UK inflation unexpectedly dips to 2.5% in December; German economy shrinks for second year – business live

JPMorgan Chase has reported its biggest ever annual profit, as its dealmakers and traders capitalised on a rebound in markets in the final quarter of 2024.

The Wall Street bank benefited from a strong economy and interest rate cuts that boosted stock sales and bond offerings, as well as more mergers and acquisitions after years of moderate activity.

Profit for 2024 rose to $58.5bn from $49.6bn in 2023, with $14bn in the fourth quarter, up from $9.3bn a year earlier.

Pointing to low unemployment and healthy consumer spending, chief executive Jamie Dimon said:

The US economy has been resilient. Businesses are more optimistic about the economy, and they are encouraged by expectations for a more pro-growth agenda and improved collaboration between government and business.

Among risks, he cited increasing government spending, inflation, and geopolitical conditions.

The bank posted a 49% jump in investment banking fees and a 21% rise in trading revenue in the fourth quarter – better than expected. Stronger trading in credit, currencies and emerging markets boosted the fixed-income division.

JPMorgan forecast net interest income (the difference between what it earns on loans and pays out on deposits) of $94bn for 2025, topping analysts’ estimate of close to $91bn.

Carlsberg’s £3.3bn deal to buy UK drinks maker Britvic, the company behind J2O juice and Robinsons squash, has been approved by a High Court judge.

The Danish brewery, which owns other brands including 1664 and Brooklyn, plans to create a drinks giant called Carlsberg Britvic.

Britvic, based in Hemel Hempstead, Hertfordshire, employs 4,500 people and owns 39 brands, including Tango.

The two companies agreed the deal last July, saying it would create an “enlarged international group” that can expand into “multiple drinks sectors”. It was approved by Britvic’s shareholders in August, and the Competition and Markets Authority, Britain’s competition watchdog, gave it the green light in December.

Mr Justice Hildyard sanctioned the takeover at a short hearing today, stating the scheme “could be and should be approved”.

Andrew Thornton KC, for Britvic, said in written submissions that the UK company is “the largest supplier of branded still soft drinks and the number two supplier of carbonated soft drinks in Great Britain”.

Thornton added that the scheme received a “unanimous recommendation” from Britvic’s directors, and “will not have any adverse impact on the interests of the company’s creditors”.

Carlsberg has said it believes the integration with Britvic can lead to £100m in cost efficiencies a year. This raised fears of job losses.

It also announced that it would buy out Wolverhampton-based Marston’s, which makes Pedigree and Hobgoblin beers, from the joint venture brewing business run by the two firms for £206m.

Britvic holds an exclusive licence with US partner PepsiCo to make and sell brands such as Pepsi, 7up and Lipton Ice Tea in the UK, which Thornton told the court will continue following the takeover.

Lloyds Banking Group is closing its office in Speke in Liverpool, but insists there won’t be any job cuts, as people will either work remotely (80%) or commute to its Cawley House office in nearby Chester. Around 500 people are affected.

A Lloyds spokesperson said:

In line with our commitment to enhancing our property estate, we are creating fewer, better-equipped, modern and sustainable offices to suit the future of our business. As part of this, we are building hubs and communities in key locations across the UK to help deliver on our strategy.

However, the Unite union warned that this is a “huge mistake” and a blow to Liverpool.

Unite national officer Dominic Hook said:

The proposed closure of the large Lloyds Banking Group centre in Liverpool Speke is a huge mistake. The impact on the hundreds of staff and the region will be significant and is wholly unnecessary.

The impact of the longer commute to Chester for colleagues is huge. While some workers in Speke do currently work from home, a substantial number still do need to travel into the centre for work. The refusal of LBG to open an alternative Liverpool office is completely unjustified and damaging. Poor communication of the site closure has added insult to injury, with management telling staff of the decision by email.

The loss of important jobs from Liverpool is a blow. Unite wants to see Lloyds Banking Group maintain its presence in the city and ensure that those who work in its Liverpool office continue to have a safe local facility to do their jobs.

Unite has serious concerns for staff who do not wish or are unable to work from home. The suggestion that they will be required to travel an additional distance, in some cases adding an hour to their commute, is unacceptable, it said.

The site in Speke is a large contact centre dealing with fraud and customer services.

I travelled to the area recently to look at the cluster of life science companies there.

Margaret Thatcher’s right-to-buy scheme has left Britain with the legacy of a social housing shortfall that would cost the government £50bn to return the number of affordable homes back to 2010 levels.

In a report issued as Labour pushes to reform the Conservative policy introduced in the 1980s, the Resolution Foundation said Keir Starmer’s government faced a huge task to replenish the UK’s affordable housing stock.

The thinktank said clamping down on a council tenant’s ability to buy their home would significantly blunt the policy’s impact on the affordable housing supply, but challenges still remained if ministers wanted to increase the availability of sub-market rent properties.

Local authority tenants have been able to purchase their homes since 1936, but changes made under the first Thatcher government in 1980 turbocharged the sale of council homes by offering tenants a discounted rate.

A US financial regulator has sued Elon Musk for allegedly failing to disclose his ownership of Twitter stock and later acquiring shares in the company at “artificially low prices”, stiffing other shareholders.

The Securities and Exchange Commission (SEC) filed suit against Musk late on Tuesday in federal court in Washington DC for alleged securities violations. According to the suit, Musk did not disclose that he had acquired a 5% stake in the company in a timely manner, which allowed him “to underpay by at least $150m for shares he purchased after his financial beneficial ownership report was due”.

Musk bought Twitter in 2022 for $44bn and later renamed it X. Before the purchase, Musk bought the 5% stake in the company, which typically requires a public disclosure. The SEC alleges that it wasn’t until 11 days after the report was due that Musk disclosed his ownership in Twitter.

The “cost of dying” has hit a record high, prompting growing numbers of grieving UK families to turn to crowdfunding or sell possessions to help pay for a funeral, according to a report.

The average cost of a basic funeral has increased by 3.5% in a year to hit an “all-time high” of £4,285, according to the insurer SunLife, which has been monitoring UK funeral costs for two decades.

The new record means that the cost of a simple funeral has risen 134% in 21 years, from £1,835 in 2004, compared with the 75% increase in consumer price inflation over the period.

SunLife, whose data is based on interviews with more than 1,500 individuals and families and 100 funeral directors, said 2020 previously marked the highest-ever price for a simple attended funeral, but because of the pandemic and other factors, costs fell in the following two years.

The board of Loungers has recommended a final increased takeover offer worth £354m from the New York-based firm Fortress Investment Group.

Fortress proposes to buy the Bristol-based bar and restaurant chain for 325 pence per share, valuing the business at £354.4m. This is 4.8% higher than the original offer of 310p a share made in November that valued Loungers at £338m.

Loungers is the latest London-listed company to strike a deal with an international private equity group. Operating the Lounge, Cosy Club and Brightside brands, it has 280 venues across the country.

Loungers shares rose by 5.8% to 326p in London.

If the buyout does not go ahead, Loungers said, there could be “materially detrimental” consequences.

Fortress has invested in other British companies including Majestic Wines.

Loungers opened its first site in Bristol in 2002 and now runs its cafe bars mainly in suburban high streets and small town centres, as well as Cosy Club restaurants in city centres.

Loungers warned that 2025 will be “challenging” for British consumers, as companies – in particular retailers and hospitality businesses, which rely heavily on workers – raise prices to cope with higher national insurance costs. Loungers also said the “poor liquidity” of its shares is likely to restrict trading volumes.

Fortress said it has irrevocable support from Loungers directors Alex Reilley (its chair) and Nick Collins chief executive), who own 6.5% and 0.9% stakes respectively in the business. It also has commitments from major shareholder Lion Capital, which owns 26% of Loungers.

Fortress needs approval from Loungers shareholders representing at least 75% of the shares. Shareholders will vote on the bid at a meeting scheduled for 30 January.

Fortress’s managing director Domnall Tait said:

This increased offer for Loungers reflects our continued belief in the business and its management team, and we look forward to supporting them through the next stage of growth. Notwithstanding the recent challenges, Fortress remains a strong believer in the UK.

Global leaders have said that escalating armed conflict is the most urgent threat in 2025 but the climate emergency is expected to cause the greatest concern over the next decade, according to the World Economic Forum (WEF).

Ahead of its yearly gathering in the Swiss ski resort of Davos next week, the WEF asked more than 900 leaders from business, politics and academia about the risks that most concern them.

Looking ahead to the coming 12 months, 23% of respondents feared “state-based armed conflict”, as Russia continues to wage war in Ukraine and a series of other deadly clashes continue, including in South Sudan and Gaza.

With devastating wildfires continuing to rage in Los Angeles, the second-most common risk highlighted for 2025 was “extreme weather events”, singled out by 14% of respondents.

Throughout last year, a series of dramatic floods, droughts and fires underlined the impact of the climate crisis on weather patterns, with scientists finding that global heating makes such events more likely and, in many cases, more extreme.

When global leaders were asked to look further ahead and identify the greatest risks facing the world over the next decade, four of their top 10 responses related to the climate crisis.

The Bank of Japan will debate whether to raise interest rates next week, its governor Kazuo Ueda said earlier today, signalling its intention to move borrowing costs higher barring a Trump-driven market shock.

The remarks, which mirror those made by the Japanese central bank’s deputy governor Ryozo Himino yesterday, pushed the yen higher as markets continued to price in the chance of a rate hike at the bank‘s next policy meeting on 23-24 January.

Speaking at a gathering of regional bank executives, Ueda said the central bank would raise borrowing costs if improvements in the economy and prices continue, Reuters reported.

Incoming US president Donald Trump’s economic policy and this year’s wage negotiations in Japan will be key when deciding on the timing of the rate hike, he said.

“There was a lot of positive talk on the wage outlook” when the BOJ’s regional branch managers met last week, Ueda said.

We are currently analysing data thoroughly and will compile the findings in our quarterly outlook report. Based on that, we will discuss whether to raise interest rates at next week’s policy meeting and would like to reach a decision.

The yen gained 0.5% against the dollar to hit 157.15 after Ueda’s remarks. The two-year Japanese government bond yield, which is sensitive to interest rate expectations, rose to 0.7%, the highest since October 2008.

House prices in the UK rose at their fastest annual rate in almost two years in November, amid other signs of a pickup in the housing market despite high mortgage rates.

The average house price was £290,000 in November, 3.3% higher year-on-year, the biggest increase since February 2023, according to the Office for National Statistics. this comes after a downwardly revised 3% annual gain in October.

Private-sector rents continued to rise strongly, up by 9% in December compared with 9.1% in November. Rents climbed the most in London, where they rose by 11.5%.

• Average rents increased to £1,369 (9.2%) in England, £777 (8.5%) in Wales and £991 (6.9%) in Scotland, in the 12 months to December

• In Northern Ireland, average rents increased by 8.6% in the 12 months to October

• In England, rents inflation was highest in London (11.5%) and lowest in Yorkshire and The Humber (5.4%), in the 12 months to December

Germany’s economy, the biggest in Europe, has shrunk for a second year in a row, underlining the challenges faced by the region’s manufacturing powerhouse.

GDP (gross domestic product) fell by 0.2% in 2024 than in the previous year. This came after a 0.3% decline in 2023, according to the federal statistics office, Destatis. The last time it suffered two years of contraction in a row was in the early 2000s.

Ruth Brand, its president, said at a press conference held in Berlin:

Cyclical and structural pressures stood in the way of better economic development in 2024. These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook. Against this backdrop, the German economy contracted once again in 2024.

German industry has been mired in decline while a debt brake constrains public spending.

The news comes six weeks before a snap election, scheduled for 23 February. Germany faces the rise of the far-right party AfD (Alternative für Deutschland), which is campaigning on a series of deeply controversial policies on everything from migration to education (its manifesto includes “re-migration”, threatening the mass deportation of migrants if it came to power).

The breakdown of the 2024 data showed that manufacturing output dropped by 3% last year, with a marked decline in machinery and equipment, and the automotive sector. Production also remained low in in energy-intensive industrial branches, including the chemical and metal-working industries.

Construction recorded a 3.8% slump in 2024 as build costs remained high, resulting in fewer residential buildings being built. By contrast, the modernisation and new construction of roads, railways and pipelines led to an increase in the civil engineering sector.

The service sector was the only bright spot, although it only grew by a modest 0.8%.

The difficult economic climate in 2024 was also reflected in foreign trade, as exports of goods and services were down by 0.8%, partly due to lower sales of electrical equipment, machinery and motor vehicles.

Britain’s banks are trying to resist hiking mortgage rates despite financial market turmoil in recent days, industry sources have told Reuters.

The cost for banks hedging their mortgage lending via ‘swaps’ has risen as a spike in UK government borrowing costs over the past two weeks to multi-decade highs triggered fears that Britain could struggle to meet its fiscal rules, forcing the chancellor to announce spending cuts or tax rises.

While investors are demanding bigger returns to hold UK government debt, major banks are accepting smaller profit margins to avoid passing on higher costs to their customers, at least for now. One source at a major UK lender told Reuters that the mortgage market remained highly competitive.

However, government bond yields have eased today following an unexpected dip in inflation to 2.5%, giving the Bank of England room to cut interest rates at its next meeting on 6 February, economists say.

Rachel Springall, finance expert at data firm Moneyfacts, said lenders are competing to attract customers.

There are millions of borrowers due to come off fixed deals, so remortgage activity will be booming in 2025.

According to Moneyfacts, the average two-year fixed residential mortgage rate is 5.49% today, unchanged from yesterday, while the average five-year fix is 5.27%, also unchanged.

Banks use swaps to manage the risks of their mortgage lending. The price of two-year swaps has risen to 4.6%, the highest since July, and five-year swap rates have climbed to 4.52%, the highest since November 2023.