Interest rates may need to fall faster, says Bank policymaker
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The Bank of England will need to cut interest rates more quickly if the jobs market continues to cool, according to its deputy governor.
Sir Dave Ramsden predicted pay rises would average just 2pc next year against the backdrop of a slowing economy. This is down from 6.5pc in 2023, paving the way for lower borrowing costs to support the economy.
He also warned that Rachel Reeves’s Budget tax raid had introduced “uncertainty to the outlook for the labour market and wider economy”, with implications for jobs, wages and prices across the economy.
While the Bank’s deputy governor for markets and banking said a “gradual” approach to cutting interest rates was the right approach because of uncertainties including Rachel Reeves’s Budget tax raid, Sir Dave added: “Were those uncertainties to diminish and the evidence to point more clearly to further disinflationary pressures, which risked inflation falling below the 2pc target on a sustained basis, then I would consider a less gradual approach to reducing Bank Rate to be warranted.”
The Bank cut interest rates to 4.75pc from 5pc this month.
However, the Chancellor’s decision to launch the biggest tax raid in history at the Budget alongside a £70bn increase in public spending partly funded by extra borrowing has led traders to reassess how quickly borrowing costs will fall.
Official figures showed inflation rose more quickly than expected in October. Traders now expect just one more rate cut by March, instead of two more ahead of Ms Reeves’s maiden budget.
Sir Dave said there was already evidence the jobs market was cooling. “My starting point, based on my assessment of the disinflationary process, is to consider it more likely that pay awards will be in the bottom half of the expected 2-4pc range than in the top half.”
He also said higher-than-expected inflation in October did not affect his prediction that the British economy will continue to cool next year.
“A very small miss in one month ... doesn’t affect my assessment,” he told an audience in Leeds.
He added that it was too early to assess the impact of Donald Trump’s US election victory.
“Obviously the US economy is the largest economy in the global economy, so the US economy has more of an impact.
“What we will have to do is respond to what actually happens.”
Read the latest updates below.
06:40 PM GMT
Signing off...
Thanks for joining us today on the Markets blog.
My colleague Chris Price will be back in the morning to cover all the latest. In the meantime, do check out our full range of business and economics stories here...
06:37 PM GMT
British fusion energy pioneer raises £100m to build first factory
A pioneering British nuclear fusion company has raised almost £100m and suggested it could have a pilot plant running within a decade, bringing hopes of a near-limitless source of clean electricity closer.
Tokamak Energy has raised $125m (£99m) from investors including Lingotto, a fund that manages the wealth of Italy’s billionaire Agnelli family and is chaired by George Osborne.
Oxford-based Tokamak Energy is seeking to develop a way of commercially harnessing nuclear fusion, the reaction that powers the sun and offers the hope of abundant clean energy.
Scientists first harnessed fusion nearly 70 years ago with the development of the hydrogen bomb.
Controlling reactions to produce continuous energy has, however, been proved impossible despite the billions of pounds spent on research.
This is because the temperatures needed to create fusion plasmas are 10 to 15 times hotter than the sun and would melt all known materials. They must be contained by magnetic fields, but designing the magnets and modelling their fields into a cage capable of containing white-hot plasmas for long periods has proved a difficult problem.
06:10 PM GMT
Hornby hails ‘good progress’ on turnaround as losses mount
Model railway company Hornby has told investors that its turnaround plan is going well, even as statutory losses rose 4pc to £5.1m.
The company, which released figures for the six months to Sept 30, said that it had recently stripped out £1m in annual costs from cutting its headcount, while next year job losses would take out another £500,000 in costs.
Sales rose 10pc to £25m, while operating losses before exceptional costs were down more than 7pc to £3.8m.
Olly Raeburn, chief executive, said:
We continue to make good progress with our turnaround strategy. [The first half of the financial year] has seen us make a number of strategic and structural changes.
05:53 PM GMT
Bitcoin surges to record high near $95,000
Bitcoin rose to a fresh record high just shy of $95,000 after a report that Donald Trump’s social media company was in talks to buy a crypto trading firm.
The Financial Times said Trump Media and Technology Group, which operates Truth Social, is close to an all-stock acquisition of Bakkt, which is backed by NYSE-owner Intercontinental Exchange. The report boosted expectations of a crypto-friendly regime under his incoming administration.
Bitcoin has soared more than 40% since the Nov 5 US presidential election, as traders bet that Trump’s stated commitment to support cryptocurrencies would lead to a less restrictive regulatory environment, lifting the sector overall.
Earlier this week, the Wall Street Journal reported Trump was meeting privately with the crypto exchange Coinbase chief executive officer Brian Armstrong, further aiding sentiment.
Bitcoin is currently at around $94,370, having risen as high as $94,939 during trading.
05:47 PM GMT
Clash between Trump and the Fed would leave markets ‘terrified’, former IMF chief economist warns
Donald Trump is set for a clash with the Federal Reserve which would leave markets “terrified”, a former IMF chief economist has warned.
The incoming US President’s policies risk stoking inflation, which would force the central bank to raise interest rates - something Olivier Blanchard said Mr Trump does not want.
“The risk of a conflict between the Trump administration and the Fed is very high,” Mr Blanchard said.
Jerome Powell, the Fed’s chairman, has indicated he could not be removed from his post by Mr Trump, who initially appointed the central banker in his first term as President.
“If the Fed does what it has to do, it will stand in the way of what the Trump administration wants,” said Mr Blanchard, speaking at an event hosted by the Peterson Institute for International Economics.
“Will it do it? Yes, I am quite convinced that at least as long as Jay Powell is chair, which is to 2026, he will stand firm. He has been very clear that the mandate of the Fed is to make sure inflation does not go up, or if it does then it comes down.
“He will stay as chair, he has been very explicit on that. Until then, we are safe.”
If Mr Trump chooses a more pliable successor to Mr Powell, that means lower interest rates and higher inflation, the former chief economist said.
“If he succeeds in basically removing Powell through other means, in ways I have not followed, cannot think, then markets would be terrified,” Mr Blanchard said.
“If he puts someone who is willing to not increase interest rates, this would put into question something we have spent decades building, which is central bank independence, credibility of monetary policy.”
05:33 PM GMT
Europe’s Stoxx 600 flat in volatile trading
The main Europe-wide stock index closed flat after a volatile day as investors remained on edge about the conflict between Ukraine and Russia.
The pan-European Stoxx 600 touched a three-month low yesterday amid an investor rush to safe-haven assets.
Main stock indexes in Germany, France and Spain ended the day in the red.
Elias Haddad, senior markets strategist at Brown Brothers Harriman, said:
Europe’s been driven by the geopolitical uncertainty - fears of the conflict between Ukraine and Russia take a more dangerous turn after Ukraine struck twice inside the Russian territory.
05:28 PM GMT
US Fed official warns against cutting rates ‘too quickly’
The US Federal Reserve should be careful not to cut rates “too quickly” and risk reigniting stubborn inflation, a senior bank official said Wednesday.
The Fed’s favoured inflation gauge has dropped sharply following a series of interest rate hikes in recent years, and now sits just above its long-term target of two percent.
At the same time, the labour market has weakened slightly, while remaining robust overall, and economic growth has been strong.
In response to these developments, the US central bank began cutting interest rates from a two-decade high in September, pivoting from focusing on tackling inflation to supporting the labour market.
But recent figures have shown a stubbornness of inflation in some sectors of the economy, even as the overall figure has continued on its downward trajectory.
“With the US economy remaining strong, moving the policy rate down too quickly, in my view, would carry the risk of stoking demand unnecessarily and potentially reigniting inflationary pressures,” Fed governor Michelle Bowman told a conference in Florida.
“Progress seems to have stalled in recent months,” she continued, adding that the Fed should pursue a “cautious approach” on rate cuts.
05:14 PM GMT
Oil prices fall as US inventories rise
Oil prices have fallen this afternoon after official statistics from the US showed the world’s largest economy had boosted its stocks of oil.
Prices had pushed upwards amid mounting focus on Ukraine’s use of long-range missiles against Russia.
But this afternoon the US Energy Information Administration said American crude stockpiles rose by 545,000 barrels last week.
The price of a barrel of Brent Crude, the global benchmark is $73.15, down 0.2pc. Earlier today, the price was up by as much as 0.9pc.
Oil is still up 3.1pc over the past three days.
04:59 PM GMT
FTSE closes down
The FTSE closed down 0.2pc. It came after tensions in the war between Ukraine and Russia grew and hotter-than-expected inflation data tempered expectations for quick interest rate cuts.
The biggest riser on the index was Sage, up 17.9pc, followed by London Stock Exchange Group, which gained 1.6pc.
At the other end of the index, housebuilder Vistry lost 5.4pc, while B&M lost 4.6pc.
Meanwhile, the mid-cap FTSE 250 lost 0.9pc.
Close Brothers was the biggest riser, gaining 7.9pc, followed by City firm CMC Markets, which added 2.3pc.
Tech investor IP Group fell 6.9pc, and construction industry supplier Genuit Group lost 5.6pc.
04:49 PM GMT
Holland & Barrett owner loses national security appeal over forced broadband sale
A Russian oligarch-backed investment firm that owns Holland & Barrett has lost its legal challenge to the enforced sale of a broadband provider.
LetterOne, whose owners include sanctioned oligarchs Mikhail Fridman and Petr Aven, was made to sell regional provider Upp in December 2022 over fears that Upp’s ultimate owners were vulnerable to “leverage by the Russian state”.
The intervention was one of the first taken under Britain’s National Security and Investment Act, which allows the government to scrutinise and potentially block acquisitions and investments in sensitive sectors.
LetterOne challenged its enforced divestment of Upp but its case was rejected by Judge Judith Farbey today.
A spokesman for LetterOne said: “This is a disappointing decision, given the swift, robust and decisive action LetterOne undertook in the aftermath of Russia’s illegal invasion of Ukraine...
“LetterOne is reviewing the judgment and will be considering whether to appeal.”
04:40 PM GMT
Interest rates may need to fall faster, says Bank policymaker
The Bank of England will need to cut interest rates more quickly if the jobs market continues to cool, according to its deputy governor.
Sir Dave Ramsden predicted pay rises would average just 2pc next year against the backdrop of a slowing economy. This is down from 6.5pc in 2023, paving the way for lower borrowing costs to support the economy.
He also warned that Rachel Reeves’s Budget tax raid had introduced “uncertainty to the outlook for the labour market and wider economy”, with implications for jobs, wages and prices across the economy.
While the Bank’s deputy governor for markets and banking said a “gradual” approach to cutting interest rates was the right approach because of uncertainties including Rachel Reeves’s Budget tax raid, Sir Dave added: “Were those uncertainties to diminish and the evidence to point more clearly to further disinflationary pressures, which risked inflation falling below the 2pc target on a sustained basis, then I would consider a less gradual approach to reducing Bank Rate to be warranted.”
The Bank cut interest rates to 4.75pc from 5pc this month. However, the Chancellor’s decision to launch the biggest tax raid in history at the Budget alongside a £70bn increase in public spending partly funded by extra borrowing has led traders to reassess how quickly borrowing costs will fall.
Official figures showed inflation rose more quickly than expected in October. Traders now expect just one more rate cut by March, instead of two more ahead of Ms Reeves’s maiden budget.
Sir Dave said there was already evidence the jobs market was cooling. “My starting point, based on my assessment of the disinflationary process, is to consider it more likely that pay awards will be in the bottom half of the expected 2-4pc range than in the top half.”
04:36 PM GMT
Wall Street drops amid rising tensions with Russia
Wall Street’s main indexes dropped this afternoon, as continued escalation of Russia-Ukraine tensions worried investors. At the same time, megacap Nvidia lost ground ahead of its quarterly results.
Stocks dipped after a report Ukraine fired long-range British Storm Shadow missiles into Russian territory. That followed Ukraine launching US-made ATACMS missiles into Russia on Tuesday, and Russia announcing it had lowered the threshold for nuclear action.
Wall Street’s “fear gauge” jumped to 18.79 before easing slightly, but it was still trading at its highest since the Nov 5 US presidential election.
Dennis Dick, trader at Triple D Trading, said:
There’s been more missiles firing between Ukraine and Russia, and the market doesn’t know what to think of that ... tensions are escalating, not de-escalating and that’s why you’re seeing the sell off in the markets.
Meanwhile, AI leader Nvidia, which is scheduled to report results after trading closes this evening, dropped 1.6pc. The index heavyweight dragged down the Nasdaq.
The Nasdaq lost 1pc, the S&P 500 lost 0.8pc and the Dow Jones lost 0.3pc.
04:31 PM GMT
Euro zone yields fluctuate on Russia-Ukraine concerns
Euro zone bond yields have bounced around today as investors reacted to ongoing tensions between Russia and Ukraine and its Western allies.
The German 10-year bond yield, the benchmark for the euro zone, is currently flat at 2.345pc.
Yields climbed throughout the day but later fell on a report that Ukraine had fired UK-made long-range missiles into Russian territory for the first time.
Tensions between Russia and the United States and its allies have risen after US president Joe Biden gave Ukraine the green light to fire Western-made missiles into Russian territory.
Yields had fallen yesterday as investors bought safe-haven assets after Ukraine used US ATACMS missiles to strike Russia, and Russian President Vladimir Putin signed a new nuclear doctrine that appeared intended as a warning to Washington, unnerving investors.
04:15 PM GMT
US jobs market ‘solid’ and more rate cuts likely, says Fed governor
The US Fed is likely to continue cutting interest rates, one of its rate-setters said this afternoon, even after traders became less confident of the speed and depth of cuts.
Lisa Cook, a Fed governor, said: “The totality of the data suggests that a disinflationary trajectory is still in place and that the labour market is gradually cooling. In my view, it likely will be appropriate to move the policy rate toward a more neutral stance over time.”
She added that that the “magnitude and timing of rate cuts will depend on incoming data” that could push the Fed to accelerate or pause cuts if, for example, the labour market starts to weaken dramatically or if inflation proves stickier than expected.
Ms Cook said she envisions inflation falling to 2.2pc next year and lower after that amid continued economic expansion and a labour market she described as “solid”.
“If the labour market and inflation continue to progress in line with my forecast, it could well be appropriate to lower the level of policy restriction over time until we near the neutral rate of interest,” said Ms Cook, without specifying what she considers the neutral rate - where Fed policy neither stimulates nor restrains the economy - to be.
Ms Cook did not explicitly endorse a rate cut at the Fed’s next meeting in December.
Investors have grown less confident about whether the Fed will deliver another quarter-point at that meeting, with the odds attached to that slipping since the election of Donald Trump to a second term introduced the possibility of tariffs, tax cuts and immigration restrictions that could change the direction of growth, employment and inflation in uncertain ways.
03:59 PM GMT
US stock prices likely to stuck for a time, says analyst
Stock prices in the US are likely to experience a “period of consolidation” - that is, trapped within a given range - a City analyst has claimed.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
Yesterday afternoon’s recovery in stock markets has been waylaid by news that Ukraine has now used British missiles against Russian targets, while tech stocks have been further hit by some pre-Nvidia earnings nerves.
03:51 PM GMT
Dame Sharon White accepts role at Canadian pension fund after John Lewis exit
Dame Sharon White has accepted a senior role at a Canadian pension fund giant after exiting John Lewis in September.
Caisse de Depot et Placement du Quebec (CFPQ) said Dame Sharon would join as its managing director and head of Europe early next year.
The fund said her “expertise and collaborative approach” would help it to grow in the UK and Europe. It currently has C$34 billion (£19.2bn) invested in the UK, with stakes in businesses including Eurostar and Heathrow airport.
The UK is the fund’s largest investment destination outside North America. Its European headquarters are based in London.
The appointment comes after months of speculation over Dame Sharon’s future following her exit from John Lewis.
Earlier this year, she was linked as a potential replacement for Sir Simon Case as cabinet secretary, in a move which would mark her return to the civil service. Dame Sharon previously served as an official in the Treasury, leaving in 2015 to become the chief executive of Ofcom.
However, over the summer, she said it was “very unlikely that I’m going to go back”. She was ruled out of contention last month. The process has reportedly stepped up in recent weeks, with Sir Simon expected to leave early next year.
Last month, think tank Frontier Economics appointed Dame Sharon as its new incoming chairman, replacing former cabinet secretary Lord O’Donnell from January.
Dame Sharon’s move to join CFPQ comes weeks after she officially stepped down from the John Lewis Partnership as its chairman.
Her tenure at the helm of the partnership, which began weeks before the pandemic hit, had been dogged with criticism, including claims that she lacked the required retail experience.
John Lewis took a different approach with its appointment of Dame Sharon’s replacement, hiring a candidate with years of experience in retail. Mr Tarry previously was the UK chief executive of Tesco.
03:45 PM GMT
Nasdaq drops as traders await tonight’s Nvidia results
The Nasdaq Composite fell by as much as 1.4pc this afternoon as traders wait for news of tech titan Nvidia’s results, out tonight.
Kathleen Brooks, research director at XTB, said:
It is rare that a single stock dominates the global financial space, however, tonight’s earnings report from Nvidia seems like a pivotal moment for global financial markets.
Subitha Subramaniam, chief economist at Sarasin & Partners, told Bloomberg:
The health of the market being driven by results of individual companies in itself points to a certain element of fragility.
03:37 PM GMT
Almost 400 jobs at risk as Morrisons plans to close Rathbones bakery arm
Almost 400 workers are facing redundancy as part of plans by Morrisons to shutter its Rathbones bakery operation.
Unions have accused Morrisons of throwing “workers on the scrapheap” since its private equity takeover in 2021.
The UK’s fifth-largest supermarket said it has started a consultation over the potential closure of the Rathbones own-label bakery operation in Wakefield following a “thorough review”.
A spokesman for Morrisons said: “After a period of growth and investment, the business has been loss making for a number of years.
“Although we have tried several routes to return the business to profitability, none have been successful.
“The current proposals do unfortunately mean that colleagues at the site are at risk of redundancy and we will do everything we can to help those colleagues affected, including investigating whether there are any other suitable roles elsewhere in the group.”
The Bradford-based retailer, which is owned by US private equity firm Clayton, Dubilier & Rice, said that its 450 in-store Market Street bakeries will not be affected by the potential closure.
Sarah Woolley, general secretary of the Bakers, Food and Allied Workers Union, said: “Since Morrisons were bought out by Clayton, Dubilier & Rice in 2021 we have seen the traditional cycle of private equity firm behaviour post-takeover that throws workers on the scrapheap without even a glance back.”
03:34 PM GMT
Pound falls dollar resumes Trump-fuelled rally
The pound has fallen against the dollar as the US currency resumed its post-election rally ahead of Donald Trump’s return to the White House.
Sterling was given a brief boost after inflation rose by more than expected to 2.3pc in October, making the chances of a Bank of England rate cut in December less likely.
Money markets indicate there is a 90pc chance that policymakers will hold rates steady next month.
However, those gains were wiped out as the dollar rebounded from a slump on Tuesday triggered by Vladimir Putin’s decision to update Russia’s nuclear doctrine.
The dollar had been hit amid a flight to safe haven assets like the yen and gold after Moscow announced it would lower its threshold for a nuclear strike.
However, the pound was last down 0.2pc at $1.265 after Russia’s foreign minister said the country would “do everything possible” to avoid the onset of nuclear war.
With that, I’ll hand you over to Alex Singleton, who will guide you through the rest of the day.
03:11 PM GMT
Jaguar advert urges viewers to ‘live vivid’ – but doesn’t feature any cars
Jaguar has been ridiculed online after releasing a new advert that features catwalk models in “daft clothes” but no cars.
The British carmaker on Tuesday debuted a new advert featuring several models with asymmetrical haircuts and brightly coloured, haute couture clothing walking around a Mars-like landscape bathed in bright pink.
Messages such as “create exuberant”, “live vivid”, “delete ordinary”, “break moulds” and “copy nothing” flash on the screen but no actual cars or references to Jaguar as a carmaker are featured.
The advert, which was released to promote the company’s new logo and wider rebrand, was dubbed a “hallucinogenic sci-fi movie” by Car Dealer magazine.
It has prompted a barrage of criticism online, including from Elon Musk.
02:55 PM GMT
Oil prices edge higher as Russia-Ukraine war escalates
Oil rose for a third day amid the rising tensions in Eastern Europe as Ukraine used British-supplied Storm Shadow missiles in Russia for the first time.
Global benchmark Brent rose 0.5pc to approach $74 a barrel after residents in the village of Marino, Kursk, found fragments from the weapons.
Russia has said it is prepared to discuss a potential ceasefire in Ukraine with Donald Trump but has launched a counteroffensive in Kursk, which was invaded by Ukrainian troops in August.
John Evans, an analyst at PVM Oil Associates said: “The Ukraine war has roared back into importance for investment markets.
“The oil market will once again enter into another bout of geopolitical versus supply push and pull.”
Prices were held back from further gains after the American Petroleum Institute said that crude stockpiles expanded by 4.8m barrels last week, according to a document seen by Bloomberg.
02:39 PM GMT
US stocks muted ahead of Nvidia results
Wall Street’s main indexes were little change as investors awaited AI giant Nvidia’s quarterly results.
The Dow Jones Industrial Average rose 27.1 points, or 0.1pc, at the open to 43,296.05.
The S&P 500 fell 2.6 points, or less than 0.1pc, at the open to 5,914.34​, while the Nasdaq Composite dropped 16.2 points, or 0.1pc, to 18,971.31.
02:27 PM GMT
Minister raises doubts over Labour housing target
A housing minister has warned that it will be “more difficult than expected” for the Government to meet its 1.5m homes manifesto pledge as supply remains constrained.
Matthew Pennycook said that the 1.5m new homes target is “an incredibly stretching target”.
Appearing on the Housing, Communities and Local Government Committee today, he said: “Delivering 1.5m homes is going to be more difficult than we expected in opposition...
“On assuming office, we discovered the situation was even more acute than we expected.”
Mr Pennycook blamed the previous Conservative Government for the “difficult inheritance” it is “grappling” with, citing forecasts from the Office for Budget Responsibility (OBR) predicting that total supply will drop below 200,000 this year.
He said the Government will not set interim yearly targets for new home completions, noting: “We’re in a trough, we’ve got to pull ourselves out of that trough. That will take time.”
However, Mr Pennycook said he is “convinced” that the 1.5m target “is deliverable”.
He said: “Both I and the deputy prime minister have never been anything other than completely candid about the fact that the 1.5m net additional dwellings, in a single parliament, is an incredibly stretching target.
“We could have of course picked a far less taxing target... but doing so in our view would’ve been an inadequate response to what is an acute and entrenched housing crisis in England.”
Recent findings by Knight Frank showed almost no housebuilders believe Sir Keir Starmer will reach the 1.5m homes target in the next five years.
Separate research from Savills showed the Government’s ambitions appear to rely on making around 200,000 new home sales to individual buyers every year. However, the firm said private housebuilding has not met that level since the 1960s.
02:23 PM GMT
Santander suffers £295m hit from car finance scandal
Santander has suffered a sharp drop in profits after setting aside £295m to cover costs from the motor finance mis-selling scandal.
The high street banking giant, which is owned by Spanish lender Banco Santander, made the provision to pay for a wide-ranging regulatory review into whether compensation is owed to customers who borrowed money from the bank to buy a car.
The decision to set aside cash meant Santander’s profits for the three-month period ending Sept 30 fell to £143m from £413m, reflecting a 65pc decline.
The provision was widely expected after the bank delayed its results last month owing to a Court of Appeal judgment that widened the scope of possible motor finance mis-selling claims.
Read how the review will impact drivers.
01:52 PM GMT
Ford to cut 800 jobs amid weak electric car sales
Ford will cut 800 jobs in Britain over the next three years amid a stalling push into electric cars.
The car maker will slash 4,000 roles across Europe by the end of 2027, with Germany and the UK worst hit, as it reduces production of key electric models.
Ford had pledged to overhaul its business on the Continent in early 2021, saying it would go almost completely electric by the end of the decade.
However, it said it had taken significant losses in recent years compounded by weak demand for electric vehicles, as well as a lack of government support for the shift.
Ford’s sales so far this year in Europe were down 17.9pc up to September, far outstripping an industry-wide decline of 6.1pc.
It joins Nissan, Volkswagen, Stellantis and General Motors in announcing major cost cutting plans.
Ford, which employs 5,300 people in Britain, said the layoffs represent about 2.3pc of its workforce of 174,000.
01:22 PM GMT
Risk of new eurozone crisis is rising, warns central bank
A surge in borrowing and “sluggish” growth have pushed the eurozone to the brink of debt crisis, the European Central Bank (ECB) has warned.
The ECB said investors were becoming increasingly concerned about government borrowing across the single currency bloc, which has barely grown in recent years.
In its latest financial stability review, it said: “Headwinds to economic growth from factors like weak productivity make elevated debt levels and budget deficits more likely to reignite debt sustainability concerns.”
It added that a collapse of trust in politicians over the past three decades had made it more difficult to deal with economic shocks.
Read why it singled out France.
12:43 PM GMT
Wall Street poised to rise ahead of Nvidia results
US stock indexes edged higher as investors awaited quarterly results from Nvidia, which are expected to be pivotal in sustaining the AI behemoth’s record rally this year.
Nvidia is scheduled to report results after the bell and its shares were up 0.5pc in premarket trading after jumping nearly 5pc in Tuesday’s session.
Achilleas Georgolopoulos, market analyst at XM, said: “There are strong expectations for another spectacular report, which means that a possible disappointment today could quickly shift the current fragile market sentiment to a negative stance.”
Nvidia, which has nearly tripled in value this year, accounted for about 20pc of the S&P 500’s returns over the past year, according to BofA Global Research.
The market’s reaction to its results is expected to be crucial in determining Wall Street’s trajectory heading into the year-end.
Discount retail giant Target sank 18pc ahead of the opening bell after it cut its full-year profit forecast.
In premarket trading, the Dow Jones Industrial Average was up 0.3pc and the S&P 500 and Nasdaq 100 were up about 0.2pc.
12:33 PM GMT
UK gas prices most expensive compared to Europe since 2021
The price of natural gas in Britain hit its widest premium compared to Europe in three years amid a slump in wind generation.
UK front-month futures rose as much as 1.5pc today and were trading near the highest level in a year.
Natural gas in Britain is normally cheaper than in Europe during the summer but sometimes becomes more expensive in the winter as demand rises.
The UK relies on the North Sea, Norway and global liquefied natural gas markets as Britain has fewer storage facilities than the Continent.
National Grid forecasts showed demand jumped to the highest since January after a cold start to the winter and a “dankelflaute” period, when low winds and poor sunshine limit solar and wind power generation.
UK gas prices were last up to more than 116p per therm, while European benchmark Dutch front-month futures were up as much as 1.9pc to more than €46 per megawatt hour.
12:11 PM GMT
Retailers ‘reeling’ from Budget tax rises, says Lidl boss
The boss of Lidl has said retailers are “reeling” from Budget tax increases, which he said will add to inflationary pressures at the grocery giant.
Lidl GB chief executive Ryan McDonnell said the discount supermarket chain is expecting to face “tens of millions of pounds” in extra costs as a result of a raft of changes launched by Rachel Reeves last month.
The Chancellor revealed a £25.7bn change to employers’ National Insurance contributions (Nics) in the Budget, which would increase the rate of the tax and reduce the threshold at which companies must pay.
Retail businesses will also come under pressure from other policy changes, including packaging levies and increases to the national minimum wage.
Lidl was among major retailers - also including Tesco, Asda and M&S - who warned the Chancellor that jobs will be cut and prices will have to rise as a result of the impact.
Mr McDonnell said: “There is a lot of impact that we will have to negotiate and I think the letter shows that the industry is reeling a lot.
“We are talking about £7bn for the whole industry. For us it will be somewhere in the tens of millions.”
He said that the jump in costs will result in “greater inflationary pressures” but stressed that it will “maintain market-leading pricing”.
11:52 AM GMT
Southern Water dealt funding blow after credit rating downgrade
Southern Water’s financing company had its credit rating downgraded after a warning that it is close to breaching its debt obligations.
Fitch Ratings downgraded SW (Finance)’s class A debt rating from BBB to BBB- amid “challenging funding conditions and the increasing risk of a documentary event of default”.
The ratings agency pointed to a £300m bond issued by the water company, which serves nearly 5m people in the South East of England, which it said imposed costs on the business which were “far above the regulatory allowance”.
The debt rating cut comes a week after Moody’s downgraded the company to junk status over its “history of material operational and financial underperformance”.
Credit downgrades make it harder for companies to secure funding, with Southern seeking to raise billions of pounds in vital funding required to pay for the upkeep of its pipes and drains, and meet strict environmental standards over the coming years.
11:35 AM GMT
Sage hits record high as it launches £400m share buyback
Shares in FTSE 100 software business Sage have surged 19pc to a record high after a jump in profits and the launch of a £400m buyback scheme.
The Newcastle-headquartered business, which develops accounting tools for small and medium-sized businesses, reported a 43pc increase in annual operating profit to £452m. Its revenues climbed 7pc to £2.3bn.
Sage increased its dividend to 24.45 pence per share, up 6pc, while hailing the launch of new artificial intelligence (AI) tools to help businesses with their accounting.
Steve Hare, Sage’s chief executive, said the company was “carrying that momentum and that confidence” into 2025. It said it expected organic revenue growth to be around 9pc next year.
The boost to Sage’s share price means its stock is up around 10pc so far this year, with the business valued at around £12.9bn.
11:16 AM GMT
‘Surely Labour must realise what damage they are inflicting’
Inflation has risen because the Government has gone a “spending spree with money they don’t have”, according to Telegraph readers.
Here is a selection of views from our comments section about the stronger-than-expected rise in CPI, and you can join the debate below:
11:01 AM GMT
Labour’s Budget will push up inflation, says Stride
Shadow chancellor Mel Stride warned the impact of the Budget would push up inflation.
“Having brought inflation back down to target, we know how important it is for all of us that the Government does the same,” he said.
“What is worrying about today’s announcement is that inflation is running ahead of expectations and official forecasts state these figures are not expected to improve.
“Labour’s Budget will push up inflation and mortgage rates.
“It’s higher inflation and lower growth under Labour.”
10:44 AM GMT
Interest rates to ‘stay higher for longer’ after inflation blow
Interest rates risk staying “elevated for longer”, economists have warned, after inflation rose at a faster pace than expected last month.
Policymakers are “unlikely” to cut borrowing costs at its meeting in December, analysts said, after the pace of price rises surged back above the Bank of England’s 2pc target in October.
Inflation rose from 1.7pc in September to 2.3pc last month, according to the Office for National Statistics, mainly as a result of higher energy prices.
However, economists fear the latest data indicates that inflation will rise to about 3pc next year after Rachel Reeves announced hikes to National Insurance and the minimum wage in the Budget.
Andrew Bailey, the Governor of the Bank of England, said on Tuesday that policymakers would be forced to cut interest rates at a “gradual” pace as they assess the impact of the policies.
As a result, traders have reduced bets on interest rate cuts, giving just a 10pc chance of a reduction in December and expecting only about three cuts over the next year.
NIESR associate economist Monica George Michail said: “While we think the Bank of England will continue to cut rates in 2025, the pace of rate cuts is expected to be slower than previously anticipated, and rates may stay elevated for longer.
“This outlook reflects forecasted inflationary pressures stemming from the recently announced Budget, in addition to heightened global uncertainty, particularly surrounding the Trump presidency”.
Sanjay Raja, chief UK economist at Deutsche Bank Research, said: “Today’s data won’t be as encouraging for the Bank of England, who have talked up a gradual approach in dialling down restrictive policy.
“In fact, today’s data will likely reinforce this message – allowing the MPC to take a more gradual and cautious path in cutting interest rates.”
10:29 AM GMT
Inflation is stable, insists Treasury minister
Chief Secretary to the Treasury Darren Jones insisted the latest inflation figures were “good news” despite the rise in CPI to 2.3pc for October, up from 1.7pc in the previous month.
He said the figures were “around” the Bank of England’s 2pc inflation target.
Mr Jones said: “We know that the cost of living continues to be a problem for working families across the country, but gone are the days when inflation was at 10 or 11pc, driving family bills through the roof.
“Inflation is stable, it’s around target and the key driver of inflation statistics today is that expected increase in the energy price cap set by the regulator Ofgem.
“But the good news is that inflation is stable. It’s close to target, and that will be good for working families across the country.”
10:13 AM GMT
Rents rise as landlords ‘decide to sell-up’
Average UK private rents increased by 8.7pc in the 12 months to October, according to the ONS.
This was up from 8.4pc in the year to September 2024, but was below the record-high of 9.2pc set in March.
Nathan Emerson, chief executive at Propertymark, which represents estate agents, said: “As we continue to see a further increase in rental prices across the UK, our members continue to emphasise key concerns regarding the ongoing trend of lack of rental stock versus an ever-growing number of tenants looking for homes.
“Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords due to the challenging legislative changes and increased financial liabilities they face.”
09:57 AM GMT
House prices rise at faster pace
Average UK house prices increased by 2.9pc in the year to September, the Office for National Statistics (ONS) said.
The annual growth rate accelerated from 2.7pc in the year to August, with the average home worth £292,000.
Average house prices increased in England to £309,000 (a 2.5pc annual increase), in Wales to £217,000 (0.4pc), and in Scotland to £198,000 (5.7pc).
The average house price for Northern Ireland was £185,000 between April and June, up by 6.4pc from a year earlier.
09:43 AM GMT
E.on Next fined £15m for bill failures
E.on Next has been fined £14.5m after failing to provide final bills and refund credit balances to almost 250,000 pre-payment meter customers, regulator Ofgem has said.
The energy watchdog said an error in the energy company’s billing system between February 2021 and September 2023 meant that customers who transferred to another supplier or ended their contract did not receive final bills within six weeks, as required.
E.on Next, which is part of the E.on Energy Group, failed to give compensation payments of £30 or £60 to affected customers, while 100,000 customers were also not made aware of the remaining credit on their accounts, worth £51 on average, and did not receive automatic refunds.
Each customer impacted is set to receive £144 on average after E.on agreed to pay out £14.5m in compensation and redress.
This includes £4.7m in credit refunds, £6.6m in compensation payments, and an extra £3.2m in compensation to affected customers.
09:21 AM GMT
Water supplier triples profits as it risks missing quality targets
Severn Trent has seen its profits almost triple even as bosses warned the company will fall short of targets on water quality.
The utility, which supplies almost 5m households in the Midlands, reported a pre-tax profit of £192m in the first half of the year, up from £71m. Revenues also rose 4.5pc to £1.2bn.
Severn Trent pointed to its strong environmental standards after securing four-star EPA status – the highest ranking – from the Environment Agency for the fifth consecutive year.
But the company admitted it expected to miss targets for the Compliance Risk Index (CRI), which measures the risks of failing compliance standards for drinking water.
Bosses said this was primarily due to its Strensham site, where it plans to introduce its biggest ever ultraviolet disinfection scheme.
Severn Trent has come under fire for sewage leaks, which have blighted British rivers in recent years. The company was fined £2m in February for its “reckless” pollution of the River Trent near Stoke.
Severn said it was confident it would reduce sewage leaks by 15pc over the next five years. It is on track for a record year of investment, which is expected at the upper end of its range of between £1.3bn and £1.5bn.
It comes as the industry braces for a final determination from regulator Ofwat next month, which will set out the prices water companies can charge for the next five years.
Chief executive Liv Garfield said: “We know there is more to do. The outstanding rating we received for our plan gives us visibility and confidence to make a fast start on the biggest investment programme in our history.”
09:01 AM GMT
FTSE 100 rises amid Sage share buyback plans
The FTSE 100 has risen as accounting software group Sage surged after announcing a £400m share buyback.
The UK’s blue-chip stock index was up 0.3pc while the midcap FTSE 250 gained 0.1pc.
Shares in Sage surged by as much as 22.3pc after it revealed underlying operating profit grew by 21pc to £529m in the year to September and said it expects organic revenues to grow by at least 9pc.
As a result, it announced a £400m share buyback plan, sending the company to the top of the FTSE 100.
Severn Trent shares were up as much as 2.9pc after it tripled profits and said it had increased investment on infrastructure.
Troubled housebuilder Vistry fell as much as 3.6pc to the bottom of the FTSE 100 after it said its chief operating officer Earl Sibley would leave the business after the decision to scrap the role.
The company has seen its share price slump since it revealed it had significantly underestimated the cost of nine developments.
British Land slumped as much as 2.9pc after it warned about “elevated” geopolitical risk and “volatility around the recent Budget and US election”, although it increased the value of its portfolio by 0.2pc in the first half of the year.
08:42 AM GMT
UK inflation back in line with G20
The latest rise in inflaton has lifted Britain’s CPI to be line with rates across other G20 countries.
Panmure Liberum chief economist Simon French has the graph:
08:33 AM GMT
Government borrowing costs rise after inflation blow
The cost of government borrowing has risen after inflation rose by more than expected last month.
The yield on 10-year UK bonds - known as gilts - rose by more than two basis points to 4.47pc as CPI rose to 2.3pc.
UK bond yields - an indicator of the cost of government borrowing - rose at a faster pace than European and US debt,
Economists fear tax-raising measures in the Budget will fuel inflation further into next year.
08:23 AM GMT
October airfares take off at fastest pace in 23 years
Although energy bills were the main factor behind the rise in inflation, aviation was another driver of price rises.
Airfares inflation rebounded from a 5pc decline in September to a 6.6pc surge in October.
This was the biggest monthly rise in airfares in October since monthly collection began in 2001.
Ruth Gregory, deputy chief UK economist at Capital Economics, said:
“So just as some of the downside news on services inflation in September was due to volatile factors, some of the upside surprise in October looks like noise too.
“What’s more, the Bank of England had expected services inflation to nudge up to 5pc in October, so today’s release won’t be too much of a blow.”
08:05 AM GMT
FTSE 100 muted at open
The FTSE 100 was little changed as trading began after inflation rose more than expected.
The UK’s blue-chip stock index inched upwards to 8,102.42 while the midcap FTSE 250 gained 0.4pc to 20,477.33.
07:55 AM GMT
Budget to push inflation close to 3pc, warn economists
Inflation will rise to about 3pc next year after Rachel Reeves announced hikes to National Insurance and the minimum wage in the Budget, according to economists.
Thomas Pugh, economist at RSM UK, warned inflation will “rebound later this year and into 2025 to around 3pc”.
He said: “There is a lot of uncertainty around how businesses will react to the big increases in costs imposed on them by the Budget.
“If they try to pass those on to consumers then that puts upward pressure on inflation, but if businesses are forced to cut costs though job losses and lower wage growth then we could be looking at softer economic growth next year and weaker inflationary pressures.”
Anna Leach, chief economist at the Institute of Directors, said: “Economic conditions are evolving rapidly following a painful Budget for business, that significantly increases the costs of employment and injects inflationary pressure into a constrained economy.
“Inflation is now set to be higher for longer as firms pass through the impact of higher costs into higher prices, and as higher public spending over the next couple of years further generates inflationary pressures.”
She added: “Unfortunately, while the recent Budget stabilised the public finances, it has undermined growth in the private sector, shattering business confidence and renewing inflationary pressures.”
Gora Suri, economist at PwC UK, said: “Looking ahead, upside risks to inflation have mounted. Last month’s Budget is likely to contribute to inflationary pressures in the short-term, both through the direct fiscal impulse and the indirect impact of specific policies. In particular, increases in employer NICs and the National Living Wage could place upwards pressure on consumer prices as some companies may raise prices to absorb increased costs.”
07:40 AM GMT
Housing costs surge as fixed rate mortgages end
Owner occupiers’ housing costs have rocketed at the fastest pace in nearly 33 years as homeowners roll off fixed rate mortgage deals and get hit by higher rates.
In the year to October, owner occupiers’ housing costs rose by 7.4pc, up from 7.2pc in September, according to the Office for National Statistics (ONS).
This was the fastest annual growth rate since February 1992.
The rise was due to higher mortgage rates as more homeowners lost the protection of their fixed rate deals and rolled onto more expensive deals.
07:36 AM GMT
Traders reduce bets on interest rate cuts
Money markets indicate there is very little chance that the Bank of England will cut interest rates next month after the latest jump in inflation.
Traders are betting there is just a 10pc chance of a reduction in borrowing costs next month, down from a 15pc chance on Tuesday.
Thomas Pugh, economist at RSM UK, said: “The rebound in inflation to 2.3pc in October is probably the start of a gradual climb which will see headline inflation return to 3pc early next year.
“However, services inflation should continue to slowly come down which will allow the Bank of England to gradually cut interest rates next year.
“A rate cut in December looks very unlikely, but we’re expecting one cut a quarter next year to leave rates at 3.75pc by the end of 2025.”
07:27 AM GMT
Pound rises after inflation jumps by more than expected
The value of the pound has risen after inflation jumped by more than expected last month.
Sterling gained 0.3pc against the dollar to $1.271 and was up 0.3pc against the euro, which is worth 83.3p.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “October’s surprisingly large rebound in CPI inflation from 1.7pc to 2.3pc won’t stop the Bank of England from cutting interest rates further.
“But it lends some support our view that the Bank will skip the December meeting and cut rates only gradually, by 25 basis points in February and at every other policy meeting until rates reach 3.5pc in early 2026.”
07:19 AM GMT
December interest rate cut ‘unlikely’ amid rising inflation
The Bank of England is unlikely to cut interest rates next month following unexpectedly strong rise in inflation, according to economists.
ICAEW economics director Suren Thiru said: “These figures confirm a disappointing resurgence in inflation as the recent tailwind from lower energy costs turned into a headwind in October, following the increase in Ofgem’s price cap which drove a notable jump in household bills.
“Inflation should drift gradually higher from here with rising energy bills, the impact of the Budget and global trade frictions likely to keep the headline rate hovering above the Bank of England’s 2pc target until well into 2025.
“While the slight uptick in services price pressures confirms that it remains a significant hurdle to sustainably maintain inflation below target, slowing wage growth and a weakening labour market should help put it on a more consistent downward trajectory.
“October’s marked rise in inflation makes a December interest rate more unlikely and concerns over renewed price pressures from the budget and international uncertainty may draw a more reluctant approach among rate setters to future policy loosening.”
Lindsay James, investment strategist at Quilter Investors, added: “Expectations for further cuts have been scaled back considerably, with rates expected to remain above 4pc throughout 2025.
“With just one more MPC meeting before year end, it is looking increasingly likely that the Bank will close out 2024 with a hold on rates.
“This is a clear reminder that short term inflationary pulses may return, potentially caused by factors such as obstacles to trade, labour market tightness, taxation and volatility in food and energy prices.”
07:13 AM GMT
We know families are still struggling, says minister
After inflation rose by more than expected last month, Chief Secretary to the Treasury Darren Jones said:
We know that families across Britain are still struggling with the cost of living.
07:12 AM GMT
Services inflation unexpectedly rises
Services inflation unexpectedly rose last month in a blow to hopes for interest rate cuts.
The figure is closely watched by the Bank of England as it changes at a slower pace than food and energy prices.
It rose from 4.9pc to 5pc in October, after analysts had expected it to remain unchanged.
Meanwhile, core inflation, which strips out volatile food and energy costs, also rose unexpectedly from 3.2pc to 3.3pc.
It had been expected to fall to 3.1pc.
07:06 AM GMT
Energy price cap sends inflation higher
ONS chief economist Grant Fitzner said:
Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year.
07:06 AM GMT
Inflation surges back above 2pc target
Inflation has surged back above the Bank of England’s 2pc target after a rise in energy bills, official figures show.
The consumer prices index (CPI) rose to 2.3pc in October, according to the Office for National Statistics.
The jump in inflation, which was stronger than analysts expected, comes after CPI fell to a three-year low of 1.7pc in September.
Economists have warned that an increase was likely to have been driven by higher energy bills after an increase in the price cap for households last month.
In October, average household energy bills increased by £149 a year after regulator Ofgem raised the cap by about 10pc from £1,568 for a typical dual fuel household in England, Scotland and Wales to £1,717.
07:02 AM GMT
Good morning
Thanks for joining me. Inflation has surged after a rise in energy bills in October.
The Office for National Statistics said the consumer prices index rose to 2.3pc last month.
It puts the rate of inflation back above the Bank of England’s 2pc target after falling to a three-year low of 1.7pc in September.
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What happened overnight
Asian shares were trading cautiously as investors looked ahead to earnings results from artificial intelligence darling Nvidia.
The world’s most valuable company will report its third-quarter results after the bell. Shares climbed 4.9pc on Tuesday and options imply a move of almost 9pc in either direction in the $3.6 trillion stock often seen as a barometer for the tech sector’s shift to AI.
MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.1pc, and Tokyo’s Nikkei slipped 0.2pc.
Bitcoin last held above $92,000, having broken above $94,000 for the first time overnight on expectations Donald Trump’s administration will be crypto-friendly. Investors are also watching Trump’s pick for Treasury Secretary, which may come as soon as today.
In China, the central bank held benchmark lending rates steady as widely expected. Chinese mainland stocks outperformed, with blue chips gaining 0.4pc. Hong Kong’s Hang Seng index edged up 0.1pc.
On Wall Street on Tuesday, the S&P 500 rose 0.4pc to 5,916.98, the Dow Jones Industrial Average fell 0.3pc to 43,268.94, and the Nasdaq Composite rose 1pc to 18,987.47.
Meanwhile, in the bond market, the yield on benchmark US 10-year Treasury notes fell to 4.402pc from 4.409pc late on Monday