AM update: Tories uphold Budget, pound slips, Centrica loses 823,000 customers

While more serious cracks have appeared in the UK economy – new OBR forecasts GDP growth will come in just 1.4% by 2022 – Chancellor Philip Hammond appears to have won party support for his Budget. There was little inside it to rock the Government boat yesterday though the fresh economic downgrades are bad news for productivity. 

"Productivity is the issue,” Mike Amey of Pimco told Wake Up to Money this morning, “if people can't make more stuff per hour then you can't pay them more, that's the basic problem, and there wasn't actually a lot in the Budget on that."

Hammond’s Budget also leads to £50bn of additional borrowing. “On balance we believe that the relaxation of previous fiscal forecasts is positive news for the economy,” Barclays’ Fabrice Montagne said this morning.

Overnight the pound was slightly lower at 1.3316, down -0.02%, though a bull run to 1.34 now looks possible as a fresh UK GDP update approaches this morning. However yesterday’s dollar sell off was more connected to general greenback weakness including fresh US inflation and Fed rate concern.  

In Asia trading was quiet thanks to a holiday in Japan and US Thanksgiving. New sanctions against North Korea added to the mood sobriety. 

• UK FTSE 100 7,419.02 +0.10%
• Dow 23,526.18 -0.27%
• S&P 500 2,597.08 -0.08%
• Nasdaq 6,867.36 +0.07%
• Nikkei 225 22,523.15 +0.48%
• DAX 13,015.04 -1.16%
• CAC 40 5,352.76 -0.25%
• Gold 1,294.00 -0.22%
• Oil WTI 57.91 -0.21%

Mitchells & Butlers profits slip but like-for-like sales up

First, pubs operator Mitchells & Butlers. Full year adjusted operating profits arrive at £314m, down -3.1% while adjusted earnings per share falls -1.4% to 34.9p. Cost headwinds have hit margins “but we continue to work hard to mitigate as much of these as possible through our focus on efficiency and profitable sales growth”.

The pub chain says it now has a more balanced business with an improved commercial culture though its shares are more than -6% down on a 12-month stretch. However like-for-like sales are up +2.3% in the first seven weeks trading of the new financial year.    

Industry costs have hit Mitchells & Butlers though better like-for-like sales look a help: Shutterstock

Centrica hemorrhages customers

We move onto a mixed mood update from British Gas parent Centrica. Trading conditions are described as "highly competitive" and “performance delivery since mid-year within the Centrica Business energy supply businesses has been disappointing” admits chief exec Iain Conn. 

However losing more than 823,00 acounts in the last four months, Centrica admits this morning, will worry. Its shares are down more than -30% year-to-date; Centrica claims it still hopes to meet 2017 targets with adjusted operating cash flow of above £2bn and a like-for-like headcount reduction of over 1,500.

The company adds: “For a period of time…we would be willing to operate with dividend cover from earnings below historic levels.”