VW ‘considers cutting 30,000 jobs’
VW is considering axing as many as 30,000 jobs as it scrambles to save billions of euros amid a slowdown in the car market, German media has reported.
The carmaker recently announced it could close some of its German factories for the first time in history as it struggles to reinvent itself for the electric era.
Analysts at Jefferies said VW is considering closing two to three facilities, with as many as five German sites under threat, putting 15,000 jobs at risk.
That job losses is feared to have doubled to 30,000, according to Manager Magazin, a leading German business publication.
A VW spokesman said: “We do not confirm the figure. One thing is clear: Volkswagen has to reduce its costs at its German sites.
“This is the only way the brand can offer attractively priced vehicles and still make enough money for future investments.
“How we will achieve this goal together with the employee representatives is part of the upcoming talks.”
Robert Habeck, Germany’s economy minister, said today that the German government is considering ways to support Volkswagen. “VW is of central importance to Germany,” he said.
Read the latest updates below.
06:08 PM BST
Meddling Eurocrats are dragging the bloc back to the Dark Ages
The EU’s ‘regulate first, ask questions later’ approach to AI is turning Europe into a tech backwater, according to Andrew Griffith, the shadow secretary of state for science, innovation and technology:
When consumers across Europe collect their eagerly awaited new iPhones this week, they’ll notice that the widely anticipated “Apple Intelligence” AI features are conspicuously absent.
While the UK, the US and other markets take the next step forward, the EU version of these products has been dumbed down as a consequence of regulation from Brussels, making every UK use of the Apple AI prompt a mini “Brexit dividend”.
Governments the world over are often tempted to think of new technology through the lens of problems that need solving with additional laws. It’s a form of policymaking that has long been entangled with those claiming to protect the interests of workers.
Indeed, we saw the trade unions, who have donated more than £29m to the Labour Party under Sir Keir Starmer’s leadership, predictably calling for prohibitive laws at last week’s TUC conference. None of this anti-innovation approach is new, and none of it has ever made anybody better off.
When 19th-century Nottingham textile workers adopted “King Ludd” from a local myth, they may have thought they were safeguarding their livelihoods.
Instead, had the Luddites been successful, they would have prevented the greatest revolution in productivity the world had ever seen – one which provided British families with high standards of living and built the basis of the modern economy we have today.
Today the Luddites live in Brussels, close to their French cousins who threw wooden clogs called “sabots” into the new machinery they so distrusted to equip their factories.
Thanks for joining us today. We will be back tomorrow morning from around 7am with the latest from the markets.
05:51 PM BST
Bank of England is ‘playing a dangerous game’, claims top economist
The Bank of England’s decision to hold interest rates has been criticised by a leading economist.
Julian Jessop, economics fellow at the free-market Institute of Economic Affairs, said:
The Bank of England’s decision to leave interest rates on hold this week is no surprise but still disappointing.
The MPC [monetary policy committee] judged that there had not been enough economic news since August to justify another cut. This is hard to square with the signs of a further easing in inflation pressures and weaker economic growth, both in the UK and abroad.
Indeed, the Bank has revised down its forecast for the temporary uptick in UK inflation when domestic energy bills rise later this year, from 2.75pc to 2.5pc.
The MPC also announced another £100bn of gilt sales – a process known as ‘quantitative tightening’ (QT). The continued normalisation of the Bank’s balance sheet will have some benefits, but it will add to the economic headwinds from the current restrictive level of interest rates.
The Bank is therefore playing a dangerous game. Fortunately, investors are expecting more cuts over the coming months, which is already feeding through into lower borrowing costs, including mortgage rates. The markets are therefore doing the MPC’s job for them.
Nonetheless, the MPC will still have to fulfil these expectations – and perhaps go further. The upshot is that the Bank may now have to copy the US Fed with a bigger half point cut at the next meeting in November.
05:23 PM BST
‘Sentiment is fickle’ despite US rate cut
Last night’s aggressive US rate cut split opinion among analysts, with some warning it could reignite inflation, while others said it showed the bank was keeping ahead of the curve in supporting the economy.
Patrick O’Hare, market analyst at stock analysis firm Briefing.com, said:
The rate cut seen and heard around the world yesterday has fostered quite the response today - even though it was initially met with some stifled enthusiasm yesterday.
Fawad Razaqzada, market analyst at City Index, said the US cut was being “seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis.”
But David Morrison, analyst at financial services provider Trade Nation, said:
Some will be asking why a [half a percentage point cut] was warranted at this time, given the underlying strength of the US economy.
Sentiment is fickle, and as we’ve just seen, markets can turn sharply.
05:18 PM BST
European shares advance as global markets cheer Fed’s outsized rate cut
European stocks closed up this afternoon after the US Federal Reserve delivered a half percentage rate cut and flagged that further easing would be measured, raising hopes of a soft landing for the American economy.
The continent-wide Stoxx 600 index closed 1.4pc up, its highest closing level in more than two weeks.
Most European stock markets also clocked sharp gains, with Germany’s blue-chip benchmark jumping 1.6pc to 19002.38 points, an all-time closing high.
Growth-sensitive technology stocks jumped 3.5pc, in tandem with tech giants on Wall Street, while miners added 3pc after prices of most base metals rose with the long-awaited Fed rate cut and weakened the dollar.
Utilities and telecoms lagged, each with a more than 1pc fall.
04:52 PM BST
FTSE closes up
The FTSE 100 closed up 0.9pc.
The top riser was Rolls-Royce, up 5.9pc. followed by mining company Fresnillo, up 4.5pc.
The biggest faller was energy company SSE, down 2.7pc, followed by National Grid, down 2.6pc.
Meanwhile, the mid-cap FTSE 250 rose 1.6pc.
IT company Bytes Technology was the biggest riser, up 7.8pc, followed by Trustpilot, up 7.3pc.
Close Brothers was the biggest faller, down 5.6pc, followed by trading platform IG Group, down 3.1pc.
04:40 PM BST
Germany considering ways to support VW, economy minister says
The German government is considering ways for it to support Volkswagen, the country’s economy minister and vice-chancellor Robert Habeck told reporters today when asked about the threat of job cuts at the country’s largest carmaker.
Volkswagen said earlier this month the carmaker needed to cut costs significantly at its namesake brand in Germany, citing high costs, low productivity and fierce competition.
“VW is of central importance to Germany,” Mr Habeck said.
The minister will visit a VW plant in the city of Emden, northern Germany, on Friday.
04:31 PM BST
European shares rise strongly after US rate cut
European shares remain strongly up this afternoon, as investors reacted positively to interest rate cuts in the US.
Germany’s Dax is up 1.5pc, France’s Cac 40 is up 2.1pc and the pan-European Stoxx 600 us up 1.3pc. The FTSE 100 is up 0.9pc, while the FTSE 250 shot up 1.5pc.
Wall Street’s initial reaction to Wednesday’s cut was a yawn last year, after markets had already run up for months on expectations for coming reductions to rates. Stocks ended up edging lower after swinging a few times.
“Yet we come in today and have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at investment bank BTIG. He said he did not anticipate such a big jump for stocks on Thursday.
04:16 PM BST
US Fed rate cut is ‘very positive sign’ for economy, says Yellen
The US central bank’s decision to slash interest rates this week is a “very positive sign” for where the world’s biggest economy stands, US Treasury Secretary Janet Yellen said this afternoon.
Ms Yellen’s remarks came a day after the Federal Reserve opted for an aggressive rate cut of half a percentage point, its first since 2020.
She said:
It reflects confidence on the part of the Fed that inflation has come way down and is on the path back to the two percent target, and that the risks with respect to inflation have really meaningfully diminished.
At the same time, we have a job market that remains strong.
Ms Yellen added that bringing down inflation successfully in the context of a robust jobs market - known as a soft landing - is “exactly what we’re seeing in the economy.”
Her comments came after Republican presidential nominee Donald Trump claimed last night that the Fed’s decision was either a response to a “very bad” economy, or it had been “playing politics”.
But Fed chairman Jerome Powell stressed after announcing the rate reduction: “We’re not serving any politician, any political figure, any cause, any issue.
03:56 PM BST
UK ‘still has to bring its inflation problem to heel’, says analyst
The pound has received a shot in the arm this afternoon after the Bank of England announce it would not, this month, cut interest rates.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
Sterling has pushed to a new 2.5 year high versus the dollar, briefly topping the $1.33 mark once more.
Unlike the Fed, the UK still has to bring its inflation problem to heel, leaving Threadneedle Street unable to loosen policy.
The onus now lies on the still newly elected government to unveil a targeted programme of growth in order to provide the boost that the UK economy needs.
03:50 PM BST
Next shares rise after ‘unstoppable force’ raises profit forecast
Next shares have risen 0.9pc today after the retailer upped its annual profit outlook for the second time in less than two months.
The chain reported a 7.1pc jump in underlying pre-tax profits to £452m for the six months to July 27 as total group sales lifted 8pc.
The group also offered some cheer for under-pressure consumers as it said prices were being cut further for its autumn and winter ranges, down 0.3pc after a 1pc fall in the first six months.
Adam Vettese, market analyst at investment platform eToro, said:
Next seems to be an unstoppable force this year, with shares up again this morning off the back of their latest update. They have raised their guidance for the second time in as many months and projected profit for the year is just shy of £1bn.
Given all of the inflation concerns the retail market has had to contend with, on top of the fact that out of the ordinary weather has affected clothing, the performance of Next is highly commendable.
Investors will be hoping Next can keep up the momentum. Having already enjoyed a 25pc gain this year alone, the question will be whether some profit taking kicks in.
03:40 PM BST
US stocks hit all-time high as jubilation sweeps markets worldwide
Wall Street has hit an all-time-high today as a delayed jubilation sweeps markets worldwide following the Federal Reserve’s big cut to interest rates.
The S&P 500 is 1.9pc higher during trading this afternoon and is above its all-time closing high set in July. The Dow Jones Industrial Average is up 1.3pc, also at an all-time-high. Meanwhile, the Nasdaq Composite is 2.7pc higher, but below its record two months ago.
Companies that feel the most relief from lower interest rates and whose profits are most dependent on the strength of the US economy helped lead the way. The Russell 2000 index of smaller stocks has risen 1.7pc. Nvidia jumped 5pc as lower interest rates weakened criticism by a bit that its stock price and other Big Techs’ shares had grown too expensive in the frenzy around artificial-intelligence technology.
The moves followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years on Wednesday evening.
03:36 PM BST
Most employers ditch diverse recruitment amid ‘anti-woke’ backlash
Employers are ditching diverse recruitment policies amid a backlash against so-called identity politics in the workplace.
Our senior business reporter Daniel Woolfson has the latest:
A majority (55.2pc) of businesses now no longer state an interest in hiring diverse candidates in their job adverts, according to a survey by the Recruitment & Employment Confederation (REC). The figure has risen from 49.2pc in 2023 and 47.9pc in 2022.
The use of “inclusive” language in job adverts has also fallen from around 72pc of postings to roughly 55pc.
Neil Carberry, the chief executive of the REC, said the shift was driven by “the unhelpful political framing of work on diverse and inclusive hiring as somehow ‘woke’.”
Thanks for following the live updates so far. Alex Singleton is taking over the reins for the rest of the day.
03:22 PM BST
VW ‘considers cutting 30,000 jobs’
VW is considering axing as many as 30,000 jobs as it scrambles to save billions of euros amid a slowdown in the car market.
The carmaker recently announced it could close some of its German factories for the first time in history as it struggles to reinvent itself for the electric era.
Analysts at Jefferies said VW is considering closing two to three facilities, with as many as five German sites under threat, putting 15,000 jobs at risk.
That job losses is feared to have doubled to 30,000, according to German publication Manager Magazin.
A VW spokesman said:
We do not confirm the figure. One thing is clear: Volkswagen has to reduce its costs at its German sites.
This is the only way the brand can offer attractively priced vehicles and still make enough money for future investments.
How we will achieve this goal together with the employee representatives is part of the upcoming talks.
03:00 PM BST
Bailey: I’m optimistic rates will come down further
Bank of England governor Andrew Bailey has said he is “optimistic” that interest rates will come down further as inflation had left “fewer aftershocks” than feared in the British economy.
He told broadcasters:
We have made a lot of progress. Inflation has come down a long way and, of course, we were able to cut rates in August.
But our job is to make sure inflation is sustainably at the 2pc target.
There are still some pressures. We have seen that services inflation is still elevated.
So I think we are now on a gradual path down, that’s the good news. Interest rates are going to come down and I am optimistic on that front.
But we do need to see some more evidence and, of course, we will be looking at every meeting.
The good news is those shocks have now passed through the system and I think the really good news on that is that they appear to have left fewer aftershocks behind than all of us feared they would.
Inflation has come back near to target now. We need to see that sort of residual element fully taken out so that we’re sustainably back at target. I’m optimistic on that front which is why I think rates will come down further.
We have got two more meetings left this year and we obviously take each meeting at a time so we will judge all the evidence and, of course, we will be doing a full round of forecasting in November.
02:38 PM BST
Wall Street surges after Fed rate cut
Stock markets rocketed to record highs on Wall Street after the Federal Reserve announced its first interest rate cut in four years, by a bigger than usual margin.
The S&P 500 rose 1.6pc to a fresh all-time intraday peak of 5,705.81, putting it on track for its 39th record close this year.
The Nasdaq Composite climbed 2.3pc to 17,985.93 while the Dow Jones Industrial Average jumped 1.5pc to 42,105.01.
02:15 PM BST
Fewer Americans claim jobless benefits
The number of Americans applying for unemployment benefits fell to their lowest level in four months last week - but economists have warned against concluding that it shows the US economy is improving.
Jobless claims slid by 12,000, to 219,000, for the week of September 14, the Labor Department reported, which is fewer than economist expectations for 230,000 new filings.
The four-week average of claims, which evens out some of weekly volatility, fell by 3,500 to 227,500.
The total number of Americans collecting jobless benefits fell by 14,000 to about 1.83 million for the week of September 7. That’s the fewest since early June.
Weekly filings for unemployment benefits are considered largely representative of layoffs.
Wall Street is on track to rally when trading begins today, with the benchmark S&P 500 poised to notch a record high after the Federal Reserve cut interest rates by half a percentage point.
Yet economists warned against reading too much into the jobless data:
The sharp drop in US jobless claims likely is due to faulty seasonal adjustment, rather than a sudden improvement in labor market conditions. Just look how strong the co-movement in *seasonally adjusted* claims is between this year and last: pic.twitter.com/AXcNbDFVpC
— Samuel Tombs (@samueltombs) September 19, 2024
Claims:
1/ As (sort of) expected, initial claims have finally returned to normal.
That summer hump has faded, just as it did last year and we're back to the 210s.
I would not interpret this as a "true" improvement, just as a seasonal adjustment whiff fading into the background pic.twitter.com/goIOuStyA3— Guy Berger (@EconBerger) September 19, 2024
02:07 PM BST
Fresh hopes of smaller tax rises after Reeves handed £10bn of Budget headroom
Rachel Reeves has been handed a boost of up to £10bn ahead of the Budget after the Bank of England said it was slowing down sales of government bonds amassed during lockdown.
Our economics editor Szu Ping Chan has the latest:
Policymakers voted unanimously to reduce the stockpile of gilts held by the Bank by £100bn over the next 12 months.
While this is the same pace of reduction as this year, only £13bn of these bonds will be actively sold by the Bank, compared with roughly £50bn the previous year.
The effect of this change will be to increase the Chancellor’s headroom by up to £10bn before the Budget, reducing the need for large tax hikes and spending cuts.
Read how the Bank’s agreement with the Treasury works - and leaves taxpayers on the hook for losses.
01:55 PM BST
UK markets higher pull back slightly after Bank of England decision
The FTSE 100 remains significantly higher after the Bank of England held interest rates at 5pc.
Britain’s blue-chip stock index had gained as much as 1.4pc before policymakers announced their decision to keep borrowing costs at the same levels.
The FTSE 100 has given up some of those gains but remains up 1pc, while the FTSE 250 is up 1.2pc.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
There is still an underlying pulse of positivity lifting London-listed stocks, as they have also been buoyed by the decision by the US Federal Reserve to cut rates for the first time in more than four years, a larger than usual 50bps downwards step.
The Fed’s priority for now is protecting the health of the US economy, rather than beating inflation right down to target.
That’s reassuring for investors in multinational companies listed on the FTSE 100, reliant on a more buoyant outlook for the world’s largest economy.
01:49 PM BST
Interest rates expected to be cut in November
Money markets expect an interest rate cut in November after the Bank of England maintained rates at its September meeting.
However, traders now only think there is a 73pc chance of a rate cut in December.
Alpesh Paleja, interim deputy chief economist at the Confederation of British Industry, said:
Monetary policy will be walking a fine line for a little while yet: between balancing upside risks to inflation, but not being too tight so as to choke off activity.
Developments in fiscal policy in October’s Budget will also be a key consideration for growth prospects.
We still anticipate another rate cut in November, and a few more next year, in line with the MPC moving at a slow but steady pace.
On their own, lower interest rates will be a welcome respite to households and businesses.
01:23 PM BST
Holding rates at 5pc is ‘logical’, say business groups
The Bank of England’s decision to maintain the base rate at 5pc is “logical”, business leaders have said.
David Bharier, head of research at the British Chambers of Commerce, said: “Last month’s rate cut gave businesses who are struggling to invest welcome breathing space. But businesses are now looking to next month’s Budget for further help.
“Firms understand the fiscal backdrop the Government is facing and the need to address public finances, but that must not be at the expense of investment and growth.”
Anna Leach, chief economist of business group the Institute of Directors, said:
The Bank has indicated a ‘gradual approach’ to lowering rates as being appropriate. This is logical given that inflation will be sticky for the next few months, with the Ofgem price cap set to increase by 10pc and domestic inflation measures still high.
All else equal, we should see a rate cut in the November meeting, which follows shortly after what promises to be a rather difficult October Budget.
“With public sector pay settlements judged to have a mildly inflationary impact, and the labour market remaining on the tight side, it’ll be interesting to see how the overall package from the Chancellor is judged by the Bank to influence the overall outlook for inflation and the pace of rate cuts.
01:15 PM BST
Telegraph readers: I wouldn’t hold your breath for any interest rate decrease
Your fellow Telegraph readers have questioned the “obsession with lowering interest rates” after the Bank of England decided to leave borrowing costs unchanged.
Here is a selection of views from the comments section below and you can join the debate here.
12:53 PM BST
Bailey’s focus is influencing behaviour, say economists
The Bank of England held interest rates to influence people’s spending habits, economists have suggested.
Barret Kupelian, chief economist at PwC, said at this point in the economic cycle, “what really matters for policymakers is how they influence the behaviours of businesses, households and wider financial markets, and in this regard we are seeing a gradual shift in people’s attitudes and perceptions”.
The decision to keep rates at 5pc comes after the Bank’s August Inflation Attitudes Survey showed that for the first time since the global financial crisis of 2007/8, more people now think that interest rates are likely to fall in the next 12 months than rise.
Mr Kupelian said: “This belief, along with other big policy developments, is likely to feed into the public’s future spending decisions, influencing future economic activity.”
12:43 PM BST
Bank of England will speed up rate cuts next year, say economists
Andrew Bailey’s signal that interest rates will be cut “gradually” means the Bank of England is acting more like the European Central Bank rather than the US Federal Reserve, according to economists.
Paul Dales, chief UK economist at Capital Economics, said:
Most importantly, a new line in the policy statement said “in the absence of material developments, a gradual approach to removing policy restraint remains appropriate”.
The contrast between this and the Fed’s jumbo 50bps rate cut last night makes sense as the Bank has yet to shift from worrying less about inflation and worrying more about weak activity.
Indeed, core CPI inflation in the UK is currently 3.6pc compared to 2.6pc on the Fed’s preferred PCE measure.
This is why the markets are pricing in a slower pace of rate reductions in the UK than in the US.
In fact, we think over the next 6-9 months the Bank will cut rates a little slower than market pricing.
We’re expecting one more 25bps cut this year (at the next meeting in November) rather than two cuts. In the second half of 2025, though, we think a more marked easing in inflation will prompt the Bank to speed up and eventually cut rates to 3pc.
He added: “We expect only one further 25 basis point cut this year (at the next meeting in November), although the pace of cuts may quicken next year with rates eventually falling to 3pc rather than to the 3.25pc to 3.5pc priced into markets.”
12:19 PM BST
Bailey: Rates to be cut ‘gradually over time’
Bank of England governor Andrew Bailey’s suggestion that rates will be reduced “gradually” is likely behind the reduction in bets on rate cuts, and the surge in the pound. He said:
Inflationary pressures have continued to ease since we cut interest rates in August.
The economy has been evolving broadly as we expected.
If that continues, we should be able to reduce rates gradually over time.
But it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much.
12:15 PM BST
Traders reduce bets on interest rate cuts
Money markets indicate there is less chance that the Bank of England will cut interest rates twice more by the end of the year.
Traders are still pricing in a reduction in the Bank Rate from 5pc to 4.75pc at the next meeting of the Monetary Policy Committee in November.
However, money markets suggest there is now only a 75pc chance of a second rate cut before the end of 2024, compared to a 98pc chance before the latest monetary policy decision was announced.
Economists have said the fact the committee voted by 8-1 in favour of a hold suggests the Bank is leaning more towards higher borrowing costs.
The Bank of England left interest rates on hold today, as expected, but with just one vote for a cut (so relatively hawkish).
The MPC also announced another £100 billion of gilt sales over the next 12 months – a form of monetary tightening known as #QT...— Julian Jessop FRSA (@julianHjessop) September 19, 2024
12:07 PM BST
Pound hits two-year high as interest rate cuts put on hold
The pound has risen 0.7pc against the dollar after the Bank of England left interest rates unchanged.
Sterling tipped over $1.33 to reach its highest level since March 2022.
12:06 PM BST
Policymakers vote 8-1 for rate hold
Eight of the nine Bank of England policymakers voted to keep interest rates unchanged on Thursday.
However, Mr Bailey said the Bank should be able to cut borrowing costs “gradually over time”.
The Bank’s governor Andrew Bailey, Sarah Breeden, Megan Greene, Clare Lombardelli, Catherine Mann, Huw Pill, Dave Ramsden and Alan Taylor voted in favour of maintaining rates.
Swati Dhingra voted to reduce the base rate by 0.25 percentage points, to 4.75pc.
12:00 PM BST
Bank of England holds interest rates at 5pc
The Bank of England has left interest rates unchanged after sending a “clear message” that it would not move too quickly to cut borrowing costs.
The Monetary Policy Committee (MPC) voted to keep the UK interest rates on hold at 5pc a day after the Federal Reserve cut US borrowing costs by half a percentage point on Wednesday.
UK policymakers cut interest rates for the first time in four years in August.
Matt Swannell, chief economic adviser at the EY Item Club, said the MPC “sent a clear message that back-to-back rate cuts were unlikely” at the last meeting.
The pound hit a two-year high on Wednesday and has risen 0.6pc against the dollar today after the US Federal Reserve announced it was cutting its own interest rates by half a percentage point.
11:48 AM BST
Government borrowing costs fall after Fed rate cut
Government bond yields remained steady a day after the Federal Reserve delivered a larger than usual interest rate cut but signalled policy moves would be measured until the end of the year.
The Fed lowered its key interest rate by 50 basis points to the 4.75pc to 5pc range, when most analysts saw a quarter-point cut as the most likely outcome.
But in flagging that they only see another 50 basis points - equivalent to half a percentage point - of cuts by the end of 2024, policymakers hinted they might lower rates at a steady pace.
Jussi Hiljanen, chief rate strategist at lender SEB, said:
I think when it comes to yesterday’s meeting, (Fed chair Jerome) Powell was pretty good at delivering a balanced message.
The market reaction reflected that message.
The yield on two-year UK bonds, known as gilts, fell three basis points to 3.86pc, while Germany’s two-year yield dropped nearly two basis points to 2.42pc.
We will wait to see if the Bank of England’s rate decision changes that trend.
11:37 AM BST
Gas prices edge up as cold spell approaches
The Bank of England will not lower interest rates unless it thinks inflation is under control, having grappled with a crisis triggered by Vladimir Putin’s war in Ukraine.
Energy prices helped push inflation to a 41-year peak of 11.1pc in October 2022, and although power costs have returned to normal levels, concerns remains that Europe is not out of the woods.
Wholesale natural gas prices have risen today to their highest level in a week as a cold weather approaches Europe.
Dutch front-month futures, the continent’s benchmark, have risen as much as 4.1pc as households turn up their heating.
Europe has become more dependent on liquefied natural gas since Putin’s invasion and faces the threat of all pipeline exports from Russia being cut off.
Egbert Laege, chief executive officer of Germany’s Securing Energy for Europe, told Bloomberg: “We see how interconnected the LNG markets are. We see this sensitivity and the volatility in the market.”
11:21 AM BST
Ocado winning customers from Aldi and Lidl, says boss
In corporate news, Ocado is winning customers away from cut-price rivals Aldi and Lidl, its chief executive has said, as the online grocer raised its sales forecasts for the year.
Our retail editor Hannah Boland has the latest:
Hannah Gibson, the boss of Ocado Retail, said recent efforts to cut grocery prices had helped it to attract more shoppers.
She said: “We’ve seen switching from Tesco now consistently for 12 months in a row. And we’ve also seen switching from some of the discounters at points as well.”
It marks a turnaround for the company, which is jointly owned by Marks and Spencer and technology firm Ocado Group.
Previously M&S bosses had suggested they were disappointed with Ocado’s performance. However, the online grocer has been bulking up its range of M&S products.
It said on Thursday that revenues were up 15pc in the 13 weeks to September, hitting £658m. The increase followed more people placing orders on its website and customers putting more in their baskets.
Ocado raised its forecasts for the full year, saying it now expected revenue growth in the low double digits compared to earlier forecast of mid-to-high single digits.
11:04 AM BST
Oil prices rise as dollar weakens
Oil prices have risen after the US Federal Reserve cut interest rates.
Brent crude oil, the global benchmark, has gained 1.2pc to more than $74 a barrel as a weakening dollar made it cheaper to buy commodities.
US-produced West Texas Intermediate rose 1pc towards $72.
The dollar has slumped 0.5pc against the pound and is close to two-year lows.
Brent is still on track for the biggest quarterly loss this year amid concerns over China’s economic slowdown and ample supply.
10:45 AM BST
Wall Street poised for surge at the opening bell
US stocks soared in premarket trading following the Federal Reserve’s half a percentage point cut to interest rates.
Rate-sensitive growth stocks like Microsoft, Meta and Alphabet advanced more than 1.5pc each.
Chip stocks also gained, with Nvidia up 2.8pc, Advanced Micro Devices rising 3pc and Broadcom up 3.4pc.
The domestically-focused Russell 2000 index also shot up 2.5pc to its highest level since July 31.
A lower interest environment could mean prospects of cheaper operating costs and greater profits for companies that are dependent on credit.
In premarket trading, the Dow Jones Industrial Average rose 1.1pc, the S&P 500 gained 1.5pc and the Nasdaq 100 lifted 2pc.
10:32 AM BST
Mortgage lenders cut rates ahead of Bank of England decision
Two mortgage lenders have cut their rates ahead of the Bank of England’s announcement on the Bank Rate today.
Our money reporter Madeleine Ross has the latest:
Virgin Money dropped its rates for both residential and buy-to-let mortgages by up to 0.2 percentage points to as little as 3.99pc, while Halifax cut rates for first-time buyers and home movers by as much as 0.09 percentage points.
Earlier this week Santander became the first lender to offer less than 4pc on two-year fixes, with 3.99pc on 60pc loan-to-value mortgages.
It comes ahead of the Bank of England Monetary Policy Committee’s (MPC) latest decision on the Bank Rate, which is due at midday today.
Read how the average two and five-year fixed rate deals have fallen.
10:16 AM BST
Pound rises after Fed rate cut
The pound has risen against the weakening dollar after the Federal Reserve cut interest rates by half a percentage point.
The pound briefly hit $1.3297, its highest level since March 2022, right after the Fed announcement on Wednesday. It was last up 0.5pc at $1.3278.
Sterling had risen on Wednesday as inflation held steady at 2.2pc in August but rose in the services sector, which is closely watched by the Bank of England, from 5.2pc to 5.6pc.
Money markets give a 10pc chance of the Bank of England cutting interest rates by a quarter of a percentage point later today.
However, policymakers are expected to cut rates in November, and traders bet there is a 98pc chance of a second rate cut by the end of the year.
Matthew Ryan, head of market strategy at Ebury, said:
Any hint at a November move would unlikely trigger any downside in sterling, as this is currently more than fully priced in by markets.
The vote on rates among committee members could be of greater importance to investors.
A closer vote, whereby we see more of a balance between the hawks and the doves, would no doubt be bearish for sterling.
09:53 AM BST
S4 Capital tumbles as tech companies cut marketing budgets
Sir Martin Sorrell’s marketing group S4 Capital has seen shares tumble after warning over full-year sales as tech companies slash their spending.
The group said revenues plunged 18.3pc in the six months to June 30 and cautioned turnover is set to fall by more than expected over the year as a whole, sending shares down by as much as 14.7pc.
Executive chairman Sir Martin said trading was being hit as tech companies cut back on their marketing budgets.
S4 Capital, which offers services under the Media.Monks brand, has slashed its workforce by nearly 1,000, or about 12pc, to 7,553 year-on-year in the first half as it looks to cut costs.
Its actions to drive savings is helping limit the impact on profits, with the group reporting underlying earnings down 17.5pc to £30.1m for the first half and holding its outlook for the full-year.
On a statutory basis, it saw pre-tax losses narrow to £17.2m from £23.2m a year ago. Sir Martin said:
Trading in the first half reflects the continuing impact of both challenging global macroeconomic conditions and high interest rates.
This particularly impacted marketing spend by some technology clients and our technology services practice was affected by a reduction in one of our larger relationships.
09:33 AM BST
Norway holds interest rates at 4.5pc
Norway’s central bank held interest rates at their highest level since 2008 and signalled it has no intention to cut borrowing costs before the end of the year.
In a major week for central banks, Norges Bank maintained the key deposit rate at 4.5pc, as had been expected.
However, policymakers signaled a first cut could come in the first three months of next year, having projected in August that there would be no change “for some time ahead”.
Governor Ida Wolden Bache said: “We believe that there is a need to keep the policy rate at today’s level for a period ahead but that the time to ease monetary policy is approaching.”
Norges Bank is likely to be among the last central banks to cut borrowing costs, as its efforts to rein in inflation has been hampered by the krone, which is the weakest performing major currency this year.
The Bank of England announces its next interest rate decision at noon. The Bank of Japan makes its announcement tomorrow.
The benchmark interest rate in Norway was last recorded at 4.50 percent.https://t.co/RAO8lhjMAC pic.twitter.com/fIi3lAv2aR
— TRADING ECONOMICS (@tEconomics) September 19, 2024
09:20 AM BST
Next warns of store closures after losing six-year equal pay battle
Next has said it could be forced to close stores after losing a landmark legal battle over equal pay.
Our retail editor Hannah Boland has the details:
The retail giant issued the warning after an employment tribunal ruled last month that Next should pay its store staff, who are predominantly women, the same hourly rates as its mostly male warehouse workers.
This will threaten Next’s ability to make stores “individually profitable”, bosses told investors on Thursday, as they pursue an appeal against the decision.
If unsuccessful, Next could have to pay more than £30m to settle the claim, which was first lodged in 2018 and includes more than 3,500 current and former shop workers.
Next laid out the potential impact of this in its half-year results.
09:06 AM BST
Bitcoin price hits three-week high as Fed cuts rates
Bitcoin hit a three-week high as the outsized Federal Reserve interest-rate cut rippled across markets.
The digital token rose as much as 4.5pc to $62,135.
Caroline Mauron, co-founder of Orbit Markets, said:
An aggressive start to the easing cycle is excellent news for risky assets including bitcoin.
The market needed a few hours to see the big picture and start reflecting the improved outlook.
08:40 AM BST
UK stocks rise amid hopes US will avoid recession
UK shares rose ahead of the Bank of England’s interest rate decision later today.
The FTSE 100 was last up 0.7pc while the FTSE 250 had gained 0.8pc as global markets were boosted by the Federal Reserve’s outsized cut to borrowing costs. UK small-cap stocks rose 0.4pc.
The Fed’s half-a-point rate cut boosted confidence for an economic “soft landing” in the world’s largest economy, with global equities rising and the pound gaining against the dollar.
George Lagarias, chief economist at Forvis Mazars, said: “The Fed took a bold step, considering that services inflation is still much higher than average and that the US economy depends on China to continue deflating goods.
“The US central bank is now committed, in the eyes of markets, to reduce rates quickly.”
All major FTSE sectors opened higher, led by a 2.6pc rise in the retail sector as Next shares hit a record high.
The retailer jumped 6pc to the top of the FTSE 100 after announcing it was on track to make an annual profit of almost £1bn.
Ocado Group shares soared nearly 15pc after Ocado Retail lifted revenue forecast for 2023-2024, as sales jumped in its latest quarter.
08:20 AM BST
Global stocks rise after Fed rate cut
Europe’s main stock markets rallied at the start of trading after the US Federal Reserve’s first interest-rate cut in more than four years.
As well as the FTSE 100 in London gaining 0.9pc, in the eurozone, the Paris Cac 40 index jumped 1.4pc to 7,551.65 points and Frankfurt’s DAX advanced 0.9pc to 18,882.53.
Asian markets also forged higher after the Fed cut its key lending rate by 50 basis points on Wednesday with US inflation easing towards the central bank’s long-term 2pc target.
In Tokyo, the Nikkei 225 index jumped 2.1pc to 37,155.33, lifted by major export manufacturers’ shares. Toyota Motor jumped 5.1pc, Sony added 2.9pc and Hitachi advanced 5.8pc.
Hong Kong’s Hang Seng gained 1.9pc to 17,993.30, while the Shanghai Composite index climbed 0.7pc to 2,736.51. Taiwan’s Taiex was up 1.7pc and South Korea’s Kospi rose 0.2pc to 2,579.86.
Nomura strategist Chetan Seth said:
The Fed’s jumbo rate cut shows a clear intention of the Fed to support the US economy and aim for a ‘soft landing’.
So long as the US manages to avoid a recession in the months ahead, the Fed pre-emptively cutting rates should be generally supportive of stocks.
08:05 AM BST
FTSE 100 surges after jumbo US interest rate cut
The FTSE 100 has leapt higher at the open after the US Federal Reserve cut interest rates for the first time in four years with a hefty reduction of half a percentage point.
The UK’s blue chip stock index rose 0.9pc to 8,329.24 while the midcap FTSE 250 jumped 0.6pc to 20,967.98.
07:56 AM BST
Rolls-Royce wins pioneering mini-nuke deal
Rolls-Royce has won a contract to build two small nuclear reactors in a deal that will help secure the energy supply of Czechia.
The British engineering giant has been named the preferred supplier for the construction of two new nuclear units at the site of the Dukovany Nuclear Power Plant operated by ČEZ Group.
Rolls-Royce said it still has to finalise contract terms and regulatory clearances for the small modular reactors (SMRs).
The company’s SMR chief executive Chris Cholerton said: “Rolls-Royce SMRs will be a source of clean, affordable, reliable electricity for Czechia – creating jobs, enabling decarbonisation, reducing the reliance on imported energy and supporting the global effort to reach net zero.”
Business and Trade Secretary Jonathan Reynolds said:
This is an outstanding vote of confidence in British engineering and proof the UK is at the cutting edge of nuclear technology.
With our international investment summit one month away, we’re seeing the benefits of political and economic stability in this country. It’s fantastic to see expertise developed at home being sold to the world and supporting the global effort to reach net zero.
07:50 AM BST
Ocado revenues rise as more shoppers use online grocer
Ocado Retail has upped its revenue guidance for the year into double-digit percentage growth after it reported a sharp rise in turnover in the third quarter.
The London-listed company said revenue rose 15.5pc year on year to £658m for the quarter ending September 1 while average orders per week rose 14.7pc to 437,000.
While average selling prices fell by 0.4pc across the group, versus roughly 2pc grocery inflation in the UK, Ocado saw more customers as 1.06m people shopped with the retailer over the period, versus 961,000 in the same period last year.
Ocado Retail’s chief executive Hannah Gibson said:
Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value.
We’re seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value.
07:45 AM BST
Next increases profit outlook as overseas sales surge
High street giant Next has upped its annual profit outlook once again thanks to surging sales overseas and a rebound in UK trading over recent weeks.
The group reported a 7.1pc jump in underlying pre-tax profits to £452m for the six months to July 27 as total group sales lifted 8pc.
It said UK sales rose by just 1pc, with its Next brand full-price sales down by 0.9pc as demand for seasonal collections was impacted by cooler early summer weather.
But overseas sales surged 23pc while the company also said UK trading since the half-year was “materially” better than expected as the weather improved over August.
Next reported a 6.9pc rise in full price sales over the first six weeks of the second half so far.
The firm upped its full-year profit guidance by £15m to £995m, as it now expects sales to rise 4pc overall.
07:33 AM BST
Bank of England expected to hold interest rates at 5pc
The Bank of England is poised to keep interest rates at 5pc after sending a “clear message” that it would not move too quickly to cut borrowing costs.
Most economists think that rate-setters on the Monetary Policy Committee (MPC) will keep the UK interest rate on hold later today.
The central bank cut rates from 5.25pc in August, implementing the first reduction since 2020 and delivering good news to squeezed borrowers across the country.
Governor Andrew Bailey said it was able to do so because inflationary pressures had “eased enough” but he stressed that policymakers “need to be careful not to cut interest rates too quickly or by too much”.
Matt Swannell, chief economic adviser at the EY Item Club, said the MPC “sent a clear message that back-to-back rate cuts were unlikely” unless subsequent economic data was weaker than expected.
He said the latest official data, which showed consumer prices index (CPI) inflation remained at 2.2pc in August, would not be enough to prompt the Bank to start cutting rates more quickly.
Sanjay Raja, chief UK economist for Deutsche Bank, agreed that the inflation figures “won’t be enough to trigger a surprise rate cut”.
07:28 AM BST
Germany suffers ‘spectacular’ 70pc drop in electric car sales
Germany suffered a “spectacular drop” in electric car sales last month, industry figures show, as Europe’s car industry battles to meet emissions targets.
Battery electric vehicle sales dropped by 68.8pc in Europe’s largest economy compared to last year.
France, Europe’s second biggest car market, recorded a 33.1pc drop in sales.
Overall, registrations of battery-electric cars dropped by 43.9pc across Europe to 92,627 in August, down from 165,204 last year.
From January to August, 902,011 new battery-electric cars were registered, representing 12.6pc of the market.
Plug-in hybrid car registrations also saw a decrease last month of 22.3pc, with declines recorded in all their major markets.
Sales of petrol cars also dropped by 17.1pc in Europe, but the sector still represents 32.6pc of the market.
07:25 AM BST
European carmakers call for urgent action to avoid billions in climate fines
European carmakers have urged the EU to delay new emissions targets as a decline in the electric vehicle market leaves manufacturers at risk of “multi-billion-euro fines”.
The European Automobile Manufacturers’ Association, known as ACEA, has called for “urgent action” before new targets come in next year.
The Brussels-based industry body said the latest vehicle registration figures show the electric car market is “now on a continual downward trajectory”.
Fully electric vehicles made up 12.5pc of all new car registrations in the EU from January to July, it said, well below the level needed to be compliant with new CO2 targets for cars and vans that come into effect in 2025.
It also urged the European Commission to bring forward the CO2 regulation reviews currently scheduled for 2026 and 2027, to 2025.
The ACEA board said: “We are missing crucial conditions to reach the necessary boost in production and adoption of zero-emission vehicles: charging and hydrogen refilling infrastructure, as well as a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen and batteries.
“Economic growth, consumer acceptance, and trust in infrastructure have not developed sufficiently either.”
It added: “The industry cannot afford to wait for the review of the CO2 regulations in 2026 and 2027, we need urgent and meaningful action now to reverse the downward trend, restore EU industry competitiveness and reduce strategic vulnerabilities.​”
07:12 AM BST
Good morning
European carmakers have called for “urgent action” from the EU to help them avoid “multi-billion-euro fines” as a slowdown in the electric vehicle market puts on them on course to miss emissions targets.
The European Automobile Manufacturers’ Association, known as ACEA, said fully electric vehicles made up 12.5pc of all new car registrations in the EU from January to July, well below the level needed to meet CO2 targets coming into force next year.
5 things to start your day
1) One in 10 on sickness benefits after surge in mental health claims | Britain on course to be among highest spenders on health-related claims, warns IFS
2) Hogwarts Express operator scrambles to survive crackdown on traditional carriages | Stringent new rules on door locks prompts merger between West Coast Railways and Riviera Trains
3) Rayner’s towns and villages building blitz branded ‘perverse’ | Housing Secretary’s plan will put homes in the wrong places, warns Resolution Foundation
4) Why the rapid death of North Sea risks leaving taxpayers on the hook for billions | Reeves’s looming tax raid on oil and gas threatens an eye-watering bill for British households
5) Matthew Lynn: There is an obvious culprit for our alarmingly sticky inflation | Labour has recklessly caved in to union demands, gone to war with landlords and pursued costly net zero targets
What happened overnight
Tokyo’s Nikkei led Asian markets higher after the US Federal Reserve announced an outsized half a percentage point cut to interest rates.
The yen hit a two-week high after the Federal Reserve announced a bumper interest rate cut and pledged a series of further reductions.
Asian markets mostly rose, with Tokyo adding more than 2pc as the yen hit almost 144 per dollar.
There were also gains in Hong Kong, where the central bank lowered its own rates owing to the city’s currency peg to the dollar, while Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta also advanced.
New Zealand’s economy shrank in the second quarter, according to official data released on Thursday morning, pushing the country close to recession.
The 0.2pc on-quarter contraction in April-June followed weak growth of 0.1pc in the previous three months.
On Wall Street, the benchmark S&P 500 rose as much as 1pc after the Fed’s interest rate cut. However, it then retreated to close down 0.3pc at 5,618.26.
The Dow Jones Industrial Average closed down 0.3pc, at 41,503.10, and the Nasdaq Composite shed a similar amount, to end at 17,573.30.
The yield on benchmark 10-year US Treasury notes rose to 3.71pc, from 3.64pc late on Tuesday.
