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Shares in companies that depend on consumer spending have plunged after Next, the fashion to homewares retailer, cut its sales forecast for the second half of its financial year and annual profit guidance.

The company used the publication of its half-year results to the end of July to say that there were too many variables at play amid the cost of living crisis to have much confidence in determining consumer demand ahead.

Next, which is widely seen as the most consistent high street performer, reported that it had enjoyed a stronger than anticipated first half with full price sales up 12.4% on the same period last year.

Profit before tax of £401m was 16% higher.

Truss gives first interviews since pound dived – economy latest

But it revealed that sales suffered during August before some demand returned in the current month.

Next, which trades from about 500 stores and online, said it now expected full price sales in its second half to fall 1.5%.

More on Cost Of Living

It had previously guided an increase of 1%.

The full-year pre-tax profit forecast fell by £20m to £840m but it still represented a rise of 2% on 2020/21.

The company’s shares fell by 10% in early deals while those of high street rivals and other consumer-facing stocks also suffered.

The FTSE 100 and FTSE 250 indexes were both down more than 2% while growing recession fears were also evident on the continent, with the German DAX and French CAC also significantly lower.

Those worst hit on the London Stock Exchange included housebuilders and personal investment platforms.

Next said it was hoping to “see benefits from recent government measures” – namely help for household energy bills – but admitted it was tough to have a clear picture of what lay ahead.

The economy is enduring challenges on many fronts, with sterling hitting record lows this week and government bonds under severe pressure after the mini-budget, prompting Bank of England intervention.

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‘Inflation is going up across the economy’

Both the pound – at $1.08 – and bond yields – the interest rate demanded to hold UK government debt – were relatively stable on Thursday morning as the PM defended the government’s growth plan and the handling of it following the market backlash.

“There are so many variables at play – energy, freight, employment, tax, economic migration, exchange rates, etc – that today, more than ever, it is not possible to predict the future on the basis of the past,” Next said.

“It is over 40 years since the UK last experienced an inflationary shock on the scale we are witnessing today; and the UK economy of the 1970s – with its reliance on highly subsidised and geographically concentrated heavy industry – was incomparably different to the economy of today.

“We have used our recent trade, along with some internal and external economic data, to build a picture of what we think is going on and how the company is likely to be affected over the coming months.”

The company’s results followed weak recent trading updates from rivals including Asos, Boohoo and Primark.

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Charlie Huggins, head of equities at Wealth Club, said of the Next results: “The fact that many retailers are struggling shouldn’t be a surprise.”

“This is arguably the most difficult trading environment since the 2008/09 financial crisis. Inflation is at levels not seen for four decades.

“Sterling is in the doldrums, trading at its weakest level against the dollar since 1985. Add to this, the war in Ukraine and the spectre of further interest rate rises. It’s not exactly conducive to consumers restocking their wardrobes.

“Perhaps the biggest issue for the whole sector is that while things look challenging right now, they look set to become even more so.

“This is due to the precipitous decline in sterling which will only exacerbate inflationary pressures.

“Next looks better positioned than most of its peers to weather the storm, and emerge stronger in light of its high margins, robust cash flows and strong balance sheet. But 2023 could be a very difficult year the way things are shaping up.”

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Royal Navy chief gives stark warning: Fund defence or risk losing Atlantic to Russia

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Royal Navy chief gives stark warning: Fund defence or risk losing Atlantic to Russia

The head of the Royal Navy has warned the government to “step up” and fund defence or risk losing the UK’s superiority in the Atlantic to Russia.

Should that happen, General Sir Gwyn Jenkins said it would be the first time since the end of the Second World War that Britain’s warships and submarines were not the dominant force in their most vital sea lanes alongside their allies.

“We are holding on, but not by much,” he told a conference in London on Monday.

“There is no room for complacency. Our would-be opponents are investing billions. We have to step up, or we will lose that advantage.”

As a senior, serving military officer speaking publicly, he did not make any direct criticism of the speed of plans by Sir Keir Starmer’s government to increase defence spending.

But Sky News has reported that he and his fellow chiefs held a “very difficult meeting” last month over how to fund plans to rebuild the armed forces amid fears of further cuts.

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Budget: what about defence spending?

Defence sources said there was growing concern at the very top of the armed forces about a gap between the promises being made by the prime minister to fix the UK’s hollowed-out defences and the reality of the size of the defence budget, which is currently not seen as growing fast enough.

That means either billions of additional pounds must be found more quickly, or ambitions to modernise and transform the armed forces might need to be curbed, despite warnings of mounting threats from Russia and China, and pressure from Donald Trump on allies to spend more on their own defences.

A Sky News and Tortoise podcast series called The Wargame tracks the hollowing out of the UK’s military since the end of the Cold War and the risk that has created.

👉Search for The Wargame on your podcast app👈

General Jenkins, the first Royal Marine to serve as First Sea Lord, used a speech at the Sea Power Conference to say that Russia is still investing billions in its naval capabilities – in particular the Northern Fleet that operates in the Atlantic – even as it wages war against Ukraine.

There has been a 30% increase in Russian incursions in the North Atlantic in the past two years, he said.

That included the Yantar spy ship, which last month was spotted off the coast of Scotland and even shone a laser at the pilots of a Royal Air Force reconnaissance plane that was tracking the vessel.

The Russian spy ship Yantar. Pic: MOD/PA
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The Russian spy ship Yantar. Pic: MOD/PA

Yet General Jenkins said what Russia is doing beneath the surface of the waves, where the UK and its allies store vital communications cables as well as critical oil and gas pipelines, was even more concerning.

“I can also tell you today that the advantage that we have enjoyed in the Atlantic since the end of the Second World War is at risk,” he said.

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Does Britain’s threat to Russia ring hollow?

HMS Iron Duke shadowing the Russian Frigate Neustrashimy through UK waters in September. Pic: PA
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HMS Iron Duke shadowing the Russian Frigate Neustrashimy through UK waters in September. Pic: PA

Navy facing huge challenges

It is a particularly tough time for the navy, which has more ships and submarines alongside and unable to operate than at sea or at least ready to sail.

The service is also suffering from a shortage of sailors and in particular submariners, which again is impacting the availability of the fleet.

The crisis follows decades of funding cuts since the end of the Cold War, compounded by a litany of botched procurement programmes that has all too often seen vessels coming into service years late, at an inflated price and in too few numbers.

Vision of ‘hybrid navy’

Despite the sombre tone, the First Sea Lord set out how he wants to transform his service and make it ready to fight a war – though not until 2029, a timeline that could be too slow if some predictions about the threat posed by Russia to NATO are correct.

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New UK military technology unveiled

His vision – working with industry and other allies – is about developing a blend of manned ships and submarines as well as unmanned ones – a “hybrid navy”.

He is also stripping back what he called the navy’s own bureaucracies to enable the service to move much faster – crucially at the pace of the threat and the pace of rapid and growing technological change.

“We will face headwinds, we will face rough seas, but together, we can solve these problems if we have the appetite, if we have the determination, and if we have the mindset.”

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Teen Afghan asylum seekers locked up for raping girl

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Teen Afghan asylum seekers locked up for raping girl

Two teenage asylum seekers from Afghanistan face possible deportation after being detained for abducting and raping a 15-year-old girl.

Jan Jahanzeb and Israr Niazal, both 17, led the “highly-distressed” victim away from friends near Leamington town centre to a secluded “den-type” area in parkland, where they pushed her to the ground and attacked her.

Sentencing the pair at Warwick Crown Court on Monday, Judge Sylvia de Bertodano said they ignored the victim’s “vigorous protests” and told them what they did “changed her life forever”.

“No child should have to suffer the ordeal that she suffered. It’s clear from the footage we have seen that no one can seriously entertain the thought that you believed she was consenting,” she said.

“You both knew perfectly well that what you were doing was criminal and wrong,” the judge added.

‘Highly distressing’

After lifting reporting restrictions protecting the identities of the defendants, the judge told them they had “betrayed” those who come to Britain seeking sanctuary and who observed the law.

Both defendants were unaccompanied child asylum seekers who arrived in the UK last year, prosecutor Shawn Williams said.

The incident happened in May of this year.

“Highly distressing” phone video found by police showed the victim screamed for help, but Jahanzeb placed his hand over her mouth.

CCTV footage showed that after being led away against her will, the terrified victim was “moved to a bushy den-type area – a really secluded location” before, according to her, she was “pushed to her knees before being raped”.

“The prosecution case is that it was probably Jahanzeb that did that, but what is certain is that Israr Niazal was present and participating,” Mr Williams said.

The victim had made “explicit verbal protests” during what Mr Williams described as an abduction.

What are their sentences?

Jahanzeb, who has already been served with deportation notification papers, was given 10 years, eight months’ youth detention.

Niazal, who may also be deported, was sentenced to nine years and 10 months.

They will start their sentences in a young offenders’ institution and move to prison at a later date, police said.

Both pleaded guilty to rape at an earlier hearing.

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Detective Chief Inspector Richard Hobbs said the offenders “went out of their way to befriend the victim with the intention of raping her”.

“The length of their sentence reflects the severity of their crime and the need to protect the public from them,” he added.

After sentence was passed, Judge de Bertodano said the victim had been “beyond brave” in attending court at a previous stage, when the defendants had intended to plead not guilty.

They were both ordered to register as sex offenders.

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‘Striking’ new artwork for UK trains revealed – as MPs debate rail nationalisation

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'Striking' new artwork for UK trains revealed - as MPs debate rail nationalisation

A “striking” new design for UK trains has been revealed by the transport secretary – but you may well think it looks familiar.

Train services already in public ownership will begin to adopt a Union flag-inspired design from this spring, Heidi Alexander has confirmed.

It’s part of the government’s efforts to nationalise most passenger rail services in the UK and run them under the new Great British Railways (GBR) brand – with its logo to be unveiled later today.

Ms Alexander will be speaking more about GBR – which is due to be formally established in 2027 – on Mornings With Ridge And Frost from around 7.10am.

The new Great British Railways logo has drawn on the original logo of British Rail from 1965.
Pic: Dovetail Games.
Image:
The new Great British Railways logo has drawn on the original logo of British Rail from 1965.
Pic: Dovetail Games.

Haven’t I seen this somewhere before?

The branding features the familiar double arrow symbol used by British Rail when the country’s trains were last state-owned.

A spokesperson for the Department for Transport (DfT) said the “iconic” symbol has been incorporated into the new GBR logo to reflect “Britain’s proud railway heritage”.

Ms Alexander has insisted it “isn’t just a paint job”, saying: “It represents a new railway, casting off the frustrations of the past and focused entirely on delivering a proper public service for passengers.”

Special one-day public exhibition launched

People in the capital will be able to see the new train livery for themselves today, with a special one-day exhibit being held at London Bridge station, where a GBR-branded Hornby model train will be on display.

The government has also partnered with a gaming company to create mock-ups of the new design, and those at the station will be able to see a digital demonstration of the new artwork in Train Sim World 6.

The new designs will also be beamed on to digital display boards over the coming days at Manchester Piccadilly, Birmingham New Street, Glasgow Central, and Leeds City.

People in the capital will be able to see a mock-up of a train in the new livery in a Train Sim World 6 game.
Pic: Dovetail Games.
Image:
People in the capital will be able to see a mock-up of a train in the new livery in a Train Sim World 6 game.
Pic: Dovetail Games.

It comes as MPs prepare to debate the government’s Railways Bill in the Commons.

The government has taken control of seven major operators so far, but has pledged to return all passenger services to public ownership as contracts with existing operators expire or are broken through a failure to deliver.

Read more:
What is Labour’s rail nationalisation plan?

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What will nationalisation actually involve?

The government has said its Railways Bill will bring 17 different organisations together and will also lead to greater accountability, better services and an easier way to buy tickets.

Among the measures is the creation of a GBR app, where passengers will be able to check train times and buy tickets without booking fees, while those with disabilities will be able to also request assistance.

A new 'one-stop shop' app will be launched as part of the scheme.
Pic: Department for Transport
Image:
A new ‘one-stop shop’ app will be launched as part of the scheme.
Pic: Department for Transport

The draft law would also beef up accountability by creating a strengthened Passenger Watchdog, while GBR would operate both services and maintain the railways themselves.

Ministers have pointed to improvements to existing services since they have been nationalised, such as South Western Railway boosting capacity by almost 10% by quadrupling its number of Arterio trains in service.

A new East Coast Main Line timetable will also come into effect this month, which the government says will lead to 10,000 extra LNER services every year, or roughly 60,000 extra seats a week.

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