![Texaco petrol station in London.](https://media.guim.co.uk/39ed0dda363e10e1f46162de2c87fb59ba005d6f/0_133_4000_2400/1000.jpg)
Closing summary
Stock markets are still drifting lower, with the FTSE 100 in London down 23 points, or 0.3%, at 7,575. Germany’s Dax has shed nearly 1% to 14,418 while France’s CAC is trading 1.1% lower at 6,428 and Italy’s FTSE MiB has lost 0.7% to 24,202.
On Wall Street, the Dow Jones has slipped 0.3% to 33,089 while the tech-heavy Nasdaq is little changed at 12,168 and the S&P 500 has lost 0.4 to 4,142.
Oil prices are pushing higher as Chinese Covid lockdowns are eased and despite a likely rise in US inventories. A potential strike by Norwegian oil workers is also boosting prices. Brent crude, the global benchmark is 0.7% higher at $121.49 a barrel. US light crude has gained 0.6% to $120 a barrel.
UK petrol prices posted their biggest daily jump in 17 years, rising 2.23p a litre and taking the cost of a full tank closer to £100 yesterday.
Growth in the UK construction industry slowed further in May, amid a “considerable loss of momentum” for housebuilders, according to a monthly survey.
The pound has fallen against the dollar and the euro, trading at $1.2558, down 0.2%, and at €1.1685, down 0.6%.
The boss of Wizz Air said air fares would go up by almost 10% in coming months, while the chief executive of Heathrow airport warned of more travel chaos this summer and beyond.
Here’s a round-up of our other main stories:
Britain’s economy is forecast to slow to a standstill next year as it suffers more than any other major industrial country from the effects of Russia’s invasion of Ukraine, according to the OECD, a respected Paris-based thinktank.
The average UK house price hit a fresh high in May, rising for the 11th month in a row, according to Halifax data, but the annual growth rate slowed in a sign that the cost of living crisis is cooling the market.
House prices increased by 1% between April and May, or £2,857, taking the average price of a home to a record of £289,099.
More talks will be held this week between unions and rail industry leaders in an attempt to avoid a week of national strikes that will shut down much of Britain’s rail network in late June.
Passengers whose journeys were affected would receive refunds for tickets they had bought, the Rail Delivery Group, which represents train companies, pledged.
Inditex, the owner of Zara, has revealed a 36% jump in sales this spring as shoppers flooded back to its high street outlets after the easing of Covid-19 restrictions.
The failure by governments and businesses to accelerate energy efficiency efforts is “inexplicable”, according to the head of the International Energy Agency.
Countries around the world are pouring funds into new natural gas facilities that could destroy the chances of limiting global heating, in response to soaring energy prices and the war in Ukraine.
More than two in five recent buy now, pay later (BNPL) shoppers relied on credit cards or other forms of borrowing to pay off what they owed, the charity Citizens Advice has said. It said the figures showed that shoppers are “piling borrowing on top of borrowing” and underlined the urgent need for BNPL to be regulated.
“A confederacy of dunces,” sighed Crispin Odey, delivering his verdict on the MPs vying to dethrone Boris Johnson and lead the Tory party.
The hedge fund kingpin, once one of Johnson’s biggest backers, had just finished a long lunch with an old contact and was in devastating form.
“Who would you really want to run the Tory party?” said Odey. “Each of them has blown it. It’s come too early for some of them. I have no regard for Boris. He has never followed through on any policy. He was my friend until Brexit was done and then he just cut me dead.”
Thank you for reading. We’ll be back tomorrow. Bye! - JK
Londoners are working from home mainly to avoid the time and cost of travelling to the office, according to a study that shows most believe they are unlikely to return to five days in the office again, reports my colleague Phillip Inman.
Cuts to public transport and the high cost of fares act as a major deterrent to workers making daily trips to the office, while traffic jams and the soaring cost of petrol and diesel, which hit a fresh peak this week, make commuting by car unattractive, the survey found.
Only 10% of the workers said they thought they would return to the office full-time compared with 73% who told researchers from King’s College London that working from home at least one day a week would be a permanent feature of modern life.
City law firm Mishcon de Reya has ditched plans to float on the stock market “for the foreseeable future,” after years of preparations for what have been a bumper payday for its partners.
A spokesperson for the firm, known for its work representing Princess Diana in her divorce from the Prince of Wales, said, according to Law Gazette:
We can confirm that we have decided to put our IPO [initial public offering] plans on hold for the foreseeable future due to market conditions. We remain an ambitious and bold business with a clear strategy and vision for our future.
The firm announced in April 2021 that it had asked investment bank J.P.Morgan Cazenove to advise on a possible float, which was intended to take place by the end of last year. Every staff member was to become a shareholder in the business, which was reported to be valued at £750m.
The boss of Standard Chartered expects a “relatively short shallow and short” recession by early next year, as central banks tackle surging inflation, driven by soaring energy prices and wage growth.
Bill Winters, the bank’s chief executive, expects that a strong financial system and less borrowing by consumers and businesses compared to the crash of 2008-9, mean that the recovery will be faster than after the global financial crisis, despite the twin shocks of the Covid pandemic and Russia’s war in Ukraine.
He told the Reuters Global Markets Forum today:
Central banks have to take this inflation problem head on.
We’ve had two real world stress tests in the last couple of years - the pandemic and a major European war.
Unlike Swiss rival Credit Suisse, which is ramping up cost cuts to offset a likely second-quarter loss, there is no “belt-tightening” coming at Standard Chartered, whose headcount is close to 2019 levels, he said.
Given the very hot job market, we don’t think we’re going to need to lay off any meaningful number of people.
![Bill Winters, group chief executive of Standard Chartered, at Davos.](https://media.guim.co.uk/e5fa2ac4a6de19a96ff9f728ea38fafd19303ffd/0_170_5094_3056/1000.jpg)
Here’s our full story on the rise in petrol prices.
The price of petrol at UK forecourts has made its biggest daily jump in 17 years, as the cost of filling a family car threatens to exceed £100 for the first time, reports our energy correspondent Alex Lawson.
A litre of petrol cost an average of 180.73p on Tuesday, according to the data firm Experian Catalist – up an astonishing 2.23p compared with the previous day.
A similar increase on Wednesday would break the £100 barrier for the average cost of filling a tank for a 55-litre family car.
Some forecourts are already selling petrol above £2 a litre, including a BP garage on the A1 near Sunderland, which is charging 202.9p.
Average diesel prices are also at a record high, hitting 186.6p on Tuesday, up 1.4p from Monday. The increased price of diesel has a significant impact on the wider economy because businesses typically use the fuel to fill vans and lorries.
Updated
Eurozone grows faster than thought in Q1
The eurozone grew at a faster pace in the first quarter than previously estimated, expanding 0.6% between January and March rather than 0.3%.
This is up from 0.2% growth in the fourth quarter, according to the latest data from Eurostat, the EU’s statistical office. The surprise upward revision has boosted the euro.
Within the EU, Ireland (+10.8%) recorded the highest increase of GDP compared to the previous quarter, followed by Romania (+5.2%) and Latvia (+3.6%). Declines were observed in Sweden (-0.8%), France (-0.2%) and Denmark (-0.1%). Germany, the biggest economy, grew by 0.2%.
Once again, #eurozone #GDP has been revised after initial estimates proved inaccurately weak. Q1 GDP growth now estimated at +0.6% by Eurostat vs. prior estimate of +0.3%. The revision - once again - brings the GDP data more into line with the @SPGlobalPMI for the eurozone. pic.twitter.com/8c8AhLqsQ4
— Chris Williamson (@WilliamsonChris) June 8, 2022
Italian retail sales were flat in April after falling 0.6% in March, according to separate figures.
#EURUSD off the lows on the back of a surprise upward revision to Eurozone GDP. #EURJPY now up for the 8th day, surpasses 143.00. More analysis: https://t.co/UrIyyOHdli pic.twitter.com/Nx6J8sv1kf
— CITY INDEX (@CityIndex) June 8, 2022
Lunchtime summary
Stock markets are still drifting lower, with the FTSE 100 in London down 26 points, or 0.34%, at 7,572. Germany’s Dax has shed 0.5% to 14,482 while France’s CAC is trading 0.7% lower at 6,456 and Italy’s FTSE MiB has lost 0.4% to 24,272.
Oil prices are pushing higher as Chinese Covid lockdowns are eased and despite a likely rise in US inventories (data out at 3.3pm BST). A potential strike by Norwegian oil workers is also boosting prices. Brent crude, the global benchmark is 1.2% higher at $122.03 a barrel, up $1.49. US light crude has gained even more, $1.62 a barrel or 1.4% to $121.03 a barrel.
UK petrol prices posted their biggest daily jump in 17 years yesterday, rising 2.23p a litre and taking the cost of a full tank closer to £100.
Britain’s economy is forecast to slow to a standstill next year as it suffers more than any other major industrial country from the effects of Russia’s invasion of Ukraine, according to estimates from the OECD, a think tank in Paris.
Growth in the UK construction industry slowed further in May, amid a “considerable loss of momentum” for housebuilders, according to a monthly survey.
The pound has fallen against the dollar and the euro, trading at $1.2531, down 0.4%, and at €1.1688, down 0.6%.
The boss of Wizz Air said air fares would go up by almost 10% in coming months, while the chief executive of Heathrow airport warned of more travel chaos this summer and beyond.
Here’s a round-up of our main stories so far:
The average UK house price hit a fresh high in May, rising for the 11th month in a row, according to Halifax data, but the annual growth rate slowed in a sign that the cost of living crisis is cooling the market.
House prices increased by 1% between April and May, or £2,857, taking the average price of a home to a record of £289,099.
Rail passengers whose journeys are affected by strikes planned for late June will receive refunds for the tickets they have bought, the head of the industry body that represents train companies has said.
The failure by governments and businesses to accelerate energy efficiency efforts is “inexplicable”, according to the head of the International Energy Agency.
Countries around the world are pouring funds into new natural gas facilities that could destroy the chances of limiting global heating, in response to soaring energy prices and the war in Ukraine.
“A confederacy of dunces,” sighed Crispin Odey, delivering his verdict on the MPs vying to dethrone Boris Johnson and lead the Tory party.
The hedge fund kingpin, once one of Johnson’s biggest backers, had just finished a long lunch with an old contact and was in devastating form.
“Who would you really want to run the Tory party?” said Odey. “Each of them has blown it. It’s come too early for some of them. I have no regard for Boris. He has never followed through on any policy. He was my friend until Brexit was done and then he just cut me dead.”
Updated
Britain’s economy is forecast to slow to a standstill next year as it suffers more than any other major industrial country from the effects of Russia’s invasion of Ukraine, reports our economics editor Larry Elliott.
The UK will grow by 3.6% in 2022 before posting zero growth in 2023, according to the Paris-based thinktank the Organisation for Economic Co-Operation and Development (OECD), with inflation expected to average 8.8% this year and fall only slightly to 7.4% in 2023.
The predictions – contained in the OECD’s half-yearly economic outlook – represent a sharp downgrade from the estimated 4.7% growth this year and 2.1% next year made six months ago.
Laurence Boone, the thinktank’s chief economist, said the UK was being hit by a combination of factors, including higher interest rates, higher taxes, reduced trade and more expensive energy.
Construction growth slows as housebuilders lose momentum
Growth in the UK construction industry slowed further in May, amid a “considerable loss of momentum” for housebuilders, according to a closely-watched survey.
A monthly survey from S&P Global and CIPS shows that the latest rise in housing construction was the weakest since the recovery began two years ago. Subdued consumer confidence and worries about the economy outlook are holding back demand, companies surveyed said.
The headline UK construction purchasing managers’ index, which measures month-on-month changes in industry activity, fell to 56.4 in May, from 58.2 in April and the lowest reading for four months.
Weaker trends in housebuilding were the main brake on growth, with this index falling to 50.7 from 53.8 in April, the worst performance for residential work since May 2020.
Commercial building was the fastest-growing segment in May (index at 59.8), with the speed of expansion easing only slightly since April. Construction companies noted strong demand for commercial work, despite a degree of hesitancy due to the uncertain economic outlook.
Meanwhile, civil engineering activity increased for the fifth month running and at a robust pace (index at 55.5) with a sustained boost from major infrastructure projects.
Companies’ confidence over the next 12 months weakened markedly, with the optimism index dropping to the weakest since August 2020.
Petrol prices post biggest daily jump in 17 years; tankload close to £100
The RAC says the average price of petrol had its biggest daily jump in 17 years, going up more than 2p a litre on Tuesday. This means it will soon cost £100 to fill up a car.
The price rose 2.23p from Monday, to 180.73p a litre. Diesel increased by almost 1.5p to yet another record high at 186.57p. A full tank of unleaded has now shot up to £99.40, moving us ever closer to the milestone of £100 for a petrol fill-up – a landmark we may reach as soon as tomorrow, the RAC says.
![Texaco petrol station in London sells unleaded petrol at 183.9 pence per litre and regular diesel at 189.9 pence per litre.](https://media.guim.co.uk/513cd97388543409b09a4488640faec0bb0d0f35/0_133_4000_2400/1000.jpg)
Wizz Air boss says air fares to rise almost 10%, while Heathrow CEO warns airport disruption could last 12-18 months
The boss of Wizz Air said air fares would go up by almost 10% in coming months, while the chief executive of Heathrow airport warned of more travel chaos this summer and beyond.
József Váradi, chief executive of the Hungarian airline, said bookings were strong in recent months and average fares had gone up “at low single digits”. He expects further fare rises “in the upper single digits” in coming months.
We see strong consumer demand for summer, but expect an operating loss for the first quarter of fiscal year 2023. The airline industry remains exposed to externalities such as air traffic control disruption and continuing operational issues within the airports sector, adding to a volatile macro environment. As a result, at this point, we are not providing further financial guidance for the year.
Wizz Air reported a 125% jump in revenues in the year to 31 March, and a loss of €642.5m.
However, as airlines and airports laid off tens of thousands of workers during the Covid pandemic and are struggling to recruit more staff, they are ill equipped to cope with the surge in demand from people eager to travel after the lifting of Covid restrictions.
John Holland-Kaye, Heathrow’s chief executive, predicted more airport disruption for up to 18 months. He told the Financial Times’ Global Boardroom conference yesterday:
I think it will take 12 to 18 months for the aviation sector to fully recover capacity, so we will have to really carefully manage supply and demand.
He said the government could help airlines hire more people by further easing the rules around security background and employment history checks for new staff.
Updated
Inditex shares rose nearly 4%. The Galician clothing company’s full name is Industria de Diseño Textil.
Russ Mould, investment director at the stockbroker AJ Bell, said:
Despite the horrible backdrop for retailers in general the market was feeling positive about Zara-owner Inditex off the back of its latest results.
Achieving the milestone of sales ahead of pre-pandemic levels and boosting gross margin despite the challenge of rising costs and supply chain issues is impressive.
That this was achieved, at least in part, by raising prices is testament to its brands’ appeal with shoppers, though a recent slowing in sales growth shows the company is not immune to the impact of cost of living pressures on discretionary spend.
Inditex has a track record of being on-trend and quick to market with its products thanks to a streamlined design and production process and it will need to bring all of this savvy to bear if it is to withstand the current pressures.
Zara owner Inditex reports surge in sales and profits
Spain’s Inditex, the world’s largest retailer, has reported a surge in sales and profits, as people replenished their wardrobes after the lifting of Covid-19 restrictions – despite the cost of living crisis.
The retailer, which owns Zara, Massimo Dutti, Pull&Bear and Bershka, said revenues climbed 36% to €6.7bn (£5.7bn) in the quarter to 30 April, above pre-pandemic levels. Performance reflected a “sharp recovery in store footfall”. Profits rose 80% to €760m.
Profits would have been even higher, but Inditex has set aside £184m this year for estimated costs arising from Russia’s war in Ukraine, which prompted it to close its stores in both countries, along with many other western brands. It was quick to act – shops shut on 24 February, the day of Russia’s invasion of Ukraine. The company has around 500 shops in Russia, making it its second-biggest market.
![Clothes are on display at one of the largest Zara stores in the world, in Madri.](https://media.guim.co.uk/0260207abe4f50d110728c52770192e1e9de0759/0_116_3500_2101/1000.jpg)
Laura Hoy, equity analyst at Hargreaves Lansdown, said:
Zara parent Inditex’s first quarter results proved consumers aren’t ready to give up on their looks just yet. Despite the ever-present cost of living crisis, people continued to flock to Inditex stores. The group’s own costs rose at a slower pace than sales, which padded profits and set the group up nicely for the year ahead. Confident is the best descriptor of management’s tone in today’s update, with a special dividend now on the table.
It was unsurprising to see inventory levels rise significantly as the group, like many of its peers, shores up its warehouses to deal with supply chain issues. Stock availability is a key challenge in the retail world right now, and Inditex seems to have it mostly under control.
However this inventory-stocking has the potential to backfire if economic conditions continue to worsen and customers eventually close their wallets. For now that doesn’t appear to be an issue for Inditex, whose trendy clothes continue to earn it a spot on dwindling budgets. But it’s something to be mindful of moving forward.
Whoever came up with the strike dates did not consider what was going on in the rail industry.
The strikes will hit Rail Live, “the only exhibition to bring the entire rail industry together in a real railway environment”, which is on 22-23 June in Warwickshire. An organiser was saying yesterday: “That’s six months’ work on some areas of the show down the tubes.”
Nigel Harris, editor of RAIL magazine, tweeted:
So long as you still come Tony! That’s six months work on some areas of the show down the tubes and we’re already furiously busy with mitigation. The team are determined to minimise impact as far as they can. It will still be a great show, we believe. https://t.co/tW9OfG698u
— Nigel Harris (@RAIL) June 7, 2022
Updated
Stock markets in Europe have opened lower this morning, with the UK’s FTSE 100 index down 2 points at 7,596.
Germany’s Dax and France’s CAC have edged down almost 0.2% while Italy’s FTSE MiB has lost 0.35%.
Rail strikes latest: passengers affected to get refunds
Here is the latest on the UK rail strikes, planned for 21, 23 and 25 June.
Rail passengers whose journeys are affected by strikes planned for late June will receive refunds for the tickets they have purchased, the chair of the Rail Delivery Group (RDG), which represents train firms, has promised, my colleaguae Joanna Partridge reports.
“If we cannot provide a service to our customers due to strike action then we will refund customers,” said Steve Montgomery, who is also managing director of First Rail.
“We need to got and draw up a set of guidance for people and how it is going to work, but we will be very flexible,” Montgomery told BBC Radio 4’s Today programme.
Rail workers belonging to the Rail, Maritime and Transport (RMT) union will stage a walkout on 21, 23 and 25 June, which is expected to shut down much of the national rail system for a week.
Industry body, the RDG, is looking at putting out advice to customers who intend to travel during the strike week, such as recommending they travel on the day before or after the walkout, Montgomery said.
He also called on the RMT union to hold talks to “resolve” the issue.
![A TransPennine Express train at Leeds train station.](https://media.guim.co.uk/c82002b6061ef2453a8028e975e751e61d16854a/0_91_3500_2101/1000.jpg)
Updated
Instant Info – Halifax UK House Price Index pic.twitter.com/HZUK9Jnrwe
— BuiltPlace (@BuiltPlace) June 8, 2022
House prices climbed £92 a day in May, according to the Halifax. (average prices climbed £2,857 in the month)
— simon read (@simonnread) June 8, 2022
Updated
Halifax says that Northern Ireland topped the table again this month for annual house price inflation, seeing prices rise by 15.2% to an average of £185,386.
The South West of England also recorded a strong rate of annual growth at 14.5%, with an average property cost of £305,173, alongside Wales at 13.7%, where a home is a now a record of £216,120.
Overall, nine regions of the UK registered double-digit annual inflation, with only Yorkshire and the Humber, Scotland and London in single figures. Nonetheless, buying a home in the capital today would still require £541,942, on average.
In Scotland, price growth is lower than the UK average, with annual inflation at 8.3%. A home there now costs an average £198,288.
![UK house prices](https://media.guim.co.uk/0f19accf1142e0c3e3a747991b45038b7afc1f34/0_0_740_475/500.jpg)
Updated
Introduction: UK annual house price growth slows – Halifax
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
There are signs that the UK housing market is cooling, with annual price rises easing to 10.5%, the slowest pace since January, when it was 9.7%.
Even so, house prices rose for an 11th month and hit a new record high in May, according to the latest data from Halifax, which is part of Lloyds Banking Group, the country’s biggest mortgage lender.
The average price of a house rose by 1%, or £2,857, between April and May to £289,099. Halifax found that house prices have risen 74% in the last 10 years, led by London.
Russell Galley, managing director at Halifax, said:
Despite the very real cost of living pressures some people are experiencing, the imbalance between supply and demand for properties remains the primary reason driving the continued climb in house prices.
For house hunters, the extent of the impact of property price inflation continues to be linked to the type of home they are looking to buy. Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home. This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wider.
However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.
So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers’ market.
Over the past decade, the cost of a home has risen by 74%, or £123,016. The strongest inflation has been in London (84.2%), followed by the East of England (84.0%) and the East Midlands (82.1%). In cash terms, London house-hunters need £247,638 more than those looking ten years ago, whereas those in the East of England need £153,930 and the East Midlands £108,116.
On the markets, crude oil prices are pushing higher ahead of inventory data from the US this afternoon. Brent crude, the global benchmark has gained 40 cents, or 0.3%, to $120.95 a barrel, while US light crude is trading at $120 a barrel, up 0.5%.
In Germany, industrial production rose 0.7% in April from March, and fell by 2.2% on the same month last year, according to provisional data from the Federal Statistical Office.
This marks an improvement from March, when output dropped by 3.7% on the month, but April’s gain fell short of the 1% forecast by economists. Also, worryingly, factory orders in the European powerhouse fell for a third month in April, we learned yesterday.
🇩🇪 German industrial production recovered but rose less than expected in April as pandemic restrictions and the war in Ukraine disrupted supply chains, official data showed on Wednesday.
— PiQ (@PriapusIQ) June 8, 2022
Came in at -2.14% (Previous -3.35%)
via Reuters on @PiQSuite - https://t.co/rlNy2IDrjI https://t.co/igvjmD3XQY
In Japan, the economic picture is a bit better than thought. Japan’s economy shrank slightly less than initially reported in the first quarter, as private consumption remained resilient. Revised data released by the Cabinet office showed GDP fell by an annualised rate of 0.5% between January and March, and dipped by 0.1% on the quarter.
The Agenda
- 7.45am BST: France trade for April
- 9am BST: Italy retail sales for April
- 9.30am BST: UK S&P Global/CIPS Construction PMI for May
- 10am BST: Eurozone GDP third estimate for first quarter (forecast: 0.3%)
Updated