Wednesday preview: Queen's speech worth watching, Whitbread reports

The Queen's speech to open parliament will dominate the news in the UK on Wednesday, while the financial calendar includes public sector borrowing data and results from Whitbread and Berkeley.

Forming the government’s intended legislative programme for the next two years, plenty of rumours have been leaked about Wednesday’s Queen’s speech, which will be screened live on television from 1030 BST.

Normally a Queen's speech sets out one year's legislative agenda but with a Brexit deadline in two years, next year's speech has been shelved in order to, the government claims, allow parliament the time to properly scrutinise the process.

Labour and the Liberal Democrats suggested Opposition parties argued it was because Prime Minister Theresa May's Conservative party is worried they will not get the necessary votes required to pass another Queen's Speech, having lost their parliamentary majority in the snap election.

After the 2015 election, the Tories had the Queen rifle off proposals for 26 pieces of legislation but this year's is expected to be about a third of the size of the one originally planned by May.

Even though the Conservatives were still locked in talks with Northern Ireland's Democratic Unionist Party on Tuesday afternoon about vote-by-vote pact that will allow the Tories to form a minority government, the two sides have so far agreed that their broad aims are to "strengthen the union, combat terrorism, deliver Brexit and deliver prosperity", according to the Times.

The speech will also, Sky News reported, include three bills designed to boost investment in transport infrastructure designed to help Britain boom after leaving the European Union, with one focusing on growing the space sector and would allow satellites to be launched from the UK for the first time, a second to help people switch to greener and cheaper electric cars, and a third bill on the next stage of the HS2 high speed rail network to link the Midlands to the North West.

May's dementia tax proposals and plans to axe universal free school meals for primary school kids has also been scrubbed from the Speech, along with other Tory manifesto pledges such as pension reforms, capping energy bills, means testing winter fuel payments and the proposed expansion of the domestic shale gas industry are also potentially off the agenda.

There are also rumours that Labour, the Lib Dems, and SNP MPs are planning to combine forces to bring down May’s minority government by trying to force through amendments to the Speech, triggering a complex constitutional manoeuvre that could force the PM to resign.

But a vote on the speech will normally first be followed by six days of debate.

UK public finances

Public sector borrowing came in at £8.5bn in April, up £1.1bn than the same month last year.

Although tax receipts grew modestly, spending was up 5.9% year-on-year.

"A large portion of that growth can be attributed to payments on index-linked gilts, which have risen on account of higher RPI inflation," said HSBC.

"The public purse now faces several challenges, including slowing economic growth, political pressures against austerity and rising inflation."

For May the bank estimates a modest £1bn narrowing in the deficit, relative to a year ago, taking the shortfall to £4.3bn.

Company updates

Whitbread, the owner of Premier Inn hotels and Costa coffee shops, will provide an update on trading for its first quarter alongside its annual shareholder meeting.

The company's fourth quarter numbers disappointed investors and analysts, with Costa like-for-like revenue decelerating to -0.8% but +0.6% on a comparable calendar basis against a tough high street retail backdrop.

Premier Inn LFL revenue growth of 2.7% was an acceleration from the 2.2% for the first nine months, with London outperforming the regions.

Deutsche Bank predicted Premier Inn margins should improve this year.

"Whitbread has made good progress with the £150m cost efficiency programme, which accounts for +220 bps in the Premier Inn margin (i.e. about £40m), helping to offset inflation and investments.

"We expect the Q1 trading update on 21 June 2017 to reassure the market and confirm that the trend is improving in Costa (compared to 4Q17), which has crystallised investors’ concerns."

UBS forecast growth in revenue per available room (revpar) of 4%, marginally below the industry growth rate for the period of circa 5%, with Costa like-for-like sales growth of 1% and flat LFL for the FTSE 100 group's pub-restaurants.

Housebuilder Berkeley will report its final results, having in March said it expected pre-tax profits to be at the top end of analysts' expectations, "with the actual outturn dependent upon completion timing on Berkeley's larger developments", with forward sales expected to be in excess of £2.6bn.

The FTSE 250 listed company said at the time that £138.8m of shareholder returns are scheduled to be made by 30 September this year through a combination of share buy-backs and dividends, with the amount of the dividend component to be announced in August.

Analysts at UBS forecast volumes up 9% to 4,100 and an average selling price of £661,000, up 27%, to give total revenues of £2,762m.

Including £55m profit from joint ventures, it expects PBT of £796m, consistent with guidance issued in March 2017, with earnings per share up 55% to 457.8p.

Wednesday June 21

INTERIMS

Wynnstay Group

INTERIM DIVIDEND PAYMENT DATE

DFS Furniture

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Crude Oil Inventories (US) (15:30)

Existing Home Sales (US) (15:00)

MBA Mortgage Applications (US) (12:00)

FINALS

Berkeley Group Holdings (The), Hornby, Immunodiagnostic Systems Holdings, Sirius Real Estate Ltd.

ANNUAL REPORT

Worldwide Healthcare Trust

SPECIAL DIVIDEND PAYMENT DATE

DFS Furniture

EGMS

St Peter Port Capital Ltd

AGMS

Andrews Sykes Group, Blackstone/GSO Loan Financing Limited, Brave Bison Group, Cathay International Holdings Ltd., Cellcast, Clontarf Energy , Good Energy Group, London Security, NetScientific , Photonstar LED Group, PJSC Lukoil ADR, St Peter Port Capital Ltd, Tarsus Group, Third Point Offshore Investors Ltd. GBP Shares, UK Commercial Property Trust, Vimetco NV GDR (Reg S), Walker Greenbank, Whitbread, Xeros Technology Group

TRADING ANNOUNCEMENTS

Whitbread

UK ECONOMIC ANNOUNCEMENTS

Public Sector Net Borrowing (09:30)

FINAL EX-DIVIDEND DATE

Tongaat-Hulett Ltd.