LONDON’S BUSINESS NEWSPAPER
THE VERDICT WE RUN THE RULE OVER BARBIE AND OPPENHEIMER P18 THURSDAY 20 JULY 2023
ISSUE 4,016
TO BROAD ACCLAIM SEAMER BECOMES FIFTH TO TAKE 600 TEST WICKETS P24
CITYAM.COM
FREE
BANK RELIEF AS INFLATION COMES IN LOW
TRADERS BET AGAINST BUMPER HIKE AT NEXT MEETING JACK BARNETT INFLATION has slimmed to its lowest level in over a year and is falling faster than expected, figures yesterday showed, raising the chances of the Bank of England slowing the breakneck pace of interest rate hikes. The rate of price growth fell to 7.9 per cent in June, down from 8.7 per cent in May, according to the Office for National Statistics (ONS). Markets expected it to fall to 8.2 per cent, while the Bank of England thought inflation would drop to 7.9 per cent. June’s figure was the lowest since March 2022 and reversed a long trend of price growth topping the Bank’s and City’s projections. Governor Andrew Bailey (pictured) will have breathed a sigh of relief at the numbers after
criticism of the Bank’s handling of price hikes. Chancellor Jeremy Hunt said: “Inflation is falling and stands at its lowest level since last March; but we aren’t complacent.” Economists have questioned whether he and Prime Minister Rishi Sunak will hit their promise of halving inflation to around five per cent by the end of the year. June’s quick inflation drop makes meeting that goal easier. Analysts cheered the data as a signal that prices in the UK may have finally turned a corner. Although down, yesterday’s inflation numbers — still the highest in the G7 — will be too hot for the Bank of England’s nine-strong Monetary Policy Committee (MPC) to tolerate, especially with wage growth r e m a i n ing high.
Traders before the release thought the MPC would repeat last month’s larger 50 basis point interest rate rise at their next meeting on 3 August and send rates to a peak of 6.25 per cent. Now a 25 basis point increase and a peak of 5.75 per cent seems to have been baked in by City traders. Scorching core and services inflation of 6.9 per cent and 7.2 per cent respectively indicate price pressures are being controlled by domestic factors, leaving the door open to a bigger rate increase next month. “While the data are encouraging at face value and mean that another 50 basis point hike at the August meeting is not a done deal, we think they still tilt the balance in favour of another [bigger] move,” analysts at BNP Paribas said. The numbers gave the FTSE 100 a welcome boost yesterday, finishing up 1.8 per cent. The more domestically focused FTSE 250 shot upward, too, by almost four per cent. Both indices are now up on the year to date.
LET BATTLE COMMENCE Tories tap Susan Hall to fight Sadiq Khan JESSICA FRANK-KEYES LONDON Tories yesterday selected a battle-hardened City Hall veteran as their candidate for next year’s mayoral election. Susan Hall, a well-known figure in London politics, will take on Sadiq Khan in the ballot, with the incumbent Mayor looking for a third term.
Hall immediately criticised Khan’s leadership of London, saying he “goes on trips while young people get stabbed on our streets” and that “he’s more interested in selling his book than he is helping Londoners with the cost of living”. Labour sources hit back, labelling Hall a ‘hard-right’ politician. £ A VICIOUS BATTLE BEGINS: P7
Goldman profit slips as bank counts cost of global dealmaking slowdown CHRIS DORRELL GOLDMAN SACHS’s profit tanked in the second quarter as the investment banking giant continued to struggle with the downturn in M&A activity while booking rising costs. Profit in the second quarter fell to $1.1bn (£0.85bn), 62 per cent lower
than last year while revenue fell eight per cent. The drop was primarily driven by a decline in Goldman’s core business areas. Investment banking fees fell 20 per cent compared to last year, with a particularly steep fall in advisory revenue. Goldman also reported a 26 per cent fall in revenue
from fixed income, an area of weakness for many banks this quarter. The fall in advisory revenue reflected “a significant decline in industry-wide completed M&A transactions,” the bank said. Chair and chief executive David Solomon (pictured) said
the results were “solid” in a time of “cyclically low activity levels”. Goldman’s operating expenses were 12 per cent higher than last year due to writedowns. The results come off the back of a
difficult start to the year for Goldman. In the first quarter, profit dropped by $2bn year-on-year due to the steep decline in dealmaking Dealmaking has stayed subdued in 2023 after 2022 was hit by inflation and geopolitical volatility. Overall global M&A value is down 44 per cent in the first five months of 2023.
INSIDE CLIFFORD CHANCE REVENUES PASS £2BN P3 WAGAMAMA DINES OUT ON SAVINGS P5 SEVERN TRUST TO INVEST £1BN P6 NOTEBOOK P12 MARKETS P14 OPINION P16-P17