Home Money LIVE: GDP up 0.4%; Ofwat outlines spending package; Heathrow passenger fares capped

LIVE: GDP up 0.4%; Ofwat outlines spending package; Heathrow passenger fares capped

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LIVE: GDP up 0.4%; Ofwat outlines spending package; Heathrow passenger fares capped

The UK economy expanded by 0.4 percent in May, beating forecasts of 0.2 percent thanks to a rise in housebuilding activity, new data from the Office for National Statistics shows.

The FTSE 100 index will open at 8:00am. Companies releasing trading reports and updates today include Heathrow Airport, Jet2, Hays, MJ Gleeson and Nightcap. Read the Business Live blog for Thursday 11 July below.

> If you are using our app or a third-party site, click here to read Business Live

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August rate cut in doubt again as economy grows faster than expected in May

Luke Bartholomew, Deputy Chief Economist at Abrdn:

‘While it is important to note that the monthly GDP series is highly volatile, the strength of today’s report is consistent with broader evidence that the UK is continuing its solid recovery following a long period of stagnation.

‘BoE chief economist Huw Pill has been somewhat cautious on the outlook for inflation, and the fact that the economy now looks set to grow faster than the Bank’s forecasts may also make investors a little more nervous about the prospect of a rate cut in August. However, as long as the inflation data cooperates, we still expect the first cut next month.’

CAA reconsiders Heathrow passenger fee cap

The UK’s Civil Aviation Authority has reduced the cap on passenger fares charged by Heathrow Airport following opposition from the Competition and Markets Authority.

The regulator had originally decided to set an estimated cap of £25.24 per passenger in 2025 and £25.28 per passenger in 2026.

These figures will now fall by around 6 per cent or £1.52 in 2025 and £1.57 in 2026, with the price per passenger capped at an estimated £23.73 in 2025 and £23.71 in 2026.

The CAA said the change reflects “a minor reduction in Heathrow’s excess revenue recovery charges in 2020 and 2021.”

It also reflects the “elimination of the premium that had been allowed on index-linked debt when calculating Heathrow’s cost of capital”, and ensures that “Heathrow’s charges reflect the costs of pension deficit repair payments and business rates”.

Ofwat outlines £88bn spending package

Household water bills in England and Wales are set to rise by an average of £19 a year over the next five years, a third less than the increase sought by utilities, according to draft proposals announced by Ofwat.

The regulator said water companies had proposed average increases of £144 over five years.

For example, Thames Water’s proposed increase of £191 by 2030 has been reduced to £99, while Severn Trent’s proposed increase of £144 has been reduced to £93.

David Black, Ofwat’s chief executive, said: “Customers want to see a step change in the way water companies look after the environment. Our preliminary decisions on the company’s plans approve a tripling of investment to achieve sustained improvement in customer service and the environment at a fair price for customers.”

‘These proposals aim to achieve a 44% reduction in storm surge spills compared to 2021 levels. We expect all companies to embrace innovation and move further and faster to reduce spills wherever possible.’

GDP grows 0.4% in May

The UK economy expanded by 0.4 percent in May, beating forecasts of 0.2 percent thanks to a rise in housebuilding activity, new data from the Office for National Statistics shows.

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