Public dissatisfaction with the Bank of England hit a record high last month, as the cost of living crisis combined with a crunch in mortgage rates to imperil family finances.
More than one-third of people are unhappy with the institution’s performance when it comes to setting interest rates to control inflation, according to a survey conducted by Ipsos and published by the Bank. Barely one-fifth said they are satisfied.
This leaves a net satisfaction score of minus 13pc, down from minus 4pc in February. It indicates the public is more dissatisfied than at any point since the Bank began its surveys in 1999.
Its Monetary Policy Committee has raised interest rates from 0.1pc in December 2021 to 4.5pc now, but inflation is still rampaging at 8.7pc, more than four-times the target rate of 2pc.
Officials are expected to take the base rate to 4.75pc next week.
It comes as ministers were warned the mortgage market faces a “spiral of repossessions” unless the Government offers support for households as average rates near 6pc, ministers have been told.
Sir Ed Davey, leader of the Liberal Democrats, is calling for a £3bn emergency mortgage protection fund to protect families at risk of losing their homes.
Read the latest updates below.
Train drivers refuse to work overtime in fresh disputes
Drivers at two train operators will refuse to work overtime and go on strike as part of industrial action in disputes separate to the ongoing national row over pay, it has been announced.
Members of Aslef at Avanti West Coast will strike on July 2, while drivers employed by London North Eastern Railway (LNER) will refuse to work overtime from July 1 until further notice.
Aslef said the dispute with Avanti West Coast is over sick pay changes, which the company is accused of trying to “force through without agreement”.
LNER is accused of failing to adhere to “agreed procedures”.
Aslef general secretary Mick Whelan said:
It is deeply regrettable that Aslef members have been forced to take this action but our members will not stand by and allow our agreed terms and conditions to be violated by the train operating companies.
We have been coming to the table to try to resolve these disputes for many months but unless the operators honour the agreements in place with our members, we will be forced to continue taking action.
The companies know how to avoid this action – it’s by honouring their agreements and negotiating fairly with our members.
Gates ‘honoured’ to meet China’s Xi
China has released a photo of Xi Jinping during his meeting with “old friend” Bill Gates in the Chinese president’s first meeting with a foreign entrepreneur in years.
In a meeting at Beijing’s Diaoyutai state guesthouse, where China’s leaders have historically received senior foreign guests, Mr Xi told the Microsoft co-founder and philanthropist that he was very happy to see him after three years and described Mr Gates as the first American friend he had met this year.
Mr Xi said: “With the current global situation, we can carry out various activities beneficial to our two countries and people, activities that benefit humanity as a whole,” he said.
Mr Gates, who arrived in Beijing on Wednesday, told the China’s leader he was “honoured” to have the chance to meet.
He said: “We’ve always had great conversations and we’ll have lot of important topics to discuss today. I was very disappointed I couldn’t come during the last four years so it’s very exciting to be back.”
Micron to invest £469m in China plant
American chipmaker Micron has said it will invest more than $600m (£469m) in its packing and testing factory in northwest China, less than a month after Beijing banned the use of its chips in critical infrastructure projects.
In a WeChat statement, the company said it would invest more than 4.3bn yuan (£472m) over the next few years in its plant in the city of Xi’an to acquire equipment and add a new factory at the facility.
Last month, China banned told some companies to stop buying products from the US chipmaker Micron, saying its products carry “serious network security risks”.
However, today President Xi Jinping said that China is willing to work with the world on technology innovation and global challenges including pandemic prevention during a meeting with American billionaire Bill Gates.
“You are the first American friend I’ve met in Beijing this year,” Xi told the Microsoft co-founder on Friday, according to state broadcaster China Central Television, adding: “We always pin our hopes on American people and hope the two peoples can continue to be friendly.”
Peel Hunt slumps to loss amid investor unease
Peel Hunt swung to a pretax loss as it endured a slump in capital markets and investors were less willing to part with their cash.
The London-based broker, advisory and trading business said that investment banking revenue plunged 60pc to £23.4m and “execution services” revenue fell 27pc to £33.8m.
The company had reported a pre-tax profit of £41.2m in the previous year to March but fell £1.5m into the red in its latest annual results.
As a result, the board is not proposing a dividend for the year.
Chief executive Steven Fine said: “It is what it is. We’re seeing some tentative signs of improvement of activity.”
During the year, the firm added 19 new clients including seven in the FTSE 350.
The company said it’s seen a gradual improvement in its deals pipeline since the start of the current financial year.
Subsidising mortgages ‘terrible economics and bad politics’
Tim Pitt, a partner at Flint Global, described the Liberal Democrats plan to create a £3bn emergency mortgage protection fund as “terrible economics and bad politics”.
He said that while Government support schemes were the right thing to do during Covid and the energy crisis, they are a “terrible idea” for battling inflation and making housing more affordable.
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Public less gloomy about inflation, says Bank of England
Mortgage rates are surging and Government borrowing costs are rising but Britons became less pessimistic about inflation in the second quarter as energy prices continued to fall, according to a Bank of England survey.
Questioned in May, consumers expected prices to rise 3.5pc over the following 12 months.
That is down from 3.9pc in February and a peak of 4.9pc in August, the poll of public attitude to inflation found.
People were also less gloomy about the outlook in the 12 months after that but still expect 3pc price rises in five years time.
Inflation expectations are closely watched by the Bank of England as policymakers battle to tame inflation, which is still running at more than four times the 2pc target at 8.7pc.
The survey by Ipsos also showed increasing dissatisfaction about the way the Bank of England is doing its job.
An index tracking satisfaction with the Bank dropped to minus 13 from minus 4 – the lowest since records started in 1999 shortly after the Treasury handed the central bank authority to set interest rates.
Coventry Building Society to raise mortgage rates
Coventry Building Society has joined the swathes of mortgage lenders pulling deals and increasing their rates.
Bosses said it would close products at 8pm on Monday and launch more expensive offers from 8am on Tuesday next week.
The changes will affect all its residential “green further advance” rates and all buy-to-let rates.
Banks expect ECB to increase interest rates to new record this year
Economists see a greater chance that the European Central Bank will deliver two more interest-rate increases, taking them to a new record of 4pc.
Goldman Sachs, UniCredit and BNP Paribas are among banks that have changed their outlook after policymakers delivered a quarter-point rise on Thursday to 3.5pc as President Christine Lagarde said there is more ground to cover to bring inflation back to 2pc.
Updated economic projections showed price pressures across the 20-nation eurozone easing more slowly than previously forecast, underpinned by a resilient jobs market and strong wage growth.
Goldman Sachs said the updated inflation projections “point to a higher hurdle to finish the hiking cycle in July” as “communication made no attempt to lay the ground for a pause in the tightening cycle”.
Analysts at BNP Paribas said they “continue to think the ECB is too optimistic on growth” with a rate of 3.75pc expected in July looking “to be a floor for the policy rate”.
Most banks though — including Morgan Stanley and Nordea — still see only one more hike in July, highlighting the impact of past increases filtering through to the economy, sluggish growth and likely reluctance among officials to push rates too far.
Gas prices slump after week of rises
European natural gas have slumped after a week of gains after supply risks and hot weather sparked volatility in the market.
Benchmark Dutch futures fell as much as 12pc, but are still on track for a weekly gain of over 15pc.
A record number of contracts traded at the Intercontinental Exchange in Amsterdam on Thursday, while open interest, a measure of market activity, jumped to the highest since last March, the first days of Russia’s invasion of Ukraine.
The market has been turbulent this month. A prolonging of maintenance at plants in Norway have coincided with scorching heat in Europe and Asia, raising demand for air conditioning.
Prices spiked again on Thursday by as much as 30pc after Bloomberg News reported that the Netherlands will permanently close a major gas field this year.
Dutch front-month gas, Europe’s benchmark, was last down 8.9pc at just below €37.50 a megawatt-hour. The UK equivalent contract fell 8.3pc.
Housing downturn prompts profit warning at Travis Perkins
Shares in Travis Perkins have slumped to the bottom of the FTSE 250 after the builders’ merchants issued a profit warning.
The company blamed “higher interest rates and weaker consumer confidence” as it said operating profits for the year would be around £240m, well below analyst estimates of £265m.
It said “persistent, higher than anticipated” consumer price inflation had driven a downturn in volumes across the markets for both new-build housing and private domestic repair, maintenance and improvement.
Shares slumped as much as 8pc but have recovered slightly to be down 5.5pc.
FTSE 100 boosted by rising oil and metals prices
The FTSE 100 opened higher after a boost from energy and mining stocks.
However, mid-cap industrial companies were put under pressure after a slump in top building materials supplier Travis Perkins following a profit warning.
The resource-heavy FTSE 100 has risen 0.5pc. The export-oriented benchmark index was on track for a weekly gain, as miners and energy stocks tracked crude oil and metals prices higher.
The FTSE 250 mid-cap index has gained 0.4pc.
Shares of Travis Perkins dropped 7.4pc to a seven-month low after the company flagged its profit would be hit by challenges in the country’s housing market.
Asos jumped 6.9pc, extending gains from the previous session on a return to profitability, with RBC raising its price target on the online fashion retailer.
Pound hits one-year high
The pound briefly broke above $1.28 in early trading and is sitting at its highest level since April last year.
Sterling is up about 0.1pc so far against the greenback but is down 0.1pc against the euro, which is still worth less than 86p.
Fears of ‘spiral of repossessions’ as mortgage rates near 6pc
The mortgage market faces a “spiral of repossessions” unless the Government offers support for households as average rates near 6pc, ministers have been told.
Sir Ed Davey, leader of the Liberal Democrats, is calling for a £3bn emergency mortgage protection fund to protect families at risk of losing their homes.
It comes as Atom Bank and Coventry Building Society today became the latest lenders to confirm they will be raising their mortgage rates.
In the last three weeks, the average rate on a two-year fix has risen from 5.34pc to 5.92pc, according to data company Moneyfacts.
Sir Ed told BBC Radio 4’s Today programme: “We’ve already seen the number of people’s homes been repossessed going up massively – surging by 50pc in the latest quarter, and my worry is that we’re going to see lots of other families losing their homes, and we could be in a spiral of repossessions.
“The banks have got to play a bigger role. They need to step in and help people who are in trouble.
“But just as there was before, there needs to be more protection for those who are really suffering and the Government just aren’t doing that.”
Tim Pitt, a partner at Flint Global, described the idea as “terrible economics and bad politics” as easing the impact of rising mortgage costs acts against the Bank of England’s biggest tool to bring down inflation.
Sir Ed Davey said the Liberal Democrats’ proposal for a £3bn emergency mortgage protection fund is “quite targeted and time-limited” and it will get help to people who would otherwise lose their homes.
He told BBC Radio 4’s Today programme: “If we don’t give that sort of help to those people, you’d see a spiral down and it will hit the whole economy.”
He said there also needs to be more support for carers, and for renters “who are getting a really poor deal”.
UK markets rise after Wall Street rally
The FTSE 100 has risen at the open after Wall Street benchmarks swept higher, extending their longest rally in a year and a half.
The blue chip index has climbed 0.3pc to 7,647 while the midcap FTSE 250 has gained 0.1pc to 19,037.55.
ITV plots bid for Gogglebox producer as it looks to bounce back from Schofield scandal
ITV has confirmed it is exploring a takeover of Gogglebox producer All3Media as it tries to move past the Philip Schofield scandal.
In an announcement to shareholders, the company said there “can be no certainty as to whether any transaction will take place,” or whether a deal would happen.
The potential acquisition comes as ITV was rocked by the resignation of presenter Philip Schofield after the This Morning host admitted to an “unwise but not illegal” affair with a younger male colleague on the show.
ITV chief executive Dame Carolyn McCall faced questions from MPs on the Culture, Media and Sport Committee this week about Mr Schofield’s exit.
All3Media is co-owned by Liberty Global and Warner Bros Discovery and could be valued at more than £1bn, according to Reuters.
China has ‘placed our hopes on the American people’, Xi tells ‘friend’ Bill Gates
Xi Jinping told his “American friend” Bill Gates that China has “always placed our hopes” in the American people, state media reported.
Xi was reported to have told Gates in Beijing: “You are the first American friend I have met in Beijing this year.”
The state-run People’s Daily said Mr Xi added: “We have always placed our hopes on the American people, and hoped for continued friendship between the peoples of the two countries.”
He added that China is willing to strengthen cooperation with the Bill & Melinda Gates Foundation.
Since arriving in Beijing for the first time since 2019 on Wednesday, the Microsoft co-founder and philanthropist has given a speech at the Global Health Drug Discovery Institute about the need to use technology to solve global health challenges.
Tesco sales rise as more shoppers trade down
Tesco said costs were starting to ease as it recorded an 8.2pc like-for-like sales increase, and said more shoppers were trading down to from higher-end supermarkets.
Chief executive Ken Murphy said:
We are pleased with our performance in the first quarter, underpinned by our relentless focus on value.
Customers continue to recognise our leading combination of great value and quality in every part of their basket – from essentials covered by our Aldi Price Match, through to our growing Finest range.
We are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items.
There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.
Tesco sees ‘early signs’ of inflation easing
Britain’s biggest supermarket has hailed “encouraging early signs” that inflation is starting to ease, as grocery bosses face pressure to cut prices faster.
Retail editor Hannah Boland has the latest:
Tesco chief executive Ken Murphy said the supermarket was “very conscious” that its customers were coming under pressure and that it was “working tirelessly” to bring prices lower.
It follows mounting pressure from the Government for retailers to start cutting shoppers’ grocery bills quicker, with the Telegraph revealing last month that Downing Street was considering bringing in a price cap for essentials.
Grocery chiefs have pushed back on the plans, claiming they could have “unintended consequences”. This includes pushing more supermarkets to have to import cheaper produce from overseas.
The UK’s largest supermarket group reported total sales of £14.8bn for the 13 weeks to May 27, with a like-for-like sales increase of 8.2pc against the same period last year.
Its UK division saw a like-for-like sales rise of 9pc after it said it saw benefits from customers switching “from premium retailers” amid pressure on consumer budgets.
Macron to meet Elon Musk again as France woos Tesla chief
Elon Musk will meet Emmanuel Macron for the second time in a month as the French president tries to persuade the billionaire to open a Tesla gigafactory.
France has been courting Chinese electric vehicle giant BYD and Tesla to build factories in the country but is competing with other EU countries such as Spain, which is in talks with Tesla too, according to Reuters.
Mr Musk will visit the VivaTech summit in Paris later today, France’s biggest tech fair.
Mr Macron told reporters at the event: “I’m going (into that meeting) with an agenda.
“We’re going to talk about artificial intelligence, in which he is involved, social media, regulation framework… And then I’ll also talk to him about cars, batteries, to promote French and European attractiveness.”
Asked specifically whether he was hoping to secure a Tesla gigafactory, Mr Macron said: “It’s up to the company to look at these different issues in Europe. So we’ll be selling France.”
Elon Musk is likely to face questions when he appears at the VivaTech conference in France after meeting Emmanuel Macron.
He could be challenged about his many business interests – particularly his acquisition of social media network Twitter.
The on-off richest man in the world bought the platform for $43bn, sacked much of its staff, allowed right-wing conspiracy theorists to return and introduced all sorts of fees and charges.
He admits the platform is no longer worth anywhere near the amount he paid.
Maurice Levy, who will interview him in an auditorium that holds more than 4,000 people, said Twitter would certainly be on the agenda.
But Mr Musk is a notoriously tricky interviewee, prone to lengthy pauses, off-topic rambles and making coded references to sex and drugs.
Mr Levy said he was going to try to be up to the challenge but told French broadcaster BFMTV he could not pretend to be a journalist.
He said: “I’m not looking for a scoop, I’m looking for an explanation, I’m looking to understand.”
Billionaire Elon Musk is set to meet Emmanuel Macron in Paris today for the second time in just over a month, as France aims to curry favour and attract investment from the Tesla boss.
The French president confirmed during a visit to France’s biggest technology trade fair VivaTech earlier this week that he would meet the businessman to “tout the attractiveness of France and Europe”.
After talking to Mr Macron, Mr Musk will appear before an audience of thousands at VivaTech for what is billed as an hour-long “conversation” with the event’s French founder Maurice Levy.
5 things to start your day
1) Nationwide to increase mortgage rates for a third time | Lenders scramble to keep up with rising wholesale borrowing costs
2) Wall Street banker accidentally sent sex tape to colleague while working from home | Adam Dell paid several million dollars to the woman who received the recording
3) ECB raises interest rates to highest in 22 years | The European Central Bank raised interest rates to their highest level since 2001, triggering a jump in borrowing costs as president Christine Lagarde warned that stubborn inflation meant more increases were on the way
4) Imperialism is taboo in Britain – but it is making an extraordinary come-back in Europe | Captains of EU doctrine are challenging Leftist ideological tenets head on
5) Third Revolut investor slashes value of company after accounting problems | More trouble for fintech firm as it struggles to secure a banking licence
What happened overnight
Asian shares rose to a four-month high as US economic data stoked expectations that the Federal Reserve is near the end of its rate-hiking campaign.
However, the yen fell after the Bank of Japan maintained its ultra-easy monetary policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.75pc higher and on course for 2.8pc gain in the week, its best weekly performance since January.
The Bank of Japan rounded up a central bank heavy week, keeping its pledge to “patiently” sustain massive stimulus to ensure Japan sustainably achieves its 2pc inflation target accompanied by wage increases.
As widely expected, the BOJ maintained its -0.1pc short-term interest rate target and a 0pc cap on the 10-year bond yield set under its yield curve control (YCC) policy.
China’s benchmark CSI 300 Index was 0.5pc higher while Hong Kong’s Hang Seng Index gained 0.8pc.
Wall Street stocks rallied Thursday, in a sign that the stock market sees the Federal Reserve’s campaign of raising interest rates as ending soon.
All three major indices jumped more than 1pc, a day after the Fed kept rates unchanged but signalled it expects further increases in 2023.
The Dow Jones Industrial Average rose 1.3pc to 34,408.06.
The broad-based S&P 500 climbed 1.2pc to 4,425.84, while the tech-rich Nasdaq Composite Index also advanced 1.2pc to 13,782.82.
The benchmark 10-year Treasury yield were down 8 basis points to 3.718pc, from 3.798pc late on Wednesday.
The two-year note was last was down 6.5 basis points to yield 4.6418pc.