| Fund independent journalism |
|
|
Japan’s economy has made a weak start to 2024, shrinking faster than expected, and confirming the UK as the joint fastest-growing G7 country this year.
Japan’s GDP contracted at an annualised rate of 2% in January-March, compared to October-December, worse than the 1.5% drop in activity forecast. That works out as a 0.5% quarterly drop in activity, as households and companies cut back.
Weak consumer spending dragged on growth as did a fall in capital spending and net exports.
There are temporary factors to blame – including a New Year’s Day earthquake near Tokyo in which more than 200 people died, and a safety scandal at carmaker Daihatsu which disrupted production.
But in another blow for Tokyo, data for the fourth quarter of last year was revised down to show GDP was flat. That means nine months with no growth, since Japan’s economy slumped last summer.
This 0.5% contraction in January-March puts Japan at the bottom of the G7 growth league.
We already know that the UK expanded by 0.6% in Q1, ahead of the US with 0.4% growth and Italy with 0.3%, while Germany and France both expanded by 0.2%. Official Q1 data for Canada isn’t out yet, but it’s estimated to have expanded by 0.6%.
Japan’s weak growth is a headache for the Bank of Japan, as it tries to normalise monetary policy after running a massive stimulus programme. Predictions that the BoJ will struggle to raise interest rates have hurt the yen against the US dollar in recent weeks.
Fortunately for the BoJ, though, the dollar is weakening after yesterday’s drop in US inflation.
Meanwhile, UK telecoms group BT has announced a new cost savings push to save £3bn per year, after reporting a drop in profits.
BT’s new CEO, Allison Kirkby, says the group is now aiming to make £3bn of gross annualised cost savings by the end of its 2029 financial year.
That’s on top of an existing £3bn cost savings and service transformation programme, which costs jobs, and which BT reports has been competed a year early.
Kirkby reports that BT has now reached “the inflection point” on its long-term strategy, having passed the peak spending pooint of its full fibre broadband rollout.
She is now announcing new financial guidance, including doubling BT’s free cash flow over the next five years.
The company is also lifting its dividend by 3.9% this year, to 8p per share.
Kirkby says: “BT Group built and connected customers to our next generation networks at record speed and efficiency over the past year, while continuing to grow revenue and Ebitda.
"Having passed peak capex on our full fibre broadband rollout and achieved our £3bn cost and service transformation programme a year ahead of schedule, we’ve now reached the inflection point on our long-term strategy."
Kirkby is under pressure from sceptical investors, who have taken out short positions worth £300m against BT’s share price.
This morning, the company also reported a 31% drop in pre-tax profits for the last financial year, to £1.186bn from £1,729bn.
That’s despite BT raising prices; average revenue per user for its Openreach broadband division grew by 10%, partly due to price rises and increased volumes.
The agenda
• 7am BST: Norway’s Q1 2024 GDP report
• 9am BST: European Central Bank’s financial stability review
• Noon BST: Bank of England policymaker Megan Greene gives speech on “The current state of Britain’s labour market”
• 1.30pm BST: US weekly jobless figures
• 2.15pm BST: US industrial production data
We’ll be tracking all the main events throughout the day ...
|
| | | … there is a good reason why not to support the Guardian | | Not everyone can afford to pay for news right now. That is why we keep our journalism open for everyone to read. If this is you, please continue to read for free.
But if you are able to, then there are three good reasons to support us today. | | 1 | Our quality, investigative journalism is a powerful force for scrutiny at a time when the rich and powerful are getting away with more and more |
| | 2 | We are independent and have no billionaire owner telling us what to report, so your money directly powers our reporting |
| | 3 | It doesn’t cost much, and takes less time than it took to read this message |
| | Help power the Guardian’s journalism in this crucial year of news, whether with a small sum or a larger one. If you can, please support us on a monthly basis . It takes less than a minute to set up, and you can rest assured that you're making a big impact every single month in support of open, independent journalism. Thank you. | | Support us |
|
|
| | |
|
| Manage your emails | Unsubscribe | Trouble viewing? | | You are receiving this email because you are a subscriber to Business Today. Guardian News & Media Limited - a member of Guardian Media Group PLC. Registered Office: Kings Place, 90 York Way, London, N1 9GU. Registered in England No. 908396 |
|
|
|
|
|
