UK economy ‘turns a corner’ as growth picks up; Jeremy Hunt expected to freeze fuel duty again – business live

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From 22m ago 09.41 GMT UK economy 'turning corner' as private sector growth hits nine-month high Newsflash: UK private sector output hit a nine-month high last month, a new survey shows, bolstering hopes that Britain is leaving recession. The S&P Global composite Purchasing Managers Index, which tracks activity at services companies and manufacturers, has risen to 53.0 in February, up from 52.9 in January. That shows a pick-up in growth, with service sector companies reporting a sustained increase in business activity last month, with the fastest rise in new work since May 2023. Improving export sales helped to boost total order books in February, today’s services PMI report shows. While output growth at service sector firms softened slightly in February, growth forecasts were the most upbeat since February 2022. It suggests that the shallow recession that began at the end of 2023 may be ending, which should cheer the chancellor ahead of tomorrow’s budget. Photograph: S&P Global Tim Moore, economics director at S&P Global Market Intelligence, explains: “Another solid expansion of business activity across the service sector in February adds to signs that the UK economy has turned a corner after entering a technical recession during the second half of 2023. New business intakes were a particularly bright spot as service providers reported the fastest order book growth since May 2023. Survey respondents cited rising business and consumer spending, linked to improved optimism towards the broader economic outlook. Resilient export sales also provided support to service sector growth, as signalled by the strongest rise in new work from abroad for eight months. BUT…. firms also reported that cost pressures have not abated. The PMI report says: On the inflation front, latest data indicated the strongest rise in input costs across the UK private sector since August 2023. Inflationary pressures intensified in both the manufacturing and service sectors in February, with the latter again posting a much faster overall rise in business expenses. Share Updated at 09.56 GMT 43m ago 09.21 GMT UK car dealers are also urging Jeremy Hunt to provide more incentives for people to buy electric cars, in tomorrow’s budget. Following the news that UK car sales jumped in February, due to business customers, Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), says: “It is promising to see that electric sales continue to grow after a bounce back last month, particularly as OEMs seek to meet the targets set by the ZEV mandate for this year. In recent months, this has primarily been driven by fleet rather than private demand. “In spite of encouraging progress, it is crucial that the Government continues to work with dealers to attain the best outcomes for consumers. “The Spring Budget provides a prime opportunity for the Government to keep this momentum going. NFDA urged the Government, in its Spring Budget submission, to increase consumer confidence in EVs through price incentives and improving electric charging infrastructure. NFDA also stressed to the Government to prioritise investment and growth in the UK automotive sector.” Share 52m ago 09.11 GMT UK's new car market records best February for 20 years It’s official: UK car sales hit a 20-year high for a February last month, driven by business customers. There were 84,886 new car registrations last month, the Society of Motor Manufacturers and Traders has just reported. That’s a 14% increase on last year, and the best performance for any February since 2004. But…… this growth is being driven by business customers, expanding their fleets of cars. Sales to private buyers dropped by 2.6%. The SMMT says: It was the 19th month of consecutive growth, which has primarily been driven by fleets investing in the latest vehicles. Indeed, fleets and businesses were responsible for the entirety of February’s increase, with registrations up 25.2% and 15.5% respectively. Private uptake continued to struggle, with a -2.6% decline to record a 33.7% market share. February is traditionally volatile as the lowest volume month of the year, with buyers often electing to wait until March and the new number plate. New car market records best February for 20 yearshttps://t.co/pFIbdMpsZo pic.twitter.com/lF3gpPpQ8Y — SMMT (@SMMT) March 5, 2024 Sales of battery-powered electric cars rose by 21.8% year-on-year, lifting their market share to 17.7%, while petrol sales rose 13.3% and diesel shrank by 7.4%. As flagged earlier, the SMMT is also urging the chancellor to cut taxes on new electric cars, and lower the tax on public EV charging. The group says: While consumers do not pay VAT on other emission reduction technologies such as heat pumps and solar panels, private EV buyers pay the full 20% levied on all cars, whether they be electric, petrol or diesel. Halving VAT on new EV purchases would save the average buyer around £4,000 off the upfront purchase price – yet cost the Treasury less than the Plug-in Car Grant that was scrapped in 2022.2 Share 1h ago 08.38 GMT Shares in Greggs have jumped 2.5% in early trading, after it reported a 27% rise in profits this morning (see 7.47am). Most of the bakery chain’s staff will also benefit, as Greggs shares 10% of its profits with team members with at least six months of service. That means thousands of Greggs workers will share £17.6 million in bonuses this month, PA Media reports. Share 2h ago 08.33 GMT Another freeze in fuel duty would be welcomed by the UK’s petrol retailers. Gordon Balmer, executive director of the Petrol Retailers Association (PRA), said yesterday: “The Spring Budget presents a pivotal moment for addressing the pressing concerns facing petrol retailers across the UK. Fuel duty has long been a key concern, providing relief to motorists amidst escalating living costs. Temporary cuts and freezes have been welcome, offering relief amidst economic uncertainty. However, the prospect of reversing these measures poses a threat, potentially aggravating the financial strain on consumers already grappling with volatile global energy prices. Conservative MP Jonathan Gullis is also cheered by today’s report that the chancellor will not lift duty tomorrow: A big win for motorists with the Chancellor keeping the 5p cut in fuel duty & continuing the inflation freeze. Delighted to have campaigned with my friend @HowardCCox & @TheSun to deliver this, with drivers £16.50 better off every time they fill up.https://t.co/Rvy1u8tkBM — Jonathan Gullis MP (@GullisJonathan) March 5, 2024 But as this chart shows, the 14-year freeze in fuel duty has cost the Treasury billions of pounds in lost tax, and also lowered the pressure on fossil fuel-powered motorists to drive less, or shift to electric cars. A helpful reminder of why carbon taxes are a great idea in theory, but trickier in practice👇 Each year for more than a decade the UK govt pencilled in a rise in fuel duty (the biggest & simplest of all UK environmental taxes). Each year it bowed to pressure & cancelled the rise pic.twitter.com/75AJLP1872 — Ed Conway (@EdConwaySky) March 4, 2024 Share 2h ago 08.10 GMT The slowdown in the UK housing market has hit earnings at building materials supplier Travis Perkins. Travis Perkins has reported a 61% drop in operating profits, from £285m in 2022 to £110m in 2023, after “a challenging year in weak market conditions”. CEO Nick Roberts cautions that 2024 will be tough too: “Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI sectors, and compounded by deflationary pressures on commodity products. Faced with these challenges, we have invested to protect and build our leading market positions. With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation. Shares in Travis Perkins are down 3.3% in early trading. Share 2h ago 07.54 GMT Conditions in the London rental market are returning to normal, estate agent Foxton reports this morning. In its latest financial results, Foxtons says: Lettings market supply and demand dynamics have normalised, with increased levels of available rental stock and fewer tenants registering for each available rental property compared to 2023. Rents soared in the capital last year, as a shortage of properties on the market allowed landlords to push up rental costs. Foxtons lettings book propped up sales in 2023, ⬆️16% while their sales revenue & financial arm both fell by 14%. Rental action boosted their adj operating profit ⬆️2% along with EBITDA ⬆️6% but their integration of Ludlow Thompson dented their profit before tax ⬇️ 34% pic.twitter.com/yWCnw1wesu — Emma Fildes (@emmafildes) March 5, 2024 Foxtons has reported a 5% rise in revenues for last year, while adjusted operating profits rose 2%. Foxtons revenues up 5% in 2023 to £147m profit down from £11.9m to £7.9m mainly due to Ludlow Thompson takeover costs. Sales revenue down 14% to £37m but letting revenue up 16% to £101m and is ‘now largest lettings agent in the UK.” Looks like the direction of travel. pic.twitter.com/sXDyBDgcBr — Peter Bill (@peterproperty) March 5, 2024 Share Updated at 08.05 GMT 2h ago 07.47 GMT Bakers Greggs eyes more growth in 2024 View image in fullscreen Photograph: Danny Lawson/PA In the City, bakery chain Greggs is aiming for more growth in 2024 after reporting a record financial performance for last year. Greggs grew its like-f0r-like sales by 13.7% in 2023, its latest financial results show. Total sales were up almost 20%, with Greggs’ expansion plans leading to a net increase of 145 stores (taking its total estate to 2,473 shops by the end of December) Pre-tax profits jumped by 27% to £188.3m – swelled by a £20.6m insurance payout due to business interruption in 2020 during the pandemic. Greggs benefitted from the slowdown in price rises for raw materials and energy last year Greggs also reports that it has started 2024 “well”, with like-for-like sales up 8.2% ao far this year, and is confident of another year of good progress. Roisin Currie, Greggs chief executive, says: Our strong growth during these tough years for the British economy gives me great optimism for the years ahead. Back in 2021, we were bold when we set out our ambition to double our sales by 2026 but we are ahead of our plan and have proven that our strategy to open new shops, extend into the evening, and build up our digital presence is a successful one. Share 3h ago 07.30 GMT Britain’s AI sector expected to get £100m extra funding in budget Larry Elliott Jeremy Hunt is planning to provide a budget boost to Britain’s growing artificial intelligence sector through a doubling of funding for the Alan Turing Institute – the national body for data science and artificial intelligence. Despite being restricted in his scope for pre-election giveaways by the weakness of the public finances, the chancellor is expected to announce a five-year package of funding worth £100m. The Treasury said the money would allow the Turing – set up in 2015 and named after the pioneering computer scientist and mathematician who died in 1954 – to make fresh advances in data science and AI. The extra funding will be allocated to research in three areas where AI is seen as having an important role to play: transforming healthcare, protecting the environment, and strengthening defence and national security. Treasury sources said the money would have a direct impact on the public through better healthcare and tackling biodiversity challenges. More here: Britain’s AI sector expected to get £100m extra funding in budget Read more Share 3h ago 07.20 GMT Jeremy Hunt set to freeze fuel duty in budget boost for drivers Jeremy Hunt is expected to give motorists a £5bn pre-election tax break in tomorrow’s budget, by – once again – freezing fuel duty. There are multiple reports this morning that the chancellor will extend the current 5p cut in fuel duty for another year. Hunt is also expected to scrap an inflation-linked rise in duel duty – extending a freeze that began in 2011. Another freeze would help motorists through the cost of living squeeze, at a time when motor fuel is rising at the fastest rate in five months. The Daily Mail says it’s a bid to show “the government is on the side of ordinary motorists”. The Times reports: Although not raising fuel duty in line with inflation and keeping the 5p cut will cost the Treasury £5 billion in the next fiscal year, it does not affect Hunt’s room for other tax cuts because they are deemed to be temporary — even though fuel duty has been frozen since 2011. Jeremy Hunt is preparing to freeze fuel duty for another year in a move that will be welcomed by motorists but cost the Treasury about £5bn ⬇️ https://t.co/suRcvDwUla — The Times and The Sunday Times (@thetimes) March 5, 2024 New data from the RAC this morning shows that average price of petrol rose by 4p a litre in February while diesel shot up by nearly 5p. Yesterday, the chancellor insisted that he wants to move the UK to become a “lower taxed economy” but will only do so in a “responsible” way. That implies tax cuts funded by lower spending, rather than higher borrowing. But new data today shows NHS funding faces the biggest cuts in real terms since the 1970s, an influential analysis shows, adding to the pressure on Hunt to prioritise public service funding over tax cuts. NHS funding faces biggest real-terms cuts since 1970s, warns IFS Read more A year ago, the Institute for Fiscal Studies pointed out that the chancellor could fund a bigger pay rise for public sector workers by cancelling plans for a fuel duty freeze…. Share 3h ago 07.20 GMT The Society of Motor Manufacturers and Traders has also repeated its plea for “fairer” taxation of electric vehicles (EVs), urging chancellor Jeremy Hunt to halve VAT on the purchase of new EVs. They also want public charging to be “as easy and affordable as plugging in at home”. Currently, public EV chargers attract a full VAT rate of 20%; but if electric car drivers charge up at home, they only pay 5%. Share 3h ago 07.19 GMT New car market 'records strongest February in 20 years' The new car market recorded its strongest February in 20 years, figures due this morning are expected to show. The latest car registration figures from the Society of Motor Manufacturers and Traders (SMMT) are expected to show that new car sales rose more than 10% last month compared with February 2023. The SMMT also reports that battery-powered electric vehicles had a market share of around 17% last month. We’ll get the full sales data at 9am… Share