Aurelia Butler

UK consumer confidence has defied expectations of an improvement and fallen to a new all-time low, as households struggle under the pressure of the cost of living crisis.The consumer confidence index, a closely watched measure of how people view their personal finances and wider economic prospects, dropped 5 percentage points to minus 49 in September, research group GfK said on Friday. That was the lowest since records began in 1974.Joe Staton, GfK client strategy director, said confidence had “tumbled” in September to a new low as households “buckl[ed] under the pressure of the UK’s growing cost of living crisis driven by rapidly rising food prices, domestic fuel bills and mortgage payments”.The fall defied expectations of a small rise to minus 42 forecast by economists polled by Reuters, who thought there would be some improvement following the government’s £150bn package aimed at freezing household energy bills. The data come the day after the Bank of England lifted interest rates by 50 basis points to 2.25 per cent, the highest since 2008, meaning borrowing will become more expensive for businesses and households. “For consumers already struggling to keep their household finances in check, the increased cost of borrowing as a result of the rate rise . . . may signify the breaking point, leading to the acceleration of decrease in demand,” said James Brown, managing partner at global consultancy Simon-Kucher & Partners.Incorporating the energy bills freeze, the BoE expects UK inflation to peak at 11 per cent in October from its current 9.9 per cent, a near 40-year high, further eroding households’ real incomes. The data also follow confirmation, ahead of Friday’s mini-Budget, that the government will from November reverse the 1.25 per cent rise in national insurance contributions that was introduced in April. Staton said the “mini-Budget, and the longer-term agenda to drive the economy and help rebalance household finances, will be a major test for the popularity of Liz Truss’s new government”.The GfK index, based on interviews collected in the first two weeks of the month, showed scores in relation to four of the five questions posed, which touch on personal finances and the wider economic picture, at record lows.Forward-looking indicators, which track expectations for the next 12 months, registered the largest fall, dropping 9 percentage points for personal finances and 8 percentage points for the economy.Economists expect record-low consumer confidence to result in falling spending, a trend registered by the BoE in its agents survey published on Thursday.

It showed that food retailers reported customers opting for cheaper goods and cutting back on non-essential items, such as confectionery. Discount chains gained market share, while sales of household items, such as furniture, electrical goods and home-improvement products, fell.Clothing sales were supported by the return to the office, but in hospitality, sales were down on pre-pandemic levels. Holiday booking also weakened and domestic tourism was limited by higher petrol prices.Demand was strong, however, for financial services and legal advice, such as tax planning, equity release, debt consolidation and early repayment. Third sector organisations also reported a large rise in people seeking debt advice. More

WASHINGTON (Reuters) -The International Monetary Fund’s board is expected to approve a new “food shock window” in the next few weeks that will allow the global lender to provide emergency funding to Ukraine, the head of the fund’s European department said on Thursday.Alfred Kammer told a conference hosted by Bloomberg that the Ukrainian government and its central bank deserved “huge credit” for managing the economic shocks caused by Russia’s invasion of the country on Feb. 24.He said an IMF mission would examine Ukraine’s budget plans and the fiscal-monetary policy mix in late October, and stressed that the central bank needed to avoid printing money to finance its budget deficit, while focusing on tax revenues instead.The fund provided $1.4 billion in emergency assistance to Ukraine in March, shortly after the war began, and worked with authorities with great success, using “orthodox and unorthodox” measures to stabilize the macroeconomy. Ukraine could receive another $1.3 billion in emergency assistance when the IMF’s board approves expanded access to its Rapid Finance Instrument (RFI) for countries experiencing food shocks as a result of the war, Kammer said.Kammer said that vote was expected in the next few weeks, and a source familiar with the matter said it was likely to occur on Sept. 30.”We are discussing with Ukraine a macro stabilization framework … that will help Ukraine in terms of internal coordination of policies, it will help in terms of identifying the external financing needs, and it will help donors to provide that financing in a timely manner,” he said.Kammer said the fund had remained in close touch with Ukrainian authorities since the war began, and was now discussing a more formal monitoring arrangement.”What we’re aiming at ultimately – this is leading towards a fully-fledged IMF program,” he added, noting that the situation was challenging given that planning was only possible on a “month-to-month” basis at the month given the ongoing war. More

Japan intervened in the foreign exchange market earlier to buy yen in an attempt to shore up the battered currency after the Bank of Japan stuck to its ultra-low interest rates, further pressuring the currency against the dollar.”The government will continue watching market moves closely with a high sense of urgency, and take necessary steps decisively in response to excessive fluctuations,” Kishida told a news conference in New York.Kishida, visiting the United States to attend the U.N. General Assembly, said Japan will ease its border controls from Oct. 11, eliminating the cap on the number of entrants into Japan and allowing visa-free travel, including by individuals.The prime minister also said he would issue instructions to his ministers on Sept. 30 about compiling a fresh stimulus package.”Upon compiling it in October, we will swiftly move to execution,” he said. More

He is expected to detail more measures in a mini-budget on Friday, including tax cuts, energy subsidies and planning reforms.Below is a brief overview of the key measures announced so far, and additional steps that could be announced on Friday.PAYROLL TAX RISE REVERSEDA 1.25 percentage point increase in payroll tax – or national insurance – that took effect earlier this year will be reversed from Nov. 6.DIVIDEND TAX RISE SCRAPPEDAn increase to dividend tax rates which had been brought in alongside the payroll tax increase – to raise contributions from those who are paid through different channels – will be scrapped from April 2023.INVESTMENT ZONESKwarteng is expected to say on Friday the government is in talks with 38 local authority areas in England to set up investment zones offering “generous, targeted and time-limited tax cuts” for businesses to create jobs and increase productivity.The zones will also see reforms to environmental regulation and streamlined planning polices.INFRASTRUCTURE PROJECTSKwarteng will also set out measures to speed up the delivery of around 100 major infrastructure projects including wind farms, roads and railways.The measures will include legislation in the coming months to help reduce “unnecessary burdens” to infrastructure projects.NO CORPORATION TAX INCREASEBritain’s 19% corporation tax rate – the lowest among the G7 club of rich nations – had been due to rise to 25% in 2023 but Friday’s mini-budget is expected to scrap those plans.STAMP DUTY CUTStamp duty on house purchases will be cut to boost economic growth by enabling first-time buyers to get on the property ladder, the Times newspaper reported on Wednesday. More

PARIS (Reuters) -France’s biggest retailer Carrefour (EPA:CARR) has increased its offer in the third round of wage talks with unions, suggesting a 2.5% pay hike from November this year, a company spokesperson said on Thursday. The offer would mean an overall 8.3% wage increase when compared to August 2021. Some unions had threatened to call a strike late this week, saying the supermarket chain’s previous offer of 2% was insufficient as workers struggle with soaring inflation. The CFDT union said on Twitter (NYSE:TWTR) it would now discuss the offer with workers. The offer also includes a 100 euro ($98.49) extra payment in October and a 12% discount on purchases at Carrefour made by workers, the union added. French companies have come under pressure to do their part in helping staff maintain their purchasing power. Large companies including Air France and Renault (EPA:RENA) recently announced they would in an exceptional move raise wages or pay extra bonuses this year.French consumer price inflation stood at 6.6% last month in EU-harmonised terms. ($1 = 1.0153 euros) More