Introduction: UK business inflation pressures hits three-year high;
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Having missed out on the Nobel Peace Prize, again, Donald Trump is unlikely to trouble the scorers in Stockholm today when the economics equivalent is handed out.
Instead, Trump’s Middle Eastern conflict is proving – to no-one’s surprise – that high energy prices fuel inflation, and that geopolitical instability hurts growth.
Just this morning, a new report shows that UK businesses are facing the sharpest inflation pressures in three years, due to rising energy, fuel and raw material costs.
Accountancy and advisory firm BDO has reported that its inflation index rose to 103.65 in September, up from 102.18 in August and its highest reading since June 2023.
These elevated costs and weakening demand are putting renewed pressure on firms ahead of the Autumn Budget, BDO warns.
Their report has also found that output fell across UK manufacturing and services last month as domestic demand softened.
Scott Knight, head of growth at BDO, says:
The oil price has dropped slightly this morning, though, after Trump declared that Ukraine and Russia have agreed to halt attacks on each other’s energy facilities following the US diesel-supply deal with Moscow announced on Friday night.
Brent crude had been down around 2% a few hours ago – but it’s now just 0.25% lower at $104.46 a barrel, a fairly small move really.
Kyle Rodda, senior financial market analyst at Capital.com, explains why:
The agenda
All day: Paris Motor Show
From 10.45am BST: Nobel Prize for economics announced
2pm BST: Russia’s trade balance for August
EU sets cap on imports of hybrid EVs from China
Newsflash: The EU is to limit the number of hybrid electrical vehicles imported from China to 350,000 cars a year, senior officials have confirmed in Brussels.
Exports of hybrids have been soaring in the last two years with about 800,000 battery and plug in hybrids expected to be sold this year.
The EU expects that the quota will halve China’s market share, which currently stands at 6%, in a four-year agreement made in Beijing last week.
Recruitment firm Hays are suffering this morning after reporting a drop in fee income over the last three months.
Shares in Hays are down 9%, as traders digest the news that its net fees fell by 3% in July-September, driven by falling demand for permanent hires.
Hays, which earns revenue by successfully placing a candidate into a job opening, says there was “ongoing fragility in Northern Europe”.
Mark Dearnley, Hays’ chief executive officer, says:
Stocks have opened higher in London this morning, where the FTSE 100 share index is up 53 points, or +0.5%, at 10,604 points.
Banks are leading the risers, with HSBC up 2.1% and Standard Chartered 1.8% higher.
The Fight Inequality Alliance is calling on finance ministers attending the IMF/World Bank meeting in Bangkok to consider debt cancellation measures to help the Global South.
They insist that “the era of austerity is over”, and demand an end to the lending rules that force governments to pay creditors before they pay for hospitals, schools and food.
FIA General Secretary Jenny Ricks said:
The FIA says it is calling for governments to:
Cancel debt. Wipe out the debts crushing poorer countries, and make every lender take the hit, from banks and hedge funds to the IMF and World Bank.
End austerity. No more cuts to schools and hospitals. Tax the richest instead.
Tax the super-rich. Back a global tax on billionaires and the new UN tax treaty.
Stop selling off public services. The World Bank should fund free public healthcare and education, not push their privatisation.
Give poorer countries a real say. The IMF and World Bank are run by rich countries. Every country deserves a fair vote.
UK chancellor John Healey is pledging to push for more international cooperation as he heads to Bangkok for the Annual Meetings of the International Monetary Fund and the World Bank.
The Treasury says Healey will use this week’s Annual Meetings to make the case that Britain and its allies can face of up to global shocks and must work together to limit the damage of conflict at home.
Healey says:
IFS warns UK faces £35bn budget shortfall
The surge in inflation following the start of the Iran war has taken a bite out of the UK’s spending plans, the Institute for Fiscal Studies (IFS) is warning this morning.
The IFS has calculated that chancellor John Healey is facing a funding gap of up to £35bn, as rising inflation has eroded the value of government departments’ cash budgets, and also driven up government borrowing costs.
They warn today that Healey’s budget later this month risks being a “work of fiction” unless he sets out plans to cover these spending pressures, including the demand to spend more on defence.
Here’s the full story:
Who might win the Nobel prize for economics today?
The biggest prize in economics, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, will be awarded today.
Known as the Nobel Prize in Economics (although it’s not one of the original Nobels), the winner(s) will be announced at the Royal Swedish Academy of Sciences in Stockholm from 10.45am UK time.
The prediction markets can give some indications about who is under consideration.
Leading the betting on Polymarket, at 30% this morning, is David Autor, professor of economics at the Massachusetts Institute of Technology.
Autor is a labour economist, who has examined how technology changes the world of work, and shown how computerization has increased skill-based wage premia in the US.
Another potential winner is Ariél Pakes, the Thomas Professor of Economics at Harvard University, currently a 19% chance on Polymarket.
Pakes’s work has focused on developing methods to empirically analyze market responses to environmental and policy changes, such as mergers and deregulation.
Pakes’s contributions to economics include the Berry–Levinsohn–Pakes (BLP) approach to demand estimation – which analysed how consumers choose between different producrs, and how a merger might push up prices.
Third, at 12%, is Susan Athey, the Economics of Technology Professor at Stanford Graduate School of Business.
Athey, the former consulting chief economist for Microsoft, was the first woman to win the John Bates Clark Medal (awarded to the top economist under the age of 40). Her research work has focused on auctions, developing the empirical models which underpin them.
There’s also some interest in American macroeconomist and monetary theorist Michael Woodford (currently 10%) – he’s one of the architects of modern forward guidance, the idea that central banks can control the economy through influencing public expectations about inflation, rather than just through interest rates.
Introduction: UK business inflation pressures hits three-year high;
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Having missed out on the Nobel Peace Prize, again, Donald Trump is unlikely to trouble the scorers in Stockholm today when the economics equivalent is handed out.
Instead, Trump’s Middle Eastern conflict is proving – to no-one’s surprise – that high energy prices fuel inflation, and that geopolitical instability hurts growth.
Just this morning, a new report shows that UK businesses are facing the sharpest inflation pressures in three years, due to rising energy, fuel and raw material costs.
Accountancy and advisory firm BDO has reported that its inflation index rose to 103.65 in September, up from 102.18 in August and its highest reading since June 2023.
These elevated costs and weakening demand are putting renewed pressure on firms ahead of the Autumn Budget, BDO warns.
Their report has also found that output fell across UK manufacturing and services last month as domestic demand softened.
Scott Knight, head of growth at BDO, says:
The oil price has dropped slightly this morning, though, after Trump declared that Ukraine and Russia have agreed to halt attacks on each other’s energy facilities following the US diesel-supply deal with Moscow announced on Friday night.
Brent crude had been down around 2% a few hours ago – but it’s now just 0.25% lower at $104.46 a barrel, a fairly small move really.
Kyle Rodda, senior financial market analyst at Capital.com, explains why:
The agenda
All day: Paris Motor Show
From 10.45am BST: Nobel Prize for economics announced
2pm BST: Russia’s trade balance for August
