I am just being real about the economy, says Andrew Bailey – latest …
Andrew Bailey has claimed he is not an “ultra-pessimist” when it comes to the UK economy, just days after he warned that the outlook for growth was among the worst he’d ever seen.
The Governor of the Bank of England hit back at accusations he was being too gloomy, insisting that he was a “realist” about the UK’s growth prospects.
Furious Tory MPs accused the governor of talking Britain down after he said there was “no doubt” that the UK’s growth potential was “lower than it has been in much of my working life”.
However, talking to the Daily Staffordshire on a regional visit on Tuesday, he said: “I’ve been written up this week as being an ultra-pessimist but I don’t see it that way. I see it as a realist view.
“That translates to us getting our sleeves rolled up and tackling the issues we face.”
Mr Bailey said Threadneedle Street policymakers were focused on bringing down inflation, which currently stands at 4.6pc.
He said: “We’ve got to get on and bring inflation down to our target of 2pc. That is the best thing we can do for growth in the economy – and we will do it.
“We start with a realist view but we are very, very, committed on behalf of the people of this country to get on with tackling the job.”
Read the latest updates below.
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10:52AM
[2]
London Metal Exchange wins court case over short-squeeze crisis
The London Metal Exchange has won its court case against one of the world’s oldest fund managers over its controversial decision to halt a runaway short squeeze in the nickel market last year.
The LME was catapulted into the global spotlight last March and drew widespread criticism after it suspended the nickel market and retroactively cancelled $12 billion of trades.
Elliott Management and Jane Street were seeking damages of $472m (£372m) but their challenges were dismissed in a ruling today.
Traders in the Ring at the London Metal Exchange in the City of London
Credit: Yui Mok/PA Wire
10:33AM
[3]
Network Rail faces probe over late trains in Wales and West of England
Britain’s rail watchdog has launched an investigation into late trains and across Network Rail’s Wales & Western region.
The Office of Rail and Road (ORR) said that punctuality and reliability has continued to deteriorate in the region while the wider network across Great Britain has seen performance stabilising.
The network covers services in Cornwall, Devon, Cardiff and Bristol, as well as those travelling from the region into London, Birmingham, Manchester and Liverpool.
Feras Alshaker, a director at the ORR, said:
While Network Rail has begun making good progress in stabilising performance elsewhere on the network, performance in the Wales & Western region has continued to deteriorate, meaning poor reliability and punctuality for passengers and freight.
Our investigation will take a detailed look at the root causes of the region’s performance issues and will consider wider contributing factors.
As part of our work we will convene a roundtable with key players in the region to support Network Rail in taking pragmatic and effective action to improve performance for all the region’s rail users.
Jeremy Hunt should scrap triple lock to reach net zero, says OECD
Jeremy Hunt should scrap the pension triple lock to pay for net zero policies, the Organisation for Economic Cooperation and Development (OECD) has said.
Our deputy economics editor Tim Wallace has the details:
The Paris-based organisation urged the Chancellor to revisit the policy as he seeks ways to reduce Britain’s national debt.[5]
Currently, the triple lock means the state pension rises by the highest of inflation, average earnings or 2.5pc. Next year, it is going up by 8.5pc, from £10,600 to £11,502, matching wage growth.
The anticipated rise comes as the UK faces increased decarbonisation costs and a surge in interest payments on the national debt, the think tank said.
Slashing emissions from power, cities, and industry is set to cost the Government 0.5pc of GDP per year, the OECD said – equivalent to around £14bn.
The loss of fuel duty from the move to electric cars is forecast to cost another 0.4pc, or around £11bn per year, by 2030.
This chart shows how the pressure comes as the British economy is already struggling.[6].
Property recovery will be ‘muted’, warn economists
The substantial rise in mortgage approvals in October still leaves approvals below their pre-pandemic average.
Mortgage approvals rose from 43,700 in September to 47,400 in October, according to the Bank of England, which is still well short of the typical 66,000 before Covid.
Imogen Pattison, assistant economist at Capital Economics, said:
Despite the stronger reading in October, mortgage approvals for house purchase are on track to total just 570,000 in 2023, the lowest since 2010.
Our view that mortgage rates will hover close to 5pc until the second half of 2024 means the recovery from here will be muted, with approvals only rising to 600,000 in 2024 still someway short of their usual level of around 800,000 before the pandemic.
Mortgage approvals rise for first time since June
Mortgage approvals increased in the UK for the first time in four months in a sign that stability is returning to the property market.
The net number of agreements rose from 43,700 in September to 47,400 in October, which was the most since July, according to data from the Bank of England.
The figure was ahead of 45,300 expected by economists.
The data also showed that gross lending fell from £18.1bn in September to £16.2bn in October.
Global bonds head for best month in 15 years
Global bonds are soaring at the fastest pace since the 2008 financial crisis, new analysis shows, as traders increasingly bet that interest rate cuts are not far away.
The rally has sent Government borrowing costs sharply lower in the wake of comments by US Federal Reserve Governor Christopher Waller on Tuesday.
The previously hawkish US interest rate setter said the current level of policy – which sits at 22-year highs – looks well positioned to slow the economy and bring down inflation.
The two-year yield on US Treasury bonds hit its lowest since mid-July at 4.69pc and the benchmark 10-year yield fell six basis points to its lowest since September at 4.28pc.
It comes as a Bloomberg gauge of global sovereign and corporate debt has returned 4.9pc in November, heading for the biggest monthly gain since it surged 6.2pc in the depths of the recession in December 2008.
The yield on two-year UK gilts fell to 4.55pc and on the 10-year gilt dropped to 4.14pc.
Euro zone sovereign bond yields also fell and markets increased bets on policy rate cuts after data from North Rhine-Westphalia, Germany’s most populous state, supported expectations for a drop in German inflation.
Export-focused FTSE 100 hit by stronger pound
The FTSE 100 slipped as the strengthening pound impacted the exporter-heavy market.
The UK’s benchmark index was down 0.3pc, while the domestically-focussed midcap index added 0.3pc.
Insurance giant Prudential lost 1.3pc after Deutsche Bank reduced its price target on the stock, with Aviva dropping 2.1pc as the bank downgraded its shares. The life insurance sector slid 1.1pc.
The pound hovered near a three-month high against the dollar as the greenback slipped on growing bets that the US Federal Reserve could begin cutting interest rates next year.
HSBC shares have fallen 2.2pc and Standard Chartered has dropped 2.4pc, dragging down the FTSE 100.
Among individual stocks, Halfords Group shed 19.6pc after the bicycles-to-car parts retailer narrowed its annual profit forecast range and lowered the upper end of its expectations.
Farfetch shares surge as founder plans to take company private
British luxury fashion site Farfetch saw its shares surge by 23pc in New York after the Telegraph revealed[12] its founder is plotting to take the company private after a disastrous US float.
José Neves is understood to be in talks with bankers and top shareholders, who include Cartier-owner Richemont, about a deal that would bring an abrupt end to its short but calamitous stint on the New York Stock Exchange.
Following the exclusive, the company cancelled its third quarter results and said it would not be providing any forward guidance.
The shares climbed a further 12pc in post-market trading.
Farfetch has lost more than 90pc of its value since listing on the New York Stock Exchange in 2018
Credit: REUTERS/Brendan McDermid
8:29AM
[13]
Deliveroo plans extension into DIY and electricals
Takeaway delivery app Deliveroo is planning to extend its order options to include DIY, homeware and electricals.
The tech company announced the move after the Supreme Court ruled last week that its riders are not classed as workers and cannot seek collective bargaining with trade unions.
Bosses said the business remains on track to deliver its target of 4pc adjusted underlying pre-tax profits by 2026.
Ahead of an investor day, founder and chief executive Will Shu:
I’m pleased to be hosting Deliveroo’s first capital markets event today. It has been 11 years since Deliveroo was founded and almost three years since our IPO. I am excited as ever about the future of the business – there continues to be significant headroom for growth.
We remain relentlessly focused on improving the delivery experience and providing value for money to consumers. I believe that this is critical to unlocking the full growth potential in our industry and I am exceptionally proud of the work our team has done in this area already.
One further driver of growth will be the expansion of our platform to encompass retail, such as DIY, homeware and electrical goods. This enhancement of our offering will leverage our existing capabilities to bring more of the neighbourhood to consumers’ doors.
Credit: REUTERS/Eric Gaillard
8:07AM
[14]
UK markets mixed at the open
UK markets were mixed ahead of mortgage data from the Bank of England released later this morning.
The UK’s blue-chip index fell 0.3pc to 7,430.99 while the midcap FTSE 250 was up 0.1pc to 18,406.31.
Bailey: I’m not gloomy, I’m just keeping it real
Andrew Bailey has claimed he is not an “ultra-pessimist” when it comes to the UK economy, just days after he warned that the outlook for growth was among the worst he’d ever seen.
Our economics editor Szu Ping Chan has the latest:
The Governor of the Bank of England hit back at accusations he was being too gloomy, insisting that he was a “realist” about the UK’s growth prospects.
Furious Tory MPs accused the governor of talking Britain down after he said there was “no doubt” that the UK’s growth potential was “lower than it has been in much of my working life”.
However, talking to the Daily Staffordshire on a regional visit on Tuesday, he said: “I’ve been written up this week as being an ultra-pessimist but I don’t see it that way. I see it as a realist view.
“That translates to us getting our sleeves rolled up and tackling the issues we face.”
Mr Bailey said Threadneedle Street policymakers were focused on bringing down inflation, which currently stands at 4.6pc.
He said: “We’ve got to get on and bring inflation down to our target of 2pc. That is the best thing we can do for growth in the economy – and we will do it.
“We start with a realist view but we are very, very, committed on behalf of the people of this country to get on with tackling the job.”
Bank of England governor Andrew Bailey at the Global Investment Summit earlier this week
Credit: CHRIS RATCLIFFE/POOL/EPA-EFE/Shutterstock
7:56AM
[16]
South West Water owner Pennon boosts dividend after leakage fines
Water supplier Pennon has increased its dividend months after one of its companies was fined for dumping raw sewage off the Devon and Cornwall coast.
The utility business said it would increase its payout to shareholders by 8.3pc to 14.04p despite underlying profit before tax falling 59.6pc to £9.1m.
It comes six months after South West Water, which it operates, was fined £2.1m by the Environment Agency last month for pollution offences over a period of four years.
Chief executive Susan Davy said:
Pennon has continued to make progress in the last six months on delivering for customers and shareholders, improving operational resilience across the group through an 87pc step up in investment, supported by a healthy balance sheet.
We are executing on our twin track strategy of organic and acquisitive growth in UK water, creating long term value and making progress on what matters most to those across our regions.
Pennon has increased its dividend months after being fined over pollution incidents
Credit: East Devon District Council
7:44AM
[17]
Brands pushing up prices for baby formula and baked beans, warns regulator
The competition watchdog has said some branded food suppliers have pushed up prices faster than their costs have risen – contributing to inflation.
The Competition and Markets Authority found that most inflation had been caused by suppliers passing cost increases onto customers.
However, it said around three-quarters of branded suppliers of infant formula, baked beans, mayonnaise and pet food have increased their profitability and contributed to food prices increasing.
Brands also told the CMA that when their costs started to fall they would offer promotions to customers, rather than cut the standard costs of their products.
The Competition and Markets Authority said around three-quarters of branded suppliers of infant formula, baked beans, mayonnaise and pet food have increased their profitability
Credit: Paul Grover for the Telegraph
7:35AM
[18]
Halfords warns of weakening sales for big-ticket items
Halfords has revealed a rise in sales and profits for the past half year but cautioned over softer demand for big-ticket products “in the last couple of months”.
The motoring and cycling business said it has seen slower like-for-like sales growth in recent months as a result.
It came as the company told shareholders that revenues grew 13.9pc to £873.5m over the six months to September 29, compared with the same period last year.
Halfords also revealed that pre-tax profits improved by 3.3pc to £19.3m for the period.
Credit: REUTERS/Molly Darlington
7:32AM
[19]
Supermarket loyalty schemes to be probed by regulators
Loyalty schemes used by supermarkets to lure customers with discount deals will be examined by the competition watchdog.
The Competition and Markets Authority set out in its latest review of competition in the groceries sector that it would examine loyalty pricing schemes from January, in particular to understand the impact on consumers and competition of this approach to promotions.
The regulator also said that it had found evidence that some brands in the baby formula market were pushing up prices by more than their level of cost increase.
Supermarket loyalty schemes will be examined by competition regulators
Credit: REUTERS/Paul Childs
7:18AM
[20]
Good morning
Thanks for joining me. Saudi Arabia will own 10pc of Heathrow after Spanish infrastructure giant Ferrovial announced it was offloading its 25pc stake in Europe’s busiest airport.
Ferrovial, which was the transport hub’s largest shareholder, said it has reached a £2.4bn deal to sell its remaining shares to the Saudi Public Investment Fund (PIF) and Paris-based Ardian, which will take a 15pc holding.
The deal brings to an end Heathrow’s long association with Spanish company, which began with controversy in 2006 when Ferrovial launched a successful hostile bid for BAA, the UK airports operator.
The sale, first mooted in August last year[21], comes after Heathrow said it recorded its highest-ever September passenger numbers of more than seven million, which also marked the first time it exceeded pre-pandemic traffic figures.
Saudi Arabia’s PIF has become a major investing force around the world as part of Crown Prince Mohammed bin Salman’s efforts to diversify’s the Gulf state’s economy away from oil. It aims to hold $2trillion (£1.6trn) in assets by 2030.
Luke Bugeja, head of Ferrovial’s airports business, said: “Over the last 17 years, we have been contributing to Heathrow’s transformation, together with our fellow shareholders, achieving some excellent milestones throughout our long-term role as investor.
“We are very pleased to have made Heathrow one of the world’s most connected airports and the busiest airport in Europe.”
5 things to start your day
1) Downturn in tech and construction make London redundancy capital of Britain[22] | One in six companies planning to cut staff as hiring sentiment among employers plunges
2) Taxi war cools as black cabs return to Uber for first time in six years[23] | Taxi union says its drivers are unlikely to sign up due to company’s track record
3) Why the Bank of England’s doom mongers are a thorn in Rishi Sunak’s side[24] | Growing divisions spell trouble for the Prime Minister gearing up for a difficult election
4) Warren Buffett’s right-hand man Charlie Munger dies aged 99[25] | The duo were famed for their long run of outperforming the American stock market
5) Jeremy Warner: The Brexit betrayal is complete: surging migration is becoming an economic burden[26] | Without the promise to take back control of Britain’s borders, Leave would not have won
What happened overnight
The S&P 500 index of 500 listed American companies was up 0.098pc yesterday at 4,554.89. The Dow Jones Industrial Average of 30 leading US companies rose 0.24pc to 35,416.98, while the Nasdaq Composite index, which is skewed towards technology businesses, rose 0.29pc to 14,281.76.
The yield on 10-year US Treasury bonds declined five basis points to 4.33pc after comments by US Federal Reserve Governor Christopher Waller, who votes on US interest rates. He said: “I am encouraged by what we have learned in the past few weeks – something appears to be giving, and it’s the pace of the economy.” Economic data from October “are consistent with the kind of moderating demand and easing price pressure that will help move inflation back to 2pc”, he told a conference.
Asian stocks briefly made one-week highs on Wednesday, bonds rallied and the dollar sank on new hints at US interest rate cuts.
In New Zealand, the dollar jumped after its central bank said another hike may be necessary if inflation proves stubborn. The New Zealand dollar was last up 1.1pc at a four-month high of $0.6207, having blown past resistance.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5pc in early trade before weakness in Hong Kong tech shares dragged it back to flat. Japan’s Nikkei fell 0.2pc.
References
- ^ Markets Hub embed test (cf-particle-html.eip.telegraph.co.uk)
- ^ 10:52AM (www.telegraph.co.uk)
- ^ 10:33AM (www.telegraph.co.uk)
- ^ 10:07AM (www.telegraph.co.uk)
- ^ seeks ways to reduce Britain’s national debt. (www.telegraph.co.uk)
- ^ This chart shows how the pressure comes as the British economy is already struggling. (www.telegraph.co.uk)
- ^ 9:54AM (www.telegraph.co.uk)
- ^ 9:45AM (www.telegraph.co.uk)
- ^ 9:17AM (www.telegraph.co.uk)
- ^ 8:51AM (www.telegraph.co.uk)
- ^ 8:37AM (www.telegraph.co.uk)
- ^ the Telegraph revealed (www.telegraph.co.uk)
- ^ 8:29AM (www.telegraph.co.uk)
- ^ 8:07AM (www.telegraph.co.uk)
- ^ 7:59AM (www.telegraph.co.uk)
- ^ 7:56AM (www.telegraph.co.uk)
- ^ 7:44AM (www.telegraph.co.uk)
- ^ 7:35AM (www.telegraph.co.uk)
- ^ 7:32AM (www.telegraph.co.uk)
- ^ 7:18AM (www.telegraph.co.uk)
- ^ first mooted in August last year (www.telegraph.co.uk)
- ^ Downturn in tech and construction make London redundancy capital of Britain (www.telegraph.co.uk)
- ^ Taxi war cools as black cabs return to Uber for first time in six years (www.telegraph.co.uk)
- ^ Why the Bank of England’s doom mongers are a thorn in Rishi Sunak’s side (www.telegraph.co.uk)
- ^ Warren Buffett’s right-hand man Charlie Munger dies aged 99 (www.telegraph.co.uk)
- ^ Jeremy Warner: The Brexit betrayal is complete: surging migration is becoming an economic burden (www.telegraph.co.uk)