Ministers have discussed a temporary nationalisation of Thames Water as investors and the government were braced for the potential collapse of the debt-laden utility.
The contingency planning yesterday came a day after the abrupt exit of Thames Water chief Sarah Bentley, who was battling to turn round a company with a legacy of under-investment and £14bn of debt.
Shareholders 12 months ago promised to invest £500mn in the company and pledged a further £1bn subject to conditions, but the £500mn was only paid this March and the additional £1bn never came.
Thames Water said it was working “constructively” with its shareholders on injecting more equity to support its “turnround and investment plans”.
Amid pessimism about the group’s prospects, the price of a 2026 bond sold by Thames Water’s parent company, Kemble Water Holdings, plunged as much as 35 pence to 50p, into distressed territory.
Sector crisis: The troubles at Thames Water have raised wider questions about the way the water sector is regulated and whether private companies are able to deliver on infrastructure improvements.
Opinion: Thames needs a financial plug, but a government that supports privatisation should not attempt to socialise any cost via taxpayers.
Here’s what else I’m keeping tabs on today:
Economic data: The US reports first-quarter gross domestic product figures, while Germany has its flash harmonised index of consumer prices for June.
UN: Member states vote on the creation of a first-of-its-kind institution to investigate the fate of at least 102,000 people who have disappeared during Syria’s 12-year conflict.
Results: De La Rue, H&M, McCormick, Nike and Rite Aid report.
Five more top stories
1. The world’s top central bank chiefs have signalled their readiness to increase interest rates further and keep them high. The heads of the US Federal Reserve, the European Central Bank and the Bank of England warned that tight labour markets were still pushing up wages and prices. Read more from their statements at the much-watched central bankers’ conference in Portugal.
2. The EU is preparing to offer “future security commitments” to Ukraine as the bloc’s leaders seek to agree long-term pledges for Kyiv after Wagner’s failed mutiny in Russia and modest gains from Ukraine’s counteroffensive. While falling well short of the mutual defence that would come with Nato membership, the pledges are designed to reassure Kyiv of enduring western support.
Related: Denmark’s foreign minister has warned that the EU risks “importing instability” if it relaxes standards on democracy and corruption to hasten Ukraine’s membership.
3. Exclusive: Some of the world’s biggest consumer brands and tech groups have backed the trial launch of a new advertising measurement system in the UK. The platform is designed to help companies better understand how advertising works across increasingly fragmented media channels. Here’s how the system could change the way marketers spend their money.
Related: Advertising industry figures are demanding refunds from YouTube following new research that suggests millions of ads on the video platform are hidden from users in ways that breach the company’s own policies.
4. Twitter’s new chief executive is preparing measures to bring back advertisers who abandoned the platform under Elon Musk. Linda Yaccarino is seeking to launch a full-screen, sound-on video ad service and woo high-profile content creators to use the platform. Read more about Yaccarino’s plans to regain advertisers’ confidence.
5. The largest US banks would lose $541bn in a hypothetical doomsday economic scenario but still have more than enough capital to absorb the losses, according to the Federal Reserve’s annual stress tests of American lenders including JPMorgan Chase and Goldman Sachs.
More banks: With its takeover of Credit Suisse complete, UBS is now embarking on a project few have succeeded in doing before: stripping back a lossmaking and capital-intensive investment bank.
The Big Read
Over the past quarter-century, Chinese carmakers such as BYD, Nio and Great Wall have become experts in electric vehicles and battery technology. With their home market largely conquered, the companies have set their sights on Europe, where sales of cars with petrol and diesel engines will be banned by 2035.
We’re also reading and listening to . . .
London’s equity market: Prime Minister Rishi Sunak’s promotion of financial services misses a crucial point: an oversized sector can harm the rest of the economy, writes John Plender.
Trump comedy: Whether we find his humour amusing or offensive, Donald Trump’s good comedic timing makes him a major electoral threat, writes Jemima Kelly.
Rachman Review podcast ????: Gideon Rachman and Edward Lucas, senior fellow at the Center for European Policy Analysis, discuss the stability of Vladimir Putin’s regime after Yevgeny Prigozhin’s aborted mutiny.
Chart of the day
The pound fell 0.9 per cent against the dollar — its largest daily drop in a month to trade at $1.2637, as traders continued to grapple with growth fears in the UK. Themos Fiotakis, head of forex research at Barclays, said the sterling was “susceptible to a bit of a sell-off” after it had rallied “too much” ahead of the BoE’s larger than expected rate increase to 5 per cent.
Take a break from the news
Dutch photographer Anton Corbijn started his passion for photography with his father’s camera. Over the years, he has collaborated with some of the music industry’s biggest names. In this HTSI feature, we meet the “fifth member” of Depeche Mode.
Additional contributions by Benjamin Wilhelm and Gordon Smith