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Equilibrium’s finance and investment news roundup

This week’s roundup includes news that Fox has increased its bid to takeover UK broadcaster SKY, a report recommending the UK introduces mortgage restrictions on homebuyers for at least five years, a stark warning from the chairman of Marks & Spencer about the future of the retail giant and how the World Cup has given UK retailers a ‘boost’.

Rupert Murdoch’s Fox increases bid for SKY to £24.5 billion

21st Century Fox, owned by Rupert Murdoch, has increased its offer to take over UK broadcaster SKY to £24.5bn, surpassing rival bidder Comcast’s previous offer of £22 billion.

Comcast’s offer was made in February, which in turn trumped Fox’s earlier offer of £18.5 billion.

A spokesperson from Fox said that SKY’s independent committee had agreed the deal. The company is now awaiting regulatory approval of the deal from Britain this week.

The media company has been trying to get approval from UK regulators to buy the 61% of SKY that it does not already own since 2016. Proceedings have been held up amid fears that it could give Mr Murdoch too much control over UK media.

House prices should be frozen for five years - report

A report from the Institute for Public Policy Research (IPPR) has said the Bank of England should impose mortgage restrictions on UK homebuyers for a minimum of the next five years.

The proposals from the left-of-centre thinktank are designed to prevent house prices rising, and end Britain’s reliance on property investment to drive the economy.

IPPR went on to suggest that the central bank should be given new powers to target zero house price inflation. This would result in house prices falling by around 10% in real terms, as wages continue to rise, making more homes more affordable.

Grace Blakeley, an IPPR research fellow and author of the discussion paper, said, ‘Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into debt for UK consumers. The 2008 crisis proved that this is unsustainable. We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation.

‘To do this we must break the cycle of ever-rising house prices driving property speculation, crowding out investment in the real economy.’

Marks & Spencer chair: 'We're on a burning platform'

The chairman of Marks & Spencer, Archie Norman, has given a stark warning about the future of the high street giant as he refused to rule out further store closures.

Mr Norman, who took over as M&S’s chairman last year, said: ‘This business is on a burning platform. We don’t have a God-given right to exist and unless we change and develop this company the way we want to, in decades to come there will be no M&S.’

In May, M&S reported a 62% fall in annual profits to £66.8 million after a £514.1 million bill for restructuring. This restructure included costs of £321 million to pay for the first phase of a programme to close 100 stores.

Mr Norman said that, in comparison to competitors such as Next, M&S has not been ruthless enough in closing older, underperforming stores.

He added, ‘We have old stores in locations where people are not spending anymore and it’s a drag on our performance.

‘We are grasping a nettle that should have been grasped many, many years ago. We have said it’s going to be 100 stores but I can’t tell you that it’s going to end there. We have got to get to the point where we have a modern estate and we have to go through the pain barrier to get there.’

Heatwave and football leads to a ‘boost’ for UK retailers

Warm weather and England’s success - so far - in the World Cup has led to a 2.3% rise in sales in June, with sales of drinks providing the biggest boost.

The heatwave has increased sales of beer and barbecues as the British public enjoyed the sunshine, and there was also a jump in big-screen TV sales to watch the football.

Total retail sales rose by 2.3% across the UK last month, above the average growth rate for consumer spending and higher than an increase of 2% in June last year.

Helen Dickinson, the chief executive of the British Retail Consortium issued a cautious warning: ‘The reality is that sales don’t grow on the feelgood factor alone. Once the euphoria of sporting success subsides, without a deal on Brexit, shoppers face the prospect of significant price increases and shortages of everyday goods.”’