Time for a recap.

First Abu Dhabi Bank has said it explored a potential bid for Standard Chartered, following a report that FAB had been considering an offer for the FTSE 100-listed lender.

Shares in Standard Chartered, which has declined to comment on the story, are up 6%, having jumped 20% when FAB’s interest was first reported by Bloomberg.

Under UK takeover rules, FAB’s statement means they are precluded from making an offer for the lender in the next six months, except under certain circumstances such as a third party announcing an offer.

Crypto focused bank Silvergate Capital has reported a sharp drop in deposits in the last quarter of 2022. Investors withdrew more than $8bn, Silvergate reported, as it also outlined plans to cut its workforce by 40%.

In the retail sector, Next, Greggs and B&M all reported a pick-up in sales in the crucial Christmas period, despite the cost of living crisis.

Next has raised its profit forecasts for the year by £20m after better-than-expected sales in the run-up to Christmas, but said it remained “cautious” about the year ahead and warned more price rises were coming.

Greggs has handed a 10% pay increase to workers as it warned of “material cost inflation” that prompted a third rise in the price of its sausage rolls in a year.

The jobs purge sweeping US tech firms has escalated as Amazon expanded staff-cutting plans to affect more than 18,000 workers and the software maker Salesforce said it would axe 8,000 employees.

UK car sales hit their lowest level in 30 years in 2022, but demand for electric vehicles jumped.

Almost no trains have run in most parts of England today, as train drivers at 15 operating companies held a strike.

The British government has been given the go-ahead to keep concealing the names of companies that received in total more than £47bn in state-backed Covid loans, after a tribunal ruled in its favour.

Taxpayers are facing a loss of almost £1bn in fraudulent or erroneous grants paid to supposedly struggling businesses during the Covid-19 pandemic.

Workers at the Co-op’s only UK coffin factory, in Scotland, have gone on strike again in a months-long row over pay….

….while the bosses of Britain’s biggest companies have made more money so far this year than the average UK worker will earn in the whole of 2023.

Cryptocurrency bank Silvergate Capital has revealed it faced mass withdrawal requests totalling over $8bn, in the aftermath of the collapse of FTX.com, and is cutting its workforce by around 40%.

Silvergate reports that its total deposits from digital asset customers declined to $3.8bn on the last day of 2022, down from $11.9bn on September 30, 2022.

Silvergate says the digital asset industry has undergone “a transformational shift, with significant over-leverage in the industry leading to several high-profile bankruptcies”.

This has sparked “a crisis of confidence across the ecosystem”, it points out, prompting many industry participants to shift to a “risk off” position across digital asset trading platforms.

Having hired staff during 2022, Silvergate is now reducing its headcount by approximately 200 employees, or 40%, to “account for the economic realities facing the business and industry today”.

It adds:

Reducing headcount will enable Silvergate to continue to offer a tailored customer experience, while prudently managing expenses in a more challenging macro environment.

Shares in Silvergate have tumbled around 46% in early trading.

First Abu Dhabi Bank has put out a statement, confirming that it considered a possible takeover offer for Standard Chartered – but is no longer doing so.

The bank says:

First Abu Dhabi Bank confirms that it had previously been at the very early stages of evaluating a possible offer for Standard Chartered, but as of the date of this announcement, is no longer doing so.

This has knocked Standard Chartered’s shares down, they are up just 5% on the day now.

Standard Chartered has surged to the top of the FTSE 100 leaderboard, spurred by reports of takeover interest in the bank.

They jumped as much as 20%, following a report that First Abu Dhabi Bank, the United Arab Emirates financial group, is considering an offer for the company.

According to Bloomberg, First Abu Dhabi Bank PJSC has been exploring a takeover bid for Standard Chartered.

Bloomberg says:

First Abu Dhabi Bank PJSC has been exploring a bid for Standard Chartered Plc, according to people familiar with the matter, in what would be a complex deal aimed at building an emerging markets lender with more than $1 trillion of assets.

The Middle East’s largest bank has been considering a full takeover of the London-based lender, the people said, declining to be identified as the deliberations are private. FAB, as the bank is known, has been assessing Standard Chartered for more than six months and is working with advisers, the people said.

Standard Chartered, which is focused on emerging markets, was valued at around £19bn before today’s share price jump. Shares are currently up 15% at 761p, having closed at 660p last night.

Health and beauty retailer and pharmacy chain Boots UK says its sales were up around 15% in December, compared with a year earlier.

Boots, part of the Walgreens Boots Alliance, says gifting, beauty and fragrance lines all performed “extremely well”. There was also an uptick in sales of over-the-counter medicines for “colds and immunity”.

Boots UK also reports a “record-breaking Black Friday” with boots.com recording its biggest ever day of sales.

Like-for-like sales in the September-November quarter were up 8.7% year-on-year.

Sebastian James, managing director of Boots UK & ROI, says it was “another positive quarter” for the group.

Our focus on giving customers our best ever value to help with cost of living pressures, as well as continued investment in our digital capability and in updating our store estate has resulted in increased retail sales and market share growth for the seventh consecutive quarter.

Our Black Friday and Christmas performance was particularly pleasing and I would like to thank the teams for their huge efforts in bringing our customers genuinely fantastic offers.”

Next expects to raise its prices this year, after the fall in the value of sterling drove up its costs.

In today’s trading update, Next predicts selling price inflation of 8% in the spring and summer season, and 6% in autumn and winter.

Next says:

Much of the increase in next year’s prices are the result of the devaluation of the pound against the dollar.

Eighty percent of our contracts are negotiated in dollars so the devaluation of the pound has had a significant impact on our prices.

The pound is currently around $1.20 against the US dollar, down from $1.35 a year ago. It has recovered since late September, when it hit a record low above $1.03.

Next adds that:

Looking further ahead, it appears likely that the recovery of the pound against the dollar (if it persists) and continuing downward pressure on factory gate prices, means that inflation is likely to be lower again in the Spring of 2024.

Here’s the full story:

Hugo Griffiths, consumer editor at online marketplace carwow, points out that the UK has reclaimed its position as Europe’s second biggest car market, despite the 2% drop in registrations in 2022.

“Let us be under no illusions that the UK’s new-car market is even close to getting back to pre-covid levels, with the 1.61 million registrations that 2022 saw being 700,000 units down on 2019, and more than a million fewer cars than were sold in 2016.

“Given how difficult a few years it has been both for consumers and the industry, however, the fact that 183 new cars were registered every hour in 2022 - more than three a minute - shows that both buyers’ appetites and factories’ abilities to produce vehicles remain in far ruder health than some might consider.

“The UK’s reclamation of its position as Europe’s second-largest market for new cars also shows how important a player we remain on the continent’s stage, something reinforced by the fact the Nissan Qashqai – a car partly conceived and entirely built here – was the most popular new car of 2022.”

Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), says 2022 was an “irregular year for new car registrations” due to several wide-ranging factors:

….from supply constraints, driven by continued lockdowns and the war in Ukraine, to the cost-of-living crisis impacting demand in the UK.

Looking ahead, NFDA and its members remain cautiously optimistic, Robinson adds:

Franchised dealers are well placed to enable the UK’s transition to electric vehicles through schemes such as Electric Vehicle Approved (EVA), which are in place to ensure consumers receive the correct support in their switch to electric.

Mark Oakley, Director of AA Cars, argues that car dealers coped well with supply shortages:

“New car sales ended the year on a high despite the current gloomy economic picture, finishing up with five straight months of rising vehicle registrations.

“Although overall sales for the year still finished down on 2021, dealers will feel that they did well to bounce back from a sluggish start caused largely by supply shortages.

“Electric Vehicles remain a bright spot with sales up 40% over the year, and this trend is likely to only grow further in the coming months.

One in six UK companies have been affected by the strikes gripping the country.

The latest survey of British firms from the Office for National Statistics found that 16% of businesses had been affected by industrial action. A quarter of those firms said they were unable to obtain necessary goods for their business.

One in 20 companies with at least 10 employees are planning to make redundancies over the next three months, the ONS found – with two-thirds taking action to cut staff costs.

Yet, almost a third of businesses with 10 or more employees reported they were experiencing a shortage of workers, including half of firms in the human health and social work activities industry.

And looking ahead to this month, more than one in five businesses reported energy prices were their main concern, followed by input price inflation (15%) and falling demand of goods and services (14%).

Britain’s services sector ended 2022 with a small contraction, as firms were hit by a drop in new orders.

Data firm S&P Global’s latest survey of purchasing managers shows there was a “fractional fall in activity” at the end of 2022.

Its services PMI has come in at 49.9, an improvement on November’s 48.8, but just below the 50-point mark showing stagnation.

Services firms reported new business fell at its weakest rate for three months, while staffing levels were unchanged, ending a long period of jobs growth.

But encouragingly, cost pressures also showed signs of weakening, with inflation rates down for both operating expenses and charges.

Tim Moore, economics director at S&P Global Market Intelligence, says

“UK service providers ended the year with another downturn in new orders as strong inflationary pressures and worries about the economic outlook sapped demand. Overall levels of business activity fell only fractionally, despite an exceptionally challenging business environment and spending cutbacks due to cost of living difficulties.

Stalling recruitment and lower backlogs of work added to signs that service sector companies are now experiencing fewer capacity pressures. Business optimism has recovered from the lows seen in the wake of last September’s ‘miniBudget’, but many firms are braced for a sustained period of subdued demand in 2023.

Around 40% of the survey panel expect a rise in business activity over the next 12 months, while 16% forecast a decline, Moore points out, adding:

Survey respondents commented on squeezed disposable incomes, elevated recession risks and a housing market downturn as key factors likely to constrain demand in the year ahead.

Although service providers widely noted concerns about global economic headwinds and stubbornly high inflation, there were also many reports citing positivity about factors within their control, including forthcoming product launches, expansion into new markets and planned business investment.”

Over in the eurozone, construction firms have suffered the biggest fall in activity since the first Covid-19 lockdowns.

Data firm S&P Global’s eurozone construction total activity index has fallen to 42.6 December, down from 43.6 in November (any reading below 50 shows a contraction).

This data indicates “a sustained contraction in eurozone construction activity levels” warns S&P Global, led by falling housebuilding activity.

Each of the three largest Eurozone nations monitored by the survey registered lower activity in December, with the most pronounced drop seen in France (41.0), closely followed by Germany (41.7). Activity at Italian construction firms fell (with a PMI of 47.0) following a brief upturn in November.

Thousands of Environment Agency workers in England will strike for the first time later this month, as a dispute over pay escalates, the UNISON union have announced.

Workers who maintain important safety structures such as the Thames Barrier, coastal sea defences and those protecting communities from floods, water pollution, spills, waste fires and fly-tipping will walk out on Wednesday 18 January from 8am to 5pm, UNISON says.

It warns that the strike comes at a time when extreme weather is more likely to hit the country.

Environment Agency workers began working to rule last month, meaning they only worked their contracted hours, and took all their scheduled breaks and full rest time between shifts. Employees also refused to volunteer to be ‘on call’ and deal with live incidents last month and over sections of the festive period.

Unison blames the Agency’s failure to give staff a decent pay rise. Last November, workers received a pay rise of just 2% – a real terms pay cut, given inflation is over 10% – plus a £345 payment, it says.

UNISON head of environment Donna Rowe-Merriman says workers didn’t take the decision to strike lightly, as they are crucial in keeping communities and the environment safe.

Rowe-Merriman says:

“But the cost-of-living crisis has reached a point where the lowest paid are truly struggling to make ends meet. Staff often have no choice but to look for other work outside the Agency. This appalling situation cannot go on.

“Communities rely on these critical workers, particularly during bouts of extreme weather and rising problems of river pollution They should be paid accordingly.

“UNISON is urging ministers and the Agency to negotiate and ensure workers are given an improved pay offer. Otherwise, more staff will join the exodus.”

Supply chain disruption has dragged UK car sales to their lowest level in 30 years, new data shows.

The Society of Motor Manufacturers and Traders (SMMT) reports that new car registrations fell by 2% in 2022 to 1.61 million units, the lowest since 1992.

The SMMT blames the ongoing supply chain disruption, which left carmakers strugging to get hold of semiconductors, saying:

Despite underlying demand, pandemic-related global parts shortages saw overall registrations for the year fall -2.0% to 1.61 million, around 700,000 units below pre-Covid levels.

But, sales did rise in the second half of last year. Registrations jumped by 18.3% in December to 128,462, the fifth monthly rise in a row.

And there was stronger demand for electric cars last year. Battery-powered electric cars overtook diesel for the first time in 2022, to become the second most popular powertrain after petrol. Sales of BEV cars jumped by 40% in 2022, compared with 2021.

The SMMT is hopeful that there could be “significant” sales growth in 2023.

SMMT CEO Mike Hawes says the government must invest more in electric charging infrastructure, to encourage motorists to switch:

To secure that growth – which is increasingly zero emission growth – government must help all drivers go electric and compel others to invest more rapidly in nationwide charging infrastructure.

Here’s the full story:

The boss of the UK’s train drivers trade union has dismissed the government’s plans for new anti-strike legislation, saying the changes would not work.

Mick Whelan, the general secretary of Aslef, dismissed Rishi Sunak’s attempt to get a trip on the ongoing industrial disputes, and also insisted that unions still have public support as today’s train drivers strike disrupts services.

The prime minister is expected to announce legislation to enforce “minimum service levels” in six sectors, including the health service, rail, education, fire and border security.

Ministers are also understood to be considering introducing laws allowing bosses to sue unions and sack employees if the minimum levels are not met.

Whelan told Radio 4’s Today programme that these changes would not make his job harder.

He argued that if Aslef had to agree different levels of minimum services, it would simply “put more strikes on to pick up the shortfall”, which would create greater strife and mean the connectivity of the railway would fall apart.

Whelan added that European countries have had minimum strike levels for several years, but they’ve never been enacted because they don’t work.

He claimed there is “posturing and preening” in the talk about minimum strike levels, warning that the UK is turning into “a very authoritian society”, citing the government’s protest bill (the public order bill) and asking “What democracy do we want to live in?”

Pressed about the current strikes, Whelan claimed that the rail companies have been pushing for “a wishlist of productivity gains”, rather than making serious proposals on investment and changing the industry.

He argues it’s wrong for rail companies to withhold pay rises for staff, while having made profits and paid dividends.

We find ourselves in a Monty Pythonesque situation where the people we work for made £500m in the pandemic but they didn’t give us a pay rise.

Whelan also told Today that he had not received details of an offer of a £2,000 pay rise reported in the Sun yesterday, and warned it would be “self-defeating” to have leaked that offer to the press.

Whelan adds that he can’t say if he’d accept such an offer, as he doesn’t know what “strings” are attached to the offer.

Whelan also vowed that the government will never split Aslef from “our railway colleagues and comrades” at the RMT union, which is also taking industrial action.

And he denies there’s a danger of losing public support for the strikes. Whelan says the polling suggests otherwise. Other workers, including civil servants and NHS staff, are also taking action, he points out, arguing there is “a view out there that all workers are in it together”.

Whelan has also appeared on Sky News this morning, saying that the union will perservere until it reaches a resolution. He points out that the union has refreshed its mandate from members:

Now people are saying we should go harder and faster. We haven’t done that yet.

Shares in Next have jumped at the start of trading in London, as traders welcome its better-than-expected results.

Next shares are up 6% to £64.50, the highest level since last August, making it the top FTSE riser. Fellow retailers JD Sports (+2.8%) and Frasers (+2.7%) are close behind.

Richard Hunter, head of markets at interactive investor, says:

“After a strong finish to the year Next has restored its previous pre-tax profit estimate, after a downgrade at its half-year numbers which blighted the share price.

The increase in pre-tax profit guidance to £860 million from the previous £840 million would represent yearly growth of 4.5%, as opposed to the 2.1% which the lower figure assumed. This is largely due to an increase of 4.8% in full price sales in the final quarter, despite the effects of the sale and clearance events, and maintains the group’s reliance on avoiding discounting where possible.

Retail stores in particular were a highlight in the latter part of the year, with full price sales rising by 12.5% in the fourth quarter due to improved stock levels and the possibility of Next having underestimated the effect Covid had been having on store visits in the previous year.

Online growth was more sedate, but with an additional contribution from finance interest income, which grew by 5.8%, the overall growth was a pleasing end to a challenging period.

Discount retail chain B&M says it too had a strong Christmas, and announced a special dividend for shareholders.

B&M has reported that its revenues grew by 12.3% year-on-year, in the 13 weeks to Christmas Eve.

That included a “very good performance” across all its UK sales categories, both in grocery and general merchandise, with “excellent sell-through in key general merchandise ranges supporting improved gross margin performance”.

It suggests that shoppers were seeking out value options amid the cost-of-living crisis. B&M sells a wide range of good at relatively low prices, such as furniture, toys, DIY products and gifts.

B&M CEO Alex Russo says the company has ‘exited the quarter’ well:

“Our strong momentum throughout the Golden Quarter across the businesses demonstrates the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail execution.

Despite the challenging macroeconomic environment, we will continue to work hard to help both existing and new customers manage the cost-of-living crisis.

B&M intends to declare a special dividend of 20.0p per ordinary share to be paid on 3 February 2023, to shareholders on its register at 13 January 2023.

Next has reinforce its reputation as one of the best-run UK retailers, by reporting an “impressive performance” in the Christmas period, says Charlie Huggins, head of equities at Wealth Club:

The group benefited from a cold snap in December, which has boosted demand for winter clothing, as well as the absence of pandemic restrictions, aiding store performance. Nevertheless, this shouldn’t take away from Next’s stellar execution. Many other retailers have struggled in the current environment, but Next’s proposition is clearly resonating with the UK consumer.

Looking ahead to the next year, the environment is set to get tougher still. Next’s sales are expected to fall modestly, with profits down close to 10%, as cost pressures take their toll. That said, this outlook is not as bad as it could have been at the time of the disastrous mini-budget, when sterling was in the doldrums.

Richard Lim, CEO of Retail Economics says there is “festive joy” at Next last Christmas, but warns that 2023 will be tough:

“These results are all the more impressive given the harsh squeeze on household finances. Store sales were particularly strong with shoppers opting to head back into physical locations to seek out the best deals and keep a tighter grip on their budgets.

“Costly online deliveries, being charged for returns and the uncertainty of whether online orders would be received in time because of strike action played into the hands of omnichannel retailers. Next’s best-in-class proposition was well-positioned to benefit from this disruption as they leveraged the value across their joined-up physical and digital platforms, providing an array of options for customers.

“However, the outlook remains tough. The combination of rising mortgage costs, spiralling energy bills and ongoing inflation across staples will hit discretionary spending throughout 2023. This recessionary backdrop set against rising operating and input costs for retailers is going to hit profits hard for large swathes of the industry.”

Retail analyst Nick Bubb is struck by Next’s prediction that profits will dip by 7.6% over the next year:

Well, the highly respected CEO of Next, Simon Wolfson, is often said to be too cautious with his guidance, but even by his standards it is surprising to see him forecast that Next’s profits will fall back by c8% in the new-year, despite reporting stronger than expected Christmas trading…

British baker and fast-food chain Greggs is also reporting a jump in sales this morning.

Greggs’ like-for-like sales grew by 18.2% in the last quarter of 2022, which lifted its total sales for 2022 by 23% to £1.51bn.

Demand for Greggs’ seasonal lines was high, it says, such as its Festive Bake, a vegan alternative, Sweet Mince Pies and festive hot drinks such as the Salted Caramel Latte.

Plant-based foods are “contributing more significantly” to Greggs’ range, it says, citing new hot options such as a Vegan Festive Baguette.

Greggs also cautioned that it continues to see material cost inflation but says it’s confident of making good progress in 2023.

Chief executive Roisin Currie says longer trading hours, and its move to digital sales, also boosted demand.

“I am proud of the progress Greggs made during 2022 in challenging conditions. Our teams did a magnificent job serving customers and managing the growing demand for Greggs products as we expand our shop estate and offer greater availability through digital channels and longer trading hours, whilst continuing to extend our menu to offer more choice.

“We enter 2023 in a strong financial position that will enable us to invest in shops and supply chain capacity to bring Greggs to even more customers across the UK. While market conditions in 2023 will remain challenging, our value-for-money offer of freshly-prepared food and drink is highly relevant as consumers look to manage their budgets without compromising on quality and taste.”

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

Retail chain Next has beaten sales expectations for the crucial Christmas period, in a sign that consumer spending may have been stronger than feared.

In the first Christmas trading update from a major retailer, Next reports that “sales in the Christmas period have been better than we anticipated”.

Full price sales over the nine weeks to 30 December were up +4.8% versus last year, Next says – around £66m better than its previous guidance of -2.0% for the period.

Cheered by this outcome, Next has lifted its guidance for full-year pre-tax profit by £20m to £860m, which would be 4.5% higher than last year.

But, Next has also forecast lower profits for the 2023-24 financial year, citing uncertainty over the consumer outlook and cost inflation.

It says:

We remain cautious in our outlook for the year ahead. Initial guidance for the year ending January 2024 is for full price sales to be down -1.5% and profit before tax to be £795m, down -7.6% versus the current year.

Next says that both Online and Retail exceeded its full price sales expectations, with Retail being particularly strong, despite the squeeze on household incomes, adding:

We think that we underestimated the negative effect COVID was having on our Retail sales last year.

Next also reports that its end-of-season Sale is “progressing well”, revealing that sales stock is 60% higher than last year – and 31% above pre-Covid levels.

“Markdown stock and sales were much higher than last year, mainly as a result of the exceptionally low surplus stock levels last year,” it says.

Also coming up today

Rail passengers face a third consecutive day of travel disruption today due to a train drivers strike

Members of the Aslef union at 15 rail companies will strike, in a long-running dispute over pay, meaning some areas will have no trains all day.

The action follows a 48-hour strike by members of the Rail, Maritime and Transport union (RMT) which led to widespread disruption across the country yesterday.

The agenda

• 7am GMT: Halifax survey of UK house prices

• 9.30am GMT: Business insights and impact on the UK economy

• 9.30am GMT: UK service sector PMI for December

• 1.30pm GMT: US weekly jobless figures

[Note: these erroneously said BST before a reader kindly flagged the error. Sunnier times are ahead, but not here yet…]