Yahoo Finance New rail strike by 40,000 workers ‘will effectively shut down the network’
Bank of England says Britain in recession as it raises interest rates by 0.5 percentage points
Jacob Rees-Mogg lifts fracking ban in bet on shale gas revolution
FTSE 100 falls after Bank of England decision
Ben Wright: Forget bankers: the bonus cap has always been pure politics
Commuters are facing more misery after unions announced a fresh wave of strikes across the country’s rail network.
Around 40,000 members of the RMT at Network Rail and 15 train operators will walk out on October 8 in a move the union said would "effectively shut down the railway network".
That comes on top of existing strikes planned for October 1 and 5.
Mick Lynch, RMT general secretary, said it was encouraging that new Transport Secretary Anne-Marie Trevelyan had met the union.
However, he said workers had “no choice” but to continue strike action as no new pay offer had been tabled.
Workers at the RMT, Aslef and TSSA are all planning industrial action early next month as the so-called summer of discontent threatens to continue into winter.
06:05 PM
Wrapping up
That's all from us, thank you for following! Before you go, check out the latest stories from our reporters:
Kwarteng to announce biggest tax cuts since Thatcher in push for growth
UK at risk of electricity blackouts for 10 hours this winter
Lord Vaizey joins cryptocurrency business which poses ‘significant risk’ to consumers
TfL chief nicknamed ‘Train Daddy’ quits as network struggles with strikes
06:03 PM
Rees-Mogg is line for millions from mooted sale of Somerset Capital
Jacob Rees-Mogg is in line for a payout worth millions of pounds from the possible sale of his investment firm Somerset Capital Management. Helen Cahill writes:
The company he co-founded has hired advisers to assess options for the business, setting the Business Secretary up for a windfall if the process leads to a sale.
Somerset Capital is exploring a merger with a rival or a management buyout as its chief executive Dominic Johnson prepares to step down and move into politics, the Financial Times reported.
Emerging markets specialist Emso Asset Management has been named as a potential suitor, although it is not known whether the two sides will be able to reach a deal.
Mr Rees-Mogg launched Somerset Capital in 2007 alongside Mr Johnson to provide clients with access to investments in emerging markets. The Business Secretary no longer has an active role at the fund but remains a shareholder with a stake of just over 10pc.
05:39 PM
UK indices in decline
The FTSE 250 has touched the lowest in over two months on recession fears after the Bank of England joined several global central banks in hiking interest rates to tame inflation.
The blue-chip FTSE 100 closed down 1.1pc at a three-week low, while the midcap index, more exposed to the domestic economy, fell 2.1pc to its lowest since July 5.
"The Bank of England delivered in line with expectations," said Sanjay Raja, senior UK economist at Deutsche Bank Research.
"The door is now open for a bigger hike in November, with the MPC explicitly acknowledging that should their updated outlook points to more persistent inflationary pressures, including from stronger demand, the Bank stands ready to respond forcefully."
05:15 PM
Sir Nick Clegg opens door for Trump’s return to Facebook as soon as January
Former US President Donald Trump could be allowed to rejoin Facebook as soon as January after the ban on his account expires, Sir Nick Clegg has said. Matthew Field has more:
The former Deputy Prime Minister and public affairs chief at Facebook-owner Meta said the company was considering whether the block on the former President’s account could be lifted.
In an interview with US publication Semafor, Sir Nick said he would talk to experts and weigh the risk of whether the account ban should be extended.
He said: “When you make a decision that affects the public realm, you need to act with great caution. You shouldn’t throw your weight about.”
The possibility of a return to social media comes amid intense speculation that Mr Trump will launch a bid for the US Presidency in 2024.
04:49 PM
Taxpayer to receive windfall from £88m Secret Cinema sale
The taxpayer is expected to receive a windfall from the sale of Secret Cinema, an immersive entertainment company, to US theatre ticketing platform TodayTix Group.
Secret Cinema, which is part-owned by the Government after receiving a Covid venture capital fund, is fetching £88m, the Financial Times reported.
The London-based firm specialises in immersive cinema and TV screenings, where the audience interacts with actors playing characters from the show. Its events cost $10m (£8.9m).
First stop: Contraxia! Join the locals for the greatest night out in the galaxy…
Head to the Neon Lotus for a night of cosmic drinks, dance-offs in space and a fierce drag queen!
📷Luke Dyson#RiseUpRavagers #SecretCinema #GuardiansOfTheGalaxy pic.twitter.com/5OwrTJAHp9— Secret Cinema (@secretcinema) September 21, 2022
04:26 PM
Turkey cuts rate for second month
Turkey's troubled lira plunged new lows after the central bank cut its policy rate for the second straight month despite annual inflation reaching 80pc and still edging higher.
The central bank lowered its benchmark rate to 12pc from 13pc and blamed skyrocketing consumer prices on external factors such as the global jump in the cost of energy and food caused by Russia's invasion of Ukraine.
The decision highlights Turkish policymakers' strong focus on economic growth nine months before a general election that polls show President Recep Tayyip Erdogan is on track to lose.
Turkey has gone the opposite direction of most other central banks worldwide which are raising rates to combat cost of living crises.
04:13 PM
Handing over
That's all from me for today – thanks for following! Giulia Bottaro will take over from here.
03:58 PM
TfL chief nicknamed ‘Train Daddy’ quits as network struggles with strikes
In related news, the chief executive of Transport for London (TfL) has quit after just over two years in charge, leaving as the network struggles with striking workers and shortfalls in its budget that have left it reliant on bailouts.
Lucy Burton reports:
Andy Byford, who was dubbed the “Train Daddy” by New Yorkers after he transformed the city's subway, announced his departure hours after City Hall said it would lend TfL up to £500m to help shore up its budget and avoid service cuts.
British-born Mr Byford, who started out on the underground as a graduate trainee in the Eighties, will return to the US where he lived prior to taking the TfL job.
Fresh from running New York’s subway, Mr Byford returned to Britain to run TfL at the height of the Covid crisis in June 2020, when the transport network was facing an existential crisis.
The transport body has been reliant on taxpayer cash since the pandemic, with TfL securing around £6bn in government funding as passenger numbers struggled to recover.
Late last month, the Department of Transport announced a long-term funding deal that will secure operations until March 2024.
03:29 PM
When are the rail strikes and who's affected?
The RMT has announced fresh strike action affecting 40,000 workers at Network Rail and 15 train operators on October 8.
But it's only the latest in a wave of new industrial action promising misery for commuters next month.
Here's a guide to the previously-announced walkouts on Britain's railways:
October train strikes: latest information and which operators are affected
03:09 PM
Lord Vaizey joins cryptocurrency business which poses ‘significant risk’ to consumers
Lord Vaizey has joined Binance, a cryptocurrency exchange described by the City regulator as posing a “significant risk” to British consumers, writes Gareth Corfield.
The former digital and culture minister has accepted a position on Binance’s new advisory board, an 11-strong body with members from around the world.
Earlier this year, the Financial Conduct Authority (FCA) said Binance’s offer of “complex and high-risk financial products” posed a “significant risk to consumers” in the UK.
Lord Vaizey said his advisory role “won’t involve me lobbying the FCA to regulate”, adding that lobbying for his former ministerial department “hadn’t even come into my head”.
“If I can help and advise [Binance] on what they need to do as a company in order to satisfy the regulator's issues, then I'm happy to do that.”
The politician served as digital and culture minister in David Cameron’s governments during the 2010s. He has 24 second jobs registered with the House of Lords’ transparency register, spanning companies such as Deloitte, charitable lottery business Omaze and investment advice agency TISA.
Read Gareth's full story here
02:49 PM
National Insurance rise to be reversed, Chancellor confirms
Rishi Sunak’s 1.25 percentage point rise in National Insurance will be reversed as part of Liz Truss’s plans to slash taxes.
The increase, which came into force in April, will be scrapped from November 6, Kwasi Kwarteng confirmed.
Kwasi Kwarteng also said the Government will cancel the Health and Social Care Levy, due to come into force in April 2023, and scrap a planned increase to dividend tax rates.
I can confirm that this year’s 1.25% point rise in National Insurance will be reversed on 6th November.
Its replacement - the Health and Social Care Levy planned for April 23 - will be cancelled.
A tax cut for workers. More cash for businesses to invest, employ and grow. pic.twitter.com/qssnBaNywK— Kwasi Kwarteng (@KwasiKwarteng) September 22, 2022
02:38 PM
Wall Street mixed at open after Fed sell-off
Meanwhile, across the Atlantic, it's a mixed start to trading on Wall Street.
Stocks were subdued at the opening bell as investors assessed the Federal Reserve's latest big interest rate rise to tackle inflation and its impact on economic growth.
The S&P 500 dipped 0.2pc, while the Dow Jones was flat. The tech-heavy Nasdaq dropped 0.5pc.
02:26 PM
Bank of England to sell £8.7bn of government bonds in fourth quarter
Another point from today's MPC meeting:
The Bank of England said it will sell around £8.7bn of government bonds in the final quarter of 2022, becoming the first major central bank to begin active sales.
The MPC voted unanimously to reduce its £838bn of gilt holdings by £80bn over the coming year, broadly in line with plans announced last month.
The reduction will come through a mixture of maturing gilts and gilt auctions. There will be 15 auctions from October to the end of the year with a planned size of £580m pounds each, for gilts across a range of maturities.
02:08 PM
My commitment to BoE's independence is absolute, says Chancellor
The Government has an "absolute" commitment to both the Bank of England's independence and its 2pc inflation target, the Chancellor has told Andrew Bailey.
In a letter today, Kwasi Kwarteng told the Bank Governor he had his full support, adding: "I know and expect that the MPC will continue to take the forceful action necessary."
It comes after Prime Minister Liz Truss suggested during her campaign that she would review the Bank's mandate – a suggestion the new Chancellor has since been forced to quash.
01:50 PM
Central banks step up fight against inflation
While our focus is clearly on the Bank of England, it's not the only central bank to have delivered a big rise in interest rates.
After the Federal Reserve's third consecutive 75 basis-point increase last night, a string of other countries have followed suit.
Norway, the first big developed economy to kick off interest rate rises last year, today mirrored the BoE by raising rates by 50 basis points to 2.25pc. But the central bank said future hikes would be more "gradual".
Meanwhile, the Swiss National Bank raised its policy rate on Thursday by another 75 basis points from minus 0.25pc to 0.5pc, putting an end to the negative rates experiment in Europe.
Japan is the sole remaining policy dove. The Bank of Japan today maintained its ultra-low interest rates and policy guidance.
01:26 PM
What you need to do now to cut your mortgage costs
With interest rates now at their highest since 2008, millions of borrowers are facing a costly jump in their monthly mortgage payments.
Rachel Mortimer has the lowdown on what you can do to keep costs in check. Read her full story here.
01:13 PM
Traders bet on slower pace of rate rises
Markets have eased their bets on future interest rate rises slightly following the Bank's cautious approach today.
Traders no longer think rates will reach 3.75pc by the end of the year. However, they still think rates will peak just under 5pc next year.
...via @samueltombs - after that rate decision financial markets signalling slightly slower rate of interest hikes from Bank of England this year - but market still sees them getting to around 4.8% by next May/June pic.twitter.com/mrhlNIPLeP
— Ben Chu (@BenChu_) September 22, 2022
01:02 PM
Will the Bank go bigger in November?
The MPC's decision to opt for a more cautious 50 basis-point rise today is fuelling speculation it could act more aggressively in November.
Sanjay Raja, senior UK economist at Deutsche Bank Research, says:
The Bank of England delivered in line with expectations.
The door is now open for a bigger hike in November, with the MPC explicitly acknowledging that should their updated outlook points to more persistent inflationary pressures, including from stronger demand, the Bank stands ready to respond forcefully.
12:58 PM
FTSE 100 falls as recession fears grow
The FTSE 100 has slid into the red after the Bank of England's latest update fuelled recession fears.
The Bank expects GDP will fall 0.1pc in the current quarter – partly due to the extra public holiday for Queen Elizabeth's funeral – meaning Britain is already in a technical recession.
A seventh consecutive interest rate rise to combat soaring inflation didn't help much, either.
The blue-chip index fell as much as 0.5pc, with rate-sensitive HSBC and healthcare stocks AstraZeneca and GSK leading declines.
12:54 PM
Former MPC rate-setter takes aim at newcomer Swati Dhingra
A former Bank of England rate-setter has taken aim at the newcomer on the MPC, suggesting she may not have "got her head around" surging inflation.
Andrew Sentance, a former MPC members who's not shy in his criticism these days, said it was disappointing that Swati Dhingra voted for just a 25 basis-point rise at her first meeting.
Good to see 3 #MPC members - Haskel, Mann and Ramsden - voting for a 0.75 percent interest rate rise. Disappointing to see the newest #MPC member Swati Dhingra voting for a meagre 0.25 percent rise. Not sure she has got her head around the severity of the current inflation surge.
— Andrew Sentance (@asentance) September 22, 2022
12:50 PM
BCC: Tomorrow's mini Budget is critical moment
David Bharier, head of research at the British Chambers of Commerce, says the Bank of England and Government could be pulling in opposite directions.
The interest rate is a very blunt instrument to control inflationary pressures that are largely driven by rocketing energy costs and global supply chain disruption.
The Bank’s decision to raise rates will increase the risk for individuals and organisations exposed to debt burdens and rising mortgage costs – dampening consumer confidence.
Recent energy price cap announcements will have provided some comfort to businesses and households alike and should place downward pressure on the rate of inflation.
Friday’s fiscal statement by the Chancellor is now a critical moment. He has the unenviable task of shoring up the economy whilst avoiding additional inflationary stimulus.
The Bank, looking to dampen consumer demand, and Government, looking to increase growth, could now be pulling in opposite directions.
What businesses will want to see is a plan to address the short-term drivers of inflation as well as a long-term strategy to promote investment that gives them confidence for the future and counteracts the recessionary pull of rising interest rates.
12:47 PM
More reaction: UK still facing aggressive interest rate rises
Seema Shah, chief global strategist at Principal Global Investors, says emergency energy bills support could spark more inflation pain further down the line.
Although the Bank of England did not raise rates by as much as anticipated, the UK is still facing into an aggressive rate hiking cycle.
Like the other major European economies, the UK is not as well positioned as the US to weather the ensuing economic aftershocks of rapid rate-hiking.
Although banks have yet to see much stress on their loan books and Truss’s government has acted rapidly to cap energy bills, it is the lag effect on the economy which is the greater challenge.
With inflation being even higher here and energy bills spiralling to point of being unaffordable for a significant proportion of the population, government support is entirely focused on solving the immediate problems at hand, via enormous borrowing which creates a potentially larger problem further down the line.
12:41 PM
Reaction: MPC in 'disarray'
Analyst Michael Hewson has an even more scathing response to the MPC split, saying the committee is in disarray.
The MPC is in disarray - split across the board.
Certainly not a good look when so many questions are being asked about their competence.— Michael Hewson 🇬🇧 (@mhewson_CMC) September 22, 2022
12:40 PM
Reaction: No-one knows what the right response is
FX analyst Viraj Patel points to the three-way split in the MPC's voting, saying it shows no-one knows what the correct approach is.
⚠️ BoE hikes 50bps. But look at the split. 9 officials. 5 voted for 50bps. 3 for 75bps & 1 for 25bps. Sums up UK economic risks in a nutshell... nobody knows what the right policy response is. Gilt sales begin. Given today... 5% BoE rates priced in markets for '23 too high $GBP pic.twitter.com/rfQ60pT7FY
— Viraj Patel (@VPatelFX) September 22, 2022
12:38 PM
IoD: Can recession be avoided?
Kitty Ussher, chief economist of the Institute of Directors, says the key question is whether inflation can be tamed without going into recession.
Expectations of future inflation are still not where the Bank of England would like them to be. Many of our members think that the peak will come next year, and so may price accordingly, running the risk that inflationary expectations become self-fulfilling.
Combined with imminent announcements of a government stimulus package, plus some remaining – albeit smaller – upward pressure on CPI from household energy prices next month, the Bank of England has made the judgement that interest rates need to continue rising.
However, the MPC also pointed to recent data showing the UK economy flatlining over the summer, and early signs that labour vacancies may have peaked.
This explains why most MPC members chose to raise rates at the lower end of market expectations rather than follow the US and eurozone and go for a higher 0.75 percentage point rise.
The key question for the months ahead is whether inflation can be tamed without entering recession. With a government determined to go for growth in a rising interest rate environment, that’s still all to play for.
12:36 PM
Capital Economics: Mini Budget to drive interest rates to 4pc
Paul Dales, chief UK economist at Capital Economics, says the BoE will have to keep raising rates even further.
The 50 basis point rise in interest rates today was partly driven by the government’s extraordinary fiscal plans that are expected to be confirmed in a not-so-mini-budget tomorrow.
It’s this, the tight labour market and sticky inflation expectations that we think will force the Bank to raise rates to a peak of 4[c and prevent it from pivoting to rate cuts until 2024.
The rate hike, which was in line with the consensus and our forecast, was the seventh rise in as many meetings and was the second 50bps rise in a row.
It was partly driven by the new government’s huge fiscal support, which includes freezing utility prices and some tax cuts that are expected to be announced in tomorrow’s fiscal statement.
While the Bank said that the Energy Price Guarantee “will lower and bring forward the expected peak of CPI inflation” it also said it means that “household spending is likely to be less weak than projected…[and] all else equal…this would add to inflationary pressures in the medium term.”
12:27 PM
Bank warns Liz Truss over inflation-fuelling policies
There's a word of warning in the MPC's release to Prime Minster Liz Truss and Chancellor Kwasi Kwarteng.
There are concerns tomorrow's tax-slashing emergency Budget could fuel inflation.
The @bankofengland MPC fire a warning shot to Truss and Kwarteng on the inflationary aspects of tomorrows fiscal statement.... pic.twitter.com/TbCwXY0uTG
— George Dibb (@GeorgeDibb) September 22, 2022
12:24 PM
Banks slip and retailers gain ground
The Bank of England's modest interest rate rise has sparked a similarly muted response on the markets.
There is some movement on the FTSE 100, however, with rate-sensitive banking stocks turning negative. NatWest and HSBC dropped 0.8pc and 0.7pc respectively, while Barclays and Lloyds trimmed gains.
Retailers including Marks & Spencer and Next both pushed higher.
12:15 PM
UK already in recession, says BoE
Here's a key point from the MPC's release - the Bank reckons Britain is already in recession.
Official data show the economy shrank 0.1pc in the three months to June. Bank policymakers now believe the economy continued to shrink by 0.1pc in the quarter to September, which would push the UK into the mildest of technical recessions – defined as two straight quarters of economic decline.
12:10 PM
Interest rates at highest since 2008
Here's more from Szu Ping Chan, who was at the Bank's lock-in this morning:
The Bank of England has raised interest rates by 0.5 percentage points to 2.25pc as a three-way split emerged over how high rates must rise to keep a lid on inflation.
Policymakers warned the UK was already in recession amid weak economic activity in the three months to September. Shops shut their doors and people stayed at home for Queen Elizabeth II's state funeral.
The Monetary Policy Committee (MPC) that sets interest rates also voted unanimously to start selling the Bank's £840bn stockpile of government bonds that was increased massively during the pandemic.
Prime Minister Liz Truss's move to cap average annual energy costs at £2,500 over the next two years meant inflation would now peak just below 11pc in October, down from a previous prediction of 13.3pc.
Policymakers said government action would "limit significantly" further rises in inflation, with price rises also less volatile in the near term. Peak inflation is now expected to be around five percentage points lower than if no action was taken, the Bank said.
The MPC added that a multi-billion pound package of tax cuts, which will be announced by Chancellor Kwasi Kwarteng on Friday, would alter the economic outlook in a "material" way. It is expected to boost growth but add billions of pounds to public borrowing.
Policymakers added that while the energy price guarantee would reduce the risk of high inflation leading to higher salary demands, it signalled that interest rates may remain higher for longer because households had more money to spend on discretionary items, adding to "inflationary pressures in the medium term".
Prices, as measured by the consumer prices index (CPI), rose by 9.9pc in the year to August.
The MPC's interest rate decision, which was delayed a week by the death of Queen Elizabeth II, represents the seventh increase in a row and takes Bank Rate to its highest level since 2008.
12:09 PM
Three-way split in MPC
Here's a surprise – a three-way split has emerged in the MPC over how far rates must rise to keep a lid on inflation.
Our economics editor Szu Ping Chan explains:
Five members, including governor Andrew Bailey, voted to raise rates by 0.5 percentage points to 2.25pc, while three others voted to tighten policy by 0.75 percentage points to reduce the risk of a "more extended and costly tightening cycle later" if people expected price rises to persist.
Swati Dhingra, who joined the MPC in August, voted to raise interest rates by 0.25 percentage points, citing signs of weakening economic activity that suggested fewer people would ask for big pay rises amid the greater economic uncertainty. This is the first three-way split on interest rates since 2011.
12:07 PM
BoE reduces inflation forecast
The MPC now says inflation will peak at 11pc later in the year.
That's down from 13pc, so it's welcome news for consumers. But it's not a significant reduction, so there'll still be pressure on policy makers to keep raising rates.
The revision comes after Prime Minister Liz Truss announced a cap on energy bills for households and businesses – a move that's expected to limit inflation.
12:03 PM
Pound wipes out gains after dovish move
Sterling is close to wiping out its earlier gains against the dollar after the Bank of England opted for a modest 50 basis-point increase in rates.
The pound is trading at around $1.1286.
12:02 PM
Interest rates rise to 2.25pc
The verdict is in and the Bank of England is playing it cautious.
It's raised interest rates by 50 basis points to 2.25pc.
11:52 AM
BoE to decide on interest rates
Less than 10 minutes to go until the Bank of England announces its decision on interest rates.
Will it opt for a 50 basis-point rise or will it follow the Federal Reserve with a more aggressive 75bp? Stay tuned...
11:42 AM
Jupiter to sell £100m Starling stake at valuation discount
Asset manager Jupiter is said to be finalising the sale of its £100m stake in Starling Bank at a sharp discount to the most recent valuation.
The FTSE 250 firm is in advanced talks with several investors in the digital bank about offloading a roughly 7pc shareholding, Sky News.
The discussions are said to have settled on a revised valuation of £1.5bn – a sharp discount to Starling's most recent valuation of £2.5bn.
Jupiter is expected to generate just over £100m from the sale, which may not ultimately comprise its entire shareholding.
11:30 AM
Pound rises ahead of Bank of England decision
Sterling has pushed higher ahead of the Bank of England's interest rate decision at midday.
The pound gained ground against the dollar, which sold off across the board after Japan stepped in to prop up the yen.
Investors are expecting the Bank of England to raise rates by 50 basis points to 2.25pc, though some think it could opt for a more aggressive 75 basis-point rise.
The US Federal Reserve last night raised rates by 75 basis points, sparking a fall in the pound to its lowest since 1985.
It was up 0.3pc against the dollar this morning to $1.13. Against the euro it was little changed at 87.26p.
11:14 AM
Lidl raises entry-level pay in £40m boost
Lidl is investing £39.5m to increase hourly wages for more than 20,000 store and warehouse workers.
The German discounter will increase entry-level pay to £10.90 per hour from £10.10 outside London and from £11.30 to £11.95 within the M25.
Some employees will earn up to £12 and £13 respectively, it said.
11:07 AM
BT will 'do whatever it takes' to protect 999 services
BT has said it will do "whatever it takes" to protect 999 services after unions announced a fresh wave of strikes.
The Communication Workers Union last night announced four strikes in October after two previous rounds of industrial action failed to secure pay increases.
While the previous walkouts excluded staff who handle 999 calls, the new ones won't.
BT said it was "profoundly disappointed" that unions had opted for a "reckless course of action", but said it would redeploy staff to the most important priorities.
It added that it made the best pay away it could in April and has held discussions with the CWU.
10:56 AM
Uniper inks deal to keep UK coal-powered plant open
Uniper has signed a deal with National Grid to keep a unit at one of its UK coal plants open for longer than planned to help keep the lights on this winter.
One of four units at the Ratcliffe-on-Soar power station near Nottingham was due to shut permanently this month, but will now be available during the coming winter and possibly beyond. The other three units also remain available.
The UK has been building up a reserve of old coal-fired stations to help shore up supplies this winter. Similar deals have already been reached with Drax and EDF.
The latest deal comes a day after the German Government confirmed a deal to nationalise Uniper, which was pushed to the brink of collapse by surging wholesale prices and Putin's gas cuts.
10:37 AM
Turkish lira slumps to record low ahead of central bank meeting
The Turkish lira has tumbled to a record low ahead of the central bank's meeting today, with some analysts expecting another rate cut.
Turkey's counter-intuitive policy of cutting interest rates to tackle inflation has baffled economists and sparked a collapse in its currency.
In August, the central bank cut interest rates to 13pc – a move that wrong-footed analysts.
The lira fell as much as 0.3pc to 18.38 against the dollar, its lowest on record.
10:24 AM
Inflation added £40m to prices this year, says PZ Cussons
Imperial Leather and Carex maker PZ Cussons has reported a drop in annual profits as it said cost inflation and declining consumer confidence impacted its performance.
The consumer goods giant posted pre-tax profits of £66.6m for the year to the end of May 31, a 2.9pc drop from last year. However, profits were ahead of market expectations.
It also saw its revenues ease back from £603m to £593m over the year.
PZ Cussons said cost inflation hit record levels with raw material prices and freight costs spiking, leading to a roughly 11pc – or £40m – increase in the cost of sales compared to the prior year.
However, the group said it was able to offset price rises by pushing through price changes and cost initiatives throughout the year.
10:07 AM
Royal Mail to tear up jobs agreement amid strikes
Royal Mail will tear up agreements over jobs and conditions that were signed when the company was taken private nine years ago in a bid to break an impasse with striking trade unions.
The company said it's informed the Communication Workers Union that it will review or serve notice on a number of historic agreements, which it said were being used to "frustrate transformation".
It said it planned to move to a more modern industrial relations framework.
It came as Royal Mail accused the CWU of blocking "any meaningful discussion" over its plans for change and had not put forward "any viable alternatives" that will fund further pay rises.
The group has proposed that talks should be taken to the Advisory, Conciliation and Arbitration Service in a further attempt to reach a resolution.
Royal Mail has set out plans to overhaul the company as it loses £1m a day due to increased competition and a rapidly declining letter market.
09:45 AM
Daily Mail boss to step down as Lord Rothermere takes control
Daily Mail chief executive Paul Zwillenberg is stepping down from the company as proprietor Lord Rothermere shores up control after a take-private deal earlier this year.
Mr Zwillenberg will step down as chief executive and board director of Daily Mail and General Trust (DMGT) at the end of September after more than six years in the role.
His departure comes after a deal earlier this year that saw the media empire returned to the control of Lord Rothermere, who will now take over as chairman and chief executive.
In a memo to staff, Mr Zwillenberg said: “An inevitable consequence of the strategy we put in place six and a half years ago, if it was successful, was that I would work myself out of a job.
“Now, with our companies all leaders in their respective markets, with great teams in place and exciting opportunities ahead, I have decided that the time is right to step down.”
During his tenure, Mr Zwillenberg oversaw a break-up of DMGT that refocused the business around its best-known tabloid newspaper.
The group sold off assets including financial information provider Euromoney and insurance business RMS, as well as its stake in property website Zoopla.
Its ventures division also invested in online car dealership Cazoo – a deal that handed a windfall to investors and was used to finance part of the take-private deal.
At the same time, DMGT consolidated its presence in news publications, buying up titles including the i newspaper and the New Scientist magazine.
09:37 AM
Aston Martin plunges on debt worry
Aston Martin has extended its decline this morning amid concerns the luxury car brand will have too much debt even after the launch of its recent rights issue.
The FTSE 250 company extended its two-day drop to 16pc, putting it on track for its worst run since June. Shares are down 69pc so far this year.
Analysts at Kepler Cheuvreux said the planned £654m fund raise "resolves short-term concerns but leaves AML with an excessive level of debt given its terrible track record of profitability and free cash flow generation".
09:08 AM
UK lifts fracking ban
The Government has confirmed it's lifting the ban on fracking for shale gas, saying strengthening the UK's energy supply was an "absolute priority".
Business Secretary Jacob Rees-Mogg said all sources of energy needed to be explored, "so it's right that we've lifted the pause to realise any potential sources of domestic gas".
The decision to lift the moratorium, which has been in place since 2019, is expected to lead to over 100 new licences.
09:06 AM
Truss tax cuts will spark ‘unsustainable’ surge in debt, claims IFS
ICYMI – Liz Truss' plan to slash taxes to boost growth is an economic gamble that will put Britain's debt pile on an “unsustainable” path that will add £100bn-a-year to public borrowing, a leading think-tank has warned.
Szu Ping Chan reports:
The Institute for Fiscal Studies (IFS) said a combination of higher spending and tax cuts championed by the Prime Minister would see the national debt balloon, even after the Government stops subsidising household energy bills.
It also suggested that it would be a “miracle” if the UK achieved a parallel increase in growth that ensured the economy grew faster than the debt burden.
Reversing April's 1.25pc increase in National Insurance and cancelling next year's corporation tax rise will add around £30bn to the annual deficit alone, the IFS said.
With debt on an “ever-rising path”, the IFS said future governments were likely to be forced into a renewed period of austerity to control the UK's debt mountain.
09:01 AM
Russian miner Polymetal offers swap for blocked shares
Russian gold miner Polymetal International has paused dividend payouts and is offering a share swap to investors whose holdings have been frozen by sanctions.
Investors holding around 22pc of Polymetal's shares were hit by EU sanctions on Russia's National Settlement Depository clearing house. They will be offered a swap for certificated shares.
While Polymetal and its shareholders, including billionaire Alexander Nesis, haven't been directly targeted by international sanctions, they're still being affected.
The company put dividend payments on hold due to a "significant decline in operating cash flows, challenges in establishing new sales channels and the short-term liquidity headwinds". Shares slumped 9.6pc.
08:50 AM
Pound's slump surpasses Brexit hit
Sterling is languishing at a 37-year low, and its torrid year shows no signs of slowing.
The pound's latest slump has taken its decline so far this year to 17pc, surpassing the 16pc loss it suffered in 2016 following the Brexit vote.
The currency is now on track to its worst year since the financial crisis in 2008, when it plunged 26pc.
08:35 AM
FTSE risers and fallers
The FTSE 100 has started the day firmly on the back foot as markets gear up for a big interest rate rise by the Bank of England.
The blue-chip index dropped as much as 1pc, before paring losses slightly.
The Federal Reserve last night confirmed its third consecutive 75 basis-point rate rise, and economists are expecting a similar move by the BoE today.
Rate-sensitive bank and insurance stocks including HSBC were the biggest drag on the index. JD Sports lost 4pc after it reported a £50m fall in profits in the first half of the year.
Safety firm Halma was one of the few stocks in the green, pushing marginally higher after reiterating its guidance for full-year revenue.
The domestically-focused FTSE 250 slumped 1pc, with Aston Martin dropping 9pc.
08:23 AM
Competition regulator to investigate cloud market
The competition regulator is launching a review into Amazon, Microsoft and Google over their position in the cloud computing market.
The Competition and Markets Authority said it would launch a market study into the three so-called 'hyperscalers', which together account for around 81pc of revenue in the market.
The review will analyse the strength of competition in the market.
The watchdog also said it will examine other digital markets over the next year, including messaging services like WhatsApp, FaceTime and Zoom, as well as connected televisions and smart speakers.
08:17 AM
HSBC to phase out thermal coal
HSBC will stop financing the expansion of thermal coal from its managed funds with immediate effect as it accelerates its climate policy.
Thermal coal, a cheap energy source used widely across Asian markets where many of HSBC's clients are based, is one of the fossil fuels most responsible for harmful emissions.
The lender last year said it would cut exposure to thermal coal financing across all its businesses including asset management by at least 25pc by 2025 and 50pc by 2030, though non-EU or non-OECD-based clients could be funded until a global phase-out by 2040.
In a new 10-point plan, HSBC Asset Management said it would immediately stop investing in listings or primary debt issuance of any company engaged in thermal coal expansion.
08:09 AM
JD Sports profits tumble £50m as supply chain chaos hits trainers
Profits at JD Sports have tumbled £50m as the sportswear giant felt the heat from inflation and supply chain chaos.
The retailer posted pre-tax profits of £383.5m for the first half of the year – down from £439.5m a year ago.
JD said the results were at the top end of its expectations, with the lower profits partially dragged down by supply chain disruption that hit stocks of trainers.
Bosses warned that widespread economic uncertainty, inflationary pressures and industrial action could cause further pain and hurt trading in the second half of the year.
It comes a day after JD said it would pay £5.5m to former boss Peter Cowgill, who stepped down in the wake of a scandal over corporate governance.
Andrew Higginson, non-executive chairman, said that although there has been a "period of transition" for the board, it had not impacted the company's financial performance.
08:01 AM
FTSE 100 slumps at the open
The FTSE 100 has dropped sharply at the open as traders look ahead to the Bank of England's interest rate decision later today.
The blue-chip index tumbled 0.9pc to 7,173 points.
07:56 AM
Hong Kong to scrap hotel quarantine from next month
Hong Kong will scrap its controversial hotel quarantine policy for all arrivals from early October, local media reports.
Taking its cues from China's brutal zero-Covid policy, Hong Kong is one of the few places that still requires travellers from abroad to quarantine on arrival. The measures have been in place for more than two-and-a-half years.
Currently, arrivals must pay for three days in a hotel and follow that with four days of self-monitoring.
The new rules will abolish the need for arrivals from overseas to do quarantine at designated hotels. Residents will be able to go straight home and self-monitor for seven days, according to the reports.
It comes after John Lee, the city's leader, this week said he wanted to keep the city connected with the rest of the world and allow an "orderly opening-up" but did not specify exactly when the quarantine policy would be changed.
Hong Kong residents and businesses have slammed the policy, saying it and other strict Covid rules threaten the city's competitiveness and standing as a global financial centre.
07:51 AM
Credit Suisse considers splitting investment bank in three
Credit Suisse has drawn up plans to split its investment bank in three as the Swiss bank tries to recover from three years of scandals.
Under proposals to the board, the lender is looking to sell profitable units such as its securitised products business to prevent a damaging capital raise, the Financial Times reports.
The proposals could see the investment bank split into three parts: the group's advisory business, which might be spun off at some later point; a so-called 'bad bank' to hold high-risk assets that will be wound down; and the rest of the business.
New chief executive Ulrich Koerner was brought in over the summer with a brief to shake up the bank, which has been left reeling by a spying scandal, the collapse of Archegos, a record trading lawsuit and a string of lawsuits.
07:42 AM
Jacob Rees-Mogg's investment firm put up for sale
Good morning.
The asset management firm set up by Jacob Rees-Mogg is exploring a sale, paving the way for a potential windfall for the Business Secretary.
Somerset Capital, which manages about $5bn (£4.5b) for investment, is in talks over a potential deal as chief executive Dominic Johnson prepares the step down ahead of a potential move into politics.
Mr Rees-Mogg co-founded the firm alongside Mr Johnson in 2007. He no longer has an active role at the company, but remains a shareholder and receives dividends.
Options being considered include a management buyout or merger with another asset manager, the Financial Times reports.
5 things to start your day
1) Former boss of failed Bulb gets new job at investor backed by David Miliband Hayden Wood to tackle energy efficiency crisis on behalf of employer Giant VC
2) Truss tax cuts will spark ‘unsustainable’ surge in debt, claims IFS PM's economic plans to add £100bn-a-year to public borrowing
3) Rees-Mogg battles to save business from a winter of collapse Government lays out unprecedented plan to pay half of companies' energy bills
4) New homes to be built with bars in windows to prevent tall people from falling out Developers attack Housing Department over health and safety drive
5) Big four supermarkets fail to pass on falling fuel prices Costs should have fallen ‘much further’ despite lowest pump price in months, RAC says
What happened overnight
The dollar surged to a fresh two-decade high and Asian stocks hit a two-year low on Thursday as the prospect of US interest rates rising further and faster than expected spooked investors.
The Australian, New Zealand, Canadian and Singapore dollars hit two-year lows. China's yuan hit a two-year low and the yen hovered near a 24-year low as investors awaited a Bank of Japan meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.4pc to its lowest since May 2020. Japan's Nikkei fell one per cent to a two-month low.
Coming up today
Economics: Bank of England interest rate decision (UK), economic bulletin (EU), consumer confidence (UK, EU), jobless claims (US)
Corporate: CVS Group, PZ Cussons (full-year results); Cineworld, JD Sports, Playtech, Polymetal International (interims); Halma (trading update)
