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Price of used Teslas drops £5,000 as electric car interest wanes - latest updates

Elon Musk slashed the price of new Tesla Model 3s this month in a bid to take advantage of US subsidies - Christian Marquardt - Pool/Getty Images
Elon Musk slashed the price of new Tesla Model 3s this month in a bid to take advantage of US subsidies - Christian Marquardt - Pool/Getty Images

Prices of used Teslas have dropped £5,000 in the past three months as falls in petrol and diesel prices contributed to a slowdown in demand for electric vehicles.

Stocks of previously-owned Tesla vehicles have trebled over the last quarter, according to latest figures.

The decline in prices was deepened by Elon Musk's decision to cut £5,500 off the price of a new Model 3, sending prices of used versions plummeting by £1,400 on Auto Trader's website overnight.

The average value of a second-hand electric vehicle across the whole retail market has now fallen for the fifth successive month, dropping 0.9pc to £36,445 between December and January.

Average prices are down 0.8pc compared to the same time a year ago.

Meanwhile, as the price of petrol and diesel returns closer to "normal" levels, the proportion of used electric vehicle advert views on Auto Trader has softened, easing from a share of 6pc of all used car advert views in June 2022, to 4pc in January.

Read the latest updates below.

05:40 PM

US Dept of Justice sues Google over market abuse claims

The US Justice Department filed a lawsuit against Alphabet's Google on Tuesday claiming the company abuses its dominance of the digital advertising business, according to a court document.

"Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies," the government said in its antitrust complaint, reported by Reuters.

The case is the second federal competition law complaint filed against Google, alleging violations of US 'antitrust' law in how the company maintains its market dominance, Reuters reported.

A previous Justice Department lawsuit filed against Google in 2020 focuses on the company's alleged monopoly in search and is scheduled to go to trial in September.

04:45 PM

Amazon workers in Coventry prepare picket lines

Amazon is bracing for its first official strike by UK workers tomorrow. Starting at midnight, staff at the online retail giant's Coventry warehouse will walk out of the online retail giant's Coventry warehouse in protest against a 50p pay rise.

Around 300 Amazon workers were expected to down tools and join picket lines, Matthew Field reports. The GMB union called for a walk-out after balloting members in December.

The union is demanding an increase in pay from £10 to £15 per hour. Amazon has offered in the region of 50p per hour, the union says.

Stuart Richards, a GMB union official for the Midlands, said on Tuesday: "This is a huge step forward for workers who've been ignored and treated like robots."

Taiwo Owatemi, MP for Coventry North West, said: "Coventry Amazon workers are taking on one of the world's most powerful employers, but by standing together alongside residents and supporters around the world, they can make a real difference and win a fair pay rise during the cost of living crisis."

The dispute is not expected to affect deliveries, as the Coventry hub provides stock to other Amazon fulfilment centres, rather than directly to customers.

Amazon said its pay offer represented a pay increase to between £10.50 and £11.45 per hour, depending on location. An Amazon spokesman said: “A tiny proportion of our workforce is involved. In fact, according to the verified figures, only a fraction of 1pc of our UK employees voted in the ballot - and that includes those who voted against industrial action."

04:34 PM

Recession, what recession?

Despite widespread predictions of doom there is reason to be cheerful about the prospect of a European economic recovery, analysts at Deutsche Bank have said.

The bank's chief economist, Mark Wall, said the dark clouds over Europe's economy had brightened slightly after gas stockpiling across the single market.

In a note to clients, the analysts said:

Given the energy crisis, we had expected the euro area to fall into recession in the winter half. We can afford to be more optimistic...

Gas storage is up and gas prices are down. Inflation is falling and uncertainty is declining. As such, we can remove the recession from our 2023 forecast, adjust headline inflation lower and pare back the deficit.

Deutsche said it now expected the eurozone to grow by about 0.5pc year-on-year in 2023, before growing by around 1pc in 2024. While still enduring a period of economic stagnation, the economic forecast was "remarkably resilient performance, all things considered".

04:30 PM

Justin Bieber sells back catalogue for $200m

Justin Bieber has sold his back catalogue for $200m to London-listed music business Hipgnosis, joining a growing list of pop stars selling the rights to their music.

Hipgnosis will take full control of the Canadian singer’s entire portfolio released before 2022, comprising 290 tracks. The deal includes the 28-year-olds past hits Boyfriend, Love Yourself and What Do You Mean?

The deal for Justin Bieber’s catalogue was brokered in part by Scooter Braun, the singer’s manager for 15 years.

In recent years artists have rushed to sell their music portfolios, as investors increasingly look to streaming revenue as an alternative source of income. Bob Dylan and Bruce Springsteen are among the raft of other performers to have brokered deals in recent years.

The Bieber back catalogue acquisition was made by Hipgnosis’s Blackstone-backed songs fund and is one of the group’s largest ever transactions.

04:01 PM

Handing over

That's your lot from me today. Gareth Corfield will guide you through the rest of the day.

03:59 PM

FTSE 100 falls but Senior leads boost to FTSE 250

The FTSE 100 has lost 0.3pc after a grim day of economic statistics, with government borrowing surging and business activity falling.

The blue-chip index has been dragged down by drugsmakers AstraZeneca and GSK, down 2.6pc and 1.5pc respectively, as well as miner Glencore, down 2.5pc, and oil giants Shell and BP, which lost 0.7pc and 1.5pc each.

However, the FTSE 250 has risen 0.5pc, with engineering company Senior making the biggest gains, up 9.2pc.

The firm - which supplies the likes of Airbus, Boeing and Rolls-Royce - reported that its adjusted pre-tax profits are expected to be above estimates.

Shares in easyJet also helped to boost the market, ahead of a trading update tomorrow.

03:46 PM

New 'fire and rehire' rules will not stop another P&O scandal, says union

The TUC union has warned that new rules from ministers designed to tackle "fire and rehire" practices are "not going to stop another P&O-style scandal".

The Government has said companies which sack workers who do not agree to accept worse working terms face compensation payments as part of a crackdown on rogue practices.

Business Secretary Grant Shapps announced the plans today for a statutory code of practice for employers.

The announcement is partly in response to the actions of P&O Ferries, which last year sacked 786 seafarers without due consultation.

P&O was widely condemned for not providing staff with notice for the sackings, but an investigation by the insolvency service found their actions were not illegal.

TUC general secretary Paul Nowak said the new rules from Government were a "reheated, repeated announcement".

P&O workers in Dover were told in a video call that they would be losing their jobs that day, and would be replaced with agency workers, prompting a wave of protests - Geoff Pugh
P&O workers in Dover were told in a video call that they would be losing their jobs that day, and would be replaced with agency workers, prompting a wave of protests - Geoff Pugh

03:32 PM

DeepMind to close offices and cut UK staff

Google owner Alphabet's research lab DeepMind will close its Canadian offices and lay off some operational staff in the UK as part of the tech giant's cost cutting drive.

The artificial intelligence unit, based in London, has decided to close down its site in Edmonton, Alberta, according to an internal memo sent this week and seen by Bloomberg.

The Edmonton office was the only DeepMind site not housed within a Google-managed office.

Impacted engineers and researchers will be offered the option to relocate to other offices but those in various organisational infrastructure roles will be laid off.

Some UK staff in similar back-office positions will also be made redundant, according to the memo.

Alphabet said on Friday that it would cut about 12,000 jobs, the latest tech giant to retrench after years of growth and hiring.

Google-owner Alphabet is closing one of its DeepMind offices and cutting staff - CJ GUNTHER/EPA-EFE/Shutterstock
Google-owner Alphabet is closing one of its DeepMind offices and cutting staff - CJ GUNTHER/EPA-EFE/Shutterstock

03:17 PM

US business activity shrinks for seventh consecutive month

US business activity has contracted for a seventh month, although at a more moderate pace, latest data show.

The so-called flash composite purchasing managers index for January rose 1.6 points to 46.6, according to S&P Global. Readings below 50 indicate falling activity.

The improvement in the measure of output at factories and services providers points to a slower rate of deterioration.

However, the gauge of input prices climbed for the first time since May, indicating businesses are still contending with rising costs for labour and some materials.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

Companies cite concerns over the ongoing impact of high prices and rising interest rates, as well as lingering worries over supply and labour shortages.

The worry is that, not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of input cost inflation has accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks.

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03:02 PM

Eurostar 'forced to leave seats empty to avoid queues'

Eurostar is being forced to leave hundreds of seats empty on trains to and from London to avoid long queues at stations, the cross-Channel train operator said.

Chief executive Gwendoline Cazenave said a reduction in the number of border officials is driving an almost 30pc increase in the time it takes to process passengers departing from London St Pancras compared with before the pandemic and Brexit.

The post-Brexit requirement to stamp UK passports for outbound travel is also contributing to the delay.

The issues are forcing Eurostar to cap the proportion of seats on many services to prevent unmanageable queues and delays.

The first departures of the day connecting London with Paris and Brussels - which have a capacity for 900 passengers - are running with 350 seats unsold.

Eurostar chief executive Gwendoline Cazenave - KENZO TRIBOUILLARD/AFP via Getty Images
Eurostar chief executive Gwendoline Cazenave - KENZO TRIBOUILLARD/AFP via Getty Images

02:45 PM

Royal Mail chief mislead us about putting parcels ahead of post, MPs claim

The Royal Mail's chief executive has been recalled to give evidence to a parliamentary committee after suggestions he misled MPs.

Doubts have been raised about the accuracy of Simon Thompson's comments to the Business, Energy and Industrial Strategy Committee after its members received hundreds of emails in the wake of his appearance.

Mr Thompson denied that Royal Mail used the Postal Digital Assistant system to track workers' productivity and urge staff to work faster.

He also said that Royal Mail policy prioritises parcels, potentially compromising the delivery of the universal service obligation (USO) that guarantees a minimum mail service.

However, these claims were disputed by emails to the committee, which is also seeking clarity on statements made by Mr Thompson on employee sick pay arrangements. Committee chairman Darren Jones said:

Since Mr Thompson appeared before the Committee last week we've had significant quantities of evidence that suggest his answers may not have been wholly correct.

Giving inaccurate information to a Parliamentary Committee, whether by accident or otherwise, is taken very seriously.

We must get to the bottom of these inconsistencies on behalf of Parliament and intend to do so during this additional hearing.

02:36 PM

Wall Street drops at the open

Markets on Wall Street have fallen into the red at the open after a slew of poor corporate results.

The Dow Jones Industrial Average has fallen 0.5pc to 33,485, the S&P 500 has dropped 0.4pc and the tech-focused Nasdaq Composite is down 0.4pc to 11,315.

It comes after reports from bellwethers including 3M and GE were below par.

01:53 PM

Musk to take stand again in trial over Tesla funding tweet

Elon Musk will take the stand again today in San Francisco after telling a jury on Monday that he had locked up financial support in 2018 to take his electric car maker Tesla private.

Mr Musk is alleged to have defrauded investors by tweeting on August 7, 2018, that he had "funding secured" to take Tesla private at $420 per share, and that "investor support is confirmed".

Mr Musk, who denies the claims, told a jury that "with SpaceX stock alone, I felt funding was secured" for the buyout, referring to the aerospace company where he is also chief executive.

He said later he chose not to take Tesla private due to a lack of support from some investors and a wish to avoid a lengthy process.

The trial tests Mr Musk's penchant for taking to Twitter to air his sometimes irreverent views, and when the world's second-richest person can be held liable for crossing a line.

A sketch shows Mr Musk being questioned by his attorney Alex Spiro during the securities-fraud trial at the federal court in San Francisco - REUTERS/Vicki Behringer
A sketch shows Mr Musk being questioned by his attorney Alex Spiro during the securities-fraud trial at the federal court in San Francisco - REUTERS/Vicki Behringer

01:36 PM

Oil prices continue rally

Oil has edged higher even as traders await fresh signals on the state of Chinese crude demand after the nation ditched Covid restrictions.

International benchmark brent crude oil has risen 0.3pc towards $89 a barrel, while US-produced West Texas Intermediate is up 0.4pc and nearing $82.

Oil has been driven higher over the past two weeks on expectations that the swift pivot in the world's largest crude importer may spur daily consumption to hit a record in 2023.

Traders are also tracking the impact of tighter curbs on Russian energy flows imposed by the European Union and US following the invasion of Ukraine.

01:18 PM

Bosses to leave Camelot after losing National Lottery licence

Camelot is to part ways with its chief executive and chairman when it is taken over by rival Allwyn Group months after losing the National Lottery licence.

Sir Hugh Robertson - the chair of the British Olympic Association and a former Tory sports minister - will step down as chairman, a role that he has held since 2018.

Nigel Railton leaves after six years in the top job and more than two decades with the business.

The shake-up at the top comes as Allwyn is expected to complete the acquisition of Camelot next month.

The two companies announced a deal in November which ended months of legal dispute.

Camelot had held the National Lottery licence since 1994 but will lose it to Allwyn from February next year.

Sir Hugh Robertson will step down as chairman of Camelot - Yui Mok/PA Wire
Sir Hugh Robertson will step down as chairman of Camelot - Yui Mok/PA Wire

01:03 PM

Premium Bonds now the 'best buy' savings account

NS&I will increase the Premium Bond prize rate from 3pc to 3.15pc next month in a boost for more than 22 million savers.

Alexa Phillips has the details:

The last time the prize fund rate was this high was in May 2008, nearly 15 years ago.

As a result, Britain's best loved savings account will become a best buy, paying the highest rate of any "easy access" account.

The odds of winning will stay the same, at 24,000 to one, but savers will have more opportunities each month to win prizes worth £50 to £100,000.

Read how the prizes will improve.

12:47 PM

3M to cut 2,500 jobs amid 'macroeconomic challenges'

3M said it plans to cut about 2,500 manufacturing jobs due to persistent macroeconomic challenges as it forecasts profits below Wall Street estimates.

Full-year adjusted earnings will be in the range of $8.50 to $9.00 per share, excluding special items, the industrial and consumer-goods conglomerate said.

The maker of Post-it notes, surgical supplies and touch-screen displays said organic sales could decline as much as 3pc.

Chief Executive Officer Mike Roman said: "We expect macroeconomic challenges to persist in 2023."

The planned job cuts are "a necessary decision to align with adjusted production volumes," he said.

3M has battled with softening demand in key segments as well as mounting risks tied to litigation over allegedly defective combat ear plugs.

It also faces liabilities over contamination caused by so-called forever chemicals, which the company plans to stop producing by the end of 2025.

3M profit forecasts have become in below Wall Street estimates - EUTERS/Nicholas Pfosi
3M profit forecasts have become in below Wall Street estimates - EUTERS/Nicholas Pfosi

12:23 PM

US markets expected to open lower

Wall Street is expected to edge lower at the open as corporate reports from bellwethers including 3M, Johnson & Johnson and GE push earnings season into high gear.

In a week packed with high-profile earnings reports and key economic data, investors will now look to assess the impact of the Federal Reserve's rate-hiking spree.

The central bank is widely expected to raise rates by another quarter of a percentage point next week.

Industrial conglomerate 3M Co fell 2.5pc in pre-market trading, leading the decliners among Dow components in premarket trading, after reporting a fall in quarterly profit.

General Electric slipped 2.6pc as it forecast a lower-than-expected 2023 adjusted profit.

Johnson & Johnson, however, rose 2.2pc after the healthcare giant beat estimates for fourth-quarter profit.

Wall Street's main indexes started the earnings-heavy week on solid ground amid renewed appetite for growth stocks following a battering last year.

Johnson & Johnson - AP Photo/Richard Drew
Johnson & Johnson - AP Photo/Richard Drew

11:59 AM

Britain's biggest sugar producer warns over 28pc drop in production

Adverse weather sent British sugar production tumbling by more than a quarter over the last year.

Sugar beet is grown in East Anglia and the East Midlands by British Sugar, a subsidiary of Primark-owner Associated British Foods.

Sown in the spring to grow through the summer, the harvested crop travels on average 28 miles to one of its four advanced manufacturing plants in Bury St Edmunds, Cantley, Newark and Wissington.

Production for the 2022 to 2023 season fell to 0.74m tons, which was down from 0.9m forecast and a drop of 28pc on the previous season.

Production at Illovo, its South African subsidiary, is expected to be higher than forecast and will be above last year's 1.45 million tons.

Shares in Associated British Foods have fallen by 2pc as the poor performance from its sugar division offset a record week for Primark in the run-up to Christmas.

11:45 AM

Factories curtailing production amid concerns subsidies will be cut, says CBI

British factories are curtailing production at record rates over concern that cuts to government energy subsidies will drive up their costs, an industry survey showed.

Some 62pc of manufacturers were running below their full capacity in the three months to January, up from 46pc in the summer, the Confederation of British Industry said.

It was the highest share of factories operating below their full capabilities since January 2021 and also reflected a global slowdown in manufacturing.

The share of firms warning that weaker orders would constrain their future output also rose to the highest level since April 2021.

Energy-intensive industries are among the hardest hit by the surge in energy prices last year, but the Chancellor has said he will reduce the amount of support the Treasury is giving to cushion manufactures against natural gas and electricity costs.

Tata Motors' Jaguar Land Rover vehicle manufacturing plant in Solihull - Chris Ratcliffe/Bloomberg
Tata Motors' Jaguar Land Rover vehicle manufacturing plant in Solihull - Chris Ratcliffe/Bloomberg

11:29 AM

Avanti West Coast ordered to stop releasing tickets just a few days ahead of travel

Train operator Avanti West Coast has been ordered to stop releasing tickets just a few days ahead of travel.

Rail regulator the Office of Rail and Road (ORR) has warned the company it must submit an improved recovery plan for producing timetables by February 2 or face "formal measures".

Avanti West Coast runs trains on the West Coast Main Line between London Euston and Glasgow Central with branches to Birmingham, North Wales, Liverpool, Manchester and Edinburgh.

Passengers wanting to book tickets for weekend travel this month have only been able to purchase tickets a few days in advance, leading to claims that many people are being denied cheaper tickets.

Weekday tickets have also been released far later than the 12-week booking window normally used by operators.

Avanti West Coast - Nathan Stirk/Getty Images
Avanti West Coast - Nathan Stirk/Getty Images

11:06 AM

Vodafone sells UK headquarters

Vodafone has sold the headquarters it has held for decades in Newbury and will rent just over half of the site's premises as it downsizes and cuts costs.

Iqon Capital agreed to buy the total of seven buildings known as The Connection on behalf of Aljazira Capital for an undisclosed figure, it said in a statement on Tuesday.

Vodafone will vacate three of the buildings, which Iqon said would be modernized as a business campus.

The site consists of about 486,810 square feet (45,226 square meters) of office space set in 38 acres (15 hectares) of grounds.

The sale comes amid major upheaval for Vodafone, which has had operations in Newbury, Berkshire, since its inception in the mid-1980s.

Its share price is hovering around 25-year lows, and the board abruptly ousted chief executive Nick Read in December.

Vodafone will sell is headquarters in Newbury - ATTILA KISBENEDEK/AFP via Getty Images
Vodafone will sell is headquarters in Newbury - ATTILA KISBENEDEK/AFP via Getty Images

10:51 AM

Pound dips as UK business activity hits two-year low

The pound suffered a sharp fall against the dollar as figures revealed business activity in Britain has fallen to a two-year low.

Preliminary data from the so-called flash purchasing managers index (PMI) showed that the downturn in the UK economy in January was worse than expected.

The monthly survey, compiled by S&P Global and the Chartered Institute of Procurement & Supply (CIPS), showed a reading of 47.8 in January, a drop from the 49 recorded in December and coming in below the market consensus of 48.8. A figure below 50 indicates a contraction.

The pound subsequently dropped as much as 0.6pc towards $1.23.

Meanwhile, the FTSE 100 also tumbled following the data, with healthcare and commodity stocks leading losses.

The blue-chip index has dropped 0.4pc, with drugmaker AstraZeneca and miner Glencore proving the biggest drags on the index.

10:35 AM

Pubs call for inquiry into energy sector 'profiteering'

Pub owners have called for an inquiry into potential profiteering in the energy sector, saying government support has done little to alleviate the rising costs faced by the sector.

The British Beer and Pub Association (BBPA) has written to the chairs of the Treasury and Business Select Committees, said it would report countless examples of price hikes and poor practice.

The trade body said the price rises had raised suspicions of profiteering on the back of taxpayers' money after the Government's energy relief schemes had little positive impact.

The BBPA has written to the energy regulator Ofgem which is investigating the claims, but says there is a need for action immediately.

Emma McClarkin, chief executive of the BBPA, said:

The spiralling cost of energy has been our members' number one concern for close to a year now and remains so.

Now, multiple reports of poor practice have compelled us to speak up on behalf of suffering businesses and make this urgent call.

There is no doubt that this is causing businesses to fail – people simply cannot afford to make ends meet and are left with no choice but to shut up shop meaning a community loses its pub or brewery, and the jobs and livelihoods that go with it, for good.

A closed pub - Dominic Lipinski/PA Wire
A closed pub - Dominic Lipinski/PA Wire

10:24 AM

Prices prices drop despite cold snap

European natural gas prices have dropped with fuller-than-normal stockpiles protecting against any supply curbs, while the demand outlook eased with an icy blast forecast to end soon.

Benchmark futures fell as much as 11pc, extending Monday's decline.

The cold weather has raised gas usage for heating, but high storage levels and strong deliveries of liquefied natural gas are calming nerves and helping to keep prices in check.

The market could ease further in the coming days with temperatures in northwest Europe turning milder and the warmer weather expected to last through to the first week of February, according to forecaster Maxar Technologies.

10:04 AM

UK economy has 'undeniably a disappointing start to the year'

After releasing data showing the drop in UK business activity, Chris Williamson, the chief business economist at S&P Global Market Intelligence, said:

Weaker than expected purchasing managers index (PMI) numbers in January underscore the risk of the UK slipping into recession.

Industrial disputes, staff shortages, export losses, the rising cost of living and higher interest rates all meant the rate of economic decline gathered pace again at the start of the year.

There were some bright spots in the survey, including improved business expectations for the year ahead and a further cooling of inflationary pressures.

But this is undeniably a disappointing start to the year for the UK, reflecting not just short-term hits to growth such as strike action and the rise in energy costs due to the Ukraine war, but also highlighting the ongoing damage to the economy from longer term structural issues such as labour shortages and trade woes linked to Brexit.

09:54 AM

Business output in UK falls at steepest pace in two years

British companies signalled that output fell at the sharpest pace in two years, according to latest data.

S&P Global's purchasing manger index fell to 47.8 in January, down from 49 in December, which was worse than forecasts of little change from economists.

Any score below 50 is considered a contraction for the economy.

Services fell sharply, although the pace of the downturn in manufacturing eased.

Rhys Herbert, senior economist at Lloyds Bank, said:

Another month of contraction in the headline figure might surprise given a more upbeat sentiment among markets in recent weeks.

Inflation is falling in the US and as a result the pace of Federal Reserve interest rate rises is now slowing.

As that development primarily reflects waning international inflationary pressures, it is a promising sign that the UK may not be far behind.

The headline figure does hide how manufacturing faces tougher trading conditions than services.

But both sectors will have felt the pressure from strike action this month.

The recent scale of this is one reflection of the domestic inflationary pressures the economy still faces in 2023, not least from a tight labour market.

09:35 AM

British economy contracts, says key economic data

The British economy continued to shrink this month, with the services sector contracting more than expected by economists.

S&P Global's flash Purchasing Managers' Index gave a reading of 48 for the UK services sector in January, down from forecasts of 49.5. A reading below 50 indicates a contraction.

Manufacturing suffered a steeper decline, down to 46.7, although this was better than the 45.5 forecast by economists.

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09:27 AM

Eurozone economy unexpectedly returns to growth

The private-sector economy in the euro area unexpectedly returned to growth at the start of 2023, suggestion the region may be set for a soft economic landing.

S&P Global's flash Purchasing Managers' Index rose to 50.2 in January, better than the 49.8 reading predicted in a Bloomberg survey and the first time since June that the gauge was above the 50 threshold that separates expansion from contraction.

A variety of factors including slowing inflation, a warmer-than-usual winter in energy-strapped Europe and an easing of supply-chain constraints are fanning optimism in the 20-member currency zone.

Chris Williamson, chief business economist at S&P Global Market Intelligence said that while the steadying of the economy adds to evidence the region might escape a recession, "the region is by no means out of the woods yet".

He said: "Demand continues to fall — merely dropping at a reduced rate — and an upturn in the rate of inflation of selling prices for both goods and services will add encouragement to the hawks to push for further monetary policy tightening."

The European Central Bank has already increased interest rates by 250 basis points and is set for another half-point hike next week.

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09:21 AM

Mini-Budget showed 'importance of macro-economic credibility' says Bank chief

A member of the Bank of England's financial policy committee has taken a swipe at the Liz Truss government after the chaos caused in the pensions market following the mini-Budget.

Sarah Breeden is speaking virtually at a conference for the Institute for Law and Finance taking place in Germany.

She said the "importance of the credibility of the macro-economic" policies became "pretty clear pretty quickly" following the events in October, when Kwasi Kwarteng spooked markets with heavy borrowing to fund tax cuts.

Ms Breeden said when macro-economic credibility is "called into question" it becomes clear "pretty quickly" how important that credibility is.

08:59 AM

Chancellor will be able to cut taxes at next election, say economists

There are some reasons to be positive after December's worse-than-expected public finances figures, according to economists.

Ruth Gregory, senior UK economist at Capital Economics, said:

There are three reasons why the data aren't quite as bad as they initially appear.

First, the Office for National Statistics (ONS) said that most of the surprise in borrowing relative to the OBR's forecast was due to the transfer of student loans to the government being bigger than expected.

Second, the more resilient economy generated higher tax revenues. Total tax receipts in December, at £74.6bn, were higher than last December's £70.6bn.

Third, the full-year estimate for the 2021/22 fiscal year was nudged down a touch from £125.4bn to £123.4bn, while borrowing in the first eight months of the current 2022/23 fiscal year was revised down by £4.6bn.

So while December's worse-than-expected public finances figures further limits the chance of big giveaways in the Budget on 15th March, we suspect that by March 2024 borrowing will be lower than projected and the Chancellor will be in a position to cut taxes/raise spending ahead of the next general election.

08:49 AM

Public finances likely to be 'bolstered in short term', says PwC

Divya Sridhar, an economist at PwC, points out that the cost of servicing government debt was more than twice that in the previous month at £17.3bn. She said:

Falling national debt was one of the five priorities set out by Rishi Sunak at the start of the year.

The OBR expects net government debt (including Bank of England) as a proportion of GDP to rise by 5 percentage points over the next year.

However, slowing inflation, reduced energy bills support and indications that there will be no immediate tax cuts in the Spring Budget are all likely to bolster public finances in the short term.

08:43 AM

FTSE 100 declines amid fall in pharmaceutical stocks

The FTSE 100 has slipped into the red, as losses in pharmaceutical companies' stocks weighed on the index.

The blue chip index has fallen 0.4pc to 7,751, with investors awaiting data on activity for British businesses, out this morning, that will offer clues on the state of the economy.

The domestically-inclined FTSE 250 midcap index is up 0.1pc to 19,812.

Early losses in drugmaker AstraZeneca and GSK weighed on the FTSE 100, with both the stocks dropping 2.2pc and 0.8pc, respectively.

Oil majors BP and Shell also added to losses, falling between 0.4pc and 0.8pc.

Investors will be on the lookout for January business activity data due at 9.30am, a crucial pit stop in gauging the state of the economy before the Bank of England's decision on interest rates next week.

Script

08:30 AM

Saga shares rise as profits on track

Saga has said it is on track to report underlying pre-tax profits between £20m and £30m this year, after the over-50s specialist confirmed it was in to sell the underwriting arm of its insurance business.

The holiday company said revenues are expected to be between 40pc and 50pc ahead of last year thanks to a rebound in demand for cruise trips and holidays.

Its shares have risen 3.3pc in early trading.

Saga's Spirit Of Discovery cruise ship - Mark Cuthbert/UK Press via Getty Images
Saga's Spirit Of Discovery cruise ship - Mark Cuthbert/UK Press via Getty Images

08:02 AM

Markets rise as Government debt surges

The markets have reacted positively to Government debt figures, showing borrowing would have been lower than OBR predictions without energy support and rising debt payments linked to inflation.

The FTSE 100 was up 0.2pc at the open to 7,796 while the FTSE 250 also climbed 0.2pc to 19,834.

08:00 AM

National Grid stands down coal power stations again

National Grid called off its request for three coal-fired units to get ready to generate to help ease a power squeeze this evening.

The order has been cancelled, but a request still stands for households to reduce their energy use from 4.30pm to 6pm.

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07:57 AM

Borrowing would have been lower than last year without energy support and inflation, says ONS

Grant Fitzner, chief economist at the Office for National Statistics, said the Government's finances would have been in better shape than last year had it not needed to spend about £20bn on energy support and interest payments. He said:

You would have to assume the energy support schemes are only a temporary measure. They won't be around for the next couple of years.

In terms of interest-linked gilts, clearly we have seen potentially the peak in consumer inflation quite recently and if that downward trend continues, as both private and official forecasts expect over the course of this year, you would see the retail prices index fall significantly.

If you strip those two factors [energy bills support and debt interest increases] out then in fact underlying public sector borrowing would have been lower than a year ago.

Indeed that was the Office for Budget Responsibility's projection back in March last year before we saw this big uptick in energy prices and inflation.

07:49 AM

Economists think Treasury will borrow less than OBR forecasts

Samuel Tombs at Pantheon Macroeconomics believes borrowing will continue to undershoot OBR predictions due to lower interest rates and energy prices compared with November's Autumn Statement, writes Szu Ping Chan.

It believes the Treasury will borrow £160bn this year, less than the OBR's £177bn forecast.

He said: "In addition, the recent fall in wholesale natural gas prices suggests that the Energy Price Guarantee will cost the government only a tiny fraction of the £13bn assumed in November."

However, Mr Tombs added the current "dearth" of business investment combined with a "startlingly sanguine" view by the OBR that households will raid their savings to help support spending were "misplaced".

Mr Tombs believes borrowing will be higher in the medium-term.

07:47 AM

Student loans shake-up also drives up government debt

Government borrowing in December was £9.8bn more than forecast by the Office for Budget Responsibility (OBR), the government's spending watchdog, and the highest December borrowing since records began in 1993.

Economics editor Szu Ping Chan has the latest:

The increase in monthly borrowing was driven by more than £5bn in extra support for households and businesses to pay energy bills, while debt interest payments soared to a record £17.3bn for December amid peak inflation.

Debt interest is forecast to hit £116bn this financial year alone.

A shake-up to student loans announced last year also drove a large share of the increase as repayments were reduced and tuition fees frozen.

Higher inflation and rising wages also helped to boost tax receipts, helping revenues from income tax to grow at a near double-digit rate in December. VAT receipts rose almost 5pc to £15.3bn.

Despite the record borrowing, this year's deficit is £2.7bn below the OBR's forecast.

07:44 AM

Borrowing surged as Government debt linked to RPI

Grant Fitzner, chief economist at the Office for National Statistics, said there were two key drivers behind the highest public borrowing for December since records began in 1993. He told BBC Radio 4's Today programme:

One was all the various energy support schemes, which we estimate would have added around £7bn to the December numbers.

The other figure was what we call a crude interest payable for interest linked gilts. That's around £13.7bn, and that's because around a quarter of Government bonds are linked to the retail prices index and that has been moving sharply higher over the past year.

07:37 AM

Primark enjoyed records sales in week before Christmas

The owner of Primark and Twinings has reported a boost in sales, as it said inflation has become less volatile and consumer spending is more resilient than it expected.

Associated British Foods (ABF) saw its group revenues jump by 16pc at constant currency rates over the four months to January 7, compared to the same period last year.

It boasted record sales at budget fashion chain Primark in the week leading up to Christmas Day, with sales in the UK up by 15pc over the four-month period.

Store visitor numbers were strong in major cities, as well as on high streets and at retail parks, ABF said.

The group noted that Primark's low prices were appealing to existing and new customers, but that economic conditions could weigh on consumer spending in the months ahead.

And despite sales growth, it also stuck by previous guidance that its full-year adjusted operating profits and earnings would be lower than the previous year.

Primark - REUTERS/Peter Nicholls
Primark - REUTERS/Peter Nicholls

07:26 AM

Interest payments on government debt soar due to inflation

Government borrowing reached £27.4bn last month due to £7bn in costs from energy support schemes and soaring interest payments on debt, according to official figures.

The Office for National Statistics (ONS) said the reading represented the highest monthly figure for December borrowing since records began in 1993.

It said the Government spent an estimated £5bn on its energy price guarantee support scheme for households and businesses last month, with a further £1.9bn paid out for energy support payments.

Interest payments on government debt jumped to £17.3bn in December - the highest December on record - as a result of sky-high inflation.

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07:22 AM

Public borrowing last at these levels in the 1960s

This graph gives an idea of the scale of public borrowing in relation to the size of the economy:

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07:17 AM

Hunt says debt must be kept 'fair for future generations'

Chancellor of the Exchequer, Jeremy Hunt said:

Right now we are helping millions of families with the cost of living, but we must also ensure that our level of debt is fair for future generations.

We have already taken some tough decisions to get debt falling, and it is vital that we stick to this plan so we can halve inflation this year and get growth going again - creating better paid jobs across the country.

07:16 AM

Public borrowing hits record for December

Public borrowing increased by more than expected last month as the Government ploughed billions more of taxpayer cash into its subsidies for household bills and dealt with soaring debt interest payments.

Net borrowing by the Treasury stood at £27.4bn in December, ahead of economists' predictions of £23.2bn for the month.

It was the highest figure for December borrowing on record and nearly double the £16.7bn borrowed the same time a year earlier.

Public sector net debt excluding public sector banks was £2.5trn or around 99.5pc of gross domestic product (GDP), with the debt to GDP ratio at levels last seen in the early 1960s, barring the pandemic.

Public borrowing more than doubled to £22bn in November, which was £13.9bn higher than the same month a year earlier.

Government debt has continued to surge after the decision in October to subsidise energy bills so that typical households pay no more than £2,500 annually.

From April, the state will lower its support, allowing households to pay typical bills of up to £3,000 instead.

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07:08 AM

Good morning

Figures out today show the scale of the Government's spending to subsidise household energy bills.

The Treasury borrowed £27.4bn in December, the highest figure ever for the final month of the year.

This was above the £22bn of public borrowing in November and £16.7bn more than was borrowed in the same month in 2021.

5 things to start your day

1) Households told to get used to cutting power as Grid extends discounts for second day | People will routinely be asked to use less electricity at peak times as part of the shift to net zero, National Grid and Ofgem officials suggested

2) Mark Carney’s climate group under fire for ‘dragging its feet’ on green investment  | Accusations call former Bank of England governor’s climate credentials into question

3) New houses will have heat pumps as standard, says FTSE 250 builder  | Redrow’s shift comes amid growing pressure to ditch gas boilers.

4) Passengers face steeper take-offs under plans to reduce noise near airports | ‘Increased minimum climb gradient’ would reduce noise pollution but emit more carbon

5) US investors push foreign investment in Britain above £2 trillion | US investors were behind an extra £89.7bn of investment into Britain from the Americas in 2021

What happened overnight

Asian markets that traded climbed after the tech-shares rally in New York, but markets including Hong Kong, Shanghai, Singapore and Seoul were closed for the lunar new year.

Tokyo gained more than 1pc while Sydney, Manila, Jakarta and Wellington were also well up.

Oil prices were barely moved after jumping last week to their highest point since November on demand hopes fuelled by China's reopening.

OANDA's Edward Moya said: "Crude prices are wavering as the dollar stabilises and over-exhaustion from China reopening headlines."