UBS posts warning over Royal Mail strike threat | Business

News that Royal Mail staff could be among the next group of workers to go on strike did not go down well in the City yesterday.

The prospect of industrial action resulted in analysts at UBS advising its clients to stop buying shares in the postal group in favour of a “neutral” recommendation over fears that the cost of strike action could impact Royal Mail’s cost-savings programme.

“Analysing past strikes, we note also customers trading down and incremental costs associated with higher temporary workers to clear delivery backlogs,” Cristian Nedelcu, an analyst at UBS, said.

He reckons that £100 million to £125 million of the £350 million cost-cutting targets the company has in place are at risk if negotiations with the Communication Workers Union are