Closing post
Time for a recap…
British carmaker Jaguar Land Rover has credited “improved production and sustained global demand” for a 22% jump in sales last year, including higher sales in the UK and US.
More than 200 jobs are being cut at Ted Baker after the administrators running the retailer, and its landlords, decided to close 15 of its stores.
The head of JP Morgan has warned that we may be entering one of the most dangerous times since the second world war.
In his annual letter to shareholders, Jamie Dimon explained:
The international rules-based order established by the Western world after World War II is clearly under attack by outside forces, somewhat weakened by its own failures and inability to keep up with the increasingly complex world.
Dimon cited the suffering of the Ukrainian people, and the “escalating tragedy in the Middle East”, and warned that America’s global leadership role is being challenged outside by other nations and inside by “our polarized electorate”.
The John Lewis Partnership has appointed the former head of Tesco’s UK operations to be its next chair.
Israel’s central bank has left interest rates on hold at 4.5%.
Global food inflation has dropped to its lowest level since the Ukraine war began, two years ago…..
….while gold has a hit a new record high today.
The high proportion of UK homeowners on fixed-rate mortgages means the Bank of England should be wary of keeping interest rates too high for too long, the International Monetary Fund has warned…..
…while the latest business surveys suggest the UK economy looks to have emerged from recession, as uncertainty drops and growth picks up.
In other news:
Abrdn CIO says mocking name is ‘corporate bullying’
Three years after an ill-advised rebranding, asset manager Abrdn has reportedly complained that jibes over its name are ‘corporate bullying’.
According to Financial News, Abdrn’s chief investment officer, Peter Branner, has hit out at criticism of the vowel-lite renaming, saying:
“I understand that corporate bullying to some extent is part of the game with the press, even though it’s a little childish to keep hammering the missing vowels in our name.
“Would you do that with an individual? How would you look at a person who makes fun of your name day in day out? It’s probably not ethical to do it. But apparently with companies it is different.”
As we covered in April 2021, there was pretty widespread criticism – and guffawing – after Standard Life Aberdeen announced it is changing its name to Abrdn – pronounced “Aberdeen”.
Abrdn’s CEO, Stephen Bird, defended the name change, saying it “reflects a clarity of focus”.
But Abrdn’s recent performance has been a bit of a dgs dnnr – shares are down 20% so far this year, and the company reported a 5% drop in operating profits for 2023.
Israel leaves interest rates on hold at 4.5%
Israel’s central bank has left interest rates on hold, as it continued to target price stability and support economic activity during the Gaza war.
At its latest meeting, the Bank of Israel’s monetary policy committee decided to maintain interest rates at 4.5%. It judged that economic activity and the jobs market continue to “recover gradually”.
But, the BoI also warned that geopolitical uncertainty has increased.
The central bank predicts that Israel’s economy will grow by 2% this year, rising to 5% in 2025.
It says today:
The Bank of Israel Research Department revised its macroeconomic forecast, which based on the assumption that the war will remain concentrated on the southern front, and continue with declining intensity until the end of 2024. For 2025, the assumption is that the war will not have any further direct effects.
Israel’s economy contracted by 5.6% in the fourth quarter of 2023.
The Bank of Israel points out that the supply of labor in the construction industry has been hit by restrictions on the entry of Palestinian laborers from Judea and Samaria and the complete cessation of employment of workers from Gaza, due to the war with Hamas following the October 7 attacks.
Updated
Paul Lévy Prize in Probability Theory to be awarded in July
A new prize to recognise advances in probability research, which could appeal to number crunchers in the City, will be awarded this summer.
The Paul Lévy Prize in Probability Theory will be awarded to a scientist who has made “outstanding contributions to Probability Theory and its Applications”.
It is being backed by the European Mathematical Society, Ecole Polytechnique, the Foundation of Ecole Polytechnique, and the Lévy family, with financial support from BNP Paribas.
It honours the memory of Paul Lévy, the great French mathematician who was professor at Ecole Polytechnique from 1920 to 1959.
The European Mathematical Society says:
Paul Lévy’s work largely shaped modern probability theory which plays an increasingly crucial role in mathematics, physics, financial mathematics, and many other fields. Paul Lévy introduced such fundamental concepts as local time, stable distributions and characteristic functions.
He made fundamental contributions in the theory of stable and infinitely divisible laws, the theory of Brownian motion, Lévy flights, and many others.
The winner will receive a cash prize of €20,000 (£17,160), making it more lucrative than the current top prize in mathematics, the Fields Medal, which is worth $15,000 Canadian dollars (£8,750).
Top mathematicians can also win the Nobel Memorial Prize in Economic Sciences, for which they receive 11 million Swedish krona (£824,000)….and complaints that it’s not a real Nobel prize etc etc.
Ted Baker: 245 jobs lost with 15 stores to close
The administrators running stricken retailer Ted Baker have announced that 15 of its stores are to close in the coming weeks.
Teneo, who took control of Ted Baker last month, have decided to close 11 of the company’s outlets by 19 April, with the loss of around 120 jobs.
In addition, twenty five head office staff have been laid off, due to a “a necessary reduction in central costs”.
The stores to be closed as part of the administration are:
Birmingham Bullring
Bristol
Bromley
Cambridge
Exeter
Leeds
Liverpool One
London Bridge
Milton Keynes
Nottingham
Oxford
Teneo say they have also learned that Ted Baker’s landlords had also served notice on four additional stores: at Bicester, Brompton Road and Floral Street in London, and at Manchester Trafford. That will lead to another 100 job cuts.
Benji Dymant, Joint Administrator, says:
“Ted Baker is an iconic British brand with strong partners around the world.
These store closures, whilst with a regrettable impact on valued team members, will improve the performance of the business, as Authentic continues to progress discussions with potential UK and European operating partners for the Ted Baker brand to bring the business back to health.
We would like to thank Ted Baker team members and partners for their ongoing efforts and support at this difficult time.”
Updated
India's Tata Motors says JLR sales up 22% last year
Jaguar Land Rover, Britain’s largest carmaker, has grown its sales by a fifth in the last year, due to “improved production and sustained global demand.”
JLR, which is owned by India’s Tata Motors, reported that its full year retail sales grew by 22% in the 12 months to 31 March 2024, to 431,733 units.
In the last quarter, sales rose by 11% to 114,038; this included a 22% increase in sales of Range Rovers (to 58,280 units), while Defender sales rose 5% (to 28,702 units), Jaguar cars jumped 39% (to 13,528 units). Sales of Land Rover Discovery vehicles rose 1% (to 9,680 units).
JLR says:
Compared to the prior year, retail sales in the quarter were up 21% in North America, 32% in the UK and 16% Overseas.
Compared to the prior year, retail sales in China were down 9% and down 2% in Europe for the quarter.
Last November, JLR reported record revenues, as it recovered from weaker demand in China, the disruption caused by the coronavirus pandemic and a global shortage of computer chips.
Land Rover customers have also struggled to get insurance for their cars, with some claiming that their vehicles are “uninsurable” after being quoted four or five-figure annual premiums.
In response, JLR relaunched its Land Rover insurance scheme to help owners get cover.
Elon Musk has fallen to fourth on the list of the world’s richest billionaires.
Musk was knocked off the podium by Meta’s Mark Zuckerberg, after a drop in Tesla’s share price last week.
Musk’s wealth dropped by $4.5bn on Friday, bringing it down to $181bn, while Zuckerberg gained $5.65bn to $187. That put the Facebook creator third on the list, behind Bernard Arnault ($223bn) and Jeff Bezos ($207bn).
Today could be kinder to Musk, though. Tesla’s shares are up 2.5% in pre-market trading, after he posted on Friday that its long-awaited robotaxi would be revealed in early August:
Tesla Robotaxi unveil on 8/8
— Elon Musk (@elonmusk) April 5, 2024
Jamie Dimon has also used his annual shareholder letter (see earlier post) to hit out at shareholder advisers and special interest groups, who he claims are “hijacking” and having “undue influence” over AGMs.
The JP Morgan boss claims is that they are ultimately making it “less desirable” for companies to go public, telling investors:
“One of the reasons it is less desirable to be a public company is because of the spiralling frivolousness of the annual shareholder meeting, which has devolved into mostly a showcase of grandstanding and competing special interest groups....The annual shareholder meeting itself has become ineffective. We should try to come up with a far more constructive alternative.”
Influential proxy advisers Glass Lewis and ISS get a special mention, both for being foreign-owned, and having too much sway on companies’ largest shareholders, with Dimon saying:
While asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that proxy advisors have undue influence.”
“....I should also point out, because it may be relevant, that ISS is owned by Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital, a Canadian private equity firm. I question whether American corporate governance should be determined by for-profit international institutions that may have their own strong feelings about what constitutes good corporate governance.”
One solution? Force institutional shareholders like pension funds and asset managers to reveal when their votes rely on Glass Lewis and ISS recommendations:
“To the extent they use recommendations from proxy advisors in their decision-making processes, they should disclose that they do so and should be satisfied that the information upon which they are relying is accurate and relevant.
However, many companies would argue that this information is frequently not balanced, not representative of the full view and not accurate. In addition, companies complain that they often cannot get the data corrected, and, therefore, a vote may go uncorrected.”
Gold at new record high
The gold price has hit a new record high today, as investors continue to anticipate interest rate cuts this year… and some central banks add to their bullion reserves.
Gold hit $2,353 per ounce this morning, above last Friday’s peak, extending its rally this year.
It has risen from around $2,000 per ounce at the start of this year. Analysts have attributed the rise to expectations of interest rate cuts (which would reduce the return on cash reserves and government bonds, undermining their attraction versus gold).
Signs that central banks have been increasing their gold reserves, led by China, are another factor, as are geopolitical worries.
Lord Ashbourne, director of energy & resources at Edison Group, says the recent rise in the gold price has definite echoes of the late 1970s, when gold rallied to mult-decade highs, adding:
In fact, we don’t expect the end of the gold market unless real interest rates (ie the difference between interest rates and inflation) reaches 4%.
Assuming that this is no time in the foreseeable future, we think there is a realistic chance of gold hitting US$3,000/oz and an outside chance that it could hit US$4,500/oz.”
Jamie Dimon warns US global leadership under attack
The head of JP Morgan has warned that America’s “polarized electorate” is undermining its efforts to provide global leadership.
In his annual letter to shareholders, Jamie Dimon says that America’s global leadership role is also being challenged outside by other nations and inside by our polarized electorate.
In a warning against isolationism, Dimon writes:
We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy.
During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount. We should remember that America, “conceived in liberty and dedicated to the proposition that all men are created equal,” still remains a shining beacon of hope to citizens around the world.
Dimon also warns that the fallout from Russia’s invasion of Ukraine should lay to rest the idea that America can stand alone.
At a time when infighting among Republicans on Capitol Hill is holding up an aid bill for Ukraine, Israel and other key allies, Dimon says:
Of course, U.S. leaders must always put America first, but global peace and order are vital to American interests. Only America has the full capability to lead and coalesce the Western world, though we must do so respectfully and in partnership with our allies.
Without cohesiveness and unity with our allies, autocratic forces will divide and conquer the bickering democracies. America needs to lead with its strengths — not only its military but also its economic, diplomatic and moral forces. And now we must do so as America’s leadership is being challenged around the world. There is nothing more important.
Dimon also warns that inflation may be stickier, and interest rates higher, than markets expect, citing the costs of building a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs.
And he predicts that the development of artificial intelligence systems will have “extraordinary” consequences, which could be as transformational as the printing press, the steam engine, electricity, computing or the Internet.
A deal that would have created the first vertically integrated cannabis company in the UK has collapsed.
Voyager, a Cannabidiol oil firm based in Perth, Scotland, has told the City it has terminated discussions with Jersey cannabis growers Northern Leaf.
The two companies had announced a proposed merger last week, which included a plan to undertake a fundraising to provide working capital for the enlarged group. However, today Voyager says those funds can’t be raised in time, due to the “Easter holiday period and slower investor response times”.
Nick Tulloch, chief executive officer and founder of Voyager, says:
“Needless to say, it is hugely disappointing to bring our proposed merger with Northern Leaf to an end. As we look back over the past few months, a transaction well received by the industry and investors has been prevented by circumstances outside of our control.
Our interest in expanding in the cannabis sector through M&A is undiminished and we continue to see numerous opportunities. Many companies in this space are now cash-constrained due to development costs outpacing market growth and, whilst this does create excellent value propositions, as a management team we go in fully aware that work is needed to reinvigorate or accelerate sales.
The proposed merger with Northern Leaf was always about bringing together two businesses that could be leaders in their respective halves of the cannabis industry.
UK home buyers have the highest choice of mortgage products since the last financial crisis, data provider Moneyfacts reported this morning.
According to Moneyfacts, there are 6,307 products available this month, the highest level since February 2008 ( when there were 6,760 on offer), up from 6,004 in March.
But… mortgages become more expensive in the last month, too. The overall average two- and five-year fixed rates both rose, to 5.80% and 5.39% respectively.
The average Standard Variable Rate (SVR) remained at 8.18%, just below the record high of 8.19% recorded in November and December 2023.
Vet firm CVS hit by cyber-attack
One of the UK’s largest vet groups has told regulators about a possible breach of personal information after it was hit by a cyber-attack.
CVS Group said hackers had gained unauthorised external access to a limited number of its IT systems. The company continued to have problems with slow-running systems on Monday after disruption across the UK business.
The chain has more than 500 locations around the world, most of which are in Britain, and is one of the big six groups of UK veterinary practices. Those groups, with backing from large investors, have snapped up vet practices across the country.
More here:
Over in the eurozone, investor morale has hit a two-year high this month, as hopes of an economic upturn continue to build.
Research institute Sentix has reported that its index of investor confidence rise to -5.9 points in April, the sixth rise in a row, and the highest since February 2022.
Economic expectations turned positive this smonth, for the first time since the start of the Ukraine conflict.
Sentix says:
Will there finally be a sustainable economic upturn? At least the economic recovery in the eurozone and world-wide is continuing.
Jason Tarry has the right retail expertise to help John Lewis Partnership succeed, argues Zoe Mills, lead retail analyst at GlobalData.
Mills explains:
“Jason Tarry was at the helm of Tesco during the crucial development of its Clubcard loyalty scheme, taking the discounters head-on and creating a retail model that its competitors have emulated since. He certainly has the experience and knowhow to rejuvenate the John Lewis Partnership.”
“This new challenge for Tarry will require a different tactic to that employed at Tesco, with Marks & Spencer, rather than the discounters, a clear threat to John Lewis’ long-term success. Marks & Spencer is forecast to continue to gradually grow market share in the UK clothing & footwear sector out to 2027, as the retailer’s focus on improved fashion pays off. Indeed, better perceptions of quality have aided sales in recent months and allowed Marks & Spencer to cut back on promotions as shoppers see the worth of purchasing at full price.
In comparison, John Lewis & Partners’ share is expected to stagnate until 2027 - Tarry will need to adopt a similar strategy to Marks & Spencer to improve quality perception and protect profit margins.”
But within the Waitrose supermarket chain, Tarry must not lose sight of its more premium proposition, Mills adds:
While remaining price-competitive will be crucial, as within general merchandise, the focus must be on quality and justifying higher price points to entice shoppers to trade up. Waitrose has sensibly preserved premium touches such as fresh-food counters; Tarry would be unwise to strip these out of the business as was the case at Tesco.”
Hiring Jason Tarry is a “big move” to quash the constant criticism about the lack of retail expertise at the top of John Lewis, says The Sun’s Ashley Armstrong:
Big news from John Lewis Partnership this morning as Tesco veteran Jason Tarry appointed as new chairman.
— Ashley Armstrong (@AArmstrong_says) April 8, 2024
Sharon White to now leave in September.
Hire is a big move to quash constant criticism about lack of retail expertise at the top of the retail group. pic.twitter.com/t1cFEBe0jW
Full story: John Lewis names former Tesco UK boss as next chair of group
By appointing Jason Tarry, the John Lewis partnersip is turning to an experienced retailer to lead the next phase of its turnaround, my colleague Sarah Butler reports.
Here’s her news story on his appointment:
Tarry’s more than three-decades of retail experience contrasts with Sharon White, who had no retail experience when she joined the partnership having run Ofcom, the UK telecoms and media regulator, and worked at the UK Treasury.
Jason Tarry says:
“The Partnership and its brands stand for trust, value, quality and service and it’s a great privilege to be succeeding Sharon as the seventh Chairman.
The Partnership is unique and I’ve long been an admirer of the employee-ownership model, its values and Partner-led customer service. This starts with a sharp focus on being brilliant retailers for customers and investing in growth.
Before Sharon White took the role of JLP chair in February 2020, only four people had done the job since 1955, so her decision last autumn to leave after just one five-year term was a surprise.
White will leave after one of the most difficult periods in its history (which dates back to 1864), with the Covid-19 pandemic having hit John Lewis and Waitrose hard.
The group had expanded dramatically over the previous two decades, at a time when online shopping was rattling the sector, and had not upgraded its IT systems well enough to cope.
Rita Clifton, deputy Chairman of John Lewis Partnership, says:
“The Board extends its huge thanks to Sharon for successfully leading the Partnership through one of the most testing periods in its history - first Covid and then the cost of living crisis.
She has faced into the toughest decisions and overseen the Partnership’s financial recovery; we are in good financial health with a return to profit, and have a strong balance sheet with record investment planned this year. Sharon has also helped ensure that employee ownership of the Partnership is secure, is demonstrably focused on its purpose as a force for good and with an open and inclusive culture.
Jason Tarry named as John Lewis's new chair
Newsflash: The John Lewis Partnership has appointed the former chief executive of Tesco UK as its new chair.
Jason Tarry will succeed Sharon White in September – White having announced last October that she would leave once her five-year term ended (it runs until next February).
JLP says Tarry’s experience spans grocery, general merchandise and fashion in senior commercial, operational and general management positions, having joined the Tesco graduate programme in 1990.
He left his role at Tesco last month.
We’re delighted to announce the appointment of Jason Tarry as the seventh Chairman of the John Lewis Partnership. Read the press release here: https://t.co/a6P2Laf2lA pic.twitter.com/O39m2zkmt3
— John Lewis Partnership News (@jlpartnership) April 8, 2024
Sharon White says:
“I’m delighted to be handing over to Jason, who has a combination of fantastic retail experience with leadership through transformation. From my many conversations with Jason, he has demonstrated a clear appreciation for the Partnership model and champions it. I look forward to welcoming him to the Partnership in September and carrying out a smooth handover.”
White’s decision to step down comes after she announced last year that the group’s turnaround would take two years longer than planned and cost more money after reporting a loss for the most recent six months.
Last month, JLP – which owns both John Lewis and Waitrose – returned to annual profit, but decided not to pay its workers a bonus for the second year in a row.
Updated
Another strike by UK train drivers in their long-running pay dispute has disrupted journeys for commuters this morning.
Members of the Aslef union walked out for the third strike in the past four days, affecting c2c, Gatwick Express, Greater Anglia, Southeastern, Southern, South Western Railway, Great Northern and Thameslink services.
The strike will hit some train into London, while services in East Anglia and the South East England are particularly disrupted.
PA Media has more details:
South Western Railway said a significantly reduced service will operate on a small number of lines, while the rest of its network will be closed. Trains will only run between 7am and 7pm.
Southern said there will be no trains running across the vast majority of its network, with a limited shuttle service running non-stop between London Victoria and Gatwick Airport.
There will be no Thameslink services running, except for a limited shuttle service calling at Luton, Luton Airport Parkway and London St Pancras and another limited non-stop shuttle service between London Kings Cross and Cambridge.
There will be no Great Northern or Gatwick Express services. However, Gatwick Airport will continue to be served by the limited non-stop Southern shuttle.
Southeastern said most of its routes and stations will be closed. There will be an extremely limited service where trains are running and the operator advised customers not to travel.
Yellen says US won't allow China to decimate new industries
US treasury secretary Janet Yellen is wrapping up a visit to China by warning that Washington will not allow Beijing to decimate new US industries.
Yellen has just held a news conference after four days of talks with Chinese officials.
She said the talks had advanced American interests, and that she had raised concerns about China’s overinvestment in industries such as electric vehicles, batteries and solar products, fueled by “large-scale government support.”
Yellen says:
“We’ve seen this story before. Over a decade ago, massive PRC [People’s Republic of China] government support led to below-cost Chinese steel that flooded the global market and decimated industries across the world and in the United States.
“I’ve made it clear that President Biden and I will not accept that reality again.”
🚨🇺🇸🇨🇳BREAKING: YELLEN - CHEAP CHINESE GOODS THREATEN WORLD ECONOMY
— Mario Nawfal (@MarioNawfal) April 8, 2024
"Now, we're seeing an increase in business investment in a number of new industries targeted by the PRC's industrial policy, and that includes electric vehicles, lithium-ion batteries, and solar. China is now… pic.twitter.com/A32Z2D8x9N
During her trip, Yellen also warned there will be “significant consequences” if Chinese companies provide support for Russia’s war against Ukraine.
Janet Yellen warns China of ‘significant consequences’ if its companies support Russia’s war https://t.co/rjHLfWN7GO via @ft
— Christopher Moseley (@ChrisMo50s) April 8, 2024
UK retailer insolvencies hit five-year high
The last year has been very tough for the UK retail sector, with weak consumer spending, rising costs and high interest rates pushing many retailers to the wall.
The number of retailers falling into insolvency jumped by 19% in the last year, new data from audit, tax and advisory firm Mazars shows, to 2,195.
High profile failures in the last 12 months include Body Shop, Ted Baker and Wilko, who all filed for administration.
Mazars says that many retailers have been hit by a combination of increased costs and cautious household spending among consumers, while higher interest rates are causing significant problems for any retailer that has a significant level of debt that is either “floating rate” or that is coming for refinancing.
Rebecca Dacre, partner at Mazars, says:
“We are unlikely to see the retail sector trading comfortably until interest rates start to fall.
Despite inflationary pressures easing, high interest rates and low consumer spending continue to persist.”
“The rise in the National Living Wage is the largest on record and some face a sharp rise in business rates from April.”
Updated
Pension and benefits rise today
The UK state pension has risen today, as have a swathe of benefits.
People receiving the state pension will get a 8.5% increase, after the government stuck with its ‘triple lock’ policy of increasing pensions by the highest of inflation, wages, or 2.5%.
Today’s increase, based on last summer’s wage inflation, will be worth an extra £900 a year to full rate claimants.
Universal credit claimants will receive a 6.7% increase, based on last September’s inflation rate. Other benefits including the personal independence payment, disability living allowance and employment and support allowance are also rising by 6.7%.
Mel Stride, the Work and Pensions Secretary, said:
“Thanks to the triple lock and our efforts to drive down inflation, we are putting money back in the pockets of pensioners. This is only possible because we have stuck to our plan and our economy has turned a corner.
“This will make a meaningful difference to all those who rely on the state pension and ensure we continue to provide a safety net for those who need it most while making work pay wherever possible.”
Updated
German exports fall 2%
Germany’s economy has suffered another drop in overseas sales.
German exports dropped by 2% during February, statistics body Destatis reports, worse than the 0.5% fall expected by economists. On an annual basis, exports were down 4.4%.
Demand from other European countries softened, with exports to EU countries down by 3.9% month-on-month.
Exports to the People’s Republic of China fell by 0.6% to 8.0 billion euros, while exports to the UK fell 2%, but there was a 10.2% jump in exports to the US.
Imports swelled by 3.2% month-on-month, but were 8.7% lower than a year ago.
Im Februar 2024 sind die deutschen #Exporte gegenüber Januar 2024 voraussichtlich um 2,0 % gesunken, die #Importe um 3,2 % gestiegen. Im Vergleich zum Vorjahresmonat sanken die Exporte um 4,4 % und die Importe um 8,7 %. Mehr dazu: https://t.co/3WyX83dI5x #Außenhandel pic.twitter.com/fQbYf65A2y
— Statistisches Bundesamt (@destatis) April 8, 2024
UK growth at ‘turning point’ as economy gains momentum
Hopes are building this morning that the UK economy is pulling out of recession.
Two industry surveys suggest that UK growth has reached a “turning point”,
Accounting and business advisory firm BDO reports that output from UK businesses has risen for the second consecutive month to its highest level in nearly two years.
BDO’s Output Index, which tracks output across the services and manufacturing sectors – climbed to 102.39 in March, its highest reading since May 2022.
This, BDO says, shows a “robust recovery and a turning point for the UK economy”.
Kaley Crossthwaite, partner at BDO, says:
“Output reaching its highest point in nearly two years illustrates the UK’s robustness in the face of global economic adversities and is a big step towards economic stability and growth.
“For businesses, the main mood right now is cautious optimism – with drops in the Employment and Optimism Index showing that we’re not out of the woods just yet. All eyes are on the Bank of England, with an interest rate cut looking possible for June, as businesses hold out hope for a further recovery this year.”
Deloitte reports that sentiment among UK chief financial officers has risen for the third consecutive quarter, as bosses grow more optimistic about the prospects for their own businesses.
The proportion of CFOs reporting high or very high levels of uncertainty facing their businesses fell to 36% this quarter, Deloitte says, which is less than half the peak seen in mid-2022 (77%).
This takes uncertainty back to levels last seen in the summer of 2021 (35%), a time when national lockdown restrictions were ending.
Introduction: Food inflation across rich nations drops to pre-Ukraine war levels
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The global cost of living squeeze has eased, as food inflation across rich nations drops to its lowest level since before Russia’s full-scale invasion of Ukraine.
After two years of surging prices, the annual rise in consumer food prices across 38 industrialised countries fell to 5.3% in February, the Financial Times reports, citing new OECD data expected today.
That’s down from 6.2% per cent in January, and well below a peak of 16.2% in November 2022, according to the latest OECD data.
Many global food commodities, such as cereals and dairy products, have been easing in recent months, after spiking in 2022, which is now feeding through to lower inflation in the shops. In the UK, food price inflation hit a two-year low last week.
The worst of high food inflation is now behind us, according to Carlos Mera, head of agricultural commodities at Rabobank, who told the FT:
“Agricultural commodity prices have dropped significantly in the last two years, since the peak in prices that followed the invasion of Ukraine, and this is acting as a disinflationary force even at [the] retail level.”
Falling inflation doesn’t mean prices are falling, though; they’re rising at a slower rate than before.
Food inflation across rich nations has dropped to its lowest level since before Russia’s war on Ukraine, easing the pressure on millions of households https://t.co/6ijiODqxJy pic.twitter.com/sL7jdqK1F3
— Financial Times (@FT) April 8, 2024
In many advanced economies, food inflation has dropped to around half its recent peak.
The OECD’s inflation gauge comes as financial markets reassess how quickly central banks will be able to cut interest rates this year.
In America, the economy is showing more vigour than expected, undermining expectations that the US Federal Reserve will cut borrowing costs three times this year.
Rising oil prices this year had also added to inflationary pressures. But this morning, Brent crude has dropped 1.7% to $89.60 per barrel, having hit a five-month high over $91 last week.
Kathleen Brooks, research director at XTB, says:
Headline inflation is now being impacted by the oil price. The WTI crude price is higher by 21% so far this year, and oil prices are now boosting US inflation after subtracting from it at the end of last year.
The International Monetary Fund is expected to release Chapter 2 of its World Economic Outlook (WEO) this morning, which will examine the impact of higher interest rates.
The agenda
7am BST: German trade balance for February
8am BST: Philippines interest rate decision
9am BST: IMF to release Chapter Two of its World Economic Outlook
3pm BST: Israel interest rate decision
Updated
