Afternoon summary
Time for a recap
The UK has been dubbed a ‘stagnation nation’ after failing to grow over the summer.
The economy was flat in the three months to September, the latest GDP data shows, with the dominant services sector contracting slightly.
Announcing the news, ONS director of economic statistics Darren Morgan said:
“The economy is estimated to have shown no growth in the third quarter.
“Services dropped a little with falls in health, management consultancy and commercial property rentals.
“These were partially offset by growth in engineering, car sales and machinery leasing.
“In the month of September the economy grew slightly, with increases in film production, health and education.
“This growth was partially offset by falls in retail and computer programming.”
The data was slightly better than expected, but highlights the damage that high interest rates are having on growth.
It means the UK fell behind the US and France, but did a little better than Germany and the wider eurozone.
Chancellor Jeremy Hunt said inflation was the main barrier to growth, while shadow chancellor Rachel Reeves warned that “growth is flatlining and Britain is worse off.”
It's time for a Labour government that has a serious plan for growth. pic.twitter.com/Rml7LLIWvn
— Rachel Reeves (@RachelReevesMP) November 10, 2023
Here’s the full story:
And analysis from Larry Elliott:
In other news…
European stock markets are in retreat today, on fears that US interest rates may not have peaked.
The Bank of England has asked more than 50 City institutions to model the impact of a sharp movement in bond prices caused by a severe geopolitical shock as part of its first financial system-wide stress test.
NatWest has scrapped almost £7.6m in potential payouts to Alison Rose, the banking group’s former chief executive, who was forced to resign over a scandal linked to the closure of Nigel Farage’s bank accounts.
The Guinness to Johnnie Walker drinks maker Diageo has issued a profit warning as a result of cash-strapped customers in Latin America and the Caribbean consuming less alcohol and seeking cheaper brands.
Vehicle breakdowns caused by Britain’s pothole-ridden roads reached record levels this year, according to the RAC.
The Industrial and Commercial Bank of China’s US arm was hit by a ransomware attack that disrupted trades in the US Treasury market on Thursday, the latest in a string of victims ransom-demanding hackers have claimed this year.
FTSE 100 on track for worst day since August
European stock markets have sunk deeper into the red, after Federal Reserve chair Jerome Powell hinted last night that US interest rates may not have peaked.
In London, the FTSE 100 index is now down just over one hundred points, or 1.35%, at 7354, on track for its biggest one-day loss since August.
David Morrison, senior market analyst at fintech and financial services provider Trade Nation, says:
Federal Reserve Chair Jerome Powell upset the apple cart during a speech yesterday evening.
He stated that the Fed wasn’t confident that it had done enough to tame inflation leaving the door open for further rate hikes. This wrongfooted traders who had convinced themselves that the US central bank was done hiking rates. It now looks as if that was wishful thinking.
