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Thames Water plots £1.5bn cash call to turn reputational tide

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Thames Water is to tap shareholders for £1.5bn of new equity in an effort to accelerate its transformation plan, months after it was hit by the latest in a string of regulatory fines.Sky News has learnt that Britain’s biggest water utility is expected to announce on Thursday that its existing investors have agreed to inject £500m into the company in the current financial year.
That sum will be supplemented by a further £1bn between the end of this year and the end of the current regulatory period in 2025, according to people briefed on Thames Water’s plans.The new funding, which is likely to have been notified in advance to Ofwat, the water industry regulator, is expected to form part of a sizeable sum of money being earmarked by Thames Water’s board to improve the company’s dire track record on leaks and customer service.One source suggested that that sum could be as much as £2bn more than the £9.6bn settlement agreed with Ofwat for the five-year period commencing in April 2020.

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Shareholders including China Investment Corporation, the country’s sovereign wealth fund; the Universities Superannuation Scheme, the UK’s biggest private pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority, are said to have endorsed the plans.
Serving roughly a quarter of Britain’s population, Thames Water has seen its reputation battered by revelations about its cavalier approach to pollution and indifferent treatment of customers.

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A year ago, it was fined £4m for allowing untreated sewage to escape from London sewers into a nearby river and park, while in August last year, it was ordered to pay £11m for overcharging thousands of customers.Under Sarah Bentley, who joined as chief executive two years ago, the company has pledged to deliver better results for both customers and the environment, at a time when Britain’s privatised water companies are under pressure for paying substantial dividends.In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry’s frequent mishaps.Earlier this week, Pennon Group, the listed company which owns South West Water, was added to a list of suppliers being investigated by Ofwat over their management of wastewater treatment works.Thames Water, which is chaired by Ian Marchant, former boss of the energy company SSE, did not respond to a request for comment on Wednesday night.

Royal Mail managers vote to strike as Britain's summer of disruption set to get worse

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Royal Mail managers have voted to strike in a dispute over what their union describes as an “ill-thought-out redeployment programme”.Members of the Unite union backed the industrial action by 86%, and by 89% in Northern Ireland.
Their ballot was a response to what the union says are plans to cut 542 frontline delivery managers’ jobs, as well as implement a redeployment programme with worse terms and conditions.About 2,400 managers at more than 1,000 delivery offices are involved in the dispute.The strike dates have not yet been confirmed.

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Unite general secretary Sharon Graham said: “It is no surprise at all that these workers have voted overwhelmingly for industrial action.
“Make no mistake, Royal Mail is awash with cash – there is no need whatsoever to sack workers, drive down pay or pursue this ill-thought-out redeployment programme.

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“These plans are all about boardroom greed and profiteering and nothing whatsoever to do with securing this vital public service.’Ruinous path'”Shareholders have been seizing the Royal Mail profits, while our members have been holding the service together. Enough is enough.”Our Royal Mail members are guaranteed Unite’s 100% support in any industrial action they take this summer to get the company off this ruinous path.”A Royal Mail spokesperson said: “We are disappointed by the announcement that Unite members have voted in favour of both industrial action and industrial action short of a strike, also known as work to rule.”Unite have stated they will be informing us in due course in relation to the terms of any industrial action.”Throughout the ballot process, Unite head office has misled members about additional job losses. This is not true. Unite has ignored our request to correct these claims.”There are no grounds for industrial action. The extended consultation on these changes concluded earlier this year, and the restructuring is complete.”We committed to protecting pay for all managers who stay with Royal Mail, and the vast majority will see an increase in their earnings.”We allowed managers to request voluntary redundancy with a package of up to two years’ salary, which was over-subscribed. We also made several concessions during the process, which Unite declined.”The ballot covers around a third of our 6,000 managers and we have contingency plans in place to keep letters and parcels moving in the event of a strike.”

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Last week’s rail strike saw huge disruption across the network

‘Only the beginning’The workers would be the latest to head to the picket lines, as Britain faces a summer of disruption.Last week the rail network was brought to a near standstill by its biggest strike in 30 years, and the TSSA union said on Wednesday its members in train station roles at Avanti West Coast had also voted to strike.Avanti West Coast operates passenger services including trains from London Euston to Birmingham, Manchester and Glasgow.TSSA general secretary Manuel Cortes said: “The ballot result at Avanti is only the beginning.”Our union is balloting members across almost another dozen train companies and Network Rail.”If they had any sense they would come to the table and sort this out, so we have a fair settlement for workers.”

De La Rue chief has licence to print his money, top investor says

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The chief executive of De La Rue, the banknote printer, has come under fire from a leading shareholder after taking a £265,000 bonus last year despite a sharp fall in its share price.Speaking to Sky News, Richard Bernstein, chief investment officer of the fund manager Crystal Amber, said Clive Vacher’s pay was inappropriate for the boss of a company valued by the London stock market at only £161m.
De La Rue’s annual report showed that Mr Vacher was awarded a total pay package worth £792,000 last year, including the cash bonus.The company has, however, been the source of perennial discontent from shareholders after seeing its value slide over the last decade.In May, it issued a profit warning – its second this year alone – over rising costs.

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Crystal Amber, which has previously urged De La Rue’s board to put the company up for sale, owns a roughly 10% stake.
Mr Bernstein said that “management alignment is absent at De La Rue”, pointing to the fact that its shares had fallen by more than half during the last year.

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“The market cap is £160m – even after the £100m that we and other shareholders invested two years ago.”He accused the De La Rue board of failing to benchmark Mr Vacher’s pay against returns to shareholders.”This level of pay may be appropriate for a CEO of a FTSE 250 constituent but not for a small-cap company,” Mr Bernstein added.”If shareholders are suffering, why should executives be given huge cash bonuses? It’s time for management to provide evidence of its worth.”De La Rue declined to comment.

Pound heads for biggest six-month drop since 2016

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The pound is heading for its biggest six-month drop against the US dollar since 2016, the year of the Brexit referendum.Sterling had fallen 0.46% to $1.2127 by mid-afternoon on Wednesday, its lowest level since 16 June, when the Bank of England raised its key policy rate by 25 basis points to 1.25%.
The pound has fallen more than 10% against the dollar this year, its performance hampered by fears of a major economic slowdown, surging inflation, and growing uncertainty about the consequences of Brexit.

Cost of living latest: If you earn less than £41,389 your take-home pay is about to go upAlso on Wednesday, Swati Dhingra, who will become a Bank of England policy-maker in August, said there is room for a gradual approach to raising interest rates.

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The bank has raised interest rates five times since December, mostly by a quarter of a point each time, in an effort to fight inflation.
But inflation hit a 40-year high of 9.1% in May and some of the bank’s policymakers say the rate rises should have been bigger.

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Ms Dhingra, an associate professor at the London School of Economics, will succeed one of those policymakers.Speaking before a parliamentary committee scrutinising her appointment, she said she might have supported a half-point rise at this month’s meeting but now thought that would have been a mistake.She said: “In hindsight, I think that maybe there is some room for a very gradual approach here.”Newer data is starting to show that possibly a slowdown has become much more imminent than we thought before.”
City Index analyst Fawad Razaqzada told Reuters: “The pound continues to be sold as worries about a sharp economic slowdown outweigh risks of runaway inflation.”This has given rise to expectations that the BoE will front load rate hikes, before stopping and potentially reversing the rate increases.”He said Ms Dhingra had “gone one step further by saying that the central bank will need to tighten its belt very gradually going forward”.’Economy beginning to slow’Meanwhile, Bank of England Governor Andrew Bailey said it is “very clear” the economy is beginning to slow, adding that the bank will not necessarily have to act “forcefully” to control inflation.
Follow the Daily podcast on Apple Podcasts,  Google Podcasts,  Spotify, SpreakerHe told a European Central Bank event in Portugal: “There will be circumstances in which we will have to do more.”We’re not there yet in terms of the next meeting.”We’re still a month away, but that’s on the table.”But you shouldn’t assume its the only thing on the table, that’s the key point,” he added.

Some Heinz baked beans and ketchup products unavailable in Tesco stores after price dispute

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Britain’s biggest supermarket group Tesco says some Kraft Heinz products are not available in its stores due to a dispute over pricing.The US food manufacturer has paused supply and some of its items are already out of stock, according to the Grocer magazine, which first reported the issue.
Baked beans, ketchup, and tomato soup are among the products understood to be affected.The dispute highlights the question of who should bear the biggest cost in the current economic climate – manufacturers, retailers, or consumers.Food manufacturers, like many businesses, are facing rising costs for fuel and commodities.

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But their bid to recoup those by increasing their prices puts them in conflict with supermarkets such as Tesco, which have vowed to try to keep prices low for consumers.
Consumers are feeling the pain too – UK inflation reached a more than 40-year high of 9.1% in May and is forecast to hit double digits.

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That comes alongside soaring prices for fuel and other increases such as council tax.Tesco said in a statement on Wednesday: “We will not pass on unjustifiable price increases to our customers.”We’re sorry that this means some products aren’t available right now, but we have plenty of alternatives to choose from and we hope to have this issue resolved soon,” it added.Kraft Heinz said in a statement: “We are working closely with Tesco to resolve the situation over pricing as quickly as possible.”We are confident of a positive resolution.”The firm added that due to the challenging economic environment – with commodity and production costs rising – it was looking at ways to provide value for customers “through price, size and packs” without compromising on quality.

US reports drop in GDP after consumer spending fails to reach expected levels

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The US has reported its first drop in economic output since the second quarter of 2020.The US economy shrank at 1.6% annual pace in the first three months of the year, according to the latest figures from the country’s commerce department.
It follows a strong 6.9% expansion in the last financial quarter of 2021.The commerce department had estimated last month that the economy contracted 1.5% in the first quarter but it made its final estimate on Wednesday and downgraded the figure.Among the factors was consumer spending, which failed to reach expected levels – up by just 1.8% instead of the 3.1% forecast.

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Consumer spending accounts for about two-thirds of US economic output.
Spending on large goods such as cars, and recreational items was revised lower, while businesses accumulated inventories at a higher rate than expected.

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But some analysts remained upbeat.Scott Hoyt, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, told Reuters: “It is extremely unlikely the economy is in recession now, however, despite the decline in first-quarter GDP and apparent weakness in output growth in the current quarter.”Job growth remains strong, investment is growing, both households and business have strong balance sheets.”Like many world economies, the US consumer is enduring the effects of soaring inflation, pushed up by an increase in the price of essentials such as energy.Earlier this month the US Federal Reserve increased interest rates by three-quarters of a percentage point – the sharpest hike in 28 years.The benchmark rate now stands at a range of 1.5% to 1.75%, levels that have not been seen since before the coronavirus pandemic began.

Morrisons sees fall in sales amid 'very fragile and difficult consumer environment'

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Morrisons has warned of a “very fragile and difficult consumer environment” as it reported a fall in sales over the past three months.The supermarket group said like-for-like sales, excluding fuel and VAT, fell 6.4% in the 13 weeks to 1 May, blaming inflation and “increasingly subdued consumer confidence”.
Total revenues for the company were up 2.6% to £4.6bn compared to the same quarter last year, helped by a 54% jump in fuel sales as prices soared.Adjusted earnings grew by £9m to £71m for the quarter, thanks to cost savings and a recovery in profit for areas previously hit by COVID-19.Chief Executive David Potts said: “In a very fragile and difficult consumer environment, Morrisons has continued to deliver a resilient performance.

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“This quarter traded over a period of significant COVID restrictions last year when travel and hospitality were both severely limited.
“As those two activities returned to more normal patterns this year, we saw very strong growth in fuel sales but a step back in grocery.

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“In April we launched one of our biggest-ever price cut campaigns which included over 25% of our entry level products.”But these are serious times and there is further serious work ahead of us as we help customers and colleagues face the highest inflation for 40 years.”Read more:’I can’t take it anymore’ – We asked Britons how the crisis is affecting themFood inflation to accelerate over summer and prices to stay highEarlier this month, Kantar Worldpanel released figures showing that like-for-like grocery prices rose by an annual rate of 8.3% in the four weeks to 12 June, up 1.3% on the previous period.Kantar warned that the leap in prices, amid the wider cost of living crisis, meant that households were facing the prospect of paying £380 more for their shopping on an annual basis as supermarkets and their supply chains faced up to mounting costs from things such as energy and fuel.Morrisons saw a £7bn takeover by private equity firm Clayton, Dubilier & Rice approved by regulators earlier this month.Last month, Morrisons clinched a deal to rescue the McColl’s convenience chain, with McColl’s staff keeping their jobs and the supermarket group taking over the company’s two pension schemes.

Electric cars, start-up investments and post-COVID holidays

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On today’s episode, Ian explores the push among global carmakers to get customers to buy electric vehicles.Plus, he speaks to the co-founder of Entrepreneur First, which invests in start-ups rather than companies that are already up and running.Finally, we hear about how attitudes to holidays have changed since the start of the coronavirus pandemic.:: Listen and subscribe to The Ian King Business Podcast here.

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Two-year extension of steel tariffs despite plea for imports from manufacturers

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A two-year extension of tariffs on some foreign steel has been revealed by the government in a bid to protect domestic producers, despite pleas from manufacturers for help to grow imports because of a domestic steel shortage.The International Trade Secretary told MPs “safeguards” would remain on 15 major categories of imported steel in total, because of a “vital public interest”, until June 2024.
Anne-Marie Trevelyan added, however, that Ukraine would be exempted because of the economic hardship imposed on the country through Russia’s invasion.The government argues the tariffs are needed to boost the competitiveness of UK steel producers in the face of cheap foreign imports.The UK’s industry is struggling through high energy prices despite state aid for the sector on electricity costs.

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The announcement places the UK on collision course with the World Trade Organisation and also the EU.
The government has argued that the plans are in line with what other European steel-producing countries are also doing in response to the threat posed by, mainly, Chinese imports.

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Manufacturers’ lodge their complaintMs Trevelyan revealed the extension as an industry body called on the government to allow them to import more steel products without paying tariffs, arguing the protectionism would result in higher costs.The Confederation of British Metalformers (CBM) said: “British steel mills have not been able to supply the…materials our members need to support critical domestic and export supply chains, nor are they likely to be able to do so in the near future.”The tariffs to date have left UK manufacturers facing 25% duties on steel once a quota level is reached.The quota currently covers about a third of British manufacturers’ steel use.The government has proposed doubling the quota to help but CBM president, Steve Morley, said it was not enough to protect his members and the wider plans risked rising costs and UK manufacturers’ ability to compete for contracts.He said of the announcement: “CBM members will continue to have to operate with a high level of uncertainty and jeopardy.”A continuation of that jeopardy over a further two years, will mean continued questions from overseas holding companies about the viability of manufacturing in the UK.”Even at reduced levels, tariff costs will continue to injure these businesses unjustifiably.”

Crypto hedge fund Three Arrows Capital plunges into liquidation

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Three Arrows Capital, a cryptocurrency-focused hedge fund, has plunged into liquidation, deepening the crisis engulfing the global digital assets sector.Sky News has learnt that partners from Teneo in the British Virgin Islands has been lined up to handle the insolvency of the Singapore-based firm, which was set up in 2012 by Su Zhu and Kyle Davies.
Cryptocurrency insiders said on Wednesday that the liquidation would be a significant moment in the current unravelling of the cryptocurrency sector, which has grown at breakneck speed in recent years.It was unclear what the immediate financial implications would be for Three Arrows’ creditors.The firm’s demise is likely to raise further questions, however, about the regulatory oversight to which cryptocurrencies and other digital assets are subject in the world’s major financial centres.

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The crisis at Three Arrows Capital was highlighted earlier this month when Voyager Digital, a crypto broker, said it was considering issuing a default notice in relation to a loan worth hundreds of millions of dollars.
The crypto landscape is experiencing tumultuous change amid a collapse in valuations of assets such as stablecoins – digital currencies pegged to the value of assets such as the US dollar or gold.

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Mr Davies told the Wall Street Journal in an interview this month that it was “committed to working things out and finding an equitable solution for all our constituents”.He added that Three Arrows was exploring options such as the sale of assets or a rescue by another firm.It was unclear whether such conversations were continuing on Wednesday, or whether some form of sale of Three Arrows’ assets by its liquidators remained possible.A person familiar with the situation confirmed that a court order in the BVI had been made on June 27 to liquidate Three Arrows.Three Arrows Capital did not respond to an emailed request for comment, while Teneo was contacted for comment.

Car insurance premiums for most popular models 'rise by £100'

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The average cost of insuring the ten most popular models of car has leapt by £100, according to analysis from a price comparison site.Comparethemarket.com said drivers typically paid a premium of £675 for their annual insurance between March and May this year – up from £575 in the same three months in 2021.
It blamed the surging value of second-hand cars and spare parts, given the supply chain disruption the global motor industry has seen that has put a severe dent in production of new vehicles too.Rising premiums add to the cost of living squeeze on family budgets, with fuel prices still hovering at record levels.If you earn less than £41,389 your take-home pay is about to go up – cost of living crisis latest

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Motoring groups have already reported that the surge in costs has forced drivers off the road as they also grapple unprecedented hikes to household gas and electricity bills along with higher food prices.
The rate of inflation is at its highest level in 40 years at 9.1% and tipped to climb higher, past 11% in the autumn according to Bank of England forecasts.

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Comparethemarket.com warned that the drivers of the most popular, often smaller, cars were facing up to the cost of motoring becoming “increasingly unaffordable”.It said, based on its own figures, that the most popular car to insure between March and May was the Ford Fiesta Zetec.”An annual premium for a Ford Fiesta Zetec now costs an average of £785 to insure – £129 more than during the same period in 2021″, the report said.The Mini Cooper and Fiat 500 Lounge were the second and third most popular models to insure respectively, it said.”A Mini Cooper typically costs £617 per year to insure, rising by £87 from 2021.”The average premium for a Fiat 500 Lounge has also increased by £57 year-on-year. Insurance for a Fiat 500 Lounge costs an average of £521 – making it the cheapest car to insure out of the ten most popular.”Comparethemarket.com director, Alex Hasty, said: “Insurers use many factors to calculate car insurance premiums, based on the individual and their driving, as well as the make and model of the vehicle.”Normally, the bigger the engine your car has, the higher the insurance premium. Alarms, immobilisers, or other built-in security features can bring down the cost of insurance by making a car more difficult to steal.”It is a good idea to shop around and see if you can get a better deal each time your policy comes up for renewal.”

Restaurant software firm Vita Mojo gets $30m Battery charge

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A developer of restaurant software which counts Gail’s, Nando’s and LEON among its clients has secured a $30m funding boost led by one of the world’s leading early-stage investors.Sky News understands that Vita Mojo, which was founded six years ago, will announce this week that it has raised the new capital in a round led by Battery Ventures.
The company enables digital ordering in restaurants and more efficient kitchen and delivery operations through its software.It argues that it can play a significant role in tackling the hospitality industry’s labour shortage crisis by reducing staff numbers in restaurants.The new funds will be used to expand into new markets and refine its product base, according to Vita Mojo, which was originally launched as a healthy restaurant chain itself before switching to become a software provider.

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“The headwinds and opportunities facing restaurants today are enormous,” Nick Popovici, Vita Mojo co-founder and chief executive, said.
“Operators are adapting to changing customer preferences around dining and ordering as well as monumental market disruptions – first the pandemic, then supply-chain disruptions and a labour shortage.

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“This has dramatically changed how restaurants operate and shrunk profit margins for those not able to adapt.”Vita Mojo’s products allow customers to personalise their in-restaurant and in-app orders by calorie counts, while it is also able to extract allergen information from restaurants’ own software.The company also works with Neat Burger and Le Pain Quotidien.Its previous fundraising, in 2018, was backed by Investec.It was unclear on Wednesday at what valuation the funds were being raised.Battery Ventures is a prominent global investor, having invested in more than 400 companies, including GetYourGuide and Glassdoor.Morad Elhafed, a general partner at Battery, and Zak Ewen, a principal at the firm, are joining Vita Mojo’s board.”Offering one platform that combines digital ordering with kitchen operations is a valuable proposition that solves the headaches of managing multiple point solutions and systems,” said Mr Elhafed.”Our experience with restaurant tech in the US makes us excited about Vita Mojo’s opportunity in Europe – and its overall mission of taking restaurants to the next level by simplifying their operations and delivering a remarkable experience for customers.”