BUSINESS LIVE: UK GDP grows 0.6%; IAG profits take off; Rightmove eyes residential market improvement

Just before close, the FTSE 100 was 0.66% up at 8,437.06.

Meanwhile, the FTSE 250 was 0.51% higher at 20,635.84.

(PA) – Ikea has pushed back the opening of its new Oxford Street store in order to fix leaks in the building’s basement.

It is the second time the proposed store, which was previously home to Topshop’s flagship London site, has seen its opening delayed.

Ingka Investment, the investment arm of the retail group, bought the Grade II listed building at 214 Oxford Street after Topshop owner Arcadia fell into administration.

Work started on the site in 2022, with original plans to open the location by autumn 2023.

Last year however, it revealed this opening plan had now been pushed to autumn 2024 due to the scale of refurbishment work.

On Friday, the Swedish furniture and homeware giant said the shop will not be opening in Spring 2025 due to the “hugely complex” nature of the renovation.

Popular budget supermarket chain Lidl has announced a third pay rise in the past 12 months for staff paid on an hourly basis.

This will see any Lidl workers paid an hourly wage receive a minimum of £12.40 across the country, rising from the brand’s previous rate of £12.

(PA) – Jaguar Land Rover (JLR) has achieved its highest ever yearly sales and its biggest profit in nearly a decade, as the luxury carmaker shrugs off any signs that budget-squeezed consumers have been reining in spending.

The company said it made £29billion in revenues over the year to the end of March, more than a quarter higher than the previous year.

This was driven by record sales of its Range Rover vehicles, where its more expensive models start at around £100,000.

Around 133,000 vehicles had been ordered at the end of the financial year, three quarters of which were for Range Rover, Range Rover Sport and Defender models.

The group’s pre-tax profit hit £2.2billion, the highest amount since 2015, it said.

Earnings were boosted by higher sales volumes as well as a reduction in material costs for the business, amid a wider easing of inflation across the UK.

The number of families including two retired generations could jump by a third to top one million within the next decade, new research reveals.

Longer-living family members will have to make their savings stretch further to cover their own needs in retirement, plus help out older or younger relatives.

Home sellers are having the ‘wool pulled over their eyes’ by estate agents looking for additional financial kickbacks, experts are warning.

Some estate agents are reportedly only putting forward offers from buyers who have been ‘financially qualified’ by their recommended mortgage broker.

Everything about the United States is big – its market, its economy and the companies housed there. It is also continuing to confound investors’ expectations.

Many anticipated it would slip into recession in 2023, but this never came to pass.

The innovative AIM-listed company, which is focused on delivering lighting, science and plant monitoring solutions for use in vertical farming and greenhouses, reported record revenues of £9.3million for the 2023 financial year, marking a 13.8 per cent year-on-year increase.

The boss of British Gas has said that every home should be forced to have smart meters installed in a bid to meet net zero targets.

Chris O’Shea’s comments come two months after government data found that almost four million smart meters across Britain are not working properly leading to customers being overcharged for energy bills.

Two in five households believe air fryers will render traditional ovens ‘obsolete’ in the future.

Since 2022, households have cut their oven usage by 48 per cent, according to new data from Utilita Energy.

Spanish bank BBVA has stepped up its bid to buy the owner of British high street lender TSB.

The Bilbao-based company took an offer of £10.5billion directly to Banco Sabadell’s shareholders after the board of its Spanish rival rejected the same proposal earlier in the week.

International Airlines Group (IAG) earnings soared during the first three months of 2024 on the back of strong demand for leisure travel.

British Airways’ parent company, which also runs Iberia and Aer Lingus, posted an operating profit of €68million (£58.5million) for the first quarter, against €9million (£7.7million) during the same period last year.

At 21, I started a company to help brands reach Gen Z through influencers.

By 27, I had grown the company to 80 people with more than half the company under 25.

Dozens of people worldwide were arrested in April, accused of using the platform Labhost to commit scams.

ITV is pinning its hopes on an advertising boom in the Euro 2024 football championships as it continues to reel from last year’s Hollywood strikes.

The broadcaster, whose recent hits include Mr Bates vs The Post Office, starring Toby Jones, said revenues fell 7 per cent in the first three months of the year to £887million.

James Sproule, UK Chief Economist, Handelsbanken:

‘The Bank of England yesterday gave a relatively upbeat assessment of the way that it expects the UK economy to develop and thus the trajectory for interest rates. Our forecast has been for the first rate cut to come in September, but earlier cuts are now being widely debated.

‘Overall, while much will be made of the UK having moved out of recession, the more critical question (to which there are no easy answers) is what is going to push growth here (and across Europe) back up above 2%?

‘During the 1997 election campaign, the song “Things can only get better” was played endlessly, perhaps the theme for this election year would be a less exciting “Things are not getting worse”.’

The FTSE 100 is trading at yet another all-time-high this morning as investors cheer the dovish tone of the Bank of England on Thursday, while the British economy grew better-than-expected in the first quarter this year.

Precious metal miners are the top gainer among sectors as gold prices rise 1 per cent. The index is up 1.8 per cent.

Anglo American has jumped 1.4 per cent after Rio Tinto considered an offer for the miner, according to a report in the Australian Financial Review.

IAG has gained 0.8 per cent after the British Airways owner reported better-than-expected first-quarter earnings.

Bank of England Governor Andrew Bailey yesterday gave his strongest hint yet that Britain could start cutting interest rates before the US.

Bailey said that progress in the battle against inflation may mean it needs to cut rates by more than markets currently expect.

Rightmove Plc expects higher mortgage rates and lengthier completion times for property sales to weigh on buyer sentiment, but has still forecasted a better 2024 for the UK residential market.

The estate agency kept its annual revenue and profit expectations unchanged but raised its customer numbers forecast.

Rightmove, which runs UK’s largest property portal, said it expected its customers to grow by 2 per cent from last year’s levels, compared with earlier forecast of a ‘slight decrease’.

James Smith, developed markets economist at ING:

‘Volatility aside, there are genuine reasons to think the economy should continue growing more strongly. Real wage growth is positive, and is likely to become even more so as the year goes on. Headline inflation is likely to be below the 2% target from May onwards, with nominal wage growth at 6% and falling more slowly.

‘And as we outline in our latest ING Monthly, we think around two-thirds of the mortgage squeeze is behind us now and will weigh less strongly on growth in the quarters ahead.

‘The recent higher volumes of economic migration appear to be boosting activity too. GDP per capita grew by a slightly more modest 0.4% in the first quarter, and fell by 0.7% in 2023 as a whole (despite overall GDP rising fractionally by 0.1%).

The bottom line is that the economy is entering a brighter period. The timing of the March bounce provides a nice starting point for the second quarter, where growth could easily come in at 0.4% or 0.5%.

‘The main unknown is the jobs market. We know both from the job vacancies numbers that the market is cooling, but data reliability issues make it hard to say how far this is translating into higher unemployment.‘

British Airways owner IAG has posted better than expected first-quarter earnings, with an operating profit of around $73 million, as the group saw strong bookings and projected a busy and profitable summer.

The first quarter is often loss-making for airlines, with fewer bookings at the start of the year.

‘Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvement to both revenue and operating profit,’ IAG Chief Executive Luis Gallego said in a statement.

European rivals Lufthansa and Air France-KLM reported worse than expected first quarters as they struggled with a range of issues, including consumer payouts and strikes.

But many airlines have expressed hope that a record summer travel season and lower jet fuel prices will help balance their books by the end of the financial year, and IAG is no exception as it strives to capitalise on strong demand.

Ben Laidler, global markets strategist at eToro:

‘The UK recession has ended, with the green shoots of economic recovery the strongest they have been in over two years. Encouragingly, recovery spanned across sectors from manufacturing to services.

‘GDP grew a greater-than-expected 0.6% in the three months to March, rebounding from the 0.3% contraction at the end of last year. The recovery has been led by rebounding business investment and manufacturing.

‘The stronger economy comes alongside the outlook for summer interest rate cuts and the recently weaker pound. This has been driving a long awaited relief rally in the overlooked FTSE 100, as well as providing some political relief in Downing Street.’

Thomas Pugh, economist at RSM UK:

‘Such a strong rebound in GDP may take a bit of pressure off the MPC to start cutting interest rates as soon as possible. Indeed, with the economy posting strong growth in Q1, the cost of waiting to cut interest rates will probably be seen as lower now.

‘However, the inflation and labour market data will be much more important to the MPCs decision. We still think the first cut will come in June, but it’s a close call between then and August.

‘Overall, today’s data reinforce our view that Q4 last year will represent the nadir of a particularly painful period of stagnation for the UK economy. But Q1 represents a turning point. Interest rate cuts are likely to come in the Summer and growth should continue in the first half of this year and pick up further after the summer and into 2025.’

The British economy exited recession in the first quarter of 2024, expanding by a better-than-expected 0.6 per cent, fresh data from the Office for National Statistics shows.

It compares to forecasts of 0.4 per cent growth and represents an improvement from a 0.3 per cent contraction in the final three months of 2023.