Closing summary
Time to wrap up… Here’s a quick reminder of the main points.
British Steel has announced a £1.25bn plan to replace two blast furnaces in Scunthorpe, in a move that would further reshape the UK steel industry and could eventually threaten the jobs of up to 2,000 steelworkers.
The company, owned by China’s Jingye, on Monday informed workers that it proposed to replace the blast furnaces with greener electric arc models, rejecting the possibility of capturing the carbon in a blow to the nascent British carbon capture industry.
Under the proposals, the two blast furnaces at Scunthorpe, in North Lincolnshire, would be replaced by an electric arc furnace at Scunthorpe and another at a site in Teesside, North Yorkshire. That would mark the return of steelmaking to Redcar, where the blast furnace was demolished last year after its closure in 2015.
British Steel is also seeking state help to support its decarbonisation push.
Unions have criticised the plan, urging the government to provide assistance to protect jobs.
Here’s the full story:
Elsewhere today:
Builders in the UK had one of their worst months in more than three years in October, led by a drop in housebuilding, a new survey shows.
UK car sales have risen for the 15th month running, after dealers reported a 14% year-on-year increase in October.
Shares in WeWork habe been suspended, pending a news announcement. The move follows reports it is likely to file for Chapter 11 bankruptcy protection soon.
The UK’s data watchdog has issued a formal apology to ex-NatWest boss Alison Rose, saying it was “incorrect” to suggest she had breached data protection laws by discussing Nigel Farage’s banking relationship with a BBC journalist.
Ryanair is to hand its shareholders regular payouts for the first time after soaring air fares put the airline on track to make record profits.
A US food company is recalling 13 and a half tonnes of dinosaur-shaped chicken nuggets after customers reported finding metal pieces in the product.
Here’s a chart showing how builders in the UK had one of their worst months in more than three years in October.
The Unite union has accused the UK government of abandoning steel workers, by allowing British Steel to plan the closure of its Scunthorpe blast furnaces with the possible loss of 2,000 jobs.
Unite general secretary Sharon Graham said:
“There is absolutely no need for mass redundancies at British Steel. We do not accept the need for one single job cut.
“The strategy of successive governments has failed. Steel is vital to the UK’s economic success, yet steelworkers are being abandoned by this government.
“Taxpayers should not be footing the bill for new investment unless that is linked to binding job guarantees. Only by the government taking a stake in the company will the right choices be made for the UK’s economy.
“The UK steel industry is at a crossroads and there is a clear political choice. Politicians must decide whose side they are on. Unite’s plan for steel would see the UK once again become a world leader in steel, doubling production, safeguarding employment and creating thousands of new jobs.
“Both the government and the Labour party now need to go much further and back the Workers’ Plan for Steel.
Unite is committing significant resource in our fight to save our steel industry.”
Jonathan Reynolds MP, Labour’s shadow business secretary, has responded to British Steel’s announcement, saying:
“The Conservatives’ sticking plaster plans would leave the UK unable to produce any primary steel products right at the time when the entire world will be demanding these goods for the net zero transition.
This is not a serious joined-up plan for the long-term for our steel industry and it will make thousands of workers in Scunthorpe redundant.
Labour knows that the British steel industry can have a bright future.
Labour has a cast-iron commitment to the steel industry, a decade of investment working with steel communities to ensure the transition to green steel comes with jobs.”
Updated
There’s a clear hint in British Steel’s announcement that they hope to receive government help to deliver their decarbonisation plan.
Xijun Cao, British Steel’s CEO and president, says:
“We are confident our proposals will help secure the low-embedded carbon steelmaking the UK require now and for decades to come.
However, we need the UK to adopt the correct policies and frameworks now to back our decarbonisation drive. Governments in the countries where our major competitors operate have adopted such policies and the longer we wait for their implementation in the UK, the more impact and challenge this will have on our competitiveness and the country’s ability to meet its carbon objectives.
“We remain in talks with the government and, with its support, are committed to making the steel Britain needs for generations to come.”
British Steel also say they examined whether they could simply build one large electric arc furnace in Scunthorpe, which would be big enough to manufacture all the steel we require for our rolling mills in the Humber and the North East.
It realised, though, that such a large furnace would need a new connection to the National Grid, which probably wouldn’t be available until 2034.
So instead, the “most viable and timely option” is to have 2 smaller furnaces – one at Scunthorpe, the other at Teeside – to produce the volumes of steel needed.
Updated
Trade body UK Steel says the industry has reached a ‘turning point’, as major producers outline their plans to decarbonise their operations.
UK Steel director general, Gareth Stace, said:
“With British Steel’s announcement, it is clear the UK steel sector is completely committed to rapid decarbonisation. Just one year after publishing the sector’s Net Zero roadmap, the UK’s major steel producers are taking crucial steps to decarbonise by 2035.
“UK steelmaking needs to compete on the world market and regain market share at home and abroad.
“This is a turning point for UK steelmaking. During this transition, we must all work together in partnership with industry, Government and trade unions to ensure the future of our sector. As we switch to electric steelmaking and cut our emissions, planning regulation snags and high electricity prices must not hold back investment in new EAF capacity. It will not be a straightforward transition, but for the whole steel sector, from existing electric furnaces to companies making huge investments now, our goal is clear.”
The Community union are concerned by British Steel’s plans to close its blast furnaces at Scunthorpe.
Community union general secretary Roy Rickhuss said:
“Were they to be realised, the plans that British Steel has announced, combined with Tata Steel’s plans, would leave the UK unable to make steel from raw materials and dangerously exposed to international markets.
“Community firmly believes that the blast furnaces continue to be vital in any responsible transition to green steelmaking.”
British Steel to shut Scunthorpe blast furnaces in £1.25bn decarbonisation plan
Newsflash: British Steel has just announced proposals to replace its blast furnaces in Scunthorpe with two new 2 electric arc furnaces (EAFs).
One EAF would be installed at Scunthorpe, with the second earmarked for its manufacturing site in Teesside, and could be operational by late 2025.
British Steel says the £1.25bn plan would help it become a clean, green and sustainable business, by decarbonising its operations.
However, the plan is subject to “appropriate support from the UK Government”
As we flagged earlier, there are reports that British Steel would be offered £500m in official support to make the switch, which could cost up to 2,000 jobs.
British Steel CEO and President, Xijun Cao, says:
“Decarbonisation is a major challenge for our business but we are committed to manufacturing the home-made, low-embedded carbon steel the UK needs.
“We have engaged extensively with the public and private sector to understand the feasibility of producing net zero steel with our current blast furnace operations.
However, thorough analysis shows this is not viable.
“Detailed studies show electrification could rapidly accelerate our journey to net zero and drive British Steel towards a sustainable future. It would also ensure we can provide our customers with the steel they require.
“Our owners, Jingye, have already invested £330 million in British Steel in just 3 years and they’re committed to the unprecedented investment our proposals require.”
British Steel says it has started preliminary talks with trade unions about the electrification plan, and has promised to support employees affected by the decarbonisation plans.
The company is also working with North Lincolnshire Council on “a masterplan” to attract new businesses and jobs to the Scunthorpe site, as some parts of the site could become vacant if the proposals go ahead.
Updated
Jobs cuts looming at publisher Reach too
The owner of the Mirror and Express newspapers is poised to announce sweeping job cuts as it accelerates its digital-first and seven-day publishing strategy, as the embattled newspaper group battles to cope with a slump in print and digital advertising revenues.
The move by Reach, which also owns hundreds of regional titles including the Manchester Evening News, Birmingham Mail and Liverpool Echo, could put the jobs of as many as a quarter of staff working on its national titles at risk.
The announcement, which could be made as soon as Wednesday, follows Reach announcing a cull of 200 roles in a £30m cost-cutting drive in January following a slump in the digital and print newspaper advertising market.
Market conditions have continued to remain torrid; the market value of Reach has slumped 30% over the last year, with its digital revenue strategy hit by large social media platforms, most notably Facebook, de-prioritising news.
In its third quarter trading update, Reach, reported a 13.7% drop in digital revenue as online page views slumped by 21% year-on-year in the first nine months.
Total print revenues also fell by 6% with both income from newspaper sales and advertising declining.
The acceleration of the digital first strategy is also expected to see the group’s remaining separate daily and Sunday newspaper operations - The Mirror, Sunday Mirror and Sunday People, Daily Express and Sunday Express - move closer to single seven day publishing operations.
The company said in its latest financial update that it expects to make £95m in profits this year but remains focused on “driving efficiencies” and cut operating costs.
In July 2020, Reach cut 550 staff, about 12% of its workforce at the time, in response to the Covid pandemic.
Reach declined to comment.
WeWork shares suspended ahead of pending news
Over in New York, trading in co-working space company WeWork has been halted, ahead of a pending news announcement.
⚠️ (Pre-market) Trading in WeWork $WE was just halted for news pending
— PiQ (@PiQSuite) November 6, 2023
via @StockMKTNewz
There were reports last week that WeWork was planning to file for bankruptcy soon, as it struggled to handle its massive debt pile and hefty losses.
Updated
Downing Street says it remains “committed” to supporting the steel industry, as we await news from Scunthorpe.
The Prime Minister’s official spokesman told reporters today:
“We are continuing to work closely with industry including British Steel to secure a sustainable, competitive future for the sector and its workers and we’ve offered a generous support package including £300m of investment for British Steel to cut emissions, safeguard jobs and unlock over £1bn in stakeholder investment.
“Now, ultimately, it is for British Steel themselves to manage commercial decisions for their company’s future.
“Obviously, I can’t specifically comment on their discussions but we will remain committed to supporting the sector.”
Sir William Lewis, the former editor of the Telegraph who had been linked to a potential bid for the influential right-leaning British newspaper, has been appointed as the publisher and chief executive of the Washington Post.
Lewis has held a string of high-profile positions including Rupert Murdoch’s News UK, Wall Street Journal and Dow Jones, and three years ago was included on a shortlist in the hunt for a new director general of the BBC.
The 54-year old, who recently co-founded the News Movement, which targets the younger social media generation that rely on platforms including YouTube, Facebook and Tik Tok, plans to halt plans to put together a bid in the £750m auction of the Telegraph.
Lewis will take up the role at the Washington Post, which was acquired by Amazon founder Jeff Bezos for $250m in 2013, on 2 January taking over from interim chief executive Patty Stonesifer.
Earlier this year, Fred Ryan, the chief executive and publisher of the Washington Post, left after almost a decade.
“Ten years ago, I made a commitment to the future of The Washington Post, inspired by its ambitious and consequential journalism,” said Bezos, adding:
“Today, I stand confident in that future knowing it is in the hands of Will, an exceptional, tenacious industry executive whose background in fierce, award-winning journalism makes him the right leader at the right time.”
Last month, the Washington Post announced plans to make 240 voluntary redundancies, about 10% of its workforce, because its “subscription, traffic and advertising projections” in recent years had been “overly optimistic”.
TUC general secretary Paul Nowak says:
“British Steel must halt these plans and get around the table with unions.
“Closing down the blast furnaces at the Scunthorpe plant would have a devastating impact on staff and the local community.
“Workers won’t stand back and watch as Britain’s steel industry is dismantled in real time.
“The Conservatives are presenting a false choice. Other countries have shown that it is possible to transition to zero-carbon steel making and protect good steel-making jobs for the future.
“We can do the same here. The UK badly needs a Biden-style industrial and climate plan.”
Updated
Key event
Unions have warned that job cuts at the Scunthorpe steel plant would be devastating for the area.
Charlotte Brumpton-Childs, GMB National Officer, says:
“GMB is deeply concerned over reports on the future of the British Steel plant at Scunthorpe.
“Any scheme that would close the blast furnaces in Scunthorpe would be another hammer blow for UK steel.
“Potential job losses on this scale would be devastating for the people of Scunthorpe.
“Formal consultation has not begun - although the business has started to talk to GMB and other unions about the various options on the table.
“GMB remains committed to debcarbonising the industry in a way that protects virgin steelmaking in the UK and the jobs it supports.”
British Steel’s plan to replace the Scunthorpe blast furnaces with electric arc furnaces will be subject to consultation with unions, who are likely to argue against job losses.
Under the proposals the two blast furnaces at Scunthorpe would be replaced by an electric arc furnace at Scunthorpe and another at a site in Teesside, marking the return of steelmaking to Redcar, where the blast furnace was demolished last year after its closure in 2015.
It is understood that problems with the electricity grid connection at Scunthorpe would make it difficult to install a second electric arc furnace until at least 2029, forcing British Steel to look into other options.
Updated
British Steel plans to shut Scunthorpe furnaces putting up to 2,000 jobs at risk
British Steel is expected to announce plans to replace two blast furnaces in Scunthorpe, in a move that would further reshape the UK steel industry and imperil the jobs of as many as 2,000 steelworkers, my colleague Jasper Jolly reports.
The company, owned by China’s Jingye, is expected to inform workers that the blast furnaces will be replaced by greener electric arc furnaces, at a meeting on Monday, according to people briefed on the plans.
Electric arc furnaces offer the ability to recycle scrap steel using clean electricity. However, they require far fewer workers than enormous blast furnaces that dominate the skylines of Scunthorpe and also Port Talbot in south Wales.
Tata Steel, which operates the Port Talbot plant, is planning a similar shift, although it delayed an imminent announcement last week.
However, there is an important difference between the two companies’ proposals: British Steel is understood to be considering keeping its blast furnaces open until the electric arc furnaces are in operation. That would put off any job losses for at least three years.
British Steel has not yet told workers how many jobs could be affected, but unions have estimated that as many as 2,000 fewer people could be required to operate the plant.
The BBC, which first reported the plans, said that British Steel had been offered £500m in UK government support to make the switch. That would match the package offered to Tata Steel.
We understand British Steel will announce a plan this afternoon to close its #Scunthorpe blast furnace which could lead to 2000 job losses. The furnace will be replaced by a greener electric arc facility which will take 2-3 years to build. pic.twitter.com/zwm1RSlMvU
— BBC Radio Humberside (@RadioHumberside) November 6, 2023
Updated
Information Commissioner apologises to Dame Alison Rose
Just in: Britain’s Information Commissioner has apologised to former NatWest CEO Dame Alison Rose, for suggesting she had breached data protection rules over the debanking scandal involving Nigel Farage.
Last month, an ICO report said that Rose had broken data protection rules, first by revealing to the BBC that Farage had a banking relationship with its private bank, Coutts; and secondly by providing “misleading information” that led the BBC to believe the bank was closing his accounts for purely commercial reasons, linked to his wealth.
But today, the ICO has apologised for ‘suggesting’ it had found she had broken General Data Protection Regulation (GDPR) rules.
The data protection watchdog says:
“The ICO recently investigated a complaint from Nigel Farage. The ICO’s investigation was solely into NatWest’s actions as a data controller.
“Our comments gave the impression that we had investigated the actions of Alison Rose, the former CEO of NatWest Group. This was incorrect. We confirm that we did not investigate Ms Rose’s actions, given that NatWest was the data controller under investigation.
“We accept that it would have been appropriate in the specific circumstances for us to have given Ms Rose an opportunity to comment on any findings in relation to her role and regret not doing so.
Finally, we apologise to Ms Rose for suggesting that we had made a finding that she breached the UK GDPR in respect of Mr Farage when we had not investigated her. Our investigation did not find that Ms Rose breached data protection law and we regret that our statement gave the impression that she did.”
UK construction fall: What the experts say
Last month’s cancellation of the northern leg of the HS2 rail line is a major issue for construction contractors, reports Max Jones, director in Lloyds Bank’s infrastructure and construction team:
Jones explains:
“Following last month’s HS2 decision, businesses are now turning their attention towards identifying opportunities from improvements to regional transport and infrastructure links. In turn, the investment will better connect towns and cities and boost economic growth, which could create additional opportunities for those in the construction sector.
“Looking at the near- and medium-term picture, contractors we speak to are mindful of risks building up across their supply chains. The concern is that contracts priced as the country was coming out of the pandemic have had their margins eroded by inflation, and this could eat into profits as projects are completed in the coming months.”
Toby Banfield, financial restructuring partner at PwC UK, says weak demand is hurting housebuilders:
“Sector headwinds showed little signs of relief in October, as the PMI recorded 45.6 in October, a marginal increase from 45.0 in September but the second-lowest reading since May 2020, fuelled by an eleventh consecutive monthly decrease for house building which continues to battle with sales weak demand which is prompting delays and hesitance with new projects.
Ongoing disruption to government infrastructure projects and the slowdown in the housing market is hurting constructors, says Kelly Boorman, partner and national head of construction at acccountancy firm RSM UK:
Boorman says there are signs of stabilisation:
‘This month’s slight uplift in the headline PMI to 45.6 brings surprisingly welcome news for the construction industry, especially after September’s steep drop. The increase was driven by an uplift in commercial activity to 49.5, which suggests stability is returning to the market and is a positive sign that construction output will continue to improve, albeit slowly.
The Bank of England’s decision to maintain its base rate at 5.25% for the second month, after 14 consecutive months of hikes is also encouraging, after months of disruption to pipelines with the housing market really feeling the pinch. It’s always a tough time of year for construction as we get into winter months, so hopefully this will facilitate some stimulation in the housing market.
Updated
The UK construction sector is being dragged down by high interest rates and low consumer demand for new homes, reports Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS).
Glen adds:
“The silver lining is that high borrowing costs are having their intended effect of putting the brakes on rising inflation. Previously suppliers were able to hike their prices in response to soaring demand.
Falling construction activity has now tilted the negotiations in favour of buyers and suppliers are having to pass on lower prices for raw materials like timber and steel. Supply chain pressures are also easing as a result of the lull in new work, with better availability of raw materials, a reduction in transportation costs and an improvement in supplier delivery times.
Glen adds that UK construction will probably face further challenging months ahead.
For the 11th successive month house building decreased in Oct. High interest rates holding back building momentum till their is greater demand. The knock-on effect = inc in sub-contractors & construction material & product prices drop (helped by cheaper transit costs) @SPGlobal pic.twitter.com/2RNRaTS0Xp
— Emma Fildes (@emmafildes) November 6, 2023
Construction costs are falling
There is one glimmer of good news, though – building costs are falling.
Today’s construction PMI shows that purchasing prices decreased at the fastest pace for over 14 years, as lower timber, steel and transportation costs were passed on by vendors.
Those cheaper raw material costs suggest that supply chain problems have eased, and also that weaker demand from building firms is forcing suppliers to offer more competitive prices.
Tim Moore, economics director at S&P Global Market Intelligence, explains:
“Total new work continued to fall more quickly than at any time since the initial pandemic lockdown period, which contributed to shrinking demand for construction products and materials during October.
Competitive pressure on suppliers to pass on lower commodity prices resulted in the fastest decline in input costs since August 2009. Sub-contractors meanwhile cut their charges for the first time in more than three years in response to a further downturn in workloads during October.”
UK construction output falls again as housebuilding shrinks
Newsflash: UK construction output declined at a sharp pace again last month.
The latest poll of purchasing managers at UK construction firms has found that business activity falling for the second month running in October, amid a lack of new work to replace completed projects.
Housebuilding fell particularly sharply, as the sector was hit by falling buyer demand and higher costs.
Building firms blamed fragile client confidence and elevated borrowing costs, due to the surge in interest rates over the last two years.
The S&P Global / CIPS UK construction PMI has come in at 45.6 for October, up from September’s 45.0.
That’s the second-lowest reading since May 2020 and shows a marked decline in total construction activity (any reading below 50 shows a contraction).
The survey says:
House building decreased for the eleventh successive month in October and at a much steeper pace than elsewhere in the construction sector (index at 38.5).
Falling work on residential construction projects was widely linked to a lack of demand and subsequent cutbacks to new projects. Civil engineering activity also decreased sharply in October (index at 43.7) and the rate of decline was the fastest since July 2022.
Today’s car sales figures show that fewer than one in four new battery-powered electric cars were sold to private buyers.
This, the SMMT says, underscores the need for fiscal incentives to encourage private consumers to switch to EV.
Overall, battery electric vehicle (BEV) uptake increased for the 42nd month in a row in October, by 20.1% to 23,943 units. That’s a slowdown on earlier in the year, though.
Car sales for 2024 revised up.
The SMMT has lifted its forecast for car sales next year, but cut its forecast for the market share of electric cars.
It says:
Looking ahead to next year, the overall market outlook for 2024 is marginally more positive than previously anticipated, up 1.0% to 1.970 million units (a 4.4% rise on the 2023 outlook).
With an absence of consumer incentives and an overwhelming dependency on fleet registrations for growth, however, BEV market share outlook has been revised down slightly to an expected market share of 22.3%, despite registrations expected to reach 439,000 units, a 35.5% increase over 2023.
Fleet sales drove UK car demand
The growth in UK car registrations last month was driven almost entirely by large fleet registrations.
Fleet registrations (cars sold to companies, organizations, or government agencies) grew by 28.8% year-on-year to reach 87,479 units.
Private demand was stable at 62,915 vehicles, a 0.3% increase, while the much smaller business sector saw registrations fall -15.2% to 3,135 units, the SMMT says.
UK car sales figures released
It’s official: UK car sales exceeded their pre-pandemic levels last month.
New data from the Society of Motor Manufacturers and Traders reports there were 153,529 new car registrations in October, up 14.3% year-on-year.
That’s 7.2% above 2019, and the best October since 2018, as the easing in supply chain problems helpd dealers deliver stock to customers.
So far this year, overall vehicle uptake is now up 19.6%, with the market currently enjoying its best year since 2019.
Mike Hawes, SMMT chief executive, says:
With demand for new cars surpassing pre-pandemic levels in the month, the market is defying expectations and driving growth.
As fleet uptake flourishes, particularly for EVs, sustained success depends on encouraging all consumers to invest in the latest zero emission vehicles. The Autumn Statement is a key opportunity for government to introduce incentives and facilitate infrastructure investment. Doing so would send a clear signal of support for drivers, reassuring them that now is the time to switch to electric.
October new car market beats pre-pandemic levels but subdued EV growth hinders green goalshttps://t.co/XrvxTzJM7u pic.twitter.com/XHl2TA3jmf
— SMMT (@SMMT) November 6, 2023
The SMMT has also revised up its forecast for sales this year by 2.1% (as flagged earlier) to 1.886 million units with further growth anticipated in 2024.
However, it has trimmed its forecast for sales growth in battery-powered electric cars (BEVs) by -1.7% to 324,000 units.
The euro has hit its highest level against the US dollar in almost two months.
The single currency has gained 0.2% this morning to €1.0751, the highest since 13th September.
The dollar has weakened as investors anticipaate that US interest rates are now at their peak, after Friday’s jobs data showed a drop in hiring.
Analysts at BNP Paribas explain:
With US economic data showing signs of moderation in Q4 in an environment where the bar to hike again has been set very high, it increasingly looks like the terminal fed funds rate has already been hit – in line with our view that July was the last hike of the cycle.
After decent gains last week, European stock markets are rather subdued this morning.
The UK’s FTSE 100 index has gained just 5 points, or 0.06%, in early trading to 7422 points.
Engineering company Melrose (+3.7%) are among the top risers in London, after signing a new £4bn partnership with aircraft engine supplier GE Aerospace. The deal will cover new technology insertions, aftermarket repair of high-volume engine structures, and production of fan cases for GE’s engines.
Shares in property developers are a little lower, though.
The pan-European Stoxx 600 index is up 0.1%, with small gains in Paris and Milan.
Updated
PA Media report that the the SMMT will slightly revise upwards its forecast for the number of new cars that will be registered in 2023 and 2024.
Its previous forecast, issued in July, predicted that registrations would reach around 1,847,000 this year and 1,951,000 next year.
Updated
Ryanair predicts record profit as higher fares boost earnings
Budget airline Ryanair has predicted it will make a record profit this financial year,
Ryanair says it benefited from strong trading over Easter, record summer traffic, and higher fares – offsetting the increased fuel costs this year.
It has posted a record profit of €2.18bn in the six months to the end of September.
It now expects to make a profit-after-tax for the full year of between €1.85bn and €2.05bn, despite its higher fuel bill, the risk of weaker consumer spending, and uncertainty over whether Boeing will deliver new planes in time.
Ryanair adds:
This guidance remains highly dependent on the absence of any unforeseen adverse events (for example such as Ukraine or Gaza) between now and the end of March 2024.”
The airline has also declared it will spend €400m on a maiden ordinary dividend.
Shares in Ryanair have jumped 6% in early trading.
Victoria Scholar, head of investment at interactive investor, explains:
Ryanair has been able to pass on additional cost pressures to consumers through higher airfares with ticket prices likely to continue to go up next year. Plus, it has been enjoying a tailwind from strong demand post pandemic which it expects will be even stronger next year, despite cost-of-living pressures with elevated inflation and interest rates. Ryanair has also been more focussed than rivals on keeping its debt down – the airline expects it will be debt-free by the end of 2026.
Investors have lots to be cheerful about in this set of results including its better-than-expected earnings, its outlook and its dividend announcement. Shares have staged impressive gains so far this year.”
Updated
Almost two thirds of UK adults are planning to cut back on spending this Christmas, according to research from Accenture.
The survey, published this morning, shows many Britons are looking to reduce their spending on presents, on eating out and on food and drink at home due to worries about the cost of living
Two thirds of Britons to spend less this Christmas, Accenture says https://t.co/O2RjQ5H4tb pic.twitter.com/Eml3yQXubS
— Reuters UK (@ReutersUK) November 6, 2023
UK "is probably already in recession": Bloomberg analysis
Analysis by Bloomberg Economics this morning shows that Britain could already be falling into recession.
The research shows a 52% chance that the economy contracted in the third quarter of 2023, and also shrinks again in the current quarter, as household spending is hit by high interest rates and rising unemployment.
That would meet the technical definition of a recession (two consecutive quarters of contraction).
Bloomberg points out:
A recession would be a headache for Prime Minister Rishi Sunak, due to fight an election next year. A recession could increase the chances of the Bank of England pivoting toward reducing interest rates, especially if inflation has come down sharply.
A UK recession probably already has begun, an analysis by Bloomberg Economics shows https://t.co/Ny3DpqTaL8
— Bloomberg UK (@BloombergUK) November 6, 2023
Last week, the BoE said there was a 50-50 chance of a recession by the middle of next year.
Updated
Introduction: UK car sales rose around 14% last month
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK car sales have climbed for the 15th month running, as the industry continues to shake off the supply chain problems suffered in the Covid-19 pandemic.
Registrations of new vehicles rose 14% year-on-year in October, according to preliminary figures from the Society of Motor Manufacturers and Traders. That extends a run of gains that began in August 2022.
Mike Hawes, chief executive of SMMT, says new car registrations have finally returned to pre-pandemic levels, after four years of disruption.
He told Radio 4’s Today programme that the supply chain issues the industry faced globally (such as shortages of semiconductors) have been easing.
We’ve been able to shore up demand, and the wait lists that so many people were experiencing over the last two or three years have eased, so we’ve been able to fulfill the level of demand that’s there.
The final sales figures for October are due at 9am.
A month ago, the SMMT reported a drop in the number of consumers buying electric cars, which is blames on a lack of incentives for households to shift to EVs.
Hawes says that business customers and fleet buyers are driving take-up of EVs, as they get the benefits of lower “Benefit in Kind” taxation on electric cars than other models.
Private buyers don’t get the same incentives, Hawes argues, so they need to calculate whether they’d be better off with an EV or not.
Repeating the SMMT’s previous calls for more incentives for consumers to buy EV cars, Hawes says:
”If we going to move the entire market, which we need to do, the government needs to be looking at pulling every single lever to try to incentivise this transition.”
Looking ahead, Hawes predicts that sales growth will probably tale off a little in the months ahead.
But, as he points out, car sales have been “counter-cyclical given the economic conditions”, and the SMMT still expects the market to grow next year.
Also coming up today
In the energy sector, Rishi Sunak will introduce an annual system to award new oil and gas licences.
The move, expected in tomorrow’s kings speech, is likely to anger environmental campaigners, as the PM looks to find new dividing lines with the Labour party ahead of the next election.
We also get a new healthcheck on UK building firms, eurozone services companies and German factories.
The agenda
7am GMT: German factory orders for September
9am GMT: UK car sales for October
9am GMT: Eurozone services PMI for October
9.30am GMT: UK construction PMI for October
5pm GMT: Virtual Q&A with Bank of England chief economist Huw Pill
