125m for Debenhams in October, but then walked away from talks saying the £300m price tag was too high.
Bloomberg has a good take on Mike Ashley’s last-ditch bid to buy Debenhams:
Debenhams has 124 stores, all rented, and if a deal is completed Frasers could operate them on a 12-month license while determining how many stores could be saved, said a person familiar with the matter, who declined to be identified as the matter is confidential. Debenhams declined to comment on the talks with Frasers Group.
The person said any deal with Frasers would have to be better than the liquidation value of Debenhams and negotiations with FRP Advisory, the administrator that has been in control of the department store since April, were likely to centre on a value of around £280m.
But the collapse of Philip Green’s Arcadia business - which runs Dorothy Perkins and Miss Selfridge concessions in Debenhams stores - could makes a rescue trickier.
“We have found that Debenhams has been overly reliant on Arcadia for many years,” said Chris Wootton, financial director of Frasers, in an emailed statement.
“As well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may may this a bridge too far for the Frasers Group.”
More here: Mike Ashley’s Frasers Group in Talks to Buy Debenhams
Introduction: Frasers Group in talks to rescue Debenhams
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Could Mike Ashley save Debenhams from liquidation?
Days after the venerable UK retailer’s administrators started to wind it down, Ashley’s Frasers Group is in talks to, possible, rescue the business - which employs 12,000 people.
Frasers told the City this morning that it is negotiating with Debenhams about a possible rescue deal.
However it cautioned that time is short. The collapse of Arcadia (Debenham’s biggest customer) last week makes a rescue package more complicated, the company adds.
Here’s the statement:
The Company confirms that it is in negotiations with the administrators of Debenhams’ UK business regarding a potential rescue transaction for Debenhams’ UK operations.
Whilst Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly
Yesterday, the Sunday Times reported that Ashley was “racing to seal a last-gasp rescue of Debenhams”, adding:
The Frasers Group tycoon has revived his interest in taking over the struggling department store chain at the eleventh hour. The move could save Debenhams from liquidation: the 242-year-old group had seemed set to disappear from the high street for good after JD Sports withdrew from the running to buy it from administrators last Tuesday.
Ashley’s group, which owns Sports Direct, and advisers to Debenhams are trying to thrash out a deal that could value the chain at more than £200m, depending on how much stock is left. Frasers would operate Debenhams’ 124 stores under 12-month licences.
Ashley has been pursuing Debenhams for a long time. He previously built up a near-30% stake in the business, which was wiped out in 2019 when it fell into administration.
Last week, former Debenhams chairman Ian Cheshire predicted that some parts of the UK business could be saved, which could protect some of the 12,000 jobs on the line.
He told Sky News last week:
“(There) is a fantastic business inside it, probably 70 stores, and a very good website which I’m sure someone will be buying, so I don’t think all these jobs are going.
🛍 NEW: Mike Ashley’s Frasers Group confirms in negotiations with the administrators of Debenhams about a potential rescue deal
— Scott Beasley (@SkyScottBeasley) December 7, 2020
“Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and further complicated by the administration of Arcadia”
"There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly."
— Scott Beasley (@SkyScottBeasley) December 7, 2020
The agenda
- 8.30am GMT: Halifax’s house price survey for November
Updated
