BUSINESS LIVE: CPI flatlines at 6.7%; Barratt warns of ‘uncertain’ outlook; Whitbread profits soar

If you thought electric vehicles (EVs) are expensive now, a post-Brexit trading rule due to be introduced in just a few months will see the average price of a battery-powered car skyrocket by an average of £3,400, the car body has warned -industry.

Electric vehicle manufacturers are likely to pass on the extra costs they incur as a result of the new ‘rule of origin’ tariffs coming into effect from January 1, because the most valuable part of these cars – the batteries – are not domestically sourced .

The boss of Goldman Sachs admitted yesterday that “with hindsight you will do certain things differently” after the Wall Street giant reported a sharp decline in quarterly profits.

Profits fell 36 percent to £1.54 billion in the third quarter, partly thanks to an ill-fated foray into consumer banking.

The pound fell yesterday after data showing a slowdown in wage growth boosted expectations that the Bank of England will not have to raise interest rates next month.

The British pound fell by almost a cent to $1.2132 after the Office for National Statistics (ONS) said average earnings grew 7.8 percent in the three months to August.

Marcus Brookes, Chief Investment Officer at Quilter Investors:

‘It is clear that Britain is not winning any race with this path as inflation is still incredibly high and much higher than that of comparable countries. As geopolitical tensions rise, energy and gasoline prices are rising again and inflationary pressures threaten to hit an economy that has suffered a painful cost-of-living crisis.

‘For the time being, the ‘higher for longer interest rates’ story will continue.

‘Although wages are now rising faster than prices, the pain has yet to be felt by many and the Bank of England is in a difficult position. At the last meeting, rate hikes were paused, but this reading means we’ll likely see at least another rate hike.

‘The question becomes when they have done enough, but because it takes so long for inflation to return to a more acceptable level, that is a difficult question to answer and there is a risk of a policy error being made.

‘We think the Bank of England has done enough and will be guided by external factors such as the Federal Reserve, but they will not want to give the impression that they are doing nothing, especially if inflation remains so high.

“This heightened period of inflation and interest rates also makes economic pain and potential recession in 2024 more likely.”

George Lagarias, chief economist at Mazars:

‘Inflation comes in waves. The picture from the data is unfortunately simple. As food and commodity prices start to fall, energy prices are rising again.

“This is a sign that the second wave of inflation is subsiding, but the third wave is ahead. Rapidly rising tensions in the Middle East are worsening the situation.

‘Would a de-escalation of hostilities help? Absolute. A quick end to oil price speculation could, all other things being equal, immediately halt the third wave of inflation and normalize prices.”

Premier Inn owner Whitbread has posted a 44 per cent rise in half-year profits, thanks to strong demand and resilient spending in its pubs and restaurants.

Adjusted pre-tax profits rose from £272m to £391m for the first half of the year, giving Brewers Fayre owner the financial headroom to announce a £300m share buyback programme.

Dominic Paul, CEO of Whitbread, said: ‘The Group is in excellent shape, trading well and has significant growth potential, both in the UK and Germany.

‘Based on our strong performance to date and an encouraging forward booking position, we remain optimistic about the full year outlook and look ahead with confidence, as evidenced by our increased interim dividend and our further planned share buybacks.’

Barratt Developments has warned that its trading prospects are ‘uncertain’ in the wake of a challenging mortgage market.

Britain’s largest housebuilder refrained from providing any annual profit forecast, saying it will focus on generating revenue through multi-unit sales to the private rental sector and affordable housing, in addition to handing out incentives to customers to to stimulate sales.

The group said: ‘Our focus during FY24 remains to generate revenue through targeted use of incentives, while continuing to manage construction activities and control our cost base.

“This will be supported by our highly selective approach to purchasing land, whilst continuing to lead the industry in sustainability.

‘We continue to expect to deliver a total of between 13,250 and 14,250 homes in FY24, including c. 650 home completions from our joint ventures and c. 750 deliveries for the private rental sector. All other guidance from our FY23 results as of September 6, 2023 also remains unchanged.”

Consumer price inflation remained unchanged at 6.7 percent in September, higher than forecasts of 6.6 percent. This gave the Bank of England food for thought at its November meeting, after it opted to pause interest rate increases in September.