![A man posts a letter in a Royal Mail postbox in 2022 in London, England.](https://media.guim.co.uk/a8a7a75e98b7fdf144d3fd4ca1e35b40abb08d99/0_143_7458_4475/1000.jpg)
Closing summary: Royal Mail to make 'drastic cut' to second-class deliveries
Royal Mail’s plan to end daily second-class deliveries would be a “drastic cut” that would hit many small businesses, according to the Federation of Small Businesses, a lobby group.
However, the group also said that it was reasonable for Royal Mail to take an extra day for second-class letters, and that it was glad that the postal service, owned by parent compay International Distributions Services, had not pursued a plan to cut its six-day service for first-class letters.
Tina McKenzie, the FSB’s policy chair, said:
Taking the axe to daily deliveries for second class would be a drastic cut which would hit the many small businesses which rely on it, and will in all probability leave some with no choice but to fork out for first class.
However, Royal Mail’s concession to retain a six-day-a-week service for first class letters is a good step in the right direction, compared to its original dire proposal – voiced via Ofcom – to torpedo daily deliveries altogether.
You can read the full details of Royal Mail’s proposals here:
In other financial news today:
Eurozone inflation dropped to 2.4% in March, surprising economists and adding to the case for interest rate cuts sooner rather than later.
Tesla will look for sites to build a factory in India after securing a concession on tariffs from the country’s government, the Financial Times has reported.
Virgin Atlantic has said that expects to make a profit this year, after narrowing its losses during 2023 in the long aftermath of the coronavirus pandemic.
Network Rail is to spend nearly £3bn to protect the railway from the effects of the climate crisis and extreme weather.
Major European airlines have started to resume flights to and from Israel, with Wizz Air, easyJet and British Airways all now flying to Tel Aviv, and Virgin Atlantic planning a resumption later this year.
Donald Trump’s social media company Trump Media managed to go public last week only after it had been kept afloat in 2022 by emergency loans provided in part by a Russian-American businessman under scrutiny in a federal insider-trading and money-laundering investigation.
The US private sector added more jobs than expected in March, according to a payrolls company, in a sign of the strength of the world’s largest economy.
You can continue to read our live coverage from around the world:
In the UK, Rishi Sunak resists calls to halt arm sales to Israel
In the US, Trump leads Biden in six swing states, a new poll shows
In our coverage of the Russia-Ukraine war, a Ukrainian minister calls for more air defences
In our coverage of the Middle East crisis, the UN human rights council is to consider call for Israel arms embargo
In Taiwan, nine killed, more than 900 injured and dozens still trapped after strongest earthquake in 25 years
Thanks for following today. Please join me again tomorrow, bright and early, for more of the same. JJ
Wall Street’s main share indices have dipped at the opening bell on Wednesday after stronger-than-expected jobs data.
Signs of a stronger economy could persuade the Federal Reserve to delay interest rate cuts, which would usually help company earnings.
Here are the opening snaps (via Reuters):
S&P 500 DOWN 7.90 POINTS, OR 0.15 %, AT 5,197.91
NASDAQ DOWN 68.50 POINTS, OR 0.42 PERCENT, AT 16,171.95
DOW JONES DOWN 17.12 POINTS, OR 0.04 PERCENT, AT 39,153.12
Barclays asks for shareholder permission to increase bonuses
Barclays has become the latest UK lender to ask shareholders to green-light bigger bonuses for its bankers.
Like HSBC, Barclays wants to take advantage of the UK’s decision to scrap the banker bonus cap, which was originally introduced after the 2008 financial crisis and limited bonuses at twice an individual’s base salary.
But while UK regulators officially lifted the cap in October 2023, Barclays held fire, instead saying it would review its position from 2024 onward.
The bank is now asking shareholders to give its remuneration committee powers to boost bonuses for some of its highest-paid bankers – who are referred to as “material risk takers”, some of which earn more than €1m (£858,000) - at their discretion.
The resolution – which will be put to a shareholder vote at Barclays’ AGM on 9 May – will ask:
That the Company and its subsidiaries be authorised to determine and apply such maximum ratio or ratios of the variable to fixed components of total remuneration for ‘Material Risk Takers’ as the Company considers appropriate, in accordance with applicable regulations.
However, the potential exponential rise in bonuses will not apply to executives yet – they’ll have to wait until the next remuneration policy is put forward to shareholders in 2026.
*this post has been updated to clarify that not all material risk takers earn more than €1m.
Updated
Chinese-owned British Steel has said that it has received planning permission to build an electric arc furnace at its Teesside plant, as it seeks to keep up pressure on the UK government to give financial support.
British Steel is hoping to receive as much as £500m in government subsidy for its £1.25bn plan to replace two blast furnaces at Scunthorpe. Those plans could threaten the jobs of as many as 2,000 steelworkers, although the likelihood of job cuts did not prevent rival Tata Steel from receiving a large promise of government support.
The company said its application was approved by Redcar and Cleveland Borough Council, while plans for a sister furnace in Scunthorpe are still being considered.
Xijun Cao, British Steel’s chief executive, emphasised that talks with the government over the support have been going on since 2022. He said:
The proposed installation of EAFs in Scunthorpe and Teesside is central to our journey to a green future as they would help us reduce emissions of CO2 by more than 75%. However, it is crucial we now secure the backing of the UK government.
Our owner, Jingye, is committed to the unprecedented investment decarbonisation requires and our desire to dramatically reduce our carbon footprint, coupled with challenging market conditions, means it is imperative swift and decisive action is taken to ensure a sustainable future for British Steel.
The electric arc furnaces would be much smaller, and require far fewer workers than when the blast furnaces at Redcar supported an entire community. However, it would still mark a significant moment for Redcar, where many people had long given up hope of a return of steelmaking.
Tesla considering India factory reports Financial Times
Tesla will look for sites to build a factory in India after securing a concession on tariffs from the country’s government, the Financial Times has reported.
Elon Musk’s car company is going through a tough period, with the number of deliveries falling during the first three months of the year. That was the first time sales had fallen for four years, amid fierce competition among electric vehicle makers.
Tesla is planning to sell many more cars in the future – and it will need to do so to justify its valuation of more than $530bn (£420bn – seriously!), which is more than five times higher than any carmaker barring Toyota.
The FT said:
The people with knowledge of Tesla’s plans said it would send a team from the US by late April to study sites for the plant, focusing on states with existing automotive hubs, including Maharashtra and Gujarat in the west and Tamil Nadu in the south.
And the paper points out that securing a Tesla investment would be a handy political boost for Indian prime minister Narendra Modi, who is the favourite in the general election this month.
Tesla has plants in the US, China and Germany. It has previously considered investing in the UK, but decided against it because of Brexit.
The large earthquake in Taiwan is thought to have trapped 70 people in Taiwan, the Associated Press has reported.
Taiwan’s national fire agency appears to have confirmed 64 miners are trapped in one mine and six in another, both in Hualien County near the earthquake’s epicentre.
You can follow more developments when we have them on our dedicated live blog:
US private sector added more jobs than expected in March
The US private sector added more jobs than expected in March, according to a payrolls company, in a sign of the strength of the world’s largest economy.
There were 184,000 new jobs during the month, said ADP. That was significantly higher than the 148,000 average forecast by economists polled by Refinitiv.
It was also an increase compared with the 155,000 jobs added in February, according to newly revised data. ADP’s data also suggest that pay growth increased by 5.1% year-on-year.
ADP’s data is closely followed because it gives a good indication of what is ahead for official non-farm payrolls data, one of the key gauges of how the US labour market is performing. It is closely watched by the US Federal Reserve, which is weighing up whether to cut interest rates in June.
Nela Richardson, ADP’s chief economist, said:
March was surprising not just for the pay gains, but the sectors that recorded them. The three biggest increases for job-changers were in construction, financial services, and manufacturing. Inflation has been cooling, but our data shows pay is heating up in both goods and services.
Struggling state-owned ferry operator CalMac has removed its chief executive after a review into transport problems for Scotland’s island communities.
Caledonian MacBrayne, which is owned by the Scottish government, said that Robbie Drummond had stepped down with immediate effect.
The ferry company’s performance has been a long-running political issue for the Scottish government, led by the Scottish National Party, over competence and the award of contracts to political allies. CalMac has faced years of delays which have resulted in significant problems with transport from the mainland to the Hebrides, while Scottish state-owned shipbuilder Ferguson Marine is also behind and far over budget for two new ships for CalMac.
CalMac on Wednesday said it wanted to “strengthen the focus further on operational performance of an ageing fleet, resilience and enhanced dialogue and responsiveness with the customers and the communities CalMac serves” ahead of “some challenging years”.
Duncan Mackison, former chief executive of David MacBrayne Ltd, a holding company for the ferry group, has been appointed interim boss until a permanent successor has been appointed.
The company said:
The Caledonian MacBrayne Ltd board takes the responsibility of delivering the Clyde and Hebrides Ferry Service (CHFS) contract extremely seriously. It recognises, that the island communities served by CalMac have faced real challenges over this past year. These challenges are likely set to continue until new vessels are introduced to the fleet over the coming years.
Adverts featuring the actor Dominic West as a sneering bank manager will be pulled from TV in their current form after the advertising watchdog ruled they were misleading because they wrongly suggest that the building society had not closed branches.
The Advertising Standards Authority (Asa) received 281 complaints, including one from rival lender Santander, about the advert, which ran in October and November. The Nationwide campaign took a swipe at high street banks that have been closing branches.
A recovery in China’s manufacturing output has failed to offset a slide in Asian stock markets that followed an earthquake in Taiwan that has killed at least nine people and forced semiconductor factories at the heart of global supply chains to shut down.
China’s factories enjoyed a period of expansion for the first time in six months in March, an official survey showed.
The official purchasing managers’ index (PMI) rose to 50.8 in March from 49.1 in February, rising above the 50-level that separates growth from contraction, and hitting the highest mark since March 2023.
Manufacturing remains a big sector in China’s economy and an important demand centre for metals such as copper and steel, as well as energy required to make goods.
The PMI followed other recent data, including a separate measure of the services industry, that suggested China‘s economy is gaining some momentum after struggling for growth in 2023.
Shares of Taiwan Semiconductor Manufacturing Co slumped 1.3% after the semiconductor giant said some facilities were evacuated after the quake. Barclays analysts said in a client note:
There have been reports of halts to semiconductor production operations, and if these become more broad-based, we expect some constraints on production, in both Taiwan and the region, that could result in upstream pricing pressures in the chip sector.
China’s blue-chip CSI300 index and Shanghai Composite index eased 0.4% and 0.2%, respectively, while Hong Kong’s Hang Seng Index fell 1.2%.
The MSCI’s Asia ex-Japan stock index shed 0.9%, compared with the 0.6% slide in the broader emerging markets stock index.
Royal Mail faces political backlash over plans to cut delivery days
Royal Mail faces the prospect of a political backlash against its plans to cut the number of days it carries out second-class deliveries.
It is a “slap in the face for families”, Liberal Democrat business spokesperson Sarah Olney has said. She said:
These plans are a slap in the face for families being asked to pay more for less. The cost of first and second-class stamps has gone up sharply in recent years.
It risks creating a cost-of-postage crisis as people feel forced to pay for first-class stamps because second-class delivery days are being slashed. People shouldn’t have to pay the price for Royal Mail’s failure after executives missed their delivery targets and paid themselves eye-watering bonuses.
It is an example of the political difficulties facing Heathrow executive Emma Gilthorpe, who was this week chosen to run Royal Mail.
Royal Mail’s parent company, International Distributions Services (IDS), proposed cutting back the Monday-to-Saturday second-class service to “every other weekday”. The proposals would also include Royal Mail cutting 1,000 jobs and saving £300m a year.
IDS said its suggestions would not require legislative change and it urged Ofcom to “act swiftly to introduce reforms by April 2025”.
The proposals would mean second-class deliveries would be slower, but there would still be the option of a more expensive next-day delivery.
You can read the full story here:
EU to enforce spending rules on Italy and other countries
European Union officials are poised to resurrect dormant rules forcing the 27 member states to stick within strict public spending rules, Italy’s economy minister said on Wednesday.
The authorities will put Italy and another 10 countries under infringement procedure for operating budgets with deficits that breach the EU’s 3% rule, Giancarlo Giorgetti said during a parliamentary hearing.
EU countries were allowed to set aside the usual cap on deficit spending during the Covid-19 pandemic. A suspension of the usual rule continued during the cost of living crisis sparked by the rise in inflation, when finance ministries reacted by dramatically increased subsidies to households and businesses.
Italy estimates a deficit-to-GDP ratio this year broadly in line with its 4.3% goal set in September, taking it far above the 3% EU ceiling. Giorgetti said:
It is granted that the European Commission will recommend the council to open an excessive deficit procedure against us as well as several other countries.
France is expected to be among the countries to come under scrutiny after it recently found that its public finances deteriorated in 2023 by more than predicted. The deficit reached 5.5% compared with 4.8% in 2022, the statistics authority said last month.
HSBC chairman Mark Tucker has told investors in Hong Kong that a sale of its Asian business will not happen – after the UK-headquartered bank defeated a proposal last year by Chinese shareholder Ping An.
Reuters reports that Tucker said at a meeting, in response to a shareholder’s question:
There is no appetite amongst our shareholder base, as demonstrated by last year’s AGM results, to vote for a spin-off. That will not happen.
HSBC defeated a shareholder resolution brought by Ping An in May 2023. Some investors had argued that HSBC’s Asian business would operate more profitably away from the regulatory and political scrutiny put on a British business. However, many of HSBC’s UK investors are reluctant to lose the bank’s cash cow.
The question on economists’ lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?
The ECB’s rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.
“Today’s reading will be a relief to ECB doves as it provides some comfort that domestic inflation is easing,” said Bert Colijn, senior economist for the eurozone at ING, a bank. He said:
While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde’s own words: “we will know a little more in April, but we will know a lot more in June”.
Richard Flax, chief investment officer at Moneyfarm, an asset manager, said the data “aligns with expectations of a cooling economy and adds weight to the argument for monetary stimulus”. He said:
Christine Lagarde’s previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.
The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.
Eurozone unemployment stayed flat in February at 6.5%.
Usually a historically low unemployment rate would give central bankers pause before they cut interest rates.
However, that does not appear to be the case this time, according to Melanie Debono, senior Europe economist at Pantheon Macroeconomics, a consultancy. She said:
Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.
A still-low unemployment rate doesn’t necessarily mean wage growth will remain at today’s highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers’ negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it.
*This post has been corrected: unemployment did not rise slightly in February as previously stated.
Updated
Royal Mail owner wants to cut delivery days and 1,000 jobs
The owner of Royal Mail has asked the industry regulator to be allowed to reduce second-class letters to just two or three days a week, cutting nearly 1,000 jobs and saving £300m a year in the process.
International Distributions Services (IDS) has told Ofcom it hopes to pare back the six-day, Monday to Saturday second class service to “every other weekday”.
However, IDS has committed to continue to deliver first class letters from Monday to Saturday, in a move which will relieve publishers and small businesses who have voiced concerns over potential “panicked” cuts.
Under the proposals, a postal worker may deliver on a single route on Monday, Wednesday and Friday, for example, and on another route Tuesday and Thursday of the same week. The speed of the second-class delivery would then depend on when the letter was posted.
First-class letters would then likely be delivered using the network of Royal Mail vans used for parcels.
Eurozone inflation drops unexpectedly to 2.4% in March
Eurozone inflation fell unexpectedly in March, adding to the case for an interest rate cut by the European Central Bank.
Consumer prices rose by 2.4% in the year to March, down from the 2.6% rate in February, according to statistics office Eurostat. That was below the 2.6% expected by economists.
It was a drop in energy prices that pulled down overall inflation. Energy prices soared over the last two years after Russia’s full-scale invasion of Ukraine, but have steadied – albeit at much higher prices – since then.
The drop in inflation will increase expectations of an interest rate cut by the European Central Bank, which is widely expected to loosen monetary policy at its meeting in June.
Virgin Atlantic loses £139m but expects 2024 profit
Virgin Atlantic has said that expects to make a profit this year, after narrowing its losses during 2023 in the long aftermath of the coronavirus pandemic.
The airline, which is part-owned by Richard Branson’s Virgin Group, said that losses before tax and exceptional items fell to £139m, down from £206m.
While some airlines – such as Ryanair – have raced past pre-pandemic passenger numbers, long-haul aviation has been slower to recover. Virgin Atlantic is focused on long-haul transatlantic routes such as between London and New York, and it also flies to a few destinations in Asia and Africa.
The company also said that it had made record total revenue of £3.1bn, up £265m versus 2022. It said that result came “despite corporate travel being slower to return to pre-pandemic levels”.
Shai Weiss, Virgin Atlantic’s chief executive, said:
In 2023, we capitalised on continued strong demand for leisure air travel and holidays, which shows that desire for experiences and travel remains, resulting in record revenues. A loss is never satisfactory; however, our performance and results illustrate that we have made really good progress in 2023, the plan is working, and Virgin Atlantic is on course to return to profitability in 2024.
Updated
Elon Musk is not a Disney shareholder – so it is unclear why he is getting involved. However, he has never been one to turn down the chance of a scrap.
The immediate prompt for his posts just now was another billionaire activist investor, Bill Ackman. Ackman, who is not directly involved in the Disney board battle, published an article-length post on Musk’s social network, X, calling for the US regulator to investigate the Disney board battle.
Ackman said that the Securities and Exchange Commission should look at who has leaked results of the Disney vote – which is not finalised. He accused the company and/or its advisers of being behind the leak, although he did not have any direct evidence other than the fact that “Only the company and its advisers have access to how shareholders have voted before the day of the annual meeting.”
Disney has been approached for comment.
There have been a few recent articles in the press about @Disney 'winning' its proxy contest with Nelson Peltz based on early election returns that have been leaked to the media. We don't have an investment in Disney, but I thought it useful to point out the inappropriateness of…
— Bill Ackman (@BillAckman) April 2, 2024
Ackman, the veteran of many battles with company boards, said that he believed the company was trying to sway institutional investors who might be wavering in the close vote. He wrote:
Here, the company and/or its advisers have leaked the early results in order to tip more institutions and other shareholders to vote for the incumbent board, unfairly tipping the scale in the incumbent board’s favor.
Elon Musk says Nelson Peltz would improve Disney
Tesla boss Elon Musk has said that Nelson Peltz would “significantly improve Disney’s share price” if he joined the board.
Musk, the world’s third richest man according to the Bloomberg Billionaires Index, also said that he would “definitely” buy Disney shares if Peltz were elected.
Nelson Peltz should definitely be on the Disney board!
— Elon Musk (@elonmusk) April 3, 2024
He would help reform the company, improve the quality of product and generally serve in the best interests of shareholders, as he has done at many other companies.
This would significantly improve Disney’s share price. https://t.co/JPa6dP7kbQ
While I don’t own any Disney shares today, I would definitely buy their shares if Nelson were elected to the board.
— Elon Musk (@elonmusk) April 3, 2024
His track record is excellent.
Ryanair has said that it cancelled almost 950 flights during March because of the conflict in Israel and Gaza.
The Irish airline said that it carried 1m more passengers during March 2024 compared with March 2023. That represented an 8% increase to 13.6m. The airline’s load factor was unchanged.
Ryanair is the world’s second most valuable by market capitalisation, behind only the US’s Delta. It flew 77,000 flights in March, and has flown 183.7m passengers during the last 12 months.
London’s FTSE 100 and Milan’s FTSE MIB are the biggest fallers of the main European stock market indices this morning. Both have lost 0.3%.
There are no major individual movers on the FTSE 100, however: the biggest faller is BT Group, down 1.7%.
Elsewhere in Europe it is a more mildly positive story. Here are the opening snaps via Reuters from across the rest of Europe:
EUROPE’S STOXX 600 UP 0.1%
FRANCE’S CAC 40 UP 0.2%, SPAIN’S IBEX UP 0.1%
EURO STOXX INDEX UP 0.2%; EURO ZONE BLUE CHIPS UP 0.3%
GERMANY’S DAX UP 0.2%
Chipmakers evacuate Taiwan factories after earthquake
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
The biggest earthquake in 25 years has hit Taiwan, killing at least seven people. On financial markets investors are bracing for disruption to the island’s crucial technology companies.
Taiwan plays a central role in the global economy because of its status as a manufacturing hub for computer chips, as well as its companies in the broader technology supply chain.
The earthquake’s epicentre was on the east coast of the island, while most of its tech manufacturing is based in the west. Nevertheless, the quake affected production at chip fabs, which rely on very sensitive machinery.
The share price of Taiwan Semiconductor Manufacturing Co, which makes most of the world’s cutting-edge chips on behalf of others, dropped by 1.3% on Wednesday. The company said in a statement it was still trying to work out the impact of the earthquake on its operations:
TSMC’s safety systems are operating normally. Preventive measures were initiated according to procedure and some fabs were evacuated. All personnel are safe, and those evacuated are beginning to return to their workplaces.
The company is currently confirming the details of the impact. Initial inspections show that construction sites are normal.
However, the company has decided to suspend work at construction sites for today, and work will resume following further inspections.
Shares in major Apple supplier Foxconn dropped by 1.4%, while TV panel manufacturer Au Optronics fell by 1.9%.
Disney reportedly fends off Nelson Peltz
Disney has reportedly managed to fend off a bid for board seats from activist investment billionaire Nelson Peltz. That would be a victory for prominent Disney chief executive Bob Iger.
Peltz’s hedge fund, Trian Fund Management, has failed to win enough shareholder backers to install Peltz and former Disney chief financial officer Jay Rasulo on the entertainment company’s board, Reuters reported, citing anonymous sources. Reuters said:
Enough votes had been cast as of Tuesday evening to put Disney’s board directors safely ahead of Trian’s two challengers.
Investors could still change their votes. However, if the result is confirmed at Wednesday’s annual meeting as expected it would represent a significant relief for Disney’s management.
Peltz has campaigned for board seats for months, arguing that the House of Mouse was too late to develop a coherent streaming strategy and that it overpaid on its $71bn acquisition of Fox.
However, Iger successfully won around well-known and powerful investors including Steve Jobs’s widow Laurene Powell Jobs, JP Morgan boss Jamie Dimon and Star Wars creator George Lucas
The agenda
10am BST: Euro area inflation rate flash reading (March; previous: 2.6% year-on-year; consensus: 2.6%)
10am BST: Euro area unemployment rate (February; prev.: 6.4%; cons.: 6.4%)
1:15pm BST: US ADP employment change (March; prev.: 140,000 jobs; cons.: 148,000)
Updated