TSB Shares Up 11% On First Day Of Trading

Shares in retail bank TSB jumped more than 11% in value after public trading in the Government-back lender started.

The list price of 260p was quickly up to more than 290p, 11.5%, within minutes of trades commencing at 8am.

In early afternoon trades on Friday the price had climbed further, to 294p, before easing back to 290p at the close.

The initial pricing of 260p, slightly above the mid-range estimate, valued the new retail bank at £1.3bn.

Lloyds Banking Group originally planned to offer 25% of TSB shares but upped the figure to 35% after keen interest was shown by investors.

A total of 175 million shares have now been offered to the public.

Lloyds is still 25%-owned by the British taxpayer after a multi-billion bailout in the financial crisis.

Lloyds chief executive Antonio Horta-Osorio said: "The successful initial public offering of TSB is an important further step for Lloyds Banking Group as we act to meet our commitments to the European Commission.

"The significant investor demand for shares in TSB, which reflects investors' confidence in the prospects for the business, has meant that we have been able to set the offer size at 35%.

"TSB has a national network of branches, a strong capital base, robust liquidity and significant economic protection against legacy issues."

EU regulators ordered to Lloyds to sell 631 branches in 2009 over competition concerns, and must now sell the remaining holding by the end of 2015.

The original buyer of the branches was to be the Co-op Bank, until a £1.5bn capital black hole was discovered in the mutual's books.

The share price range was initially set at between 220p and 290p, on June 9.

At the time, Lloyds said in a statement that the float would commence around June 24.

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Cashless High Street Ditches Notes And Coins

By Becky Johnson, North of England Correspondent

Shoppers will find their cash is worthless in one Manchester suburb as only cards will be accepted by stores on the high street.

As part of a social experiment, shops along fashionable Beech Road in Chorlton will only take payments on plastic.

It comes as research shows people are increasingly using cards instead of notes and coins.

Many of the shops, bars and restaurants on the road are independently owned.

Mary Paul, of the Beech Road traders' association, said: "Businesses can see the way things are going with more money being taken on cards across the board, so this is a very interesting glimpse into the future for all of us."

This month the British Retail Consortium (BRC) revealed cash use has fallen by 14% in the last five years.

Card use is increasing rapidly, with debit cards currently being used for 32% of transactions compared to 30% last year.

Some experts predict physical currency will cease to exist within 20 years.

Shops on Beech Road in Chorlton are trialling plastic-only payments

Helen Dickinson, director general of the BRC, said: "Customers are taking advantage of new ways to shop and pay. The availability of contactless cards, handy express stores and self-service tills, as well as online sales, has increased the use of debit cards for smaller payments in place of cash."

Mark Latham, product and innovation director at Handepay, the card payment provider behind the idea to trial a cashless high street, added: "Britain is at the forefront of countries heading towards becoming cashless because the public are always eager to embrace new technology.

"Recent research showed most Londoners would welcome a cash-free society as they're so used to paying for everything with cards.

"There's now an expectation that card payment is available everywhere - it takes us aback as consumers if it isn't.

"Business owners love it too as it cuts down on queues, reduces lost sales and gives them more time to interact with their customers.

"All evidence shows consumers spend more too, as they're no longer limited to just the cash in their pockets."

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Home Loan 'Slowdown' As New Rules Take Effect

There has been a "slowdown" in new home loan advances because of increased lender scrutiny, according to the Council of Mortgage Lenders (CML).

It said gross mortgage lending held steady in May at an estimated £16.5bn - identical to April's lending figure.

It was, however, 12% up on the figure recorded in May last year.

Tighter rules governing mortgages were initiated in late April, known as the Mortgage Market Review (MMR).

The new rules were designed to make sure borrowers had the capability to meet repayments if interest rates rise in the future.

CML chief economist Bob Pannell said: "Market indicators point to a slowdown in activity levels, in part associated with new mortgage rules, but it is unclear how lasting this will be.

"Implementation of the new regulatory regime is likely to have disrupted the normal patterns of activity, creating statistical 'fog' around the published figures.

"As this lifts over the coming months, a clearer picture as to any lasting impact of the MMR rules on lending activity should emerge."

MMR guidelines have seen prospective borrowers quizzed by lenders over their monthly outgoing expenditure.

Questions have covered gym membership fees, how much is spent monthly on toiletries, and the ratio of fresh produce to non-perishable food items.

Some applicants have spent more than seven hours on the telephone answering questions as part of the process.

The CML covers around 95% of lenders operating in Britain and it records mortgage advances.

A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property, whereas  mortgage advances are the total amount of a loan actually provided to the buyer, by the lender.

Expectations have risen recently that the Bank of England will raise the base rate, currently at an historic low of 0.5%, gradually this year.

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Npower Risks Telesales Ban Over Billing Woes

By Poppy Trowbridge, Consumer Affairs Correspondent

The energy regulator has given 'big six' supplier nPower until August to remedy "major billing issues" amid a threat of massive penalties over customer service failings.

Ofgem said nPower will be required to publish monthly progress updates until the problems are resolved.

The watchdog also announced it has launched an investigation into nPower's customer service failings.

It said that if it was found to have broken rules on customer service it risks fines of up to £300m - 10% of its sales - as a result.

It is the first case opened under the regulators' new standards of conduct and could lead to a financial penalty or redress payment if they are found to have broken rules.

With about 15% of the market, nPower has struggled with its billing system for the past year.

Many customers have been left not knowing what they owed and when as delays in billing mounted.

Npower has topped the 'big six' complaints table every quarter since the end of 2012, amid promises to improve service.

Ofgem senior partner in charge of enforcement Sarah Harrison said: "Ofgem has been monitoring nPower's service closely and we have been increasingly concerned about the slow progress to tackle failings.

"Npower's recovery plan has not delivered as far and fast as is necessary.

"Our analysis of complaints data also raises some serious concerns which will be thoroughly examined in our investigation."

In December, nPower was fined £1m by Ofgem and banned from door-to-door selling.

Since then the energy giant has halved the number of billing problems, according to Ofgem.

In response to the Ofgem decision, nPower spokesman Guy Esnouf told Sky's Kay Burley: "We are confident we can get there. We are completely committed to get this right.

"Already we have resolved about half of the billing problems. There were other issues last year for which we apologise to our customers and Ofgem in its press release today say those are resolved.

"We will finish the job on late billing by the end of August."

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GM Ignition Fault 'May Have Killed 100 People'

Up to 100 deaths could be linked to a faulty ignition switch in GM cars that the firm failed to rectify for more than a decade, says a US lawmaker.

Representative Diana DeGette, a Colorado Democrat, mooted the figure as she grilled GM chief executive Mary Barra at a congressional hearing on Wednesday. 

The number is higher than the 13 people the company says died in crashes linked to the problem, and nearly double the death toll of 53 cited in lawsuits.

GM engineers had known about the defective switch since 2001, but the firm did not recall the vehicles until this year.

Wheelchair-bound Trenton Buzard was paralysed in a GM crash

The US government fined GM $35m (£20m) last month, but critics pointed out that amounted to less than a day's revenue for the car-maker.

In her second appearance on Capitol Hill over the scandal, Ms Barra told the House committee lessons had been learned.

"I never want anyone associated with GM to forget what happened," she said in her prepared remarks.

A Wisconsin car crash, linked to the GM fault, that killed two teenagers

"This is not another business challenge. This is a tragic problem that should never have happened and must never happen again."

Earlier this week the car-maker announced a new recall of 3.36m vehicles because of ignition switch problems, on top of the 2.6m Chevrolet Cobalts, Saturn Ions and other cars recalled in February.

The House Energy and Commerce Subcommittee on Oversight and Investigations asked why it had taken GM so long to act.

Rep. Diana DeGette holds up the faulty switch at a hearing in April

Its members questioned whether the company's culture could change, and if this month's dismissal of 15 employees was really enough.

The lawmakers also said that a report paid for by GM into the scandal had failed to answer key questions.

The 315-page report, made public on June 5, blamed the faulty ignition switch on a rogue engineer.

Family members of a GM crash victim wipe away tears at a news conference

"It does not fully explain why stalling was not considered a safety issue within GM," Ms DeGette said. 

"And most troubling, the report does not fully explain how this dysfunctional company culture took root and persisted."

The lawmaker said senior executives, including Ms Barra, should have acted sooner.

Representative Fred Upton read a 2005 email from a GM employee who recommended a "big recall".

Family members of victims in front of GM's Detroit headquarters

The firm also failed to act on reports it received in 2007 and 2010 about the malfunction.

The defective ignition was prone to turning off, causing the engine to shut down and disabling the air bags.

Ms Barra told the hearing that she had been encouraging people to speak up about potential safety issues.

The company had issued 44 recalls of 18 million cars in the US this year, she added, as part of a tougher approach to safety.

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Miliband Plans Benefit Cuts for Young Jobless

Unemployed youngsters should have their benefits withdrawn if they refuse to undergo training in vital skills, Ed Miliband will announce.

The Labour leader is set to call for 18 to 21 year olds to be given a "youth allowance" instead of out-of-work benefits.

But the money will require them to sign up to learn key skills and youngsters would not be eligible if their parents are relatively well off.

The proposals, which will be revealed in a speech to think-tank the Institute for Public Policy Research (IPPR), would also see Labour increase the rate of contributory Jobseeker's Allowance (JSA) for those who worked for a significant period before they became unemployed.

Mr Miliband will say: "We can't just hope to make do and mend and we can't just borrow and spend money to paper over the cracks.

"It is a principle deeply felt by the British people that people should get something back for all they have put in and not get something for nothing.

"The next Labour government will change the way JSA operates to make sure that someone who has been working for years and years and paying in to the system gets more help if they lose their job than someone who has been working for just a couple of years."

Prime Minister David Cameron has already suggested preventing under 25s from receiving benefits unless they are "earning or learning".

But Mr Miliband will propose scrapping out-of-work benefits for those aged 18 to 21 and replacing them with a "youth allowance" at the same value - around £57 a week.

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Morrisons Plans 2,600 Job Cuts In Shake-Up

Morrisons has confirmed plans for 2,600 job cuts as the loss-making supermarket chain battles falling sales and market share.

A statement detailing the changes said the losses, representing 2% of its workforce, would result from cutting tiers of in-store management.

But the company insisted it could improve customer service at the same time as more staff would be focused on serving shoppers.

The announcement was made as the supermarket combats a flight to discounters with a series of price cuts that will cost it £1bn over three years.

Earlier this month, Morrisons reported a 7.1% slump in quarterly sales on the back of annual losses of £176m - a performance which prompted chief executive Dalton Philips to waive his bonus.

Morrisons now has 117 convenience stores

Morrisons has been the worst performer among the big four chains in terms of sales amid tough competition from the discounters, including Aldi and Lidl, though major rivals including Tesco have also endured falling market share.

The chain was slow to launch an online food offering and also lagged behind its biggest competitors on convenience store numbers.

Former chairman Sir Ken Morrison used the supermarket's annual general meeting to publicly criticise the current management's strategy just a week ago - reportedly describing it as "bull****".

Morrisons said that while the changes would be painful for its workforce, trials of its planned new management structures had proved a hit with customers.

The statement suggested that some stores currently had seven tiers between the shop floor and the store manager and it hoped to relocate some of those managers who will lose their jobs to new store and convenience operations.

Mr Philips said: "This is the right time to modernise the way our stores are managed.

"These changes will improve our focus on customers and lead to simpler, smarter ways of working.

"We know that moving to the new management structure will mean uncertainty for our colleagues and we will be supporting them through the process."

The company's share price - which has lost more than a quarter of its value over the past year - rose 3% in the moments after the announcement was made.

The union Usdaw took a different approach to that of investors.

National officer Joanne McGuinness said: "The next few weeks will be a worrying time for our members in Morrisons and we will do everything possible to support them.

"Today marks the start of a 45-day consultation period, where we will look in detail at the company's business case.

"Our priority will be to safeguard as many  jobs as possible, maximise employment within the business and get the best possible outcome for our members affected by this restructuring."

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'Supermarket Price War' Helps Inflation Ease

The first annual fall in food prices since 2006 has helped the rate of inflation tumble to a four-and-a-half year low of 1.5%.

The Office for National Statistics (ONS), which also published figures highlighting further gains for UK house prices, said the dramatic easing in the annual rate of price growth in May could be largely explained by a supermarket price war.

The ONS had measured CPI inflation at 1.8% the previous month.

The major "big four" supermarket chains of Tesco, Asda, Sainsbury's and Morrisons are scrapping for market share in a bitterly contested fight for business that has seen heavy discounters like Aldi and Lidl gaining ground.

The ONS charted an annual 0.6% fall in food prices in May.

It said a broad range of goods including drinks and clothing fell in value.

Air fares, which were lower due to the timing of Easter, had a significant downward effect though petrol pulled in the other direction as pump prices crept up.

The figures were announced days after Bank of England governor Mark Carney signalled that the first hike in the base rate of interest could come sooner than thought - with speculation pointing to this autumn.

While continued low inflation - below the Bank's 2% target - appears to ease any pressures on the Bank to lift rates, Mr Carney has highlighted stronger economic growth and falling unemployment as factors to consider in raising the rate from its historic low of 0.5% - a level that has not changed since March 2009.

An area of concern for Mr Carney and the bank's Financial Policy Committee, which monitors risks to financial stability, is UK house price inflation which soared ahead at an annual rate of 9.9% in April.

The ONS measured year-on-year growth of 18.7% in London though more recent reports from the likes of the Royal Institution of Chartered Surveyors and Rightmove have charted an easing in price growth in the months since - citing new controls on mortgage lending as a factor.

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Maiden Chinese 'Green Bond' To List In London

By Mark Kleinman, City Editor

An arm of the World Bank is to list the first 'green bond' denominated in China's currency in London in a move that will be hailed by ministers as a boost for the City's global status.

Sky News has learnt that the International Finance Corporation (IFC), which is the World Bank's private sector-focused investment arm, plans to raise about RMB 500m (£47m) to invest in climate-related projects.

Although modest in scale, it will represent a milestone as the first renminbi-denominated green bond issued by the IFC, and will see it listed on the London Stock Exchange.

An announcement about its completion is expected to be made by the Washington-based institution on Tuesday to coincide with the visit to the UK by Li Keqiang, the Chinese Premier, City sources said.

The news is expected to be hailed by David Cameron and George Osborne as a vital step in positioning London as the premier offshore centre for financing using the Chinese currency, they added.

That message is likely to be given particular emphasis because of the extent to which the UK's financial markets have come under scrutiny amid probes into manipulation of critical benchmarks such as foreign exchange and Libor.

The IFC is a major global development institution which taps financial markets to invest in projects across the developing world, and was influential in creating so-called Panda bonds in China and Dim Sum bonds in Hong Kong.

In March, it issued a RMB1bn (£94m) bond in London - also the first of its kind - which it said would support the internationalization of the Chinese currency.

At the time, the Chancellor said:

"Nearly two-thirds of all Renminbi activity outside of greater China takes place in London and IFC's decision to issue in London provides yet more evidence that the capital is the western hub for Renminbi.

"The Government will continue to work very closely with the private sector and the Chinese and Hong Kong authorities to build a thriving RMB market in London."

The proceeds of 'green bonds' are set aside to invest in renewable energy and energy-efficient projects, and are designed to help address the vast funding gap for such initiatives.

Sources familiar with the latest IFC deal said there had been significant interest from investors.

The IFC's RMB 'green bond' issue will form part of a package of City-focused deals designed to underpin its pre-eminence as a global financial centre.

China Construction Bank is to be designated as the first offshore clearing bank for the Chinese currency, while Industrial & Commercial Bank of China will be given permission to establish a wholesale branch in London.

UK-based companies are also expected to be given new assistance in financing China-focused transactions through a separate Government deal involving the Export Credit Guarantee Department, sources said.

Other trade and business deals announced during Premier Li's visit will include major projects and supply agreements involving BP and Shell, as Sky News revealed on Monday.

A Treasury spokesman declined to comment.

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Chinese Visit To Bring In Deals Worth £17bn

By Mark Stone, China Correspondent, in Beijing

A raft of commercial deals between the UK and China totalling more than £17bn will be agreed later in the first visit to Britain by a Chinese leader for over three years.

China's Premier Li Keqiang is accompanied by a delegation of more than 150 business leaders and top level Communist Party officials.

He is holding talks with David Cameron at a UK-China summit and a news conference will provide a rare opportunity to question the Chinese leadership.

Mr Li will also be given a guard of  honour and have an audience with the Queen at Windsor Castle in a move which has angered critics of China's record on Human Rights and political freedoms.

Campaign group Free Tibet has written to Buckingham Palace requesting the meeting with the Queen is cancelled.

Britain's Deputy Prime Minister used unusually direct language and risky timing to describe China's people as being "politically shackled to a doctrine which is a one party state, a communist state".

"Of course we can't agree on large scale and systematic human rights abuses which still continue in China to this day: the many journalists who are persecuted. The very widespread use of the death penalty," Nick Clegg said at his weekly press conference yesterday.

Mr Clegg added that despite these concerns, he hoped to have "very productive discussions" with the Chinese leadership.

The commercial deals, which Sky News understands have been under negotiation right up until the last minute, should cover trade and investment across a variety of sectors including energy, transport, finance, health and education.

China's sovereign wealth funds could help to finance major British infrastructure projects including the HS2 high speed rail link and the next generation of nuclear power stations. China is understood to be putting its largest share of European investment into the UK. 

Britain's two biggest oil companies, BP and Shell, will unveil multi-billion pound deals, and an arm of the World Bank is to list the first 'green bond' denominated in China's currency in London.

Britain has also announced a new streamlined visa service for Chinese travellers.

The UK is not part of the visa agreement which allow overseas visitors to travel to twenty six countries in Europe which means that 90% of Chinese tour operators say they leave the UK off their itinerary every year.

The visa application process will now be simplified, allowing tourists to apply using the same form as other European countries. Chinese visitors will also be able to use an Irish visa to travel to the UK. 

China's growing middle class and the rebalancing of its economy from export to domestic consumption also presents Britain with huge opportunities.

British fashion giant Burberry opened its largest Asian store in Shanghai in April. The company's China strategy has helped boost global revenues.

In the automotive sector, Jaguar Land Rover has seen staggering success across China with 130 dealerships in 90 cities. The company is now Indian-owned but the cars are made in the UK.

"The thesis now is that the UK is entering a sweet spot. Chinese consumers increasingly recognise the UKs value as a brand," said Duncan Clark, an investment advisor with 20 years' experience in China.

"They are buying luxury goods, they're buying higher quality services as well including education and training - areas that the UK excels in."

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Carney Boosts Lloyds Plan For £1.3bn TSB Float

By Mark Kleinman, City Editor

The state-backed Lloyds Banking Group is this weekend considering increasing the price at which it sells shares in TSB, its high street subsidiary, amid strong demand from investors.

Sky News has learnt that Lloyds could announce early next week that it is revising the 220p-290p range for the flotation of TSB by raising the bottom end to approximately 240p.

Investment banking sources said Lloyds would make a decision after consulting its advisers during the next couple of days.

One insider said that the Mansion House address by Mark Carney, Governor of the Bank of England, had bolstered sentiment among City investors for TSB shares, with further interest registered on Friday.

Mr Carney said it was conceivable that interest rates would rise from their historic low of 0.5% sooner than markets expected, implying that a rate hike could come before the end of this year.

That would potentially benefit TSB, the profitability of which is geared to interest rates to a greater degree than most of its high street rivals.

One insider said the City's assumptions about TSB's profitability, outlined in its prospectus last week, might need to be revised given the boost to margins on mortgages and current accounts which could result from an early rate rise.

At the 255p mid-point of the 220p-290p range announced last Monday, TSB would be valued at £1.275bn, roughly 15% below its book value of just over £1.5bn.

The expectation that shares in the UK's seventh-largest lender will be sold for less than its book value disappointed some City analysts.

Yet even at that level, Lloyds would still attract a price for TSB that is significantly higher than the £750m which the Co-operative Group planned to pay for the 631-branch network before a deal collapsed last year.

The prospectus revealed that TSB made an after-tax profit of £172m last year on revenue of £798m, although the earnings figure included a £105m tax gain.

Banking sources also said that approximately 60,000 retail investors had applied for shares, lured by the offer of free bonus stock.

That figure could increase significantly by Tuesday, when the window for retail applications closes.

Lloyds is selling between 25% and 27.5% of TSB in the flotation.

It is required to offload the remainder by the end of next year under a state aid deal agreed with Brussels following the bank's taxpayer bail-out in 2008.

Lloyds, which is being advised by Citi, JP Morgan, UBS, Investec, Royal Bank of Canada and Rothschild, declined to comment.

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Centrica Chief Laidlaw Rules Out BG Switch

By Mark Kleinman, City Editor

Sam Laidlaw, the boss of Centrica, has ruled himself out of the running to take the top job at BG Group, the troubled FTSE 100 energy group.

Sky News has learnt that Mr Laidlaw, whose departure from the owner of British Gas is expected to be announced within weeks, has told friends that he is not interested in the BG role.

The vacancy at the helm of BG emerged in May, when Chris Finlayson was ousted after just a year in the job, following problems with key exploration projects and a string of profit warnings.

Mr Laidlaw, who has been Centrica's chief executive since 2006, was linked with the BG role in 2012, and was reported this weekend by one newspaper as having agreed to take the job.

However, insiders confirmed that Mr Laidlaw had had no serious discussions on either occasion with BG, which is now understood to have identified a preferred candidate to replace Mr Finlayson from outside the UK.

BG's new chief executive could be announced at around the time of its second-quarter results at the end of next month, said one.

By coincidence, Centrica's new boss is likely to be appointed at around the same time, with Iain Conn, a senior BP executive, involved in ongoing negotiations with the company.

Sky News revealed last month that one of the potential obstacles to Mr Conn's appointment as Centrica's new boss is his multimillion pound shareholding in BP, a significant proportion of which has yet to pay out.

BP's latest annual report shows that Mr Conn owns approximately £3m-worth of BP shares and has about £16m-worth of additional awards which are subject to performance criteria.

Mr Conn had also been sounded out about joining BG, but is not thought to be in talks about that role.

British Gas is often confused with BG Group, although the two are now entirely separate companies after being privatised by Margaret Thatcher in 1986.

Centrica plc was created in 1997 following a demerger from British Gas plc, which was then renamed BG.

BG now has a market value of just over £43bn, and is repeatedly touted as a takeover target for the likes of Exxon-Mobil, America's biggest energy group.

Centrica's market value stands at £16.45bn, with its shares having fallen by more than 12% during the last year as political heat on the major domestic energy suppliers has intensified.

BG and Centrica both declined to comment.

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Carney Boosts Lloyds Plan For £1.3bn TSB Float

By Mark Kleinman, City Editor

The state-backed Lloyds Banking Group is this weekend considering increasing the price at which it sells shares in TSB, its high street subsidiary, amid strong demand from investors.

Sky News has learnt that Lloyds could announce early next week that it is revising the 220p-290p range for the flotation of TSB by raising the bottom end to approximately 240p.

Investment banking sources said Lloyds would make a decision after consulting its advisers during the next couple of days.

One insider said that the Mansion House address by Mark Carney, Governor of the Bank of England, had bolstered sentiment among City investors for TSB shares, with further interest registered on Friday.

Mr Carney said it was conceivable that interest rates would rise from their historic low of 0.5% sooner than markets expected, implying that a rate hike could come before the end of this year.

That would potentially benefit TSB, the profitability of which is geared to interest rates to a greater degree than most of its high street rivals.

One insider said the City's assumptions about TSB's profitability, outlined in its prospectus last week, might need to be revised given the boost to margins on mortgages and current accounts which could result from an early rate rise.

At the 255p mid-point of the 220p-290p range announced last Monday, TSB would be valued at £1.275bn, roughly 15% below its book value of just over £1.5bn.

The expectation that shares in the UK's seventh-largest lender will be sold for less than its book value disappointed some City analysts.

Yet even at that level, Lloyds would still attract a price for TSB that is significantly higher than the £750m which the Co-operative Group planned to pay for the 631-branch network before a deal collapsed last year.

The prospectus revealed that TSB made an after-tax profit of £172m last year on revenue of £798m, although the earnings figure included a £105m tax gain.

Banking sources also said that approximately 60,000 retail investors had applied for shares, lured by the offer of free bonus stock.

That figure could increase significantly by Tuesday, when the window for retail applications closes.

Lloyds is selling between 25% and 27.5% of TSB in the flotation.

It is required to offload the remainder by the end of next year under a state aid deal agreed with Brussels following the bank's taxpayer bail-out in 2008.

Lloyds, which is being advised by Citi, JP Morgan, UBS, Investec, Royal Bank of Canada and Rothschild, declined to comment.

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Retailers Set Goals On World Cup Success

By Emma Birchley, Sky News Correspondent

England fans are not the only ones hoping the players can find the back of the net as their World Cup campaign finally gets under way.

Retailers too are banking on success.

The Centre for Retail Research has estimated that every time England scores - shops, restaurants and pubs will benefit to the tune of almost £200m.

At Sainsbury's, designers started working on the merchandise more than a year ago.

Corporate affairs director Alex Cole said: "The longer England stays in the tournament, the more excuse we have got for parties as a nation.

"But also the sun is really important so the sunnier it is the more likely we are to say, yes, we will have a BBQ and get some people round to watch the match with us."

The further in the competition England progress, the better for retailers

But it is not just sales of sausages and beer that soar. TVs are selling well. So too are souvenirs and sportswear.

Takeaway pizzas are expected to sell in their millions but many people will head straight from work to bars or restaurants to watch the matches.

Phil Collinson, manager at Rileys Sports Bar in central London, is expecting 30,000 fans to come through the doors during the tournament.

"It's our responsibility to make sure everyone from all the different nations has the chance to see the matches," he said. "It will be an incredible atmosphere and great to be part of."

Reaching the final 16 is expected to see the takings by retailers, bars and restaurants rise by more than £1.3bn while a place in the final would be worth almost £2.6bn to the economy.

Michael Jarman says success equals spending

With England taking on Italy in their first game, it can mean split loyalties if you are running an Italian business in the heart of London.

But while there is no surprise who Lorenzo Mariotti, manager of the restaurant Little Italy in Soho, wants to win, he knows the importance of the home nation staying in the competition.

"We really need both teams to play well and go (as) far as they can and hopefully meet in the semi-final or final," he said. "It will be the most great game of the World Cup."

Former footballer and city trader Michael Jarman says success in the tournament will see football fans out spending.

"You find the general morale and momentum of the UK consumer is going to be more upbeat, a bit more optimistic," he said.

"You then have the new football season starting. Naturally there will be a better feel-good factor."

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