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- FTSE 100 down 21 points at 7,657.
- Nationwide (LON:NBS) to buy Virgin Money (LON:VMUK).
- Aviva (LON:AV) hits profit targets.
UK could face £60 billion fiscal black hole, Citi analysts warn
Britain’s growth projections could be overly optimistic for the year ahead as the likes of supply shocks are left unaccounted for, analysts have said.
Though the Office for Budget Responsibility forecast UK gross domestic product (GDP) to climb by 0.8% for the year, Citi analysts said on Tuesday that a more realistic figure would be around 5%.
Indeed, Citi noted the 8% forecast would see UK GDP grow far quicker than has been seen so far since the pandemic.
“We think post-Covid fiscal headwinds are only just beginning,” the bank said in a note, as it warned further “supply shocks” were likely in the future.
According to the bank, the OBR’s fiscal spending forecast is short by about £30 billion to £35 billion, while cuts unveiled in Wednesday’s budget are also likely “undeliverable”.
The government will have to spend in the region of £20 billion to £25 billion extra than is planned therefore, the bank said, taking the UK’s so-called fiscal black hole to between £50 billion and £60 billion.
Harbour Energy results muted as windfall tax, lower prices weigh
Harbour Energy (LON:HBR) PLC has unveiled a 76% drop in full-year pre-tax profit, as the effects of lower oil and gas prices weighed on the company.
Pre-tax profit fell to US$0.6 billion (£0.47 billion) from US$2.5 billion over the year, Harbour said on Thursday, on the back of a 31% drop in revenue to US$3.7 billion.
This reflected lower wholesale gas prices and a decrease in production, according to the company.
After-tax, profit sat at US$32 million, compared to US$8 million last year, largely as a result of the company paying an effective tax rate of 95%, in part driven by the UK’s windfall tax on oil and gas firms.
Harbour also updated on its planned US$11.2 billion acquisition of Wintershall Dea's upstream assets in the likes of Norway, Germany, Argentina and Mexico.
“Significant progress has been made on the various approvals and workstreams required for completion” since the proposal was announced in December, Harbour said.
“We remain focused on the successful completion of the Wintershall Dea [..] are excited about our future,” chief executive Linda Z Cook commented.
Admiral sees return of motor insurance customers
Admiral has revealed a resurgence in motor insurance customers over the second half of the year, helping to bump up group profits.
Some 180,000 signed up for motor insurance with Admiral over the latter part of the year, taking such customers to a flat 4.94 million year on year, after higher prices drove people away earlier on.
Motor insurance profit jumped by 13% to £593 million as a result, with Hargreaves Lansdown (LON:HRGV) analysts saying Admiral was now “starting to reap the rewards” of hiking prices before rivals as inflation soared.
Total group profit climbed 23% to £442.8 million, as overall customer numbers jumped 6% to 9.73 million.
This was on the back of a 31% increase in revenue to £4.81 billion, with Admiral suggesting significant price increases over the last year would feed through in 2024.
“Despite global uncertainties, our outlook is positive, benefitting from improved market conditions and a strengthened position, thanks to the discipline we maintained in the last year,” chief executive Milena Mondini de Focatiis commented.
Admiral declared a final dividend of 52p, taking the total 103p for the year, down on the 112p set in 2022.