The Daily Telegraph Thursday 1 August 2019 *** 27

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Markets Currencies

FTSE 100 Dow Jones

q

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Commodities

Gold

q

$1413.93

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Brent Crude

p

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Biggest riser

Next

6064 p

+448.00 (+7.98pc)

Biggest faller

Taylor Wimpey

161 ¾p

-14¾ (-8.35pc)

Inside

Entente

cordiale

Johnson

may flirt

with Trump,

but he and

Macron are

kindred

spirits

Ambrose

Evans-

Prithard

Apple’s

new core

The tech

giant’s

balance

has shifted

from sales

of phones

to software

and

wearable

devices

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nside

Lloyds takes further £550m PPI hit

By Lucy Burton

LLOYDS Banking Group has
suffered a further £550m
blow related to the payment
protection insurance (PPI)
scandal as the deadline for
claims looms. 
Britain’s biggest high
street bank, which has now
paid out more than £20bn
for mis-sold PPI, unveiled a
7pc drop on pre-tax profits to
£2.9bn for the first half,
following a flurry of claims,

ahead of the Aug 29 dead-

line.

George Culmer, Lloyds’

outgoing finance chief, said

it was “obviously disappoint-

ing” to be announcing an-

other rise in the bank’s PPI

bill, adding that the spike

“caught us by surprise”. 

He said that there had

been just under 200,000 so-

called information requests

• the first stage of claiming
  for PPI – every week in July
  and he would expect that to

continue throughout Au-

gust. “You are seeing it ramp

up as we speak,” he said. 

Banks have paid out more

than £36bn in PPI claims

since 2011, according to the

City watchdog. They are

estimated to have spent

almost £50bn on the scandal

including staff costs. 

Lloyds said there had been

a “significant increase” in

PPI-related calls in the past

three months, adding to its

already gigantic bill.

Next boss backs Johnson’s hardball tactics

to prepare Britain for a no-deal Brexit

By Laura Onita and Michael O’Dwyer

NEXT’S chief executive has backed
Boris Johnson’s hardball Brexit tactics
as the retailer continues to prepare for
the UK’s departure from the EU.
Lord Wolfson, who supported the
Leave campaign, said: “I think it’s very
good that we’ve got a government that
is earnestly preparing for no deal. It’s
not my preferred outcome... but I think
no one disagrees that if there is going to
be a no deal we’re better to be prepared
for it than unprepared.
“My own belief is that the readier we
are to walk away with no deal the more

likely we are to get a deal.” The high

street bellwether has a so-called Brexit

steering committee, which oversees

the retailer’s contingency plans if there

is a disorderly Brexit, including the

“administrative, legal and physical in-

frastructure” that might be required.

Next, one of the more resilient retail-

ers, was cheered by investors yester-

day after it said annual  profits will be

slightly higher than expected as sales

rose. Shares jumped 8.5pc, or 474p, to

£60.90.

Next’s full price sales were up 4pc

for the three months to the end of July.

Although retail sales declined 4.2pc,

this was better than the 8pc to 10pc

slide analysts were expecting. Online

sales soared 11.9pc, offsetting the con-

tinued decline of in-store sales.

As a result, Next  now expects full-

price sales to rise 3.6pc for the year,

more than double the previous forecast.

Aston Martin

crashes to

£78m loss as

UK sales slide

By Alan Tovey

ASTON MARTIN’s boss Andy Palmer
refused to field questions about his
future after the luxury carmaker
swung to a £78.8m loss in the first half
and the company’s shares took yet
another tumble.
The loss reverses the £20.8m profit
Aston made in the same period last
year and marks the latest blow for the
company since its disastrous flotation
at the end of last year following a shock
profit warning last week.
Shares plunged as investors digested
the results, falling as much as fifth be-
fore closing 12.3pc down at 498p.
The company’s market value has
fallen by more than £3bn since its ini-
tial public offering when the shares
were listed at £19. There is speculation
in some quarters it could now be a
takeover target or taken back into pri-
vate ownership by the investors who
sold their stakes in the flotation.
Underlining the troubles at Aston,
the boss of Rolls-Royce cars spoke out
to ease fears of a systemic issue in the
luxury car market and Aston suffered
another downgrade on its debt – the
second in two days.
Mr Palmer blamed the poor perfor-
mance on a “worsening trading envi-
ronment”, contributing to last week’s
decision to slash annual sales forecasts
from between 7,100 and 7,300 cars to
between 6,300 and 6,500.
“We are disappointed our projec-
tions for wholesales have fallen short of
our original targets impacted by weak-
ness in two of our key markets as well
as continued macroeconomic uncer-
tainty,” Mr Palmer said.
The chief executive – who received
share awards estimated at £26m in the
flotation – refused to take questions

The luxury carmaker’s

shares slump to a new

record low as its debt

suffers second downgrade

from The Daily Telegraph about Aston’s

performance and how long his position

is tenable in light of the problems the

company is facing.

The scale of Aston’s problems led

Torsten Muller-Otvos,  Rolls-Royce

Motor Cars chief executive, to say he

was “concerned” about the damage

that issues at the rival manufacturer

could do to the wider sector.

“It puts a question mark into peo-

ple’s minds about whether they should

buy a luxury car because they are wor-

ried something is wrong with the sec-

tor – that is absolutely not the case,” he

said.

“The luxury market is healthy – look at

the others in the field – Lamborghini, Fer-

rari, they are all producing good num-

bers. They are all what I would call

well-managed companies. It is absolutely

not doom and gloom for the sector.”

Revenues at Aston Martin fell 4pc to

£407.1m as the company sold fewer of

its high-priced “specials” such as the

£2m-plus Valkyrie and more of the

cheaper low-end Vantage range. The

average selling price of cars fell from

£167,000 last time round to £145,000.

Profits were also hit by a £19m provi-

sion taken by the company after a start-

up, which is believed to have bought

the designs for a discontinued model,

failed to pay off.  Rising costs as Aston

gears up for the introduction of the

DBX, the marque’s first SUV, also con-

tributed to the poor performance.

The latest dire figures raise ques-

tions about how long the company can

stagger on at its current rate before it

has to raise fresh finance.

Ben Marlow: Page 28

By Harriet Russell

TROUBLED fund manager Neil Wood-

ford is scrambling to address a breach

of regulatory limits on unquoted shares

in his equity income fund after two of

his stock picks delisted from the

Guernsey stock exchange. 

European rules mean that only 10pc

of his fund can be invested in stocks

that are not listed on or are due to be

admitted to an eligible exchange.

Benevolent AI and Industrial Heat

have chosen to delist from The lnterna-

tional Stock Exchange (TISE), meaning

Mr Woodford’s fund will breach this

limit. Usually, fund managers are

expected to correct a breach within six

months. A Woodford spokesman said:

“Following the inadvertent passive

breach, action to bring the fund back

into compliance is already under way.”

Mr Woodford suspended trading in

his flagship fund on June 3. Earlier this

week, investors were told the fund

would remain “gated” until December.

Separately St James’s Place revealed

that it would consider renewing its

relationship with Mr Woodford.

It terminated that relationship in

June when it pulled a mandate to man-

age £3.5bn of funds.

The comments came as the wealth

manager reported inflows fell from

£5.2bn to £4.4m in the six months to

June, funds under management peaked

at £109.3bn, compared to £96.6bn last

year. Shares fell more than 5pc to close

at 984p.

Lord Wolfson, the

Next chief: ‘The

readier we are to

walk away with no

deal, the more likely

we are to get a deal’

10pc

The unquoted shares limit that

European rules state must not be

exceeded by fund managers

ERIN SCOTT/REUTERS

Woodford addresses regulatory breach

as St James’s Place says it may renew link

Fed cuts rates for the first time in 11 years

By Tom Rees

THE US Federal Reserve has cut inter-

est rates for the first time since the

financial crisis as the central bank

attempts to stop the American econ-

omy succumbing to the deepening

global slowdown.

The rate-setters bowed to pressure

from Donald Trump and Wall Street to

reduce the federal funds rate – a global

benchmark for markets – by 25 basis

points to 2.25pc as the trade war dark-

ens the outlook.

Jerome Powell, the Fed chairman,

said “weak global growth, trade policy

uncertainty and muted inflation” had

prompted the major shift in policy. Its

rate-setters left the door open to fur-

ther cuts as they ended the reversal of

quantitative easing early.

Mr Powell warned that global

growth had been “disappointing”, par-

ticularly in the eurozone and China,

and simmering trade tensions had

caused businesses to be more cautious

on spending.

However, he insisted the cut was to

“insure against downside risks” and

only represents a “mid-cycle adjust-

ment to policy”.

The Fed has faced intense pressure

from the president to make a big cut to

borrowing costs to boost the US econ-

omy, but the drop in rates is modest

compared to the emergency stimulus

used to battle the crisis.

In less than a year the Fed’s policy-

makers have made a complete about-

turn, shifting from raising rates on a

quarterly basis to the first cut since

borrowing costs hit a record low of

0.25pc in December 2008. The US has

been the bright spot in the global

economy in recent years, but analysts

fear its strong run is coming to an

end  as the impact of the trade war

deadlock spreads.

Wall Street fell about 1pc after the

well-telegraphed cut as investors pared

back expectations of more stimulus.

Richard Flynn, of Charles Schwab, said

the cut “should give markets more

room to breathe” but warned the stim-

ulus will “do little to stave off the

deepening recession in global manu-

facturing and slide in earnings that

could begin to weigh on jobs”.

The European Central Bank is ex-

pected to follow suit with fresh stimu-

lus in September as a flash GDP

estimate revealed yesterday that

growth in the ailing eurozone halved in

the second quarter.

GDP rose by just 0.2pc, down from

0.4pc in the first quarter, as the global

industrial downturn brought Germany

and Italy’s economies to a standstill.

‘It will do little to stave off

the deepening recession in

global manufacturing that

could begin to weigh on jobs’

Andy Palmer, chief

executive, refused to

take questions from

The Daily Telegraph

about Aston’s

performance

Jerome Powell, chairman of the US Federal Reserve, said that ‘weak global growth, trade policy uncertainty and muted inflation’ had led to the quarter-point cut to 2.25pc

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