In This Article:
Britain’s factories suffered the deepest slump in orders since the first Covid lockdown and are braced for worse to come as demand from customers in the UK and overseas withers.
Businesses are slashing investment amid rising taxes and red tape, according to the Confederation of British Industry’s survey of the manufacturing sector.
“Manufacturers have entered the New Year in a grim mood. Confidence has evaporated over the last three months as orders have dropped,” said Ben Jones, economist at the business group.
“A fall in domestic deliveries comes amid widespread concerns over the impact of the increase in National Insurance contributions, minimum wages and changes to employment law on firms’ operating costs.”
Much of the global manufacturing sector is struggling with German industry gripped by high energy prices, weak demand and stiff competition from Chinese car manufacturers, while China itself is also battling against an economic slump caused in part by a property crisis.
As a result British factories have few orders from overseas.
“Export prospects appear worse than at any time since the pandemic, reflecting a slowdown in overseas demand and reports of ongoing difficulties securing supply contracts with customers based in the EU,” said Mr Jones.
He called on the Government to inject fresh confidence into the economy.
“Several firms noted concern that negative sentiment risks becoming self-fulfilling,” said Mr Jones.
“The government can play a role in re-booting confidence by sending clear signals of intent on policies that could support the manufacturing sector, notably delivering an industrial strategy that helps the UK win the global race for growth, matching skills to economic needs, and accelerating our energy transition and resilience.”
The share of businesses reporting falling orders outweighed the proportion with rising demand by a margin of 20 percentage points, the worst since July 2020.
Expectations for the coming quarter are even worse, with the net balance anticipating growth in orders falling to minus 32pc, the lowest since April 2020, at the start of the first Covid lockdown.
Read the latest updates below.
06:03 PM GMT
Signing off...
That’s all for today on this live blog.
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05:51 PM GMT
Housebuilders outpace the FTSE after Starmer pledges help
Housebuilding giants saw shares rise faster than most in the FTSE 100 today, after Sir Keir Starmer said he would end a “challenge culture” on infrastructure projects.
Sir Keir said opponents of major infrastructure projects will have fewer chances to “frustrate growth” through repeated legal challenges.
Danni Hewson, an analyst at the investing firm AJ Bell, said the sector “has arguably been oversold since Labour’s election victory considering the huge focus the Government has placed on housebuilding”.
He added: “Moves by the PM today to make it easier for huge infrastructure projects to go ahead by limiting the number of legal challenges - taking on the Nimbys who Keir Starmer said stood in the way of growth - have been seen as a clear indication that the Government is serious about building back Britain.”
Persimmon rose 3.9pc, Taylor Wimpey added 3.2pc and Barratt Redrow increased by 2.5pc.
05:41 PM GMT
Ad titan considers ditching London for New York
Advertising behemoth WPP has considered ditching the London stock market for New York as it pursues US growth in the wake of Donald Trump’s return to the White House.
Mark Read, the chief executive, said the company had looked at moving its primary listing to New York and that it “was something we keep a watching eye on”.
He cited the example of other chief executives who had shifted their listing to the US and enjoyed a “positive experience”.
In an interview with the Financial Times, the ad boss called on Sir Keir Starmer’s Government to “get to the bottom” of the crisis on the FTSE 100, after a string of businesses snubbed the London market in favour of America.
Mr Read said the valuation discount for London-listed companies was the “biggest it’s been in history”, adding: “It’s driving M&A and a reduction in the number of listed companies.”
Read more of our report on the growing discontent about about the London market...
05:31 PM GMT
I won’t resign over Heathrow expansion, Miliband insists
Ed Miliband has refused to resign if the Government publicly backs a third runway at Heathrow, just days after he said the rise of net zero was “unstoppable”.
The Energy Secretary, who has previously argued that environmental principles must be backed up with actions, said the idea of him quitting the Cabinet over the expansion of Europe’s busiest airport was “ridiculous”.
Mr Miliband moved to clarify his position amid speculation that the Chancellor will formalise the Government’s backing for a new runway in a speech next week, at which she is also expected to endorse applications for expanding Gatwick and Luton.
He said: “The whole of the Government is focused, and I’m focused, on delivering our clean energy mission as part of what we need to do as a country, as part of the Prime Minister’s mission and as part of meeting our economic growth mission – our number one priority.”
His comments sparked an immediate backlash from green campaigners, who accused him of hypocrisy.
05:14 PM GMT
FTSE 100 rises to near record after Trump waits on tariffs
The FTSE 100 rose today, ending just short of a fresh record high.
The blue-chip index gained 0.2pc to 8,565 points. The FTSE 250 mid-cap index eased 0.2pc.
Stock investors took comfort as Trump held off imposing hefty tariffs on his first day in the office and announced big investments in artificial intelligence infrastructure, sparking a rally in global tech shares.
In earnings-driven moves, CMC Markets dropped 16.7pc after the trading platform’s muted forecast fell short of investors’ heightened expectations following upbeat projections from industry peers. Peer IG Group slipped 6.4pc despite the online trading platform posting a 30pc rise in its first-half profit.
Investors meanwhile are awaiting a slew of monetary policy decisions including the Federal Reserve and the European Central Bank next week and the Bank of England (BoE) in early February.
Data last week showed British inflation slowed unexpectedly last month and core measures of price growth - tracked by the BoE - fell more sharply, cementing bets on an interest rate cut next month.
Traders are putting an 82pc chance of a first quarter-point reduction on Feb 6 and have fully priced in at least two rate cuts this year.
05:10 PM GMT
Trump now ‘new factor’ in oil prices, warns trader
Donald Trump is now a major factor affecting oil prices, a trader has warned after prices dropped sharply.
Frank Monkam, head of macro trading at Buffalo Bayou Commodities, told Bloomberg: “Oil markets are now facing the introduction of a new variable this year, that is the ‘Trump call option’ on energy prices.”
The cost of a barrel of oil dropped this afternoon after Donald Trump told the World Economic Forum: “I’m also going to ask Saudi Arabia and Opec to bring down the cost of oil. You’ve got to bring it down.”
Brent Crude lost as much as 1.2pc.
04:31 PM GMT
Oil drops after Trump calls for Opec price cuts
The cost of a barrel of oil dropped after Donald Trump told the World Economic Forum that Opec should cut prices.
He said: “If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue - you got to bring down the oil price.”
The price of Brent Crude is down by 0.4pc, having been up as much as 0.8pc earlier today.
You can read our coverage of Mr Trump’s speech here.
04:19 PM GMT
Reeves makes pitch to Big Tech in attempt to revive economy
Britain’s choice of a former Amazon executive to chair its competition regulator is a clear pitch for investment from Big Tech, company bosses and City lawyers have suggested.
Cristina Caffarra, a competition economist, said the selection of Doug Gurr, former head of Amazon UK, indicated Britain was moving closer to US regulation in the hope it would attract investment.
“This is the significance of it,” she said.
Competition lawyer Dominic Long at A&O Shearman said there could be an increase in cross-border deals for UK assets.
“All things being equal, it will be easier to get potentially problematic deals through now than it would have been, say, 12 months ago,” he said.
One unnamed FTSE 100 chief executive told Reuters that the Government was trying to rebuild ties with Big Tech.
He said that with Donald Trump’s new US administration set to give greater leeway to the likes of Meta, Apple, Microsoft, Google and Nvidia, Britain realised it needed to follow suit.
“Given the way the world is going in terms of size and scale of business, we maybe need to look at things in a somewhat different way in the UK,” he said.
Sir Martin Sorrell, chief executive of ad group S4 Capital and founder of WPP, said the talk at the World Economic Forum in Davos was that Britain had become overly regulated.
“Maybe this is a welcome change in the UK,” he said.
04:05 PM GMT
Factories suffer fastest slump in orders since Covid hit
Britain’s factories suffered the deepest slump in orders since the first Covid lockdown and are braced for worse to come as demand from customers in the UK and overseas withers.
Businesses are slashing investment amid rising taxes and red tape, according to the Confederation of British Industry’s survey of the manufacturing sector.
“Manufacturers have entered the New Year in a grim mood. Confidence has evaporated over the last three months as orders have dropped,” said Ben Jones, economist at the business group.
“A fall in domestic deliveries comes amid widespread concerns over the impact of the increase in National Insurance contributions, minimum wages and changes to employment law on firms’ operating costs.”
Much of the global manufacturing sector is struggling with German industry gripped by high energy prices, weak demand and stiff competition from Chinese car manufacturers, while China itself is also battling against an economic slump caused in part by a property crisis.
As a result British factories have few orders from overseas.
“Export prospects appear worse than at any time since the pandemic, reflecting a slowdown in overseas demand and reports of ongoing difficulties securing supply contracts with customers based in the EU,” said Mr Jones.
He called on the Government to inject fresh confidence into the economy.
“Several firms noted concern that negative sentiment risks becoming self-fulfilling,” said Mr Jones.
“The Government can play a role in re-booting confidence by sending clear signals of intent on policies that could support the manufacturing sector, notably delivering an industrial strategy that helps the UK win the global race for growth, matching skills to economic needs, and accelerating our energy transition and resilience.”
The share of businesses reporting falling orders outweighed the proportion with rising demand by a margin of 20 percentage points, the worst since July 2020.
Expectations for the coming quarter are even worse, with the net balance anticipating growth in orders falling to minus 32pc, the lowest since April 2020, at the start of the first Covid lockdown.
03:34 PM GMT
Quiz quits stock market in blow to London
Fashion chain Quiz has quit the stock market as it scrambles to secure its future after its shops suffered from a worsening economy.
The company, which runs 62 stores and 47 concessions across the UK, de-listed from London’s junior Aim stock market on Thursday morning.
Shortly before Christmas, the retail firm said it planned to de-list from the stock market in a bid to cut its costs.
The struggling retailer recently warned that it will run out of cash early this year unless it quickly secures more funding.
Quiz, which employs 1,500 people, said sales had been “disappointing” in the Christmas trading period and that its cash reserves are “less than previously anticipated”.
It said the poor trading was partly because of the “impact of inflationary pressures on consumer confidence and spending”.
The company hired advisers to look at ways it could free up cash or secure more funding in order to help secure its future.
Chairman Peter Cowgill said the company needs to “substantially reduce” costs, amid speculation the group could close stores.
The Telegraph reported earlier this week that Quiz is preparing to close up to a third of its stores to help slash costs.
It is understood that the company has not yet made any decisions over whether it will proceed with closures or a major restructuring.
03:20 PM GMT
Stocks move in opposite directions ahead of Trump appearance
Major UK and US stock indices moved in opposite directions as markets looked ahead to a Davos address from President Donald Trump.
The FTSE 100 was up 0.3pc while the midcap FTSE 250 fell by 0.3pc.
Over on Wall Street, the Dow Jones Industrial Average was up 0.3pc, while the broad-based S&P 500 dipped 0.1pc.
The tech-rich Nasdaq Composite Index dropped 0.5pc.
Mr Trump is scheduled to appear via live stream at Davos where banking and oil industry chief executives will be given the chance to ask questions at the new US president.
Earlier at Davos, World Trade Organization chief Ngozi Okonjo-Iweala urged nations to keep calm over tariffs, warning that a tit-for-tat trade war would be “catastrophic” for the world economy.
With that I will hand you over to Alex Singleton, who will make sure you stay updated on the latest news about the UK economy and markets.
02:50 PM GMT
HSBC to close Zing app putting 400 jobs at risk
HSBC is shutting down its global payments app Zing a year after launch, putting hundreds of jobs at risk, as the global bank continues to overhaul its structure.
The bank’s chief executive has instigated a series of changes to drive down costs since stepping into the role last year.
Zing was launched in the UK in January 2024 for people to hold funds in different currencies, send money internationally, or spend in the UK and abroad through an app and a multi-currency debit card.
The fintech entered the market as a competitor to money apps like Wise and Revolut.
The closure is understood to be putting up to about 400 jobs at risk, including a significant number of non-HSBC staff contracted for customer support roles.
The bank has plans in place to support affected employees including possible opportunities to be redeployed elsewhere within the business.
HSBC said the decision means Zing’s “underlying technology platform” will be integrated into the wider bank.
HSBC’s boss Georges Elhedery has initiated an overhaul of the global banking giant since taking on the top job in September.
02:22 PM GMT
Reeves’s ‘Marxist maths’ costing the taxpayer, says Griffith
Rachel Reeves’s Budget plans mean Britain “may have lost the equivalent of 500k taxpayers as our high earners and innovators flee the UK”, according to the shadow business secretary.
Andrew Griffith has put out this video after figures from New World Wealth, a global analytics firm, indicated a record number of millionaires have left Britain since Sir Keir Starmer came to power.
The Adam Smith Institute suggested those millionaires would have been paying at least £393,957 in income tax each.
02:10 PM GMT
Khan raises climate concerns as Reeves expected to back Heathrow expansion
Sir Sadiq Khan said he would “consider the merits” of the situation if Rachel Reeves uses a speech on growth next week to back a third runway at Heathrow.
The Mayor of London said the Climate Change Committee (CCC) indicated that “the only time expansion of aviation should be considered is if it abides with our climate change commitments”.
The CCC has said no expansion should be permitted until the establishment of a mechanism for assessing aircraft emissions and limiting flights if required. Even then, it should only be allowed if aviation is cutting emissions fast enough for more flights to be accommodated.
Sir Sadiq said: “The three big concerns that would need to be addressed if, in the hypothetical case, the speculation was to become a reality, is could a new runway be built that abides with carbon targets, concerns around noise pollution, and concerns around air pollution?”
Ms Reeves said the Government was committed “in statute” to getting to net zero by 2050, but added there were “lots of things that contribute to carbon emissions.
The aviation industry plans for reaching net-zero emissions are currently based almost entirely around substituting jet fuel for so-called sustainable aviation fuel (SAF) derived from waste oils, animal fats and ethanol from corn.
SAF volumes remain tiny, however, and would need to be scaled up 80 or 100 times even to reach 10pc SAF by 2030, in line with Government targets. A mechanism to stabilise prices won’t be introduced in the UK until 2026, delaying significant production.
02:04 PM GMT
Khan hits back at Reeves over net zero
Sir Sadiq Khan has hit back at Rachel Reeves over the importance of reaching net zero as the Chancellor prepares to throw her weight behind plans for a third runway at Heathrow.
The Mayor of London said there is a climate emergency and that he continues to regard expanding Heathrow as being incompatible with carbon-reduction goals.
His remarks will be regarded as a rebuke to Ms Reeves, who said this week in Davos that measures to promote economic growth should take primacy over other concerns, including those surrounding emissions and global warming.
Sir Sadiq told the London Assembly: “I’m quite clear. My views on the expansion of Heathrow by a new runway haven’t changed.
“What Londoners know and the Government knows is the aviation sector is important for growth, jobs and prosperity, but we face a climate crisis and a climate emergency.”
Ms Reeves said at the World Economic Forum that carbon emissions had too often been used as an excuse “not to invest” and that Britain’s “insane” planning system had weighed on infrastructure spending to the extent that it was now holding back the economy.
She said: “Growth is the number one mission of this government, because growth underpins everything else, whether that is improving our schools and our hospitals or indeed being able to get to net zero.”
The Chancellor is expected to use a speech on growth next week to support a mooted third runway at Heathrow and endorse applications for enlarging Gatwick and Luton.
01:16 PM GMT
People are ‘saving money and not buying things’
Rachel Reeves talk of supporting growth “is quite simply rubbish” in light of the Government’s strengthening of workers rights, according to Telegraph readers.
Here are some views from the comment section below and you can join the debate here:
12:18 PM GMT
UK stocks stall as confidence falls
The FTSE 100 has stalled after touching a record high earlier this week amid weakening consumer confidence in Britain and ahead of Donald Trump’s address at the World Economic Forum in Davos.
The blue-chip index dipped 0.1pc while the FTSE 250 midcap index dropped 0.3pc.
Stock investors largely took comfort this week as Trump held off imposing hefty tariffs on his first day in the office and announced big investments in artificial intelligence infrastructure, sparking a rally in global tech shares.
Focus is now on data showing consumer confidence has plunged in Britain, as well as corporate earnings and a video appearance from President Trump in Davos later in the day.
CMC Markets dropped 14pc to the bottom of the FTSE 250 after the trading platform’s forecasts fell short of investors’ heightened expectations following upbeat projections from industry peers.
The FTSE 100-listed Associated British Foods dropped 2.9pc near the bottom of the FTSE 100 after it reported weak trading in the UK in the Christmas quarter and cut annual sales forecast for Primark.
11:34 AM GMT
Sainsbury’s to cut 3,000 jobs and close cafes
Sainsbury’s has announced it will cut more than 3,000 jobs and plans to shut its remaining in-store cafes as part of a major overhaul.
The headcount reduction represents about 2pc of the company’s current 148,000-strong workforce.
It will see about 20pc of senior management roles cut at the supermarket giant as part of plans to focus on fewer, bigger roles and to simplify its head office and management teams.
The retailer also said it had decided to close its remaining 61 Sainsbury’s Cafes, subject to consultation.
The majority of Sainsbury’s shoppers do not use the cafes regularly, whereas in-store food halls and concessions have grown in popularity, it said.
Simon Roberts, Sainsbury’s chief executive, said the supermarket was facing a “particularly challenging cost environment” as it moves forward with its company strategy.
He said: “As we accelerate into year two and beyond of our strategy, we are facing into a particularly challenging cost environment which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.
“The decisions we are announcing today are essential to ensure we continue to drive forward our momentum but have also meant some difficult choices impacting our dedicated colleagues in a number of parts of our business.
“We’ll be doing everything we can to support anyone impacted by today’s announcements.”
10:57 AM GMT
Rachel Reeves to water down non-dom tax raid
Rachel Reeves is planning to water down her tax raid on ultra-wealthy non-doms after an exodus of millionaires from Britain.
The Chancellor has prepared an amendment to the Finance Bill that will make it easier for non-doms to bring money instantly to the UK following growing fears that the super-rich will quit the UK en masse.
Asked at a fringe event at the World Economic Forum about the surge in high-end taxpayers leaving Britain, Ms Reeves told Emma Tucker, the editor of The Wall Street Journal: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”
It comes as the number of millionaires leaving the UK doubled last year.
10:40 AM GMT
Turnover slumps for third of firms in run-up to Christmas
Around one in three businesses said turnover declined in the run-up to Christmas, according to new experimental official figures.
The Office for National Statistics said the 30pc of trading firms reporting a slump in December was the highest proportion in two years.
Meanwhile, one in five companies said they expect turnover to decrease next month, just as separate surveys indicate consumer confidence has plunged to new lows.
However, this was down from 25pc forecasting a drop in revenues for January.
10:06 AM GMT
Pound inches higher ahead of Trump’s address in Davos
The pound has edged higher as traders wait to hear whether Donald Trump will follow through on his threats of tariffs as he prepares to address the World Economic Forum in Davos.
Sterling was last up 0.1pc to $1.232 and is about 1.1pc higher since the start of the week, reflecting investor relief that Trump has concentrated on other policy areas rather than tariffs since his inauguration on Monday.
The euro was little changed against the pound at 84.5p.
Sterling slid at the start of the year even as UK bonds fell and yields shot higher, in what analysts said was a worrying breakdown of the usual relationship between currency and debt markets.
Persistent inflation, low growth, and depressed business confidence after Rachel Reeves’s Budget have all been blamed for the volatile episode, which was also driven by a sell-off in US government bonds.
The next big event could be a speech by President Trump in Davos later today.
Jane Foley, head of FX strategy at Rabobank, said: “Sterling has independently been repriced since the start of the year.
“There’s less news this week but I think the market is facing the fact that there’s going to be less growth and higher inflation than previously imagined.”
09:47 AM GMT
Minister rules out joining European trade bloc
A minister has ruled out the UK joining a pan-European agreement to bolster post-Brexit trade.
Matthew Pennycook said the Government was “not seeking” to participate in the Pan-Euro-Mediterranean Convention (PEM).
Maroš Šefčovič, the official who led post-Brexit negotiations for the EU, had told the BBC that the UK joining the PEM is “something we could consider”.
The deal allows for tariff-free trade of goods across Europe, as well as some North African and Levantine nations.
Asked if the UK could join the PEM, housing minister Mr Pennycook said: “We’re not seeking to participate in that particular arrangement.”
He also told BBC Radio 4’s Today programme: “I think in general the Government’s been very clear... that we do want a closer relationship with our European partners, both in trading terms but also, importantly... in terms of security and defence co-operation, where we need to work far more closely.
“So absolutely, yes, we do want a closer relationship. As for this particular arrangement: no, we’re not seeking to participate in it at the present time.”
09:29 AM GMT
Everyone is feeling the pinch, says shadow minister
After consumer confidence sank to new lows, shadow business secretary Andrew Griffith, said:
This is the latest and worrying evidence of the damage this socialist government is doing to the economy.
09:12 AM GMT
Primark ‘weighed down by weak consumer confidence’
The owner of Primark has come under pressure from weak consumer confidence, analysts have said, after it cut its guidance for sales growth at the discount retailer.
Associated British Foods - which also has sugar, agriculture and ingredient arms - said it is aiming for low-single digit growth at Primark this year, having previously forecast mid-single digit sales growth.
Shares fell 1.9pc as ABF’s retail business saw sales nudge 0.4pc lower to £3.4bn for the 16 weeks to January 4. This was a rise of 1.9pc on a constant currency basis.
Julie Palmer, partner at Begbies Traynor, said: “Primark, ABF’s retail crown jewel, has continued its international expansion, with solid growth in both the US and Europe.
“However, closer to home, its performance in the UK and Ireland has been more challenging, with unseasonable weather negatively impacting footfall and contributing to a decline in UK sales.
“While its value-focused appeal over Christmas offered some relief, it could not offset the broader challenges of a high street weighed down by weak consumer confidence.”
She added the key for ABF in the months ahead would be “successfully managing profitability in a period of cautious consumer sentiment”.
Adam Vettese of eToro added: “Not even a festive uptick could offset poor trading in the months prior and one could argue it’s become particularly concerning for a retailer that is very much a cornerstone of the UK high street.
“Cost of living has been a concern for some time but with Primark’s value offering at low prices we might have expected a little more resilience in these conditions.”
08:55 AM GMT
Revolution Beauty sales expected to drop by quarter
Troubled cosmetics brand Revolution Beauty has warned that annual sales are set to tumble by around a quarter after online trading weakness in December and delays to retail launches.
Shares plunged by 19.1pc as the group - which sells make-up, skincare, hair and body products online and through concessions - said it had seen some “sales softness” over the key Christmas month across its digital channels, as well as “an element of de-stocking” by retailers in the US.
It comes as closely watched surveys show consumer confidence about the UK economy has plunged to new lows.
The drop in sales has compounded the impact of delays to a number of retailer launches due to take place in its fourth quarter, which will now go ahead in the first half of its new financial year.
Revolution Beauty cautioned that net sales are expected to plunge by around 25pc for the year to February 28, with underlying earnings in the “high single-digit millions”, supported by cost-cutting efforts.
It had previously said that underlying earnings would be at least in line with the £12.6m reported the previous year, excluding a £10.2m write-off on old stock.
But Revolution Beauty said it was “confident in a return to overall growth overall” in the next financial year.
08:35 AM GMT
Reeves’s growth plans need to be ‘accelerated’, says Lloyds Bank boss
Britain needs “to see action” from Rachel Reeves on her plans for growth, the boss of Lloyds Banking Group has said.
Charlie Nunn said the plans set out by the Chancellor to rekindle expansion in the economy must be “accelerated”.
However, he said there is “an opportunity for the UK to really stand out” if the rest of the world is hit by tariffs from Donald Trump’s administration, which Britain’s economy would be largely shielded from.
He told Bloomberg TV in Davos: “The Chancellor has talked about having set the foundations and having got the foundations right. That was really important.
“We didn’t have an economic plans for the UK that was stable and in a good place. But what we will see over the next few months is the things they have talked about need to now be accelerated and they need to come at pace.”
He added that a number of business leaders “have been concerned about what’s going on at the moment”.
He said: “But the opportunity to get growth going is really available for the UK. When we just look at the broader landscape this year, we see growth probably accelerating in the US.
“If tariffs do hit the rest of the world, I think the rest of the world will slow down but the UK with the structure of its economy - more services based, very international, no supply chains heavily into the US - there’s an opportunity for the UK to really stand out.
“You’ve seen the IMF come out and say they think UK growth will be stronger than the other G7 economies apart from the US, and that’s a great foundation for thinking about the future.”
08:09 AM GMT
UK stocks edge lower amid weakening confidence
The FTSE 100 edged lower at the open after a pair of closely watched surveys indicated consumer confidence is plummeting.
The UK’s blue-chip index was down 0.1pc to 8,540.97 while the midcap FTSE 250 was little changed at 20,582.29.
08:04 AM GMT
Consumers ‘negative’ about the economy, says Lloyds Bank boss
People are feeling nervous and negative about Britain’s economy, the boss of Lloyds Banking Group has said, as the Chancellor continues to push her growth agenda to business leaders in Davos.
Charlie Nunn said he thought the Chancellor “did a good job” of engaging and “giving some very strong messages” as she appeared at the World Economic Forum.
Ms Reeves said her growth plans “trumps” the push towards net zero and warned that Britain’s “insane” planning system had led to underinvestment.
Mr Nunn told Bloomberg TV that the UK economy faced a “mixed picture” following the uncertainty in markets in recent weeks, as a sell-off in bonds raised government borrowing costs and raised questions about Ms Reeves’s ability to meet her fiscal rules.
He said: “When you look at households and businesses, they are very resilient. One of my favourite stats at the moment is that household savings and deposits have increased 6pc over the last 12 months.
“So people have money. There’s a nervousness around the economy and negative sentiment at the moment.
“The real opportunity for the new Government now they’ve got the foundations set is to get the ambition and the growth back into the economy. That’s what we think is important over the next 12 months.”
07:39 AM GMT
Primark-owner’s sales fall as shoppers feel ‘cautious’
The parent company of Primark has revealed a dip in sales over recent months after the high street chain’s UK shops were knocked by “cautious” sentiment among shoppers and unfavourable weather.
Associated British Foods, which also runs large grocery, sugar and agriculture divisions, revealed that total sales slipped by 2.2pc to £6.7bn for 16 weeks to January 4.
Its retail arm, which is predominantly the Primark brand, saw sales nudge 0.4pc lower to £3.4bn.
Primark said it saw sales decline in the UK and Ireland while growth over Christmas was dragged back by “weaker autumn trading in a challenging retail environment”.
It said demand from some of its shoppers was “weak as a result of cautious consumer sentiment” while mild autumn weather impacted sales of certain items, such as coats and jackets, over October and November.
07:19 AM GMT
EU could consider inviting UK to join trade group, says Šefčovič
The European Union could consider the UK joining a continent-wide trade agreement, as Sir Keir Starmer’s Government seeks a reset with the bloc, an EU trade chief has indicated.
Maroš Šefčovič, who led post-Brexit negotiations for the EU, told the BBC the UK joining the Pan-Euro-Mediterranean Convention (PEM) is “something we could consider”.
The PEM allows for tariff-free trade of goods across Europe, as well as some North African and Levantine nations.
Some business groups have backed the UK joining PEM as it would help to maintain complex supply chains, but the previous Conservative Government chose not to pursue it as part of a post-Brexit trade agreement.
Speaking to the BBC at the World Economic Forum in Davos, Switzerland, Mr Šefčovič said the idea had not yet been “precisely formulated” and that the “ball is in the UK’s court”.
The UK Government has begun consulting with businesses on the benefits of the PEM plan and how it could help cut red tape and improve trade, the BBC said.
Mr Šefčovič also told the broadcaster he would like to see the possibility of a full-scale veterinary agreement between the EU and UK reviewed.
If UK food and farm products were given single market treatment, he said it would mean “we would have to have the same rules and we have to upgrade them at the same time, we call it dynamic alignment”.
The lack of a veterinary agreement after Brexit has been a major sticking point for UK food businesses hoping to export to Britain’s nearest neighbours.
07:11 AM GMT
Starmer to make it tougher for ‘Nimbys’ to block major projects
Sir Keir Starmer will make it more difficult for the public to block new major infrastructure projects such as wind farms and nuclear plants through the courts.
The changes, announced on Thursday, are part of an overhaul of planning rules championed by the Prime Minister aimed at building 1.5 million homes and improving energy infrastructure.
It comes as the Government is under pressure to prove it has a plan for economic growth as forecasts have been downgraded after the £40 billion tax rise unveiled in the Budget in October.
Read why the Prime Minister said he is “taking on the Nimbys”.
07:08 AM GMT
Fears mount over the economy as consumer confidence falls to new low
Consumer confidence in the economy is in freefall amid growing fears of recession, a pair of influential surveys have warned.
It comes in the wake of a record tax-raising Budget, and the end of winter fuel payments for many pensioners, as well as a raft of gloomy rhetoric from the Government on the state of Britain’s growth prospects.
Expectations for the state of the economy plunged to fresh lows, according to the British Retail Consortium, with half of consumers expecting the situation to worsen and only one-in-six predicting an improvement in the nation’s growth.
Older Britons are particularly downbeat, the BRC found, with Generation Z - those aged 27 or under - the most optimistic.
Helen Dickinson, the industry group’s chief executive, said ministers’ pessimism has spread to households.
“As the government warns of tough times ahead, it is little surprise that the public have caught the January blue. Expectations of retail spending and wider spending both fell significantly, though much of this is likely to be the end of the Christmas period, as people tightened their belts for the new year ahead,” she said.
“On top of this challenging market backdrop, retailers are facing £7bn in additional costs from the Budget and new packaging levy. With retailers’ tight margins leaving little scope to absorb more costs, many are warning of price rises and job cuts in the coming months.”
Similarly 62pc of those surveyed by consumer group Which? expect the economy to get worse.
It comes after the economy ground to a halt in the three months to November, raising fears the nation is at risk of a winter recession.
06:48 AM GMT
Good morning
Thanks for joining us. Consumer expectations for the economy have plunged to a new low as the Government faces continued pressure over public finances, a survey shows.
Expectations for the state of the economy over the next three months have worsened according to the British Retail Consortium (BRC) Consumer Sentiment Monitor, which delivered a reading of minus 34, down from minus 27 in December.
Those aged 18 to 27 - Generation Z - remain the only group to expect the economy to improve, while two-thirds of those aged between 60 and 78 expect it to worsen, the poll found.
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What happened overnight
Asian stocks moved mostly higher after a morning briefing by Chinese officials showed the government remains determined to boost share prices.
Markets in Hong Kong and Shanghai rose early after the announcement, with the Shanghai Composite index gaining 1.4pc.
The Hang Seng in Hong Kong, a market linked to limited trading by mainland Chinese investors, shed early gains, falling 0.6pc.
In Tokyo, the Nikkei 225 index gained 0.8pc to 39,957.51, helped by gains in technology shares, including those of SoftBank.
It is investing heavily in Stargate, a joint venture the White House has announced will start building out data centers and the electricity generation needed for the further development of artificial intelligence.
On Wall Street, the S&P 500 rose 0.6pc, to 6,086.37, and came close to its all-time closing high set early last month. The Dow Jones Industrial Average added 0.3pc, to 44,156.73, and the Nasdaq Composite climbed 1.3pc, to to 20,009.34.
In the bond market, the yield on benchmark 10-year US Treasury notes rose to 4.60pc from 4.57pc late on Tuesday. It had largely been regressing since an encouraging update on inflation last week, but it is still well above where it was in September, when it was below 3.65pc.