LONDON BRIEFING: UK GDP accelerates as Burberry returns to profit

Thu, 14th May 2026 07:59

(Alliance News) - UK economic growth accelerated in the first quarter as the services sector led a 0.6% expansion, while Burberry swung to annual profit, while Spire Healthcare Group said it would be minded to accept a 250p-per-share takeover proposal from funds advised by Toscafund.

Here is what you need to know before the London market open:

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MARKETS

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FTSE 100: called up 0.5% at 10,372.15

GBP: slightly higher at USD1.3529 (USD1.3520 at previous London equities close)

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ECONOMICS

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The UK economy grows 0.6% in the first quarter of 2026, accelerating from revised growth of 0.2% in the previous quarter and matching market expectations, according to the Office for National Statistics. Growth is driven by the services sector, which rises 0.8% in the quarter, while production output increases 0.2% and construction output climbs 0.4%. Monthly GDP rises 0.3% in March, beating expectations for a decline, as services output also grows 0.3% in the month. Industrial production falls 0.2% month-on-month in March and is flat year-on-year.

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Separate Office for National Statistics data show the UK total trade balance records a GBP9.66 billion deficit in March. The visible trade deficit widens to GBP27.22 billion, reflecting a gap between goods exports and imports, while the non-EU trade deficit totals GBP15.20 billion during the month.

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BROKER RATINGS

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DZ Bank cuts Vodafone to 'hold' (buy) - fair value 120 (130) pence

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LBBW raises Shell to 'buy' (hold) - price target 3,450 (2,900) pence

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COMPANIES - FTSE 100

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National Grid reports pretax profit of GBP4.18 billion for the year ending March 31, rising from GBP3.65 billion a year prior, while diluted earnings per share increase to 65.2p from 59.8p despite revenue falling to GBP17.69 billion from GBP18.38 billion. The utility firm raises its total dividend by 3.8% to 48.49p per share, including a final dividend of 32.14p. National Grid says capital investment reaches a record GBP11.6 billion in financial 2026 and expects cumulative investment of GBP70 billion between financial 2027 and 2031, supporting asset growth of around 10% annually. The company forecasts underlying earnings per share growth of 13% to 15% in financial 2027 and a compound annual growth rate of 8% to 10% between financial 2027 and 2031, while aiming to grow dividends in line with UK CPIH inflation.

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Burberry reports pretax profit of GBP49 million for financial 2026, swinging from a GBP66 million loss a year prior, while adjusted operating profit rises to GBP160 million from GBP26 million despite revenue edging down to GBP2.42 billion from GBP2.46 billion. Burberry says fourth-quarter performance is driven by momentum in Greater China and the Americas, while EMEIA revenue is flat amid reduced tourist activity linked to the Middle East conflict. The luxury fashion firm expects wholesale revenue to grow by a mid-single-digit percentage in the first half of financial 2027 and says it is encouraged by progress as it focuses on long-term value creation. Burberry also says Chair Gerry Murphy will retire after the release of first-half results in November, to be succeeded by Bridgepoint founder William Jackson.

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Aviva says first-quarter general insurance premiums rise 19% year-on-year to GBP3.4 billion, while wealth assets under management increase 18% to GBP233 billion with net flows of GBP3.3 billion. The insurer says the undiscounted combined operating ratio improves to 94.1% from 96.6% a year prior and it remains on track to achieve a UK & Ireland combined operating ratio below 94% in 2026. Aviva also says it is on track to deliver 11% compound annual operating earnings per share growth between 2025 and 2028 and is making good progress integrating Direct Line Insurance Group PLC.

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COMPANIES - FTSE 250

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Spire Healthcare says it has received a 250p-per-share takeover proposal from funds advised by Toscafund Asset Management LLP and would be minded to recommend the offer if a firm bid is made. Shares in the company closed at 150.40p on Wednesday. Spire says Toscafund, its second-largest shareholder, is undertaking confirmatory due diligence, and discussions remain at an early stage. Separately, the healthcare provider says trading in the first four months of 2026 is in line with expectations, with strong growth in private patient revenue, particularly self-pay. Spire also says progress continues on its GBP30 million savings target, and it expects full-year adjusted Ebitda to be broadly in line with 2025.

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Watches of Switzerland says revenue rises 11% to a record GBP1.83 billion in financial 2026, driven by strong growth in the US, which now accounts for more than half of group sales. The luxury watch retailer expects adjusted Ebit of GBP152 million to GBP155 million for the year, ahead of prior guidance. Watches of Switzerland says it expects financial 2027 revenue growth of 5% to 10% at constant currency and adjusted Ebit margin expansion of 40 to 80 basis points. The firm says it remains mindful of the geopolitical environment but has minimal direct exposure to the Middle East or tourist consumers.

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OTHER COMPANIES

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Gattaca says trading is ahead of market expectations as strong contract recruitment growth continues into the second half. The specialist staffing firm now expects continuing underlying pretax profit for financial 2026 of at least GBP6.0 million, ahead of prior guidance of GBP4.5 million. Gattaca says contract recruitment has continued to perform strongly across its core sectors, while Chief Executive Matthew Wragg says strategic investments and operational discipline are supporting performance despite challenging market conditions.

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By Eva Castanedo, Alliance News reporter

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