Thames Water in crisis after funding failure; UK confirmed in recession – business live

A Thames Water employee working in Windsor fixing leaking pipes in July 2023.

LIVE – Updated at 08:03

Live, rolling coverage of business, economics and financial markets as water company says it will not receive £500m injection from shareholders.

08:03

Thames Water chief executive Chris Weston says the company will continue to serve its 15m customers.

Of special administration, Weston says:

There is a possibility, but the key message today is one of reassurance.

Weston says he is not going to comment on past actions (when it was run by different management).

There will be a huge amount of investment in the underlying infrastructure, Weston says.

Thames Water boss: company is ‘a long way’ from special administration collapse

08:01

Thames Water chief executive Chris Weston says that a special administration, under which the UK government would probably have to step in to secure water supplies, is a long way away.

However, he did not rule out the prospect, speaking to BBC Radio’s Today programme.

He said:

If at the end of the day – probably well into the end of next year – we were in a situation where we had no equity, then there would be the prospect […] of special administration, but we are a long way from that point at the moment.

07:57

Being unable to raise new funding is “a long way off”, says Thames Water’s Chris Weston.

He says it is a hypothetical question. It is premature to go there at the moment, he says.

07:56

Chris Weston says that Thames Water had hoped to confirm the funding package today, but we are not there yet.

He says that the company is in a “solid financial position” and has enough money to last until May 2025.

That will give the company time to talk to existing and new shareholders about new funding.

07:54

Chris Weston, Thames Water’s chief executive, is speaking to BBC Radio’s Today programme.

He says he can reassure customers that the business continues to operate as usual.

07:47

Fergal Sharkey, the punk singer turned water pollution campaigner, has said that the UK government should not give Thames Water “a penny of the public’s money”.

07:46

Thames Water says Ofwat feedback on its investment plans made it “uninvestible” – because the regulator’s disapproval could mean the water company could face even bigger costs to rectify the situation.

The water company must set out a five-year plan that meets the regulator’s expectations. However, the plan for the 2025-2030 period (called PR24) has been sunk by larger required investments under its next asset management plan period 8 (called AMP8).

The company said:

Thames Water aims to secure a PR24 regulatory determination that is affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors.

Thames Water to seek new emergency funding after agreement collapses

07:32

Good morning, and welcome to our live coverage of business, economics and financial markets.

Thames Water has said that it is looking for new funding after it failed to meet the conditions on the first £500m of a planned £750m injection by shareholders.

The announcement will raise serious questions about Thames Water’s financing, although its chief executive attempted to reassure customers across London and the south east of England that it will be “business as usual”.

Thames Water reached the agreement on the £750m in emergency funding in July 2023. It needed the money to upgrade its infrastructure after leakage rates hit five-year highs in 2022 – a situation that continued in 2023. That has heaped political pressure on the UK water industry, as voters express their outrage about raw sewage flowing into British rivers.

The company today said that regulator Ofwat had objected to its plans, meaning that it had not met conditions outlined in the funding deal. It said:

As a result, the conditions of the support letter from July 2023 have not been satisfied and the first £500m of the new equity that had been anticipated will not be provided by Thames Water’s shareholders by 31 March 2024.

The company said it will seek new investments in the coming months:

Thames Water intends to pursue all options to secure the required equity investment from new or existing shareholders.

Chris Weston, Thames Water’s chief executive, said:

I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water. Our 8,000 staff remain committed to working with our partners in the supply chain to provide our services for the benefit of our customers, communities and the environment.

UK confirmed in recession

In other news, the UK economy has been confirmed as in recession during the final quarter of 2024.

Unrevised figures from the Office for National Statistics (ONS) showed that GDP fell by 0.1% in the third quarter, followed by 0.3% in the fourth quarter.

More on both stories to follow.

The agenda

8:55am GMT: Germany unemployment rate (March; previous: 5.9%; consensus: 5.9%)

12:30pm GMT: US GDP growth rate (fourth quarter final estimate; prev.: 4.9%; cons.: 3.2%)

12:30pm GMT: Canada monthly GDP growth rate (January; prev.: 0%; cons.: 0.4%)