Yahoo Finance UK secures record orders for bonds as inflation drops to 4.6pc
Investors acquired a record £93bn of UK government bonds during a sale today, it has been reported, as investors bet that interest rates have peaked.
The sale of 20-year gilts fetched the largest ever level of orders for UK sovereign bonds, excluding the first ever sale of “green bonds” back in 2021, according to Bloomberg News.
The sale of the bonds, which mature in 2043, was conducted by Barclays, HSBC, Lloyds, Morgan Stanley and UBS.
The race to snap up bonds comes as investors bet that interest rates will begin to fall next year amid falling inflation.
The UK consumer prices index (CPI) dropped sharply to 4.6pc in October from 6.7pc the previous month, according to the Office for National Statistics (ONS), after a slowdown in the increasing cost of gas and electricity.
As a result, money markets are pricing in that the Bank of England will begin cutting interest rates by a quarter of a percentage point by June at the latest, with some economists predicting rates will be cut sooner.
When interest rates are high, the yield on bonds - the return for investors - is higher and vice versa.
Global bonds have rallied in recent days as traders ramp up bets that central banks will begin cutting interest rates next year, with 20-year gilts now yielding around 4.6pc, down from a peak above 5pc last month.
Read the latest updates below.
06:12 PM GMT
Signing off
Thanks for joining us today for live coverage of the markets and the world of business. Chris Price will back from around 7am tomorrow but for this evening I’ll leave you with some of the latest business news from The Telegraph:
06:08 PM GMT
Earl's Court developer scales back housing plans amid weak demand for London luxury property
The developer behind the regeneration of Earl’s Court has scaled back its housing plans amid a drop in demand for luxury properties in London, writes Riya Makwana.
The Earl’s Court Development Company (ECDC) said it would build 500 fewer homes than planned at the 40-acre derelict site, which once played host to artists including David Bowie and Led Zeppelin.
The scheme, located between Brompton Cemetery and High Street Kensington in London, will now host 4,000 homes.
It is the second time plans have been scaled back: the site’s former owner originally won approval to build 7,500 homes at Earl’s Court in 2012.
The ECDC has cut back its housing plans after opposition from local residents and the council, who pushed for more green space in the development and fewer tall buildings.
Initially, the scheme was set to have four tall buildings that were each 31-storeys. However, developers will now only build one 42-storey building.
New proposals include a 20pc increase in open space and 10pc cut in space allocated to offices and residential buildings, leaving 60pc of the land left unbuilt.
Councillor Cem Kemahli, lead member for planning and public realm at The Royal Borough of Kensington and Chelsea, said: “I welcome the additional green space and lower rise buildings in the new Earls Court Masterplan and am pleased to see suggestions for architecture in keeping with our Royal Borough, such as modern mansion blocks and townhouses that respect the local heritage.”
The plans are also being drawn up against a backdrop of weaker demand for luxury housing in London. Sales of homes worth between £2m and £5m fell by almost a third in the third quarter of the year compared to the same period of 2022, according to LonRes.
ECDC declined to give details of what type of housing it was planning to build at the site or an indicative price range, though it said 35pc will be affordable.
The Earl’s Court project is the largest redevelopment in London. The site hosted Earl’s Court Exhibition Centre until it was demolished in 2015. Its redevelopment has been beset by delays and objections and the site has lost more than £800m of its value since its peak.
Rob Heasman, chief executive at ECDC, said: “Our plans have progressed and benefitted from continued open dialogue with a broad spectrum of community groups and stakeholders, as we bring forward a new piece of city that will have wide reaching benefits for London.”
ECDC plans to submit a final planning application in mid-2024 with the first phase of development, which will include 1,000 homes, hoped for by 2026.
06:05 PM GMT
Trial for hydrogen-fueled homes on verge of approval
Up to 2,000 homes in Redcar, north Yorkshire, could be supplied with hydrogen rather than gas under a new scheme:
The Energy Secretary is poised to approve a landmark hydrogen heating trial in a north Yorkshire town despite growing local protests.
It is understood Claire Coutinho is “minded to approve” the scheme in Redcar, with an announcement expected in weeks.
Government support for the project will pave the way for Northern Gas Networks (NGN) to start supplying up to 2,000 homes with hydrogen instead of gas for heating and cooking, in the first trial of its size.
The scheme has major implications for UK energy policy because the experiment is seen as the gas industry’s last chance to prove hydrogen heating can be implemented amid a wave of growing criticism.
Matt Oliver and Jonathan Leake report...
05:42 PM GMT
Britishvolt buyer faces legal battle over unpaid wages
The new owner of Britishvolt, the company that aimed to build an independent battery factory for electric vehicles, is at risk of being wound up after a former employee started a legal proceeding against it over alleged unpaid wages, writes Howard Mustoe.
The person filed a statutory demand, which is a legal notice a creditor can serve on a debtor, and acts as a prelude to seizing a business’s assets in court, the Financial Times reported.
Recharge Industries, owned by Australian investor David Collard, bought the assets of Britishvolt earlier this year after the British company ran into financial difficulties.
The statutory demand gives Recharge 21 days to pay up or face further action which, if upheld, could mean bankruptcy proceedings.
Britishvolt was the brainchild of former investment banker Orral Nadjari, who saw the looming demand for batteries from carmakers in the UK and a gap in the market for an independent producer.
But it ran out of funding after borrowing became more expensive and Mr Nadjari stepped down. At the time of its demise in January, the company had signed initial deals with carmakers like Aston Martin, but it had secured no firm orders.
Recharge bought some of the assets of Britishvolt, but not the land set aside for the factory in Blyth, Northumberland, which has still not been built.
Meanwhile, most of the biggest carmakers in the UK, including Nissan, JLR, Mini and Aston Martin, have secured alternative supplies for cells. JLR’s owner Tata will build a plant in the UK after securing government funding, Nissan has its own factories near its carbuilding plant in Sunderland and Mini will obtain cells from its owner BMW. Aston Martin has partnered with US electric carmaker Lucid to develop its EVs and cells.
Recharge Industries was approached for comment.
It has so far only paid £6.1m of the £8.6m agreed price for Britishvolt. In August Recharge was accused of missing a payment deadline for the remaining sum.
The final payment for the purchase was due in April, according to EY, which is administering Britishvolt in the wake of its collapse.
EY said it would pursue the payment, suggesting it would allow extra time for a deal to be struck.
Britishvolt collapsed after the Government refused to release funds early to rescue the business.
Recharge Industries’ owner, Scale Facilitation, which Mr Collard controls, said at the time “we dispute we are in default” of the business sale agreement.
05:00 PM GMT
FTSE 100 closes up, boosted by falling inflation
The FTSE 100 rose 0.62pc today to 7,486.91. The biggest risers were Experian (up 7.53pc), St James’s Place (up 6.57pc) and Ocado (up 5.6pc). Tesco and Diageo both dropped 1.83pc.
Meanwhile, the FTSE 250 increased 0.76pc to 18,676.48.
04:55 PM GMT
St James’s Place rejects shareholder complaints over executive pay
St James’s Place has defended handing generous “windfall” share awards to senior executives after an investor rebellion over the payouts, writes Adam Mawardi.
The wealth manager said on Wednesday it would not adjust the number of shares awarded to bosses because it would risk “damaging the credibility” of the incentive scheme.
The decision, which followed engagement with shareholders, came after 22pc of investors voted against the FTSE 100 company’s remuneration report in May. The settlement saw outgoing chief executive Andrew Croft handed £3.1m and chief financial officer Craig Gentle £2.3m.
Investors objected to what were seen as overly generous share awards. Performance-based bonuses were declared in 2020 at a time when the pandemic meant its share price was depressed.
However, the shares were only paid out to executives earlier this year, by which time the stock had rallied significantly. By the start of this year, St James’s Place’s share price had doubled from the lows seen during the pandemic. Mr Croft had £1.7m in vested shares at the end of 2022.
The Institutional Shareholders Service (ISS), an advisory group, raised concerns about the share awards earlier this year, saying executives were benefiting from “a windfall gain”.
St James’s Place defended the payout on Wednesday, arguing that its remuneration committee acted “in the best interests of the company and its stakeholders”.
It rejected calls from a “minority” of shareholders to reduce the awards. In an update shared to the London Stock Exchange, the company highlighted that it had already cut bosses’ bonuses in 2020 and frozen share price awards at 2019 levels.
St James’s Place’s share price has also fallen significantly since its annual general meeting, amid regulatory scrutiny over its fee structures.
The company announced last month that it will cut fees and scrap its controversial exit fees following pressure from the Financial Conduct Authority.
Shares are down more than 36pc this year, wiping billions of the company’s value.
04:53 PM GMT
A new employee park: weight loss drugs
Health insurance, an on-site gym and free fruit are among the healthy perks that big employers typically offer. Now Novo Nordisk is going one further and offering free weight loss drugs to its staff, according to a Blomberg report. The drugmaker, behind the “miracle” Wegovy weight loss drug, will give its Danish staff free supplies of its drug if sanctioned by a doctor.
The drug has certainly be transformational for Novo Nordisk, which has seen its share price soar 367pc in the past five years.
04:38 PM GMT
Fossil fuels boost SSE
A FTSE 100 energy firm “positioned at the heart of the clean energy transition” has received a substantial profit boost from adding gas-fired power stations:
Two new gas-fired power stations have helped SSE triple its profits from fossil fuel operations.
The energy supplier made adjusted operating profits of £312m from its thermal power division, compared with £100m for the same period last year. SSE’s thermal division covers its operations that generate power by burning fossil fuels.
Gas-fired generation accounted for 45pc of the company’s overall operating profits of £693m in the six months to the end of September.
SSE credited the “significant increase in earnings” to “additional capacity from Triton Power, acquired in September 2022, and Keadby 2 power station, in Lincolnshire, which entered commercial operation in March”. Between them, the two contributed £103m towards earnings.
SSE Thermal acquired Triton Power in partnership with Equinor for £341m last year. Triton operates three plants, though one is no longer generating and only one is of significant size.
Click here for the full report by Jonathan Leake.
04:27 PM GMT
ChatGPT owner OpenAI halts new business as it struggles with surging demand
The owner of ChatGPT has been forced to halt new sign-ups as it struggles to meet growing demand for its artificial intelligence technology, writes Matthew Field.
Sam Altman, the chief executive of OpenAI, said the start-up had been hit by a “surge in usage” which has pushed the firm beyond its “capacity”.
He said OpenAI would be “pausing new ChatGPT Plus sign-ups for a bit” to “make sure everyone has a great experience”.
OpenAI has recently secured a string of high-profile customers, including companies such as Microsoft, Morgan Stanley and Salesforce.
Social media app Snapchat has also developed an AI bot powered by OpenAI’s technology.
ChatGPT can be used to compose emails and summarise documents, while its so-called Plus service - which has paused registrations - provides access to a more intelligent chatbot at faster speeds.
The technology has generated a flurry of interest as companies race to embrace tools powered by AI.
Mr Altman said the pause came after an event where OpenAI revealed new tools for web developers to customise ChatGPT technology.
Richard Windsor, a technology analyst with Radio Free Mobile, said OpenAI could be unable to “support the extra demand” because of an inability to obtain chips.
AI products rely on graphics microchips to power their technology.
OpenAI is racing against rivals, such as Google and US-based Anthropic, to develop tools that can be used by consumers and businesses.
Some advocates have claimed chatbots like ChatGPT could usurp Google’s internet search engine, but so far it has made only modest inroads.
OpenAI’s ChatGPT tool currently attracts around 180 million unique visitors to its website each month, according to Reuters.
A smartphone app version of its AI chatbot has also been downloaded 15m times.
Mr Altman told staff earlier this year that the company was on track to generate $1.3bn in revenues per year.
The Silicon Valley business has reportedly been offering salaries of up to $10m to tempt engineers away from rivals such as Google, according to The Information.
04:23 PM GMT
A softer stance toward Beijing? Labour says government has 'incredible naivety' towards China
Our economics reporter Melissa Lawford reports on comments by the Shadow Business Secretary, Jonathan Reynolds, who has accused the government of “incredible naivety” towards China by appointing David Cameron as Foreign Secretary:
Jonathan Reynolds said Lord Cameron had allowed questionable Chinese investments in Britain while he was Prime Minister. Mr Reynold said Rishi Sunak was now making a mistake by softening National Security takeover rules aimed at cracking down on Chinese investment in sensitive industries.
Mr Reynolds said: “To be frank, there were investments that took place in the Cameron-Osborne machine that the Chinese themselves didn’t believe they would ultimately have been able to do. It’s clear that they didn’t get the balance right.”
Lord Cameron’s government courted China extensively in what became known as the “golden era” of relations between the two countries.
The former Prime Minister was memorably photographed drinking pints of beer with President Xi Jinping during a visit to Britain and Lord Cameron’s chancellor, George Osborne, hoped to make China the UK’s second-largest trading partner.
The unexpected return of Lord Cameron to the Government as Foreign Secretary this week has prompted China hawks to urge Mr Sunak not to weaken his position, amid fears that Lord Cameron will seek to take a softer stance toward Beijing.
04:06 PM GMT
Ocado secures technology deal with Canadan drug distributor
Ocado, the FTSE 100 online supermarket and technology group, has signed a deal with McKesson Canada to provide fulfillment technology. McKesson was, until last year, a major player in distributing and retailing pharmaceuticals in the UK, owning Lloyds Pharmacy and drug distributor AAH Pharmaceuticals. In Canada it is a major distributor of drugs and will be using Ocado’s automated fulfilment technology.
The deal is Ocado’s first outside the supermarket sector and its shares rose sharply on the news, up 6.59pc.
03:31 PM GMT
Handing over
I’ll say bye for the day at this point and leave you in the hands of Alex Singleton until the evening.
The sharp fall in inflation has undoubtedly been the story of the day, beating Rishi Sunak’s target to halve the pace of price rises by the end of the year.
Energy prices were the largest factor in the fall but the second biggest contributor was food and non-alcoholic beverages, where the annual inflation rate was the lowest since June last year.
So in honour of food’s contribution, here is an image of the judges hard at work today during the annual World Championship Scotch Pie Awards held at Carnegie Conference Centre in Dunfermline.
The contest include categories for Scotch pies, football pies and savouries, including delicious haggis savouries:
03:18 PM GMT
Pound slides as US retail sales stronger than expected
The pound has fallen further against the dollar after slightly stronger than expected US retail sales data.
Retail sales slipped 0.1pc last month, less than 0.3pc forecast by economists, the Commerce Department said.
Meanwhile data for September was revised higher to show sales increasing 0.9pc instead of the previously reported 0.7pc rise.
It has tempered the euphoria after lower-than-expected US inflation data on Tuesday, which sent the value of the dollar plunging amid hopes of interest rate cuts.
Today, the pound has fallen 0.7pc against the greenback back toward $1.24 after a surge of 1.8pc on Tuesday.
03:03 PM GMT
Gas-fired power stations fuel jump in profits at SSE
Two new gas-fired power stations have helped SSE triple its profits from fossil fuel operations.
Our energy editor Jonathan Leake has the details:
SSE made adjusted operating profits of £312m from its thermal power division, compared with £100m for the same period last year. SSE’s thermal division covers its operations that generate power by burning fossil fuels.
Gas-fired generation accounted for 45pc of the company’s overall operating profits of £693m in the six months to the end of September.
SSE credited the “significant increase in earnings” to “additional capacity from Triton Power, acquired in September 2022, and Keadby 2 power station, in Lincolnshire, which entered commercial operation in March”. Between them, the two contributed £103m towards earnings.
Read what bosses said about investment in renewables.
02:45 PM GMT
Barbie movie added £80m to UK economy
Box office hit Barbie contributed more than £80m to the UK economy and created 685 jobs, according to the studio that made it.
Greta Gerwig’s movie about the Mattel doll, starring Margot Robbie as the titular character and Ryan Gosling as Ken, is Warner Bros’ most successful theatrical release ever.
The film was largely shot at Leavesden studios in Hertfordshire, where Gerwig created the detailed and vivid Barbieland sets.
It generated more than £95m at the UK box office, the evidence says.
The movie is the biggest film of 2023 so far and has also out-earned 2022’s biggest hit, Top Gun: Maverick.
In written evidence to MPs on the Culture, Media and Sport Committee as part of its British film and high-end TV inquiry, Warner Bros said:
During its production in the UK, it contributed over £80m in direct spend to the local economy, created 685 jobs, involved over 6,000 extras, supported 754 local businesses, paid over £40m in local wages.
It has also generated over £95m in box office revenues in the UK alone. As such the benefit of attracting such productions are that they are net positive for the UK.
02:31 PM GMT
Wall Street rises at the opening bell
US stock markets have gained after cooling producer prices reinforced the view that the Federal Reserve has finished raising interest rates.
The Dow Jones Industrial Average rose 0.2pc to 34,920.51 while the benchmark S&P 500 was up 0.2pc to 4,507.95.
The tech-heavy Nasdaq Composite gained 0.4pc to 14,149.43.
It comes after the S&P 500 and Nasdaq Composite posted their biggest daily percentage gain in more than six months on Tuesday as softer-than-expected consumer prices data raised hopes that US interest rates have peaked.
02:22 PM GMT
Musk denies SpaceX discussing Starlink listing
Elon Musk has denied that his rocket company SpaceX is in discussions about listing its fast-growing satellite business Starlink.
The SpaceX chief executive tweeted that the suggestion that the satellite unit could be spun off in an initial public offering is “false”:
False
— Elon Musk (@elonmusk) November 15, 2023
02:02 PM GMT
Gas prices fall ahead of mild weather
The main cause of the sharp fall in inflation in October was the drop in the Ofgem price cap - and there could be further relief for households on energy prices.
Natural gas prices have fallen today as record storage levels remain barely touched amid unusually mild weather for the time of year.
Dutch front-month futures - the benchmark European contract - have fallen 1.2pc today to trade around €47 per megawatt hour, with the UK equivalent contract dropping 1pc to below 118p per therm.
European gas prices have fallen 7.2pc over the last month and have UK contracts have fallen 6.1pc.
Britain’s inflation figure dropped dramatically from 6.7pc to 4.6pc in October after the latest Ofgem price cap came into effect, limiting typical household energy bills to £1,834.
Last year, energy bills were capped at £2,500 after a surge in prices in the wake of Russia’s invasion of Ukraine.
01:39 PM GMT
Wall Street poised to open higher as wholesale prices ease
US stock indexes have extended gains in premarket trading as lower-than-expected US wholesale price figures fuelled expectations that the Federal Reserve will not raise interest rates again.
The producer price index (PPI) rose 1.3pc last month on an annual basis against expectations of a 1.9pc increase.
Compared to the previous month, the Labor Department reported that PPI — which measures inflation before it hits consumers — dropped 0.5pc in October from September in the biggest drop since April 2020.
A separate report showed retail sales fell 0.1pc in October on a monthly basis, compared to market forecasts of a 0.3pc fall.
In premarket trading, the Dow Jones Industrial Average was up 0.3pc, S&P 500 had gained 0.4pc, and the Nasdaq 100 was 0.7pc higher.
01:35 PM GMT
Inflation falls 'may be harder to achieve', warn economists
The sharp fall in price rises from 6.7pc to 4.6pc in October will not be repeated as inflation drops to the Bank of England’s 2pc target, economists have warned.
Chris Williamson, chief business economist at S&P Global, has just put out a chart showing how inflation often moves in line with the closely-watched purchasing managers index (PMI) surveys his organisation releases.
Judging by the forecast for PMIs, inflation may prove tricky to budge:
After a sharp decline to 4.6% in October, further falls in UK #inflation might be harder to achieve in the coming months, given the recent stubbornness of #PMI survey selling price data. Next week's flash PMI data will add more insights into the inflation path. #BOE #CPI #GBP pic.twitter.com/JhI1S4GUJZ
— Chris Williamson (@WilliamsonChris) November 15, 2023
The stubborn inflation sentiment was echoed by fund manager Emma Mogford of investment group Premier Miton. She said:
Today’s drop in CPI inflation is another data point which supports the idea that rates don’t need to go higher.
However, with core inflation still high, I don’t think we should expect a rate cut anytime soon.
01:20 PM GMT
Glencore helps push FTSE 100 higher after inflation drop
The FTSE 100 has continued its march higher after a brief lull in mid-morning trading, boosted by falling inflation and Glencore stocks.
The UK’s benchmark index has gained 1.2pc, while the midcap FTSE 250 has risen 1.3pc amid growing confidence that interest rates will be cut by next summer.
Glencore shares were one of the main factors pushing the FTSE 100 higher, gaining the move in five months after announcing its acquisition of a majority stake in the coal business of Canadian miner Teck Resources.
It has become the latest company to snub the London Stock Exchange after confirming proposals to spin off and list its coal business in New York.
Glencore shares have risen 4.6pc today.
01:05 PM GMT
What tumbling inflation means for Hunt’s hopes of tax cuts
Falling inflation has handed Jeremy Hunt a boost less than a week before he delivers his second Autumn Statement.
Our economics editor Szu Ping Chan and deputy economics editor Tim Wallace analyse what that means for potential tax cuts:
The Chancellor’s latest assessment of the economy will be delivered against a different economic backdrop to a year ago. Growth may still be elusive, but inflation is now falling sharply, not rising.
Prices, as measured by the consumer prices index, rose by 4.6pc in the year to October, down from 6.7pc in September.
With signs that the worst of the cost of living squeeze is over, inflation at a two-year low and interest rates expected to fall next year, there is now speculation that Hunt will announce tax cuts next week.
Read how the Chancellor can cut taxes.
12:04 PM GMT
Fears ECB raised rates too high as eurozone inflation falls below US
October was the first month after almost a year and a half that US inflation was higher than in the eurozone.
The steep decline in inflation in Europe to 2.9pc could signal that European Central Bank overreacted when it raised interest rates to a record 4pc this year. US inflation dropped to 3.2pc in October.
It comes as the European Commission cut its estimates for eurozone growth this year from 0.8pc to 0.6pc.
Good thread - there’s a very good chance ECB overreacted and raised interest rates too high, too quickly https://t.co/C5O9Y20oCP
— Aslak Berg (@BergAslak) November 15, 2023
So overall, we are finally seeing in the y/y data what I think was clear all along - eurozone inflation was just much more about supply shock than US inflation. And this is likely to become more obvious as more time passes.
4/4https://t.co/16lsr1Inyu— Kamil Kovar (@CrisisStudent) November 15, 2023
11:51 AM GMT
Wall Street poised to open higher as inflation falls
US stock indexes are on track to open higher as an encouraging inflation reports in the US and the UK fuelled hopes interest rates have peaked.
The benchmark S&P 500 and the tech-heavy Nasdaq posted their biggest daily percentage gains in more than six months on Tuesday after a larger-than-expected fall in inflation.
Money markets suggest there is a 95pc chance the US Federal Reserve will keep rates steady in December, according to the CME Group’s Fedwatch tool.
Traders expect US policymakers to begin cutting rates from May.
Focus will also be on meeting between US President Joe Biden and Chinese leader Xi Jinping for the first time in a year today, for talks that may ease friction between the adversarial superpowers on military conflicts, drug-trafficking and artificial intelligence.
In premarket trading, the Dow Jones Industrial Average was up 0.3pc, the S&P 500 had gained 0.4pc and the Nasdaq 100 had risen 0.6pc.
11:32 AM GMT
Savers able beat inflation for first time in two years
Savers can now beat inflation for the first time in two years as inflation dropped below the interest rates paid on the best accounts.
Our money reporter Madeleine Ross has the details:
The consumer price index (CPI), which measures the rate at which prices increase, fell from 6.7pc in September to 4.6pc, down from a peak of 11.1pc last October, meaning Rishi Sunak has achieved his target of halving inflation by the end of the year.
While top savings rates have fallen below 6pc this month, there are now more than 900 savings accounts paying more than the rate of inflation.
The best easy-access account, at 5.2pc with Ulster Bank, comfortably beats the inflation rate, as do the top one-year and two-year fixes, with Metro Bank at 5.91pc and JN Bank with 5.8pc.
See a chart of the top savings deals.
11:10 AM GMT
Minister not expecting breakthrough over train driver pay offer
Transport Secretary Mark Harper said there is no indication of an imminent breakthrough in the long-running pay dispute involving train drivers.
He told MPs he has not heard “any such mood music” suggesting union Aslef might change its position.
A so-called memorandum of understanding (MOU) was developed between industry body the Rail Delivery Group (RDG) and the Rail, Maritime and Transport (RMT) union last week, which could suspend a separate row over pay and jobs for railway workers.
In relation to the Aslef dispute, Mr Harper told the Commons’ Transport Select Committee:
There is, most people think, a perfectly fair and reasonable offer on the table and I genuinely don’t understand why Aslef won’t put it to their members.
It would take the average pay of a train driver from £60,000 for a 35-hour four-day week to just under £65,000 for the same working week.
Now I think most people will think that’s quite reasonable.
But the most important thing is, it’s on the table, and I hope Aslef put it to their members.
10:52 AM GMT
Fall in inflation below Bank of England forecasts
The drop in inflation to 4.6pc in October was below the Bank of England’s forecast of 4.8pc for the month.
This chart shows how inflation looks on course to drop more or less in line with its predictions over the next two years:
At 4.6%, the annual rate of inflation in October 2023 was the lowest in two years, according to the @ONS.#UK #Inflation #October pic.twitter.com/Hv4wLrxRFS
— Moneyfactscompare (@Moneyfacts_couk) November 15, 2023
10:36 AM GMT
Oil prices fall as US and Brazil production beats expectations
Away from inflation data, oil prices have slipped as an industry report pointed to an expansion in US stockpiles.
Global benchmark Brent was down 0.8pc to below $82 a barrel, while West Texas Intermediate down 0.7pc below $78.
The International Energy Agency said global oil markets will not be as tight as expected this quarter, with production growth in the US and Brazil beating forecasts.
That sent a different message to an assessment from the Opec cartel of oil-producing nations which suggested there are robust growth trends and healthy fundamentals.
Oil has fallen sharply since mid-October when the outbreak of the war between Israel and Hamas sent prices higher.
A larger-than-expected decline in US inflation on Tuesday spurred bets the Federal Reserve will start cutting interest rates by mid-2024, aiding the longer-term outlook for oil consumption and sending the dollar tumbling.
10:16 AM GMT
European Commission cuts growth forecast for eurozone
The European Commission has lowered its eurozone growth forecast to 0.6pc this year and 1.2pc in 2024, saying “a high cost of living took a heavier toll than expected”.
The revised growth forecasts were 0.2 percentage points lower for 2023 than previously given, and 0.1 point lower for 2024.
Although inflation is easing in Europe, it still remains high at 2.9pc in October.
Brussels expects inflation to reach 3.2pc in 2024, compared to a previous estimate of 2.9pc. For 2023, it is expected to be 5.6pc, as previously forecast.
Growth forecast for 2024 (%):
🇲🇹 4.0
🇷🇴 3.1
🇮🇪 3.0
🇵🇱 2.7
🇨🇾 2.6
🇭🇷 2.5
🇱🇹 2.5
🇭🇺 2.4
🇱🇻 2.4
🇬🇷 2.3
🇸🇮 2.0
🇪🇪 1.9
🇧🇬 1.8
🇪🇸 1.7
🇸🇰 1.7
🇨🇿 1.4
🇩🇰 1.4
🇧🇪 1.4
🇱🇺 1.4
🇪🇺 1.3
🇵🇹 1.3
🇫🇷 1.2
🇳🇱 1.1
🇦🇹 1.0
🇮🇹 0.9
🇩🇪 0.8
🇫🇮 0.8
🇸🇪 -0.2
Autumn #ECForecast ↓— European Commission (@EU_Commission) November 15, 2023
10:04 AM GMT
Homeowners still yet to feel full interest rate impact, warn economists
The significant fall in inflation could not come soon enough for mortgage borrowers, who have faced much higher repayments as the Bank of England raised interest rates to slow down price rises.
The latest ONS data show house prices have begun falling as a result, but PwC has warned that the worst impacts are yet to be felt.
As house prices fell for the first time since 2012, PwC economist Jake Finney said:
This is primarily due to the effects of monetary policy tightening on mortgage rates and economic activity more broadly.
While we do not anticipate any rate rises soon, the impact has not fully been felt yet by homeowners.
Around one in three mortgaged households have still to see their mortgage rates change since the Bank of England started hiking rates in late 2021.
Our analysis indicates that the average household coming off a fixed term mortgage could see their annual repayments increase by around £3,000.
09:51 AM GMT
House prices fall for first time since 2012, official data show
The average UK house price fell for the first time in nine years, official figures show, as high interest rates began to hamper the market.
Typical prices fell by 0.1pc in the 12 months to September, according to the Office for National Statistics (ONS), which is the first fall since April 2012.
Across the country, the typical property value was £291,000, with prices down in England to £310,000 (falling by 0.5pc), decreased in Wales to £215,000 (falling by 2.7pc), but increased in Scotland to £195,000 (a 2.5pc rise).
Average house prices increased by 2.1pc to £180,000 over the year in Northern Ireland.
ONS head of housing market indices Aimee North said:
Our initial estimate of UK house prices show they fell very slightly in the year to September.
The steepest annual falls were in Wales and southern England, while prices continued to grow over the year in Scotland and many areas of northern England and the Midlands.
Meanwhile the rise in rental prices continues to accelerate across the country, with Wales, London and Scotland seeing the biggest annual increases.
09:33 AM GMT
Mortgage rates fall as traders predict drop in borrowing costs
Average mortgage rates have continued their recent falls as markets increasing bet on cuts to interest rates by June next year in the wake of falling inflation.
The average deal on a two-year fixed mortgage stands at 6.19pc today, while the typical five-year fix stands at 5.79pc, according to Moneyfacts.
It comes as Britain’s biggest mortgage lenders are ramping up a pre-Christmas price war, with high street banks including Halifax and HSBC announcing fresh cuts to fixed-rate mortgage deals on Tuesday as brokers said they expected further reductions in the coming days.
Our economics editor Szu Ping Chan outlines which lenders are cutting rates.
09:16 AM GMT
Government borrowing costs fall as inflation drops
The cost of borrowing for the Government has fallen to fresh five-month lows as inflation came in lower than expected in October at 4.6pc.
The yield on 10-year UK gilts - the returns the Treasury promises to buyers of its debt - has dropped to 4.14pc, having last been at that level in June.
The two-year gilt yield, which is more sensitive to interest rates, has dipped at a slightly faster pace to 4.53pc.
09:05 AM GMT
Road ahead still 'bumpy', warn analysts
Britain’s economy will still struggle over the next year despite the sharp drop in inflation, according to analysts.
Julien Lafargue, chief market strategist at Barclays Private Bank, said inflation is “still too high for comfort”
He said:
The UK economy is still very much facing stagflation and, in our view, the road ahead will likely continue to be bumpy.
In this context, and given the significant progress achieved on inflation’s front over the last six months, we would expect the Bank of England to keep interest rates unchanged for a few more months.
The Chancellor said the attention now switches to making the UK economy grow:
"Now we are beginning to win the battle against inflation, we can move onto the next part of our economic plan, which is the long term growth of the British economy."
The Chancellor speaks to @SkyNews on the news that inflation has halved ahead of next week's Autumn Statement. pic.twitter.com/bH2piqTAIf— HM Treasury (@hmtreasury) November 15, 2023
08:53 AM GMT
Inflation data 'looks good all round'
Janet Mui, head of market analysis at RBC Brewin Dolphin, said the latest inflation data “looks good all round”. She said:
The good news is the decline in headline inflation was relatively broad based.
A reflection of domestic inflation pressure, the CPI services inflation dropped from 6.9pc to 6.6pc in October and below the Bank of England projection.
Today’s data further strengthens the narrative of the end of the hiking cycle in the UK and markets are pricing in rate cut from June 2024.
08:30 AM GMT
FTSE 100 jumps amid hopes of interest rate cuts
UK stock markets rose after the larger than expected drop in inflation in October.
The commodity-focused FTSE 100 was up as much as 1.1pc while the mid-cap FTSE 250 gained 1pc.
The fall in inflation, which economists think could lead to interest rate cuts from May next year, has helped boost rate-sensitive stocks.
Homebuilders were the largest gainers, adding 2pc, while the banks sector gained as much as 1.6pc.
Precious metal miners added as much as 1.9pc, while industrial metal miners were up as much as 1.8pc, as prices of most metals rose on a softer dollar and falling bond yields.
Shares of Experian rose 3.4pc to the top of the FTSE 100 after the world’s largest credit data company reported an increase in half-yearly profit, benefitting from sustained demand in key markets North America and Europe.
British power generator and network operator SSE reported half-yearly earnings above its forecast, taking the shares up by 2.6pc.
08:18 AM GMT
We're beginning to win the battle against inflation, says Hunt
Chancellor Jeremy Hunt has said “we are beginning to win the battle against inflation” but “there’s lots more work to do”.
He said meeting the promise of halving inflation would allow the Government to “move to the next part of our economic plan”, focused on growth.
He told broadcasters:
In January, the Prime Minister said that his number one pledge was to halve inflation. People at the time said that was going to be easy to deliver, it would happen automatically.
We now know that wasn’t the case, we took some very difficult decisions to control borrowing and debt, and we have now delivered that pledge a whole month early.
There’s lots more work to do. We still have to bring inflation down to its target level of 2pc.
But now we are beginning to win the battle against inflation, we can move to the next part of our economic plan, which is the long-term growth of the British economy.
That’s why next week will be an autumn statement for growth.
08:11 AM GMT
Hunt: We have 'made it easier for the Bank of England to do their job'
Chancellor Jeremy Hunt has said the Government would back the Bank of England’s “difficult decisions” on using interest rates to further lower inflation.
He told broadcasters:
The Government has a very important role in bringing down inflation, because we are responsible for the whole fiscal context - a year ago, markets were worried that borrowing and debt were out of control.
We took difficult decisions to bring that borrowing and debt down.
As a result of that, we made it easier for the Bank of England to do their job.
But we will continue to support them with the difficult decisions that they take on interest rates, because the job is not yet done.
08:09 AM GMT
Halving inflation 'removes one obstacle to tax cuts'
The Chancellor has one less obstacle to announcing tax cuts in his Autumn Statement next week, according to economist Julian Jessop:
Three policy takeaways from today's better UK #inflation data...
1. Can safely rule out any further interest rate hikes from the #BankofEngland, even if the first cut is probably still some way off.
2. At least one of #Sunak's 5 targets has been hit - inflation has halved. In…— Julian Jessop (@julianHjessop) November 15, 2023
08:04 AM GMT
UK markets surge as Sunak hits inflation target
The FTSE 100 has surged higher after Rishi Sunak met his target to halve inflation by the end of the year.
The UK’s blue-chip index jumped 0.9pc after the open to 7,505.34 while the FTSE 250 gained 0.5pc to 18,607.18.
07:57 AM GMT
Unrealistic to expect rate cuts until 'well into 2024', says IoD
After the dramatic fall in inflation, Dr Roger Barker, director of policy at the IoD, said:
Although this month’s sharp decline in inflation was already baked into the numbers, due to the downward adjustment of the energy price cap, it is still an encouraging development.
The rate of core inflation (excluding food and energy), which fell from 6.1pc to 5.7pc, is still relatively high.
However, there was a noticeable easing of inflationary pressure across a range of categories of goods and services this month. This must give hope that higher interest rates are starting to work, and that they won’t need to rise further.
However, it’s probably unrealistic to expect rate cuts until well into 2024, given the continued tightness of the labour market and the stubbornness of inflationary pressures in some areas.
07:50 AM GMT
Interest rates will be cut to 4.5pc by end of next year, say economists
Samuel Tombs, economist at Pantheon Macroeconomics, predicts inflation will ease to around 3.5pc by next March and then to average about 2.7pc in the second half of 2024.
He said:
October’s consumer prices report should entrench expectations that the Monetary Policy Committee (MPC) will be able to start to reduce bank rate in about six months’ time.
We continue to think that sufficient progress back towards the 2pc target will have been made by the MPC’s May meeting for it to reduce bank rate to 5pc, and eventually to 4.5pc by the end of next year.
07:41 AM GMT
Pound falls as markets predict interest rate cuts by June
The pound has slipped back after inflation fell to its lowest level in two years, raising expectations that the Bank of England will begin cutting interest rates by the middle of next year.
Sterling fell back 0.2pc against the dollar to $1.24 and was down 0.1pc against the euro, which is worth 87p.
Money markets have priced in a quarter of a percentage point cut in interest rates by June next year.
Richard Garland, chief investment strategist at Omnis Investments, said:
This is a large fall in the headline CPI, but was widely anticipated due to year-on-year effects and falling energy prices; nevertheless, it is good news which confirms the downward trend in inflation.
It is likely to mean that the Bank of England is in a good position to begin cutting rates in late 2024, but much depends on the strength of the labour market and the economy.
07:35 AM GMT
Inflation fall 'seals the deal on December interest rate hold'
Core inflation, which strips out volatile food and energy prices, fell from 6.1pc to 5.7pc in October, which was below economists’ forecasts of 5.8pc.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales (ICAEW), said:
This dramatic drop suggests that the UK has turned the corner in its battle against soaring inflation, particularly given the fall in core inflation, which indicates that underlying price pressures are also easing.
While the Prime Minister has achieved his target to halve inflation this year, this owes more to the downward pressure on prices from falling energy costs and rising interest rates than any Government action.
Although subsequent declines will be more modest, the drag on demand from a softening jobs market and high interest rates may mean that inflation falls back to the Bank of England’s 2pc target more quickly than they currently expect.
This fall in inflation seals the deal on a December interest rate hold and may drive a three-way voting split among rate setters with a member voting for a rate cut as concerns over a flatlining economy grow.
07:31 AM GMT
Inflation falls will stall, warn economists
Paul Dales, chief UK economist at Capital Economics, warned that the large drop in inflation in October will not be repeated in the coming months.
He said:
Looking ahead, our forecast is that the downward trends in CPI and core inflation will stall over the next few months before starting to edge lower again in February.
But even then, we think the restrictions on labour supply and the stickiness of inflation expectations will mean that inflation fades slowly rather than suddenly.
That explains why we think the Bank of England won’t feel comfortable cutting interest rates until late in 2024 rather than in mid-2024 as priced into financial markets.
07:29 AM GMT
Meeting inflation target 'cold comfort' for working people, say Lib Dems
Liberal Democrat Treasury spokeswoman Sarah Olney said:
Rishi Sunak congratulating himself over today’s figures will be cold comfort for all the hard-working people still bearing the brunt of this Conservative chaos.
For months on end, people across the country have been watching as their pay cheque gets squeezed from all sides, draining every spare penny. From the ever-increasing cost of the weekly shop to skyrocketing mortgage payments.
Enough is enough. With next week’s autumn statement, the Government must properly help families and pensioners struggling with the cost-of-living crisis and give our NHS the funding it desperately needs.
07:25 AM GMT
It's not the time to pop Champagne corks, says Reeves
Shadow chancellor Rachel Reeves said the Government should not be “popping Champagne corks” about the fall in the rate of inflation, with people still struggling with the cost of living.
She said:
The fall in inflation will come as some relief for families struggling with the cost of living.
But now is not the time for Conservative ministers to be popping champagne corks and patting themselves on the back.
After 13 years of economic failure under the Conservatives, working people are worse off with higher mortgage bills, prices still rising in the shops and inflation twice as high as the Bank of England’s target.
Rishi Sunak is too out of touch and his party is too divided to help people who are worried about the cost of living.
A Labour government’s priority would be making working people better off by boosting wages, cutting people’s bills and getting the economy growing again.
07:23 AM GMT
PM: Inflation has fallen after 'hard decisions and fiscal discipline'
Rishi Sunak said “hard decisions and fiscal discipline” by his Government had contributed to the fall in inflation.
“Inflation works like a tax. It eats into the pound in your pocket, affecting the price of your food shop, your mortgage, the size of your pension pot,” the Prime Minister said.
“This is why halving inflation has been my number one priority.
“Getting it down has involved hard decisions and fiscal discipline.
“Official figures released this morning confirm we have halved inflation, meeting the first of the five priorities I set out at the beginning of this year.
“While it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to 2pc.”
07:17 AM GMT
Sunak says he has delivered on his 'top priority'
Rishi Sunak has tweeted that the Government has met its pledge to halve inflation:
In January I made halving inflation this year my top priority.
I did that because it is, without a doubt, the best way to ease the cost of living and give families financial security.
Today, we have delivered on that pledge. pic.twitter.com/qcfuLeLiXe— Rishi Sunak (@RishiSunak) November 15, 2023
07:15 AM GMT
Prices rose by 0pc between September and October
While inflation was down to 4.6pc in October compared to the same month last year, inflation was unchanged between September and October.
The 0pc monthly rate is being seen as a sign that inflation is on its way back to the Bank of England’s 2pc target.
By contrast, the rise was 0.5pc from August to September and economists had predicted it would rise by 0.1pc.
More relevant that the headline 4.6% annual rate for U.K. CPI is the flat monthly rate in October. We knew big base effects were going to drag down the annual comparison, but now starting to see monthly prints (cautiously) consistent with 2% inflation.
— Simon French (@shjfrench) November 15, 2023
07:10 AM GMT
Inflation falls after 'small reduction' in energy price cap, says ONS
Office for National Statistics chief economist Grant Fitzner said:
Inflation fell substantially on the month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.
Food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years.
The cost of goods leaving factories rose on the month. However, the annual growth was slightly negative, led by petroleum and basic metal products.
07:05 AM GMT
Sunak meets target to halve inflation
The rate of Consumer Prices Index inflation fell to 4.6pc in October, down from 6.7pc in September, the Office for National Statistics said, meaning the Government has met its target to halve inflation by the end of the year.
In the year to October 2023:
▪️ Consumer Prices Index including owner occupiers’ housing costs rose by 4.7%, down from 6.3% in September
▪️ Consumer Prices Index (CPI) rose by 4.6%, down from 6.7% in September
➡️ https://t.co/8axCF0xTBa pic.twitter.com/60khlBx0c4— Office for National Statistics (ONS) (@ONS) November 15, 2023
07:00 AM GMT
Good morning
Thanks for joining me. Inflation has dropped below 5pc for the first time in two years as falling energy prices helped Rishi Sunak meet his target to halve the measure before the end of the year.
The consumer prices index fell to 4.6pc in October, coming in below the Prime Minister’s target of falling below 5.4pc.
5 things to start your day
1) Central banks will have to slash rates as the world’s fiscal bubble bursts | The main prop of global economic recovery is wobbling
2) The Cassandra warning that central banks are driving the world’s economy off a cliff | Optimism may be short-lived as the scale of interest rates hikes is yet to fully hit
3) Over-65s are stopping young families getting on housing ladder, says Zoopla | Two fifths of older homeowners live in a home that is larger than they need
4) Mortgage price war ramps up as Sunak prepares to claim inflation victory | Major lenders cut fixed-rate deals ahead of critical announcement
5) Selfridges seized by Thai retailer after debt crisis at co-owner | It ends weeks of uncertainty over ownership of the luxury department store
What happened overnight
Asian shares surged higher as they were cheered by a rally on Wall Street that was one of the best days of the year following a surprisingly encouraging report on inflation.
Tokyo’s benchmark Nikkei 225 rose 2.6pc to 33,545.14 as investors appeared to shrug off news that Japan’s economy contracted at a worse than expected 2.1pc annual rate in July-September.
Hong Kong’s Hang Seng added 3.3pc to 17,971.81, while the Shanghai Composite gained 0.5pc to 3,069.81 after economic data for October showed the Chinese economy is holding up even as some indicators slowed.
Factory output and retail sales rose but property sales fell further. Lending, exports and inflation have also been lower than expected.
Australia’s S&P/ASX 200 jumped 1.4pc to 7,105.90. South Korea’s Kospi surged 1.9pc to 2,480.51.
On Tuesday, the S&P 500 closed up 1.9pc at 4,495.70, while the technology-focused Nasdaq Composite was up 2.4pc to 14,094.38. The Dow Jones Industrial Average rose 1.4pc to 34,827.70.
Meanwhile, US Treasury yields dropped after lower than expected inflation signalled to the market that interest rates might have hit their peak - with expectations of cuts next year. The yield on 10-year Treasuries declined 18 basis points to 4.46pc.
