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World risks ‘tepid Twenties’ as debt levels and inflation soar, warns IMF

The IMF's Kristalina Georgieva warned over "a sluggish and disappointing decade"
The IMF's Kristalina Georgieva warned over "a sluggish and disappointing decade" - Markus Schreiber/AP

The world is at risk of a “sluggish and disappointing decade”, the head of the International Monetary Fund has warned, while urging vigilance to restore price stability and jumpstart economic growth.

Kristalina Georgieva, managing director of the IMF, said: “Without a course correction, we are ... heading for the Tepid Twenties”. She urged governments to make reforms, including cutting red tape and improving access to capital, that could boost growth.

Inflation is easing faster than expected but has not been fully defeated, she said, urging central bankers to carefully calibrate their decisions on cutting interest rates to incoming data.

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She said headline inflation for advanced economies was 2.3pc in the final quarter of 2023, down from 9.5pc just 18 months ago, and the downward trend was expected to continue in 2024.

That would create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year, although the pace and timing would vary, she told an event hosted by the Atlantic Council think tank.

“On this final stretch, it is doubly important that central banks uphold their independence,” Ms Georgieva said, urging policymakers to resist calls for early rate cuts when necessary.

“Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening. On the other side, delaying too long could pour cold water on economic activity,” she said.

Read the latest updates below.


06:31 PM BST

Signing off...

Thanks for joining us today. We’ll be back in the morning to live blog the markets, but here are a few of our latest business stories from elsewhere at The Telegraph:


06:31 PM BST

Tech firm launched with backing from Mike Lynch jumps after growth pledge

Shares in a cyber security firm backed by tech entrepreneur Mike Lynch jumped as much as 9.8pc today after it claimed it would grow by more than a quarter over the coming year.

Darktrace told investors that its annual recurring revenue had reached $731.1m (£582.9m), a rise of 23.5pc on the year before. It said that margins for the last quarter should come in above the 21pc previously forecast.

Cathy Graham, the finance chief, said: “We believe the markets in which we operate are emerging from a period of relative economic uncertainty and moving to an environment where organisations can prioritise proactive cyber defence.”

Mr Lynch was a founding investor in Darktrace and was on the board until 2018.


05:21 PM BST

Regulator warns over big tech dominance of AI

The Competition and Markets Authority (CMA) has sounded the alarm over the dominance of big tech firms in developing artificial intelligence services.

The regulator’s boss, Sarah Cardell, warned that the “interconnected web” of Google, Apple, Microsoft, Facebook owner Meta, Amazon and Nvidia could harm customers.

The CMA is concerned that “incumbent firms may try to use partnerships and investments to quash competitive threats”.

Ms Cardell said that “the growing presence” of these companies could shape “new markets to the detriment of fair, open and effective competition, ultimately harming businesses and consumers, for example by reducing choice and quality and increasing price”.

She added that with “the benefit of hindsight”, the CMA could have done more to deal with “the competitive threats posed by large digital platforms”.


04:53 PM BST

Footsie closes down

Both the FTSE 100 and FTSE 250 closed down today.

The FTSE 100 declined by 0.5pc. The biggest riser was British Gas owner Centrica, which rose 3.4pc, followed by engineering group Smiths, which rose 2.7pc. The biggest faller was Aviva, down 6.5pc, followed by pensions giant Phoenix, down 5.8pc.

The FTSE 250 dipped by less than 0.1pc. The biggest riser was cyber security company Darktrace, up 6.3pc, followed by Rolex dealer Watches of Switzerland, up 5.1pc. Package holiday operator TUI dropped 4.6pc, followed by City firm Man Group, down 3.9pc.


04:49 PM BST

European markets down despite suggestion of a June rate cut

A signal by the European Central Bank of a likely interest rate cut in June failed to encourage share prices upwards today on either side of the English Channel.

The ECB updated its guidance to say that if inflation in the eurozone keeps falling towards its 2.0 percent target then rate cuts would be appropriate. The next update in its inflation forecast is due for its June meeting.

“The ECB’s decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.


04:46 PM BST

Fears grow over stagnation as business confidence remains low in BCC survey

Britain’s small and medium sized businesses have not seen any sign of an economic rebound so far this year, raising fears the country will struggle to escape from the recession suffered at the end of 2023. Tim Wallace and Noah Eastwod report:

Small companies’ sales showed no significant acceleration in the first quarter of 2024, according to the British Chambers of Commerce’s quarterly survey, while investment intentions stayed weak.

David Bharier, head of research at the business group, said it was “further evidence that the UK economy is trapped in a low-to-no growth state.”

While most businesses surveyed by the BCC did not see an improvement in trading during the first quarter, more remain optimistic than not. 56pc said they expected revenues to increase over the next 12 months.

Mr Bharier said: “Although business confidence remains buoyant at the start of the year, most SMEs are still not reporting any tangible improvement to business conditions.

“The lack of investment among most SMEs is a real concern. Inflation, skills shortages, and an almost endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at the government level, have led to paralysis for many businesses.”


04:12 PM BST

US private equity group buys Poundstretcher after failed Morrisons bid

US private equity group Fortress has swooped to buy British discount chain Poundstretcher after having failed in an attempt to buy Morrisons three years ago. Hannah Boland reports:

Fortress, the private equity firm that owns Majestic Wine stores and Punch Pubs Group, revealed that it has struck a deal for Poundstretcher, one of Britain’s first discounters.

It will be installing Andy Atkinson, the former Morrisons commercial director, as the discount chain’s new chief executive.

Fortress managing director Ahsan Aijaz said Poundstretcher was operating in a “critical part of the UK retail sector”.

“We have a demonstrated history of investing in sponsored companies to drive growth, increase profitability and job creation - our plans for Poundstretcher are no different.”

The swoop comes years after Fortress sought to gain a foothold in the UK grocery market with a move to buy Morrisons. Its attempt was scuppered by Clayton, Dubilier & Rice (CD&R), which won the bidding war for the British supermarket with a £7bn bid.

Since then, Fortress has snapped up wine merchant Majestic Wines and Punch Pubs Group, which has 1,241 pubs across the UK.

Its move into the discount retail market follows a boom in the sector in recent years, as cost of living pressures have spurred demand from shoppers for cheaper versions of products.

Fortress said outgoing owner Aziz Tayub was retiring. Mr Tayub said he was pleased that Fortress would have the “resources and investment needed to take Poundstretcher to its next stage of growth following my retirement”.

A branch of Poundstretcher in Lewisham, south-east London, in 2012
A branch of Poundstretcher in Lewisham, south-east London, in 2012 - Oli Scarff/Getty Images

04:07 PM BST

Port Talbot steelworkers to vote on strikes

The Community steelworkers’ union is asking its members to “take a stand in support of the steel industry” by striking in protest against job losses at Tata Steel, principally at sites in Port Talbot and Llanwern in Netport.

Community says that Tata’s proposals for “decarbonisation on the cheap” would mean the closure of Blast Furnace 4 at Port Talbot, a pause of steel production for three years, the closure of Llanwern’s cold mill, while building an “untested” electric arc furnace “with no secured scrap supply”.

Community Union General Secretary Roy Rickhuss said:

Tata’s bad deal for steel would be a hammer blow for our steel industry. It would see vital skilled jobs lost, and dirty steel products imported from overseas.

The loss of primary steelmaking capacity would make Britain an outlier on the G20, and would weaken national security in an increasingly uncertain world. That’s to say nothing of the devastation that would be wrought on communities built on steel in South Wales and beyond.

Tata’s plan is bad for jobs, bad for the environment and bad for Britain. It’s unviable, undeliverable and unacceptable, and our members won’t be bullied or intimidated into accepting it.

A Tata Steel spokesperson said:

Following the announcement in January of the company’s plans to invest £1.25bn and to restructure the UK business, we started a formal information sharing and consultation process with our trades union colleagues, which continues in an open, collaborative and constructive fashion ...

Our current business is unsustainable, reporting losses of more than £1m a day.

This investment is critical as much of our existing iron and steelmaking operation in Port Talbot is at the end of its life, is unreliable and inefficient, and it was for this reason that we had to cease our coke-making operations on 20 March.

By restructuring our UK operations we will be able to sustain the business as we transition to new electric arc furnace technology.

Tata Steel's Port Talbot steelworks in south Wales
Tata Steel's Port Talbot steelworks in south Wales - Ben Birchall/PA

03:56 PM BST

Britain and Spain closer to Gibraltar deal over goods and movement

The UK and Spain are getting closer to an accord allowing free circulation of goods and people between disputed Gibraltar and Spain, the Spanish foreign minister said on Thursday ahead of a meeting with his British counterpart.

Jose Manuel Albares, who will meet Britain’s Foreign Secretary David Cameron in Brussels on Friday, told Onda Cero radio that technical meetings in recent weeks had narrowed positions and the two sides are “closer”.

The two ministers will also meet European Commission vice president Maros Sefcovic and Gibraltar government chief Fabian Picardo in Brussels on Friday.

The Spanish minister said he does not expect an accord Friday because of the “complex” issues. “But we are starting to be close to an accord on the general lines,” he said.

Britain and Spain, which have disputed control of the tiny territory since it was ceded to Britain in the 1713 Treaty of Utrecht, reached a provisional accord in 2020 on free access for goods and people after Britain’s withdrawal from the European Union.

But no definitive agreement has been reached.

Spain and the European Union in 2022 proposed creating a “shared prosperity zone” with Britain for Gibraltar, where thousands of Spaniards go to work each day.

But that would have meant Spain taking control of Gibraltar’s external frontiers to control access to the Schengen visa free zone.

Spain has insisted that while it is ready to make a deal with Britain on free access, it is not giving up its demand to take back sovereignty of the tiny rock at the southern tip of the Iberian peninsula.

A British Airways jet takes off from the airport near the Rock of Gibraltar seen from the Spanish side of the border, 2019
A British Airways jet takes off from the airport near the Rock of Gibraltar seen from the Spanish side of the border, 2019 - Freya Ingrid Morales/Bloomberg

03:49 PM BST

IMF boss says China should boost domestic demand and shift toward services

International Monetary Fund chief Kristalina Georgieva has said that China needs to boost domestic demand and shift more of its economy toward services to reduce the problems caused by excess manufacturing capacity.

Ms Georgieva told an Atlantic Council event in Washington that China could boost its economic output by 20pc in the coming years if it follows the IMF’s reform advice.

She said:

We recognise there have been sectors in the Chinese economy over the years where overcapacity has existed. It is critical to develop domestic demand and then shift more of the economy towards services, so this doesn’t persist as a problem for China.


03:26 PM BST

World risks ‘tepid Twenties’ as debt levels and inflation soar, warns IMF

The world is at risk of a “sluggish and disappointing decade”, the head of the International Monetary Fund has warned, while urging vigilance to restore price stability and jumpstart economic growth.

Kristalina Georgieva, managing director of the IMF, said: “Without a course correction, we are ... heading for the Tepid Twenties”. She urged governments to make reforms, including cutting red tape and improving access to capital, that could boost growth.

Inflation is easing faster than expected but has not been fully defeated, she said, urging central bankers to carefully calibrate their decisions on cutting interest rates to incoming data.

She said headline inflation for advanced economies was 2.3pc in the final quarter of 2023, down from 9.5pc just 18 months ago, and the downward trend was expected to continue in 2024.

That would create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year, although the pace and timing would vary, she told an event hosted by the Atlantic Council think tank.

“On this final stretch, it is doubly important that central banks uphold their independence,” Ms Georgieva said, urging policymakers to resist calls for early rate cuts when necessary.

“Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening. On the other side, delaying too long could pour cold water on economic activity,” she said.

The head of the International Monetary Fund has warned over slow growth
The head of the International Monetary Fund has warned over slow growth - Yuri Gripas/Reuters

03:17 PM BST

MasterChef judge to shut restaurant as minimum wage pressures hit hospitality

Celebrity chef Monica Galetti
Celebrity chef Monica Galetti - Lia Toby

The celebrity chef and MasterChef judge Monica Galetti is shutting her London restaurant as the rising minimum wage hammers the hospitality industry.

Hannah Boland has the story:

Ms Galetti said she had decided to shut down Mere, her restaurant in London’s Fitzrovia, with a “heavy heart” after opening it in 2017 with her husband, David, a sommelier.

She said it was “the right time after seven years” in a post on Instagram. Ms Galetti set up the restaurant, which was named in honour of her mother and serves South Pacific-influenced French cuisine, after rising through the ranks of Le Gavroche.

She is also a judge on MasterChef: The Professionals, alongside Marcus Wareing.

The decision comes amid a flurry of top chefs shutting their restaurants in the face of rising costs.

Hospitality bosses have been warning over pressures from rising minimum wage costs. The national living wage rose to £11.44 this month, the biggest cash increase since the minimum wage was created in 1998.

Read Hannah’s full story here


03:09 PM BST

Comment: ECB going at different speed to Fed

Charles Hepworth, investment director at GAM, says:

The European Central Bank left its main refinancing rate at 4.5pc, much as expected and continued the mantra that ‘rates will remain sufficiently restrictive for as long as necessary’. There was no real reaction post the announcement.

More interesting was the preceding press conference. Asked whether a rate cut is to be expected in June, ECB President Christine Lagarde, indicated without affirming, that the Governing Council will have a lot more data by then to help coalesce its view.

She did acknowledge that some council members were confident enough already, so this was quite revealing.

This represents an obvious different speed in the direction of travel compared to the Federal Reserve – inflation in the Eurozone is coming down in a more linear fashion than in the US and rates will move lower in the EU more quickly.


02:55 PM BST

Comment: Lagarde will pursue her own strategy

Nicolas Forest, chief investment officer at Candriam, says:

The ECB is ready to cut independently of the Fed, at least in the very short term. With the inflation rate slowing down toward its target of 2pc, wage data moving in the right direction and a clear consensus among ECB Council members, the ECB has communicated a clear message regarding the start of the easing cycle in June.

This marks a significant difference with the intentions of the Fed, which appears to be backtracking, concerned about the rebound in inflation to 3.5pc in March. Consequently, it is more likely that the Fed will delay its easing cycle to later in the year.

President Christine Lagarde will need to adopt a different approach and pursue an independent monetary strategy going forward. This is especially critical given its restrictive stance and its impact on the European economy.

We still anticipate two rate cuts after June, however Lagarde will not pre-commit to a specific path for future cuts. She will remain in data dependency mode and assess the situation on a meeting-by-meeting basis.

This approach is particularly prudent as oil prices climb to new highs amid geopolitical risks and stronger demand in the near term. The main fear is that headline inflation could rise again.


02:38 PM BST

Lagarde: We’re not Fed dependent

ECB President Christine Lagarde acknowledged changes in the US economic outlook but said conditions in the eurozone were different.

“We are data-dependent, not Fed-dependent,” she said.

Ms Lagarde said that “just a few” members of the Governing Council believed it was already time to loosen policy but had agreed to rally to the consensus to wait.


02:36 PM BST

ECB signals rate cuts

The EU has signalled it will kick off interest rate cuts in the summer, even as markets pared back expectations of rate cuts in the UK and US.

The European Central Bank held interest rates steady at an all-time high of 4pc this afternoon, marking the fifth straight meeting without change.

But officials gave the clearest indication yet of a rate cut in June amid signs inflationary pressures are starting to ease.

The ECB said: “If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.”


02:09 PM BST

US producer prices rise by most in 11 months

US producer rises rose in March by the most in 11 months in the latest sign of lingering inflation.

The producer price index for final demand rose 2.1pc from last year, according to Labor Department data. On a monthly basis, the PPI increased 0.2pc after a sharp advance in February.

The so-called core PPI, which excludes volatile food and energy categories, rose 2.4pc from March 2023, and 0.2pc from the prior month.

It comes after figures yesterday showed consumer prices topped expectations for a third straight month, prompting traders to cut bets on interest rate cuts by the Fed.


01:40 PM BST

Heat pump owners host visitor days in scramble to increase demand

ICYMI - Heat pump owners are to host visitor days at their homes for prospective buyers as Britain races to boost demand for the technology in an attempt to hit net zero targets.

Michael Bow reports:

Homeowners can invite curious neighbours round so they can see the pumps in action using a website launched by the charity Nesta, in a move likely to recall 1960s Tupperware parties when the brand’s supporters showed off its products to their friends.

Heat pumps, a low carbon alternative to gas boilers, are meant to be at the heart of Britain’s switch away from fossil fuels.

However, take-up has been far lower than needed, with only 250,000 of the devices installed in UK homes a year against a target of 600,000 installations a year by 2028.

Nesta, which said that most families have never even seen one of the generators, has already recruited around 150 homeowners to host heat pump parties and answer questions from would-be owners.

Read the full story here


01:07 PM BST

City watchdog attacks Neil Woodford over fund collapse

The City watchdog has issued a sharp rebuke against former star investor Neil Woodford and said it would have fined the administration of the collapsed fund £50m.

The Financial Conduct Authority (FCA) said Mr Woodford had a “defective and unreasonably narrow understanding” of some of his responsibilities, adding it had proposed to take action against him.

Lawyers for Mr Woodford said he disagreed with the findings.

The regulator also accused Link Fund Solutions of failing to manage the liquidity of the Woodford Equity Income Fund after its suspension, making it difficult for investors to access their money at short notice.

The FCA said it had decided against fining Link as it would leave less money to distibute to out-of-pocket investors.

In response on Thursday, Link said: “As we have previously stated, LFSL (Link Fund Solutions Limited) entered into a conditional settlement agreement with the FCA and Link Group expressly on the basis that there is no admission of liability.

“If the scheme had not been approved, LFSL would have challenged the FCA’s findings and defended itself against any claims made against it by scheme investors.”


12:33 PM BST

AI boom will be built on Amazon services, says Andy Jassy

Amazon Andy Jassy AI
Amazon boss Andy Jassy - David Ryder/Bloomberg

Amazon boss Andy Jassy has insisted his company’s cloud infrastructure will play a key role in the growth of artificial intelligence (AI).

In a letter to shareholders, Mr Jassy said: “While we’re building a substantial number of GenAI applications ouselves, the vast majority will ultimately be built by other companies.

“We’re optimistic that much of this world-changing AI will be built on top of AWS.”

The Amazon boss said AWS would be at the core of AI applications and models and “help democratise this next seminal phase of AI”.

The comments come even after the tech giant began cutting hundreds of jobs in its AWS division.


12:05 PM BST

Heavily-indebted millennials have less to spend in stores, new survey suggests

Retailers are at particular risk of collapsing, the latest Weil European Distress Index shows, as more shoppers are forced to cut back having overstretched themselves.

The study found there had been a “significant downturn in consumer spending” at retailers as many households struggle with rising debts.

It found this was especially true “amongst millennials who are often the most highly indebted and over-stretched”.

“As a result, the sector is experiencing a downturn in performance and a surge in insolvencies, highlighting serious concerns about its resilience amidst widespread economic pressures.”

Andrew Wilkinson, senior european restructuring partner and co-head of Weil’s London restructuring practice, said:

Whilst some sectors show signs of recovery, distress levels remain comparatively high. 

With the current macroeconomic indicators presenting a more nuanced picture than previous forecasts, we can expect capital-intensive and highly leveraged businesses to continue to feel pressure. 

Those operating in the industrials, retail and real estate sectors are bearing the brunt of these pressures. Businesses able to adjust their capital investment strategies will fare better in weathering the storm.


11:32 AM BST

Instagram to blur nude images sent by under-18s

Instagram will scan under-18s’ messages and blur explicit photos in an effort to protect children from unsolicited images.

As Technology Editor James Titcomb reports:

The social media app will automatically prevent young users from seeing images if its algorithms detect nudity being sent in private messages.

It comes amid growing concerns about social media and smartphones’ negative impact on teenagers, which has led to calls for younger teenagers to be banned from owning smartphones, and the rise of online blackmail using intimate photos of victims.

Instagram will also warn under-18s when they share explicit images of themselves that sending the pictures could leave them vulnerable to scams or bullying.

Read more here...


11:01 AM BST

European shares slip ahead of ECB meeting

European shares have slipped as investors hold off on big bets ahead of a monetary policy decision by the European Central Bank.

The pan-European STOXX 600 lost 0.3pc amid expectations that the ECB will signal it could look at a rate cut in June, given easing price pressures and economic weakness.

Joost van Leenders, senior investment strategist at Van Lanschot Kempen, said: “The ECB has clearly signalled that it wants to see more evidence of moderating wage growth before it is ready to cut interest rates.”


10:32 AM BST

Gucci hires top executive from luxury rival LVMH

Gucci
Gucci

Gucci is hiring a top executive from luxury rival LVMH as it battles to turn around its fortunes after a slump in sales.

Kering said it was hiring Stefano Cantino to help steer its Gucci brand strategy. Mr Cantino most recently oversaw communication and image at Vuitton.

He will join Gucci from May 2 and report to chief executive officer Jean-Francois Palus.

It comes just weeks after more than €7bn (£6bn) was wiped off the value of luxury giant Kering as it warned of a slump in sales at its biggest brand Gucci.

Kering, which also owns Saint Laurent, Balenciaga and Alexander McQueen, said it expected total sales to fall 10pc for the first three months of the year compared to last year.

It said this was largely driven by a “steeper sales drop” at Gucci, with demand in the Asia-Pacific region particularly disappointing.

Gucci sales are expected to be down almost a fifth on last year for the first quarter.


10:11 AM BST

Net zero ban on petrol cars is wrong, says Aston Martin owner

Aston Martin
Aston Martin

The boss of Aston Martin has branded a net zero ban on petrol cars “premature” as global demand founders for electric vehicles (EVs).

As Industry Editor Matt Oliver writes:

Lawrence Stroll, the Canadian billionaire owner of the luxury British marque, claimed the push towards EVs was currently supported more by “hype” than real consumer demand.

Many buyers are simply not interested in buying battery-powered cars despite government incentives, he said, with a lack of charging infrastructure partly to blame.

His comments came as new figures showed record numbers of rapid EV chargers were deployed in the UK last month, but carmakers including Volkswagen and Mercedes warned of an electric car sales slowdown in Europe.

Read more here...


09:49 AM BST

Poundstretcher bought by Majestic Wine owner Fortress

Leicester-based retailer Poundstretcher has been snapped up by Fortress Investment Group, the private equity owner of Majestic Wine and Punch Pubs.

Andy Atkinson, the former group commercial director at Morrisons, will join Poundstretcher as chief executive following the takeover.

The acquisition by Fortress comes as Poundstretcher’s owner Aziz Tayub retires. It did not disclose how much the private equity firm was paying for the retailer, although said the deal was entirely funded by equity.

Ahsan Aijaz, managing director and co-head of private equity at Fortress, said: “Poundstretcher is an exciting business in a critical part of the UK retail sector, and we recognise its importance to consumers across the country. We have long believed in the UK, and the consumer sector, as evidenced by our investments. 

“We have a demonstrated history of investing in sponsored companies to drive growth, increase profitability and job creation - our  plans for Poundstretcher are no different. Fortress believes in empowering management teams to deliver their strategy and we look forward to working with the team to invest in and grow Poundstretcher.”


09:26 AM BST

Heathrow warns UK airports being put at a ‘competitive disadvantage’

Heathrow has warned that UK airports are being put at a “competitive disadvantage” by a scheme which requires transit passengers to pay a £10 fee.

Britain’s biggest airport said it understood the “overall rationale” for having an electronic travel authorisation (ETA) scheme in place. The ETA requires people who do not have a legal residence in the UK or a visa to pay a £10 fee.

Currently, only nationals of Qatar, Bahrain, Kuwait, Oman, the United Arab Emirates, Saudi Arabia and Jordan fall under the scheme, although it will soon be extended to the EU and the rest of the world.

Heathrow argued that transit passengers should not be included in the scheme, saying applying it to airside transit passengers “will put UK airports at a competitive disadvantage compared to EU hubs”.

“We are already seeing an impact. In the first four months of ETAs being in place, 19,000 fewer transit passengers travelled from Qatar, with the transfer route recording its lowest monthly proportions for over 10 years each month since the implementation of ETAs.

“This is a huge blow to UK competitiveness as many long-haul routes, which are highly important to the UK’s economy, exports and wider connectivity, rely on transit passengers.

“With more connecting passengers expected to choose other hubs as the scheme expands, minsters need to take action to remove this measure.”


09:07 AM BST

Interest rate cuts should still be ‘a way off’

Interest rate cuts should still be a “way off”, a top Bank of England official has said.

Megan Green, a policymaker for the Bank of England, said there had been encouraging news on UK wage growth and services in recent months. However, she suggested that this did not mean interest rate cuts should be imminent.

It comes amid waning expectations for sweeping rate cuts in the US, after official data on growth forced traders to reassess their predications. They are now forecasting for the Fed to only cut interest rates twice instead of three times this year.

Hopes have been mounting that the Bank of England could be poised to cut rates as soon as this summer. Andrew Bailey said last month that interest rate cuts were on the way amid signs of easing inflationary pressures. Kantar figures showed grocery inflation had fallen to its lowest level in two years last month. Mr Bailey said it was reasonable to expect two or three cuts this year.

However, writing in the Financial Times, Ms Green suggested the BoE should be waiting longer to cut rates.

Ms Green, who is among the more hawkish members of the BoE’s monetary policy committee, said: “The UK economy has faced the double whammy of a very tight labour market and a terms of trade shock from energy prices. Inflation persistence is therefore a greater threat for it than the US. But market pricing for interest rates does not reflect this.”

She said the risk of inflation persistance was “diminishing”, but indicators remained “higher than in other advanced economies, particularly the US”. 

“Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well.”


08:50 AM BST

Poundland owner warns over ongoing shipping delays from Red Sea attacks

The Poundland owner has said the Red Sea crisis is still leading to some surcharges in freight rates and delays to container lead times, months after shipping companies were first forced to reroute vehicles.

Pepco Group said it was seeing disruption from the Middle East turmoil, although said it was managing product availability across its business and did not expect the issues to significantly impact gross margin in the six months to October.

It comes after attacks by Houthi rebels on vessels in the Red Sea earlier this year sparked disruption to shipments of stock.

The Red Sea is a crucial shipping route between Europe and Asia, although several of the world’s biggest freight companies have said they are avoiding the area indefinitely.

Moody’s in February warned it risked keeping new-season clothing off the shelves if stock was taking longer to reach the UK. It said this could potentially force retailers to have to discount clothes if they were no longer the latest season.


08:30 AM BST

Fears grow over stagnation as business confidence remains low in BCC survey

Britain’s small and medium sized businesses have not seen any sign of an economic rebound so far this year, raising fears the country will struggle to escape from the recession suffered at the end of 2023.

As Tim Wallace and Noah Eastwood report:

Small companies’ sales showed no significant acceleration in the first quarter of 2024, according to the British Chambers of Commerce’s quarterly survey, while investment intentions stayed weak.

David Bharier, head of research at the business group, said it was “further evidence that the UK economy is trapped in a low-to-no growth state.”

While most businesses surveyed by the BCC did not see an improvement in trading during the first quarter, more remain optimistic than not. 56pc said they expected revenues to increase over the next 12 months.

Mr Bharier said: “Although business confidence remains buoyant at the start of the year, most SMEs are still not reporting any tangible improvement to business conditions.

“The lack of investment among most SMEs is a real concern. Inflation, skills shortages, and an almost endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at the government level, have led to paralysis for many businesses.”


08:21 AM BST

South Korea stocks erase early losses after parliamentary vote concerns

Over in South Korea, stocks reversed early losses as investors said the impact from parliamentary elections in the country may not be as long-lasting as first expected.

The benchmark Kospi rose almost 0.4pc in afternoon trading, having initially fallen around 1.6pc.

It came after a rise in memory chip-makers helped offset market jitters over yesterday’s parliamentary vote, which had been seen as potentially making Yoon Suk Yeol, the president, a lame duck for his remaining three years in office.

Analysts warned on Wednesday that the opposition parliamentary majority could lead to political gridlock for the president’s administration. The president has been seeking to push through a “Corporate Value-up Program” which would boost shareholder returns.

However, Choi Kwangwook, chief investment officer at TheJ Asset Management Co, said: “There may be a short-term correction due to concerns about the weakening momentum behind the Value-up. But the ruling party may have to further strengthen their investor-friendly capital market policies to better appeal to the public.”


08:11 AM BST

AstraZeneca ups dividend in show of ‘confidence in its performance’

Pascal Soriot
Pascal Soriot - Bloomberg

British pharmaceutical giant AstraZeneca is raising its dividend by 7pc, saying this reflected its confidence in its performance and cash generation.

AstraZeneca will now be paying out $3.10 per share. Michel Demaré, chairman of the group, said the uplift was “in line with our progressive dividend policy, which remains unchanged and reflects the continuing strength of AstraZeneca’s investment proposition for shareholders”.

It comes ahead of its annual general meeting today, where focus will be on Pascal Soriot’s pay package.

Influential advisory firms Glass Lewis and ISS had both recommended shareholders vote against AstraZeneca’s pay policy, under which Mr Soriot will receive up to £18.7m.

One of AstraZeneca’s shareholders this week, however, said it disagreed with the advisory firms, saying Mr Soriot was “massively underpaid,” this week.

Rajiv Jain, from GQG Partners, said Mr Soriot had more than earned his higher pay “given AstraZeneca’s impressive turnaround since he joined more than a decade ago”.


07:55 AM BST

UK storage company snapped up in £378m deal

London market
London market

European self-storage giant Shurgard has struck a deal to buy smaller UK rival Lok’nStore in a £378m deal.

Aim-listed Lok’nStore said it had agreed a takeover deal with Shurgard, a Belgian rival, saying the deal represented “significant value” for its shareholders.

Shurgard said it would allow it to increase its footprint in the “two most attractive target markets outside of London”.

In the South East, Lok’nStore has 32 properties with five under development, whilst in Manchester Lok’nStore has five properties, three of which are under development.

The acquisition is subject to approval from Lok’nStore shareholders.

It is expected to lead to job cuts across the Lok’nStore busienss, with Shurgard expected to evaluate its operations after the takeover.

The UK company said the deal would “likely result in the loss of the majority of roles across Lok’nStore’s administrative and head office functions, including roles relating to Lok’nStore’s status as a UK listed company”.


07:34 AM BST

ECB expected to signal June rate cut

The European Central Bank is poised to lay the ground work for an interest rate cut in June at its meeting today, after inflation slowed sharply.

The ECB is expected to keep borrowing rates at a record high on Thursday, in what would be the fifth meeting it has decided to hold.

However, officials have been increasingly suggesting that cuts could be coming in the next few months. It comes after consumer price inflation fell to 2.4pc last month. Estimates have suggested it could dip to hit the ECB’s 2% target before the end of the year.

Ulrich Kater, chief economist at DekaBank, said: “The ECB has signaled that interest rates will very likely be cut in June and the latest inflation data should have reinforced this. 

“Beyond June, the uncertainty and the risks to the inflation outlook argue for caution and Lagarde may hold back with signals.”


07:23 AM BST

Property market poised for a bounce back, Rics survey shows

The property market is set to bounce back in the coming months, amid a rise in the number of new listings and growing demand among buyers.

House prices started to stabilise in March, according to the latest survey from the Royal Institution of Chartered Surveyors, coming after months of falls.

Tarrant Parsons, a senior economist at Rics, said demand was continuing to recover “gradually” across the UK housing market, with new buyer enquiries rising for the third month in a row.

The number of new listings coming onto the market was up for a fourth consecutive month, the survey results showed.

Mr Parsons said: “With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward.

“In keeping with this, near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21”.


07:07 AM BST

Good morning

Interest rate cuts should still be “a way off” in the UK, one Bank of England ratesetter has said, as she warned that the country was struggling with more “inflation persistence” than in other economies.

Writing in the Financial Times, Megan Greene said: “The risk of inflation persistence is diminishing as these indicators come down in line with the MPC’s forecast.

“But they remain higher than in other advanced economies, particularly the US. Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well.”

5 things to start your day

1) Thames Water bondholder warns creditor losses will deter investment in UK | Nationalisation threatens to discourage financing of Britain’s ageing infrastructure

2) Slash benefits to get more men into work, IMF urges | Mel Stride vows to ‘do whatever it takes’ as Fund calls for radical action on worklessness

3) KPMG hit with record fine for exam cheating | Big Four accounting firm ordered to pay $25m for scandal involving hundreds of employees

4) Post-Brexit boost for the City as EU rules on stock market research scrapped | FCA consults on plans to remove laws underpinning £9 trillion industry

5) Post-Brexit checks on food to cost consumers £2bn, report claims | New rules are equivalent to a 10pc tariff, warns Allianz


What happened overnight


On Wall Street, the Dow Jones Industrial Average fell 1.09pc, to 38,461.51. The S&P 500 dropped 0.95pc, to 5,160.64, and the Nasdaq Composite lost 0.84pc, to close at 16,170.36.

The yield on benchmark US 10-year Treasury bonds rose to 4.546pc, from 4.366pc late on Tuesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7pc and the Nikkei dropped 0.8pc.

China’s blue chips eased 0.4pc and Hong Kong’s Hang Seng index fell 1.1pc, after data showed consumer prices in the world’s second-largest economy rose by a muted 0.1pc in March, missing expectations.