Labour could cut taxes by £16bn, say economists
Rachel Reeves will be handed a £16bn spending boost from official forecasters if Labour wins the General Election, according to economists.
If it updated its forecasts now, the Office for Budget Responsibility (OBR) would give the next government nearly double the £8.9bn expected fiscal headroom announced at the March Budget.
Capital Economics, a consultancy, said the new forecast would allow Labour to “reverse some of the scheduled spending restraint, or the freeze on personal tax thresholds, but not both”.
The change in public finances comes after a downward revision to the OBR’s borrowing forecast of about £5bn on average over the next five years thanks to a boost to tax revenues from the recent strength in wage growth.
The next chancellor could have fiscal headroom as large as £27bn if Capital Economics’ is correct in forecasting that interest rates will be cut further than investors expect and that tax revenues will be higher than the OBR predicts due to higher house and equity prices.
However, it said the OBR’s forecast for the public finances could range from being £13bn in the red to as much as £38bn of headroom, equivalent to 1.4pc of GDP.
Deputy chief UK economist Ruth Gregory said: “Overall, as things stand, we suspect the next government may be handed a bit more fiscal space by the OBR.
“But it probably won’t have enough fiscal headroom to do everything it wants all at once.
“Much, of course, will depend on the economic developments between now and the next fiscal event and the OBR’s forecasts, both of which would influence the headroom, as well as the willingness of the next government to raise taxes to fund extra spending that isn’t covered by any more headroom.”
Read the latest updates below.
06:04 PM BST
Signing off...
Thanks for joining us today. We’ll be back in the morning when Chris Price will be covering the latest markets news from around 7am.
05:42 PM BST
Bill Gates warns political backlash could ‘slow down’ climate change action
Bill Gates has warned that political backlash against green policies in developed countries could hamper the fight against climate change.
“Politics could slow this stuff down,” he said. “Rich countries not only need to [reduce] their own emissions, but they also need to be the primary source of both the risk capital and the bootstrap funding ... to get to zero green premium.”
Mr Gates was speaking at a London summit organised by his energy investment firm, Breakthrough Energy, which backs tech companies trying to cut greenhouse gases.
The “green premium” is a phrase Mr Gates has used to refer to the extra cost of doing business in a less polluting way.
It comes amid fears of a pushback against policies to address climate change in the US, Europe and some corners of UK politics.
Mr Gates added that while he is “optimistic” about the world’s overall response to climate change, he cast doubt on the chances of hitting the target of net zero emissions by 2050.
He said: “It would take wild success to actually get to zero by 2050 because that’s every country, every sector.”
He added: “I don’t think I’m crazy to be optimistic, though I’d be the first to admit that hitting this specific goal of absolutely net zero emissions by 2050, we’re not likely to achieve that.”
05:30 PM BST
European shares subdued as H&M plunges
European shares slipped on Thursday on investor caution ahead of crucial global economic data and the first round of French elections, while retailer H&M sank after missing quarterly profit forecasts.
The pan-European Stoxx 600 closed 0.4pc lower, extending losses for the third straight sessions.
Retail stocks led sectoral declines with a 1.9pc drop as H&M, the world’s second-biggest fashion retailer, plunged 12.9pc after missing quarterly earnings forecasts and predicting a drop in June sales.
Magnus Raman, an analyst at Kepler Cheuvreux, said:
H&M repeats the goal of an operating margin of over 10pc for 2024 and beyond. However, management warns that the conditions for achieving the goal this year have become more challenging.
05:14 PM BST
American stocks inch lower as semiconductor shares ease
Wall Street’s major stock indexes are floudering this afternoon, with the most notable change being chipmaker Micron Technology. Its shares are down more than 7pc after a disappointing revenue forecast late Wednesday. An index of semiconductor companies was down 1pc.
Mike Gallagher, director of research at Continuum Economics, said:
It’s going to be a bit difficult for the tech sector to drive on the market the way that it’s done.
The S&P 500 is virtually unchanged, while the Dow Jones Industrial Average is up 0.2pc, and the Nasdaq Composite is up 0.1pc.
05:08 PM BST
Third day of red ink for FTSE 100 while investors wait on new data
The FTSE 100 fell for the third consecutive day today as GSK dropped after the US public health agency narrowed the scope of the drugmaker’s RSV vaccine, while investors awaited key US and domestic economic data.
The benchmark FTSE 100 was down 0.6pc to 8,179.68 points.
The pharma sector was weighed down by the 4.6pc drop in GSK after the US CDC on Wednesday narrowed its recommendation for the use of respiratory syncytial virus vaccines in older adults this year and held off on recommending their use for adults under the age of 60.
Investors were also in a wait-and-watch mode over US personal consumption expenditure (PCE) numbers, due on Friday, which could influence the Federal Reserve’s stance on interest rate cuts this year.
Additionally, UK gross domestic product (GDP) figures could add to the Bank of England’s confidence to cut rates in August.
The benchmark FTSE 100 index has retreated 3.5pc from its record level hit in mid-May in the build-up to Britain’s July 4 parliamentary elections.
05:04 PM BST
Global stocks slide as elections impose ‘wait-and-see attitude’ on markets
Global stocks mostly slid Thursday as Europe geared up for key elections, the US awaited key inflation data and Japan contemplated measures to strengthen the yen.
Investors were meanwhile awaiting the outcomes of French and British general elections due over the next week.
Wall Street stocks wobbled ahead of the first presidential debate between Joe Biden and Donald Trump and key inflation data.
The debate, to take place on Thursday evening, “has imbued the market with a bit of a wait-and-see attitude”, said Briefing.com analyst Patrick O’Hare.
Friday sees the release of the PCE index, the US Federal Reserve’s preferred measure of inflation.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
Should this point towards a further slowdown in price growth then the final day of June trading might go the same way as May’s, which saw a strong rally.
A softer PCE reading could renew hopes of a September rate cut, which have taken a knock of late.
05:03 PM BST
Yen gains after 38-year low as Japanese government considers response
The Japanese currency edged up against the dollar today after hitting a 38-year low yesterday, putting investors on alert for a possible intervention by Japanese authorities.
The Japanese unit’s latest retreat came as uncertainty surrounded the Federal Reserve’s timetable for cutting interest rates, and the Bank of Japan’s caution in tightening monetary policy.
The country’s vice finance minister Masato Kanda said this week that authorities were keeping a close eye on movements in foreign exchange markets and were ready to step in with yen support 24 hours a day.
Their determination was put to the test after the yen fell to 160.87 per dollar late Wednesday - its weakest since 1986 - as US Treasury yields spiked.
Analysts say it is possible traders will keep pushing the envelope to see at what point the government will act, with some saying the currency could hit 170.
04:56 PM BST
Euro zone yields hit two-week high as the risk premium on French debt rises
Euro zone government bond yields rose to their highest levels in two weeks on Thursday as investors looked ahead to inflation data due from the United States and Europe.
The risk premium investors demand to hold French debt widened to within striking distance of a seven-year high hit almost two weeks ago, as markets looked towards the first round of parliamentary elections at the weekend.
Germany’s 10-year bond yield, the benchmark for the euro zone, rose to 2.455pc from 2.453 yesterday.
Stronger-than-expected inflation prints from Australia and Canada this week have reminded markets that the battle against price rises is ongoing.
US personal consumption expenditure (PCE) inflation data for May is due on Friday, and is likely to guide Federal Reserve policy and have knock-on effects for other central banks.
France’s 10-year bond yield rose to 3.195pc, up from 3.175pc yesterday.
04:53 PM BST
FTSE 100 closes down
The FTSE 100 closed down 0.5pc. The top riser was packaging supplier DS Smith, up 15.7pc, followed by competitor Mondi, up 3.6pc. The biggest faller was Burberry, down 6.5pc, followed by drugmaker GSK, down 4.pc.
Meanwhile, the mid-cap FTSE 250 rose 0.2pc. The top riser was Moongpig, up 15pc, followed by Rolex retailer Watches of Switzerland, up 6pc. Currys fell 5.8pc, while Aston martin dropped by a similar amount.
04:42 PM BST
Sunak and Starmer undermining Britain’s energy security, says oil company
Rishi Sunak and Sir Keir Starmer are destroying the offshore oil industry and undermining Britain’s energy security, a leading oil and gas company has said. Jonathan Leake reports:
David Latin, the chairman of Serica Energy, claimed that windfall taxes and political opposition had made Britain the most hostile country he had ever operated in outside of war zones.
Mr Latin said: “I have been involved in this industry for more than 30 years and have worked all over the world.
“Other than when I was responsible for a company which had significant assets in a war zone, I have never encountered a [political] situation which was so challenging when it comes to making investment decisions, and planning for the future more generally, as it is in the UK at present.”
04:28 PM BST
Bank of England likely to cut rates in August, former MPC member says
The Bank of England is likely to cut interest rates soon, “probably in August”, as long as inflation and wage data align with the Monetary Policy Committee’s May forecasts, a former MPC member said on Thursday.
“They have clearly signalled they are willing to cut soon if data are okay,” said Michael Saunders, an MPC member at the Bank of England between 2016 and 2022.
The Bank kept its bank rate unchanged at a 16-year high of 5.25pc last week, ahead of a July 4 national election, with some policymakers saying their decision not to cut rates was “finely balanced”.
Mr Saunders, a senior adviser at Oxford Economics, expected markets to be relieved with a large Labour party win in the election, saying: “Markets and investors will not be sorry to see the Conservative government end.”
He said Labour - far ahead in opinion polls - would likely lay out tough spending plans for the next few years in its autumn budget, but did not expect major tax hikes to be included other than “modest measures”, such as on private school fees.
“Then, provided the economy is okay, they will gradually add to their public spending plans in subsequent years, while staying well within the fiscal rules,” he said.
04:23 PM BST
Uyghur group wins appeal over UK probe into ‘slave labour’ cotton
British authorities must reconsider whether to open a probe into the importation of cotton allegedly produced by slave labour in the Chinese region of Xinjiang, a London court ruled on Thursday, allowing an appeal by a Uyghur rights group.
The World Uyghur Congress, an international organisation of exiled Uyghur groups, took legal action against Britain’s National Crime Agency (NCA) after it declined to begin a criminal investigation.
Beijing vigorously denies any abuses. “The Chinese government has made it very clear that the allegation of ‘forced labour’ in Xinjiang is nothing but an enormous lie propagated by anti-China elements to smear China,” a spokesperson for the Chinese embassy in London said.
In its legal action, the World Uyghur Congress argued that the NCA wrongly failed to investigate whether cotton from Xinjiang amounts to “criminal property”.
Last year, a judge at London’s High Court ruled there was “clear and undisputed evidence of instances of cotton being manufactured ... by the use of detained and prison labour as well as by forced labour”.
But the legal challenge was dismissed on the grounds that the British authorities’ approach to the law – which was that there has to be a clear link between alleged criminality and a specific product – was correct.
The Court of Appeal overturned that decision, ruling that “the question of whether to carry out an investigation ... will be remitted to the NCA for reconsideration”.
A spokesperson for the NCA said: “We respectfully note the judgment of the Court of Appeal and are considering our next steps.”
04:17 PM BST
Western tariffs a ‘challenge’ for China’s battery giant
An executive from China’s battery giant CATL said on Thursday that Western tariffs tied to electric vehicles present a “challenge” for the firm, and are bad for customers too.
The European Union is due to impose hefty tariffs on Chinese-made electric cars by July 4, after Washington increased duties on the sector last month.
Canada suggested this week it might also follow suit.
CATL is a major player in the market as the world’s top producer of electric vehicle batteries, having signed deals with carmakers including Tesla, Stellantis and BMW.
Ni Jun, CATL’s chief manufacturing officer, said:
I will say this is a challenge ...
I believe [the tariffs are] not good for the consumer ...
Whether you are a European consumer or Asian consumer, we want to have affordable product, high quality, (that) can save the planet.
CATL has been helped by robust financial support from Beijing, which has prioritised the development of domestic high-tech industries that it views as strategically advantageous.
04:11 PM BST
Kemi Badenoch accuses Labour of wanting to micromanage business
The Business Secretary, Kemi Badenoch, has launched an attack on Labour’s plans to “micro-manage” businesses and promote identity politics in the world of work.
In a speech to the British Chambers of Commerce, she criticised Labour for wanting mandatory reporting on ethnicity pay gaps - even though the Conservatives have already introduced gender pay gap reporting.
She said that 70 new regulations would create lots of jobs for compliance consultants and keep employment tribunals busy, but would not promote growth.
She said:
Their vision of the future economy is one that micro-manages your business to meet their political objectives. That includes the divisive agenda of identity politics ...
In their manifesto they say they will enshrine in law the full right to equal pay for ethnic minorities. But you know and I know we already have laws that do that.
This is going to be much more political.
A law that will be used to work out what people of different ethnicities should be paid.
And they’ll be checking on you.
In 2016, the Conservative administration commissioned Tory peer Baroness McGregor-Smith to produce a report on ethnicity in the workplace. It recommended mandatory ethnical pay gap reporting. However, the Governement decided to instead provide guidance to support employers who wished to report the gap voluntarily.
03:54 PM BST
Levi drops 17pc amid wafer-thin profits
Shares of Levi Strauss are down 17pc today after issuing disappointing quarterly results last night, which failed to hit market expectations.
The company reported a wafer-thin profit of $18m on net revenues of $1.4bn, compared with a loss of $2m a year earlier.
Levi is pivoting to a direct-to-consumer business and prioritising higher-margin products after an inventory glut last year caused several quarters of weakness in wholesale demand.
In the reported quarter, Levi’s US wholesale revenue was down mid-single digits, although the company added the channel was “significantly more profitable” than last year due to improved inventory levels.
“Our consumer is proving to be resilient. They’re coming into our stores and they’re shopping online. There are indications … certainly there’s some level of uncertainty as we look into the back half of the year and beyond,” said Levi’s finance chief Harmit Singh.
However, the company executives said the Dockers brand, known for its chinos and khakis, underperformed in the quarter, hurting Levi’s top line.
This undermined robust denim demand - driven by full price sales in women’s clothing, as consumers shopped for denim dresses, tops and skirts.
03:33 PM BST
Boeing sued over mid-air blowout investigation as transparency push backfires
Boeing is being sued by American regulators for sharing details of an investigation into the mid-air blowout of a 737 Max plane, as an effort to improve transparency backfired on the business.
Christopher Jasper and Matt Oliver have the details:
The company was accused on Thursday of “blatantly” violating an agreement signed with the US National Transportation Safety Board (NTSB), after bringing in journalists to its Seattle factory for the first time since the crisis erupted.
During the tour, executives revealed that the Jan 5 blowout on a 737 Max 9 plane, operated by Alaska Airlines, happened partly because Boeing workers had failed to fill out an important piece of paperwork.
One insider also blamed the relative inexperience of the company’s workforce since the pandemic, suggesting they were having to “turn baristas into aerospace mechanics” in Seattle.
Read how Boeing was publicly criticised by the NTSB.
With that, I will bid you farewell for the day and hand over the reins to Alex Singleton, who will keep the live updates coming.
03:17 PM BST
Boots owner’s shares down 25pc to lowest since 1980
Shares in the US owner of Boots have fallen by 25pc after the pharmacy chain surprised investors with worse than expected results, fuelled by challenging conditions in America.
Walgreens Boots Alliance, which has been exploring the sale of Boots, said it was finishing a multi-year plan to shutter some underperforming US stores, but it didn’t detail how many were targeted.
Walgreens and its major American competitors such as CVS and Rite Aid - which is going through a bankruptcy reorganisation - have already closed hundreds of stores over the past few years. The companies have dealt with challenges that include years of low margins on prescriptions and rising costs for running their shops.
Analysts say they have also been hit by growing competition from Walmart supermarkets, Amazon and other discount retailers over sales of non-prescription products.
Tim Wentworth, chief executive, said that the company continues to face challenges that include “persistent pressure on the US consumer.”
Walgreens Boots Alliance runs about 12,500 pharmacies worldwide, including more than 8,600 locations in the United States. Boots has 2,100 stores in the UK.
Mr Wentworth said that “changes are imminent” for about 25pc of the company’s US stores, which could include closing of a “significant portion” of them.
The company said profits were $344m (£272m) in the three months to May 31. Walgreens told investors that earnings per share were down 36.6pc, and cut its profit guidance for the year.
That guidance cut was not “overly shocking to us as the company now begins the next leg of its turnaround,” Leerink Partners analyst Michael Cherny said.
In the UK, Boots’ management is understood to have been pushing Walgreens toward an initial public offering (IPO) for the British pharmacy business, which would mark a return of the company to the London Stock Exchange.
An IPO of Boots would be expected to value it at around £7bn, meaning it would return the company to the FTSE 100.
The plunge in Walgreens shares was the biggest one-day decline in since at least 1980, according to Bloomberg research.
03:07 PM BST
Next government to be given £16bn spending boost
Rachel Reeves will be handed a £16bn spending boost from official forecasters if Labour wins the General Election, according to economists.
If it updated its forecasts now, the Office for Budget (OBR) would give the next government nearly double the £8.9bn expected fiscal headroom announced at the March Budget.
Capital Economics, a consultancy, said the new forecast would allow Labour to “reverse some of the scheduled spending restraint, or the freeze on personal tax thresholds, but not both”.
The change in public finances comes after a downward revision to the OBR’s borrowing forecast of about £5bn on average over the next five years thanks to a boost to tax revenues from the recent strength in wage growth.
The next chancellor could have fiscal headroom as large as £27bn if Capital Economics’ is correct in forecasting that interest rates will be cut further than investors expect and that tax revenues will be higher than the OBR predicts due to higher house and equity prices.
Deputy chief UK economist Ruth Gregory said:
Overall, as things stand, we suspect the next government may be handed a bit more fiscal space by the OBR.
But it probably won’t have enough fiscal headroom to do everything it wants all at once.
Much, of course, will depend on the economic developments between now and the next fiscal event and the OBR’s forecasts, both of which would influence the headroom, as well as the willingness of the next government to raise taxes to fund extra spending that isn’t covered by any more headroom.
02:48 PM BST
US economy slows in boost for rate cut hopes
The American economy expanded at its slowest pace in two years, official figures show, in a sign high interest rates may be taking their toll.
Gross domestic product (GDP) grew by 1.4pc in the first three months of the year, which was a slight upgrade from the previous estimate of 1.3pc by the Commerce Department.
Consumer spending grew just 1.5pc, down from an initial estimate of 2pc.
The first quarter’s GDP growth marked a sharp pullback from a strong 3.4pc pace during the final three months of 2023.
🇺🇸 More prudent #consumers
📉Real #GDP in Q1 '24
✅+1.4% q/q (+0.1pt)
✅+2.9% y/y
🛒Consumer +1.5% (revised🔻)
🏘️Resid +16%
👩💻Biz invest +4.4%
🔻Inventory -0.4pt
📦Trade -0.7pt (strong imports)
🏦Gov +1.8%
📉PCE #inflation
✅Headline 2.6% y/y (⤵️0.2pt)
✅Core 2.9% (⤵️0.3pt) pic.twitter.com/xU8nLc8OIA— Gregory Daco (@GregDaco) June 27, 2024
02:35 PM BST
Wall Street slumps as Micron drags down chip stocks
The main US stock indexes slipped at open as a slump in Micron hurt some semiconductor stocks.
The Dow Jones Industrial Average fell 20.70 points, or 0.1pc, at the open to 39,107.10 as investors also examined a string of economic data ahead of this week’s crucial inflation report.
The S&P 500 opened lower by 4.31 points, or 0.1pc, at 5,473.59, while the Nasdaq Composite dropped 11.20 points, or 0.1pc, to 17,793.95 at the opening bell.
Investors were disappointed by chipmaker Micron Technology’s revenue forecast, sending the stock down 5.2pc.
02:26 PM BST
US jobless claimants hit two year high in boost to hopes for rate cuts
The total number of Americans collecting jobless benefits rose to the highest level in more than two years in a sign the employment market is slowing down and raising hopes of interest rate cuts.
The Labor Department reported that jobless claims for the week ending June 22 fell by 6,000 to 233,000 from 239,000 the previous week.
However, the total number of Americans collecting unemployment benefits rose for the eighth straight week, to 1.84m, for the week of June 15. That’s the most since November of 2021.
The Federal Reserve have raised interest rates 11 times since March in an attempt to extinguish the four-decade high inflation following the economic rebound from the Covid recession of 2020.
The Fed’s intention was to cool off a red-hot jobs market and slow wage growth, which can fuel inflation.
Claims:
1/ Initial claims a little lower again this week, but still elevated relative to the 1st half of the year.
To the degree this is a seasonal adjustment issue, it might not resolve until later in the summer. pic.twitter.com/iSuDX6tfsI— Guy Berger (@EconBerger) June 27, 2024
02:19 PM BST
Island Poke rescued from administration, saving 100 jobs
Hawaiian food chain Island Poke has been sold to a hospitality start-up backer in a rescue deal, saving more than 100 jobs.
Island Poke - which has 16 sites across London, as well as outlets in Brighton, Newcastle and Edinburgh - has been bought in a so-called pre-pack administration deal by IP Topco, which is a subsidiary of White Rabbit Projects.
White Rabbit was an existing shareholder in Island Poke, since it first backed the firm in 2016.
Administrators at Begbies Traynor - who were appointed on June 26 - said the sale has secured more than 100 jobs.
It comes after Island Poke had sought to put in place a company voluntary arrangement (CVA) to restructure the business, but administrators said efforts on this failed.
Island Poke was set up by James Porter after he quit his job at an art gallery to start selling the Hawaiian-inspired food at a street food market.
The first Island Poke restaurant opened in Kingly Street in London’s Soho in 2016.
12:32 PM BST
Moonpig delivers more subscribers despite higher prices
Moonpig has seen yearly profit jump by a third as the online greeting cards business cashed in on higher prices and half a million paying subscribers.
Shares in the London-listed company were up by 8.7pc after it reported a profit before tax of £46.4m in the year to the end of April, up 33pc from £34.9m the previous year.
Higher earnings came off the back of sales totalling £341.1m, which was 6.6pc higher than last year.
Moonpig said sales growth was driven by more people placing orders as well as average selling prices increasing by 5pc.
The retailer upped the prices of its cards during 2023, while stamp and shipping prices for gifts have also risen.
It has about 90m reminders set up for customers, who are alerted ahead of birthdays and occasions like Mother’s Day and Valentine’s Day.
It said it also benefitted from half a million people signing up to its subscription service, Moonpig Plus, which offers discounted cards and perks for £9.99 a year.
12:19 PM BST
Turkey holds interest rates at 50pc
Turkey’s central bank has held interest rates at 50pc as it continues to battle inflation which rose in May to 75.4pc.
Policymakers nodded to the rise in inflation, saying “the decline in the underlying trend of monthly inflation registered a temporary pause”.
It stuck to its guidance that “the tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range”.
Nicholas Farr, emerging Europe economist at Capital Economics, said: “While we think inflation has now reached a peak, the pace of disinflation over the second half of the year is unlikely to be fast enough to allow the central bank to cut interest rates anytime soon.”
He added that “rate cuts are unlikely to begin until 2025”.
Turkey Interest Ratehttps://t.co/RQ2GeXJfdD pic.twitter.com/fdwigfLeqc
— TRADING ECONOMICS (@tEconomics) June 27, 2024
12:08 PM BST
US market for GSK vaccine slashed by millions, say analysts
Analysts at Goldman Sachs said the decision by the US committee to limit its recommendations for GSK’s RSV vaccine will limit patient access, writes Matthew Field.
It said it means “those who wish to obtain a vaccine in the US would be required to pay out-of-pocket, potentially impacting access to patients who could benefit”.
Analysts at Jefferies, meanwhile, said the decision could cut the current size of the US market from around 93m people to 55m for the coming winter.
“Longer term, we are confident use expands,” Jefferies analysts said.
On the news, the company said: “In GSK’s view, the totality of evidence provides further confidence in the unchanged and favourable benefit-risk profile of Arexvy.”
There is indeed more uncertainty about the risk-benefit ratio in this group,” said Professor Christopher Chiu, an infectious diseases expert at Imperial College London. “This does not mean that the vaccine will not be beneficial in younger people with risk factors and the decision should be reviewed as more evidence becomes available.
Professor Johathan Ball, deputy director of the Liverpool School of Tropical Medicine, said: “The most likely driver for this decision is that serious morbidity and resulting mortality is associated mainly with the very young and elderly.”
12:05 PM BST
GSK drags down FTSE 100 after vaccine blow in US
GSK was the worst performer on the FTSE 100 after US regulators failed to approve the drug for millions of under 60s, writes Matthew Field.
The drugs giant’s shares slumped as much as 7.2pc - wiping nearly £4.8bn off the value of the company - as it suffered a second blow in a week to the hopes of its blockbuster vaccine for Respiratory Syncytial Virus (RSV) - the winter infection known as the “silent killer”.
A US Centers for Disease Control panel postponed a vote on green lighting GSK’s Arexvy drug for people aged 50 to 59, cutting the number of potential doses for the British-made shot by millions.
The regulator approved the use of vaccines for RSV for routine jabs for everyone over the age of 75 and for those aged 60 and over considered to be high risk.
However, US regulators said they wanted to see more data on the efficacy and cost-benefit of the jab on younger people. The move comes despite the vaccine getting waved through by the Federal Drug Administration just this month.
The decision comes after GSK lost out to rival Pfizer for a major UK contract to deploy its vaccine, with the government signing a deal for 3.5m doses of its jab for the elderly and 1.4m for pregnant women.
GSK has emerged as the market leader in jabs for RSV - accounting for around two thirds of doses in America - against rivals US Pfizer and Moderna, although Wednesday’s decision applies to all immunisations for the virus.
Pfizer shares dropped by 2pc, while shares in Moderna fell by 11pc after new data suggested a weaker immune response to its drug.
11:56 AM BST
BP freezes offshore wind projects to focus on fossil fuels
BP has put all new offshore wind projects on pause as the oil company’s new chief executive seeks to focus more heavily on fossil fuels.
Our energy editor Jonathan Leake has the details:
Murray Auchincloss, who became permanent head of the business at the start of the year, has also frozen hiring in the offshore wind division.
The move, which was first reported by Reuters, follows investor discontent over the company’s switch to green energy.
However, it is likely to trigger a backlash from climate campaigners who have waged a years-long campaign to push BP into clean energy.
Read why Mr Auchincloss is seeking to slow down investments in big budget, low-carbon projects.
11:41 AM BST
Pound rises ahead of US inflation data
The pound has risen as investors await the latest US inflation figures and data on the health of the UK economy.
Sterling was up 0.2pc against the dollar to $1.265 and had gained 0.1pc versus the euro, which is worth 84.5p.
The US published personal consumption expenditures (PCE) data on Friday, which is closely watched by the Federal Reserve as an indication of US inflation.
Meanwhile, official figures on the UK economy will also be published tomorrow.
Jayati Bharadwaj, a strategist at TD Bank Group, said that the prospect of a Labour victory, and thus a “softer” Brexit deal, would be “positive” for the pound.
11:16 AM BST
Mortgage payments could fall for millions by end of the year, says Bank of England
Nearly a fifth of mortgage borrowers will see their monthly repayments fall by the end of the year, the Bank of England has said, as markets expect policymakers to begin cutting interest rates.
Our deputy economics editor Tim Wallace has the latest:
About 1.5m households on variable rate mortgages are expected to see a cut to their rates this year, rising to almost 2m by the end of 2026, the Bank said in its Financial Stability Report.
Money markets think the Bank of England will begin cutting interest rates by November at the latest, meaning the 18pc of borrowers with floating rate loans will start to feel the benefit.
However, around 3m British households are still on low-rate mortgages of below 3pc, many of which were fixed before interest rates surged.
Almost all of those will move on to higher rates by the end of 2026, and can typically expect to pay an extra £180 per month each.
10:58 AM BST
French election is a threat to Britain’s economy, Bank of England warns
The looming French election poses a threat to global financial stability and the British economy, the Bank of England has warned.
Our deputy economics editor Tim Wallace has the details:
Officials at Threadneedle Street warned of potential market turmoil after President Emmanuel Macron called a snap poll that could hand a majority to Marine Le Pen’s anti-migration National Rally party.
Ms Le Pen favours increased borrowing, meaning a victory would risk driving up France’s already high debt levels.
If bond investors flee a nation such as France, it threatens to send shockwaves through wider financial markets, forcing up borrowing costs just as heavily indebted companies and households need to refinance their loans and mortgages.
Read why the Bank’s Financial Policy Committee, headed by Andrew Bailey, the Governor, particularly singled out France.
10:48 AM BST
Private equity-backed firms ‘struggling’, warns Bank of England
The Bank of England has warned that companies backed by private equity are “struggling” as higher interest rates put pressure on the debt-laden industry.
The Bank rebuked lenders in the private equity market for their poor risk-management practices in its twice-annual Financial Stability Report.
Officials have been concerns about the risks of the sector, which finances about 10pc of Britain’s private sector jobs.
In April it ordered some banks to stress test their exposure to “indebted” private equity giants, which are face an “increased drag” on their performance as a result of higher interest rates.
The report said:
Improved transparency over valuation practices and overall levels of leverage would help to reduce the vulnerabilities in the sector.
Risk management practices in some parts of the sector also need to improve, including among lenders to the sector such as banks.
The Financial Policy Committee will consider the outcome of regulatory work by the Financial Conduct Authority and Prudential Regulation Authority to address some of these issues.
10:33 AM BST
Fresh Brexit debate would harm business stability, warns Reynolds
Dredging up the Brexit debate would be counterproductive and harm desperately needed stability, shadow minister Jonathan Reynolds has said.
Our senior economics reporter Eir Nolsøe has sent this from the British Chambers of Commerce annual conference in London:
Asked why Labour has ruled out rejoining the European single market or a customs union despite pledging to grow the economy, Mr Reynolds said: “The growth can only come through a stable proposition.”
He added: “You could not relive the argument and provide people with the reassurance that we’re moving to a period where British politics is going to be in a stable position.”
Speaking to hundreds of business leaders, he added that he knew businesses have struggled to adjust.
Mr Reynolds said: “Of course, it has been really, really difficult. You cannot erect barriers to trade with your major trading market, and that’s not painful.”
He said, however, that looking to the future was a “genuinely better pitch to business”.
10:18 AM BST
Eurozone may have only one more rate cut this year, says policymaker
The European Central Bank may only cut interest rates once more this year, an official has warned.
National Bank of Slovakia governor Peter Kazimir, who sits on the ECB’s Governing Council which sets interest rates, said:
I think we could expect one more interest-rate cut this year.
I still see a significant risk of rising inflation, which may not fully align with our expectations.
I expect this pressure of possible price increases mainly from wage growth.
Money markets predict there will be at least one more rate cut this year by the ECB, taking place by October with a possibility of another cut before the year is over.
09:59 AM BST
Labour wants ‘effective policy, not pantomime’ for businesses, says shadow minister
Labour is “not putting on politics as entertainment”, shadow business secretary Jonathan Reynolds has said, in response to accusations that the party’s election campaign is dull, writes Eir Nolsøe.
Speaking at the British Chambers of Commerce annual conference to hundreds of bosses and senior business leaders, Mr Reynolds said:
I’m told by some commentators they don’t think Labour’s campaign is exciting.
My friends, we’re not pitching you a new Netflix series. You know we’re not putting on politics as entertainment.
We want to return to serious government, to effective policy and politics and public service, not a pantomime.
09:48 AM BST
Britain must stop ‘walking on eggshells over Brexit’
One of Britain’s leading business groups has urged the next government to “stop walking on eggshells” when it comes to Brexit.
Our senior economics reporter Eir Nolsøe has the latest from the British Chambers of Commerce (BCC) Global Annual Conference in London:
Shevaun Haviland, the director general of the BCC, told a room full of British bosses her message to the next leader of the country.
She said: “We must stop walking on eggshells and say it’s how it is.
“The current plan isn’t working for our members. The EU is our largest market accounting for 42pc of all our exports leaving the EU has made it more expensive and bureaucratic to sell our goods and services across the channel.”
She added she was “not here to look backwards” but insisted better trading terms were possible.
Ms Haviland was speaking the day after Sir Keir Starmer and Rishi Sunak clashed over the UK’s trading relationship with the EU during the election debate.
Mr Sunak warned Sir Keir a better deal with Brussels would hinge on “accepting more migrants”.
09:42 AM BST
Gas prices steady as hot weather increases demand
Wholesale gas prices have risen as heatwaves ramped up the need for fuel.
Dutch front-month futures, Europe’s benchmark, were up 2.2pc to nearly €35 per megawatt hour as the continent competes with Asia for liquified natural gas.
The UK equivalent contract was up 2pc.
09:19 AM BST
UK markets flat ahead of GDP figures
UK stock indexes were largely subdued amid caution ahead of the latest figures on the British economy.
The benchmark FTSE 100 was flat, while the mid-cap FTSE 250 was up 0.1pc.
The pharma and biotech sector was impacted by a share drop in drugmaker GSK after a US committee narrowed its recommendation for the use of respiratory syncytial virus (RSV) vaccines in older adults this year and held off on recommending their use for adults under the age of 60.
On investors’ radar this week is the US personal consumption expenditure (PCE) numbers, due on Friday, which could influence the Federal Reserve’s stance on interest rate cuts this year.
Meanwhile, UK gross domestic product (GDP) figures this week could potentially add to the Bank of England’s confidence to cut rates in August.
Precious and industrial metal miners were down as much as 1.7pc and 1.1pc respectively as gold and copper prices steadied near weekly and monthly lows.
Shares in car and parts companies dropped as much as 1.5pc after industry data showed Britain’s car output had dropped 11.9pc in May compared to last year, declining for the third straight month.
Burberry slipped 3.2pc as the company traded without entitlement to its latest dividend payouts.
09:11 AM BST
British car industry demands tax cuts as Vauxhall threatens to close factories
Car makers have demanded support for the automotive industry just days after the manufacturing giant behind Vauxhall threatened to mothball its British factories.
Our industry editor Matt Oliver has the details:
With the general election looming, the Society of Motor Manufacturers and Traders (SMMT) urged the next Government to “back British manufacturing” with a combination of tax cuts and regulatory changes to reinvigorate consumer adoption of electric vehicles.
The lobby group warned that “maintaining the status quo is not an option” and that Britain risks being “outcompeted” by the US, China and the European Union in the battle for investment in electric vehicles (EVs) factories and supply chains.
It comes after Stellantis, the car giant behind Vauxhall, warned that it would be forced to close plants at Ellesmere Port and Luton, unless the Government relaxed rules forcing manufacturers to sell a certain proportion of EVs.
Mike Hawes, chief executive of the SMMT, said: “Massive change is underway in the UK’s car factories as manufacturers retool for new electric models.
“Amid strong international competition for green automotive investment, however, the UK needs to ensure it has the most attractive conditions for manufacturing businesses and a compelling offer for existing and new investors.”
08:58 AM BST
Sweden hints at lower borrowing costs as it holds interest rates at 3.75pc
Sweden’s central bank said that interest rates could be cut two or three times in the second half of the year as the tide turns in its battle against inflation.
The Riksbank held its key interest rate at 3.75pc as expected, after surprising markets in May when it cut the policy rate for the first time in eight years.
It said in a statement:
Given that inflation is fundamentally developing favourably, economic activity is assessed to be somewhat weaker, and the krona exchange rate is a little stronger, the forecast for the policy rate has been adjusted down somewhat.
If inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year.
08:41 AM BST
DS Smith gains as obstacle to takeover removed
Shares in packaging company DS Smith have risen by 6.6pc after paper maker Suzano ended its pursuit of International Paper, clearing an obstacle to a takeover.
International Paper, the world’s largest paper company, had said it would pursue a London stock market float if its £5.7bn takeover of Amazon packaging firm DS Smith goes ahead.
It won a bidding war with rival suitor Mondi for DS Smith, but the deal risked being derailed when Suzano made a takeover bid for International Paper.
However, on Tuesday, Suzano walked away from the deal.
08:31 AM BST
H&M shares sink after June sales warning
H&M shares dropped by the most in six month after it warned that sales in the summer were weaker than expected.
The clothing retailer’s shares tanked by as much as 14pc in Stockholm after it said that sales in June probably fell by about 6pc compared to last year after blamed the bad weather swept much of Europe.
RBC Capital said that trading in June had been “a little softer” than hoped, while Citi said H&M appeared cautious about its ability to hit its underlying profit margins.
The slump comes despite it increasing second quarter profits by 52pc.
08:22 AM BST
GSK shares plunge after US ruling on RSV vaccine
More than £4.5bn was wiped off the value of GSK as trading began after a US committee ruling restricting use of its RSV vaccine.
The drugs giant’s shares slumped 7.2pc after the US Advisor Committee on Immunisation Practices said that all adults over 75 should only receive a single dose of the treatment.
The committee also voted that those aged 60 to 74 who are at severe risk of RSV should only get a single dose, restricting the size of the market for GSK.
RSV, or respiratory syncytial virus, causes infections of the lungs and respiratory tract.
08:10 AM BST
UK markets subdued ahead of US inflation
UK markets were muted at the open as investors were reluctant to make big bets ahead of a key inflation reading in the US due on Friday.
The FTSE 100 was down 0.1pc to 8,220.65 while the midcap FTSE 250 was little changed at 20,293.43.
08:05 AM BST
H&M profits rise as it cuts costs
H&M revealed a jump in profits as it pressed on with efforts to control costs amid fierce competition from fast-fashion rivals such as Zara.
The world’s second biggest fashion retailer said profit after tax rose by 52pc in the second quarter to five billion kronor (£373m).
Chief executive Daniel Ervér said:
We achieved our best results for many years in the second quarter, showing once more the H&M group’s strength and robust financial position, with strong cash flow as well as improved profitability and sales.
We are now raising our ambitions further to strengthen the brand, the customer offering and the shopping experience.
With a focus on our customers, committed colleagues and a faster pace of investment in the second half of the year we see good conditions for continued profitable, long-term and sustainable growth.
07:55 AM BST
Halfords hits skids as consumers buy less cycling kit
Car parts to bicycle retailer Halfords has revealed falling annual profits and warned trading has remained affected by falling demand for bikes, as well as the wet weather during spring.
The group reported a 7.9pc drop in underlying pre-tax profits to £43.1m for the year to March 29.
Including its tyre supply chain business, which it has offloaded as part of an outsourcing deal, statutory pre-tax profits tumbled 45pc to £19.9m.
The group saw like-for-like cycling sales drop 2.8pc, although the wider group saw growth of 5pc thanks to better trading at its Autocentres arm, where sales jumped 10.7pc.
Halfords said trading since the start of the new financial year has “continued to be soft, impacted by low consumer confidence around big ticket, discretionary purchases, and poor spring weather, which has reduced store footfall and affected sales of both cycling and staycation products”.
It cautioned that it expects cycling and consumer tyres market sales by volumes to continue to fall over 2024-25 and to remain broadly flat in motoring servicing and retail motoring products.
07:44 AM BST
Currys reveals rising profits after batting away takeover bids
Currys has revealed rising profits months after it fended off a £757m takeover approach from activist investor Elliott.
The electricals retailer said adjusted pre-tax earnings grew by 10pc to £118m, adding that trading so far this year had been in line with expectations.
However, it reported slower sales over the past year as consumers continued to rein in budgets as they felt the bite from higher living costs.
It reported revenues of £8.5 billion in the year to April 27, down 2pc at constant currency from the prior year.
The retailer generated an overall profit before tax of £28 million after turning around the performance of its struggling Nordics business, which was a significant improvement from the £462m loss it reported the year before.
Currys said its phones and mobile services sold well, but demand for domestic appliances weakened and electronics and computer sales fell more steeply.
Underlying earnings in its UK and Ireland business were down 16pc to £142m.
Elliott Advisors, which also owns bookseller Waterstones, decided in March it would not make another offer for Currys after previous bids had been rejected.
Currys said the bids “significantly undervalued” the company.
07:22 AM BST
Watches of Switzerland hopeful that good times are returning
Britain’s largest Rolex retailer said it remained “cautiously optimistic” about the year ahead despite revealing a fall in profits as spending on luxury items dried up.
Watches of Switzerland revealed underlying profits fell 11pc to £179m in the year to April 28 but this was better than analysts had expected.
Revenues of £1.5bn were up 2pc on a constant currency basis, although they were down across the UK and Europe after “significant” price increases.
Chief executive Brian Duffy said these came at a time “of reduced consumer confidence influencing discretionary spending”, which he expects to ease this year.
US revenues increased by 11pc on a constant currency basis to £692m and it has a series of new showrooms planned on both sides of the Atlantic, including a new “flagship Rolex boutique” on Old Bond Street in London.
Mr Duffy said:
I am proud of the performance that our team delivered this year in what was undoubtedly a more challenging market.
We cemented our position as a leading international luxury watch and jewellery retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model.
07:07 AM BST
Job vacancies slip below pre-pandemic levels for first time in UK
Job openings have plunged by a fifth over the past year, signalling a rapidly cooling labour market that will boost hopes of interest rate cuts.
Jobseekers now face far less choice than in recent years following a sharp reversal of the post-pandemic boom in openings, data from Indeed shows.
The number of available roles on the online jobs platform has even dipped below its pre-Covid level for the first time since the end of lockdowns in spring 2021.
However, the weakening job market may be welcomed by weary mortgage holders.
The figures mark a significant turning point that could assuage fears among the Bank of England’s rate-setters that a tight labour market is fuelling persistent inflation.
Traders currently place a two in three chance that Threadneedle Street will embark on the first reduction in August to bring rates down from a 16-year-high of 5.25pc.
Jack Kennedy, economist at Indeed, said the UK’s slowdown in hiring has been far more pronounced than in other similar countries.
Mr Kennedy said: “The UK does stand out as the only large economy where postings are actually below pre-pandemic. There is a bit of employer caution. It will be interesting to see after the election whether that changes.”
Job postings in the UK dropped below the pre-Covid level for the first time in late May and are now 1pc lower.
Among the six large European or North American countries Indeed tracks, the UK is the only one where advertised roles have slipped below pre-pandemic levels.
In France, openings are still 43pc higher, while in Germany and the US the figures are 39pc and 12pc higher respectively. In Ireland, they remain 18pc higher and in Canada 1pc.
However, Mr Kennedy noted: “We do see pockets, particularly in low-paid sectors, where hiring remains somewhat challenging.”
Job adverts have plunged by 71pc from their peak in March 2022.
07:00 AM BST
Good morning
Thanks for joining us. The number of job postings has fallen by 20pc over the last year, a new report shows, paving the way for the Bank of England to begin cutting interest rates.
Job postings in the UK dropped below the pre-Covid level for the first time in late May and are now 1pc lower, data from Indeed shows.
5 things to start your day
1) Labour’s ban on late-night work emails risks lower pay, warns IFS | Plans for ‘right to switch off’ could raise costs for businesses, finds think tank
2) Hollywood theme park in Bedford promises £50bn boost to Britain | Universal Studios claims 20,000 jobs could be created by its first tourist attraction in Europe
3) How the Bank of England could hand Starmer a £11bn windfall | Labour’s financial firepower stands to benefit from a simple change to the bond-selling process
4) Porsche seized as police raid former Selfridges tycoon’s mansion | Fraud investigators take assets following collapse of Rene Benko’s company Signa
5) Matthew Lynn: This is the EU ancien regime’s last, contemptible hurrah | The bloc is about to be consumed on three fronts, and has no idea how to prevent it
What happened overnight
Asian shares fell and bond yields spiked amid nervousness about inflation overnight
The yen’s slide past 160-per-dollar had currency traders bracing for Japan to step in and steady it.
The dollar hit six-week highs against the pound as markets became jittery.
Shares in bellwether chipmaker Micron Technology slid 8pc in US after-hours trade as it met rather than topped lofty revenue expectations.
Stock markets fell more than 1pc in Tokyo, Hong Kong and Sydney.
The Dow Jones Industrial Average fell 128.53 points, or 0.3pc, to 38,981.88, the S&P 500 lost 10.58 points, or 0.2pc, to 5,458.72 and the Nasdaq Composite gained 24.56 points, or 0.1pc, to 17,740.55.
Yields on US Treasury bonds rose amid a pick up in inflation in other countries, with Australian consumer inflation accelerating to a six-month high in May. The yield on benchmark 10-year US Treasury bonds rose to 4.312pc, from 4.238pc late on Tuesday.