(Bloomberg) -- While end of year trading updates have been filled with optimism around a better-than-expected festive period for retailers, the numbers from the ONS this morning don’t lie: retail sales fell in December as people cut back on spending. And while Brits pull back, in part due to higher energy prices, Scottish utility company SSE boosted their earnings expectations off the back of those elevated levels. 

Here’s the key business news from London this morning:

In The City

SSE Plc: The Scottish electricity company boosted its full year earnings expectations after soaring power prices lifted its power generation assets, despite lower than planned renewables output.

  • The final result will depend on the weather, but it now expects its full year adjusted earnings per share more than 150p, compared to previous guidance of at least 120p

Close Brothers Group Plc: The merchant bank will increase its provisions relating to its Novitas loan book as it expects it to take longer than expected to recover the related loans after initiating legal action against one of the insurers.

  • Close Brothers bought Novitas Loans in 2017 but decided to stop lending to new customers in July 2021

Spirent Communications Plc: The electronic solutions provider expects its 2022 adjusted operating profit to be slight ahead of the market’s consensus, after navigating economic challenges, supply chain constraints and cost inflation.

  • Economic uncertainty, however, has been prompting some of its customers to put of investment decisions, meaning its performance will “likely to have a heavier than usual weighting” to the second half of this year

Retail Sales: The volume of goods purchased in shops and online fell unexpectedly last month, capping the worst year on record after a cost-of-living squeeze and strikes rattled the industry.

  • Retail sales fell 1% in December, driven by non-food sales, while economists expected a gain of 0.5%

In Westminster

Labour edged closer to becoming the government-in-waiting that the polls imply after the party leadership’s successful first day out at Davos. British business figures and bankers said Labour leader Keir Starmer and his shadow chancellor Rachel Reeves had impressed in their attempt to demonstrate that the opposition is “open to business.”

More than half of Britain’s homes fell in value in the final three months of last year, as high borrowing costs and spiraling inflation weighed on the housing market. Meanwhile, the number of people searching for lodgers to stay in their spare rooms spiked. 

In Case You Missed It 

UK employers unleashed a hiring spree at the start of 2023 even as consumer confidence about the economy stalled. 

The highest increase in consumer debt in over 18 years is fueling a surprise recovery in the UK’s retail sector, as Britons borrow to buy products ranging from high-ticket electronic items to basics such as milk. 

Finally, Bloomberg Opinion deals columnist Chris Hughes takes a closer look at a clash between bondholders and Melrose Industries Plc — “the arch cost-cutter of the engineering world known for giving nothing away.” 

Looking Ahead 

Next week will see results from Primark-owner Associated British Foods Plc as well as discount carriers EasyJet Plc and Wizz Air Holdings Plc. 

The airlines’ reports may illustrate how European travellers have been trading down in recent months, according to Bloomberg Intelligence analyst Conroy Gaynor. “The growth of these low-cost airlines threatens industry pricing,” Gaynor says, adding that some of the pent-up demand that’s been boosting airlines until New Year may now be behind us.

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