Closing summary
Our two main stories today:
Ford has said that it will cut 4,000 jobs in Europe, becoming the latest carmaker to seek to reduce costs amid slowing growth in electric car sales and competition from China.
The American carmaker said on Wednesday it would cut 800 jobs in the UK and 2,900 in Germany. The company’s UK sites in Dagenham and Halewood will not be affected.
The cuts represent about 14% of its 28,000 workforce in Europe and will be completed by the end of 2027.
Ford is the latest in a series of global carmakers to aim for cost savings as the industry struggles with waning demand while also trying to invest in the transition to electric cars.
Inflation increased to 2.3% in October, heaping pressure on the Bank of England to delay further interest rate cuts until next year.
Figures released by the Office for National Statistics (ONS) on Wednesday showed that a rise in energy bills pushed up the consumer prices index (CPI), reversing a downward trend this year in inflation, which was 1.7% in September.
The figure for the year to October was slightly above the 2.2% City economists had expected.
The ONS said higher gas and electricity prices were offset by lower oil prices, which reduced the transport and raw materials costs of manufacturing businesses. Falls in the price of theatre and live music tickets also helped to limit the fastest month-on-month increase in prices since October 2022, at 0.6%.
Thank you for reading. We’ll be back tomorrow. Take care! – JK
UK housebuilder shares fall after inflation jump
Shares in UK housebuilders have fallen today, after UK inflation jumped more than expected, suggesting that the Bank of England will move cautiously in reducing borrowing costs.
Inflation accelerated to 2.3% last month from 1.7% in September – taking it back above the Bank’s target. Inflation in the services sector, which the central bank regards as a key measure of domestic price pressures, rose to 5% from 4.9%.
The UK housebuilders’ index fell by 3.4% with Vistry Group (formerly Bovis Homes) the biggest loser, with shares down 8.1%. Other FTSE 100 builders Berkeley Group, Persimmon, Barratt Redrow and Taylor Wimpey dropped by between 2.5% and 3%.
Ford’s UK sites in Dagenham and Halewood will not be affected, reports my colleague Jasper Jolly.
Here’s our full story:
Ford to cut 4,000 jobs in Europe, with Germany and the UK hardest hit
Ford has announced it will cut 4,000 jobs in Europe, mainly in Germany and the UK.
This amounts to 14% of the American carmaker’s European workforce. The layoffs will be made by the end of 2027. Globally, they represent around 2.3% of Ford’s workforce of 174,000.
The company blamed significant losses in recent years caused by weak demand for electric vehicles, a lack of government support for the shift to EVs, and growing competition.
Ford is the latest carmaker after Nissan, Stellantis and General Motors to cut costs as the industry struggles with growing competition from Chinese rivals in Europe, waning demand in China, and the challenges of selling electric cars that are still too expensive for many people to buy.
The European Union has imposed tariffs on Chinese-made EVs, which it says benefit from unfair subsidies from the Beijing government.
Ford’s move deals a big blow to Germany, Europe’s largest economy. Volkswagen is threatening to close factories, slash wages and cut thousands of jobs to improve its ability to compete. The country is also in political crisis, with a snap election in February, while companies grapple with growing trade tensions with China and the threat of US tariffs following Donald Trump’s victory in the US presidential election.
Ford said Europe’s automakers
face significant competitive and economic headwinds while also tackling a misalignment between CO2 regulations and consumer demand for electrified vehicles.
Ford’s sales in Europe plunged by 17.9% in September, far outstripping an industrywide decline of 6.1%.
Ford called on the German government to provide more incentives and better charging infrastructure to help consumers transition to EVs. Berlin ended EV subsidies in December last year, and sales of electric cars in Germany were down by 28.6% in the first nine months of this year.
Ford‘s chief financial officer John Lawler wrote in a letter to the German government:
What we lack in Europe and Germany is an unmistakable, clear policy agenda to advance e-mobility, such as public investments in charging infrastructure, meaningful incentives ... and greater flexibility in meeting CO2 compliance targets.
Ford already announced 3,800 job cuts in Europe in February 2023.
Updated
Tokyo Metro wins contract to run London’s Elizabeth line
The company behind Tokyo’s renowned metro system has won a deal to take over the operation of London’s Elizabeth line, replacing the incumbent Chinese-owned operator MTR.
Tokyo Metro Company (TMC) has promised to bring Japanese reliability and punctuality to London’s newest rail line after its consortium with the UK transport group Go-Ahead and the Japanese trading house Sumitomo Corporation beat three other bidders for the deal.
The GTS Rail Operations consortium will now take over the running of the line, which opened in 2022, for at least seven years from next May.
MTR, which is three-quarters owned by the Hong Kong government and operates the transport network in the administrative region of China, won the deal to manage services on the Elizabeth line in 2014 when Boris Johnson was mayor.
Sharon White joins Canadian pension fund
Dame Sharon White, the former chair of John Lewis, has been appointed as the European head of the Canadian public pension fund manager that holds investments in companies including Eurostar and Heathrow airport.
White, who stepped down as John Lewis chair in September, has been given the official title of managing director and head of Europe at Caisse de dépôt et placement du Québec (CDPQ) and will start in January.
White, the shortest-serving chair in the history of the John Lewis Partnership, had been due to leave the retailer next February but stepped aside early to make way for former Tesco boss Jason Tarry.
The announcement of White’s decision to step down came a month after she announced that the group’s turnaround would take two years longer than planned and cost more money.
John Lewis ditched its annual staff bonus for the second time in three years in March last year, after the group slumped to a worse-than-expected £230m full-year loss.
Her tenure had been mired in controversy including a reported plan to dilute its employee-owned mutual model by selling a stake in the business to raise more than £1bn, which was shelved after she narrowly won a vote of confidence in which staff backed her to continue but expressed dismay at the retailer’s poor performance.
Lidl returns to profit on sales of nearly £11bn after slowing expansion
Lidl’s UK business has bounced back into profit after it slowed expansion in favour of improving existing stores, spurring a jump in sales to above £9bn.
The German-owned discounter, which is close to overtaking Morrisons to become the UK’s fifth-largest supermarket, said it had gained more than 300,000 new shoppers and 60% of Britons visited the chain at least once year.
Profits rebounded in the year to February as the group cut back investment, opening just one net new store, according to the accounts, compared with 45 in the previous year.
The company began slowing down the rate of new stores last year, after several years of frequent store openings. However, it plans to open 40 new outlets next year and 18 in the coming months.
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E.ON must pay £14.5m to prepayment customers after billing failures
The energy regulator has ordered power supplier E.ON Next to pay £14.5m in compensation to nearly 250,000 prepayment customers, after an investigation found “unacceptable” failures to pay credit they had on accounts or final bill payments they were owed.
Ofgem found that the customers were affected over an 18-month period from early 2021 to late last year by an error in E.ON Next’s billing system. About 100,000 of the affected accounts were also in credit.
Prepayment customers who transferred to another supplier or terminated their contract did not receive final bills within the required six-week period, and the gas and electricity supplier subsequently failed to make the required compensation payments of £30 or £60.
Because customers did not receive a final bill they were also unaware of any credit remaining on their accounts, worth an average of £51 per affected customer.
Here’s our full analysis on the jump in UK inflation to 2.3%, back above the Bank of England’s target, from 1.7% in September. Higher energy bills were the main culprit, while food inflation also rose.
UK pension fund loses more than £350m with waste incinerator power plants
One of the UK’s biggest pension funds has lost more than £350m on a series of “calamitous” investments in incinerator power plants that are expected to go bust in the coming days.
The Guardian understands that Aviva Investors will put three incinerators into administration this week after pouring millions of pounds into what has been described as the country’s “dirtiest form of power generation”.
Aviva’s own accounts show that the three incinerator plants – in Hull in East Yorkshire, Boston in Lincolnshire and Barry in south Wales – accumulated loans totalling £480m from its investors between 2015 and 2023.
Aviva has written off £368m for the plants, which were originally intended to run on biomass waste wood and later converted to burn household waste, but which struggled to reach their targets.
Updated
HSBC to open London ‘wealth centre’
HSBC is to launch its first UK “wealth centre” in London’s Mayfair district, offering more personalised banking services and exclusive events such as wine tastings as part of a drive to win more rich customers.
The lender will take up two floors of the 16-storey Smithson Tower at 25 St James’s Street – close to the Ritz Hotel and Fortnum & Mason department store – as part of a revamp of HSBC’s premier-tier bank service. Aimed at the sought-after “mass affluent” market, premier is a tier below private-banking clients and is targeted at customers with £100,000 to £2m in income, assets or deposits.
The 8,000 sq ft wealth centre, which is due to open by summer 2025, will give premier clients access to a concierge team, catering services and a barista coffee bar, alongside 12 high-spec meeting rooms with panoramic views of London to meet HSBC team of dedicated relationship bankers.
Updated
Santander puts aside £295m for car loan mis-selling
Santander UK has put aside £295m to cover potential payouts to car loan customers as the bank issued its first estimate of the financial fallout from the growing car loan mis-selling scandal.
The figures were released alongside the bank’s third-quarter results, which were delayed last month after a court of appeal ruling in October said it was unlawful for two lenders to have paid a “secret” commission to car dealers without borrowers’ knowledge.
The provision dented the bank’s pre-tax profits, which fell to £143m in the quarter, down from £413m in the second quarter.
Car lenders such as Santander UK had already been facing potential payouts over an Financial Conduct Authority (FCA) investigation into a specific type of commission payment, discretionary commission arrangements, that was banned in 2021.
Updated
ONS may have ‘lost’ a million workers from job figures since pandemic
Policymakers have been “left in the dark” by official jobs figures since the pandemic, which may have “lost” almost a million workers according to the thinktank Resolution Foundation.
In a report, the thinktank said the regular snapshot from the Office for National Statistics may have painted an “overly pessimistic” picture of the UK labour market since the pandemic.
The thinktank’s principal economist, Adam Corlett, says in the report that response rates to the key Labour Force Survey (LFS) have collapsed, from 39% in 2019 to just 13% last year.
There are concerns that workers may be less likely to respond to the survey than people who are economically inactive, potentially skewing the results.
Updated
Pound and gilt yields rise after jump in inflation
Sterling rose after the higher-than-expected inflation figures were released, as did the yield – or interest rate – on government bonds.
The pound rose as much as 0.25%, and is now marginally higher at $1.2687.
Yields on two-year gilts, as UK government bonds are known, which are the most sensitive to interest rate expectations, rose more than 4 basis points to 4.456% and are now at 4.42%.
Ten-year and 30-year gilt yields rose by a similar amount, which mirrored a similar move in US government bonds, Treasuries.
Unite, the UK’s biggest union, is calling for “serious action” to tackle the cost of living crisis.
Unite general secretary Sharon Graham said:
With inflation rising again, we need some serious action to tackle the root causes of the cost-of-living crisis.
For a start, that means taking on the profiteers who have driven sky high prices and bringing the energy system back into public hands.
Updated
Financial markets now see the probability of a rate cut at next month’s Bank of England meeting at around 16%.
The Bank’s governor, Andrew Bailey, yesterday stressed that the central bank was pursing a “gradual approach” to reducing borrowing costs from their current level of 4.75%, allowing time to assess the impact of the tax changes in last month’s budget. He said:
A gradual approach to removing monetary policy restraint will help us to observe how this plays out, along with other risks to the inflation outlook.
Updated
Here’s some instant analysis from our new economics editor Heather Stewart, who has just taken over from Larry Elliott. She writes:
Any lingering hope that the Bank of England might deliver a pre-Christmas interest rate cut next month appears to have evaporated, after official data showed inflation jumping to 2.3% in October.
The CPI measure had been expected to tip up, after dipping to 1.7% in September, but 2.3% was stronger than expected.
September’s reading was the first time inflation had fallen been below the Bank’s 2% target since July 2021, and looks likely to be the last for some time.
Much of the explanation lies in energy prices, with Ofgem’s price cap rising from October – in contrast to the same period last year, when utility bills were falling rapidly from the peak hit in the wake of Russia’s invasion of Ukraine.
Electricity prices rose by 7.7% in October, the ONS said, having fallen by 7.5% last year. Gas prices increased by 11.7% in October, compared with a 7% drop last year.
Economists were quick to suggest that the stronger-than-expected rise confirmed expectations that the Bank’s monetary policy committee (MPC) will wait until the new year before going further, after cutting rates to 4.75% earlier this month.
Donald Trump’s arrival in the White House is also giving policymakers pause: if he presses ahead with across-the-board tariffs, the short-term impact at least is likely to be inflationary.
The Conservatives have responded to the inflation figures.
Mel Stride, shadow chancellor, said:
Having brought inflation back down to target, we know how important it is for all of us that the government does the same.
What is worrying about today’s announcement is that inflation is running ahead of expectations and official forecasts state these figures are not expected to improve. Labour’s budget will push up inflation and mortgage rates.
And here is Monica George Michail, associate economist at the National Institute of Economic and Social Research:
⚡️Our reaction to the latest #inflation figures is out now ⚡️@MichailMonica @EconSteveM @RoyalEconSoc pic.twitter.com/Q6C290Lhk5
— National Institute of Economic and Social Research (@NIESRorg) November 20, 2024
Updated
Ruth Gregory, deputy chief UK economist at Capital Economics, said:
Much of this overshoot in core inflation and services inflation was due to a sharp rise in airfares inflation, which the Bank won’t consider a sign of stickier price pressures.
Airfares inflation snapped back from -5.0% to +6.6%, partly due to the biggest monthly rise in airfares in October since monthly collection began in 2001. So just as some of the downside news on services inflation in September was due to volatile factors, some of the upside surprise in October looks like noise too. What’s more, the Bank of England had expected services inflation to nudge up to 5.0% in October, so today’s release won’t be too much of a blow.
Even so, October’s data may mean that the rebound in CPI inflation over the coming months (due to unfavourable base effects in clothing, cars and recreation/culture) may take inflation further above the 2.7% we had been forecasting for January. That will strengthen the case for caution at the Bank of England.
And it suggests that, barring a major downside surprise in November’s inflation data, the Bank will almost certainly leave rates unchanged at 4.75% at its next meeting in December.
The stronger than expected inflation figures dampened hopes of imminent interest rate cuts from the Bank of England.
Services inflation – closely watched by the central bank – rose from 4.9% to 5%.
Core inflation, which strips out volatile items like food and energy, also defied forecasters, rising from 3.2% to 3.3%.
Luke Bartholomew, deputy chief economist at abrdn, said:
Headline inflation was always going to pop up again given energy price effects, but the slightly larger than expected increase reported today is somewhat disappointing. In particular, services inflation, which is closely watched by policymakers as a sign of underlying inflation pressures, was stronger and still well above an inflation-target consistent rate, albeit broadly in line with the Bank of England’s forecasts.
Headline inflation is likely to drift further above target for the next few months, but it is the fundamental determinants of inflation that will determine the path of interest rates from here. And with the budget set to boost growth and inflation next year, there is little reason for the Bank to deviate from its only gradual rate cutting schedule any time soon. So we continue to expect the next rate cut early next year.
Updated
Simon French, chief economist and head of research at investment bank Panmure Liberum, said on X:
UK inflation back to +2.3% in October (+1.7% prev.) largely as a function of a slowdown in the rate of household energy deflation. UK back in line with G20 inflation rate after a couple of quarters undershooting https://t.co/cQ9GsypApz pic.twitter.com/RR1S0uqtiC
— Simon French (@Frencheconomics) November 20, 2024
Treasury chief secretary: 'more to do' to ease cost of living pressures
Food price inflation edged higher to 1.9% from 1.8% in September, well down from the recent peak of 19.2% in March 2023, which was the highest annual ate for over 45 years.
Treasury chief secretary Darren Jones acknowledged there was “more to do” to ease cost of living pressure, as inflation increased to 2.3% in October from 1.7% in September.
Jones said:
We know that families across Britain are still struggling with the cost of living. That is why the budget last month focused on fixing the foundation of our economy so we can deliver change.
That includes boosting the national minimum wage, freezing fuel duty and protecting working people’s payslips from higher taxes. But we know there is more to do. That is why the government is focused on economic growth and investment so we can make every part of the country better off.
Updated
Introduction: UK inflation picks up to 2.3% after energy bills rise
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Inflation in the UK picked up more than expected last month because of higher electricity and gas prices.
The consumer prices index rose at an annual rate of 2.3% in October, up from 1.7% in September. Economists had expected a rate of 2.2%.
CPI rose by 2.3% in the 12 months to Oct 2024, up from 1.7% in Sept 2024.
— Office for National Statistics (ONS) (@ONS) November 20, 2024
Read the release ➡️ https://t.co/cIrNnjEwEf pic.twitter.com/ndDXNa23Mj
Electricity prices rose by 7.7% in October, having fallen by 7.5% last year. Gas prices increased by 11.7% in October, compared with a 7% drop last year.
The energy price cap went up, and Ofgem, the regulator, estimates that for an average household paying by direct debit for dual fuel, this equates to £1,717, a rise of £149 on an annual bill.
The Agenda
4pm GMT: Bank of England deputy governor Dave Ramsden speaks
6pm GMT: European Central Bank vice president Luis de Guindos speaks
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