Hard Brexit highly damaging, states former top civil servant

There’s no trade deal available in the Eu which will stop Britain going for a major economic hit after Brexit, the government’s former top trade official has cautioned.

Inside a direct warning to MPs, Mister Martin Donnelly, the main civil servant in Liam Fox’s Department for Worldwide Trade until captured, claims that departing the only market towards negotiating a lengthy-winded, Canada-style trade deal will “damage United kingdom competitiveness and then leave us with less investment, lower living standards and lengthy queues in the border”.

Donnelly, who left the trade department captured and that has extensive experience employed in The city, writes within the Observer that there’s no credible free trade deal available “able to provide the guaranteed market access, shared regulation and consumer protection that Britain needs”.

“Vote to depart the only market should you must. But get it done together with your eyes open,” he informs MPs. “Wishful thinking doesn’t create well-compensated jobs, pay taxes or fund public services.”

He warns that departing the EU’s legal structures leaves Britain “more protected, more controlled and poorer”.

leaked European commission document recommended that Britain wouldn’t be offered a bespoke trade deal granting accessibility single marketplace for products or services. Additionally, it has the government fighting to have a Brexit crisis on several fronts: it might face a Commons defeat as soon as Tuesday more than a digital rebel attempt to make sure that the EU’s Charter of Fundamental Legal rights retains effect after Brexit.

The Observer has additionally found that senior legal figures within the Lords are poised to make sure that rulings through the European Court of Justice (ECJ) have a location in United kingdom courts after Brexit.

Lord Pannick QC, who defeated the federal government in the court over its make an effort to trigger Brexit with no election in parliament, stated he’d part of to alter the EU withdrawal bill if ministers didn’t clarify the “uncertainty” over EU law after Brexit day.

“We need clearness on whether idol judges should, apart from in exceptional conditions, follow judgments from the European Court of Justice around the retained EU law which is a part of domestic law after Brexit,” he stated. “[The present bill] gives insufficient guidance to the idol judges.

“When the withdrawal bill involves home of Lords, I’ll be tabling an amendment to want domestic courts to interpret retained EU law consistently using the judgments from the court of justice handed lower publish-Brexit, unless of course the domestic court is content there are exceptional reasons to avoid so.

“Such an amendment is made to promote legal certainty, and also to ensure consistency between your retained EU law and also the same laws and regulations in Europe, that is particularly important to advertise do business with Europe, to make sure freedom of services, for data protection, safeguarding the atmosphere, protecting employment legal rights as well as in a number of other fields.”

Lord Pannick

Lord Pannick: ‘We need clearness on whether idol judges should, apart from in exceptional conditions, follow judgments from the European Court of Justice.’ Photograph: Dan Kitwood/Getty Images

That move will infuriate Brexiters as well as contradicts Theresa May, that has made jurisdiction from the ECJ a red line in Brexit talks.

Meanwhile, senior ministers have a crunch meeting on Monday over how you can unlock Brexit talks using the EU, with foreign secretary Boris Manley wanting guarantees more than a future trade deal before investing in a significant rise in divorce bill.

In the Observer article, Donnelly spells the benefits Britain enjoys from the single market membership can’t be replicated inside a trade deal. He urges MPs unsure by what make up the final Brexit deal must take to purchase themselves time by backing temporary membership from the European Economic Area, which will come with single market access, for any transition period. Doing this allows additional time to “see when we will find a practical alternative that fits our economic needs”.

“Please don’t discard our hard-won competitiveness, our understanding-based economy which pulls global talent and investment, and our effective services sector due to false promises that people can leave the only market and everything is going to be fine,” he warns MPs. “That isn’t exactly what the details inform us.Inches

An identical warning was already from Mister Ivan Rogers, the previous ambassador towards the EU, who stated there would be a “radical difference” between your free trade arrangement that Britain could be offered and membership from the customs union and also the single market it had become quitting.

A senior EU official hit back against David Davis’s claim throughout a speech in Berlin a week ago the United kingdom should have a better deal than Norwegian, because of its comparative size. The state in The city told the Observer, however, that suggestions from British politicians the United kingdom could remodel its economy to become a lot more like Singapore had cut right through to EU leaders.

“They say ‘But we’re a large country therefore we could possibly get something much better than Norway’. My response is ‘no, it’s the alternative way round’. Norwegian is really a fisheries and oil economy. They aren’t a rival. You, the United kingdom, really are a competitor. Particularly with regards to safeguards against various dumping. Threats happen to be made and safeguards must be introduced.”

Meanwhile, companies will also be growing their lobbying within the results of departing the EU without any deal. The tourism industry has independently cautioned that 25,000 jobs held by Britons working in the market in Europe, in addition to £1bn in tax revenue, are in risk.

Eloise Todd, mind from the pro-Remain Perfect for Britain campaign, stated: “In a few days from the budget, this really is further evidence that we’re facing a Brexit black hole in the centre in our economy.”

US economy rebounds from September slump with the addition of 261,000 jobs in October

The United States economy bounced in October from the dramatic slump in hiring within the wake of two devastating hurricanes, the labor department announced on Friday.

The United States added 261,000 new jobs and also the unemployment rate ticked lower to 4.1%.

In September the united states shed 30,000 jobs – the very first reduction in seven years – as hurricanes Harvey and Irma held back hiring in Texas and Florida. The leisure and hospitality industry was hardest hit through the hurricanes in September, shedding 111,000 jobs.

Employment in food services and consuming places rose dramatically in October – up 89,000 – carrying out a loss of 98,000 in September.

October’s figure was still being less than analysts had expected, possibly reflecting the ongoing impact from the storms. September was the 2nd month of disappointing growth in america jobs market. The labor department had calculated the US had added 169,000 new positions in August, underneath the 180,000 that were expected by economists.

However the figures from August and September have finally been revised up, to 208,000 and 18,000 correspondingly. And also at 4.1% the unemployment rates are now at lows unseen since December 2000.

Paul Ashworth, chief US economist at Capital Financial aspects, stated that although October’s figure wasn’t as robust as have been expected, the revisions towards the two previous several weeks might have taken into account the low number. “Nevertheless, that also means employment elevated with a relatively modest 140,000 monthly in the last two several weeks, that is a significant slowdown around the pace of employment development in the very first 1 / 2 of this season,Inches he stated.

Wage growth, that has been slow because the recession, stalled in October. Average hourly earnings fell by one cent in October to $26.53 an hour or so. Economists had expected a small monthly gain.

The discharge of October’s figures comes each day after Jesse Trump announced a brand new tax plan he has promised can create more jobs in america. The program, that will deliver big cuts for business and also the wealthy, in addition to more sensible cuts for that middle-class, will give you “the rocket fuel our economy must soar greater than ever before before”, Trump stated.

On Wednesday, ADP, the non-public payroll supplier, stated the non-public sector added 235,000 positions in October.

Mark Zandi, chief economist of Moody’s Analytics, which will help compile the report, stated: “The employment market rebounded strongly in the hit it required from Hurricanes Harvey and Irma. Resurgence in construction jobs shows the rebuilding has already been under way. Searching with the hurricane-produced volatility, job growth is robust.”

The solid increase in jobs will probably confirm plans through the Fed to boost rates of interest at its next meeting in December. On Thursday, Trump hired Given board member Jerome Powell because the next chair from the central bank. He’ll replace Jesse Yellen when her term leads to Feb.

The GOP’s bill is ‘a sensible framework’ — but ‘still a deficit-exploding tax cut’ for the rich and corporations

Many of the ideas in the Republican tax proposal unveiled Thursday have found bipartisan support in the past and endorsements from economists who see a way to improve the U.S. economy. That includes plans to make the corporate rate more competitive, simplify personal taxes, curb several tax breaks of dubious value and provide more assistance to working families.

The controversy is over who will gain the most: the rich and corporations. The GOP bill would cut the corporate rate well below previous attempts, eliminate a tax on inheritance that affects only people with many millions of dollars, and take other actions that do not provide direct benefits to most Americans.

And the proposal represents a significant break with previous tax-rewrite discussions. Republicans have in the past focused on the importance of not adding to the nation’s debt through tax reform. Democrats have favored overhauling the tax code to raise revenue to pay for needed improvements in America’s infrastructure or to provide services for the middle class and poor.

But in this case, Congress’s Joint Committee on Taxation estimated Thursday that the tax plan would be paid for by $1.5 trillion in additional borrowing over the next decade. Much of that reflects tax reductions benefiting the wealthy and companies.

Budget experts say the GOP’s decision jeopardizes what could otherwise be one of the great legacies of Republican-controlled government: fixing the U.S. tax code and improving the economy.

House Republican leaders on Thursday, Nov. 2 proposed legislation that would overhaul the U.S. tax code. Here’s what you need to know about it. (Monica Akhtar/The Washington Post)

“I do think this is a sensible framework. It emphasizes the need for corporate reforms and how our tax system works,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. “But this is still a deficit-exploding tax cut at a time when the deficit is at near-record levels.”

At heart, the GOP plan cuts taxes on large businesses and pays for those reductions by raising taxes on individuals, the exact opposite of what was done in the 1986 Tax Reform Act under President Ronald Reagan. Republicans have long held up the 1986 effort — which did not add to the deficit — as a model.

The cut in corporate taxes will deplete the Treasury by nearly $847 billion over the next decade, according to the Joint Committee on Taxation. The elimination of the estate tax — which is paid only by the small portion of Americans with estates worth more than $5.49 million — and related measures will cost $172 billion. The creation of a 25 percent rate for people who pay corporate taxes through the individual code — a popular way for the wealthy to reduce their tax obligation — will cost $448 billion.

The GOP offsets some of those costs by raising taxes on individual earners who use tax breaks such as the mortgage interest deduction and the state and local tax deduction. But critics say the GOP could have chosen to overhaul the tax code in a way that concentrated benefits on middle- and working-class Americans — and chose not to.

“You can very much achieve tax reform without giving higher-income earners a tax cut,” said Chye-Ching Huang, deputy director of federal tax policy at the left-leaning Center on Budget and Policy Priorities.

President Trump and top Republican leaders argue that the middle class and working poor will benefit from lower taxes of big businesses because corporations will use the money they save on taxes to hire more workers and pay existing employees higher wages.

“We will be creating jobs like you have rarely seen,” Trump said in the Oval Office, as he kissed a postcard of the House GOP tax plan, hailing it as a “great Christmas present.”

Invariably, overhauling the tax code creates winners and losers, and the writers of the legislation argued that they were making progress toward a top policy goal.

“None of [the critics] thought we would even get this far with tax reform, and they’re wrong,” Rep. Kevin Brady (R-Tex.), the chief author of the tax bill, said Thursday.

The plan contains several policies that have attracted bipartisan support before. The current corporate tax rate of 35 percent is far higher than those of most other wealthy countries, leading many companies to say they are at a disadvantage and must spend a disproportionate amount of time and resources on complying with tax rules. In his last year in office, President Barack Obama proposed lowering it to 28 percent.

The GOP has pursued a much lower rate, proposing on Thursday a 20 percent rate. Earlier this year, the GOP planned to offset the deep cut in the corporate tax rate by imposing a substantial new tax on imports, a move that was killed by retailers and other industries. The bill unveiled Thursday didn’t have many revenue streams from businesses.

Likewise, many experts agree the tax code contains numerous tax breaks that don’t provide much benefit to the economy. For example, while many existing homeowners may appreciate the mortgage interest deduction, research suggests that it disproportionately benefits higher-income earners and does little to spur home-buying. Democrats have proposed limiting its value before — just as the GOP tax bill on Thursday proposed allowing new home buyers to deduct interest on only $500,000 of mortgage debt rather than the current $1 million threshold.

Only 5 percent of mortgages in the United States are worth more than $500,000, according to the National Low Income Housing Coalition.

The mortgage interest change, among other limits to tax breaks benefiting individual earners, would raise more than $1.25 trillion over the next decade, according to the Joint Committee on Taxation.

Alan Auerbach, professor of economics and law at the University of California at Berkeley and one of the country’s top tax scholars, said some provisions in the plan make a lot of sense. For example, he praised how the GOP proposal would allow companies to deduct the cost of investing in new equipment, which is likely to spur immediate spending in the economy. But he lamented how much the plan adds to the deficit, among other provisions.

The bill “has a pulse,” he said, but he’s “not sure it can be resurrected” into something that is good policy for the United States, especially after so many interests groups and lobbyists pressure Congress for changes in the coming weeks.

Republicans are pushing an aggressive timeline to get the bill to the president’s desk. The idea is to limit lobbying by moving quickly, but many are skeptical it can happen.

“The problem is we’re creating policy in an era of free-lunch economics,” MacGuineas said. “No one seems to acknowledge budget constraints and real choices.”

US economy grows 3% in third quarter despite twin hurricanes

The United States economy shook from the impact of two major hurricanes within the third quarter growing in a robust 3%, the commerce department reported Friday.

monthly fall in employment.

Houston’s metropolitan area, which bore the brunt of hurricane Harvey, may be the country’s s fifth largest, and makes up about 3% of national economic output.

The outcome from the storms on gdp (GDP), the largest way of measuring economic health, continues to be considered. However the bad jobs report was considered like a storm-related anomaly by most economists and also the stock markets have ongoing hitting record highs.

The commerce department stated the storms most likely covered up business activity in areas including gas and oil extraction in Texas and agriculture production in Florida but added “it isn’t feasible to estimate the general impact of Hurricanes Harvey and Irma on 2017 third-quarter GDP”.

Consumer spending, which makes up about about 70% people GDP, gew at 2.4% within the quarter, below recent surveys, and might have been covered up through the storms. But companies ongoing to invest robustly with nonresidential fixed investment growing in a 3.9% rate within the third quarter. Exports were less strong and increased in a 2.3% pace while government spending fell in a .1% rate.

“The 3.% annualised grow in third-quarter GDP, that was almost unchanged from the 3 major.1% rise in the 2nd, is going to be welcomed through the White-colored House and shows that the hurricanes wound up getting little lasting effect on the economy,” Capital Financial aspects stated inside a note.

Although some economists reason that maintaining 3% growth might be difficult because of the US’s aging workforce and slowing productivity, the figures will probably increase the Federal Reserve’s determination to improve rates at its next meeting in December and are available because the Trump administration is pushing via a radical overhaul from the tax system so it argues will further spur growth. That assumption continues to be challenged by Democrats and lots of economists.

Food destroyed by drought could feed greater than 80m each day, states World Bank

The meals produce destroyed by droughts could be enough to give a rustic having a population how big Germany’s every single day for any year, the planet Bank has reported.

In new research, it stated, the “shockingly large and frequently hidden” effects of prolonged periods without rain threatened to stunt the development of kids and condemn these to an eternity of poverty.

The report stated the lost food production associated with drought would feed greater than 80 million people every single day for any year, adding that although floods and storm surges had an instantaneous impact, droughts were “misery in slow motion”.

The Planet Bank stated ladies were born in droughts bore the marks for his or her whole lives, becoming an adult psychologically and physically stunted, undernourished and unwell.

New data implies that women born during droughts had less use of education, had more children and were more prone to are afflicted by domestic violence. Problems brought on by droughts were forwarded to generation x, resulting in a vicious circle of poverty.

Droughts reduce crop yields, forcing maqui berry farmers to grow into nearby forests, the financial institution stated, adding: “Since forests behave as an environment stabiliser which help regulate water supplies, deforestation decreases supply of water and exacerbates global warming.” For firms, the economical price of a drought was four occasions as large as a ton, it stated.

Guangzhe Chen, senior director around the globe Bank’s water global practice, stated: “These impacts demonstrate why it’s more and more essential that we treat water such as the valuable, exhaustible, and degradable resource that it’s. We have to better comprehend the impacts water scarcity, that will be severe because of growing populations along with a altering climate.”

The Planet Bank stated that lots of the countries impacted by drought overlapped with areas already facing large food deficits which were considered fragile, heightening the necessity to tackle the issue.

A woman walks across a dry riverbed in Kenya

A lady walks across a dry riverbed in Turkana, Kenya on 18 October 2017. Photograph: Jennifer Huxta for that Protector

Its report suggested constructing new water storage and management infrastructure, along with an approach to control the interest in water. It advised tougher regulating power companies operating in metropolitan areas so they receive incentives to take a position and enhance their performance. Safety nets ought to be set up to assist families cope when droughts switched into economic shocks.

“If we don’t take deepening water deficits and also the bigger and much more frequent storms that global warming brings seriously, we’ll find water scarcity distributing to new regions around the globe, potentially exacerbating problems with violence, suffering, and migration,” stated the report’s author Richard Damania. “Current means of managing water are less than the task. This ocean-change will need a portfolio of policies that acknowledge the economical incentives involved with managing water from the source, towards the tap, and to its source.”

Inflation hits its highest level in five-and-a-half years; MPC right to cut interest rates after Brexit vote says Carney

  • Inflation rises to 3pc, its highest level in five-and-a-half years; the increase will crank up the pressure on the Bank of England to hike interest rates next month to curb inflation
  • RPI remains at its highest since 2012; business rates will jump by 3.9pc next April as a result
  • Sterling sinks as Mark Carney speaks at a select committee; the pound falls 0.7pc against the dollar to below $1.32
  • FTSE 100 nudges higher as the pound retreats; theme park owner Merlin nosedives 20pc after a “difficult” summer of trading, blaming terrorism and bad weather

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4:26PM

Virgin Money insists its credit card business is safer than the bigger banks

Virgin Money chief executive Jayne-Anne Gadhia

Virgin Money has insisted it has a safer credit card business than Britain’s big banks, amid growing fears over ballooning consumer credit.

The challenger bank’s chief executive Jayne-Anne Gadhia told analysts today the company had conducted its own “extreme” in-house stress test of its expanding credit card book and found in a downturn it would face fewer problems than its peers.

Last month the Bank of England warned lenders they risked losing as much as £30bn on personal lending if the economy took a turn for the worse, with as much as a quarter of credit cards defaulting.

But Ms Gadhia said Virgin’s own credit card business – which has grown balances to £2.9bn – would fare better than its peers.

Read Iain Withers’ full report here

3:36PM

Dow Jones on course for another record finish; US industrial production rebounds

The Dow Jones has nudged up 0.1pc

US markets have opened and the Dow Jones has nudged up into positive territory, leaving it on course for another record finish. 

The index has been dragged up by UnitedHealth’s 4.8pc jump on hopes that a decline in medical costs at the health insurer could boost full-year figures.

There’s a bit of economics data to update you with from the States this afternoon. 

Industrial production growth bounced back in September to rise by 0.3pc after being disrupted by hurricane season the previous month. 

Paul Ashworth, chief US economist, said there were still “signs of disruption evident last month, leaving scope for a much bigger rebound in production in October”.

He added:

“Overall, with global trade and economic growth booming and the dollar still down substantially from its peak early this year, the outlook for US manufacturing looks bright. That optimism comes through in the upbeat survey evidence. As a result, we expect solid gains in manufacturing output in the fourth quarter.”

3:06PM

Revolution Bars suitor leaves empty handed as investors reject £100m bid

Investors have left Revolution Bars shaken after rejecting a cash offer for the company

Shares in Revolution Bars dropped as much as 8pc after a second potential suitor in two weeks was left unable to secure a deal.

Stonegate, the owner of the Slug & Lettuce chain, had bid 203p a share for its rival, valuing the chain at £100m. But it failed to secure shareholder support for its cash offer, sending the target’s shares down to 176p.

Owners of just 60pc of Revolution’s shares voted in favour of the Stonegate bid at each of the two separate Court and General meetings held by the company to allow investors to express their view on the deal.

To be successful, the bid needed 75pc of shareholders to vote in favour.

Read Bradley Gerrard’s full report here

2:27PM

Asos profits double as overseas growth offsets weak pound

Asos makes two thirds of its sales overseas

Asos profits have doubled in the past year as the online retailer’s rampant overseas expansion allowed it to storm past its struggling British high street rivals.

The fashion site has delivered a 145pc jump in pre-tax profits to a record £80m while group sales have surged by 33pc to £1.9bn in the year to August 31.

Asos’ upbeat numbers are partly down to the rapid consumer shift from traditional bricks and mortar shopping to clicks on mobile devices. This has resulted in the online fashion market growing at twice the rate of the overall fashion sector over the last five years.

However, Nick Beighton, Asos boss, said that it was “not enough to just be online”. He added: £There has been a continual channel shift as twentysomethings use their mobile phones, but you can’t just be digital, you’ve got to be selling what people want to buy.”

Read Ashley Armstrong’s full report here

2:09PM

Pearson stems decline in key US market

Pearson chief executive John Fallon is under pressure

The troubled education giant Pearson has suffered a further decline in its core American textbook business in the third quarter but avoided its worst fears, to the relief of investors.

On the back of a string of profit warnings, Pearson said the improved trend meant it could narrow its full-year profit forecast to the upper end of the range.

The company, which has cast off media assets such as the Financial Times to focus on education in recent years, now expects a minimum adjusted operating profit of £576m. The previous lowest prediction was £546m.

The improvement reflects a 5 percentage point cut to Pearson’s expected tax rate for the year to 16pc following the “favourable outcome of certain historical tax issues”.

Read Christopher Williams’ full report here

1:45PM

Inflation hits 3pc as cost of living squeeze intensifies 

Prices jumped by 3pc in the past year, the fastest rise in more than five years as imported inflation and higher energy prices pushed up the cost of living.

Food prices climbed as inflation in staples such as bread, rice and meat accelerated in September, while transport costs also rose as petrol became more expensive.

Computer games and theatre tickets also dragged up the consumer price index, the Office for National Statistics said.

Read Tim Wallace’s full report here

1:16PM

Carney grilling ends

Bank of England governor Mark Carney

Final question is about the gender pay gap and he replies that the gap is 24pc on a median basis at the Bank of England and 21pc on mean basis.

He says they are in the middle of a deliberate strategy of changing this at the central bank.

And with that, it’s over. Nothing much new there to be perfectly honest. He defended, as he always does, quantitative easing and the interest rate cut taken shortly after the Brexit vote while also allaying fears about ballooning household debt.

Sterling took a bit of a battering during that appearance, sinking 0.7pc to below $1.32 against the dollar and 0.3pc against a basket of the leading currencies.

1:03PM

Carney on QE: We’re clean and not addicted

We’ve move onto quantitative easing and Mr Carney is given a quote comparing it to heroin.

Extending the metaphor, he replies: “We’re clean and not addicted to QE or will go through withdrawal symptoms.”

He adds that the Bank of England will not just unwind for fun and prove a point, adding that the central bank will observe the Fed’s balance sheet unwinding programme.

12:50PM

Household debt only requires macro-prudential response

When asked if he is too relaxed on household debt, Mr Carney says that the Bank of England is taking action on household debt but to an appropriate degree. It only merits a macro-prudential response, adding that “we’re never relaxed about anything”. 

On Government fiscal policy, he says that he will not and cannot give his opinion and when asked if Help to Buy has pushed up house prices, Mr Carney says that it hasn’t had a multiplier effect on supply.

12:39PM

Carney: We shouldn’t take the lead on Brexit from the markets

Moving onto household debt, Mr Carney is relatively upbeat. He explains away fears of a car finance bubble and says that the quality of “borrowers has gone up substantially”. 

We shouldn’t take the lead from the markets on Brexit given its complexity, he adds. It matters more how households and businesses react.

12:20PM

New BoE policymakers lean on the dovish side

New deputy governor Sir Ramsden is not ready to vote for an interest rate hike

I missed new Bank of England policymakers Silvana Tenreyo and Sir Dave Ramsden’s grillings this morning but fortunately Reuters was watching. Here’s what happened:

New Bank of England rate-setter Silvana Tenreyro said she was not ready to vote to raise the Bank’s record low interest rates in November although she might do so in the coming months if inflation pressure builds in Britain’s labour market.

“My view is that we are approaching a tipping pint at which it would be necessary or justified to remove some of that stimulus,” she told British lawmakers on Tuesday.

New deputy governor Dave Ramsden said he was not close to voting for an interest rate hike, raising some questions for investors about when the BoE would make its widely expected first hike in more than a decade. 

Deputy Governor Dave Ramsden said he was not part of the majority of BoE policymakers who believe a rate hike is likely to be needed “in the coming months” because he saw little sign of inflation pressure building in Britain’s labor market.

They’re still questioning Mr Carney but the debate has centered on Brexit on which the governor can’t give many certain answers. They’ve just moved onto household debt. I must admit this select committee is lacking some teeth, he’s having quite an easy ride.

12:05PM

Sterling sinks against the dollar as Carney speaks

Since Mr Carney started speaking the benchmark 10-year Gilt yield has fallen 3.2 basis points to 1.30pc. Meanwhile on the currency markets, against a basket of the leading currencies, the pound has sunk to a 0.2pc loss for the session while against the dollar sterling has slipped 0.6pc to $1.32.

Spreadex analyst Connor Campbell commented on the appearances by MPC members this morning:

“There were conflicting messages from the BoE this Tuesday. The central bank’s newest deputy governor, Sir Dave Ramsden, stated he wasn’t one of the MPC members who said they were close to raising rates last month. In contrast, policymaker Silvana Tenreyro said she would be ‘minded to vote for a bank rate increase’ if the UK’s data justified it.  

“As for head honcho Mark Carney, he dismissed a question from the Treasury Committee asking whether it would be wise to raise borrowing costs in order to give the BoE room to cut in the case of a recession, arguing that it isn’t ‘appropriate or necessary given that policy can move quite nimbly’.”

11:51AM

Carney warns against moving clearing out of London; BoE working on hard Brexit contingency plan

They move onto the subject of clearing and Mr Carney warns against moving clearing out of London, saying that fragmenting European clearing would create costs for the European real economy.

He adds that the Bank of England is working on a contingency plan for a hard exit without any transition period but believes there will be a transition deal.

11:35AM

Carney: Interest rate cut after Brexit was not unnecessary 

Mr Carney disagrees with a select committee member arguing that the interest rate cut after Brexit was unnecessary.

The pound has largely been determined by the prospects of the trade deal with the European Union. It was the markets judgement on how Brexit will affect real incomes. 

That will ruffle a few feathers.

Raising rates now to potentially support the economy later with a cut is not consistent monetary policy, he says to another question.

He also reiterates that the MPC believes that a hike in interest rates in the coming months will be appropriate.

11:27AM

Watch Mark Carney here

11:26AM

Mark Carney Treasury Committee appearance begins

Bank of England governor Mark Carney has just started his appearance at the Treasury Commitee.

He said that the Bank of England expects inflation to peak in October, admitting that it is likely that he will be writing a letter to the Chancellor explaining why inflation is so far from the 2pc target rate.

He emphasises that the effects of monetary policy takes time to feed through, adding that some factors pushing up inflation are out of the central bank’s control such as rising oil prices.

11:19AM

Attention turns to tomorrow’s wage growth reading

All eyes will turn to tomorrow’s wage growth reading, which is expected to remain flat and lag far behind inflation at 2.1pc. Back to the reaction to today’s figures.

Capital Economics’ UK economist Paul Hollingsworth believes that the Bank of England “will probably be focussed more on tomorrow’s wage growth figures for any signs that domestic cost pressures are building”.

He added:

“Nonetheless, the fact that this is the last set of inflation figures before the key MPC meeting on 2nd November, they will be a key factor in the Committee’s thinking. What’s more, September’s inflation figures are used for the uprating of some benefits.”

Kate Smith, head of pensions at Aegon, explains how today’s figures affect the Lifetime Allowance:

“This month inflation figures are uniquely important because they are used by the government to calculate the rise in the Lifetime Allowance (LTA) for the first time. The increase for the LTA in 2018/19 will be £1,030,000 based on today’s figures, and following a series of reductions it is welcome that the base-level is set to start growing again, even if on the surface the numbers aren’t large.

“Despite being small, this is a complex area, so those affected should seek financial advice to make sure their pension is protected from additional tax charges”

A quick sitrep on the pound. Sterling has nudged a little further down against the dollar to a 0.3pc loss for the session at $1.3250 while against the euro it remains 0.2pc higher at €1.1270.

10:54AM

Inflation reaction: Painful squeeze on consumers will ease next year

Inflation will exceed 3pc in October before falling back towards the 2pc target by the end of 2018, according to Pantheon Macro

Just a reminder that Mark Carney and two other Bank of England policymakers are currently appearing in a Treasury Select Committee and we’ll bring you the latest from Parliament as it comes.

Let’s have a look at what the experts made of today’s figures.

Pantheon Macro UK economist Samuel Tombs believes that inflation will slip below 2pc by 2019, meaning that the MPC will be discouraged from raising interest rates more than once in the next 12 months.

He added: 

“Inflation looks set to fall sharply in 2018, now that retailers have nearly completed sterling-related price rises.

“Domestically-generated inflation has remained muted; indeed, inflation in the services sector was just 2.7% in September, well below its 3.7% average in the decade before the recession.”

EY ITEM Club’s chief economic advisor Howard Archer believes that it would take a surprisingly weak earnings figure tomorrow and particularly poor third quarter GDP growth to stop the MPC from lifting interest rates next month.

The painful squeeze on consumers will begin to gradually ease during 2018, he added. 

10:20AM

Inflation key takeaways

  1. Inflation nudged up to 3pc in September, its highest level since April 2012. Inflation remaining far above the Bank of England’s 2pc target rate will crank up the pressure on the central bank to raise interest rates at next month’s Monetary Policy Committee meeting.
  2. The ONS said that rising prices on food and recreational goods along with transport costs were the main factors putting upward pressure on the reading.
  3. RPI remained flat at 3.9pc, an almost six-year high, meaning that business rates (which are determined by today’s figure) will rise substantially next April. This “will be the last straw” for many SMEs, said the Federation of Small Businesses.
  4. The increase in the headline figure was forecast by economists and thus the pound is unchanged following the release, remaining 0.2pc lower against the dollar this morning at $1.3260.
9:58AM

RPI reading will heap more misery on small businesses

Although the Retail Price Index reading came in flat at 3.9pc, a slightly softer figure than economists were expecting, it will heap more misery on small businesses, according to the Federation of Small Businesses.

Today’s RPI reading means that business rates bills will rise by 3.9pc next April and that increase “will be the last straw many” SMEs, its national chairman Mike Cherry said.

He added:

“Today’s RPI figure follows six months of business rates misery for our small business community. Since April’s bruising revaluation we’ve had the staircase tax, introduction of an unworkable appeals platform and chronic delays to the Chancellor’s £435 million relief package. A near four per cent bill increase next April, on top of losing year one transitional caps, will be the last straw for many.

“The Chancellor should give careful consideration to his inaugural Autumn Budget. The last thing our businesses need is new tax increases or loss of entrepreneurial reliefs.”

9:46AM

3pc inflation turns up the heat on the Bank of England; sterling largely unchanged

Mr Carney will not be dusting off the parchment and pen to write the chancellor to explain why inflation has veered so far from the Bank of England’s 2pc target rate and he has done it by the skin of his teeth.

While the rise to 3pc was expected, inflation hitting its highest point in five-and-a-half years will  turn up the heat on the Bank of England’s Monetary Policy Committee. 

The central bank’s policymakers have dropped some very strong hints in the last month or so on raising interest rates but this combined with reasonably solid economics data of late will make it very difficult for the MPC to leave the base rate unchanged in November’s meeting.

Meanwhile on the currency markets, sterling has barely budged an inch after today’s headline CPI figure came in line with economists’ forecast 

9:34AM

Inflation hits a five-and-a-half-year high

Inflation increased to 3pc in September, its highest level in five-and-a-half years. The reading was in line with economists’ forecasts but will crank up the pressure on Bank of England policymakers to raise interest rates at the next Monetary Policy Committee in November. More to follow…

9:17AM

Merlin shares plunge after terror fears hit attractions

Shares in the Legoland owner have plunged today

Shares in the owner of Madame Tussauds and Alton Towers tumbled in early trade as it revealed the impact of recent terror attacks on trading in the UK.

Merlin’s latest trading figures confirmed the hit from terrorist attacks on UK attractions in the peak summer months, which left group like-for-like revenue growth almost grinding to a halt, edging up 0.3pc in the 40 weeks to October 7.

Poor weather across the UK and Northern Europe and extreme weather in Italy and Florida were also to blame, according to Merlin. Shares plunged 19pc to 365p.

Merlin also unveiled a deal to roll out new Peppa Pig attractions worldwide. The agreement with Entertainment One – which owns the rights to the popular children’s cartoon character – is to develop new attractions and themed accommodation based on the pre-school favourite.

Read the full report here

9:15AM

Inflation preview: what the experts say

Let’s have a quick round-up of what the experts are saying ahead of today’s inflation figures.

CMC Markets analyst Michael Hewson explains how Bank of England governor Mark Carney could be put in an embarrassing spot this morning:

“If CPI rises by more than 1% above the banks 2% target Governor Carney will have the unenviable task of having to write to the Chancellor explaining why inflation is above target, and what the Bank intends to do about it.  

“He can’t very well say, well Phil it turns out that rate cut last year wasn’t such a good idea, but don’t worry we’ve got it in hand and we’re going to put rates back to where they were beforehand.”   

It could be a busy day for Mr Carney will all this letter writing and select committees. Although I imagine he’s had that inflation letter saved in his drafts for some time now.

 Spreadex analyst Connor Campbell provided this preview:

“That’s because investors are eagerly awaiting September’s inflation reading, which is set to see the consumer price index finally hit a 5 year high of 3.0%. Such a reading would put even more pressure on the Bank of England to raise rates, though that hawkish urge may be tempered by the continued fall in real wages (set to be confirmed tomorrow) and a sharp month-on-month drop in retail sales (coming on Thursday).  

“For now, however, the pound is focused on inflation. Cable is up 0.1%, though admittedly half a cent away from the $1.33 levels it was tickling on Monday morning, while against the euro sterling has climbed 0.3%.”

8:54AM

Inflation expected to rise to a five-and-a-half-year high

Some have taken Bank of England policymakers’ sudden hawkish turn on interest rates with suspicion but today’s inflation figures are expected to bolster the consensus view that the Monetary Policy Committee will pull the trigger on interest rates next month.

The headline CPI figure is expected to rise to its highest level in five-and-a-half years and make an increase in the central bank’s base rate almost a done deal.

With no inflation report being released in conjunction with the headline CPI figure, there will be no press conference following the release but Mark Carney will be appearing in front of the Treasury Select Committee later today, who I’m sure won’t skirt around the issue.

Today will also be the best opportunity yet to size up the newest members of the MPC,  Silvana Tenreyro and Sir David Ramsden, who will be appearing alongside Mr Carney.

8:25AM

Agenda: Inflation figures dominate markets’ focus; Merlin plunges 20pc on flat revenue growth

It could be a rollercoaster day for Merlin Entertainment shares

UK inflation figures steal the limelight this morning with the headline CPI reading expected to nudge up to 3pc and confirm that the squeeze on UK households has become a little tighter.

If inflation pushes any higher, Bank of England governor Mark Carney will be put in the embarrassing predicament of having to write a letter to chancellor Philip Hammond explaining why the headline reading has strayed so far from the central bank’s 2pc target rate.

Combined with tomorrow’s wage growth reading, today’s figure is expected to crank up the pressure on the BoE’s Monetary Policy Committee to reverse last year’s emergency interest rate cut and push up the base rate to 0.5pc in November’s meeting.

Ahead of the figures, the pound is having a mixed morning on the currency markets, dipping 0.2pc to $1.3265 against the dollar and nudging up 0.2pc to €1.1271 against the euro.

On the retreating FTSE 100, theme park operator Merlin Entertainments has nosedived 20pc after enduring a “difficult” summer of trading. The Thorpe Park owner blamed terrorism and bad weather and admitted that revenue growth for 2017 is now expected to be “approximately flat”.

At the other end, publisher Pearson, which has suffered from a string of profit warnings of late, has popped 7pc after reporting that full-year operating profit will be in the upper end of estimates.

Interim results: B.P. Marsh & Partners

Full-year results: Utilitywise, Bioventix, Orchard Funding, Bellway, ASOS, DotDigital Group, Genedrive

Trading statement: SEGRO, Moneysupermarket.com, Merlin Entertainments, Pearson, Mediclinic International, Virgin Money, Evraz, BHP Billiton

AGM: Frontier Developments

Economics: PPI m/m (UK), RPI y/y (UK), CPI y/y (UK), HPI y/y (UK), Import Prices m/m (US) Industrial Production m/m (US), NAHB Housing Market Index (US), ZEW Economic Sentiment (EU), Final CPI y/y (EU)