Chancellor Rachel Reeves will be keeping a close eye on inflation data ahead of her autumn budget, due next Wednesday.Elsewhere this morning, there's upheaval at WH Smith, as my colleague Joanna Partridge reports:WH Smith's chief executive has stepped down with immediate effect, after a review found accounting failures in its North American division, prompting the retailer to slash its profit outlook.Our priority now is to rebuild trust and credibility and to improve the performance and profitability of our North America division.We are confident that the actions we have taken and will continue to implement over the months ahead will ensure a strong foundation for the business going forward. Continue reading...
Rolling coverage of the latest economic and financial news, as shares fall across Asia and bitcoin hits a seven-month lowEurope's major share indices are down by more than 1%, as the sell-off spreads across global markets.The UK's FTSE 100 index fell by 0.9%. Germany's Dax is down 1.3%, France's CAC and Italy's FTSE Mib both lost 1.5%, and Spain's Ibex dropped 1.6%.It's been a challenging start to the week as markets brace for two key events: Nvidia's earnings tomorrow night and the US payrolls report on Thursday.For now, equities remain under pressure, with the S&P 500 (-0.92%) posting a third consecutive loss [on Monday] for the first time since September and marking its worst three-day run since April (-2.61%) with futures down another half a percent as I type this morning. Concerns swirling around the AI trade pushed Nvidia (-1.88%) to another decline.I think [OpenAI] can be very successful as a company but at the same time I'm very nervous about the size of these investments in these data centres. That's the particular thing that I am concerned about." Continue reading...
David Zahn of Franklin Templeton said bond yields could rise in response to chancellor's fiscal plans and government would have to reactThe bond markets could force Rachel Reeves to deliver a second budget if investors are disappointed by the chancellor's fiscal plans next week, a City investor has warned.David Zahn, the head of European fixed income at Franklin Templeton, said the biggest risk from the budget on 26 November was that Reeves disappoints", leading to a sharp rise in bond yields - the interest rate on UK government debt. Continue reading...
The Maga base rallied on inflation and racial grievances, but stressing race over the economy is costing the US presidentDonald Trump's 2024 campaign strategy leaned heavily on two sources of grievance among the Maga base. The first was the rising cost of living, propelled by the sharp burst of inflation that peaked at 9% a year in July 2022. Though inflation had receded to 2.7% by election day, frustration over prices convinced many voters that Trump would be a superior steward of the economy. The other theme was race.The strategy won the presidency. Then Trump made a mistake: focusing relentlessly on hostility towards immigrants and the diverse citizens of urban America, the president pretty much ignored - nay, worsened - his supporters' economic woes. In elections earlier this month, US economic grievances came back to bite him. Pummeled by voters, Trump is now trying to recover his economic narrative. But it may be too late. Continue reading...
From mobiles to insurance and subscriptions, firms are able to exploit the fact they know more than customersEver felt swizzed by the small print in your mobile contract, bamboozled by a plethora of insurance products or locked into a subscription you signed up for by mistake?Then you are far from alone: a paper on the UK's productivity predicament suggests the way the markets for some key services work is not only a monumental pain for consumers but bad for the economy, too. Continue reading...
In the local authority where people have the least spare cash there are hopes the chancellor will instil changeAnika* has a full-time job, but says she never eats in local cafes or restaurants and takes her lunch to work. The cost of living is too high for her to buy more than the basics of life.Everything is so expensive. I cry, and ask myself what more can I do to make things better," she says. Continue reading...
by Richard Partington Senior economics correspondent on (#71GFG)
Paul Nowak says OBR should be modernised to ditch hardwired' support for austerity economicsBritain's budget watchdog is in danger of strangling growth and should be modernised to ditch its hardwired" support for austerity economics, the Trades Union Congress has warned.Less than two weeks before Rachel Reeves's autumn budget, the trade union umbrella group said the Office for Budget Responsibility (OBR) was at risk of being a straitjacket" on growth in living standards. Continue reading...
Retreat from plans to increase income tax means Labour is unlikely to make system fairer and more coherentFor decades now, whenever the British public has faced the prospect of tax rises, large sections of the electorate - so large they sway most politicians - have made it quite clear, let those increases be by stealth.It is a message every chancellor since Nigel Lawson has heeded, with just a few honourable exceptions in the intervening decades. Continue reading...
Survey finds 60% of key cities councils are planning to sell assets to meet costs of adult and children's social careEnglish councils are planning to sell social clubs, sports centres and shopping arcades as they bet on a fire sale of assets to balance the books, according to a survey of local authorities.The key cities group of councils, which represents second-tier cities in England, said 60% of councils were planning to sell assets to meet the escalating costs of adult and children's social care. Continue reading...
by Kiran Stacey, Richard Partington and Rowena Mason on (#71FFY)
Chancellor expected to freeze level at which people start paying income tax for two years rather than putting rates upRachel Reeves will raise 7.5bn from millions of workers by freezing tax thresholds at the budget, after her decision to scrap controversial plans to raise income tax led to a sell-off in the bond market.Government sources said the chancellor had decided to maintain the level at which people start paying income tax for two years while abandoning plans to raise the headline rate, which would have broken a manifesto promise. Continue reading...
Jitters over the UK's autumn budget grow as chancellor Rachel Reeves abandons plans to raise income tax on 26 NovemberThe pound is now trading down just 0.24% versus the dollar at around 1.3159.The 10-year gilt yield is now up 0.06 percentage points at 4.49%Chancellor of the Exchequer Rachel Reeves has been able to drop plans to raise income taxes because she received an improved fiscal forecast from the UK's budget watchdog, people familiar with the matter said.The latest update from the Office for Budget Responsibility moved in a significantly more favorable direction due to the strength of government receipts and stronger wage performance, the people said, asking not to be named discussing sensitive matters. Continue reading...
John Furner, the retail chain's boss in the US, will succeed McMillion as global CEO after 31 JanuaryWalmart's CEO, Doug McMillon, will retire next year after more than a decade in charge of one of the world's largest retailers.John Furner, the chain's boss in the US, will succeed McMillion as the Bentonville, Arkansas-based grocery retailer's global CEO after 31 January. Continue reading...
New economic data shows fall in UK exports to the US, as Britain's economy shrinks slightly in SeptemberChancellor Rachel Reeves is harking back to the happier days of stronger growth in the first two quarters of this year.Responding to this morning's GDP figures, Reeves says:We had the fastest-growing economy in the G7 in the first half of the year, but there's more to do to build an economy that works for working people.At my Budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living." Continue reading...
Announcement by first minister John Swinney comes after Moody's and S&P give country same credit rating as UKThe Scottish first minister John Swinney has said Edinburgh is on track to issue its own government bonds, nicknamed kilts", after the country was given the same credit rating as the UK.Two ratings agencies Moody's and S&P Global gave Scotland a score of Aa3 and AA respectively, echoing their judgment for the UK as a whole. Continue reading...
Sale of index-linked debt sees record demand, while UK bond yields are only marginally higher on the back of political chaos'Southern Water is looking to tap the bond markets for hundreds of millions of pounds, just days after apologising for the catastrophic spill of plastic biobeads that polluted the Sussex coastline.Bloomberg reports that Southern Water is looking to sell as much as 600m of bonds today.The firm is sounding out investors for five-year and eight-year sterling denominated notes, both with a spread of around 230 basis points over gilts at initial price thoughts, according to a person familiar with the matter.At the same time, the company announced a tender offer for 350 million of Sub-Class A4 notes that mature in March 2026 at a purchase price of 100.5. It will conclude on November 19, according to a statement. Continue reading...
Experts say Brussels must stand up against Beijing using supplies of vital chips and minerals as sword of Damocles'As interventions go it was pretty audacious. The Dutch government decision at the end of September to take over Nexperia, a Chinese-owned chip factory, almost brought the entire European car industry to a halt.Tensions between Europe and China de-escalated over the weekend as Beijing confirmed it would ease restrictions on automotive chip supplies to the EU, prompting sighs of relief in car factories around the world. Continue reading...
Industry body says shoppers are waiting for discount day, as Barclays reports falling consumer confidenceRetailers suffered the slowest sales growth since May last month as shoppers were cautious in the run-up to expected budget tax rises and held out for Black Friday discounts.Sales rose 1.6% in October, a step down from 2.3% the month before, according to the latest figures from the British Retail Consortium (BRC) trade body and the advisory group KPMG. Continue reading...
ITV says it is in preliminary discussions regarding a possible sale of its M&E business to Sky for an enterprise value of 1.6bn.Despite pre-budget uncertainty, UK house prices jumped by 0.6% last month according to new data from lender Halifax.Halifax reported that the value of the average UK home increasing by almost 1,650 last month to 299,862 - the highest on record. This also lifted the annual rate of hous inflation to 1.9%, from 1.3% in September.Demand from buyers has held up well coming into autumn, despite a degree of uncertainty in the market, with the number of new mortgages being approved recently hitting its highest level so far this year.There is no doubt that affordability remains a challenge for many. Average fixed mortgage rates are currently around 4% and likely to ease down further, but with property prices at record levels, moving home can feel like a stretch.A split of ITV's operations is one of a number of options that the broadcaster's management, led by chief executive Carolyn McCall, has looked at as part of efforts to boost the value of the company.McCall's team believes ITV is undervalued on the stock market.Doubling down on UK broadcasting would mark a gutsy bet by Comcast, which has written down the value of Sky by billions of dollars since acquiring it for $39 billion in 2018. The US company agreed in June to sell its German business Sky Deutschland for an upfront price of 150 million ($173 million), a fraction of its valuation in previous years, showing how much the market for European broadcasters has deteriorated.Comcast's deliberations are ongoing and may not lead to a transaction, the people said, asking not to be identified because the information is private.Media analyst Ian Whittaker told the BBC that a combination of Sky and ITV would mean that had 70% plus" of the UK TV advertising market, which he said in normal circumstances" would be rejected by regulators because of the dominance it would give them.But he added that with questions hanging over the future of TV, a takeover could be seen as almost a rescue deal. Continue reading...
S&P 500 down 1.1% and Nasdaq down 1.9% as hiring freezes and layoffs sharpen fears US economy is slowingFears that the US economy is slowing, with firms shedding jobs and imposing hiring freezes, sent Wall Street tumbling on Thursday.The S&P 500 index of leading firms was down 1.1% as investors also highlighted concerns about the potential for a slump in the value of businesses that have benefited from huge investments in artificial intelligence. The tech-heavy Nasdaq Composite fell 1.9%. Continue reading...
Economists predict UK rate cuts in December, after narrow vote to hold Bank Rate at 4% todayThe pound is trading near a seven-month low this morning, as the City awaits the Bank of England's decision on interest rates.Sterling is up just 0.1% against the US dollar at $1.3064, having threatened to fall below $1.30 earlier this week for the first time since April.Yet fresh dovish signals from the BoE today could validate further downside, keeping momentum stretched and positioning skewed.There's obviously a list of possible tax measures, but raising taxes on banks is a long way down that list," said one person briefed on her thinking.Another person close to the process said: She is not minded to do this." A third person said: Banks are already paying a lot of tax. We aren't going to do it." Continue reading...
Scheme aims to raise $125bn to invest in bonds, with returns used to reward tropical countries for conservationAs a battle-scarred veteran of the war against nature, Garo Batmanian has spent 45 years trying to defend the Amazon rainforest. For most of that time, the resistance he leads has been outfunded and outgunned by those who profit from destruction. The most Batmanian felt he could achieve was to slow the advance of the chainsaws and tractors.But the director-general of Brazil's forest service feels there could be a chance at the Cop30 climate summit in Belem, Brazil, next week, not just of an even fight, but perhaps a victory. There is one condition: world governments must rally behind an initiative being launched by the host nation - the Tropical Forest Forever Facility (TFFF). Continue reading...
This blog is now closed, you can read more on this story hereReeves says welfare needs to be reformed.There is nothing progressive about refusing to reform a system that is leaving one in eight young people out of education, or employment.I put our public finances back on a firm footing, provided an urgent cash injection into a faltering public services and began rebuilding our economy.But since that budget, the world has thrown even more challenges our way. Continue reading...
The chancellor is levelling with us about the pain to come. Is there anyone outside Planet Rachel who couldn't see that truth two years ago?This would actually have been quite an understandable day for Rachel Reeves to cry at work. I'm really clear," the chancellor told the CBI less than a year ago, I'm not coming back with more borrowing or more taxes." Can I shock you ...? We did wipe the slate clean," she continued less than 12 months ago. [We] put public finances and public services on a firm footing, and as a result we won't have to do a budget like this ever again." Again: can I shock you ...?So, then, to Reeves's podium appearance from Downing Street this morning. Vibes-wise, it was like knowing you were going to be very incompetently mugged in three weeks' time, but having to listen to a speech from the mugger about the context of it all. Or maybe a speech from an asteroid trying to get out in front of what people are going to say about it when it craters the West Midlands.Marina Hyde is a Guardian columnistA year in Westminster: John Crace, Marina Hyde and Pippa Crerar
Expert panel says report on gap in global wealth between rich and poor highlights need for intervention by G20More than $70tn (53tn) of inherited wealth will pass down the generations across the world over the next decade, widening inequality and highlighting the need for intervention by the G20 group of leading nations, a group of economists and campaigners have warned.In a report ahead of the G20 meetings in Johannesburg, hosted by the South African government later this month, the expert panel said the gap in global wealth between rich and poor will widen over the next decade without a permanent monitoring group such as the UN Intergovernmental Panel on Climate Change. Continue reading...
by Presented by Pippa Crerar and Kiran Stacey; produc on (#7170D)
Nigel Farage promised to set out his fiscal stall in a major speech in the City of London, but what did he actually say? Pippa Crerar and Kiran Stacey discuss Farage's retreat from its election promise to cut 90bn of taxes, his failure to commit to the pensions triple lock and his desire to woo the wealthy.Meanwhile, Rachel Reeves continues to labour on the autumn budget. What's going on behind the scenes?
Rolling coverage of the latest economic and financial news, as Opec+ pauses oil output hikes beyond December amid fears of a crude glutShares in Italian drinks maker Campari have fallen almost 3% tthis morning after Italian tax police seized 1.29bn worth of shares in the company, held by its controlling shareholder, following a tax evasion investigation.On Friday police said they were seizing Campari shares held by its controlling company Lagfin after a probe found 5.3bn of allegedly undeclared capital gains.The booking cycle for academic year 2025/26 has seen an increase in reservations from UK students and a reduction in the number of Chinese students staying with us, potentially the result of geopolitical events.Rental growth remains in line with guidance and we are well positioned for January sales activity. All the while, we have continued to improve the quality of the portfolio whilst delivering on capital deployment commitments." Continue reading...
EY Item Club downgrades forecast for next year, with Office for Budget Responsibility expected to follow suitThe prospect of looming tax rises and a fall in business investment will restrict the UK's economic growth rate next year to less than 1%, according to a health check of the economy by a leading consultancy.With less than four weeks before Rachel Reeves delivers her budget on 26 November, the EY Item Club has downgraded Britain's growth for next year, indicating that the economy will continue to expand at a sluggish pace, limiting tax receipts and the chancellor's financial room for manoeuvre. Continue reading...
Oxfam warns Trump policies risk driving inequality to new heights - but Democrats have also exacerbated wealth gapThe collective wealth of the top 10 US billionaires has soared by $698bn in the past year, according to a new report from Oxfam America published on Monday on the growing wealth divide.The report warns that Trump administration policies risk driving US inequality to new heights, but points out that both Republican and Democratic administrations have exacerbated the US's growing wealth gap. Continue reading...
The US high court will hear arguments on whether Trump's erratic imposition of global tariffs is legally validDonald Trump thrives on emergencies. He cried havoc on the very first day of his second term, declaring a national emergency caused by an invasion" of illegal aliens" from Mexico. He has since invoked emergencies more than any president since the passage of the National Emergencies Act in 1976.Next Wednesday, he faces another of his own making, as the US supreme court hears oral arguments on whether his globe-shaking signature economic policy - tariffs - is legally valid. Continue reading...
A debate on how to achieve fairer, greener growth could point the way to a successor for neoliberal capitalismWhat replaces neoliberal capitalism is a question at the forefront of Donald Trump's mind every day.The US president has never much liked those elements of the Washington consensus that celebrate free markets and liberal trade, as we have come to see in both his presidencies. Continue reading...
by Richard Partington Senior economics correspondent on (#71573)
Poor output since the leave vote has landed Rachel Reeves with a bigger-than-forecast budget spending gapFor Rob Rooney, the impact of Brexit for the City of London is clear. Frankfurt, Madrid, Milan and Paris are all doing better than they were. It has been at London's expense. There is no question about that."In his time as Morgan Stanley's top executive in London, Rooney led the US investment bank's relocation of hundreds of bankers and billions of pounds of assets to Frankfurt to sidestep Britain's shock EU departure. More than 440 other City companies followed suit, moving almost 1tn between them - roughly 10% of the entire UK banking system - to financial hubs across the EU. Continue reading...
by Justin McCurry in Gyeongju and Helen Davidson in T on (#714XP)
Mark Carney warns Asia-Pacific leaders global economy undergoing profound change, as China's president mounts defence of free tradeThe Canadian prime minister, Mark Carney, has warned that the era of free trade and investment that formed the foundations of the postwar global economy has ended.In a stark message to Asia-Pacific leaders at the Apec summit in South Korea on Friday, Carney said rules-based open trade no longer worked in a global economy that was undergoing one of its most profound periods of change since the fall of the Berlin Wall in 1989. Continue reading...
Talk of small boats' may dominate politics and the media, but the cost of living crisis is what most adults spend their time worrying aboutWage increases finally began to outpace price rises in June 2023, so we could technically class the previous month as the height of the cost of living crisis. Certainly, May that year was when the headlines about butter peaked. Lurpak and Anchor, both owned by the same dairy co-op, Arla, had reduced the size of their standard butter pack from 250g to 200g. The price was brought down accordingly, in due course, but for a while, certain supermarkets were still charging half-pound prices for a what would we even call 200g?" pack.The problem was, butter units are universal. A half-pound of butter always weighs the same amount in your hand, regardless of the brand. Seeing the small version in a supermarket felt almost sci-fi, like a tiny off-key detail that alerts you to the fact you've been kidnapped by aliens into a simulacrum world. They would have gotten away with it, but for that tiny flaw. Forced by the outcry to release a statement, the brand said it was trying to make prices more accessible" for consumers. One almost feels embarrassed for it, flailing around for cosy equality language that didn't explain its butter-miniatures at all.Zoe Williams is a Guardian columnist Continue reading...