Rain, Rain, Go Away

It would appear rain is very powerful.  As well as having the ability to leave election announcements looking not well planned (how much did we spend on the press room inside Number 10?), it is also being blamed for the poor performance of the UK economy in April.

The economy saw what is being reported as 0.0% growth in April (a phrase which is making my head hurt), down from 0.4% growth in March.

Specifically, the wet weather is being linked to difficulties faced by workers on building sites and the lack of shoppers on the high street.  Manufacturing output fell by 1.4% month on month, while construction activity was 1.4% lower and retailers lost 2.0% of their trade. These declines were balanced out by a 2% rise across the whole services sector, boosted by rises in IT and communication services, professional businesses (1.2%), and arts and entertainment (2.6%).

Paul Dales, the chief UK economist at the consultancy Capital Economics, said the economy could begin to grow again during the summer.  “Despite the stalling of the recovery in April, the dual drags on economic growth from higher interest rates and higher inflation will continue to fade throughout the year. That will generate a bit of an economic tailwind for the next government,” he said.

Suren Thiru, the economics director at the accountancy body the ICAEW, said April’s zero growth rate was unlikely to encourage the Bank of England to cut interest rates at its meeting later this month.  “Despite these disappointing GDP figures, a June interest rate cut looks improbable with the Bank of England likely to be a little wary of shifting policy in the middle of a general election campaign.”

In a rather tenuous link to wet weather from the NTI newsroom, things are better when they are not raining, which brings us to news from Superdry.

99% of creditors of the clothing brand have voted in favour of its restructuring plan, which includes proposals to obtain rent reductions across 39 UK stores, an equity raise underwritten by founder Julian Dunkerton, and delisting from the stock market.  The plan, which does not include any store closures, follows after a possible take-private deal fell through earlier this year. It will result in “material cash savings from rent and business rate compromises” over the three years of its restructuring plan.

Teneo senior managing director Gavin Maher said: “Having 99% of those creditors that voted being in favour means that the plan company has achieved an important milestone in securing creditor support for the restructuring plan.”

Shareholders will now vote on the equity raise and delisting at Superdry’s general meeting on Friday (14 June). If the resolutions are passed, the High Court will be asked to sanction the restructuring plan at a hearing on 17 June.