Rishi Sunak is facing a fresh setback to his target of halving inflation as oil prices hit $95 for the first time this year.
The price of Brent crude closed in on $96 per barrel on Tuesday, the highest level since November 2022 as Russia and Saudi Arabia conspire to limit production and push up global costs.
Inflation figures published on Wednesday [today] are expected to show the first acceleration in consumer prices since February. Analysts have forecast a 7.1pc rise for August on the year, up from July when consumer price inflation came in at 6.8pc.
George Buckley, economist at Nomura, said the predicted rise is “pretty much all because of petrol”.
Petrol hit £1.54 per litre on average this week, according to figures from the Department for Energy Security, up from £1.49 a month ago to its most expensive since December.
Diesel is rising even more rapidly, up 6p to £1.58 over the past four weeks.
Analysts warned oil risks a further rise towards $100 per barrel, adding to inflationary pressures which had been coming down, raising fears that the cost of living crisis is not over yet.
The sustained rise into September will keep pressure on the Bank of England ahead of its interest rate decision on Thursday.
The Bank’s Monetary Policy Committee is expected to increase rates for the 15th consecutive time, taking the base rate to 5.5pc, its highest since 2008.
Mr Buckley estimated rising petrol prices will add half a percentage point to headline inflation over August and September together.
He said: “It probably supports the case for a further hike, because it makes it even longer to get inflation down.”
Earlier this month, Andrew Bailey, Governor of the Bank of England, told MPs that it was “much nearer now to the top of the cycle” on interest rates, raising expectations of another increase which may be the final one.
However, rising oil prices risk putting more pressure on Mr Bailey in the battle to get inflation back down to the Bank’s 2pc target. It is also a hazard for the Government as the Prime Minister set out ambitions earlier this year to halve inflation by the end of 2023, suggesting it will need to fall to 5pc to meet his target.
The RAC said petrol could keep rising towards £1.60 per litre with diesel on track to jump above £1.70 as oil keeps getting more expensive.
Simon Williams of the RAC said: “With oil now heading towards $100 a barrel, as a result of further production cuts by Saudi Arabia and Russia and rising demand from China, drivers are in for a hard time at the pumps.
“[Petrol] prices on the forecourt are actually too high at an average 155.5p due to retailers taking bigger margins than normal. If they were playing fair with drivers, they would be reducing their prices rather than putting them up.”
Luke Bosdet at the AA said that wholesale diesel prices have risen particularly rapidly, in part because of the seasonal pattern of demand for heating oil competing with the car fuel to push up prices.
But he blamed retailers for a sharp rise in petrol prices for motorists.
He said: “It seems that the fuel trade wasted no time in ramping up the pump prices.
“In ‘rocket and feather’ terms, the retailers have lit the burners and the rockets are flying once more.”
Gordon Balmer, executive director of the Petrol Retailers’ Association, denied forecourts are taking unfair margins.
He said: “Our members operate on razor thin margins in a highly competitive market. Fuel margins have increased to compensate for the increase in their costs in the form of labour, energy and the highest inflation rates for years.
“Retailers are not immune to the shifts in the global crude oil price and cuts to Saudi Arabian production levels have forced prices up which are now spilling over into the pump price. Our members are very aware of the impact that this will have on household budgets, and do everything they can to keep their communities fuelled and fed.”
He called on the Chancellor to retain the 5p cut to fuel duty and extend the freeze on the tax.
07:54 PM BST
See you tomorrow
That’s all from us today. I’ll leave you with the latest from our columnists:
07:35 PM BST
Ocado bets on Marks & Spencer to help drive turnaround
Ocado Retail is prioritising the sale of M&S products in a bid to boost its turnaround effort.
Daniel Woolfson and Chris Price report:
Hannah Gibson, chief executive of Ocado Retail, is hopeful that the greater prominence of M&S goods in-store will help stem losses and boost customer numbers.
The online grocer is a joint venture between Ocado Group and M&S, although its sales have struggled since the end of the pandemic.
Ms Gibson said Ocado Retail has been working closely with M&S to make sure it has a “greater share of product space on-site”.
She said Ocado Retail would be “talking more about M&S” in the lead-up to Christmas.
It comes after Ocado chief executive Tim Steiner admitted in July that the company’s joint venture with M&S had been a disappointment and was “not where we wanted it to be”.
“If we look back at where we were in 2019, and what we hoped the business would be trading at right now, obviously that’s disappointing,” he said.
Ocado Retail saw its sales surge during Covid but struggled with falling demand as lockdown restrictions eased.
It suffered its first-ever annual fall in grocery sales in 2022 as shoppers cut back amid the cost of living crisis.
M&S has pushed for closer collaboration between the two partners, requesting more of its products on the Ocado website and with greater prominence on the homepage.
Ocado Group’s shares rallied on Tuesday after its retail arm recorded a 7.2pc increase in sales to £569.6m in the third quarter.
Ms Gibson said: “We are gaining customers from a broad area from a wider range of stores.”
It follows a series of price cuts on items like kale, avocados and organic vegetables as it battles to win back market share.
Ocado, alongside traditional supermarkets, such as Tesco and Sainsbury’s, has faced fierce competition from discounters Aldi and Lidl.
07:17 PM BST
City law firms buying solar power from rural homeowners to meet net zero targets
City of London law firms are buying green power from British countryside homes to help meet net zero targets.
Energy editor Jonathan Leake reports:
The chief of Good Energy, which buys electricity from rural generators and sells it to companies, said law firms are flocking to use its service to boost their green credentials.
Nigel Pocklington said: “We also have about 10,000 business customers, especially big City law firms who aspire to be carbon neutral.”
The niche energy supplier buys electricity from community wind power projects and people with solar panels on their roofs. Buyers of the energy include the Bar Council, the London-based association of barristers, and Doughty Street legal chambers whose current members include Amal Clooney, the human rights lawyer, and once included Sir Keir Starmer, the Labour leader.
Good Energy is also partnered with the Legal Sustainability Alliance, which counts major law firms Clifford Chance and Norton Rose Fulbright among its members.
The company was founded in 1997 by Juliet Davenport OBE as one of the first companies offering 100pc renewable electricity. It played a pioneering role in the development of the renewable energy market and invested heavily in its own network of wind and solar assets.
However, it sold off those assets in 2022 to National Grid to pay off debts it had run up during its expansion.
It now acts as an energy services company, buying and selling renewable electricity and “greener gas” to customers.
Its 1,700 power generators are often in remote places such as the Cwm Cadian hydropower project in Snowdonia, which uses a river to spin a turbine that produces enough electricity for 100 homes.
Others include the Albourne vineyard in Sussex where founders Alison Nightingale and Nick Cooper have installed solar panels to power their operations but also to export surplus energy to the grid.
Good Energy also installs solar panels, offering to buy electricity from customers who generate surplus power up to 20 pence per kilowatt hour.
Mr Pocklington said: “We think about 20pc of the UK’s population will pay extra for green energy as a priority.”
The company’s half-yearly results show profits rose to £32.7m in the first half of 2023 compared with £12.2m in the same period last year.
07:11 PM BST
Henry Boot's profits hit by construction slowdown
Henry Boot’s profits have fallen 36pc as rising interest rates and inflationary pressures hit the construction sector.
The British property developer recorded pre-tax profits of £23.3m during the first half of 2023, down from £37.8m.
The firm’s construction business traded below expectations as sector-wide supply constraints and subcontractor availability resulted in severe delays to projects.
However, land sales and completed housing development projects helped boost revenue 24.5pc to £179.8m.
The London-listed company said it delivered a “resilient performance” despite facing “continued economic uncertainty”.
Tim Roberts, chief executive, said: “Whilst uncertainty in our markets has increased, we believe we have enough momentum to carry us through the year, although the outlook for 2024 for the time being is not so clear.”
06:43 PM BST
H&M to charge customers for online returns
H&M has become the latest retailer to charge customers for online returns.
Shoppers must pay £1.99 to return items either in store or online, which will be deducted from their refund. Members of H&M’s loyalty programme can return parcels free of charge.
The fast-fashion company introduced the policy across the UK at the start of the summer and plans to continue the rollout to more markets.
The Swedish business follows in the footsteps of rival retailers Zara, Boohoo, Uniqlo and Next which already charge for online returns.
The move is designed to reduce the amount of items being brought back by shoppers as clothing companies seek to recover the costs involved in processing returned stock.
06:21 PM BST
City workers end pay strikes after securing 20pc rise
More than 250 City workers have ended industrial action after securing a 20pc pay rise.
Police, security, maintenance and administrative workers employed by the City of London Corporation, the local authority for the Square Mile, have agreed to end strikes after accepting an improved pay deal.
Most workers will see their salaries increase over 20pc, while some will receive a 30pc pay rise, according to trade union Unite.
The deal includes a £3,000 pay rise for this year, plus a one-off cost of living payment of £1,000 for 2022.
The dispute saw union members walkout in May, with subsequent strikes postponed while negotiations continued.
Unite said: “This result will inspire our members at other local authorities across the UK who are currently taking strike action over pay with the full support of Unite.”
06:08 PM BST
Gmail, Maps and YouTube to feature AI-powered search assistant
Google is rolling out its AI-powered search assistant, Bard, to its other apps: Gmail, Maps and YouTube.
The expansion comes as the tech giant seeks to ward off competition from similar technology designed by Microsoft-backed OpenAI, the tech startup behind ChatGPT.
Bard will be able to mine information embedded in users’ Gmail accounts, pull directions from Google Maps and find helpful videos on YouTube.
The software will compete against Microsoft’s efforts to embed OpenAI’s chatbot into its Bing search engine.
05:37 PM BST
FTX sues founder’s parents for siphoning off millions to ‘enrich themselves’
The parents of disgraced cryptocurrency entrepreneur Sam Bankman-Fried have been accused of siphoning off millions of dollars in “misappropriated funds” from FTX.
Claims against Joseph Bankman and Barbara Fried have been made in a lawsuit by administrators of FTX, as the crypto company seeks to claw back cash that they allegedly received prior to its collapse.
FTX has alleged the pair “exploited their access and influence” at the business to “enrich themselves”, as they benefitted from perks such as luxury hotel stays and the use of private jets.
They are demanding that Mr Bankman, a law professor at Stanford University, return a sum of $18.9m (£15.2m) allegedly used to pay for a beach house in the Bahamas.
He is said to have grown “deeply enmeshed in” FTX’s operations after its launch in 2021.
The professor allegedly received “millions of dollars in unearned ‘gifts’ and real property, flew on privately chartered jets, expensed $1,200 per night hotel stays to the FTX Group, and even appeared in a Super Bowl commercial”.
05:06 PM BST
North Sea oil explorer Serica to drill new wells despite windfall tax
North Sea oil and gas company Serica Energy has announced a new drilling programme, even as competitors cut back on activity because of the windfall tax.
Energy editor Jonathan Leake reports:
Mitch Flegg, Serica’s chief executive, said he was looking forward to “near continuous well and drilling activity across the Bruce and Triton hubs during the next eighteen months” as he announced a small rise in profits.
The company made a profit after tax of £175,472 in the first half of 2023, up from £116,729 in the same period last year.
It came despite the introduction of the windfall tax last year, which increased the level of total UK oil and gas production levies from 40pc to 75pc and is set to remain in place until 2028.
The tax came with an investment allowance that allowed offshore operators to recover £91.40 for every £100 spent on new projects. Serica took advantage of the generous allowances to invest in boosting production from several wells.
It also completed a £367m takeover of Tailwind Energy, another North Sea operator, which had its own tax losses to offset against the windfall levy.
The combined effect was to lower the company’s overall taxation rate from 75pc to 55pc.
Mr Flegg said: “Substantial tax losses were acquired with Tailwind, with the potential to generate over £400m of UK tax offsets.”
Serica’s results contrast with those of many other North Sea operators. Harbour Energy, the UK’s largest oil and gas producer, last month swung from a near $1bn profit to an $8m (£6.3m) loss during the first half of the year. It said the windfall levy had left it with an effective tax rate of 102pc.
Similarly, Ithaca Energy said it would cancel projects and cut production because of the tax while Enquest fell to an after tax loss of $21.2m in the first half of this year.
Despite its comparatively strong performance, Mr Flegg said the windfall tax was casting a shadow over the sector.
He said: “Serica’s current circumstances and optimism reflected in its investment plans should not mask the fact that we share the widespread concerns within the sector about the health of the UK’s offshore upstream industry given the current fiscal regime and future uncertainties.”
Serica operates two hubs in UK waters that produce the equivalent of 49,000 barrels of oil a day, 55pc as gas and the rest as oil.
Alex Smith, an analyst with Investec, said: “Overall, the company delivered a strong first half benefitting from production from the Tailwind assets.
“But question marks remain on the political backdrop for the medium term and potentially how Serica can achieve further inorganic growth. I think this is driving the uncertainty and share price moves.”
Serica said its exploration well in North Eigg, off the coast of Scotland, did not deliver commercial volumes of gas. The well, which cost £13m, will be abandoned.
Shares, which had risen from 235p to 267p over the last four weeks, fell back to 251p.
04:49 PM BST
FTSE 100 closes in the green
The FTSE 100 has closed 7 points or 0.095pc higher at 7,660.20 after a choppy trading session. The FTSE 250 closed 0.12pc lower at 18,426.7.
Investors remained cautious ahead of inflation data tomorrow and the Bank of England’s interest rate decision, while surging oil prices has fuelled inflation concerns.
04:44 PM BST
Revolut to miss deadline to file accounts for second year in a row
Revolut is set to miss the deadline to file its financial accounts for the second year running as it continues to wait for a lucrative UK banking licence.
Banking and financial services correspondent Simon Foy has the story:
Britain’s most valuable fintech company has said it received an extension to file its 2022 accounts until the end of December, three months beyond the initial deadline of September 30.
A clean set of accounts is regarded as a key milestone for the company if it is to be granted a banking licence by the Bank of England.
Last year, the company missed two deadlines to file its accounts amid pressure from its auditors to improve internal controls.
When Revolut eventually submitted the 2021 accounts to Companies House in March, its independent auditor, BDO, warned that the majority of its revenues for the financial year “may be materially misstated” because of flaws in internal systems.
As a result, the auditor issued the app with a qualified opinion on its long-delayed 2021 accounts.
04:11 PM BST
Labour drafts in firm set up by former MI6 spies to help City charm offensive
Sir Keir Starmer is believed to have drafted in an advisory firm set up by former MI6 spies to help Labour’s charm offensive on the City ahead of the general election.
Economics reporter Melissa Lawford reports...
The Labour Party is using strategic advisers Hakluyt & Co to help arrange meetings with chief executives of Britain’s biggest companies, Bloomberg reported.
Hakluyt, which was founded by a group of former intelligence officials including Fitzroy Maclean, who witnessed Stalin’s show trials, and Christopher James, whose career spanned the SAS, MI6 and the Foreign and Commonwealth Office (FCO), claims to work with around 40pc of the world’s largest companies by market capitalisation.
It has been dubbed “a retirement home for ex-MI6 officers” by the Bureau of Investigative Journalism.
03:59 PM BST
Oil surge stokes inflation fears
Rising oil prices have raised concerns that inflation will blight the global economy for longer than expected, sparking a downturn in markets.
Global stock indexes have treaded water today while bond yields have risen amid concerns that oil’s push towards $100 could keep inflation high.
Brent crude is trading above $95 a barrel and has risen by more than a quarter since mid-June amid unilateral supply cuts from Russia and Saudi Arabia.
It comes ahead of key decisions on interest rates by the US Federal Reserve on Wednesday and the Bank of England on Thursday.
Economists expect inflation to have picked up in Britain as a result of rising fuel prices, putting pressure on monetary policymakers.
Craig Erlam, senior market analyst at OANDA trading group, said: “When central banks are starting to see the light at the end of the inflation tunnel, $100-plus oil will be incredibly unwelcome and unhelpful.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The battle against inflation still hasn’t been won, and there will be fresh skirmishes ahead especially if recent disinflationary forces ease off.”
03:37 PM BST
I’ll say goodbye for now at this point and pass you over to Adam Mawardi, who will make sure you stay informed.
With oil very much in focus, I’ll leave you with this striking image of pumpjacks drawing out oil and gas from wells near Calgary in Alberta.
03:35 PM BST
CBI cancels annual meeting amid funding crunch
The Confederation of British Industry (CBI) has cancelled its annual general meeting at the last minute as it struggles to secure a funding lifeline.
My colleague Adam Mawardi reports:
The Confederation of British Industry (CBI) has cancelled its annual general meeting at the last minute as it struggles to secure a funding lifeline.
The scandal hit-organisation on Tuesday informed members that Wednesday’s meeting would be postponed as it deals with “short term cash flow challenges”.
It faces a funding crunch after hundreds of major companies cancelled their memberships en masse in the wake of a sexual misconduct scandal earlier this year.
In a note sent to members, the CBI said: “To reassure members, we are in positive dialogue over finalising financing options and are confident that we will be able to resolve this short-term issue and secure the footing of an organisation that remains in a strong medium to long term position.
“But given the significant interest in the CBI right now, we are opening-up and refocusing our previously planned AGM.”
Although the annual general meeting has been postponed, the industry lobby group is still expected to provide an update to members on Wednesday.
The organisation faces an uphill battle of rebuilding its reputation after explosive allegations of sexual assault and a toxic culture emerged this year.
The misconduct allegations sparked an exodus of members, including FTSE 100 companies John Lewis, NatWest, Virgin Media O2 and Aviva.
Although the CBI received a vote of confidence from its remaining members in June, the organisation has been forced to cut jobs and close overseas offices to ensure its survival.
The latest announcement follows reports that CBI is at risk of running out of cash within weeks.
The organisation, which claims to be the “voice of business”, has reportedly held talks with manufacturers’ lobby group MakeUK about a potential merger.
MakeUK later confirmed that it had entered “early-stage discussions to explore how the two parties might work closer together”.
03:27 PM BST
Bond markets hit amid inflation fears
Bond markets have come under pressure ahead of the latest interest rate decision by the US Federal Reserve and the Bank of England.
Rising oil prices have raised concerns that central banks may need to keep rates higher for longer to bring inflation down to their 2pc targets.
The yield on 10-year US Treasury bonds climbed toward their highest level in 16 years as Brent crude tipped above $95 a barrel.
The five-year yield on US Treasuries rose to the highest point since 2007, with the pressure also fuelled by hotter-than-anticipated inflation data in Canada for the second consecutive month.
It comes as the eurozone’s benchmark 10-year Bund yield approached its highest levels in over 12 years after hawkish remarks from European Central Bank (ECB) officials.
Bank of France governor Francois Villeroy de Galhau said the ECB would keep rates at 4pc for as long as needed after some policy hawks recently called for rates to stay at high levels for longer.
03:07 PM BST
Wilko to shut 111 stores next week
Wilko has revealed 111 of its stores will close for good next week.
The firm will close 37 stores after trading on Monday September 25, a further 37 on Wednesday, September 27 and another 37 on Friday, September 29.
The high street chain, which entered administration last month, started its closure process last week.
All of Wilko’s 400 shops will close by early October, according to administrators from PwC.
02:54 PM BST
US jobs market easing in 'healthy way', says Yellen
The US Treasury Secretary remains confident a “soft-landing” can be achieved with the American economy despite major strikes by car workers, the threat of a government shutdown and rising oil prices.
Janet Yellen said she sees evidence that the economy is making substantial progress to reduce inflation while maintaining a strong jobs market and healthy consumer spending.
She told Reuters:
What I’m seeing in the economy is a cooling in the labour market that’s taking place in a healthy way, that does not involve mass layoffs.
It’s some of the heat coming out of the job market.
02:44 PM BST
China invited to Sunak's AI summit
China has been invited to a summit in Britain on the safe development of artificial intelligence, the Foreign Secretary has confirmed.
James Cleverly said China was one of the leading nations in AI tech, prompting the invitation to Beijing.
The AI Safety Summit on November 1 and 2 will bring together companies and countries from around the world to Bletchley Park, considered the birthplace of modern computing.
It comes after the US banned private sector investments in Chinese technology companies last month, while Beijing is said to have banned the use of iPhones by government officials.
Mr Clevely, who became the most senior minister to visit China in five years last month, said: “The UK’s approach to China is to protect our institutions and infrastructure, align with partners and engage where it is in the UK’s national interest.”
He added: “We cannot keep the UK public safe from the risks of AI if we exclude one of the leading nations in AI tech. That’s why China has been invited to our AI Safety Summit in November.”
Mr Cleverly has argued for a new British policy of engagement with Beijing, saying it would be a mistake to try to isolate the world’s second-largest economy and China’s help is needed in areas such as climate change and economic instability.
02:39 PM BST
Oil hits $95 as Saudi Arabia cuts supplies
Oil prices have surged to a 10-month high as Saudi Arabia’s energy minister declined to outline any changes to production cuts which squeezed the market.
Brent crude, the global benchmark, has jumped above the $95 a barrel mark several times today amid a flurry of predictions it could reach $100.
Before the start of this month the highest oil price of the year was $88 in January.
Chevron chief executive Mike Wirth told Bloomberg TV said: “We’re certainly moving in that direction.
“Supply is tightening, inventories are drawing, these things happen gradually and you can see it building. The trends would suggest that we’re certainly on our way, we’re getting close.”
Oil prices have surged by more than a quarter since mid-June after Saudi Arabia and Russia agreed to cut supplies until the end of the year.
On Monday, Saudi Arabia Energy Minister Prince Abdulaziz bin Salman told a conference in Canada that the Opec cartel was working to keep markets stable and improve energy security. Output plans will be reviewed every month, he said.
02:33 PM BST
Wall Street falls at the opening bell
US markets slumped as rising oil prices raised concerns that interest rates will have to stay higher for longer to quell inflation.
The Dow Jones Industrial Average has fallen 0.1pc to 34,587.92 while the broad-based S&P 500 dropped 0.2pc to 4,444.42.
The tech-heavy Nasdaq Composite has slipped 0.3pc to 13,663.41.
02:07 PM BST
Unions give 'Big Three' carmakers deadline for pay talks
Union leaders behind the walkouts at America’s “Big Three” carmakers have said they may expand a limited strike if “serious progress” toward a new contract agreement is not made by Friday at noon.
The United Auto Workers (UAW) is striking at all three Detroit carmakers for the first time in its history, but the 13,000 workers on the picket lines for a fifth day Tuesday are hitting only three facilities, one each at General Motors, Ford and Stellantis, in a novel strategy.
The union can stretch the funds it maintains for striking workers if it limits picketing, but the targeted strikes can still ripple through integrated production systems.
In a video statement late Monday, UAW President Shawn Fain said more factories may be picketed if there is no significant progress in talks by the end of the week.
“We’re not messing around,” he said.
Stellantis resumed negotiations with the UAW this week and on Tuesday, the company’s North American chief operating officer Mart Stewart said common ground is still being sought to end the standoff.
A spokesman for General Motors said representatives of the company and the United Auto Workers also were continuing to negotiate.
01:53 PM BST
Britain touted as future ‘associate member’ of the EU
Britain could rejoin the European Union as an “associate member” under plans for the bloc’s dramatic expansion drawn up by France and Germany.
Our Brussels correspondent Joe Barnes has the details:
The country would be expected to contribute to the EU’s annual budget and be governed by the European Court of Justice in exchange for “participation” in its Single Market.
The plan will be officially unveiled on Tuesday afternoon as Sir Keir Starmer, the Labour leader, meets France’s Emmanuel Macron in Paris.
Sir Keir has said he would prioritise getting a “much better deal for the UK” as part of a review of the post-Brexit trade deal due in 2026 if he wins the next General Election.
Brussels is preparing to welcome Ukraine as a full member of the bloc in less than seven years as part of its biggest shake up in decades.
01:24 PM BST
Oil spike sparks inflation worries
Higher oil prices risk fuelling inflation and are the focus of debate about whether central banks will leave interest rates higher for longer.
Duncan MacInnes, investment director at Ruffer, said “the whole debate now has moved from where is the peak for rates to how long do you stay at the peak for”.
Looking at the impact on the eurozone, Charles Hepworth, investment director at GAM Investments, said that inflation “remains stubbornly above the European Central Bank’s target rate of 2pc, and with an accompanying oil price spike seen over the last few months, this will continue to raise headaches for the ECB’s Governing Council”.
Samuel Zief, head of global FX strategy at JPMorgan Private Bank, said central banks should not be overly concerned by the run-up in oil prices, which he said should fade as economies slow. He said:
What the central banks are really, really focused on, it’s not really the supply-side energy shocks anymore, it’s really the sticky services part of the inflation basket.
Pick whatever central bank you want, they’re talking about either they’re done already or they’ll do one more hike and they’ll go on pause.
12:50 PM BST
One of UK's least reliable train operators has contract renewed
One of Britain’s least reliable train operators has been handed a long-term contract renewal.
The Department for Transport (DfT) announced that CrossCountry, whose network stretches across large parts of the country, will continue to run services.
It also renewed Avanti West Coast’s contract.
Office of Rail and Road (ORR) figures show the equivalent of 6.8pc of CrossCountry services were cancelled between April and June.
That was the third highest proportion across all operators, behind only Grand Central and Transport for Wales Rail.
CrossCountry’s network stretches from Aberdeen in the north-east of Scotland to Penzance in western Cornwall via Birmingham.
It is owned by Arriva, which is a UK-based subsidiary of the German state railway operator Deutsche Bahn.
CrossCountry’s services have been badly disrupted by staff striking in a dispute over working conditions.
12:39 PM BST
City watchdog finds ‘no evidence’ of debanking – but admits it didn’t look at Farage case
The City watchdog has claimed that it found “no evidence” that customers have been debanked for their political views but admitted that it did not examine Nigel Farage’s case at Coutts.
Our banking & financial services correspondent Simon Foy has the details:
The Financial Conduct Authority (FCA) said that information supplied by banks, building societies and payment companies suggested that no accounts were “primarily” closed because of a customer’s political beliefs between July 2022 and June 2023.
However, the review is likely to face ridicule after regulators admitted that Mr Farage’s account closures at Coutts were not investigated as part of the review.
Asked about Mr Farage’s case, one senior regulator at the FCA said there was a “high profile example” that was being looked at separately by the bank involved, adding that the case “fell outside of the reporting period”.
NatWest is currently carrying out its own review into Mr Farage’s account closure.
12:07 PM BST
Drivers 'in for a hard time' if oil hits $100, warns RAC
Motorists are “in for a hard time” as the cost of a barrel of oil approaches $100, the RAC has warned.
Brent crude is trading above $95 a barrel for the first time this year and has risen by more than a quarter since mid-June amid unilateral supply cuts from Russia and Saudi Arabia.
Oil’s push towards $100 will continue to hit drivers, who already face higher fuel prices at the pumps.
RAC fuel spokesman Simon Williams said: “Since the beginning of August petrol has gone up 10p a litre and diesel nearly 13p adding £5.50 to tank for petrol and £7 for diesel.
“With oil now heading towards $100 a barrel, as a result of further production cuts by Saudi Arabia and Russia and rising demand from China, drivers are in for a hard time at the pumps.”
The price of diesel is expected to increase from an average of 159p a litre to over 170p if oil hits $100, according the motoring group.
Meanwhile, petrol could jump from 155.5p to 160p per litre if “retailers remain intent on making more money per litre” by keeping forecourt prices higher than wholesale prices.
Mr Williams said prices on the forecourt “are actually too high due to retailers taking bigger margins than normal”.
He added: “If oil were to hit $100, it should really only take the average petrol price up by another 2p.”
11:46 AM BST
Wall Street poised to open higher ahead of Fed meeting
US stock indexes have inched higher in premarket trading ahead of the Federal Reserve’s two-day monetary policy meeting, which will end with the announcement of its next interest rate decision on Wednesday.
Investors are focused on the Fed meeting where it is widely expected the central bank will hold benchmark interest rate at the current 5.25pc to 5.5pc range.
Recent economic data has signalled that core inflation is crawling toward the Fed’s 2pc target, although a steady climb in oil prices remains a concern.
Crude prices have gained for three consecutive weeks, with Brent in London hitting a 10-month high today.
Meanwhile, traders are waiting to see what happens with grocery delivery app Instacart’s Nasdaq debut to assess a potential recovery in the initial public offering (IPO) market.
Its parent company Maplebear secured a fully diluted valuation of $9.9bn (£8bn) after its New York listing was priced at $30 per share, the top of its indicated price range.
Arm Holdings last week had a stellar market debut, raising hopes of a bounce back in the IPO market.
In premarket trading, the Dow Jones Industrial Average, S&P 500 and the Nasdaq 100 were all up about 0.1pc.
11:32 AM BST
Brent crude hits $95 as oil boss predicts $100
Oil is probably is heading for the $100 mark soon amid tightening supplies, the boss of Chevron has said.
Brent crude has topped $95 a barrel today, putting it at its highest level since November last year.
Mike Wirth, chief executive of the second-largest US oil company, told Bloomberg TV prices are “certainly moving in that direction”.
Brent futures, the international crude benchmark, have jumped almost 12pc in the past three weeks amid strong demand and cuts to supply by oil powerhouses Saudi Arabia and Russia.
Wirth has held a bullish view on oil for some time. In March, he cited a combination of dwindling spare production capacity around the world and the anticipation that China’s economy will pick up speed again.
He also forecast that oil would reach $100 in January 2022, citing geopolitical risks. At the time, prices were trading just under $87. By March, they topped $130 after Russia’s invasion of Ukraine.
11:16 AM BST
Elon Musk threatens to put Twitter behind a paywall
Our senior technology reporter Matthew Field has the latest:
Mr Musk said on a call with Benjamin Netanyahu, the prime minister of Israel, that he was considering taking a “small monthly payment” for continued access to the social network, which he has rebranded as “X”.
He said taking a fee, which would require a card payment, was the only way to remove a “vast army of bots” from the social network.
Efforts to make users pay also come against a backdrop of plunging revenue at Twitter.
Advertisers have pulled back since Mr Musk’s takeover last year, motivated by concerns about a rollback of moderation on the platform and what many claim is a rise in hate speech.
Read how Mr Musk has gone on the offensive against critics who have accused him of failing to stop antisemitism.
11:00 AM BST
Pound near three-month lows before interest rate decision
The pound held near three-month lows ahead of the Bank of England’s interest rate decision later this week, which is expected to yield a final rate rise in the current cycle.
Sterling was last unchanged on the day against the dollar at less than $1.24, just above the lows on Monday which took the currency to its weakest level since early June. It was flat against the euro at 86p.
The Bank of England meets on Thursday and money markets show traders widely expect to see one final quarter-point rate rise to 5.5pc, but no realistic prospect of a rate cut until next summer.
Inflation has fallen to 6.8pc from a 41-year peak of 11.1pc last October, but it is still the highest among major economies and progress in bringing it down has been far slower.
Consumer inflation in the United States has fallen to 3.7pc from last June’s 9.1pc rate, while in the euro zone, inflation is running at 5.2pc, almost half last October’s 10.7pc reading.
10:48 AM BST
Britain’s economy almost as weak as Argentina, warns OECD
Britain will be one of the worst performing advanced economies this year and next, the OECD has warned, with only Argentina performing worse over the next two years.
Our economics reporter Melissa Lawford has the details:
The organisation said Britain’s growth this year would only outpace Germany and Argentina, while next year only Argentina will be below the UK.
The prediction comes amid a row between former Bank of England governor Mark Carney and Liz Truss over whether Britain is turning into Argentina.
Mr Carney earlier this week accused Ms Truss of turning Britain into “Argentina on the Channel” with her mini-Budget.
Ms Truss hit back and claimed that Mr Carney was himself responsible for Britain’s economic problems, given his role in “the 25-year economic consensus that has led to low growth across the Western world.”
Argentina has become synonymous with economic dysfunction after defaulting on its international debts nine times in its history.
10:10 AM BST
Eurozone inflation drops days after interest rates hit record high
Inflation in the eurozone dropped back marginally last month, it has emerged, days after policymakers pushed interest rates to a record high.
Consumer prices across the bloc rose by 5.2pc in the year to August, down from 5.3pc in July and from 9.1pc a year earlier.
It comes after the European Central Bank raised interest rates to a record 4pc last week, the highest level since the euro was introduced in 1999.
Governing Council member Francois Villeroy de Galhau, the Governor of the Bank of France, old BFM TV the record rates were at a “good level” and the bloc now needs “to be patient, to be tenacious” in the face of inflation.
— EU_Eurostat (@EU_Eurostat) September 19, 2023
09:47 AM BST
Gas prices hit as North Sea production ramps up
European gas prices have crept higher even as production ramped up at Norway’s largest field in the North Sea.
Benchmark futures slipped as much as 2.1pc in early trading after dropping 5.5pc lower on Monday.
Prices have slumped 19pc over the last month amid milder temperatures across the continent which have left storage sites more than 94pc full.
Meanwhile, Norway’s Troll field is ramping up production after closures for maintenance and any threats to supply from Australian strikes at gas plants have failed to materialise.
Dutch front-month futures were last 1.3pc higher near €35 per megawatt hour.
09:30 AM BST
BP appoints new finance chief after Looney exit
BP has appointed Kate Thomson as chief financial officer as part of a hastily arranged board reorganisation following the resignation of boss Bernard Looney over his relationship disclosures.
Ms Thomson, who has been at the oil giant for 19 years, takes the position held by Murray Auchincloss, who was promoted to interim chief executive following Mr Looney’s sudden departure.
Mr Auchincloss said:
Kate’s experience and skills make her ideally suited to take on the role of interim CFO.
She brings deep technical knowledge together with a detailed understanding of BP, and has a first-class track record of leadership across our finance function.
I look forward to working alongside her as we continue to deliver BP’s strategy.
09:15 AM BST
Record 4pc interest rates are 'good level,' says ECB policymaker
The European Central Bank will maintain its interest rates at 4pc for a sufficiently long time in its bid to bring down inflation, one of its policymakers has said.
Governing Council member Francois Villeroy de Galhau, the Governor of the Bank of France, told BFM television.:
Inflation is a disease and rates are the medicine.
The medicine is starting to work.... We think 4pc is a good level.
We need to maintain the rates at 4pc a sufficiently long time.
The ECB raised its main interest rate last week to a record high 4pc and signalled its latest hike was likely to be the last as the eurozone’s economy slows.
The eurozone’s latest inflation figures will be released shortly.
08:59 AM BST
German holidaymakers boost Tui
Tui chief executive Sebastian Ebel said:
We are seeing a strong close to the summer season and we are on course to achieve results in line with expectations.
This is particularly evident in our main markets - Germany, where bookings year on year are 10pc higher, and UK, where bookings are in line with an already strong prior year summer season and 4pc ahead of pre-pandemic levels.
Indeed, had it not been for the various events during the last few months which were outside of our control, not least the wildfires on Rhodes, we would have performed ahead of expectations.
08:53 AM BST
Rhodes wildfires hold back Tui
Tui has said the bounceback in demand for travel helped summer bookings soar close to pre-Covid levels, but revealed growth was held back by disruption from devastating wildfires in Rhodes.
The holiday group reported a 5pc rise in summer bookings to 13.7m, reaching 96pc of levels seen before the pandemic struck.
It said it had taken 1.1m extra bookings since its last update in early August alone, with demand in the final month of the season “well ahead” of last summer, up 8pc.
The group said it would have performed even better than expected in the peak summer quarter had it not been for disruption from events such as the wildfires in Rhodes.
The Germany-based airline and package holiday company evacuated around 8,000 guests from Rhodes after wildfires broke out in July amid a searing heatwave in Europe, with around 5pc of all its flights going to the Greek island in the summer.
But Tui confirmed guidance for full-year underlying earnings to be “significantly” higher in the fourth quarter and full year to September 30 despite the impact.
08:41 AM BST
Markets subdued ahead of inflation figures
UK stocks were muted at open as investors remain cautious ahead of inflation data tomorrow and the Bank of England’s interest rate decision.
Both the FTSE 100 and FTSE 250 indexes were flat in early trading.
Global financial markets are keenly awaiting the US Federal Reserve’s and the Bank of England’s interest rate decisions this week along with UK inflation data on Wednesday.
Shares of Kingfisher dipped 4.8pc to the bottom of the benchmark index, as the firm downgraded its annual profit forecast by 7pc, after lower sales in France and Poland.
Hargreaves Lansdown jumped 4.7pc to the top of the FTSE 100 after the investment platform beat its annual profit estimates.
Online supermarket Ocado Retail, a 50/50 joint venture between Ocado Group and Marks & Spencer , maintained its full-year outlook as it reported a step-up in revenue growth in its latest quarter. Shares of Ocado gained 4.5pc.
08:28 AM BST
Naked Wines slumps to loss as former boss parachuted in
Naked Wines has sounded the alarm about its future as it revealed it slumped to a £15m loss weeks after its opinion-dividing boss Rowan Gormley returned to become chairman of the company he quit for years ago.
Mr Gormley apologised to shareholders as he promised the online wine merchant will come through a difficult trading period “leaner and tougher”.
However, he acknowledged that there had been “material uncertainty around our going concern”.
The company revealed underlying earnings before taxes and other charges of £17.4m, fractionally ahead of expectations.
Bosses said they had identified £10m of further annual cost savings and that the foundations had been “laid to make profitability sustainable”.
Chief executive Nick Devlin said: “The trading environment is tough, but Naked remains highly resilient. We have taken decisive action and have met the key goals in our “pivot to profit” strategy. Our focus now is on delivering profitable growth.”
Mr Gormley added: “While I think that the team’s plan is a good one, success is not guaranteed.
“This is not as gloomy as it sounds. If we can’t improve our new customer acquisition economics, then we still expect to have a profitable, cash generative business, albeit smaller than the one we have today.”
08:07 AM BST
YouTube stops Russell Brand making money from channel
YouTube has blocked Russell Brand’s account from making money from advertising and merchandise, suspending one of the comedian’s key sources of income following sexual assault allegations.
Our technology editor James Titcomb has the latest:
A spokesman for the Google-owned video site said it was “demonetising” any channels related to Mr Brand and that its rules cover behaviour off the site itself.
“We have suspended monetisation on Russell Brand’s channel for violating our Creator Responsibility policy,” a spokesman said. “If a creator’s off-platform behaviour harms our users, employees or ecosystem, we take action to protect the community.”
Mr Brand has 6.6m subscribers on YouTube. Adverts from companies including Currys and Masterclass were running as recently as Monday. The taxi app FreeNow said it had requested that its adverts no longer appear on Mr Brand’s channel.
Mr Brand had used YouTube to respond to allegations over the weekend.
08:04 AM BST
Tepid start for UK markets
UK markets were muted ahead of interest rate decisions by the Bank of England and the US Federal Reserve.
The FTSE 100 was flat after the open to 7,648.80 while the midcap FTSE 250 was little changed at 18,447.29.
07:53 AM BST
Kingfisher battles with downturns in France and Poland
Thierry Garnier, the chief executive of Kingfisher, said:
Our like-for-like sales in the first-half were slightly ahead of expectations, against a backdrop of unseasonal weather and ongoing macroeconomic challenges in our markets.
We saw good growth in our UK banners, with Screwfix gaining significant market share.
At the same time, we faced strong comparatives and a weaker trading environment in Poland, while consumer confidence in France is at a 10-year low.
Overall, demand for our core and ‘big-ticket’ categories was healthy, and we were pleased to see an improving volume trend in these categories through the half.
However, to better reflect our performance in the first-half and the trading environment in our markets, we have updated our profit guidance for this year and are proactively managing our operating costs accordingly.
07:50 AM BST
B&Q owner issues profit warning after wet weather
B&Q owner Kingfisher has cut its full-year earnings outlook after profits dropped by a third, with wet weather and low consumer confidence dampening sales in Europe.
The retail giant told investors its statutory pre-tax profit fell to £317m from £474m in the half year to the end of July.
Like-for-like sales were down by 2.2pc over the period, with stronger trading in the UK & Ireland offset by weaker consumer demand in France and Poland.
Kingfisher said it was planning to more proactively manage costs in the second half of the year, and lowered its adjusted pre-tax profit expectations for the full year to around £590m from the previous guidance of £634m.
07:47 AM BST
Hargreaves Lansdown shrugs off slowing economy
Asset management giant Hargreaves Lansdown has revealed surging profits despite clients dealing with an economic downturn.
Pre-tax profits at Britain’s biggest broker increased by 50pc to £402.7m, ahead of analysts estimates, with the company handling £134bn of assets, up 8pc.
The investment platform grew revenues by 26pc to £735.1m compared to the previous year as it retained 92pc of its customers and added another 67,000.
Chief executive Dan Olley, who took over as boss in August, said:
As I begin my CEO tenure, it is clear to me that at its core this is a strong business with fantastic heritage that has significant potential to benefit from the structural, demographic, and regulatory shifts in the UK and the expected growth in the wealth market.
My early focus is to ensure we are set up to capture this growth opportunity, that we have pace of execution, cost discipline as we travel on this journey, and that we are giving our people the best opportunity to deliver for our clients and shareholders.
07:31 AM BST
Economy faces slump in demand on par with 2008
Businesses are facing a downturn in demand similar to the levels faced during pandemic and 2008, Lloyds has warned, as bosses prepare to face potentially the 15th consecutive increase in interest rates this week.
New orders declined in nearly every sector of the British economy in August for the second month in a row, a closely watched survey showed.
Lloyds said this had only happened during the 2020 lockdown and at the time of the global financial crisis in 2008.
The industries feeling the sharpest drops in interest from buyers were chemicals and automobiles and auto parts.
Only software services bucked the trend and eked out some growth, according to the Lloyds Bank UK Sector Tracker.
Nikesh Sawjani from Lloyds said the figures suggested the economy was experiencing “a widespread fall in demand, similar to what we saw during very challenging periods for the UK economy”.
He added that the signs of weakening demand suggested that higher interest rates were working as intended and the Bank of England would not need to raise rates much further.
Threadneedle Street’s rate-setters will on Thursday vote on whether to increase interest rates for the 15th time in a row, after lifting borrowing costs from 0.1pc in December 2021 to 5.25pc.
07:17 AM BST
Oil near highest level since November
Oil is trading near a 10-month high as the market showed fresh signs of tightness driven by supply cuts from Saudi Arabia and Russia.
Global benchmark Brent edged toward $95 a barrel, advancing for a fourth straight day.
Premiums for physical barrels are surging as refiners struggle to make enough diesel ahead of a seasonal ramp-up in demand.
The tighter market has spurred predictions from the likes of Chevron chief executive Mike Wirth that $100-a-barrel oil will return.
Crude has rallied by more than 30pc since mid-June as Saudi Arabia and Russia curtailed exports in a bid to drain inventories and drive a rebound in prices.
An improving outlook in the world’s two biggest economies — the US and China — has also supported oil’s advance. The surge in energy costs looks set to boost inflationary pressures, complicating the task facing central bankers.
Brent crude has already gained 0.6pc today while US-produced West Texas Intermediate has risen 1.1pc toward $93.
07:11 AM BST
Ocado wins back middle classes after price cuts
Ocado’s joint grocery venture with Marks & Spencer boosted revenues as the online retailer won back the middle classes following a series of price cuts.
Ocado Retail shares have gained 4.5pc after it recorded a 7.2pc increase in sales to £569.6m in the third quarter despite the number of items in its average basket slipping from 45 to 44 compared to the same three months last year. Average orders per week on Ocado.com grew 1.9pc to 381,000,
It follows a series of price cuts on items like kale, avocados and organic vegetables as it battles to win back market share.
Ocado Group’s chief executive Tim Steiner admitted in July that the company’s joint grocery venture with M&S had been a disappointment so far and is “not where we wanted it to be” at this stage.
In its trading update for the three months to August 27, the company maintained its guidance for the full year, forecasting “marginally positive” underlying profit.
Ocado Retail’s chief executive Hannah Gibson, who took the job last September, said the company was delivering on its “Perfect Execution strategy, making sure every element of our customer proposition and our operating model is at its best”.
She added the company’s third quarter results “underpins our confidence” that the business will deliver “mid-single digit revenue growth and full year profitability” in its full-year results.
06:40 AM BST
Thanks for joining us. Bosses are facing a downturn in demand equivalent to levels experienced during the pandemic and in the wake of the global financial crisis, a survey from Lloyds has shown.
The slump comes as businesses prepare for the Bank of England to potentially announce a 15th consecutive increase in interest rates on Thursday to 5.5pc.
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1) ‘Sandwich generation’ paying for Britain’s inactivity crisis, says ex-Bank of England chief | Andy Haldane warns over pressures of long-term sickness on middle-aged workers
2) Cut taxes or electric car industry will suffer, ministers warned | Carmakers blame lack of incentives for battery-powered vehicles’ flagging demand
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What happened overnight
Asian shares sank as worries about the Chinese property sector weighed on markets from Hong Kong to Australia, while Japanese investors sold chip stocks on their return from a holiday-extended weekend.
Benchmark US Treasury yields hovered near 16-year peaks and the dollar held close to six-month highs as traders braced for a Federal Reserve rate decision on Wednesday, in a week that also sees policy decisions from the Bank of Japan and Bank of England.
Crude oil continued its rally amid tighter supply, stoking worries about stagflation.
MSCI’s broadest index of Asia-Pacific shares slipped 0.3pc.
Japan’s Nikkei tumbled 1.1pc under the weight of big losses for chip-related stocks including Tokyo Electron and Advantest.
Japanese markets were closed Monday, when Asian tech stocks sold off following a Reuters report that TSMC had asked its major vendors to delay deliveries.
US markets closed slightly higher on Monday, with the S&P 500 edging up 0.1pc to 4,453.53, coming off its second straight losing week.
The Dow Jones Industrial Average rose less than 0.1pc to 34,624,30, while the Nasdaq Composite added less than 0.1pc to 13,710.24.