Bank of England keeps interest rates at 5.25% but hints at a June cut

Policymakers say they want to see more evidence that price pressures are easing before cutting rates

• Business – live

The Bank of England has signalled it could start cutting interest rates as early as June after inflation was found to be “moving in the right direction”, as it kept borrowing costs on hold at 5.25% for the sixth time in a row.

Alongside the decision to keep rates on hold, the Bank said inflation was already on course to hit its target of 2% and would fall to just 1.6% in two years, opening the door to future cuts in interests.

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‘Unfair banking’ and ‘damaging’ financial rules harming UK’s small firms, MPs warn

Treasury committee says ‘debanking’ and use of personal guarantees for loans is putting small businesses at risk

Unfair banking practices and “damaging” financial regulators are harming small businesses and putting innovation and growth at risk, parliament’s Treasury committee has warned.

A report from the committee’s inquiry into access to finance for small and medium-sized enterprises (SMEs) said a lack of supportive policies were compounding problems for firms that had survived a “torrid” five years, which included the global pandemic and energy crisis.

“Confidence amongst SMEs in accessing finance has fallen and acceptance rates for business credit has lowered significantly,” the report said.

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MP calls Royal Mail delivery cuts a ‘slap in the face for families’ – as it happened

Live, rolling coverage of business, economics and financial markets as UK postal service says it wants to cut 1,000 jobs and cut delivery days

The question on economists’ lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?

The ECB’s rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.

While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde’s own words: “we will know a little more in April, but we will know a lot more in June”.

Christine Lagarde’s previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.

The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.

Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.

A still-low unemployment rate doesn’t necessarily mean wage growth will remain at today’s highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers’ negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it.

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Jump in domestic orders ends two-year UK manufacturing dip

Output improves to 20-month high and job losses slow but global problems continue to restrict foreign orders

A jump in domestic orders helped pull UK factories out of almost two years of contraction last month, according to a leading business survey.

Output from the manufacturing sector improved to a 20-month high in March, marking the end of a period of shrinking activity that started in July 2022.

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Blow for Sunak as revised figures confirm UK did go into recession last year

Latest estimate from ONS says GDP declined by 0.3% in final quarter of 2023

Official figures have confirmed that the UK economy went into recession at the end of last year, after the latest estimate found it contracted in the last two quarters of 2023.

In a blow to the government’s economic standing, the Office for National Statistics (ONS) said the economy, as measured by gross domestic product, shrank by 0.3% in the last three months of the year, unrevised from an earlier estimate.

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UK government borrowing higher than expected in February

Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole

Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.

The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.

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Tory party fined £10,750 by Electoral Commission for not accurately reporting non-cash donations – UK politics live

Donations were related to an employee seconded to the party by a donor

The Conservative party has been fined £10,750 by the Electoral Commission for failing to accurately report non-cash donations worth more than £200,000.

The donations related to an employee who had been seconded to the party by a donor. The commission said:

The party under-reported non-cash donations, in the form of an employee seconded to the party by a donor between April 2020 to December 2023. The non-cash donations were under reported by more than £200,000, when the seconded employee went from part-time to full-time work at the party.

The party also reported late a single non-cash donation relating to the same seconded employee, in December 2023.

Our investigation into the Conservative and Unionist Party found a number of donations inaccurately reported or reported late. The political finance laws we enforce are there to ensure transparency in how parties are funded and to increase public confidence in our system, so it’s important donations are fully and clearly reported.

Where we find offences, we carefully consider the circumstances before deciding whether to impose a sanction. We take into account a range of factors before making our final decision, including proportionality.

Penny Mordaunt is not going to become the leader of the Conservative party with a coronation. That idea is inconceivable.

In defence of Rishi Sunak, it is quite hard for a leader to be, at this stage in his leadership, significantly more popular than the party, because the two get quite closely identified and the Conservative party’s popularity fell before Rishi Sunak did, so I wouldn’t hold him personally responsible.

I think we’ve been in office for a long time, and I agree with you that the changes of leadership didn’t help. I was not in favour of removing Boris Johnson, as you may remember, but that has happened and parties need to deal with the current situation, not what might have been.

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UK mothers earned £4.44 less an hour than fathers in 2023, finds analysis

‘Motherhood penalty’ appears to be worsening, with pay gap for median hourly pay growing by 93p an hour since 2020

The “motherhood penalty” is wreaking havoc on women and the economy, according to campaigners, as fresh analysis reveals that the pay gap between mothers and fathers in the UK has grown by nearly £1 an hour since 2020.

A study of the hourly earnings of mothers and fathers, released on International Women’s Day, found that on average mothers earned 24% less an hour than fathers in 2023 – a “motherhood pay penalty” of £4.44 an hour.

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Sunak warned unfunded axing of national insurance would harm services

Economists say making the policy an election pledge could cost £40bn, which is badly needed for health, education and elsewhere

Rishi Sunak has been warned against fighting an election on an unfunded plan to abolish employee national insurance amid projections the move could blow a £40bn hole in the public finances.

As the pre-election battle on the economy between the Conservatives and Labour intensified, the prime minister was on Thursday under mounting pressure to explain how the measure could be afforded while public services were crumbling.

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Budget 2024: Jeremy Hunt announces 2p cut in national insurance

Chancellor also scraps ‘non-dom’ tax breaks and slashes capital gains on property in pre-election gambit

Jeremy Hunt has announced a 2p national insurance cut in his budget as a pre-election gambit to revive flatlining opinion poll ratings and reboot Britain’s economy from recession.

In what could be the last major economic intervention before voters go to the polls, the chancellor said the government was making progress on its economic priorities and could now help hard-pressed families by permanently lowering certain taxes.

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Put aside differences to focus on growth across UK, Ed Balls tells politicians

Former shadow chancellor is one of the authors of a new academic paper on how to bridge the regional divide

Britain needs a 20-year cross-party consensus to level up the economy and unleash the untapped potential of regions outside London and the south-east, the former Labour shadow chancellor Ed Balls has said.

Balls, one of five co-authors of an academic paper on bridging the UK’s regional divide, said it was vital that Labour and Conservative politicians put aside their differences in order to embed necessary funding and governance reforms.

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Rishi Sunak’s promise to grow the economy ‘in tatters’ as UK enters technical recession – business live

UK economy shrank by 0.3% in October-December, worse than expected, putting UK in a technical recession in a blow to the PM

Net trade, household spending and government consumption all contracted in the final quarter of last year, helping to push the UK economy into a technical recession.

Household expenditure fell by 0.1% in real terms (adjusted for inflation) in Q4 2023, following a downwardly revised fall of 0.9% in Q3, as consumers cut back in the cost of living squeeze.

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More than 47,000 UK businesses on ‘brink of collapse’, warn insolvency experts

25% jump in firms facing ‘critical’ financial distress, with property and construction sectors featuring heavily, says Begbies Traynor

More than 47,000 UK companies are on the brink of collapse after a 25% jump in the number of businesses facing “critical” financial distress in the final three months of 2023, according to a report.

It marks the second consecutive quarter-on-quarter period when critical financial distress has risen by a 25%, the latest “Red Flag” report by insolvency specialists Begbies Traynor found.

Construction (7,849)

Support services (7,096)

Real estate & property services (6,228)

Professional services (4,347)

General retailers (3,133)

Telecoms & IT (2,830)

Health & education (2,719)

Media (1,828)

Financial services (1,373)

Food & drug retailers (1,343)

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Retail slump raises spectre of recession as Hunt looks more Truss-like by the day

Surprise fall in December sales damages chancellor’s claims that UK economy is on right track

The UK economy was probably in recession during the second half of 2023 if the latest retail sales figures are anything to go by.

A surprise 3.2% slump in the level of sales in Great Britain during December appears to show the cost of living crisis was continuing to hurt household finances despite a rise in wages that gave many consumers a bit more spending power.

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UK economy returns to growth amid Black Friday spending lift

GDP rises by 0.3% in November after October decline, with car leasing and video games fuelling bounceback

The UK economy returned to growth in November after a recovery in consumer spending driven by Black Friday sales, with shoppers hunting for bargains as the key Christmas shopping season got under way.

Gross domestic product rose by 0.3% on the month, after a decline of 0.3% in October, according to the Office for National Statistics (ONS). City economists had forecast more modest growth of 0.2%.

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Manufacturers say UK becoming more competitive as global hub, survey finds

Findings show British bosses growing in confidence over sector’s prospects despite ‘headwinds of sustained economic challenges’

Britain’s largest manufacturers believe the UK is increasing its competitiveness as a global hub for manufacturing, despite high energy costs, worker shortages and political instability holding back progress.

In a crunch period for the economy before the general election, the manufacturing trade body Make UK and the accountancy firm PricewaterhouseCoopers said industry bosses were growing more confident about the sector’s prospects, but “headwinds of sustained economic challenges” still remained.

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Labour should make UK leader in wellbeing-informed policy, says peer

Call by economics of happiness expert Richard Layard comes as research agency set up under David Cameron is to be axed in Whitehall cuts

A Labour government should make the UK the world’s first country to make policy based on its impact on wellbeing as well as the economy, one of the world’s leading experts on the economics of happiness has said.

With Keir Starmer in No 10, Downing Street should require Whitehall departments to appraise the potential impact on citizens’ wellbeing when they make funding bids, Richard Layard said. The next chancellor should announce measures of happiness and misery alongside GDP in their annual budget statements, he added.

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How a spring UK budget could fire the starting gun for an early election

UK economic prospects are bleak but an agenda-setting fiscal event such as sweeping tax cuts in March offers another roll of the dice

To grasp the nettle, or wait in the hope that things somehow miraculously improve. This is the choice Rishi Sunak will be weighing for the next general election, as the Conservatives limp towards the finishing line of another challenging year.

After Jeremy Hunt announced the government would hold an earlier than anticipated budget, with a date set for 6 March, the possibility of a poll in May, in the afterglow of some electioneering tax cuts, is clearly being given considerable thought.

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Bank of England keeps interest rates on hold as concern about economy grows

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.

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Jeremy Hunt’s post-Brexit City shake-up is ‘damp squib’, say MPs

Treasury select committee says Edinburgh reforms launched a year ago have had little impact on UK economy

Jeremy Hunt’s post-Brexit City shake-up has been dismissed as a “damp squib” that has had little impact on the UK economy a year after its launch.

The chancellor announced the “bold collection” of policy changes known as the Edinburgh reforms in December 2022 with the claim they would “create jobs, support businesses and power growth across all four nations of the UK”.

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