Lloyds bank profits plunge by 26% as lender prepares for bad loans

Larger-than-forecast drop to £1.5bn in third quarter came despite rising interest rates

Profits at Lloyds Banking Group dropped by 26% in the three months to September, as the UK’s “deteriorating” economic outlook forced it to put aside nearly £670m to protect against potential defaults on loans and mortgages.

Lloyds, which owns Halifax and is the country’s largest mortgage lender, said pre-tax profits had tumbled to £1.5bn in the third quarter, down from £2bn during the same period last year. That was larger than the 9.5% fall to £1.8bn that analysts had predicted.

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Bank of England left in the dark ahead of new interest rate decision

With fiscal statement deferred and mixed government messaging on tax and spending the BoE has little to go on

The Bank of England will next week consider how much to raise interest rates without having received any guidance from the government about its tax and spending policies, after Jeremy Hunt pushed back the date for this year’s “autumn statement”.

Its policymakers meet on 3 November to decide the increase in the cost of borrowing required to tackle a rate of inflation that climbed above 10% in September.

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Wealth taxes could raise £37bn for UK public services, campaigners say

Tax Justice UK calls on Rishi Sunak’s government to introduce five reforms targeting the richest people

Rishi Sunak’s new government could raise up to £37bn to help pay for public services and the energy bills support scheme if it introduced a string of “wealth taxes”, according to tax equality campaigners.

Tax Justice UK called on the government to introduce five tax reforms targeting the very wealthy, who the campaign group said had done “really well financially” during the coronavirus crisis and national lockdowns, rather than seek to save money with further cuts to public services.

Equalising capital gains tax with income tax could raise up to £14bn a year. At present many well-paid people collect their salaries via sole trader or business partnership companies, and can pay capital gains tax at a rate of 20% rather than income tax, which is as high as 45% for earnings over £150,000. CGT also applies to income from renting out a second home, and dividend income on stocks and shares.

Applying national insurance to investment income could raise £8.6bn.

Closing loopholes on inheritance tax could raise £1.4bn.

Scrapping the non-dom regime and taxing their offshore income could generate £3.2bn.

And introducing a 1% tax on super-rich people’s assets over £10m could raise an additional £10bn.

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Tory backer says UK economy is ‘frankly doomed’ without Brexit renegotiation

Guy Hands says Conservatives are putting country ‘on a path to be sick man of Europe’

The billionaire businessman Guy Hands has accused the Conservatives of putting the UK “on a path to be the sick man of Europe”, as he issued a series of stark predictions about what could lie ahead for the post-Brexit economy, including higher taxes and interest rates and fewer social services.

The founder and chair of the private equity firm Terra Firma, a longtime Tory supporter, called for the government to renegotiate Brexit, stating that otherwise the British economy was “frankly doomed”.

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Senior Tories say Boris Johnson’s return as PM would risk party’s death

Boris Johnson and Rishi Sunak hold talks as deadline for nominations approaches on Monday

Senior Tories are engaged in a frantic campaign to stop Boris Johnson staging a dramatic return to Downing Street, with claims he would cause further economic damage and risk “the end of the Conservative party”.

Johnson’s team was claiming on Saturday night that he had privately secured the support of the 100 MPs necessary for entering the race, despite only 55 backing him in public. The assertion was immediately disputed by MPs and rival leadership campaign sources. Johnson released a photo of himself lobbying an MP on the phone, but his allies on Saturday night could not confirm he would officially enter the contest to win back the leadership he was deposed from just months ago.

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UK economic outlook downgraded to ‘negative’ by rating agency

Moody’s say downgrade from ‘stable’ was driven by political instability and high inflation

The UK’s economic outlook has been downgraded from “stable” to “negative” by the rating agency Moody’s because of political instability and high inflation.

Moody’s said the change in outlook was driven by “heightened unpredictability in policymaking amid weaker growth prospects and high inflation” and “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility”.

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One in 7 Britons skipping meals in cost of living crisis, says TUC

UK heading for ‘Victorian levels of poverty’ unless pay and benefits rise with inflation, says union body

One in seven people in the UK are skipping meals or going without food, according to new polling data released by the Trades Union Congress (TUC).

The data from an MRP poll by Opinium reveals that more than half of British people are cutting back on heating, hot water and electricity in the cost of living squeeze, and one in 12 have missed the payment of a household bill.

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UK housebuilder Bellway expects sluggish sales as interest rates rise

Company warns that next 12 months will be tougher, with economy likely to go into recession

The UK housebuilder Bellway has said demand for houses has moderated since the summer and it expects the number of sales to be roughly flat over the next year against a backdrop of rising interest rates and a deteriorating economy.

The company completed a record 11,198 homes in the year to 31 July, up 10.5% on the previous year, as a booming housing market drove £3.5bn of revenues, up 13% and also a record.

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Jeremy Hunt to detail mini-budget U-turn to MPs after Penny Mordaunt insists PM had ‘genuine reason’ for missing Commons question – live

Latest updates: chancellor to make statement after leader of Commons denied PM was hiding under a desk

Judging by what Conservative MPs have been telling journalists in private over the last few days, the consensus (but not unanimous) view among Tories seems to be that Liz Truss will have to be replaced as party leader before the next election. But very few MPs are saying that in public, and Sky’s Tom Larkin, who is running a spreadsheet of Tories calling for Truss’s resignation, has only got three names on it.

Damian Green, the former first secretary of state, was on the Today programme and you would expect him to be on the Larkin list. He is chair of the One Nation Conservatives caucus, the group most horrified by Truss’s experiment with hardline free market ideology. But he insisted that Truss did have the credibility to carry on as PM, despite the fact she is abandoning most of the key tax policies at the heart of her leadership campaign. He explained:

She is a pragmatist - she’s realised that the first budget didn’t work in spectacular fashion, so she’s now taken the sensible view that we will now try something else, and she’s appointed a very sensible chancellor in Jeremy Hunt.

I obviously don’t know what he’s going to say, but clearly what he’s going to do is already beginning to reassure the markets, and I hope will continue to do so afterwards.

Yes, because if she leads us into the next election, that will mean that the next two years have been a lot more successful than the past four weeks have been. That would not only be good for the Conservative party, that would be particularly good for the country as well, so I think everyone would welcome that.

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BAE Systems in middle of dogfight between Saudis and Biden over oil

As the row between the US president and the Gulf kingdom over increasing oil production escalates, the UK arms industry giant may have to choose which of its two lucrative customers to side with

The UK has long had an awkward relationship with Saudi Arabia, but that unholy alliance now faces a stern test. After Joe Biden reacted angrily to the Opec+ decision to cut oil production, workers at BAE Systems’ fighter jet factory at Warton, on the banks of the Ribble in Lancashire, will have an eye on the fallout from the oil cartel’s decision.

The US president had hoped to persuade the world’s largest oil producer to ramp up production in order to lower oil prices, which have fed into surging inflation and fears over a global recession. Biden had been cultivating relations with Saudi Arabia’s de facto ruler, Mohammed bin Salman, illustrated by a fist bump in Jeddah in July. But despite all that, Prince Mohammed defied Biden, with Opec+ opting for a cut in output, a move that was seen as siding with fellow cartel member Russia, helping prop up its arms revenues.

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Five million UK families ‘face mortgage rising by £5,100 a year by end of 2024’

Increase adds up to a £26bn rise for homeowners, says Resolution Foundation thinktank

More than five million families could see their annual mortgage payments rise by an average of £5,100 between now and the end of 2024, heaping fresh pain on households already struggling with higher food and energy bills.

The increase adds up to a £26bn mortgage rise for homeowners, according to the analysis by the Resolution Foundation thinktank which said nearly a fifth of British households would have to spend more on their housing costs by the end of 2024.

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Kwasi Kwarteng reportedly believes Liz Truss ‘only has a few weeks’ – as it happened

Source close to sacked chancellor briefs Times that ‘wagons are still going to circle’ around embattled prime minsiter

The Conservative peer, Ed Vaizey, said he disagreed with the international trade secretary, Greg Hands, who earlier said Kwasi Kwarteng’s early return is not unusual. “It is quite unusual for this to happen,” he said.

Speaking to Sky News, Vaizey said the chancellor cutting his trip to the US short is “not a good sign”. He said:

I’m afraid the chancellor coming back a day early doesn’t fill one with confidence.

The fact that people were speculating about the prime minister’s leadership this early in her premiership is not ideal, but I think he’s just got to bite the bullet. He’s got to try to give the markets confidence in the British economy.

If he can do that then perhaps he can say: ‘Well, I had to do some difficult choices, slightly humiliating choices, but the result is stabilisation and I can move forward.’

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‘Lipstick effect’: Britons turn to small luxuries in cost of living crisis

Strong demand for beauty products such as eyeliners and mascaras, as chocolate and coffee also sell well

The shadow cast by the cost of living crisis has spurred a retreat into small luxuries with Britons cheering themselves up with mood boosters such as luxury lip balms and false nails as well as chocolate and coffee.

The lipstick index, coined by Estée Lauder’s Leonard Lauder, is the idea that sales of affordable luxuries rise in economic downturns. This spending behaviour has been true during previous downturns and the same picture is emerging again as consumers battle severe financial headwinds.

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Another U-turn looms – how much will it save and what else could the chancellor ditch?

Corporation tax plans likely to be latest to be dropped – bad news for Kwarteng’s credibility, but good for his balance sheet

Liz Truss is on the verge of reversing one of the last major pillars of her chancellor’s disastrous September mini-budget.

While Kwasi Kwarteng mingles with finance ministers at the International Monetary Fund gathering in Washington DC, discussions are taking place in London that would see the promise to freeze corporation tax rates binned. There is also speculation about dropping smaller measures including a more generous tax treatment of share dividends. These U-turns would come hard on the heels of the humiliating climbdown on Kwarteng’s promise to scrap the 45p top rate of tax.

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For the love of cars: will steep gas prices stall Democrats’ midterm hopes?

Economy in focus: America has a love affair with cars – but soaring prices are causing a rift. In the midwest, Adam Gabbatt asks voters what they think

The Henry Ford museum, in Dearborn, Michigan, is a tribute to America’s obsession with the motor vehicle.

The sprawling complex, set across 12 acres, is home to early examples of the Ford Model T, the mass-produced, affordable vehicle that set the US on the path of a car-dominant culture, as well as other era-defining vehicles right up to today.

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No 10 warns of ‘difficult decisions’ on public spending despite Truss’s vow to avoid cuts – UK politics live

Statement from No 10 comes straight after PM told MPs she was ‘absolutely’ committed to avoiding public spending cuts

Sajid Javid, the former Tory chancellor, has been speaking at an event organised by the Legatum Institute thinktank this morning. As Chris Smyth from the Times reports, Javid said the turmoil in the markets was caused by the fact that the tax cuts in the mini-budget went “way beyond” what Liz Truss promised during the leadership campaign, and by the fact that her energy bills bailout was also much bigger than expected.

The government has drawn up a plan to cap the unit cost of gas and electricity for two years. Labour proposed its own plan to freeze energy bills, but it only proposed a commitment for six months.

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The Bank of England’s lifeboat is in choppy waters with its bond buying

Pensions hedging crisis shows how the City never seems equipped to handle the next big financial hazard

Pension funds have found themselves embroiled in a byzantine world of exotic financial trading that many of them appear to have badly misunderstood.

On Tuesday, a third rescue mission in little more than a fortnight was announced by the Bank of England, which is reprising its role in the 2008 financial crisis as the City’s lifeboat.

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Pound falls sharply against dollar after Bank confirms bond-buying end date

Sterling falls more than a cent to below $1.10 after Andrew Bailey tells pension firms they have ‘got to get this done’

The pound has fallen sharply against the dollar after Andrew Bailey warned the Bank of England would not extend its emergency intervention in financial markets beyond this week, after the turmoil sparked by the government’s mini-budget.

Sterling skidded by more than a cent against the dollar to below $1.10 after the Bank’s governor insisted the £65bn scheme to purchase UK government bonds would not be continued beyond the deadline on Friday.

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Starmer’s chief of staff to leave job as Labour leader unveils major party shake-up – UK politics live

Latest updates: Labour leader hoping to put party on war footing ahead of next election

In the supreme court Dorothy Bain KC, the lord advocate, the Scottish government’s most senior law officer, is now setting out her case.

Here is the 50-page submission to the court setting our her case that was released in July.

Despite the political context of this reference, the questions the court has to decide are limited to technical questions of law. The court will decide them by applying legal principles.

The court will require time after the hearing to prepare its judgement. The hearing is the tip of the iceberg. We also have more than 8000 pages of written material to consider.

Therefore, as usual, is likely to be some months before we get our judgement.

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Truss overrules Kwarteng Treasury pick in bid to calm markets

Veteran official gets permanent secretary role instead of reformer as fiscal plan is brought forward by three weeks

Liz Truss has overruled Kwasi Kwarteng’s top appointment at the Treasury and handed the role to a veteran Treasury official, one of a series of moves designed to calm markets and backbenchers.

It was also announced that the chancellor will set out plans to shore up the public finances three weeks earlier than planned and publish long-awaited forecasts by the Office for Budget Responsibility at the same time.

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