Closing summary
Grocery price inflation in the UK picked up in October, while supermarket sales hit their highest level so far this year, as shoppers started their Christmas shopping early, buying mince pies and Christmas cake.
Grocery prices rose by 2.3% year-on-year, up from 2% in September “but still within typical levels,” according to retail analysts Kantar. The rate has been below 3% every month since the early summer.
The UK’s jobs market has shown further signs of cooling after a rise in unemployment in September while pay growth slowed, as business leaders warned the budget could hit hiring demand and lead to higher prices.
Figures from the Office for National Statistics (ONS) show the rate of unemployment rose to 4.3% in the three months to September, up from 4% the previous quarter, amid broader signs of a slowdown in the jobs market.
While the ONS warned its jobs market figures should be treated with caution amid data collection issues, separate figures showed the number of employees on company payrolls fell by 9,000 over the quarter and vacancies fell for a 28th consecutive month to the lowest level since May 2021.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Bye! – JK
Sandoz opens £10m device development lab in Cambridge
In a boost to UK life sciences, the Swiss drugmaker Sandoz has just opened a £10m device development lab in Cambridge to work on pen injectors, autoinjectors, on-body devices, inhalers, nasal and ophthalmic sprays.
The company, which specialises in generic drugs (cheap copies of drugs that have come off patent) and is the largest generic drugmaker in the world, employs 45 scientists at the site and is in the process of hiring 15 more by early next year, with more recruitment planned later in 2025.
Its UK headquarters is in Camberley in Surrey, where around 170 people. The firm is also opening a £100m factory in Slovenia and is pursuing investments in Austria.
Richard Saynor, the Sandoz chief executive, and Baroness Gillian Merron, health minister responsible for life sciences and innovation, have opened the device development centre in Cambridge.
Merron said
Biosimilar medicines and generic medicines deliver huge cost savings to the NHS and taxpayer, freeing up funds for frontline patient care.
The Sandoz expansion is a vote of confidence in the UK’s world-leading life sciences sector, boosting economic growth, delivering a raft of new, affordable treatments and improving the resilience of our supply chains.
I’ve just been on a media call with AstraZeneca boss Pascal Soriot.
AstraZeneca’s China president Leon Wang, who was detained last month by Chinese authorities, is in touch with a lawyer but the company has “very little information” about the investigation, according to the drugmaker’s chief executive. He spoke after the company released third-quarter results.
“We are in the early stage and we don’t have all the detailed information that will enable us to draw conclusions as it relates to what happened,” said Soriot. “In fact we have very little information” about Wang’s case and the company has not been approached by the Chinese government about it, he added.
Asked about oversight of its operations in China, Soriot said the Anglo-Swedish drugmaker had 18,000 employees in China.
You really cannot police 18,000 people from headquarters.
The company later clarified that it has just over 16,000 employees in China.
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Shell defeats landmark climate ruling ordering cut in carbon emissions
Shell has won its appeal against a landmark climate judgment by a Dutch court, which in 2021 ordered the fossil fuel company to sharply reduce its greenhouse gas emissions.
A court of appeal ruled on Tuesday that, while Shell does have a “special responsibility” to cut its emissions as a big oil company, this would not be achieved by imposing a specific legal goal.
Shell had appealed against a lower court ruling in 2021 that it must cut its global carbon emissions by 45% by the end of 2030 compared with 2019 levels. It was the first such ruling against a company in the world.
Shell’s chief executive, Wael Sawan, welcomed the appeal decision, saying it was “the right one for the global energy transition, the Netherlands and our company”.
Opec cuts global oil demand growth forecasts
The oil cartel Opec has cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year – its fourth consecutive downgrade.
The Organization of the Petroleum Exporting Countries said in its monthly report that world oil demand will rise by 1.82m barrels per day (bpd) this year, down from growth of 1.93m bpd it forecast last month.
There is a wide range of forecasts for the strength of demand growth in 2024, partly due to differences over demand from China and the pace of the world’s switch to cleaner fuels. Opec is still at the top end of industry estimates after the revision.
The oil cartel also cut its global demand growth estimate for next year to 1.54m bpd, from 1.64 million bpd.
UK can strike Trump trade deal and rebuild EU relations, says top BOE economist
The UK can strike a US trade deal with Donald Trump while also rebuilding EU relations after Brexit to cement its status as a “beacon of stability” in an increasingly volatile world, a leading economist has said.
Andy Haldane, the former Bank of England chief economist, said Keir Starmer’s government could show the UK was “open for business at a time when so much else of the world is looking inward – whether to the EU, or the US, it could really pay dividends”.
After Trump’s election victory the prime minister has faced competing demands urging him to pick a side in trade talks with Washington and Brussels, just as he had begun a push to mend fences with Europe.However, Haldane suggested the UK government could have both with a trade policy straddling the Atlantic. “I hope the government is in a position to really pat its head and rub its tummy at the moment,” he told the Guardian.
Of course we should pursue energetically an improved deal with the EU, although that won’t be straightforward. The new government committed to that and should keep on committing to that.
That should not, though, preclude – and does not preclude, as difficult as it will be – seeking out a free trade arrangement with the US under a new Trump presidency.
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Metro Bank fined £17m for money-laundering failures
Metro Bank has been fined nearly £17m by the UK’s financial watchdog for failings in its money-laundering controls over four years.
The Financial Conduct Authority (FCA) issued the £16.7m penalty after finding failures in monitoring 60m transactions over a four-year period that risked a “gap being left in the defence against the criminal use of the financial system”.
Problems persisted despite being raised by junior employees three years before they were completely resolved, the regulator said.
Metro said it accepted the FCA’s findings and had since resolved the monitoring system failings and enhanced its processes.
The challenger bank, which has 76 branches and 2.7 million customers, launched in the UK in 2010 as the first high street bank to open in more than 100 years.
From June 2016, Metro automated the monitoring of customer transactions for potential financial crime.
DCC shares jump on break-up plans
Shares in the Irish support services firm DCC jumped after the company laid out plans for a break-up of the business to focus on its energy division.
DCC, which is headquartered in Dublin but listed on the FTSE 100 in London, hopes to capitalise on opportunities in energy transition such as biofuels, and announced plans to sell its healthcare division by 2025 and evaluate strategic options for its technology arm over the next two years.
The shares soared by 17% and are now trading 13.3% higher.
Donal Murphy, the chief executive, said:
We are announcing decisive actions today to simplify our group, pursue our largest growth and returns opportunity and unlock substantial shareholder value, from positions of strength. This aligns with our philosophy of disciplined capital allocation.
In the energy sector we are building a unique, multi-energy, sustainable business focused on supporting our customers with their energy transition. Our strategy will deliver strong profit growth, high returns and a significant reduction in our customers carbon emissions.
Our healthcare and technology divisions have a long and successful heritage in DCC. They are high-quality businesses, led by strong, entrepreneurial management teams. Our actions are designed to ensure that these businesses and our people have the best opportunity to grow and progress.
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Vodafone says there won't be price rises after Three merger
The finance boss of Vodafone has assured customers that they will not experience price rises as a result of its proposed merger with Three, which could be completed next year.
Speaking to journalists after it published its half year results, Margherita Della Valle, chief financial officer at the telecoms company, said its pricing strategy would not change after the merger.
The comments come after the Competition and Markets Authority (CMA) said last week that the deal could be pro-competitive if the pair pledged to continue the roll-out of 5G and put in place some short-term price commitments.
Della Valle said that the companies had made a decision to freeze all packages under 20 gigabytes for the next three years, if the deal goes ahead.
She said:
The merger is pro-competitive because we create a third scale operator that can compete with the big two (BT/EE and Virgin Media O2) already in the market.
Going forward, there will be more competition because there will be a third scale network capable of competing with these two.
The competition watchdog will now make its final decision on whether the merger can go ahead on 7 December, with the two companies expecting to complete the merger in early 2025 if given the green light. The enlarged group would serve about 27 million customers.
Della Valle also said the merger would create between 8,000 and 12,000 jobs in the UK, with some of this offset by job cuts due to synergies of roles after the merger.
The comments came as the London-listed company saw revenues hit €15.1bn (£12.5bn) for the first half of the year, up 1.7% on last year’s figure. This came despite revenues falling in Germany, its biggest market.
AstraZeneca CEO: taking China probes 'very seriously'
AstraZeneca’s chief executive has said that the drugmaker is taking investigations by Chinese authorities into its business in the country “very seriously” and will “fully co-operate” with them.
Authorities are thought to be investigating the importation of two AstraZeneca cancer treatments into China.
Pascal Soriot’s remarks came as Britain’s biggest pharmaceutical company lifted its 2024 revenue and profit forecasts, and announced it was spending $3.5bn on research & development and manufacturing of cancer and other drugs in the United States, in its biggest investment in at least a decade.
The company’s share price has fallen over the past fortnight, since it announced that its China president, Leon Wang, who was executive vice president for internatinal market, was standing back because he is under investigation by Chinese authorities. Alongside Wang, two former and two current executives have also been detained over allegations of illegally importing oncology medicines. AstraZeneca’s China business is now being run by Michael Lai, the general manager.
Chinese authorities are understood to be investigating the importation of AstraZeneca’s cancer drug Imjudo, which has not been approved for sale in China, as well as shipments of Enhertu between Hong Kong and China. Enhertu is another cancer treatment that was first licensed in Hong Kong and then in China. The investigations concern the five individuals, and not the company itself.
Soriot said:
We take the matters in China very seriously. If requested we will fully cooperate with the authorities. We remain committed to delivering innovative life-changing medicines to patients in China.
There has been a wider crackdown by Beijing on drugmakers and hospitals in recent years as part of an anti-corruption campaign, aimed at bringing rising medical spending under control.
AstraZeneca reported a 21% rise in revenues to $13.6bn between July and September, catapulting pre-tax profit 24% higher to $1.8bn, stripping out currency moves.
Here is our full story the UK job market:
The UK’s jobs market has shown further signs of cooling after a rise in unemployment in September while pay growth slowed.
Figures from the Office for National Statistics (ONS) show the rate of unemployment rose to 4.3% in the three months to September, up from 4% the previous quarter.
While the ONS warned its jobs market figures should be treated with caution amid data collection issues, there were broader signs of a slowdown from separate figures showing the number of employees on company payrolls fell by 9,000 over the quarter. Vacancies also fell for a 28th consecutive month to the lowest level since May 2021.
The government has come under pressure from businesses after outlining tax increases in the budget, including a rise in employer national insurance contributions (NICs) that bosses have said could lead to job cuts.
And here’s some instant analysis from our outgoing economics editor Larry Elliott:
For the past few years only cursory attention has been paid to the unemployment figures because the jobless rate has been low and there have been plenty of unfilled vacancies for those seeking work. But, thanks to a slowing economy and decisions made by Rachel Reeves in last month’s budget, that could be about to change.
For the next few months every release on the state of the labour market will be scrutinised to see what impact two announcements made by Reeves last month are having on jobs.
Inevitably, the chancellor’s decision to increase the national minimum wage by 6.7% and increase employer national insurance contributions will have some effect but it will take months to assess how big those effects will be.
UK grocery price inflation rises while supermarket sales hit 2024 high
Grocery price inflation in the UK picked up in October, while supermarket sales hit their highest level so far this year, as shoppers started their Christmas shopping early, buying mince pies and Christmas cake.
Grocery prices rose by 2.3% year-on-year, up from 2% in September “but still within typical levels,” according to retail analysts Kantar. The rate has been below 3% every month since the early summer.
Promotional activity by the grocers is helping to keep prices down. Fraser McKevitt, head of retail and consumer insight at Kantar, said:
Spending on deals has been going up consistently for the past 18 months and it now makes up 28.6% of all sales. Offers are helping to lift branded sales especially. The growth gap between brands and own-label is the biggest it’s been since February 2021, sitting at 4.9% and 2.7% apiece.
Take-home sales at the big supermarket chains and other grocers increased by 2.3% over the four weeks to 3 November to reach £11.6bn, making this the biggest sales month of the year so far.
Christmas came early, with 14.4% of households picking up mince pies in October while 648,000 shoppers have already bought a Christmas cake. Halloween also boosted sales.
McKevitt said:
Many of us got into the spooky spirit last month, as 3.2m households bought at least one pumpkin. Confectionery spending also got a boost to £525m in October as sales of chocolates and sweets both went up, climbing by 13% and 7% each.
Trips to the supermarket hit a four-year high at 480m, the highest since before the pandemic.
Ocado topped the growth table, boosting its sales by 9.5% over the 12 weeks to 3 November, while the two largest supermarkets in Britain – Tesco and Sainsbury’s – also outperformed the wider market.
Asda continued to struggle, with sales down 5.5% while the Co-op’s sales fell by 2.1%.
Updated
Liz Kendall, the work and pensions secretary, said:
2.8 million people – a near record number are locked out of work due to poor health. This is bad for people, bad for businesses and it’s holding our economy back.
That’s why our Get Britain Working plan will bring forward the biggest reforms to employment support in a generation, backed by an additional £240m of investment.
And while it’s encouraging to see real pay growth this month, more needs to be done to improve living standards too. So, from April next year over three million of the lowest paid workers will benefit from our increase to the National Living Wage, delivering a £1,400 a year pay rise for a full-time worker.
Responding to the news that unemployment has risen to 4.3%, Liberal Democrat Treasury spokesperson Daisy Cooper said:
Any rise in unemployment is concerning and many will be worried about the impact of the upcoming National Insurance hike on British jobs.
Small businesses have been clobbered by years of Conservative economic vandalism and the government’s jobs tax could now make it even harder to hire new staff and give out pay rises. Jobs and salaries could be in for yet another hit and that’s just not fair.
The new government should be supporting our small businesses, not placing more financial pressures on them. Ministers must change course, starting by exempting GPs and social care providers from the National Insurance hike.
The job market figures come after the government set out tax increases in the budget, including a rise in employer national insurance contributions (NICs) which business leaders say could hit hiring and pay increases.
Paul Daley at Capital Economics added:
Even though the rise in pay growth in September will probably be followed by a bigger gain in October, as the new public sector pay deals start, the easing in private sector regular pay suggests that the Bank of England will continue to cut interest rates gradually. We continue to think the Bank will skip the December meeting and cut rates at the following February meeting.
Public sector pay will probably jump again in October as the 5-6% pay deals agreed in recent months start to take effect… Most important for the Bank, was that private sector earnings excluding bonuses was stable at 4.8% in September. That left it exactly in line with the rate the Bank forecast last week.
Gora Suri, an economist at PwC UK, said:
The labour market continues to loosen, with vacancies dropping further, though still slightly above pre-pandemic levels. The unemployment rate also ticked up slightly to 4.3%.
But wage growth is proving to be a little more persistent. Annual growth in employee’s total earnings is up to 4.3%, reflecting the civil service one-off payments made in the summer. Despite a loosening labour market, nominal pay growth remains in excess of the circa 3% level that is considered to be consistent with the Bank’s 2% inflation target. Real pay continues to grow given that inflationary pressures have fallen back at a faster pace than wage growth.
Looking ahead, businesses are likely to face increasing cost pressures. Almost simultaneously, they have been hit with a trifecta of policy changes which raise their costs - an increase in employer NICs, a rise in the National Living Wage and the Employment Rights Bill. If businesses pass some of this onto workers, this could weigh on pay growth in the short to medium term.
Asda and Sainsbury’s said last week that the NIC rise would cost them £100m and £140m respectively as they warned they could pass these costs on in the form of higher prices, while Tesco faces a £1bn increase in its national insurance bill this parliament.
Updated
Introduction: UK unemployment rises while regular wage growth slows; bitcoin breaks $89,000
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Unemployment in the UK has gone up, while regular wage growth slowed to the lowest rate in more than two years, according to official figures.
The unemployment rate rose to 4.3% between July and September, up from 4% in the June to August quarter, according to the Office for National Statistics, which warned that the job market figures should be treated with caution due to data collection issues.
Pay excluding bonuses climbed by 4.8% year-on-year, the lowest since June 2022. Including bonuses, wage growth picked up to 4.3% from 3.8%, although this was affected by one-off payments made to the civil service last summer.
Liz McKeown, the ONS’s director of economic statistics, said:
Growth in pay excluding bonuses eased again this month to its lowest rate in over two years. Pay growth including bonuses increased, but for recent periods these figures have been affected by last year’s one-off payments made to public sector workers.
Job vacancies have fallen again, as they have been doing for more than two years now. However, the total still remains a little above where it was before the pandemic.
The number of job vacancies fell to its lowest level since May 2021, down by by 35,000 on the quarter to 831,000 between August and October.
The pound fell by 0.5% to $1.2806, the lowest since mid-August, after the figures were released.
Earnings excluding bonuses grew 4.8% in the year to July to Sept 2024, the lowest since Apr to June 2022, when it was 4.7%. Earnings including bonuses grew at 4.3%, though this rate is affected by the Civil Service one-off payments last summer.
— Office for National Statistics (ONS) (@ONS) November 12, 2024
➡️ https://t.co/gcn0KISqDy https://t.co/k2mxn8By6N pic.twitter.com/MjOsYREMAn
Paul Daley, chief UK economist at Capital Economics, said:
Overall, there is little here to suggest the Bank of England needs to worry that the loosening in the labour market and the easing in underlying wage growth are coming to an end.
Asian shares tumbled amid disappointment over Beijing’s latest economic stimulus package, and as investors worried about president-elect Donald Trump’s policies.
Meanwhile, bitcoin jumped to a new high of more than $89,000.
The Shanghai market lost 1.3% while Hong Kong’s Hang Seng slid by 3%.
The price of bitcoin, the world’s best-known cryptocurrency, has more than doubled from $37,000 a year ago, as markets are expecting lighter regulation of crypto currencies under a Trump administration. Bitcoin touched $89,982 and is now trading around $89,300.
The Agenda
11am GMT: Eurozone/Germany ZEW economic sentiment index
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