Carillion takes hit after rescue plan rejected by lenders

Carillion shares fall on reports that lenders have rejected a rescue pan of the construction company.

Carillion is struggling with £900 million of debt and a £590 million pension deficit. Workers’ unions are being asked to step in to attempt to save the 19,500 jobs that are held at the construction firm.

Shares were down on morning trading on the London Stock Exchange. By mid-afternoon, shares were down 26.5% (5.3 points) to 14.7%. To put this into perspective, Carillion shares have lost 90% of their value since July 2017.

The key lenders of HSBC, Barclays, Santander and Royal Bank of Scotland have discussed reducing debt and restructuring the organisation’s balance sheet.

A government spokeswoman declined to comment on any specific meetings on the potential future of the company. She said: “Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supplier market and work closely with our key suppliers.

“The company has kept us informed of the steps it is taking to restructure the business. We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress.”

A spokesman from Carillion declined to comment.

Slowest UK house price growth for a half decade in 2017

The year ended 2.6% higher than it started but London was the weakest area for the first time in 13 years.

In December, the average house price in the UK was £211,156, which was a 0.6% month-on-month increase, according to Nationwide Building Society.

The 2.6% increase, the slowest since 2012, showed a poor comparison in relation to December 2016, which held a 4.5% annual increase.

Prices were down in London to 0.5% annually, with an average of £470,992. On the other end of the spectrum, the West Midlands was the best-performing region with a 5.2% annual increase.

Wales, Scotland and Northern Ireland also saw annual increases of 3.3%, 2.6% and 2%, respectively.

Nationwide’s chief economist Robert Gardener said: “London saw a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.5%. London ended the year the weakest-performing region for the first time since 2004.”

Robert Gardner went on to say that Brexit will play a huge role in determining house prices going forward.

Confidence in UK housing sector hits half-decade low

The Halifax bank survey showed 20% of people think house prices will drop because of rising inflation and the potential of an increase in interest rates.

This is the weakest reading since October 2017 and people under the age of 25 and living in London are the least optimistic. Correlated alongside this is the weak growth in wages, rising inflation rates, and for the first time in a decade, the Bank of England being set to increase interest rates.

The survey, which took in 2,000 British adults, saw two-thirds stating obtaining a deposit as the greatest barrier to buying a new house. Job security was also a major worry. £222,293 was the average price of a house in the UK in August.

Not surprisingly London was the only area with an entirely negative outlook to purchasing right now. The ages of 16 to 24 were the most pessimistic about buying; over 65 was the most positive group surveyed.


Construction boom in central London

Building projects in the capital hit eight year high

Construction is at highest levels seen in eight years in central London’s key business districts. The amount of office space currently under construction is at 14.8m sq ft. This is spread across 120 separate projects.

The figures are heartening given the warnings from industry bosses, in particular banking, about pulling out of the city post-Brexit. New business hubs are to be created in Battersea, White City and Stratford, with 65% of the 2.9m sq ft of space pre-let, including the landmark Apple office due to open in the old Battersea Power Station.

Although the amount of office space currently being built is up 4% on six months ago, pre-Brexit, on the downside, there is a marked decrease of new construction projects starting. The volume has fallen by 42% and completion dates have slipped back by three months on average.

Britain’s ambitous building plans, including the new high speed rail line to the north of England, Hinkley Point nuclear plant and third runway at Heathrow, all hinge on the availability of skilled labour, and if the supply of migrant labour is cut off post-Brexit, it could cause further repercussions for building project completion. According to the National Institute of Economic and Social Research, over half the construction workers in London are migrants.


Mortgage approvals hit 19-month low

British banks approved 36,997 mortgages for house purchases last month, down from 37,672 in July

LONDON, Sept 26 (Reuters) – Britain’s housing market showed signs of slowing in August with the number of mortgages approved by banks falling to its lowest level since January 2015 and analysts said they expected further weakness ahead as Brexit uncertainty dampens demand next year. British banks approved 36,997 mortgages for house purchases last month, down from 37,672 in July and 21 percent lower than in August 2015, the British Bankers’ Association said on Monday. The figures extended a slowdown which began at the start of this year ahead of the introduction of a new tax on homes bought by landlords in April and Britain’s referendum decision to leave the European Union in June. “The outlook for stagnation in households’ real incomes next year, as inflation picks up and hiring slows sharply, points to a prolonged period of weakness in mortgage lending ahead,” Samuel Tombs, an economist at Pantheon Macroeconomics, said. A rise of 1.5 percent in the average mortgage value in August pointed to a slowdown in house price growth over coming months, Tombs said. Howard Archer, an economist at IHS Global Insight, said house prices would likely be flat until the end of 2016 and fall by 3 percent in 2017 as the start of talks over Britain’s exit from the EU exacerbated uncertainty about the economic outlook. The BBA said growth in net credit card lending slowed in August, rising by 136 million pounds compared with an increase of 290 million pounds in July. But consumer borrowing overall remained strong with personal loans and overdrafts rising by a net 343 million pounds, the biggest increase since May, underscoring how consumers appear to have taken the Brexit vote in their stride. The data was collected after the Bank of England cut interest rates to a new record low of 0.25 percent on Aug. 4. The BBA figures do not include lending by mutually owned building societies, which accounts for around third of mortgages. The next release of the more comprehensive Bank of England lending data is due on Thursday.

(Reporting by Peter Hobson; editing by William Schomberg)

Copyright(c) Thomson Reuters 2016.