Closing summary
The European Central Bank has raised interest rates by a bigger-than-expeced half point, taking its key deposit rate (which was negative) to 0% and hinted at further rate hikes in the coming months. It was its first rate hike in 11 years and was triggered by soaring inflation, which reached 8.6% last month, far above its 2% target.
The central bank also unveiled a new new bond purchase scheme called Transmission Protection Instrument, which is intended to cap the rise in countries’ borrowing costs (particularly those of highly-indebted nations like Spain and Italy) and limit financial fragmentation.
The euro, bond yields and European bank shares all rose on the announcement, but the shares soon gave up their gains.
Soaring inflation pushed interest payments on UK debt to a record high in June, putting the government’s budget deficit on course to reach more than £100bn this year, almost double its pre-pandemic level.
Gas has started to flow at reduced levels from Russia to Germany through the Nord Stream 1 pipeline after fears a scheduled shutdown for maintenance work would be used as a pretext to permanently close off the supply.
However, the resumption at an estimated 40% of supplies is insufficient to keep an energy crisis at bay in Europe this winter, experts said.
Our other main stories:
Thank you for reading. We’ll be back tomorrow. Bye! - JK
European shares are drifting lower again. The UK’s FTSE 100 index is down 10 points, or 0.15%, at 7,254 while Germany’s Dax and Italy’s FTSE MiB both lost about 1% and France’s CAC slipped 0.3%. The euro is 0.4% higher versus the dollar at $1.0214.
On Wall Street, the Dow Jones is down 0.2%, while the tech-heavy Nasdaq is up 0.3% and the S&P 500 is flat.
Asked whether this is a historic moment for the ECB, Lagarde replies:
It’s a rather historical moment for me at least, for two reasons. it’s very good when a whole team, 25 members around the table are completely aligned in support for a transmission instrument that will support monetary policy going forward.
It’s an extremely gratifying moment.
It’s the first time in over a decade that we raise interest rates and moving out of negative interest rates....but I have a short history as a central banker,
she concludes.
Lagarde explained that there are “no ex ante limitations” to the new TPI bond purchase programme.
The governing council would rather not use it, but if we have to use it we will not hesitate.
Updated
Lagarde explains that from now on, monetary policy decisions will be based on a month-by-month basis, on the basis of the latest data – so no more forward guidance.
The new TPI instrument was approved with unanimity by the ECB’s governing council, Lagarde said. Policymakers weighed up the pros and cons of a 50 basis point hike at this meeting, and judged that
it was appropriate to take a larger step towards exiting from negative interest rates.
At the end of the meeting, “all members rallied to the consensus of 50bps,” she said. All eurozone members are eligible for the new TPI programme. Voilà, she concluded.
Markets had expected a 25 basis point rate hike at today’s meeting, followed by a 50bps move at the next meeting in September.
Updated
Lagarde: Inflation to stay 'undesirably high'
Lagarde just said that price pressures are spreading across more sectors and inflation is expected to stay “undesirably high owing to continued pressures from energy and food prices,” but energy prices should stabilise and supply chain bottlenecks should ease at some stage. Inflation “ is expected to remain above our target for some time,” she added later.
She noted that wage growth had increased gradually in recent months, “but still remains contained overall”.
R.I.P. forward guidance.
— Frederik Ducrozet (@fwred) July 21, 2022
Not necessary a bad thing in the end, but credibility is an important asset that the ECB needs to preserve.
Updated
Details of the new TPI tool will be published at 2.45pm BST.
Chris Beauchamp, chief market analyst at the trading platform IG Group, said:
The ECB has put new life into the euro with its surprise 50bps rate hike, and its strong words on its new crisis-fighting mechanism are designed to add to the sense that the central bank is serious about confronting the twin challenges that it faces.
The bank’s record on raising rates is hardly encouraging, but with inflation running so hot this is a clear statement of intent that has markets scrambling to price in a more hawkish policy in the months to come.
You can watch the ECB press conference with president Christine Lagarde live here.
Before we tune into the ECB’s press conference, here is some instant reaction.
Carsten Brzeski, global head of macro at ING, said:
A historic day for the European Central Bank. For the first time since 2011, the Bank has hiked interest rates and did so with a bang. Hiking rates by 50bp and softening forward guidance shows that the ECB thinks the window for a series of rate hikes is closing quickly.
What did the ECB just announce?
- All three key ECB interest rates were increased by 50bp.
- Forward guidance was changed to a “meeting-by-meeting” approach, which is a more dovish tweak compared with the aggressive forward guidance from the June meeting.
- A Transmission Protection Instrument (TPI) was introduced but without any details.
Brzeski said:
This decision shows that the hawks must have got cold feet, fearing that the promised higher-than-25bp rate hike in September would be washed away by the looming recession. The agreement on a TPI had to be paid for by the doves with a stronger rate hike.
We all know that today’s rate hike will not bring down inflation in the short run - not even on the demand side of the economy, which will react much more to the looming recession than to any ECB action. The hike, as well as potential further hikes, are all aimed at bringing down inflation expectations and to restore the ECB’s damaged reputation and credibility as an inflation fighter.
Today’s decision shows that the ECB is more concerned about this credibility than about being predictable. This matters more than forward guidance. Today’s decision conforms with our previous view that the ECB will not be able to deliver as many rate hikes over the next 12 months as markets had priced in after the June meeting.
The euro firmed by half a percent on the ECB’s move, while Spain’s Ibex index rose 0.7% to a session high and Italy’s FTSE MiB pared earlier losses of more than 2% and is now down just 0.3%. Bond yields also rose.
The ECB also agreed to provide extra help to more indebted nations such as Italy. It approved a new bond purchase scheme called Transmission Protection Instrument, which is intended to cap the rise in their borrowing costs and limit financial fragmentation.
It said:
In particular, as the Governing Council continues normalising monetary policy, the TPI will ensure that the monetary policy stance is transmitted smoothly across all euro area countries.
The TPI will be an addition to the Governing Council’s toolkit and can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area.
The scale of TPI purchases depends on the severity of the risks facing policy transmission.
As interest rates go up, borrowing costs increase more for countries like Italy, Spain and Portugal as investors demand a bigger premium to hold their debt.
ECB president Christine Lagarde is due to hold a press conference shortly.
Updated
Here is our full story on the ECB’s move:
ECB raises rates by 50bps to combat inflation
The European Central Bank has raised its three key interest rates by 50 basis points to combat inflation, a larger move than it had previously signalled.
It is the central bank’s first rate rise in 11 years and took the benchmark deposit rate to 0%. It hinted at further rate hikes in the next few months. Inflation in the eurozone reached 8.6% last month.
The governing council judged that it is appropriate to take a larger first step on its policy rate normalisation path than signalled at its previous meeting. This decision is based on the Governing Council’s updated assessment of inflation risks...
At the Governing Council’s upcoming meetings, further normalisation of interest rates will be appropriate.
The frontloading today of the exit from negative interest rates allows the Governing Council to make a transition to a meeting-by-meeting approach to interest rate decisions.
We raised interest rates by 0.5%.
— European Central Bank (@ecb) July 21, 2022
See our latest monetary policy decisions https://t.co/7arxAFKnmc pic.twitter.com/mCInj0jyaM
Updated
Martin Sorrell's ad group cuts earnings target, shares halve
Sir Martin Sorrell’s digital advertising group S4 Capital lost half its stock market value after the costs of rapid hiring forced it to slash its full-year earnings target.
It cut its estimate for full-year core earnings to about £120m from a market expectation of approximately £160m after rapid hiring in the content division hit first-half earnings.
Sorrell, who built WPP into the world’s biggest advertising holding company, launched the digital ad group S4 in 2018, acquiring companies and growing rapidly as it counted Google, Facebook and other tech groups as clients.
But it has hit turbulent waters this year. Four months ago the group spooked the market by delaying financial results after the auditor refused to sign off on the accounts. It later published them in early May, pledging to strengthen its financial controls after it discovered weaknesses and a lack of documentation in its content division.
On Thursday shares in the group, which hit a peak of 878p in September 2021, fell more than 50% in early trading to 116p, recovering slightly by lunchtime to 135p – a 40% drop.
Mike Ashley's Frasers Group plans more stores
Mike Ashley’s Frasers Group, the owner of Sports Direct and Jack Wills, plans more acquisitions and store openings after sales rose by almost a third and profits bounced back following the end of high street lockdowns, writes our retail correspondent Sarah Butler.
Pre-tax profits for the company, which also owns House of Fraser, Flannels, Game and Evans Cycles, and recently bought the online specialists Missguided and Studio Retail, increased to £366m in the year to 24 April from just £8.5m a year before, as sales rose almost 31% to £4.7bn.
Frasers’ new chief executive, Michael Murray, said shoppers had defied expectations that sales had permanently shifted online during the pandemic. The group’s profit rise came despite booking £227m of property impairments as store values declined in the light of fears about the industry’s future.
Draghi resigns as Italy's prime minister
Mario Draghi has confirmed his resignation as Italy’s prime minister after an attempt to salvage his broad coalition failed when three key parties snubbed a confidence vote, paving the way for snap elections that could take place as early as late September.
Backed by a groundswell of public support, the former European Central Bank chief had attempted to continue his administration on condition that his alliance “rebuild a pact of trust” that would enable it to work together to overcome huge challenges over the coming months.
Draghi formally handed his resignation to President Sergio Mattarella on Thursday morning and it was accepted.
The main Italian stock exchange in Milan fell 1.5%.
Oil & gas industry delivered $2.8bn a day in profit for last 50 years
The oil and gas industry has delivered $2.8bn (£2.3bn) a day in pure profit for the last 50 years, a new analysis has revealed, our environment editor Damian Carrington reports.
The vast total captured by petrostates and fossil fuel companies since 1970 is $52tn, providing the power to “buy every politician, every system” and delay action on the climate crisis, says Prof Aviel Verbruggen, the author of the analysis. The huge profits were inflated by cartels of countries artificially restricting supply.
The analysis, based on World Bank data, assesses the “rent” secured by global oil and gas sales, which is the economic term for the unearned profit produced after the total cost of production has been deducted.
China fines Didi $1.2bn
China has issued a fine of $1.2bn to the ride hailing juggernaut Didi Global, for breaking its cyber security laws, reports our China affairs correspondent, Vincent Ni.
Beijing’s regulator – Cyberspace Administration of China (CAC) – on Thursday said it had found “conclusive evidence” against Didi, whose shares stopped trading in New York last year.
The CAC accused Didi of illegally collecting millions of “screenshot information” from users’ mobile photo albums and passengers’ facial recognition information. It said the company’s data collection methods posed “severe security risks”.
“We sincerely thank the authorities for their inspection and guidance, and the public for their criticism and supervision,” Didi said in a statement on social media, in response to the fine. “We will take this as a warning and pay equal attention to both security and development.”
The Didi saga began last summer, when China’s internet regulator launched an investigation, two days after the company’s massive initial public offering in New York. It also quickly ordered smartphone app stores to pull Didi’s app.
Chinese analysts said the authorities’ move reflected their concern about the company’s handling of sensitive data. They worried that information such as sensitive locations and personal details could be leaked overseas.
During the year-long probe, Didi also decided to withdraw from the US stock market and re-list the company in Hong Kong.
UK government borrowing worsens as debt interest costs hit record high
A record surge in Britain’s borrowing costs in June, pushed up by soaring inflation, has put the government’s budget deficit on course to reach more than £100bn this year, almost double its pre-pandemic level.
Highlighting the scale of the economic challenge that will face the next prime minister, debt interest payments hit £19.4bn last month alone, the highest since monthly records began in April 1997, according to the Office for National Statistics.
A quarter of the UK’s £2.5tn government debt is index-linked, making the cost of servicing it vulnerable to rising inflation.
Here are the company’s responses. Both said they will appeal against the CMA’s decision and fines.
Pfizer said:
Pfizer disagrees with the CMA’s latest infringement decision and will be appealing against it.
As we have consistently stated throughout this process, ensuring a sustainable supply of our products to UK patients is of paramount importance to us and was at the heart of our decision to divest phenytoin capsules to Flynn Pharma in 2012.
The Competition Appeal Tribunal and the Court of Appeal both ultimately found in Pfizer’s favour in respect of the CMA’s original decision, which was set aside together with the associated fine.
We maintain that we approached this divestment, as with all our business operations, with integrity and believe it fully complies with established competition law.
Pfizer and Flynn fined £70m for overcharging NHS for epilepsy drug
The drugmakers Pfizer and Flynn Pharma have been fined a total of £70m for overcharging the NHS for a life-saving epilepsy drug.
The New York-based drug giant Pfizer was fined £63m while Flynn, a smaller UK pharmaceutical firm based in Stevenage, received a £6.7m penalty.
The fines are the result of an in-depth investigation carried out by the Competition and Markets Authority (CMA), which found that Pfizer and Flynn charged “unfairly high prices” for phenytoin sodium capsules for more than four years.
The firms de-branded the drug, previously known as Epanutin, which meant it was no longer subject to price regulation and the firms could set prices at their discretion. Given Pfizer and Flynn were the dominant suppliers of the drug in the UK at the time, the NHS had no choice but to pay the inflated final price for this important anti-epilepsy medicine, the CMA said.
Over the following four years, Pfizer charged prices between 780% and 1,600% higher than previously. The company supplied the drug to Flynn, which then sold the capsules on to wholesalers and pharmacies at a price between 2,300% and 2,600% higher than the prices previously charged by Pfizer.
This led to NHS annual costs for phenytoin capsules ballooning from £2m in 2012 to around £50m the following year.
The CMA had issued an infringement decision in December 2016, finding that the companies’ behaviour broke competition law, which was challenged by Pfizer and Flynn in a lengthy appeal process. In March 2020, the Court of Appeal dismissed Flynn’s appeal in its entirety and the CMA reinvestigated the matter.
Andrea Coscelli, the CMA’s chief executive, said:
Phenytoin is an essential drug relied on daily by thousands of people throughout the UK to prevent life-threatening epileptic seizures. These firms illegally exploited their dominant positions to charge the NHS excessive prices and make more money for themselves – meaning patients and taxpayers lost out.
Such behaviour will not be tolerated, and the companies must now face the consequences of their illegal action.
Updated
Here is a round-up of today’s other stories.
One of the UK’s biggest philanthropic investors has quietly sold its stakes in large oil and mining companies such BP and Shell.
The Wellcome Trust is one of the biggest funders of scientific research in the UK with a £38bn investment fund. For almost a decade it has resisted pressure from organisations, including the Guardian, who argued that profiting from fossil fuel companies was incompatible with the Trust’s objective of improving public health and wellbeing.
Wellcome Trust staff were told on Tuesday that the organisation has stopped investing in large oil and mining companies. However, in a sign of the complicated politics around such a decision, the organisation said it would not actively seek press coverage of the decision.
The next prime minister needs to grab Britain’s net zero plans “by the scruff of the neck” to boost investor confidence, an influential House of Lords committee has said.
The economic affairs committee, which counts former Bank of England governor Lord King among its members, has warned Britain is at risk of a “disorderly transition” away from fossil fuels and has urged the government to set out a detailed plan including deadlines for investment decisions.
What could be a priceless Fabergé egg has been found on board a Russian oligarch’s superyacht seized by US authorities, one of the more curious items unearthed in sanctions-led investigations so far.
US deputy attorney general Lisa Monaco told the Aspen security forum on Wednesday it was one of the more “interesting” finds her team has made.
A growing number of financially squeezed households are “turning to crime” by submitting bogus insurance claims, with data revealing a sharp rise in cases over the past year.
Zurich UK, one of Britain’s biggest insurers, said the cost of living crisis was fuelling the increase in insurance fraud, where people exaggerate or make up claims for items such as jewellery and electrical goods.
Universities must do more to track and prevent student homelessness, which is expected to increase because of the cost of living crisis and widening participation in higher education, according to a report.
Students are less likely than their peers in the general population to experience homelessness, but with more young people from disadvantaged backgrounds being admitted to universities experts say they could be at greater risk of homelessness and in need of extra support.
What an almighty mess the British economy is in, says a Guardian editorial (and that was before the doubling in government debt interest costs to a record high and the worsening in the public finances).
To quote just a few of the stories from this week alone: inflation surged on Wednesday to a fresh 40-year high, and the Bank of England governor, Andrew Bailey, warned that it faced its “largest challenge” in keeping prices under control, and interest rates could rise next month by half a percentage point. Meanwhile, economists at UBS Investment Bank believe 99% of British workers are getting worse off, their pay not keeping pace with the price of food, energy and petrol.
Away from Westminster, an unprecedented number of households will spend this winter choosing between freezing and starving. Many more will have no choice but to cut back on refilling the car, and buying items of school uniform or nappies. The personal-finance expert Martin Lewis is not indulging in hyperbole when he warns of civil unrest, of families just not paying their utility bills.
Russia resumes limited gas supplies but fears remain
Russia has resumed critical gas supplies to Europe through Germany, reopening the Nord Stream gas pipeline after 10 days, but uncertainty lingers over whether the continent can avert an energy crisis this winter.
“It is working,” a Nord Stream spokesperson said, without specifying the amount of gas being delivered.
The German government had feared Moscow would not reopen the pipeline after the scheduled work. It believes Russia is squeezing supplies in retaliation for western sanctions over Moscow’s invasion of Ukraine.
According to data provided by Russia’s state-owned energy giant Gazprom to Gascade, the German operator of the line, 530 gigawatt hours (GWh) will be delivered during the day. This is only 30% of its capacity, Klaus Mueller, the president of Germany’s energy regulator, the Federal Network Agency, said on Twitter.
Here is our full story:
Stock markets drift lower, pound falls
UK and European shares are drifting lower, while the Italian market is down 2.3% amid the political chaos there. Mario Draghi is expected to quit as prime minister today after he failed to garner support from three key partners in his unity government yesterday.
- UK’s FTSE 100 index down 40 points, or 0.6%, at 7,224
- Germany’s Dax down 61 points, or 0.5%, at 13,219
- France’s CAC down 10 points, or 0.2%, at 6,173
- Italy’s FTSE MiB down 485 points, or 2.3%, at 20,6862
The pound has dropped about 0.4% against both the dollar and the euro after the worsening UK public finance figures.
Alison Ring, public sector and taxation director for the Institute of Chartered Accountants in England and Wales, said:
The latest inflation-fuelled numbers will provide little comfort for the new prime minister, as at £55bn for the quarter to June, the deficit is more than double what it was before the pandemic.
With inflation at a 40-year high and record energy prices this winter, the question facing the next prime minister and chancellor will not be about whether or not to write another cheque to struggling families, but how big it will be.
She said rising supplier cost inflation and public sector pay demands that are unlikely to be satisfied by a proposed 5% increase will put severe pressure on both operating and capital budgets.
Combined with long-term demographic trends that continue to drive public spending higher, the likelihood is that any tax cuts committed to during the Conservative party leadership campaign will end up being reversed in the years ahead.
Updated
Danni Hewson, AJ Bell financial analyst, said:
Families wondering why the government isn’t doing more to help them deal with their strained finances need to understand that the treasury’s fighting its own battle with inflation.
The debt interest paid out last month was the highest figure since records began in 1997 and with inflation still running hot things are only going to get more expensive particularly as some of that debt rolls over and refinancing is going be substantially more expensive.
At the moment inflation is playing a dual role because it’s also boosting the government’s tax take. When things cost more people have to pay more in taxes like VAT, but it also means the government is having to pay more and the bill for things like wages is going up. And of course, if people don’t have money to spend, they simply won’t buy stuff and that will bring its own consequences. At the moment fiscal policy demands an ability to balance on a tight rope, spend too much and debt becomes insurmountable spend too little and the economy will simply grind to a halt.
She added that there was also some good news in the figures:
A booming labour market is helping pad out government coffers with tax receipts up by more than £5bn compared to the same time last year and despite the uptick in borrowing in June borrowing since the start of the financial year is almost £6n less than the same period in 2021.
But it’s clear there is not a huge amount of wiggle room for the pair hoping to jump into the hot seat at Number 10. And as temperatures drop and energy prices deliver yet another unwelcome shock in the autumn there will be increased pressure to do more to help households. Giveaways will be popular with voters and party members alike, but they’ll need to be carefully costed. Today’s figures will focus minds and colour debates, promises will need to be more than piecrust.
Public sector net borrowing excluding public sector banks was £22.9 billion in June 2022, the second-highest June borrowing since monthly records began in 1993.
— Office for National Statistics (ONS) (@ONS) July 21, 2022
This was £4.1 billion more than in June 2021 https://t.co/g5mJ9YIvZe pic.twitter.com/9kuMGcac1G
Updated
More reaction to the worsening UK public finance figures, which make it hard for the new chancellor, and any new prime minister, to cut taxes to ease the cost of living squeeze.
Hoa Duong, economist at PwC, said:
Today’s data shows June adding a further £23bn to the current government deficit, the highest level in 14 months and almost twice the amount recorded in May. This means the UK continues to spend significantly more money than it received in taxes and other income, leading to an estimated borrowing of around 12.4% of GDP. This is much higher than the 50-year average of 3.6%, meaning encouraging growth is the key to sustainable public finances strategy.
This increasing deficit highlights the difficult balancing act facing the new chancellor of the exchequer. While tax cuts could ease business cost pressure and encourage growth, this could push up inflation, exacerbating the current pay squeeze. At present this means a choice between focusing on managing the deficit or tackling the cost of living rises, but not both.
UK racked up a record debt interest bill in June at £19.4 billion pounds, according to @ONS data out today.
— Andy Bruce (@BruceReuters) July 21, 2022
Reflects soaring inflation which will result in bigger payouts from the government's index-linked bonds. pic.twitter.com/jNyRsVhQnD
Updated
The chancellor of the exchequer, Nadhim Zahawi, said:
We recognise that there are risks to the public finances including from inflation, with debt interest costs in June more than double the previous monthly record.
That’s why the government has taken action to strengthen the public finances, and in their latest forecast the OBR assessed that we are on track to get debt down.
Introduction: Russia resumes gas supplies to Europe, ECB set to hike rates
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
Russia has resumed supplies of gas to Europe today via the Nord Stream 1 pipeline this morning following 10 days of annual maintenance work, the pipeline operator said – but at sharply reduced capacity.
The president of Germany’s Federal Network Agency, Klaus Müller, said on Twitter that the pipeline was running at about 30% of capacity.
Die #Gas-Nominierung von #NordStream1 für heute ist bei ca. 530 GWh/d (= ca. 30% Auslastung) geblieben. Für die jeweils nächsten 2 Stunden ist sie verbindlich, untertägige Veränderungen wären sehr ungewöhnlich. Die initiale Nominierung für den 22.7. erfolgt am Nachmittag. @bnetza https://t.co/itMR5TL6bB
— Klaus Müller (@Klaus_Mueller) July 21, 2022
Concerns that Russia is weaponising gas deliveries prompted the EU to lay out a plan yesterday to cut gas usage by 15% until March. The European Commission urged member states to reduce consumption voluntarily, as its president Ursula von der Leyen warned that a complete shutdown in supplies was “likely”.
The news came as Russia’s foreign minister told state news agency RIA Novosti that Russia’s military “tasks” in Ukraine now go beyond the eastern Donbas region.
The Italian prime minister Mario Draghi is set to resign (again) today, confirming last week’s resignation which was rejected by the country’s president, after three key parties in his broad coalition did not participate in a confidence vote on the conditions he set for his government continuing.
The former European Central Bank president offered his resignation last week after the Five Star Movement (M5S), a key component of his broad coalition, snubbed a vote on a €26bn cost of living package. This means an early election in the autumn in Italy, and political uncertainty until then.
European Central Bank policymakers are considering raising interest rates by a bigger-than-expected 50 basis points at today’s meeting to combat soaring inflation, Reuters reported, citing two sources. It would be its first rate hike in more than a decade, and most economists have forecast a 25 basis-point rise.
To cushion the impact of higher borrowing costs, they are also set to announce a deal to help more indebted countries like Italy on the bond market.
Meanwhile, the Bank of Japan maintained its ultra-low interest rates today, even though it forecast that inflation will exceed its target this year. Other central banks such as the US Federal Reserve and the Bank of England have already raised interest rates several times in recent months.
Finally, new figures show that the UK government’s fiscal position is worse than the Office for Budget Responsibility predicted in March. The government borrowed £22.9bn in June, more than expected. Tax receipts, at £70.5bn, were a bit lower than expected, while spending of £86bn was in line with the OBR’s estimates. However, this reflects eye-wateringly high debt interest payments of £19.4bn.
Ruth Gregory, senior UK economist at Capital Economics, said:
Indeed, with RPI [retail price index] inflation at its highest level since 1982 (to which index-linked gilts are pegged), those payments were twice as high as in the previous June and the highest since records began in April 1997.
June’s public finances figures provided more evidence that the government’s fiscal position is worse than the OBR predicted back in March. This may limit the ability of the next Prime Minister to provide more relief for households when a further rise in CPI [consumer price index] inflation from 9.4% in June to around 12% in October worsens the cost of living crisis.
The Agenda
- 1.15pm BST: ECB interest rate decision
- 1.30pm BST: US Initial jobless claims for the week of 16 July
- 1.45pm BST: ECB press conference
- 3.15pm BS: ECB president Christine Lagarde speech
