Back to the Royal Mail takeover, where the government has just confirmed it has reaches agreement with Royal Mail’s prospective new owners, and approved EP Group’s takeover.

Business secretary, Jonathan Reynolds says it shows the government is working hand in hand with private sector to improve crucial public services.

Under the deal, the UK has negotiated a ‘Golden Share’ in Royal Mail. This should prevent the headquarters of Royal Mail, or its tax base, being moved abroad without UK government approval.

Reynolds said:

For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers.

Today’s agreement is yet another example of this Government’s commitment to working hand in hand with business to generate reform give respite to people right across the UK, as we are working towards ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach.

I’d like to thank EP Group and Daniel Křetínský for their constructive approach to our discussions and their commitment to protecting this national icon. I look forward to working with them to fix the foundations and ensure Royal Mail continues to deliver for the communities and businesses who rely on it most.

Newsflash: UK companies are cutting jobs at the fastest rate since early in the Covid-19 pandemic, a new survey of British purchasing managers shows.

S&P Global’s latest flash PMI report, just released, shows that staffing numbers are falling in December, for the third month in a row, as firms react to October’s tax-raising budget.

The rate of job shedding across the private sector economy was the fastest for almost four years, led by services companies.

Firms are choosing not to replace voluntary leavers due to rising employment costs, the report says, such as forthcoming increases in employers’ National Insurance contributions and the minimum wage.

The increase in employers’ NICs rates is also leading to cutbacks to working hours and longer-term efforts to restructure workforces, S&P Global says

The PMI report shows that there was marginal growth across the private sector this month; its Composite Output Index was unchanged at 50.5, just over the 50-point mark showing stagnation.

But while the services sector grew, there was another contraction in manufacturing.

Worryingly, business optimism fell to the lowest level since December 2022, largely due to an ongoing slide in service sector confidence.

Chris Williamson, chief business economist at S&P Global Market Intelligence says:

“Businesses are reporting a triple whammy of gloomy news as 2024 comes to a close, with economic growth stalled, employment slumping and inflation back on the rise.

“Economic growth momentum has been lost since the robust expansion seen earlier in the year, as businesses and households have responded negatively to the new Labour government’s downbeat rhetoric and policies. Business confidence has sunk to a two-year low as companies weigh up a tougher outlook for sales alongside rising costs, notably for staff as a result of changes announced in the Budget. The survey’s price gauges are indicating that inflation is turning higher again.

“Firms are responding to the increase in National Insurance contributions and new regulations around staffing with a marked pull-back in hiring, causing employment to fall in December at the fastest rate since the global financial crisis in 2009 if the pandemic is excluded.

“While the December PMI is indicative of the economy more or less stalled in the fourth quarter, the loss of confidence and increased culling of jobs hints at worse to come as we head into the new year. Policymakers at the Bank of England may be cautious about cutting interest rates, however, given the resurgence of inflation being signalled, adding further to downturn risks in 2025.”

Back in the financial markets, France’s risk premium has risen this morning after a surprise credit rating downgrade.

Ratings agency Moody’s surprised Paris on Friday night by lowering its rating on French debt to “Aa3” (its forth-highest rating) from “Aa2”.

Moody’s took the unscheduled move following the collapse of Michel Barnier’s government this month, after MPs refused to accept €60bn of tax hikes and spending cuts in his proposed budget.

Moody’s says:

“Looking ahead, there is now very low probability that the next government will sustainably reduce the size of fiscal deficits beyond next year.

“As a result, we forecast that France’s public finances will be materially weaker over the next three years compared to our October 2024 baseline scenario.”

French bonds are a little weaker this morning, pushing up the yield (or interest rate) on its 10-year debt by around 2 basis points, to 3.05%.

German 10-year bunds are little changed, at a yield of 2.25%, so the gap between Paris and Berlin’s borrowing costs has widened.

Kathleen Brooks, research director at XTB, says:

The move by Moody’s brings it in line with Fitch and S&P, but it highlights the focus on French budget deficits and the risks they pose to bond market stability. French bond yields are a touch higher on Monday, but are generally stable.

This comes after bonds sold off in Europe and in the US last week. The French 10-year bond yield rose 16bps last week, the UK yield rose by 18bps, and the 10-year Treasury yield also rose by 18bps. If we see continued upward pressure on yields, then bond market risk could be front and centre after the New Year.

Australia’s financial intelligence agency has taken gambling giant Entain to the federal court, alleging it “deliberately obscured the identities” of high risk customers and failed to stop a “serious risk of criminal exploitation”, my colleague Henry Belot explains.

The Australian Transaction Reports and Analysis Centre’s (Austrac) civil penalty proceedings allege that Entain, which runs the Ladbrokes and Neds betting brands, committed “serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws”.

Entain’s shares are now down 5%, extending their earlier losses.

The UK’s Communication Workers Union says it has reached a “groundbreaking agreement in principle” with EP Group over its takeover of Royal Mail.

Communication Workers Union general secretary Dave Ward says:

“At the same time as this agreement is announced, we are pleased to have reached a negotiators settlement with EP Group covering crucial areas such as job security, the governance of the company, a meaningful stake in the business for employees, restoring quality of service, legally binding commitments and improving the terms and conditions of our members.

“This agreement provides the foundation to rebuild Royal Mail.

“These have been challenging negotiations but through the support of our members we have delivered what by any measure is a groundbreaking agreement which puts postal workers and customers back at heart of everything we do in Royal Mail.

EP Group has told the City that it has reached an agreement in principle with the CWU, which represents frontline workers in Royal Mail, and one with CMA Unite, which represents Royal Mail’s managerial workforce, to help clear its takeover offer – alongside the agreement with the government just announced.

Ward adds that the CWU will always campaign for Royal Mail to be returned to public ownership, but took the decision to protect its members once it was clear the government would support the takeover by Daniel Křetínský.

Ward adds:

“The other major factor here is whilst many will fear Royal Mail falling into the hands of a foreign equity investor, the truth is that the status quo is what will kill off postal services in the UK.

“The Royal Mail Group Board have been running the company into the ground over a sustained period and in the process have completely alienated their own workforce. It is time for a fresh start and a complete re-set of employee and industrial relations.

“If the takeover is completed, we will make sure every aspect of our agreement with EP Group is upheld in full.”

Keith Williams, non-executive chair of Royal Mail’s parent company IDS, says today’s announcement of an agreement between EP Group and the government is “an important milestone in the approvals process” for the takeover of Royal Mail.

Williams explains:

The IDS Board welcomes the Government’s endorsement and legal backing for the comprehensive package of undertakings and commitments we negotiated. These provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the United Kingdom.

“We welcome the Government’s commitment today to secure a stable future for Royal Mail. This will not come from a change in ownership alone but must also be backed by urgent reform of the Universal Service and the continued transformation of this great British business.”

Newsflash: Czech billionaire Daniel Křetínský’s EP Group has announced it has reached agreement with the UK goverment, and UK unions, over its proposed takeover of Royal Mail.

As flagged earlier, this appears to clear the way for Křetínský to take control of the postal operator.

In a statement to the City, EP Group says it has entered into “legally binding undertakings”, having worked closely with the Secretary of State for the Department for Business and Trade.

These new undertakings include ensuring that Royal Mail continues as the Universal Service Provider in the UK, until there is a further change of control in Royal Mail.

There is also a five-year pledge not to transfer any surplus from Royal Mail’s pension fund, and also to keep IDS and Royal Mail’s headquarters in the UK.

Gambling firm Entain has been hit by a money-laundering lawsuit in Australia.

Australia’s financial crime watchdog has alleged that Entain – which operates a string of betting companies including Ladbrokes – has breached Australian anti-money laundering (AML) and counter-terrorism financing (CTF) laws by its online betting platforms.

AUSTRAC CEO Brendan Thomas said the agency considers there were systemic failures in Entain’s approach to its AML/CTF obligations, saying:

“AUSTRAC’s proceedings allege that Entain did not develop and maintain a compliant anti-money laundering program and failed to identify and assess the risks it faced. We are alleging this left the company at serious risk of criminal exploitation.

“Money laundering is often a symptom of serious criminal activity, including fraud, scams and corruption, all of which have equally serious effects on our communities.

Entain says it has co-operated fully with AUSTRAC throughout its investigation.

The company’s CEO, Gavin Isaacs, told shareholders this morning that Entain takes the allegations “extremely seriously”.

Isaacs said:

We have co-operated fully with AUSTRAC throughout its investigation and we are implementing further enhancements to Entain Australia’s AML and CTF compliance arrangements. Whilst we still have some further improvements to make, we expect these to be implemented in line with the plan we communicated to AUSTRAC in 2023.

We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community.”

Shares in Entain have fallen around 3%, making it the top faller on the FTSE 100 share index.

Although the London stock market may soon lose Royal Mail, it has gained a new member this morning.

Canal+, the international pay-TV company and owner of the studio behind the Paddington film franchise, has floated in the City this morning.

Canal+ is being spun out of French media conglomerate Vivendi.

Chancellor Rachel Reeves has hailed the floatation as a “vote of confidence” in the UK’s capital markets.

Maxime Saada, chair of Canal+, told Radio 4’s Today Programme that the company wanted to reach global investors, as two-thirds of its 27m subscribers are outside France.

Saada says:

It was very important for us to appeal to international investors, and London has a strong base of international investors investorss and a very strong global reputation.

But despite that, the London Stock Exchange is on course for its worst year for departures since the financial crisis.

New figures show that 88 companies have delisted or transferred their primary listing from London’s main market this year with only 18 taking their place, according to the London Stock Exchange Group.

Bitcoin has soared to new alltime highs in the early hours of this morning, as the crypto rally gathers pace.

The world’s largest cryptocurrency is up around 4% since Friday night, hitting $106,533, and extending its rise over the $100k mark.

These latest gains came as traders bet that Donald Trump’s new administration will bring in a friendlier regulatory environment for crypto, and could even create a new ‘bitcoin strategic reserve’, similar to its gold reserves.

Last week, Trump pledged to “do something great with crypto”, to avoid other countries getting ahead of the US on the issue.

Analyst Naeem Aslam of Zaye Capital Markets says:

There is no shortage of good news in the crypto world, and it seems that bitcoin traders are going to continue to get more presents from Santa in terms of higher highs for the bitcoin price.

There was a time when 100K was a real profit-taking target for most traders and investors, but with new momentum, many traders think and believe that they need to adjust their expectations, and the new realistic target for them is bitcoin’s price hitting the level of 150K at minimum and with 200K a real potential by the end of this next year at this time. This means that traders are going to hold their horses and wait patiently while celebrating every single victory as the bitcoin price makes new highs.

Christmas is coming, which means the UK housing market is cooling.

With winter setting in, a potential house buyer’s fancy is lightly turning to more pressing concerns than a move – such as present-buying, food options, and juggling visiting the in-laws.

And this means that asking prices set by new sellers coming to market have dropped by £6,395, or 1.7%, this month to £360,197, new data from Rightmove shows, as sellers’ pricing power diminished in the face of advent.

But Boxing Day could bring a bounce – last year, on 26th December there was a record number of new sellers launching to the market for that time of year.

Rightmove reports that the number of sales being agreed is up by 22% compared with this time last year, while the number of new buyers contacting estate agents about homes for sale is up by 13%.

Rightmove’s Tim Bannister says:

“New sellers in December have to work particularly hard to capture the attention of Xmas-party and festivity-distracted buyers, and the 1.7% average monthly fall is a fitting gift for those who are still buying homes rather than presents.

Despite this monthly drop, prices have risen by 1.4% compared with this time in 2023, broadly in line with our prediction of a 1% rise in prices this year.

We are now looking ahead to the traditional Rightmove Boxing Day bounce in home-mover activity, which has increasingly become a key date in the housing market calendar.

The online estate agent is forecasting a 4% rise in 2025 as falling interest rates stimulate the market.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The “Czech Sphinx” has reportedly triumphed in his bid to take control of Royal Mail.

The British government has approved Czech billionaire Daniel Křetínský’s £3.57bn takeover of Royal Mail’s owner International Distribution Services, according to reports this morning.

This green light should pave the way for the formerly state-owned postal service provider to pass into foreign ownership for the first time in its history.

The BBC is reporting that the sale has been approved, and that the takeover will be announced on Monday morning.

As part of the final deal, the UK government will retain a so-called “golden share” in the postal service giving it special rights over the governance of the company, the Financial Times reports.

Once the deal goes through, Royal Mail would leave the stock market, 11 years after being floated by David Cameron’s coalition goverment at a value of £3.3bn.

IDS accepted the terms and conditions of the bid, from Křetínský’s EP Group, in May. That offer was worth 360p per share, for the 73% of Royal Mail that he didn’t already own.

Křetínský has made various commitments, including to keep the Universal Service Obligation (USO) under whch letters are delivered six days per week, not to raid its pension surplus, and to keep Royal Mail headquartered and tax resident in the United Kingdom.

Officials had been reviewing whether the deal poses a risk to national security interests, including looking at Křetínský’s links to Russia.

Royal Mail failed to deliver about a quarter of first-class post on time in recent months, marking a worsening in its recent delivery performance, when it is already under investigation for missing delivery targets.

The agenda

• 8.15am GMT: European Central Bank president Christine Lagarde gives a speech to mark the 10th anniversary of the introduction of the euro in Lithuania

• 9am GMT: Eurozone flash PMI survey for December

• 9.30am GMT: UK flash PMI survey for December

• 1.30pm GMT: NY Empire State Manufacturing Index

• 2.45pm GMT: US flash PMI survey for December