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| UK inflation hits lowest level since March 2017 as clothing and petrol prices fall – business live | UK inflation hits lowest level since March 2017 as clothing and petrol prices fall – business live |
| (about 1 hour later) | |
| European stock markets have closed higher tonight. | |
| The FTSE 100 gained 64 points, or almost 1%, to 6,765, recovering from its lowest close in two years on Tuesday. | |
| GlaxoSmithKline led the rally, ending the session almost 4% higher after announcing its consumer healthcare tie-up with Pfizer. | |
| Tim Gamble, Global Head of Pharma Consulting at the Economist Intelligence Unit, says: | |
| What this deal means is a concerted pivot towards innovation and decoupling of the consumer healthcare business. The hook up with 23andMe, appointment of Hal Barron to R&D gives insight into the innovation strategy pursued by Chief Executive Emma Walmsey. | |
| This places greater strain on the Pharma division - but it’s external regulatory constraints that may yet place the drag on Walmsey’s ambitions.” | |
| GSK plans break-up after £10bn Pfizer deal | |
| Italy was the stand-out performer today, gaining 1.6% after reaching a compromise with the European commission over its 2019 budget. | |
| Italy avoids EU sanctions after reaching 2019 budget agreement | |
| The German DAX gained 0.4%, while France’s CAC rose by 0.6%. | |
| With just over an hour to go until the US interest rate decision, stocks are up on Wall Street too. | |
| The Dow Jones industrial average is up 275 points at 23,950, a gain of 1.1%. | |
| But that could unravel if the Fed is more hawkish than expected tonight.... | |
| Back in London, cab hire company Uber has lost another legal attempt to prevent its UK drivers being classed as workers, rater than self-employed. | Back in London, cab hire company Uber has lost another legal attempt to prevent its UK drivers being classed as workers, rater than self-employed. |
| The Court of Appeal has has upheld an earlier ruling, in 2016, that drivers were effectively employed by Uber, and thus entitled to holiday pay and the minimum wage. | The Court of Appeal has has upheld an earlier ruling, in 2016, that drivers were effectively employed by Uber, and thus entitled to holiday pay and the minimum wage. |
| TUC General Secretary Frances O’Grady says it’s an important decision: | TUC General Secretary Frances O’Grady says it’s an important decision: |
| “No company is above the law. Uber must play by the rules and treat its staff properly. | “No company is above the law. Uber must play by the rules and treat its staff properly. |
| “Today’s ruling should be a warning to other gig economy employers. If you play fast and loose with workers’ rights, unions will expose you and hold you to account. | “Today’s ruling should be a warning to other gig economy employers. If you play fast and loose with workers’ rights, unions will expose you and hold you to account. |
| Jonathan Chamberlain, partner at law firm Gowling WLG, says other companies should take note: | Jonathan Chamberlain, partner at law firm Gowling WLG, says other companies should take note: |
| Yet another court confirms that the more a brand seeks to control the activities of the people that deliver that brand’s services to the public, the less likely those people are to be self-employed. | Yet another court confirms that the more a brand seeks to control the activities of the people that deliver that brand’s services to the public, the less likely those people are to be self-employed. |
| The law will probably always remain uncertain in this area, despite the governments promise of reform, but the direction of travel is clear. | The law will probably always remain uncertain in this area, despite the governments promise of reform, but the direction of travel is clear. |
| I expect the Supreme Court to uphold this judgement but we shall see.” | I expect the Supreme Court to uphold this judgement but we shall see.” |
| Wall Street is open, but traders are keeping their powder dry, ahead of the US interest rate decision.... | Wall Street is open, but traders are keeping their powder dry, ahead of the US interest rate decision.... |
| U.S. stocks open largely unchanged ahead of today's Fed decision https://t.co/tJEO0jbC02 pic.twitter.com/Pg8jGyvmoX | U.S. stocks open largely unchanged ahead of today's Fed decision https://t.co/tJEO0jbC02 pic.twitter.com/Pg8jGyvmoX |
| A quick recap. | A quick recap. |
| UK inflation has fallen to its lowest level in 20 months. Consumer prices rose by 2.3% in the year to November, thanks to cheaper petrol and clothes. | UK inflation has fallen to its lowest level in 20 months. Consumer prices rose by 2.3% in the year to November, thanks to cheaper petrol and clothes. |
| Economists believe that inflation will keep slowing in 2019, helping to keep real wages in positive territory. | Economists believe that inflation will keep slowing in 2019, helping to keep real wages in positive territory. |
| UK house price inflation has also slowed, to its lowest level in over five years. Price in London fell by 1.7%, as Brexit anxiety weighs on demand. | UK house price inflation has also slowed, to its lowest level in over five years. Price in London fell by 1.7%, as Brexit anxiety weighs on demand. |
| The Italian stock market is surging after Rome and the EU reached agreement over its budget plans for next year. | The Italian stock market is surging after Rome and the EU reached agreement over its budget plans for next year. |
| Investors are nervously awaiting the Federal Reserve’s interest rate decision, at 7pm GMT. The Fed is likely to raise borrowing costs, but could also lower its forecasts for future rate hikes. | Investors are nervously awaiting the Federal Reserve’s interest rate decision, at 7pm GMT. The Fed is likely to raise borrowing costs, but could also lower its forecasts for future rate hikes. |
| Craig Erlam of trading firm OANDA says the Fed could surprise the markets by holding borrowing costs -- something which president Trump has been demanding for months. | Craig Erlam of trading firm OANDA says the Fed could surprise the markets by holding borrowing costs -- something which president Trump has been demanding for months. |
| A dovish hike is widely expected today and increases next year reduced to one or two, although I wonder whether they may hold off and surprise the markets. I may not agree with Trump’s constant Fed bashing but he may have a point on this occasion. With the global economy facing lower growth in 2019, including the US, inflation in check and US stocks in correction territory, it may not be the best time to be raising rates. | A dovish hike is widely expected today and increases next year reduced to one or two, although I wonder whether they may hold off and surprise the markets. I may not agree with Trump’s constant Fed bashing but he may have a point on this occasion. With the global economy facing lower growth in 2019, including the US, inflation in check and US stocks in correction territory, it may not be the best time to be raising rates. |
| I don’t think anyone would blame the Fed for taking a break this month and lining up two or three next year, depending on how the economy performs. It may even provide comfort for investors and be the catalyst for a late Santa surge, bringing the year to an end on a more positive not. Of course, this will then naturally attract criticism that the central bank is bowing to pressure from the White House but being independent doesn’t always mean going against the wishes of Trump. | I don’t think anyone would blame the Fed for taking a break this month and lining up two or three next year, depending on how the economy performs. It may even provide comfort for investors and be the catalyst for a late Santa surge, bringing the year to an end on a more positive not. Of course, this will then naturally attract criticism that the central bank is bowing to pressure from the White House but being independent doesn’t always mean going against the wishes of Trump. |
| It’s official! The European Commission and Italy have reached an agreement over its 2019 budget. | It’s official! The European Commission and Italy have reached an agreement over its 2019 budget. |
| The peace deal avoids Rome being hauled an ‘excessive deficit procedure’ that could have led to an EU fine -- and potentially fuelled euroscepticism in Italy. | The peace deal avoids Rome being hauled an ‘excessive deficit procedure’ that could have led to an EU fine -- and potentially fuelled euroscepticism in Italy. |
| AFP has more details: | AFP has more details: |
| European Commission Vice President Valdis Dombrovskis said Wednesday that the “agreement is not ideal” but allows the Commission to avoid legal action against Italy “provided that the measures are fully implemented.” | European Commission Vice President Valdis Dombrovskis said Wednesday that the “agreement is not ideal” but allows the Commission to avoid legal action against Italy “provided that the measures are fully implemented.” |
| The threat of action is not rare in EU terms but it came amid growing tension between the Commission and Italy’s populist government, which had vowed to resist any pressure from Brussels. | The threat of action is not rare in EU terms but it came amid growing tension between the Commission and Italy’s populist government, which had vowed to resist any pressure from Brussels. |
| Dombrovskis said “the Italian government has come a long way” from the heated rhetoric of a few weeks ago. | Dombrovskis said “the Italian government has come a long way” from the heated rhetoric of a few weeks ago. |
| The early rally in Italian stocks is continuing -- the FTSE MIB is now up 1.8%, while the yield (or interest rate) on Italy’s 10-year government debt has plunged to 2.77%, down from 2.94% yesterday. | The early rally in Italian stocks is continuing -- the FTSE MIB is now up 1.8%, while the yield (or interest rate) on Italy’s 10-year government debt has plunged to 2.77%, down from 2.94% yesterday. |
| Here’s our news story on the slowdown in UK house price growth, and the dip in consumer price inflation. | Here’s our news story on the slowdown in UK house price growth, and the dip in consumer price inflation. |
| London property slump drags back UK house price growth | London property slump drags back UK house price growth |
| Britain’s factories have produced some Christmas cheer , reporting that orders have risen in December for the second month running. | Britain’s factories have produced some Christmas cheer , reporting that orders have risen in December for the second month running. |
| A pick-up in export demand helped to swell order books, according to the CBI. | A pick-up in export demand helped to swell order books, according to the CBI. |
| This kept its order book balance in positive territory (meaning more factories had higher orders rather than lower ones), although at +8 it was down on November’s +10 | This kept its order book balance in positive territory (meaning more factories had higher orders rather than lower ones), although at +8 it was down on November’s +10 |
| However, the sector is still anxious about Brexit. | However, the sector is still anxious about Brexit. |
| CBI economist Anna Leach explains: | CBI economist Anna Leach explains: |
| “The UK’s manufacturing sector enters the Christmas period with a small upswing, with output growth gathering further pace. The firming in exports orders is also particularly welcome. | “The UK’s manufacturing sector enters the Christmas period with a small upswing, with output growth gathering further pace. The firming in exports orders is also particularly welcome. |
| “But uncertainty over Brexit still casts a long shadow over this sector and the rest of the economy,” she said. | “But uncertainty over Brexit still casts a long shadow over this sector and the rest of the economy,” she said. |
| “Politicians must finally stop the endless infighting and come together to secure a workable solution, or we’re in danger of edging closer to a no-deal Brexit.” | “Politicians must finally stop the endless infighting and come together to secure a workable solution, or we’re in danger of edging closer to a no-deal Brexit.” |
| Here’s Dan Tomlinson from Resolution Foundation on the slowdown in UK house price growth: | Here’s Dan Tomlinson from Resolution Foundation on the slowdown in UK house price growth: |
| And house prices are falling ever further in Inner London: down by 2.9% compared to the same month a year ago. pic.twitter.com/yMRxO0CvsO | And house prices are falling ever further in Inner London: down by 2.9% compared to the same month a year ago. pic.twitter.com/yMRxO0CvsO |
| But but but...House prices in London are still up by 35% compared to 5 years ago.Affordability remains a big challenge - and will do for the foreseeable future. pic.twitter.com/KJsRxO7cbh | But but but...House prices in London are still up by 35% compared to 5 years ago.Affordability remains a big challenge - and will do for the foreseeable future. pic.twitter.com/KJsRxO7cbh |
| Alastair Neame, senior economist at the CEBR thinktank, also predicts that inflation will keep falling in the months ahead, as retailers fight for business. | Alastair Neame, senior economist at the CEBR thinktank, also predicts that inflation will keep falling in the months ahead, as retailers fight for business. |
| “Lower inflation is another welcome sign that household finances will continue to improve over the coming months, but low confidence and consumer indebtedness look set to keeping spending in check.“ | “Lower inflation is another welcome sign that household finances will continue to improve over the coming months, but low confidence and consumer indebtedness look set to keeping spending in check.“ |
| Today’s inflation report also shows that clothing prices have fallen by 0.8% in the last year -- the only thing that has actually got cheaper since November 2017. | Today’s inflation report also shows that clothing prices have fallen by 0.8% in the last year -- the only thing that has actually got cheaper since November 2017. |
| Business Today: sign up for a morning shot of financial news | Business Today: sign up for a morning shot of financial news |
| Tom Stevenson, investment director at Fidelity International, reckons Brexit angst is pulling inflation down, as retailers are forced to slash prices. | Tom Stevenson, investment director at Fidelity International, reckons Brexit angst is pulling inflation down, as retailers are forced to slash prices. |
| “Brexit uncertainty and flagging consumer confidence are showing up in increasingly soggy data, with inflation hitting lowered expectations this morning. Retailers are being forced into heavy discounting to persuade shoppers to open their wallets, offsetting the inflationary impact of the weaker pound. Clothing was a notable drag. | “Brexit uncertainty and flagging consumer confidence are showing up in increasingly soggy data, with inflation hitting lowered expectations this morning. Retailers are being forced into heavy discounting to persuade shoppers to open their wallets, offsetting the inflationary impact of the weaker pound. Clothing was a notable drag. |
| “However, it’s not all bad news as last week’s ONS earnings data showed that UK wage growth has risen to a healthy 3.3%. UK households are getting progressively better off. | “However, it’s not all bad news as last week’s ONS earnings data showed that UK wage growth has risen to a healthy 3.3%. UK households are getting progressively better off. |
| UK inflation is clearly on a “downward trend,” says Mike Jakeman, senior economist at PwC. | UK inflation is clearly on a “downward trend,” says Mike Jakeman, senior economist at PwC. |
| That’s a boost to workers, as earnings are expected to keep rising this year (although a disorderly Brexit could change that!). | That’s a boost to workers, as earnings are expected to keep rising this year (although a disorderly Brexit could change that!). |
| Jakeman says: | Jakeman says: |
| “Consumer price inflation slowed in November, to 2.3% year on year, from 2.4% in October. This was the slowest pace of increase for 20 months and was driven by the effect of lower global oil prices, which reduced the cost of a tank of fuel for British motorists by an average of 2.6 pence a litre in the past month. But even setting the aside the effects of volatile components such as fuel, it is clear that inflation is on a downward trend. | “Consumer price inflation slowed in November, to 2.3% year on year, from 2.4% in October. This was the slowest pace of increase for 20 months and was driven by the effect of lower global oil prices, which reduced the cost of a tank of fuel for British motorists by an average of 2.6 pence a litre in the past month. But even setting the aside the effects of volatile components such as fuel, it is clear that inflation is on a downward trend. |
| Both headline and core inflation measures have steadily slowed during 2018, as the effect of a weaker pound has diminished and economic growth has remained tepid. | Both headline and core inflation measures have steadily slowed during 2018, as the effect of a weaker pound has diminished and economic growth has remained tepid. |
| UK CPI #inflation ticks down slightly to 2.3% in November, in line with consensus forecasts, driven largely by falling fuel prices and recreational goods such as video games pic.twitter.com/vHM2n7C4Gt | UK CPI #inflation ticks down slightly to 2.3% in November, in line with consensus forecasts, driven largely by falling fuel prices and recreational goods such as video games pic.twitter.com/vHM2n7C4Gt |
| Good news for anyone looking to get onto the housing ladder: UK house price inflation has hit its lowest in over five years. | Good news for anyone looking to get onto the housing ladder: UK house price inflation has hit its lowest in over five years. |
| The price of the average UK property rose by 2.7% in the year to October, down from 3% in September. | The price of the average UK property rose by 2.7% in the year to October, down from 3% in September. |
| Once again, London property prices dragged the national average down -- dropping by 1.7% in the last 12 months. | Once again, London property prices dragged the national average down -- dropping by 1.7% in the last 12 months. |
| Average UK house price growth slowed to 2.7%y/y in October according to the latest ONS/Land Registry figures. London & the N. East both saw house price falls, while the N. West & N. Ireland are currently seeing the fastest rates of average house price inflation. pic.twitter.com/MBVyO5RiXk | Average UK house price growth slowed to 2.7%y/y in October according to the latest ONS/Land Registry figures. London & the N. East both saw house price falls, while the N. West & N. Ireland are currently seeing the fastest rates of average house price inflation. pic.twitter.com/MBVyO5RiXk |
| Jeremy Leaf, north London estate agent, fears that 2019 will be tough for the housing market too: | Jeremy Leaf, north London estate agent, fears that 2019 will be tough for the housing market too: |
| Overall, prospects for the new year are not good as all the recent Brexit and general economic uncertainty are not reflected in these statistics. | Overall, prospects for the new year are not good as all the recent Brexit and general economic uncertainty are not reflected in these statistics. |
| ‘On the ground, December is proving to be fairly typical - generally quiet but still, thankfully, a fair number of buyers who need to move checking out what they consider are the best value options.’ | ‘On the ground, December is proving to be fairly typical - generally quiet but still, thankfully, a fair number of buyers who need to move checking out what they consider are the best value options.’ |