Closing summary
The outlook for the UK housing market is “more positive” as prices improved at their strongest rate in a year, according to Nationwide.
The building society’s index found that the average house price had increased by 0.7% in January on the previous month – a significant turnaround from the December figures, which showed a 1.8% decline in prices.
The average UK house price was £257,656 in January, and was down 0.2% on a year earlier.
Robert Gardner, Nationwide’s chief economist, said: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”
Novo Nordisk shares hit a record high after the Danish company reported soaring sales of its obesity and diabetes drugs Wegovy and Ozempic, pushing its market value past $500bn and cementing its position as Europe’s most valuable company.
Runaway demand for the drugs, which are taken by celebrities including Oprah Winfrey and Elon Musk, has left the company struggling to keep up with orders and scrambling to expand production sites.
Novo Nordisk shares rose by 4% on Wednesday before settling to trade 1.2% higher, leaving its market value hovering near $500bn (£394bn). The obesity drug boom has turned the drugmaker into Europe’s most valuable company, ahead of France’s luxury goods group LVMH, with a market value of $422bn.
Separately today, the GSK chief executive, Emma Walmsley, said its new RSV vaccine was expected to bring in annual sales of at least £3bn in future.
Britain’s second-biggest drugmaker beat analysts’ expectations with fourth-quarter profits and sales as the RSV vaccine became a blockbuster, racking up £1.2bn sales in four months, on top of steady demand for its shingles shot and HIV medicines. RSV, a common respiratory virus, can lead to hospitalisation and death in older adults.
Our other main stories:
Thank you for reading. We’ll be back tomorrow. Take care! – JK
German inflation slows to lowest since mid-2021
Inflation in Germany has slowed to its lowest level since mid-2021, as energy prices dropped and food price inflation eased.
The annual rate fell to 2.9% in January from 3.7% in December, marking the lowest level since June 2021. Core inflation, which excludes volatile items like energy and food, also slowed, to 3.4% from 3.5% the lowest level since June 2022.
German #inflation slows to 2.9% in January from 3.7% in December, lowest level since June 2021. Core CPI slows to 3.4% in Jan from 3.5% in Dec, lowest level June 2022. Energy in deflation, Energy prices dropped -2.8% YoY, while Food CPI slowed to 3.8% from 4.5% in Dec. pic.twitter.com/GqOxXPgQOm
— Holger Zschaepitz (@Schuldensuehner) January 31, 2024
EU to delay new green rule in bid to appease protesting farmers
Farmers protesting across Europe have won their first concession from Brussels, with the EU announcing a delay in rules that would have forced them to set aside land to encourage biodiversity and soil health.
The European Commission vice-president, Maroš Šefčovič, described Wednesday’s decision, which is expected to be rubber-stamped by member states within 15 days, as “a helping hand” for the sector at a difficult time.
Citing flooding, wildfires in Greece, heatwaves across southern Europe and drought in Spain, he said it was important to listen to farmers and “to avoid the polarisation which is making any good conversation and discussion more difficult. He said:
We feel we are obliged to act under this pressure which the farming community [is feeling].
We have had a number of extreme meteorological events, droughts, flooding in various parts of Europe, and there was a clear negative effect on the output, on the revenue – and of course, decreased income – for the farmers.
New Brexit food checks likely to mean less choice, warn delis
Thousands of delicatessens and other specialist food shops have said new border rules that come in from Wednesday are likely to mean reduced choice of products for consumers.
The Guild of Fine Food (GFF), which represents 12,000 businesses, has raised fears that European suppliers of specialist foods such as cheeses and meats will stop supplying the UK as a result of the additional red tape for imported goods.
John Farrand, the managing director at the GFF, said: “I’m just worried that we are going to end up buying and selling only mass produced products. Are we going to see the end of smaller, more interesting products, which are ultimately better for the planet?”
UK minister: Brexit checks ‘price you pay for being a sovereign state again’
British businesses experiencing “some friction” when trading with the European Union after Brexit is the “price you pay” for “being a sovereign state again”, a government minister has said.
On the fourth anniversary of Britain officially leaving the European union, the health minister and Brexiter Andrea Leadsom said UK firms should “adapt” to the change in trade rules after new checks were brought in on food, drink and some agricultural products – suggesting they should not buy goods from Europe.
When asked what the successes of Brexit were, Leadsom told LBC News:
I’m hugely delighted at Brexit. We have our sovereignty back, we’re in control of our money, laws and borders. The NHS has considerably more than £350m a week and we’ve signed up to 70 trade deals.
Updated
UK risks steep decline without £28bn green economy pledge, Labour warned
Labour’s proposed investment of £28bn a year in the low-carbon economy is an absolute minimum, a leading business figure has said, adding that without green investment on that scale the UK will face steep decline as a result of crumbling infrastructure and stagnating industry.
Jürgen Maier, the former UK head of Siemens, the German industrial giant and major investor, said massive investment was needed to rebuild the UK economy and make it fit for the future, and that it should concentrate on low-carbon energy, transport and industry.
These are the growth areas of the future. The £28bn is not a cost, it’s an investment. If you make this investment, business will return to the UK.
The GSK share price has reversed earlier losses and is now up 3.6% at £15.93, as the company reported upbeat results and upgraded its outlook, with its new RSV vaccine expected to become an ‘at least £3bn’ sales a year drug . The shares have increased 15% in the past six months.
Updated
Novo Nordisk shares rise to record high
Novo Nordisk shares rose as much as 4% to hit a record high after the Danish drugmaker reported soaring sales of its obesity and diabetes drugs and higher profits.
This pushed the company’s market value through $500bn, cementing its position as Europe’s most valuable company, ahead of France’s luxury goods group LVMH.
Updated
New Morrisons boss says ready to 'start a new chapter' as sales rise 3.3%
Morrisons sales rose 3.3% last autumn, still well behind inflation, as the new boss of the struggling grocer’s new boss said it was ready to “start a new chapter”.
The UK’s fifth largest supermarket, which has about 500 supermarkets, revealed its pace of growth had improved throughout last year so that total sales rose 2.7% to £14.9bn in the three months to the end of October.
Rami Baitiéh, who took over from David Potts as chief executive in November, said:
We are developing plans to reinvigorate, refresh and strengthen Morrisons and to start a new chapter.
Underlying sales growth, which excludes the impact of store openings and closures, rose 1.8% indicating a fall in the amount of goods sold as food price inflation was more than 5% throughout the year.
Underlying profits rose 6.5% to £970m, but that figure does not include interest payments on Morrisons debts which stand at about £5.5bn.
The company said it had raised £450m during the year from the sale and leaseback of assets, including its warehouses, and generated more than £540m of cash.
Earlier this week, the group also sold off its petrol forecourts business to sister company MFG (Motor Fuel Group) for £2.5bn. The deal will hand Morrisions almost £2bn to potentially pay down its debts or invest in lowering prices and improving stores. It has meanwhile kept a 20% stake in MFG.
China's Country Garden puts 1,000-home London project up for sale
The embattled Chinese property developer Country Garden has put its £450m residential development in East London up for sale, as it flogs assets to raise money following a cash crunch.
The property agent Knight Frank said it had been appointed by Risland UK, a subsidiary of Country Garden, to market its 1,000-home development at Calico Wharf in Poplar. Construction has not begun yet.
The project has planning approval for several buildings, including a tower of up to 23 storeys, and is slated to include shops as well as homes.
Country Garden is the largest private property developer in China, and like other developers is struggling after authorities sought to rein in excessive debt levels from 2021. It defaulted on $11bn of offshore bonds in October and has extended repayments for its onshore notes.
Updated
Universal Music shares fall after it threatens to pull songs from TikTok
Shares in Universal Music Group have fallen after it said it intends to pull its millions of songs from TikTok after a dispute with the social media platform over payments, as talks collapsed.
This would mean that TikTok would no longer have access to songs by artists including the American singer-songwriter Taylor Swift and Canada’s The Weeknd and Drake.
Universal accused TikTok of “bullying” and claimed it wanted to pay just a “fraction” of what other social media sites pay for access to its vast song catalogue.
Universal shares fell as much as 3.4%, its biggest intraday decline since October, in Amsterdam and are now trading 1% lower at €27.39.
Stock markets mixed, oil prices fall on weak Chinese data
In financial markets, the FTSE 100 index has just turned positive, and is two points ahead at 7,669.
Earlier it was dragged lower by share price falls at Vodafone and GSK, while caution ahead of the US Federal Reserve’s rate decision tonight (we are expecting no change) and weak Chinese data also weighed on the global mood.
Vodafone shares are down 3% after the the French telecoms firm Iliad said its British rival rejected a sweetened proposal to merge their Italian businesses. GSK shares fell 1.2% even though the drugmaker beat market expectations with its 2023 results and it upgraded its outlook.
Germany’s Dax is trading 0.2% lower while France’s CAC is slightly negative and Italy’s FTSE MIB has gained 0.8%.
Oil prices are falling today as sluggish economic activity in China, the world’s biggest oil importer, weighed on sentiment. Manufacturing shrank for a fourth straight month in January, an official factory survey showed.
Brent crude, the global benchmark, has lost nearly $1 to $81.91 a barrel, down 1.2%. US light crude has fallen 1.3% to $76.81 a barrel.
However, oil prices remain on track for their first monthly gain since September as broadening Middle East conflicts raised concerns over supply.
The pound has dipped 0.2% against the dollar to $1.2671.
Inflation has declined in six German states that are important to the economy in January, suggesting that national inflation has resumed its downward path and raising hopes for a slowdown in eurozone inflation.
The inflation rate in North-Rhine Westphalia, Germany’s most populous state, declined to 3% in January from 3.5% in December. In Bavaria, inflation eased to 2.9% from 3.4%; in Brandenburg to 3.7% from 4.5%; in Saxony, to 3.5% from 4.3%; in Baden-Württemberg, to 3.2% from 3.8% and in Hessen, to 2.2% from 3.5%.
Germany publishes national figures at lunchtime, ahead of eurozone inflation data tomorrow which are expected to show a dip to 2.8% from 2.9%.
European Central Bank policymaker Joachim Nagel said yesterday:
I am now convinced that we have tamed that greedy beast.
The ECB is expected to start cutting borrowing costs this spring, as inflation eases.
Here is our full story on Fujitsu:
Bosses at Fujitsu have apologised to the wrongfully convicted Post Office workers and their families involved in the Horizon IT scandal and said it would work out the amount of compensation when the direction of the public inquiry became clear.
Earlier this month, executives at Fujitsu told MPs it would contribute to compensation payments to post office operators who were wrongfully convicted after failures in the Horizon IT software made by the Japanese tech firm made it look like money was missing from their shops.
Paul Patterson, Fujitsu’s boss for Europe, told MPs the company had a “moral obligation” to pay compensation but did not specify how much should be set aside to pay out. The UK business minister, Kemi Badenoch, wrote to the company to demand talks on how much it would pay.
The Guardian’s political correspondent Aletha Adu has sent over some reaction to Labour’s announcement that it won’t reinstate the cap on bankers’ bonuses if it wins the next general election.
Momentum, a grassroots organisation of the party’s leftwing, said:
This is a terrible decision totally out of touch with Labour’s values and public opinion. For over forty years our economic model has sucked wealth from the country & enriched a few in the City.
It even crashed the economy in 2008. Yet instead of learning the lessons from New Labour’s failures, Starmer & Reeves seem determined to repeat them.
Labour has repeatedly criticised the Tories for removing the cap, so we can expect some comments at prime minister’s questions today about hypocrisy...
Labour MP Darren Jones, shadow chief secretary to the Treasury, said at the time when the government lifted the cap on bankers’ bonus, that it showed they were “out of touch”.
Labour leader Sir Keir Starmer previously attacked the plan to remove the cap on bankers’ bonus as amounting to “pay rises for bankers, pay cuts for district nurses”.
Updated
Walmsley: GSK's blockbuster RSV jab to bring in 'at least £3bn' annual sales
GSK boss Emma Walmsley said the company expects its new RSV vaccine to bring in annual sales of “at least £3bn” in future. Speaking to journalists after the company released better-than-expected 2023 results, she said:
We’re absolutely delighted with the RSV launch, in four months reaching blockbuster status.
We’re very optimistic about the long term prospects of this asset being at least £3bn. We’re only 11% penetration so far in the US. We do expect ‘24 to be a year of good growth as we continue to drive penetration. We’re excited about being able to hopefully add a further cohort of the 50 to 59 year olds.
The RSV vaccine is currently approved for people aged over 60, but GSK is seeking regulatory consent for those aged over 50. RSV, a common respiratory virus, can lead to hospitalisation and death in older adults.
GSK has upgraded its outlook and now estimates it can deliver more than £38bn of sales by 2031, compared with its previous forecast of £33bn. It now expects to reach its original 2031 goal by 2026.
The vaccine, called Arexvy, was launched in the US in the autumn. It was approved in the UK in July but is not available on the NHS yet. GSK remains in discussions with government. The shot can be bought privately at pharmacies and private clinics.
Asked about vaccination rates, Walmsley said:
It will take a few years to get there, to get to the kind of the flu rates which are closer to 60%.
And in the UK, we do have the vaccine approved privately. What we’re looking forward to is to be able to get to national immunisation programmes.
The absolute key is this is a fantastic return on investment for any government because it keeps people out of hospital, it creates capacity in GP surgeries. It increases participation in the workforce which actively drives productivity for the country. So we know that every pound or dollar spent on vaccination is very, very well spent even before you talk about the benefits to patients.
We’ve been having very positive discussions with the government and we’re hoping to bring this to the UK public as soon as possible.
The GSK share price is down 1.2% at £15.19 today, but has risen nearly 10% in the past six months.
Updated
French inflation eases faster than expected to 3.1%
Inflation in France has eased faster than expected.
It came in at 3.1% in January compared with 3.7% in December, according to INSEE, the French statistics office.
January’s figures are weaker than those forecast by INSEE in mid-December. The fall in inflationary pressure is particularly marked for energy (up by 1.8% year-on-year, compared with 5.7% in December), but also for food (+5.7% year-on-year, compared with +7.2% in December) and manufactured goods, where prices are virtually stable compared with January 2023 (+0.7% year-on-year, compared with +1.4% in December).
Charlotte de Montpellier, senior economist for France and Switzerland at ING, said:
This is clearly a move in the right direction, which should be greeted with relief by the European Central Bank. On the other hand, the rise in services prices was stronger in January, at 3.2% compared with 3.1% the previous month.
Looking ahead, the leading indicators suggest that inflation in France will continue to fall over the coming months, although not necessarily continuously. In particular, the contribution of energy to inflation is likely to rise again in the coming months, due to a less favourable base effect for petroleum product prices and the end of various government support mechanisms for energy bills…
Ultimately, we expect inflation to remain close to 3% for the first part of the year, before gradually easing towards 2% in the second half and remaining close to that level in 2025. On average over the year, CPI [consumer prices index] inflation could be close to 2.5%.
Fujitsu says UK pullback may hit finances as it apologises again to victims of IT scandal
Japan’s Fujitsu remains committed to Europe, but said its pullback in the UK following the Horizon IT scandal may hit its financial performance, as it apologised again to subpostmasters and their families.
The technology company’s chief financial officer Takeshi Isobe apologised after the scandal in which hundreds of Post Office workers were wrongly convicted of theft, fraud and false accounting because of glitches in the software developed by Fujitsu.
He said Fujitsu must work to restore its credibility, and reiterated that the firm will refrain from bidding for new UK government projects, but will continue to work on existing projects.
Isobe said Fujitsu does not expect an immediate financial impact in its fourth quarter and is trying to figure out the potential impact on its next financial year, which begins in April.
Photograph: Toru Hanai/Reuters
Updated
Here is our full story on UK house prices:
The outlook for the UK housing market is “more positive” as prices improved at their strongest rate in a year, according to Nationwide.
The building society’s index found that the average house price had increased by 0.7% in January on the previous month – a significant turnaround from the December figures, which showed a 1.8% decline in prices.
The average UK house price was £257,656 in January, and was down 0.2% on a year earlier.
Robert Gardner, Nationwide’s chief economist, said: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”
Updated
North of England faces travel disruption amid train drivers’ strike
There is more misery for rail commuters as strikes continue.
Rail passengers in the north of England face major disruption on Wednesday as strikes by train drivers stop all Northern and TransPennine Express (TPE) services.
The 24-hour strike is the second in a series of rolling stoppages over a week by members of Aslef, the drivers’ union, in the long-running pay dispute.
It follows strikes that wiped out the biggest national rail commuter services in southeast England yesterday. Passenger numbers on the tube were down 10% from last Tuesday with many rail commuters unable to reach the capital, according to figures from Transport for London.
Both Northern and TPE have warned customers not to attempt to travel on Wednesday as no services will run, including on TPE’s routes into Scotland. An overtime ban that started on Monday across all the operators in England is also expected to bring more short-notice cancellations to services and potential disruption until next Tuesday.
Elon Musk’s $56bn Tesla pay package is too much, judge rules
In the US, a Delaware judge ruled in favour of the investors who challenged billionaire Elon Musk’s $56bn Tesla pay package as excessive, a court filing showed.
The judge found that Musk’s compensation was inappropriately set by the electric-vehicle maker’s board and struck down the package. If the decision survives any potential appeal, the Tesla board will have to come up with a new compensation package for Musk.
“Never incorporate your company in the state of Delaware,” Musk responded on Twitter/X.
GSK posts better-than-expected profits thanks to RSV vaccine
Britain’s second-biggest drugmaker GSK has beaten analyst expectations with fourth-quarter profits and sales thanks to a strong launch of its new RSV vaccine coupled with steady demand for its shingles shot and HIV medicines.
In the first annual results since the company spun off its consumer healthcare business Haleon (in July 2022), GSK reported a pretax profit of £6.1bn, up 14% at constant exchange rates. Turnover rose 5% to £30.3bn. It made sales of £8.05bn in the final quarter of the year.
Emma Walmsley’s strategy is focused on vaccines, infectious diseases and HIV drugs, with further acquisitions likely to boost the firm’s pipeline of new medicines. GSK has 71 vaccines and specialty medicines in clinical development, including 18 in late stage trials.
Its Arexvy vaccine for RSV (respiratory syncytial virus), a common respiratory virus that usually causes mild, cold-like symptoms but can be serious for children and elderly people, was the first approved RSV vaccine for older adults in May when the US regulator approved it.
The jab has become a blockbuster (with more than $1bn annual sales) and has outshone US rival Pfizer’s shot Abrysvo. More than a fifth of adults over 60 in the US have been vaccinated with either jab so far.
GSK is attempting to lower the age threshold from 60 to 50. The RSV vaccine was launched in the US last autumn and has an estimated two-thirds market share, with sales of more than £1.2bn so far.
It brought in sales of £529m between October and December, while GSK’s shingles vaccine Shingrix generated £908m.
Walmsley said clear highlights in 2023 were the “exceptional launch of Arexvy and continued progress in our pipeline”.
We are now planning for at least 12 major launches from 2025, with new vaccines and specialty medicines for infectious diseases, HIV, respiratory and oncology. As a result of this progress and momentum, we expect to deliver another year of meaningful sales and earnings growth in 2024, and we are upgrading our growth outlooks for 2026 and 2031. We remain focused on delivering this potential - and more - to prevent and change the course of disease for millions of people.
Richard Hunter, head of markets at interactive investor, said:
GSK has delivered a reminder that it remains a serious player on the global stage, with successful product launches being followed by a strong pipeline of potential new drugs.
The long-term potential of the sector is not in question, as moves towards personalised medicine and growing middle classes in emerging markets provide possibilities for endless demand. Meanwhile, the move away from the “white pills and Western markets” model , a phrase which Glaxo coined some years ago, is translating into a more specialised business, which was confirmed by the spin-off of its consumer healthcare unit Haleon in 2022.
Updated
Shadow chancellor Reeves rules out reinstating bankers' bonus cap
Rachel Reeves, the shadow chancellor, has said that Labour will not reinstate a cap on bankers’ bonuses that was scrapped lat year by the Conservative government.
In a big shift from previous Labour policies, she set out Labour’s plans to boost economic growth through financial services, which she described as one of the UK’s greatest assets that the party will “unashamedly champion”.
Bankers’ bonuses were capped at 200% of their regular pay across the EU to deter the excessive risk taking that many say caused the financial crisis.
The short-lived Liz Truss government abandoned the bonus cap. Reeves, a former Bank of England economist, told the BBC that she has no plans to reinstate it, despite criticism from the umbrella body for the UK’s trade unions at the time.
The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.
But that has gone now and we don’t have any intention of bringing that back. And as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.
Reeves said Labour’s policies will also include closer ties with the EU, expanding finance centres outside London, streamlining regulation and boosting pension investment in UK companies and green technologies.
Introduction: UK house prices rise in January, Novo Nordisk obesity drug sales surge – business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
House prices across the UK rose this month, as buyers took advantage of mortgage rates trending down, according to a survey.
The average price of a home increased by 0.7% to £257,656 in January, following no monthly change in December, according to Nationwide building society. Compared with January last year, prices were down just 0.2%, following an annual decline of 1.8% in December. It was the smallest annual drop in a year.
Robert Gardner, Nationwide’s chief economist, said:
There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.
These shifts are important as this led to a decline in the longer-term interest rates (swap rates) that underpin mortgage pricing around the turn of the year. However, the partial reversal in recent weeks in response to stronger than expected inflation and activity data cautions that the interest rate outlook remains highly uncertain.
While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive. The most recent RICS survey suggests the decline in new buyer enquiries has halted, while there are tentative signs of a pickup in the number of properties coming onto the market.
The Bank of England is expected to keep its base rate at 5.25% on Thursday but may lower some of its inflation forecasts, which could give it room to start cutting rates from the summer.
Denmark’s Novo Nordisk has reported strong revenue growth, with sales of its obesity and diabetes drugs soaring. Obesity drug sales alone jumped 154% at constant exchange rates to 41.6bn Danish kroner (£4.8bn) last year, fuelled by demand for Wegovy. Sales of diabetes drugs such as Ozempic grew by 52%, and obesity and diabetes sales together totalled 215bn kroner (nearly £25bn).
Overall sales rose 36% to 232bn kroner, while profit before tax jumped 52% to 104.7bn kroner.
The company has struggled to keep up with demand and is building more factories.
For 2024, sales growth is expected to be 18-26% at constant exchange rates, and operating profit growth is expected to be 21-29%.
Lars Fruergaard Jørgensen, president and chief executive, said:
We are very pleased with the strong performance in 2023 reflecting that more than 40 million people are now benefiting from our innovative diabetes and obesity treatments.
Our focus in 2024 will be on reaching more patients, progressing and expanding our pipeline as well as the continued significant expansion of our production capacity.
Blockbuster anti-obesity drugs such as Ozempic and Wegovy appear to dampen inflammation — raising hope that they could be used to treat diseases, including Alzheimer’s and Parkinson’s, that are characterised by brain inflammation, according to the journal Nature.
The Agenda
7.45am GMT: France inflation for January (previous: 3.7%)
8.55am GMT: Germany unemployment for January (forecast: 11,000)
1pm GMT: Germany inflation for January (forecast: 3%, previous: 3.7%)
7pm GMT: US Federal Reserve interest rate decision (forecast: no change)
7.30pm GMT: Fed press conference
Updated
