Bank of England unlikely to cut interest rates until 2025

The Bank of England will not cut interest rates until 2025, according new forecasts from Oxford Economics, which said policymakers were likely to “err on the side of caution”.

Andrew Goodwin, chief UK economist at Oxford Economics, said he had previously expected the Bank to start cutting rates from May next year, but now believed this would be delayed until the following year.

“The Monetary Policy Committee (MPC) has a relatively pessimistic view of potential supply and is particularly wary of the inflationary implications of a tight labour market.”

Whilst Oxford Economics is forecasting a “modest rise in unemployment over the next year”, the group said it was “unlikely that we will see much spare capacity emerge”.

“The stickiness of core pressures means we see headline inflation remaining above the 2pc target until early-2025. And the persistent inflation overshoots of the past couple of years will still be fresh in the memory, not only for policymakers but also financial markets.

“Against this backdrop, we think the MPC will err on the side of caution, waiting until it has strong evidence that price pressures are back under control before it considers loosening policy.”

It comes amid expectations that the Bank will raise interest rates for the 13th consecutive time later this month, as it battles with stubbornly high inflation. Interest rates are currently at their highest level in almost 15 years.

07:00 PM

Signing off

That’s all from us this week. Enjoy the heat wave this weekend (remember to stay hydrated). I’ll leave you with our latest stories:

• To be sick on the NHS is becoming a death sentence

• North Sea producers accuse Hunt of ‘pointless’ overhaul to windfall tax

• British delivery giant that employs 2,300 people on verge of administration

06:18 PM

Zuckerberg’s Meta tries to lure Oprah and Dalai Lama to help launch Twitter rival

Meta is trying to lure Oprah Winfrey and the Dalai Lama to its upcoming Twitter rival as Mark Zuckerberg attempts to take on Elon Musk.

Senior business reporter Matthew Field has the details:

Read the full story here...

05:35 PM

FTSE 100 falls for third week in a row

Britian’s blue-chip index sank today after housing stocks continued their downward spiral as stresses in the sector continued to build.

The FTSE 100 index dropped by 0.49pc to 7,562.36, while the FTSE 250 midcap index slipped 0.1pc tp 19,091.66. Both indexes logged weekly declines of 0.6pc and 0.3pc respectively.

It marks the third consecutive week that the FTSE 100 has fallen amid investor concerns around global interest rates remaining higher for longer, heightened by surprise hikes by two major central banks earlier this week.

The real estate and the home construction sectors declined 0.4pc and 1pc, respectively, as mortgage rates in Britain rose again with economists warning that rising borrowing costs would put the housing market under renewed strain.

04:41 PM

Greggs to open 150 new stores across UK

The chief executive Greggs has said the bakery chain is set to open 150 new shops across the UK.

The sausage roll seller said it will open new stores in Cornwall and other areas where it currently has fewer sites as part the group’s rapid expansion.

The restaurant group also plans to launch new sites at forecourts and service stations in hopes of targeting tourists and travellers.

Greggs currently operates around 2,300 shops across the UK, but said it hopes to expand to more than 3,000 as part of its long-term growth strategy.

The company said it expects to open 150 net new stores this year, but could accelerate the plans if more sites become available.

Roisin Currie, who was appointed as chief executive last year, said:

04:27 PM

Handing over

That’s all from me, I’ll leave you in the hands of my colleague Adam Mawardi.

03:54 PM

BAE Systems wins new £270m contract for Royal Navy radars

BAE Systems has won a new £270m contract to work on Royal Navy radar systems in a move which secures hundreds of jobs across the UK.

The defence giant will be supporting the Royal Navy’s three main radar systems under the contract, which is supported by the Ministry of Defence and replaces existing contracts. BAE is expected to be upgrading existing radars.

Minister for defence procurement James Cartlidge said: “Equipping our armed forces with the latest technology to counter emerging threats is critical to ensuring the safety and effectiveness of our fleet and personnel.

“Securing hundreds of jobs across the UK, this contract is a boost for the UK supply chain and lets our adversaries know we are equipped, prepared and ready.”

Scott Jamieson, managing director of BAE Systems’ maritime services business, said: “This is a pivotal moment for UK radar technology development.

“This contract secures a decade of investment into a critical capability for the UK armed forces.”

03:31 PM

Tesla shares jump on deal with General Motors over electric car chargers

Shares in Tesla have jumped by 7pc after rival General Motors said its electric cars would work using Elon Musk’s Superchargers.

Tesla was trading at its highest level since last September, after GM joined Ford in embracing Tesla’s North American charging plug standard.

It means the three largest electric vehicle makers in the US have agreed on a standard for car chargers. GM, Ford and Tesla account for around 70pc of current US electric vehicle sales.

Mr Musk last night said the deal was “just going to be a fundamentally great thing for the advancement of electric vehicles”. Around 60pc of the fast chargers in the US and Canada are made by Tesla.

02:51 PM

Airline ditches mandatory heels and make-up for female cabin crew

Female cabin crew will no longer have to wear make-up and high heels at Qantas, in a change the Australian airline said was “reflective of the times”.

As Daniel Woolfson reports:

Read more on it here.

02:19 PM

Osborne advisory firm reportedly brought into Activision Blizzard takeover

An advisory firm where George Osborne is a partner has been brought into the takeover of Activision Blizzard by Microsoft, according to Sky News.

Robey Warshaw has reportedly been drafted into Microsoft’s takeover of the Call of Duty-maker as an advisor.

It comes as Microsoft earlier this week signalled it was prepared to compromise on the terms of its $69bn (£55bn) merger with Activision after it was blocked by the UK competition regulator.

Brad Smith, the company’s president, this week said he was “in search of solutions” to get the merger through as he backed away from attacks on the Competition and Markets Authority (CMA).

01:46 PM

Bank of England won't cut interest rates until 2025, economist says

The Bank of England is unlikely to cut interest rates until 2025, according to Andrew Goodwin, chief UK economist at Oxford Economics.

Mr Goodwin said he had previously expected the Bank to start cutting rates from May next year, but now expected this to be delayed until the following year.

“The Monetary Policy Committee (MPC) has a relatively pessimistic view of potential supply and is particularly wary of the inflationary implications of a tight labour market. Though we forecast a modest rise in unemployment over the next year, it’s unlikely that we will see much spare capacity emerge.

“The stickiness of core pressures means we see headline inflation remaining above the 2pc target until early-2025. And the persistent inflation overshoots of the past couple of years will still be fresh in the memory, not only for policymakers but also financial markets.

“Against this backdrop, we think the MPC will err on the side of caution, waiting until it has strong evidence that price pressures are back under control before it considers loosening policy.”

01:32 PM

Binance to block dollar withdrawals from US crypto exchange within days

Binance is to block dollar withdrawals from its US cryptocurrency exchange within days amid a crackdown by the Biden administration on the industry.

As Matthew Field reports:

Read more here.

12:56 PM

Meta takes step towards launching Twitter rival

Facebook ower Meta has reportedly outlined plans to staff for the launch of a rival social media site to Twitter.

According to the BBC, Facebook-owner Meta is developing a social media site for sharing “text updates”, with plans for it to be released as soon as the end of this month.

At a company-wide meeting earier this week, Meta chief product officer Chris Cox was said to have told staff the new site would be “our response to Twiter” and would be linked to its Instagram app.

The Verge reported that Mr Cox said: “We’ve been hearing from creators and public figures who are interested in having a platform that is sanely run, that they believe that they can trust and rely upon for distribution.”

Meta did not immediately respond to requests for comment.

12:31 PM

UK mortgage offers down on start of the month

Following the news last night that HSBC pulled all of its mortgages after customers rushed to secure deals before rate rises, Bloomberg has run the numbers on what the market looks like today.

On Friday, there were 5,056 home loan products available in the UK, data compiled by Moneyfacts Group showed. This is around 4pc lower than it was at the start of the month, although Bloomberg said the findings had suggested that some lenders were putting their deals back on the market at higher rates.

HSBC, which accounts for almost a quarter of the home loans market, said it would relaunch its products on Monday.

It comes after yields on government debt have been rising sharply in recent weeks following shock inflation data. This has prompted investors to raise their forecast for the peak of interest rates.

Read more about HSBC’s move here.

11:57 AM

Russia in longest interest rate pause in more than seven years

Russia has held interest rates yet again, making its pause the longest in more than seven years, as policymakers keep an eye on inflation in the wake of a spending push on the war in Ukraine.

Russia’s central bank kept its benchmark rate at 7.5pc, where it has been since last September, as analysts said that inflation appears to have hit a “trough in annual terms in April”.

The country’s heavy spending on its war in Ukraine and severe labour shortages have raised concerns that inflation will start to pick up.

Raiffeisenbank analysts Stanislav Murashov and Grigory Chepkov said: “The acceleration of inflation in the first days of summer may prompt the central bank to toughen its rhetoric.”

11:34 AM

Shoe Zone buoyed by sunnier weather

High street store Shoe Zone has been boosted by the better weather in recent weeks, as shoppers rush to buy sandals and flip-flops to bask in the sun.

Shoe Zone said sales had “exceeded expectations” since it last updated the market in mid-May, with strong trading in May and early June.

It pointed to “strong early demand for summer products”, and said its profits had also been buoted by lower shipping costs.

It comes ahead of what is expected to be a hot weekend, with temperatures set to top 30C in some parts of the country.

Shares in Shoe Zone jumped by almost 10pc on Friday morning, although remain around 4pc lower than in mid-May, when it revealed profits had more than halved in the first six months of its financial year.

11:05 AM

Grocery prices 'will come down in France next month' after policy moves

French policies designed to bring grocery prices down will start to pay off as soon as July, finance minister Bruno Le Maire said, weeks after it emerged the UK was considering a similar scheme.

Mr Le Maire said the prices of hundreds of products would start to come down from next month, after 75 big food industry players signed up to an agreement to charge the “lowest possible amount” for some essential food products.

He said pasta, poultry and oil would be among those products where prices were cut, adding: “There will be checks and there we will be sanctions for those who don’t abide by the rules.”

“On a certain number of products where wholesale prices have fallen, then the prices will have to fall too, by 2, 3, 5 maybe even 10pc.”

It comes weeks after the Telegraph revealed that the UK was considering a similar policy, with Downing Street in discussions over a price cap on essentials, which retailers would sign up to voluntarily.

10:24 AM

Windfall tax reaction: Oil prices unlikely to drop 'any time soon'

More reaction is coming out in response to the Government’s windfall tax announcement this morning.

Ryan Crighton, policy director at Aberdeen & Grampian Chamber of Commerce, said:

Mr Crighton said prices had “already returned to historically normal levels, so there are no windfall profits to tax”, adding that it was unlikely the oil price would dip below $72 per barrel for six months “any time soon”.

10:04 AM

Amigo soars on potential lifeline

Lender Amigo Holdings has been handed a lifeline after shareholder Michael Fleming approached the company to offer to look for financing options.

Amigo, which in March said it was set to be liquidated after failing to raise money in a rescue plan, said financier Mr Fleming had until early September to find and complete a debt investment for the company.

Shares more than doubled on the news, jumping by 115pc, on hopes that Amigo could avoid a wind-down.

Shareholders were expected to be wiped out by the planned liquidation, which came after Amigo said it had not received enough interest from potential investors to raise the £45m it had been seeking.

09:46 AM

Croda shares hit by profit warning

Croda International is the biggest faller on the FTSE 100 this morning, after it cut its profit forecasts.

Shares in Croda were down as much as 15pc on Friday morning, after it said it now expected profits to come in between £370m and £400m, compared to City forecasts of £454m.

It blamed customer destocking for the profit hit, as more of its customers for crop protection chemicals opted to hold less excess stock because of the uncertain economic outlook.

The FTSE 100 was largely flat on Friday morning, after fellow blue chip AstraZeneca was buoyed by news that its experimental antibody drug had received approval in the US.

09:30 AM

Reaction: Windfall tax change 'bolts on yet another complication'

John O’Connell, chief executive of the TaxPayers’ Alliance, has been responding to the Government’s windfall tax announcement this morning:

09:13 AM

Labour waters down £28bn green prosperity plan

The Labour Party has watered down its plans to pour £28bn into green industries every year, as Rachel Reeves said it was important to not be “reckless” on spending.

Speaking on the BBC Radio 4 Today programme, the shadow chancellor shied away from making a commitment on how much a Labour government would be investing into green projects in its first year in power.

The Labour party has previously commited to investing £28bn every year until 2030. Ms Reeves said: “We will get to the investment that is needed. But we’ve got to do it in a responsible way.”

Shadow climate secretary on Ed Miliband later backed Ms Reeves on Twitter saying: “Britain needs this £28bn a year plan and that is what we are committed to.”

09:01 AM

ChatGPT creator backs lab-grown meat company

The creator of ChatGPT has thrown his backing behind a British lab-grown pork company, reports Daniel Woolfson. 

Read more here.

08:48 AM

AstraZeneca strikes multibillion dollar deal with British biotech

AstraZeneca has struck a deal with British biotech Quell Therapeutics to work on treatments for type 1 diabetes and inflammatory bowel disease.

Drug giant AstraZeneca said it had agreed a partnership deal with Quell, which could potentially be worth more than $2bn (£1.6bn).

The two companies will be using cell therapies to try to tackle autoimmune diseases, essentially replacing damages cells with new ones to reverse conditions.

Mene Pangalos, executive vice president of biopharmaceuticals research at AstraZeneca, said the collaboration was “aligned with our strategy to target underlying disease drivers to stop or slow disease progression and ultimately accelerate the delivery of transformative care to patients with chronic autoimmune conditions”.

08:19 AM

Network International agrees to £2.2bn private equity takeover

Middle Eastern payments group Network International is poised to quit the London markets, after its board backed a takeover offer from Canadian private equity firm Brookfield Asset Management.

Brookfield has agreed to buy FTSE 250 company Network International in a £2.2bn deal. Card processor Network International only listed in London in 2019. It said the takeover offer was “fair and reasonable”.

If the deal goes ahead, Network International would become the latest in a series of companies leaving the London market, coming amid wider concerns about the health of the London stock exchange.

Earlier this month, Swedish private equity firm EQT agreed the takeover of Dechra Pharmaceuticals, a British cat and dog drug maker.

Meanwhile, building material giant CRH earlier this year announced it was moving its listing from London to New York, while Paddy Power owner Flutter has said it is weighing a similar step. Microchip designer Arm, meanwhile, has said it is snubbing London for its stock market debut, despite repeated efforts by Rishi Sunak to lobby it to pick the LSE.

08:04 AM

Britain to ease windfall tax to boost investment in the North Sea

Jeremy Hunt has unveiled plans to soften the Government’s windfall tax on oil and gas companies after warnings of a jobs bloodbath in the North Sea.

Confirming a report in the Telegraph, the Chancellor this morning announced new plans to reduce the windfall tax on oil and gas firms if prices fall to normal levels for a sustained period of time.

It comes after warnings from the industry that companies are starting to cut back on investment in the UK in the wake of the tax.

Gareth Davies, Exchequer Secretary to the Treasury, said: “While we stepped into help, never again can our energy supplies be at the whim of petrostate despots like Putin. That’s why it’s so important that we secure investment in our own domestic supply, protecting the tens of thousands of British jobs that come with it.

“It would be beyond irresponsible to turn off the North Sea taps overnight. Without oil and gas from British waters, we would be forced to import even more from overseas, putting our security of supply at risk.”

07:54 AM

Mothercare chief executive leaves after less than five months

The chief executive of Mothercare is stepping down with immediate effect, as the retailer said a change of leadership was “in the best interests of the company and its shareholders”.

Daniel De Vesconte, who only took over as chief executive of the company in January this year, had been brought in to “drive the Mothercare brand globally over the next five years”. It followed a lengthy period where Mothercare had not had a chief executive.

Announcing his appointment last November, Clive Whiley, chairman of Mothercare, had pointed to Mr Le Vesconte’s experience in selling direct to consumers. He had previously held senior roles at Dr Martens and Abercrombie & Fitch.

On Friday, Mothercare said Mr Whiley and Andrew Cook, Mothercare’s chief financial officer, would “revert to leading the operating board, as was the case for the previous three years”, until a replacment chief executive is found.

Mr Whiley said: “The board is fully committed to the group’s successful long-term strategy and, further to last month’s pre-close trading update, the company continues to perform in line with expectations. In addition we are progressing a number of options to refinance the group’s debt facilities.

“Working together with Mothercare’s senior management team I am confident that the group’s successful, consistent strategy and culture will continue the group’s profitable growth.”

07:38 AM

Good morning

Britain’s biggest supermarket has been reported to the Competition & Markets Authority over claims its Clubcard prices could be misleading to shoppers.

Which? said it was “simply not good enough” that Tesco was not offering the same method of pricing for products under its loyalty scheme, which meant shoppers may not realise which is the best deal.

It said the pricing method was “at best confusing for shoppers struggling with soaring food inflation and at worst could be breaking the law”.

Tesco hit back at the claims saying its labelling “meets the current legal requirements and guidelines” and that it was “disappointed that Which? has chosen to make these ill-founded claims against our Clubcard Prices scheme”.

5 things to start your day

1) HSBC pulls all new mortgage deals after flood of demand | Bank withdraws mortgages amid scramble to secure deals with rates expected to rise

2) Jeremy Hunt poised to ease windfall tax in boost for North Sea | Change expected to put distance between Government and Labour ahead of election

3) City turns its back on Crispin Odey after sexual misconduct allegations | Morgan Stanley moves to cut ties with hedge fund magnate as new allegations emerge

4) Housing approvals plunge to 14-year low as Gove reforms dent demand | Developers are being hamstrung by tighter environmental regulations

5) Eurozone sinks into recession | The eurozone entered into a technical recession at the start of the year, according to revised data, as rising inflation hit consumer spending.

What happened overnight

Wall Street stocks finished higher Thursday, reflecting better sentiment on the US economy and a consensus view that the Federal Reserve will not hike interest rates next week.

The Dow Jones Industrial Average finished up 0.5pc at 33,833.61. The broad-based S&P 500 gained 0.6pc to 4,293.93, while the tech-rich Nasdaq Composite Index jumped 1pc to 13,238.52.

Treasury yields retreated after the spike in new US unemployment benefits fuelled concerns of a looming recession.

The policy sensitive two-year Treasury yield edged down to 4.5085pc, while the yield on benchmark 10-year bond slid to 3.712pc.

Asia-Pacific equities rose to their highest level since mid-February on Friday, taking cues from the overnight Wall Street rally.

Japanese and Australian bond yields followed those on US Treasuries lower, and the dollar remained on the defensive early in the Asian session.

MSCI’s broadest index of Asia-Pacific shares added 0.6pc, and at one point touched its strongest level since February 16.

Much of that was driven by a 1.66pc jump in Japan’s Nikkei, which rebounded strongly following its plunge from a 33-year high in the previous session.

Hong Kong’s Hang Seng added 0.21pc, while mainland Chinese blue chips edged 0.1pc higher.