Zero trains to run across 15 operators as February rail strikes hit commuters
Commuters will be left stranded across the country as 15 train operators run zero trains both tomorrow and Friday.
The walkouts by both the Aslef and RMT unions mean there will not even be reduced services operating for passengers left weary by months of strike action.
The companies affected include Avanti West Coast; Chiltern Railways; CrossCountry; East Midlands Railway; Gatwick Express; Great Northern; Heathrow Express; Island Line; London Northwestern Railway; Northern; Southeastern; Southern; Thameslink; TransPennine Express; and West Midlands Railway.
The following train companies are running an amended service on the strike days: Greater Anglia & Stansted Express; Great Western Railway; and LNER.
It comes as rail union TSSA has today received two formal offers in relation to all members employed by the train companies in the national rail dispute over pay, job security and conditions.
The pay offer over two years gives workers a 5pc pay rise or £1,750, whichever is greater, in the first year and a further 4pc increase in the second year.
The union's executive committee will now consider the offers and consult representatives at more than a dozen train companies before deciding whether to put it to members in a vote.
Read the latest updates below.
That's all from us today, we shall see you tomorrow! Before you go, have a look at the latest stories from our reporters:
UK economy to suffer more than sanctions-hit Russia in 2023, warns IMF
World at risk of financial crisis to rival Great Depression, warns ‘Black Swan’ hedge fund
Mike Lynch-backed Darktrace accused of misrepresenting accounts by short seller
1,000 jobs at risk after Tesco buys Paperchase brand
Spotify losses surge after podcast spending binge
UK markets slump amid grim IMF forecasts
UK markets slipped into red on Tuesday after a report from the International Monetary Fund said that Britain will be the only major economy to plunge into recession this year.
The IMF’s forecasts say that every major economy, including sanction-hit Russia, will enjoy growth this year apart from the UK.
The FTSE 100 dropped by 0.17pc, dragged down by losses for basic resources and energy firms like Weir Group, Anglo American and United Utilities Group.
Investors will also be keeping in mind forecasts for the US Fed's interest rate decision on Wednesday, which is likely to impact the FTSE 100, and the Bank of England's rate decision on Thursday.
Policymakers at both nations' central banks are expected to hike up interest rates again, according to analysts.
Llyod’s of London set to give staff one-off cost of living bonus
Lloyd’s of London will give staff an additional £1,500 to cover rising living costs as inflation continues into 2023.
The insurance exchange told staff Tuesday that those earning less than £75,000 would receive the one-time contribution, according to a spokesperson.
This comes after Lloyd’s gave the same staff an extra £2,500 last year as soaring energy bills and food prices created a cost of living crisis.
Other companies including HSBC, NatWest Bank and Barclays have made similar gestures.
Mike Lynch-backed Darktrace accused of misrepresenting accounts by short seller
Darktrace, the cybersecurity company, has lost a quarter of a billion pounds from its valuation after an aggressive US short-seller claimed the company engages in fraudulent accounting.
Gareth Corfield reports:
Quintessential Capital Management (QCM), a New York-based asset management firm, alleged that Darktrace engages in “channel stuffing” and other fraudulent practices designed to artificially inflate its sales figures.
So-called “channel stuffing” is when a company strikes fake sales contracts with commercial partners immediately before a deadline such as the end of the financial year. After the deadline passes, goods “sold” under the fake contract are quietly returned.
In a 70-page report published on Tuesday, QCM’s founder Gabriel Grego claimed that Darktrace was “shifting tomorrow’s revenues into today’s books”.
He said: “After a careful analysis, we are deeply sceptical about the validity of Darktrace’s financial statements and fear that sales, margins, and growth rates may be overstated and close to a sharp correction.”
A Darktrace spokesman denied the QCM allegations and said the company was confident in its accounting.
Swiss Bank profits from higher interest rates
UBS said it made $1.7bn (£1.38bn) in profits in the last three months of 2022 after it completed the year with record loan and deposit volumes in Switzerland.
The bank said it remained strong despite wider economic uncertainty and the war in Ukraine “affecting asset pricing levels and investor sentiment”.
Although this was partly offset by increased rates paid to customers with savings products. It also saw total revenues for its investment bank drop by nearly a quarter over the period.
That's all from me on an eventful day. My colleague Riya Makwana will take you through the next few hours.
Overseas investors plough record amount into Government debt after Hunt’s budget
Overseas funds piled into UK government bonds at an unprecedented pace in December in one of the strongest signs yet that the market is on the mend following the chaos of the mini-Budget.
Non-residents bought £38.3bn of gilts last month, figures published by the Bank of England showed today.
According to experts, much of this likely stemmed from the so-called liability driven investment funds popular with pensions, which were sent into crisis following Kwasi Kwarteng's ill-fated fiscal statement last September.
The prospect of unfunded tax cuts meant fund managers had to liquidate positions to meet collateral calls, fueling a self-reinforcing cascade of selling that sent the yield on some long-dated gilts above 5pc.
The Bank of England was forced to step in to stabilise markets and eventually made nearly £4bn in profit from the intervention that helped to bring down Liz Truss's government.
David Parkinson, sterling rates product manager at RBC Capital Markets, said a "portion of the strong December number" likely stemmed from the liability driven investment funds.
No trains to run on strike days - as one union receives pay offer
Commuters will not even be able to squeeze onto an extra overcrowded train to get to work tomorrow and Friday, as it emerged 15 operators will not even run a reduced timetable on strike days.
The walkouts by the RMT and Aslef union workers come as there is a chink of light in the negotiations on another rail dispute.
Rail union TSSA has today received two formal offers in its battle over pay, job security and conditions.
For the first time the offers cover management and control staff, as well as stations and other grades within the rail industry.
The offers come after several rounds of talks with the Rail Delivery Group on behalf of the train operating companies and include - an improved pay deal over two years, commitments for no compulsory redundancies until the end of 2024, improved opportunities for redeployment, as well as full consultation over proposed reforms to ticket offices and any changes to terms and conditions.
The union's executive committee is deciding whether to put the deal to members.
The train companies involved in the dispute are: Avanti West Coast, C2C, Chiltern Railways, Cross Country, East Midlands Railway, Govia Thameslink Railway, Greater Anglia, Great Western Railway, London North Eastern Railway, Northern Trains Limited, South Eastern Railway, South Western Railway, Trans Pennine Express and West Midlands Trains.
‘Dam bursts’ as insolvencies hit highest number since financial crisis
The "dam has burst" on insolvencies, experts have warned, after the highest number of companies since the financial crisis failed last year.
Senior economics reporter Eir Nolsøe has the details:
Interest rates, energy prices and pandemic loans becoming due are pulling the rug from under thousands of firms which are unable to pay their debts, industry leaders say.
Some 22,109 companies became insolvent in 2022 in England and Wales, meaning they are on the brink of going under. This is the highest figure since 2009, government figures show.
Christina Fitzgerald, president of insolvency and restructuring trade body R3, said that after two years of government support suppressing the numbers, "2022 was the year the insolvency dam burst".
Read how many businesses are for the first time experiencing a "trilemma" of supply chain pressures.
Farfetch deal for Yoox Net-A-Porter examined by regulators
The competition regulator has said it will probe Farfetch's deal to buy a stake in online retail business Yoox Net-A-Porter.
Last year, luxury goods giant Richemont agreed to sell its 47.5pc stake in Yoox Net-A-Porter to its fellow online fashion platform.
Richemont secured a minority interest of around 12pc to 13pc of Farfetch, as well as agreeing to use the platform for Richemont brands.
It is understood the deal valued Yoox Net-A-Porter at around one billion euros (£880 million), below previous estimates.
The Competition and Markets Authority said on today that it is now examining whether the deal amounts to a merger.
It said it will then therefore assess whether this deal "may lead to a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".
Government sent 'cabin boy' to answer questions on IMF, Labour MP claims
The Government was criticised for sending its "cabin boy" to answer questions on the IMF forecast, rather than a more senior minister.
The IMF has predicted the UK would be the only G7 nation to suffer a contraction in its economy this year.
Labour MP Barry Sheerman told the Commons: "Isn't it time the minister tells the truth to my constituents? Isn't the truth that not only have they hollowed out our defence capacity, this Government has hollowed out our economy."
Speaking to Treasury minister James Cartlidge on the sparely populated Government benches, Mr Sheerman added: "Would he also explain to my constituents why they have sent the cabin boy? The ship of shame over there, no crew there, no captain, no first mate, and they send the captain's cabin boy to answer questions on this most vital question of the moment."
Conservative former Cabinet minister Greg Clark called for a "clear industrial strategy so that investors can have a clear view of the Government's business policy, as countries like the US, Japan and South Korea are doing".
Mr Cartlidge replied: "He's absolutely right, whatever forecasts say, we have got a clear strategy for long term sustainable growth in this country."
Follow the political reaction in our live blog.
Wall Street mainly up as markets open
Wall Street has opened higher after wage growth data pointed to easing inflation ahead of the Federal Reserve's decision on interest rates.
The Dow Jones was up 0.2pc at the opening bell to 33,783.74, while the broad-based S&P 500 climbed 0.2pc to 4,026.64.
However, the tech-heavy Nasdaq Composite was down 1.7pc to 11,423.13.
US labour costs increased less than expected last quarter as wage growth slowed, suggesting that the central bank's aggressive approach to taming inflation has been taking hold.
The Fed will make its decision on rates on Wednesday evening, with traders betting on a 25-basis-point hike (bps) at the end of the its two-day meeting, and a terminal rate of 4.9pc in June.
Paterson scandal blamed as Britain slides down trust list
Britain has slipped down a global ranking of perceived public sector corruption in a year when the Government faced the Owen Paterson lobbying scandal and spent months without an ethics adviser.
Transparency International described public trust as "worryingly low" as the UK dropped seven places to rank 18th among 180 nations in the Corruption Perceptions Index.
It suffered the biggest slide among G7 countries as its score for perceived levels of public sector corruption fell to an historic low of 73, although still well above the global average of 43.
It comes days after Rishi Sunak sacked Conservative party chairman Nadhim Zahawi over his tax affairs.
The scandals in Britain during 2022, ranging from lobbying to ministerial misconduct, "highlighted woeful inadequacies in the country's political integrity systems," the Berlin-based watchdog said.
The report flagged the attempt by former prime minister Boris Johnson to overhaul standards to help Tory MP Owen Paterson evade a November 2021 ethics probe.
The report said the appointment in December of a new ethics adviser and changes to transparency rules for ministers were "steps in the right direction," but added more needs to be done.
Hungry consumers happy to pay more as McDonald's sales surge
Consumers are happy to pay more for their fast food after McDonald's revealed fourth-quarter sales exceeding expectations despite raising the price of its burgers and fries.
In July, the company announced it would put up the price of a cheeseburger in UK by a fifth to £1.19.
However, sales rose 12.6p in the final three months of last year, surpassing analyst estimates of about 8pc.
Despite this, McDonald's shares slipped 2.5pc in pre-market trading after the company's fourth-quarter operating margin and its projection for 2023 both fell short of analyst estimates.
Shares have risen 2.8pc so far this year, below the 4.6pc increase of the S&P 500 index.
Chief executive Chris Kempczinski said he expects "short-term inflationary pressures to continue in 2023".
Nonetheless, McDonald's is "highly confident" in a revamped operational plan that includes a greater focus on opening new locations, he said. Earlier this month, the company said it was trimming corporate jobs as part of the new strategy.
World at risk of financial crisis to rival Great Depression, warns 'Black Swan' hedge fund
An American hedge fund advised by the economic guru known as "The Black Swan" has warned a debt timebomb risks pushing the global economy into a downturn rivalling the Great Depression.
Special correspondent Matt Oliver has the details:
Mark Spitznagel, chief investment officer of Miami-based Universa Investments, said levels of borrowing were so high following a decade of low interest rates that they now risked triggering a "contagious inferno" that could envelop the financial system.
"It is objectively the greatest tinderbox-timebomb in financial history – greater than the late 1920s, and likely with similar market consequences," the 51-year-old told his clients in a letter reported by Bloomberg.
Mr Spitznagel's firm is advised by Nassim Taleb, a Wall Street trader turned economics professor dubbed the Black Swan after his 2007 book of the same name presciently warned of failings in the banking system ahead of the global financial crisis.
Read how Universa has a record of issuing dire market predictions.
KPMG says audit fees will go up this year
KPMG expects to increase its audit fees this year as the Big Four accounting firm looks to offset higher costs from regulatory requirements and operating expenses.
UK chief executive Jon Holt made the comments as the business published its annual results, showing revenues increased 12pc to £2.7bn in the year to September.
He told Bloomberg: "The sector is facing a number of upward cost drivers, from new audit and accounting standards to inflationary pressures."
Clients will likely bristle at the remarks. Chief financial officers at some of the UK's largest companies have already complained to the Big Four about the high costs of audits, arguing they should not have to pick up the tab for pay rises handed out to accountants.
KPMG UK paid UK partners £717,000 last year, a rise of about 4pc as the firm sold more consulting and deal advice. Still, the firm's 786 UK partners made less than rivals at Deloitte, PwC and EY.
Its revenue gains were fueled by a 24pc increase in deal advisory and a 22pc rise in consulting. Pre-tax profit rose 3pc to £449m, excluding disposals.
Adani pulls off $2.5bn share sale after fraud allegations
Indian billionaire Gautam Adani pulled off a closely watched $2.5bn equity sale for his flagship company, earning some reprieve after his empire was rocked by allegations of fraud by short seller Hindenburg Research.
The offering by Adani Enterprises was India's largest follow-on share sale, and was fully subscribed on the final day, aided by a last minute surge in demand.
While its completion is a victory for MrAdani after Hindenburg's allegations put the offering in doubt, that is unlikely to fully dispel investor concerns about the conglomerate's corporate governance.
Uptake from retail investors was notably weak, with a large portion of the offering taken up by institutions and existing shareholders including Abu Dhabi's International Holding Co.
Market values of Mr Adani's listed companies plunged after Hindenburg alleged the conglomerate used a web of companies in tax havens to inflate revenue and stock prices. Adani has denied the short seller's allegations and threatened legal action against the firm.
Paperchase stores to continue trading 'in the short term'
Paperchase has said its stores will continue to trade in the immediate future following the sale of its brand and intellectual property to Tesco.
The company has more than 100 stores and employs about 820 people.
Kirstie Provan and Gary Shankland, of Begbies Traynor, which is handling the administration, said:
The joint administrators can confirm that the intellectual property and brand name owned by the company has been sold to Tesco.
Unfortunately, despite a comprehensive sales process, no viable offers were received for the company, or its business and assets, on a going concern basis.
However, this sale reflects the interest in the well-known and established brand and will enable the brand to continue in Tesco stores across the UK.
The joint administrators will continue trading the company's operations in the short term with all stores remaining open and trading as normal.
The joint administrators will continue to monitor trading in the stores and further updates will be provided in due course.
BBC journalists to vote on strike action
BBC journalists could go on strike in March over the corporation's latest proposals to share some local radio programmes across its network of stations.
Members of the NUJ will be balloted on whether they want to walk out after a compromise put forward by the BBC was rejected by 70pc of members.
Under the BBC's original proposals, local radio stations would share programmes with neighbouring stations after 2pm on weekdays and at weekends.
Some news bulletins would also be pre-recorded. The plans result in a loss of posts and journalists having to re-apply for their own jobs.
Paul Siegert, NUJ national broadcasting organiser, said:
There is real anger about the BBC's plans for local radio which will result in 5.7m people getting a much-reduced service.
It will completely undermine the BBC's public service remit and take the 'local' out of local radio.
We expect there to be an overwhelming vote for action. The union has made it plain that it supports the BBC’s expansion of digital, but believes it can be done without destroying local radio.
In a separate dispute, BBC members in Northern Ireland have voted 95pc in favour of industrial action over the corporation's proposal to close 36 posts across the province and end the BBC Radio Foyle Breakfast Show.
Pfizer reveals weaker outlook for 2023
Covid vaccine booster shots and treatments for the virus helped push Pfizer to a better-than-expected final quarter of 2022.
However, the drugmaker also revealed a 2023 forecast that starts off well below Wall Street estimates.
In the recently completed fourth quarter, Pfizer booked nearly half of its $24.3bn (£19.7bn) in revenue from its top-selling Covid vaccine Comirnaty and another $1.8bn (£1.5bn) from the treatment Paxlovid.
Overall, the drugmaker posted adjusted earnings of $1.14 per share.
Analysts forecast fourth-quarter earnings of $1.05 per share on $24.4bn in revenue, according to FactSet.
For the new year, Pfizer expects adjusted earnings to range between $3.25 and $3.45 per share.
Tesco buys Paperchase brand but 800 jobs still at risk
Tesco has confirmed it has bought the Paperchase brand and its intellectual property - but the stationery chain's stores and 800 staff are not part of the deal.
The announcement comes an hour after it was confirmed that the company had fallen into administration.
Tesco has not bought any the company's more than 100 stores, or any products, as part of the sale.
Jan Marchant, managing director of home and clothing at Tesco said:
Paperchase is a well-loved brand by so many, and we're proud to bring it to Tesco stores across the UK.
We have been building out plans to bring more brands and inspiration to the ranges we currently offer, and this will help us to take those plans further.
We look forward to sharing more with our customers in due course.
US markets expected to open lower
Analysts think markets on Wall Street will take a downward turn at the opening bell later as investors weigh up whether the US Federal Reserve will slow down its pace of monetary tightening.
Futures contracts on the S&P 500 and Nasdaq 100 fluctuated before turning lower after a torrid session on Wall Street on Monday that dragged the Nasdaq to its worst day since Dec 22.
Chipmakers led declines in premarket trading, with NXP Semiconductors dropping more than 4pc after a disappointing first-quarter forecast.
Signs of earnings pressure are complicating the picture for investors hopeful that the Fed will ease off on its aggressive rate-hike cycle.
Willem Sels, chief investment officer at HSBC Private Bank, said:
The prospect of a stabilisation of interest rates at 5pc after March is shifting the focus from the rate side to the growth side.
Mixed earnings will probably continue to lead to some volatility in coming weeks, so we are neutral on developed-market equities for now.
Spotify's paying subscribers surpasses 200m
The number of paying subscribers on Spotify has topped 200m helping the music streaming giant boost revenues by 18pc.
The Stockholm-based company said the number for its fourth quarter was a 10m increase on the previous three months and also revealed ad-supported revenue climbed 14pc even as brands slow down their spending in anticipation of a recession.
Its sales stood at €3.2bn (£2.8bn) although losses widened to €231m (£203m).
Spotify sacked 6pc of its staff last week - around 600 people - joining the wave of tech businesses laying off staff following a hiring spree during the pandemic.
The company is grappling with how to boost profitability in a business where 70pc of revenues goes to music labels in royalties.
Shares rose 5pc in pre-market trading in New York.
Boeing to deliver the last 747
Boeing will bid farewell to the iconic 747 when it delivers the final plane to Atlas Air this afternoon, marking an end of an era when the first-ever "jumbo jet" ruled the skies.
Thousands of Boeing employees – including some of the so-called "Incredibles" who developed the jet in the 1960s – are expected to watch the last delivery of the historic plane, which brought air travel to the masses and represented an indelible slice of Americana.
Kim Smith, Boeing's vice president and general manager for the 747 and 767 program, said: "It's a very emotional experience, I know, for so many of the current team and so many that have lineage in the program over the many decades."
Known as the "Queen of the Skies," the 747 was the world's first twin-aisle jetliner, which Boeing designed and built in 28 months and Pan Am introduced in 1970.
Boeing's Everett, Washington, facility has been the 747's production site since the plane's conception. Built in 1967 to produce the mammoth jet, it remains the world's largest manufacturing plant according to Boeing.
Reeves says look at 'facts' after IMF prediction
Rachel Reeves said criticism that some of the IMF's past forecasts had proved to be incorrect did not take away from the "facts" about the UK economy's performance under successive Conservative administrations.
The shadow chancellor, asked by broadcasters in Westminster whether the IMF forecast could be trusted, said:
If we don't want to look at the predictions, let's look at the facts of what has happened in terms of UK growth.
The average growth in the UK economy has been just two-thirds under the Conservatives than it was under the last Labour government. And the UK is now the only major economy to be smaller today than it was before the Covid pandemic hit.
That isn't a prediction about what is to come, that is the state of the UK economy after 13 years of Conservative governments.
Ms Reeves said Labour would look to "seize some of the opportunities" in the green sector as well as "fixing some of the holes in the patchwork Brexit deal", if it was in power in a bid to get "our economy firing on all cylinders".
Paperchase collapses into administration
Paperchase has appointed administrators after failing to secure a rescue deal.
The stationery chain said "no viable offers" were receivef for the business as a going concern.
However, administrators said there had been "significant interest in the Paperchase brand and attendant intellectual property".
It follows reports that Tesco is keen on securing a deal for the Paperchase brand but not its stores, putting 800 jobs at risk.
Administrators Kirstie Provan and Gary Shankland of Begbies Traynor said:
The joint administrators will continue trading the company's operations in the short term, with all stores remaining open and trading as normal.
At present, the company will continue to honour gift cards, but would strongly urge customers to redeem these as soon as possible. Redemption will not be possible after two weeks.
The joint administrators will continue to monitor trading in the stores and further updates will be provided in due course.
Oil's monthly gains wiped out
Oil has nearly wiped out its gains since the start of the year and could be headed for a monthly loss as traders await more clues on the outlook from a series of sources.
Brent crude has fallen 1.3pc today to below $84 a barrel as traders wait to see what will happen with Chinese energy demand and what interest rates will look like after a policy decision from the US Federal Reserve on Wednesday evening.
US-produced West Texas Intermediate fell 1.5pc below $77 a barrel, with investors also keen to know the latest guidance from cautious Opec+ cartel of producers.
China's reopening after abandoning its harsh zero-Covid policy has boosted optimism that consumption will pick up as mobility improves. Still, oil's latest move lower came despite data on Tuesday showing activity in Asia’s biggest economy has rebounded sharply.
While the Federal Reserve is expected to raise interest rates again in its first meeting of 2023 on Wednesday, a smaller hike of 25 basis points is widely expected. That, and comments from Chair Jerome Powell, may signal that the US central bank's monetary tightening cycle could be close to complete.
European gas prices surge as temperature set to drop
European natural gas has jumped as forecasts showed the weather turning cooler than previously estimated next week.
Benchmark Dutch futures for March jumped as much as 11pc and are now trading around €59 per megawatt hour.
Some models estimate temperatures will drop again after a warm spell, potentially boosting gas usage in heating and forcing more withdrawals from fuller-than-normal storage sites.
Maxar Technologies sees cooler conditions in northern and central Europe next week, but still close to average levels for the time of year.
It comes after the fall in gas prices helped the eurozone economy to a surprise growth of 0.1pc in the final quarter of 2022.
However, natural gas prices are still three times higher than before Russia started massing troops on Ukraine's border a year ago, after rising to a record high of 18 times that level in August.
ING Groep expects prices to average in the region of €60 to €65 over the first half of 2023, increasing to as much as €80 in the second half. While that is higher than current levels, it is far below last year when gas rose to record highs.
Mortgage approvals slump as borrowing costs surge
Mortgage approvals fell to their lowest level in two and a half years as higher borrowing costs took their toll on the property market.
Banks and building societies authorized 35,612 home loans in December, the fewest since May 2020 when the housing market was shut due to the coronavirus pandemic, figures from the Bank of England show.
Weakening demand is feeding through to house prices, which are on course to fall this year after booming during the pandemic. Nationwide Building Society is predicting a 5pc drop, while Halifax thinks 8pc.
An unprecedented series of interest-rate increases from the Bank of England has bumped up the cost of mortgages. The effective rate on new loans rose 32 basis points to 3.67pc last month.
Unsecured credit such as personal loans and credit-card debt rose just £500m after hitting a five-month high of £1.5bn in November. Consumers paid off half a billion pounds of credit-card debt over the Christmas period.
Eurozone avoids recession
The eurozone has avoided a recession after unexpectedly growing at the end of 2022.
The region managed 0.1pc growth in the fourth quarter despite double-digit inflation and the war in Ukraine.
Economists had expected a 0.1pc contraction.
#Eurozone may dodge #recession after surprise growth: Eurozone GDP grew 0.1% QoQ in 4Q, defying economist estimates for a contraction of 0.1%. While German & Italian GDP shrank, France and Spain recorded expansion. (via BBG) pic.twitter.com/vAdkdV94yN
— Holger Zschaepitz (@Schuldensuehner) January 31, 2023
Pound falls after IMF warning
The pound has slid against the dollar after the IMF said the UK is on course to be the only major economy to shrink this year.
Sterling has lost 0.2pc against the greenback taking it closer towards a valuation of $1.23.
It comes as Britain is expected to be the only G7 nation to suffer a contraction in the size of its economy - with even Russia forecast to see gross domestic product grow 0.3pc.
The IMF did not downgrade any other G7 economy this year as it raised its global growth forecast from 2.7pc to a still sluggish 2.9pc.
Gusbourne buys more land as English fizz sales surge
English sparkling wine maker Gusbourne has bought another 55 hectares of land, it has emerged, as sales of homegrown fizz continue to surge.
Gusbourne, based in Kent, now has 196 hectares of freehold land and expects that most of its new acquisitions through 2022 will be planted with new vineyards over the coming years.
In a trading update today, it said revenues for the year are expected to be up 48pc to about £6.2m.
Wine merchant Majestic revealed this month that sales of English sparkling wine surged over Christmas amid fears of Champagne shortages.
Gusbourne shares have risen 1.5pc today.
Paperchase shops 'not part of Tesco deal'
Paperchase shops will not be part of the rescue deal involving Tesco, according to Sky News's Mark Kleinman, who expects an official announcement on the stationery chain's future today:
Revealed: A deal for Tesco to buy the Paperchase brand is likely to be confirmed later following the high street stationery chain’s second skirmish with insolvency in under three years. As I understand it, the grocer won’t take on any Paperchase shops. https://t.co/zqHaGsgaTW
— Mark Kleinman (@MarkKleinmanSky) January 31, 2023
Job cuts warning at British American Tobacco
Lucky Strike and Camel cigarette maker British American Tobacco (BAT) has warned of possible job losses as it revealed an overhaul of its regional structure and business divisions.
The group said the plans will see the number of regions cut from four to three - merging the European business with the Americas division - while it will reduce its business units from 16 to 12, with changes taking effect from April 1.
It is currently consulting with affected staff and said there may be job losses as a result of the restructure but declined to give more details.
BAT, which employs more than 52,000 people worldwide, said the consultation is taking place with staff at various levels across affected divisions, including senior management.
The firm said its three new regions will be: USA, where it has the Reynolds American business; Americas and Europe; and Asia Pacific, Middle East and Africa.
Its European business is currently split out as a fourth region.
Tesco 'in talks to buy Paperchase'
Tesco is reportedly in advanced talks to buy the Paperchase brand and other intellectual property assets out of administration later today, according to Sky News.
Exclusive: Tesco is in advanced talks to buy the Paperchase brand and other intellectual property assets out of administration later today, in a deal that will cast doubt over the future of hundreds of employees and scores of high street shops. Full story on @skynews shortly.
— Mark Kleinman (@MarkKleinmanSky) January 31, 2023
Airlines must 'use or lose' UK airport slots, Harper to announce
Airlines operating at British airports will have to use 80pc of their take-off and landing slots in order to keep them, the Transport Secretary will say today, as he brings the industry back in line with pre-pandemic rules.
The so-called "use it or lose it" 80:20 rule, which was waived when the pandemic led to a drop in passenger numbers, will return from March 26 as demand for international travel soars, Mark Harper will say.
The Transport Secretary is due to say slots rules will return to normal this summer during a speech at the Airport Operators' Association's annual conference.
He will say: "Now we're able to start a new, more optimistic, conversation about the future."
Airport slots are limited and highly valuable, providing airlines permission to use airport infrastructure like runways and terminals at a specific date and time.
A safety net for airlines introduced during the pandemic will remain in place, allowing carriers such as British Airways, Easyjet and Ryanair, to hand back 5pc of their slots before the start of the season to help avoid last-minute cancellations.
Tesco overhaul to hit 2,100 jobs
Tesco said it will shake-up its shop management roles and shut remaining counters and hot delis in an overhaul which will impact around 2,100 jobs.
The UK's largest supermarket chain said the shake-up will also introduce around 1,800 new shift leader roles in stores, leading operational duties on the shop floor.
It also said it will close its remaining counters and hot delis at stores from February 26, having previously removed counters from the majority of shops.
Tesco said all affected workers will be offered alternative roles. It did not say how many staff work on counters and delis.
The retailer also said 350 workers will be impacted by a series of localised changes, such as the closure of eight pharmacies and reduced hours at some in-store post offices.
Markets fall as IMF predicts UK economy will shrink
London's main stock indexes slipped on Tuesday as investors braced for a series of interest rate rises, while the IMF's warning about the UK economy added to the downbeat mood.
The blue-chip FTSE 100 index has fallen 0.5pc to 7,745.42 with economically sensitive energy, banks and mining stocks leading losses.
Britain is the only G7 nation to have suffered a cut to its 2023 economic growth outlook in International Monetary Fund forecasts published today, adding to pressure on Chancellor Jeremy Hunt to come up with a growth plan.
The economy looks set to shrink by 0.6pc this year, a sharp downgrade from previously expected growth of 0.3pc in the IMF's October forecast.
Meanwhile, traders are betting on the Bank of England to increase interest rates for a tenth consecutive time on Thursday.
The midcap FTSE 250 index slipped 0.3pc to 19,870.76.
Limiting the index's losses, Pets At Home jumped 10.4pc after the company raised its full-year profit forecast, boosted by robust demand for its pet food, litter and accessories during the Christmas period.
On the FTSE 100, Johnson Matthey rose 1.8pc after the chemicals firm said it had entered into a long-term supply and joint development agreement with Plug Power for hydrogen technology-related products.
Household grocery bills jump by £788 as food prices hit record high
Shoppers are facing the sharpest increase in their grocery bills on record, after signs that food price inflation had passed its peak vanished in January.
Retail editor Hannah Boland has the details:
Grocery prices were up 16.7pc year-on-year in January, in the largest rise since Kantar started monitoring food inflation in 2008.
That included a "staggering" 2.3 percentage point jump in the four weeks to January 22.
The previous high had been in October 2022, with inflation appearing to ease in November and December.
However, analysts at Kantar said "that small sign of relief for consumers has been short-lived" in January, as supermarkets upped their prices once again after the Christmas period.
Milk, eggs and dog food were among the items where prices rose the most, according to the Kantar analysis.
Samsung profits hit eight-year low as microchip demand wanes
Samsung profits plummeted nearly 70pc in the last quarter to an eight year low as a weak global economy depressed demand for its consumer electronics products and computer memory chips.
The company's operating profit of 4.3 trillion won (£2.8bn) for the three months to December was its lowest since the third quarter of 2014. Revenue fell 8pc to 70.46 trillion won (£46bn).
The South Korean tech giant thrived through the first two years of the pandemic thanks to its dual strengths in parts and finished products.
It benefited from robust demand for PCs, TVs and chips powering computer servers as the virus forced millions to work at home.
But it has been harder for the company to weather the economic shock unleashed by Russia's war on Ukraine, which disrupted industrial supply chains and left major economies grappling with higher inflation and slower growth.
Samsung also expects demand for its smartphones and TVs to fall further in the first quarter amid the global economic downturn.
Samsung's share price fell 3.5pc on Tuesday.
'Loss of people from our labour force' behind IMF forecast, say economists
The shortage of workers being experienced by companies is part of the reason behind forecasts from the IMF that the UK economy will shrink this year, according to economists.
Paul Johnson, director of the Institute for Fiscal Studies, told BBC Radio 4's Today programme:
There are a few things affecting us more than other countries. One in particular is the loss of people from our labour force.
We have heard a lot about the fact we have lost half a million-plus people from work - people retiring early, immigrants not coming in from the European Union and so on.
That is not affecting any other country in Europe. The United States is the only other country remotely like that - so that is a particular challenge for us.
Higher interest rates are feeding very quickly through to mortgages in the UK and we've got the continuing challenges from Brexit.
Markets fall after poor UK growth forecast from IMF
The markets have lost ground after the IMF's prediction that the UK will be the only major economy to shrink this year.
The FTSE 100 was down 0.3pc to 7,761.13 while the FTSE 250 sunk 0.8pc to 19,880.76.
Wickes boosted by sales of loft insulation and draught excluders
DIY chain and builders' merchants Wickes has seen a boost to trade as households rush to buy energy-saving products to help cut soaring power bills over the winter months.
The group said falling DIY sales stabilised in the final three months of the year, helped by strong sales of ranges such as loft insulation and draught excluders.
Wickes saw overall core like-for-like sales lift 5.2pc in an ongoing improvement since the summer, with trade sales performing strongly, while total group sales lifted 11.5pc.
It said that while DIY sales remain below last year, the performance improved towards the end of the fourth quarter.
Wickes added that material price rises has eased back further thanks to falls in the cost of timber, with inflation at 9% in the three months to the end of December.
It said wholesale energy prices were falling, but that it still expects its gas and electricity bill to be around £10 million higher in 2023, including costs from switching to fully renewable energy.
French economy unexpectedly grows
The French economy dodged a contraction in the final quarter of 2022 despite inflation forcing households to reduce spending.
France's gross domestic product (GDP) grew 2.6pc for the year, data shows, better than projections of 2.5pc for the year.
Analysts had also predicted a contraction of 0.2pc in the fourth quarter, when in fact the French economy grew by 0.1pc, according to data released by the government's INSEE statistics office.
The momentum from a strong rebound at the end of 2021, as the country recovered from the downturn caused by the Covid pandemic, helped at the start of 2022, before rising inflation and the fallout from the Ukraine war began to put the brakes on growth.
Foreign trade contributed positively as imports fell by 1.9pc, outweighing a 0.3pc dip in exports.
However, household spending dropped by 0.9pc by in the final three months of the year.
🇩🇪 German retail sales collapsed by 5.3% MoM in December.
🇫🇷 French household consumption declined 0.9% QoQ in Q4.
🇪🇸 Spanish household consumption declined 1.8% QoQ in Q4.
Looks like the European consumer succumbed to the income shock.
— Frederik Ducrozet (@fwred) January 31, 2023
Uncertainty sparked by mini-Budget still weighing on UK, says IFS
Liz Truss's mini-Budget was, at least indirectly, part of the reason behind the IMF's predictions of poor growth in Britain, according to the director of the Institute for Fiscal Studies.
Paul Johnson told BBC Radio 4's Today programme:
Most of the immediate effects of that have gone.
We're not so different from other countries now in terms of the interest we are paying on debts and what has happened to the exchange rate.
But there are long-term consequences of political instability, particularly in terms of international companies being happy to invest, and the sort of risk premium they might take on the UK.
So whilst most of the consequences of that mini-Budget have dissipated, the sharpness of the increase in interest rates that that created and the uncertainty that I think it has created will continue to weigh on the UK in ways that aren't immediately visible in the headline figures.
Pets at Home predicts profit boost
Pets at Home has raised its profit guidance after record sales over the latest quarter.
The pet products and vet group revealed that group revenues lifted by 8.8pc to £347.5m over the 12 weeks to January 5, compared with the same period last year.
The company said "robust trading momentum has continued" into the fourth quarter of the financial year.
As a result, it said pre-tax profit for the year is due to be ahead of previous guidance of £131m.
Britain 'outperforming' IMF predictions, says minister
Government minister Richard Holden insisted the UK can "outperform" the International Monetary Fund (IMF) prediction that Britain will have the worst performing economy of all advanced nations. He told GB News:
What we've seen actually over the last couple of years, this isn't a forecast, this is what actually happened, both the IMF and the OECD said the UK would grow more slowly than other countries, well let's look at what actually happened.
Actually we've grown faster than those countries, we've grown faster than Germany since 2016, we've grown faster than France, Italy, and Japan since 2010. We're actually outperforming these predictions.
I'm not saying there aren't headwinds, internationally, there certainly are, but I think Britain can outperform just like we have done and beat these forecasts just like we have done over the last couple of years.
Brexit 'costing UK economy £100bn a year'
Brexit is costing the UK's economy £100bn a year as the way the split from the EU has been implemented leaves companies struggling to attract investment and hire workers.
On the third anniversary of Britain leaving the bloc, the nation’s economy is 4pc smaller than it might have been according to analysis by Bloomberg Economics.
Business investment in the UK has grown 19pc less than the average across G7 economies, it showed.
Economists Ana Andrade and Dan Hanson said: "Did the UK commit an act of economic self-harm when it voted to leave the EU in 2016? The evidence so far still suggests it did.
"The main takeaway is that the rupture from the single market may have impacted the British economy faster than we, or most other forecasters, expected."
The data comes as the IMF downgraded its 2023 UK growth forecast by more than any other G7 nation.
However, cutting ties with the EU has allowed Britain to create freeports to spur trade and reform financial services rules to the benefit of banks in the City of London.
Rishi Sunak said: "We’ve made huge strides in harnessing the freedoms unlocked by Brexit to tackle generational challenges.
"Whether leading Europe’s fastest vaccine rollout, striking trade deals with over 70 countries or taking back control of our borders, we’ve forged a path as an independent nation with confidence."
Ms Andrade and Mr Hanson estimate that there are 370,000 fewer EU workers in employment in the UK than might have been the case had Britain stayed in the single market, a figure only partially offset by the arrival of non-EU citizens. They wrote:
Scarcity of labour adds to inflationary pressure in the short-term and constrains potential growth further out.
That's not good news for an economy facing bleak long-term prospects, with trend growth of a little over 1pc.
When it comes to trade, the picture is slightly less negative, with the economists concluding that Brexit does not seem to be leaving a clear mark. Ms Andrade and Mr Hanson wrote:
If for a while it looked like the barriers imposed with the EU in 2021 were driving a wedge between the UK and the G7's trade performance, that gap no longer looks as significant.
Still, trade data has been subject methodological revisions, potentially clouding the comparison. Over the longer term, we would expect trade to bear the brunt of the impact of leaving the single market.
It has been a morning of brutal economic statistics for Britain on the third anniversary of Brexit.
The UK is on course to be the only major economy to shrink this year owing to Jeremy Hunt's tax raid and higher borrowing costs, according to the International Monetary Fund.
Meanwhile, analysis by Bloomberg Economics shows leaving the bloc is costing the UK economy £100bn a year amid weakening business investment and companies struggling to hire workers.
5 things to start your day
1) Hunt’s tax raid means UK will be only major economy to shrink this year, says IMF | Fund blames prospect of deeper recession on ‘tighter fiscal and monetary policies’
2) Musk to take on PayPal as Twitter prepares to launch online payments. Billionaire is going head to head with his old company PayPal as Twitter gears up to become an online payments business.
3) Britain faces subsidy war with Brussels as it relaxes tax credits for carmakers. Fears prompt calls for Hunt to unveil measures ensuring survival of UK car industry.
4) Pay-as-you-go RAF training jets could cut costs for MOD. Contractor explores plans to rent out aircraft used to train fighter pilots.
5) ‘Virtue signalling’ Unilever goes back to basics. Critics claim the consumer goods giant has forgotten its real purpose – to make money.
What happened overnight
Asian shares mostly fell in muted trading as investors awaited decisions on interest rates and earnings reports from around the world. As well as awaiting the US Federal Reserve's looming decision on interest rates, traders were watching for indicators on the Chinese economy, the region's key engine for growth.
Tokyo shares gave up early gains to close lower, with traders awaiting economic events worldwide including key central bank decisions.
The benchmark Nikkei 225 index lost 0.4pc to end at 27,327.11, while the broader Topix index fell 0.4pc to 1,975.27.
Australia's S&P/ASX 200, meanwhile, edged up nearly 0.1pc to 7,487.10.
The Aussie dollar fell 0.7pc by Tuesday –but at $0.7036 it is up about 3.2pc for the month so far. The kiwi, last at $0.6474, is up more than 1.5pc for January. The US dollar index is down 1.3pc for January so far and held at 102.28 on Tuesday. The Japanese yen fell 0.4pc overnight but was steady at 130.26.
Also in Asia, the selloff in Adani Group shares has also continued as the region's richest man seeks to complete a $2.5bn equity sale by its flagship firm amid the turmoil triggered by short-seller Hindenburg Research.
Adani Total Gas plunged by 10pc daily limit to lead losses in most of the group’s stocks. Flagship Adani Enterprises was up about 2pc in early trading in Mumbai, but remained below the floor price set for its follow-on share sale.