Ireland unveils tax cuts, markets fall on China data - as it happened

Rolling economic and financial news, from the latest wealth report to the UK inflation data

• Irish Budget details
• Credit Suisse wealth report released
• German investor morale hit by VW scandal
• UK inflation turns negative again
• Chinese imports tumble 20%

5.40pm BST

US consumers lower growth in earnings and household spending, according to a survey from the New York Federal Reserve.

The September report shows stable inflation expectations, but earnings growth and spending growth fell sharply from the month before. Spending growth is more than a percentage point below its June 2015 level and has reached a new low since the survey began in June 2013.

CONSUMER SURVEY: Expectations for lower growth in earnings & household spending http://t.co/Vju3e5odh9 pic.twitter.com/AfdMSAgG7A

5.24pm BST

More on the Irish Budget from Henry McDonald in Dublin:
As is now customary since the financial crash in 2008 and the wave of anti-Austerity protests that rocked European capitals over the last few years the Garda Siochana on budget day have erected steel securtiy barriers at the street leading towards Leinster House, the home of the Irish parliament in Dublin.

This afternoon there were just eight protestors behind the barricades, four of whom were not there protesting about the budget.

5.02pm BST

Renewed worries about the Chinese economy after the country revealed a poor set of trade data - with imports down around 20% year on year - helped send European stock markets into the red again. On top of that, German confidence figures also disappointed, perhaps not a surprise given the continuing emissions scandal at Volkswagen and its effect on the German economy as a whole.

Commodity stocks were under pressure after the Chinese data, but the agreed bid for SABMiller helped limit some of the damage to the UK market. The final scores showed:

4.22pm BST

After leaving US interest rates on hold in September, the Federal Reserve would find it difficult to raise borrowing costs this month.

That is the view of St Louis Federal Reserve president James Bullard, who in fact opposed the decision to delay raising rates in September. But he said the data released since the last meeting was unlikely to persuade other policymakers to sanction a move when they meet in two weeks. Indeed the recent non-farm payroll numbers proved to be well below expectations. Bullard said (quotes from Reuters):

It is very tough for the committee to make a big decision and then change it after only one meeting. Roughly speaking the data has not been that different from what would have been expected, and the jobs report was weaker.

3.41pm BST

In the last budget the Fine Gael-Labour government announced the abolition of the controversial "double Irish" tax avoidance scheme.

This arrangement allowed multinationals to reduce their tax bill far below Ireland's 12.5% corporate tax rate by shifting most of their taxable income from an operating company in Ireland to another Irish-registered firm in an offshore tax haven such as Bermuda.

3.10pm BST

Irish Finance Minister Michael Noonan has been on his feet delivering Budget 2016 for the Republic, writes Henry McDonald in Dublin. He has been addressing a very sombre Dail which prior to the budget being laid out heard tributes led by Taoiseach Enda Kenny for the 10 people who lost their lives in the fire in South County Dublin last Saturday and then 24 hours later the murder of an Irish police officer in County Louth.
After a minutes silence to remmeber the victims Noonan opened his budget speech by referring to 2016, the centenary year of the Easter Rising against British rule. He said the anniversary gave Ireland "the chance to reflect" on how far Ireland has come especially in recent years and how the state had faced up to the financial crash, the bail out and the recession.
Noonan's headline give-away measure was a series of tax cuts totalling a750m which in part will be financed by a 50 cents rise in the price of a 20 pack of cigarettes.

The Finance Minister then laid out examples of how these tax cuts including slashing the hated Universal Social Charge (brought in to appease the IMF-EU during the bail out) would affect different families. These included:

2.41pm BST

US markets have fallen back in early trading, along with other global markets in the wake of poor Chinese trade figures, which cast new doubt over the prospects for the world's second largest economy.

The Dow Jones Industrial Average is down more than 90 points or 0.5%, while European markets are also still firmly in the red.

2.13pm BST

After the Treasury Select Committee heard from the newest member of the Bank of England's Monetary Policy Committee, Jan Vlieghe, who appeared in no hurry to vote for a rate rise, it was the turn of fellow rate-setter Ian McCafferty.

McCafferty was the only one of the nine-member monetary policy committee (MPC) to vote for a hike last week. Katie Allen reports:

McCafferty appeared less worried about the negative impact on the UK and the inflation outlook from a global economic slowdown.

"I place more weight on some of the upside domestic risks to to inflation over the three-year horizon," McCafferty told MPs.

Asked about the relative merits of using quantitative easing (QE) or changes in the Bank rate to influence the economy, McCafferty noted policymakers had more experience on Bnk rate. He also said he would like to see the Bank rate become an effective marginal instrument again. "Over time, I would like to see Bank rate get up to a point at which we could cut it again were we to need to do so were the economy to slow or inflation to dip below target."

The latest official figures showed inflation dipped into negative territory in September, at a rate of -0.1%. But McCaffterty sought to reassure MPs "I do not think we are entering a form of deflation" and noted there were few signs of changes in consumer behaviour as a result of stagnant prices.

2.02pm BST

Dorsey's promise of no "corporate speak" in his email to Twitter employees about the job cuts fell at pretty much the first hurdle:

Unless you're making a paper aeroplane, your roadmap doesn't need to be streamlined.

1.46pm BST

Over in California, Twitter has just announced plans to cut around 8% of its workforce.

Jack Dorsey hasn't wasted much time since becoming CEO again. In a letter to staff, he says Twitter will "part ways" with up to 336 workers in an attempt to grow faster.

.@jack's latter to laid off twitter staff pic.twitter.com/VgcOnZfYQC

Shares of $TWTR up 3% in pre-market trading as the company announces as many as 336 job cuts, higher Q3 guidance. pic.twitter.com/bPn9xwS72r

1.16pm BST

One of the bankers blamed for the financial crash in Ireland due to over-lending to property speculators faces extradition from the United States later today.

1.08pm BST

Our economics editor, Larry Elliott, has taken a look at today's UK inflation data, which showed prices were 0.1% cheaper in September than a year ago.

We haven't seen such weak price pressure in the British economy for many decades, he points out:

This is going to be a record-breaking year for UK inflation. Not since the interwar period has upward pressure on the cost of living been as persistently weak as it has since the start of 2015.

The Bank of England is therefore confronted with a situation in which the inflation rate for goods is currently -2.4% while the inflation rate for services is +2.5%.

Related: UK inflation: pushed and pulled from without and within

12.39pm BST

The top 1% of wealth holders now own half of all household wealth.

And that includes 120,000 "ultra-high net worth individuals" across the globe who own at least $50m of wealth each.

Notably, we find that middle-class wealth has grown at a slower pace than wealth at the top end. This has reversed the pre-crisis trend, which saw the share of middle-class wealth remaining fairly stable over time.

12.18pm BST

UK parliament's Treasury Committee has been hearing from the newest member of the Bank of England's rate-setting Monetary Policy Committee, Jan Vlieghe, and it appears he is in no hury to vote for a hike.

"Clearly, the UK is an open economy, it has very important trade and financial links to the rest of the world. The UK is in reasonably good shape, growth is solid but not fantastic.

But we absolutely have to take into account we are operating in a global environment which is adverse, so to speak, and it's a headwind to growth and it is one of the things that will prevent, I think, the UK economy from accelerating meaningfully from the pace we are seeing currently."

"We need them to rise... I am not confident enough right now that they will rise in order to vote for an immediate rate hike. I think we have time. We can wait and see how this plays out and I would want to see a more convincing broad-based upward trajectory before I say OK, now I am confident enough that we will get to 2% eventually and therefore vote for a rate rise."

12.11pm BST

Despite the evidence of today's ZEW survey, German economy minister Sigmar Gabriel has claimed the diesel emissions scandal at Volkswagen won't permanently damage the German economy.

Asked whether the VW crisis would hit the economic outlook for Germany, Europe's largest economy, Gabriel said:

"No, I don't expect the problems at Volkswagen to have lasting effects on the German economy."

"They have behaved in an appalling way,"

"These [defeat] devices were made illegal in 1998 and it is unbelievable to think a company the size and reputation of VW have been doing something like this. They are going to suffer very substantial damage as a result and they deserve to."

11.23am BST

For the first time in seven years an Irish budget will actually be giving away something for its citizens after the years of tax hikes, brutal spending cuts, the humiliation of an IMF-EU bail out and the crash of the Celtic Tiger.

10.40am BST

The Volkswagen diesel emissions scandal and economic problems in emerging markets have become a toxic cocktail for confidence within Germany, new data shows.

More ugly numbers from #Germany: German Oct ZEW Econ Sentiment drops to 1.9 from 12.1 in Sep on VW scandal. pic.twitter.com/CvgCVX0yDj

"The exhaust gas scandal of Volkswagen and the weak growth of emerging markets has dampened economic outlook for Germany."

ZEW darkened by Germany's 3 shocks: #refugees, #Volkswagen, EM woes. Still, too soon to talk about slowdown. My take http://t.co/a2xZ5nY8G6

10.26am BST

Over in Germany, Volkswagen has just announced that it is cutting its investment programme by a1bn per year, as it grapples with the fallout from the diesel emissions scandal.

In a statement just released, VW announced a range of changes including shifting all its diesel cars to cleaner exhaust emissions systems, and making the next generation of its Phaeton car run on electricity..

"The Volkswagen brand is repositioning itself for the future.

We are becoming more efficient, we are giving our product range and our core technologies a new focus, and we are creating room for forward-looking technologies by speeding up the efficiency program."

10.15am BST

Over in parliament, MPs are beginning to quiz former hedge-fund economist Gertjan Vlieghe about his appointment to Britain's Monetary Policy Committee. You can see it here. It could be quite tasty, as explained earlier....

The first Belgo-Brit on the MPC, Gertjan Vlieghe, is appearing before the Treasury Select Committee right now http://t.co/ZnPesKcqsz

10.11am BST

September's inflation rate is used to calculate a range of benefits payments in the UK.

Consumer expert Paul Lewis reports that these payments will now be frozen, as will other payments linked to the headline inflation rate.

CPI of -0.1% means benefits will be frozen - not cut -including the extra bits of state pension. Company pensions linked to CPI also frozen.

To be clear all the extra bits of the state pension are index linked with CPI. They will be frozen next April because Sept CPI is -0.1%.

10.03am BST

Britain's return to negative inflation isn't a great surprise or a great calamity, says Jeremy Cook, chief economist at the international payments company, World First:

He reckons inflation will pick up sharply in 2016, once the recent slump in oil prices fades into history.

Headline inflation has been pressured for nearly a year now from falling energy and commodity prices but we must remember that base effects will see that initial drop in oil prices fall out of the calculations in the coming months.

10.00am BST

Howard Archer of IHS Global Insight also sees UK interest rates on hold for longer.

Deflation of 0.1% in September will likely fuel market belief BOE will not be raising interest rates before late-2016 & maywait until 2017

9.59am BST

With inflation back below zero, it's hard to see Britain's interest rates rising from their current record low before 2016.

Peter Cameron, Associate Fund Manager at EdenTree Investment Management, explains:

"Inflation is back in negative territory again and it's very unlikely that we'll see the Bank of England raise interest rates this side of Christmas. Although wage pressures are emerging and the impact of the falling oil price will soon start to drop out of the numbers, a rate hike would have a deflationary effect by pushing up Sterling.

At a time when the ECB is signalling it is ready to expand QE and the Fed is likely to delay its own rate lift-off into 2016, the Bank will be fearful of allowing Sterling to appreciate too much."

9.56am BST

Underlying CPI picture is of inflation close to zero for several months, and a big boost to real wages, which continues.

9.55am BST

There's no sign of deflation in the British housing market. New data shows that prices rose by 5.2% across the country in August:

UK regional house price growth in August. East of England out in front and North West prices grew faster than London. pic.twitter.com/9rdV1SPMW8

9.50am BST

UK chancellor George Osborne insists that Britain is not entering a period of 'damaging deflation':

Inflation at -0.1% while wages rising at fastest rate in over a decade is a real boost for budgets of working families

We shouldn't mistake this for damaging deflation: we remain vigilant and our system is designed to deal with such risks

9.48am BST

The bigger picture is of a broadly flat inflation rate since the beginning of the year, says Richard Campbell, head of CPI at the Office for National Statistics.

"The main downward pressures on CPI came from clothing, which rose more slowly this September than in recent years, and falling petrol and diesel prices."

9.42am BST

Clothing and footwear prices rose by 2.8% between August and September this year, compared to 4% between the same 2 months a year ago. That pushed the inflation rate down, to 0.1% in September.

Fuel prices fell by 2.9% between August and September this year compared with a smaller fall of 0.6% between the same 2 months a year ago.

The largest downward contribution came from petrol, with prices falling by 3.7 pence per litre between August and September this year compared with a fall of 0.8 pence per litre between the same 2 months a year ago. Diesel prices are now at their lowest level since December 2009, standing at 110.2 pence per litre.

Gas prices fell by 2.1% between August and September this year, compared with no change between the same 2 months a year ago, with price reductions from a major supplier.

9.37am BST

Food and fuel have played a key role in dragging UK inflation down in the last year.

Over the last year, food prices fell by 2.5% and prices of motor fuels fell by 14.9%, according to the ONS.

9.35am BST

This chart confirms that the UK's inflation rate has been bobbing around zero for most of this year.

9.34am BST

Here's the key points from today's inflation report:

9.31am BST

Here we go! UK inflation has turned negative again!

The Consumer prices index fell by 0.1% in September, the Office for National Statistics reports. That's weaker than the zero reading that economists had expected.

9.26am BST

Crumbs! The pound has just taken a dive in the foreign exchange markets, dropping almost one cent against the US dollar.

Leaked #CPIguesses

9.19am BST

More signs of weakness in Germany - Berlin is expected to trim its estimate for growth this year to 1.7%, down from 1.8%.

Economy minister Sigmar Gabriel could announce the new forecast tomorrow, according to Reuters.

9.06am BST

Just 30 minute to go until we get the Britain's inflation date for September.

City economists broadly expect that the consumer prices index will remain flat for a second month, leaving inflation at zero. But a negative reading can't be ruled out.

Falling pump prices and a cut in energy bills by British Gas are expected to have kept inflation at zero last month, putting little pressure on the Bank of England to raise interest rates from their record low any time soon.

Official figures on inflation due at 9.30am are forecast to show no change in the consumer prices index measure. Against the backdrop of tumbling global commodity prices, from food to oil, inflation in the UK has been at or close to zero since February, well below the Bank's target of 2%.

Related: UK inflation forecast to stay at zero

8.58am BST

MPs could give Gertjan Vlieghe, Britain's newest interest rate setter, a rough ride when he appears before them in an hour's time.

"It's probably right that happens because financial markets have not had a great reputation recently. Sadly, I think, that will overshadow what is an otherwise great appointment."

BOE's New Official Faces Grilling on Hedge-Fund Links, Rate View http://t.co/p8V7aimgKB via @business

8.45am BST

Bloomberg economist Maxime Sbaihi predicts that today's ZEW survey, due at 10am BST, will show economic confidence deteriorated in Germany this month.

Combination of #refugeecrisis, #VolkswagenScandal & EM slowdown is likely to weigh on the German ZEW survey for October (released today).

8.31am BST

European stock markets are all falling this morning, as the 20% slide in Chinese imports last month spooks traders.

In London, the FTSE 100 has lost 36 points, or 0.6%, led by mining stocks such as Glencore (-4.5%).

A whopping 20% fall in Chinese imports in September didn't get the day off to the best start, with that drop in demand sure to cause ripples of worry the world over.

8.13am BST

Shares in SABMiller have jumped by 9% at the start of trading in London, to around 39.50.

That's short of the 44 per share proposal which its board have accepted; the City may not be 100% convinced that AB InBev will pull this deal off.

7.57am BST

You know a deal is big when it moves the pound.

Here's how sterling reacted to the news that AB INBev and SABMiller have agreed terms.

7.49am BST

One of the biggest takeover battles in the City in recent years is heading to a climax this morning.

They have a deal. #SABMiller agrees "in principle" to 44 per share offer from #ABInBev. Now they face the regulators.

Related: SABMiller agrees AB Inbev takeover deal of 68bn

7.46am BST

The impact of China's slowdown will be felt around the globe, warns economist Cees Bruggemans.

China September trade: exports -3.7% yoy, imports -20%. China is Aussie & Kiwi biggest export destination. Doesn't bode well for currencies

7.38am BST

The 20% tumble in Chinese imports last month means that growth is continuing to slow, says Yang Zhao, China economist at Nomura Holdings Inc. in Hong Kong.

He said (via Bloomberg)

"Import growth remained sluggish, suggesting weakening domestic demand, particularly investment demand

We maintain our view that GDP growth will decline to 6.7 percent in the third quarter."

7.33am BST

The latest trade data from China has sent a shiver through the markets this morning.

Chinese imports slumped by over 20% year-on-year in September (in dollar terms), a worse performance than economists had expected. That means imports have now fallen for 11 months running, as the country's economy has slowed.

Imports plunged 20.4% in September from a year earlier to $145.2bn, customs officials said, due to weak commodity prices and soft domestic demand.

These factors will complicate Beijing's efforts to stave off deflation, one of the headwinds threatening the world's second biggest economy.

Equities down, metals down, Oz$ down...after Chinese imports SLUMP 17.7% pic.twitter.com/IRtHHSA4Pm

7.21am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After the glamour and drama of yesterday's Nobel economics prize, we're back into the gritty world of data this morning.