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House prices in Germany dropped by a record 10.2pc in the third quarter in a further sign of the struggles faced by Europe’s largest economy since the pandemic.
It was the fourth consecutive quarter of declines compared to the same time a year earlier, and the biggest since Germany’s statistics office began keeping records in the year 2000.
The drop comes amid the biggest property crisis in decades in Europe’s largest economy.
Konstantin Kholodilin of the German Institute for Economic Research said: “Until 2022, there was a speculative price bubble in Germany, one of the biggest in the last 50 years.
“Prices have been falling ever since. The bubble has burst.”
For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand strong.
But a sharp rise in rates and costs has put an end to the run, tipping developers into insolvency as bank financing dries up and deals freeze.
It comes as official data showed Germany is the worst performing G7 economy since the pandemic, growing by just 0.3pc.
Britain slipped back behind France to be the next worst performer after downward revisions to growth left the UK on the brink of recession.
Read the latest updates below.
06:01 PM GMT
Happy Christmas – and see you next year
Thanks for joining Chris, me and our team of contributing reporters this year on the Markets live blog.
Christmas cake beckons, so we’ll be back in the New Year blogging breaking business news. We really appreciate your views in the vibrant comment section and look forward to writing for you in 2024.
In the meantime, I’ll leave you with some of the latest headlines from The Telegraph’s wider Business section:
05:33 PM GMT
Tesla doubles down on battery manufacturing in China
Elon Musk’s Tesla has signed a deal today to acquire land for a new factory in Shanghai, after the world’s second-largest economy struggles experienced a 10pc drop in foreign investment in the first 11 months of the year.
Construction of the factory is expected to start early next year with production to come on line by the end of the year, the Xinhua News Agency said.
The factory will not build batteries for cars but for energy companies companies to store power. These are increasingly important with the growth in solar power and wind energy, which only generate electricity when weather conditions are favorable and need to store it for when residential and commercial users need it.
05:25 PM GMT
Warren Buffett-backed BYD opts for European factory
The Chinese electric vehicle manufacturer backed by Warren Buffett is to build a car factory in Hungary, the company has said, as it plans to ram up its market share in Europe.
With the new factory, the rival of Tesla “hopes to accelerate the entry of new energy passenger vehicles into the European market, further deepen (the firm’s) global layout, and actively promote the green transformation of the global energy structure”, it said on Chinese social media, according to AFP.
Mr Buffett’s Berkshire Hathaway originally bought into BYD stake in 2008, but has been selling down his stake from a reported 21pc in late 2021 to under 8pc by the end of November.
Mr Buffett told CNBC in April that he had been selling shares in BYD because of the valuation of his stake had become around $6.5bn, saying “I think it’s an extraordinary company … we haven’t sold all our BYD by a long shot. We are not in a hurry to sell it.”
05:09 PM GMT
Retailers put hopes on a last-minute Christmas shopping
Retailers are hoping for a “last minute dash” from shoppers after some disappointing sales figures in recent months.
It comes after gloomy data was released by the CBI suggesting that retailers have endured eight consecutive months of year-on-year sales going down.
But the latest data from the ONS suggests that November might actually have seen some green shoots.
Darren Morgan, of the ONS, said:
Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend. However, with the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.
The trade body representing major retailers nonetheless struck an upbeat note. Helen Dickinson, chief executive of the British Retail Consortium, said:
Many retailers tried to give sales a needed boost in November by starting their Black Friday sales even earlier this year. Cosmetics and toiletries had another strong month as consumers continued to splurge on smaller indulgences.
Retailers anticipate that consumers will be making a last-minute dash to their favourite stores in the final days leading up to Christmas.
04:49 PM GMT
Footsie closes in the green
The FTSE 100 was up 2.78pc today. Lloyds Banking Group was the biggest riser, up 1.81pc, followed by investment fund Pershing Square, up 1.73pc. The biggest faller was JD Sports, down 5.15pc, followed by Ocado, down 4.25pc.
Meanwhile, the FTSE 250 rose 0.31pc, with PureTech Health leading the pack, up 20.95pc, followed by Harbour Energy, up 5.82pc. Industrial refractory business RHI Magnesita fell 4.55pc, followed by industrial thread company Coats Group, down 3.68pc.
04:44 PM GMT
Lionsgate to spin off studio business
Lionsgate will spin off its studio unit – famous for the John Wick and Hunger Games films – into a a so-called “blank cheque” company listed on Nasdaq.
The studio business is to be marged into Screaming Eagle Acquisition Corp, a special purpose-acquisition company (Spac) to create a listed company representing Lionsgate’s television and film assets that include a vast back catalogue.
The existing Lionsgate, officially known as the Lions Gate Entertainment Corporation, is listed on the New York Stock Exchange and will retail its pay-for cable and satellite channels, according to reports.
Lions Gate Entertainment Corporation will gain £350m from the split and retain 87.3pc of the Spac, which is expected to be renamed Lionsgate Studios.
04:30 PM GMT
Bristol Myers Squibb plans £11bn takeover of schizophrenia drug developer
Pharmaceutical giant Bristol Myers Squibb will acquire drugmaker Karuna Therapeutics for $14bn (£11bn), the two American companies announced this afternoon.
Bristol will gain Karuna’s experimental drug KarXT, which has the potential to be a game changing medicine to treat schizophrenia, Alzheimer’s disease and bipolar disorder.
Bristol chief Christopher Boerner said: “We expect KarXT to enhance our growth through the late 2020s and into the next decade.”
KarXT could hit the market for schizophrenia treatment as soon as September, depending on regulatory approvals.
Meanwhile, clinical trials for Alzheimer’s treatment are underway, with data expected by 2026.
04:20 PM GMT
North Sea oil giant Equinor hit by advertising ban over ‘misleading’ climate claims
An advert for North Sea oil giant Equinor has been banned by regulators over “misleading” environmental claims. Our reporter James Warrington has the details:
The Advertising Standards Authority (ASA) censured Equinor over an ad that suggested wind and carbon capture played a balanced role in the company’s energy output when oil and gas still make up the vast majority of its business.
The ruling applied to an advert in The Economist in June, which said that “wind, oil, gas, carbon capture and new jobs” were “all part of the broader energy picture”.
In September, Equinor secured approval to develop Britain’s largest untapped oil field in the North Sea, sparking fury from environmental activists.
In response to the ruling, the state-owned Norwegian company said the advert was aimed at politicians, advisers and journalists, rather than the general public.
The company added that the words “oil” and “gas” featured prominently in the advert and that text at the bottom said that it was “producing the oil and gas the UK needs now”.
The advert also featured a picture of a worker on an oil rig.
But in its ruling, the ASA argued that the ad would be seen by consumer and business readers, as well as decision-makers.
It said the ads were “likely to mislead” after omitting “significant information”.
A spokesman for Equinor said: “We respect, but are disappointed by, the ruling of the Advertising Standards Authority Council. We will take note of it for future campaigns.”
04:14 PM GMT
US dollar drops amid expectations of a March interest rate cut
The dollar fell on Friday, hitting a nearly five-month low against a range of other countries after data showed annual American inflation slowed further in November. This had the effect of cementing market expectations for a US interest rate cut next March.
Inflation in the US was just 2pc in the third quarter of 2023 according to new figures.
In the 12 months to November, inflation stood at 2.6pc, down from 2.9pc in October.
Stuart Cole, chief macro economist at Equiti Capital, explained:
The market will view the data as very much adding weight to the Fed’s recent tilt towards an easier monetary stance.
This is the Fed’s preferred measure of inflationary pressures, so if you take into account the fact that some of the effect of the tightening delivered to date is still to be felt, then I think the FOMC may well be starting to privately feel that it’s job done as regards getting inflation back under control.
04:06 PM GMT
Major London workspace company BE Offices goes into administration
BE Offices, which provides “all-inclusive, inspirational office space solutions” across London and in Birmingham, Belfast and Southampton, has gone into administration, according to a report.
It has previously been in a voluntary arrangement with creditors.
The company was not answering its main telephone line this afternoon.
It follows the collapse of WeWork, which entered Chapter 11 bankruptcy protection in the United States, after its model of taking out long-term leases and selling on fashionable space with office buildings on a short-term basis came unstuck.
03:54 PM GMT
High interest rates are cooling the American housing market
Sales of new American homes cooled more than anticipated in November, slipping to the lowest level in a year, according to official data that lends further support to the growing consensus that the Fed will soon start cutting interest.
The market for new properties has been boosted in recent months by a lack of existing homes, as high mortgage rates dissuaded homeowners – who previously locked in lower rates – from putting their houses up for sale.
Last month, sales of new single-family houses came in at a seasonally adjusted annual rate of 590,000, around 12 percent below October’s figure, the US Commerce Department said. This was slightly above November 2022’s pace of 582,000, however.
While the latest weakness appears to reflect elevated mortgage rates earlier in the year, rates have since come down.
03:44 PM GMT
China’s stock market drops further in strong year for American shares
If you’re worried about growth in the FTSE 100, spare a thought for what’s happening in China.
The Nasdaq Golden Dragon China Index, which tracks listed companies based in China but with shares traded in the US, is down more than 11pc in 2023. This has occurred in a year where the Nasdaq Composite index (heavily skewed towards American technology firms) is up 45pc.
Today that Chinese index has dropped 2.4pc, prompting Rajeev De Mello, a fund manager at the Geneva-based GAMA Asset Management, to tell Bloomberg: “In a way it is a fitting end for a year that has severely disappointed China bulls. The performance gap between US and China equities is staggering.”
03:30 PM GMT
Handing over
I’m heading off for the festive holidays so I’ll take this opportunity to wish you a very happy Christmas.
Fear not, though, as Alex Singleton will be doing his best Santa impression as he delivers you little presents of news as they arise.
Speaking of which, I need to grab a few last gifts before the big day, much like these shoppers bustling around Covent Garden in London today:
03:09 PM GMT
Guardian staff fear for their pets in work from home crackdown
A staff revolt is looming at The Guardian over the newspaper’s return to the office amid concerns the new policy will give some workers less time to spend with their pets.
Our reporter James Warrington has the details:
Bosses have told staff they must come into the office for a minimum of three days a week from January after many failed to return following the pandemic.
But the mandate has been met with anger by the National Union of Journalists (NUJ), which has asked members for their views on the issue.
In a survey distributed earlier this month, Guardian staff were asked how much they agreed with various statements about the impact of returning to the office.
These ranged from concerns about the financial impact of commuting, to issues around work-life balance and distractions in the office.
Read how the Guardian has been plunged into in-fighting over the policy.
02:54 PM GMT
Tesla ‘suspension failure’ claims investigated by Swedish regulators
Swedish regulators are investigating alleged suspension failures in Tesla cars in a probe similar to that of neighbouring Norway’s traffic safety regulator.
The country’s Transport Agency told Reuters “that investigative work is also underway with us”.
A spokesperson for the Swedish regulator declined to comment on details of the probe as it was still ongoing.
The Norwegian Public Roads Administration (NPRA) on Thursday said it started questioning Tesla in September 2022 and asked the carmaker to assess consumer complaints about lower rear control arms breaking on its Model S and X vehicles.
The Norwegian agency could recommend that Tesla recall the vehicles to replace the parts if it determines they pose a “serious risk.”
However, it could also close the review if there is no safety issue or decide to extend the investigation.
02:37 PM GMT
Wall Street gains after inflation falls
The S&P 500 and the Nasdaq opened higher after a key US inflation reading came in softer than expected, boosting recent investor optimism that the Federal Reserve could lower borrowing costs next year.
The Dow Jones Industrial Average fell 55.08 points, or 0.2pc, at the open to 37,349.27.
The S&P 500 opened higher by 7.17 points, or 0.2pc, at 4,753.92, while the Nasdaq Composite gained 42.31 points, or 0.3pc, to 15,006.18 at the opening bell.
01:50 PM GMT
US inflation falls faster than expected
A measure of inflation favoured by the US Federal Reserve weakened by more than expected in November amid lower energy prices, government data showed, providing further reassurance to policymakers about a slowdown in price rises.
The personal consumption expenditures (PCE) price index rose 2.6pc from a year ago in November, markedly below October’s 2.9pc figure, the Department of Commerce said.
Compared with a month ago, the index decreased 0.1pc, on the back of a slump in energy prices and lower food costs.
With the volatile food and energy segments removed, “core” PCE inflation cooled to an annual rate of 3.2pc, down slightly from October as well.
This adds to data indicating that inflation is coming down as the Fed holds interest rates steady at a 22-year high in a bid to firmly lower inflation back to its long-term 2pc target.
With consumption and the jobs market remaining relatively resilient, hopes of a so-called “soft landing” – where inflation comes down without triggering a damaging recession – have risen.
12:40 PM GMT
UK markets close flat as Britain at risk of recession
The FTSE 100 has closed early for the Christmas holiday, with Britain’s blue-chip index ending the shorter day little changed at 7,697.51.
The midcap FTSE 250 ended the day 0.1pc higher at 19,598.24 amid strong retail sales data for November, although gains were held back by data showing the UK economy is at risk of recession.
Meanwhile, the pound has risen 0.3pc against the dollar to move well above $1.27.
Brent crude in London has dipped to be flat on the day at just below $80 a barrel.
12:07 PM GMT
Wall Street poised to fall ahead of inflation figures
US stock markets have dipped ahead of the opening bell as investors await a key inflation report.
The personal consumption expenditure data – the Fed’s preferred inflation gauge – could test an eight-week long rally on Wall Street driven by optimism that the Federal Reserve could lower interest rates next year.
Economists expect the price index to show a 2.8pc rise on an annual basis in November, softening from a 3pc increase the month before.
Core prices, excluding volatile items like food and energy, are expected to have risen by 3.3pc last month, compared with 3.5pc growth in October.
The S&P 500 and the Nasdaq finished over 1pc higher on Thursday after data signaled third-quarter US economic growth was not as robust as originally stated, aiding hopes that the Fed could reduce borrowing costs next year.
All three indexes are poised for their eighth-straight week in the green, with the S&P 500 set for its longest weekly winning streak since 2017, and the Nasdaq and the Dow since 2019.
Meanwhile, Nike plunged 11.9pc before the bell after the sports-wear maker trimmed its annual sales forecast blaming cautious consumer spending, a weaker online business and more promotions, and said it plans to cut supplies of key product lines to manage costs.
In premarket trading, the Dow Jones Industrial Average was down 0.3pc, the S&P 500 was little changed and the Nasdaq 100 slipped by 0.1pc.
11:48 AM GMT
Wholesale gas holds stead amid Red Sea turmoil
Gas prices are little changed despite the ongoing attacks in the Red Sea on vessels heading through the vital trade route.
European benchmark contracts remained around €34 per megawatt hour, while the UK equivalent was static at about 85p per therm.
Prices had ticked higher after the attacks by Yemeni militants on transports through the Red Sea.
However, contracts have slumped by about a quarter over the last month as European supplies hold up. A mild winter so far has subdued demand.
11:26 AM GMT
Rail fares to increase by up to 4.9pc next year
Regulated rail fares in England will increase by up to 4.9pc from March 3 next year, the Department for Transport has said.
July’s RPI measure of inflation, which is traditionally used to determine annual fare rises, was 9pc. The previous cap on increases in regulated fares was 5.9pc.
Transport Secretary Mark Harper said:
Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.
Changed working patterns after the pandemic mean that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.
We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.
11:23 AM GMT
Unilever snaps up haircare brand K18
Unilever has agreed to buy fast-growing premium haircare brand K18 as it continues to shake up its stable of brands.
The deal, for an undisclosed sum, comes after Unilever sold off some of its weaker performing brands in recent months.
Earlier this week, the consumer giant announced it will sell a group of more than 20 brands including Timotei shampoo and Impulse body spray to private equity firm Yellow Wood Partners.
The company also sold off its Dollar Shave Club business in October.
K18 meanwhile is a rapidly growing business specialising in hair masks and other products to address hair damage, with celebrity fans including Hailey Bieber and Selena Gomez.
The brand, which was founded in 2020 by Suveen Sahib and Britta Cox, has been buoyed by surging popularity through social media, recording around 20 billion TikTok views.
11:01 AM GMT
Bank of England rate setter hints at shift on interest rates
One of the Bank of England’s most hawkish policymakers has signalled he may be ready to shift his stance on interest rates if inflation continues to cool.
Prof Jonathan Haskel, one of a minority of Monetary Policy Committee members who pushed for rate hikes at recent meetings, tweeted that there was “news” in the latest inflation report, which showed the consumer prices index eased from 4.6pc to 3.9pc in November.
The Imperial College Business School professor said that the fall in services inflation, which strips out volatile factors like air fares, seemed more “broadly based” than in previous months.
However, he insisted that he would not shift his stance “based on one month data”.
Personal view of the Nov CPI release and commentary: 1/3
1. News in latest data? Yes.
2. News in previous months that was ignored? IMHO, no.Evidence. Chart based on ONS data shows service sector inflation with and without “erratics” (flagged in Dec minutes para 32) pic.twitter.com/nehu8754Y3
— Jonathan Haskel (@haskelecon) December 21, 2023
2/3. My view.
a. Service inflation excluding erratics better indication of underlying pressure than headline.
b. Svc inflation has been falling.
c. But svc_excluding, up to now, hardly falling. Tight policy judgement correct.
d. Latest obs broadly based = news.— Jonathan Haskel (@haskelecon) December 21, 2023
3/3. Additional point: I wouldn’t want to make policy based on one month data.
(End)— Jonathan Haskel (@haskelecon) December 21, 2023
10:17 AM GMT
Pound edges higher after retail sales improve
The pound has shifted higher after official figures showed better than expected retail sales in November.
Sterling was up 0.1pc against the dollar to tip back above $1.27 after a sharp fall in inflation earlier this week sent its value lower amid increased bets on the Bank of England cutting interest rates.
However, the pound was held back by official data showing Britain’s economy is teetering on the edge of recession.
Sterling has risen 0.1pc against the euro to 86p.
09:58 AM GMT
Oil prices push higher after Red Sea attacks
Oil extended its biggest weekly advance in two months as fresh attacks in the Red Sea prompted hundreds of ships to opt for safer but longer routes.
Global benchmark Brent traded 1pc higher above $80 a barrel and is set for a second straight weekly gain after a string of seven declines. US-produced West Texas Intermediate rose 1.2pc above $74 a barrel.
Freight rates have soared as more ships take extensive and costly detours – mostly around the southern coast of Africa – to avoid the risk of sailing through the Suez Canal and Red Sea.
Iran-backed Houthi rebels in Yemen have been targeting everything from oil tankers to container vessels.
Meanwhile, Angola announced on Thursday that it was leaving the Opec oil cartel, shrinking the group to 12 nations.
09:34 AM GMT
China gaming stocks in £63bn rout after regulator crackdown
The world’s largest gaming company led an $80bn (£63bn) sell-off in stocks in the sector after Chinese regulators announced a wide range of rules aimed at curbing spending and rewards that encourage video games.
Tencent shares plunged as much as 16pc at one point while those of its closest rival, NetEase, plunged as much as 25pc after the draft rules were published.
Online games will now be banned from giving players rewards if they log in every day, if they spend on the game for the first time or if they spend several times on the game consecutively. All are common incentive mechanisms in online games.
The new rules, which will effectively set spending limits for online games, sparked panic among investors.
Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong, said:
It’s not necessarily the regulation itself – it’s the policy risk that’s too high.
People had thought this kind of risk should have been over and had started to look at fundamentals again. It hurts confidence a lot.
09:21 AM GMT
Long queues after strikes hit Christmas getaway
Christmas getaway disruption is continuing with long queues for cross-Channel journeys, motorway closures and train cancellations.
The Port of Dover in Kent said it is taking about 90 minutes to process cars with pre-booked tickets.
It attributed the delay to a surge in demand for ferries after the Channel Tunnel rail link was closed on Thursday due to unscheduled industrial action by French workers, which ruined the travel plans of tens of thousands of people.
Eurostar, which operates passenger services to and from London St Pancras, said it will operate two extra services per day between London and Paris up to and including Christmas Eve to help people whose trains were cancelled on Thursday.
Vehicle-carrying train service Eurotunnel said it is running its usual timetable but is only accepting customers who have pre-booked.
The M20 motorway in Kent remains closed in the coastbound direction between junctions 8 and 9 due to Operation Brock, which involves organising a queue for freight traffic during disruption to cross-Channel services.
National Highways said this is causing 45-minute delays.
08:59 AM GMT
Fresh Tube strikes announced by RMT union
London Underground workers will stage a series of strikes in the new year in a dispute over pay.
Members of the Rail, Maritime and Transport union (RMT) have voted overwhelmingly to take industrial action over a 5pc pay offer.
Engineering and maintenance workers will be taking action over January 5 and 6, with no rest-day working or overtime until January 12.
London Underground control centre and power/control members will be taking action over January 7 and 8, and fleet workers will walk out on January 8.
Signallers and service controller members will take action on January 9 and 12 while all fleet, stations and trains grades will walk out on January 10.
RMT general secretary Mick Lynch said Tube workers who help bring “vast amounts of value” to the London economy were not going to put up with senior managers and commissioners “raking it in”, while they were given “modest below-inflation offers”.
08:55 AM GMT
Retailers hit by weak Nike results
JD Sports shares slumped as much as 6.9pc in early trading to the bottom of the FTSE 100 after Nike revealed it is seeking to make cost savings of as much as $2bn (£1.6bn).
The US sports giant published a weak sales outlook after the closing bell on Wall Street, sending its shares down 12pc in after-hours trading, with revenues expected to be down in the third quarter of its financial year and up in the low single digits in the fourth quarter.
Nike is seen as a bellwether for the sports fashion industry, with its weak performance hitting shares of retailers around the world.
Mike Ashley’s Frasers Group, which owns Sports Direct, has fallen 0.9pc while Primark owner Associated British Foods has dropped 0.8pc.
Victoria Scholar, head of investment at Interactive Investor said:
Nike has struggled amid the weak consumer backdrop, heavy promotions and discounts, sluggish online sales and a slowdown in demand from the world’s second largest economy China.
Sports retailers have been more cautious in terms of their stock purchases too, weighing on Nike’s wholesale business.
While the US economy has thus far proven to be more resilient than expected, there are concerns about a slowdown coming through in 2024 which could hurt Nike.
08:38 AM GMT
UK markets edge down after data revisions raise risk of recession
UK stocks slipped in early trading after a dour GDP reading left Britain teetering on the edge of recession.
The blue-chip FTSE 100 and the domestically-focused FTSE 250 both edged down 0.1pc.
Retailers were among the biggest fallers, declining as much as 1.5pc despite data showing shop sales rose by more than expected in November, as some commentators questioned whether the impact of Black Friday is waning.
Life insurers were amongst top decliners, falling as much as 0.9pc.
The FTSE 100 is eyeing a fourth straight weekly gain, while the FTSE 250 is set to rise for a third consecutive week.
Global markets have rallied amid hopes that the US Federal Reserve will begin cutting interest rates early next year, while a surprise drop in inflation this week boosted UK equities.
UK markets will close early at 12.30pm as traders head home for the Christmas holidays.
08:30 AM GMT
Revolut suffers loss as delayed accounts published
Revolut has swung to a loss of £25.4m despite higher interest rates, as it faces a renewed battle over its attempts to secure a UK banking licence.
Our senior technology reporter Matthew Field has the latest:
The £24bn financial technology company recorded the pre-tax loss in 2022, falling from a profit of £39.8m a year earlier, while it recorded an increase in revenues of 45pc – to £922.5m.
The numbers in its long-delayed accounts came after Revolut was forced to redesign its financial IT systems after its auditors issued a warning over its last set of accounts.
The financial technology company was heavily scrutinised in March after its auditors, BDO, raised warnings over almost £477m of revenues in its accounts.
For 2022, BDO said the “matter has been resolved” and it was satisfied it had seen “sufficient appropriate audit evidence” to verify Revolut’s 2022 numbers.
08:11 AM GMT
German house prices suffer record 10pc fall
Residential property prices in Germany continued their fall, dropping 10.2pc in the third quarter from a year earlier, a further grim sign for the nation’s real-estate sector, official data showed.
Germany’s statistics office said the decline was the biggest since it began keeping records in the year 2000.
08:03 AM GMT
UK markets fall as Britain at risk of recession
The FTSE 100 fell at the opening bell as revised official data showed Britain could be falling into a recession.
The UK’s blue chip index was down 0.5pc to 7,681.32 while the midcap FTSE 250 was down 0.1pc to 19,553.70.
Markets are open for a shorter period today ahead of the Christmas holidays.
07:59 AM GMT
Sunak has failed to grow the economy, says Reeves
The Prime Minister has “failed to grow the economy”, shadow chancellor Rachel Reeves said.
Responding to the latest GDP figures, Labour MP Ms Reeves said:
Rishi Sunak is a Prime Minister whose legacy is one of failure. He failed to beat Liz Truss, he failed to cut waiting lists, he failed to stop the boats and now he has failed to grow the economy.
Thirteen years of economic failure under the Conservatives have left working people worse off with higher bills, higher mortgages and higher prices in the shops.
It’s time for change. The Labour Party, led by Keir Starmer, has a long-term plan to grow the economy and make working people better off.
07:54 AM GMT
Britain may be in ‘mildest of mild recessions’, say economists
The fall in GDP in the third quarter indicates that Britain may already be in the “mildest of mild recessions”, according to economists.
Ashley Webb, UK economist at Capital Economics, said:
Whether or not there is a small recession, the big picture is that we expect real GDP growth to remain subdued throughout 2024.
The breakdown of Q3 GDP showed that the drag from higher interest rates is starting to hit households harder.
The 0.5pc quarter on quarter fall in consumer spending (revised down from 0.4pc q/q previously) was the first fall since Q4 2022.
But the 0.4pc q/q rise in real household disposable income helped the saving rate rise from 9.5pc in Q2 to 10.1pc in Q3.
With the full effects of higher interest rates yet to feed through to the economy, we think consumer spending will fall further in Q4 2023 and Q1 2024.
Overall, today’s release suggests the economy was a bit weaker than we previously thought in Q3 and the mildest of mild recession may have begun. Looking ahead, the latest activity surveys point to weak GDP growth in Q4 too.
07:40 AM GMT
Sunak’s pledge to grow the economy severely in doubt, warn analysts
After the UK’s economic performance was revised down for the second and third quarters, Quilter Cheviot’s head of fixed interest research Richard Carter, said:
ONS data this morning reveals UK GDP fell by a surprise 0.1pc in Q3 compared to the previous quarter, revised down from a first estimate of no growth, highlighting just how much of a strain there currently is on the UK economy.
Q2 was also revised down and is now estimated to have shown no growth compared to the 0.2pc increase previously estimated, meaning the UK has barely scraped by without a recession in 2023.
Growth is weakening and interest rates are really beginning to bite and while a recession has just been avoided to date, there is no guarantee one will be avoided in 2024.
You just have to look at October’s -0.3pc reading to see that growth is trending further in the wrong direction.
Inflation has eased more than anticipated and interest rate predictions are suggesting more easing than originally thought in 2024, but the damage may already have been done. Certainly, Rishi Sunak’s pledge to grow the economy is now severely in doubt.
This is going to ratchet the pressure up on the Bank of England to cut interest rates. The government would certainly like this given 2024 is likely to be an election year, but ultimately the Bank of England will stick to the narrative of the job is not yet done on inflation and it is too early to be talking about rate cuts.
07:32 AM GMT
Christmas will still come down to the wire for retailers, experts warn
Black Friday is no longer giving the same boost to retailers, meaning the latest increase in retail sales figures should be viewed with caution, according to Lisa Hooker of PwC. She said:
At a headline level, retail sales increased in November compared with October’s disappointing performance, with sales volumes – excluding petrol – up 1.3pc on the previous month, and they were also up 0.3pc vs the previous year.
Almost all of the increase was due the early start to Black Friday which we identified in our online promotions tracker, as well as the more seasonal wetter and colder weather at the start of the month, encouraging more shoppers to spend earlier in the month.
However, a note of caution interpreting November’s results as they did not include the whole Black Friday weekend.
The longer term trend suggests that Black Friday is no longer giving the same boost to retailers as previously, with the non-seasonally adjusted sales peak falling every year since 2019. This echoes the findings of our own survey which showed a quarter fewer consumers interested in Black Friday overall.
Indeed, non-food volumes remained 2.7pc below pre-pandemic levels, in spite of the apparent improvement last month.
This means that, in spite of the headline improvement in sales last month, Christmas is still likely to come down to the wire for retailers. Consumers said they would spend less overall, but can they be persuaded to spend more than they planned in the final weekend before the big day itself? And, if not, the likelihood of bumper Boxing Day sales to clear seasonal stock will only increase.
Regardless, the Golden Quarter will have been a disappointment for many retailers, and they will be hoping that the improving macroeconomic backdrop of lower inflation and increasing real wages will improve their outlook in the new year.
07:23 AM GMT
Black Friday boosts retailers in run-up to Christmas
Retail sales grew stronger than expected last month as shoppers snapped up Black Friday bargains and bought Christmas presents, according to official figures.
The Office for National Statistics (ONS) revealed that retail sales volumes increased by 1.3pc in November.
It was ahead of the predictions of economists, who had forecast 0.4pc growth for the month.
The ONS also revised its data for October upwards, reporting that there was zero growth in retail sales after previous estimating a fall of 0.3pc.
07:20 AM GMT
Struggling small businesses drive economic slowdown, says ONS
ONS director of economic statistics Darren Morgan said:
The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates.
The broader picture, though, remains one of an economy that has been little changed over the last year.
The latest VAT data, which takes a little time to receive and process means we now estimate the economy showed no growth in the second quarter, with weaker performances from smaller businesses, particularly those in both hospitality and IT than first shown.
We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering & design and telecommunications all performing a little worse than we initially thought.
07:09 AM GMT
Economic outlook is far more optimistic, insists Hunt
After the downward revisions for the economy, Chancellor Jeremy Hunt said:
The medium-term outlook for the UK economy is far more optimistic than these numbers suggest.
We’ve seen inflation fall again this week, and the OBR expects the measures in the Autumn Statement, including the largest business tax cut in modern British history and tax cuts for 29 million working people, will deliver the largest boost to potential growth on record.
07:08 AM GMT
Britain at risk of recession as growth revised down
The UK is teetering on the edge of a recession, official figures show, after initial estimates on the performance of the economy were revised down.
Gross domestic product (GDP) fell by 0.1pc in the three months to September, according to the Office for National Statistics.
Initial estimates had indicated the economy flatlined in the third quarter, and the subsequent estimates that the economy shrank by 0.3pc in October means the fourth quarter could also show a contraction.
Two consecutive quarters of economic contraction are the definition of a technical recession.
Britain’s economy is also estimated to have shown no growth in the second quarter of the year, revised down from a previously estimated increase of 0.2pc.
The data will increase pressure on the Bank of England to cut interest rates early next year to avoid a deeper economic downturn.
Separate figures showed this week that inflation fell to 3.9pc in November as households battled with 15-year high interest rates of 5.25pc.
GDP is estimated to have fallen by 0.1% in Quarter 3 (July to Sept) 2023, revised down from the previous estimate of no growth.
Meanwhile GDP is now estimated to have shown no growth in Q2, revised down from the previous estimate of +0.2% growth.
➡️ https://t.co/KjTIdncntf pic.twitter.com/xb7H0dRZKD
— Office for National Statistics (ONS) (@ONS) December 22, 2023
07:01 AM GMT
Good morning
Thanks for joining me. Britain is at risk of a recession after revisions to official data showed the economy shrank in the third quarter.
The Office for National Statistics said GDP slumped by 0.1pc in the three months to September.
Two consecutive quarters of contractions are defined as a technical recession. The UK began the fourth quarter with a 0.3pc contraction in October.
5 things to start your day
1) Hunt hints at spring tax cuts if Britain’s debt bill falls | Economists expect the Chancellor to have over £10bn of fiscal wiggle room
2) The war on landlords has backfired – and Britons are paying the price | Nation’s animosity towards the ‘bogeymen of modern times’ has reached a breaking point
3) Paramount heiress prepares to bow out as Hollywood streaming wars turn ugly | Billionaire tycoon speculated to be exploring selling 77pc stake of controlling shares
4) China blocks exports of rare earth technology after MPs warn Beijing is ‘weaponising’ supplies | Move follows Western efforts to restrict the country’s access to microchip technology
5) Patrick Minford: The Laffer Curve is about to blow up the SNP | Decision to introduce 48pc top tax rate is only going to bring in modest amounts
What happened overnight
Shares were mostly higher in Asia after several strong profit reports helped Wall Street claw back most of its sharp loss from day before.
Japan’s core inflation rate fell to 2.5pc in November from 2.9pc a month earlier as energy costs eased. The decline might counter expectations that the central bank will tighten its lax monetary policy in coming months.
Bank of Japan officials have indicated they want to ensure inflation is sustained near the 2pc target level and that wages are also rising before adjusting the central bank’s longstanding minus 0.1pc benchmark interest rate.
Tokyo stocks trimmed early gains and closed only marginally higher as markets overseas move into the holiday season.
The benchmark Nikkei 225 index edged up 0.1pc, or 28.58 points, to end at 33,169.05, while the broader Topix index added 0.5pc, or 10.45 points, to 2,336.43.
The Kospi in Seoul added 0.4pc to 2,609.54. Hong Kong’s Hang Seng index gave up 0.4pc to 16,548.98 and the Shanghai Composite index was up 0.5pc at 2,933.25. In Sydney, the S&P/ASX 200 picked up 0.1pc to 7,510.90.
Bangkok’s SET slipped 0.3pc and the Sensex in Mumbai was up 0.3pc.
Wall Street shares resumed their upward climb on Thursday. The Dow Jones Industrial Average of 30 leading American companies closed up 0.9pc at 37,404.35 points, while the broader S&P 500 index was up 1pc at 4,746.75. Meanwhile, the Nasdaq Composite index, which is skewed towards technology shares, was up 1.3pc at 14,963.87.
The yield on benchmark 10-year US Treasury bonds was up 1.5 basis points to 3.892pc, from 3.877pc late on Wednesday.
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