Pound slumps to lowest level in four months

Chris Price

Fri, Nov 15, 2024, 10:35 AM 44 min read

Chicago Federal Reserve president Austan Goolsbee followed up Powell’s comments on Friday and said it would make sense for the Federal Reserve to slow the pace of interest rate cuts if there was disagreement among policymakers over how far rates need to be lowered to put monetary policy on a neutral footing.

It came as the US Commerce Department said retail sales rose 0.4pc last month, slightly higher than expected.

In addition, the Labor Department said import prices unexpectedly rose 0.3pc last month after a 0.4pc decline in September amid higher prices for fuels and other goods. Analysts had expected a decline of 0.1pc.

04:04 PM GMT

FTSE dips amid Trump’s RFK Jr appointment

The FTSE and most of the major European stock indexes are down this afternoon.

The FTSE 100 dropped 0.1pc, with the biggest faller being GSK, which lost 4pc. Drug companies have come under pressure today after Donald Trump chose renowned vaccine sceptic Robert F Kennedy Jr as his health secretary.

France’s Cac 40 fell 0.5pc and Germany’s Dax lost 0.2pc.

Chris Beauchamp, chief market analyst at online trading platform IG, said:

A three-day bounce for the FTSE 100 is running out of steam, thanks in large part to index heavyweight GSK, which has fallen as investors fret about a much tougher period ahead for pharma stocks now that Trump’s pick for health secretary has been announced.

03:59 PM GMT

German chancellor says country hit by ‘financial emergency’ after invasion of Ukraine

Olaf Scholz, the German chancellor, said the war in Ukraine constitutes a financial emergency for the country, which would open up the possibility of more spending, in an interview with the Sueddeutsche Zeitung newspaper.

At the start of the war in 2022, Germany had no idea how long the conflict would last or how long over 1m Ukrainian refugees would need protection in the country, Mr Scholz said.

“The misjudgement we made back then does not prevent us from doing the right thing today. Russia’s war is an extraordinary event that justifies a financial emergency - and therefore higher spending,” he said, while also calling for a moderate change in the debt rule that currently limits public spending.

“A reform will not solve all of our financial problems, but it will make our path a little easier,” he added.

03:52 PM GMT

Russia and China mull new gas route via Kazakhstan

Russia and China have been discussing a new route for supply of up to 35bn cubic metres a year of Russian gas via Kazakhstan, according to a report.

The Russian news agency Tass quoted Russian deputy Prime Minister Alexander Novak.

The possibility of the route was first disclosed by Kazakhstan in May.

Moscow has been in painstaking talks with Beijing for years over gas exports, including via the Power of Siberia 2 pipeline designed to run via Mongolia.

Alexander Novak said Russia and China have been discussing a new route for oil - Maxim Shipenkov/EPA-EFE/Shutterstock

03:44 PM GMT

Rolls-Royce engine crisis to ground flights from UK to South Africa

Virgin Atlantic has told thousands of customers that they will no longer be able to fly to Cape Town next Easter as a crisis surrounding Rolls-Royce engines forces it to ground planes.

Virgin will halt flights from London to Cape Town between March and May amid a shortage of spare engines and components for its Boeing 787 jets.

The carrier usually operates daily to the South African city during the European winter and had previously extended operations there to include the Easter break.

The engine crisis had already forced Virgin to delay the resumption of flights to Tel Aviv – which it had originally planned for March 31 – and the launch of a new service to the Ghanaian capital, Accra, which was slated for May 1.

A spokesman for the airline said: “It’s been necessary to make these changes to our 2025 network due to supply-chain uncertainty, including ongoing delays to the delivery of engines and parts from Rolls-Royce.”

Virgin expects to be deprived of one or two of its 787s – of which it has 17 – at any one time through much of next year as their Trent 1000 engines suffer maintenance delays.

The spokesman said: “Our teams are working closely with our partners at Rolls-Royce to minimise disruption to our flying programme.

“We’d like to apologise to affected customers, who have been contacted with their options, including to rebook travel with an alternative carrier, move to a different date or receive a refund.”

Virgin said it was possible that some passengers might be able to fly via Johannesburg, where its services are unaffected.

British Airways serves Cape Town daily throughout the year, and while it has been hit even harder than Virgin by Rolls-Royce engine issues, a spokesman said it had no plans to downgrade the service.

Rolls-Royce says it has created a Trent 1000 task force to help address the crisis and that what it terms supply-chain output has increased by a third.

That is having a “positive impact,” a spokesman said, “making more components available and minimising the time engines spend in our maintenance, repair and overhaul centres”.

A Virgin Atlantic Boeing 787 inside one of Virgin's maintenance hangars at Heathrow — A Virgin Atlantic Boeing 787 inside one of Virgin’s maintenance hangars at Heathrow - Heathcliff O'Malley

03:38 PM GMT

Wall Street falls toward worst loss since Election Day as vaccine makers sink

The big bump Wall Street received from last week’s presidential election and interest rate cut keeps fading.

The S&P 500 fell 1.2pc in trading this afternoon, the Dow Jones fell 0.7pc and the tech-heavy Nasdaq dropped 1.8pc.

Makers of vaccines helped drag the markets lower after president-elect Donald Trump said he wants Robert F. Kennedy Jr, a prominent anti-vaccine activist, to be his health secretary.

Moderna sank 6.9pc and Pfizer fell 4.1pc amid concerns about a possible hit to profits.

RFK Jr is a prominent anti-vaccine activist - Alex Brandon/AP

03:30 PM GMT

One in 10 cash machines close in three years

The UK has seen one in 10 ATMs close over the past three years, according to new figures.

Analysis of data from Link - the network of cash machines - shows there were around 48,500 ATMs open as of June this year.

This was down 10pc from 54,000 in June 2021.

The figures show significant regional differences where closures are happening. London and the South West have been worst impacted, losing one in seven machines.

In addition, 12 local authority areas have seen at least a quarter of their ATMs close over this period.

The East Midlands county of Rutland has fared the worst of any area in the country, losing half of the 18 cash machines it had in June 2021.

At this point, let me say thanks for following the live updates so far today.

I’ll hand you over now to Alex Singleton, who will keep you up to speed on the markets as we head towards the end of the week.

One in 10 cash machines has closed in the last three years - Asadour Guzelian

03:17 PM GMT

Drug maker sell-off deepens after RFK Jr made health secretary

More than $8.7bn was wiped off the value of Pfizer in early trading in New York after the appointment of vaccine sceptic Robert F Kennedy Jr as Donald Trump’s next health secretary.

The US drugs giant’s shares were down as much as 5.9pc on Wall Street following a near $4bn hit taken to the Covid vaccines maker’s market valuation on Thursday.

Moderna, which also made jabs during the pandemic, suffered a $1bn blow after the opening bell following a $991m sell-off the previous day.

02:56 PM GMT

BAE to open new howitzer factory in Sheffield to strengthen support for Ukraine

BAE Systems will open a ￡25m artillery factory in Sheffield as part of efforts to support Ukrainian forces in the battle against Russia.

The company said today that the facility will begin making M777 towed howitzers next year, creating 50 skilled jobs locally.

The new building was built by a third party and has been leased by BAE, which is now renovating it for artillery production and making the site secure.

It effectively reverses the company’s decision to wind up production of the guns in the UK in early 2023, after the Ukraine conflict prompted a renewed surge of interest.

02:37 PM GMT

US stocks plunge as traders reduce bets on interest rate cuts

Wall Street markets fell at the opening bell after Jerome Powell signalled the US Federal Reserve would be slow to cut interest rates.

The tech-heavy Nasdaq Composite plunged 1.3pc to 18,869.02 as trading began after money markets indicated the chances of a December rate cut had fallen to about 50pc.

It stood at more than more than 80pc on Wednesday.

The Dow Jones Industrial Average was down 0.3pc to 43,603.46 while the broad-based S&P 500 fell 0.7pc to 5,905.79.

02:25 PM GMT

Chevrolet maker General Motors to axe 1,000 jobs

General Motors is laying off about 1,000 workers worldwide amid uncertainty about the transition to electric vehicles.

The mostly white-collar workers were notified today as the company seeks to develop and update petrol-powered models while investing in EV battery and assembly plants.

The company said: “We need to optimise for speed and excellence.

“This includes operating with efficiency, ensuring we have the right team structure and focusing on our top priorities.”

GM has about 150,000 employees worldwide, with the largest group at its technical centre in the Detroit suburb of Warren, Michigan. The company has about 40,000 white-collar workers.

A Hummer electric vehicle on the production line at General Motors' factory in Detroit, Michigan — A Hummer electric vehicle on the production line at General Motors’ factory in Detroit, Michigan - Emily Elconin/Bloomberg

02:07 PM GMT

US retail sales dampened after hurricanes

Retail sales in the US slowed in October, official data show, as hurricanes in recent months hit high streets.

Sales rose 0.4pc in October from a month prior to $718.9bn, according to the Department of Commerce.

This was a smaller uptick than September’s revised 0.8pc increase.

Consumer spending has helped to power the US economy over the past year despite elevated interest rates as the central bank battled to rein in inflation.

But the cooldown in October, which came after the central bank started lowering the benchmark lending rate, could have been influenced by hurricanes Helene and Milton, which landed in late-September and early October respectively.

The storms were likely to have forced some businesses to close temporarily, while people grappled with the aftermath, said economists at Pantheon Macroeconomics.

01:38 PM GMT

Rachel Reeves’s Budget ‘will cost Britain 100,000 jobs’

Rachel Reeves’s National insurance (NI) tax raid will destroy 100,000 jobs as hard-pressed companies are forced to lay off staff and freeze hiring, analysis has found.

Deutsche Bank warned the jobs market was already showing signs of “cracking” and warned that the Chancellor’s changes to NI would put further strain on employers.

Sanjay Raja, an economist at the bank, said he expected the hit will be twice as much as the 50,000 jobs predicted by the Office for Budget Responsibility in its forecasts published alongside the Budget.

Read how pay is also expected to be affected.

01:20 PM GMT

Gas prices near one-year high amid Russian supply fears

Gas prices are on track to log a second consecutive weekly gain amid doubts over supplies from Russia.

Dutch front-month futures, the benchmark wholesale contract used for Europe, remained close to their highest level in a year after a row between a Kremlin-controlled energy giant and one of its customers sent prices surging.

The contract is up more than 7pc this week after a gain of more than 8pc last week as traders focused on flows of gas from Russia through the Continent.

Austrian supplier OMV received an award of €230m (￡190m) from an arbitration council this week in relation to a dispute with Kremlin-backed Gazprom.

OMV’s chances of recovering that sum from Gazprom are slim given sanctions placed on the company, so it has suggested it may seek payment in kind by withholding money for ongoing gas supplied to it by the Russian energy giant.

Warren Patterson, head of commodities strategies at ING, said: “Payments are usually due by the 20th of every month, so the market is likely to be on edge at least until then.

“Forecasts for colder weather next week have only provided further support to prices.”

Dutch front-month futures were last down 1.2pc to about €45 per megawatt hour.

12:59 PM GMT

Why Britain needs its own Elon Musk to trim down Whitehall waste

If there were any doubts about Elon Musk’s determination to slash government spending as Donald Trump’s new efficiency tsar, his latest missives on X should put them to bed.

“The excess government spending is what causes inflation! ALL government spending is taxation,” the Tesla chief executive wrote on X on Thursday.

One of the president-elect’s first appointments upon winning the election was to name Musk head of the newly created Department of Government Efficiency.

Read how Britain’s bloated Civil Service could benefit from the billionaire’s cut-throat approach to public spending.

Elon Musk said excess government spending causes inflation

12:41 PM GMT

Oil falls amid weak China demand

The price of oil has slipped amid a decline in demand from China.

Brent crude, the international benchmark, was 0.4pc lower towards $72 a barrel and on course to fall more than 2pc this week.

In China, oil demand declined in October compared to the previous year.

Its oil refiners in October processed 4.6pc less crude than a year earlier, falling year-on-year for a seventh month.

It comes after the closures of some plants and reduced operating rates at smaller independent refiners, data from the National Bureau of Statistics showed today.

Oil prices have been under pressure since Donald Trump’s victory in the US presidential election, which has sent the value of the dollar surging.

This impacts the price of commodities priced in the US currency as it makes it more expensive for most buyers.

12:07 PM GMT

Reeves failed to produce ‘pro-growth Budget’, says commercial property giant

One of Britain’s largest commercial property landlords has urged the Government to promote growth after failing to produce a “pro-business” Budget.

Landsec chief executive Mark Allen said ministers need to focus on improving skills, infrastructure and the regulatory environment as official figures showed the economy slowed down in the third quarter of the year.

Mr Allen was encouraged by Rachel Reeves’ speech at Mansion House on Thursday, during which she pledged to rip up red tape in financial services.

Mr Allan said: “We certainly didn’t have a pro-growth Budget a few weeks ago.

“There are three things we need leadership from the Government on to promote growth. It’s improving infrastructure… the regulatory environment … and skills in the UK.

“We’ve seen good rhetoric and good initial steps on all of those, but it’s a three-year project, not a three-month project.”

Landsec’s portfolio was valued at ￡10bn in September. The landlord swung back into the black, posting ￡243m profit at its half-year mark, while rents grew by 5.5pc.

The landlord aims to deliver 6,000 homes across three sites in London and Manchester, and is working on progressing its planning applications for significant schemes in Lewisham, Finchley Road and Mayfield.

Having recently bought an additional ￡120m stake in its Bluewater shopping centre, Landsec also intends to purchase more major retail destinations in the second half of its financial year.

11:51 AM GMT

Economy’s ‘road ahead remains bumpy’

Britain faces more bumps in the road, economists have warned, after GDP slowed to 0.1pc in the three months to September.

Sanjay Raja, chief UK economist at Deutsche Bank, warned that the tax rises could hit business spending further before Chancellor Rachel Reeves’s spending plans start having a positive impact early next year.

He warned: “The road ahead remains bumpy.”

He added: “Private sector investment plans may start to get trimmed. And hiring plans are likely to be put on ice.

“Indeed, cracks in the labour market are already emerging. We see growth picking up a touch towards year-end. And we still see positive momentum into 2025. But downside risks are brewing.”

Barret Kupelian, chief economist at PwC, appeared to issue a warning ahead of Donald Trump’s return to the White House, when the President-elect is expected to enact inflationary tariff and tax-cutting policies.

Mr Kupelian said: “Looking forward, the Government’s recently announced spending plans will push up economic growth in the near-term - however, the outlook has become less rosy since these plans were first announced, as the international trading backdrop appears much more challenging.

“If this uncertainty persists, it could manifest into a significant headwind to growth for next year.”

Chancellor Rachel Reeves during a visit to Tokamak Energy in Milton, Abingdon, today - Ben Birchall/PA Wire

11:36 AM GMT

How gloomy Labour talked Britain to the bottom of the G7 growth league

Sir Keir Starmer and Rachel Reeves campaigned on a promise to make Britain the fastest-growing economy in the G7.

But new data shows that the country has in fact crashed near the bottom of the growth table in the months since the election.

GDP growth plunged from 0.5pc in the second quarter of the year to 0.1pc in the third, according to the Office for National Statistics (ONS). The figures cover July to September, the three months after Labour won the general election on July 4.

Read how the UK’s economic recovery is already running out of steam despite grand promises from Ms Reeves.

11:15 AM GMT

Wall Street on track for declines as Powell pushes back on rate cuts

US stock indexes were lower in premarket trading after the Federal Reserve’s chairman indicated interest rates will not be reduced quickly.

Jerome Powell highlighted economic growth, a strong jobs market and inflation at 2.6pc as reasons why the US central bank will remains cautious about lower borrowing costs.

Money markets indicate there is still a 62pc chance of an interest rate cut by the Fed in December but traders have reduced bets after placing odds of 82pc before Powell’s speech.

Quincy Krosby, chief global strategist for LPL Financial, said: “Fed chair Powell telegraphed news that markets didn’t want to hear but news that was clearly manifest in the last CPI report, that the Fed cannot yet declare victory in its campaign to quell inflation.”

Stocks of vaccine makers lost ground after Donald Trump selected Robert F Kennedy Jr, who has spread misinformation on vaccines, as his health secretary.

BioNTech, Moderna and Novavax all fell more than 2[c in premarket trading, while Pfizer dipped 0.4pc.

Ahead of the opening bell, the Dow Jones Industrial Average was down 0.4pc, the S&P 500 had fallen 0.6pc and the Nasdaq 100 was down 0.8pc.

11:01 AM GMT

Danish vaccine maker fears Kennedy Jr will fuel vaccine scepticism

The boss of a Danish vaccine maker has warned the appointment of Robert F Kennedy Jr as the next health secretary under the Trump administration risks fuelling scepticism about getting jabs.

Paul Chaplin, who is in charge of ￡1.5bn biotech group Bavarian Nordic, expressed concern after the President-elect said on Thursday he has selected RFK Jr, who has spread misinformation on vaccines, to lead the United States’ top health agency.

He told Reuters: “It doesn’t help when you’ve got a health secretary who’s sceptical of vaccines in convincing the public to take vaccines.”

Shares in Bavarian fell more than 16pc after the company posted a lower-than-expected core profit for the third quarter while its 2025 orders also fell short of expectations.

10:43 AM GMT

EU predicts in rising economic growth

The European Commission has predicted economic growth to pick up slightly and inflation to keep falling in the eurozone next year.

However, it warned of growing risks linked to geopolitical tensions amid expectations that Donald Trump will impose tariffs when he takes office in January.

Forecasts by the commission showed eurozone growth accelerating slightly to 1.3pc in 2025, up from 0.8pc this year.

Meanwhile inflation in the single currency area is predicted to ease to 2.1pc, down from 2.4pc.

Commission vice-president Valdis Dombrovskis said: “With the EU economy steadily recovering, growth should pick up more speed next year.

“Still, given today’s high geopolitical uncertainty and many risks, we cannot afford to be complacent. We need to deal with longstanding structural challenges.”

The growth figure was virtually unchanged from the last forecast the EU executive body published in June, when it envisaged economic activity would increase by 1.4pc in 2025.

10:30 AM GMT

‘There can be no economic growth with high tax’

Sir Keir Starmer has been urged to “abandon net zero and reduce taxes” if he wants the economy to grow after GDP growth fell further than expected to 0.1pc in the three months to September.

Telegraph readers have been expressing their views on the slowdown in Britain’s economy.

Here is a selection of some of their views and you can join the debate here:

10:14 AM GMT

Tories: Labour economic ‘trash talk’ to blame for poor growth figures

The Tories have pounced on this morning’s less-than-stellar economic numbers and claimed they were the result of a summer of “trash talking” by the Government, writes our politics live blog editor Jack Maidment.

The economy approaching stagnation in the third quarter of 2024 is a fresh headache for Sir Keir Starmer but it is a political gift for the Tories.

Andrew Griffith, the shadow business and trade secretary, tweeted: “Labour inherited the fastest growing economy in the G7 but thanks to their summer of trash talking the economy, growth has now slowed significantly.

“This is all before the disastrous Budget hits business with higher NI and taxes - or their trade union-inspired Employment Bill.”

Mims Davies, the shadow Welsh secretary, echoed a similar sentiment as she said today’s anaemic growth figures represented a “must do better moment for this feeble Government”.

Nigel Huddleston, the co-chair of the Conservative Party, said: “This Labour government has done nothing but trash talk the British economy, British business, and British workers since coming to power - and then topped it off with the most ant-business Budget in decades.

“The inevitable result: slower growth.”

Shadow business secretary Andrew Griffiths said the Government had embarked on a 'summer of trash talking the economy' — Shadow business secretary Andrew Griffiths said the Government had embarked on a ‘summer of trash talking the economy’ - Yui Mok/PA Wire

09:58 AM GMT

Trump victory leaves pound with no growth this year

The pound’s gains so far this year have been wiped out by the election of Donald Trump, which has sent the dollar surging.

Sterling was down 0.1pc against the US currency to $1.266, sending it back below the level where it started this year.

Expectations that the Bank of England would cut interest rates slower than its peers in the US and Europe had sent the value of the pound surging, tipping above $1.34 in September.

However, the President-elect’s victory has cemented a decline which began with concerns about tax rises in Rachel Reeves’ Budget, which would push up inflation.

It is feared Mr Trump’s plans to cut taxes and impose tariffs will drive up inflation, forciong the US Federal Reserve to keep interest rates higher for longer.

The pound has dropped for seven weeks in a row, its longest losing streak in decades, wiping out gains of 5pc on the year.

Matthew Amis, investment director at Abrdn, said: “Recent sterling weakness has principally been a story of US dollar strength.”

Donald Trump's US election victory has wiped out the pound's gains this year — Donald Trump’s US election victory has wiped out the pound’s gains this year - REUTERS/Carlos Barria

09:31 AM GMT

Drugmakers plunge as Trump names Kennedy Jr as health secretary

Shares in drugs maker GSK fell to their lowest level in two years after Donald Trump appointed vaccine sceptic Robert F Kennedy Jr as his health secretary.

The London-listed pharmaceuticals giant fell as much as 4pc to its lowest point since October 2022 after the appointment of the man the President-elect said will “make America great and healthy again”.

Mr Kennedy Jr - known as RFK Jr - has previously voiced anti-vax opinions and suggested fluoride is lowering children’s IQ.

Other drugs stocks also fell heavily. AstraZeneca - the most valuable member of the FTSE 100 - down as much as 3pc.

Across the FTSE 100 and FTSE 250, pharmaceutical companies were down as much as 2.6pc.

Paris-listed Sanofi, which makes flu vaccines, was down as much as 4.4pc as it hit a four-month low.

Announcing Mr Kennedy’s appointment, Mr Trump said: “Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to public health.”

Robert F Kennedy Jr has been appointed as Donald Trump's health secretary — Robert F Kennedy Jr has been appointed as Donald Trump’s health secretary - AP Photo/Morry Gash

09:19 AM GMT

Lib Dems warn NI tax raid could be ‘final nail in the coffin’

The Liberal Democrats labelled today’s economic figures “disappointing” but laid the blame for them squarely at the door of the Conservative Party, writes Jack Maidment.

But Daisy Cooper, the Lib Dems’ Treasury spokesperson, also warned that Rachel Reeves’ Budget National Insurance raid “could be the final nail in the coffin” for struggling small businesses as she urged a rethink.

“Today’s disappointing figures underline the scale of the challenge facing our economy after years of reckless mismanagement by the previous Conservative government,” she said.

“After a Budget promising to deliver little by way of growth and an unfair tax on small businesses, we need to see a real growth plan from the Government.

“These additional taxes could be the final nail in the coffin for the many small businesses that are already struggling. It’s the last thing our economy needs to get it out of the slow lane.”

08:56 AM GMT

FTSE 100 falls after growth slowdown

Stock markets in London fell after Britain’s economy slowed down during the third quarter of the year.

The FTSE 100 dropped 0.2pc while the domestically-focused FTSE 250 was down 0.3pc after GDP growth weakened from 0.5pc in the second quarter to 0.1pc in the three months to September.

Shadow business secretary Andrew Griffith said: “Labour inherited the fastest growing economy in the G7 but thanks to their summer of trash-talking the economy, growth has now slowed significantly.

“This is all before the disastrous Budget hits business with higher NI and taxes - or their trade union-inspired Employment Bill.”

In corporate news, Land Securities rose as much as 2.8pc to the top of the FTSE 100 after the commercial property giant raised its expectations for earnings per share after growth in occupancy and raising rents.

GSK shares fell as much as 4pc to their lowest level in two years after Donald Trump made vaccine sceptic Robert F Kennedy his new health secretary.

Fellow drugmaker AstraZeneca fell as much as 2.7pc.

08:32 AM GMT

Labour succeeded in ‘talking the economy down’, says Stride

Mel Stride blamed GDP figures showing growth slowed between July and September on Labour “talking the economy down”.

The shadow chancellor said the Government was “reaping, to a degree, what they’ve done” and have followed up with a Budget that has ramped up taxes “that are going to bear down on growth”.

It was put to Mr Stride on Times Radio that he could not blame Labour for the figures given the party only came to power on July 5, to which he replied: “No, I’m afraid I have to disagree with this.

“Across that quarter, across the summer, what the Labour Government did in order to justify what they planned to do all along, which was to substantially hike taxes... it was their mission to talk down the UK economy.”

He added: “I’m afraid they’re reaping to a degree what they’ve done in terms of talking the economy down. And of course now what they’ve done is follow it up with a budget that has indeed ramped up taxes, particularly taxes that are going to bear down on growth.”

He said the changes had resulted in the Office for Budget Responsibility forecasting lower growth than they had under the Tories in the spring.

Shadow chancellor Mel Stride said the Government was 'reaping, to a degree, what they've done' after the uncertainty in the run-up to the Budget — Shadow chancellor Mel Stride said the Government was ‘reaping, to a degree, what they’ve done’ after the uncertainty in the run-up to the Budget - Wiktor Szymanowicz

08:28 AM GMT

December rate cut ‘improbable’ despite economic slowdown

The Bank of England is unlikely to cut interest rates next month despite Britain’s economy veering towards stagnation, according to money markets and economists.

Derivatives traders are still betting there is about a 15pc chance that interest rates will be reduced from 4.75pc to 4.5pc next month, little changed from Thursday’s odds.

ICAEW economics director Suren Thiru said the latest data “suggest that the economy went off the boil even before the Budget, as weaker business and consumer confidence helped weaken output across the third quarter, particularly in September”.

He added: “In spite of these downbeat figures, a December policy loosening looks improbable as rate setters will likely be concerned enough over inflation risks from the Budget and growing global headwinds to resist signing off back-to-back interest rate cuts.”

08:20 AM GMT

We need to raise investment to fix growth, says senior MP

The chairman of the Business and Trade Committee has called for the Government to enact “pretty bold and pretty quick measures” to fix the slow economic growth.

Labour MP Liam Byrne said the latest growth figures result from “really long-term problems in the British economy”.

He told BBC Radio 4’s Today programme: “We need to raise the investment rate in the British economy, we have not been invest enough in infrastructure and skills and innovation for a long period of time.

“I’m afraid that catches up with you, especially if you’re now in this new world where so much of our trade is wrapped in red tape.

“We’re in quite a difficult position at the moment and we’re going to need some pretty bold and pretty quick measures from our Government.”

08:13 AM GMT

Britain’s economy is second worst performer in G7

Britain’s economy was the second-worst performer in the G7 in the three months to September in a blow to Sir Keir Starmer’s ambition to make it the leader for growth.

The UK eclipsed only Italy, whose economy stagnated, in the third quarter and was well behind the US, the group’s top economy with expansion of 0.7pc.

Britain was also behind France, up 0.4pc, Germany, up 0.2pc, and Japan, up 0.2pc, with Canada yet to report.

The slowdown puts growth over the first three quarters of the year at 1.3pc, behind the US on 1.9pc but ahead of France and Italy on 0.8pc and 0.4pc, with Canada set to stay just behind the UK based on current forecasts.

Simon Pittaway, senior economist at the Resolution Foundation, said: “After bouncing back from recession earlier this year, Britain’s recovery is already running out of steam.

“The UK has fallen below the US at the top of the G7 GDP growth leaderboard, with growth slowing, wage rises shrinking and employment starting to fall.

“The UK has been a GDP rollercoaster over the past 12 months, but its medium-term performance has been staid and stagnant.”

Barret Kupelian, chief economist at PwC, said: “Looking forward, the Government’s recently announced spending plans will push up economic growth in the near-term - however, the outlook has become less rosy since these plans were first announced, as the international trading backdrop appears much more challenging. If this uncertainty persists, it could manifest into a significant headwind to growth for next year.”

08:05 AM GMT

UK markets slump as economy nears stagnation

The FTSE 100 dropped at the open after official figures showed Britain’s economy slowed down sharply in the third quarter.

The UK’s blue-chip stock index dropped 0.4pc to 8,036.03 while the midcap FTSE 250 sank 0.4pc to 20,451.88.

07:46 AM GMT

UK not on the precipice of recession, insist economists

Britain is not about to fall into recession, economists have said, after economic growth slowed to 0.1pc in the three months to September.

The UK economy has only grown in two of the past six months after the services sector “ground to a halt”, according to Capital Economics.

Deputy chief UK economist Ruth Gregory said: “Overall, despite the contraction in September, we still expect GDP growth to pick up in the coming quarters as the government’s debt-financed spending boosts activity and as the drags from higher inflation and higher interest rates continue to fade.

“Even so, we have become a bit more concerned about underlying weakness in the economy and the risks to our GDP forecast have shifted slightly to the downside.”

The slowdown in growth comes a week after the Bank of England trimmed its annual growth forecast for 2024 to 1pc from 1.25pc.

NIESR associate economist Hailey Low said: “Today’s Q3 GDP figures, though less robust than in the first half of the year, reflect the impact of pre-Budget uncertainty.

“More notably, it is disappointing that the Chancellor did not fully leverage her landmark Budget last month to introduce measures addressing the UK’s low productivity growth, tackling growth inertia, and stimulating long-term economic growth.”

07:33 AM GMT

Budget uncertainty ‘played a big part’ in slowdown

Businesses warned that doubts about what would be in the Budget played a role in the slowdown in growth.

CBI lead economist Ben Jones said:

Uncertainty ahead of the Budget probably played a big part, with firms widely reporting a slowdown in decision making.

07:29 AM GMT

Pound edges up as economic growth slows

The value of the pound has edged higher after official figures showed Britain’s economy slowed down in the run-up to the Budget.

Sterling was up 0.1pc against the dollar to $1.268 but slipped 0.2pc against the euro to 83.3p.

07:23 AM GMT

Economy was ‘already losing momentum ahead of Budget’

Britain’s economy was already slowing down before Rachel Reeves announced ￡40bn of tax rises in her maiden Budget, official figures show.

The chart below shows how growth has declined this year:

07:18 AM GMT

Manufacturing slump drags down growth

Britain’s economic growth slowed after GDP is estimated to have fallen by 0.1pc in September.

The ONS said the decline was largely because of slumps in manufacturing output and information and communication services, after unrevised growth of 0.2pc in August.

Production output fell by 0.5pc in September, mainly because of the fall in manufacturing.

It had experienced growth of 0.5pc in August.

It fell by 0.2pc in the three months to September 2024.

07:12 AM GMT

I am not satisfied with these numbers, says Reeves

As the economy’s growth slowed to 0.1pc in the third quarter, Chancellor Rachel Reeves said:

Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.

07:09 AM GMT

Growth subdued across most industries, says ONS

After the economy slowed down more sharply than expected, ONS director of economic statistics Liz McKeown said:

The economy grew a little in the latest quarter overall as the recent slowdown in growth continued.

07:07 AM GMT

Economy nears stagnation in blow for Starmer

Britain’s economy neared stagnation in the third quarter of the year, official figures show, in a blow to Sir Keir Starmer’s growth ambitions.

Gross domestic product (GDP) growth dropped to 0.1pc in the three months to September, according to the Office for National Statistics (ONS).

It was worse than the 0.2pc growth that had been expected by analysts and means the economy grew at a slower pace than the 0.5pc growth recorded in the three months to June.

Sir Keir Starmer pledged last year that a Labour government would make Britain the fastest growing economy in the G7 as one of his five long-term visions for the country.

However, the Office for Budget Responsibility (OBR) warned that Rachel Reeves’s ￡40bn of tax rises announced in the Budget will weaken long-term growth between 2026 and 2028 compared to its previous forecasts.

A poll of bosses by the Institute of Directors this month found that two-thirds of business leaders thought the Budget did not support the Government’s growth mission.

07:02 AM GMT

Good morning

Thanks for joining me. We begin the day with the latest growth figures for the British economy, which has slowed down in the third quarter.

The Office for National Statistics said GDP expanded by 0.1pc in the three months to September.

It was better than/worse than/in line with analysts’ predictions.

5 things to start your day

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What happened overnight

Asian stocks were mostly higher as Japan’s economy grew faster than expected in the third quarter.

In Tokyo, the Nikkei 225 index was up 0.8pc at 38,842.13 as the yen continued dropping against the US dollar in the wake of Donald Trump’s election victory, fuelling exporters’ sales. Nissan’s shares jumped 4.5pc.

Japan’s economy grew by 0.9pc in the three months to September, higher than the 0.5pc increase in the previous quarter.

The growth came even as the Bank of Japan raised its key interest rate to 0.25pc from 0.1pc in July.

The BOJ said during its October meeting that it plans to continue increasing rates, with a potential target of 1pc in the second half of the next fiscal year, which begins in April, if economic activity and prices develop as expected.

The Hang Seng in Hong Kong added 0.3pc to 19,486.97 and the Shanghai Composite index dropped 0.4pc to 3,367.94 after a report from the National Bureau of Statistics showed the nation’s retail sales rose 4.8pc year-on-year in October, beating forecasts.

However, industrial output slowed from the previous month and improvements in the property industry were marginal.

Australia’s S&P/ASX 200 gained 0.7pc to 8,279.20, while South Korea’s Kospi edged 0.2pc higher, to 2,407.27.

On Wall Street on Thursday, the S&P 500 fell 0.6pc to 5,949.17, though it’s still near its all-time high set on Monday.

The Dow Jones Industrial Average dropped 0.5pc to 43,750.86, and the Nasdaq Composite sank 0.6pc to 19,107.65.

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