Forecast-beating drop in November takes rate to lowest level in more than two years
Britain’s two-year cost of living crisis eased last month as cheaper petrol and less expensive food helped send the annual inflation rate sharply lower to 3.9% – its second big monthly fall in succession.
In a much bigger decline than had been anticipated by economists, the annual rate of price rises fell from 4.6% in October to its lowest level since September 2021.
Continue reading...Food prices were 29% higher last month than in September 2021, leaving many households still under pressure
At last, UK inflation has fallen far and fast enough to start to match countries such as France, where the annual rate of price rises has reduced at a faster pace this year.
At 3.9% last month, the headline figure remains almost double the 2% target set for the Bank of England but significantly lower than the 11.1% peak in October last year and below the 5.3% target Rishi Sunak set for the end of 2023.
Continue reading...Interest rates will need to stay high for sufficiently long to return inflation to 2% target
The Bank of England has said Britain is facing a tougher job to crush persistently high inflation than other advanced nations, as it kept interest rates on hold at the highest level since the 2008 financial crisis.
Pushing back against expectations in financial markets for a deep round of interest rate cuts next year, the central bank said there was still a long way to go before it could declare victory on inflation, despite a worsening outlook for the UK’s stagnant economy.
Continue reading...Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next year
The western world’s largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.
In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.
Continue reading...Vacancies declining as growth falters, recruiters’ body tells Bank of England
Britain’s largest recruiters have warned the Bank of England that demand for permanent hiring among UK businesses has plunged at the second fastest rate since the pandemic, amid worsening headwinds for the UK economy.
Ahead of the central bank’s decision on interest rates on 14 December, the Recruitment and Employment Confederation (REC) trade body said lingering economic uncertainty and hesitancy to commit to new hires had weighed on activity in November.
Continue reading...Treasury select committee highlights concerns over data privacy and increased possibility of bank runs
The idea of creating a digital pound should not even be considered until the UK government and Bank of England address concerns over data privacy and the increased risk of bank runs, a parliamentary committee has warned.
MPs on the Treasury select committee said that while it was true that the rollout of a central bank digital currency could trigger fresh innovation and competition in the payments sector, serious questions remained about whether the positive effects outweighed the risks and costs.
Continue reading...Rolling coverage of business as US revises up GDP growth in third quarter to fastest pace of 2023
At lunchtime in the UK and western Europe markets are fairly flat all around.
The UK’s benchmark FTSE 100 has barely moved, although grocery delivery company Ocado is the top gainer, up 4.8%. (An Ocado director buying shares may have helped.) Trainer retailer JD Sports was the second biggest, up 4.5%.
These allegations are false, not true, incorrect, are not accurate. And it’s an attempt to undermine the work of the COP28 presidency,
I promise you, never ever did I see these talking points that they refer to or that I ever even used such talking points in my discussions.
Continue reading...Stance on inflation poses threat to ‘soft landing’ forecast for global economy, says OECD
Continued tough action by central banks to tackle stubborn inflation risks tipping Britain and other developed countries into recession next year, the west’s leading economic thinktank has warned.
The Organisation for Economic Co-operation and Development (OECD) said the chances of policymakers getting it wrong were “pretty high” and posed a threat to its central “soft landing” forecast for the global economy.
Continue reading...Covid tier system introduced in October 2020 and imposed different restrictions on English regions in effort to contain spread of virus. This live blog is closed
At the Covid inquiry Sadiq Khan, the mayor of London, said that he was not getting information from the government in February about Covid. He said he was “disappointed” by that.
In late February and early March he was getting information from other cities around the world instead, he said. He said this happened even though his foreign affairs team consisted of just three people.
The government generally does give us information about a variety of things happening. I’m disappointed the government weren’t giving us information in February about what they knew then.
Continue reading...JP Morgan also approached as Metro reportedly tries to thrash out rescue package with investors
The Bank of England’s regulatory arm is understood to have approached a number of big lenders in the past few days, including NatWest and JP Morgan Chase, to see if they had any interest in the embattled high street rival Metro Bank.
JP Morgan Chase examined a potential bid to take over the whole of Metro after speaking to the Prudential Regulation Authority (PRA) but decided on Saturday night not to go ahead with it, a source said.
Continue reading...Survey of businesses gives further indication that Bank of England could limit future interest rate rises
Businesses are pulling back on hiring and slowing their output under the strain of rising borrowing costs, according to a study that gives a further signal that the Bank of England could limit future interest rate rises.
A modest pickup in manufacturing in August failed to prevent a slowdown in broader UK private sector economic activity, a survey of businesses by the accountancy firm BDO found.
Continue reading...Huw Pill says he prefers longer, more steady use of interest rates of Table Mountain model over sharp rise and fall of Matterhorn approach
Tourist attraction, backdrop to millions of selfies and one of the world’s most easily identifiable landmarks. Cape Town’s Table Mountain is all of these things, but now it has found a new role: as a guide to what will happen to UK interest rates.
For Huw Pill the opportunity was too good to pass up. Invited by South Africa’s central bank to speak at a high-level conference, the Bank of England’s chief economist said there were two ways for Threadneedle Street to bring UK inflation back to the government’s 2% target.
Continue reading...Economic experts say it will take until third quarter of 2024 for output to return to pre-pandemic peak
Rishi Sunak will fight the next election against a backdrop of an economy suffering from five years of lost growth and a widening of the gap between the prosperous and less well off parts of Britain, a leading thinktank said on Wednesday.
The National Institute of Economic and Social Research (NIESR) said it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak and that there was a 60% risk of the government going to the polls during a recession.
Continue reading...Farmers warn wheat, oilseed rape, potatoes and other crops have been affected after wettest July on record
UK farmers have warned that harvests of wheat, oilseed rape, potatoes and other crops have been hit by the cool, wet summer, raising fears of further food price inflation.
The wettest July on record for parts of the UK risks colliding with rising prices of essential ingredients on global markets due to the ongoing conflict in Ukraine and unpredictable weather affecting harvests from southern Europe to China.
Continue reading...Rise to 5.25% comes as no surprise but Bank of England’s language will frighten many
If it isn’t hurting it isn’t working. That was the message from John Major, then chancellor, in 1989 during a previous period when interest rates were being used to combat high inflation. And it was the message rammed home by the Bank of England on Thursday.
Any hard-pressed households or struggling business looking for comfort from Threadneedle Street would have been disappointed by news that the pain will continue and is likely to intensify. Interest rates may not yet have peaked.
Continue reading...Policymakers vote for quarter-point rise to 5.25% – the 14th hike in a row – but BoE rules out prospect of recession
The Bank of England has warned businesses and households that the cost of borrowing will remain high for at least the next two years as it raised interest rates for the 14th consecutive time to 5.25%.
Ruling out the likelihood of a recession over the next two years, policymakers blamed strong wages growth in recent months for the need to increase interest rates by 0.25 percentage points to the highest level for 15 years.
Continue reading...Unions say widespread job losses in recent months have left UK ‘teetering on the brink of recession’
The TUC has urged the Bank of England to call a halt to interest rate increases after warning that widespread job losses in recent months have left the UK “teetering on the brink of recession”.
Employment had fallen in more than half of Britain’s 20 industrial sectors in the three months to June, the union body said as it predicted a fresh increase in the cost of borrowing would put tens of thousands more livelihoods at risk.
Continue reading...US Fed will also have to raise rates more aggressively than forecast, says Washington-based body
Interest rates in the UK will need to stay higher for longer than previously forecast in order to tackle stubbornly high inflation, the International Monetary Fund has warned.
The IMF’s regular update on the state of the global economy singled out the US Federal Reserve and the Bank of England as two central banks that will need to raise official borrowing costs more aggressively than it assumed only three months ago.
Continue reading...UK economy became reliant on cheap money due to the Bank’s actions, warns former permanent secretary to the Treasury
The Bank of England’s quantitative easing money-printing programme enabled high inflation to take root in Britain, while creating “windfall gains” for the rich, a former Treasury mandarin has warned.
Nick Macpherson, who was permanent secretary to the Treasury under the last Labour government and during David Cameron’s premiership, said the central bank’s £895bn bond-buying stimulus programme had gone “too far” and made the inflation shock hitting Britain worse.
Continue reading...Anguished families talk about how the Bank of England’s 13th consecutive interest hike is affecting them – and their fears for the future
Liam, 36, a senior IT manager and married father-of-one from Newcastle upon Tyne, is one of millions of homeowners whose mortgage payments will rise even higher after the Bank of England on Thursday put up the base interest rate to 5% – a 15-year high.
Together with his husband, Liam bought his four-bedroom house in 2019 for £269k, and the couple’s three-year mortgage deal, refixed at 1.64% in 2020 just before the first lockdown, expired in March.
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