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A slump in oil prices could lead to further reductions at the fuel pumps but any benefit risks being stripped away next month as the chancellor seeks ways to bolster the public finances.

A barrel of Brent crude, the international benchmark, slipped below $70 for the first time since December 2021 on Tuesday afternoon.

The month ahead contract was down by as much as 4% on the day at one stage, following a monthly report by the OPEC+ group of major oil-producing nations that further cut demand expectations for both 2024 and 2025.

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The weakening prospects, coupled with growing expectations of oil oversupply, kept the market suppressed according to analysts.

They said the only upwards pressure was being applied by an incoming storm that could affect production in the Gulf of Mexico.

Oil prices have plunged from levels nearer $90 since the beginning of July, largely on the back of evidence that major economies are slowing.

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Motoring groups have long complained wholesale fuel prices have failed to keep pace with that decline – being quick to rise but slow to fall.

Sustained oil weakness should push fuel costs down further

Wholesale costs, also recently aided by a stronger pound versus the oil-priced dollar, stood last week at their lowest levels since October 2021, according to the AA.

But it said that without the 5p-per-litre fuel duty cut imposed by the last government to keep a lid on rising prices in 2022, that three-year low for wholesale costs would have been delayed by up to a fortnight.

The AA said the gap between wholesale costs – what retailers pay – versus pump prices had reduced in recent weeks amid regulatory pressure.

Critics have long accused retailers of profiteering, bolstering their margins for a third year after the Competition and Markets Authority accused filling stations of overcharging motorists to the tune of almost £2.5bn during 2022 and 2023 combined. Supermarket chains were singled out for particular criticism.

But with oil costs falling further, it is speculated that chancellor Rachel Reeves may feel able to remove the 5p duty cut without drivers noticing much change at the pumps, assuming pump prices continue to ease – albeit slowly.

She is widely expected to use her first budget on 30 October to fill, what she can, of a £22bn “black hole” she claims to have found in the public finances inherited from the Tories.

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Cuts to winter fuel payments are among measures already announced.

The Treasury has refused to comment on possible other announcements though the wealthy have been put on notice that they will bear the brunt of tax hikes.

A fuel duty reduction has, therefore, not been ruled out.

AA president Edmund King said last week of a fuel duty hike threat: “Removing it threatens to send millions of low-income drivers back into the era of ‘perma-high’ road fuel prices.

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“Getting rid of the fuel duty cut unleashes a £3.30 a tank (standard 55 litres) shock on the personal and family budgets of the 28% of drivers who spend a set amount when they go to a fuel station.

“With 33 million drivers in the UK, that is more than nine million affected private motorists – most of whom are low-income and struggling to balance their budgets.

“If the current pump price rebounds to 144p a litre, and then 6p is added with a fuel duty hike and the extra VAT it will bring, it will plunge the least well-off families and families back into the nightmare of petrol at 150p a litre or more”. he concluded.

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WH Smith buyer ‘faces 12-month ban’ on mass shop closures

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WH Smith buyer 'faces 12-month ban' on mass shop closures

The new owner of WH Smith’s high street chain has effectively been barred from launching a wave of mass store closures for at least 12 months amid plans for rapid restructurings at two other retailers it owns.

Sky News has learnt that WH Smith would have the right to cancel a year-long transitional services agreement (TSA) put in place with Modella Capital – which struck a deal to acquire the business in March – if it launched a company voluntary arrangement (CVA) before the first anniversary of the transaction’s completion.

The clause in the TSA, which enables Modella Capital to continue using WH Smith’s systems after it takes ownership, is significant, according to retail insiders.

WH Smith agreed to sell its 480 high street shops to Modella in a £76m deal, ending 233 years of high street history.

Modella plans to rebrand the chain under the name TG Jones after it takes control.

In recent weeks, Sky News has revealed plans drawn up by Modella to launch CVAs at both Hobbycraft and The Original Factory Shop, which it has owned for nine and three months respectively.

Both of those restructuring processes have put significant numbers of stores at risk, and industry executives say that, over time, a sizeable part of the WH Smith high street estate could also be at risk.

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A spokesman for Modella said: “We have a number of exciting plans for the future of TGJones.

“A CVA is not on the agenda, as it is a solvent business.”

WH Smith, which will become a pure-play travel retailer once the Modella deal completes, declined to comment further ahead of the completion of the sale.

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Hovis and Kingsmill-owners in talks about historic bread merger

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Hovis and Kingsmill-owners in talks about historic bread merger

The owners of Hovis and Kingsmill, two of Britain’s leading bread producers, are in talks about a historic merger amid a decades-long decline in the sale of supermarket loaves.

Sky News has learnt that Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, and Hovis, which is owned by investment firm Endless, have been involved in prolonged discussions about a combination of the two businesses.

City sources said this weekend that the talks were ongoing, but that there was no certainty that a deal would be finalised.

Bankers are said to be working with both sides on the talks about a transaction.

A deal could be structured as an acquisition of Hovis by ABF, according to analysts, although details about the mechanics of a merger or the valuations attached to the two businesses were unclear this weekend.

ABF is also said to be exploring other options for the future of Allied Bakeries which do not include a deal with Hovis.

If completed, a merger would unite two of Britain’s best-known ambient food brands, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning strength of man.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair the bread industry’s financial health in recent decades.

The impact of the war in Ukraine on wheat and flour prices has been among the factors increasing inflationary pressures on bread producers, according to the most recent set of accounts for Hovis filed at Companies House last year.

The overall UK bakery market is said to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

The principal obstacle facing a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis would reside in its consequences for competition in the UK market.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector in the UK, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group a larger share of that segment of the market, although one source said Warburtons’ overall turnover would remain larger because of the breadth of its product range.

Nevertheless, reducing the number of major supermarket bread suppliers from three to two would be a test of the Competition and Markets Authority’s approach to such industry-reshaping mergers at a time when the watchdog is under intense government scrutiny.

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In January, the government removed the CMA chairman, Marcus Bokkerink, as part of a push to reorient Britain’s economic regulators around growth-focused objectives.

An industry insider suggested that a joint venture involving the distribution networks of Hovis and Kingsmill was a possible, although less likely, alternative to a full-blown merger of the companies.

They added that a combined group could benefit from up to £50m of cost savings from such a tie-up.

In its interim results announcement this week, ABF said the performance of Allied Bakeries had continued to struggle.

“Allied Bakeries continues to face a very challenging market,” it said.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025.”

In a separate presentation to analysts, ABF described the losses at Allied as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Allied also owns Speedibake, an own-label bread manufacturer.

Hovis has been owned by Endless, a prominent investor in British businesses, since 2020, having previously been owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites and its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF and Endless both declined to comment.

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Struggling Aston Martin steers into fresh pay controversy

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Struggling Aston Martin steers into fresh pay controversy

Aston Martin is steering a path towards a twin-pronged pay row with shareholders as it grapples with the impact of President Trump’s tariffs on car manufacturers.

Sky News can reveal that the influential proxy voting adviser ISS is urging investors to vote against both of Aston Martin Lagonda Global Holdings’ remuneration votes at next week’s annual general meeting.

The pay policy vote, which is binding on the company, has attracted opposition from ISS because it proposes significant increases to potential bonus awards to Adrian Hallmark, the company’s new chief executive.

“Concerns are raised regarding the increased bonus maximums, which are built upon competitively[1]positioned salary levels and do not appear appropriate given the company’s recent performance,” ISS said in a report to clients.

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Aston Martin is also facing a meaningful vote against its pay report for last year – which is on an advisory basis only – because of the salaries awarded to Mr Hallmark and other executive directors.

The company’s shares have nearly halved in the last year, and it now has a market value of little more than £660m.

Despite the ISS recommendation, Aston Martin will win the vote by virtue of chairman Lawrence Stroll’s 33% shareholding.

The luxury car manufacturer has had a torrid time as a public company and now faces the headwinds of President Trump’s tariffs blitz.

This week it said it would limit exports to the US to offset the impact of the policy.

Aston Martin did not respond to a request for comment ahead of next Wednesday’s AGM.

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