Pound slumps below $1.12 as tax cut worries grip markets

Chancellor Kwasi Kwarteng pound sterling dollar bonds interest rates Bank of England - Oli SCARFF / AFP
Chancellor Kwasi Kwarteng pound sterling dollar bonds interest rates Bank of England - Oli SCARFF / AFP

The pound has slumped further against the dollar as concern over the Government’s tax-cutting fiscal plans continue to grip markets.

Sterling extended its losses during another torrid day for the currency, tumbling more than 1pc to trade below $1.12.

While Liz Truss’s reversal of plans to abolish the top rate of income tax and the Bank of England’s £65bn intervention in bond markets have helped to calm last week’s turmoil, investors remain on edge about the outlook for the UK.

Deutsche Bank today warned Britain won’t recover to pre-pandemic levels by 2024 and will only get back to its trend growth rate of 1.25pc by the middle of the decade.

Meanwhile, the Bank of England said its intervention in bond markets helped to stave off a “spiral” in financial markets as it pinned the blame for the turmoil on Kwasi Kwarteng’s mini-Budget.

BoE Deputy Governor Jon Cunliffe said the Bank estimated that as much as £50bn of additional gilt sales would take place “in a short space of time” on top of the usual £12bn daily trade, highlighting how close the UK came to a financial meltdown.

Follow the latest updates below.

06:24 PM

And that's a wrap

That's Gareth Corfield signing off at the end of today's business live blog. I leave you with this snippet:

A Lebanese woman who last month held up a Beirut bank to retrieve her own savings was released on bail on Thursday after she handed herself in to authorities following weeks on the run, her lawyer said.

Sali Hafiz, 28, was ordered to pay 1 million Lebanese pounds ($25) and slapped with a 6-month travel ban over the Sept. 14 bank holdup that turned her into a folk hero in a country where hundreds of thousands of people have savings trapped in banks.

05:37 PM

HSBC cuts mortgage rates

Returning to serious news, personal finance reporter Tom Haynes has the latest from HSBC:

One of Britain’s biggest lenders has cut its mortgage rates, marking the return of competitive deals to the market.

HSBC confirmed interest rates in its mortgage range were being reduced, including the 60pc loan-to-value two-year fixed-rate loan, which has dropped from 5.49pc to 5.09pc.

Its 60pc five-year fix has been cut by 0.15 percentage points to 4.89pc. Both deals come with a £999 fee.

The lender’s latest reductions will affect loans at 60pc, 70pc, 80pc, 85pc, and 90pc loan-to-value, it said.

05:30 PM

Belarus tries novel anti-inflation measures

Meanwhile, the economic powerhouse that is Belarus is experimenting with new financial strategies, as Tom Rees reports...

Belarus has adopted an unconventional approach to fighting inflation: banning price rises.

President Alexander Lukashenko, a close ally of Vladimir Putin, said consumer price rises would be blocked with immediate effect in an effort to tame surging inflation in the ex-Soviet country.

"From October 6, all price increases are forbidden. Forbidden! From today. Not from tomorrow, from today. So that prices aren't driven up in the next 24 hours," Mr Lukashenko told a meeting with officials.

Details of how Belarus would enforce such a policy were not immediately clear.

05:28 PM

Euro shares fall

European shares tumbled on Thursday as newly-published minutes from the European Central Bank's last meeting fanned fears about the state of inflation in the eurozone and aggressive policy moves to tame it.

The pan-European STOXX 600 index reversed early session gains and was down 0.6pc, extending losses to a second straight session.

"Markets are starting to process the prospect that the Fed and to a lesser degree the ECB will be forced to keep aggressively hiking rates in the near term" said the bank.

04:53 PM

EU's latest Russian sanctions come into force

The European Union has imposed a fresh round of sanctions on Russia, expanding import/export bans as well as banning all cryptocurrency transactions with the country.

The measures, which came into force with their publication in the bloc's official administrative journal, also include the outline of an oil price cap on Russian crude - but the cap will only be enforced after details are worked out within the G7 group of nations.

All Russian cryptocurrency transactions, regardless of amount, are now banned along with sales to Russia of electronic components such as transistors, electronic integrated circuits, controllers, and aerial surveillance cameras.

04:34 PM

Kwarteng and Truss to meet MPs next week

The Chancellor will address Conservative MPs next week as he and prime minister Liz Truss attempt to regain their party's trust following the turmoil of the last few weeks.

Kwarteng plans to meet the Tories' 1922 Committee on Wednesday, according to a person familiar with the matter who told Bloomberg about the upcoming meeting.

Likely topics include which areas of public spending to cut back following planned tax reductions. Raising welfare payments has become a hot topic, split between those MPs who want to raise them by inflation and those who want any rise in state benefits to match comparable wage rises across the private sector.

04:10 PM

Handing over

That's all from me for today – thanks for following! Gareth Corfield will take things from here.

03:57 PM

Treasury: Kwarteng committed to fiscal discipline

Here's some more from the Treasury on Kwasi Kwarteng's meeting with bank bosses this morning.

We're told the Chancellor discussed the situation in the mortgage market with some of the country's top lenders, but they're not being forthcoming with details...

03:36 PM

Treasury vows to work closely with banks on mortgages

The Treasury will work closely with the financial sector on mortgage lending, finance minister Kwasi Kwarteng told banks during a meeting this morning.

A readout of the meeting said: "While it is the responsibility of the sector to provide the best value for mortgage rates, the Chancellor confirmed that the Treasury would continue to work closely with the sector in the weeks and months ahead."

03:06 PM

Row over ‘grotesque’ £1.5bn Liverpool Street revamp

Liverpool Street station - AP Photo/Alberto Pezzali
Liverpool Street station - AP Photo/Alberto Pezzali

Conservationists are opposing a “grotesque” £1.5bn plan to build a 16-storey tower block above London’s Liverpool Street station, writes Oliver Gill.

Sellar, which developed the Shard skyscraper, said its redevelopment will deliver a “cost-free” upgrade to the capital's third-busiest train station.

Conservationists fear the redesign could risk the glass roof of the Grade II listed station — which dates back to 1874 — and neighbouring Andaz hotel, formerly known as Great Eastern railway hotel.

Liverpool Street, in the heart of the City of London, is closed to traffic other than taxis. Sellar’s plans include the road being pedestrianised and parts of the gothic buildings on the street demolished.

Some £450m would be set aside to improve the train terminus as part of the development works over and around the station. Changes include a two-storey concourse as well as step-free access for the London Underground. It will also help ease congestion as the final stages of Crossrail, or the Elizabeth Line, are completed. The line has a station at Liverpool Street.

Read Ollie's full story here

02:46 PM

Bond yields climb and pound tumbles

The pound fell and UK gilt yields surged amid continued concerns over the Government's fiscal plans and as traders braced for the end of the Bank of England's emergency intervention.

Longer-dated maturities led the fall in gilts, with the 30-year yield surging as much as 19 basis points to 4.4pc.

That's the highest since September 28, when the Bank staged a dramatic intervention by pledging to buy up to £65bn of bonds.

With that backstop set to end on October 14, traders are now bracing for further turbulence.

Meanwhile, the pound dropped against the dollar and traded as low as $1.1218.

02:37 PM

Wall Street pares losses after jobs data

Wall Street has started the day on the back foot, though it's pared losses from earlier in the day after new jobs data.

Fresh figures showed an increase in weekly jobless claims, raising hopes the Federal Reserve may need to ease its aggressive interest rate rises.

The benchmark S&P 500 fell 0.3pc, while the Dow Jones was down 0.4pc. The Nasdaq slipped 0.1pc.

02:19 PM

Britain risks rolling blackouts this winter, warns National Grid

Britain faces the prospect of rolling blackouts this winter if it is unable to import enough energy.

Rachel Millard reports:

National Grid has warned that households and businesses could be cut off for up to three hours a day if electricity supplies run short.

The electricity would be cut off in some areas of the country to ensure power does not go down more widely.

Consumers will also be relied on to accept payments to cut their energy usage at peak times if supplies are looking tight.

Coal-fired power plants are also being kept online longer than planned to help cover imbalances.

It comes as cuts to Russian supplies of gas to Europe amid its war on Ukraine have wreaked havoc on gas and electricity markets.

Supplies of electricity from France are also strained due to outages on its nuclear fleet.

National Grid describes the prospect of insufficient gas supplies as “unlikely” but says the winter is likely to be “challenging” and it needs to be prepared.

Read Rachel's full story here

02:07 PM

Virgin Media O2 offers bonus as BT workers strike

Virgin Media O2 is offering a cost-of-living bonus to its lowest paid staff – as BT workers strike in a row over pay.

The telecoms group will provide payments totalling £1,400 for employees earning £35,000 and under to support with the rise in the cost-of-living.

The first payment of £400 will be issued next month followed by the same amount in January 2023, and then six payments of £100 a month until July 2023.

It comes on the same day as members of the CWU at BT walked out in the latest industrial action in a long-running dispute over a below-inflation pay offer.

The latest walkout was extended to include 999 operators handling emergency calls.

01:55 PM

Striking rail maintenance staff paid 18pc more than market rate

Rail strike union pay - Chris J. Ratcliffe/Bloomberg
Rail strike union pay - Chris J. Ratcliffe/Bloomberg

Striking rail maintenance workers are already paid almost a fifth more than those doing comparative roles, the industry regulator has said.

Oliver Gill and Patrick Sawer report:

The Office of Rail and Road (ORR) said that workers demanding double-digit pay rises are already on salaries that are 18pc higher than “market comparators.”

The independent analysis sheds fresh light on the bitter industrial dispute which has led to rail strikes across the country.

Most of Britain’s railways will grind to a halt again on Saturday as members of the Rail, Maritime and Transport workers union (RMT) walk out. Just one in five trains are expected to run with rail insiders saying the strikes by signal workers mean it is impossible to run anywhere near a full service.

The ORR commissioned independent consultants to look at the total reward, including pay, pension costs and other measurable benefits, of 64,000 railway workers.

Andrew Haines, chief executive of Network Rail, the public sector body that employs signal workers and other maintenance staff, said that the ORR analysis showed many rail workers are already on lucrative pay packets.

​Read the full story here

01:08 PM

Nord Stream leak probe raised fears of 'gross sabotage', says Sweden

A crime scene investigation into the damages on the Nord Stream 1 and 2 gas pipelines has strengthened suspicions of "gross sabotage", Sweden has said.

Swedish security police said: "After completing the crime scene investigation, the Swedish Security Service can conclude that there have been detonations at Nord Stream 1 and 2 in the Swedish economic zone that have caused extensive damage to gas pipelines."

Officials said they had seized some material on site that will now be analysed.

Swedish and Danish authorities have been investigating four leaks in the pipelines, which are feared to have been caused by sabotage.

12:34 PM

Five-year mortgage rate passes 6pc as Kwarteng meets banks

The cost of a five-year mortgage rate breached 6pc for the first time in more than a decade as Chancellor Kwasi Kwarteng holds a meeting with the UK's biggest lenders.

The average five-year fixed-rate mortgage rose to 6.02pc this morning, the highest since February 2010, according to Moneyfacts Group.

The average two-year deal rose to 6.11pc after passing the 6pc threshold yesterday for the first time in almost 14 years.

Mr Kwarteng is meeting executive from banks including Barclays and NatWest amid fears of a crisis in the mortgage sector.

Lenders pulled more than 40pc of mortgage products from the market following the Chancellor's tax-cutting mini-Budget. The ensuing market turmoil sent yields soaring on interest-rate swaps, which lenders use to price mortgages.

12:23 PM

M&S launches digital credit account for struggling customers

M&S credit cost-of-living crisis - Hollie Adams/Bloomberg
M&S credit cost-of-living crisis - Hollie Adams/Bloomberg

Marks & Spencer is starting to offer a digital credit account allowing customers to spend as much as £500 interest free as struggling customers look to push back payments.

Sparks Pay is available to customers who have signed up to the M&S Sparks loyalty programme and enables one-click purchases online and on the retailer's app with deferred interest payments.

The annual interest rate later rises to 23.9pc.

Shoppers are increasingly relying on credit as the cost-of-living crisis squeezes household budgets.

The Bank of England last month said consumer credit card borrowing rose 13pc in the year to August – the highest rate since 2005.

12:11 PM

US futures fall

Wall Street looks set to open lower as investors weigh up conflicting signals about the health of the economy.

Traders are digesting Opec's decision to slash oil production by 2m barrels a day, which drove prices to a three-week high.

Washington has pushed back against the move, saying it could stoke inflation and benefit Russia.

Markets will also have a close eye on US jobs data due out tomorrow for signs on how the Federal Reserve might act.

Futures tracking the S&P 500 and Nasdaq were both down 0.7pc, while the Dow Jones lost 0.6pc.

12:02 PM

Credit Suisse explores sale of Mandarin Oriental Savoy Zurich

Credit Suisse Mandarin Oriental Savoy Zurich - REUTERS/Arnd Wiegmann
Credit Suisse Mandarin Oriental Savoy Zurich - REUTERS/Arnd Wiegmann

Credit Suisse is exploring a sale of the Mandarin Oriental Savoy in Zurich amid a strategic review aimed at driving down costs.

A spokesman for the Swiss lender confirmed it had started a sales process for the building, adding it would carefully assess all offers and potential investors.

The sale of the hotel, formerly known as the Savoy Hotel Baur en Ville, could attract around 400m Swiss francs (£360m), according to reports by Swiss finance blog Inside Paradeplatz.

In 2020, Credit Suisse announced that the hotel – opened almost two centuries ago by Austrian banker Johannes Baur – would undergo extensive renovations, closing its doors from early 2022 to mid-2024.

The hotel's total number of rooms is set to shrink from 104 to 80, resulting in more spacious accommodation.

11:48 AM

Satellite merger could drive up cost of in-flight wifi, says watchdog

The competition watchdog has raised concerns over the planned $7.3bn (£6.1bn) takeover of British satellite firm Inmarsat, saying it could lead to airlines paying more for on-board wifi.

Inmarsat agreed a takeover deal with US rival Viasat in November last year in a move that's faced scrutiny on national security as well as competition grounds.

The Competition and Markets Authority said the two companies competed closely in the aviation sector, and while only some airlines currently offer in-flight wifi, the availability of these services is expected to grow significantly in coming years.

The watchdog's investigation also found that it can be very difficult for airlines to switch providers, meaning the merged company could effectively lock in a large part of the customer base before emerging suppliers are able to compete.

The CMA gave the companies five working days to submit proposals to address the competition concerns, at which point it will decide whether to refer the case for an in-depth investigation.

Viasat and Inmarsat said they were confident the deal would benefit consumers by improving efficiencies and lowering costs, while Inmarsat said it would provide more jobs and investment in the UK space industry.

Colin Raftery, CMA Senior Director, said:

This is an evolving market, but the merging companies are currently two of the key players – and it remains uncertain whether the next generation of satellite operators will be able to compete against them effectively.

Ultimately, airlines could be faced with a worse deal because of this merger, which could have knock-on effects for UK consumers as in-flight connectivity becomes more widespread.

11:32 AM

Bishopsgate: Multiple people injured in suspected stabbing

Multiple people have been injured in a suspected stabbing in the heart of the City of London.

Witnesses reported that three people had been stabbed in Bishopsgate after a bike thief was challenged.

It's reported to have taken place outside 22 Bishopsgate – right next to Threadneedle Street and less than 200m from a police station.

11:28 AM

Brits stockpile thermal underwear as heating bills soar

John Lewis warm clothes energy -  iStockphoto
John Lewis warm clothes energy - iStockphoto

British shoppers are stockpiling thermal underwear, gloves and dressing gowns to help them fight the cold this winter as they try to avoid turning up the thermostat to save money.

With energy bills surging, people are looking to save a few pounds by wrapping up warm.

John Lewis said its customers were buying extra layers to get them through winter, with sales of hooded blankets, onesies, thermals, dressing gowns and slippers all soaring in recent weeks.

Sales of women's winter thermals more than doubled last week compared to the previous week, while a wearable blanket with a hood is now a bestseller. Dressing gown sales were up 76pc compared to last year.

Claire Miles at John Lewis said: "With the cost of energy such a concern, we are seeing customers spend with heat in mind."

One-piece onesies were also flying off the shelves much earlier than usual, the retailer said, in a sign that they were being bought for warmth this year rather than as a light-hearted Christmas gift.

11:05 AM

BoE links intervention directly to mini-Budget

The Bank of England has said it first spotted signs of the market turmoil that would trigger its £65bn intervention in bond markets on the day of Kwasi Kwarteng's mini-Budget.

In a letter that undermines the Government's suggestion that the market meltdown was caused by global interest rate moves, BoE Deputy Governor Jon Cunliffe said the problems emerged on Friday 23 September, when the tax-cutting fiscal plans were announced.

Mr Cunliffe said the Bank first identified liquidity concerns among liability-driven investment fund managers on the day of the statement.

In his letter to Mel Stride, chairman of the Treasury Committee, Mr Cunliffe said the Bank estimated that as much as £50bn of additional gilt sales would take place "in a short space of time" on top of the usual £12bn daily trade.

Some funds "tried to sell gilts and failed to do so", he added.

Read the full letter here

10:48 AM

Mark Carney warns over weaponisation of fossil fuels

Mark Carney fossil fuels - Michael Nagle/Bloomberg
Mark Carney fossil fuels - Michael Nagle/Bloomberg

Mark Carney has sounded the alarm over the weaponisation of fossil fuels, saying it exposed the dangers linked to continued reliance on oil, gas and coal.

The former Bank of England Governor told a conference that "events have put in sharp relief the failing of current energy systems".

He added that energy was being "used as a weapon" and households were facing "crippling" bills.

Scientists have warned that the planet may be on track to warm by more than double the critical 1.5C threshold.

Mr Carney, who's co-chair of the Glasgow Financial Alliance for Net Zero, said: "If we don't get this decade right, 1.5C is no longer in reach. The carbon budget for 1.5C will be exhausted in a decade on the current trajectory."

10:30 AM

What Truss could save by linking benefits to pay instead of soaring inflation

Liz Truss benefits pay inflation -  Anadolu Agency
Liz Truss benefits pay inflation - Anadolu Agency

Just days after escaping one rebellion by Tory MPs, Liz Truss was facing another brewing mutiny in the corridors of Birmingham’s ICC this week, writes Tom Rees.

Truss bowed to a revolt over abolishing the top rate of income tax on the eve of her party’s annual conference but her hand could be forced again on the issue of benefits.

In a bid to reassure markets in the wake of the chaotic mini-Budget, Truss is considering whether she can tighten the purse strings by increasing benefit payments by average earnings rather than inflation. Such a move should help to soothe the concerns of international investors by helping to balance the books on the recent fiscal statement.

Increasing welfare payments by the lower rate of average earnings, rather than inflation, could save the Exchequer £11bn next year.

However, it also risks exploding tensions in her party.

Read Tom's full story here

10:11 AM

Firms set to raise prices by 6.6pc over next year

British companies expect to increase their prices by 6.6pc over the next year as they grapple with surging costs.

The forecasts for the quarter ending in September mark the highest reading since the Bank of England started surveyed finance chiefs in 2017.

Wage growth is expected to stand at 5.9pc over the next year – also an increase – while inflation is expected to climb to 9.5pc.

The survey highlights the gloomy outlook for the economy, with businesses not expecting price rises to slow any time soon.

09:49 AM

UK construction outlook dims as interest rates rise

The UK construction industry turned more pessimistic in September as rising interest rates and the growing threat of a recession held back new orders.

S&P Global said its gauge of business expectations fell to its lowest in more than two years despite an unexpected increase in output during the month.

The PMI covering construction output rose to 52.3 in September – the first reading showing growth since June.

But Tim Moore, economics director at S&P Global, said: "The return to growth was fuelled by delayed projects and easing supply shortages rather than a flurry of new orders. Forward-looking survey indicators took another turn for the worse."

The survey is the latest sign that rising interest rates and surging energy prices are denting confidence about the outlook for the economy.

S&P Global PMI construction - S&P Global
S&P Global PMI construction - S&P Global

09:31 AM

Oxbridge warned UK's largest pension scheme over debt strategy

Britain’s top universities warned the £90bn Universities Superannuation Scheme, the country’s largest private-sector pension fund, that debt-fuelled investment strategies would pose “significant risks” to their members.

Patrick Mulholland has more:

Several universities, including Cambridge and Oxford, as well as Imperial College London, wrote to USS earlier this year to oppose the ploughing of billions of pounds more into leveraged hedging strategies, the Financial Times reported.

So-called liability-driven investment (LDI) strategies were at the centre of the market turmoil that ensued last week following the mini-Budget, and almost collapsed a number of defined benefit pension schemes.

The chaos wreaked by LDIs, which are derivatives meant to help insulate pension funds from the impact of inflation, was only brought under control by a large intervention from the Bank of England. In a swift reversal of its policy of quantitative tightening, the bank propped up the market for gilts, or UK government bonds, through a £65bn bailout.

It is understood that USS chief executive Bill Galvin, who previously headed up the Pensions Regulator, pushed for ramping up the use of LDIs in the pension’s portfolio as a cornerstone of its investment strategy.

In a letter addressed to Galvin in February, representatives from Cambridge, Oxford and Imperial College wrote: “We believe the increase in leverage may introduce potentially significant risks into the scheme in a period of high market volatility.”

The USS told the FT that it was not a “forced” seller of any assets through the gilt market turmoil last week, but that it had “taken actions to rebalance its portfolio exposures”.

09:12 AM

Nurses begin biggest strike ballot in a century

Nurses strike RCN ballot - Jane Barlow/PA Wire
Nurses strike RCN ballot - Jane Barlow/PA Wire

More than 300,000 members of Britain's largest nursing union will begin voting today in the biggest strike ballot in its 106-year history.

The Royal College of Nursing said it had been forced into the move after years of real-terms wage cuts deterred people from joining the NHS leaving huge staffing gaps across the service.

Pat Cullen, RCN general secretary, said: "We are understaffed, undervalued and underpaid. For years our profession has been pushed to the edge, and now patient safety is paying the price."

The union said it wanted a pay rise of 5pc above inflation to overcome real-term pay cuts as its members struggle to cope with the soaring cost of living.

The union's boss said below-inflation pay meant workers could neither afford to stay in or join the profession, adding that "patient care was at risk" due to thousands of unfilled nursing jobs across the UK.

A spokesperson for the government's Department of Health and Social Care said they hoped nurses would consider carefully the impact any strike would have on patients.

08:57 AM

Gas prices rise as EU weighs temporary cap

European gas prices pushed higher amid outages in Norway, while traders held their breath ahead of a potential EU price cap.

Benchmark prices rose as much as 4.5pc after declining in earlier trading. Deliveries from the Norwegian Troll field will be cut from today for an unspecified period due to a compressor failure.

Another outage at a different field will take place next week due to annual maintenance.

Meanwhile, the EU is considering a plan that includes a temporary limit to benchmark prices, while working on setting up a new index for liquefied natural gas.

The price cap would be designed to shield consumers and businesses from soaring bills, but the industry is worried it could hinder supplies as Europe looks for alternatives to Russian energy.

08:46 AM

Shell slides on 'weak' trading

Shell is dragging down the FTSE 100 this morning after its trading update failed to impress analysts.

Jefferies said the oil giant's update was "weak" due to low gas trading and high cash taxes.

Analysts Giacomo Romeo said contribution from Shell's integrated gas arm was "significantly lower" in the quarter, while upstream production guidance and refining margins also fell short.

RBC said the update was "disappointing".

Shares in Shell fell as much as 4pc.

08:38 AM

FTSE risers and fallers

The FTSE 100 has edged higher in a hesitant start to trading.

The blue-chip index rose 0.2pc as investors look ahead to more data for hints about the state of the economy.

Imperial Brands topped the index, rising more than 4pc after the tobacco company launched a £1bn share buyback.

Industrial products maker RS Group also made strong gains after it upgraded its profit forecasts.

Energy giant ​Shell weighed on the index though, shedding 3.7pc after a trading update that analysts branded "weak".

The domestically-focused FTSE 250 was up 0.4pc. Volution Group surged 13.5pc following an upbeat trading update.

08:28 AM

German factory orders slump as country teeters on the brink

German factory orders slumped in August in the latest sign Europe's largest economy is teetering on the brink of a recession.

New orders – which usually provide a preview of industrial output – plunged by 2.4pc.

The Federal Statistics Office said: “Enterprises still have difficulties completing their orders as supply chains are interrupted because of the war in Ukraine and distortions persist that have been caused by the Covid-19 crisis.”

The was one positive point, as data for July was revised to show a 1.9pc gain, rather than the initially reported drop of 1.1pc. The change was due to late reporting of large aerospace orders.

But the overall mood remains glum, with surging energy costs and stubbornly high inflation expected to push Germany into recession.

08:12 AM

Tobacco giant Imperial Brands plans £1bn share buyback

Imperial brands cigarettes share buyback - REUTERS/Leonhard Foeger/File Photo
Imperial brands cigarettes share buyback - REUTERS/Leonhard Foeger/File Photo

Imperial Brands will buy back up to £1bn in shares as the maker of Gauloises and Golden Virginia said it will hit sales and profit forecasts for the full year.

The FTSE 100 company will repurchase as much as 5.3pc of its stock in a year-long buyback programme starting tomorrow. It said the move was possible now that its debt is in the lower end of a target range.

Imperial reiterated its previous guidance and said it expects full-year revenue and operating profit to both grow by around 1pc.

It's the company's first buyback programme in two years, and comes hot on the heels of a £2bn package launched by rival British American Tobacco earlier this year.

Imperial, which gets around 70pc of its profits from traditional cigarettes in its five top markets, is trying to slash losses from its vaping and smoking alternative products.

08:02 AM

FTSE 100 opens flat

The FTSE 100 is treading water at the open as markets remain on edge over the Government's fiscal plans.

The blue-chip index inched marginally into the green at 7,055 points.

07:48 AM

Russia could cut oil output amid price cap plans

Russia could cut its oil production by as much as 3m barrels per day if the EU and US push ahead with a plan to cap prices, experts have warned.

The EU yesterday reached a compromise on a new package of sanctions against Russia, including a price cap on oil sales to third-party countries – a measure designed to curb Russia's revenues.

Separately, Opec agreed to cut oil output to keep prices propped up.

Alexander Novak, Russia's deputy prime minister, said the cap would backfire and could lead to his country temporarily cutting production.

Analysts warned Putin could shut in as much as several million barrels per day without damaging his oil fields.

Kevin Book at ClearView Energy Partners said: "Russia might not find a plausible deniable pretext for all 3m barrels a day right away, but Putin might not need to. Even half of that could exert immediate strain on markets."

07:35 AM

Income taxes to rise by £21bn despite Budget cuts

Chancellor Kwasi Kwarteng - REUTERS/Toby Melville
Chancellor Kwasi Kwarteng - REUTERS/Toby Melville

The Treasury will impose an additional £21bn of income taxes despite Liz Truss's "tax-cutting" mini-Budget, a detailed analysis released on Thursday has revealed.

Here's more from Tom ReesBen Riley-Smith and Charlotte Gifford:

The average household will be £1,450 per year worse off as a result of the stealth raid, according to the Institute for Fiscal Studies (IFS) think tank.

The typical basic rate taxpayer will pay an added £500 in income tax and National Insurance per year by 2026 while higher rate earners are facing a £3,000 annual increase.

The figures are based on analysis of the decision by Kwasi Kwarteng to freeze tax thresholds, which in three years' time will deliver an extra £41bn to the Exchequer amid high inflation and rising wages. Meanwhile, his cuts to personal taxes will be worth only £20bn.

The so-called fiscal drag effect is likely to form a key part of a report by the Office for Budget Responsibility due to be delivered to the Chancellor on Friday. It is expected to pave the way for him to be able to say that debt will fall as a share of GDP after markets took fright at his “unfunded” tax cuts.

​Read the full story here

07:21 AM

UK volatility may rattle bonds again, warns Goldman Sachs

The underlying source of volatility in UK markets remains unresolved and risks sparking turmoil in gilts again.

That's according to Goldman Sachs, which said the Bank of England's intervention in bond markets had calmed investor nerves but didn't address concerns about Liz Truss's tax-cutting plans and soaring inflation.

It said it expected renewed selling pressure on the pound, which in turn is likely to lead to more losses in bonds over the medium term.

Analysts wrote that the market was "yet to be convinced that the UK's monetary and fiscal policy framework will control inflation over the medium term".

"Indeed, the UK Government has yet to formally set a fiscal anchor, the BoE has under-delivered on rate hikes, and we don't expect it to over-deliver going forward."

06:29 AM

Kwarteng summons bankers to Downing Street in mortgage row

The Chancellor has summoned bank chiefs to Downing Street after turmoil in the mortgage market sent rates to a 14 year high and triggered a wave of deals being pulled, Melissa Lawford, Patrick Mullholland and Szu Ping Chan write.

The average rate on a two-year fixed-rate mortgage is now 6.07pc, according to Moneyfacts, the first time the average rate has exceeded 6pc since November 2008.

Lenders withdrew a record number of deals following the mini-Budget after wild swings on currency markets and a big sell-off of British government gilts.

Between September 23 and October 1, the number of available mortgage deals fell by 43pc – a loss of 1,703 products.

Read more: Mortgage rates soar past 6pc for first time in 14 years

05:56 AM

Dollar climbs as pound’s surge is halted

The dollar fought for a footing in choppy trade on Thursday, with support from upbeat US data.

The dollar rose 1pc on the euro and 1.3pc on sterling overnight and was trying to hold those gains in bumpy early trade in Asia.

The euro has now made two unsuccessful attempts to regain parity this week and last bought $0.9916.

Sterling’s rebound from record lows has paused just below $1.14 this morning.

05:36 AM

Musk's deposition postponed

Elon Musk and Twitter have agreed to postpone the billionaire's deposition scheduled for today, according to a report.

The parties are trying to reach an agreement to end their litigation and close Musk’s $44 billion purchase of the social media company.

Musk had been due to be deposed today as part of that litigation but Reuters reported a source as saying this has now been put on hold.

It comes as anti-hate speech campaigners, who fear Musk will loosen Twitter’s moderation, warn that the platform could be bad news for persecuted groups. Read the full story here.

Elon Musk - REUTERS
Elon Musk - REUTERS

05:29 AM

Good morning

The Treasury will impose an additional £21bn of income taxes despite Liz Truss's "tax-cutting" mini-Budget, a detailed analysis released on Thursday has revealed.

The average household will be £1,450 per year worse off as a result of the stealth raid, according to the Institute for Fiscal Studies (IFS) think tank.

The typical basic rate taxpayer will pay an added £500 in income tax and National Insurance per year by 2026 while higher rate earners are facing a £3,000 annual increase.

5 things to start your day 

1)  Mortgage rates soar past 6pc for first time in 14 years as Kwarteng summons bankers The Chancellor summoned bank chiefs to Downing Street after turmoil in the mortgage market triggered a wave of deals being pulled.

2) Treasury set for £21bn income tax boost despite mini-Budget cuts The average household will be £1,450 poorer per year as a result of the stealth raid, according to the Institute for Fiscal Studies.

3) Ad-free Google rival to launch in the UK Founder of Neeva claims Google is abusing its dominance of internet search engines.

4) Elon Musk’s free speech vision for Twitter at risk from Britain’s ‘purse-lipped puritans’ Anti-hate speech campaigners 'fear for a Musk-owned Twitter'

5) Ben Marlow: Ukrainian heroics are testing the strength of the oil cartel What these major territorial advances mean for Opec is yet to be determined.

What happened overnight 

The dollar rose 1pc on the euro and 1.3pc on sterling overnight. All three main indexes on Wall Street ended in the red, though they managed to claw back most of their earlier losses thanks to a late rally.

Asian markets were mixed as this week's global rally ran out of juice: Tokyo, Singapore, Seoul, Taipei and Jakarta all rose again, but Hong Kong retreated after leaping almost 6pc higher on Wednesday. Sydney, Wellington and Manila were also slightly lower.

Coming up today

  • Economics: Construction PMI (UK), retail sales (EU), jobless claims (US), factory orders (Germany).

  • Corporate: Imperial Brands, Chemring, CMC Markets, Ferrexpo, R S Group (trading statements); N Brown (interims); Volution (full-year results).