Rapidly rising wages in the UK will pile pressure on the Bank of England to keep raising interest rates. That’ll make things tougher for Brits on variable rate mortgages. Then again, further inflation fueled by rising wages could only exacerbate the cost of living crisis, leading to a further impact on businesses. At the same time, higher rates can boost income from customer deposits for companies like Wise Plc, who this morning boosted their full year guidance.
(Bloomberg) — Rapidly rising wages in the UK will pile pressure on the Bank of England to keep raising interest rates. That’ll make things tougher for Brits on variable rate mortgages. Then again, further inflation fueled by rising wages could only exacerbate the cost of living crisis, leading to a further impact on businesses. At the same time, higher rates can boost income from customer deposits for companies like Wise Plc, who this morning boosted their full year guidance.
Here’s the key business news from London this morning:
In The City
Ocado Group Plc: The average order size in the company’s retail joint venture with Marks & Spencer Group Plc declined in the fourth quarter due to consumers cutting back and the unwinding of pandemic shopping habits.
- Meanwhile rising costs, investments in capacity and marketing costs means the company expects close to break-even ebitda in the full year
- Looking ahead, the company warns that its ebitda will probably be negative in the first half of 2023, before flipping into positive territory in the latter part of the year
Wise Plc: The cross-border payments company increased its full year total income growth expectations to 68 to 72% from 55% to 60% previously, as a result of strong growth in the third quarter.
- Higher interest rates also boosted the company’s income from customer deposits
In Westminster
A new battlefront has opened up in the standoff between pro-independence forces in Scotland and the British government after Rishi Sunak vetoed a contentious new law on gender recognition.
Meanwhile, the prime minister is set to accept the demands of party rebels to make directors at major technology firms liable to greater penalties if they fail to protect children from dangerous online content as he seeks to avoid a damaging defeat in parliament, people familiar with the government’s plans told Bloomberg.
In Case You Missed It
The UK drew 115 bids from 76 companies to lease areas of the seabed to look for oil and gas resources. The leases are the first step in a years-long process to potentially develop new fossil fuel resources in the UK.
Finally, Bloomberg Opinion’s Chris Hughes takes a closer look at the satellite industry, where competition has been heating up with new entrants like Elon Musk and Jeff Bezos. “Yet British antitrust authorities are wary of allowing a transatlantic merger of two of the established operators,” Hughes says.
Looking Ahead
Burberry Group Plc will report third-quarter sales tomorrow. The trenchcoat maker is grappling with shifting tides in the luxury industry while advancing with an internal transformation. The company has an opportunity to turn itself into a British LVMH by focusing on its heritage, according to Bloomberg Opinion’s Andrea Felsted. While third-quarter sales growth will probably slow compared to the 5% delivered in the first six months, China’s reopening “raises recovery prospects,” Bloomberg Intelligence analyst Deborah Aitken says. “The Americas could stay tricky.”
Inflation data for December are also due at 7:00 a.m. tomorrow, with Bloomberg Economics forecasting a deceleration to 10.3% from 10.7% in November. “The key question is how fast the fall will be this year and whether it will be enough to allow the central bank to consider rate cuts,” the economists write.
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