Closing post
Time to recap…
The EU has launched a formal investigation into whether TikTok has broken online content rules, including the safeguarding of children.
The EU’s executive arm, the European Commission, said it had opened official proceedings against the Chinese-owned short video platform over a potential breach of the Digital Services Act (DSA).
It said the investigation was looking at areas including protection of minors, maintaining records of its advertising content and whether its algorithms led users down damaging content “rabbit holes”.
The Bank of England risks making the UK’s recession worse unless it cuts interest rates soon to ease the pressure on households amid the cost of living crisis, its former chief economist has warned.
Andy Haldane, who had been a leading advocate of raising interest rates before leaving the central bank in 2021, said there was a danger that the Bank could “crush the economy” by keeping borrowing costs at the highest level in 16 years.
The prices of homes being put up for sale in Britain have risen by around £3,000 this month, according to Rightmove data that suggests momentum is building in the housing market.
Germany’s Bundesbank has predicted that its economy will shrink again this quarter, putting it in a technical recession.
Israel is on the brink of a recession after its economy shrank sharply after the war with Hamas began.
A Chinese e-commerce company has said it is considering making an offer for Currys, sending the electronics retailer’s shares soaring amid hopes of a bidding war with private equity investor Elliott.
The share price of Currys surged by a third on Monday morning after JD.com revealed it was “in the very preliminary stages” of a cash takeover bid.
Apple is reportedly facing a €500m fine from the EU over restrictions on access to music streaming services, in what would be a landmark blow to the US tech company.
Chef Salt Bae’s London restaurant has been forced to turn off the heating amid soaring energy bills.
Nusr-Et steakhouse, the outlet at the Park Tower hotel in Knightsbridge known for expensive dishes such as £680 wagyu striploin or £630 giant tomahawk steak, said it had made an effort to cut costs despite recording a jump in profits.
The world’s five largest listed oil companies have made profits of more than a quarter of a trillion dollars since Russia’s invasion of Ukraine led to dramatic increases in energy prices and household bills.
The amount of fraud committed in the UK more than doubled to £2.3bn in 2023, marking the second-biggest year for scams in the last two decades.
Ministers have been urged by Citizens Advice to protect consumers from a hike in household energy bills to pay for the proposed Sizewell C power station, amid international tensions over the rising costs of nuclear projects.
The platinum arm of Anglo American is to cut 3,700 jobs in South Africa as the British mining company attempts to improve performance in the troubled division.
And Tesco is starting to show pricing per unit, such as gramme or millilitre, on Clubcard discounts, after pressure to make its offers clearer.
Tesco starts showing unit pricing on Clubcard discounts
Tesco has quietly begun putting clearer labels on its loyalty card offers amid an investigation by the competition watchdog and pressure from the Which? consumer group.
The supermarket has now begun pricing per unit, such as gram or millilitre, on Clubcard discounts making it easier for shoppers to compare prices between different sized packs.
Rocio Concha, director of policy and advocacy at Which?, said:
“The lack of unit pricing on Tesco’s Clubcard offers was a glaring omission and we warned that this approach could be breaking the law last summer, so it’s good to see the nation’s largest supermarket stepping up to do the right thing by making this important change.
We look forward to seeing this rolled out quickly across all stores and online so shoppers can benefit as soon as possible. The government also needs to now update outdated pricing rules so all shoppers can easily compare value.”
In a blog on Tesco’s website, UK boss Jason Tarry said Tesco had begun laying out Clubcard deals by weight and volume in stores and planned to do this online as well.
He said:
“This is something that we have been planning to do for some time, and I am really pleased that we are ready to make the change. Over the coming weeks these changes will appear in all our stores, as our colleagues update millions of price labels on the shelf edge.”
Updated
Back in the UK property sector, demand for new buy-to-let (BTL) mortgage borrowing has tumbled among older landlords.
Figures released by trade association UK Finance today showed 7,980 “later life” BTL loans, including those for house purchase and re-mortgaging, were handed out in the fourth quarter of 2023.
This was less than half the 16,930 loans advanced for this purpose to over-55s in the final quarter of 2022.
TikTok said it would continue to work with experts and the industry to keep young people on its platform safe and that it looked forward to explaining this work in detail to the European Commission, Reuters reports.
A TikTok spokesperson said.
“TikTok has pioneered features and settings to protect teens and keep under 13s off the platform, issues the whole industry is grappling with.”
EU opens investigation into TikTok
The European Union has opened an investigation into whether TikTok breached online content rules aimed at protecting children and ensuring transparency.
The move puts the social media platform, owned by ByteDance, at risk of a hefty fine.
EU industry chief Thierry Breton says it will examine TikTok’s addictive design, its age verification and privary settings, and the “rabbit hole” effect – where users follow algorithmic recommendations to videos more extreme than the video they were watching.
Today we open an investigation into #TikTok over suspected breach of transparency & obligations to protect minors:
— Thierry Breton (@ThierryBreton) February 19, 2024
📱Addictive design & screen time limits
🕳️ Rabbit hole effect
🔞 Age verification
🔐 Default privacy settings
Enforcing #DSA for safer Internet for youngsters pic.twitter.com/4d2F0FQUHw
In December, a Guardian investigation found that TikTok moderators were being told to allow under-13s to stay on the platform if they claimed their parents were overseeing their accounts.
Last summer, new regulation forcing more than 40 online giants including Facebook, X, Google and TikTok to better police the content they deliver came into effect in the EU.
A firm that does not comply with the law could face a complete ban in Europe or fines running up to 6% of its global revenue.
Updated
The shekel weakened slightly on the news that Israel’s economy shrank at an annualised rate of almost 20% in the last quarter.
[The shekel] was trading 0.5% down at 3.626 per dollar at 3:09 p.m. in Tel Aviv, heading for its first drop in four days.
Stocks initially pared advances, but soon extended them.
Despite the economic problems in countries such as the UK, Germany and now Israel, Goldman Sachs are more upbeat about stock market prospects this year.
The Wall Street titan has lifted its rating on global equities to “overweight” on prospects of economic growth and recovery in manufacturing activity, up from a previous rating of “neutral”.
Goldman says:
We expect growth to become a more important driver of risk appetite and equity/bond correlations should be more negative this year.
Israel’s sharp drop in GDP in the October-December quarter is the latest piece of bad economic news for the country.
The conflict is expected to cost Israel around 255 billion shekels ($70.3 billion) by the end of 2025, equivalent to around 13% of GDP, according to the Bank of Israel.
In November, the central bank cut its forecast for GDP growth this year to 2%, from an estimate of 3% on the eve of the war.
And earlier this month, Moody’s delivered Israel’s first ever credit rating downgrade, citing elevated political risk and deteriorating public finances stemming from the war.
Israel on brink of recession after GDP shrinks in Q4
Israel is on the brink of a technical recession after its economy shrank sharply after the war with Hamas began.
Israel’s GDP contracted at an annualised rate of 19.4% in the final quarter of 2023, new data from the Central Bureau of Statistics shows.
That’s the equivalent of a quarterly drop of almost 5% during the quarter.
#Israel Q4 #GDP annualised basis falls 19.4% quarter-on-quarter vs estimate of 10.5% decline: Bloomberg
— Stock market news tracker_DS (@deepika63379858) February 19, 2024
[explanation: Annualised GDP extrapolates a quarterly change in activity to show how much an economy would grow, or shrank, if it was continued over a whole year]
The statistic bureau says:
“The contraction of the economy in the fourth quarter of 2023 was directly affected by the outbreak of the Iron Swords War on October 7,”
The Times of Israel reports that this is the deepest decline since the second quarter of 2020, when pandemic lockdowns hit consumer spending and left many businesses closed.
Reuters reports that the economy was hit by a 26.9% drop in private spending, an 18.3% fall in exports and 67.8% slide in investment in fixed assets, especially in residential building.
Government spending, mainly on war expenses, jumped 88.1%.
Israel’s economy grew at an annualised rate of 1.8% in the third quarter of 2023, down from a previous estimate of 2.7%. That’s the equivalent of 0.45% growth in Q3.
A technical recession is defined as two quarterly falls in GDP in a row.
Updated
Bundesbank: Germany likely to be falling into technical recession
Germany is likely to follow the UK into a technical recession, the country’s central bank has warned today.
The Bundesbank has warned that economic output is likely to decline again, slightly, in the first quarter of this year, following the drop in the final quarter of 2023.
That would put Germany into a technical recession, the Bundesbank points out in its latest monthly report, adding:
While this would mean the ongoing period of weakness in the German economy following the start of the Russian war of aggression against Ukraine would continue, there is still no evidence of a recession in the sense of a persistent, broad-based and distinct drop in economic activity, nor is such a recession currently on the cards.
The Bundesbank also warns that there is “no recovery in the German economy yet”, pointing to factors such as a drop in foreign industrial demand, cautious consumer spending, and higher funding costs which may constrain domestic investment.
Updated
In the mining sector, Anglo American Platinum is planning to cut thousands of jobs at its operations in South Africa.
AAP announced that a restructuring that could affect about 3,700 jobs at its South African operations, as it responds to rising costs and falling prices for platinum-group metals.
CEO Craig Miller said the restructuring decision “has not been taken lightly”, telling a conference call:
“It’s very much a last resort, not least as we recognise the unemployment challenges in South Africa and the socio-economic impact that the proposed restructuring may have on our people and the communities we are part of.”
Anglo American Platinum to cut jobs in South Africa as metals prices slide https://t.co/FKJnSH2Yif
— Financial Times (@FT) February 19, 2024
You can hear Andy Haldane’s podcast with Bloomberg here.
As well as arguing that the Bank of England should already have cut interest rates, Haldane also warns that the balance of economic risks have moved to the downside, after a week in which inflation was lower than expected, and the economy weaker than forecast.
The Bank of England risks deepening the UK's recession if it doesn't cut interest rates soon, ex-BOE chief economist Andy Haldane (now @theRSAorg) tells us on the Bloomberg UK Politics Podcast
— Lizzy Burden (@lizzzburden) February 19, 2024
Listen here: https://t.co/kPSH02TNxv
And read more: https://t.co/uX2WateVZa pic.twitter.com/BRpTELsbKh
Nintendo shares slide on reports of delay to Switch 2
Shares in Nintendo are down over 5% this morning following reports that its next-generation console will launch later than hoped.
Bloomberg reported today that game-makers have been told Nintento is pushing back the launch of its Switch successor to the beginning of 2025, rather than later this year as expected.
Some of Nintendo’s partners were advised not to expect the still-unannounced console until March 2025 at the earliest, Bloomberg adds.
AJ Bell investment director Russ Mould says:
“The release of a next generation console is a big staging post for a games company so it’s no surprise investors have reacted with shock and disquiet to speculation Nintendo may not get its new iteration of the Switch to market this year. Reports say the company is guiding its game publishing partners that the new machine won’t hit the shelves until the early months of 2025.
“While a blow, the importance attached to these releases means ultimately it is sensible for Nintendo to delay if it means the finished product is released without any technical issues.
“Nintendo has enjoyed a renaissance over the last decade or so, with the release of Pokémon Go and the success of the original Switch helping to make the brand relevant to a whole new generation of gamers.
“More recently, the company has been tapping into its catalogue of IP and the massive success of the Super Mario Bros movie lights up a big potential avenue for licensing revenue in the future.
“Nintendo also benefits from its cross-generational appeal with less sophisticated hardware which is cheaper to make, helping to underpin strong margins on its flagship console when for rivals these sales are a loss leader.”
Nintendo shares fell after reports by games media and Bloomberg that its next-generation console will be delayed until early 2025 from later this year https://t.co/wYX3bCq0Ic pic.twitter.com/53LUiiUHTJ
— Reuters (@Reuters) February 19, 2024
The FTSE 100 index is flat, despite AstraZeneca jumping 3.3% after it reported that its Tagrisso drug had shown a “statistically significant and highly clinically meaningful improvement in progression-free survival” for patients with lung cancer.
Tagrisso, plus chemotherapy has been approved for use in the US, AstraZeneca also reported this morning.
European stock markets have begun the new week with small losses.
The pan-European Stoxx 600 index has dipped by 0.2% this morning.
This is led by a 0.5% drop on France’s CAC 40, after French finance minister Bruno Le Maire yesterday lowered France’s 2024 economic growth forecast to 1% and announced plans to cut spending by €10 billion.
Analysts at Goldman Sachs predict the Bank of England will cut interest rates in May.
They point out that last week’s flurry of economic data showed the UK unemployment rate fell to 3.%, while retail sales rebounded by 3.4% – and inflation was lower than expected at 4%.
Goldman say:
In sum, the tighter labour market and increased sales activity would skew risks towards a first cut in June.
Even so, the January inflation print surprised to the downside and supports our economists’ expectation of a first cut in May.
Goldman’s economists also lowered their 2024 GDP growth forecast to 0.4% last week, down from 0.6% previously.
Price comparison site MoneySupermarket has reported record revenues, as consumers try to avoid insurance price hikes.
MoneySupermarket’s revenues swelled by 11% year-on-year in 2023, to £432m, which it attributes to “exceptional trading in Insurance”.
It explains:
Car and home insurance premiums have increased significantly because of the rising cost of claims.
However, there was no “material revenue” from energy switching, because there are very few tariffs cheaper than Ofgem’s price cap for households to move to.
Rental growth drops back to single digits
Elsewhere in Britain’s property sector, growth in rental costs have slowed to a 13-month low.
Estate agent Hamptons reports that the average rents on newly let properties rose 8.3% across Great Britain in the year to January. That’s the lowest rental inflation in just over a year, after it peaked at 12% in August.
Hamptons reports that 59% of landlords achieved a higher rent when a new tenant moved in last month, down from a peak of 81% in January 2022.
Rents jumped as the Bank of England started to raise interest rates at the end of 2021, meaning higher borrowing costs for landlords who rolled onto new mortgage deals.
But rental growth is likely to remain sticky, Hamptons predicts, and run ahead of inflation for the remainder of 2024.
8 of the 11 regions in UK saw the pace of rental growth slow between Aug 2023 & Jan 2024. London’s rental growth was the most tautly reigned in by affordability pressures from 17.1% to 8.1%. Consequently, fewer landlords (59%) secured higher rents in Jan 24 @Hamptons1869 pic.twitter.com/r5THMklasQ
— Emma Fildes (@emmafildes) February 19, 2024
Aneisha Beveridge, head of research at Hamptons, says:
“Last summer looks like it may have been the high watermark for rental growth. Since then, fewer landlords have been putting up the rent. Where they have, in cash terms, monthly increases have tended to be in double rather than triple figures.
Updated
Currys shares surge as JD.com joins takeover battle
Shares in electrical goods retailer Currys have surged by up to 35% at the start of trading, as a takeover battle looms.
US investment group Elliott and China’s e-commerce group JD.com are both circling Currys.
Currys confirmed yesterday it had rejected a takeover bid from Elliott, worth 62p per share, saying the offer significantly undervalued its business.
JD.com has thrown its hat in too, telling the City this morning it is in the “very preliminary stages of evaluating” whether to make a cash offer for Curry’s.
JD.com says:
There can be no certainty that any offer will ultimately be made for Currys, nor as to the terms on which any offer might be made. A further announcement will be made if and when appropriate.
Currys was founded in 1884 by Henry Curry as a bicycle-building business before diversifying into the sale of toys, gramophones and radios when it listed on the London Stock Exchange in 1927.
Currys’ shares have hit nearly 65p this morning, up from 47p on Friday night, their highest level since March 2023.
Updated
Government outlines new curbs on short-term lets in England
The UK government has announced proposals to rein in the growth of short-term holiday lets in tourist hotspots in England – but they won’t prevent the practice.
Changes in planning rules announced today will mean:
Planning permission will be required for future short-term lets
A mandatory national register will provide valuable information and help ensure accommodation is safe
Homeowners can continue to let out their own main or sole home for up to 90 nights a year
The government says its proposals will give communities greater control over future growth in short-term lets, to prevent a “hollowing out” of communities, and address anti-social behaviour.
Under the reforms councils will be given greater power to control short-term lets by making them subject to the planning process.
Last April, the governmnent proposed that people who convert homes into short-term holiday lets would require planning permission in tourist hotspots in England.
Today they are also confirming that a new mandatory national register will give local authorities the information they need about short-term lets in their area.
Airbnb, which has helped drive the growth in short-term letting, has welcomed the government’s plans (which is a sign that the proposals are unlikely to damage the market much!).
Amanda Cupples, general manager for Northern Europe at Airbnb, says:
The introduction of a short-term lets register is good news for everyone. Families who Host on Airbnb will benefit from clear rules that support their activity, and local authorities will get access to the information they need to assess and manage housing impacts and keep communities healthy, where necessary.
Updated
UK house asking prices rise: What the experts say
Here’s some reaction to Rightmove’s report that UK house asking prices rose again this month, from Tomer Aboody, director of property lender MT Finance:
“As confidence starts to creep back into the market due to the reduction in mortgage rates and lower inflation, we are seeing higher sales volumes, with vendors encouraged to sell.
“Encouragingly, while sales have picked up, vendors are pricing correctly in order to attract buyers. This, in turn, is making a property purchase more affordable and appealing to buyers. Unless there is some dramatic intervention from the Government, we don’t expect to see a huge increase in pricing in the forthcoming 12 months or so.”
Agreed sales get a 3% boost on 2019 levels for the first 6wks of 2024. Renewed seller optimism, inc’ing listings by 7% along with avg ASKING PRICES ⬆️ 0.9% in Feb to £362,839. Misguided pricing will be detrimental thou as savvy buyers only move on those priced right @rightmove pic.twitter.com/ziydpP3tVx
— Emma Fildes (@emmafildes) February 19, 2024
Nigel Bishop of buying agency Recoco Property Search says:
“We have seen first-hand that buyer confidence has returned to some degree, particularly if compared to this time last year. This uplift in market activity is largely driven by the availability of more affordable mortgage products but also falling inflation. Equally, sellers have become more motivated to put their property up for sale which is resulting in buyers having a larger pool of properties to choose from.
House hunters at the higher end of the market, of homes priced £2mn and above, however, are generally less dependent on a mortgage and remain cautious amid the potential impact of this year’s election and upcoming Spring Budget. Cash or chain-free buyers who are currently making an offer are less likely to settle on the seller’s asking price and willing to enter tough price negotiations.”
Lunar New Year tourism picks up in China, but foreign direct investment slows
There’s some encouraging economic data from China this morning as the Lunar New Year break ends, and some less positive statistics too.
On the upside, tourism revenues in China during the Lunar New Year holiday surged by 47.3% year-on-year and surpassed 2019 levels.
Domestic tourism spending hit 632.7 billion yuan (£69.7bn), according to government figures, thanks to a domestic travel boom amid a longer-than-usual break.
#China Lunar New Year Tourism Revenue (18 Feb): +47.3% y/y to 633b yuan, 7.7% higher than 2019’s pre Covid levels #OOTT #OPEC
— Nitin Kashimpuria (@nkashimpuria9) February 19, 2024
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
The week starts with the soothing news that the Chinese traveled and spent more than they did in the same period of 2019. As such, the Chinese stock markets return from the CNY break on a cheery note.
The CSI 300 index of Chinese stocks is up 1.1% today.
Dampening the mood, though, is data showing that foreign businesses’ direct investment (FDI) into China last year increased by the lowest amount since the early 1990s.
China’s direct investment liabilities, a broad measure of FDI, rose by $33bn in 2023, down 81.7% from 2022, according to data from the State Administration of Foreign Exchange released on Sunday.
The slowdown commes amid rising tensions with the West which are making it harder for China to attract foreign capital.
Updated
Before he left the BoE in 2021, Andy Haldane warned – presciently – that an inflationary “tiger” had woken up and was prowling the economy.
The Bank didn’t react, and only started raising interest rates in December 2021 – and has been criticised for this tardiness.
Haldane now points out that failing to cut rates in a timely fashion will compound the error.
He tells Bloomberg’s UK Politics podcast:
“It’s one thing to have missed inflation on the way up, which happened, it’s quite another to then have crushed the economy on the way down.
“That double blow to credibility is one if I were a central banker, in my old job, I would be looking to avoid.”
BOE risks deepening UK’s recession, Andy Haldane warns
The Bank of England risks making the UK’s recession worse unless it cuts interest rates soon, the central bank’s former chief economist has warned.
Andy Haldane, who left the Bank in 2021 after a 32-year stint, says his former colleagues should consider loosening policy to support the economy.
Concerns over the economy have risen since the UK fell into a technical recession at the end of last year, GDP data released last Thursday showed.
Some economists have predicted that the economy is picking up this year.
But, asked whether the BOE could worsen the recession unless it loosened policy soon, Haldane told Bloomberg’s UK Politics podcast:
“I think that’s where the balance of risks lies, yes.”
“For me the case for putting in place some upfront, early insurance on the monetary policy side is strong and strengthening, and I’m fearful we leave that insurance a little too late in the year.”
The Bank of England risks deepening the UK’s recession if it doesn’t pivot to interest-rate cuts soon, its former chief economist Andy Haldane warns https://t.co/TIgA4uguNX
— Bloomberg Economics (@economics) February 19, 2024
Eaarlier this month the BoE left interest rates on hold at 5.25%, with just one of its nine policymakers voting for a cut (two wanted a rise).
There was relief last week when UK inflation was lower than expected in January, at 4% (twice the Bank’’s target). But BoE governor Andrew Bailey then doused hopes that this could lead to faster cuts in interest rates.
The City money markets are currently anticipating around three interest rate cuts this year, bringing Bank rate down to 4.5% by December, with the first cut expected by June.
Updated
Introduction: Average price tag on a UK home up £3,000 in February
Good morning, and welcome to our rolling coverage of business, the financial markets and the economy.
The UK property market is picking up this month, at least for sellers who price their homes correctly.
Property portal Rightmove reports this morning that the average asking price for a home rose by 0.9% or £3,091 this month to £362,839.
The increase means sellers are asking 0.1% more for their homes than a year ago, on average, as the fall in asking prices last year is reversed.
Rightmove reports that momentum is building in the market, with 7% more new listings coming to market than last year, and a 7% rise in the number of buyers making enquiries too.
Agreed sales in the first six weeks of 2024 are 16% higher than over the same period last year, when the market was reeling from the jump in mortgage costs after the mini-budget of September 2022.
Rightmove’s Tim Bannister suggests sellers should take advantage of the situation while it lasts. He says:
Mortgage rates have fallen considerably from their peak and are now remaining broadly stable after the uncertainty of late 2022 and 2023.
Momentum to move in 2024 is continuing to build, but prospective sellers mustn’t get carried away. Buyers now have more choice of property for sale and many are still very price-sensitive, with mortgage rates remaining elevated.
Sellers who are serious about moving this year would be well-advised to ride this wave of increased buyer confidence with an attractive asking price before any pre-election jitters or unexpected events dampen the momentum.
Zoopla, the property search site, has also reported a pick-up in activity this month:
To date, Feb is showed an inc in sellers ⬆️ 10%, which had buyers interest piqued, ⬆️ 11% on this time last year = an inc in agreed sales across all regions & countries of the UK & more than 10% higher in 6 regions led by London, the South East & Yorkshire & Humber. @Zoopla pic.twitter.com/PP2i13TsFI
— Emma Fildes (@emmafildes) February 18, 2024
However, although activity levels are higher, Rightmove reports it is taking the average seller 16 days longer to find a buyer than a year ago.
That suggests that while “accurately and competitively priced” properties are being snapped up, over-priced ones are being shunned.
Also coming up today
The war between Brussels and Big Tech could be escalating, with Apple facing its first ever fine from the EU for allegedly breaking the law over access to its music streaming services.
The FT reports that the penalty is in the region of €500m and is expected to be announced early next month.
It follows an inquiry into whether Apple blocked apps from telling iPhone users there were cheaper alternatives to access music subscriptions outside the App Store.
The agenda
9am GMT: Spain’s trade balance for December
11am GMT: Israel’s Q4 GDP report (first estimate)
Updated
