Bank of England’s Dhingra warns of ‘downside risks’ for UK economy; Adam Neumann ‘seeking to buy WeWork out of bankruptcy’ – as it happened | Business

Time for a quick recap

Bank of England policy-maker Swati Dhingra has warned the BoE may be “underplaying the downside risks” for the UK economy by failing to cut interest rates, as she has been pushing for.

Dhingra told the FT:

“I’m not fully convinced there’s some kind of really sharp excess demand in the economy coming from the consumption side.

I’m more concerned that we might be underplaying the downside risks.”

Confidence among UK construction firms has hit a two-year high, on hopes that interest rates will be cut….

.. but activity dropped in the sector again last month, led by another fall in housebuilding.

WeWork founder Adam Neumann is trying to buy back the company after it filed for bankruptcy in November.

Neumann’s new real estate company, Flow Global, has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat, the New York Times’s Dealbook reports today.

The government’s sale of its stake in NatWest to the public could begin as soon as June, MPs have heard.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

‘’The government is gearing up to launch the highest-profile public share offer since the Royal Mail IPO more than a decade ago. With confirmation from UK Government Investments (UKGI) that the sale of NatWest shares could happen as early as June, it’s clear it’s all systems go to get the process off the ground.

Between 2008 and 2009, it cost the government £45.5 billion to bail out the then Royal Bank of Scotland. This was at an average of 520p per share, much higher than the current price. Back in November, the Chancellor said any sale would be subject to market conditions and achieving value for money. It’s hard to see how that will be achieved, particularly given the current share price of 219p

The Treasury Committee also examined how much money has been lost through the UK’s investment in satellite operator OneWeb (quite a lot, by the sound of it).

BP has beaten profit expectations, and pledged to hand another $14bn to shareholders in buybacks over the next two years. Shares are up 5.5% this afternoon.

UK retail sales growth slowed to its lowest level in 17 months in January, as consumers cut back on non-food items.

An astonishing story is breaking in America – Adam Neumann, the founder of collapsed office rental company WeWork, is trying to buy the business back.

That’s according to the New York Times’s Dealbook, which reports today that Neumann has been trying to buy back the now-bankrupt business in recent months — with the help of the hedge fund mogul Dan Loeb, of Third Point.

Dealbook report that Neumann’s new real estate company Flow Global is pushing WeWork to consider its takeover approach, according to a letter his lawyers sent to WeWork’s advisers yesterday.

They say:

Flow which has already raised $350 million from the venture capital firm Andreessen Horowitz, disclosed in the letter that Loeb’s Third Point would help finance a transaction.

Flow has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat.

However, Flow’s lawyers are accusing WeWork of stonewalling for months.

They wrote:

“We write to express our dismay with WeWork’s lack of engagement even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders.”

WeWork filed for chapter 11 bankruptcy last November, after its share price fell by 98% last year. That left it with a market capitalization of less than $50m, down from $47bn at its peak.

WeWork was badly hit by the pandemic, as workers were forced to stay at home.

But investors also refused to accept its high valuation, concluding it was a property company not a hybrid tech one. That sunk its first attempt to float on the stock market, in 2019.

Neumann left the company in 2021 with a $445m exit package, and his personal wealth was estimated at $1.7bn last November by Bloomberg.

Newsflash: A Bank of England rate setter has warned that the central bank may be “underplaying the downside risks” for the UK economy by not cutting interest rates.

Swati Dhingra, an external member of the bank’s Monetary Policy Committe, argues that weak consumer spending and falling inflation mean the BoE should cut rates now.

Dhingra was the only policymaker to vote for a rate cut last week, when the Bank left interest rates on hold at 5.25%.

And today, she argues that not lowering borrowing costs is a risk.

Dhingra tells the Financial Times:

“I’m not fully convinced there’s some kind of really sharp excess demand in the economy coming from the consumption side.

I’m more concerned that we might be underplaying the downside risks.”

Last week, six BoE policymakers voted to leave interest rates on hold, while two pushed for higher interest rates due to concerns over persistent inflationary pressures.

Dhingra, though, is worried there are fewer “buffers” supporting households, as the savings built up in the pandemic are run down, and job vacancies fall.

She warns:

“You might see the real economy start to get negatively hit in a more profound way — and I don’t see why we should be risking that.”

More here: Bank of England policymaker warns of ‘downside risks’ for UK economy

A record number of rental and affordable homes were built last year, but overall new home completions fell 12%, according to new figures.

Some 45,649 new homes were completed in the rental and affordable sector, up 10% on 2022 and the highest figure ever recorded by the National House Building Council, the UK’s largest provider of new home warranties and insurance.

Overall, 133,213 new homes were completed in 2023, down 12% on 2022, with private sector completions falling 20% to 87,564.

The outlook doesn’t look too rosy. Last year, there was a 44% drop in new home registrations – the process by which a developer registers their intent to build a new home – to 105,449. Across the UK, all regions saw a fall in registrations, with the biggest declines in the North West (-61%), West Midlands (-59%) and East (-52%).

Steve Wood, CEO at NHBC, said:

“Whilst there were considerable supply and demand pressures on the new homes market in 2023, it is very encouraging to see record numbers of new home completions in the affordable sector. Several major house builders have partnered with housing associations and Build to Rent providers, re-focusing parts of their output to help address the demand for affordable homes.

“The backdrop of high interest rates, significant inflationary pressures and challenges with planning consents has supressed private sale output in 2023. That said, there are some signs of demand returning to the market and we would expect an improved position in 2024 as consumer confidence begins to recover and mortgage rates start to fall.”

Looking to the year ahead, Wood added:

“With a general election looming, we may also see new home-buyer incentives that influence build volumes. In the mid to long-term, the industry would welcome measures that restore consumer confidence and encourage market growth.”

The UK taxpayer appears to have lost hundreds of millions of pounds through its shareholding in satellite firm OneWeb.

The Treasury committee has questioned UK Government Investments this morning about the government’s decision in June 2020 to spend £400m buying the then-bankrupt satellite company.

OneWeb was subsequently merged with France’s Eutelsat in 2022, giving the government a 11% stake in the Paris-listed communications firm.

Charles Donald, chief executive of UKGI (which handles the government’s stakes in various companies) told MPs that the 11% stake in Eutelsat is not, currently, worth the £400m investment in OneWeb.

He indicated it could be in the “tens of millions”, but didn’t have an exact figure.

When pressed on the value of the UK’s stake in Eutelsat, Donald indicated “it could be in excess of £200m”.

He also pointed out that Eutselsat withgrew its guidance for this year’s profitability and revenues last week, which knocked its share price.

But Donald insisted the shareholding in Eutelsat has a different longterm prospect than the original shareholding in OneWeb.

Harriett Baldwin MP, chair of the committee, was unimpressed, asking:

“So effectively the UK taxpayer has paid £400m for some intellectual property that now resides within a French company. And we’ve lost money on the transaction?”

Eutelsat currently has a market capitalisation of €1.75bn, meaning the UK’s 10.89% stake would be worth €190m, or £162m.

Last week, it revealed that OneWeb’s activities are “running behind schedule relative to the original roadmap”, although also “progressing well”.

OneWeb is building a “constellation” of hundreds of satellites in low-earth orbits designed to provide internet coverage everywhere on the plane.

Donald told MPs that UKGI assessed the £400m investment in OneWeb, and was “not in a position to confirm” it was good value for money. The government issued a “ministerial direction” to override concerns from civil servants.