Economy

Asking prices for homes coming to the market rose by 7.8% year-on-year in October, the smallest increase since January.Britain’s housing market had already been showing signs of cooling after a more than 20% surge in prices since the start of the pandemic as the cost of living rose and the Bank of England steadily increased interest rates.But last month Truss’s government announced a plan to boost economic growth through unfunded tax cuts that alarmed financial markets.The turmoil meant some institutions temporarily stopped selling mortgages to new customers, while others ramped up repayment rates for new loans.Rightmove said the first-time buyer category had been hit hardest by the uncertainty.”Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties,” Tim Bannister, Rightmove director of property science, said.Rightmove reported a rush of buyers trying to complete sales before mortgage offers fixed at prior lower repayment rates expired.Bannister said would-be buyers faced tricky decisions now.”It’s understandable that some new movers who have the option to wait may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home,” he said.Rightmove’s index of asking prices, which is not seasonally adjusted, typically falls in November and December. More

LONDON (Reuters) – Britain’s new finance minister Jeremy Hunt faces an early test of his attempt to stem the crisis of confidence in Prime Minister Liz Truss on Monday when the bond market delivers its verdict on his weekend overhaul of her economic programme.Truss fired her friend Kwasi Kwarteng and named Hunt as her new chancellor of the exchequer on Friday in the hope of recovering some economic policy credibility and staying in Downing Street, little more than month after she moved in. But British bond prices immediately renewed their sharp sell-off in the final hours of trading last week as investors decided that Truss’s decision to allow a rise in tax on company profits – reversing her promise to freeze them – was not enough.Hunt, a former foreign and health minister, said on Saturday some taxes will go up, spending will rise less than previously planned and that he hoped investors would take note of his changes that represented a near total U-turn in fiscal policy. “No government can control the markets. No chancellor should seek to do that,” Hunt told BBC television in an interview broadcast on Sunday.”There is one thing we can do and that’s what I’m going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.”The Sunday Times reported Hunt would delay by a year a cut to income tax for workers which Truss had promised for April.Trading in Britain’s battered government bonds resumes at 8am (0700 GMT) on Monday, the first day that trading in long-dated debt will not be supported by emergency Bank of England bond-buying which began on Sept. 28 and expired on Friday.”MEETING OF MINDS”Any bond market respite is likely to prove fragile before Hunt announces a new budget plan on Oct. 31.The budget will aim to narrow a hole in public finances that the Sunday Times reported is as big as 72 billion pounds ($80.4 billion), including the 45 billion pounds of tax cuts originally planned by Truss, only about 20 billion pounds of which have so far been reversed.BoE Governor Andrew Bailey gave Hunt a vote of confidence on Saturday, saying they had an “immediate meeting of minds” on the need to fix the public finances. But Bailey also said interest rates would probably have to go up sharply next month, even with the economy likely to go into a recession soon.Goldman Sachs (NYSE:GS) said on Sunday it expected Britain’s economy to shrink by 1.0% in 2023, a more severe contraction than its previous forecast of a 0.4% shrinkage, as Truss’s tax cuts were reversed.Former finance minister George Osborne, who oversaw a tight squeeze on spending for six years until the 2016 Brexit vote, said the last six years of political upheaval in Britain were taking its toll on the economy.”That is how the rest of the world looks at it,” he told Channel 4 television. “You have this unreality in the British political system – they don’t want to address the fundamental deterioration in the UK’s economic position in the world.” ($1 = 0.8949 pounds) More

LONDON (Reuters) – More large British companies view borrowing as expensive than at any time in the past decade, due partly to financial market turmoil caused by the government’s “mini-budget”, according to a survey published on Monday.The quarterly Deloitte UK CFO Survey found 56% of chief financial officers at top companies thought credit was costly, the most since 2010. Some 39% said new credit not easy to get.”A 12-year period of easy credit conditions is drawing to an end,” Ian Stewart, chief economist at Deloitte, said. “Not since the credit crunch have CFOs rated debt – whether that’s bank borrowing or corporate bonds – as being less attractive as a source of finance for their businesses than they do today.”CFOs who responded after Sept. 23’s mini-budget were more likely to report high credit costs than those who responded before, Deloitte said.British borrowing costs in financial markets jumped in late September after the finance minister at the time, Kwasi Kwarteng, announced 45 billion pounds ($50 billion) of unfunded tax cuts.Kwarteng was fired on Friday by Prime Minister Liz Truss who also announced a U-turn on the country’s corporate tax rates. She had wanted to freeze them but they will now rise in April, as planned by the previous government of Boris Johnson.The Deloitte survey found CFOs on average saw a 78% chance that Britain would fall into recession in the next 12 months, and had tilted towards defensive strategies which prioritised cost reduction and cash control.The survey of 87 CFOs, including 23 from FTSE 100 companies and 30 from FTSE 250 firms, took place between Sept. 20 and Oct. 3. ($1 = 0.8917 pounds) More

The head of Britain’s biggest union has warned that the largest nationwide strike by NHS workers since the early 1980s could hit health services this winter if ministers ignore calls to match pay with inflation.Christina McAnea, general secretary of Unison, said the union would be balloting 406,000 members in the NHS across England, Wales and Northern Ireland from October 27, while a ballot of Scottish members was already under way. Other unions representing NHS workers, including the Royal College of Nursing, are holding their own votes and could join Unison in co-ordinated action involving 750,000 workers.Industrial action would lead to operations and appointments being cancelled, adding to the intense strains on health services, with a record 7mn people now waiting for hospital treatment. McAnea said pressures had become so acute that many parts of the health system were already operating with staffing levels close to the minimum that would be in place during a strike to ensure patients’ safety.“We’re haemorrhaging staff. The NHS can’t keep its staff or recruit,” McAnea said, adding that ambulance workers in particular felt the service was already “as bad as it’s been by going on strike”.The ballot move comes as Britain enters an “autumn of discontent” with strikes disrupting rail networks, major ports, Royal Mail postal services and 999 emergency call handlers joining continuing action by staff at BT Group. Last week, the RMT transport union confirmed it would ask members to back a further six months of industrial action on the railways. Teachers’ and doctors’ unions are also preparing to ballot their members and — in an echo of the past — Unison members at the National Coal Mining Museum have voted to strike.McAnea said action on this scale had not occurred since the bitter disputes with Margaret Thatcher’s government over nurses’ pay in the early 1980s. 

Christina McAnea: ‘We’re haemorrhaging staff. The NHS can’t keep its staff or recruit’ © Charlie Bibby/FT

The government’s flat-rate pay increase of £1,400 earlier this year for all staff covered by the NHS Agenda for Change contract is relatively generous to the lowest-paid staff, although wages are still falling in real terms. But many professionals on modest salaries — including nurses, paramedics and physiotherapists — would see their pay rise by about 4 per cent under the current offer. In comparison, consumer prices rose 9.9 per cent in the year to August while average wages, including bonuses, in the private sector grew 6.8 per cent. Many people on salaries of around £30,000 were exhausted after routinely being asked to work extra shifts and weekends, and “really feeling the pinch”, McAnea said, with the new worry of rising mortgage rates prompting some to seek second jobs.

New research commissioned by the NHS Confederation showed that the NHS is a major contributor to the UK economy and that every £1 invested in the health service generates as much as £4 of economic growth. Speaking ahead of the annual gathering of the UK trade union movement at the TUC Congress in Brighton on Tuesday, McAnea rejected comments from prime minister Liz Truss telling striking rail staff to “get back to work” so the country can move forward.Ministers had not yet responded to her requests for a meeting, she said, contrasting the approach of the Westminster government with those in Scotland, Wales and Northern Ireland, where “we’re seen as part of the social fabric of the country”.Unions would find ways to operate even if the government pressed ahead with plans to raise the thresholds for strike ballots to pass, McAnea suggested, but warned that a separate proposal — to require unions to put all offers from employers to their members — was impractical. More

WASHINGTON (Reuters) – Japan and other countries facing the fallout from a soaring U.S. dollar found little comfort from last week’s meetings of global finance officials, with no sign that joint intervention along the lines of the 1985 “Plaza Accord” was on the horizon.With a strong push from Japan, finance leaders of the Group of Seven advanced economies included a phrase in a statement on Wednesday saying they will closely monitor “recent volatility” in markets.But the warning, as well as Japanese Finance Minister Shunichi Suzuki’s threat of another yen-buying intervention, failed to prevent the currency from sliding to fresh 32-year lows against the dollar as the week came to a close.While Suzuki may have found allies grumbling over the fallout from the U.S. central bank’s aggressive interest rate hike path, he conceded that no plan for a coordinated intervention was in the works.”Many countries saw the need for vigilance to the spill-over effect of global monetary tightening, and mentioned currency moves in that context. But there wasn’t any discussion on what coordinated steps could be taken,” Suzuki said in a news conference on Thursday after attending separate meetings of the G7 and G20 finance leaders in Washington.U.S. Treasury Secretary Janet Yellen made clear that Washington had no appetite for concerted action, saying the dollar’s overall strength was a “natural result of different paces of monetary tightening in the United States and other countries.””I’ve said on many occasions that I think a market-determined value for the dollar is in America’s interest. And I continue to feel that way,” she said on Tuesday, when asked if she would consider a Plaza Accord 2.0 agreement.NO YEN SUPPORTIn 1985, a destabilizing surge in the dollar prompted five countries – France, Japan, the United Kingdom, the United States and what was then West Germany – to band together to weaken the U.S. currency and help reduce the U.S. trade deficit. Following the deal, named the Plaza Accord for the famed New York hotel where it was hammered out, the dollar shed roughly 25% of its value over the ensuing 12 months.With no current U.S. interest in engineering that kind of deal, other countries have to find ways to mitigate the pain stemming from a strong dollar, which has forced some emerging economies to hike interest rates to defend their currencies even at the cost of cooling economic growth more than they want.Emerging Asian nations have seen significant capital outflows this year that are comparable to previous stress episodes, heightening the need for policymakers to build liquidity buffers and take other steps to prepare for turbulence, said Sanjaya Panth, deputy director for the International Monetary Fund’s Asia and Pacific Department.”The situation for Asian economies is very different from where they were 20 years ago” as countries accumulated foreign reserves that make them more resilient to external shocks, Panth told Reuters on Thursday on the sidelines of the IMF and World Bank annual meetings in Washington.”At the same time, the rising debt levels, particularly in some economies in the regions, are a concern,” he said. “Some form of market stress cannot be ruled out.”The Bank of Korea delivered its second-ever 50-basis-point interest rate hike on Wednesday and made clear the won’s 6.5% slide against the dollar in September that drove up import costs played a key role in the decision.South Korea’s central bank Governor Rhee Chang-yong said on Saturday he does not sense an interest among U.S. officials to stem the dollar’s strength through joint intervention.But he said some kind of international cooperation on the dollar may be needed “after a certain period.””I think a too-strong dollar, especially for a substantial period, won’t be good for the Unites States either, and actually I’m thinking about the long-term implication for the trade deficit, and maybe another global imbalance may happen,” he said.In Japan, the onus is on the government to deal with a renewed plunge in the yen, caused in part by the policy divergence between the Federal Reserve’s determination to raise U.S. interest rates and the Bank of Japan’s resolve to keep borrowing costs ultra-low.At the news conference where Suzuki issued his warning about sharp yen falls, BOJ Governor Haruhiko Kuroda ruled out anew the chance of a rate hike.The dollar jumped about 1% to a fresh 32-year high of 148.86 yen on Friday, testing authorities’ resolve to combat the Japanese currency’s relentless slide. The dollar/yen is now up roughly 2% from levels when Japan intervened on Sept. 22 to buy yen for the first time since 1998.Japanese policymakers have said they won’t seek to defend a certain yen level, and instead will focus on smoothing volatility.Masato Kanda, the country’s top currency diplomat, told reporters on Friday that authorities were ready to take “decisive action any time” if excessively volatile yen moves continued.Even moderating abrupt yen moves, however, could be a challenge as Kuroda’s assurance that the BOJ will keep interest rates in negative territory gives investors a green light to continue dumping the currency.”It’s impossible to reverse the yen’s downtrend with solo intervention,” said Daisaku Ueno, chief forex strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley (NYSE:MS) Securities.”Once the yen falls below 150 to the dollar, it’s hard to predict where its depreciation could stop because there’s no technical chart support until around 160,” he said. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeeverIt seems like an age away, but whatever optimism investors had at the start of the quarter for a broad-based market rebound looks to have completely evaporated. Friday’s slump on Wall Street, spike in the 10-year U.S. bond yield above 4% and the Fed’s implied terminal rate to almost 5%, and dollar surge to fresh 32-year peaks against the yen near 150.00 saw to that. Asian markets on Monday will likely get clobbered.It is becoming increasingly clear that the Fed will not stop raising rates until it sees hard evidence that inflation is falling. It’s safe to say September’s inflation report was not what policymakers – or investors, businesses or households – were hoping for. On top of this macro gloom, micro and market conditions are deteriorating too.The U.S. earnings season goes up a gear this week, with Tesla (NASDAQ:TSLA), J&J (NYSE:JNJ), BofA and Goldman among those reporting. Analysts expect third-quarter earnings per share growth for the broader index excluding energy to fall 2.6%, Refinitiv data shows. Liquidity across a range of markets, particularly bond markets, is worryingly thin. The UK gilt market has come under the spotlight, but even U.S. Treasuries might not be immune from dysfunction, analysts say.All in all, it is an extremely challenging backdrop for investors, even if many assets might seem extremely cheap. The trouble is, they can get even cheaper before recovering.Asian markets have all that to digest on Monday, as well as Chinese President Xi Jinping’s address to the Communist Party Congress on Sunday, which focused heavily on security issues.Meanwhile, the regional data front this week sees the release of Q3 GDP, unemployment, trade, house prices, FDI and an interest rate decision from China, and Japanese inflation and Australian central bank meeting minutes. Key developments that could provide more direction to markets on Monday:South Korea trade Japan tertiary activity index (August)New York Fed manufacturing index (October) More

Hello and welcome to the working week.Or should that be the week of the workers? The 20th national congress of the Chinese Communist party is under way in Beijing and all eyes are on President Xi Jinping ahead of the expected vote to hand him an unprecedented third term in office. The FT has spoken with more than two dozen business executives, farmers, government officials and Chinese academics — although, understandably, none would go on the record — to give a broad picture of the country as it enters this new era.Back in the UK, representatives of British workers will gather in Brighton for the annual TUC Congress, which was rescheduled due to the death of Queen Elizabeth II last month. Given the state of the economy and industrial unrest, there will be much to discuss. Pensions, the cost of living crisis and defending the right to strike are all on the agenda.Economic troubles will be high on the agenda for the European Council meeting between EU heads of state, which begins on Thursday in Brussels.The fallout from the January 6 2021 attack on Capitol Hill continues to grab headlines in the US. On Friday, Donald Trump’s former political adviser Steve Bannon is due to be sentenced for contempt of Congress after failing to comply with a subpoena issued by the committee investigating the attack. He faces a fine of between $100 and $100,000 as well as a minimum of 30 days and a maximum of one year in jail for each count.Finally, among the anniversaries this week is a significant one for a British institution as the BBC turns 100. Many people will have a view on this. Perhaps it is time to review former FT editor Lionel Barber’s take on a century of “Auntie Beeb”.What events are concerning you in the coming seven days? You can contact me directly by sending a message to [email protected]. Thank you.Economic dataIt’s going to be another difficult week for economic data, but then these are the times we are in. UK inflation figures for September are likely to see another rise in the headline rate back in double digits, while the GfK confidence reading and retail sales update will probably underline how unlikely a consumer-led recovery is at the moment. Plus, on Friday, S&P will review the UK’s credit rating of AA (currently with a negative outlook) as will Moody’s. Another Friday that is unlikely to be quiet for the British press.The Federal Reserve will on Wednesday publish its latest Beige Book, providing commentary on current US economic conditions, and there will be an update on the increasingly fragile American housing market.China’s monthly activity indicators will most likely illustrate the ongoing impact of Covid-19 restrictions.CompaniesWe’re deep into the earnings season, starting the week with the rest of the big Wall Street banks reporting third-quarter numbers, followed by a mixture of consumer goods, retail, media, airlines and tech.Higher costs are hitting online retailers. Naked Wines, which reports interims on Monday, shocked the markets last month when it reported a change in strategy towards profitability. Asos will present full-year earnings on Friday, the first under the tenure of chief executive José Antonio Ramos Calamonte, but has already warned that these will be at the bottom of expectations due to cutbacks in consumer spending.Investors in UK residential housebuilder Bellway will be looking at the future given concerns about the impact of rising borrowing costs on the British housing market. The order book stood at £2.1bn in August, but more recent trading patterns and levels of sales interest will be key, alongside any signs of stress in the mortgage market.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayNew Zealand, Q3 consumer price index inflation rate dataUK, a government consultation on a new legal framework for defined benefit pension schemes, including a set of rules for funding and investment strategies, closes today. The government wants schemes to reduce investment risk. Results: Bank of America Q3, Bank of New York Mellon Q3, Charles Schwab Q3, Naked Wines H1, Rio Tinto Q3 operations updateTuesdayChina, monthly GDP, retail sales and industrial production figuresGermany, ZEW economic sentiment surveyUS, September industrial production figures plus NAHB housing market indexResults: Bellway FY, BP Marsh & Partners H1, Goldman Sachs Q3, Hasbro Q3, Johnson & Johnson Q3, Lockheed Martin Q3, Moneysupermarket Q3 trading statement, Netflix Q3, Omnicom Q3, Publicis Groupe Q3 sales, Roche Q3, Signature Bank Q3, State Street Q3WednesdayCanada, September CPI figuresEU, September HICP inflation rate dataUK, September CPI, producer price index (PPI) and retail price index (RPI) inflation rate dataUS, Federal Reserve publishes its Beige Book summary of economic conditionsResults: América Móvil Q3, ASML Q3, Asos FY, Deutsche Boerse Q3, Hargreaves Lansdown Q1 trading update, IBM Q3, Just Eat Takeaway Q3 trading update, Liontrust H1 trading update, Man Group Q3 trading update, Nestlé Q3, Procter & Gamble Q3, Rathbones Group Q3, Tesla Q3, Travelers Q3, United Airlines Q3ThursdayCanada, monthly retail sales figuresFrance, October business confidence surveyGermany, September PPI inflation rate dataJapan, September trade balance figuresUS, existing home sales and jobless claims dataResults: ABB Q3, AJ Bell FY trading update, Akzo Nobel Q3, American Airlines Q3, AT&T Q3, Bunzl Q3 trading update, Centamin Q3, Dunelm Q1 trading update, GB Group H1 trading update, Jupiter Fund Management Q3 trading update, Marsh & McLennan Q3, National Express trading update, Nokia Q3, Pernod Ricard Q1, Philip Morris Q3, Schroders Q3 trading update, Travis Perkins Q3 trading update, Union Pacific Q3, Vivendi Q3FridayEU, consumer confidence figuresHong Kong, September CPI inflation rate dataJapan, September CPI inflation rate dataUK, GfK consumer confidence survey, September public sector net borrowing and September retail sales figures. Citi/YouGov public inflation expectations survey. Plus, S&P to review the UK’s credit rating AA (negative outlook); Moody’s to review the UK’s credit rating.Results: American Express Q3, Deliveroo Q3 trading update, IHG Q3 trading update, London Stock Exchange Q3 revenues update, Schlumberger Q3, Sika Q3, Verizon Communications Q3, Whirlpool Q3, Wickes Q3 trading updateWorld eventsFinally, here is a rundown of other events and milestones this week. MondayFrance, President Emmanuel Macron opens the Paris Motor ShowGermany, Chancellor Olaf Scholz greets Spain’s King Felipe and President Frank-Walter Steinmeier hosts a state dinner for the royals during their official visitLuxembourg, meeting of EU foreign ministers to discuss the Ukraine war, EU relations with China and the upcoming COP27 UN Climate Change ConferenceSpain, trial due to begin of the football clubs Barcelona and Santos and footballer Neymar on fraud and corruption charges over the transfer of the Brazil forward to Barça in 2013UK, winner of the Booker Prize, the leading prize for English language fiction, will be announced at a ceremony in LondonTuesdayAzerbaijan, Restoration of Independence Day national holidayQatar, official opening of the Al-Kharsaah solar power plant, a key part of the country’s ambition to host the first net zero football World Cup later this yearUK, the rescheduled TUC Congress gathering for trades union members begins in Brighton. Pensions, the cost of living crisis and defending the right to strike are among the items on the agenda.UK, centenary of the founding of the British Broadcasting CorporationWednesdayThailand, finance ministers from Asia-Pacific Economic Cooperation (Apec) countries begin a three-day meeting in BangkokThursdayBelgium, European Council meeting between EU heads of state begins in Brussels with the Ukraine war, the energy crisis and the economy on the agenda.FridayUS, Steve Bannon, a key associate of former president Donald Trump, to be sentenced for contempt of Congress for defying subpoena from the committee investigating last year’s attack on the US CapitolSaturdayNew Zealand, draw to decide the group stage matches for the ninth Women’s World Cup, which will begin in July 2023 at venues in Australia and New ZealandSundaySlovenia, presidential election More

Tunisia has reached a preliminary agreement with the IMF on a $1.9bn loan designed to help alleviate the North African economy plagued by food and fuel shortages.The deal, which was announced late on Saturday and is yet to be ratified by the IMF board in December, is expected to open the door to loans from other donors awaiting the reassurance that the heavily indebted country was committed to reforms, which form part of the package. Before the agreement, some analysts were predicting Tunis would not be able to meet its debt repayments and would likely default.This will be the third agreement between Tunisia and the IMF since 2013 and diplomats have warned in recent months that the country has failed to implement previously agreed reforms. These included reducing subsidies, privatising state-owned enterprises and cutting civil service wage cost, which is seen as one of the highest in the world relative to the size of the economy.The Tunisian government had “already taken steps to contain the civil service wage bill and started to gradually phase out generalised wasteful price subsidies”, the IMF said on Saturday.It said the loan would help Tunisia restore fiscal stability, “enhance social protection and promote higher, greener and inclusive growth and private sector-led job creation”. Elements of Tunisia’s reform programme include increasing targeted cash transfers to the poor and expanding the social safety net for vulnerable families affected by price rises, according to the IMF. The government is also committing to reforming state-owned companies.Earlier this month, long queues of cars formed outside petrol stations as a result of fuel shortages attributed to the rationing of foreign currency by the central bank. Kais Saied, the president who rules by decree and has changed the constitution in the summer to gain extensive powers, has accused speculators and hoarders of stockpiling commodities and manipulating the market to make huge gains.Until Saied suspended parliament last year, Tunisia was seen as the only example of a successful democratic transition to have emerged from the Arab uprisings of 2011. Many Tunisians said at the time that they supported his move because the democratic experiment failed to stem economic decline and rising prices.But the country’s economic woes have worsened since, as Russia’s full-scale invasion of Ukraine placed increased strains on Tunis’s budget by fuelling steep increases in the prices of food and petrol imports.Commodities such as sugar and vegetable oil have been in short supply. Recent video footage that went viral showed customers jostling each other at a supermarket in order to seize scarce packets of staples. More