BUSINESS LIVE: Bharti to buy major BT stake; FTSE 100 CEO pay soars; Heathrow boosted by

(PA) – Catherine Mann, a rate setter at the Bank of England, has said the UK should not be “seduced” into thinking inflation will stay low over the coming year.

Ms Mann, an external member of the Bank’s Monetary Policy Committee (MPC), said she is concerned that inflation could rise again soon, despite the main measure falling to the Bank’s 2% target earlier this year.

Speaking to the Financial Times newspaper, Ms Mann pointed to survey evidence that suggests companies expect to increase wages and prices.

She said that indicates that she and other rate setters are “looking at a problem for next year.”

At the start of August, the Bank cut the base interest rate to 5%, a quarter point drop, after a year of high rates designed to curb inflation.

But it signalled a cautious tone on further cuts, and many economists believe rates will be kept unchanged when the committee next meets in September.

Ms Mann, a former OECD chief economist, was one of four policymakers who voted to leave rates unchanged at the last meeting, at 5.25%, a 16-year high.

“Inflation has come down but… we shouldn’t be seduced by headline inflation because of the role of energy and external aspects working through,” she said.

Heathrow Airport has blamed a policy brought in under the previous Conservative government for a ‘devastating’ decline in passenger numbers

Britain’s busiest airport reported a 90,000 drop in passengers on routes included in a £10 per person electronic travel authorisation (ETA) system, which was introduced in 2023.

India’s Bharti Enterprises has agreed to purchase a 24.5 per cent holding in BT from  the telecoms firm’s largest shareholder, Altice UK.

The Indian conglomerate’s international investment arm, Bharti Global, has struck a deal to buy 10 per cent of BT’s shares immediately and a further 14.5 per cent stake upon ‘receipt of applicable regulatory clearances’.

Bharti told shareholders on Monday it has no plans to fully acquire the company and would support BT’s executive team and strategy, including its plans to spread 5G technology across the UK.

Susanah Streeter, head of money and markets, Hargreaves Lansdown:

‘BT is the biggest riser in early trade, leaping by more than 6% as it emerged that India’s Bharti Global will buy a big chunk of the business. It will acquire a 24.5% stake, from Altice UK, with almost 10% being transferred immediately.

‘This is a confidence boosting move, with Bharti Global clearly confident that there is long-term untapped value in the group.

‘It clearly sees great potential in Openreach, which is responsible for maintaining and building out the new fibre networks. It hopes to reach 25mn premises by 2026 and looks well on track to do that.

‘It’s also likely to have been encouraged by indications that the cost of building 5G infrastructure may have peaked, and once new customers are moved over to the new networks, there is the potential for lower running costs.’

London-listed stocks are tracking global gains this morning, after rounding off a turbulent week with declines, weith resources-linked stocks and strength in BT Group providing further support.

Most sub-sectors are trading upwards, with personal goods rising 1.5 per cent and leading gains, pulled up by a 1.6 per cent gain in top player Burberry.

Construction and materials are the only exception, falling 0.4 per cent and weighed down by landscaping and roofing products supplier Marshalls that fell 3.5 per cent after a 19 per cent slump in its half-yearly profit.

On the data front, investors are awaiting the US consumer price index data due on Wednesday to gauge the Federal Reserve’s stance on interest rate cuts in September.

Also due this week are inflation figures and gross domestic product data out of the UK, as investors anticipate the Bank of England’s next rate cut.

Among individual stocks, BT Group has jumped 6.3 per cent after India’s Bharti Enterprises said it would acquire a 24.5 per cent stake in the telecom giant for about £3.2billion, buying out its top shareholder.

Profits at Stagecoach have roared back as passengers return to buses – but the over-60s have stayed away despite their free travel perks.

Britain’s biggest bus and coach operator has benefited from Government-backed schemes to encourage post-pandemic public transport use, such as free travel for under-22s in Scotland.

A UK-wide £2 fare cap was also introduced in January 2023 to help those struggling with the cost-of-living crisis and extended until the end of this year.

Catherine Mann, an external member of the Bank of England’s Monetary Policy Committee, has warned that goods and services prices are set to rise again and wage pressures in the economy could take years to dissipate.

Mann voted against this month’s cut in interest rates and said in a Financial Times podcast that she put her hawkishness at 7 out of 10, down from 10 out of 10 earlier this year when she voted to raise rates further from their 16-year high of 5.25 per cent.

‘There is an upwards ratchet to both the wage setting process and the price process and it may well be structural, having been created during this period of very high inflation over the last couple of years,’ she said.

‘That ratchet up will take a long time to erode away,’ she added.

CPI returned to the BoE’s 2 per cent target in May but data this week is likely to show it rose back above it to 2.3 per cent, and the BoE has forecast it will reach about 2.75 per cent later this year as the effect of last year’s fall in energy prices fades.

Mann said she saw upward pressure on wages from the fact that wages had risen fastest for the lowest paid, compressing pay scales and creating a potential demand over the coming years from better-paid workers to restore the earnings premium they previously enjoyed.

Richard Hunter, head of markets at Interactive Investor:

‘For the premier index, a decent opening was marked by some welcome strength in the beleaguered shares of Diageo after a rare broker upgrade.

‘The shares have fallen by 27% over the last year following weakness in its Latin American operations and some evidence of consumers dialling down from the premium drink offerings.

‘The standout performer, though, was BT, whose shares added more than 6% at the open following the announcement that Bharti Global had agreed to acquire a 24.5% stake in the company, adding to BT’s hike of 15% over the last year.

‘On the flipside, a broker downgrade left JD Sports in the red at the open, although the share price move did little to upset a run which has seen the price rise by 21% over the last six months.

‘The FTSE100 has now added 6.3% in the year to date, and is still on alert as a stable haven investment destination should volatility persist elsewhere.

‘The economic theme will also continue in the UK, with the release later in the week of both unemployment and inflation data.

‘The recent rate cut from the Bank of England is not expected to be repeated this year, and the numbers will add some focus as to whether the reduction was appropriate at this point.

‘The more recent market volatility has shaved some of the gains seen over recent weeks for the FTSE250, although the index is still up by 5% so far this year.’

Heathrow airport is hoping to achieve a record 8 million passengers in a single month, after traveller numbers were boosted by the summer holidays and Paris Olympics.

Passenger numbers were up 4.2 per cent year-on-year in July, bringing Britain’s biggest airport just 20,000 passengers short off the 8 million milestone.

Heathrow CEO Thomas Woldbye said:

‘Team GB’s performance in Paris has been an inspiration to the nation and to Team Heathrow.

‘In July, we were smashing a passenger record almost every single day and we’re chasing down our never before seen goal of serving 8 million passengers in a single month.

‘I’m proud that although there were a few potential challenges which could have caused us to stumble, our team remained focused on the prize of making every journey better and delivered a medal-winning start to the summer getaway.’

Top City bosses scooped pay packets worth £4.2m on average last year as FTSE 100 CEO wages soared to a record high.

Analysis shows that average chief executive pay at the biggest London-listed companies jumped 2.2 per cent in 2023.

And it is set to rise even further this year after top brass at major firms bagged huge raises.

India’s Bharti Enterprises is set to acquire a 24.5 per cent stake in BT, buying out telecoms giant Patrick Drahi as the group’s top shareholder.

Bharti said the £3.2billion deal not indicate an intention of making an offer to acquire the whole of BT, which Drahi first bought into in 2021.

The Indian company said it would acquire an initial 9.99 per cent stake before seeking to acquire the remaining 14.51 per cent following regulatory approvals, including voluntarily applying for clearance under the UK National Security and Investment Act.

BT’s shares have risen by 24 per cent in the last six months, as the fruits of its long-term investment plan to build the country’s fibre network start to materialise.

BT boss Allison Kirkby said: ‘We welcome investors who recognise the long-term value of our business, and this scale of investment from Bharti Global is a great vote of confidence in the future of BT Group and our strategy.

‘BT has enjoyed a long association with Bharti Enterprises, and I’m pleased that they share our ambition and vision for the future of our business.

‘They have a strong track record of success in the sector, and I look forward to ongoing and positive engagement with them in the months and years to come.’