🏛️ Inflation Hanging Around Like a Bad Smell

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🏛️ Inflation to hang around longer than expected

As predicted, the Bank of England raised interest rates for the 12th time in a row on Thursday (to 4.5%) and significantly upgraded its growth forecasts for the UK, confirming a recession will be avoided. However, it struck a somber tone on inflation. The central bank said high prices will now last a lot longer than previously expected, staying above its 2% target until the start of 2025 - after the next election.

Separately, Governor Bailey was asked by journalists whether Chief Economist Huw Pill was right to say brits should get used to being poorer - he responded that he didn’t think Pill’s choice of words “was the right one”.

📊 Rolls Royce progress not enough for investors

In an update to markets on the state of its transformation plan announced in February, RR said financial performance was “improving” thanks to the changes made. Trading was in line with expectations, according to CEO Erginbilgic, with strong demand in key markets and an increase in flying hours of its engines (RR are paid service fees based on flying time). The engineering giant held its forecasts steady for the full year, expecting to bring in around £1bn of operating profit for 2023. However, despite the update shares dipped 6.7%, potentially a result of markets expecting RR to increase end of year forecasts. (Official)

📺 Advertising slump a struggle for ITV

The British broadcaster reported a 10% slowdown in advertising revenues for Q1, which CEO Carolyn McCall said was “as expected”. ITV warned this would likely continue in the short term as brands cut marketing budgets in the face of a macroeconomic slowdown, forecasting another 12% drop in Q2. On the upside, performance at ITVX - the broadcaster’s steaming service - was strong, with a 29% increase in revenue during the quarter. It wasn’t enough though, as shares dropped 2% after the update. (Official)

What Else Happened?

Economics / Politics / General

Despite sky-high inflation and a waning economic situation, sales of London “super-prime” homes (£10m plus) had their best year since the Brexit vote.

Deals

British Gas, OVO and Octopus Energy are all thought to have bid for Shell’s UK retail unit after it was put up for sale; the business is reportedly worth somewhere between £50m-£100m.

GSK announced plans to offload 240m shares in Haleon - the consumer healthcare company it spun off last year - equating to 2.5% of its share capital.(BBG)

Today’s VC round up:

• Ireland-based Everseen raised a €65m Series A round for its AI-powered platform aimed at helping retail shops cut down on wasted inventory.

• AccelerComm - a Southampton University spinout whose tech fixes errors in 5G network transmissions - raised a £21.5m Series B funding round.

• Scotland’s Liftango raised £2.5m to help expand its shared mobility platform.

Company News / Trading Updates

Revolut CFO Mikko Salovaara quit his position just weeks after auditor BDO warned they were unable to verify the fintech’s accounts.

First Group shares sunk 4.8% as the government nationalised the TransPennine Express train routes across North England and Scotland, citing “continuous cancellations”.

Grainger - the UK’s largest landlord - said inflation had given the business a boost as rental income grew 12% over the last six months.

Ties between Vodafone and its largest investor, e&, were strengthened as the UAE-based telecoms business was given a board seat.

🌎 Global Snapshot

Los Angeles regional lender PacWest saw heavy selling in its shares as the bank announced it lost nearly 10% of deposits in just one week.

Adidas decided against burning its leftover Yeezy inventory, announcing instead that it will sell some of it and donate the proceeds to charity; the sportswear giant was left with stock worth over $1bn after the split with Kanye.

Peloton shares fell to record lows on Thursday after the indoor bike maker recalled over two million faulty units; shares now lie around 95% below pandemic highs.

Activist investor Elliot Management built a position of 10% in tyre maker Goodyear and is now demanding changes to the board, a disposal of its store network and a wider operational review; shares jumped 21% after the news broke.

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