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Good morning. Today we're talking about the UK’s economic outlook, the US takeover of a London music firm and banks scrapping banker bonuses.

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Big Stories

UK economy lags behind

The UK economy faces a bleak outlook and will be the worst-performing G7 nation in 2025 with growth of 1%, according to the OECD. The economic think tank says the grim forecast stems from a combination of high interest rates and the lingering effects of last year's significant inflation surge. The OECD further downgraded its 2024 growth forecast for the UK to a meagre 0.4% from 0.7%, placing it behind other major economies like the US, Japan, France and Germany. While UK inflation has cooled from its peak, it remains stubbornly above desired levels, creating a dilemma for the Bank of England. Cutting interest rates to stimulate growth could reignite inflation, leading to a delay in such measures. The UK’s sluggish growth stands in stark contrast to the world picture, as the global economy shows signs of recovery, with growth forecast to remain steady at 3.1% in 2024 before rising modestly to 3.2% in 2025.

London music firm taken over

US private equity firm Blackstone has prevailed in a bidding ware for London-listed music rights investor Hipgnosis. The US fund outbid rivals with an offer of $1.57bn. Founded by former music manager Merck Mercuriadis, Hipgnosis aimed to transform music into an asset class by acquiring song catalogues of artists like Blondie and the Red Hot Chili Peppers. However, the company faced challenges due to rising interest rates and difficulties recouping its investments. Following a turbulent six years as a publicly traded company, Hipgnosis agreed to the takeover offer, marking the end of its independent journey. Mercuriadis' strategy of acquiring music rights for a steady income stream ultimately proved unsustainable, leading to investor dissatisfaction and the company's decision to explore strategic options.

Banks scrap bonus caps

HSBC shareholders approved the removal of the EU-imposed cap on bankers' bonuses, following a similar move by Goldman Sachs. The change comes after the UK's decision to scrap the cap in 2022 during Kwasi Kwarteng’s brief tenure as chancellor. Previously, the cap limited bonuses to twice an employee's basic salary, a rule introduced in 2014 to curb excessive risk-taking after the financial crisis. Banks argued the restriction hindered their ability to attract and retain top talent compared to competitors in other financial hubs like New York and Singapore. While HSBC cited increased flexibility in pay structures as a benefit, the move also sparked criticism from pensioners whose own payouts were reduced. Other major UK banks like Lloyds are also considering similar actions to remove the bonus cap.

Elsewhere...

Back on the market: The Daily and Sunday Telegraph newspapers are back up for sale after an Abu Dhabi-backed bid to take them over collapsed.

Down cycle: Peloton shares fell to a record low after the CEO announced plans to step down and the fitness firm with cut 15% of its workforce.

Drink up: Heineken is investing £39m in more than 600 of its pubs in the UK in a move it says will bring 62 back from the dead.

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