Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

The water sector in England and Wales is failing and needs stronger regulation to better protect billpayers and the environment, according to the interim findings of a landmark review. The independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, says that public trust had been shaken by "pollution, financial difficulties, mismanagement [and] infrastructure failures." In launching the review, the government had ruled out nationalising the sector - arguing this would be too expensive and would not necessarily lead to improvements. "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector," Sir Jon said. "We have heard of deep-rooted, systemic and interlocking failures over the years – failure in government's strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest."

 

Sky News

BBC News

The Times

Former Bank of England employees say climate change was deprioritised under governor Andrew Bailey. Some said he had diverted the institution’s focus away from “soft” risks that were hard to quantify.

 

Financial Times

Growth expectations among private sector firms in the UK have fallen to the lowest level since September 2022, according to the Confederation of British Industry's (CBI) Growth Indicator survey. The analysis shows that 30% more private sector firms are expecting activity to fall than to grow over the next three months. This was driven by predictions of declines in business and professional services (-29%), and consumer services (-43%). Alpesh Paleja, deputy chief economist at the CBI, said: "Our surveys were already pointing to weaker momentum than official data at the start of this year, and this sluggishness looks to have continued since."

 

City AM

Bank of England policymaker Catherine Mann says the Bank needs to consider the impact of its quantitative tightening programme. She said that now the Monetary Policy Committee is cutting interest rates, "we need to consider the differing effects of our policies on different parts of the yield curve and their effects on monetary policy transmission as a more salient issue."

 

Reuters

British business is warning that the Labour government's industrial strategy, to be published this month, will be “fatally flawed” unless it deals comprehensively with the UK’s very high energy costs.

 

Financial Times

Stuart Machin, the CEO of Marks & Spencer, saw his pay package increase to over £7m for the financial year ending in March, marking a 39% rise from £5.1m the previous year. The increase was largely due to performance-linked bonuses, including £1.6m tied to the retailer's performance and £4.6m in long-term bonuses. M&S is currently grappling with the aftermath of a cyber attack that disrupted online operations and is expected to cost £300m in profits this year. M&S said on Monday that it had "agreed to delay" setting the performance targets for pay in the current financial year in light of the hack. Machin has been commended for his crisis management and maintaining communication with customers and investors. M&S chair Archie Norman expressed confidence that the incident would be a "bump in the road" towards growth, despite its immediate challenges.

 

BBC News

Financial Times

The Daily Telegraph

The Times

The Guardian

Big Four accountancy firms are racing to develop audits that verify the effectiveness of artificial intelligence tools as clients demand proof that their AI systems work and are safe.

 

Financial Times

HSBC is set to invest $4bn into its private credit funds as part of a broader strategy to tap into the lucrative private credit market, which is valued at $2trn. The bank aims to establish a $50bn credit fund within five years, attracting external investors to bolster its offerings. Nicolas Moreau, CEO of HSBC Asset Management, remarked, "It's an arms race," as he highlighted the competitive landscape as banks including Citi and UBS also enter the market. Although the investment is modest compared to HSBC's $3trn balance sheet, it aligns with CEO Georges Elhedery's vision to enhance revenue through higher-returning sectors. HSBC AM has already deployed $7bn across 150 transactions since its inception in 2018, with plans to focus on direct lending in the UK and Asia.

 

Reuters

Patrick Tiernan, Lloyd’s of London’s new chief executive, has announced several changes to the insurance marketplace's executive team. Lloyd’s chief underwriting officer, Rachel Turk, was appointed as chief of market performance and will join the Council of Lloyd’s. Caroline Sandeman-Allen was appointed as chief of market oversight, while Jonathan May was appointed to the executive team in his current position as CEO of Lloyd’s Insurance Company. George Marcotte will continue to serve as interim chief operations officer while the board seeks a permanent appointment.

 

City AM

Solange Chamberlain has been appointed as the new chief executive of NatWest's retail bank, following the lender's return to full private ownership. The appointment comes nearly six months after David Lindberg's departure. Chamberlain, who has been with NatWest since 2019, will assume the role on July 1, pending regulatory approval. She has previously served as chief operating officer of the commercial bank and group director of strategic development.

 

Sky News

Automakers are warning that China's restrictions on rare earth magnet exports could lead to significant production disruptions, potentially forcing car factories to close within weeks. The Alliance for Automotive Innovation has expressed urgent concerns, stating that without reliable access to these essential components, the production of critical automotive parts will be severely impacted.

 

Reuters

The world’s advanced economies risk a significant GDP loss if they move too quickly to localise supply chains as a result of the deteriorating geopolitical environment, the OECD has warned.

 

Financial Times

A little-known but seemingly indestructible substance called trifluoroacetic acid (TFA) is seeping into waterways across Europe as industry executives warn about the cost of EU efforts to eradicate pollution.

 

Financial Times

Thyssenkrupp is facing significant job cuts, with the IG Metall union estimating that over 20,000 positions could be at risk as the company transitions to a holding structure and divests parts of its business. The planned changes include the sale of minority stakes in several divisions and the potential outsourcing of up to 11,000 jobs in the steel sector, raising concerns among workers and union representatives.

 

Reuters

Ford is  facing a crisis as over 10,000 workers at its Cologne plant in Germany went on strike for the first time in its 100-year history. The strike was prompted by plans to cut 2,900 jobs. Industry experts, including Ferdinand Dudenhöffer from the Bochum Center for Automotive Research, warn that Ford's position in Europe is precarious as the company struggles to adapt to the shift towards electric vehicles. David Lüdtke from the IG Metall labour union says he remains committed to fighting for job security and fair compensation for employees.

 

Deutsche Welle (EN)

An executive at a telecommunications firm was sacked after complaining in robust terms to his bosses about the growing use of American management-speak including such terms as "growth mindset" and "personal development planning." An employment tribunal in south London heard that Darren Anthony sent a "threatening" email to complain about the way he had been treated in his first week at Talk 4 Business. He said that phrases imported from the US were rife. But his bosses deemed his message was "offensive and abusive." After his sacking, Anthony sued to claim that he had suffered age and disability discrimination, which the tribunal dismissed.

 

The Times