BUSINESS LIVE: GDP growth flatlines; Diageo suffers demand dip; Redrow sales slump

The British love affair with fake meat was more of a fleeting romance, as consumers turned their backs on it as quickly as they fell for it.

It has been claimed that the vegan market could be worth as much as £50 billion globally by 2030, but sales in Britain appeared to have leveled off.

Robert Alster, CIO at Close Brothers Asset Management:

‘Today’s GDP figures will come as a surprise as they show that the economy leveled off in the third quarter and a contraction was avoided. This could complicate the Bank of England’s path as there is less basis to delay further rate increases and even consider rate cuts.

‘It will reinforce the Bank’s hawkish tone at last week’s meeting, and Andrew Bailey is likely to continue to temper talk of austerity, sticking to the message that rates should remain high for some time to come.

‘However, despite the more positive figures, the Bank still has flexibility. With supermarket inflation in Britain dipping below double figures, the upcoming inflation data on November 15 will be crucial in showing how much further the Bank of England has to go, and the possibility of rate cuts next year.

“It’s a relatively dramatic turnaround in a relatively short period of time.”

‘UK GDP was slightly better than expected, but in reality the economy has largely stagnated this year.

“We expect this trend to continue in the coming quarters as the impact of higher interest rates continues, although a recession cannot be ruled out.”

Shell is suing Greenpeace for £1.7 million after its protesters occupied an oil rig for 13 days.

The oil giant says it supports the right to peaceful protest, but the “unlawful and extremely dangerous” action endangers the lives of both protesters and crew.

Struggling Home REIT has once again sold off part of its portfolio for a fraction of the purchase price as it scrambles to raise cash.

The homeless housing company – which has been under scrutiny since November last year following a report by short-seller Viceroy Research – announced it had sold a further 153 properties in a series of auctions earlier this week, raising around £23.4 million was picked up.

Households are struggling under the weight of rising car and home insurance premiums – and there is no sign that prices are likely to fall again.

Redrow expects annual profit and revenue to be at the lower end of the forecast range as the builder faces a subdued autumn housing market.

A British housebuilder’s latest warning about challenging housing market conditions comes as high mortgage costs and wider economic concerns are driving homebuyers away.

Earlier this week, Redrow’s larger peers Taylor Wimpey and Persimmon flagged uncertainty for the coming months.

The company has had to adapt to a “tougher trading environment” in terms of construction speed and operating costs, Redrow chairman Richard Akers said.

In September, the company had forecast pre-tax profits of £180 million to £200 million for the 2024 financial year, and sales of £1.65 billion to £1.7 billion.

Emma Mogford, manager of the Premier Miton Monthly Income Fund:

‘A flat economy is generally not something to be happy about. However, given cost of living pressures and higher interest rates, this is a decent result.

‘As long as the pressure from higher interest rates remains, I think we can go into the festive season with a hint of optimism about the UK economy.’

Diageo expects organic profit growth to decline in the first half of the current financial year due to ‘materially weaker’ performance in Latin America and the Caribbean.

“Macroeconomic pressures in the region are resulting in lower consumption and downtrading by consumers,” the world’s largest spirits company said in a statement.

“These impacts slow progress in reducing canal inventory to appropriate levels for the current environment.”

Latin America and the Caribbean represent nearly 11 percent of the Johnnie Walker maker’s net sales.

Sales in the region are expected to decline by more than 20 percent year-on-year in the first half of fiscal 2024, the company added.

Michael Field, European market strategist at Morningstar:

‘UK GDP growth came in at 0.2% in September, contrary to economists’ expectations of a flat performance. This follows from the growth of 0.1% indicated in August. While this level of growth is far from robust, the important thing is that the UK economy is in the black, and flat quarter-on-quarter growth means Britain will not enter a technical recession in 2023.

‘The manufacturing sector is usually blamed for Britain’s slow economic growth, and in many ways rightly so. Industrial activity, as reflected in manufacturing PMIs, has been declining since mid-2022. However, with the manufacturing sector contributing less than 20% of GDP, this is only part of the problem.

‘The bigger problem lies with the services sector, which accounts for almost 80% of GDP and provides almost the same percentage of employment. Here, a major decline in spending by both businesses and consumers over the past eighteen months has hurt the economy. The somewhat positive news, however, is that services output increased by 0.2% in September, after a decline of 0.7% in August.

‘With interest rates at their highest levels since the global financial crisis, the cost of interest on debt is starting to become really burdensome for both companies and households. With interest rates likely to remain high for some time to come, it is difficult to see a quick turnaround in services spending, meaning low GDP growth could continue for some time to come.”

The UK economy stagnated in the third quarter, recording flat gross domestic product growth between July and September and beating expectations of a 0.1 percent decline, new data from the Office for National Statistics shows.