Introduction: UK consumer confidence up, but is 'Burnham bounce' fading?
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK consumer confidence has surprisingly hit a two-year high this morning, but the recovery could be faltering as inflation climbs.
Research group GfK has reported that its Consumer Confidence Barometer rose to -13 in September, a rise of one point compared with August, with people more optimistic about their personal finances and the wider economy.
That’s the highest level since August 2024, just after the last general election, and higher than forecast.
Encouragingly, this is also the first time since summer 2024 that consumer confidence has risen for three months in a row.
But less cheeringly, consumer confidence is still in negative territory, and there are signs that the recovery could be faltering.
Over the summer, UK businesses reported a “Burnham bounce” after the new prime minister took the wheel from Sir Keir Starmer, and announced measures including a cap on bus fares and a discount on business rates for pubs, clubs and live music venues.
Bloomberg suggests GfK’s data shows this recovery is running out of steam, as higher energy costs push up inflation.
Neil Bellamy, consumer insights director at GfK, explains:
GfK reports that consumers are less willing to buy big-ticket items this month, and more keen to save money instead.
Bellamy adds:
The agenda
10.15am BST: Bank of England governor Andrew Bailey appears on a panel at the Monetary Economics Conference
1.30pm BST: US durable goods orders data
3pm BST: University of Michigan’s US consumer sentiment index
UK mortgage rates stick at multi-year highs
After rising steadily for several days, UK mortgage rates have finally flattened out.
Moneyfacts reports that the average five-year fixed rate mortgage is unchanged today, at the highest since October 2023, while two-year mortgages remain at the highest since July 2024.
Here’s the details:
Administration looms over TalkTalk
TalkTalk is scrambling to secure its future amid the threat of administration, closing in on deals to sell its consumer and broadband arms as it seeks to save 900 jobs.
The telecoms company said on Friday it is in the final stages of sealing deals to sell its consumer business as well as its wholesale operation, PXC.
“The company is now in the final stages of its sales process for the business and expects to conclude both transactions imminently.”
The UK’s fourth-largest broadband company was founded in 2003 by Charles Dunstone as a subsidiary of Carphone Warehouse. It has struggled in the highly competitive telecoms market, with its customer numbers shrinking from 4 million in 2019 to about 1.5 million.
More here:
The pound is on track for its worst week against the US dollar in three months.
Sterling has dropped by 1.2% against the dollar so far this week, as the greenback has benefited from strong economic data which spurred bets on US interest rate rises. That would be the biggest weekly fall since 11-15 June.
This morning, the pound is hovering near three-month lows against both the dollar (at $1.323) and the euro (€1.162).
Shares in aerospace manufacturer Airbus have dipped by over 1% this morning after it reported a “quality issue” in the fuselage structure of its A321neo aircraft.
Airbus said yesterday that the problem is not a safety risk, and its planes can continue operating.
Reuters reports that the defect affects about 500 aircraft, including roughly 250 already in service and 250 in production.
UK bond yields dip back
After a choppy day yesterday, UK goverment bonds are recovering this morning.
With prices rising, the yields (or rate of return) on both short and long-dated gilts have dropped.
Two-year gilt yields, which are used to price mortgages, are down 5 basis points (0.05 of a percentage point) to 4.85%, while 10-year gilt yields are down 2.5bps to 5.35%.
European stock markets have opened higher.
In London, the FTSE 100 share index is up 48 points or 0.46% at 10,728 points, with mining stocks and banks among the risers.
Germany’s DAX is up 0.6%, with France’s CAC 40 0.4% higher.
Macron: I pressed Trump not to ban diesel exports
French president Emmanuel Macron is leading the fight against the imposition of a ban on US diesel exports.
Macron has revealed that he told Donald Trump a 90-day diesel export ban reportedly being considered by the White House was a bad idea, Politico reports.
He told a TV interview:
Trump is reportedly considering a 90-day export ban to provide a temporary respite from high pump prices for US households before the midterm election.
As we reported yesterday, the EU has warned Donald Trump against plans to ban US diesel exports to the global market, saying the move would negatively affect Europe and the US.
Next month’s budget has the potential to either strengthen the recovery in consumer confidence, or pop it.
Pat McFadden, work and pensions secretary, has claimed that chancellor John Healey’s budget on 28 October could help to build confidence in the economy.
McFadden told the FT:
The oil price is dropping, following reports that the US and Iran are discussing a phased deal to reopen the strait of Hormuz.
Reuters reported that US and Iranian negotiators in New York are exploring “a phased path out of war” that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.
However, the talks “face a big obstacle” as neither side wants to be the first to surrender its leverage.
But still… Brent crude is down 1.25% today at $105.30 a barrel.
Here’s a breakdown of today’s UK consumer confidence report, showing how four of the five measures that feed into the index rose this month.
Introduction: UK consumer confidence up, but is 'Burnham bounce' fading?
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK consumer confidence has surprisingly hit a two-year high this morning, but the recovery could be faltering as inflation climbs.
Research group GfK has reported that its Consumer Confidence Barometer rose to -13 in September, a rise of one point compared with August, with people more optimistic about their personal finances and the wider economy.
That’s the highest level since August 2024, just after the last general election, and higher than forecast.
Encouragingly, this is also the first time since summer 2024 that consumer confidence has risen for three months in a row.
But less cheeringly, consumer confidence is still in negative territory, and there are signs that the recovery could be faltering.
Over the summer, UK businesses reported a “Burnham bounce” after the new prime minister took the wheel from Sir Keir Starmer, and announced measures including a cap on bus fares and a discount on business rates for pubs, clubs and live music venues.
Bloomberg suggests GfK’s data shows this recovery is running out of steam, as higher energy costs push up inflation.
Neil Bellamy, consumer insights director at GfK, explains:
GfK reports that consumers are less willing to buy big-ticket items this month, and more keen to save money instead.
Bellamy adds:
The agenda
10.15am BST: Bank of England governor Andrew Bailey appears on a panel at the Monetary Economics Conference
1.30pm BST: US durable goods orders data
3pm BST: University of Michigan’s US consumer sentiment index
