Thames Water creditors plan board shake-up if rescue deal goes ahead
A group of senior Thames Water creditors plan a boardroom shake-up if Britain’s biggest water company avoids nationalisation and their turnaround plan goes ahead.
The creditors said they plan to appoint four new board members if the government allows them to take formal ownership of the struggling company.
They said they have lined up Liz Barber, the former boss of Yorkshire Water, to join the board, along with Dame Bernadette Kelly, the former permanent secretary at the Department for Transport, and Clive Selley, the former chief executive of Openreach, which builds and maintains the UK telecommunications network. Mike McTighe, the former chair of Openreach who is already advising Thames Water, would also join the board.
This comes as new prime minister Andy Burnham faces growing pressure to renationalise Thames Water under the government’s special administration regime, which would mean large losses for creditors. Burnham has previously indicated the government should take control of Thames in order to write off debts worth billions of pounds.
The company, which is struggling under a £20bn debt mountain, serves 16 million customers across London and the south east but has been on the verge of financial collapse for almost three years. It could run out of cash as soon as October – but still paid its finance chief a £1m signing fee earlier this month – a decision the environment department labelled “unacceptable”.
The creditors, a group of distressed debt investors and financial institutions that go by the name of London & Valley Water, are negotiating with ministers and the regulator Owat and want to take over Thames Water formally this autumn, if regulators will give leniency on future fines. Under their plan, they would inject short-term bridge financing ahead of a broader debt restructuring.
The consortium said the new directors would “oversee Thames Water’s 10-year turnaround and deliver a comprehensive transformation of Thames Water in the interest of customers and the public”.
McTighe said:
The challenge at Thames Water is huge. If this recapitalisation plan is accepted, we will apply full dedication as a new board, working alongside the executive team to transform the business and build a culture in which the customers and local communities who depend on Thames Water come first.
We will focus relentlessly on protecting public health and safety, respecting and improving the local environment, ensuring what people pay for their water is fair and the most vulnerable are protected, investing to secure clean and reliable water supplies for current and future generations, and being accountable for what we do.
It will take time to fix Thames Water, but we are committed to rebuilding trust with the customers and public Thames Water serves.
“Having stirred up a hornets’ nest in the Middle East, there may have been some expectation that the US administration would seek to bolster relationships elsewhere, but instead the opposite has happened,” said Susannah Streeter, chief investment strategist at the Wealth Club. She explained:
Relations between the USA and Canada have taken another fractious turn after trade talks collapsed, leading to 50% tariffs on some Canadian goods being imposed over the weekend.
Canadian exporters will be bracing for a drop in sales if US importers try and find alternative supplies rather than paying the tariffs. But it’s likely many costs will be passed on through wholesalers and retailers and it will be American consumers who’ll end up paying more, with tariffs acting like a tax on imports.
While the impact on inflation through this latest hike should be relatively contained, the cumulative effect of tariffs across multiple trading partners is an increasing worry, especially combined with higher energy prices induced by conflict in the Middle East.
The collapse in US-Canada trade talks could add another upward nudge to Treasury yields, with the trade row deepening concerns about US economic policy, mounting debt and inflationary pressures.
The Trump administration has tried to sell tariffs as a way of bringing in huge amounts of government revenue and helping tackle America’s debt mountain. But the chaotic tariff regime has been beset with legal challenges and has led to mass refunds, so far from making a dent, the US deficit is heading towards $2.1tn this year and the national debt has just breached $40trn.
Also, tariffs and wars are not just costly, they risk acting as a drag on growth while simultaneously pushing up prices, creating a toxic combination. Slower growth can also mean weaker tax revenues, making it harder for the US to grow its way out of its debt mountain. These are all concerns that will be playing on central bankers’ minds, ahead of the key Jackson Hole summit later this week, and investors will be looking for insights from Fed chair Kevin Warsh about where interest rates could head given the highly tricky economic and monetary environment.
The lesson from Canada’s collapsed trade talks with the US: negotiation may be futile
Here is some analysis on the looming trade war between the US and Canada:
The calamitous collapse of trade negotiations between Canada and the United States is a warning to nations worldwide that pursuing any kind of dialogue with the current US administration is doomed at the outset, according to observers who say this recent episode indicates seeking a fair deal is futile.
Andrea Lawlor, an associate professor of political science at McMaster University in Ontario, said:
No matter the closeness of the historical relationship, the American administration has signalled that it now prioritises its interests above those of some sort of global economic coordination or harmony.
It feels like these talks ‘failed’. However, I’m not sure there was really a success to be had.
The two countries are now in a deepening trade war after weeks of urgent talks fell apart shortly before the 12am EST (5am BST) deadline on Saturday, when the US imposed 50% tariffs on $20bn (£14.6bn) worth of Canadian goods.
A defiant Mark Carney said on Saturday that he had rejected the deal because of last-minute US demands that would have undermined Canada’s sovereignty. The Canadian prime minister said: “They asked too much and they offered too little … you’re at war when you’re attacked, and we got attacked.” He promised to match US tariffs “dollar for dollar”.
Donald Trump had initially announced the tariffs on 20 July,saying Canada had unfairly discriminated against American businesses.
The core example provided by the White House is Canada’s bans on the sale of US alcohol in eight of its 10 provinces and all three territories. The removal of US spirits, wine and beer from shelves came into effect after Trump’s first round of tariffs, slapped on Canada in early 2025.
The breakdown of talks came as a shock. Trump had claimed on Tuesday that a three-day extension would be applied to the tariff deadline, as an agreement was all but signed. On Wednesday, he told reporters that a “very fair deal for both” sides had been ironed out.
But as details of the agreement began to leak to Canadian media, there was growing alarm that Carney and his negotiators were conceding too much in exchange for lower tariffs on steel, aluminium and cars.
Introduction: Canadian dollar dips after US-Canada talks collapse into trade war; oil prices fall ahead of US sanctions on Iran
Good morning, and welcome to our rolling coverage of the global economy, the financial markets, the eurozone and business.
The Canadian dollar fell after the country’s trade talks with the US collapsed on Friday and Washington imposed 50% tariffs on $20bn of Canadian goods, prompting Canada to retaliate.
The Canadian dollar dipped 0.2% to C$1.3798 per US dollar, retreating from a three-month high. It had been strengthening on hopes of a trade deal with the US. The two sides appeared close to an agreement on Friday to lower tariffs on steel, aluminium and cars, but the deal fell apart at the last minute.
Mark Carney, Canada’s prime minister, said they were “walking away from a bad deal”, and would now “match Washington’s new tariffs dollar for dollar”. So that means Canada will face 50% new tariffs on goods including wine, furniture, dairy products, cement, clothing, fishing rods and hockey sticks, covering around 5% of Canada’s exports to the US.
Carney said that their own retaliatory tariffs on US steel, electronics, dairy, appliances, agricultural equipment, pulp and paper and other products would take effect on 8 September. The new US tariffs come on top of existing levies on cars, aluminium, steel and lumber.
Over in the US, president Donald Trump posted that “Canada wants the benefits of being a State, without being one!!! They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!”
Analysts at Deutsche Bank led by Jim Reid said:
There’s already been a market reaction this morning to the breakdown of the talks, with the Canadian dollar weakening against every other G10 currency, including a -0.26% fall against the US dollar. Otherwise, Bloomberg also reported overnight that Canada saw little chance of the talks resuming before the midterm elections.
Asian stock markets declined while oil prices also fell as markets waited for details of threatened US sanctions on Iran due later on Monday.
Japan’s Nikkei fell nearly 0.7%, Hong Kong’s Hang Seng dropped 1.9% and South Korea’s Kospi tumbled 3.2%.
China’s Alibaba shares slumped in Hong Kong after it launched a $10.2bn share sale at a sharp discount to fund development of chips, AI infrastructure and models.
Brent crude, the global oil benchmark, lost 1.6% to $92.81 a barrel.
Later this week, the annual Jackson Hole conference kicks off in Wyoming, and the new US Federal Reserve chair, Kevin Warsh, is due to speak on Friday.
His speech comes at a critical time, amid anxiety in government bond markets over inflation and Donald Trump’s tax and spending plans that helped push the national debt to over $40 trillion.
Analysts said bond traders would be looking for signals from Warsh over its commitment to fighting inflation.
The Trump-appointed head of the US central bank has previously signalled reluctance to “spoon-feed” financial markets over how it plans to set interest rates to keep fast-rising prices in check.
However, anxiety over Trump’s handling of the economy and investor fears that his war with Iran is stoking inflation have rocked global financial markets amid a dramatic sell-off in US government bonds.
The Agenda
1pm BST: Mexico GDP for second quarter (final)
1.30pm BST: US Chicago Fed national activity index for July
Updated
