Yahoo Finance China steps up support for Putin as Western sanctions bite - latest updates
China’s total trade with Russia has soared to levels not seen since the beginning of Vladimir Putin’s war in Ukraine, official data showed, as Beijing steps up support for its sanctions-hit ally.
Trade between the two countries last month was worth $20.5bn (£16.5bn), data from Beijing revealed, with Chinese imports from Russia worth $11.3bn.
There was no official breakdown of the figures, which also showed China’s exports more broadly falling for the first time since February - breaking a two-month growth streak following the easing of zero-Covid restrictions.
Rising global inflation, the threat of recession elsewhere and geopolitical tensions with the United States have weakened demand for Chinese products.
China’s exports fell 7.5pc from a year earlier in May and imports were down 4.5pc, adding to signs an economic rebound following the end of anti-virus controls is slowing as global demand weakens under pressure from higher interest rates.
But China’s trade with Russia bucked the otherwise grim trend for Beijing.
China is Russia’s largest trading partner, with trade between them reaching a record $190bn last year, according to Chinese customs data.
During a summit in March, Chinese President Xi Jinping and Russian leader Vladimir Putin pledged to boost trade to $200 billion this year as they hailed their “no limits” partnership.
Russian energy deliveries to China were set to grow by 40pc this year, Deputy Prime Minister Alexander Novak said last month.
Read the latest updates below.
03:22 PM
CNN boss ousted after backlash over Donald Trump town hall
The boss of CNN has been ousted following a backlash over the left-wing news channel’s recent interview with Donald Trump and a damaging magazine profile.
Our media reporter James Warrington has the details:
Chris Licht was appointed chairman and chief executive of CNN just 13 months ago after making his name as a TV producer.
But his tenure was plagued by a series of programming missteps and controversies that sparked a revolt among the network’s staff.
Most recently, Mr Licht drew fierce criticism over his decision to host Donald Trump in a town hall last month that was packed with the former president’s supporters.
Staff were said to be furious that the channel had given air to lies and misinformation spread by Mr Trump, who has been impeached twice.
Read how else the CNN boss’s reputation was hit.
03:00 PM
Oil rises as dollar weakens
Oil prices have crept up further as a weaker dollar made commodity prices more attractive.
Brent crude, the international benchmark, has gained 0.5pc to more than $76 a barrel, while US-produced West Texas Intermediate has risen 0.6pc above $72.
The dollar has weakened against major currencies as markets increasingly price out the possibility of the US Federal Reserve cutting interest rates later this year.
Prices have also been supported by Saudi Arabia’s announcement on Sunday that it will cut production by a million barrels a day from July.
Oil had lost about 10pc this year amid concerns about China’s recovery from tight Covid restrictions.
02:46 PM
Wall Street edges higher after opening bell
The S&P 500 and Nasdaq opened marginally higher as investors refrained from making big bets ahead of inflation data and the Federal Reserve’s policy meeting next week.
The Dow Jones Industrial Average was flat at the open at 33,562.47, with the S&P 500 was also barely opened higher by less than 0.1pc at 4,285.47.
The Nasdaq Composite gained 0.1pc to 13,295.26 at the opening bell.
02:16 PM
Yellen sees 'path' for US economy to make soft landing
The US Treasury Secretary has said she sees a “path” for inflation to come down while retaining a strong US job market.
Janet Yellen the priority remains to “bring inflation down,” telling CNBC that the Biden administration continues to support the Federal Reserve’s efforts in that regard.
She also said that the recent deal to suspend the debt limit was a “win” for the American people, adding that without it a “recession would have been very likely”.
She warned “we’re seeing areas of the economy that are slowing down,” outlining there will be “issues” with commercial real estate amid changing work patterns.
She suggested that banks would be able to handle the strains ahead.
Following the decision by US regulators this week to sue crypto exchanges Binance and Coinbase, Ms Yellen said that “additional regulation would be appropriate” for the digital asset industry.
01:59 PM
US mortgage approvals at lowest level since 1995
Mortgage approvals for home purchase in the US slumped in May to their lowest level in nearly 30 years as a renewed rise in mortgage rates hits buyer demand.
The Mortgage Bankers Association index of applications for home purchases dropped 1.7pc in the week ended June 2 to 151.7, the second-lowest level since 1995.
Sam Hall, property economist at Capital Economics, said:
This points to further near-term weakness for home sales, which we think will stay close to their current lows for the remainder of the year.
Refinancing activity also edged lower by 2.9pc month on month. This was driven by a rise in mortgage rates from an average of 6.5pc in April to 6.7pc in May.
As a result, affordability still looks badly stretched by past standards, which will continue to weigh on mortgage demand in the coming months.
Buyers will also face headwinds from a weakening economy, so we doubt demand will rise far from its current level over the rest of this year..
01:44 PM
Woking Council declares bankruptcy over £1.2bn deficit
Woking Council has declared itself effectively bankrupt after a string of poor investments that have left it with a deficit of £1.2bn.
The Surrey council has issued a Section 114 notice after admitting its expenditure is set to exceed the financial resources it has available, meaning it cannot balance its budget.
It blamed the move on an “historic investment strategy that has resulted in unaffordable borrowing, inadequate steps to repay that borrowing and high values of irrecoverable loans”.
It has become the latest English council to run into trouble following poor commercial investments after other recent failures at Thurrock, Croydon and Slough.
Council leader Cllr Ann-Marie Barker said:
My administration has been very clear about the huge financial challenges facing the council due to the legacy of inherited debt.
The notice makes clear the true scale of these challenges which are so significant that the council cannot simply deal with them on its own.
We must work in partnership with the whole of government and its agencies to support us in delivering a robust Improvement and Recovery Plan.
01:29 PM
Government plans to renew local TV licences
The Government has proposed to renew the licences of 34 local television services across Britain, subject to a review of each station’s future plans.
Media minister Sir John Whittingdale said:
Local TV stations from Belfast to Birmingham help to support local journalism, drive the creative economy and foster pride in communities.
We want to see this continue, so we’ve set out plans... to review all services to ensure they’re well positioned to continue serving local audiences with trusted and distinctive content for years to come.
01:20 PM
ECB’s Knot says more rate hikes may be needed
A European Central Bank chief has warned that prolonged inflation may prompt further increases in borrowing costs in the future.
Governing Council member Klaas Knot said: “I’m not yet convinced that the current tightening is sufficient.
“Inflation could well remain too high for a long time and further rate hikes will then be necessary.”
The Dutch central bank chief’s remarks come as ECB is expected to raise rates next week and again in July.
One of its more hawkish policymakers, Mr Knot has previously said he’s “open minded” on the possible need to hike in September, too.
01:04 PM
William Hill owner's shares surge after consortium's investment
Shares in William Hill owner 888 have soared to the highest level in nearly six months after a group of gambling industry veterans began pushing for changes at the bookmaker.
The company’s share price has jumped more than 30pc today, raising its market value to nearly £470m.
An investor group has built a 6.6pc stake in the company, it was revealed on Tuesday.
The consortium includes Lee Feldman, the ex-chairman of GVC Holdings, the acquisitive betting firm now known as Entain, and several former top Entain executives.
888’s market capitalisation has plunged from a peak of about £1.8bn in 2021 after its debt-fuelled takeover of rival bookmaker William Hill’s assets outside the US.
Jefferies analysts James Wheatcroft and Jaina Mistry wrote that 888’s William Hill deal seems “highly similar to the highly successful integration of GVC and bwin, familiar ground for several members of this new shareholder grouping”.
They added: “We read the investment as a positive endorsement of the 888/William Hill integration opportunity, and opportunistic given 888’s low valuation.”
12:51 PM
US businesses commit £14bn to UK
US firms have committed more than £14bn of new investment in the UK, creating almost 2,500 jobs.
The cash injection, announced by the Government today, includes £583m of investment in projects including World Fuel Services and Meld’s green hydrogen facility in Hull,.
It also includes a new Mars facility in the London Gateway Freeport, expansions of BNY Mellon’s existing and Vanguard’s new Manchester offices and a new HCA Healthcare facility in Birmingham.
NEW: US firms announce £14 billion of new investment in the UK, creating thousands of jobs and growing the economy.@RishiSunak is in Washington DC right now to bang the drum for British business and build a UK-US alliance that strengthens our economic security.
— UK Prime Minister (@10DowningStreet) June 7, 2023
12:35 PM
Fridays owner revenues dip amid cost-cutting drive
The parent firm of restaurant chain Fridays has revealed a slight dip in sales so far this year as customer spending continues to come under pressure.
Hostmore told shareholders that total revenues dipped 1pc over the 22 weeks to June 4, over the same period last year. Meanwhile, like-for-like sales were down 3pc.
The group runs 91 sites across the Fridays - which recently rebranded from TGI Friday’s - and 63rd+1st brands.
The hospitality chain had seen total revenues increase by 2pc over the first 16 weeks of the year.
It comes as the group continues to move forward with significant cost-cutting plans announced over the past two months.
In May, the company said a small number of head office and supply chain workers would be impacted by cost-saving initiatives designed to save the firm £4.1m more each year, after the firm had already announced a £1.8m-a-year savings programme.
Shares in the company were 1.2pc higher after early trading.
12:00 PM
US markets expected to inch downward
Wall Street is poised to edge lower when markets open later as investors remain cautious ahead of inflation data and the Federal Reserve’s policy meeting next week.
The main US indexes ended higher on Tuesday, with S&P 500 up almost 20pc from its October 2022 lows, underpinned by rising expectations that the Fed will hold interest rates steady at its policy meeting on June 13-14.
US shares have also been boosted by a rally in megacap stocks and a stronger-than-expected earnings season.
However, some analysts say that profit-taking may be round the corner for big tech and other major growth stocks.
Charalampos Pissouros, senior investment analyst at XM, said:
The Nasdaq is more than 40pc up from its October lows, not posting a decent correction since mid-March.
Therefore, the risks of a corrective setback seem to be increasing, especially with a potential liquidity squeeze from Treasury issuance looming.
In premarket trading, the Dow Jones Industrial Average was down 0.1pc, while the S&P 500 was flat. Futures on the Nasdaq 100 were down 0.1pc.
11:41 AM
Topgolf shares surge after PGA, DP and LIV mega-merger
Shortly we’ll look ahead to what might happen when markets open in the US - and one of the stories of the day on Tuesday was the jump for golfing entertainment brand Topgolf after the shock announcement that the PGA Tour will merge with Saudi-backed rival LIV Golf.
Shares in Topgolf, which makes golf equipment and operates a chain of high-tech driving ranges, gained as much as 6.5pc in New York following the news, while golf gear peer Acushnet rose as much as 5.7pc.
Analysts at Jefferies project the deal will drive more interest in golf. Randal Konik said:
The recent announcement has undoubtedly caught the golf industry by surprise.
However, we believe that this unexpected agreement holds immense potential to elevate the sport of golf to new heights.
The global nature of this collaboration creates a more vibrant golfing landscape attracting new players, sponsors and fans which will inevitably fuel growth for golf original equipment manufacturers, in our view.
The deal comes after Topgolf cut its outlook last month, stoking concern that interest in golf is cooling following a pandemic-fuelled surge.
Even with Tuesday’s jump, Topgolf shares remain down about 2pc this year. Acushnet, meanwhile, has gained 15pc so far in 2023.
11:19 AM
Bus drivers to strike over pay
The Heathrow security staff strikes come as Unite also announces more than 1,700 bus drivers in London will stage walkouts over four days in a pay dispute.
They will strike on June 20, 21, 27 and 28 after rejecting a 7pc pay offer.
Elsewhere, 800 First West Yorkshire bus drivers in Leeds will begin strike action every day from June 18 over the company’s refusal to return the date on which new pay rises are enacted back to normal.
Unite members want the deal to be back dated to April, rather than waiting for the increase in October at the earliest.
“When First West Yorkshire needed its drivers to dig deep for the company, they did. Not only did they put their & their families’ health on the line by continuing to drive First buses, they also agreed to delay getting a pay rise. @UniteSharon #Leeds https://t.co/VWdYNNOrJR
— Unite the union: join a union (@unitetheunion) June 7, 2023
11:03 AM
Eid and school holidays hit by Heathrow strikes
The security guard strike days at Heathrow’s Terminals 3 and 5 will disrupt getaways for Eid festival and the beginning of the school holidays, as well as the August bank holiday weekend.
Unite general secretary Sharon Graham said:
Unite is putting Heathrow on notice that strike action at the airport will continue until it makes a fair pay offer to its workers.
Make no mistake, our members will receive the union’s unflinching support in this dispute.
HAL has got its priorities all wrong. This is an incredibly wealthy company, which this summer is anticipating bumper profits and an executive pay bonanza.
It’s also expected to pay out huge dividends to shareholders, yet its workers can barely make ends meet and are paid far less than workers at other airports.
10:59 AM
Summer of strikes announced at Heathrow
More than 2,000 security guards will hold a month of strikes at Heathrow airport, beginning later this month.
The Unite union has announced 31 days of strike action beginning on Saturday, June 24, in a dispute over pay.
The walkout by workers at Terminal Three will result in a large number of airlines facing the prospect of disruption, delays and cancellations this summer.
These include: Virgin, Emirates, Qatar, United, American and Delta.
They will join walkouts which have already been taking place at Terminal Five, disrupting British Airway’s summer schedule.
10:50 AM
China stocks up gold reserves
China increased its gold reserves for a seventh straight month, signalling ongoing strong demand for the precious metal from the world’s central banks.
China raised its gold holdings by about 16 tons in May, according to data from the People’s Bank of China.
Total stockpiles now sit at about 2,092 tons, after adding a total of 144 tons from November through last month.
Central banks bought a record volume of gold last year as nations stockpiled the precious metal amid rising geopolitical uncertainty and stubborn global inflation.
While buying fell steeply in the first quarter of this year, according to the World Gold Council, gold-watchers expect purchases to remain robust.
About a quarter of central banks intend to increase their holdings over the next 12 months amid increasing pessimism toward the future role of the US dollar, according to a survey published by the council in May.
#China’s #gold binge extends to 7th month as holdings climb. China raised its gold holdings by 0.51mln ounces in May. Total stockpiles now sit at ~67.3mln ounces or 2,092 tons, after adding a total of 6.4mln ounces from Nov through last month. pic.twitter.com/xuzeh6dUws
— Holger Zschaepitz (@Schuldensuehner) June 7, 2023
10:37 AM
China exports drop more than expected
Chinese exports fell for the first time in three months in May, adding to risks in the world’s second-largest economy as global demand weakens.
Overseas shipments shrank 7.5pc from a year ago to $284bn, official data showed today, worse than the median forecast for a 1.8pc drop.
Exports to most destinations contracted, with double-digit declines to places including the US, Japan, Southeast Asia, France and Italy.
Imports declined 4.5pc to $218bn, better than an expected drop of 8pc, leaving a trade surplus of $66bn.
Chinese purchases from most regions declined in May, with contractions of more than 20pc in imports from Taiwan and South Korea — a sign of weakness in global electronics demand.
The latest #China #trade data do not look great, with both #exports and #imports down from a year ago. pic.twitter.com/c294gVlntL
— jeroen blokland (@jsblokland) June 7, 2023
10:14 AM
Pound inches up as market prices out Fed rate cut
The pound has edged higher against the dollar as chances faded for a rate increase next week by the Federal Reserve.
Sterling has gained 0.1pc against the greenback to be worth $1.24.
However, analysts are not expecting a major rally.
Rabobank chief strategist Jane Foley said the dollar is likely to have an edge over most major currencies as the likelihood of the Fed cutting rates wanes.
She said: “Over the last month or so, we’ve seen the market slowly pricing out the risks of a 2023 interest rate cut. And that’s certainly been our view - we don’t think they will cut until 2024.”
The pound has gained 0.1pc against the euro, which has dipped below 86p.
09:59 AM
Stealth taxes to pile 'significant' pressure on UK households, OECD warns
Jeremy Hunt’s stealth tax raid will pile “significant” pressure on UK households over the next few years, the OECD has warned, as the equivalent to a 4p rise in income tax adds to a cost of living squeeze.
Economics editor Szu Ping Chan has the details:
The Paris-based organisation, which recently appointed former Treasury official Clare Lombardelli as its chief economist, said the Chancellor’s decision to freeze income tax thresholds until 2028 will “significantly increase fiscal pressure on households, pushing 1.7m people to start paying income taxes and 1.2m people to pay higher rates”.
It now predicts the UK will avoid recession this year, though at 0.3pc the economy is expected to barely grow.
However, the OECD said inflation would be among the highest in the 38 member club of industrialised economies in 2023 as food prices and underlying inflation remain stubbornly high.
The OECD’s criticism of so-called “fiscal drag”, which forces workers to hand more of their pay rises to the taxman as thresholds fail to keep up with the cost of living, has already been likened to a 4p increase in the basic rate when combined with employer national insurance contributions, raking almost £30bn extra a year by 2027-28.
Despite the tax raid, the OECD warned that “fiscal space is left” for tax cuts, with the UK’s growing debt pile “leaving the government significantly exposed to movements in interest rates”.
09:44 AM
Harbour Energy shares rise amid merger talks
Harbour Energy shares have risen as much as 5pc amid reports that it is in talks to merge with Talos Energy.
The two companies have been holding on-off discussions for at least six months and rekindled talks in recent weeks, according to Reuters.
The combined company could list in New York, the news agency said.
Harbour Energy has axed a fifth of its workforce as it blamed Jeremy Hunt’s windfall tax for deterring investment.
The Edinburgh-based company made pre-tax profits of $2.5bn (£2.1bn) during 2022 but reported post-tax profits of only $8m once the impact of Energy Profits Levy were taken into account.
09:27 AM
Vodafone and CK Hutchison poised to agree merger 'this week'
Vodafone and CK Hutchison are understood to be in the final stages of agreeing a merger to create Britain’s biggest mobile operator, with a long-awaited announcement expected as soon as Friday or early next week.
The structure of the agreed deal is in line with Vodafone’s announcement in October, with the British group owning 51pc and Hutchison owning 49pc, according to Reuters.
This will be achieved by adjusting the ownership of debt rather than exchanging cash, sources told the news agency.
Including debt, the deal could be valued at around £15bn and would create a business with about 27 million customers, overtaking EE, owned by BT, and Virgin Media O2, owned by Telefonica and Liberty Global.
09:17 AM
Gas prices fall amid weak summer demand
European natural gas prices have fallen as traders weighed the extension of a Norwegian plant outage against a generally subdued demand outlook in the region.
The benchmark contract swung between small gains and losses in early trading, after a volatile start of the week that saw prices rally more than 20pc before crashing by about 13pc over a two-day period.
Underpinning the market uncertainty are questions over a possible demand pick-up in the second half of the year, when countries from Germany to China will start preparing for the next heating season.
Hammerfest LNG, Norway’s gas liquefaction plant and a key supplier for the rest of Europe, will remain shut for a week longer than initially expected, just as rising temperatures across the continent risk boosting demand for the fuel to meet cooling needs.
The weather is expected to remain warmer than usual through most of June.
Dutch front-month gas - Europe’s pricing benchmark - has fallen 1.9pc to below €24.50 a megawatt-hour, after earlier gaining as much as 2.2pc.
09:10 AM
Sir Ivan Menezes was 'an inspiring figure'
Sir Ivan Menezes has been hailed as a “forward thinking” chief executive, as tributes have been paid to the former Diageo boss following his death at the age of 63.
Just awful news on the passing of Sir Ivan. An inspiring figure in the drinks industry and will be always personally grateful for taking @ChaseDistillery into the Diageo family. RIP 💔 https://t.co/38V0j76bYE
— Andrew Carter (@AndrewCarter21) June 7, 2023
Awful news that Sir Ivan Menezes, the chief executive of @Diageo_News, has passed away. A superb CEO who not only did a stellar job running the business but who was also forward thinking and very much in tune with the times. Sincere condolences to his family and colleagues.
— Ian King (@IanKingSky) June 7, 2023
Really sad news about Sir Ivan Menezes- he was always such a pleasure to meet and talk to- and an extraordinary champion of a truly world leading British company
— Scott Beasley (@SkyScottBeasley) June 7, 2023
Terrible news about one of the good guys, now gone far too soon https://t.co/xdcWGcfZ6S
— Vivek Menezes (@vmingoa) June 7, 2023
08:53 AM
Markets fall after weak China export figures
Britain’s resource-heavy stock indexes have slipped as weak trade data from China drove miners lower, while shares of homebuilders dropped on dismal domestic housing prices data.
The resource-heavy FTSE 100 and the the domestically-focused FTSE 250 midcap index were each down 0.2pc.
Homebuilders stocks declined 1.1pc after data from mortgage lender Halifax said house prices dropped on an annual basis in May for the first time in 11 years.
Miners shed 0.7pc as copper prices dipped after data showed China’s exports shrank much faster than expected in May and imports fell.
Energy stocks also edged 0.4pc lower, tracking lower crude oil prices.
Croda International lost 2.1pc as Goldman Sachs lowered its rating on the speciality chemicals group’s stock to “neutral” from “buy”. The chemicals sector index shed 1.4pc.
08:43 AM
OECD growth outlook still lower than last year
The OECD has slightly raised its growth outlook for the world economy as inflation eases and China has dropped Covid restrictions, but it warned the recovery faces a “long road”.
The Paris-based organisation forecast an economic expansion of 2.7pc, up from 2.6pc in its previous report in March, with upgrades for the United States, China and the eurozone.
But it is still under the 3.3pc growth recorded in 2022.
OECD chief economist Clare Lombardelli wrote:
The global economy is turning a corner but faces a long road ahead to attain strong and sustainable growth.
The recovery will be weak by past standards.
08:35 AM
Hacking gang issues ultimatum to victims
The Russian-linked cybercrime gang behind a massive hack this week has warned major British companies employing more than 100,000 staff to email them before June 14 or stolen data will be published.
According to the BBC, whose employees were among the victims in the hack, the Clop group made the threat in broken English on the dark web.
Also targeted in the data breach were the payrolls of British Airways, Boots, Aer Lingus, Nova Scotia Government and the University of Rochester after the gang broke into a piece of popular business software called MOVEit and used that access to get into the databases of potentially hundreds of other companies.
The BBC said Clop had posted: “This is announcement to educate companies who use Progress MOVEit product that chance is that we download a lot of your data as part of exceptional exploit.”
The post went on to urge organisations affected by the hack to send an email to the gang to begin a negotiation on the crew’s darknet portal, the broadcaster said.
Earlier this week the UK’s leading payroll provider Zellis said that eight of its customers have been impacted by the “global issue”, which may have exposed personal information, including names, addresses, and banking details.
08:27 AM
Zara owner's sales leap as shoppers shrug off cost-of-living pressure
Zara owner Inditex has reported first-quarter profits soaring by more than 50pc as sales leaped higher despite consumer spending pressures.
The fashion giant reported a 52pc jump in pre-tax profits to €1.5bn (£1.3bn) in its first quarter to April 30 thanks to a 13pc surge in sales, or a 15pc rise with currency movements stripped out.
The group said sales growth has remained in double digits, up 16pc on a constant currency basis since May 1 as it said “spring/summer collections continue to be very well received by our customers”.
08:21 AM
OECD 'recognises our cuts to business taxes,' says Hunt
After the OECD released its latest outlook for the UK, Chancellor Jeremy Hunt, said:
Today’s report boosts our growth forecast, praises our action to help parents back to work with a major expansion of free childcare, and recognises our cuts to business taxes which aim to drive investment.
But while inflation is still too high, we must stick relentlessly to our plan to halve it this year. That is the only long term way to grow the economy and ease the cost of living pressures on families.
08:11 AM
We Soda confirms plan to list shares in London
We Soda, the world’s largest producer of natural soda ash, has confirmed plans to list shares on the London Stock Exchange, in a rare initial public offering (IPO) for Britain.
The IPO is expected to raise up to $1.1bn (£890bn) for the Turkish-owned company. We Soda said it would use $800m (£645m) to pay off some of its debt, and the remainder for general corporate use.
It expects to sell at least 10pc of its shares to qualify for the FTSE indices, which could eventually see it join the FTSE 100.
It marks the largest IPO this year for London, which has faced a quiet spell after some companies, including Cambridge-based chip producer Arm, chose to sell their shares overseas instead.
08:07 AM
Government will pay billions more on debt as rates soar, OECD warns
The Treasury could be forced to pay billions of pounds more in interest on the UK’s debt, as economists warn that rates may need to go much higher to fight stubborn inflation.
Economists at the OECD, which is a group of rich countries, have warned that “significant additional monetary tightening” may be needed globally if inflation proves persistent.
The warning comes even as Western central banks have already raised interest rates at the most aggressive pace in decades to highs last seen during the financial crisis.
Jeremy Hunt’s wafer-thin fiscal headroom means the Government would be highly exposed to further large rises in borrowing costs, the OECD cautioned in its closely watched forecast.
Mr Hunt has only left himself a buffer of £6.5bn to meet his own fiscal rule of getting debt-to-GDP falling within five years, the smallest of any chancellor since at least 2010.
While the OECD upgraded the UK’s growth forecast for 2023 from a fall of 0.2pc to a rise of 0.3pc, it warned that the thin margin could thwart the fragile recovery:
It said: “Significant risks surround the [UK] outlook. The high interest burden on public debt and the recent drop in average debt maturity leave the public finances exposed to movements in bond yields.”
The OECD’s forecasts highlighted that inflation in the UK has kept “broadening” - meaning it is rippling through different parts of the economy.
This is usually a warning sign that is becoming persistent.
This was also reflected in separate OECD data on Tuesday, which found that the UK had by far the highest rate of core inflation in the G7 in April at 6.2pc.
Inflation in the UK is expected to average 6.9pc in 2023, which is more than three times the Bank of England’s 2pc target. It will then fall to 2.8pc the following year.
The intergovernmental organisation also revised up its assumption of interest rates from March, predicting that they will peak at 4.75pc instead of 4.25pc.
Inflation will only return close to the Bank’s 2pc target by the end of next year, it said.
08:04 AM
Markets open higher
Markets have risen at the open amid rising expectations that China will step in to stimulate its economy and as overnight gains on Wall Street helped brighten the mood.
The FTSE 100 has started the day 0.2pc higher at 7,611.66 while the midcap FTSE 250 has climbed 0.2pc to 19,221.45.
07:54 AM
Late Diageo boss Menezes 'created a truly inclusive business'
Following the death of former boss Sir Ivan Menezes, Diageo chairman Javier Ferrán said:
This is an incredibly sad day. Ivan was undoubtedly one of the finest leaders of his generation.
Ivan was there at the creation of Diageo and over 25 years, shaped Diageo to become one of the best performing, most trusted and respected consumer companies.
I saw first-hand his steadfast commitment to our people and to creating a culture that enabled everyone to thrive. He invested his time and energy in people at every level of the company and saw potential that others may have overlooked. This is one of many reasons why he was beloved by our employees, past and present.
Ivan’s energy and his commitment to diversity created a truly inclusive business and enabled Diageo to have a positive impact on the communities we serve. His passion for our brands was second-to-none and in his heart, he remained the Johnnie Walker marketer from his early days. The desire to build the world’s best brands never left him.
We are truly privileged to have had the opportunity to work alongside such a thoughtful and passionate colleague and friend - a true gentleman. He has built an extraordinary legacy.
Ivan leaves behind many friends and a beloved family, and our thoughts are particularly with his wife, Shibani and his two children, Nikhil and Rohini. On behalf of the board, executive committee and all our employees, we extend our deepest sympathies to them.
07:52 AM
Sir Ivan Menezes, long-time Diageo boss, dies aged 63
Sir Ivan Menezes, the long-time boss Diageo who led developed the company’s reputation for its ethics and dedication to social purpose, has died at the age of 63 following a short illness.
Knighted by the King in his first New Year’s Honours list, Sir Ivan led the drinks company since 2013.
Johnnie Walker maker Diageo’s share price has risen by around 23pc over the last five years, helped by a rise in demand for premium spirits before and during the pandemic. Over the year to June 2022 its sales rose 21.4pc to £15.5bn.
It was announced on Monday that the company’s incoming chief executive Debra Crew had taken up her new post a month early after Sir Ivan suffered complications following emergency surgery for a stomach ulcer.
07:38 AM
Housing market 'in correction rather than a crash'
Estate agents and mortgage brokers have said the flatlining growth between April and May is a stronger indicator of how the housing market is fairing, rather than the first annual decline in prices since 2012.
Jamie Minors, managing director at Norwich-based estate agents Minors & Brady said: “The fact that growth remained flat in May is a more accurate gauge of the market.
“Clearly the volatility in the mortgage sector at the tail end of the month is likely to have impacted some buyers’ confidence, but they have not headed for the hills.”
Kim McGinley, director at Vibe Specialist Finance, said: “Annual house price growth may be down for the first time in 11 years, but what we are witnessing is a correction rather than a crash.”
Kevin Dunn, mortgage adviser at Leicester-based broker Furnley House, said: “Though the headline number showing the first negative annual price growth in over a decade makes for grim reading, the flat trajectory of growth in May is a better reflection of where the market is at.
Buyers have now adjusted to the higher interest rate world we’re in. The property market is proving more resilient than many thought given the sheer number of headwinds facing the economy, although what happens later this month at the next Monetary Policy Committee meeting could clearly have an influence moving forward.”
07:27 AM
South East worst hit by housing downturn
House prices continue to fall on an annual basis across southern England, again led by the South East, which was down 1.6pc to an average price £385,943.
It was closely followed by the South West, down 1.4pc to £301,079.
In Greater London prices are down over the last year by 1.2pc to an average price £536,622.
Apart from Wales, where growth was unchanged at 1.1pc, all areas of the UK have seen annual house price growth weaken in May compared to April, with most now recording a low single-digit rate of property price inflation.
The West Midlands remains the best performing region, with house prices rising 2.7pc to an average of £251,137.
07:22 AM
House prices face 'further downward pressure'
After the fall in annual house prices, Halifax Mortgages director Kim Kinnaird said:
Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer.
Property prices have now fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August. But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.
As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end.
With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take Base Rate above 5pc for the first time since the start of 2008. Those expectations have led fixed mortgage rates to start rising again across the market.
This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling. Therefore further downward pressure on house prices is still expected.
One continued source of support to house prices is the labour market. While unemployment has recently ticked up from very low levels, brisk wage growth would over time help to improve housing affordability, if sustained.
07:19 AM
Annual house prices fall for first time in 11 years, says Halifax
House prices have fallen for the first time on an annual basis in 11 years amid widening concern about soaring mortgage costs.
Prices slumped 1pc in the year to May, down from 0.1pc growth in April, according to mortgage lender Halifax. It is the first fall since December 2012.
Monthly prices were static in May following a 0.4pc fall in April, making the average home worth £286,532.
The property market is under pressure as the Bank of England is expected to raise interest rates to as much as 5.5pc before the end of the year in its fight against persistent inflation, with mortgage lenders racing to pull cheap deals.
Halifax Mortgages director Kim Kinnaird said: “With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take Base Rate above 5pc for the first time since the start of 2008. Those expectations have led fixed mortgage rates to start rising again across the market.
“This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling. Therefore further downward pressure on house prices is still expected.”
Figures from rival lender Nationwide said prices slumped 3.4pc over the year to May, deepening from a 2.7pc decline in April.
It said house prices fell for the eighth time in nine months by 0.1pc in May compared to April.
07:16 AM
Good morning
House prices have fallen on an annual basis for the first time since December 2012, according to lender Halifax.
Across the UK, house prices fell by 1pc, Halifax said.
The average house price remained flat month-on-month in May, sitting at £286,532.
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What happened overnight
Wall Street stocks were higher at the end of a choppy session Tuesday as beaten-down regional banking shares advanced on a quiet day for markets.
The Dow Jones Industrial Average edged up less than 0.1pc to 33,573.28.
The broad-based S&P 500 gained 0.2pc to 4,283.85, while the tech-rich Nasdaq Composite Index climbed 0.4pc to 13,276.42.
In the bond market, the yield on the 10-year Treasury slipped to 3.68pc from 3.69pc late Monday.
In the Asia-Pacific markets on Wednesday morning, stocks strengthened as expectations for stimulus from China and overnight gains on Wall Street boosted the mood.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7pc in the morning.
China’s benchmark equity index rose 0.3pc, while Hong Kong’s Hang Seng added 1.2pc.
On Tuesday, China reportedly asked the biggest banks to cut deposit rates to boost the economy. Speculation of policy support for the troubled property sector has been lifting those shares over the past week.
Japan was an outlier, with the Nikkei sliding 1.1pc after touching a 33-year high on Tuesday.
The Australian dollar reached its highest since mid-May at $0.6690, extending a rally following another central bank rate increase.
