In This Article:
Deaths will consistently outnumber births in Britain from the middle of the next decade, according to the Office for Budget Responsibility (OBR), in a tipping point that will leave the country dependent on migration.
The population of people born in Britain is forecast to begin declining in 2035, according to OBR projections published on Thursday. It follows a long-term fall in birth rates.
The UK’s birth rate has fallen from three per woman on average in the 1960s to around two a decade ago and 1.5 in 2022, following a similar pattern to much of the rich world.
The country needs a birth rate of 2.1 births per woman if the population is to remain stable without migration, the OBR said.
Deaths outnumbered births for the first time since 1976 in 2020, a year disrupted by the pandemic, and figures published by the Office for National Statics (ONS) show there were just 400 more births than deaths last year.
The OBR expects a tipping point in the middle of the next decade at which point deaths consistently outnumber births. If net migration fell to zero, the population would start shrinking from 2035 as a result, dropping by 11m by the 2070s.
It poses a critical threat to the economy and the public finances as the drop in births leaves an increasingly elderly population more and more reliant on a smaller share of workers to pay their pensions and cover the cost of healthcare.
While the UK-born population is forecast to be in decline by the middle of the next decade, the OBR does not expect the overall population to fall as strong net migration flows are expected to continue.
The spending watchdog, which made the projections as part of its modelling of public finances, forecast the population will grow from 68m last year to 82m in the 2070s, on the assumption that net migration averages 315,000 people per year.
A net 685,000 people moved to Britain in 2023, down from 764,000 in the previous year but still up considerably higher than the 184,000 who came in 2019.
The previous Conservative Government repeatedly failed to meet its promises to bring down migration levels. Sir Keir Starmer pledged to reduce net migration in the Labour manifesto ahead of July’s election.
Even assuming migration into Britain continues, the declining birth rate means over-65s will account for a growing share of the population while the proportion of children in the UK will shrink.
In 1974, one in four people in Britain were aged under 16. Today one-in-five are children. By 2074, that will fall to 15pc, meaning fewer than one-in-six will be under 16.
At the same time, the share of the population aged over-65 will increase from 18pc now to 27pc in the 2070s - meaning more than one-in-four people will be on or over the cusp of retirement.
David Miles, a top official at the OBR, said the solution to the public finance challenge posed by the ageing population may be to work longer, rather than encouraging women to have more children.
He said: “People worry that with relatively low fertility rates, there’ll be a shortage of workers: who’s going to do all the work? Who’s going to look after the young and the old? I think part of the answer for that is the old themselves.
“If there is a shortage of labour, there will be natural adjustments in terms of wages and also making work more attractive and feasible for people who, at the moment, we might think of as retirement age,” he said, suggesting more flexible work would help keep older people in the workforce for longer.
“I think those adjustments over the long run I think will be very powerful [and] are probably more likely to be the answer to low fertility than trying to encourage women to have lots more children.”
Birth rates are falling across much of the world, leading to fundamental changes in societies. This is epitomised by China, the world’s second-largest economy. The United Nations expects the Chinese population to drop by more than half over the course of this century, falling from 1.4bn today to under 650m by 2100.
Decades of the one-child policy, which forbade couples from having more than one child, forcibly accelerated the country’s ageing. Despite officially cancelling the policy in 2015, the country’s population fell in both 2022 and 2023.
06:13 PM BST
Signing off
That’s all from us. I’ll leave you with the latest piece from Ben Marlow, associate editor: John Lewis may be out of the woods – but it’s no M&S
06:00 PM BST
Nokia denies reports of plans to replace chief executive
Nokia has denied reports that it is undergoing a process to replace its chief executive Pekka Lundmark.
“The Board fully supports President and CEO Pekka Lundmark and is not undergoing a process to replace him,” Nokia said in a statement to Reuters.
The Finnish phone maker said it continuously assesses and discusses the leadership team’s long-term succession plan through a comprehensive approach that covers internal and external candidates.
The firm added that its chief executive and chairman are fully aware of this process.
05:20 PM BST
Christmas food deliveries under threat from EU border rules, warn truckers
A new fingerprint scheme designed to tighten EU border checks risks disrupting deliveries of fresh food in the run-up to Christmas, a leading trade group has warned.
Logistics UK said the rules, which will require all non-EU passengers at Dover to have fingerprint and facial recognition checks, will create tailbacks and interrupt the flow of goods.
A nationwide publicity campaign is needed to prevent disruption, the group added, as the EU prepares to roll out its new Entry/Exit System (EES) on Nov 10.
Transport editor Christopher Jasper has the story...
04:42 PM BST
FTSE 100 closes in the green
The FTSE 100 has closed 0.57pc higher at 8,240.97, while the midcap FTSE 250 index closed 0.77pc higher at 20,695.77.
The performance comes despite warnings from the budgetwatch that Britain is at risk of a public debt spiral as spending is projected to rise well above government income.
The OBR said public spending is projected to rise from 45pc to over 60pc of GDP over the next 50 years.
04:30 PM BST
Apple’s AirPods hearing aids approved by medical regulator
A US medical watchdog has approved Apple’s plans to transform its AirPods earphones into hearing aids.
The US Food and Drug Administration authorised the iPhone maker’s new feature after it was tested in a clinical study with 118 subjects with mild to moderate hearing loss.
Senior technology reporter Matt Field explains what you can expect from Apple’s new hearing aids:
iPhone users will be able to tell if they are losing their hearing after Apple launched a medical-grade audio test to its headphones.
04:16 PM BST
Stellantis to halt production of Fiat 500 election model
Carmaker Stellantis is suspending the production of the electric version of its Fiat 500 car in Italy.
The Peugot and Vaxhaull owner blamed the move on weak demand as electric vehicle sales in Europe have plunged.
Stellantis in a statement: “This measure is necessary to a current lack of orders.”
Italian government officials have called for a review into the EU’s plan to ban sales of new internal combustion engines from 2035, making it impossible to sell new fossil-fuel powered vehicles.
04:01 PM BST
Trade union announces protest in Asda equal pay row
Female Asda workers are to protest outside superstore next week in a long-standing pay row.
The women, represented by GMB Scotland, will rally outside Asda’s Perth superstore on Monday.
According to GMB, female shop workers are earning up to £2 less than male colleagues working in warehouse roles.
It comes as Asda faces an equal pay claim from 60,000 shop workers in what will be the largest private sector claim ever.
03:35 PM BST
Gold hits record high amid rate cut hopes
Gold prices climbed to record highs amid expectations that the US Federal Reserve will begin cutting interest rates next week from their 23-year highs.
Spot bullion prices rose as much as 1.5pc to touch $2,551.73 as wholesale inflation figures today cemented the case for a reduction in borrowing costs.
The producer prices index fell from 2.1pc to 1.7pc in August, which was the lowest rise in wholesale inflation since February.
Meanwhile, separate data showed a further slowdown in the employment market, with initial jobless claims up by 2,000 to 230,000 in the week ended September 7, according to Labor Department.
Ole Hansen, head of commodities strategy at Saxo Bank, said: “A cocktail comprising an ECB rate cut, small pickups in jobless claims and PPI has been enough to send gold to a fresh record high.”
I’m heading off now but my esteemed colleague Adam Mawardi is stepping in to make sure you stay updated through until the evening.
03:19 PM BST
Boots announces new boss amid potential sale talks
Boots has appointed Anthony Hemmerdinger, a former senior director of Asda and Sainsbury’s, as its new boss after current chief Sebastian James announced his departure.
Mr Hemmerdinger will take over as managing director of the pharmacy giant in November from his current role heading up the company’s retail and operations.
He takes over the high street stalwart amid a period of uncertainty over its ownership following reports in May that its US owner Walgreens was pursuing a potential sale.
It was reported in May that Walgreens Boots Alliance was reaching out to potential buyers for a possible £7bn takeover.
The company has also been reported to be considering spinning Boots off via a float on the London Stock Exchange in recent years, which would come as a major boost to Britain’s financial markets.
Mr James, the son of the hereditary peer the 5th Baron Northbourne, was recently named as the new chief executive of private equity-backed healthcare firm Veonet, one of Europe’s largest chains of ophthalmology clinics, which treat eye conditions.
02:57 PM BST
Jim Ratcliffe to close Scotland’s last oil refinery over net zero petrol car ban
Scotland’s last remaining oil refinery will shut down next summer with 400 job losses amid a looming ban on new petrol and diesel cars.
Our energy editor Jonathan Leake has the details:
Grangemouth refinery, co-owned by Sir Jim Ratcliffe’s Ineos, will be closed partly due to falling demand for fossil fuels as Britain pushes to ban the sale of new petrol cars by 2035 to hit net zero targets.
These three charts illustrate the economic picture faced by the Scottish oil industry.
02:41 PM BST
Growth revised down because consumption ‘has not picked up’, says Lagarde
Christine Lagarde concluded her press conference by saying that the European Central Bank had cut its growth forecasts for the eurozone because consumption “has not picked up” as expected.
After revising growth forecasts lower, she said:
That is caused by what? By the fact that energy prices have significantly impacted downward and have benefitted to the headline inflation.
02:33 PM BST
US stocks mixed as wholesale inflation slows
Wall Street stock markets lacked direction at the opening bell as wholesale inflation slowed last month.
The Labor Department said that its producer price index — which tracks inflation before it reaches consumers — rose 1.7pc in the year to August, which was the smallest rise since February. It was down from 2.1pc in July.
As trading began, the S&P 500 was flat at 5,551.34 while the Nasdaq Composite was down 0.1pc to 17,373.71.
The Dow Jones Industrial Average was up 0.2pc at 40,922.50.
02:23 PM BST
Euro strengthens as Lagarde indicates rates to stay high ‘for as long as needed’
The euro gained ground against the pound despite the ECB cutting interest rates today.
The single currency was up 0.1pc against sterling at 84.5p and was up 0.2pc versus the dollar at $1.10.
02:19 PM BST
Lagarde: Interest rates to stay restrictive ‘for as long as needed’
Interest rates in the eurozone will remain restrictive on the eurozone economy “for as long as needed”, Christine Lagarde has said, after the ECB cut rates for the second time this year.
The ECB president said she did not want to comment on where the so-called neutral rate of interest rates sits, saying this would become clear “as we get closer”.
She told the press conference in Frankfurt:
How long are we going to be sufficiently restrictive? Until we have been sufficiently restrictive.
02:11 PM BST
ECB to decide whether to cut rates ‘meeting by meeting’
Christine Lagarde said that while domestic inflation is “not satisfactory”, the European Central Bank will decide “meeting by meeting” whether to cut interest rates.
Insisting the Governing Council’s decision making will be “data dependent”, Ms Lagarde added that “data dependency does not mean data point dependency”, meaning it will not be “fixated on one single number”.
She said: “I am not giving you any commitment of any kind.”
The decision to cut interest rates from 3.75pc to 3.5pc was unanimous, she said.
Money markets indicate there is a 59pc chance the ECB will cut rates again at its next meeting in October, with at least one more rate cut priced in by the end of the year.
02:02 PM BST
Eurozone growth could be downgraded further, warns Lagarde
Christine Lagarde has warned that eurozone growth faces “risks to the downside” after the European Central Bank cut interest rates.
The President said financing costs remain restrictive as previous increases to interest rates continue to work their way through the region’s economy.
“Credit growth remains sluggish amid weak demand,” she said.
01:58 PM BST
Lagarde: Eurozone recovery faces headwinds
Christine Lagarde said the recovery in the eurozone economy faces headwinds as she began her press conference after the European Central Bank cut interest rates to 3.5pc.
The President said she expects the region to rebound as wages rise but warned the eurozone’s jobs market remains resilient and demand for labour needs to moderate further.
Overall, the growing cost of labour is slowing, she said, while profits are continuing to “partially offset” the growing pressure of higher labour costs.
01:36 PM BST
European Central Bank ‘spurred into’ interest rate cuts amid faltering growth
The European Central Bank has been “spurred into action” amid its faltering growth outlook, according to economists.
Yael Selfin, chief economist at KPMG, said:
Today’s decision to cut interest rates comes amidst a sluggish economic backdrop.
01:30 PM BST
Eurozone growth outlook downgraded by ECB
Quarterly projections from the ECB’s staff showed that growth this year will be slightly lower than forecast in June while inflation is still only seen back at target in the second half of next year.
Staff project that the economy will grow by 0.8pc in 2024, rising to 1.3pc in 2025 and 1.5pc in 2026
This is down from June pojections of GDP growth of 0.9pc this year, 1.4pc in 2025 and 1.6pc in 2026.
01:26 PM BST
ECB tight-lipped on next steps for interest rates
The ECB provided almost no clues to its next step, even as investors bet on steady policy easing in the months ahead.
As it cut interest rates to 3.5pc, it said:
The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.
01:24 PM BST
ECB raises forecast for underlying inflation
The European Central Bank cut interest rates after it revised higher its projections for underlying inflation.
Policymakers warned that core inflation, which strips out volatile food and energy prices, would it 2.9pc this year, up from June’s projection of 2.8pc.
It would then drop to 2.3pc in 2025, up from a previous prediction of 2.2pc, and 2pc in 2026.
Its overall projections for inflation are unchange, with price rises expected to average 2.5pc this year as it cut interest rates to 3.5pc.
It said the consumer prices index would then drop to 2.2pc in 2025 and 1.9pc in 2026.
01:15 PM BST
Eurozone interest rates cut to 3.5pc
The European Central Bank has cut interest rates in the eurozone amid signs the bloc’s economy is at risk of recession.
Policymakers lowered rates by a quarter of a percentage point to 3.5pc, having made the same move from record highs of 4pc in June.
It comes as Germany’s economy shrank unexpectedly in the second quarter of the year, leaving Europe’s largest economy teetering on the brink of recession.
01:04 PM BST
Bond market weakens ahead of eurozone interest rate announcement
Eurozone bond yields rose ahead of a widely anticipated interest rate cut from the European Central Bank, bouncing back after falling sharply in recent days.
Germany’s 10-year bond yield, the benchmark for the euro zone, was up three basis points at 2.11pc, having touched 2.09pc on Wednesday, its lowest since August. Yields move inversely to prices.
The two-year German yield was up six basis points at 2.2pc, after falling to its lowest since March 2023 on Wednesday at 2.13pc. Shorter-dated yields are highly sensitive to expectations about central bank interest rates.
Markets fully expect the ECB to cut rates by a quarter of a percentage point to 3.5pc. Traders are pricing in the possibility of two more rate cuts this year, although that could change depending on what ECB President Christine Lagarde says during her press conference later.
Mohit Kumar, chief economist for Europe at Jefferies, said:
A 25-bp cut is a consensus and should not be a surprise.
12:52 PM BST
Wall Street poised to inch higher ahead of rate cuts
US stock indexes edged higher in premarket trading ahead of a likely interest rate cut next week.
Most megacap and growth stocks rose slightly, with Google-parent Alphabet up more than 1pc.
A string of weakening employment and economic growth data over the past few weeks had led to rising bets on a larger-than-usual 50-basis point interest rate reduction from the U.S. central bank, but those expectations have largely faded.
After Wednesday’s inflation report, traders now see an 87pc chance of the Fed cutting interest rates by a quarter of a percentage point when it meets on September 17-18, according to CME’s FedWatch Tool. It would be the first rate cut since March 2020.
Analysts at Wells Fargo said:
Our base case forecast looks for a 25 basis points reduction in the federal funds rate at the September FOMC meeting followed by two 50 bps rate cuts at the November and December FOMC meetings.
In premarket trading, the S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up about 0.1pc
12:31 PM BST
JP Morgan to cap junior bankers’ working day – at 13 hours
JP Morgan is to cap hours for junior bankers at 13 hours a day as Wall Street banks look to allay concerns that they have fostered a culture of overworking.
Our reporter James Warrington has the details:
The US investment bank will reportedly introduce a new cap of 80 hours a week for junior investment bankers.
Read how other Wall Street banks’ working hours stack up.
Click here to view this content.
12:01 PM BST
VW to start pay talks early amid threat of factory closures
Volkswagen said talks with unions over a new pay deal for workers would begin a month early, following the German carmaker’s threat to close factories and cut jobs.
Discussions are likely to be fraught as union leaders promised “bitter resistance” to the cost-saving measures.
The IG Metall union and VW management had agreed to a first round of negotiations on September 25, the group said.
The talks, initially slated to start at the end of October, will set the terms of employment for some 120,000 workers in Germany.
The “challenging situation” at the carmaker and the “resulting uncertainties” were behind the decision to bring forward the talks, the group said.
Volkswagen surprised workers last week with the announcement that it could shutter sites in Germany for the first time in its 87-year history.
It blamed the plans on high manufacturing costs, a stuttering switch to electric vehicles, and rising competition from China.
11:52 AM BST
Tesco loses Supreme Court ‘fire and rehire’ case
Tesco’s “fire and rehire” plans have been deemed unlawful by the Supreme Court, which ruled that the retail giant cannot sack staff before bringing them back on worse terms.
Our employment editor Lucy Burton has the latest on the case:
Britain’s biggest supermarket was defeated in a dispute before the UK’s top court on Thursday, ending a long-running battle with shopworkers union Usdaw.
11:31 AM BST
Oil prices rise amid hurricane concerns
The price of oil has risen after Hurricane Francine halted US offshore crude production in the Gulf of Mexico.
Brent crude has gained 1.7pc today to nearly $72 a barrel, having dropped below $70 for the first time in nearly three years earlier this week.
Hurricane Francine led to shutdowns of crude production facilities in the US, sparking fears that supplies could be affected in the short-term.
However, analysts think the rebound could be short lived. Li Xing Gan, financial markets strategist at Exness, said:
A global economic slowdown and a weak demand outlook are significant headwinds.
11:19 AM BST
Pound edges higher amid US rate cut predictions
The pound has edged higher as inflation figures cemented bets on a US interest rate cuts next week.
Sterling was up 0.1pc to $1.306 after hitting a three-week low against the dollar on Wednesday after data showed the UK economy stagnated in July.
But while growth has stalled in Britain in recent months, the economy has still shown more robust growth than the eurozone since the beginning of the year.
The European Central Bank is expected to cut interest rates later today from 3.75pc to 3.5pc.
Against the euro, the pound was also little changed at 84.4p.
Meanwhile, the Bank of England meets next week, and futures markets imply around an 80% chance that interest rates remain on hold, after a 25 basis point rate cut in August.
Kirstine Kundby-Nielsen, FX analyst at Danske Bank, said: “I think they will only deliver one more cut this year.”
She added: “That will play an important role and is set to support the pound.”
10:53 AM BST
Tesco loses Supreme Court battle with union over ‘fire and rehire’
A union has won a Supreme Court battle against Tesco over so-called proposals to “fire and rehire” workers on less favourable terms.
The Union of Shop Distributive and Allied Workers (Usdaw) took legal action over the supermarket chain’s proposals to fire staff at some distribution centres and rehire them on lower pay in 2021.
After the High Court ruled in the union’s favour in 2022, Tesco successfully appealed against the decision the same year.
The union then took the case to the country’s highest court, with five Supreme Court justices ruling unanimously today that Tesco should be blocked from dismissing the staff.
Lord Reed, Lord Leggatt and Lord Lloyd-Jones, Lord Burrows and Lady Simler ruled: “Objectively, it is inconceivable that the mutual intention of the parties was that Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so.
“This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.”
A Tesco spokesperson said: “We accept the Supreme Court’s judgment.”
10:41 AM BST
OBR has revealed ‘shocking state’ of public finances, says minister
In response to the latest OBR fiscal risks report, Chief Secretary to the Treasury Darren Jones said:
The OBR has laid bare the shocking state that our public finances were left in by the previous government.
10:29 AM BST
Medical advances have prolonged life in poor health, says OBR
Britons are living more of their lives in poor health as a result of medical advances, the budget watchdog has said, as public health spending per person has doubled since the turn of the century.
Over the past four decades, total UK health spending - both public and private - has gone from being the lowest to the sixth highest as a share of GDP among 19 advanced economies, the OBR said.
However, across those economies, the UK “still ranked below the average per-person total health spend of £3,880 in 2022”.
The OBR said this “reflects the UK’s lower GDP per-person relative to most of the countries”.
Its latest fiscal risks and sustainability report found that during the pandemic, the UK saw one of the largest spikes in health spending, followed by a slight fall as a per cent of GDP in 2022.
This left UK health spending at 11.3pc of GDP in 2022, just above the advanced-economy average of 10.7pc.
10:08 AM BST
Britain faces £40bn of tax rises or spending cuts every decade to keep debt down
Britain faces about £40bn of tax rises or spending cuts each decade in an effort to avoid a “spiral” of public debt, the OBR has warned.
The budget watchdog said that national debt risks rising to 270pc of GDP over the next 50 years.
However, if governments want to return debt to its pre-pandemic levels, this “would require an average fiscal tightening of 1.5pc of GDP per decade” over the same period.
Britain’s economic output stands at about 2.7trillion - or 99.4pc of GDP, according to the Office for National Statistics - meaning that a 1.5pc tightening on the public books would need about £40bn of either tax rises or spending cuts.
The OBR said this comes at a time when the UK’s population is getting older - and those people typically contribute less to the economy:
09:51 AM BST
Britain at risk of public debt spiral, warns OBR
Britain is at risk of a public debt spiral, the budget watchdog has warned, as spending is projected to rise well above government income.
The OBR said public spending is projected to rise from 45pc to over 60pc of GDP over the next 50 years.
Meanwhile, revenues are expected to remain at around 40pc of the nation’s economic output.
While the national debt is projected to hit 270pc of GDP, this could worsen to 300pc in the wake of potential shocks from an aging population, climate change and war.
The OBR warned: “In practice, if these pressures and shocks were to materialise as we project, then governments would need to take mitigating policy action to prevent this debt spiral from occurring.”
09:42 AM BST
Public debt on track to nearly triple to 270pc of GDP, warns OBR
Britain’s national debt is on track to hit 270pc of GDP over the next 50 years, the budget watchdog has warned, amid spiralling public spending.
The Office for Budget Responsibility (OBR) said public spending is at its highest sustained level since the mid-1970s as a result of increased spending on public services, welfare, and interest costs.
In its latest assessment of fiscal risks and sustainability, the OBR said that governments around the world face increased pressure from aging populations, climate change and rising geopolitical tensions.
“These and other pressures would eventually put the public finances on an unsustainable path,” the OBR warned.
As a result, Britain’s public debt is predicted to nearly triple over the next 50 years from just under 100pc of GDP to 270pc of the country’s economic output.
09:20 AM BST
Oil demand growth weakest since pandemic
Global oil demand will growth at its slowest pace since the onset of the pandemic, rhe International Energy Agency (IEA) has warned, amid a slowdown in the Chinese economy.
The Paris-based agency has cut its demand growth forecast by 70,000 barrels per day (bpd) to 900,000 bpd.
It expects Chinese demand to grow by only 180,000 bpd in 2024 as a broader macroeconomic slowdown coincides with higher uptake of electric vehicles.
The organisation said: “With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade.”
The IEA left its 2025 demand growth forecast unchanged on the month at about 950,000 bpd but suggested that the global oil market could be oversupplied next year if the OPEC+ producer group proceeds with its plan to unwind voluntary output cuts.
08:57 AM BST
FTSE 100 surges amid rate cut hopes
The FTSE 100 enjoyed its strongest gain in a month amid hopes for interest rate cuts after US inflation fell to a three-year low.
The UK’s blue-chip stock index rose as much as 1.3pc to 8,301.36 - its highest level in over a week - as the consumer prices index in the US fell to 2.5pc.
The fall in inflation means money markets have priced in a quarter of a percentage point cut to interest rates by the Federal Reserve next week, with the European Central Bank expected to make the same move today.
Global sentiment has bounced back, with the Cac 40 in France up 1pc and the Dax in Germany higher by 1.3pc after Asian markets and Wall Street closed up overnight amid a boost from technology stocks.
On the London markets, the mid-cap FTSE 250 was up 1.1pc.
Industrial metal miners advanced as much as 2.6pc as copper prices hit a one-week high.
Energy shares climbed as much as 1.9pc as oil prices rose amid concerns of Hurricane Francine impacting US output.
Trainline was the top gainer on the FTSE 250 with a 11.3pc rise after the company said it expects core profit to exceed previous forecast.
Fever-Tree Drinks dipped 7.2pc after the beverage maker cut its annual revenue growth forecast.
08:40 AM BST
Bank of England to roll out new rules aimed at avoiding future bank bailouts
The Bank of England aims to roll out revised new rules on how much capital UK banks must set aside to cope with future crises, as it juggles efforts to shock-proof lenders without hurting their global commercial interests.
In a speech published today, the regulatory arm of the Bank said it would make “substantial amendments” to several earlier proposed “Basel” bank capital reforms in response to consultation and evidence.
The changes outlined today will come into force on January 1, 2026, instead of on July 1.
Financial regulators crafted the Basel III rules after the 2007-2009 global banking crisis forced taxpayers to bail out several banks.
The bulk of the Basel package is already in force across major lenders, with some remaining elements still to be implemented into national rulebooks.
Phil Evans, director of prudential policy, said: “In terms of the capital impact, we think there will only be a very small impact on requirements, on average, across UK firms.”
08:19 AM BST
European markets jump after US and Japanese gains
Europe’s main stock markets rallied at the start of trading following strong gains in Tokyo and on Wall Street thanks to big uplifts for tech shares.
Investors were awaiting an expected cut in eurozone interest rates from the European Central Bank later in the day, ahead of a reduction from the US Federal Reserve next week as global inflation cools.
The FTSE 100 index climbed 1.2pc to 8,292.45 points at the open.
In the eurozone, the Paris CAC 40 index won 1.1pc to 7,478.43 points and Frankfurt’s DAX jumped 1.2pc to 18,548.67.
The euro and pound steadied against the dollar.
08:17 AM BST
Bond yields edge higher ahead of expected eurozone rate cut
Government bond yields have edged up ahead of a widely anticipated interest-rate cut by the European Central Bank.
Markets fully expect a quarter-point cut by the ECB to 3.5pc, with traders pricing in the possibility of two more rate cuts this year, although analysts said this might be excessive.
Commerzbank head of interest rate strategy Michael Leister said: “Today’s ECB projections are key, but the hurdle for back-to-back cuts seems high.”
The 10-year UK gilt yield inched up one and a half basis points to 3.78pc, but remained close to its lowest levels since February.
Meanwhile the German 10-year bund yield rose a similar amount to 2.12pc. It touched 2.09pc on Wednesday, its lowest since the market turmoil of early August.
08:04 AM BST
UK shares jump higher following Wall Street rally
Stock markets in London leapt higher as trading began following a rally in US tech stocks and in Japan overnight.
The FTSE 100 began the day up 1.1pc to 8,297.18 while the midcap FTSE 250 rose 0.1pc to 20,684.78.
Earlier, Tokyo’s Nikkei index closed more than three percent higher on Thursday following a rally in US tech stocks and as a weaker yen boosted investor sentiment.
The benchmark Nikkei 225 gained 3.4pc, or 1,213.50 points, to end at 36,833.27, while the broader Topix index climbed 2.4pc, or 61.83 points, to 2,592.50.
07:52 AM BST
Fever-Tree sales drop as summer weather disappoints
Fever-Tree sales unexpectedly slumped in the first half of the year as it battled a “tough market backdrop” and a washout summer.
Group revenues were down by 2pc to £172.9m as sales in the UK and Europe were hit by the poor weather.
Underlying profits rose 79pc to £18.2m but this was short of analyst estimates of a rise to £21.6m.
Chief executive Tim Warrillow said:
The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived.
07:32 AM BST
Trainline on track as customers switch to digital tickets
Trainline said it expects profits this year to beat its previous forecasts as it revealed growing ticket sales in the UK and Europe, helped by fewer strike days.
The online ticket retailer said it expects underlying earnings to exceed growth of 2.4pc to 2.5pc it outlined in May.
Group net ticket sales increased by 14pc to £3bn, with UK sales up 15pc to £2bn as more commuters switched to digital tickets.
Chief executive Jody Ford said:
As Europe’s number one rail app, our strong performance shows how our relentless focus on innovation is helping more customers to choose digital ticketing.
07:17 AM BST
‘Transformation plan is working’, says John Lewis boss
After reducing losses by 49pc in the first half of its financial year, John Lewis said:
We have historically delivered the majority of our profits in the second half of the year.
Nish Kankiwala, chief executive of the John Lewis Partnership, said: “These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.”
07:15 AM BST
John Lewis sharply cuts losses as turnaround plan bears fruit
The John Lewis Partnership has revealed sharply narrowed half-year losses and said annual profits would be “significantly” higher as its overhaul starts to bear fruit.
The employee-owned group, which runs the department store chain and Waitrose supermarket arm, reported pre-tax losses of £30 million for the six months to July 27, down 49pc on a year earlier.
The John Lewis department store business saw half-year sales fall 3pc to £2bn, but Waitrose notched up 5pc sales growth as average prices rose just over 2pc.
The group said while the consumer and economic backdrop was “uncertain”, it was confident of growing full-year profits “significantly” above the £42m posted for 2023-24.
07:11 AM BST
Housebuilding plans rely too much on private sector, Starmer told
The Government’s plans to build 1.5m homes over the next five years rely too much on the private sector, a think tank has warned.
Resolution Foundation researcher Camron Aref-Adib said:
The Government has set an ambitious target to deliver 1.5 million more homes over the parliament, and followed up with welcome planning reforms to encourage private developers to get building as soon as possible.
Other steps are also needed to get more shovels in the ground, he said.
07:11 AM BST
Labour must ‘hold its nerve’ against green belt Nimbies, says Resolution Foundation
Sir Keir Starmer’s Government must “hold its nerve” against green belt Nimby opposition to hit its goal of building more than one million new homes before the end of the current Parliament, a leading think tank has urged.
The Resolution Foundation, a left-leaning research body, has warned the Prime Minister he must if anything go further with his original plans because an initiative to re-label low-quality green belt land as a new “grey belt” is not by itself enough to get enough homes built.
Sir Keir’s Government has laid out ambitious plans to build an additional 1.5m homes across the UK during the course of this Parliament.
Camron Aref-Adib, a researcher at the think tank, said it was vital the Government does not cave in to opposition to development schemes.
“Giving local housing targets more teeth and opening up more land for development should help to boost housing supply, as long as the Government holds its nerve against local opposition,” he said.
Loss of nerve has plagued previous efforts to get Britain building, as Governments have frequently backed down in the face of attacks by so-called Nimby opponents, which stands for “Not In My Back Yard”.
The former Conservative Government ditched its own proposed planning reforms in 2021 following the Chesham and Amersham by-election, when a Tory candidate was ousted by a Liberal Democrat opponent.
06:53 AM BST
Good morning
Thanks for joining me. Sir Keir Starmer has been urged to “hold his nerve” against Nimby opposition to his plans to build 1.5m homes over the next five years.
The Resolution Foundation, a left-leaning research body, told the Prime Minister to go further, as his relabelling of low-quality greenbelt land to “greybelt” does not go far enough to meet his target.
5 things to start your day
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2) Boohoo scraps ‘game-changing’ US warehouse after only a year | Disappointing sales force fast fashion company to pull back on international ambitions
3) Ford files patent to eavesdrop on drivers’ conversations | Technology would listen for keywords that could help target adverts to occupants
4) Thousands of Port Talbot steelworkers to lose jobs despite £500m state lifeline | Taxpayer-funded subsidy expected to save only 100 extra jobs at Welsh steelworks
5) Luke Johnson: I know three billionaires who have already fled Labour’s Britain. It’s just the start | In peddling the politics of envy, this anti-wealth Government risks catalysing a catastrophic talent drain
What happened overnight
Asian shares mostly rose after gains on Wall Street led by a handful of influential Big Tech companies.
Japan’s benchmark Nikkei 225 soared in early trading, adding 2.8pc to 36,605.62, although the sharp gains were partly a reflection of earlier sharp drops.
The cheap yen was a boon for some issues, as it boosts the value of overseas earnings when converted into yen. Toyota jumped 2.8pc, while Nintendo edged up 1.2pc.
In currency trading, the US dollar slipped 0.1pc against the pound, which is worth $1.305.
Shares in Nippon Steel were little changed after a group of Japan’s top businesses wrote a letter to US Treasury Secretary Janet Yellen expressing concerns about “political interference” in the company’s proposed acquisition of US Steel.
US Steel issues finished nearly 7pc higher a day earlier.
Also overnight, Australia’s S&P/ASX 200 rose 0.7pc to 8,041.10. Hong Kong’s Hang Seng jumped 1pc to 17,283.46, while the Shanghai Composite was little changed at 2,720.40.
Wall Street reversed an earlier in the day sell-off to close higher yesterday. The Dow Jones Industrial Average rose 0.3pc, to close at 40,861.71, the S&P 500 gained 1.1pc, to 5,554.12, and the Nasdaq Composite added 2.2pc, to 17,395.53.
Yields on benchmark 10-year US Treasury notes rose marginally to 3.66pc, from 3.65pc late on Tuesday.