Closing summary
The global economy is “turning a corner”, according to the latest outlook from the Organisation for Economic Cooperation and Development (OECD) as it upgraded the UK’s growth forecast for this year to faster than that of Japan, Italy and Germany.
The OECD ranked Britain joint second among the G7 developed countries, behind the US, in its latest outlook on the global economy, but the UK is still expected to have the highest inflation in the group.
Describing the UK’s economic growth as “robust”, the OECD upgraded its growth for 2024 to 1.1% from a forecast of 0.4% made in May, as the country recovers from a mild recession at the end of last year. The forecast of 1.2% growth in 2025 was maintained.
The union representing 33,000 striking Boeing workers says a survey of its members shows they are “not interested” in the aircraft maker’s latest 30% pay offer.
The International Association of Machinists and Aerospace Workers (IAM), Boeing’s largest union, said in a post on X, formerly known as Twitter:
Our members stand strong, and we remain ready to continue mediated or direct negotiations with Boeing. This has been made clear to both the company and our membership. The only way to resolve this strike is through negotiations, and rest assured, your Union will not bargain through the media.
The survey results from yesterday were overwhelmingly clear, almost as loud as the first offer: members are not interested in the company’s latest offer that was sent through the media. Many comments expressed that the offer was inadequate and the company’s decision to bypass the Union was viewed as disrespectful.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Bye! – JK
Updated
Here is a response from Shein to the ‘greenwashing’ investigation launched by Italy’s antitrust authority into the Dublin-based company that runs websites in Europe for the online fashion retailer.
Shein is ready to cooperate openly with relevant Italian authorities, providing the necessary support and information to address any inquiries. We would also like to take this opportunity to reaffirm our commitment to complying with the laws and regulations in the markets where we operate and to maintaining transparency with our customers.
Vaccine patent legal battle heads to Court of Appeal
A multimillion-pound legal battle between rival developers of Covid-19 jabs over vaccine technology patents is set to continue at the Court of Appeal in London.
In July, a High Court judge delivered a mixed ruling in the long-running dispute that has pitted US pharmaceutical giant Pfizer and and its German partner BioNTech against the US vaccine maker Moderna.
The firms faced off at two trials in London earlier this year centred on the use of messenger RNA (mRNA) technology in life-saving coronavirus jabs.
At a hearing in London today, Pfizer and BioNTech were granted permission to appeal against a part of the judgment from Mr Justice Meade, PA reported.
Moderna sued Pfizer and BioNTech for alleged patent infringement in relation to their Comirnaty vaccine, arguing it was due compensation for products manufactured after 7 March 2022.
Pfizer and BioNTech denied infringement, with both firms seeking the “revocation” of two Moderna patents, claiming they were “invalid”.
Mr Justice Meade concluded one of the European Moderna patents, labelled EP565, was “invalid”. But the judge said a different patent, called EP949, was “valid” and was infringed by Pfizer and BioNTech.
At today’s hearing, the same judge granted Pfizer and BioNTech permission to appeal against his EP949 decision, but refused Moderna permission to appeal against his ruling over the EP565 patent.
Michael Gove named as Spectator editor after GB News backer’s takeover
The former cabinet minister Michael Gove has been named as the new editor of the Spectator magazine, weeks after the GB News backer Sir Paul Marshall completed a £100m takeover of the politically right-leaning magazine.
Gove, who will take over from Fraser Nelson on 4 October, will be joined by the former Daily Telegraph and Spectator editor Charles Moore who has been named as chair.
Nelson, who joined the Spectator in 2006 and became editor in 2009, said in a blogpost that Gove was his “clear successor” having been tipped as a future editor during his time as a journalist on titles including the Times and as a contributor to the Spectator.
The 57-year-old, who stepped down from parliament at the general election, served in the governments of David Cameron, Theresa May, Boris Johnson and Rishi Sunak.
Gove will take up the role after final approval from Acoba, the Advisory Committee on Business Appointments, although associates believe this will be a formality as he was never involved in sectors such as media regulation while in government.
RMT rail workers vote to accept pay deal
Rail workers have voted to accept pay offers by train companies and Network Rail, reducing the prospect of a repeat of the national strikes that have caused misery for passengers over the last two years.
Members of the National Union of Rail, Maritime and Transport Workers (RMT) voted overwhelmingly to support the pay offers that will result in increases of more than 4% over the next two years.
The RMT said the ballot result meant that the long-running national dispute was now over and the outcome reflected collective efforts to defend jobs and pay conditions from the attacks of private contractors and the previous Conservative government.
The RMT held more than 30 days of industrial action since June 2022 over a previous pay dispute with Network Rail and rail operators.
A deal was agreed in March last year with Network Rail, while its deal with operators was concluded in November last year.
The latest pay deal will lead to union members at Network Rail, who are largely maintenance staff and signallers, receiving a 4.5% increase this year. Almost 89% of those members who voted were favour of the deal.
US mortgage applications continue rebound
Mortgage applications in the US rose again last week, continuing the rebound seen in recent weeks, as Fed interest rates come down.
Applications jumped by 11% in the week to 20 September, following a 14.2% increase in the previous week, according to the latest data from the Mortgage Bankers Association.
MBA Mortgage Applications +11% (est -, last +14.2%) pic.twitter.com/6Yc0StDJ0a
— Mario Cavaggioni (@CavaggioniMario) September 25, 2024
The Federal Reserve, America’s central bank, cut interest rates by a half point a week ago, its first reduction in four years, as inflation has eased.
Italy launches greenwashing probe into Shein website
Italy’s antitrust watchdog has launched an investigation into a Dublin-based company that manages the Italian website of the online clothing retailer Shein over possible misleading environmental claims – known as “greenwashing”.
The investigation targets Infinite Styles Services and accuses the company of trying “to convey an image of production and commercial sustainability of its garments through generic, vague, confusing and/or misleading environmental claims,” Italy’s antitrust authority said in a statement, according to Reuters.
Infinite Styles Services and Shein have been contacted for comment.
The Italian authority said some of the information on the clothing collection ‘evoluSHEIN‘, declared to be sustainable, could mislead consumers about the amount of “green” fibres used, while also failing to tell them the garments can’t be further recycled.
It also said Shein‘s website appears to emphasise a commitment to decarbonisation, which seems to be contradicted by the increase in greenhouse gas emissions shown in Shein‘s sustainability reports for 2022 and 2023.
Founded in China, Shein is known for its cheap tops and dresses. Its treatment of workers, including child labour, and environmental record have come under increased scrutiny following reports that it could list its shares in London.
Workers rights campaigners have called for the UK government to oppose the online fashion business joining the FTSE, arguing that a London listing would be “yet another betrayal to working people everywhere and the planet”.
Under EU anti-greenwashing regulations that came into force this year and will apply in all member states in two years’ time, companies are banned from making vague environmental claims about their products, like labelling them “energy efficient” or “environmentally friendly” if they don’t provide evidence to back them up.
CBI appoints two female business figures to board
The CBI has appointed two female business figures to its board, as it tries to rebuild itself and its reputation.
The business lobbying group was rocked by allegations of misconduct by senior managers published in the Guardian last year. Recently, the Guardian revealed that the CBI has used gagging clauses to prevent staff from discussing their experiences of sexual misconduct and bullying at the organisation.
Ruth Cairnie, chair of Babcock International Group and the senior independent director at BT Group, and Lesley Ann Nash, non-executive director at St James’s Place, Workspace Group and Homes England, are to join the CBI board as non-executive directors.
Along with current board members, who are re-elected annually, Cairnie and Nash will stand for election by members at the CBI’s annual meeting on 22 October.
Cairnie’s executive career was at Royal Dutch Shell spanning research, B2B businesses, strategy, supply Chain and M&A and her previous roles include senior independent director at Associated British Foods and chair of the POWERful Women initiative.
She said:
Having effective dialogue and partnership between government and business is critical to securing meaningful progress in addressing issues and driving dynamism into the UK economy. To achieve that, the CBI has a unique and essential role to play.
It can bring a cross-economy perspective, speaking for large, listed companies as well as the trade associations and SMEs who make up supply chains across the country.
Nash is a qualified accountant who worked in investment banking at UBS and Morgan Stanley, including spending two decades on the trading floor. In 2013, she left the private sector to join the Cabinet Office where during her seven years as a senior civil servant, she worked under three prime ministers and six different cabinet office ministers.
Nash said:
In the first 100 days of a new government, facing economic challenges and tough fiscal decisions, the role of the CBI as a single voice of business to government is more important than ever. I am delighted to join the CBI Board to help them take the voice of business to the heart of government.
Rupert Soames, the CBI’s chair, said:
Ruth and Lesley Ann bring immense knowledge and experience to our board. Their diverse experience across the private and public sectors in both executive and non-executive roles is what we need to help lead the CBI into our 60th anniversary year.
Our members want to see us partnering with the new Government, bringing business’ innovation and optimism to the table to implement practical measures that will bring about growth. Ruth and Lesley Ann possess both the insights and enthusiasm to ensure that we deliver for members.
UK petrol prices hit a three-year low
Petrol and diesel prices have hit a three-year low, reflecting lower oil prices and a stronger pound.
The average unleaded price was 135.87p yesterday, according to the RAC motoring group. We are now a long way from the record highs of July 2022 when the average price of a litre of unleaded hit £1.92.
RAC fuel spokesperson Simon Williams said:
To see pump prices drop to this level is really positive news, both for households who depend on their vehicles for getting about, and for the wider economy – as there’s a clear link between the cost of fuel and the headline rate of inflation. Depending on where drivers fill up, they can be paying as little as £1.26 for a litre of unleaded – making the cost of refuelling a typical family car come in at under £70.
A relatively low oil price, caused by lower demand globally, and a relatively strong pound are the two factors that are contributing to pump prices falling.
We believe there is scope for pump prices to come down further in the next few weeks to reflect the lower wholesale costs retailers are paying when they buy fresh fuel stocks.
We continue to look forward to the new government proceeding with its plans to introduce greater pump price transparency with the Pumpwatch scheme, along with an official monitoring function that can help ensure drivers are charged a fair price every time they fill up.
Alison Watson, founder and chief executive of Class Of Your Own (COYO), has been appointed the first female president of the Chartered Institution of Civil Engineering Surveyors (CICES).
COYO is a social enterprise and specialist education consultancy, which developed the ‘Design Engineer Construct!’ learning programme, a curriculum subject in its own right, taught by high school teachers.
Watson was awarded an MBE in 2018, in recognition of her services to education and elected as an honorary fellow of CICES the following year.
Her presidential term is themed ‘Make Space for Education’, with the ambition of building on the collaborative spirit established by her predecessor, Batsetswe Motsumi.
Watson said:
As surveyors, we witness the ever-changing landscape of our world - but one thing remains constant: the need to pass on our knowledge.
Time spent in education is brief but our influence can be unlimited, as I’ve seen in my everyday work in schools - and our support has never been more important.
My presidential theme ‘Make Space for Education’ is a call-to-action to our industry to ensure we don’t allow our expertise to fade.
We must actively engage with and inspire the next generation with the same care and attention we’d give our own children, so the vital role of surveyors in shaping the future of our planet and its people continues.
‘I have £7 in my bank account’: how the two-child benefit cap changed Britain
The news that rich donors have bought thousands of pounds’ worth of clothes for the prime minister and the chancellor has a particular sting for Saira.
The single mother of three girls, aged from five to 17, she has been struggling to clothe them this month because of the two-child benefit limit, the rule that means most benefit recipients don’t get extra universal credit payments for third and subsequent children. Labour has so far chosen not to repeal this austerity-era initiative, which the Conservatives introduced in 2017.
In early September, with a new school term starting, Saira bought a waterproof coat for each of the girls (£150 in total), two sets of school uniforms and a PE kit each for the two younger ones, plus one pair of school shoes and one pair of trainers each. She took out an advance budgeting loan from the benefits office and spent well over £400.
Even with the loan, the surge of back-to-school expenditure left her with £7 in her account this Monday, to last until 30 September. Because she is not working, her bank will not let her go into her overdraft without imposing a fine. When we spoke on Monday morning, a fortnight after meeting in person at her home, she said she had spent the past hour trying to gather the emotional energy needed to send a WhatsApp message to her sister-in-law to ask for a loan – anything between £20 and £100 to tide her over until her next universal credit payment is made in a week.
Because of the two-child limit, she has been allocated universal credit for her two older children, but not for her youngest daughter, leaving the family with about £3,455 less every year than they would have had before the policy was introduced. Her youngest daughter, Aminah, is one of about 500,000 third or subsequent children born since the Conservatives brought in the cut on 5 April 2017 who has been ruled not entitled to means-tested support payments.
When she looks at her universal credit account on her mobile phone, Saira sees Aminah’s ineligible status underlined in the monthly breakdown of payments, which states, under Children: “You get support for two of your three children.” She senses here a subtext that the state considers the child should not have been born and does not count for much. “It looks harsh when you see it there,” she says.
Saira, who worked in retail and call centres before losing her job when her employer said he was unable to accommodate her request for part-time hours, finds that her universal credit payments routinely fail to stretch to the end of the month. “It’s the last 10 days that are the hardest,” she says.
Updated
The FTSE 100 index in London is now up by 6 points at 8,288, while the Italian borsa has edged 0.1% higher and the German and French markets are down by around 0.5%.
Crude oil is also retreating, with Brent down 0.2% at $75.01 a barrel. The dollar has risen slightly against sterling and the euro, and a basket of other major currencies.
Joshua Mahony, chief market analyst at Scope Markets, has looked at the main moves in financial markets today.
European markets have failed to follow their Asian counterparts higher for a second consecutive session, as the boost felt from the People Bank of China’s stimulative measures start to fade. Notably, the early gains seen for the Shanghai and Hang Seng have lost much of their momentum, with initial 3% upside falling back to end roughly 1% higher.
While markets have clearly enjoyed a welcome boost off the back of a surprisingly comprehensive set of measures announced by the PBoC, we are ultimately left wondering whether it will resolve the stuttering growth story or simply provide a short-term boost to sentiment.
The dollar has been on the rise since yesterday’s collapse in the consumer confidence survey, with the Conference Board release figure dropping from 105.6 to 98.7 in September. Unfortunately, this feeds back into the narrative around a potential slowdown in the jobs market, with the survey seeing a decline in the percent of consumers seeing jobs as plentiful, as the “hard to get” figure rose. This brought fresh concerns over a potential surge in US unemployment, while we saw a rise in the number of consumers that believed the US was already in a recession.
For markets, the prospect of a hard landing brings fresh concerns over the direction of earnings, although the rising expectations of a 50bp November cut from the Fed does help to counterbalance some of the risk-off consequences.
Co-op returns to profit despite losing almost £40m to shoplifting
The Co-operative Group has laid bare the impact of shoplifting as it said the cost of crime in its stores soared by almost 20% to £40m in the first half of the year.
The member-owned mutual has spent £18m so far this year on measures to protect staff in its food business, including rolling out body-worn cameras and fortified kiosks.
Despite this, the grocery chain took a hit of £39.5m from theft and fraud in the first six months of 2024 – up 19% on a year earlier – even as it increased campaigning on the problem.
Matt Hood, the managing director of food operations, said:
It isn’t going away. The reality is that every day four of our colleagues are attacked, up 34% on 2022, and scarily, a further 115 of my colleagues will be seriously abused, up 37% on two years ago.
High-speed Paris-to-Berlin train to launch in December
A new high-speed train linking Paris and Berlin is to launch in December, operators have announced.
The daytime service will complement a popular night train route between the two capital cities that relaunched last year to much fanfare but has since been beset by technical problems.
The daytime train service, which has been delayed by logistical issues and will take an hour longer than originally announced, will run between Berlin Hauptbahnhof and Paris Gare de L’Est, stopping in Strasbourg, Karlsruhe, and Frankfurt Süd, and will take about eight hours.
The fastest train journey now running between the French and German capitals takes just under nine hours, but requires two or three changes, making for a clunky and often unreliable experience.
‘As long as it takes’: on the frontline of the Boeing strike, workers brace for a long battle
Workers have manned a picket line outside Boeing’s airplane factory in Renton, Washington, around the clock since tens of thousands walked off the job earlier this month. Almost two weeks into the strike, the largest now under way in the US, nobody knows when it will end.
Orlando, a quality inspector at the aerospace giant, arrived at 3.45am on Saturday, long before dawn. On the outskirts of a city as expensive as Seattle, the cost of living is “always going up”, he said. “And I guess the biggest part is making sure our wages reflect that.”
When Boeing tabled a new “best and final” offer on Monday, the International Association of Machinists and Aerospace Workers (IAW) declined to put it to a vote ahead of a Friday deadline imposed by the company, complaining it had been “thrown at us without any discussion”.
Striking workers held up signs and waved to passing cars and trucks. Drivers whizzed by honking horns to show support, occasionally pulling over to chat with workers. A semi-trailer truck let off a loud blast from its horn drowning out all other sounds.
Orlando, 25, was among several workers who declined to give their full name for fear of retaliation when they return to work.
“We are feeling pretty good, and we feel that we have the strength,” said Maden, 39, a 12-year quality control employee at the Renton facility. He believes the public, by and large, is behind them.
“It looks like we always want money, but behind the scenes, it is a lot more than that,” Maden said. “I believe that the public is getting more understanding of why we are on strike and what has been done to us.”
Last weekend, workers brought along a portable charcoal barbecue and a poster with the cartoon likeness of Boeing’s former CEO Dave Calhoun grinning and carrying away stacks of $100 bills. “WE MAKE THEM BILLIONS THEY GIVE EACH OTHER MILLIONS,” it read.
Here is our full story on the OECD’s upbeat assessment of the UK and global economy:
‘Davos on the Mersey’: key conference takeaways as Labour tries to woo business
Meanwhile, the Labour party’s annual conference carries on in Liverpool, dubbed by some insiders “Davos on the Mersey” because it is so packed with company executives.
Like last year, the exhibition and conference fringe had sponsored events, lounge areas and advertising from exhibitors including Gatwick, National Grid, Ikea and Specsavers. This year, however, business leaders were looking for clues about how Labour will govern after July’s election landslide.
After less than 100 days in power, and a month before the first Labour budget in almost two decades, many still await clarity on a range of policy priorities. But there were some hints of what the government is planning.
Rachel Reeves, the chancellor, dropped the broadest possible hint in her conference speech that the budget, on 30 October, would include a relaxation of the government’s self-imposed fiscal rules to prioritise investment in the UK economy.
Reeves told delegates on Monday:
It is time the Treasury moved on from just counting the costs of investment in our economy to recognising the benefits, too.
Sources confirmed she could change the way the government’s five-year debt rule is assessed to allow more spending on housing, roads and hospitals.
The chancellor hinted that next month’s budget would include a relaxation of the government’s self-imposed fiscal rules to prioritise investment in the UK economy.
This could involve excluding losses for the Treasury on the Bank of England winding down its crisis-era quantitative easing bond-buying programme, which experts say could open up headroom in the public finances worth up to £15bn.
It could also include moving Labour’s new investment institutions, the National Wealth Fund and GB Energy, off the government’s books.
Updated
DFS falls to loss, warns of 'long road to recovery'
The British furniture retailer DFS has fallen to a full-year loss, after it was hit by consumer caution amid high borrowing costs, and Red Sea disruption to shipping, and warned of a “long road to recovery” in the upholstery market.
The retailer, which specialises in sofas, reported a loss before tax of £1.7m, due to “record low market demand and Red Sea shipping disruption”. This compares with a £29.7m profit in the previous year. Revenues fell by 9.3% to £987m, with orders down by 1.8% year-on-year.
Delays to shipments due to cross the Red Sea – which have been rerouted around the African continent because of attacks on ships by Houthi rebels – were partly to blame.
Many UK consumers have been unable to buy bigger ticket items like new sofas as they have struggled with high interest rates. Those who have ordered were hit by delays.
DFS is expecting “a gradual market recovery over the course of the year”.
Tim Stacey, the chief executive, said:
Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return. We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the 2025 financial year.
In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.
It is clear that the upholstery market has a long road to recovery given the 20% decline on pre-pandemic levels that we have seen.
OECD: Global economy 'turning a corner'
The global economy is “turning a corner”, according to the latest outlook from the Organisation for Economic Cooperation and Development as it upgraded the UK’s growth forecast for this year to faster than Japan, Italy and Germany.
The OECD ranked Britain joint second among the G7 developed countries behind the US in its latest outlook on the global economy, but the UK is still expected to have the highest inflation in the group.
Describing the UK’s economic growth as “robust”, the OECD upgraded its growth for 2024 to 1.1% from a forecast of 0.4% made in May, as the country recovers from a mild recession at the end of last year. The forecast of 1.2% growth in 2025 was maintained.
In the May forecast, the UK was behind all other nations in the informal bloc but is now expected to outpace Japan, Italy and struggling Germany. Britain is now on a par with Canada and France but behind the US.
However, Britons are still expected to face headwinds from rising prices, with inflation expected to increase from 2.2% in August to 2.7% by the end of the year. UK inflation is on course to remain at 2.4% for 2025, rising at the fastest rate in the G7.
Overall, the OECD said that the global economy was “turning a corner” and lower inflation and cuts to the cost of borrowing by central banks would support “ongoing momentum” in most major economies. Those conditions will allow the global economy to return to health after the shocks caused by the coronavirus pandemic and Russia’s invasion of Ukraine, it said.
The OECD’s chief economist, Álvaro Pereira, said he was surprised by the strength of the recovery earlier in the year after the UK economy contracted in 2023.
The OECD was among the most pessimistic economic forecasters when it made a judgment in May that low consumer spending and weak business investment would drag on Britain’s growth.
Business investment has remained low, but rising wages and low inflation boosted consumer spending by more than expected.
Back to Rightmove’s rejection of the third takeover offer from Rupert Murdoch’s REA Group, worth £6.1bn, as too low.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
Rightmove is playing hard to get and Rupert Murdoch’s REA Group is going to have to up its game again if it has a chance of winning over the board to accept a takeover offer. The bids so far have been rejected out of hand, and even the improved latest offer is considered to materially undervalue the company and its future prospects.
With the UK government pledging to build 1.5m new homes, interest rate cuts eyed and the property market springing into life again, Rightmove clearly sees significant growth opportunities ahead.
Our full story is here:
Panmure Liberum analyst Sean Kealy said:
It’s hard to see why 759p is a good enough offer to ignore that potential plus the business’ growth prospects thereon out. On top of which, the structure of the offer is overly complicated – with 55% of it in scrip, which we expect many funds would choose to sell in the event of a deal, thereby complicating the realisation of value by investors.
As a result, we continue to see a low likelihood that a successful deal can be closed, in the absence of some creativity on REA’s part to increase its bid.
Updated
The pound slipped today, after trading close to 30-month highs yesterday.
Sterling is worth $1.3378, down 0.25%. The UK fund manager abrdn cautioned against an overly bullish outlook for the pound.
Matthew Amis, investment director at abrdn, said:
While we’ve seen bullish forecasts on the pound recently, we are less convinced. These forecasts are based on the view that Bank of England will struggle to get base rates materially lower from here. This contrasts with the US Federal Reserve who seem willing to aggressively cut interest rates. So while the pound reaching $1.40 may be good for holidaymakers, it would not be such good news for mortgage holders.
The US Federal Reserve cut 0.50 percentage points last week, by contrast the Bank of England was pushing back on the market view by telling us to expect ‘gradual’ cuts. Our view is that the BoE will cut in November, after which that gradual rate of cuts will accelerate.
Between now and November, Rachel Reeves will deliver her first budget, this will be fundamental to how the BoE position itself going into 2025. The UK is currently winning its battle with elevated levels of inflation but isn’t out of the woods yet. Reeves needs to be careful not to relight this fire. If she does, the result will be interest rates at higher levels for longer and a stronger pound.
Yesterday, Andrew Bailey, the governor of the Bank of England, said interest rates would fall “gradually”.
In an interview with KentOnline, he said that “inflation has come down a long way” – it was 2.2% in August, just above the central bank’s target, having fallen from over 11% in autumn 2022.
Last week, the Bank left interest rates on hold at 5% – but Bailey said he is “very encouraged” that inflation will fall.
Updated
Sweden's Riksbank cuts interest rates, flags more cuts
Sweden’s Riksbank has cut interest rates and signalled further reductions in the coming months and early next year, as inflation has fallen below the central bank’s target.
It cut its policy rate by 0.25 percentage points to 3.25%, saying:
Inflationary pressures have fallen over the year and are now assessed to be compatible with an inflation rate of around 2%.
The Riksbank has gradually eased its monetary policy over the year, by both cutting the policy rate and communicating that further cuts can be expected. Low and stable inflation and falling interest rates are contributing to a recovery in the economy.
Headline inflation has continued to fall from a peak of of over 10% in 2022, coming in at 1.2% in September – below the Riksbank’s forecast and its 2% target. It started cutting rates in May, the first easing in eight years, followed by another move in August.
Lower inflation is leading the world’s oldest central bank, founded in 1668, to reduce borrowing costs at a faster pace than previously flagged, as it explained in today’s statement:
If the outlook for inflation and economic activity remains unchanged, the policy rate may also be cut at the two remaining monetary policy meetings this year. A cut of 0.5 percentage points is possible at one of these meetings.
Moreover, the forecast indicates one or two further rate cuts during the first half of 2025. The policy rate is thus expected to be cut at a clearly faster pace than was previously communicated, which contributes to stronger economic activity and an inflation rate close to the target.
Updated
The oil giant BP is holding a board meeting in India this week, as it scouts for more opportunities in the country.
India, the world’s third-biggest oil importer, wants to boost its stagnant oil and gas output. The government said in June that India’s top exploration company Oil and Natural Gas Corp was seeking a tie-up with a large global oil firm to boost production from its western offshore Mumbai High fields.
The BP board is on a five-day visit to India, and met Indian oil minister Hardeep Singh Puri yesterday.
The British company’s chief executive Murray Auchincloss said in a statement:
We see growing business opportunities, including through our world-class partnership with Reliance, producing the country’s gas and growing our joint retail presence.
BP and India’s Reliance Industries have a fuel stations and convenience stores joint venture that operates under the Jio-bp brand.
Puri, who hosted the BP board at his residence, said on X:
Delighted to host the entire board of @bp_plc over dinner at my residence.
— Hardeep Singh Puri (@HardeepSPuri) September 25, 2024
I am sure that the robust partnership between the global energy major and India which spans across the entire energy value chain including exploration & production, biofuels, fuel retail & other emerging… pic.twitter.com/3lMv9BO7sG
UK, European shares fall as China stimulus boost fades
While Chinese stocks had another day of strong gains on the back of Beijing’s stimulus blitz, shares in London and the rest of Europe have fallen this morning.
The UK’s FTSE 100 index is down 0.17%, or 13 points, at 8,269. Rentokil Initial is the biggest riser, up 3%, following the news that the activist investor Nelson Peltz’s Trian Partners has taken a seat on the struggling pest control company’s board.
The Dax in Frankfurt fell by nearly 0.5% while the CAC in Paris slipped by 0.4% and the FTSE MIB in Milan was little changed.
Union says Boeing workers 'not interested' in 30% pay offer
The union representing 33,000 striking Boeing workers says a survey of its members shows they are “not interested” in the aircraft maker’s latest 30% pay offer.
The International Association of Machinists and Aerospace Workers (IAM), Boeing’s largest union, said in a post on X, formerly known as Twitter:
Our members stand strong, and we remain ready to continue mediated or direct negotiations with Boeing. This has been made clear to both the company and our membership. The only way to resolve this strike is through negotiations, and rest assured, your Union will not bargain through the media.
The survey results from yesterday were overwhelmingly clear, almost as loud as the first offer: members are not interested in the company’s latest offer that was sent through the media. Many comments expressed that the offer was inadequate and the company’s decision to bypass the Union was viewed as disrespectful.
Yesterday, the union reacted with anger at what Boeing called its “best and final” pay offer of a 30% rise per four years. It included the reinstatement of a performance bonus, improved retirement benefits and a one-off $6,000 (£4,470) bonus.
The company said the offer was dependent on it being ratified by union members by midnight Pacific time on Friday 27 September.
However, IAM declined to put the offer to a vote, saying the proposal was not negotiated with the union and that it fell short of members’ demands.
Boeing has said its latest offer, made after unsuccessful federal mediation last week, made significant improvements and addressed demands from the union and employees. “We first presented the offer to the union and then transparently shared the details with employees,” the company added.
Nelson Peltz's Trian Partners takes board seat at Rentokil
Nelson Peltz’s Trian Partners has taken a seat on Rentokil Initial’s board, a fortnight after the pest control company issued a profit warning, sending its shares sharply lower.
Today, the shares rose by 2.9%.
Trian, a New York-based hedge fund founded by Nelson Peltz and Peter May, is an activist investor with a 2.3% stake in Rentokil.
Its head of research, Brian Baldwin, will sit on Rentokil’s board as a non-executive director from 1 October, and will also join its nominations and remuneration committees. He has played leadership roles in many of Trian’s investments, and also sits on the board of the UK fund manager Janus Henderson.
Richard Solomons, Rentokil’s chairman, said:
We look forward to working with him to deliver long-term sustainable value for our shareholders and, in particular, executing our plans to integrate the Terminix business and to increase organic growth in our North America operations.
Rentokil became the biggest pest control company in the world with the $6.7bn deal to acquire US rival Terminix agreed in December 2021.
Weaker demand for termite extermination services sent Rentokil shares crashing by 19% on 11 September, after the company warned of lower profits caused by a slowdown in North America.
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Co-op Group returns to profit on quick commerce growth
The Co-op Group, which owns Britain’s seventh-biggest supermarket chain, is back in the black, as growth in membership and its quick commerce business offset rising costs.
The Co-op, which is owned by its members, said the number of members had grown by 20% to 5.5 million, putting it on target to reach 8 million by 2030.
The group has a partnership with Uber Direct, allowing shoppers to order groceries on the Co-op website with delivery through the Uber Eats’ network.
It plans to open 120 new food stores by the end of next year. The 180-year-old group runs almost 2,400 supermarkets as well as funeral, insurance and legal services businesses. Food sales grew by 3.2% while legal services posted 35% revenue growth, the fastest-growing division.
The Co-op made a profit before tax of £58m in the first half of the year, compared with a loss of £33m a year earlier. The group credited lower interest payments and strong Funeralcare investment returns. Revenues rose by £100m to £5.6bn.
Shirine Khoury-Haq, the chief executive, said:
We have delivered a strong performance for the first six months of this year as our strategy starts to gain real momentum. Although the external environment remains challenging, it is testament to the underlying strength of our Co-op that we have outperformed in all our markets while significantly increasing our investments in our colleagues, pricing and in the growth of our businesses.
The dollar has weakened as Chinese monetary stimulus coursed through commodity markets yesterday and gave many emerging markets currencies a lift, said ING analysts led by Chris Turner.
The jury is out on whether this China stimulus story is an enduring one for global currencies. However, evidence of a US slowdown continues to accrue and investors do seem to have shifted to a sell-dollar mindset.
Chinese stimulus was the top story in FX markets yesterday. Metals markets rallied and the currencies of the emerging market commodity exporters in Latin America and South Africa had a good day.
The jury is out on whether this theme can be maintained. For example, were Chinese monetary stimulus backed up with some fiscal stimulus (consumption vouchers?) then we would have a little more confidence that these short-term trends could follow through.
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Introduction: Britain’s Rightmove rejects £6.1bn offer from Murdoch’s REA; Chinese stocks extend rally
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The British online property portal Rightmove has rejected an improved £6.1bn takeover proposal from billionaire Rupert Murdoch’s REA Group, saying it undervalued the company.
The Australian group said on Monday that it had made a third offer for the company, worth £6.1bn. But Rightmove said the increased proposal “continues to be unattractive and materially undervalues the company and its future prospects”.
REA responded swiftly, saying it was “disappointed” by the latest rejection, and “frustrated” that the rejections aside, “REA has still had no substantive engagement with Rightmove”. It added:
REA urges Rightmove shareholders to encourage the board of directors of Rightmove to engage in constructive discussions with REA to work towards a recommended transaction,
ahead of next Monday’s “put up or shut up” deadline.
Chinese stocks have rallied for a second day, fuelled by Beijing’s stimulus, while the rest of Asia is more mixed.
The mainland China CSI 300 index rose by 1.68% following a 4.3% jump the day before, while Hong Kong’s Hang Sing added nearly 1% after Tuesday’s 4.1% leap. Japan’s Nikkei slipped by 0.26% while South Korea’s Kospi lost 1%.
The People’s Bank of China launched a blitz of stimulus measures to support its economy, cutting the amount of cash banks must hold on their books, lowering several key interest rates and unveiling more support for the property market.
The news lifted stocks around the world. On Wall Street, the S&P 500 celebrated its 41st record high yesterday.
However, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, cautioned:
The problem is, the stimulus measures will take time to show in the economic data. And more worryingly, they won’t do much to fix the country’s deepest issues – they won’t reverse local governments’ heavy debt burden, China’s aging population, and will hardly boost the demand-led growth. As such long-term investors appreciate the efforts but prefer to watch from a distance for now.
The Agenda
8.30am BST: Sweden Riskbank interest rate decision
12pm BST: US MBA Mortgage applications
3pm BST: US New Home sales for August
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