Rolling coverage of the latest economic and financial news, as Bank of England governor Andrew Bailey switches vote - allowing rate cut today

Another reduction expected next year but monetary policy committee is deeply divided over inflation prospects

Rate-setters back quarter-point cut after steep fall in inflation and weak economic data but vote remained close

UK inflation falls more than expected to 3.2% cementing expectations of interest rate cut tomorrow; oil prices jump after Trump orders Venezuela blockadeThe Food and Drink Federation has taken a closer look at food prices in today's UK inflation data. It says:By category, we have seen a mixed performance. The ONS reported on 48 main categories this month, of which 26 saw inflation slowing, with inflation rising for the other 22 categories.Prices rose the fastest for beef and veal (27.7%), chocolate (17.3%), whole milk (14.8%) and coffee (14.5%).Prices fell for nine categories, with the largest drops for: olive oil (-16.2%), flours (-6.1%), pasta (-4.2%) and sugar (-4.0%).It's good to see food inflation starting to fall, not least as shoppers fill their cupboards for the festive season. Nonetheless, food prices remain higher this Christmas than last and many consumers are having to make tough choices about what they buy this year.Manufacturers continue to work hard to cut costs and pass any potential savings on to consumers, but themselves continue to face significant cost pressures. To really impact this persistent food inflation, we need government to redouble efforts with food businesses to reduce costs, like energy, and boost growth and productivity to bring down prices in the coming weeks and months across the food and drink supply chain. Continue reading...

Monetary policy committee, cautious in recent months, expected to respond with cut in interest rates

Drop in November annual rate adds to case for Bank of England cut to interest rates on Thursday

Price of turkey jumps as much as 15 compared with 2024, while chocolate has steepest mark-upShoppers are paying up to 70% more for Christmas chocolate treats compared with last year, while the price of a turkey has jumped by as much as 15, according to the consumer champion Which?The group analysed a range of ingredients for a typical Christmas dinner, as well as other typical festive treats including mince pies, sparkling wine and chocolates. Continue reading...

Rolling coverage of the latest economic and financial news, as US non-farm payrolls rise by 64,000 in November but shrink by 105,000 in October

October figure from ONS suggests employers laid off workers, as earnings growth excluding bonuses fell

Government says arrangement will bring in extra 400m on top of more than 15bn of existing annual trade with KoreaThe UK has signed a new trade deal with South Korea designed to increase exports of cars, Scottish salmon and Guinness canned in Britain.Keir Starmer described the deal, which replaces an existing agreement, as a huge win for British business and working people". It follows UK deals with India and the US, and the free trade agreement with the EU clinched this year. Continue reading...

Reflecting on chaos of early pandemic, former chancellor said it was acutely stressful' to see rising interest bill on government bondsRishi Sunak was concerned about the UK's ability to fund itself in March 2020 after the government announced rescue measures costing tens of billions of pounds to prevent mass redundancies, the Covid-19 pandemic inquiry has heard.The former prime minister, who was chancellor when the first UK lockdown was announced, said he feared foreign investors had become more concerned about Britain's ability to pay its way than other countries in a similar situation. Continue reading...

City's small shops are reaching tipping point amid higher business rates, staff costs and big chains eager to move inIt's lunchtime at Dormitory, an independent bedlinen store on Gloucester Road in Brighton, and proprietors Sue Graham and Cathy Marriott are peering across the street at the Brighton Sausage Co. They can tell when shoppers have stayed indoors by the number of sausage rolls left in the window. It's a Tuesday before Christmas - supposedly the busiest time of the year. But there's still a big pile remaining.In 10 years' time, we're all going to be going, We need shops. Where have they all gone?'," Marriott says. Her warning echoes widespread fears for Brighton's plentiful independent shops, which have given the Sussex city international renown. Continue reading...

The City expects a cut in interest rates on Thursday but the economic prospects for 2026 complicate the pictureIn the economic gloom of Labour's first year in power, Rachel Reeves has had a reliable shred of comfort to cling to: five times since the general election, the Bank of England has cut interest rates.This week, in all likelihood, the chancellor will get a sixth to shout about, as Threadneedle Street prepares to reduce borrowing costs in an early Christmas present that will be seized upon by the Treasury. Continue reading...

New business rates regime that is poised to hit pubs and hotels is latest example of hasty decision-makingThere is a heavy cloud hanging over Labour's Christmas celebrations.The most recent figures show the economy is going backwards and worse, the slide is prompting recession talk in the corridors of City banks. Continue reading...

Mark Rowley says capital is a safe city, and claims of no-go areas are completely false'Members of the House of Lords have proposed totally unnecessary" and very cruel" amendments to the assisted dying bill in a bid to scupper it, Kim Leadbeater, the MP leading the campaign for the legislation, has said. Kiran Stacey has the story.I have beefed up the post at 9.08am to include the direct quote from Wes Streeting about not being able to guarantee patient safety in the NHS if the strike by resident doctors in England goes ahead. You may need to refresh the page to get the update to appear. Continue reading...

Disappointing UK GDP report shows economy contracted by 0.1% in both September and OctoberToday's GDP report also shows the economy only grew by 1.1% over the last year - a weak performance.The ONS says:GDP is estimated to have grown by 1.1% in the three months to October 2025, compared with the same three months a year ago. Over this period services grew by 1.5% and construction grew by 1.1%, whereas production fell by 1.3%.GDP is estimated to be 1.1% higher in October 2025, compared with October 2024.The economy contracted slightly in the latest three months, as production fell again and services growth stalled.

GDP fell by 0.1% in October as activity failed to regain momentum after cyber-attack on Jaguar Land Rover

Exclusive: John Fingleton says regulators need to change their attitude to risk to end the country's economic stagnationOverbearing health and safety rules are stopping Britain building new infrastructure, according to the economist whom Keir Starmer has cited as an inspiration for his growth strategy.John Fingleton, who recently wrote a report for government on how to encourage developers to build new nuclear power plants, told the Guardian regulators needed to change their attitude to risk if the country was to end its long economic stagnation. Continue reading...

Rolling coverage of the latest economic and financial newsIn the energy sector, Russia's revenues from exports of crude oil and refined products has fallen to its lowest level since the invasion of Ukraine in 2022.The International Energy Agency has reported this morning that Moscow's sales of fossil fuels fell again in November due to lower export volumes and weaker prices.These brighter prospects extend to our 2026 forecast, which we have upgraded by 90 kb/d, to 860 kb/d y-o-y.We need to ask who is setting the agenda for the UK's future with AI."In the absence of independent regulation or scrutiny, we're at the mercy of technology companies' commercial interests aligning with what the public want." Continue reading...

Rolling coverage of the latest economic and financial news, as Evoke decides to undertake a review of the Company's strategic optionsEuropean stock markets are mostly in the red this morning, as defence company stocks fall.Shares in German automotive and arms manufacturer Rheinmetall are down 3.3%, UK weapons maker BAE System has dropped by 1.27%, and Italian defence firm Leonardo has lost 2.2%.Mainland European equity markets are heading lower in a day that will be dominated by monetary policy out of the Americas.Notably, the defence sector has particularly suffered this morning, with the likes of BAE Systems, Rheinmetall, and Thales lose traction as the end of the Russia-Ukraine war comes into sight. Unfortunately for Europe, the peace agreement appears to be a deal Trump has formed with Russia behind the back of European leaders whom the President has labelled weak". Continue reading...

Chancellor defends budget but tells MPs there were too many leaks' and that and much of them were inaccurateRachel Reeves has condemned leaks before her make-or-break budget as unacceptable" as she revealed her income tax U-turn was agreed in partnership with Keir Starmer.Defending her tax and spending plans before MPs on the Commons Treasury committee, the chancellor said she had been frustrated by leaks that were clearly not authorised" before her November speech. Continue reading...

Data from World Inequality Report also showed top 10% of income-earners earn more than the other 90%

UK gilt yields may have dropped a bit relative to other major countries, but it's not at all clear that the fall with continue

Thinktank says Rachel Reeves's budget had started to assure bond markets about fiscal approach

In a boost for Rachel Reeves, deputy governor says analysis shows chancellor's policies will lower annual rate next yearThe Bank of England expects Rachel Reeves's budget will reduce the UK's headline inflation rate by as much as half a percentage point next year.In a boost for the chancellor after last month's high-stakes tax and spending statement, Clare Lombardelli, a deputy governor at the central bank, said its early analysis showed the policies would lower the annual inflation rate by 0.4 to 0.5 percentage points for a year from mid-2026. Continue reading...

Rolling coverage of the latest economic and financial news, as Bank of England policymakers testify to MPs on the Treasury committeeTeresa Ribera, the EC's executive vice-president for Clean, Just and Competitive Transition, has explained why the Commission is probing Google over its artificial intelligence activities:AI is bringing remarkable innovation and many benefits for people and businesses across Europe, but this progress cannot come at the expense of the principles at the heart of our societies,"This is why we are investigating whether Google may have imposed unfair terms and conditions on publishers and content creators, while placing rival AI models developers at a disadvantage, in breach of EU competition rules." Continue reading...

Age of diagnosis' of low-level mental health issues' such as ADHD making system too costly, Conservative leader says

Booming Chinese exports have driven trade surplus past $1tn but also reveal the extent of country's reliance on foreign marketsA boom in exports that has pushed China's trade surplus past $1tn for the first time reveals the extent to which its economy is still overwhelmingly reliant on foreign markets - and the difficulty figures like Donald Trump will have in trying to rebalance global trade.Data released on Monday shows that in the first 11 months of this year, China's trade surplus in goods was $1.076tn. The record trade surplus comes even as exports to the US have plummeted, a reflection of the bruising US-China trade war that, despite a recent cooling, has dampened the flow of goods between the world's two largest economies. Continue reading...

Bank reports 1.1% drop in card spending despite Black Friday boost for retailersUK households cut back on spending at the fastest pace in almost five years last month as consumers put Christmas shopping on hold, according to a leading survey.Adding to concerns that uncertainty surrounding the budget has helped dampen consumer confidence, Barclays said card spending fell 1.1% year on year in November - the largest fall since February 2021. Continue reading...

Paramount says its hostile offer provides superior value, and a more certain and quicker path to completion to WBD shareholders"

Bank under budget pressures as it responds to former Fed chair's report into failure to forecast surging inflation

Markets expect final rate cut amid pressure from Trump as Jay Powell urges central bank to proceed with cautionA divided Federal Reserve meets this week to decide whether to cut interest rates, the US central bank's last meeting before the end of a tumultuous year.The US central bank faces a number of unique challenges as it weighs its latest interest-rate decision. Continue reading...

My husband, Bill Kingdom, who has died aged 69, was a global leader in water supply and sanitation. He worked for 20 years with the World Bank, based in Washington DC from 1999 to 2019, where he led urban and rural water supply and sanitation projects. He developed innovative financial and governance frameworks in south and east Asia, southern Africa, and the Middle East. His work provided access to clean and affordable water for some of the poorest people in the world.Bill's early career was with Mott MacDonald, the engineering consultants based in Cambridge, from 1978 to 1986. During that time he worked for several years on water projects in Indonesia, where he developed a love for the country and enduring friendships. He became fluent in the local language and enjoyed visiting bric-a-brac markets. Later, based in Oman, Bill was instrumental in bringing drinking water to Muscat. Continue reading...

Mark Carney is considering lifting a tanker ban that has protected coastal communities for 53 yearsThe distress call went out to the Canadian coast guard station after midnight on an October night. The Nathan E Stewart, an American-flagged tugboat, sailing through the light winds and rain of the central British Columbia coast, had grounded on a reef.The captain tried to reverse, moving the rudder from hard over port to hard over starboard. The boat pivoted but did not move, and the tug repeatedly struck the sea bed. Continue reading...

High street banks dodged a windfall tax - now they should invest in growth of local lendersNikhil Rathi, chief executive of the Financial Conduct Authority, made a pilgrimage on Friday from its glass and steel HQ in east London to the Pioneers Museum in Rochdale - the spiritual home of the co-operative movement.His unlikely day trip aimed to highlight the City watchdog's role in opening the way to a doubling of the size of the mutuals sector - a Labour manifesto pledge. Continue reading...

In today's newsletter: Critics say the OBR's growing influence has outpaced its accountability, raising questions about whether it serves the public, the Treasury, or the marketsGood morning. The Office for Budget Responsibility (OBR) was designed to be an institution that crunches numbers quietly in the background. Instead, over the past week, it has found itself dragged kicking and screaming into the political spotlight.On the day attention should have been fixed on Rachel Reeves's economic plans, many instead watched the fallout from the OBR's accidental early publication of her budget. After the leak there followed days of anger and disbelief, which culminated in the resignation of the OBR's chair, Richard Hughes.UK news | Vladimir Putin is morally responsible" for Dawn Sturgess's novichok death, an inquiry has found. Sturgess died after spraying herself with a nerve agent smuggled into the UK by Russian agents.UK politics | A group of Holocaust survivors have demanded Nigel Farage tell the truth and apologise for the antisemitic comments that fellow pupils of Dulwich College allege he made toward Jewish pupils, as the Reform leader turned on broadcasters for questioning him about the growing scandal.Eurovision | Ireland, Spain, Slovenia and the Netherlands will boycott next year's Eurovision after Israel was given the all-clear to compete in the 2026 song contest despite calls by several participating broadcasters for its exclusion over the war in Gaza.UK politics | Lord Evans of Watford, suspended by the House of Lords for breaking lobbying rules after a Guardian investigation, is now facing claims that he received at least $1m (760,000) in an allegedly corrupt deal.US news | The New York Times is suing the US defense department and the defense secretary, Pete Hegseth. The lawsuit argues restrictions imposed by the Trump administration violate free speech protections. Continue reading...

Commission unveils 3bn strategy to de-risk and diversify supply chains for critical rare earth metals and elements

Private employment decreased by 32,000 jobs last month after an upwardly revised 47,000 increase in OctoberUS private payrolls unexpectedly declined in November, the ADP employment report showed on Wednesday.Private employment decreased by 32,000 jobs last month after an upwardly revised 47,000 increase in October. Economists polled by Reuters had forecast private employment rising by 10,000 jobs after a previously reported 42,000 rebound in October. Continue reading...

A viral essay has caused outrage in the US with its argument that the poverty line for a family of four is now $136,500. But is this so wrong?Have you heard that a family of four in the US is now considered poor if their household income is under $136,500 (103,300) a year? Don't @ me about the maths - I'm just the messenger. The person behind this calculation is Michael Green, who is chief strategist and portfolio manager for Simplify Asset Management. I think this means that he makes large sums of money by fiddling with even larger sums of money. When not doing that, Green writes a newsletter and recently published a viral piece on Substack arguing that the poverty line, calculated as $31,200 by the Department of Health and Human Services, is a broken benchmark". These days a family with a low six-figure income is officially the new poor", he reasoned.Green's essay has sparked numerous rebuttals, with people arguing that he had turned the poverty measure into a middle-class measure. It's completely disconnected from reality," the economist Kevin Corinth said, for example, noting that the $136,500 figure was higher than the US median household income of $83,730. It's laughable to put a poverty line far above the median income in the United States." Continue reading...

Economic obsession | Two-child benefit divide | Paddington stare | No Place | Word of the yearYour editorial (The Guardian view on OBR v the Treasury: ministers have embraced the theatre of errors, 1 December) correctly flags the huge uncertainty in trying to come up with a five-year forecast of the difference between taxes and spending. Although markets like big fiscal headroom numbers, they seem to ignore the wise words of Bertrand Russell, who defined mathematics as the subject in which we never know what we are talking about, nor whether what we are saying is true". This also applies to the concept of the medium-term fiscal headroom that economists and politicians alike are obsessed with.

With the row deepening over budget leaks, who is most likely to replace Richard Hughes in the increasingly thankless role of chair?Had Richard Hughes not resigned as boss of the Office for Budget Responsibility (OBR) on Monday amid the indignation over the accidental publication of Rachel Reeves's budget, the Treasury might now be under pressure over the tsunami of leaks that preceded it.The OBR's David Miles told MPs on Tuesday the leaks had been so widespread and misleading that the watchdog feared its reputation was at stake. Continue reading...

BoE governor Andrew Bailey says it's important to remember why Office for Budget Responsibility was created, amid row over budget leaksThe Bank of England is planning to ease capital rules for high street banks for the first time in a decade, marking the latest attempt to loosen regulations designed to protect the UK economy in the wake of the 2008 financial crisis.The central bank has proposed lowering capital requirements related to risk weighted assets, by one percentage point to about 13%, reducing the amount lenders must hold in reserve. The move is designed to make it easier to lend to households and businesses.The results of the 2025 Bank Capital Stress Test demonstrate that the UK banking system is able to continue to support the economy even if economic and financial conditions turn out to be materially worse than expected. This underscores the role of financial stability as a pre-condition for sustainable growth.UK-focused banks - Lloyds Banking Group, Nationwide Building Society, NatWest Group and Santander UK Group Holdings plc were most affected by the UK macroeconomic stress, driven by higher interest rates, inflation, unemployment and house price falls.Internationally-diversified banks - Barclays plc, HSBC Holdings plc and Standard Chartered plc faced additional pressures from global downturns and traded risk shocks in markets such as Hong Kong, China, the US and Europe. Continue reading...

Official tells MPs there was lots of information appearing in the press that wasn't particularly helpful'The Office for Budget Responsibility complained to senior Treasury officials in the run-up to the budget about a flurry of leaks that it said spread misconceptions" about its forecasts, it has emerged.Prof David Miles of the OBR's budget responsibility committee told MPs on the Treasury select committee on Tuesday that the watchdog had raised the issue of leaks with the department before the chancellor's statement last week. Continue reading...

Prices are rising on everything from energy to food - but there are ways to cushion the impactInflation measures how much prices rise over time. It is measured officially by the Office for National Statistics (ONS). Continue reading...

UK economy will grow faster than France, Germany and Italy but slower than US next year, report predicts

Labour backbenchers have been cheering it as a win for the most vulnerable in society. In fact it was aimed at the bond marketsThe charge is a grave one: that Rachel Reeves has just lied to Britons, spooking them into paying billions in extra taxes that she can splash out on higher benefits. However hyperbolic, this isn't the usual Westminster sparring; this time, someone might get hurt. A week ago, critics of Reeves and Keir Starmer were, rightly, calling their budget chaotic". Today, it's denounced as lies, and Kemi Badenoch is demanding the chancellor quit.

Richard Hughes takes full responsibility' for watchdog error as Starmer attempts to secure chancellor's positionThe chair of the Office for Budget Responsibility has resigned after a damning internal inquiry into the leak that threw Rachel Reeves's budget into chaos described it as the worst failure" in the institution's history.The departure of Richard Hughes, who said he took full responsibility" for the watchdog's failure to handle sensitive information, dragged the rolling recriminations over the budget into a fifth day. Continue reading...

The government is trapped between Labour's instincts and bond traders' demands. Sensible fixes exist, but require imagination ministers have yet shownThe confected frenzy splashed across the morning front pages from the Telegraph to the Mail is remarkable mostly for its absurdity. An outrage machine has decided that a forecast of a few billion pounds in a model that makes projections about trillions of pounds of taxes and spending is the lie of the century. We can't predict the weather next year, but apparently the public finances in 2029 can be judged with pinpoint accuracy. That's why the headlines about holes" and sleaze probes" are a joke. It is theatre, but it is bad theatre.The Office for Budget Responsibility (OBR) possesses no great moral or predictive authority. Yet many of its accusers and defenders treat it as an allseeing oracle. In fact, the OBR, to its credit, admits that its medium-term projections are frequently wrong. It often wrongly estimates inflation and productivity, and has had its assumptions upended by unforeseen events. The OBR's 2019 five-year forecast undershot actual GDP growth by 200bn. Given this degree of error, treating a projected current budget balance of 20bn in 2029-30 as a hard fact is deeply unserious.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Treasury's independent economic forecaster says outlook for economy rosier than chancellor led everyone to believe

Richard Hughes says he is stepping down in order to restore confidence in organisationQ: Yesterday you said Rachel Reeves was lying. Today you are saying she gave out false information. Are you still accusing her of being a liar?Badenoch replies: Yes." Continue reading...