Europe biz: Hong Kong drops London Stock Exchange bid, no-deal Brexit could trigger austerity
Gary Parkinson
The Hong Kong bourse will not be buying LSE (Credit: AP Photo/Kin Cheung)

The Hong Kong bourse will not be buying LSE (Credit: AP Photo/Kin Cheung)

Hong Kong drops bid for London Stock Exchange

Hong Kong Exchanges and Clearing (HKEX) is to drop its $39 billion offer for the London Stock Exchange Group (LSE), after the failure of a three-week "charm offensive" to persuade shareholders and regulators. LSE's board rejected the initial proposal in mid-September, and HKEX had until the end of Wednesday to make a binding offer. 

HKEX has been diversifying and bought the London Metal Exchange in 2012 for $2.2 billion. The LSE has its own purchase plan, to buy the data analytics company Refinitiv for $27 billion – a deal the HKEX takeover would have halted. It's not the first failed attempt to take over the LSE: there have been seven bids or proposed mergers over the past two decades, with interested parties ranging from the Stockholm Stock Exchange and Deutsche Börse to the Toronto Stock Exchange and the Nasdaq.


Easyjet to benefit from rivals' problems

Budget airline Easyjet said on Tuesday its full-year profits would be at the upper end of expectations, after revenue was boosted by pilot strikes at rivals Ryanair and British Airways. Easyjet's pre-tax profits are expected to be around $515 million to $527 million. 

A September strike by BA pilots is expected to wipe $150 million off this year's earnings, according to BA's owner IAG. Ryanair pilots also walked out, helping Easyjet's revenue per seat to increase by 0.8 percent in the second half, compared with previous expectations of a slight fall.


No-deal Brexit 'would trigger austerity'

A leading think tank has warned that the UK leaving the European Union without a deal would likely more than double Britain's budget deficit to around $125 million, triggering a return to governmental austerity measures. The Institute for Fiscal Studies (IFS) asserted that a no-deal Brexit would mean either higher taxes or less money to spend on public services than staying in the EU or leaving with a deal. 

In its annual assessment of public finances, the IFS suggested that even under a "relatively benign" no-deal Brexit, with no major border delays, the economy would enter recession in 2020. The report expects the government's resultant fiscal stimulus would take borrowing to 4 percent of national income by 2021/22. 

The UK government's economic chief Sajid Javid may face a problem (Credit: AP Photo/Alastair Grant)

The UK government's economic chief Sajid Javid may face a problem (Credit: AP Photo/Alastair Grant)

Germany industry rise 'a flash in the pan' 

Despite various worrying metrics Germany's economy was in slowdown, the country's industrial output rose unexpectedly in August. The German economics ministry revealed that figures rose 0.3 percent on July, confounding expectations of a 0.1 percent drop. 

However, the country's months-long manufacturing contraction continues, and analysts still fear Europe's largest economy tipping into recession. "One could entertain the idea that the German economy will just about avoid a recession, but unfortunately one must consider the industrial production data for August as a flash in the pan," said VP Bank's Thomas Gitzel. "We expect production in September to be negative. This means that GDP will contract at least slightly in the third quarter."


Selfridges enjoys record year of sales

A major revamp has paid dividends for Selfridges: the world-renowned department store has posted a record operating profit of $222 million. Sales rose by 11.5 percent year-on-year to $2.14 billion, thanks to a new 18,288-square-meter accessories hall in London and boutiques in the Birmingham store. 

Selfridges is in the final quarter of a four-year $370 million investment plan, overhauling its flagship Oxford Street store while increasing its digital capabilities via a Chinese-language website and an Android app.