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Pound gains sharply against the dollar over Brexit hopes after hammering | Business News

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Pound gains sharply against the dollar over Brexit hopes after hammering | Business News

The pound has made strong gains against the dollar over hopes of a breakthrough in Brexit talks.

A deal is imminent and could be agreed as early as Wednesday evening, a senior EU diplomat told the Reuters news agency.

Sterling has been further buoyed by France lifting a border blockade aimed at stopping the spread of a fast-spreading new COVID-19 strain, although a backlog of lorries remains, fuelling frustrations.

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Hancock outlines changes to tier system

The pound was up by nearly two cents versus the US dollar at just over $1.35.

It has also climbed a cent versus the euro to just below €1.11.

The pound had been pummelled this week as countries around the world imposed travel bans against the UK to combat the new coronavirus variant, along with the imposition of tougher domestic coronavirus restrictions.

“The market is anticipating that a deal will be agreed in the next day or two,” said MUG strategist Lee Hardman, adding
sterling could strengthen to $1.36/$1.37.

He said, however, traders would be keen to see details of any agreement, given the expectation is the initial deal
will be a bare bones one with specifics still to be thrashed out in 2021.

He added: “The best case scenario for the pound would be if we also see details released form the EU and UK side of things alongside the deal to try and reduce the initial disruption when we shift to a new trading arrangement.”

Eurasia Group managing director Mujtaba Rahman told clients: “On process, the commission is very keen to strike a deal by tomorrow evening at the latest, as it fears it will otherwise be difficult to even provisionally apply a deal for 1 January.”

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Meanwhile, the Confederation of British Industry has warned that even more businesses face “insurmountable pressure”, following the announcement that more areas would be moved into the toughest Tier 4 to try and curb the growing number of coronavirus cases.

CBI deputy director-general Josh Hardie said: “The rapid rise in infections is alarming so it’s only right the Government is taking measures to bring the number of cases down to protect public health.

“However, with more areas moving into higher tiers even more businesses face insurmountable pressure after such a tough year.

“While some retailers and entertainment venues have already taken precautionary measures by deciding to close, many others will lose out from one of the busiest periods of the year which brings in billions of pounds.

“Tighter COVID restrictions have already been a huge setback for firms and this will be felt even more by those who have now spent much of the year under them.

“The extension of government-backed business loans and the furlough scheme will provide some certainty and respite for those under new tiers.

“But the government should revisit support in January to ensure businesses across the UK make it through beyond Spring.

“Efforts to speed up mass rapid testing and vaccine rollout will help reopen the economy safely, but it is clear challenges will continue well into next year.”

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Daisy tycoon Riley in bid approach to rival Maintel | Business News

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Daisy tycoon Riley in bid approach to rival Maintel | Business News

One of Britain’s most successful telecoms entrepreneurs has approached a listed cloud services rival about a potential takeover.

Sky News has learnt that Daisy Group, which is run by Matthew Riley, has lodged a preliminary 450p-a-share offer for Maintel Holdings, which is quoted on London’s junior AIM stock market.

City sources said the approach had been made by Daisy earlier this month, valuing Maintel at close to £70m.

Maintel provides managed cloud and IT services to corporate customers, including a number of public sector clients such as NHS hospital trusts.

The company said in results last September that it had had a “challenging” first half because of the coronavirus crisis, but added that it had “played a key role during the pandemic to date in ensuring that hospitals, care homes, local authorities and other key front-line services have been able to function to maximum potential”.

“We have also enabled hundreds of thousands of UK office workers to transition smoothly and efficiently to home working.”

One analyst said the business would be a natural fit with Daisy’s core operations.

If he succeeds with an offer, it would be the latest in a string of takeovers and disposals overseen by Mr Riley.

He recently sold a minority stake in Daisy’s Digital Wholesale Solutions arm to the private equity firm Inflexion in a deal valuing it at £1bn.

Maintel shares were trading on Friday morning at about 393p, giving it a market capitalisation of £55m.

Daisy declined to comment, while neither Maintel not its advisers at Finncap could be reached for comment.

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David and Victoria Beckham pay themselves £21m in dividends over two years | Business News

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Motor enthusiast David Beckham has a substantial fleet of cars in the UK and LA

David and Victoria Beckham have paid themselves £21m in dividends from their businesses over the last two years.

The accounts filed with Companies House showed that a £14.5m dividend was paid to the famous couple in 2019, up from £11.1m in 2018, with a further £7.1m in 2020.

The most recent amount went to the Beckhams after they bought the 33% stake in David Beckham Ventures Limited that had been owned by XIX Entertainment – a media group run by music mogul Simon Fuller.

Image:
The ex-footballer’s global brand rights are managed by David Beckham Ventures Limited

Pre-tax profits at the company, which manages the former footballer’s global brand rights, dropped to £11.3m in 2019, from £14.8m the year before.

The decline was due to charitable donations made to UNICEF, currency fluctuations, and increasing staff numbers.

Mrs Beckham’s fashion business, meanwhile, saw pre-tax losses grow from £12.5m in 2018 to £16.6m in 2019.

Victoria Beckham Holdings Limited, which is owned by Beckham Brand Holdings, XIX Entertainment and private equity firm NEO investment Partners, launched a cost-cutting programme last September.

Also last year, the group said it had breached the financial covenants of a loan with HSBC, which led to shareholders injecting £9.2m to settle the debt.

Sales at the fashion label increased £2.5m to £38.3m in 2019, but it continued to lose money and did not pay a dividend.

Fashion designer, model and singer Victoria Beckham poses on the red carpet as she arrives for the opening ceremony and the screening of the film "Cafe Society" out of competition during the 69th Cannes Film Festival in Cannes
Image:
Victoria Beckham owns her own fashion label

The accounts said: “Directors continue to focus on taking the company to break even.

“Since the year end, the COVID-19 pandemic has impacted trading, with stores carrying the company’s products subject to varying lockdown restrictions.

“This led to a substantial closure of the group’s stores during 2020 (late March to end May, November, late December onwards) and a resulting impact on revenues.

“Over this period the company’s ecommerce operations saw positive year-on-year growth.”

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Virus lockdown and Brexit bureaucracy hit UK economy – PMI | Business News

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Virus lockdown and Brexit bureaucracy hit UK economy - PMI | Business News

Business activity saw its sharpest drop in the UK since May, according to a closely-watched survey.

The preliminary IHS Markit/CIPS Flash UK composite purchasing managers’ index (PMI) fell to a reading of 40.6 in January, down from 50.4 in December.

Anything below 50 signals a contraction and the flash survey covers around 75-80% of the total survey.

The survey blamed the latest shutdown brought in by the government to limit the spread of the coronavirus and the post-Brexit shift to a more bureaucratic trading arrangement with the European Union.

Chris Williamson, chief business economist at IHS Markit, said: “Services have once again been especially hard hit, but manufacturing has seen growth almost stall, blamed on a cocktail of COVID-19 and Brexit, which has led to increasingly widespread supply delays, rising costs and falling exports.”

The pace of job losses accelerated in January, despite an easing in December.

It comes as the number of UK deaths from COVID-19 nears 100,000 – the highest in Europe and the fifth-highest in the world after the US, Brazil, India and Mexico.

But, with the vaccine programme continuing to expand, there are hopes for an economic rebound later this year, with the number of companies feeling optimistic about the year ahead hitting a 6.5-year high.

The PMI for the services industry, which accounts for 80% of Britain’s economy, fell to 38.8 in January from 49.4 in December, its lowest level since May and the third month of contraction.

The manufacturing PMI fell to 52.9 in January from 57.5 in December.

Ruth Gregory, senior UK economist at Capital Economics, said the drop in the composite flash PMI was “far larger than the consensus forecast”.

On a more positive note, the manufacturing PMI “only” dropped from 57.5 in December to 52.9, and a third of that decline was due to the “stocks of purchases” balance falling to a more normal level.

“Admittedly, the PMI received a boost due to the lengthening of suppliers’ delivery times, caused by Brexit supply chain disruptions and COVID-19 border closures. Longer delivery times are usually associated with strong demand and raise the headline index.

“But the output balance remained above the 50 no-change mark.

“Overall, the composite PMI points to a fall in GDP in January of about 5% month-on-month. That would be much bigger than November’s 2.6% month-on-month fall in GDP, but at least it would be mild in the context of the 18.8% m/m decline seen during the first lockdown in April 2020.”

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