Closing summary: City minister 'to meet banks' over mortgage scheme
The UK’s City minister is reportedly set to meet representatives of large British banks in order to discuss an extension of support for first-time buyers, as the government looks to win potential housebuyers ahead of the autumn statement.
The meeting is expected to take place before the autumn statement, the chancellor’s secondary fiscal event, on 22 November, Sky News reported.
The City minister is to hold talks with some of Britain’s biggest banks in the lead-up to the autumn statement as the government looks to extend its flagship scheme for first-time buyers.
The Sunday Times reported at the weekend that a package of support for first-time buyers was being lined up for the autumn statement.
An extension of the mortgage guarantee scheme, which enables homebuyers to acquire properties worth up to £600,000 with only a 5% deposit, is said to top the list of options.
It comes as chancellor Jeremy Hunt looks to improve the Conservative party’s offer to young people, ahead of a general election that is expected next year.
Financial markets today showed why the government’s room for manoeuvre is limited: the Conservatives have had a wary eye on the bond markets since the rapid ejection of Liz Truss as prime minister last year.
The UK’s 30-year bond yield hit its highest in 25 years, a change that could eventually lead to borrowing costs rising for households.
In other business news today:
US authorities have demanded documents from Tesla in relation to the electric carmaker’s driver assistance technology and the range of its cars.
Keir Starmer has confirmed that a Labour government will invest £3bn in the UK steel industry in a speech today at Port Talbot steelworks, the steel lobby group has said.
US supermajor Chevron has said it will buy smaller oil company Hess in a $53bn deal, as it looks to keep upping oil production well into the 2030s.
China’s stock market index has dropped to its lowest level since before the coronavirus pandemic in 2019, a sign of the struggles of the world’s second biggest economy.
Foxconn, has said it will cooperate with authorities following the revelation that it faces a tax investigation in China.
You can continue to read our live coverage from around the world:
In our coverage of the Israel-Hamas war, Gaza says more than 5,000 people killed as Israel says Hamas is holding 222 hostages
In the UK, Rishi Sunak tells Commons that UK agencies believe Gaza hospital blast was caused by militants’ rocket
In our coverage of the Russia-Ukraine war: Erdoğan submits Sweden’s Nato bid for ratification; Russia plans significant defence spending increase, says UK
In the US, nine Republicans vie to be speaker candidate as House paralysis enters third week
In our Europe coverage, Orbán calls Brussels ‘a bad parody’ as he pokes fun over EU’s rule of law measures against Hungary during speech
Thank you for reading today. Please do return tomorrow bright and early for more live coverage. JJ
The business secretary, Kemi Badenoch, has reportedly dealt another blow to the scandal-hit Confederation of British Industry (CBI) by turning down an invite to speak at the lobby group’s annual conference.
Badenoch’s team has told the CBI that she would not be able to address the conference due to scheduling clashes leading up to the chancellor, Jeremy Hunt’s, autumn statement on 22 November, according to Sky News.
It leaves the CBI without a high-profile speaker at the annual event, which is set to take place at the Queen Elizabeth II conference centre in London on 20 November. However, the Guardian understands that a speaker for the event – aimed at showing fruits of the organisations re-engagement efforts – may be announced in coming days.
You can read the full report here:
Updated
US authorities demand internal Tesla documents for investigations
US authorities have demanded documents from Tesla in relation to the electric carmaker’s driver assistance technology and the range of its cars.
Tesla revealed that it had received subpoenas from the US Department of Justice (DoJ) for “documents related to Tesla’s Autopilot and FSD”, its “full self-driving” mode that aims to eventually enable completely driverless autonomy.
The authorities also asked for documents to do with “personal benefits, related parties, vehicle range and personnel decisions”, Tesla said.
Tesla boss Elon Musk has had several run-ins with US regulators, including the DoJ. It last week alleged in a legal filing that depositions from former employees at Twitter, now rebranded X, raised “serious questions” about whether the company was complying with an order imposed by the consumer and competition watchdog, the Federal Trade Commission (FTC).
Musk has also previously been sued by the Securities and Exchange Commission, the markets regulator, over his statements on supposedly taking Tesla private, and he is also under investigation in relation to his purchases of Twitter shares before taking over the social network.
Tesla that it did not believe any wrongdoing had been found:
To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. We cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand.
Updated
It is going to be a new look, slimmed down snapshot of the UK labour market when the Office for National Statistics provides its latest update at 7am tomorrow morning.
The release has been delayed for a week because the monthly estimates for employment and unemployment are based on the labour force survey (LFS), and the ONS is concerned about the quality of the information it has been getting. Put simply, it has been having trouble finding enough members of the public willing to pick up the phone.
As a result, it will be adjusting the LFS with data from other sources, including payroll data from HM Revenue and Customs and the claimant count, which is an alternative way of calculating joblessness.
The ONS said the release would cover employment, unemployment and inactivity broken down by age but not by gender.
Other details, such as whether of not employees were born outside the UK, will also be missing, but the ONS said it would still be possible to make historical comparisons between its old and new datasets.
A bit more info on Labour’s plans for the UK steel industry: it appears to include investments in a new technique to make clean steel. That would be a huge relief for workers on blast furnaces at Port Talbot and Scunthorpe.
Here is the problem: enormous blast furnaces that run constantly are the main way to make new steel. But they cause unavoidable carbon emissions, meaning switching to clean electricity is not possible. So Tata Steel and British Steel under China’s Jingye are considering switching to electric arc furnaces which use electricity to melt recycled steel.
That is potentially clean, but will not need thousands of workers for huge blast furnaces. So unions are hoping for an additional plan: as well as using electric arc furnaces, they want directly reduced iron plants capable of turning iron ore to steel, using hydrogen to remove the oxygen from the ore and leave the metal behind.
Labour’s exact plans are not clear, but last year it said that its £3bn steel investments would include hydrogen. That would preserve jobs, and the ability to continue making steel from iron ore in the UK.
However, it would also need the steel companies on board to make big investments in a technology that has not yet been carried out at the huge scale needed by big steel plants.
You can read more about the quandary facing steel producers in the UK (and indeed around the world) in my report from Port Talbot earlier this summer:
Keir Starmer confirms £3bn UK steel investment planned - lobby group
Keir Starmer has confirmed that a Labour government will invest £3bn in the UK steel industry in a speech today at Port Talbot steelworks, the steel lobby group has said.
Gareth Stace, director general of lobby group UK Steel, said:
We welcome Labour’s continued commitment to the future of our steel industry. Steel is a strategically vital core product that no developed economy can be without. The UK is the only G20 country where steel production has sharply declined over the last decade relative to the size of our economy and manufacturing base – we are a real outlier.
For our steel sector to not only survive but actually thrive and deliver a massive boost to Net Zero Britain, we need a strong, long-term partnership between government and industry.
It comes with workers at both of the UK’s remaining sites with blast furnaces bracing for steep job losses.
British Steel’s Chinese owner is reportedly considering cutting as many as 2,000 jobs as it shifts to cleaner electric arc furnaces. The owner of Port Talbot’s steelworks, Tata Steel, is also expected to cut as many as 3,000 jobs.
Unions are furious about the plans, and are hoping to put forward alternatives that do not require huge redundancies.
Charlotte Brumpton-Childs, national officer at the GMB union, said:
GMB does accept that mass job losses are the way to decarbonise the steel industry. There are a myriad options available and fair, just transition for workers must be at the centre of any plan.
British Steel workers have endured a turbulent few years, accepting pay cuts and pay freezes, dealing with uncertainty and having their terms and conditions eroded to help keep the company going. It shows flagrant disregard to repay their commitment with announcements that up to half of them of them could lose their jobs.
Updated
On the London Stock Exchange the FTSE 100 has dipped a bit further: it is now down by 0.5% for the day because commodities companies have dropped on lower prices.
Germany’s Dax index is down by nearly 1%, while France’s Cac 40 is down by 0.3%.
The UK risks seeing its manufacturing sector fall behind rival economies if the government does not offer certainty over policies on shifting to green energy, according to the head of FTSE 100 packaging maker DS Smith.
Miles Roberts, the company’s chief executive, said British government decarbonisation policy has lacked the clarity of European rivals, meaning DS Smith has moved ahead with a €90m (£78m) investment in a paper mill in Rouen, northern France, while waiting for more clarity from government before investing in upgrades in the UK.
The EU’s Green Deal and the US Inflation Reduction Act have offered enormous subsidies to help industries to reduce their own carbon emissions as well as to manufacture the technology needed for the transition away from fossil fuels.
“We’re saying to the UK, we’re here. What’s your plan?” said Roberts. “It would be very helpful to understand what’s happening in the UK that’s mirroring the EU. We’ve taken back control, so where is that control? How are we making Britain an attractive place to invest?”
You can read the full story here:
Chevron to buy oil rival Hess in $53bn deal
US supermajor Chevron has said it will buy smaller oil company Hess in a $53bn deal, as it looks to keep upping oil production well into the 2030s.
Chevron said it will give Hess shareholders 1.0250 shares of Chevron for each Hess share, equivalent to $171 per share. The total deal size will reach $60bn when including debt.
The deal will give Chevron access to the huge boom underway in the South American country of Guyana, where companies are rushing to exploit huge reserves found off its coast – even as environmental campaigners have argued that the products will harm the atmosphere.
Reuters reported:
The deal puts two of the top oil giants, Chevron and ExxonMobil, head-to-head in two of the world’s fastest growing oil basins - shale and Guyana.
Guyana has become a major oil producer in recent years after huge discoveries by Exxon Mobil, its partner Hess and China’s CNOOC, which together produce 400,000 barrels per day from two offshore vessels and have said they could develop up to 10 offshore projects.
Chevron boss Mike Wirth has made it clear that he wants to keep pumping as much oil as possible (including in a big interview with the Financial Times today in which he seemingly forgot to mention the big acquisition about to drop on the same day). The company is committing much less capital to lower-carbon energy than some of its European rivals such as Shell and BP – which themselves are heavily criticised by environmental groups for not doing enough to look beyond petroleum (to coin a phrase).
The signal from Chevron was clear in its announcement of the Hess deal on Monday:
The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade.
It is not just the 30-year where UK bond yields are rising: the benchmark 10-year yield is also up strongly today.
The 10-year gilt yield hit a high of 4.743% on Monday, the highest since August, and up from 4.213 as recently as 20 September.
It is not just a UK phenomenon: the US 10-year Treasury yield rose above 5%, the highest since July 2007.
German 10-year yields rose to a high of 2.966%. Yields were marginally higher at the start of the month, but October has brought the highest levels since the eurozone crisis of 2011.
New 25-year high for UK government long-term borrowing costs
The UK government’s cost of borrowing for the long term has hit a new 25-year high as investors around the world bet on higher interest rates.
The 30-year UK gilt yield, a measure on the returns gained by investors lending governments money, rose on Monday to 5.209%, its highest since the summer of 1998. Yields move inversely to prices, so the move corresponds to prices of the debt falling.
Rising bond yields are tricky for governments because they make it more expensive to borrow.
Over most of the last 25 years more expensive debt servicing has not been a worry for governments, as central banks cut interest rates to near zero following the financial crisis of 2008-9.
During Liz Truss’s disastrous premiership UK bond yields surged as investors worried about unfunded tax cuts. However, the moves higher in recent months reflect the expectation that interest rates will remain higher for longer to fight inflation.
That also means that the Conservative party would not be able to tame bond markets by dispensing with a prime minister for a second time. Higher bond yields will likely limit the room for manoeuvre for a pre-election giveaway from the chancellor Jeremy Hunt, because any tax cuts or increased spending might be seen as inflationary by markets.
This explainer from the Guardian’s economics correspondent, Richard Partington, tells you all you need to know:
The influential Tory donors behind the JCB digger empire could be hit with a bill for more than £500m to settle a longrunning investigation by HM Revenue and Customs, the Guardian can reveal.
The investigation into Anthony Bamford, a Tory peer, and his brother Mark, the director of a subsidiary of the Conservative party, is understood to span a complex network of offshore tax havens and companies.
The inquiry is understood to be targeting efforts by the Bamford dynasty to aggressively minimise the payment of UK taxes and covers two decades.
Lawyers acting for Lord Bamford and Mark Bamford declined to comment on the record.
You can read the full story here:
China has targeted Apple supplier Foxconn with a tax investigation. Foxconn’s share price dropped by 2.9% on Monday.
Foxconn is deeply involved in trade between the US and China, but also with the Taiwan, which China claims to own. So the timing of the intervention seems notable, writes the Guardian’s Kalyeena Makortoff:
It comes months after Foxconn’s founder, Terry Gou, announced he would run as an independent leadership candidate in Taiwan’s 2024 presidential election. Gou – a well-known and outspoken businessman – resigned from Foxconn’s board in September, days after announcing his election bid.
Gou’s presidential candidacy comes amid ongoing tension over Taiwan’s independence, with China having vowed to subsume Taiwan into the Chinese state, under what it calls “reunification” plans. That is despite widespread resistance by Taiwan’s population and its main political parties.
Gou used the launch of his presidential bid in August to declare that he would “bring 50 years of peace to the Taiwan Strait and build the deepest foundation for the mutual trust across the strait”.
You can read the full report here:
Chinese stocks fall to pre-pandemic levels
China’s stock market index has dropped to its lowest level since before the coronavirus pandemic in 2019, a sign of the struggles of the world’s second biggest economy.
The CSI 300 index in Shanghai fell by more than 1% to a low of 3,450 points on Monday, the lowest since February 2019.
That was far below the peak of 5,930 points in February 2021, when China’s economy was outperforming others because of strict coronavirus controls. However, those controls eventually dragged the country back.
Slowing economic growth in China has seen investors mark down the earning prospects of its biggest companies listed in Shanghai and Hong Kong. It has also exposed the vulnerabilities of some of the biggest companies in China’s embattled property sector, which have since defaulted on debt obligations.
Investors have also been rattled by China’s geopolitical manoeuvring against the US, its great rival. The Financial Times, which first reported the stock market drop, cited an Asia-based senior capital markets banker at one Wall Street investment bank, who said investors need clarity before they shift money back to China en masse:
Global investors need two floors before they get back into China — they need a floor for the geopolitics and a floor for the Chinese economy. Only then they can start pricing things up.
Shares in London-listed drug company Indivior have risen by 7% on Monday after it said it will pay a $385m settlement of lawsuits claiming it had illegally supressed competition for its addiction treatment Suboxone.
Indivior, a member of the FTSE 250 index of mid-sized companies, said it had agreed the payment with drug wholesalers allegedly affected by its actions. Indivior was alleged to have switched from a tablet to an oral film for the product to extend its monopoly over the valuable product used to treat opioid addiction.
Indivior chief executive Mark Crossley said:
We are pleased to achieve this settlement to conclude this legacy multi-district antitrust matter.
The resolution of this litigation, which was filed over a decade ago, provides greater certainty for all Indivior stakeholders and allows us to continue focusing on our important work for patients suffering from opioid use disorder and mental health illnesses around the world.
The FTSE 100 has dippedx in the first minutes of trading. It fell by 0.2%.
Commodity-linked stocks dragged back the index. As well as oil prices, gold, silver and copper prices also fell back on Monday morning.
The biggest downward mover was gold miner Fresnillo, which dropped 1.9%. Miners Glencore and Anglo American both dropped 1.2%.
Updated
Oil prices drop amid Gaza diplomacy; Apple supplier Foxconn faces tax probe
Good morning, and welcome to our live coverage of business, economics and financial markets around the world.
Oil prices dropped back on Monday after diplomatic efforts over the weekend to try to prevent the conflict between Israel and Hamas from spreading, including aid convoys being allowed into Gaza.
The price of a barrel of Brent crude oil, the North Sea benchmark, for December delivery fell as low as $91.08 on Monday morning, down by more than a dollar, or about 1%, following the weekend closure of markets. West Texas Intermediate, the North American grade also used as a global benchmark, fell by 1.2% as low as $86.83.
Neither Israel nor Palestine are significant fossil fuel producers, but analysts are concerned that supplies from other countries could be affected if fighting spreads further through the region. Israel has been bombing Gaza in response to Hamas’s attack on civilians on 7 October, but it has so far not launched a promised ground invasion into the territory.
Vandana Hari, founder of oil market analysis provider Vanda Insights, told Reuters:
There is some relief in the oil market that Israel is holding off on a planned ground incursion of northern Gaza to negotiate a release of hostages, which opens up a window for diplomacy.
A ground siege is seen as a potential trigger for widening the Israel-Hamas conflict into the Middle East region, the factor behind crude’s risk premium over the past fortnight.
Elsewhere, one of the key manufacturers of Apple’s iPhone, Foxconn, has said it will cooperate with authorities following the revelation that it faces a tax investigation in China.
Chinese state-controlled media reported the existence of the probe on Sunday, and Foxconn – officially called Hon Hai Technology Group – confirmed its existence. It said:
Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units on the related work and operations.
Any move to rein in Foxconn could have geopolitical ramifications, given its importance to Apple – the world’s biggest public company – and therefore for the US economy. Unnamed sources told Reuters they believed only Foxconn’s probe was made public for political reasons. Reuters reported:
They highlighted the audit comes less than three months ahead of Taiwan’s presidential election and amid Foxconn’s diversification drive to move some production out of China.
The agenda
1:30pm BST: US Chicago Fed national activity index (September; previous: -0.16)
3pm BST: Eurozone consumer confidence flash reading (October; prev.: -17.8; consensus: -18.3)
