The new low-cost long-haul Norwegian airline Norse Atlantic Airways has announced plans to fly between Europe and the US from early 2022, as it aims to fill the gap in budget transatlantic air travel left by Norwegian’s departure from long-haul routes.

Norse, which was formed in March by Norwegian airline industry veterans, will initially fly from Oslo, London and Paris to New York, Los Angeles and Fort Lauderdale.

The carrier’s chief executive, Bjørn Tore Larsen, said the airline intended to be flying its entire fleet of 15 Boeing 787 Dreamliners – featuring Viking-inspired branding – by summer 2022.

The airline plans to start recruiting pilots and aircrew at the end of 2021, and expects to have about 1,600 staff by next summer, all of whom will be directly employed.

The world’s major economies have seen their rapid recovery after easing Covid restrictions begin to run out of steam in the last month as a resurgence in the virus depressed consumer spending, according to the Organisation for Economic Cooperation and Development.

There are signs that the recovery in the US and Japan is losing momentum, the OECD said, while parts of Europe and China have slowed as consumers remain reluctant to eat out, visit attractions and shop as they did before the pandemic.

The Paris-based organisation said data supplied by its 38 member countries showed that most major economies had passed their 2021 peak levels of growth and while they were still expanding, it was at a slower pace.

Just in: Private equity firm Carlyle has declared that its offer for UK inhaler maker Vectura is final.

That means that the takeover tussle with cigarette firm Philip Morris will not go to a five-day auction process tomorrow, as had been expected.

Instead, Vectura shareholders must now choose between Carlyle’s £958m offer at 155p per share, and PMI’s higher offer at 165p, which values the company at around £1bn.

In a statement released after the London stock market closed, Carlyle said that it considers its offer to be “full and fair”. So the offer will not be improved, and is now final.

As a result, the proposed auction procedures laid out by the Takeover Panel yesterday will not be implemented.

Carlyle add that it believes its offer is in Vectura’s best interests -- rather than being owned by a tobacco company.

It is encouraging shareholders to consider the “broader context” and the impact of each offer on the company and its wider stakeholders when choosing which offer to support [as health experts have warned that Vectura could be blocked from taking part in research programmes with universities if it is bought by PMI].

Carlyle’s statement explains:

Carlyle Bidco has always made it clear that it believed its offer provided a full and fair value as well as wider benefits to Vectura and its broader stakeholders. Carlyle Bidco remains fully supportive of Vectura’s existing strategy to build an independent leading CDMO with genuine global reach, credibility and involvement in the market for inhaled and respiratory medicines and devices.

Carlyle Bidco believes that partnering with Carlyle would offer significant opportunity to Vectura’s many employees (particularly Vectura’s leading scientists), suppliers, customers and research partners.

In particular, it would allow the Company and its employees to continue to participate in key scientific forums and would provide the resources Vectura needs to accelerate its strategy and to continue its vital work helping patients suffering from respiratory illness.

Simon Dingemans, a managing director in Carlyle’s European buyout advisory group, said:

“Carlyle believes its offer is in the best interests of the business and its stakeholders, including its employees, partners and customers, as well as, most importantly, the patients it serves and helps to provide with effective and accessible medicines.”

Back in London, the FTSE 250 index of medium-sized companies has hit a new record high too.

The domestically-focused FTSE 250 is up 125 points in late trading at 23578, a gain of around 0.5%.

Top risers include engineering firm Babcock (+6.7%) after JP Morgan lifted its price target, outsourcer Capita (+5.8%) which reported a return to profit last week, and outsourced office group IWG (+3.6%) after reporting a pick-up in demand this morning.

Today’s ZEW survey also showed that investors are less worried about rising prices in the eurozone, with inflation expectations dipping.

Guy Foster, chief strategist at wealth manager Brewin Dolphin, says that general concerns about inflation appear to be diminishing, partly thanks to the recent drop in energy prices:

• “Very unusually short term inflation expectations have been running above medium term inflation expectations for the past nine months.
• “Inflation expectations look to have eased with two year breakevens dipping below five year breakevens.
• “It is encouraging to see some normality beginning to creep back into the front of the inflation curve.
• “That said a lot of this is just has to do with the falling oil price. There is very little to suggest that the global supply chains are becoming looser.
• “If anything the prospect of lockdowns returning to China mean supply chain issues could worsen
• “But the falling oil price is a major disinflationary force in the US and that should make the pace of price gains more sustainable while we wait for supply chains to start flowing once again.”

The pound has hit its highest level against the euro since the early days of the pandemic, following the drop in German investor morale.

Sterling has risen 0.25% to €1.1825, its highest since late February 2020, as the weaker-than-expected ZEW survey weight on the euro.

Craig Erlam of OANDA says the ZEW survey has knocked the euro:

Current conditions remain strong but it would appear that concerns around slowing Chinese growth and the anticipated next wave of Covid is responsible for the downbeat expectations, despite high vaccination numbers. Not to mention the belief that growth will be softer due to the level already achieved.

As you can see from the numbers, this survey can be volatile which may explain why the euro has only seen a modest dip, albeit enough to make it an underperformer on the day.

The pound has been climbing against the euro since the end of lockdown restrictions in England in late July. That’s due to hopes for the UK recovery.... and the European Central Bank’s pledge to keep interest rates at record lows until the recovery is secure.

The single currency has also dropped against the US dollar today to $1.172, the lowest since early April.

Recent strong US data has boosted the dollar, as it could prompt the US Federal Reserve to ease back on its stimulus programme.

Currency expert Kit Juckes of Société Générale says:

We’ve had soft ZEW data that just keep the pressure on the euro, after yesterday’s strong JOLTS [showing record US job openings].

Confidence among German investors has fallen to its lowest level since last year, amid worries that rising COVID-19 infections or a slowdown in China could hurt the recovery.

The ZEW economic research institute said its survey of investors’ economic expectations for Germany fell for the third month running in August.

It tumbled to 40.4 points, from 63.3 points in July. That’s its lowest level since last November, and a bigger drop than expected (a Reuters poll had forecast a fall to 56.7).

A measure of current conditions in Europe’s largest economy improved, up 7.4 points to 29.3.

But ZEW President Achim Wambach warned that pandemic concerns are rising, and could hold back the recovery.

Expectations have declined for the third time in a row. This points to increasing risks for the German economy, such as from a possible fourth COVID-19 wave starting in autumn or a slowdown in growth in China.

The clear improvement in the assessment of the economic situation, which has been ongoing for months, shows that expectations are also weakening due to the higher growth already achieved.

Here’s some reaction:

InterContinental Hotel Group has also announced it will launch a new brand targeting the luxury leisure market in the coming weeks.

IWG (whose brands include Holiday Inn, business-focused Crowne Plaza, and luxury brands like Kimpton and Regent) hopes to attract independent hoteliers to sign up to this new Luxury & Lifestyle collection brand.

CEO Keith Barr said:

The addition of a collection brand will provide high quality independent hotels access to the many benefits of IHG’s system, whilst retaining a property’s distinctive identity.

There are currently around 1.5 million independently run rooms in the market segments we are targeting, and we expect the collection to attract more than 100 hotels within 10 years.

The move suggests that IHG may anticipate that richer travelers will drive the recovery in the sector, as AJ Bell’s Danni Hewson explains:

“InterContinental’s plans to launch a new luxury brand coming out of the pandemic suggest it reckons regular foreign travel might be dominated by wealthier holidaymakers in the future amid the extra costs and complexity of jetting overseas.

“InterContinental’s model should in theory leave it well positioned to rebound as the economy recovers, given it does not have lots of capital tied up in owning hotels. Instead operating an asset-light model with most of its premises managed on a franchise basis.

“With many independent hoteliers facing severe Covid-related pressures InterContinental has been able to sign them up to its brands.

“However, InterContinental’s franchise model does arguably give it less control over the pace of growth with its hotel estate expanding much more slowly than that of rivals like Marriott and Hilton in the first half of the year.

US small business owners grew less optimistic about the recovery last month, amid supply chain disruptions and a struggle to find workers.

That’s according to the National Federation of Independent Business, whose Small Business Optimism Index dropped by 2.8 points in July to 99.7, from June’s 102.5.

The survey found that expectations for business conditions and future sales dipped, while labor shortages remained acute.

NFIB chief economist Bill Dunkelberg said:

“Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation.”

Dunkelberg added that:

As owners look for qualified workers, they are also reporting that supply chain disruptions are having an impact on their businesses.

Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains.”

Around 49% of US company owners reported job openings that couldn’t be filled, an increase of three points from June and a 48-year record high.

Yesterday, the JOLTS survey showed that job openings hit record levels in June, over 10m. Those vacancies are encouraging firms to raise wages to attract staff, with some workers quitting jobs to take up a better offer.

NFIB’s survey also shows that inflation pressures remain -- 44% plan to increase prices in the next three months, which was unchanged from June’s record high reading.

The battle for Vectura between a tobacco company and a private equity firm shouldn’t simply come down to price.

Our financial editor Nils Pratley argues that the company must heed the concerns of health experts. Once the auction battle between Philip Morris and Carlyle is over, Vectura can still say which offer is best, not simply the highest.

Nils writes:

The amusing line in the unfunny saga of a tobacco giant trying to buy a company that develops inhalers to treat lung diseases came last Friday when the board of Vectura, the target, switched its allegiance from Philip Morris to the rival bidder, the private equity firm Carlyle. The directors said it wasn’t only Carlyle’s higher offer they liked. They also noted “the reported uncertainties” for Vectura’s stakeholders if the Marlboro men were to win.

Those reports – everything from fury on the part of medical groups to threats to Vectura employees’ membership of scientific bodies – were entirely predictable. But, it seems, the board had failed until that point to spot the problem in a healthcare company accepting Big Tobacco’s dollar. Up until then the directors were prepared to swallow Philip Morris’s pitch that it wants to be a “wellness” company and will quit the fags one day, honest.

Vectura’s recommendation is temporarily redundant because Philip Morris chucked a higher bid, just over £1bn, on the table on Sunday and the Takeover Panel has now ordered that a five-day auction be run to determine best offers.

But a formal auction is not an excuse for Vectura’s board to retire to the labs, or even the bike sheds. At the end of the process it is still allowed to say which offer is best for the company. Exercising a “fiduciary” duty involves more than simply saying a bid of 165p-a-share beats one at 155p. The wider picture – the fluffy stakeholder stuff belatedly acknowledged from the boardroom – matters.

Carlyle is not the embodiment of saintliness, it should be said. In different circumstances, it probably wouldn’t be shy about doing deals with tobacco firms itself. But it looks a better owner of Vectura than Philip Morris for many reasons – experience in healthcare investment, or the presence of Simon Dingemans, a former finance director of GlaxoSmithKline, as its lead figure in the offer.

Vectura’s board can’t undermine the auction at this stage, but, once the bidding is over, the board should return to the principle it finally stumbled upon last Friday: healthcare and cigarettes do not belong together.

The battle for UK asthma treatment maker Vectura has taken another twist this morning.

Cigarette maker Philip Morris International has switched its bid for Vectura Group into a a takeover offer, which means it needs a lower level of shareholder support to win the battle against private equity firm Carlyle.

PMI now needs a majority of investors to back its £1bn offer - previously it had proposed a “scheme of arrangement”, which requires the support of shareholders owning 75% of voting rights.

Over the weekend, PMI raised its offer for inhaler maker Vectura to 165p per share, having seen its initial 150p offer trumped on Friday by Carlyle’s 155p bid (which Vectura had supported, before PMI upped its bid).

The two rival bidders will enter an five-day auction process tomorrow, unless final bids have landed before 5pm today. Shares in Vectura have nudged up to 174p this morning.

And health charities and anti-smoking campaigners are concerned that a cigarette maker could take control of Vectura, as my colleague Rob Davies reports:

Malcolm Clark, senior cancer prevention policy manager at Cancer Research UK, said: “It’s clear there’s more at stake in the outcome of this deal than the share price. It’s unethical for big tobacco to be allowed to profit from treating diseases made far more prevalent because of its products.”

Sarah Woolnough, chief executive of Asthma UK and the British Lung Foundation, said: “Every year in the UK, 90,000 people die from conditions such as chronic obstructive pulmonary disease (COPD), which are linked to smoking.

“It is unacceptable that companies that have profited from the devastation smoking causes could then make even more money providing treatments for the illnesses they have caused.”

Vectura is a specialist in inhaled medicines, including devices for the treatment of asthma, a condition that can be worsened by smoking.

Inquiries for office space bounced back to pre-Covid levels in the second quarter, according to IWG, as the world’s biggest workspace provider benefitted from the boom in demand for hybrid working solutions, my colleague Mark Sweney reports.

The company, formerly known as Regus, added a record 900 new clients in the first half and experienced a “very strong recovery” in meeting room and day office usage in the second quarter as the company begins to see a recovery from the pandemic.

Revenues from the hiring of meeting rooms and day offices surged 40% between the first and second quarters this year, as lockdowns came to an end and businesses adopt new hybrid working patterns, in which employees split the week between their home and an office desk not necessarily inside their corporate headquarters.

Here’s the full story:

Betting company Flutter is topping the FTSE 100 risers, after predicting its US operations will reach profitability in 2023.

Flutter are up 8% this morning, after saying it expects positive EBITDA at its US arm in two years time, where some states have legalised gaming and sports betting [that’s earnings before interest, taxes, depreciation, and amortization].

The company (which owns Paddy Power and Betfair) says it saw “a very strong” first half of 2021; overall adjusted group revenues rose 30% year-on-year with average monthly customers up 40%.

Its FanDuel fantasy sports and online betting operation posted revenue growth of 159% to £652m, as the lucrative US market opens up after the Supreme Court overturned a federal law that barred gambling on football, basketball, baseball and other sports in most states in 2018.

Flutter reports that it continues to grow its US customer base rapidly:

In the last 12 months to 30 June, FanDuel acquired 1.7 million new sportsbook and gaming customers, equating to over three times the total existing base acquired up to that point.

CEO Peter Jackson says Flutter is strengthening its leadership position in the US:

In the US, we remain the number 1 online sports betting operator by some distance thanks to the quality of our products and the extensive reach of the FanDuel brand. The customer economics we are seeing in the US bode very well for the future, with early FanDuel customers generating positive payback within the first 12 months of acquisition.

We remain absolutely focused on extending our sports product advantages and replicating our market share success in further states as they regulate. In gaming we see an opportunity to grow our market share and look forward to further enhancing our product offering in the coming months.

Flutter also flags up that its priority in the US is winning more customers (so as more states legalise gambling, its costs go up...)

We remain entirely focused on growing the embedded value of the business by acquiring as many customers as we can for as long as we can generate attractive returns on that investment.

It is important to note that our projection assumes that none of California, Florida or Texas launch online sports betting/gaming before 2024. Should one of these large states regulate sooner, our level of investment in new player acquisition would be higher and profitability could therefore be delayed.

UK housebuilder Bellway is also benefitting from the recovery, but expects to set aside more money to fix legacy fire safety problems at some of its developments.

Bellway says it completed 10,138 homes in the year to 31 July, nearly 35% more than in 2020 (when it built 7,522) and close to the 10,892 completions in 2019, before the pandemic.

It also saw a “strong recovery in housing revenue”, up 41% to over £3.1bn, and only 2.5% below the level achieved in the 2019 financial year.

Its order book has risen almost 15% to a record level at £2.022bn, or 7,082 homes.

Looking ahead, Bellway says there are “wider economic uncertainties because of Brexit and the continuing pandemic”, but customer confidence is strong, and the UK’s vaccination programme is supporting the economy.

It also flags up that there are “intermittent labour shortages across the sector” as some of its staff, subcontractors and suppliers are told to self-isolate to curtail the spread of COVID-19.

Bellway also says it “anticipates a further net legacy building safety expense in the second half of the financial year”, to fix cladding issues following the Grenfell Tower disaster four years ago.

It has previously set aside almost £132m to pay for fire safety improvements since 2017, and will give more details in its preliminary results in October.

The company says it is working with home owners and warranty providers to determine whether the combination of materials used in the construction of whole wall systems adequately prevents the spread of fire.

Bellway explains:

This is a complex area where cost estimates are subject to change as on-site works progress and further investigative works are undertaken, or, if the scope of Government legislation further widens.

Bellway continues to actively pursue recoveries from suppliers, subcontractors, and professional advisors where they have fallen short of the standards required.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Demand for hotels and office space is picking up as economies reopen from pandemic lockdowns, according to two companies this morning... but worries over the delta variant continue to weigh on markets.

InterContinental Hotels Group (IHG) has reported a significant improvement in demand over the first half of 2021, with revenue per room (RevPAR, a key measure) up 20% on 2020.

IHG, which owns Holiday Inns, is seeing the strongest recovery in China and the US, helping it to make an operating profit of $138m for the six months to June 30th, up from a loss of $233m.

IHG is also seeing a bounceback in business travel as well.

And while Europe is lagged in H1, IHG says business has picked up in recent weeks as the easing of lockdown restrictions sees families take holidays again.

Keith Barr, chief executive officer for IHG Hotels & Resorts, explains:

“Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds.

It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China.

Essential business travel was a key element of our resilience throughout the pandemic, and we are now seeing more group activity and corporate bookings start to come back. These trends and the momentum in the business have continued in recent weeks, including in EMEAA where a lifting of travel restrictions in some markets is also now driving improvements in demand. With occupancy and rate continuing to improve, nearly 50% of our hotels achieved RevPAR above 2019 levels in July.

However, IHG will not be paying an interim dividend for 2021 - a reminder that conditions are not back to normal as trading is rather lower than in 2019.

IWG, the serviced offices firm, says it’s seeing signs of recovery after posting a loss in the first half of the year, with revenues down 15% year-on-year in January-June.

IWG, which owns the Spaces and Regus brands, says it’s saw a “strong occupancy recovery” in the second quarter in its major markets, and anticipates “future top-line recovery” thanks to the growth of hybrid working and new customer wins.

The company - a rival to WeWork - says enquiries and customer retention rates have returned to pre-COVID-19 levels in Q2, reporting:

• Very strong recovery in meeting room and day office usage in Q2 with revenue up 39.9% on Q1 2021
• Month-on-month improvement in EBITDA during Q2
• US showing the strongest recovery; June was a record month for space sold

It has reported a pre-tax loss from continuing operations of £162.7m for the first half, compared with a loss of £237.3m for the first half of 2020.

But IWG warns that the pace of recovery dependent on continued easing of pandemic restrictions.

Mark Dixon, Chief Executive of IWG plc, says the firm has “cautious optimism” about the second half of the year, and expects a stronger recovery in 2022.

“The month-on-month improvements in our key operating metrics as we came into the summer months are encouraging and we anticipate this momentum continuing into the second half of 2021.

The significant move to hybrid working has created unprecedented demand for our flexible work products. This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices.

The markets remain a little subdued, with worries over the spread of the Delta variant of the coronavirus denting sentiment, pushing oil and metal prices down yesterday.

The agenda

• 10am BST: ZEW survey of eurozone economic sentiment
• 11am BST: NFIB survey of US small business confidence