Britain heading for debt crisis, warns economist
04:57pm
The FTSE 100 was down 0.4pc at the closing bell, continuing a weak start to the month. The mid-cap FTSE 250 closed relatively flat, with a decline of 0.03pc.
Meanwhile, Wall Street edged higher on the core personal consumption expenditures (PCE) index easing from 2.9pc to 2.8pc.
04:46pm
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A megadonor to Nigel Farage’s Reform is in line to see his wealth surge by $60bn (£45bn) thanks to a cryptocurrency deal.
Christopher Harborne, who this week was revealed to have handed £9m to Mr Farage’s party, controls up to 12pc of the shares in the company behind Tether, a widely used cryptocurrency.
The business is in talks to raise funds at a $500bn valuation. If it achieves that price tag, Mr Harborne’s stake would be worth $60bn.
04:32pm
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Sir Keir Starmer has been accused of “staggering ineptitude” after he apparently failed to grasp key details about his North Sea windfall tax.
Speaking on a visit to Scotland on Thursday, the Prime Minister claimed incorrectly that the tax on energy profits only kicked in when prices rose sufficiently to create a genuine windfall.
He said this was why Labour was keeping the 78pc tax in place until 2030 – despite the destruction of 1,000 jobs a month as energy companies quit the North Sea.
04:11pm
Trustpilot’s stock is up 15pc the day after being accused of waging “mafia-style extortion campaigns” against businesses to try and force them to sign up to its service.
Shares in the online customer review platform slumped to a two-year low on Thursday after American short seller Grizzly Research claimed it was using “illegal tactics” to push companies into signing up for accounts.
Trustpilot disputed the claims, calling them “selective, misleading and framed to support a predetermined narrative”.
04:01pm
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Brussels has sparked a free speech row with the White House by hitting Elon Musk’s X with a €120m (£105m) fine.
The European Commission said X, formerly known as Twitter, had broken EU “big tech” rules by deceiving users over its “blue tick” verification service.
Reports of the fine prompted JD Vance, the US vice president, to accuse the EU of “attacking American companies over garbage”.
03:48pm
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A chipmaker dubbed “China’s Nvidia” has jumped by more than 500pc on its stock market debut, in the latest example of an artificial intelligence (AI) bubble.
Moore Threads, headquartered in Beijing, raised $1.1bn (£749m) following its initial listing on Shanghai’s stock exchange, with its valuation later surging to more than $40bn on Friday.
The Chinese tech firm designs graphics processing units, or GPUs, the same type of chip that has turned Nvidia into the world’s most valuable company with a valuation of more than $4.5tn.
03:31pm
The US stock market is ticking toward the edge of its all-time high as Wall Street drifts toward the finish of a quiet week.
The S&P 500 rose 0.4pc and is just 0.1pc below its record. The Dow Jones Industrial Average was up 189 points, or 0.4pc, and the Nasdaq Composite was 0.4pc higher.
In a sign of how relaxed investors have become, Wall Street’s volatility index – considered a “fear gauge” for US markets – dipped to its lowest level since September.
03:12pm
Money markets indicate the US Federal Reserve is almost certain to cut interest rates at its next meeting on Wednesday.
Traders are betting there is a 95pc chance that policymakers will lower borrowing costs to a new range of 4pc to 3.75pc.
It comes after the Federal Reserve’s preferred inflation measure cooled slightly, increasing the chances the central bank will cut a key rate next week.
The core personal consumption expenditures (PCE) index edged down from 2.9pc to 2.8pc in September, according to the US Commerce Department.
03:03pm
A measure of inflation that is closely watched by the US Federal Reserve rose during September, official figures show.
The core personal consumption expenditures (PCE) index edged down from 2.9pc to 2.8pc, according to the US Commerce Department.
The change was in line with analyst expectations. The figures have been released after a long delay caused by the 43-day federal government shutdown that ended last month.
02:32pm
Investors on Wall Street made gains ahead of closely watched figures used by the Federal Reserve to gauge inflation in the world’s largest economy.
The Dow Jones Industrial Average rose 0.1pc to 47,944.42 at the open, while the benchmark S&P 500 gained 0.3pc to 47,944.42.
The tech heavy Nasdaq Composite climbed 0.5pc to 23,620.84.
02:00pm
Britain and other major developed economies are heading towards a sovereign debt crisis as they struggle to get a grip on spending, a prominent economist has warned.
Gerard Lyons said the risks “might be starting to become more evident” in markets as global bond yields rise around the world.
“Six of the G7 are heading for a debt trap by the end of the decade,” Mr Lyons told the Edelman Smithfield Investor Summit.
“It matters more for France and Britain because both of those countries are more dependent on international investors to buy their debt.
“Hence in France and the UK it is more of a live issue. A debt trap is effectively when your debt becomes greater than the size of your GDP. Quite a few countries are already there.”
Government borrowing costs have climbed this week, with US Treasuries on track for their worst week in six months ahead of inflation figures delayed by the 43-day government shutdown.
Meanwhile, the yield on long-dated Japanese government bond yields – the return governments promise to pay buyers of their debt – hit record highs this week as central bank indicated it will increase interest rates.
Mr Lyons warned Britain had shown the difficulty of getting public finances under control, running only seven budget surpluses since 1969.
“So it’s very difficult for governments to get themselves in a position, when they’re in a debt trap, to stabilise it,” he said.
“And it’s proving difficult to actually stop us heading in the direction of a debt problem. So debt is really coming to the fore.”
Mr Lyons added: “We’re in an environment where Western democracies seem incapable or unable to address the underlying issues that are causing debt to keep on rising.
“So a debt crisis I would say is likely by the end of this decade but we might start to see that, as we started to see with France a few months ago, factored into market thinking much sooner.”
01:19pm
The Bank of England may cut interest rates more than investors expect to counteract tax rises in the Budget, economist have said.
Private bank Berenberg has warned the market may be underestimating how fast policymakers could lower borrowing costs in the face of tax rises that will hit growth.
“Estimates of fiscal multipliers and the effect of interest rates on aggregate demand imply that the BoE would have to lower its policy rate by 75bp to offset the 1ppt of discretionary fiscal tightening that the government plans in fiscal year 2026-27.
Senior UK economist Andrew Wishart has forecast policymakers will lower rates just two more times from 4pc now to 3.5pc next year.
He said the Bank has to “strike a balance between cutting too quickly, risking a more severe rise in unemployment, and too slowly, risking a reacceleration of demand that keeps inflation above the 2pc target”.
However, he said it was likely that rates would be cut more steeply if his forecast is wrong.
“First, as inflation declines the real interest rate will increase, improving the incentive to save rather than spend,” he said.
“If so, the Bank of England may need to lower its policy rate just to keep the overall stance of policy unchanged.”
He added policymakers may have to cut rates three more times to “offset” the impact of the Government’s tax rising plans in the next financial year.
01:04pm
In a further blow to Britain’s high streets, Poundland has announced another wave of store closures over the winter.
The budget retailer will have shut more than 100 shops in the UK by early next year after kicking off its restructuring programme.
A further 14 stores will be closed by early February, it said today, on top of the 19 that are also still set to shut over coming months.
These shops have launched clearance sales with reductions of up to 40pc on stock from homeware and groceries to clothing and beauty products.
Poundland eventually expects to have reduced from around 800 shops at the beginning of its turnaround efforts to between 650 and 700 once the process is complete.
Poundland was sold for £1 to investment firm Gordon Brothers in June and avoided entering administration after a restructuring plan was approved in the High Court in August, days before the company was due to run out of money.
12:46pm
Visa has struck a deal to move its European headquarters to London’s Canary Wharf, handing a fresh boost to the city’s financial district.
The US payments company has agreed to lease 300,000 sq ft on a 15-year deal at One Canada Square, relocating from its current base in Paddington in the summer of 2028.
The agreement is a boost for the Canary Wharf Group, which has been battling to regain its status after an exodus of companies in recent years.
12:14pm
US stock indexes edged higher in the run up to delayed figures on inflation later today.
The Commerce Department will release the personal consumption expenditures index for September, which is the US Federal Reserve’s preferred guage of inflation.
It is the first release since a recent 43-day government shutdown halted official data announcements.
Markets are heading into what could be the Fed’s most divisive meeting in years when it decides whether to lower borrowing costs next week. A majority of policymakers say they need more data to show that inflation is moving closer to the central bank’s 2pc target.
In premarket trading, the Dow Jones Industrial Average was up 0.1pc, the S&P 500 edged 0.2pc higher and the Nasdaq 100 gained 0.4pc.
11:55am
The boss of one of Wall Street’s biggest banks warned Sir Keir Starmer against over-regulating in the City a week after the Chancellor spared lenders from tax rises in the Budget.
Brian Moynihan, the chief executive of Bank of America, said his bank has 6,000 staff in Britain and insisted there is still “plenty of upside” for London in the race to attract international companies.
He warned there was a risk that talent could look elsewhere if red tape becomes a burden.
“If you make it hard to operate, that’s when people start to make decisions,” he told Bloomberg.
Bank stocks have climbed by 3.6pc on the FTSE 100 and FTSE 250 since Rachel Reeves revealed in the Budget that she would not raise taxes on banks to fund her spending plans.
Mr Moynihan said: “Our advice is be the best place for non-UK-based companies to operate and you’ll get companies coming here.
“It won’t be that people leave, its just where the next 500,000 people are going to go.”
11:10am
The value of the pound was close to its highest against the dollar in more than a month ahead of closely watched data on US inflation.
Sterling was up 0.1pc to $1.334 as the US currency was hit by bets that the Federal Reserve will lower interest rates next week.
Figures later today will given an indication on the inflation picture in the US, where investors are still lacking official data after the record government shutdown that ended last month.
The pound has jumped to its highest level on the dollar since late-October this week, having posted its biggest daily gain since April on Wednesday.
It followed figures on Britain’s private sector suggested the economy is now slowing as fast as feared.
Matthew Ryan, an analyst at payments firm Ebury, said: “With the economy continuing to trundle along, and with the uncertainty surrounding the Budget now largely in the rear view mirror, sterling has found some welcome breathing room.
“Focus will quickly shift to the December meeting of the Bank of England, with another rate cut already almost entirely baked in by markets. Focus surrounding the decision will instead be on where the bank sees rates going in 2026.”
10:49am
The EU slightly revised up eurozone third quarter economic growth to 0.3pc in a further sign that interest rates on the Continent will hold steady in the coming months.
The new data from the bloc’s statistics agency was 0.1 percent higher than the initial estimate for the July-September period released at the end of October.
Money markets indicate the European Central Bank will leave interest rates unchanged at 2pc over the next year.
The euro was flat against the pound following the data at 87.4p.
10:26am
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Josh Simons, a Labour government minister, does not hold back when it comes to the greatest challenges facing the nation.
It is “impossible to have kids and save for a home”, he tweeted, lamenting that the birth rate is a “BIG problem for the UK”.
Raising children while facing financial insecurity means many people find their 20s, 30s and 40s are “frankly, s—”.
The parliamentary secretary in the Cabinet Office knows of what he speaks: “I can vouch (two kids [under] five and third on the way)”.
10:20am
Nearly four fifths of business leaders believe the Budget was “anti-business”, according to a new survey.
Some 77pc of accountants and senior business leaders surveyed by Institute of Chartered Accountants in England and Wales (ICAEW) said Rachel Reeves’s fiscal statement was bad for companies, with a third saying it was very anti-business.
The survey of more than 1,600 business people found that many thought the measures announced in the Budget were complex and lacked a coherent strategy.
Nearly half (47pc) of those surveyed said they were against the increase in the minimum wage for those aged 21 and over, which companies and think tanks have said will make it more difficult for young people to get a job.
Almost four fifths of respondents also criticised the government’s plans to impose a cap on tax-free pension contributions made through salary sacrifice.
Iain Wright, chief policy and communications officer at ICAEW, said: “For a government whose number one ambition is economic growth – and a Chancellor who certainly had the opportunity to go for growth – this was not the Budget to deliver a much-needed confidence boost to UK plc.
“Our members consistently tell us doing business is too expensive, too difficult and too uncertain. Unless the Government signals a clear change of course, it will struggle to deliver the conditions for growth the UK needs.”
Mr Wright said the Budget was “a missed opportunity”. He said changes announced last week had only increased the complexity of the UK’s tax system, with companies already spending large amounts of time ensuring that they comply with regulations.
“A simplified system would be so much better for an environment and economy that is conducive towards growth,” he said.
10:02am
The Bank of England is increasingly likely to “surprise” markets with more interest rate cuts next year as Britain suffers from weak growth, an asset manager said.
RBC, which manages $560bn (£420bn) of client money, is preparing for policymakers to reduce borrowing costs in an effort to revive the struggling economy.
The Office for Budget Responsibility last week cut its forecasts for cumulative growth by 1.3 percentage points by the end of the decade.
Mark Dowding, chief investment officer at RBC BlueBay Asset Management, said: “Prospects for weaker UK growth suggest scope for the Bank of England to surprise with more interest rate cuts than markets currently discount, which stands in contrast to how RBC Bluebay view the outlook for the Fed in the US.”
This could lead to lower government borrowing costs in the near future, he added.
“As unpopular as she may be, Rachel Reeves’s survival for the time being is largely seen as a good thing by the gilt market,” he said.
“Reflecting on these developments, RBC Bluebay has moved to a modest overweight position in gilts, though the firm continues to remain positioned short in the pound, based on the view that the UK’s growth prospects will continue to be depressed, and this should lead to monetary easing as an offset.”
09:43am
Around 3.3 million pension savers are on course to be clobbered by salary sacrifice changes announced in the Budget, HM Revenue and Customs (HMRC) figures show.
Guidance published online by HMRC about the changes said an estimated 7.7m employees currently use salary sacrifice to make pension contributions.
Of these, 3.3m sacrifice more than £2,000 of salary or bonuses.
Changes announced in the Budget will mean salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from national insurance (NI) from April 2029.
Contributions above £2,000 will be treated as ordinary employee pension contributions in the tax system and subject to NI contributions.
Sir Steve Webb, a former pensions minister who is now a partner at consultants Lane Clark & Peacock, said: “A Budget measure that was largely seen as complex and technical could have significant real-world implications for millions of workers.
“At a time when the nation as a whole has a significant ‘under-saving’ problem, this change will make matters worse.”
09:20am
Britain’s housing market will “limp” towards the end of the year after the paralysis caused by the Budget, estate agents have warned.
Shepherd Ncube, chief executive of Springbok Properties, said: “The market coming to a standstill in November provides yet more evidence of the pre-Budget paralysis that has frozen the market in recent months, as buyers and sellers stepped back to wait for clarity.
“Unfortunately, the Chancellor ultimately gave them nothing and so whilst the uncertainty may have lifted, we can expect the market to now limp towards the finish line in 2025, with no surge in activity expected to drive us into 2026.”
Verona Frankish, chief executive of Yopa, added: “A static rate of house price appreciation in November reflects the holding pattern that the property market found itself in ahead of the Autumn Budget.
“Buyers waited, sellers held back and activity naturally slowed until households knew what the Chancellor had in store.
“That moment has now passed, but what matters most is that house prices continue to rise annually, showing the sector’s long-term strength.
“The Budget didn’t offer the boost many hoped for, but 2025 has already delivered a consistent performance that sets a strong foundation for continued progress in 2026.”
08:57am
The cost of government borrowing edged up as a sell-off in Japanese debt showed little sign of slowing down.
The yield on 10-year gilts – as UK government bonds are known – crept higher to 4.44pc as investor concern persists over public finances around the world.
Yields on 30-year Japanese government bonds have hit record highs, after the Bank of Japan gave its strongest signal yet this week that interest rates could rise this month.
Long-dated yields elsewhere have been swept higher as well, outpacing the rise in shorter-dated yields in a dynamic known as curve steepening.
Yields on 30-year German bonds are up nine basis points this week, the most since mid-August.
By contrast the yield on 30-year gilts has fallen after the Budget restored some confidence in the sustainability of the public finances.
08:29am
Housebuilders fell after Halifax data showed the property market stalled in November after the “uncertainty” created by the Budget.
Developers on the FTSE 100 and FTSE 250edged down 0.1pc, with Vistry falling at the fastest pace of 0.7pc.
08:09am
The UK’s stock markets edged higher in anticipation of closely watched data in the US which could impact how many times interest rates are cut in the near future.
The FTSE 100 edged up 0.1pc in early trading to 9,719.15 while the mid-cap FTSE 250 was flat at 22,078.01.
It comes as the personal consumption expenditures (PCE) index, the Fed’s preferred measure of inflation, will be released in the US later.
A reading below-forecasts would likely ramp up hopes for several more interest rate reductions in the US in 2026, which could pave the way for the Bank of England to do the same.
08:01am
The Budget had a “chilling effect” on areas of the property market with higher prices, according to a buying agent.
Jonathan Hopper, chief executive of Garrington Property Finders, said Halifax’s data reveals “just how nervy the market became in the weeks running up to the Budget”.
He said: “In November, large swathes of the market were suspended between confidence and caution.
“Every deal was hard-fought and sentiment was fragile, especially in areas with higher average prices – where pre-Budget jitters had a sharp chilling effect.
“On a regional basis, the market looked positively K-shaped. Prices in the north of England, Scotland and Northern Ireland ratcheted up while they fell in London and surrounding counties.”
The Chancellor introduced a mansion tax in the Budget, which will add a surcharge to home worth more than £2m on their council tax.
But Mr Hopper added there has been a “collective sigh of relief in the capital’s prime market that the Budget wasn’t as punitive as it might have been”.
07:44am
The Halifax data paints a more pessimistic picture of the housing market than the rival index released by Nationwide.
Nationwide’s figures indicated house prices rose 0.3pc between October and November. Compared to the same month last year, it said prices rose by 1.8pc in November, down from 2.4pc growth in the 12 months to October.
Ashley Webb of Capital Economics said: “The stagnation in the Halifax measure of house prices in November sends a weaker signal than the Nationwide release earlier this week.
“But with prices having only fallen once in the last six months, the big picture is that the housing market has been resilient to the combination of high mortgage rates, weak employment and Budget uncertainty.”
Capital Economics predicts interest rates will fall from 4pc now to 3pc next year, rather than to 3.5pc expected by investors.
Mr Webb said this implies lower mortgage rates will allow house prices to rise 3.5pc next year and by 3pc in 2027.
He added: “The recent stability of mortgage approvals suggests house price growth will pick-up next year.”
07:30am
Britain’s housing market has held up “remarkably well” in the face of the Budget after going through five interest rate cuts since August last year, the president of property portal OnTheMarket said.
Jason Tebb said: “The housing market showed considerable resilience this year, shaking off external economic concerns and holding up remarkably well even when the stamp duty concession ended and when speculation was rife as to what property taxes the Budget might contain.
“However, national average figures conceal significant regional differences with the market performing stronger in the north than the more expensive south, where affordability is more of an issue.
“Confidence among buyers and sellers has been boosted by five base rate cuts over the past 16 months.
“Whether there is another reduction this month, or borrowers have to wait until the new year, there is finally a stability in the market which is helpful. Further reductions in base rate will assist with affordability, stimulate the market and encourage activity into the new year.”
07:23am
House prices fell in London at the fastest pace across the country, although it remains the most expensive place to live.
In the South, three regions saw prices decrease in November. In London prices fell by 1pc, the South East by 0.3pc and Eastern England by 0.1pc.
London remains the most expensive part of the UK, with an average property now costing £539,766.
07:21am
Northern Ireland remained the strongest performing nation in the UK for house prices.
Property values were up 8.9pc over the last year, up from 7.9pc last month, making the typical home worth £220,716.
Scotland recorded annual price growth of 3.7pc in November, up to an average of £216,781. In Wales property values rose 1.9pc to £229,430.
In England, the North West recorded the highest annual growth rate, with property prices rising by 3.2pc to £245,070, followed by the North East with growth of 2.9pc to £180,939.
07:15am
Thanks for joining me. House prices hit a standstill last month as buyers faced “uncertainty” in the lead up to the Budget.
The value of a typical home was unchanged between October and November, according to the latest Halifax house price index.
Compared to the same month last year, house prices grew by 0.7pc, a sharp slowdown from the 1.9pc in the 12 months to October.
This made the average property worth 299,892, up £138 to a new record high.
Amanda Bryden, head of mortgages at Halifax, said: “This consistency in average prices reflects what has been one of the most stable years for the housing market over the last decade. Even with the changes to Stamp Duty back in spring and some uncertainty ahead of the Autumn Budget, property values have remained steady.
“While slower growth may disappoint some existing homeowners, it’s welcome news for first-time buyers. Comparing property prices to average incomes, affordability is now at its strongest since late 2015. Taking into account today’s higher interest rates, mortgage costs as a share of income are at their lowest level in around three years.
“Looking ahead, with market activity steady and expectations of further interest rate reductions to come, we anticipate property prices will continue to grow gradually into 2026.” Here is what you need to know.
1) Rightmove under pressure as activist investor takes £250m stake | London-based Independent Franchise Partners (IFP) has built up a 5.8pc stake in the house-buying portal in recent weeks, becoming Rightmove’s third-biggest shareholder
2) Reeves ‘could raid school budget’ as birth rate collapses | A sharp fall in the number of school pupils over the next decade leaves room for the Chancellor to raid the education budget for savings, the Institute for Fiscal Studies (IFS) has said
3) Trustpilot accused of running ‘mafia-style extortion racket’ | Shares in the online customer review platform slumped to a two-year low on Thursday after an American research firm accused it of using “illegal tactics” to push companies into signing up for accounts
4) Scotland’s key carbon capture project faces collapse in new blow to Miliband | The driving force behind the project, energy group Storegga, said it planned to sell its stake in the scheme, delivering a major blow to the net zero push spearheaded by Ed Miliband, the Energy Secretary
5) Zuckerberg prepares to abandon Metaverse dream | Meta shares surged by $100bn (£75bn) as investors cheered plans for Mark Zuckerberg to rein in spending at his struggling “Metaverse” unit
Japan’s Nikkei wiped out this week’s gains as Asian markets were mixed before a key US inflation reading.
The Nikkei 225 fell 1.3pc after weaker-than-expected household spending highlighted the impact of inflation.
Bets on an interest rate rise later in the month grew. The yield on 10-year Japanese government bonds hit 1.94pc early in the day, its highest since mid-2007.
The benchmark yield was on track for a 12.5 basis point rise this week, marking the steepest five-day climb since March, but recent strong auction results suggested the cheap bond prices are drawing buyers into the market.
A quarter-point rate rise from the Bank of Japan later this month is now being priced at 75pc, after Governor Kazuo Ueda told investors on Monday the central bank would weigh the “pros and cons” of raising interest rates.
In Chinese markets, Hong Kong’s Hang Seng index slid 0.1pc to 25,921.69, while the Shanghai Composite index rose 0.1pc to 3,877.83, as traders turned cautious ahead of key data from China next week including inflation, trade and producer prices. Investors are also awaiting policy signals from high-level economic meetings in China.
South Korea’s Kospi index rose 1.1pc to 4,074.00. Among gainers were LG Electronics, which rose 5.6pc, and Hyundai Motors, which added 7.2pc.
In Australia, the S&P/ASX200 edged up less than 0.1pc to 8,623.40. Taiwan’s Taiex was nearly unchanged.
The broader MSCI index of Asia-Pacific shares outside Japan was up 0.4pc and was set for a gain of 1pc for the week. Most regions were up a little but South Korea managed a decent rise of 1.4pc.
In the US, the Dow Jones Industrial Average closed almost 0.1pc lower, while the benchmark S&P 500 gained 0.1pc and the tech-heavy Nasdaq Composite rose 0.2pc.
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