BUSINESS LIVE: Inflation eases to 2.8%; FTSE up as Chancellor delivers Spring Statement

Virgin Wines has announced a new strategy to increase its annual revenue to at least £100million over the next five years.

The AIM-listed group, one of the country’s largest direct-to-consumer wine sellers, plans to achieve this in part by expanding customer numbers and taking advantage of its commercial partnerships.

National Savings and Investments has revealed a bumper net financing target of £12billion in the Spring Statement, which means it is looking to rake in more of savers’ cash.

This follows a year of disappointment for savers in which NS&I has cut rates on popular accounts such as Premium Bonds and Income Bonds.

Aerospace giant Babcock has won a contract extension worth around £1billion with the Ministry of Defence as Britain ramps up military spending.

The FTSE 100 group said the extension to the Defence Support Group [DSG] service provision and transformation contract ‘will deliver a comprehensive range of support capabilities for the Army in the UK with global reach’.

Inflation fell more than expected to 2.8 per cent in February, but remains above the Bank of England’s target.

At its peak, inflation stood at 11.1 per cent. The latest ONS figures show that consumer prices index inflation fell from 3 per cent in January to 2.8 per cent in December.

There will be no stamp duty reprieve for homebuyers after Rachel Reeves made no reference of it during today’s Spring Statement.

It means from 1 April, homebuyers across England and Northern Ireland will pay more upfront tax when buying a property with thousands racing to try to complete before the new rates kick in.

Individual Savings Accounts could see a radical shake-up in the near future, Spring Statement documents reveal.

The Government has revealed it is considering reforms to cash Isas, after weeks of speculation.

More taxpayers will face harsher late payment charges under new rules announced alongside Chancellor Rachel Reeves’ Spring Statement.

The Treasury published plans to increase late payment penalties for VAT and income tax self-assessment (Itsa) taxpayers as they join the ‘Making Tax Digital’ scheme from April 2025.

Why launch one new electric car when you can launch three?

Nissan has today unveiled its all-new Leaf EV and confirmed it is to revive the iconic Micra name with a battery power supermini later this year.

Britain’s economy is now forecast to grow by just 1 per cent this year, according to the latest projections from the Office for Budget Responsibility.

It marks a major downgrade from a forecast of 2 per cent in the OBR’s previous outlook published in October, when Chancellor Reeves delivered her first full budget.

The OBR expects economic output to expand by 1.9 per cent in 2026 and by 1.75 per cent over the rest of the decade.

Those forecasts compared with the OBR’s previous expectations for growth of 1.8 per cent in 2026 and 1.5 per cent in 2027.

Morrisons has boosted its medium-term savings target to £1billion, as the supermarket faces growing costs and the lingering impact of a major cyber security incident.

The retailer’s chief executive Rami Baitiéh has previously warned of an ‘avalanche of costs’ arrising from changes announced in Chancellor Rachel Reeves’ Autumn Budget, which the British Retail Consortium estimates will add an addition £7billion to its members’ cost base.

Shell’s chief executive was paid £8.6million in 2024 – and could scoop as much as £15m this year.

Wael Sawan saw his take-home pay rise 9 per cent last year from £7.9million in 2023.

Vistry investors will go without a final dividend after the housebuilder endured a torrid 2024 that saw three profit warnings amid rising costs and continued weak demand.

The housebuilder reported an adjusted pre-tax profit slump of 35 per cent to £263.5million for 2024, far below an initial estimate of £350million and later guidance of £300million.

Thomas Pugh, economist at RSM UK:

‘The slowdown in inflation to 2.8% in February will be welcomed by the Bank of England and the Chancellor ahead of her spring statement this afternoon. However, this is a temporary slowdown.

‘Inflation will almost certainly lurch higher in April as annual price resets and budget tax rises take effect.

‘We already think that inflation will peak at close to 4% in the summer, but the risk is that firms are more aggressive in passing on rising employment costs and instead of gradually falling, services inflation remains steady. In that case, even two more rate cuts from the MPC would look ambitious.’

North Sea oil and gas firm Ithaca Energy forecast higher 2025 production on Wednesday, encouraged by its acquisition of the British assets of Eni.

Ithaca Energy snapped up nearly all of Eni’s British oil and gas producing assets last year in an all-stock deal worth around £754million, with an aim to become one of the biggest independent North Sea energy companies.

Evoke shares fell sharply on Wednesday as the William Hill and 888 owner warned of slowing revenue growth at the start of 2025.

The gambling group unveiled annual earnings at the top end of expectations, rising 4 per cent to £312.5million on revenue growth of 3 per cent to £1.75billion.

The City watchdog has come under fire over the Neil Woodford scandal as MPs and peers said 500,000 investors remain in the dark over its findings six years on.

Savers had £3.7billion trapped in fund manager Woodford’s flagship fund when it was shuttered by regulators in 2019. But the Financial Conduct Authority (FCA) warned in September that action against him may not be resolved until 2026 or later.

Myron Jobson, senior personal finance analyst at Interactive Investor:

‘The lower than expected fall in inflation offers scant relief for the Chancellor ahead of the Spring Statement as the real litmus test for inflation will take place in the coming months, following rises in utility and other household bills in April and once the impact of President Donald Trump’s tariff wars starts to filter through.

‘The dip in inflation in February was largely down to the discounting of clothing items – which is a volatile component. It reflects bumpier progress on inflation’s path back to the Bank of England’s 2%, with the inflation landscape becoming increasingly uncertain as various economic factors begin to take effect. The UK’s central bank has warned that inflation could spike to 3.7% later this year before falling.

‘Looking beyond the headline figure, the continued easing of core inflation, which strips out volatile food and fuel costs to gain a clearer sense of the underlying trend, could offer some assurance to the Bank of England to cut interest rates in May.’

Smiths Group offered the City some lukewarm support yesterday by saying it would stay listed in London – at least for now.

The engineering group, which makes airport baggage-screening kits and explosive detectors, has been urged by US activist investor Engine Capital to explore a move to New York.

Nathaniel Casey, investment strategist at Evelyn Partners:

‘The Office of Budget Responsibility (OBR) is expected to deliver a downgraded UK growth outlook which could wipe out the fiscal headroom that she created during the Budget last Autumn.

‘With a slashed growth outlook and inflation still proving stubborn, Reeves faces a challenging task later today when she delivers her Spring Statement as she tries to balance the economy’s need for growth while balancing the books and staying within her own fiscal rules.

‘With rising energy price caps expected over the coming quarters, the BoE will have to balance the risks of low growth and above-target inflation. In our view, the growth risks outweigh the inflation risks, and the Bank will cautiously continue its interest rate cutting cycle over the coming quarters.’

Rob Morgan, chief investment analyst at Charles Stanley

‘Although the worst of the cost-of-living crisis is fading into the distance households cannot rest on their laurels. UK inflation remained stubborn in February at an annual 2.8%, moderating slightly from the 3.0% seen the previous month.

‘However, it’s only a speck of good news. Price rises are forecast to move in the wrong direction most of this year following a small lull. Services inflation also remains stubbornly strong at 5% and continues to drag inflation away from target.

‘CPI is expected to hit 3.7% in the third quarter, according to the latest forecast from the Bank of England, driven by higher energy and utility costs.

‘The saving grace for some households is that resilient wage growth is ahead of price rises for the time being, although the relentless drag of frozen tax bands is watering down the positive effect on disposable income.’

Inflation eased by slightly more than expected in February, falling to 2.8 per cent from 3 per cent the previous month, according to the Office for National Statistics.

The fresh data comes ahead of Rachel Reeves’ inaugural Spring Budget, with the Chancellor expected set to outline more than £10billion of spending cuts in efforts to plug a £22billlion fiscal black hole.