Evening Standard

So far so good for UK Plc, but real tests are yet to come

-

WHAT have we actually learned from the deluge of company results that hit the wires today? For the most part, that life goes on — despite warnings of Brexit Armageddon.

Poring over the numbers from some of our biggest blue-chips, phrases that kept cropping up were “in line with expectatio­ns” and “on track”: not particular­ly sexy, but handy reassuranc­e for investors poking out of the referendum bunker.

Big companies such as BAE Systems — which will benefit from the renewal of the UK’s nuclear deterrent — don’t see any “material” short-term impact; Rolls-Royce, admittedly after a string of profit warnings, kept its outlook unchanged; British Gas owner Centrica admits — like

Russell Lynch

everyone — to uncertaint­y about the new post-Brexit landscape but is sticking to the plans it made in February. BT, boosted by the news this week that it can hang on to Openreach, even beat City profit forecasts.

Where the bad news came, it was expected. The attempted coup in Turkey added to tour operator Thomas Cook’s headaches but the shares still jumped more than 7% after the City took the view that things could have been worse.

And who seriously thought that Merlin Entertainm­ents, the owner of Madame Tussauds, wouldn’t be jittery about a heightened terror threat given recent events? Chief executive Nick Varney managed to eke out profit growth in a “resilient” first half.

Royal Dutch Shell badly missed the analysts’ numbers but in the current oil price climate, that’s hardly a bolt from the blue.

Don’t be distracted by the postBrexit sterling slump: the £2.2 billion currency hit that Rolls-Royce took far from tells the story of the business, while Schroders crowing about record funds under management seems disingenuo­us when it was solely down to sterling’s fall.

Elsewhere, well-run companies are still well-run companies. JD Sports Fashion — the sportswear chain for people who don’t like sport — delivered its perennial profit upgrade as people still have money in their pockets to spend for now.

For me, the real canary in the coalmine is Lloyds Banking Group. Bad news though the 3000 job cuts are for staff, the industry is moving on apace: when was the last time you went into a bank branch?

More worrying is the message from Antonio Horta-Osorio on the slowdown in appetite for credit from businesses of all sizes, with decisions deferred and delayed. That blow to confidence will make it a tricky autumn for the economy despite this relative summer cheer — and it’s the main reason why the Bank of England will be pulling the trigger on interest-rate cuts next week.

 ??  ??

Newspapers in English

Newspapers from United Kingdom