European Central Bank ready to cut interest rates; UK retail sales jump as inflation slows – business live

Newsflash: Boohoo has sensationally backed down over a controversial scheme that would have handed sizeable bonuses to directors of the loss-making fast fashion group.

Boohoo has told shareholders that it has withdrawn a resolution from next month’s AGM which would have handed £1m bonuses to Mahmud Kamani and Carol Kane, its co-founders, and to CEOJohn Lyttle.

The u-turn comes after a backlash from some investors, who were gearing up to revolt against the plan when it came to a vote at the AGM on 20th June.

Boohoo says that having engaged with “certain shareholders”, it has decided not to implement the Incentive Plan at this time.

Kamani, Kane and Lyttle were not due bonuses because they missed financial targets for the last year. However, Boohoo’s remuneration committee agreed to a pay out anyway, citing their “overall performance” and a change of strategy during the year.

In the company’s latest annual report, they explained:

However, the Remuneration Committee considered at great length the overall formulaic outcomes and determined that they were not reflective of the overall performance of the management team during the financial year.

This was against the backdrop of an agreed change in focus by the board during the second half of the year placing greater emphasis on cash and inventory management, to ensure the business continues to be well positioned to capitalise on top line growth going forward.

Shares in UK water companies are falling today, after The Guardian reported that regulator Ofwat is poised to refuse of the industry’s requests to lift consumer bills sharply.

Ofwat’s draft determination, which will set how much water companies can raise bills, has been postponed until after the general election.

Many water companies had sought hefty increases, to fund network improvements, but some will receive as little as half of what they have asked.

My colleague Anna Isaac reported:

Britain’s biggest water monopoly company, Thames Water, which serves more than 16million customers in the London and Thames Valley regions, faces nationalisation unless it can attract vast quantities of fresh capital. It has requested bill rises of 59% – after accounting for inflation – from the regulator.

These figures have been rejected by Ofwat based on the latest iteration of Thames’s business and turnaround plans. The documents were described as a “microwave job”, according to sources who have reviewed them. They include “fag-packet figures” and reflect a board whose members appear determined to “sit on a deckchair on the Titanic”, the same sources said.

In the City today, Pennon Group’s shares have fallen 3.5% – the top faller on the FTSE 250 share index. On the larger FTSE 100 index, United Utilities and Severn Trent have both lost 2.8%.

In the artificial intelligence world, OpenAI – the creator of the ChatGPT chatbot – has set up a new Safety and Security Committee.

The new committee is responsible for making recommendations on critical safety and security decisions for all OpenAI projects – a crucial issue, given concerns about the dangers which AI could pose.

Its first task is to evaluate and further develop OpenAI’s processes and safeguards over the next 90 days, before making recommendations to its board. OpenAI says it will review them, and then announce its “adopted recommendations”.

OpenAI says:

OpenAI has recently begun training its next frontier model and we anticipate the resulting systems to bring us to the next level of capabilities on our path to AGI.

While we are proud to build and release models that are industry-leading on both capabilities and safety, we welcome a robust debate at this important moment.

The commmittee will be led by OpenAI’s chair Bret Taylor, CEO Sam Altman, and directors Adam D’Angelo and Nicole Seligman.

Earlier this month, a former senior employee at OpenAI said the company was prioritising “shiny products” over safety, revealing that he quit after a disagreement over key aims reached “breaking point”.

And last week, a leading scientist and artificial intelligence campaigner told The Guardian that major tech firms had distracted the world from the existential risk to humanity posed by AI.

UK retail sales have bounced back this month, new data shows, as slowing inflation encouraged customers to spend in the shops.

The latest CBI Distributive Trades Survey shows that UK retail sales grew at their fastest pace since December 2022 in the year to May.

A net balance of +8% of retailers reported that sales volumes were up year-on-year, a sharp improvement on the -44% recorded in April [the balance is the difference between firms who answered ‘up’ or ‘down’].

That may be a sign that the economic recovery picked up this month; potentially a boost to Rishi Sunak, as he argues “the economy is turning a corner”.

However, a small majority of retailers expect sales to fall moderately next month.

Sales were seen as “average” for the time of year – the strongest reading in eight months.

The CBI also reports that selling price inflation in the retail sector eased considerably in May, to its lowest since August 2020.

A balance of 20% of retailers reported they’d raised their prices, down from 54% in February.

That chimes with this morning’s survey from the BRC, showing shop inflation had returned to normal levels.

Fewer wholesalers reporting higher prices than in February, too.

Alpesh Paleja, CBI lead economist, says:

“May’s increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near-term. Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further.

“That being said, retailers are restrained about their business situation over the coming quarter. Headlines sales are expected to fall moderately next month, and it’s concerning that retailers’ investment intentions have deteriorated noticeably.

“The mixed mood from our survey demonstrates just how nascent the economic recovery is. All parties should use this general election campaign to embrace policies which will embed sustainable growth, foster the investment we need to develop a labour market which delivers higher living standards, and to accelerate our transition to net zero.”

NatWest has confirmed that the IT problems which affected its services this morning are now resolved.

A NatWest spokesperson said:

“We are aware that some customers were experiencing difficulties accessing NatWest mobile and online banking this morning. The issue has been resolved and customers are now able to log in as normal. We apologise to customers for any inconvenience caused.”

NatWest’s website now declares that its online banking service is “working normally” again.

But, it says there is still some service disruption on the mobile app, with some customers unable to view their credit card information on our mobile app.

“We’re working hard to fix this, sorry if it’s causing you any issues,” NatWest adds.