Thames Water says in its annual results just out that as of the end of June, it held liquidity of £1.8bn in funds, enough to keep it going for only “the next 11 months”. However, the group also reported an underlying profit before tax of £140m, an “improvement” of £272m from the loss reported in the prior year, and underlying revenue of £2.4bn, which reflected an “inflation-linked increase in our charges for water and wastewater services.” Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21% to £1.2bn. Thames said it had spent £2.1bn improving its infrastructure throughout the year, an 18% increase in spending that marked a “record” high. Thames, Britain’s largest water company, has debts of £18bn, which it is struggling to service with higher interest rates. Earlier this year, shareholders refused to invest £500m into the business to keep it afloat, but once Ofwat has published its response to the five-year business plans submitted last year by all the English and Welsh water companies, Thames will contact potential investors again, it said. Yesterday, a spokesperson for Prime Minister Sir Keir Starmer ruled out nationalising Thames Water, saying: “The cost of nationalisation to the taxpayer will not be consistent with our fiscal rules and we don’t think it’s the right course of action”. Before the election, the now Business Secretary Jonathan Reynolds also said he “wouldn’t want to see a nationalisation” of Thames Water when speaking at a debate hosted by Bloomberg. He warned at the time that “investment can involve losing as well as gaining money,” and said: “people should not expect the state to bail out bad investments.” Labour’s Manifesto included putting failing water companies into special measures and giving regulators the power to block pay bonuses to executives.  

Bank of England (BoE) policymaker Jonathan Haskel has cautioned against interest rates being cut as anticipated in August. Britain’s battle against inflation remains incomplete, he said, meaning interest rates should be kept higher for longer than the financial markets expect. “I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably,” Haskel, a member of the BoE’s monetary policy committee (MPC), said in a speech at King’s College London yesterday. Inflation fell to the BoE’s 2% official target in May, but Haskel warned this would be temporary given pressures from a tight jobs market. “The playing out of those shocks through the economy, and the continued tight and impaired labour market, means that inflation will remain above target for quite some time,” he said. Haskel, who has voted repeatedly to keep rates on hold, completes his term on the MPC at the end of August. New Chancellor Rachel Reeves will appoint his successor.  

Bad weather dampened credit and debit card spending in June for the first time in three years, according to Barclays’ latest consumer spending report. The month saw a 0.6% drop in spending, the first decline since February 2021. Barbecue equipment, home and garden renovations and garden centres are said to have been particularly hard it. In May, spending on debit and credit cards grew by 1%.

EDF has pulled out of the competition to build mini-nuclear reactors in Britain. The French state energy giant had been competing vying with five others to win government support for its small modular reactor (SMR) design, but has not submitted plans due yesterday. Meanwhile, British firm Rolls-Royce is known to have submitted its SMR tender response to Great British Nuclear (GBN) as part of the process. The completed scheme for mini-nuclear reactors is expected to create more than 40,000 British jobs, and provide enough electricity to power a million homes for over 60 years.

Metro Bank is said to be reviving plans to offload a multibillion pound mortgage portfolio just months after an investor bailout rescued it from the brink of collapse. According to Sky News, the high street lender is working with Morgan Stanley on a process to raise capital from the sale of the mortgages. City sources told Sky the size of the portfolio had yet to be finalised, but one adviser suggested it could be closer to £4bn than £3bn. Metro Bank had been negotiating with Barclays on a £3bn mortgage book sale, but failed to agree a price.  

Hiscox shares rose some 11% yesterday as rumours circulated of takeover interest by two companies, Japan's Sompo and Italy's Generali.  

HSBC has been fined HKD 24m (£2.4m) by Hong Kong's pension regulator for offering incentives to unauthorised agents to promote its Mandatory Provident Fund (MPF) scheme in 2020 and 2021. Yip Sze Ki, the former head of pensions at HSBC, has also been barred from holding senior executive positions at any MPF operator for 18 months. The bank, the largest lender in Asia, acknowledged the disciplinary action and confirmed its full cooperation with the investigation, Reuters says, adding that it has since implemented corrective measures.

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