Thursday, 11th May: The divorce from the EU was never going to be easy, but today the Bank of England (BoE) said the short-term squeeze on households from inflation is to be more severe than they thought earlier in the year. Initially, the UK produced strong economic data after the June 23rd vote, today the BoE, in its Quarterly Inflation Report, raised forecasts for inflation this year to 2.7%, up from its February forecast of 2.4%, whilst trimming its growth forecast to 1.9% (vs 2.0% in February). In no surprise, interest rates have been kept on hold at 0.25% (voting 7-1), although warned that a rise could come before the end of 2019. The pound fell against both the euro and US dollar at the time of the BoE’s announcement, continuing to trade during the afternoon. At the time of writing £/$ is -0.39% @ $1.2879, while £/€ is -0.4% @€1.1851.
If you have an Italian accounting scandal hanging over your head, that could cost you £500m, how do you afford it? Well one way BT are looking to free up some cash is to strip the chief executive and the already-departed finance chief of their bonuses – the former having previously being awarded a bonus worth £4m. BT are also looking to shed 4,000 jobs worldwide over the next 2 years, but fear not, Michael Owen isn’t leaving our screens; the job losses will come from the global services business which employs 18,500 people. BT reported flat underlying revenue in its’ full year announcement, revealing a 10% increase to the dividend, but warning the dividend next year would not be at the same growth rate. Share fell 3% intra-day, bringing them back to January lows. BT closed the day -4.5%.
Rooted to the foot of the FTSE 100 was Hikma Pharmaceuticals who today said they are unlikely to get US approval for a generic asthma drug this year. The generic drug producer, alongside its partner Vectura will now have to give more data to the UK Food & Drug Administration, who don’t have the quickest of turnarounds – 10 months it will take for them to respond. Hikma closed -8.23% with Vectura closing -8.97%.
Labour leader Jeremy Corbyn might be pleased to see the back of Thursday. With his party trailing the Conservatives in opinion polls, the addition of his draft manifestos being leaked to newspapers hasn’t made life much easier. Can’t get much worse you would think? Cue a BBC cameraman having his foot run over by a car carrying no other than Jeremy Corbyn himself. The cameraman has been taken to hospital for “assessment and treatment”, while a Labour Party spokesman declined to comment.