Afternoon summary
With US markets closed for Labor Day, it’s time to wrap up.
A quick reminder of the key developments…
Globla shares have rallied today as investors welcome Beijing’s efforts to stabilise its economy, and hope that the Federal Reserve has finished raising U.S. interest rates.
The UK’s FTSE 100 hit a three-week high, before sliding back in afternoon trading, Mining companies were among the risers, on hopes of increased demand from China, along with luxury goods firm Burberry.
Traders were cheered that Chinese developer Country Garden has agreed a delay on debt repayments with its creditors, offering some respite from the country’s crisis-hit property market.
Traders were also encouraged that China’s is setting up a special bureau to promote the development and growth of the private economy, following last week’s push to encouraged lenders to lower rates on existing mortgages.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:
[Friday’s] US jobs data hinted at a finally loosening jobs market, while Chinese stocks rallied on further measures deployed by the Chinese government to support the country’s faltering property market.
In fact, the latest news suggests that more than 1800 new homes were sold in Beijing on Saturday alone after the government eased mortgage rules last week (vs. around 3100 homes were sold in Beijing during the entire August). The Hang Seng index jumped more than 3% this Monday before paring gains.
In other news…
About 7,000 businesses are likely to fail every quarter in 2024 as high interest rates cause financial strain and the UK economy enters recession, according to a thinktank.
MPs have raised concerns that Asda’s ownership structure could be limiting the supermarket’s ability to support shoppers through the cost of living crisis.
Ryanair has reported its best month ever for passenger numbers even though it was forced to cancel hundreds of 350 flights because of the air traffic control systems failure in Britain.
Rail passengers travelling to and from Huddersfield station have been the most likely to see their plans thwarted by cancellations, according to an analysis of Great Britain’s trains.
More than one in five Britons have cut their pension contributions or stopped paying in altogether as the cost of living crisis forces households to make difficult decisions.
JP Morgan analysts have predicted that office buildings in London’s financial district will lose a fifth of their value this year.
The head of the European Central Bank has said it is critical to convey monetary policy communications clearly, to keep inflation expectations anchored….
…while inflation in Turkey has jumped to almost 60%.
And shares in fashion chain Superdry have dropped over 10% to a record low, as trading resumes after last week’s suspension.
More than one in five Britons have cut pension payments in living cost crisis
More than one in five Britons have cut their pension contributions or stopped paying in altogether as the cost of living crisis forces households to make difficult decisions, according to a study.
The research coincides with the head of one of Britain’s biggest fund managers, Abrdn, calling for a doubling of minimum pension contributions for millions of workers in order to avert a “very real” retirement incomes crisis.
With real wages falling and bills rising sharply, millions of people have been looking for ways to reduce spending and boost their incomes, with some concluding that they cannot afford to save for retirement at the moment.
According to a UK survey by the investment platform Hargreaves Lansdown, 22% of people have either stopped (14%) or cut back (8%) on pension contributions during the cost of living crisis.
ECB's Lagarde: effective communication of policy is challenging
The head of the European Central Bank has warned that effectively communicating monetary policy is always a challenge.
Christine Lagarde, says the current high level of interest in rising prices is “both a challenge and an opportunity for central banks”.
In a speech to the European Economics & Financial Centre, Lagarde says:
On the one hand, increased attention to inflation developments may contribute towards a de-anchoring of inflation expectations.
But on the other hand, it is exactly when people are paying most attention that central banks should deliver their key communication to ensure that those expectations remain firmly anchored.
The ECB president also hit out at social media, and “the rising tide of fake news”, for hammpering the task of communicating policy and setting inflation expectations.
She says:
For starters, policymakers can no longer take people’s attention for granted in the internet era. One recent study finds that the average duration of attention on a screen has plummeted from around 150 seconds in 2004 to a mere 47 seconds today.
It has also become increasingly challenging to disseminate factual information. Falsehoods on Twitter, now known as X, are found to spread about 10 to 20 times faster than facts. And more opinionated tweets are likely to reach more people. For instance, research shows that ECB-related tweets with negative, stronger or more subjective views are more likely to be retweeted, liked or replied to.
Here’s the full speech.
How can central bank policymakers communicate more effectively?
— European Central Bank (@ecb) September 4, 2023
President Christine @Lagarde talks about the importance of accessible and humble communication at the European Economics Financial Centre in London.
Read the full speech https://t.co/6VosEfZVRZ pic.twitter.com/FQ5myUbRPq
In New York, the Wall Street opening bell remains unrung today, as traders take a day’s vacation to mark Labor Day.
European markets have slipped back a little, but the FTSE 100 is still up 0.2% or 14 points at 7484, and the Europe-wide Stoxx 600 is up 0.33%.
Craig Erlam, senior market analyst for UK & EMEA at OANDA, says:
Not the most thrilling start to the week, with the US bank holiday naturally bringing with it a more peaceful opening session but markets in Europe have started fairly well.
Perhaps there’s some carryover from last week - I’m still surprised at the lack of uplift from the jobs report - or the prospect of a stimulus-induced boost to China’s economy. Or maybe there’s nothing much at all behind the small gains in Europe and we’re just getting back into the swing of post-summer break trading.
UK economists have been digesting Friday’s news that Britain’s recovery from the Covid-19 pandemic had been faster than expected.
Under the Office for National Statistics new data, the UK economy was actually 0.6% above its pre-pandemic levels in the final quarter of 2021, not 1.2% smaller as first thought.
Thomas Pugh, economist at RSM UK, warns that the revision will not deter the Bank of England from raising interest rates again this month:
“Turns out the UK isn’t such a laggard after all! Revisions to GDP growth in 2020 and 2021 mean that rather than being about 0.2% smaller than its pre-pandemic size, the UK economy may actually be about 1.5% bigger.
“Admittedly, this would still mean that the UK is still near the back of the G7 pack, but it would be ahead of Germany and the gap between the UK and the rest of the G7 looks significantly smaller.
Faster GDP growth during the pandemic doesn’t change anything in the real economy now, but if the UK economy has been running hotter than we thought, it would help to explain some of the persistence in inflation and the tightness of the labour market.
“However, it is unlikely to make any difference to the Monetary Policy Committee. Inflation is still 6.8% and wage growth is still 8.5%, far above the 3.5% the MPC estimates is consistent with 2% inflation. So, there is still likely to be another 5bps rate hike later this month to take interest rates to 5.5%.”
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research, says the ONS doesn’t deserve a kicking for underplaying the recovery in the past – given how hard it has been to track the economy.
McWilliams adds:
The underlying story is that the UK pre-Brexit was doing slightly better than equivalent countries in the EU and is now doing about equally badly. This factual data doesn’t really make much difference to the case for or against Brexit (the OBR’s assessment that Brexit will cost 4% of GDP now looks to be on shaky ground). My own take is that whether the UK economy does well in the future depends on whether we run our own country well including getting the right phasing on the decarbonisation of the economy, whether we can sort out the malaise in the public sector; whether we can get taxes back down to sensible levels and whether we can handle the issue of welfare dependency.
These problems will exist whether we could renegotiate our way back into the EU – which seems unlikely – or whether we stay outside.
Shares in clothing retailer Superdry have been unsuspended this morning, and promptly fallen 10% to a record low.
Superdry’s shares were frozen last week as its auditors finalised their review of its accounts. Those accounts were released last Friday, showing that it had made a near £150m loss last year, and also predicted sluggish sales this year.
Superdry has also taken a £25m loan from restructuring specialist Hilco, priced at 10.5% above the Bank of England base rate – meaning an overall interest rate of 15.75% currently.
Our financial editor Nils Pratley warned last week that co-founder Julian Dunkerton faces an uphill battle to turn the company around:
The strategy from here is keep chiselling away at overheads while overhauling a weak wholesaling operation that sells to department stores and independent retailers who have troubles of their own. Doing all the overseas wholesaling out of the Cheltenham HQ no longer works, reckons Dunkerton, thus faith is being placed in local agents in important continental European markets such as Germany.
The City’s view? “Execution risk remains high,” said analysts at Investec politely. It will be an impressive turnaround if it happens from here.
Updated
The first round of potentially thousands of layoffs at failed retailer Wilko were expected to start today, even as hopes of a rescue deal for parts of the business remain.
Administrators confirmed last week that 269 people in the company’s Worksop support centre would be having their last day with the business.
Redundancies at the company’s Worksop and Newport warehouses are also due to start early this week, after a surprise £90m bid for the discount retailer fell through.
Yesterday, the Sunday Times reported that the administrators who took control of Wilko last month had won the backing of creditors for a rescue deal led by HMV tycoon Doug Putman that could save about 8,000 jobs.
Office buildings in London’s financial district will lose a fifth of their value in the year through March, analysts at JPMorgan Chase & Co have predicted.
Bloomberg has the details:
City valuations have deteriorated in recent months, with statistics from Investment Property Databank Index showing an 8% decline, analysts including Neil Green said in a note to clients.
They downgraded British Land — whose tenants include UBS Group AG and TP ICAP Group Plc — to neutral after two years at overweight.
“We are concerned that selling pressure will grow in the City office market,” they wrote, warning that unrealized losses on assets may trigger disposals.
Office buildings in London’s financial district will lose a fifth of their value in the year through March, warns JPMorgan https://t.co/n4TO7Ly8kO
— Bloomberg UK (@BloombergUK) September 4, 2023
Troubled Thames Water has appointed a new Operations Director for London.
Esther Sharples, who worked for 16 years at Transport for London, where she was responsible for asset operations on the London Underground, has joined Thames Water to lead its operational team in the capital.
Al Cochran, Interim Co-CEO and CFO of Thames Water said:
“It is vital that we continue to have a tailored regional strategy that meets our customers’ and communities’ specific needs and improves performance.
I am therefore delighted to welcome Esther to lead our London operational team. She brings with her a wealth of experience in managing vast and complex infrastructure, which has been demonstrated during her time at TFL.
Back in July, Thames secured £750m of emergency funding from its shareholders. However the company, which has debts of over £14bn, warned that further funding will be needed in the years ahead.
Thames also faces criticism over its plans to pump the River Thames with treated wastewater in south-west London.
Join us on Saturday to challenge Thames Water on their proposals to introduce treated sewage into the Thames at Teddington / Ham https://t.co/US60ozBA7N
— Richard James (He/Him) (@richardbjames) September 4, 2023
Good news for Wetherspoon’s customers – the pub chain is to cut its prices by 7.5% in the UK and Ireland on Thursday 14th September, for just that day.
The reduction is designed to highlight the tax burden on the hospitality industry, with JD Wetherspoon arguing there is a “vast disparity” in how pubs and restaurants are taxed, compared with supermarkets.
The group’s founder and chairman, Tim Martin, explains:
“The biggest threat to the hospitality industry is the vast disparity in tax treatment among pubs, restaurants and supermarkets.
“Supermarkets pay zero VAT in respect of food sales, whereas pubs and restaurants pay 20%.
“This tax benefit allows supermarkets to subsidise the selling price of beer.
“Pubs have been under fantastic pressure for decades because of the tax disadvantages which they have with supermarkets.”
Updated
There have been sizable gains for China’s internet giants today, after Beijing took steps to support its property sector.
Alibaba and JD.com have become sensitive to macroeconomic developments in recent weeks, points out Barron’s, given their reliance on the health of the consumer. Alibaba jumped 3.3% in Hong Kong trading Monday, JD.com climbed 5%, and Baidu rose 3.4%.
The factors driving the Chinese stock rally on Monday were almost exclusively linked to the country’s struggling property sector. Beijing and Shanghai relaxed mortgage rules in a bid to boost housing demand, following Guangzhou and Shenzhen in easing their policies. Country Garden, one of China’s biggest developers, also struck a deal with creditors for an extension to onshore bond payments, Reuters reported.
But those measures led to a broad-based rally in Chinese stocks, including its tech giants. It also added to the feeling that Beijing may keep the stimulus measures coming. Goldman Sachs (GS) analyst Hui Shan said she expects measures to continue “until policymakers are satisfied with the result.”
Updated
Weight-loss drug Wegovy launching in UK, but some private insurers won't pay for it
In the pharmaceutical sector, weight-loss drug Wegovy is being made available in the UK as part of a “controlled and limited launch”.
The drug, also known as semaglutide, will be prescribed via specialist NHS weight management services alongside a reduced calorie diet and exercise from 4 September.
Those eligible should have a body mass index (BMI) of more than 30 and at least one weight-related co-morbidity.
The National Institute for Care and Excellence (Nice) gave Wegovy the green light for NHS use earlier this year. Its guidance said it should be used for a maximum of two years.
The manufacturer of Wegovy, Novo Nordisk, said it believed the launch of the drug in the UK “will help provide an additional option to support people living with obesity”.
More here:
Last Friday, Novo Nordisk overtook LVMH as Europe’s most valuable company. Its shares have rallied again today, up 1.7% to a new record high.
However, some private insurers have said they will not pay for treatment with Wegovy.
Aviva, which has 1.1 million UK customers with private medical insurance, told Reuters:
“Treatment with semaglutide, for diabetes or weight loss, is not a benefit under our policies.”
AXA Health is taking the same stance, saying:
“As it stands, AXA Health would not cover the use of Wegovy as this would be prescribed as an outpatient drug for a chronic condition”.
Simple Online Pharmacy, a UK-based online pharmacy chain, says it will charge patients with private insurance or those paying out of their own pockets between £199 and £299 for a month’s supply of Wegovy.
Updated
Full story: Country Garden shares jump after Chinese developer strikes debt deal
The share price of the ailing Chinese developer Country Garden has jumped by as much as a fifth after its creditors agreed a delay on debt repayments, offering some respite from the country’s crisis-hit property market.
The company agreed over the weekend to extend the payment dates on a 3.9bn yuan (£430m) private bond, to the relief of investors who had thought it would default on payments due on Saturday. Country Garden will instead have three years to repay the debt, after it won a narrow vote with the backing of 56% of its creditors, Reuters reported.
Its shares jumped as high as 1.05 Hong Kong dollars on Monday, up from 0.89 dollars on 31 August, the last trading day before a holiday. The deal also helped lift global markets, with European stocks hitting a three-week high.
Updated
Turkish inflation surges to 58.9% in August
Over in Turkey, inflation has jumped to almost 60%, adding to the pressure on the country’s central bank.
Annual Turkish inflation jumped to 58.9% in August, new data shows, up from 48% in the year to July.
Economists had expected a smaller increase, to 55.9%.
On a monthly basis, prices rose by 9.1% in August, driven by both food and non-food prices.
Last month, Turkey’s central bank hiked interest rates by more than expected to 25%, as it pressed on with a new commitment to damp inflation through monetary policy.
The central bank had previously cut rates through 2022, under pressure from president Recep Tayyip Erdoğan, whih has weakened the lira – pushing up the cost of imports.
#UPDATES:Turkey reports annual inflation of 58.94% in August exceeding expectations and rising for a second consecutive month in response to declines in the lira and recent tax hikes.#smart24tvnow pic.twitter.com/kSK647jc12
— Smart24 Television (@Smart24TVnow) September 4, 2023
Investors are cheering China’s various rescue measures, reports UBS Global Wealth Management chief investment officer Mark Haefele.
He writes:
We have been looking for more significant property rescue measures for some time to shore up sentiment and consumer confidence, and this now appears to be materializing in a more convincing way.
Alongside a pending drop in mortgage interest rates, housing demand may finally turn around, albeit gradually. Local governments set their own floor levels for both down-payments and interest rates, so implementation by city will still be key.
The RRR cut should help lower banking sector US dollar funding costs and ease downward pressure on the yuan, while the yuan deposit interest rate cuts should support lending and ease pressure on banks’ net interest margins.
With the sum of China’s policy response to date now closer to our base case scenario, we keep our most preferred stance on emerging market equities in our global strategy and on Chinese equities in our Asia strategy, with a barbell approach that balances both stimulus beneficiaries and defensives.
Home sales in two of China’s biggest cities have soared over the last few days after mortgage rules were relaxed, Bloomberg reports.
It’s an early sign that government efforts to cushion a record housing slowdown is helping.
Existing-home sales for Beijing and Shanghai doubled over the weekend from the previous one, according to CGS-CIMB Securities.
Raymond Cheng, head of China property at CIMB, says:
“We were surprised by the strong pick up in Beijing and Shanghai, despite the challenging economy.”
Home sales in two of China’s biggest cities soared in the past two days following mortgage relaxations, an early sign that government efforts to cushion a record housing slowdown is helping https://t.co/U5KWmmDTW5
— Bloomberg (@business) September 4, 2023
Eurozone investor mood darkens
Back in the eurozone, investor morale has fallen by more than expected as Germany’s economic weakness remained a major drag on the region
Sentix’s index for the euro zone declined to -21.5 points in September from -18.9 in August, weaker than the -20.0 estimated by analysts polled by Reuters.
🇪🇺 Europe Sentix Investor Confidence (Sep) $EUR
— PiQ (@PriapusIQ) September 4, 2023
Actual: -21.5 🔴
Expected: -19.6
Previous: -18.9
- https://t.co/orvmA6Wqwk
Sentix managing director Manfred Huebner says:
The situation in Germany remains particularly precarious. Here we are measuring the weakest situation ... since July 2020, when the economy was slowed by the first coronavirus lockdown.
Germany is also weighing heavily on the economy in the eurozone as a whole ... The tipping point of a global recession is less distant than one might think.”
A measure of the current economic situation fell to -22, the lowest since last November, while the sub-index for future expectations in the euro zone dropped to -21.0 points, from -17.3 in the previous month.
Huebner added that the “complete lack of economic competence in the political leadership and the enormous uncertainties for the economy caused by the energy and electricity crisis are dragging the German economy deeper and deeper into recession”.
Sentix: Germany is once again "the weak man of Europe". The complete lack of economic competence in the political leadership and the enormous uncertainties for the economy caused by the energy and electricity crisis are dragging the German economy deeper and deeper into recession pic.twitter.com/iUGrR1iUIP
— Petar Momchev (@momchev12) September 4, 2023
Last Friday’s US jobs report, showing a surprise rise in unemployment to 3.8%, is also helping markets today, as it could prevent another rise in US interest rates.
Russ Mould, investment director at AJ Bell, explains:
“Investors are growing warm to the idea that the Federal Reserve might not rush to raise interest rates again at its next meeting. An increase in unemployment for August and lower than expected wage growth suggest the Fed may sit on its hands and make no change to rates,” says
“Judging by the messages from US corporates regarding a slowdown in trading, it does feel like we could be at a turning point for monetary policy. Nonetheless, it is impossible to say for certain what the Fed will do, given these are only data points from a brief period of time.
He adds:
“Sentiment across Asian markets improved after the weekend vote by creditors in favour of restructuring a bond repayment by troubled Chinese property developer Country Garden. Chinese authorities also lowered downpayment requirements for first and second-time home buyers, thereby providing yet another stimulus initiative to drive greater economic growth.
European stocks hit three-week high on China optimism
European stock markets are rising at the start of the week, lifted by optimism that China is taking steps to support its property sector, and the wider economy.
In London, the FTSE 100 index of blue-chip shares has gained 45 points, or 0.6%, to 7510 – its highest level since 14 August. Mining companies, which benefit from Chinese demand for commodities, are among the top risers.
Germany’s DAX is up 0.5%, while France’s CAC has gained 0.6%, lifting the pan-European Stoxx 600 to its highest in over three weeks.
European stocks open higher 📈 awaiting Lagarde's speech later today.
— SimpleFX (@SimpleFXcom) September 4, 2023
DAX40 +0,5%
FTSE100 +0,4%
CAC40 +0,6%
IBEX35 +0,5%
▶️Trade here: https://t.co/9RBAjBne13 📊#simplefx #stocks #market #trade #investing pic.twitter.com/PK98x62EyU
That follows gains in Asia-Pacific markets, where China’s CSI 300 index has gained 1.5% and Japan’s Nikkei rose 0.7%.
The rally comes as China’s central government today approved setting up a special bureau to promote the development and growth of the private economy.
Reuters says the bureau will be responsible for devising policies to promote the development of private companies, both domestically and in terms of their international competitiveness, and provide a trouble-shooting function, according to Cong Liang, the state planner’s vice chairman.
That follows last Friday’s stimulus measures to boost China’s ailing property market and support a weakening yuan.
In another boost, Chinese property developer Country Garden has agreed a deal with its creditors to extend onshore debt payments worth 3.9 billion yuan (£425m). That should help stabilise the company, after it reported a record loss of 48.9 billion yuan for the first half of the year last week.
Shares in Country Garden jumped as much as 19% to their highest level since August 10th.
Richard Hunter, head of markets at interactive investor, says Beijing’s efforts are lifting investor spirits:
China’s property sector has been in the eye of the recent economic storm, but investors are coming to the conclusion that the cumulative effects of recent moves by the authorities may actually begin to move the dial. Further relaxation of home buying restrictions is expected to follow imminently, which would add to recent moves such as the reduction of downpayments for first-time buyers and the lowering of rates on existing mortgages.
News from Country Garden that it had secured approval to extend payments for an onshore bond was also of some comfort, while there were also reports that there had been a rise in real estate transactions following Beijing’s moves last week. The next test of this renewed optimism will come later in the week as China reports its trade balance, imports and exports position on Thursday.
The generally optimistic momentum carried over to the UK in opening exchanges, with the main indices posting solid gains. The FTSE100 was buoyed by the more recent China news, with mining stocks attracting some risk-on buying interest and with the likes of Prudential and HSBC also ticking higher given their Chinese exposure. It remains to be seen whether this risk appetite is sustained, but if the news from the two global economic superpowers continues to trend in the right direction, the premier index is likely to receive a knock-on benefit given the importance of overseas earnings to many of its constituents.
Updated
Insolvencies and (lack of) liquidity point to an economic downturn, warns Professor Costas Milas, of the Management School at University of Liverpool.
He tells us:
The rise in insolvencies is indicative of a wider downturn in the UK economy not least because liquidity, proxied by money growth in the economy, is also dropping fast. In fact, Divisia money growth has just recorded a huge drop to a historical low of -7.2% per annum in July 2023.
This is quite a worry because money growth is a very reliable predictor of future UK growth.
The data suggests significant downward pressure on GDP growth. Assuming away negative news on inflation, the latest data suggests no further interest rate rises this month. The Bank of England’s interest-rate setters should take notice…
Switzerland’s economy stagnated in the last quarter, hit by a slump in manufacturing output.
Swiss GDP was unchanged quarter-on-quarter in Q2, missing expectations of a small rise of 0.1%, official data shows.
Switzerland’s manufacturing sector shrank by 2.9%, due to a “marked decline” in the chemical and pharmaceutical industry.
Swiss GDP (Q/Q) Q2: 0.0% (exp 0.1%; prev 0.3%)
— LiveSquawk (@LiveSquawk) September 4, 2023
- Swiss GDP (Y/Y) Q2: 0.5% (exp 0.5%; prevR 1.5%)
German exports fall in July
Germany’s economy continues to suffer from weak trade, hurting its efforts to return to growth.
German exports fell by 0.9% month-on-month in July, new official data shows, as its manufacturers suffered from weak overseas demand. That included a drop in shipments to the UK, although exports to China rose.
Imports rose by 1.4%, leaving Germany with a trade balance of €15.9bn.
🇩🇪 𝗚𝗘𝗥𝗠𝗔𝗡 𝗘𝗫𝗣𝗢𝗥𝗧𝗦 𝗗𝗢𝗪𝗡 𝗜𝗡 𝗝𝗨𝗟𝗬
— PiQ (@PriapusIQ) September 4, 2023
Full Story → https://t.co/lMzpW88Dwk
German Exports (MoM) (Jul):
Actual: -0.9%
Expected: -1.5%
Previous: 0.1% pic.twitter.com/3CBWcxNGKw
ING say the figures are a disappointment, adding:
Disappointing export and retail sales data shows that the German economy started the third quarter on a weak footing. The risk of falling back into contraction remains high.
Updated
As well as pushing businesses to the wall, higher interest rates are also driving house prices lower.
The National Institute of Economic and Social Research (Niesr) has reported that August’s 5.3% drop in house prices mean that 50,000 people had fallen into negative equity over the last 12 months, meaning their home is worth less than their mortgage, the Daily Telegraph reports.
Max Mosley, an economist at Niesr, warns:
“Mortgage holders across the country have had to endure Covid, a cost-of-living crisis and now a cost-of-owning crisis.”
Ryanair: 63,000 passengers hit by ATC failure
Budget airline Ryanair has revealed that over 60,000 of its customers saw their flights cancelled during last week’s air traffic control chaos.
Ryanair reports this morning that more than 350 flights were cancelled on August 28 and 29 – Monday and Tuesday last week – due to the air traffic control (ATC) failure, impacting 63,000 of its passengers.
The Irish carrier said the ATC failure – which caused widespread travel disruption last week and left passengers stranded – “has still not been explained”.
Ryanair carried 18.9 million guests in total last month, up 11% on a year earlier, it added – a new monthly record.
August was BUSIEST month In #Ryanair history
— Eoghan Corry (@eoghancorry) September 4, 2023
18.9m passengers
up 26.8pc on 2019 and up 11.8pc on 2022
Ryanair operated 103k flights
350 flights (63,000 pax) cancelled 28-29 due to English ATC failure
Load factor 96pc, 23rd time that record figure has been achieved in a month pic.twitter.com/soiK1RA18j
The automatic flight planning system used by Nats, the company that provides national air traffic control services in the UK, was out of action for several hours on Monday.
Airspace was not closed, but the number of planes in the sky was severely restricted while the automated system was down.
Last week, Ryanair’s CEO Michael O’Leary blasted air traffic services for its lack of communication over the outage.
The CEO of Ryanair, Michael O'Leary, blasts air traffic services for a lack of communication.
— Sky News (@SkyNews) August 29, 2023
Live updates: https://t.co/g6peyXfxB7 pic.twitter.com/M248i4DjGz
Nats says that the failure was triggered by a single piece of data in a flight plan that was wrongly input to its system by an unnamed airline. Willie Walsh, the director general of the global airlines body, Iata, said it was “staggering” that inputting a single flight plan incorrectly could knock the whole system over
Updated
Introduction: Interest rate rises to drive up business insolvencies
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Around 28,000 UK businesses are expected to fold next year, as high borrowing costs put an unbearable strain on companies.
Economics consultancy the CEBR is predicting that Britain is likely to witness 7,000 business insolvencies per quarter in 2024, as the economic drops into recession.
In a new report, CEBR warns that rising interest rates and weaker demand from the cost-of-living crisis will lead to more business failures, with debt repayments hitting unsustainable levels for some businesses.
This rise in insolvencies may be indicative of a wider downturn in the economy, CEBR warns, adding:
If large investments in projects are being delayed, likely due to high borrowing costs, and businesses are collapsing, there will be impacts felt throughout the economy, from suppliers of materials to workers losing their jobs.
Firms have already gone to the wall since the Bank of England began its cycle of rising interest rates. There were 6,700 business insolvencies in Britain in the April-June quarter this year – 50% higher than before the pandemic.
🇬🇧 UK INSOLVENCY SERVICE: NUMBER OF COMPANY INSOLVENCIES IN ENGLAND AND WALES IN Q2 2023 WAS THE HIGHEST SINCE Q2 2009 - RTRShttps://t.co/flD2SilE3k pic.twitter.com/87gbACxbyp
— Christophe Barraud🛢🐳 (@C_Barraud) July 28, 2023
Business insolvencies jumped 30% to a 13-year high of 22,000 in 2022 as government support programmes that offered companies protection from their creditors during the pandemic came to an end.
CEBR forecasts a recession in the UK, with two consecutive quarters of contraction in GDP in Q4 2023 and Q1 2024, taking the shine off last Friday’s welcome news that the economy has been stronger than thought since the pandemic.
More here:
CEBR also predict that UK interest rates will peak at 5.75%, up from 5.25% at present, adding to the pressure on borrowers.
Yesterday, chancellor Jeremy Hunt warned that inflation may increase this month, in a “blip”, as new data shows petrol and diesel prices rose last month.
The agenda
7am BST: German trade balance for July
8am BST: Switzerland’s Q2 2023 GDP report
2pm BST: Bank of Israel sets interest rates
2.30pm BST: ECB’s Christine Lagarde speech at European Economics & Financial Centre
Updated
