Yahoo Finance Investors ramp up bets on rate cut next year after BoE meeting
Investors have ramped up bets that borrowing costs will fall next year after the Bank of England’s decision to hold interest rates at 5.25pc.
The yield on the benchmark 10-year UK gilts has fallen as much as 18 basis points to 4.32pc.
It is the largest daily fall since August and puts the bond’s yield close to its lowest level since September.
The yield is the return the Government promises to investors who buy its debt. Yields fall as bond prices rise.
It comes after policymakers on Threadneedle Street on Thursday voted to keep rates at 5.25pc after inflation remained at 6.7pc in September amid rising fuel prices.
Andrew Bailey, governor of the UK central bank, told a press conference that “it is much too early to be thinking about rate cuts” as inflation remains far above its 2pc target.
However, traders have responded by betting that the Bank of England’s decision to keep interest rates high for longer will eventually lead to sharper cuts next year.
Henry Cook, senior economist at MUFG, told Bloomberg: “Our current view is that the first UK rate cuts will occur by next summer – slightly earlier than markets are currently pricing. We expect that cracks will emerge in the ‘higher for longer’ narrative over coming months.”
07:10 PM GMT
Signing off
That’s all from us tonight. I’ll leave you with the latest headlines:
Musk gives Ukraine discount on Tesla Powerwalls to prevent blackouts
ChatGPT boss says lack of AI skills risks locking older workers out of the job market
Britain faces recession risk in election year, warns Bank of England
Why halving inflation is not enough to save Sunak’s election vows
05:39 PM GMT
FTSE 100 closes in the green
Rate-sensitive homebuilders and real estate stocks lifted the FTSE 100 into the green as the Bank of England kept interest rates unchanged.
The exporter-focused FTSE 100 climbed 1.42pc to 7,446.53. Meanwhile, the midcap FTSE 250 index jumped 3.38pc to 17,767.30.
The benchmark FTSE 100 logged its best day in over three weeks, while the mid-cap index marked its best session since July.
04:59 PM GMT
Interest rates: Telegraph readers have their say
Telegraph readers are discussing Andrew Bailey’s warning that interest rates are more likely to rise than fall.
Bill P wrote:
“About the only reason now why interest rates could rise is that the BoE is selling its long-dated gilts far too quickly. There should be an inquiry into why they took such long-dated money in the first place. Some of it doesn’t expire until 2071!”
M EH said:
“BoE warn economy to flatline and thousands of homes and more than half of mortgage borrowers still haven’t come off their existing fixed rate deals. And people think interest rates are going higher...
“The taxpayer is now paying nearly £100bn a year in interest on the Government’s borrowing, borrowing is at record highs across the population, the country simply cannot afford rates going higher. They can’t afford rates at this level. Oh, and the economy isn’t growing. None of that equals higher interest rates. They’ll be coming down in the new year, as soon as recession kicks in.”
Join the conversation in the comments section to have your say.
04:30 PM GMT
Starlink has hit cashflow breakeven, says Musk
SpaceX’s Starlink satellite network has reached a cash flow breakeven point, according to chief executive Elon Musk.
The billionaire shared the update in a social media platform X, formerly known as Twitter.
The constellation of low-orbit satellites, operated by SpaceX, provides high-speed internet access particularly to areas without conventional connections.
Cash flow break even is the point where a company’s total revenue equals its total expenses.
Excited to announce that @SpaceX @Starlink has achieved breakeven cash flow! Excellent work by a great team.
Starlink is also now a majority of all active satellites and will have launched a a majority of all satellites cumulatively from Earth by next year.— Elon Musk (@elonmusk) November 2, 2023
04:15 PM GMT
PM begins closing speech at AI safety summit
Rishi Sunak has begun his closing speech at the AI safety summit in Bletchley Park.
LIVE: Prime Minister Rishi Sunak’s statement from the AI Safety Summit at Bletchley Park https://t.co/YLn6O8FO7f
— UK Prime Minister (@10DowningStreet) November 2, 2023
04:04 PM GMT
Ladbrokes-owner eyes £100m cost-cutting plan after regulatory clampdown
The owner of Ladbrokes and Coral is embarking on a £100m drive to bring down costs amid a government clampdown on the sector.
Senior business reporter Daniel Woolfson has more:
London-listed Entain warned on Thursday that job cuts would be part of the effort to streamline its business.
Jette Nygaard-Andersen, chief executive at Entain, said: “We’ve grown very, very fast over the last five, six years, and a lot of that has been through M&A [mergers and acquisitions]. And that means it’s left the organisation and our structure very, very complicated. And you can imagine, duplicate roles across many regions.”
She added: “Inevitably, and sadly, there will be some roles that are reduced.”
Ms Nygaard-Andersen did not say how many jobs could be affected.
Entain has spent the last three years shaking up the company in an effort to strengthen its business and make it more profitable.
It has introduced stricter controls to curb the damaging effects of gambling over recent years amid a clampdown on the sector by the Government.
The company has toughened its affordability checks on betters and has introduced a “single customer view”, which prevents users switching between its subsidiaries to place bets if they reach a limit at one of them.
Ms Nygaard-Andersen said: “In the old days, if you hit your deposit or spent limit with Coral, you could go on and play with Ladbrokes. But what the regulator wants to see is that operators implement a single view of the customers so it goes across all brands.”
She said the impact of these measures was around £165m.
She said: “It’s a short-term impact that is painful, of course, for the business. But it’s the right thing to do. And it will set us up in a way that we have a much more sustainable business going forward.”
Entain’s UK business also suffered from a string of predictable football results over recent months that led to increased winnings for its customers, costing it around £45m.
“Over the last six years, we’ve only seen five weeks of loss-making weeks in football, and two of those fell in October,” Ms Nygaard-Andersen said.
Entain is increasingly focusing its efforts on the US since the American Supreme Court repealed legislation that had effectively banned sports betting at a federal level (except in Nevada) in 2018, allowing states to begin setting their own rules on gambling.
“It’s still early days there,” Ms Nygaard-Andersen added. “So there is enormous growth to be had.”
The company said on Thursday that revenues excluding the US were down 5pc over the third quarter of 2023 on a pro forma basis.
03:59 PM GMT
Edinburgh to declare housing emergency as SNP’s rent controls backfire
Edinburgh is poised to formally declare a housing emergency in a sign that the SNP’s rent control policies have backfired.
The City of Edinburgh Council will on Thursday urge Holyrood to ramp up funding for housing, as it tables a motion highlighting a housing “crisis”.
It will note that some 5,000 families are living in temporary accommodation in Scotland’s second-largest city amid a shortage of social housing and soaring private rents.
The move comes just over a year after former first minister Nicola Sturgeon restricted rent rises on social and private rentals and placed a moratorium on evictions. Ms Sturgeon said at the time the freeze would help tackle the “humanitarian emergency” of the cost of living crisis.
Senior economics reporter Eir Nolsøe has the story...
03:31 PM GMT
Handing over
It’s goodbye from me for another day as Adam Mawardi jumps into the blog hotseat.
I will leave you with a video from the Governor of the Bank of England explaining why policymakers kept interest rates at 5.25pc.
Governor Andrew Bailey explains today’s interest rate decision. pic.twitter.com/d86FXza0la
— Bank of England (@bankofengland) November 2, 2023
03:17 PM GMT
Government borrowing costs cut as bond markets rally
Government borrowing costs have fallen significantly in the wake of the Bank of England’s decision to hold interest rates at 5.25pc.
The yield on benchmark 10-year UK gilts fell as much as 18 basis points to 4.32pc. Yields fall as prices rise.
It is the largest daily fall since August and puts the bond’s yield close to its lowest level since September.
The yield is the return the Government promises to investors who buy its debt.
It comes as money markets predict that interest rates staying high “for an extended period of time” will eventually lead to sharper cuts in interest rates.
02:59 PM GMT
France split with UK and US over wide availability for AI
Over at the AI Safety Summit, a geopolitical schism has emerged over the widespread availability of the technology.
Our senior technology reporter Matthew Field has the latest from Bletchley Park:
France has been pushing to “open source” more AI code, meaning it can be widely accessed. This publicly available code can help boost competition as it makes it available to start-ups.
However, many AI experts fear the proliferation of powerful AI tools will make them harder to control.
Florentino Cuéllar, president of the Carnegie Endowment for International Piece and a delegate at the AI Summit, said: “You could say the countries that have been thinking very carefully about security have been well represented here at this summit but certainly the UK and the US are among them.
“And there are some countries in the European Union, France among them, and some in the global south that are interested more generally in the availability of this technology to multiple countries, and that can take the form of open source.”
Emmanuel Macron has championed using so-called “open source” AI in France, putting his position into conflict with other world leaders.
02:47 PM GMT
M&S apologises for Christmas advert post after Palestinian flag backlash
Marks & Spencer has apologised for posting a picture on social media that showed burning hats that resembled the colours of the Palestinian flag.
Our retail editor Hannah Boland has the latest:
The retailer removed a post from its Instagram that showed an outtake from its newly released Christmas advert alongside the caption: “This Christmas, do what you love... like saying no to paper hats.”
The post prompted a fierce backlash on social media over claims it made a political statement because the red, green and silver hats appeared to reflect the Palestinian flag.
One social media user said it was “1000pc intentional” in a comment underneath the image, although M&S said the advert was filmed in August before conflict broke out between Israel and Hamas.
02:33 PM GMT
US markets rise after string of strong results
Wall Street’s main stock indexes rallied amid hopes that the US Federal Reserve had reached the end of its tightening campaign, while a raft of upbeat corporate updates added to the bullish mood.
The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy.
The comments, which were perceived to be dovish, sent US Treasury yields tumbling, with the benchmark 10-year yield hitting near three-week lows.
All three major stock indexes touched their highest level since October 19.
Mega-cap growth stocks including Microsoft, Nvidia, Alphabet and Tesla rose between 0.2pc and 3.9pc.
On the earnings front, Qualcomm climbed 5.9pc after the chip designer forecast first-quarter sales and profit above Wall Street estimates as a slowdown in smartphone sales eases.
PayPal advanced 3.9pc as the payments giant raised its full-year adjusted profit forecast.
Starbucks jumped 9.4pc after fourth-quarter results beat estimates, while data analytics firm Palantir Technologies rose 18.8pc on forecasting quarterly revenue above estimates.
01:45 PM GMT
Bailey insists he is 'apolitical' after Carney's Labour endorsement
Andrew Bailey has now wrapped up his press conference alongside deputy governors Ben Broadbent and Sir Dave Ramsden.
However, the most juicy exchange during the event came away from the chat about interest rates - and when the conversation switched to the Governor’s predecessor Mark Carney.
Asked what he thought about Mr Carney’s decision to endorse Rachel Reeves to be the next chancellor of the UK, Mr Baileys said:
The Bank is independent and apolitical. And that is absolutely at the core of this institution. So let me be clear on that.
Obviously, former governors can make their own decisions. They’re not part of the institution any longer and Mark did not tell me in advance because there’s no reason why he should. He has no obligation to tell me.
I’m not, I have to tell you, at the stage of contemplating life thereafter, but I just want to absolutely emphasise the core of this institution, and I will tell you honestly, it’s the core of me personally as well, I am apolitical and we are independent, in respect of the functions we perform, and that is absolutely central to us.
01:37 PM GMT
Mortgage holders face higher charges in coming months, warn analysts
The decision to leave interest rates on pause may help to boost housing market confidence, but experts have warned that households could face another tough year ahead as budgets remain squeezed.
Andrew Hagger, a personal finance expert from Moneycomms, said:
The monthly hikes in base rate may have stalled, but the cost-of-living squeeze hasn’t gone away - increased energy costs, higher prices at the pumps and soaring mortgage rates mean there’s little respite for the household budget at the moment.
Many people will have to tighten their belts this Christmas, but will be hoping that 2024 is less harsh on their bank balance - however, any rate reductions will be slow and steady, so it’s likely to be another tough year ahead.
Oliver Blackbourn, portfolio manager at Janus Henderson Investors, added:
The mortgage market had seen borrowers moving to longer fixed periods in the years prior to 2022, seeking to lock in low costs.
This has delayed the impact of higher interest rates on those mortgage holders but, without a sharp loosening of monetary policy, many will still face much higher charges over the coming months and years.
01:24 PM GMT
Bank of England not trying to send message to markets, says Broadbent
Bank of England Deputy Governor Ben Broadbent said the publication of the Bank’s forecasts was not aimed at sending a message to the financial markets.
He said:
I don’t think there is any particular message we’re trying to send financial markets.
Nothing much has happened to prices in financial markets since we published this forecast.
The main message ... is a broader one which is that we think policy has to remain restrictive for quite some time.
01:18 PM GMT
Bank of England will cut rates next year, says leading economist
Samuel Tombs from Pantheon Macroeconomics said he still expects the Bank of England to cut rates next year despite its insistence that borrowing costs are unlikely to come down any time soon.
He said:
We are sticking with our forecast that the MPC (Monetary Policy Committee) will reduce Bank Rate by 75 basis points next year, with the first 25-basis-point-cut coming in May.
Guidance based on the MPC’s forecasts - which committee members have admitted are less meaningful than usual and which are under review due to recent large errors - shouldn’t count for much.
The MPC is currently reactive and backward-looking, and its stance will shift, potentially quickly, as the economic data change.
He added that even if the Bank does cut rates modestly in 2024, monetary policy would still be effectively tightening as homeowners come off fixed deals and have to refinance at higher interest rates.
01:08 PM GMT
Bank of England looking more closely at jobs market amid 'resilient' wages
Andrew Bailey said that wages have been more resilient than expected in response to a question from our economics editor Szu Ping Chan.
The Governor said the Bank of England is looking more carefully at labour supply estimates amid evidence that earnings have been more resilient than expected.
He said that the efficiency with which people are matched to jobs seems to have gone down, which is keeping the labour market tight.
01:03 PM GMT
UK economy 'rather meh' after third quarter, say economists
Cutting analysis from Simon French of Panmure Gordon:
Bank of England seeing inflation at 4.8% in October, and growth flat in Q3 actually suggests a fairly bullish run of near term U.K. data. Beyond then it’s rather meh…
— Simon French (@shjfrench) November 2, 2023
Meanwhile, Hussain Mehdi of HSBC Asset Management said:
Like the Fed and ECB, we believe the Bank of England is done in this hiking cycle given UK economic momentum is flagging and labour market conditions are cooling.
Very restrictive policy should do the job of moderating demand. With forward-looking indicators pointing to further economic slowdown and disinflation ahead, we think the doves may start gaining the upper hand as we head into 2024.
12:59 PM GMT
Bailey declines to say where interest rates will settle
Andrew Bailey refused to outline what he thinks will be the level where interest rates will settle once the shocks to the UK economy settle.
He said: “As a committee we don’t spend time discussing what we think the equilibrium rate for rates is.
“It underpins the system but as a guide to policy setting I don’t think it is helpful.”
Deputy Governor Ben Broadbent said that it would be “misleading” to give out a number of where rates would settle after coming down from their 15-year highs.
He added: “One finds out only after the event what the neutral rate is.”
He acknowledged that rates at the moment are above the level where they will eventually settle.
12:45 PM GMT
UK economy will be 'broadly flat' next year, warns Bailey
Andrew Bailey said inflation risks remain skewed to the upside and warned that economic growth is likely to remain “broadly flat” throughout next year.
He said high interest rates will squeeze down inflation but the Bank is mindful that restrictive monetary policy should not be in place “for too long”.
12:42 PM GMT
Bailey: Wage growth 'much higher' than comfortable
Andrew Bailey said that wage growth is “much higher” than comfortable as he set out the Bank of England’s predictions for the path of inflation.
The Governor said employment is likely to be broadly flat in the coming months and that most indicators show the labour market is easing.
He said a lower supply of workers is weakening the jobs market and said the labour market loosened by more than expected in August.
12:37 PM GMT
UK economy going 'in wrong direction', says Reeves
Rachel Reeves, Labour’s shadow chancellor, said:
At the start of the year, Rishi Sunak and Jeremy Hunt promised to get the economy growing.
These figures show we are going in the wrong direction.
We are forecast to have gone from low growth to no growth, with working people paying the price.
12:22 PM GMT
Inflation to take longer to reach 2pc, Bank of England warns
The Bank of England’s forecast shows that the Government is likely to meet its target to halve inflation by the end of this year, but it will take longer to return to the 2pc target than previously thought.
The Bank said that Consumer Prices Index (CPI) inflation is likely to be around 4.6pc in the fourth quarter, down from its previous 4.9pc forecast.
The Prime Minister had promised to get inflation to 5.4pc by the fourth quarter.
Officials had previously thought that inflation would return to the 2pc target by the second quarter of 2025. But they revised that forecast on Thursday to say that inflation will remain above 2pc until the final quarter of 2025.
12:20 PM GMT
We are now at peak rates, say analysts
The decision by the Bank of England to hold rates steady has emboldened some analysts to say they think it is unlikely rates will rise again before there are cuts.
Emma Mogford, fund manager at Premier Miton said:
I feel increasingly confident we are now at peak rates.
The rapid increase in interest rates in the last year will continue to bring down demand for goods and services and hence inflation, which the Bank of England expects to be back at 2pc in two years.
If inflation can fall while the economy is resilient, that should be good for UK equities.
Yael Selfin, chief economist at KPMG UK, said: “We expect the next couple of months to bring little change to the overall level of interest rates as inflation continues to gradually descend towards its target.”
12:14 PM GMT
Pound pushes higher as interest rates held steady
Sterling has now risen 0.5pc against the dollar today to push above $1.22.
Meanwhile, the FTSE 100 has held onto its gains and remains up 1.2pc on the day.
12:12 PM GMT
UK has been more resilient than expected, says Hunt
After the latest interest rate decision, Chancellor Jeremy Hunt said:
Inflation is falling, wages are rising and the economy is growing.
The UK has been far more resilient than many expected, but the best way to deliver prosperity is through sustainable growth.
The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state.
12:10 PM GMT
Bailey: It's much too early to think about rate cuts
After holding rates at 5.25pc, Bank of England governor Andrew Bailey said:
Higher interest rates are working and inflation is falling.
But we need to see inflation continuing to fall all the way to our 2pc target.
We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed.
It’s much too early to be thinking about rate cuts.
12:06 PM GMT
Inflation to fall below 5pc in October, says Bank of England
The Bank of England has predicted that inflation will have dropped below 5pc in October in a boost to the Prime Minister.
Policymakers predicted price rises will have reduced from 6.7pc in September to 4.8pc, putting Rishi Sunak on track to meet his goal to halve inflation by the end of this year.
While six members of the Monetary Policy Committee voted to keep rates on hold, three voted for rates to increase to 5.5pc, which would have been the highest level since February 2008.
12:02 PM GMT
Bank of England holds interest rates at 5.25pc
The Bank of England has held interest rates at their 15-year highs of 5.25pc.
The Monetary Policy Committee voted by a majority of 6-3 in favour of keeping rates steady.
Governor Andrew Bailey said policymakers are watching to see if more rate rises will be needed.
11:56 AM GMT
Interest rate decision announced imminently...
Just a few minutes until the Bank of England announces its next interest rate decision.
The pound is currently up 0.4pc today against the dollar at nearly $1.22.
11:42 AM GMT
Wall Street expected to open higher after Fed rate hold
Before the Bank of England’s decision, let’s take a look at what is likely to happen in US markets later.
Wall Street’s main stock indexes are poised to open higher amid hopes that the US Federal Reserve has reached the end of its monetary tightening campaign.
A number of upbeat corporate updates have also lifted sentiment.
The Fed held interest rates steady on Wednesday, as expected, and while Chairman Jerome Powell left the door open to further tightening, he also acknowledged the impact of a recent surge in bond yields on the economy.
Meanwhile, shares of Qualcomm climbed 5.7pc in premarket trading after the chip designer forecast first-quarter sales and profit above Wall Street estimates as the slowdown in smartphone sales eases.
PayPal advanced 6.1[c as the payments giant raised its full-year adjusted profit forecast.
Starbucks jumped 5.5[c after beating estimates on quarterly comparable sales, while Apple’s shares rose nearly 1pc ahead of the tech behemoth’s quarterly numbers due after markets close later.
In premarket trading, the Dow Jones Industrial Average was up 0.4pc, the S&P 500 had gained 0.5pc and the Nasdaq 100 was up 0.8pc.
11:25 AM GMT
Oil climbs as Fed holds interest rates steady
Oil rose along with broader financial markets after the Federal Reserve hinted it may have finished raising interest rates.
Global benchmark Brent crude has risen 1.4pc rose to trade around $86 a barrel after falling about 5pc over the previous three sessions.
The Fed held off raising borrowing costs for a second time on Wednesday and signalled that a recent rise in longer-term Treasury yields reduces the impetus to hike again.
The rise comes after crude gave up its premium since the start of the Israel-Hamas war as the conflict has so far failed to spread across the Middle East.
ING analysts Ewa Manthey and Warren Patterson wrote in a report that Brent “has been trading firm this morning on positive economic sentiment after the US Fed continued to pause interest rate hikes”.
11:12 AM GMT
PM meets with von der Leyen at AI summit
Rishi Sunak said he was “delighted to be working so closely” with European Commission president Ursula von der Leyen in discussing artificial intelligence (AI).
He suggested they would also talk about “tackling illegal migration” during their bilateral meeting at the UK’s tech summit at Bletchley Park.
“You’ve taken the lead in putting AI on the agenda... I’m delighted that we’re working so closely together, together with the Americans and other countries,” he said.
Earlier, the Prime Minister gave a “warm welcome” to UN secretary general Antonio Guterres and said the two would discuss the situation in Gaza as they sat down for a bilateral meeting at the AI summit.
10:56 AM GMT
UK bond yields drop as markets expect Bank of England to hold rates
Government borrowing costs have dropped ahead of the Bank of England’s interest rate decision.
The yield on benchmark 10-year UK gilts has fallen 10 basis points to 4.39pc as money markets increasingly expect a steadying of monetary policy.
The bond market is closely watched as an indicator of the direction of mortgage rates and shows the returns the Government must offer to buyers of its debt.
Shorter-term bond market yields, which are more sensitive to interest rate movements, have dropped to two-month lows after the Federal Reserve held US interest rates at 5.25pc to 5.5pc.
The yield on two-year US Treasuries has slumped to 4.95pc while the two-year UK gilt yield has dropped nearly six basis points today to 4.71pc.
Fed chairman Jerome Powell indicated the aggressive 20-month run of rate increases was likely to slow the US economy after what he had described as the “outsized” jump in third quarter US GDP.
The benchmark 10-year Treasury yield has fallen three basis points to 4.7pc.
10:30 AM GMT
Pound moves higher ahead of interest rate decision
The pound has crept higher as traders await the Bank of England’s interest rate decision.
Sterling was up 0.3pc against the dollar toward $1.22 but slipped 0.2pc against the euro, which is worth more than 87p.
Money markets have priced an almost 90pc chance the Bank will keep interest rates at their current 15-year high of 5.25pc.
However, traders have not fully priced in a rate cut until September 2024 - well after cuts are expected to have begun in other parts of Europe.
RaboBank FX strategist Jane Foley said: “Pricing is reflecting the view that Bank of England rates will have to remain on ‘Table Mountain’ for some months given the UK’s inflation risks,”
Jefferies chief European economist Mohit Kumar added: “We remain of the view that November could see a positive performance from rates, credit and equities.”
10:14 AM GMT
Olive oil prices surge 75pc in Europe in less than than three years
The Bank of England has raised interest rates to 5.25pc as it fights to bring down inflation, which stands at 6.7pc.
The inflation figure is much lower in the eurozone, down to 2.9pc, but the latest official data indicates that households in Europe are still feeling a lot of pain.
In September 2023, the price of olive oil was 75pc higher on the continent than in January 2021.
Potato prices were also on a staggering rise. Since January 2021, prices for potatoes increased by 53pc in September.
EU #food prices: olive oil up 75% since January 2021 💰
🫒In September 2023, the price of olive oil was 75% higher than in January 2021
🥔Prices for potatoes increased by 53%
🥚For eggs, prices were 37% higher
🧈For butter, prices were 27% higher
👉 https://t.co/6uIZP12Gp7 pic.twitter.com/4DIWLhpnyo— EU_Eurostat (@EU_Eurostat) November 2, 2023
10:00 AM GMT
What will the Bank of England do on interest rates? Take part in our poll
09:45 AM GMT
PM 'must not hesitate to regulate' frontier AI, says Labour
Labour has said it would urgently introduce binding requirements for companies developing powerful AI after Rishi Sunak said he would not “rush” to regulate the technology.
The party has promised to force firms to report before they train models over a certain capability threshold and to carry out safety tests strengthened by independent oversight if it wins the next general election.
The Prime Minister has said that mitigating the risks of AI should be a global priority, but that the Government will not “rush to regulate” and does not want to be “alarmist” about the issue.
The Government’s white paper on AI proposes five “principles” such as “safety” and “accountability” for companies to adhere to, but these will not initially be put on a statutory footing.
Peter Kyle MP, shadow technology secretary, said:
AI has the potential to transform the world and deliver life-changing benefits for working people. From delivering earlier cancer diagnosis, to relieving traffic congestion, AI can be a force for good.
But to secure these benefits we must get on top of the risks and build public trust. It is not good enough for our ‘inaction man’ Prime Minister to say he will not rush to take action, having told the public that there are national security risks which could end our way of life.
09:35 AM GMT
'We can't be certain' about AI risks, says Sunak
Prime Minister Rishi Sunak has said “we can’t be certain” about the risks of AI but there is a possibility they could be on a similar scale to pandemics and nuclear war.
However, speaking as he arrived at the UK’s tech summit in Bletchley, he said it is important not to be “alarmist” because the debate is ongoing.
Asked whether a Terminator-style rise of the machines is possible, he said:
People developing this technology themselves have raised the risk that AI may pose and it’s important to not be alarmist about this. There’s debate about this topic. People in the industry themselves don’t agree and we can’t be certain.
But there is a case to believe that it may pose a risk on a scale like pandemics and nuclear war, and that’s why, as leaders, we have a responsibility to act to take the steps to protect people, and that’s exactly what we’re doing.
09:28 AM GMT
Tesla sales in China fall
Tesla delivered 72,115 China-made electric vehicles in October, down 2.6pc from a month earlier, the China Passenger Car Association (CPCA) said on Thursday.
Sales of China-made Model 3 and Model Y cars edged up 0.6pc from a year earlier.
Chinese rival BYD, which makes EVs and hybrid models from its Dynasty and Ocean series, delivered 301,095 passenger vehicles in October, up 5pc from September and a 38.4pc increase from the same month last year.
Elon Musk’s Tesla has prioritised sales over earnings, particularly in China, where the US EV giant has come under growing pressure from local rivals. Aggressive discounts have battered its margins but failed to boost its market share.
Tesla’s market share in China’s EV segment shrank to just under 9.9pc in the third quarter from just shy of 13pc in the second quarter and just over 9.9pc a year earlier.
It missed third-quarter estimates for gross margin, profit and revenue. It also undershot third-quarter forecasts for its global deliveries, as planned factory upgrades for a revamped version of the Model 3 curbed production.
Tesla debuted the refreshed and higher-priced Model 3 in China in September and officially began deliveries on Oct. 26.
Domestic automakers have made more headway in the world’s largest auto market, where foreign brands including Japan’s Mitsubishi Motors and South Korea’s Hyundai Motor have taken steps to wind down or scale back on their operations.
09:05 AM GMT
Shell's oil drilling plans will not bring down energy bills, say campaigners
As Shell posted quarterly profits of £5.1bn, Friends of the Earth campaigner Imogen Dow said:
Buoyed by last year’s bumper profits – the biggest in Shell’s history – the company is going full steam ahead with plans to extract every last drop of oil and gas it can. And it was revealed as the main beneficiary of the new North Sea production licenses awarded earlier this week.
We’re told these have been granted in the name of strengthening our energy security, but plundering our remaining fossil fuel stocks will do nothing to bring down the sky-high energy bills millions of households are bracing for yet again this winter.
The Government has failed to roll out the measures that will actually make a difference - a street-by-street insulation programme and a massive push to increase the production of cheap, homegrown renewable energy.
The companies fuelling the climate and energy crises continue to cash in at our expense. Meanwhile, consumers remain dangerously exposed to future price shocks and volatile gas markets, which are increasingly threatened by global instability. It hardly needs saying that we must get off expensive and harmful oil and gas for good.
08:54 AM GMT
Ryanair cancels nearly 900 flights over Israel-Hamas war
Ryanair has revealed it cancelled 870 flights after the outbreak of war in Israel following Hamas’s deadly attacks.
Europe’s largest airline revealed it still carried 17.1m passengers during a record October, an increase of 9pc on the same time last year, across more than 96,700 flights.
08:33 AM GMT
FTSE 100 gains 1pc after boost from Shell and Sainsbury's
The FTSE 100 rose as it was given a boost by strong results from Shell and Sainsbury’s as well as the US Federal Reserve’s decision to leave interest rates unchanged.
The internationally-focused index was up 1pc while the mid-cap FTSE 250 rose 1.4pc and was on track for a five-session winning streak.
Shell gained 0.9pc as the global energy major reported third-quarter profit in line with expectations and announced a share buyback programme of $3.5bn over the next three months. The broader oil and gas index was up 0.8pc.
Investors will closely monitor the Bank of England’s monetary policy meeting today, where ratesetters are widely expected to hold borrowing costs at a 15-year high of 5.25pc.
Sainsbury’s climbed 4.6pc after forecasting full-year profit at the upper half of its previous guidance.
Smith+ Nephew beat market expectations for third-quarter revenue on strong demand for its medical products, and named John Rogers, former finance boss of ad group WPP , as its new chief financial officer.
The stock jumped 4.2pc, while the medical equipment and services index climbed 3.6pc, leading sectoral gains.
Entain shares slipped 4.7pc as the owner of Ladbrokes betting shops posted a fall in online net gaming revenue for the third quarter.
08:28 AM GMT
Shell delivers despite challenge from last year's oil price surge, say analysts
Shell has managed to deliver strong results despite the challenge of matching last year’s oil price surge in the wake of the Ukraine war, analysts have suggested.
The London-listed oil and gas producer said its adjusted earnings fell 34pc in the third quarter to $6.2bn (£5.1bn) compared with a year earlier but had managed to increase profits compared to the previous quarter.
Last year profits were adversely inflated as a result of the surge in the price of crude after Russia’s invasion of Ukraine.
Stuart Lamont, investment manager at RBC Brewin Dolphin, said:
Shell’s results are a contrast with BP’s earlier this week, more or less matching expectations on the back of rising profits.
Comparisons with last year, when oil prices first began their surge, were always going to be tough, but the company has managed to deliver.
Another share buyback should be good news for shareholders, but there is little said about its plans to achieve net zero in today’s update – this remains a longer term concern for many, after the company announced its decision to focus on oil and gas production earlier this year.
With the geopolitical environment still volatile, oil prices look likely to continue recent rises which should mean a strong final quarter for Shell.
08:21 AM GMT
AI Safety Summit has been 'landmark' event, insists Donelan
Technology Secretary Michelle Donelan insisted the UK’s “landmark” AI safety summit was significant despite the absence of world leaders.
She told LBC Radio that Canadian prime minister Justin Trudeau “is actually attending today, virtually I believe”, while European Commission president Ursula von der Leyen and US vice president Kamala Harris were there.
“We even had yesterday representation from China, a minister from China,” Ms Donelan said.
“I was on the stage at one point with both America, the EU and China. That speaks volumes for the level of engagement.”
08:11 AM GMT
AI offers 'humongous benefits', says Technology Secretary
Artificial intelligence offers “humongous benefits” but the Government has a responsibility to manage the risks, Technology Secretary Michelle Donelan said.
Speaking from the AI safety summit in Bletchley Park, she told GB News:
We have convened countries across the globe, companies that are working in this space producing that cutting-edge AI and also academics, scientists, experts from all over the world to have a conversation and work out, ‘OK, what are the risks?’
How can we work together in a long-term process so that we can really tackle this and get the benefits for humanity, not just here in the UK, but across the globe?
She compared it to the international effort required to tackle climate change, adding:
We thought that actually what we need to do is work collaboratively with the rest of the world.
I compare it to climate change - if we just do our own work in a silo, it won’t have the same impact.
08:06 AM GMT
UK markets open higher as Fed holds rates
The FTSE 100 has begun the day higher after the US Federal Reserve decided to leave interest rates unchanged at 5.25pc to 5.5pc, raising hopes that it has finished its cycle of increases to borrowing costs.
The blue-chip stock index rose 0.7pc after markets opened to 7,395.63 while the midcaps FTSE 250 has gained 0.9pc to 17,341.62.
07:57 AM GMT
BT warns it could lose 400,000 broadband customers as competition dials up
BT has warned it could shed more broadband customers than previously expected amid tough competition from rivals.
Our media reporter James Warrington has the latest:
The telecoms giant lost 155,000 broadband customers in the first half of the year, which it blamed on slower build of new homes and losses to competitors.
BT said it still expected the customer base in its Openreach division to decline by 400,000 in 2024, but warned there was a risk losses would exceed this level.
BT, which is the largest player in the market, said its full-fibre broadband network has now reached 12m homes, with its build rate averaging 66,000 per week.
However, the company is shedding customers from its old copper network as dozens of smaller providers such as Cityfibre expand their full-fibre networks across the country.
Overall, BT’s revenues were flat at £10.4bn in the six months to the end of September, while pre-tax profits jumped by 30pc to over £1bn thanks to cost-cutting plans.
07:52 AM GMT
Food 'back at the heart of Sainsbury’s' says boss
As Sainsbury’s revealed a slump in half-year profits, chief executive Simon Roberts said:
Food is firmly back at the heart of Sainsbury’s.
We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us.
We know people are still finding things tough and we’re working harder than ever to reduce our costs, putting the money back into our customers’ pockets through lower prices on the products they buy most often.
I’m pleased to say food inflation is coming down and we are passing savings on to customers.
We’ve rolled out Nectar Prices to over 6,000 products and the vast majority of customers are now shopping with Nectar, saving over £450m since April.
07:50 AM GMT
Sainsbury's profits slump as it focuses on cutting food prices
Supermarket Sainsbury’s has revealed a 27pc fall in half-year profits, but cheered soaring grocery sales as it focused on keeping food costs down for cash-strapped customers.
The grocery chain and Argos owner posted statutory pre-tax profits of £275m for the six months to September 16, down from £376m a year ago.
On an underlying basis, pre-tax profits remained flat at £340m.
It reported a 6.6pc rise in like-for-like retail sales, excluding fuel, in its second quarter, down from growth of 10pc in the first three months, as its performance was impacted by a difficult performance for its clothing range.
Total grocery sales jumped 8.9pc in the second quarter and 10.1pc over the first half, but was partially offset by a tough market for general merchandise and clothing, with second quarter sales down 0.6pc and 14.6pc respectively.
But the group said full-year profits are now expected to be in the “upper half” of its guidance, at between £670m and £700m as efforts to keep prices low has boosted grocery sales.
07:42 AM GMT
Shell’s profits hit £5.1bn amid shift back to oil and gas
Shell increased its third quarter profits as revenues were boosted by higher energy prices and as the company doubled down on its fossil fuel strategy.
The oil giant said its adjusted earnings reached $6.2bn (£5.1bn) in the three months to September, up from $5.1bn (£4.2bn) in the previous three months.
The result was only $24m (£19.7m) behind expectations, unlike BP which missed its forecast underlying replacement cost profit by around $700m (£575m), causing shares to plummet on Tuesday.
The increase, which was largely in line with what analysts had expected, came as it enjoyed higher oil prices, better margins from Shell’s refining business and more production from its upstream unit.
Brent crude, the international benchmark, increased in value by more than a quarter during the three months to September covered by the company’s latest results.
Meanwhile, Shell’s renewables business suffered a loss of $67m (£55m) as chief executive Wael Sawan seeks to scale back the company’s investment in green energy in a bid to boost profits.
The business announced it would buy back $3.5bn dollars (£2.9bn) of shares from investors over the next three months, an increase from $3bn in the previous period.
Mr Sawan said: “Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets.”
The total amount that Shell has said it will return to shareholders so far this year is $23bn (£18.9bn), Mr Sawan said.
07:37 AM GMT
Good morning
Thanks for joining me. Oil giant Shell managed to avoid the fate that befell rival BP earlier in the week as its earnings for the third quarter stayed largely in line with expectations.
The oil and gas giant revealed it had increased adjusted earnings from $5.1bn (£4.2bn) in the second quarter to $6.2bn (£5.1bn) in the three months to September.
5 things to start your day
1) Fed chief warns still ‘long way to go’ on inflation fight | The central bank chief left the door open for future interest rate rises even as the Fed voted to hold borrowing costs unchanged
2) Warning for Bank of England as Lagarde is accused of hammering eurozone economy | There are fears central banks may have taken their determination to tame inflation a little too far
3) Thames Water to cut 300 jobs as it battles £14bn debt pile | UK’s largest water company targets retail and digital divisions in bid to improve finances
4) Private equity giant behind Six Nations delays stock market listing | This is the second time CVC Capital Partners has put its IPO plans on hold
5) Blow to Putin as Russia faces UK trial over $60bn Yukos oil battle | Three former shareholders of the oil giant are fighting to enforce a 2014 arbitration award
What happened overnight
Asian shares were mostly higher after the US Federal Reserve indicated it may not need to raise interest rates again after deciding to hold monetary policy steady for a second straight meeting.
Japan’s benchmark Nikkei 225 gained 1.1pc in afternoon trading to 31,950.61. Australia’s S&P/ASX 200 jumped 0.9pc to 6,899.70. South Korea’s Kospi surged 1.8pc to 2,341.96.
Hong Kong’s Hang Seng added 0.9pc to 17,246.87, while the Shanghai Composite edged 0.3pc lower to 3,015.33.
In Japan, Prime Minister Fumio Kishida announced an economic stimulus package worth about $113bn (£92.8bn) that is meant to cushion the blow to household budgets from rising inflation and timed to counter weakening public support for his government. The package includes tax breaks for individuals and companies and subsidies to reduce rising energy costs.
Wall Street stocks rallied Wednesday after the Federal Reserve paused interest rates, with the Dow Jones Industrial Average rising 105.95 points or 0.32pc to 33,158.82.
The S&P 500 gained 20.88 points or 0.50pc to 4,214.68. The Nasdaq Composite added 96.25 points or 0.75pc to 12,947.48.
Meanwhile, the benchmark 10-year Treasury yields fell to 4.766pc, the lowest since October 17.
