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| Poor households hit hard as UK inflation sticks at five-year high - business live | Poor households hit hard as UK inflation sticks at five-year high - business live |
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| Over in Greece prime minister Alexis Tsipras has taken many by surprise with an announcement that his government will distribute €1.4bn worth of welfare handworks to citizens worst hit by cuts in the coming weeks. Helena Smith reports from Athens: | Over in Greece prime minister Alexis Tsipras has taken many by surprise with an announcement that his government will distribute €1.4bn worth of welfare handworks to citizens worst hit by cuts in the coming weeks. Helena Smith reports from Athens: |
| Attempting to repeat his politically adroit gesture of handing out pre-Christmas ‘gifts’ last year, the leftist leader said the Greek economy had done so well his government had decided to distribute € 1.4bn from the primary surplus it had posted in 2017. | Attempting to repeat his politically adroit gesture of handing out pre-Christmas ‘gifts’ last year, the leftist leader said the Greek economy had done so well his government had decided to distribute € 1.4bn from the primary surplus it had posted in 2017. |
| In a televised address that took many by surprise, Tsipras said the government had decided to more than double the amount it would distribute in the form of a one-off “social dividend” in December. | In a televised address that took many by surprise, Tsipras said the government had decided to more than double the amount it would distribute in the form of a one-off “social dividend” in December. |
| Among those entitled to the handout would be citizens worst hit by austerity, including low-income pensioners and unemployed. | Among those entitled to the handout would be citizens worst hit by austerity, including low-income pensioners and unemployed. |
| “We are in the very pleasant position of being better prepared and more organised to offer an even bigger amount … to the people who need it most,” he said. | “We are in the very pleasant position of being better prepared and more organised to offer an even bigger amount … to the people who need it most,” he said. |
| Because the debt-stricken country had beaten fiscal bailout targets mandated by international creditors keeping it afloat, €720m of the primary surplus would go towards buttressing households earning less than €18,000 annually, the equivalent of around 3.4 million people, he said. | Because the debt-stricken country had beaten fiscal bailout targets mandated by international creditors keeping it afloat, €720m of the primary surplus would go towards buttressing households earning less than €18,000 annually, the equivalent of around 3.4 million people, he said. |
| Another €360m would be given to Greece’s public power corporation to protect poorer consumers from tariff increases while €315m would alleviate “unfair” health insurance payments previously incurred by pensioners. | Another €360m would be given to Greece’s public power corporation to protect poorer consumers from tariff increases while €315m would alleviate “unfair” health insurance payments previously incurred by pensioners. |
| The leftist-led coalition is hoping to make a “clean exit” from international supervision when its third EU-IMF funded bailout officially expires next summer. | The leftist-led coalition is hoping to make a “clean exit” from international supervision when its third EU-IMF funded bailout officially expires next summer. |
| But critics today were quick to accuse Tsipras of dangerous populism with the main opposition New Democracy party saying the measures were the price of over-taxation that had otherwise killed the economy and as such were tantamount to taking from Peter to give to Paul. | But critics today were quick to accuse Tsipras of dangerous populism with the main opposition New Democracy party saying the measures were the price of over-taxation that had otherwise killed the economy and as such were tantamount to taking from Peter to give to Paul. |
| Stock markets are under pressure at the moment, with worries about the Trump tax plans, a stronger euro and declines in commodities combining to send shares lower. Connor Campbell, financial analyst at Spreadex, said: | Stock markets are under pressure at the moment, with worries about the Trump tax plans, a stronger euro and declines in commodities combining to send shares lower. Connor Campbell, financial analyst at Spreadex, said: |
| The euro seemed to be the only real winner this Tuesday, with the currency managing a robust rise as seemingly everything else fell. | The euro seemed to be the only real winner this Tuesday, with the currency managing a robust rise as seemingly everything else fell. |
| The Dow Jones joined in with the wider decline after the bell. The US index dropped nearly 150 points, hitting a fortnightly low as it struggles to keep its head above 23300 due to doubts about Donald Trump’s tax plan. | The Dow Jones joined in with the wider decline after the bell. The US index dropped nearly 150 points, hitting a fortnightly low as it struggles to keep its head above 23300 due to doubts about Donald Trump’s tax plan. |
| One of the main drivers of UK trading this Tuesday was the commodity sector. Brent Crude fell 1.1% on increased output in the US, while copper plunged 2% as China’s manufacturing production slipped from 6.6% to a worse than forecast 6.2% month-on-month. This all sparked a 2.5%-3% dive from the likes of Rio Tinto, Anglo American and BHP Billiton, with BP also falling 0.7%, preventing the FTSE – which is down 0.2% – from enjoying sterling’s sharp decline against the euro. | One of the main drivers of UK trading this Tuesday was the commodity sector. Brent Crude fell 1.1% on increased output in the US, while copper plunged 2% as China’s manufacturing production slipped from 6.6% to a worse than forecast 6.2% month-on-month. This all sparked a 2.5%-3% dive from the likes of Rio Tinto, Anglo American and BHP Billiton, with BP also falling 0.7%, preventing the FTSE – which is down 0.2% – from enjoying sterling’s sharp decline against the euro. |
| It’s safe to say the Eurozone indices are not best pleased with the euro’s recent comeback. The currency is looking pretty buff this Tuesday, surging 0.7% against the pound and 0.8% against the dollar thanks to a mixture of strong GDP and ZEW economic sentiment readings, and the various issues plaguing its rivals. This meant that the DAX shed another 80 points, leaving the German bourse at a fresh near 3 week nadir. The CAC, meanwhile, lost 0.6%, with the Spanish IBEX dropping under 10000 following a 0.8% decline. | It’s safe to say the Eurozone indices are not best pleased with the euro’s recent comeback. The currency is looking pretty buff this Tuesday, surging 0.7% against the pound and 0.8% against the dollar thanks to a mixture of strong GDP and ZEW economic sentiment readings, and the various issues plaguing its rivals. This meant that the DAX shed another 80 points, leaving the German bourse at a fresh near 3 week nadir. The CAC, meanwhile, lost 0.6%, with the Spanish IBEX dropping under 10000 following a 0.8% decline. |
| Falling real pay, higher housing costs, and cuts to benefits are limiting the ability of UK households to save money for emergencies and retirement, MPs on the Treasury Select Committee have been told.In the first session of the committee’s inquiry into household finances, Torsten Bell, director of the Resolution Foundation, said family budgets were being constrained as wages in real terms are £15 a week lower than they were before the financial crisis.“In those circumstances - and housing costs have gone up quite a lot during that phase - then obviously people are finding it hard to save,” Bell said.He added that many low to middle income families say that while they’d like to save £10 or more a month, they cannot afford to do so. | |
| US markets are heading lower in early trading, on continuing concerns about the Republican tax plans. Investors are also worried that further interest rate rises - with another expected next month - could harm the economic recovery. | US markets are heading lower in early trading, on continuing concerns about the Republican tax plans. Investors are also worried that further interest rate rises - with another expected next month - could harm the economic recovery. |
| Weaker than expected Chinese data overnight also added to the downbeat mood. | Weaker than expected Chinese data overnight also added to the downbeat mood. |
| The Dow Jones Industrial Average is currently down52 points or 0.22% while the S&P 500 and Nasdaq Composite both opened 0.35% lower. | The Dow Jones Industrial Average is currently down52 points or 0.22% while the S&P 500 and Nasdaq Composite both opened 0.35% lower. |
| The pound remains weaker against both the dollar and euro. | The pound remains weaker against both the dollar and euro. |
| The stronger than expected US producer prices figures are supporting the US currency, with the pound now down 0.05% at $1.3108. | The stronger than expected US producer prices figures are supporting the US currency, with the pound now down 0.05% at $1.3108. |
| Against the euro, sterling has slipped 0.8% to €1.1151 following positive economic news from the eurozone, including 2.5% GDP year on year growth in the three months to September. | Against the euro, sterling has slipped 0.8% to €1.1151 following positive economic news from the eurozone, including 2.5% GDP year on year growth in the three months to September. |
| Over in the US, and producer prices climbed by more than expected in October. | Over in the US, and producer prices climbed by more than expected in October. |
| The month on month figure rose by 0.4%, the same figure as in September but higher than the forecast 0.1%. On a yearly basis, prices were up 2.8% compared to expectations of a 2.4% rise and a 2.6% increase in September. | The month on month figure rose by 0.4%, the same figure as in September but higher than the forecast 0.1%. On a yearly basis, prices were up 2.8% compared to expectations of a 2.4% rise and a 2.6% increase in September. |
| The figures add more weight to the idea of another rate rise by the Federal Reserve in December. | The figures add more weight to the idea of another rate rise by the Federal Reserve in December. |
| UK house prices continued to climb in September, according to separate figures released by the ONS. | UK house prices continued to climb in September, according to separate figures released by the ONS. |
| Prices increased by 5.4% in the year to September 2017, up from 4.8% in the year to August. The ONS said the annual growth rate had slowed since the middle of 2016 but remained around 5% during 2017. | Prices increased by 5.4% in the year to September 2017, up from 4.8% in the year to August. The ONS said the annual growth rate had slowed since the middle of 2016 but remained around 5% during 2017. |
| But there are further signs of cooling in London, which showed the lowest annual growth rate in the country at 2.5%. | But there are further signs of cooling in London, which showed the lowest annual growth rate in the country at 2.5%. |
| Further signs of cooling housing market in London in latest ONS data. Rolling-average number of transaction in Inner London fallen to lowest since early-2010 pic.twitter.com/IwwG8C1pAW | Further signs of cooling housing market in London in latest ONS data. Rolling-average number of transaction in Inner London fallen to lowest since early-2010 pic.twitter.com/IwwG8C1pAW |
| Howard Archer, chief economic adviser at EY ITEM Club, said housing market activity was being hit by weaker consumer purchasing power and wariness over making major transactions. He said: | Howard Archer, chief economic adviser at EY ITEM Club, said housing market activity was being hit by weaker consumer purchasing power and wariness over making major transactions. He said: |
| We see house prices being muted over the fourth quarter and then rising a modest 2%-3% in 2018. | We see house prices being muted over the fourth quarter and then rising a modest 2%-3% in 2018. |
| The fundamentals for house buyers are likely to remain challenging over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth. | The fundamentals for house buyers are likely to remain challenging over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth. |
| Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions. It is also very possible that the recent Bank of England interest rate hike will weigh down on housing market activity. | Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions. It is also very possible that the recent Bank of England interest rate hike will weigh down on housing market activity. |
| While the increase in interest rates was just 0.25% and mortgage rates are still at historically very low levels - with the impact further limited by the fact that the share of mortgages on variable rates has fallen to around 40% from a peak of 70% in 2001 - the fact that it was the first rise in interest rates since 2007 could have a significant effect on housing market psychology by focusing minds on the likelihood that households will have to deal with higher mortgage rates over the coming months and years. | While the increase in interest rates was just 0.25% and mortgage rates are still at historically very low levels - with the impact further limited by the fact that the share of mortgages on variable rates has fallen to around 40% from a peak of 70% in 2001 - the fact that it was the first rise in interest rates since 2007 could have a significant effect on housing market psychology by focusing minds on the likelihood that households will have to deal with higher mortgage rates over the coming months and years. |
| Having said that, the Bank of England again stressed that interest rates will rise only gradually and to a limited extent. | Having said that, the Bank of England again stressed that interest rates will rise only gradually and to a limited extent. |
| Time for a quick recap. | Time for a quick recap. |
| Britain’s inflation rate remains at its highest level since 2012, putting more pressure on people hit by the real wage squeeze. | Britain’s inflation rate remains at its highest level since 2012, putting more pressure on people hit by the real wage squeeze. |
| The consumer prices index rose by 3% in October, matching September’s reading. Although over the UK’s target, it is a little less than economists – and the Bank of England itself – had forecast. | The consumer prices index rose by 3% in October, matching September’s reading. Although over the UK’s target, it is a little less than economists – and the Bank of England itself – had forecast. |
| Food prices are playing a key role driving CPI up, with food price inflation hitting 4.1%. | Food prices are playing a key role driving CPI up, with food price inflation hitting 4.1%. |
| Here’s what contributed to that 3% CPI inflation rate in Oct. Food prices rising at fastest rate since 2013 pic.twitter.com/zM2UJyXc9K | Here’s what contributed to that 3% CPI inflation rate in Oct. Food prices rising at fastest rate since 2013 pic.twitter.com/zM2UJyXc9K |
| Inflation is hitting poorer families hardest, says the Resolution Foundation. That’s because the cost of essential items is pushing higher. | Inflation is hitting poorer families hardest, says the Resolution Foundation. That’s because the cost of essential items is pushing higher. |
| The jump in inflation for food and drink items to 4.1% hits those on lowest wages the hardest. People already feeling the rising cost of everyday items. https://t.co/YJMT2Es6T4 | The jump in inflation for food and drink items to 4.1% hits those on lowest wages the hardest. People already feeling the rising cost of everyday items. https://t.co/YJMT2Es6T4 |
| Inflation may be steady at 3% but vegetable prices up 5.7% - bad news for anyone on a tight budget, and a blow to healthy eating. Happy Christmas. https://t.co/r7iPWuS6Tv | Inflation may be steady at 3% but vegetable prices up 5.7% - bad news for anyone on a tight budget, and a blow to healthy eating. Happy Christmas. https://t.co/r7iPWuS6Tv |
| Some economists are predicting that inflation may now be peaking. That would bring some relief to families. But until wages rise faster, Britain’s cost of living squeeze will continue. | Some economists are predicting that inflation may now be peaking. That would bring some relief to families. But until wages rise faster, Britain’s cost of living squeeze will continue. |
| Unions are pushing the government to relax the public sector pay cap, to help teachers, nurses et al recover from years of austerity. | Unions are pushing the government to relax the public sector pay cap, to help teachers, nurses et al recover from years of austerity. |
| UNISON general secretary Dave Prentis says workers are under financial pressure: | UNISON general secretary Dave Prentis says workers are under financial pressure: |
| “The government needs to take action in next week’s budget, ensure the pay cap is lifted and give public service employees a decent wage rise.” | “The government needs to take action in next week’s budget, ensure the pay cap is lifted and give public service employees a decent wage rise.” |
| Here’s our economics editor Larry Elliott on today’s figures: | Here’s our economics editor Larry Elliott on today’s figures: |
| Over in Frankfurt, the Bank of England’s governor has spoken about Brexit.... | Over in Frankfurt, the Bank of England’s governor has spoken about Brexit.... |
| Britain is experiencing "exceptional circumstances" because of Brexit, Mark Carney says https://t.co/LNr0A23mjq pic.twitter.com/xxR2zNbbmh | Britain is experiencing "exceptional circumstances" because of Brexit, Mark Carney says https://t.co/LNr0A23mjq pic.twitter.com/xxR2zNbbmh |
| The jump in food price inflation to 4.1% may drive more families to Britain’s growing roster of food banks. | The jump in food price inflation to 4.1% may drive more families to Britain’s growing roster of food banks. |
| Garry Lemon of the Trussell Trust, a charity which runs food bank, says it’s already an issue: | Garry Lemon of the Trussell Trust, a charity which runs food bank, says it’s already an issue: |
| Worrying to see food price #inflation so high. @UniofOxford research by @rloopstra showed that 1/4 households coming to @TrussellTrust network of #foodbanks reported rising food costs as an issue last winter.https://t.co/NDNjO6aoW3 https://t.co/8yEjHZvELv | Worrying to see food price #inflation so high. @UniofOxford research by @rloopstra showed that 1/4 households coming to @TrussellTrust network of #foodbanks reported rising food costs as an issue last winter.https://t.co/NDNjO6aoW3 https://t.co/8yEjHZvELv |