Pound rises above $1.29 as Trump fears hit dollar; Poundland chain up for sale – business live

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ITV production arm reports record earnings after Mr Bates vs the Post Office

In corporate news, ITV’s profits jumped in 2024 thanks to record earnings at the British broadcaster’s production arm, ITV Studios, as it benefited from hits including Mr Bates vs the Post Office, the Jilly Cooper adaptation Rivals and Fool Me Once.

The FTSE 250 company said revenues were down 3% to £4.1bn in 2024 compared with the previous year, but its measure of adjusted profits was up 11% at £542m. Profit before tax more than doubled to £521m, up from £193m a year earlier.

ITV has been seeking to make itself less reliant on the volatile earnings from its UK broadcast TV channels, with investors expecting linear television to wither as the shift to online streaming services such as Netflix, Amazon Prime and Disney+ progresses.

Beijing has also adopted a defiant attitude in the face of new US tariffs.

China’s ministry of foreign affairs has promised that China will “fight to the end” with the US in a “tariff war, trade war or any other war”, marking China’s strongest rhetoric on US president Donald Trump since he entered the White House.

On Tuesday, in response to Trump imposing an extra 10% tariff on Chinese goods, taking the cumulative duty to 20%, China’s foreign ministry spokesperson Lin Jian said: “Exerting extreme pressure on China is the wrong target and the wrong calculation … If the US has other intentions and insists on a tariff war, trade war or any other war, China will fight to the end. We advise the US to put away its bullying face and return to the right track of dialogue and cooperation as soon as possible.”

The comments about “any other war” were shared on X by the spokesperson for ministry of foreign affairs. The post was then re-posted by the Chinese embassy in the United States. The embassy reiterated the message, writing: “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”

Bank of England governor Andrew Bailey warned yesterday that a full-blown trade war would pose a “substantial” threat to the British economy, after Donald Trump imposed 25% tariffs on Canada and Mexico, and a further 10% levy on China.

Bailey said any imbalances, such as China’s big current account surplus, should be addressed in “multilateral forums” rather than bilaterally.

Ultimately, the biggest impact of a trade war could be on productivity, a measure of economic efficiency, according to Bank rate-setters. For example, increases in productivity through the introduction of new technologies allow the economy to expand without boosting inflation.

A breakdown in transatlantic “information sharing” could have a major impact on productivity growth, Huw Pill, chief economist at the Bank of England, told MPs on the Treasury select committee.

“The relationship is broken” is how Canadians responded to Trump’s tariffs.

“Since Trump began his tariff threats against Canada and his ‘jokes’ about making Canada the 51st US state, I have not bought a single product originating in the US,” said Lynne Allardice, 78, a retired business owner from New Brunswick, Canada.

“Not a single lettuce leaf or piece of fruit. I have become an avid reader of labels and have adopted an ‘anywhere but the US’ policy when shopping. I will not visit the States while Trump remains in office, and most of the people I know have adopted the same policy.”

Acquaintances, Allardice added, were selling US holiday properties they had owned for many years.

The Jack Daniel’s maker Brown-Forman’s CEO Lawson Whiting said yesterday that Canadian provinces taking US liquor off store shelves was “worse than a tariff” and a “disproportionate response” to levies imposed by the Trump administration.

Several Canadian provinces have taken US liquor off store shelves as part of retaliatory measures against Donald Trump’s tariffs.

“I mean, that’s worse than a tariff, because it’s literally taking your sales away, [and] completely removing our products from the shelves,” Whiting said on a post-earnings call.

European shares extend gains, bond yields jump again

The German stock market has extended gains, with the Dax in Frankfurt opening 1.1% higher. Investors have been cheered by what economists nickname Berlin’s “big bazooka,” a fiscal sea change that could revive the German economy.

Other European stock markets are also pushing higher, extending yesterday’s rally, amid hopes of easing US tariffs, after the one-month reprieve for carmakers from new levies on Canada and Mexico.

France’s CAC is 0.6% ahead while Italy’s FTSE MiB has climbed more than 1%. The pan-European Euro Stoxx index has risen by 0.5%.

The FTSE 100 index in London is bucking the trend, down by 0.2% or 17 points at 8,737.

Germany’s borrowing costs are still rising after the prospective partners in the next German government agreed on Tuesday night to loosen the controversial debt brake to allow higher spending on infrastructure and defence.

The yield, or interest rate, on the 30-year German government bond has risen by 8 basis points to 3.15% this morning, after jumping by 25bps at one stage yesterday. The yield on the 10-year bond is up by 10bps to 2.886%.

The yield on the two-year UK government bond, known as gilt, is also surging, rising by 11bps to 4.396%, the highest since 21 January.

UK rate expectations shift; BCC predicts 'long and challenging year for UK businesses'

Interest rate expectations have shifted in the UK. Financial markets are no longer fully pricing in two rate cuts by the end of the year, predicting 45 basis points of reduction from the current 4.5% base rate by December.

The shift came during yesterday’s Treasury select committee hearing, when Bank of England governor Andrew Bailey and other policymakers discussed the economic outlook.

Meanwhile, the British Chambers of Commerce (BCC) is predicting “a long and challenging year for UK businesses”.

It has become more gloomy about the growth outlook for the UK and said firms will struggle to invest as they deal with a raft of rising cost pressures.

The business lobby group now expects the UK economy to grow by 0.9% this year, revised down from its previous forecast of 1.3%. This year’s limited growth will be driven largely by increased day-to-day government spending. Growth is expected to accelerate slightly in 2026 to 1.4%, but that is also slightly down from the last forecast of 1.5%.

With businesses facing increased cost pressures following the autumn’s budget, inflation is now expected to remain above the Bank of England’s target until the last quarter of 2027. Inflation is forecast to be 2.8% by the end of this year, up from 2.2% in the last forecast, before falling to 2.1% by the end of 2026 and 2% in the fourth quarter 2027. The BCC expects unemployment to rise to 4.6% by the end of this year, from 4.4% now.

With stubborn inflationary pressures in the economy, the BCC is forecasting the Bank of England will continue to take a cautious approach to interest rate cuts. It expects just one cut in the base rate to 4.25% by the end of 2025, rather than two cuts to 4% as previously forecast. The rate is seen falling to 4% in 2026. No further cuts are then predicted through to the end of 2027.

Vicky Pryce, chair of the BCC Economic Advisory Council, said:

This is going to be a long and challenging year for UK businesses. The BCC’s forecast shows an economy struggling without the secure foundations to kickstart business investment.

Inflation will continue to be stubborn this year forcing the Bank of England to keep interest rates relatively high. Global uncertainties will add further dark clouds to the economic climate.

Businesses can’t simply rely on the promise of long-term strategies from government, they need support now to invest, recruit and trade.

Introduction: Pound rises above $1.29 as Trump fears hit dollar; Poundland chain up for sale

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

The pound has risen further to the heady heights of $1.29. It’s now trading above that level at $1.2916, the highest in four months and up nearly 0.2%.

Sterling has been boosted by a general slide in the US dollar, and a brighter mood in markets following a reprieve on US tariffs and the prospect of higher infrastructure and defence spending in Europe, led by Germany.

The dollar slid further against a basket of major currencies, after news that Donald Trump will exempt carmakers from 25% tariffs on Canada and Mexico for a month as long as they comply with free trade rules.

The euro also continues its rally and has hit a four-month high against the dollar, amid optimism sparked by Germany’s proposed €500bn infrastructure fund and overhaul of its borrowing rules. The European single currency rose by 0.3% to $1.0820 for the first time since 7 November.

Asian stock markets bounced, led by Hong Kong’s Hang Seng, up by 3.06% while Japan’s Nikkei climbed by 0.77%. In China, the Shanghai Composite rose by 1.17% while the Shenzhen Composite gained 1.77%.

The South Korean Kospi added 0.7%, despite news that a pair of fighter jets accidentally dropped eight bombs in a civilian district during a military exercise. Fifteen people were injured, two of them seriously.

European discounter Pepco Group said it is evaluating all strategic options to separate its struggling 825-store Poundland business in Britain this year, including a potential sale.

Ahead of an investor day, the Warsaw-listed group, which also owns the Pepco and Dealz brands, said it will focus on the Pepco brand “as the single future format and engine driver of group earnings”.

Pepco said in December it was considering options for the Poundland chain after it booked a €775m impairment charge, plunging the group to an annual loss of €662m.

Group like-for-like sales were up 1.5% in the eight weeks to 2 March, “with a strong performance from Pepco and Dealz offset by continued challenges at Poundland”.

The agenda

• 8.30am GMT: Eurozone HCOB construction PMI

• 9.30am GMT: UK S&P Global Construction PMI

• 10am GMT: Eurozone retail sales for January

• 1.15pm GMT: European Central Bank interest rate decision (quarter point cut forecast)

• 1.30pm GMT: US trade for January, initial jobless claims for week of 1 March

• 1.45pm GMT: ECB press conference
  2.45pm GMT: ECB staff macroeconomic projections

• 3.15pm GMT: ECB president Christine Lagarde speech

• 8.15pm GMT: Bank of England policymaker Christine Mann speech