Closing summary
That’s all for today. Time for a quick recap.
The pound has rallied back over $1.13 after Liz Truss announced she is resigning as prime minister, teeing up a short battle to replace her.
The London stock market has also closed higher, while some UK bond prices have strengthened a little today, lowering the cost of long-term borrowing a tad.
Analysts see Rishi Sunak and Penny Mordaunt as the front-runners, with the winner due to be named a week on Friday.
The end of Truss’s brief, calamitous, stint in Downing Street will also likely end the push for Trussonomics, following the frenzied market reaction to her unfunded tax cuts paid for by higher borrowing.
Analysts say a shift to more orthodox conservative economic policy could stabilise market, and remove the so-called ‘moron risk premium’ which hit UK assets.
As Paul Dales of Capital Economics put it earlier:
“Overall, the resignation of Truss is a step that needed to happen for the UK government to move further along the path towards restoring credibility in the eyes of the financial market.
“But more needs to be done and the new prime minister and their Chancellor have a big task to navigate the economy through the cost of living crisis, cost of borrowing crisis and the cost of credibility crisis. The situation is clearly going to evolve very quickly.”
Business leaders have demanded that Truss’s successor acts rapidly to stabilise the crisis-hit economy.
Our Politics Liveblog has all the action:
In other news…
A Bank of England deputy governor has predicted that interest rates may not rise as high as the markets expect.
Investors now believe the Bank is likely to raise interest rates by three-quarters of a point in November, not the full percentage-point increase expected recently.
More UK firms are running short of cash, and suffering a drop in business, according to the latest weekly data from the ONS.
The cost of living crisis is forcing millions of people to skip meals, new research from Which? has found….
… while Waitrose customers have been turning to spam, pilchards, and fish heads to cut their spending.
Trade from the UK to the EU is down 16% on the levels anticipated had Brexit not happened, a new report has found.
While UK hospitality firms are suffering the biggest downturn since the pandemic lockdowns of 2021.
National Grid has significantly increased its financial incentive for households that shift their power usage away from peak times as part of a renewed effort to prevent rolling power cuts.
A National Grid director has explained how the plan will reward homes and businesses for using energy outside of peak hours:
In other energy news, the gas and electricity supplier Ovo has revived its interest in snapping up nationalised rival Bulb.
Asset managers have said they are navigating tough investment conditions in the UK, as economic turmoil reduced the value of their portfolios and persuaded customers to pull and divert their cash.
Jupiter Fund Management said the macroencomic backdrop was worsening, while Schroders reported a drop in sssets under management, including a £20bn decline in its “solutions” division, which covers funds focused on liability driven investing, or LDI.
And National Express has reported a further rebound in passengers and a rise in revenues after it stepped up services during rail strikes and helped shuttle police during the Queen’s funeral.
In other news tonight, the gas and electricity supplier Ovo has revived its interest in snapping up nationalised rival Bulb, potentially gazumping a bid by Octopus Energy.
Ovo has written to Bulb’s special administrator to inform it that it is again considering a purchase. Ovo originally submitted an offer to buy Bulb shortly after it collapsed in November last year, but later pulled out of the auction, during which several bidders have fallen away.
Discussions between government officials and Octopus have dragged on for months. Industry sources told Sky News, which first reported Ovo’s renewed interest, that its proposals would not require additional taxpayer funding, unlike those of Octopus.
