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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Pound on worst run since March 2020 with UK economy ‘close to stalling’; some Gatwick strikes suspended – as it happened

Twitter Inc. X (Organization) Elon Musk United Kingdom Linda Yaccarino United States Recession Ocado EY ITEM Club Andrew Griffith
The Canary Wharf business district in London.
The Canary Wharf business district in London. Photograph: Bloomberg/Getty Images

Afternoon summary

Time for a recap:

The pound is heading for its seventh daily fall in a row – its worst run since March 2020 – as signs build that the UK economy is slowing.

Sterling is down almost half a cent at $1.281, barely a week after hitting 15-month highs of $1.314 against the US dollar.

The pound has weakened as City investors have cut their forecast for the peak in UK interest rates to around 5.75%, down from 6.5% expected earlier this month.

Sterling came under more pressure after a survey of UK purchasing managers found that Britain’s economy is close to stalling this month.

Data provider S&P Global found that rising interest rates, elevated inflation, and more caution among clients due to the uncertain economic outlook hit company growth.

High interest rates are set to restrain the economy over the next few years, with economic forecasters at EY ITEM Club halving their 2024 growth forecast.

Borrowers continue to face higher costs too, with two-year fixed mortgage rates rising again today.

But with the UK economy weakening, the Bank of England could resist pressure for a large interest rate rise next month, and only plump for a quarter-point hike.

The US economy is also slowing this month, while eurozone firms suffered a drop in activity.

Elsewhere today…

Some of the strikes planned by baggage handlers and other workers at airport Gatwick in the peak summer travel period have been suspended or cancelled.

The Unite trade union has announced that staff were offered better pay deals, meaning some strikes are cancelled and others put on hold pending ballots.

Rail passengers are facing further disruption over the summer holidays after train drivers announced another week-long overtime ban in a long-running dispute over pay.

Elon Musk has revealed a new logo for Twitter, choosing a “minimalist art deco” X as part of a rebrand of the platform.

Reaction from the social media platform’s users has been mixed, if witty:

Must has also indicated the design would be altered, tweeting that it “probably changes later, certainly will be refined”.

Financial regulators are to be summoned to parliament to explain how they prosecuted the case of a multimillion-pound pensions fraud whose victims have yet to receive compensation and which has not led to anyone serving prison time.

Welsh whisky is to join its Scottish and Irish counterparts in being officially awarded protected origin status under the UK’s post-Brexit regime.

Factories in England and Wales are seeing a downward trend in the share of their trade going to the EU, an analysis from the manufacturers’ trade body shows.

Holiday company TUI has now said it had cancelled all its flights from Britain to the Greek island of Rhodes up to and including Friday due to the wildfires on the island.

TUI also put on six extra planes today to fly customers from Germany and the UK back home.

Ryanair has said its flights to Rhodes are operating as normal and are unaffected by forest fires that have prompted large-scale evacuations of the Greek island, as it reported a near quadrupling of profits in the spring.

The venture capital industry has come under fire from MPs for its “unacceptable failure” to invest in businesses located outside London or south-east England, or those run by women and ethnic minorities.

TUI cancels UK flights to Rhodes up to Friday

Holiday company TUI has now said it had cancelled all its flights from Britain to the Greek island of Rhodes up to and including Friday, due to the wildfires hitting the island, Reuters reports.

TUI had previously cancelled all its trips there up to and including Tuesday.

The company continues to operate repatriation flights to bring stranded holidaymakers back to the UK and other European countries, as flagged earlier today.

Its statement on Monday added that it had also cancelled flights for holidaymakers heading to the hotels in Rhodes which have been affected by the fires up to and including Sunday.

TUI adds:

“All customers due to travel on these flights will receive full refunds.”

Updated

Here’s our news story on the pound’s weakness:

Advertisements for the films
Advertisements for the films "Oppenheimer," and "Barbie". Photograph: Chris Pizzello/AP

UK cinemas are celebrating their biggest weekend since 2019 as the dual offerings of Barbie and Oppenheimer lured punters in.

Greta Gerwig’s film about the Mattel doll, played by Margot Robbie, having an existential crisis and Christopher Nolan’s epic about the “father” of the atomic bomb, generated almost £30m at the UK box office, according to the UK Cinema Association.

Cinema chain Vue said a fifth of its customers had purchased tickets to see both films in a double bill dubbed by social media as Barbenheimer.

More than 2,000 of Vue’s Barbie screenings were sold out, according to the company.

US economic expansion losing momentum

Newsflash: The US economic recocery is losing momentum this month as service sector growth slows, the latest survey of purchasing managers at American companies shows.

S&P Global’s flash US PMI Composite Output has dropped to 52.0 in July, down from 53.2 in June, and nearer to the 50-point mark showing stagnation.

This is the slowest growth in five months, with output growth at services companies slowing and manufacturers reporting broadly unchanged levels of production this month.

Total new order growth slowed this month, while export demand conditions for manufacturers worsened.

Business optimism about the year-ahead outlook fell to its lowest level so far this year.

The economic picture is darkening, says Chris Williamson, chief business economist at S&P Global Market Intelligence, adding:

“July is seeing an unwelcome combination of slower economic growth, weaker job creation, gloomier business confidence and sticky inflation.

The overall rate of output growth, measured across manufacturing and services, is consistent with GDP expanding at an annualized quarterly rate of approximately 1.5% at the start of the third quarter. That’s down from a 2% pace signalled by the survey in the second quarter.

However, growth is being entirely driven by the service sector, and in particular rising spend from international clients, which is helping offset a becalmed manufacturing sector and increasingly subdued demand from US households and businesses.

The US stock market has begun the new week with some small gains.

The Dow Jones industrial average has gained 92 points, or 0.25%, to 35,320, extending its recent strong run, while the broader S&P 500 is up 0.4%.

Updated

Holiday operator TUI says it has “extended its support” for holidaymakers caught up in the willdfires on the island of Rhodes.

TUI says that early this morning, six of its additional planes flew its customers and other holidaymakers from Germany and the UK back home.

The TUI planes brought holidaymakers safely back to Hanover, Frankfurt and Stuttgart and in the UK to London-Gatwick, Birmingham and Manchester. In addition, another TUI flight will take Danish guests back to Billund, the company adds:

America’s economic growth has also weakened, mirroring the slowdown we’ve seen in the UK and the eurozone already today.

U.S. economic growth edged down slightly month-on-month in June, as production activity weakened, data from the Federal Reserve Bank of Chicago shows.

The Chicago Fed National Activity Index decreased to -0.32 in June from -0.28 in May, suggesting that U.S. economic activity grew below its average historical trend last month.

Measures of production, consumption and sales all fell, while there was a small increase in employment levels.

More Gatwick strikes suspended as DHL workers win 15% pay rise

More Gatwick strikes have been suspended, the Unite union, has just announced, easing the threat of holiday disruption this summer.

Workers employed by DHL have accepted a 15% pay rise and an ‘uplift in skills pay, meaning hourly rates will rise by between 15% and 31%. Plus, workers will get an extra shift premium of £1.25 per hour for work between midnght and 4.59am.

As a results, DHL staff will no longer strike from Friday 28 July to Tuesday 1 August, and also from Friday 4 August to Tuesday 8 August.

Unite general secretary Sharon Graham said:

“This is an excellent result secured by the steadfast position of our DHL members.

Once again, workers are gaining real material benefits from Unite’s absolute focus on improving jobs, pay and conditions.”

Almost 1,000 staff who work on roles at Gatwick including baggage handling and check-in desks at four companies, including DHL, voted to hold those eight days of strike action earlier this month.

But the strikes could yet be called off, with ASC and Menzies workers currently balloting on improved offers.

If the ASC workers reject the pay offer, they will go ahead with strike action scheduled between 28 July and 1 August as well as strikes between 4 August and 8 August, Unite says.

Strikes by Menzies workers between 28 July and 1 August have been suspended, however if the offer is rejected, strikes between 4 August and 8 August will go ahead.

Talks with GGS are “progressing in a positive direction”, Unite adds, meaning that strike action by GGS workers scheduled between 28 July and 1 August has been suspended to allow negotiations to continue.

However, strike action between 4 August and 8 August is still scheduled to go ahead if a satisfactory outcome is not reached in time.

Updated

Full story: Elon Musk reveals the new Twitter logo X

The “X” logo has long been an obsession of Elon Musk’s and is his name for an “everything app” that he has pledged to launch at some point – with Twitter the likely vehicle, our global technology editor Dan Milmo writes.

Shortly before buying Twitter in October, Musk described the social media platform as “an accelerant to creating X, the everything app”.

After taking over Twitter in October last year, Musk folded the company into an entity called X Corp, whose parent is X Holdings Corp. This month, the Tesla CEO announced he was forming a new artificial intelligence company called xAI.

The crowd-sourced logo had been posted by Twitter user Sawyer Merritt, co-founder of a sustainable clothing business, who tweeted that the font had been used for a discontinued podcast, although it also bears similarity with a font used by Indian dance music artist Kxlider.

Updated

The old blue bird has vanished from the top of the Twitter home page, replaced by the new “minimalist art deco” X.

There are concerns that Elon Musk is throwing away 15 years of brand recognition, by rebranding Twitter as X.

Mike Proulx, Forrester VP research director, explains:

“By changing Twitter’s app name, Elon Musk will have singlehandedly wiped out over fifteen years of a brand name that has secured its place in our cultural lexicon. This is an extremely risky move because with ‘X,’ Musk is essentially starting over while its competition is afoot.”

The good news for Musk is that #TwitterX is trending in the UK this morning.

Less encouragingly, I’ve also seen #RIPTwitter popping up in the trends list too.

Fashion retailer Matalan has reported a “challenging” first quarter as the cost-of-living squeeze on spending.

The slow transition to summer weather also weighed on the group’s sales, with April’s thundery showers and an unsettled May deterring people from buying new warm-weather clobber.

Total revenues at the low-cost clothing and homeware chain fall by 8% to £264m in the three months to May 27, compared to £287m made in the same period last year.

Matalan, which has 230 stores across the UK and 48 franchised shops overseas, said it had noticed an impact from shoppers spending less on non-essential items.

Chief executive Jo Whitfield said:

“The business had a challenging first quarter with cost of living pressure resulting in depressed consumer spending in discretionary categories.

“Unseasonal weather delayed a refresh of wardrobes for early spring creating a tough start to the season.”

Eurozone firms suffer steeper downturn

Companies in the eurozone are also having a tough July.

Eurozone business output fell at the fastest rate for eight months in July, according to the latest HCOB flash PMI survey data produced by S&P Global, released this morning.

The survey showed that demand conditions worsened across the board in the eurozone this month, with new business shrinking at the fastest rate since last November.

The goods-producing sector saw one of the steepest declines in new orders since 2009, while services companies reported the first downturn in new orders for seven months.

Inflationary pressures moderated, though, with “gathering deflation in manufacturing” and “slower service sector inflation”.

Pound heads for longest run of losses since 2020

The pound is on track for its longest losing run since early in the Covid-19 pandemic, as City traders dial down their forecast for UK interest rate rises.

Sterling is down a quarter of a cent today at $1.281, its lowest level in a fortnight.

This is its seventh daily drop in a row, as traders digest this morning’s warning that UK private sector growth is weakening this month.

The pound against the US dollar this year
The pound against the US dollar this year Photograph: Refinitiv

That’s the worst run since March 2020, when the pound fell for eight consecutive sessions.

The selloff reflects growing expectations that UK interest rates will not rise as fast as previously feared, as the economy slows and inflation drops.

The pound had surged to a 15-month high of around $1.314 on 13th July, after rising by six days in a row (the best run of 2023), but the mood has turned against the pound since.

Updated

UK government bond prices are rallying this morning, pulling down the yield (or interest rate) on British debt.

Five-year and 20-year gilt prices have jumped to six-week highs this morning, as this morning’s weak survey of UK purchasing managers pulls down on expectations for UK interest rate rises.

The yield on 20-year UK bonds has dropped to 4.38%, down from 4.47% on Friday night. Bond yields fall when prices rise.

The slowdown across UK companies this month bolsters the case for the Bank of England to only raise interest rates by a quarter of one percent next week, argues Simon Harvey, head of FX analysis at Monex Europe.

That would take UK interest rates to 5.25%, up from 5% today.

Harvey says:

All in all, today’s data once again confirms that the effects of the BoE’s tightening cycle are now starting to have an impact on the real economy, and with services activity cooling specifically, this should provide further justification for the BoE to decelerate its hiking cycle with a 25bp hike in August.

The Cty seems to share this view, with the chances of a 50-basis point (half a percentage point) hike now down to 32% today, having been odds-on earlier this month.

Updated

July’s weak PMI reading suggests the UK is suffering from “faltering economic resilience”, says Thomas Pugh, economist at RSM UK.

Pugh points to data last week showing a drop in consumer morale:

The fall in the flash S&P/CIPS Composite PMI to 50.7 in July, combined with the drop in the GfK measure of consumer confidence to -30, suggests that the economy is starting to buckle under the weight of the surge in interest rates and exceptionally high inflation.

‘Admittedly, at 50.7 the composite PMI is consistent with flat GDP growth rather than a contraction. But July was the fourth consecutive fall in the PMI having peaked at 54.9 in April.

What’s more, the drop was broad based with both the services (53.0 to 51.5) and manufacturing (46.0 to 45.0) sectors falling. This suggests that momentum and resilience in the private sector is starting to falter, and it is not difficult to see the economy slipping into recession in early 2024 as the impact of interest rate hikes continue to feed through into the real economy.

Dr John Glen, chief economist at CIPS, agreed that higher interest rates are hitting UK growth this month (as shown by today’s PMI report).

Dr Glen says:

“Higher borrowing costs are here to stay and the private sector knows it. Interest rate hikes are not just affecting new orders today but spending plans long into the future.

The biggest concern is increasingly not if the UK economy will enter recession but for how long.

More optimistically, though, he sees “the jigsaw pieces for a supply-led reduction in inflation” falling into place:

Global supply chains are returning to normal after years of pandemic shortages and rising costs. Stocks of unused goods built up to help manage Brexit, the pandemic and most recently global shipping disruption are finally being run down.

Manufacturing input costs are falling and supplier performance is improving at the fastest rate we have ever seen. This renewed supply chain agility, combined with falling raw material and transportation costs, could not have come at a better time for business.”

UK economy 'close to stalling' in July as high interest rates hit firms

Newsflash: growth at UK companies has slowed to its lowest level since January as higher interest rates slow the economy, a new survey shows.

Data firm S&P Global Insight repoorts that UK private sector output rose at its weakest rate for six months in July

Companies reported that business activity was hit by rising interest rates, elevated inflation, and more caution among clients due to the uncertain economic outlook.

That backs up EY ITEM Club’s warning this morning that higher borrowing costs weigh on growth (see opening post).

Growth slowed at service sector companies, while manufacturing output shrank at the fastest rate since last December.

This pullsed S&P’s flash PMI Composite Output Index down to 50.7 for July, down from June’s 52.8, and a 6-month low. Any reading over 50 shows growth.

UK flash PMI report for July 2023

Several service sector firms blammed weaker residential property market conditions for weakening demand, while others cited cutbacks to discretionary business and consumer spending.

Manufacturers cut their prices for the second month running, as they benefitted from a big improvement in suppliers’ delivery times and falling cost pressures.

Chris Williamson, chief business economist at S&P Global Market Intelligence, says rising interest rates are taking their toll on the economy.

“The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries.

July’s flash PMI survey data revealed a deepening manufacturing downturn accompanied by a further cooling of the recent resurgence of growth in the service sector.

Rising interest rates and the higher cost of living appear to be taking an increased toll on households, dampening a post-pandemic rebound in spending on leisure activities.

Meanwhile, manufacturers are cutting production in response to a worryingly severe downturn in orders, both from domestic and export markets.

“Forward-looking indicators, such as order book inflows, levels of work-in-hand and future business expectations, all point to growth weakening further in the months ahead, adding to a risk of GDP falling in the third quarter.

Updated

Two-year fixed mortgage rates rise

UK short-term mortgage rates have risen a little higher today, despite last week’s fall in inflation.

Financial data provided Moneyfacts reports that the average 2-year fixed residential mortgage rate has risen to 6.81%, up from 6.80% on Friday.

But the average 5-year fixed residential mortgage rate was unchanged at 6.32%.

Last week, the average rate on both types of mortgage fell for the first time since May, after the larger-than-expected fall in UK inflation to 7.9% in June.

The money markets currently expect Bank of England base rate to peak at 5.75% next spring, down from forecasts of a peak of 6.5% earlier this month.

Savings rates have crept a little higher today, Moneyfacts says:

  • The average 1-year fixed savings rate today is 5.15%. This is up from an average rate of 5.14% on the previous working day.

  • The average easy access savings rate today is 2.73%. This is up from an average rate of 2.70% on the previous working day.

  • The average 1-year fixed Cash ISA rate today is 4.90%. This is up from an average rate of 4.89% on the previous working day.

  • The average easy access ISA rate today is 2.83%. This is up from an average rate of 2.78% on the previous working day.

Spain's IBEX drops after general election deadlock

A man chooses a ballot paper to cast his vote during the General Elections in Hospitalet
A man chooses a ballot paper to cast his vote during the General Elections in Hospitalet Photograph: Ramon Costa/SOPA Images/Shutterstock

Spain’s stock market has dropped by over 1% this morning, after last weekend’s general election left the country in political deadlock.

Neither the left or right-wing political parties appear to have a clear path to power.

Spain’s opposition conservative party, the People’s Party (or PP) secured the most number of seats, with 136, followed by the incumbent Spanish Socialist Workers’ party (or PSOE) with 122.

The far-right Vox party took 33 seats – well down on the 52 they picked up in the last election – while the new, far-left Sumar alliance were in fourth place with 31 seats.

Spain is in for weeks of negotiating and horse-trading as the rival camps explore their options for government.

My colleague in Madrid, Sam Jones, explains:

Negotiations by the two blocs to form governments will start after a new parliament convenes on 17 August. King Felipe VI will invite the PP’s leader, Alberto Núñez Feijóo, to try to secure the prime ministership. In a similar situation in 2015, PP leader Mariano Rajoy declined the king’s invitation, saying he could not muster the support.

If Feijoo declines, the king may turn to the prime minister, Pedro Sánchez, with the same request. The law does not set a deadline for the process but if no candidate secures a majority within two months of the first vote on the prime minister, new elections must be held.

Updated

Back in the City, shares in digital advertising and marketing services business S4 Capital have tumbled by around a fifth after it cut its revenue and profit forecasts this morning.

S4, founded by Sir Martin Sorrell five years ago, told shareholders that net revenue in the second quarter of this year had been “below budget”, which it blamed on challenging macroeconomic conditions.

Clients, particularly in the tech sector, were cautious and very focussed on the short term, S4 said.

It has slashed its forecast for like-for-like net revenue growth this year to a range of 2-4%, as opposed to 6-10% previously.

The firm’s operational EBITDA profit margin target has been cut to 14.5-15.5%, down from 15-16%.

S4 added that its ‘content’ division, which creates adverts for brands, has had a ‘difficult’ first half of 2023, saying:

Based on our preliminary review of the H1 results, Technology services continues to perform well, Data&digital has seen growth slow compared to 2022, but is trading satisfactorily, while Content has had a more difficult period generating results below our budget.

Updated

The new X logo is being displayed on Twitter’s HQ tonight:

With the old blue bird logo heading for the pigeon coop in the sky, tweets are now to be called “x’s”, according to Elon Musk (we’ll see how long it takes for that to catch on…)

Updated

Another take on the Twitter rebrand:

Shares in travel companies have dipped this morning, after budget airline Ryanair cut its forecast for traffic growth this year.

Ryanair reported a surge in earnings in the April-June quarter this morning, almost quadrupling its profits after tax to €663m, up from €170m a year ago (when the Ukraine war hit demand).

Traffic rose 11% year-on-year to 50.4 million passengers in the quarter.

But, Ryanair has also cut its forecast for travel for the full year to approximately 183.5m (a rise of 9%), down from the 185m originally expected. It blames delays to deliveries of new Boeing aircraft.

But Ryanair also reported “a softening” in fares in late June and early July, which may indicate that demand is weakening. The airline also suggested that it may need to cut fares to fill its planes this coming Christmas and New Year, having added 25% more seats compared to pre-Covid levels.

British Airway’s parent company, IAG, are down 3% in early trading.

EasyJet have dropped by 4.1%, while TUI are down 3.4%, as the airlines race to repatriate holidaymakers who have fled hotels due to the Greek wildfires.

Ocado shares surge after patent litigation deal

In the City, shares in Ocado have jumped by over 11% to their highest level since January, after it reached a deal with Norwegian robotics firm AutoStore over patent litigation claims.

Under the deal, announced last weekend, AutoStore will pay £200m to Ocado.

They will also have “complete freedom” to access and use technology covered by each other’s pre-2020 patents, and can continue to use and market their own existing products without risk of infringing each other’s post-2020 patents.

This litigation has hung over Ocado since October 2020, when Autostore filed a case arguing the UK firm had infringed six of its patents relating to its use of robots to retrieve goods from warehouses.

Today, Ocado CEO Tim Steiner says:

“I am pleased that we have worked together to resolve our differences and can now continue to focus on what we do best - innovating, developing and enabling partners to access world beating technology”

Twitter users react

Some Twitter users are unimpressed by the X rebrand, and mourning the old blue bird logo (although it’s still displayed at the top of the Twitter homepage at pixel time).

There have also been some rather pointed suggestions for the new logo, reflecting concerns about Twitter’s viability or its political leanings, which didn’t make the cut:

Updated

Elon Musk has changed his profile information on Twitter to read “X.com,” which now redirects to a user’s homepage on twitter.com.

Twitter chooses fan-submitted ‘X’ as new logo

Twitter appears to have changed its logo, ditching its signature blue bird in favour of a stylised X.

Chief executive Linda Yaccarino has just tweeted the new logo, a day after owner Elon Musk invited his 149 million followers to suggest an X logo, and said the company would switch if a “good enough X logo” were posted.

Musk also indicated that the logo would probably be changed in future, and “certainly will be refined”.

The move to X is part of Musk’s push to transform Twitter, which he bought for $44bn last year, into an everything app.

And here is the new logo – described by Musk as “minimalist art deco”:

Musk’s rebranding of Twitter as X comes as he struggles to attract advertising and faces increased competition following the launch of Meta’s Threads platform.

Since buying Twitter, he has slashed the workforce and cut costs, and tried to cajole users into paying $8 per month for Twitter Blue.

Twitter’s chief executive, Linda Yaccarino, confirmed the launch of the X brand on Sunday. She tweeted:

“It’s an exceptionally rare thing – in life or in business – that you get a second chance to make another big impression. Twitter made one massive impression and changed the way we communicate.

Now, X will go further, transforming the global town square.”

Yaccarino said X would be “centred in audio, video, messaging, payments/banking” and would be a “global marketplace for ideas, goods, services, and opportunities”. She added: “X will be the platform that can deliver, well … everything.”

Updated

Introduction: Interest rate rises to hit UK growth next year

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Rising interest rates are set to slow the UK economy next year, casting a pall over the country in a likely election year.

The EY Item Club, the economic forecasting group, has halved its forecast for UK economic growth in 2024 to 0.8%, down from the 1.9% projected in April.

The 2025 GDP growth forecast has also been downgraded, from 2.3% to 1.7%.

These growth downgrades are due to the increase in UK interest rate over the last 20 months, from 0.1% in December 2021 to 5% today.

EY ITEM Club predict two further interest rate rises from the Bank of England, in August and September, meaning Bank Rate peaks at 5.5%.

That will further slow growth, and put more pressure on mortgage holders, with over one million households across Britain are expected to lose at least 20% of their disposable incomes to surging mortgage costs.

Martin Beck, chief economic advisor to the EY ITEM Club, says:

“The inflation and interest rate outlook is a key risk for the forecast. Should inflation prove more stubborn than expected, the prospect of even more rate rises than we expect will come very much into play. On the other hand, the potential is there for inflation to fall faster than expected, as June’s outturn demonstrated.

But the good news is that the economy remains on course to avoid recession, with the UK economy is expected to grow 0.4% in 2023, up from the 0.2% growth seen three months ago.

Beck explains:

“At the moment, the boost from less expensive energy in particular means the EY ITEM Club doesn’t believe recent interest rate rises will push the consumer sector or wider economy into recession. And although the current rate rising cycle doesn’t appear to be over yet, current market expectations for Bank Rate to climb to around 6% seem unlikely to come to pass.

That said, how the Bank of England perceives things will be key and, should it opt for a more hawkish stance, there is a real risk that interest rates could continue to ratchet up to a level where even the protection afforded by healthy household and business balance sheets isn’t enough to prevent a recession. On that count, the next few months – and what they tell us about just how sticky inflation and strong pay growth are – will be crucial.”

The path for economic growth could influence Rishi Sunak’s decision on when to call the next election, with senior Conservatives urging him to go to the polls in the spring.

Also coming up today

City minister Andrew Griffith is expected to write to the chief executives of 19 banks, building societies and digital challengers today, to warn them that regulations around politically exposed persons are “being applied in a disproportionate manner by some financial institutions”.

Griffith will summon bank chiefs for a meeting to discuss how customers can be protected from “being de-banked”, following the row after Coutts cut ties with Nigel Farage.

Travel firms and airlines are being urged to reimburse passengers who decide against flying to Rhodes as the Greek island is ravaged by wildfires. One leading consumer group arguing it would be “unconscionable” to withhold refunds.

A string of travel companies have cancelled package holidays to Rhodes, and are now scrambling to repatriate thousands of tourists.

Greek authorities have issued an evacuation order for parts of Corfu, after wildfires broke out on there too.

The agenda

  • 9am BST: Flash estimate of eurozone manufacturing and services sectors in July

  • 9.30am BST: Flash estimate of UK manufacturing and services sectors in July

  • 1.30pm BST: Chicago Fed National Activity Index of the US economy

  • 2.45pm BST: Flash estimate of US manufacturing and services sectors in July

Updated

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