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| UK inflation sticks at 2016 low, as London house prices keep falling – business live | UK inflation sticks at 2016 low, as London house prices keep falling – business live |
| (32 minutes later) | |
| Time for a recap | |
| Inflation across the UK is rising at the slowest rate in almost three years, in a boost to households. The Consumer Prices Index rose by 1.7% year-on-year in September, unchanged from August, and below the Bank of England’s target. | |
| This should mean that working age benefits rise next year, ending a four-year austerity freeze that has cost the lowest-earning families hundreds of pounds a year. | |
| The end of the Benefit Freeze? Benefits set to rise 1.7% with inflation in first increase in five years https://t.co/mSN4WbtGgg | |
| House price growth has picked up, despite fresh falls in London and the South East. | |
| The pound has briefly hit a new five-month high against the US dollar, as Brexit deal rumours fuel volatility. | |
| British Pound forming a "oooh, damn, no wait, feck, oh hang on, no it's nothing, or is it, Tony Connelly tweet, Arlene Foster denial" pattern today pic.twitter.com/GCSkUTCbte | |
| Worries about the American economy have risen, after US retail sales fell for the first time in seven months. | |
| The IMF has warned that corporate debt is a ticking timebomb, which could be detonated by the next downturn. | |
| Investors fear the US-China trade conflict could escalate soon, after the House of Representatives passed legislation to protect human rights in Hong Kong. | |
| Here’s some alarming lunchtime reading (or late-breakfast reading, if you’re in America): | Here’s some alarming lunchtime reading (or late-breakfast reading, if you’re in America): |
| Low interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said. | Low interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said. |
| In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago. | In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago. |
| The IMF noted that the stimulus provided by central banks in both developed and developing countries had the side-effect of encouraging firms to borrow more, even though many would have trouble paying it back. | The IMF noted that the stimulus provided by central banks in both developed and developing countries had the side-effect of encouraging firms to borrow more, even though many would have trouble paying it back. |
| Officials at the Washington-based organisation fear that the buildup of debt makes the global financial system highly vulnerable and are telling member states not to repeat the mistake of the early 2000s, when warning signs of a possible market meltdown were ignored... | Officials at the Washington-based organisation fear that the buildup of debt makes the global financial system highly vulnerable and are telling member states not to repeat the mistake of the early 2000s, when warning signs of a possible market meltdown were ignored... |
| More here: | More here: |
| Global economy faces $19tn corporate debt timebomb, warns IMF | Global economy faces $19tn corporate debt timebomb, warns IMF |
| Ouch. Over in America, retail sales have fallen for the first time in seven months, declining by 0.3% in September. | Ouch. Over in America, retail sales have fallen for the first time in seven months, declining by 0.3% in September. |
| This could be a sign that the trade war with China is causing more damage to the US economy, and that the slump in factory demand is spreading to consumers. | This could be a sign that the trade war with China is causing more damage to the US economy, and that the slump in factory demand is spreading to consumers. |
| CNBC has the details: | CNBC has the details: |
| The Commerce Department said on Wednesday retail sales dropped 0.3% last month as households cut back spending on motor vehicles, building materials, hobbies, and online purchases. That was the first and biggest drop since February. | The Commerce Department said on Wednesday retail sales dropped 0.3% last month as households cut back spending on motor vehicles, building materials, hobbies, and online purchases. That was the first and biggest drop since February. |
| Data for August was revised up to show retail sales gaining 0.6% instead of 0.4% as previously reported. Economists polled by Reuters had forecast retail sales would climb 0.3% in September | Data for August was revised up to show retail sales gaining 0.6% instead of 0.4% as previously reported. Economists polled by Reuters had forecast retail sales would climb 0.3% in September |
| US retail sales fell for first time in 7 months in Sept. Could raise fears manufacturing-led weakness spreading to broader #economy. Retail sales down 0.3% last month as households cut spending on motor vehicles, building materials, hobbies + online buys. https://t.co/TPoVcWtnny | US retail sales fell for first time in 7 months in Sept. Could raise fears manufacturing-led weakness spreading to broader #economy. Retail sales down 0.3% last month as households cut spending on motor vehicles, building materials, hobbies + online buys. https://t.co/TPoVcWtnny |
| Newsflash: Sterling has hit its highest level since May, on reports of progress in the Brexit negotiations...before quickly reversing! | Newsflash: Sterling has hit its highest level since May, on reports of progress in the Brexit negotiations...before quickly reversing! |
| The pound jumped over $1.28 after RTE’s Tony Connelly reported that the DUP party have accepted the latest proposals regarding consent. | The pound jumped over $1.28 after RTE’s Tony Connelly reported that the DUP party have accepted the latest proposals regarding consent. |
| That relates to plans for a customs border down the Irish Sea, and whether the Northern Ireland Assembly would have a veto. | That relates to plans for a customs border down the Irish Sea, and whether the Northern Ireland Assembly would have a veto. |
| BREAKING: two senior EU sources say the main stumbling block to a deal has been removed with the DUP accepting the latest proposals on consent... Optimism a deal can now be done... | BREAKING: two senior EU sources say the main stumbling block to a deal has been removed with the DUP accepting the latest proposals on consent... Optimism a deal can now be done... |
| This suggestion cheered the markets, sending sterling rocketing....until DUP leader Arlene Foster said it was nonsense..... | This suggestion cheered the markets, sending sterling rocketing....until DUP leader Arlene Foster said it was nonsense..... |
| 'EU sources' are talking nonsense. Discussions continue. Needs to be a sensible deal which unionists and nationalists can support. https://t.co/CpugVBfyBZ | 'EU sources' are talking nonsense. Discussions continue. Needs to be a sensible deal which unionists and nationalists can support. https://t.co/CpugVBfyBZ |
| ...sending the pound back down to earth: | ...sending the pound back down to earth: |
| Andy Sparrow’s Politics Live blog has everything you need to know: | Andy Sparrow’s Politics Live blog has everything you need to know: |
| Brexit: Irish PM hints extra EU summit might be needed because 'many issues' still to be resolved– live news | Brexit: Irish PM hints extra EU summit might be needed because 'many issues' still to be resolved– live news |
| Some good news: The husband and wife team who bought Thomas Cook’s network of high street travel agencies out of liquidation have offered jobs to nearly 2,000 of the company’s former workforce. | Some good news: The husband and wife team who bought Thomas Cook’s network of high street travel agencies out of liquidation have offered jobs to nearly 2,000 of the company’s former workforce. |
| John and Irene Hays are reopening 186 Thomas Cook sites, having beaten two US private equity companies in the race to buy the asset earlier this month. | John and Irene Hays are reopening 186 Thomas Cook sites, having beaten two US private equity companies in the race to buy the asset earlier this month. |
| Hays Travel owners offer jobs to 2,000 ex-Thomas Cook staff | Hays Travel owners offer jobs to 2,000 ex-Thomas Cook staff |
| Back to house prices.... and Lucy Pendleton of estate agents James Pendleton says that younger, first-time buyers are keeping the market moving: | Back to house prices.... and Lucy Pendleton of estate agents James Pendleton says that younger, first-time buyers are keeping the market moving: |
| “Growth may be almost static nationwide but it would be even worse were it not for the UK’s army of first-time buyers who are putting a floor under prices with their can-do attitude. | “Growth may be almost static nationwide but it would be even worse were it not for the UK’s army of first-time buyers who are putting a floor under prices with their can-do attitude. |
| “Despite a nuclear winter’s worth of uncertainty, it’s the younger generation who are still forging ahead as if nothing was wrong. They have the longest time horizon and we know that they have continued to transact in huge numbers lately. | “Despite a nuclear winter’s worth of uncertainty, it’s the younger generation who are still forging ahead as if nothing was wrong. They have the longest time horizon and we know that they have continued to transact in huge numbers lately. |
| Figures released yesterday showed that first-time buyers hit their highest level since the financial crisis in August, as low interest rates keep mortgage repayment costs down . | Figures released yesterday showed that first-time buyers hit their highest level since the financial crisis in August, as low interest rates keep mortgage repayment costs down . |
| My colleague Richard Partington points out that the government’s benefit freeze has cost poorer households nearly £600 a year each, on average: | My colleague Richard Partington points out that the government’s benefit freeze has cost poorer households nearly £600 a year each, on average: |
| Households squeezed by the government’s benefits freeze are set to receive the first cash increase in payments in five years, despite the austerity policy costing lower-income families £580 each year since 2015. | Households squeezed by the government’s benefits freeze are set to receive the first cash increase in payments in five years, despite the austerity policy costing lower-income families £580 each year since 2015. |
| According to the Resolution Foundation, working-age benefits – including child benefit, universal credit, non-disability tax credits and jobseeker’s allowance – are poised to rise with inflation by 1.7% next April. | According to the Resolution Foundation, working-age benefits – including child benefit, universal credit, non-disability tax credits and jobseeker’s allowance – are poised to rise with inflation by 1.7% next April. |
| It would mark the first cash rise since George Osborne launched the benefits freeze in 2015. However, the government has yet to confirm its spending, tax and benefits plans for the year ahead, when the freeze was due to end. | It would mark the first cash rise since George Osborne launched the benefits freeze in 2015. However, the government has yet to confirm its spending, tax and benefits plans for the year ahead, when the freeze was due to end. |
| The assessment comes after the Office for National Statistics (ONS) said inflation remained unchanged in September, with the consumer price index (CPI) holding steady at 1.7%. | The assessment comes after the Office for National Statistics (ONS) said inflation remained unchanged in September, with the consumer price index (CPI) holding steady at 1.7%. |
| The inflation reading for September is used by the government to uprate the value of benefits payments each year, as well as state pensions and business rates. | The inflation reading for September is used by the government to uprate the value of benefits payments each year, as well as state pensions and business rates. |
| According to the latest snapshot from the ONS, inflation stayed at 1.7% as sliding fuel prices were offset by increases in the cost of furniture, household appliances and the cost of booking a hotel room... | According to the latest snapshot from the ONS, inflation stayed at 1.7% as sliding fuel prices were offset by increases in the cost of furniture, household appliances and the cost of booking a hotel room... |
| More here: | More here: |
| Benefits to rise 1.7% with inflation in first increase in five years | Benefits to rise 1.7% with inflation in first increase in five years |
| The IFS points out that freezing benefits payments at 2015 levels has cut the welfare bill by several billion pounds a year. | The IFS points out that freezing benefits payments at 2015 levels has cut the welfare bill by several billion pounds a year. |
| That put struggling families in the front line of the austerity crunch: | That put struggling families in the front line of the austerity crunch: |
| The @ONS announced today that inflation is 1.7%, meaning that, on current plans, most working-age benefits will go up by that much in April. That will be the first increase since 2015, because of a 4-year benefits freeze. This has reduced benefits spending by £4.4bn per year. pic.twitter.com/82dvsIUY0u | The @ONS announced today that inflation is 1.7%, meaning that, on current plans, most working-age benefits will go up by that much in April. That will be the first increase since 2015, because of a 4-year benefits freeze. This has reduced benefits spending by £4.4bn per year. pic.twitter.com/82dvsIUY0u |
| And even if working benefits do rise by 1.7%, based on today’s inflation reading, that only matches the rising cost of living. | And even if working benefits do rise by 1.7%, based on today’s inflation reading, that only matches the rising cost of living. |
| In contrast, total wages rose by 4% in the year to July - which would be used for pensions uprating under the triple-lock system. | In contrast, total wages rose by 4% in the year to July - which would be used for pensions uprating under the triple-lock system. |
| Prices up 1.7% in September. Means benefits will rise by that amount in April. What this means: end of benefits freeze after a long 4yrs as they keep pace with pricesWhat this doesnt mean: working age benefits actually increasing (they'll increase at 1/2 rate of pensions/wages) https://t.co/mDI27NGUKa | Prices up 1.7% in September. Means benefits will rise by that amount in April. What this means: end of benefits freeze after a long 4yrs as they keep pace with pricesWhat this doesnt mean: working age benefits actually increasing (they'll increase at 1/2 rate of pensions/wages) https://t.co/mDI27NGUKa |
| September’s inflation data is traditionally used to set welfare payments. | September’s inflation data is traditionally used to set welfare payments. |
| So this morning’s CPI figures should mean that benefits rise by 1.7% next April, assuming the government ends the long austerity freeze. | So this morning’s CPI figures should mean that benefits rise by 1.7% next April, assuming the government ends the long austerity freeze. |
| That freeze has capped payments in cash terms, meaning they’ve actually fallen when inflation is taken into account, hurting the poorest families in the UK. | That freeze has capped payments in cash terms, meaning they’ve actually fallen when inflation is taken into account, hurting the poorest families in the UK. |
| The TUC is urging the government to end the freeze: | The TUC is urging the government to end the freeze: |
| Inflation is 1.7%. That’s the amount benefits should go up next April, if the government finally lifts its four-year freeze on benefit uprating. This is because benefits uprating is traditionally linked to the inflation figure for the September of the previous year. pic.twitter.com/LbZ74FXH0l | Inflation is 1.7%. That’s the amount benefits should go up next April, if the government finally lifts its four-year freeze on benefit uprating. This is because benefits uprating is traditionally linked to the inflation figure for the September of the previous year. pic.twitter.com/LbZ74FXH0l |
| The benefits freeze has meant that vital safety nets, such as job seekers’ allowance and child benefit, haven’t risen with inflation as they usually would. Instead, they’ve stayed at the level they were in 2015. This, in real terms, is a big cut to benefits. | The benefits freeze has meant that vital safety nets, such as job seekers’ allowance and child benefit, haven’t risen with inflation as they usually would. Instead, they’ve stayed at the level they were in 2015. This, in real terms, is a big cut to benefits. |
| The benefits freeze has meant that those with children, those receiving income support, and those who are out of work and struggling, have lost out on hundreds over this time. | The benefits freeze has meant that those with children, those receiving income support, and those who are out of work and struggling, have lost out on hundreds over this time. |
| The Joseph Rowntree Foundation estimates that the benefits freeze pushed around 200,000 people into poverty in the first three years of the freeze, around half of them children. If continued as planned, this will increase to 400,000 people. | The Joseph Rowntree Foundation estimates that the benefits freeze pushed around 200,000 people into poverty in the first three years of the freeze, around half of them children. If continued as planned, this will increase to 400,000 people. |
| Poverty isn’t inevitable – it’s a cruel political choice. That’s why government needs to end the benefits freeze now. | Poverty isn’t inevitable – it’s a cruel political choice. That’s why government needs to end the benefits freeze now. |
| ONS Head of Inflation Mike Hardie sums up this morning’s data: | ONS Head of Inflation Mike Hardie sums up this morning’s data: |
| “Inflation remained unchanged into September at its lowest rate since late 2016. Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms. | “Inflation remained unchanged into September at its lowest rate since late 2016. Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms. |
| “Annual growth in UK house prices showed a moderate pick-up in August although it remains below the increases seen throughout 2018. Wales saw the strongest growth with prices continuing to fall in London and the South East”. | “Annual growth in UK house prices showed a moderate pick-up in August although it remains below the increases seen throughout 2018. Wales saw the strongest growth with prices continuing to fall in London and the South East”. |
| Despite recent house price falls in London, it’s still desperately difficult to get onto the housing ladder, or shimmy up the steps. | Despite recent house price falls in London, it’s still desperately difficult to get onto the housing ladder, or shimmy up the steps. |
| That’s because real wages have only just started growing faster than house prices, meaning property is very unaffordable. | That’s because real wages have only just started growing faster than house prices, meaning property is very unaffordable. |
| The Resolution Foundation have the details, including that London house prices have risen six times faster than earnings in the capital, since 2011. | The Resolution Foundation have the details, including that London house prices have risen six times faster than earnings in the capital, since 2011. |
| Despite the slowdown in house price growth – and a welcome pick up in earnings growth – the gap between growth in house prices and earnings since 2011 remains huge. pic.twitter.com/wD2qOCqnm8 | Despite the slowdown in house price growth – and a welcome pick up in earnings growth – the gap between growth in house prices and earnings since 2011 remains huge. pic.twitter.com/wD2qOCqnm8 |
| But across London, pay growth has only just started outpacing house price growth. The bigger picture is that since early 2011 house prices have increased six times faster than earnings in the capital. Home ownership in London remains far out of reach for many families. pic.twitter.com/Xa6rXF79hr | But across London, pay growth has only just started outpacing house price growth. The bigger picture is that since early 2011 house prices have increased six times faster than earnings in the capital. Home ownership in London remains far out of reach for many families. pic.twitter.com/Xa6rXF79hr |
| Inflation is also looking subdued in the eurozone. | Inflation is also looking subdued in the eurozone. |
| New data today shows that prices are only rising by 0.8% in the last year, the weakest since 2016, down from 1% in August. | New data today shows that prices are only rising by 0.8% in the last year, the weakest since 2016, down from 1% in August. |
| Good news for households, but a headache for the European Central Bank as it launched another stimulus programme. | Good news for households, but a headache for the European Central Bank as it launched another stimulus programme. |
| #Euro Annual #Inflation Final at 0.8% https://t.co/jMc1LoqXTG pic.twitter.com/4cGMOmFJA4 | #Euro Annual #Inflation Final at 0.8% https://t.co/jMc1LoqXTG pic.twitter.com/4cGMOmFJA4 |
| This could force the ECB to keep easing monetary policy, despite opposition from more hawkish members of its governing council. | This could force the ECB to keep easing monetary policy, despite opposition from more hawkish members of its governing council. |
| #Eurozone #CPI falls to +0.8% YoY in September, from previous +1.0% and less than expected +0.9%it rises +0.2% MoM, as expectedThis should incentivise the #ECB to become more dovish and strenghten the #USD against the #EUR@graemewearden | #Eurozone #CPI falls to +0.8% YoY in September, from previous +1.0% and less than expected +0.9%it rises +0.2% MoM, as expectedThis should incentivise the #ECB to become more dovish and strenghten the #USD against the #EUR@graemewearden |