BUSINESS LIVE: UK economy contracts; Royal Mail fined for poor delivery; Boohoo eyes Fraser deal

Shares in recruitment firm SThree plummeted yesterday after it warned that political and economic turmoil in Europe is hitting its profits.

The FTSE 250 company, which specializes in jobs for science, technology, engineering and maths experts, now expects profits of around £25 million for the 12 months to the end of November 2025.

This is less than half the £66m expected by analysts.

The shares slumped 36 per cent at the start and ended the day down 26.6 per cent, or 96 pence, at 265 pence.

James Smith, developed markets economist, UK, at ING:

“Having started the year with a dazzling – and certainly surprising – quarterly growth figure of 0.7% for the first quarter, momentum has slowed considerably in the second half of the year. In the monthly GDP for October, activity fell for the second consecutive month, although only by a marginal 0.1%. We think overall fourth-quarter GDP is likely to remain stable.

‘Actually, the story is more nuanced than that. Much of that early 2024 strength was concentrated in sectors that are less tangible and generally not consumer-facing. Services sectors with a clear focus on consumption and more intrinsically linked to underlying economic fundamentals actually fared better over the summer, when the broader economy appeared to be slowing, although we did see a considerable drop in activity in these areas during October.

‘Our conclusion from this is that the economy has probably slowed, but neither the initial boost nor the more recent slowdown is likely to have been as extreme as this year’s monthly GDP data indicates.

“We continue to think the UK economy is set to outperform most of Western Europe next year, judging by our Annual GDP forecasts for 2025. This perhaps says more about the health of other parts of the continent, but it also largely reflects recent fiscal stimulus.”

Hetal Mehta, head of economic research at St. James’s Place:

‘Today’s GDP data will be disappointing for the government, especially as the drop follows a contraction in September. However, the monthly data is noisy and some slowdown from the strong growth at the beginning of the year was to be expected.

‘With easing credit conditions, lower interest rates and increased public spending on the way, the UK economy should see modest growth next year.

‘The positive signals from the real estate market are a good check on the economy and show some resilience.’

The British economy unexpectedly contracted 0.1 percent in October, adding to signs of a sharper-than-expected slowdown and the growing likelihood that the Bank of England will accelerate the pace of rate cuts. interest.

Sterling has retreated from its recent strength as traders react to the figures, which were well below forecasts for 0.1 percent growth for the month.