North Sea oil and gas exploration is “finished” if Labour wins the General Election and delivers on its election policies, Ashley Kelty, research director at Panmure Gordon, a leading investment bank, says. He told The Telegraph over the weekend that a victory for Sir Keir Starmer would prompt operators to give up on British waters if the party executes plans to put another 3% on the windfall taxes introduced by the Conservatives, which has already taken total on the industry to 75%; ban all new drilling; and strip offshore companies of tax breaks they get when investing in new fields. These plans were confirmed by shadow chancellor Rachel Reeves at a meeting last week. Many operators are already moving investments overseas, The Telegraph says, among them Serica Energy, one of the top 10 UK producing oil and gas companies, which operates 11 fields producing the equivalent of 46,000 barrels of oil a day. David Latin, Serica’s chairman, said: “Government policy for the UK upstream sector has been erratic for decades but it’s become even more arbitrary and short term. That’s forced us to focus more on finding investment opportunities overseas instead of the UK in order to be resilient against future unpredictable shifts in UK government policy. Analysis suggests that if Labour’s rumoured tax plans are implemented, investment in the UK oil and gas sector will be reduced by £20bn over the next 10 years, which would result in UK production being halved compared to what it would be otherwise”. Another offshore operator, Kistos, said it had “walked away” from two recent offshore investment opportunities because of uncertainty over the next government’s plans. Kistos has assets in Norway and the Netherlands as well as UK waters, and executive chairman Andrew Austin said it was now looking overseas for future investment. He said: “We are not going to invest in UK waters under the current level of fiscal uncertainty. I have already walked away from two investment opportunities.”Kelty added that ‘lost’ oil and gas reserves may never be recovered, such would be the damage under Labour’s plans.

Rachel Reeves will also pledge today to “lead the most pro-growth Treasury in our country’s history” if Labour wins the General Election on 4th July. In her first major economic speech of the election campaign, she will also argue: “If we can bring business back to Labour, we can bring growth back to Britain.” Reeves, a former Bank of England economist, will tell business leaders that her party has changed under Sir Keir Starmer and will “offer a government that is pro-worker and pro-business”. She will also outline “Five missions for a decade of national renewal. And six first steps to point the way to a better Britain.” Meanwhile, a public letter written by Labour has been endorsed by more than 100 business leaders. It has been published in The Times and reads: "We, as leaders and investors in British business, believe that it is time for a change. For too long now, our economy has been beset by instability, stagnation, and a lack of long-term focus. The United Kingdom has the potential to be one of the strongest economies in the world. A lack of political stability and the absence of consistent economic strategy has held it back. The country has been denied the skills and infrastructure it needs to flourish. We are looking for a government that will partner fiscal discipline with a long-term growth strategy. Working in partnership with the private sector to drive innovation and investment will build digital and physical capital and fix our skills system. This is the only way to put us on track for sustained productivity growth. Labour has shown it has changed and wants to work with business to achieve the UK's full economic potential. We should now give it the chance to change the country. We are in urgent need of a new outlook to break free from the stagnation of the last decade and we hope by taking this public stand we might persuade others of that need too”. Signatories to the endorsement include the boss of retailer Iceland, the chairman of JD Sports, the head of the UK arm of ad giant WPP, the former CEO of Aston Martin and the founder of a children's company that once included Sunak's wife Akshata Murty as an investor. Previously, the Conservatives have also sought business signatures for a public letter ahead of general elections.

British ISA: The Labour party will push ahead with the Conservative Government’s plans to introduce a British ISA if elected to power, City AM says this morning. The plans were announced by Chancellor Jeremy Hunt in his March budget and offer an additional £5000 tax-free allowance for investments made into British listed companies. Under the timelines set out by Hunt, a consultation on the plans will close on the 6th June and no firm date has been marked to launch the products into the market.

The Institute for Fiscal Studies (IFS) has challenged Sir Keir Starmer to set out the Labour party’s spending plans, saying that with limited borrowing room and taxes already high, the public must be informed of the “dark clouds” that loom over Britain’s public finances. “There are cuts on the way with absolutely zero sense from the main parties about where those might fall,” the IFS said, adding: “For a party to enter office and then declare that things are ‘worse than expected’ would be fundamentally dishonest. The next government doesn’t need to enter office to ‘open the books’; those books are transparently published and available for all to inspect”. The IFS report noted that weak growth and sustained high borrowing costs are “the worst of both worlds” and other issues such as the fact the new government will also face rising costs for compensation claims, most notably to victims of the infected blood scandal, and that central banks have indicated that they intend to keep interest rates higher for longer, will also prove problematic.

Shop price inflation has fallen to 0.6%, down from 0.8% last month, according to the British Retail Consortium (BRC), well below the three month average rate of 0.9%, and making annual growth the lowest since November 2021. Helen Dickinson, BRC CEO said: “Shop price inflation has returned to normal levels”.  

Bitcoin and other exchange-traded notes (ETNs) have begun trading on the London Stock Exchange. ETNs are traded and settled like regular shares and track the performance of underlying assets such as bitcoin or ether, similar to spot bitcoin exchange-traded funds (ETFs), which were approved by the US Securities and Exchange Commission in January.

Ofwat is poised to refuse most water companies’ requests to increase consumer bills, with some getting as little as half of what they have asked for, The Guardian claims this morning, adding that the decision from the water watchdog for England and Wales has been pushed back until after the general election on 11th July. Thames Water has requested bill rises of 59% taking bills to £749 per year; Southern Water a 91% rise taking bills to £915 a year; and Wessex Water has requested a 50% increase, meaning customers will pay £822 a year. The full story at https://www.theguardian.com/business/article/2024/may/28/water-watchdog-suppliers-price-rises-ofwat-bills-thames-water

The Co-operative Bank is being taken over by Coventry Building Society it was confirmed on Friday. The £780m deal will create a high street lender with assets of £89bn, and see the private equity-owned Co-op Bank return to mutual ownership. Up to £125m of the sale will be deferred for up to three years, subject to the performance of Co-op Bank during that period. Coventry, which was founded in 1884, is currently the UK's third-largest mutual lender, with around 2m members. The Co-op Bank has around 2.5m customers.

Arrowxl is to be sold after Logistics Group, the company behind it which is owned by the billionaire Barclay family and formerly included Yodel, racked up debts of more than £150m before going into administration, City AM reports. According to a new document filed by administrators Teneo with Companies House, Arrowxl was valued at £70m in 2021 but now has an estimated realisable value of £57.5m.

Apple has pulled the plug on a supply deal with one of Britain’s largest microchip plants, leaving it at risk of closure, the Sunday Telegraph reported. Accounts filed by the US semiconductor company Coherent, which owns a 310,000 sq ft facility in County Durham, revealed the loss of its main customer. Coherent manufactures components for the iPhone’s Face ID system, but the US giant is believed to have ceased orders due to upcoming changes to the next version of the iPhone. The facility laid off more than 100 staff a year ago after Apple informed the company it planned to cease orders. The remaining 257 staff have been kept on to see through the remaining contracts.

KPMG UK and its Swiss partner have voted “overwhelmingly” in favour of merging to become a $4.4bn (£3.5bn) business. The merger will make the new firm the second largest in the KPMG network, with a total workforce of almost 19,000 people.

Persimmon, the FTSE-100 housebuilder, is exploring a bid for Legal & General-owned Cala Group that could value its smaller rival at up to £1bn and mark another step in the industry’s consolidation, Sky News says. Sky also says Indian pharmaceutical group Dr Reddy is closing in on a deal to snap up Nicotinell, the anti-smoking aid, from Haleon, its FTSE-100 parent company.

Boohoo shareholders are said by The Times to be furious at the decision to hand top bosses £1m in bonuses despite the company reporting a £160m loss. Boohoo is an AIM-listed online fast-fashion giant which also owns Debenhams and Karen Millen. One top-five shareholder told the outlet they were “furious” that bosses had received bonuses after revenue had fallen by 17% and said they will vote against them at next month’s AGM. Another large shareholder said it was “outrageous”.  “I have never seen proposals for a new long-term scheme that hasn’t been discussed with shareholders,” they said. 

Ithaca Energy has appointed ENI executive Luciano Vasques as CEO following its £750m deal to buy almost all of the Italian firm's UK assets. He replaces interim CEO Iain Lewis, who now returns to his CFO role at the North Sea oil and gas explorer.

Abrdn announced on Friday that Group CEO Stephen Bird has stepped down. Group CFO Jason Windsor has been appointed as interim group CEO at the FTSE 250 fund manager, although Bird will stay on until 30th June - the fourth anniversary of his tenure - to ensure a seamless transition of leadership. The board said the search for a permanent CEO, which would include external candidates, was underway.

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