BUSINESS LIVE: BoE base rate decision; UK-US trade deal talk; Next boosts guidance

Some 280 UK-listed companies have now issued warnings over tariff related risks since Donald Trump’s announcement on 2 April, according to analysis by Bowmore Wealth Group.

The tariffs included a 10% baseline for all countries per cent, with 60 countries hit with additional ‘reciprocal’ tariff rates

UK companies could suffer not just from a hit to their US sales but also from supply chains issues caused by retaliatory tariffs or trade restrictions.

Businesses that have so far reported that they are at risk from US tariff increases include HSBC, Rolls Royce, Aston Martin, and Halfords.

Jonathan Webster-Smith, chief investment officer at Bowmore, said:

‘Many of the UK’s largest companies have been forced to alert their investors that profits could be at risk. But clearly the scale of the hit to profits is up in the air.”

‘The markets are now hopeful that the US is reversing the worst of its tariffs but the whole affair has been a real blow to the concept of American exceptionalism and that US equities will always outperform.’

Hackers have ramped up attacks on Britain with incidents doubling in recent months, the UK’s cyber security agency said.

‘Hostile nation states’ led by China, Russia, Iran and North Korea are believed to be at the forefront of malign online activity, along with groups using ransomware to extort money.

Matt Basi, managing director of London Capital Group:

‘Traders have positioned themselves for a Bank of England rate cut of at least 25 basis points today, as markets seek a much needed boost to the UK economy.

‘With a cut already heavily priced in, some have even suggested the committee could go further and opt for a deeper 0.5% reduction in light of pressure caused by tariff uncertainty.

‘We expect Bailey to keep his options open for further cuts later in the year, given that geopolitical/economic news cycles now appear to be a weekly phenomenon.’

Paddy Power owner Flutter has cut expectations for its US business this year after shouldering punter-friendly US basketball results in the first quarter.

Flutter, which also owns Betfair, told shareholders it saw US earnings grow by more than sixfold to $161million over the first three months of the year, which the New York-listed group credited to ‘strong operating leverag

The typical home rose in value by just under £900 in April, according to the latest figures from Halifax.

The mortgage lender revealed that house prices rose by 0.3 per cent last month meaning that year-on-year the average property is up 3.2 per cent.

Jeff Brummette, chief investment officer at Oakglen Wealth:

‘A base rate cut looks nailed on but what will be most significant is the Banks’ future guidance.

‘Given the recent NICs rise, hiring slowdown and rising prices, it is possible policymakers will provide more solid guidance for future easing, provided inflation stays under control – but President Trump’s tariffs continue to cause enormous uncertainty and may keep the bank cautious.

‘The front end of the yield curve should continue to perform the best, with a steepening of the curve to be expected.’

Next has upgraded annual profit guidance for the second time in two months after unseasonably warm weather drove higher sales in the first quarter.

The retailer told shareholders on Thursday is had benefited from recent demand for summer clothes, while in-store footfall has also fared well.

The world’s biggest jeweller Pandora will reshuffle its supply chain as uncertainty over Donald Trump’s tariffs rages.

Chief executive Alexander Lacik said it will start sending products from its Thailand factory to Canada and Latin America, rather than from a warehouse in the US.

The boss of Barclays has promised not to announce any more branch closures this year or next in a boost for the High Street.

Chief executive CS Venkatakrishnan, known as Venkat, made the pledge as he faced questions at the lender’s annual general meeting from shareholders over its shrinking presence in towns and cities.

Ozempic maker Novo Nordisk has cut its sales and profit forecasts amid a surge in copycat weight-loss drugs.

The Danish pharmaceutical giant, which also makes Wegovy, fell victim to ‘compounding’ – a practice in the US that allows pharmacies to produce replicas.

Prime Minister Keir Starmer will provide an update on trade talks with the US later today.

‘Talks on a deal between our countries have been continuing at pace and the Prime Minister will update later today,’ a Government spokesperson told Reuters.

British engineering firm Renishaw has narrowed its full-year sales and profit outlook, and said it will introduce a surcharge to pass on the additional costs brought on by US tariffs.

The US makes up about 20 per cent of Renishaw’s global revenue, and the company has factories in the UK, Ireland and India.

‘Under the current regime our products imported into the USA are either impacted by aluminium and steel tariffs or subject to the ‘reciprocal’ tariff regime,’ the company said in a statement.

Meanwhile, British auto parts supplier Dowlais said it expects full-year performance to be toward the lower end of its forecast, citing increased economic uncertainty stemming from recent US tariffs.

US President Donald Trump’s tariffs have sparked weeks of instability in the auto industry, prompting automakers to revise forecasts, shift production plans, and temporarily shut down plants.

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

‘Next continues to deliver for investors, with yet another profit upgrade continuing its hot streak.

‘Sales over its first quarter were well ahead of expectations, nearly double the group’s forecasts.

‘In the UK, both online and in-store sales powered higher at mid-single digits. There had been some weakness from in-store sales of late, but it looks like the better weather has convinced shoppers to head to stores to try before they buy. Next remains cautious about the outlook for future footfall, and in-store growth is expected to return to being broadly flat over the rest of the year.

‘Much of the overperformance over the period has been put down to warmer weather, which has pulled forward demand for summer-weight clothing.

‘Alongside some tough comparable numbers and Next’s expectations that National Insurance increases will begin to weigh on the economy, sales guidance for the rest of the year has been maintained for now.’

Next has upgraded full-year guidance for the second time in two months after first quarter full-price sales rose by a better-than-expected 11.4 per cent, with a spell of warm weather boosting demand for summer ranges.

The retailer, often seen as a useful gauge of how British consumers are faring, is now forecasting a year to January 2026 pre-tax profit of £1.08billion, up from previous guidance of £1.066billion.

It made £1.011billion last year, topping £1billion for the first time.

However, Next warned of uncertainty ahead.

It said: ‘As we mentioned in our March guidance, we are more cautious about sales in the second half because the comparative numbers (in Autumn Winter 2024) were much stronger. 

‘In addition, we believe that the full effects of this April’s National Insurance increases will begin to filter through to the wider economy in the second half.  For completeness, we have shown the two year growth (versus 2023/24) in the right hand column in grey.’

US President Donald Trump will announce a trade deal with the UK later today, according to reports.

Trump touted a ‘major’ upcoming agreement with a ‘big and highly respected country’ on social media late on Wednesday.

The New York Times and Politico reports that Britain will be the trade partner revealed by the President.

Trump is expected to announce the deal at a 10:00am local time (1400 GMT) news conference in the Oval Office at the White House.

Sterling initially climbed as much as 0.5 per cent before paring gains to be up 0.2 per cent in response.

The Bank of England’s Monetary Policy Committee will later today reveal its latest decision on the direction of UK interest rates.

Financial markets expect the MPC to opt for a 25 basis point base rate cut from 4.5 to 4.25 per cent as the bank steps up efforts to reinvigorate an increasingly sluggish British economy.