LIVEBUSINESS LIVE: Borrowing hits £16.6bn; HSBC shake-up; Mulberry says Frasers’ takeover ‘untenable’

Interest rates will fall to 2.75 per cent over the course of the coming year in a boost for millions of borrowers, Goldman Sachs has predicted.

Economists at the Wall Street giant believe the Bank of England will cut more sharply than suggested by market pricing, which points to rates falling to 3.5 per cent.

Rachel Reeves has been urged to make it easier for small businesses to sell abroad in what could be a boost of nearly £10billion for Britain.

Business lobby group Walpole – which represents hundreds of luxury firms including Burberry and Aston Martin – wants an incentive introduced to encourage UK firms to export.

Chief executive Helen Brocklebank wrote to the Chancellor this month, saying companies need aid to help with ‘the first few costly years of operation in a new market’.

Mulberry has rejected a second takeover proposal from Mike Ashley’s Frasers Group, dismissing the group’s latest offer as ‘untenable’.

Frasers raised its proposal to 150p per Mulberry share on 11 October, valuing the luxury brand, best known for its handbags, at £111million.

Mulberry’s biggest shareholder, Challice Limited, the vehicle of Singapore-based property tycoon Ong Beng Seng and his wife Christina which owns 56.4 per cent, said two dayy later it would not support Frasers’ proposal.

Under UK takeover rules, Frasers, which owns 37 per cnet of Mulberry, has until 28 October to make a firm offer or walk away.

Shares in Mulberry closed Monday at 125p.

HSBC has unveiled an overhaul of its global structure as new boss Georges Elhedery looks to reduce costs and home in on the bank’s leading divisions.

The bank said it was merging its commercial and institutional banking operations, and creating a new international wealth and premier banking division.

It was also simplifographic structuying its gere with the creation of ‘Eastern markets’, which incorporates Asia and the Middle East, and ‘Western markets’, comprising of the UK, Europe and Americas.

HSBC also announced the appointment of Pam Kaur as its new chief financial officer, having joined the bank more than a decade ago.

Elhedery said: ‘The changes that we are announcing today will make it easier for our colleagues to serve our customers and drive the future success of the Group. The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged.

‘Our home markets of the UK and Hong Kong, together with our corporate and institutional banking as well as our wealth and Premier banking businesses, are the core strengths of HSBC.

‘By making these changes, we can better focus on increasing leadership and market share in those businesses which have clear competitive advantage and the greatest opportunities to grow.

‘This is how we will fast forward our plans to execute our strategy, unleash the full potential of the bank and ensure our talented colleagues can thrive, and deliver best in class products and service excellence, for our customers.’

Lindsay James, investment strategist at Quilter Investors:

‘The UK’s finances are stretched close to breaking point, as public sector net debt excluding public sector banks estimated at 98.5 per cent of GDP at the end of September 2024.

‘This is an uptick of 4 per cent compared to the same time last year. The last time such levels were seen was in the 1960s, when the Labour Chancellor of the day was ultimately forced into a policy of tax increases and spending reductions.

‘Although Rachel Reeves has promised that the UK will not see a return to austerity, a series of tax increases in one form or another are all but guaranteed at next week’s budget.

‘The Chancellor has warned the UK public that there is a very large fiscal ‘black hole’ to be filled and has repeatedly indicated that difficult decisions will be necessary.

‘The Labour government will want to avoid a repeat of the negative reactions from financial markets in recent years to unfunded tax cuts and spending plans, so the Chancellor will need to be transparent when announcing any changes and the anticipated costs.

‘The mood has been bleak in the lead up to the budget, and while it remains to be seen how the market will react to any announcements, there are still some positives for the UK economy.

‘For the first time in more than three years inflation is now well below the Bank of England’s 2% target. The economy finally grew in August following two months of stagnation, and while higher interest rates have begun to take a toll on the labour market, there are still signs of progress.

‘With all that considered, the Bank of England is expected to continue on its ‘slow and steady’ path with the potential for another 0.25% cut at its next monetary policy meeting, which could help to lift consumer confidence and provide a much needed boost to the economy.’

UK government borrowing hit £16.6billion last month, well ahead of Office for Budget Responsibility projections of £15.1billion and marking the third highest borrowing figures for September on record.

However, the reading was below City forecasts of £17.5billion for the month.