Reeves warned of growing economic gloom after record tax raid
In This Article:
Britain’s biggest companies have warned Rachel Reeves that the economy faces further decline in the wake of her record £40bn tax raid.
More than a dozen executives warned the Chancellor that her assault on workers and businesses will hurt investment and hiring, with “ripples felt across the wider economy”.
The executives, from businesses including NatWest, Aviva, Heathrow and SSE, used a roundtable organised by the British Chambers of Commerce to warn that the economic backdrop remained “extremely challenging”.
In a show of hands conducted ahead of Ms Reeves’s arrival, just three of 19 attendees said they expected the economic backdrop to improve in 12 months time.
Speaking after the meeting, Martha Lane Fox, president of the BCC and chair of the Business Council, which meets once a quarter, said: “There’s no hiding the reality that the Budget was tough for business. Millions of firms are now facing a raft of increased costs in the coming months.
“Higher bills will impact investment and recruitment. Our latest forecast also suggests the ripples will be felt across the wider economy.”
A string of surveys in recent weeks have warned that the UK suffered a “sustained loss of momentum” in the wake of Ms Reeves’s tax raid.
Businesses are now implementing hiring freezes en masse in response to the Chancellor’s maiden Budget, with bosses blaming a £25bn rise in National Insurance contributions for their decision to cut staff.
Ms Reeves spent the meeting in south London trying to convince the business leaders that wider reforms, including changes to planning laws and removing barriers to trade would help to boost growth, adding that the record tax raid would not be repeated.
In a statement released after the meeting, Ms Reeves said: “My Budget was one to wipe the slate clean in the face of an inherited £22bn blackhole and bring businesses the stability they desperately need. It involved difficult decisions, but has laid the foundations for growth, and our partnership with business will be vital to delivering that.
“This government will bring investment and reform to kickstart economic growth and improve living standards across Britain.”
Britain’s economy barely grew in the three months since Labour took power, according to official figures. Economists warned that more job losses were on the way.
Steven Bell, chief European economist at Columbia Threadneedle, said: “The outlook is undoubtedly worrying. There will almost certainly be a rise in unemployment as employers scale back on recruitment and many low-margin labour intensive firms go out of business.
While Mr Bell said he believed Britain will avoid recession, he added: “Growth will be distinctly sluggish and accompanied by a noticeable rise in unemployment. The Treasury is undoubtedly rattled by the reaction to the Budget and is rumoured to be planning to ‘reprofile’ some of the bigger increases in planned government spending.
“The Budget did little to achieve their goal of securing a lasting improvement in UK growth. To do that, they must implement reforms. Top of the list should be an attempt to bring the ballooning bill for health and disability benefits under control. It is set to rise to £100bn by 2028, equivalent to almost £4,000 for every household in the UK. If they can do that, it would improve the public finances, increase labour supply and boost economic growth. Let’s hope they succeed.”
Read the latest updates below.
06:11 PM GMT
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The Markets blog will be back tomorrow from around 7am. In the meantime, you can read the latest business news and commentary here.
06:09 PM GMT
UAE buys McLaren after carmaker suffers record loss
British supercar maker McLaren has been sold to an Abu Dhabi sovereign wealth fund, in a deal presided over by the Emirate’s crown prince.
The Woking-based company has until now been owned by state-owned Bahraini investment outfit Mumtalakat.
But the firm has now sealed an agreement to sell McLaren’s automotive business to CYVN Holdings, which is managed by the trillion-dollar Abu Dhabi Investment Authority.
It comes after McLaren posted record annual losses of £924m in 2023, up from £349m the year prior.
Under the deal, Mumtalakat will retain control of the McLaren racing brand, with CYVN coming in as a minority shareholder.
05:59 PM GMT
Donald Trump expected to open Wall Street trading tomorrow
President-elect Donald Trump is expected to ring the opening bell at the New York Stock Exchange on Thursday, the ceremonial start of the day’s trading, according to Associated Press sources.
It will be a notable moment of recognition for Trump, a born-and-bred New Yorker who gave up living full time in his namesake Trump Tower in Manhattan and moved to Florida.
The US stock market soared after Trump won the 2024 election in part by seizing on Americans’ worries over the economy.
05:55 PM GMT
European shares close up amid hopes for rate cuts
European stocks recouped earlier losses and closed up today, as investors looked towards potential rate interest rate cuts.
The pan-European Stoxx 600 index had slipped earlier in the day, but settled higher by 0.3pc after US data showed the consumer price index (CPI) rose as expected in November on both a monthly and annual basis.
Odds of a quarter point cut by the Fed next week rose, with traders almost fully pricing it in.
Tomorrow, focus will be on the European Central Bank’s monetary policy decision, with LSEG probabilities data indicating an 85pc chance for a quarter of a percentage point reduction.
“The weakness in the business surveys, combined with the potential for tariffs on European exports to the US, increases the risk of a European recession,” said Joe McConnell, at JP Morgan Asset Management.
Mr McConnell expects the ECB will cut rates by a quarter point at every meeting between now and June, taking the deposit rate down to 2pc by the middle of next year.
The rate-sensitive banks index edged up 0.1pc to touch its highest since August 2015. More broadly, expectations of interest rate cuts have been the primary driver for the Stoxx’s 8.6pc so far this year.
05:22 PM GMT
Nasdaq hits 20,000 for first time as AI rally rages on
The Nasdaq breached the 20,000-point mark on Wednesday, as a rally in technology stocks showed no signs of slowing on hopes of looser regulation under Donald Trump’s presidency and bets on AI-fueled earnings growth in the coming quarters.
The tech-heavy index rose 1.8pc to an all-time high of 20,031.56 points.
It has jumped more than 33pc this year, outperforming the benchmark S&P 500 and blue-chip Dow, as technology megacaps including Nvidia, Microsoft and Apple add more heft to the index with their relentless surge.
Currently, the three companies form the $3-trillion club, with the iPhone maker gaining a narrow lead.
The index hit 19,000 points for the first time in early November, when Donald Trump secured victory in the US presidential election and his Republican Party swept both houses of Congress.
US stocks have since been supported by hopes that Trump’s policies on tax cuts and looser regulation could support Big Tech firms, and the Federal Reserve’s monetary easing could keep the American economy humming.
04:59 PM GMT
FTSE 100 closes up
The FTSE 100 closed up 0.3pc today.
The top riser was Enderavour Mining, up 5.9pc, followed by Pearson, up 3.4pc.
At the other end of the index, GSK lost 2.4pc, while British Land dropped 2.1pc.
Meanwhile, the mid-cap FTSE 250 finished the day flat.
The top riser was Raspberry Pi, which gained 7.6pc, followed by venture capital firm Molten Ventures, which added 6.3pc.
04:37 PM GMT
Eurozone government bond yields mixed ahead of interest rate decision
Euro zone government bond yields are a mixed picture today as investors await tomorrow’s European Central Bank policy meeting, which should deliver a quarter point rate cut and some dovish guidance.
We expect “the ECB to more explicitly recognise that, so long as incoming data confirms the rapid convergence of inflation to target, it will ease policy all the way to a neutral setting,” said Citi, after reiterating its expectations for a quarter point rate cut.
It added as the ECB wants to avoid being too dovish, it is unlikely to accelerate its monetary easing.
Germany’s 10-year bond yield, the benchmark for the euro zone bloc, rose slightly to 2.13pc.
04:20 PM GMT
Google shares soar 4.6pc after launching new AI tech
Shares in Google owner Alphabet jumped as much as 4.6pc this afternoon after the company announced the launch of Gemini 2.0, its most advanced artificial intelligence model to date.
Chief executive Sundar Pichai said the new model would mark what the company calls “a new agentic era” in AI development, with AI models designed to understand and make decisions about the world around you.
“Gemini 2.0 is about making information much more useful,” Pichai said in the announcement, emphasising the model’s enhanced ability to understand context, think multiple steps ahead and take supervised actions on behalf of users.
The developments “bring us closer to our vision of a universal assistant,” he added.
The release sent shares in Google soaring a day after the stock already gained 3.5pc after the release of a breakthrough quantum chip.
The tech giants are furiously taking steps to release more powerful AI models despite their immense cost and some questions about their immediate usefulness to the broader economy.
04:16 PM GMT
Global shares rise after US inflation comes in as expected
Global shares have risen after an in-line inflation reading kept intact bets on the Federal Reserve cutting interest rates later this month.
The dollar hit a two-week high and gold prices rose. Oil prices pared gains after producers group Opec cut demand growth forecasts.
MSCI’s gauge of stocks across the globe rose 0.6pc, while the pan-European Stoxx 600 rose 0.2pc. The FTSE 100 also added 0.2pc.
On Wall Street, the S&P 500 rose 0.7pc, the Nasdaq soared 0.5pc and the Dow Jones Industrial Average of 30 leading American companies fell less than 0.1pc.
04:13 PM GMT
Russia attempts to take on US over AI tech
President Vladimir Putin said today that Russia would develop AI with Brics partners and other countries, in a bid to challenge the dominance of the US.
“Russia must participate on equal terms in the global race to create strong artificial intelligence. It is precisely the advanced solutions that Russian scientists are currently working on,” Mr Putin told an AI conference in Moscow.
Western sanctions intended to restrict Russia’s access to the technologies it needs to sustain its war against Ukraine have resulted in the world’s major producers of microchips halting exports to Russia, sorely limiting its AI ambitions.
Russia’s dominant lender Sberbank is spearheading AI development in Russia, but Sberbank chief German Gref acknowledged in 2023 that graphics processing units (GPUs), the microchips that underpin AI development, were the trickiest hardware for Russia to replace.
On Wednesday, the bank said national AI associations from Brics members Brazil, China, India and South Africa, but also from Serbia, Indonesia and other non-Brics countries, had joined a new AI network.
It said the network would facilitate joint research into technology and AI regulation, and provide opportunities for AI products to be sold in member countries’ markets.
Stanford University’s Global AI Vibrancy Tool, which evaluates 36 countries based on 42 AI indicators including research and development, ranks Russia 29th.
04:06 PM GMT
Stocks rally following US inflation data
Wall Street’s tech-heavy Nasdaq has surged this afternoon. Its index of its top 100 companies is up 1.4pc, while the broader Nasdaq Composite is up 1.3pc.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “Risk sentiment [how traders and investors are behaving and feeling] had been kept in check ahead of the inflation print today, but the news has unleashed fresh buying.
“Technically the ‘Santa Rally’ doesn’t usually start for a few more days, but the Nasdaq 100 has got its gains in early, surging to a new record high. Interestingly, we have seen the dollar push higher too even though today’s figures are unlikely to mean the Fed will swerve from a rate cut next week. But looser rates should mean stronger economic growth, reinforcing the desire of investors to keep investing in the US.”
04:03 PM GMT
UK economy faces ‘dreaded trade-off’ next year
The Bank of England will only be able cut interest rates three times next year as a result of rising inflation, economists have warned.
Robert Wood and Elliott Jordan-Doak, of Pantheon Macroeconomics, said:
The dreaded trade-off between inflation and growth will be back in 2025. The MPC will cut interest rates
further to keep the economy ticking over as real household income growth slows; rate setters want to avoid
driving the economy into a hole. But CPI inflation will pick up to 3.0pc year-over-year in April as favourable
energy price effects fade and services inflation stays elevated.
03:58 PM GMT
US looking for ways to reduce Russia’s oil revenues, Yellen says
The United States is looking for creative ways to reduce Russia’s oil revenue and hamper its ability to wage war in Ukraine, Treasury Secretary Janet Yellen said this afternoon. She was speaking in an interview with Bloomberg Television.
In September, Reuters reported that Russia’s economy ministry had revised up its 2024 forecasts for exported sales of oil and gas by $17.4bn (£13.7bn) from the previous estimate to $239.7bn thanks to higher prices.
03:49 PM GMT
EU agrees tougher sanctions on Russia’s ‘shadow’ oil fleet
EU countries have today agreed to blacklist around 50 more oil tankers from Russia’s “shadow fleet” used to circumvent Western sanctions over the Ukraine war, officials said.
The move - set to be formally approved by foreign ministers on Monday - was part of a 15th package of sanctions to be imposed by the 27-nation bloc since Moscow’s 2022 invasion.
Ukraine’s international backers have looked to curb funds going to the Kremlin’s war machine by imposing a price cap and restrictions on Russia’s key oil exports.
To skirt the measures, Russia has resorted to using a so-called “shadow fleet” of often ageing vessels that operate under dubious ownership or without proper insurance.
“The EU and its G7 partners are committed to keeping a pressure on the Kremlin,” European Commission chief Ursula von der Leyen wrote on X.
Diplomats said the new round of sanctions would see the number of ships targeted by the EU to around 80.
That follows similar moves by Britain and the United States.
03:43 PM GMT
High street ‘distress signal’ as retailers launch early sales after Reeves raid
A string of high street stores are launching their sales early this year as retail bosses scramble to attract shoppers following Rachel Reeves’s Budget tax raid.
Despite it being the sector’s most popular period of the year, some of Britain’s biggest retailers are already offering discounts on clothes, beauty and homeware.
That marks a contrast with the usual timing of festive period sales, as retailers usually wait until Boxing Day to launch their biggest discounts to offload unsold stock.
The likes of Debenhams, Liberty, Harrods, Hobbs and Sweaty Betty all currently have swathes of items on sale, with some offering discounts of up to 70pc.
03:35 PM GMT
Wall Street rises after ‘all clear’ for December rate cut
Most US stocks are back to rising on Wednesday after the latest update on inflation appeared to clear the way for more help for the economy from the Federal Reserve.
The S&P 500 has gained 0.7pc and is on track to break its first two-day losing streak in nearly a month. The Dow Jones Industrial Average is flat, and the Nasdaq Composite has risen 1.3pc.
Treasury yields also eased in the bond market on expectations that today’s inflation data will allow the Fed to deliver another cut to interest rates at its meeting next week.
Lower rates would help give support to the economy, but they could also provide more fuel for inflation.
Wednesday’s report said US consumers paid prices in November that were 2.7pc higher than a year earlier. That is a slight acceleration from October’s inflation rate of 2.6pc, but it was exactly what economists were expecting. Another report on inflation at the wholesale level will arrive on Thursday.
Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said: “The data have given the Fed the ‘all clear’ for next week, and today’s inflation data keep a January cut in active discussion.”
Expectations for a series of cuts to rates by the Fed have been one of the main reasons the S&P 500 has set an all-time high 57 times this year, with the latest coming last week.
03:33 PM GMT
Canada slashes interest rates as Trump tariffs loom
Canada’s central bank cut its interest rate by half a percentage point to 3.25pc in an attempt to boost its slowing economy ahead of looming tariffs from Donald Trump’s impending US administration.
The cut is the Bank of Canada’s fifth since June, after it raised rates from record lows in 2023 to rein in inflation, which has fallen to its target level.
Thanks for following today’s live updates so far. I’ll head off at this point and leave you in the capable hands of Alex Singleton.
03:16 PM GMT
British microchip champion plunges after announcing £117m fundraising plan
Shares plunged in one of Britain’s biggest microchip businesses after it announced plans to raise money through a $150m (£117.6m) bond offering.
Alphawave dropped as much as 16pc as it announced the fundraising plan.
Earlier this month, President Joe Biden blacklisted Beijing technology investor Wise Road Capital, which has a joint venture with Alphawave.
The £1bn UK-listed semiconductor business, which designs semiconductor “chiplets” aimed at boosting speeds for data centres and artificial intelligence (AI) supercomputers, had its shares suspended on the London Stock Exchange last year after auditors delayed issuing its final accounts.
03:02 PM GMT
Pound nears pre-Brexit high amid French and German woes
The pound was edging closer to its highest level against the euro since Brexit as European economies continue to struggle.
Sterling was last up 0.1pc against the euro, which is worth 82.3p, its lowest since March 2022.
Dropping below 82.03p would take the euro to its lowest against the pound since June 24, 2016, the day of the outcome of Britain’s vote to leave the European Union.
Jane Foley, head of FX strategy at Rabobank, said: “A little question seems to have popped up over the last few weeks, perhaps amongst the mainstream press, asking whether or not euro sterling could finally go back down to where it was before the referendum in 2016.
“That would be on the back of this perception that the ECB is more growth-oriented - or lack of growth-oriented - and we’ve got these political issues, clearly in France and in Germany.”
Germany faces a snap election next year after the collapse of its coalition government, while France’s prime minister Michel Barnier resigned last week after losing a no-confidence vote over his budget, which had aimed to cut the deficit in Europe’s second-largest economy.
Meanwhile, the pound erased some of its losses against the dollar today after the latest inflation figures cemented bets on the Federal Reserve cutting interest rates next week.
Sterling was down 0.1pc against the US currency to $1.276.
02:47 PM GMT
Supreme Court permission ‘very good news’ for car finance industry
Banking stocks were still higher although no longer leading London’s main share indexes after Close Brothers was granted permission by the UK’s highest court to appeal against a landmark ruling on hidden motor finance commission.
Lloyds Bank was last up 3.7pc and Close Brothers was up 4.2pc.
The banking group submitted an application to the Supreme Court to challenge an earlier judgment in the Court of Appeal.
It will mark the latest development in the looming crisis facing the motor finance industry, with major lenders on the hook for potentially billions of pounds’ worth of compensation.
Close Brothers paused new UK motor finance lending following the ruling, but said last month it had resumed a “significant proportion” of the business.
Adrian Dally, director of motor finance at the Finance & Leasing Association, said: “Permission to appeal is very good news indeed.
“The expedited process will give the motor finance sector the certainty it needs.”
02:36 PM GMT
US stocks rise as inflation rises as expected
Wall Street’s main indexes opened higher after November inflation figures kept intact bets on the Federal Reserve cutting interest rates later this month.
The Dow Jones Industrial Average rose 52.6 points, or 0.1pc, at the open to 44,300.41.
The S&P 500 rose 25.2 points, or 0.4pc to 6,060.15​, while the Nasdaq Composite rose 145.7 points, or 0.7pc, to 19,832.96.
02:20 PM GMT
Fed ‘almost certain’ to cut interest rates after inflation figures
Money markets are pricing in a 96pc chance that the Federal Reserve will cut interest rates next week after inflation rose as expected.
Traders had given an 86pc chance before official figures showed the US consumer prices index rose from 2.6pc to 2.7pc, as analysts had predicted.
Garry White of Charles Stanley, said a quarter of a percentage point interest rate cut by the US central bank “remains almost certain at its 18 December meeting”.
He added: “But the Fed is likely to pause its rate cuts in January – the month that Donald Trump gets inaugurated – as inflationary risks are rising, fuelled by the new president’s proposed policies.”
Nathaniel Casey of Evelyn Partners said: “Although slightly warmer, this inflation print is unlikely to derail the Fed’s rate cutting cycle and we continue to expect the Fed to cut rates by 25 basis points at their final 2024 later this next month.”
Neil Birrell of Premier Miton Investors said: “The Fed meeting this time next week is expected to produce a 0.25 percentage point cut in interest rates and today’s inflation data for November will do little to change that.
“It came in exactly as expected, with no surprises in any element of it. This is a data release that will give confidence to the Fed.”
02:03 PM GMT
UAE strikes trade deal with Russia as Starmer pursues closer ties with Gulf state
The United Arab Emirates (UAE) has struck a trade deal with Russia, just days after Sir Keir Starmer sought to charm the Gulf state on a visit this week.
The UAE’s deal with the Eurasian Economic Union (EAEU), which includes Vladimir Putin’s regime, was announced immediately after the Prime Minister’s return to Britain and is a potential embarrassment for Downing Street.
Russia is subject to a wide range of economic sanctions imposed by the West, with the aim of curtailing its access to crucial war materials and undermining its ability to sustain its invasion of Ukraine.
Read how the efforts to isolate Moscow have been partially undermined by the willingness of other nations to continue dealing with the country.
01:41 PM GMT
Wall Street poised for gains after inflation figures
US stock indexes moved higher in premarket trading as investors stuck to their bets that the Federal Reserve will cut interest rates this month, following the latest inflation data.
The consumer prices index (CPI) rose to 2.7pc in November, according to the Labor Department, which was in line with analyst expectations.
In premarket trading, the Dow Jones Industrial Average was up 46 points, or 0.1pc, the S&P 500 gained 16.25 points, or 0.3pc, and the Nasdaq 100 was up 85 points, or 0.4pc.
01:31 PM GMT
US inflation rises to 2.7pc
US inflation rose last month in a move that is unlikely to influence the potential for an interest rate cut by the Federal Reserve next week.
The consumer prices index rose to 2.7pc in November, up from 2.6pc the previous month, according to the Labor Department.
Core inflation, which strips out volatile food and energy prices, was unchanged at 3.3pc. Both readings were in line with analyst expectations.
01:14 PM GMT
Opec cuts forecast for oil demand for fifth consecutive month
The Opec oil cartel has announced deep cuts to its forecast for global crude demand amid signs of a weakening world economy.
The group of nations cut its predictions for this year and 2025 for the fifth consecutive month, meaning it has slashed projections by 27pc since July.
It comes after Opec and its allies, including Russia, agreed for a third time last week to delay plans to ramp up production.
Oil prices have fallen by 17pc since July as demand from China has weakened and the US has ramped up drilling.
Opec reduced its projections for consumption this year to 1.6m barrels per day, down by 210,000 barrels per day from last month’s projection.
It revised down next yuear’s prediction by 90,000 barrles per day to 1.4m barrels per day.
Brent crude, the international benchmark, was last up 1.1pc today at just under $73 a barrel amid reports that Joe Biden is considering tougher sanctions on Russian oil producers.
12:56 PM GMT
US stocks mixed ahead of inflation figures
Wall Street was subdued in premarket trading ahead of inflation figures that could influence the Federal Reserve’s move on interest rates.
Inflation is expected to have edged higher from 2.6pc to 2.7pc last month, leaving it above the Fed’s 2pc target.
Jochen Stanzl, chief market analyst at CMC Markets, said the inflation rate has been rising again gradually since October and “an end to this short-term upward trend would be necessary to confirm the expectation of three interest rate cuts in the next six months”.
He said: “The Fed wants to see further progress and does not yet consider the fight against inflation to be over. As long as the labour market does not cool down faster, it has time to continue monitoring the situation.”
Traders are betting there is an 86pc that the Fed will deliver a quarter of a percentage point rate cut next week.
In premarket trading, the Dow Jones Industrial Average was little changed, the S&P 500 was up 0.1pc and the Nasdaq 100 had gained 0.2pc.
12:35 PM GMT
Britain’s stock market falls below Oman and Malaysia in global rankings
Britain’s stock market has plunged below Oman and Malaysia in the global rankings for new listings as the City’s woes deepen.
Companies floating in London raised $1bn (£790m) this year, down by 9pc, according to data compiled by Bloomberg.
It pushed Britain down by four spots in the worldwide league table for fundraising from initial public offerings (IPOs) this year, to 20th place – $40bn behind the fundraising clout of the US, which ranked first.
12:03 PM GMT
Watch: Tractors descend on London in protest at tax raid
Hundreds of farmers in tractors have descended on London in protest against the Government’s inheritance tax raid, writes Tom McArdle.
Tractors lined up in Westminster today before a planned slow-drive around central London.
Driving around Parliament Square, many tractors were decorated with Union flags and signs that read: “No farmers, no food”, “Not hungry, thank a farmer” and “Save British Farming”.
11:49 AM GMT
Banking shares surge as Supreme Court grants appeal over car finance crisis
Banking shares have jumped after the Supreme Court agreed to hear an appeal on the ruling that has triggered a potential motor finance mis-selling scandal.
Lloyds Bank rose by the most in nine months - as much as 4.4pc - to lead gains on the FTSE 100 after Close Brothers was granted permission to appeal the case.
Close Brothers surged by as much as 12.3pc to the top of the FTSE 250.
Shares had plunged following a Court of Appeal judgment last month which ruled that any hidden commissions paid to car salesmen by banks for arranging car financing loans were illegal.
The ruling overturned a longstanding practice in motor finance and ran counter to guidance from the Financial Conduct Authority (FCA).
The court also ruled that salesmen more generally had a “fiduciary duty” to help consumers get the best deal — a move that could have broad implications for all types of loans if the Supreme Court upholds the decision.
11:29 AM GMT
Budget missed tax loophole on agricultural land, MPs told
MPs have heard that the Budget has not looked at a tax loophole where those who sell assets and then buy agricultural land can avoid capital gains tax on those original assets sold.
Dr Arun Advani, director of the think tank CenTax, said changing these rules would not affect farmers who are currently using the land for agriculture and food production.
He added that a fairly standard tax planning strategy would be to sell assets, get the large gain, purchase agricultural property, and hold that until death when there is both relief of inheritance tax and capital gains tax.
“So I think something that hasn’t seemed to have been looked at at this Budget, but that certainly should be scrutinised, because it causes this exact problem - the fact that relief for any asset I’m selling, if I’m using it to buy agricultural land, is a way in which I can avoid the capital gains and currently inheritance tax.
“And that creates demand for agricultural land from people who have no desire to farm the land but want to buy it because they’re getting it from a tax minimisation perspective.”
Asked why the Government did not consider this, he laughed and said: “I can’t really speak for what the Government does. Hopefully after this select committee, you can ask the ministers about that. I have no idea.”
11:10 AM GMT
Inheritance tax raid on farmers will only ‘slightly’ slow inflation in land prices
A tax expert has warned that raising inheritance tax rates to 20pc for agricultural assets over £1m will probably only “slightly” slow land price inflation.
Speaking to the Environment Committee on Tuesday, Dr Arun Advani, director of the think tank CenTax, told MPs that a 20pc rate is “still much more attractive than other sorts of assets”.
Farmers have descended on Westminster in protest against changes to inheritance tax announced in the Budget.
Dr Advani said: “The concern with the way the reform has been done is that it still leaves ... roughly 20pc effective rate above the threshold that’s been set.
“One reason for doing that is because there are farmers who you might be concerned about, who are earning, who have wealth a bit above the current tax-free threshold, who you want to give a low rate to because of the well documented concerns about incomes of farmers.
“But the downside is it still means that if you have, say, £100m or a billion pounds that you want to put into farmland, 20pc rate is still much more attractive than other sorts of assets.
“And so what you will still have in this world is people who want to buy up agricultural land, competing with genuine farmers, who are trying to expand their farm, who really are actually wanting to work on the land. They’re still going to have to compete with much better off people.”
10:47 AM GMT
Oil rises as Biden considers new sanctions on Russia
The price of oil has risen amid reports Joe Biden’s administration is considering harsher sanctions against Russia’s lucrative crude industry.
Brent crude, the international benchmark, was up nearly 1pc towards $73 a barrel, while US-produced West Texas Intermediate rose to more than $69.
The President’s team was considering restrictions that might target some Russian oil exports, according to Bloomberg News.
The Kremlin said today that the reports suggested the Biden administration wants to leave a difficult legacy for US-Russia relations.
Prices were also higher ahead of the latest US inflation data which will indicate whether the Federal Reserve will cut interest rates this month.
10:24 AM GMT
The Onion’s takeover of Infowars blocked by court
Satirical news website The Onion has lost its acquire the assets of conspiracy theorist Alex Jones’s Infowars platform after a judge took issue with the auction process.
The decision by a federal judge in Texas on Tuesday is a victory for Jones, whose Infowars site was put up for sale as part of his bankruptcy case.
He was ordered to pay nearly $1.5bn (£1.2bn) over falsely calling one the Sandy Hook school shooting, one of the deadliest in US history, a hoax.
Families of the Sandy Hook victims had backed The Onion’s bid.
Following a two-day hearing in Houston, US Bankruptcy Judge Christopher Lopez said he would not approve the sale, pointing to concerns about transparency in the auction.
Ben Collins, chief executive of The Onion’s parent company Global Tetrahedron, said: “We are deeply disappointed in today’s decision, but The Onion will continue to seek a resolution that helps the Sandy Hook families receive a positive outcome for the horror they endured.”
10:03 AM GMT
FTSE 100 lower as companies shift to US
The FTSE 100 has fallen after the decision by one of its largest companies to move its primary listing from London to New York.
The UK’s blue-chip stock index was down 0.1pc as it continued to be weighed down by Ashtead.
The construction equipment rental company announced on Tuesday it was moving its primary listing away from the UK and it was the worst performer on the FTSE 100 for a second day in row.
Ashtead shares were down 5.6pc, adding to losses of 14pc yesterday.
British American Tobacco was up 0.8pc as it revealed rising vape sales.
British Airways owner IAG was the top gainer on the FTSE 100 after its stock was upgraded to a “buy” rating by analysts at Deutsche Bank.
The FTSE 250 was down 0.2pc.
09:39 AM GMT
Next pandemic ‘risks setting global economy back by 20 years’
A new deadly pandemic more lethal than Covid would set the global economy back two decades, a study has warned.
The disaster scenario, mapped by Lloyd’s of London, shows the global economy would suffer up to $46 trillion (£36 trillion) of economic losses if an infectious virus with a death rate of over 5pc swept the globe.
In GDP terms, that would mean a reduction in global output of 6.4pc – setting the world economy back by about 20 years.
Read what would happen in the worst-case scenario.
09:17 AM GMT
HSBC eyes $3bn in savings in overhaul
HSBC’s turnaround plans under its new chief executive could cut costs by as much as $3bn (£2.4bn), it has been reported.
The lender told managers last week that the revamp could take until June next year to complete, according to Bloomberg.
Such a reduction in costs would remove about 10pc of its expense bill under its new boss George Elhedery.
It emerged last month that HSBC is to lay off hundreds of top bankers as bosses scramble to cut costs and slim down the sprawling organisation.
Swathes of managers in the bank’s newly formed corporate and institutional banking division have been asked to reapply for their jobs, with interviews reportedly already under way.
Shares rose 0.3pc.
08:47 AM GMT
Adidas headquarters raided in tax investigation
Adidas’s headquarters was raided by German authorities as part of a long-running tax investigation.
The search of the sportswear giant’s HQ in Herzogenaurach and other offices on Tuesday was part of a probe into a five-year period starting in October 2019.
Adidas said the investigation was related to customs and tax regulations for products imported into Germany, adding it has been in contact with authorities for several years about the matter and is providing documents and information.
Shares fell 1.2pc after the latest blow to the company, which is recovering after severing ties with rapper Ye, formerly known as Kanye West, and losing the contract for the German national football team for the first time since the 1950s to arch rival Nike.
Adidas said: “The company does not expect a significant financial impact in connection with the investigation.”
08:33 AM GMT
Vape sales rise at British American Tobacco
British American Tobacco said it is on track to make more money from selling vapes in the second half of the financial year than the first.
The smoking giant’s shares edged up 0.3pc as it said in a trading update that it had about 40pc vaping market share across key markets like the US and the UK with its Vuse products.
However, it added that global tobacco industry volumes are expected to be down 2pc year-on-year, as more people turn away from smoking traditional cigarettes.
Chief executive Tadeu Marroco said the company is making “further progress increasing profitability” across “new category” products.
Analysts have projected total sales for the year to be down slightly on 2023, at £26.3bn, while BAT’s Vype, Glo and Vuse vaping products should see sales rise about 9pc to £3.6bn.
08:21 AM GMT
Heathrow prepares for busiest ever Christmas Day
Heathrow airport said it is preparing for its busiest Christmas Day.
Europe’s busiest airport expects the number of passengers travelling through its terminals on December 25 to be 21pc higher than on the same day last year.
It also predicts that passenger numbers for the month as a whole will exceed the previous record of 6.7m in 2023.
The airport made the forecast after confirming it served 6.5m passengers last month, which was up 6.1pc from the same month last year, marking its busiest ever November.
The total volume of cargo handled by Heathrow in the first 11 months of the year was 11.2pc higher than in the same period in 2023.
It attributed this to an increase in the cargo capacity of modern aircraft and strong demand.
Heathrow chief executive Thomas Woldbye said: “This year has been all about providing high levels of service for record amounts of passengers at Heathrow, and November was no different.
“As we embrace the festive season, our focus remains on ensuring smooth, joyful journeys - whether it is helping passengers get away for Christmas to reunite with their loved ones, or making sure cargo reaches its destination on time.”
08:06 AM GMT
UK markets fall ahead of American inflation figures
The FTSE 100 dropped at the open ahead of US inflation data today which could cement the path for interest rate cuts.
The UK’s blue-chip stock index fell 0.3pc to 8,259.71 while the midcap FTSE 250 declined 0.3pc to 20,915.84.
08:02 AM GMT
Zara owner reveals record profit
Zara owner Inditex posted another record quarterly profit as strong online and in-store sales gave the world’s biggest fashion retailer a boost.
The Spanish group, whose other brands include Massimo Dutti, Pull & Bear and Bershka, reported a profit after tax of €1.7bn (£1.4bn) for the third quarter, up 6pc from the same period last year.
While it beat the record for a single quarter, it was lower than the net profit of €1.8b forecast by analysts surveyed by financial data firm FactSet.
For the first nine months of 2024, Inditex said net profit reached €4.5bn compared to €4.1bn over the period last year.
Sales grew 7pc to €27.4bn over the nine-month period ending October 31.
“Inditex continued with a very robust operating performance due to the creativity of the teams and the strong execution of the fully integrated store and online business model,” it said in a statement.
The company also reported a strong start to the fourth quarter, with store and online sales between November 1 and December 9 rising nine percent from the period last year.
07:50 AM GMT
Tui profits take off amid demand for package holidays
Tui has seen annual earnings jump by a third thanks to surging demand for package trips, but expects growth to slow over the year ahead.
The holiday group posted a 33pc rise in underlying pre-tax earnings to €1.3bn (£1.1bn) in the year to September 30 as revenues lifted 12pc.
Tui said it expects further growth in the new financial year, but at a slower pace, with revenues set to rise by between 5pc to 10pc and underlying pre-tax earnings to increase by 7pc to 10pc.
Sebastian Ebel, chief executive of Tui, said: “2024 was a very good year for us.”
07:48 AM GMT
Elon Musk’s SpaceX soars to $350bn valuation in wake of Trump win
The rocket company led by Elon Musk has seen its valuation surge to about $350bn after his backing of Donald Trump in the US election.
SpaceX, which also makes satellites, has been boosted by a share buyback of as much as $1.25bn (£1bn) of the company’s common shares at $185 apiece, according to an email to employees seen by Bloomberg.
Mr Musk was a prominent backer of Mr Trump during the US election and will lead a new Department of Government Efficiency expected to reduce red tape for businesses.
The valuation cements SpaceX’s status as the most valuable private start-up in the world, according to Bloomberg.
Mr Musk’s businesses have seen an enormous boost since the US election, with Tesla shares up 65pc and close to a record high since the vote on November 5.
The billionaire’s own wealth has soared to about $384bn (£301bn).
07:47 AM GMT
Pay FTSE bosses like football stars, says billionaire Tory donor
Bosses of London-listed companies should be paid like Premier League footballers without facing a backlash, according to a billionaire Tory donor.
Lord Michael Spencer, the founder of brokerage ICAP, said Britain would not be able to attract or retain top talent unless it tackles the “political hot potato”, as the UK continues to lose companies to US markets.
The comments come a day after Ashtead, one of the largest companies on the FTSE 100, worth £27bn, announced it was moving its primary listing from London to New York.
Paddy Power-owner Flutter and building materials group CRH have also moved their listings to the US this year.
Lord Spencer, a former Treasurer of the Conservative party, told the Financial Times: “We don’t mind paying our footballers, top-rate footballers, extraordinary amounts of money.
“Somehow that’s considered perfectly acceptable. But if the CEO of BP or HSBC earns £20mn a year, materially less than their peer group in America, everyone jumps up and down saying this is an outrage.”
07:16 AM GMT
Good morning
Thanks for joining me. A billionaire Tory donor has said Britain must pay chief executives like “top footballers” if wants London to stop lagging US markets.
Lord Michael Spencer’s plea to tackle the “political hot potato” comes a day after Ashtead announced it was moving its primary listing from the London Stock Exchange to Wall Street.
5 things to start your day
1. Struggling Boots owner in takeover talks with US private equity giant | Walgreens in discussions with Sycamore over deal that could value company at $10bn, sparking a 20pc share price surge
2. Britain has too many overqualified graduates, finds major study | OECD survey examined workers who believe their role is beneath their capabilities
3. First carbon capture plant signed off after 20 years of delays | Miliband announces ‘new era for clean energy’ as Teeside project gets green light
4. Price of Christmas dinner jumps to outstrip food inflation | Average cost of festive meal rises after poor weather and turmoil for turkey farms
5. How a break-up could catapult Heathrow back to the top | The transformation of New York’s JFK is fuelling calls for more competition at the London airport
What happened overnight
Markets diverged on Wednesday ahead of US inflation data that could play a key role in the Federal Reserve’s interest rate decision next week, while traders were also keeping tabs on Beijing hoping for more economic support measures.
Seoul extended Tuesday’s rebound rally, though political uncertainty after South Korean President Yoon Suk Yeol’s brief imposition of martial law kept the won under pressure around two-year lows against the dollar.
Shares in Hong Kong and Shanghai rose in early trade, while there were also gains in Wellington and Jakarta.
Tokyo, Sydney, Singapore, Taipei and Manila fell.