UK jobs market in trouble as Marks and Spencer food sales rocket to £2 billion

Hello and welcome to our wrap up of the week. I'm Citi-M editor, Andy Solvester. This is Citi-AM's news editor, Rupert Hargreaves

Rupert say hello. Hello. And we're going to whistle through some of the things that have happened this week, which we found particularly of interest. It's January. So let's talk about Christmas, as if we haven't already had enough of it. We started to get reports from the retailers, the big grocers, M&S, Tesco, Santerbury, so forth, about how their Christmas period went, the so-called Golden Quarter

It doesn't feel like a mixed bag, but the market's treated it like one

The market has. I think it rewarded Sainsbury's and Tesco in its own weird way, punished M&S for not

giving it a decent outlook. But MMS, MNS, I think, is the winner

MNS is a winner of Christmas. It's a winner in general because it's recovered finally after a decade of recovery

It used to be called the turnaround retailer, or the retailer embarking on his turnaround

edited some copy this morning to say the turned around retailer, which I don't think is really the phrasing

But yeah, I mean, and all that's been driven by, you know, two CEOs who've just put quality right at the heart of the brand

Fewer gimmicks, like the sort of peruna stuff back in the day. Focusing on food, focusing on homeways that people want to buy

People are actually willing to spend. People are willing to spend on their quite expensive food

Yeah, which is weird in a cost of living crisis, cost of living crisis. Yeah. And looking at more and more in the numbers, it seems like

stuff, you know, grocery, at home things, food in particular, seems to still be holding up

It's the nights out and maybe that discretionary going out, outspend that seems to be falling

Yes and no, I mean, some pub of nightcap also reported this week and it said it had a record Christmas

Yeah. A revolution bars struggled. It is a mixed bag. People still seem to be willing to pay for quality

Surely you're not implying. Vucca Revs, isn't it? Good night out. Yeah, it's a mixed back. I think like so much economic data at the

moment and so much economic data looking ahead to 2024, if you look at it as a bull on the economy

you can find reasons to be bullish. And if you want to see it as a bear, you can find many

reasons to be bearish. So apart the bullish grocery spending, we'll move on to the bearish signs

that you can find from the results of two recruitment companies, Hayes and

Robert Walters, both out this week, both talking about double-digit year-on-year decreases in fee

revenue in Q4, driven by weaker job markets, basically, right, in hiring. I don't know

what your take on where they go over the jobs market Because obviously they said nothing to worry about here don worry about it Things are rebound They are cutting jobs themselves Well exactly They cut several hundred jobs I think recruiters are the ones that tend to their leading indicators in the stock market

which yourself is a leading indicator. So they cut the jobs and they announce the troubles before everyone else

It'll be interesting to see how that plays out. Because in some parts of the market, it still seems relatively strong the jobs market

But is that the backward-looking figures that the government is reporting versus, is the forward-looking indicator that the recruitment providers might offer

Yeah, and it'll be interesting to see what happens to average wage growth over the next six to nine months

because we've seen this massive uptick in average pay growth. As effectively employers were forced to grapple with inflation, employees

my mortgage is more expensive, my train is more expensive, I need more pay. As inflation starts to come down, assuming it does, some people think pretty rapidly

you know, I'd be interesting to see whether some of that heat that's in those pay growth

numbers comes out of it or whether there's a little bit of a holdover, which itself, of course

will keep inflation higher. So it's a mess. Things are, things are, it's just difficult to see

what 2024 looks like. There's a wild card in AI. Yeah, of course. If suddenly if AI starts

becoming a big issue, where's, then you have productivity savings, you start laying people off

for AI. There's now a serious conversation about should that be allowed, should there be a tax on

AI. The US job numbers, US economic figures show that productivity is increasing, whereas

jobs are holding state like full-time employment is falling. So it's an interesting debate there

And I'm an optimist about new technology, right? I don't foresee that we'll all be out of work

thanks to artificial intelligence. I'd like to think robots couldn't have the sparkling

conversation that we're having today. But there is always short-term displacement. Those new jobs that be created tend to take a little bit longer to filter through and to start becoming the job

In the initial sense, it's just job losses. Totally different topic entirely, but an area that has been of interest this week

Dramatic industry and in the headlines industry. The water industry in the UK, never off the headlines

Big deal-ish in the UK this week. Yeah, well, we had. Which one should we start

Should we start the Eton College or the... Let's start with the..

Pen and Water deal. The big deal that probably was more significant than what was the good headline

The big deal that... I mean, it's quite interesting because it shows that money is..

People are still willing to invest. Sort of a week or a couple of weeks after that..

Thames Waters' valuation was marked down significantly by one of its major investors

Penin has come out and paid million or whatever it was including debt for Southeast Surrey Southeast Surrey So clearly there something going on there

It just remains to be easy. I think the market kind of liked it

Market seems to like it. I mean, I guess the one thing you can say about South East Surrey is there, gets into why

the industry is so wildly complicated. Stuff like sewerage and wastewater isn't in Southeast Surrey's world

That's still run by Thames Water. South East Surrey are just really about keeping the taps running, which out of the many things that water companies are supposed to do

seems to be the one thing that the UK's phalanx of failing water companies have at least mostly managed to do

and I'm sure in Surrey in terms of water, have failed you. So I suppose in some ways it's a sensible deal to get bigger if you've got southwest water, you've got Bournemouth Water just to grow

And there's an interesting debate here about public-owned companies, water companies, versus

private businesses that are owned like Thames Water privates and Penn and has a scheme

I believe where bill payers can actually have shares in the company which is an

interesting debate that there's a there's a ESG issue there in getting your customers

to invest in the company and benefiting from the company if it does have dividends. Yeah. Is that a good model to look at it is compared to the Thames Water one where no one

really has any idea what's going on? Well the one we have at the moment is leading in

actually towards Thames Water being in financial trouble for the next. Easy financial trouble

X, well, yeah, X number of years, right? Speaking of your very quickly, what was your favourite of these three water stories from the week

One storm overflow draining Gloucestershire, having been continuously pumping out untreated sewage

since December the third. Second, Eaton having to delay the start of its turn time because Thameswater, sewers were flooding

or three, that the water regulator is looking for a 70 grand a year crisis communications expert

Considering how much we'll be contacting them, Christ's communications expert. I think that's my favourite story

I'll take the answer the phone quicker than they currently do. I'm trying to think what else has really gripped the attention this week

And probably the other thing that's always bubbling along and we'll be talking about 52 weeks a year is around city reforms

Our chief city reporter Charlie Conchial could chat with Rachel Kent this week

She's the lawyer that was tasked with effectively breathing some new life into the UK's

research environment, effectively equity ysts. looking at shares. Is it good? Is it bad? Is it going to go up? Is it going down and taking a proper look at those companies

She, well, take us through the state of play right now and then some of her frustrations

Well, I think we start with her frustration because the frustrations are, you've had all these reforms and nothing is happening

Well you had recommendations You had recommendations you had reports you had politicians talking about it and nothing is happening So that her frustration explaining the state of play All these things keep being promised that are going to bring people back to the London equity markets they going to start

IPOs again, companies interested, investors interested, and they're just not happening. Yeah. And that's the main problem that the markets have been facing

And there's a bit of a, it feels sometimes like that there's a meme

of various different Spider-Men that does the rounds on Twitter, different times to time

where they're all pointing at each other. And it sometimes feels like that with government regulators and the city establishment

or everybody's pointing at each other saying, well, no, you go first, you go first. And then they'll point at the investor saying, no, you need to take more risk. Yeah

And the investor saying, well, why should I? Yeah. So it's sort of, it's not really, yeah, there's some point there has to be movement and someone's

going to have to be the first to go. And I have to start putting money in and leading the way

And sadly, losing money because that is part of the game. But it's about encouraging risk and risk will lead to reforms

In time. In time. If money's coming into the market, then people will try and change the market for the better

If it's not. We had the interview with Carson Block and the response from the city regulator

the Carson Block, so you can't take away all these protections and the city regulators. well, if you take, if the market's dead and no one's here, what's the point having regulations

Yeah, what was the line? There's no point having a perfect market if there's no one in it. If no one's in it. Yeah. Well, I think they'll probably be often to test that thesis this year

judging by the start of things, which hasn't looked much better. Let's just touch very briefly one last thing on the geopolitical element

This start of the year, really, has been, I suppose, dominated in those world headlines

by what's going on the Red Sea. I won't go into the long

details of it for now from a political perspective, but from a business perspective, it creates

two things, right? Geopolitical instability and more tangibly, shipping routes are being

messed around with. And we're already starting to hear the supermarket bosses saying

eh, we're keeping an eye on it. Yeah, disruption that was the theme of 2020, 2020, 2021

is now back in 2024. Shipping rates are going up. Shipping times are taking longer

That's the real risk. We're going to have these supply chain issues again

once the economy's returns normal, and they're going to come back to the, where you can't get a car for 18 months

because it's taken so long to build it. We're going to start seeing that again

And is that going to lead to inflation again? Another complication in 2024 that makes it more difficult to predict

We're going to stop our predictions for 2024 because if we keep talking for any longer, we'll only be wrong

That's all from us at Citi-A.M. The newsroom, Mr. Rupert Hargreaves. I'm Andy Sylvester

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