BUSINESS LIVE: Unemployment rises to 4.4%; Raspberry Pi confirms £542m IPO; Heathrow eyes record summer

UK budget computer firm Raspberry Pi will price its shares at 280p, at the top of its estimated pricing range, in its initial public offering, it said on Tuesday.

The terms suggest a valuation of £541.6million, the company said in a stock market update. Raspberry Pi is set to raise £166million from the listing.

Shares will begin trading on the London Stock Exchange once the market opens at 8am on 11 June.

Eben Upton, chief executive of Raspberry Pi, said: ‘The quality of the interactions during the marketing process has underlined our belief that London has the right calibre and sophistication of investor to support growing, ambitious technology businesses such as Raspberry Pi.

‘The reaction that we have received is a reflection of the world-class team that we have assembled and the strength of the loyal community with whom we have grown.’

The IPO has been hyped as a welcome victory for the London market, which has been hit by a swathe of UK-listed firms being bought out or defecting abroad.

The stock market is set for a pick up later this year after months of doom mongering about the exchange.

Investment bank Peel Hunt said yesterday it was expecting there to be an ‘increasing number’ of London market debuts by the second half of 2023. The broker added that it had ‘further confidence’ of an even bigger revival in the first half of 2025.

Susannah Streeter, head of money and markets at Hargreaves Lansdown:

‘The hot labour market is cooling, but not fast enough for policymakers to confidently dip their toes into rate cut waters.

‘The number of vacancies has fallen back, but still stands at 904,000, above pre-pandemic levels, with companies still scrabbling for workers to fill crucial gaps in rotas.

‘This is putting pressure on wages, with the annual growth in average regular earnings stuck at 6% for the February and April period.

‘Far too many people are still ill, with sickness partly responsible for the increase in inactivity rates. Long-term sickness also means family members have been landed with caring responsibilities, preventing them from taking up paid work.

‘This collision of a series of unfortunate events, partly prompted by long waiting lists for NHS appointments and operations, will continue to niggle the Bank of England’s decision makers. With unemployment rising to 4.4%, it’s set to take further steam out of the labour market, but it still seems highly unlikely there will be an interest rate cut this month, particularly given it’s bang smack in the middle of an election campaign.

‘An interest rate cut in August is still a very real possibility, especially with other data coming through over the past week indicating that price pressures in the services sector are easing. However, the financial markets have not been fully pricing in a cut until November.’

Thomas Pugh, economist at RSM UK:

‘Strong pay growth will give the hawks on the committee some ammunition and the combination of sticky inflation and the election means there is almost no chance of a rate cut next week.

‘But inflation is clearly returning to normal levels and the labour market is easing slowly. What’s more, the MPC has made it clear that rates at 5.25% are well into restrictive territory so a 25bps cut would still leave them restrictive and bearing down on inflation. In our opinion an August rate cut is the right move.

‘While the focus in financial markets is on the impact of pay growth on interest rates, importantly for households, real wages grew by 2.2%.

‘That will help households claw back some of the loss in their living standards over the last few years and combined with rising consumer confidence could give a boost to consumer spending in the second half of this year, helping a consumer spending driven recovery.’

Richard Carter, head of fixed interest research at Quilter Cheviot:

‘The UK labour market has been in somewhat in a state of flux due to statistical issues in reporting the data.

‘Recently the revised data indicated the UK had a much stronger jobs market than was previously thought, and while today shows some sign of it turning, it remains to be in a fairly robust shape and earnings growth remains strong as we head towards the general election.

‘The number of payrolled employees in the UK decreased by 36,000 (0.1%) between March and April 2024, but rose by 201,000 (0.7%) between April 2023 and April 2024.

‘Therefore, this on its own is not going to shift the needle for the Bank of England to start cutting rates. Similarly, the UK unemployment rate (for people aged 16 years and over) was estimated at 4.4% in February to April 2024.

‘What the Bank of England crucially wants to see is wage inflation fall more than it has, especially with the headline rate of inflation very much near target.

“The BoE will be incredibly cautious to cut rates at a period when spending power is high for consumers and potentially triggering a fresh inflationary bout. As such, today’s data will continue to put a dampener on a rate cut in June or August, with November remaining the likeliest date to see that first fall.’

The UK unemployment rate rose to 4.4 per cent in the three months to the end of April, up from 4.3 per cent in the previous quarter, according to fresh data from the Office for National Statistics.

But hopes that an easing labour market could spell an interest rate cut at this month’s meeting of the Bank of England’s Monetary Policy Committee are kept in check by strong wage growth, with UK pay excluding bonuses up 6 per cent in the second quarter.

But economists had forecast wage growth of 6.1 per cent for the quarter, while they expected the unemployment rate to remain at 4.3 per cent for the period.