Dieselgate trial gets underway at High Court
Before we go:
Car manufacturers decided they would rather cheat to prioritise “customer convenience” and sell cars than comply with the law on deadly pollutants, the first trial day of the largest group action in English legal history has been told.
More than a decade after the original “dieselgate” scandal broke, lawyers representing 1.6 million diesel car owners in the UK argue that manufacturers deliberately installed software to rig emissions tests.
They allege the “prohibited defeat devices” could detect when the cars were under test conditions and ensure that harmful NOx emissions were kept within legal limits, duping regulators and drivers.
Should the claim be upheld, estimated damages could exceed £6bn. The three-month hearing that opened at London’s high court on Monday will focus on vehicles sold by five manufacturers - Mercedes, Ford, Renault, Nissan and Peugeot/Citroen - from 2009. In “real-world” conditions, when driven on the road, lawyers argue, the cars produced much higher levels of emissions.
The judgment on the five lead defendants will also bind other manufacturers including Jaguar Land Rover, Vauxhall/Opel, Volkswagen/Porsche, BMW, FCA/Suzuki, Volvo, Hyundai-Kia, Toyota and Mazda, whose cases are not being heard to reduce the case time and costs.
Lawyers for the defendants will make opening statements later this week. The car manufacturers deny having used prohibited defeat devices.
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Closing summary
On Wall Street, stocks have extended gains, with the tech-heavy Nasdaq rising by 2%, reversing some of Friday’s heavy losses, when it closed 3.6% lower. Investor’s fears over the US-China tariff war (which triggered the sell-off) have subsided somewhat, after Donald Trump adopted a more conciliatory tone on Sunday.
European markets have staged small gains, while Asian stocks tumbled overnight.
The global financial system is vulnerable to shocks amid a recent surge in the price of shares and other assets, Bank of England governor Andrew Bailey has warned.
Our other main stories:
Thank you for reading. We’ll be back tomorrow. Take care – JK
Greenpeace threatens to sue crown estate for driving up cost of offshore wind
Greenpeace is threatening to sue King Charles’s property management company, accusing it of exploiting its monopoly ownership of the seabed.
The environmental lobby group alleges the crown estate has driven up costs for wind power developers and boosted its own profits, as well as the royal household’s income, due to the “aggressive” way it auctions seabed rights.
The crown estate, as the legal owner of the seabed around England, Wales and Northern Ireland, is responsible for auctioning offshore wind rights. It has benefited from the huge growth in the industry, commanding hefty option fees from renewable energy developers to secure areas of the seabed to build their windfarms.
It made a £1.1bn profit in its financial year ended in March, double its level just two years ago.
Will McCallum, co-executive director at Greenpeace UK, said the estate should be “managing the seabed in the interest of the nation and the common good, not as an asset to be milked for profit and outrageous bonuses”.
We should leave no stone unturned in looking for solutions to lower energy bills that are causing misery to millions of households.
Given how crucial affordable bills and clean energy are to the government’s agenda, the chancellor should use her powers of direction to ask for an independent review of how these auctions are run. If the problem isn’t fixed before the next round, we may need to let a court decide whether or not what’s happening is lawful.
Dutch government says decision to take control of chipmaker 'exceptional'
The Dutch government has said its decision to take control of a local chip manufacturer amid concerns about possible transfer of technology to its parent company in China was “exceptional” and did not come at the request of the US government.
The Dutch Ministry of Economic Affairs said its intervention in Nexperia was due to “acute signals of serious administrative shortcomings and actions” at the company.
It invoked never-before-used powers under a Dutch law known as the “Availability of Goods Act” which does not give it ownership but gives it the power to reverse or block management decisions it considers harmful.
The move prompted a 10% fall in Wingtech’s shares in Shanghai on Monday, and the firm said in a statement it was consulting with lawyers and seeking government support to “protect the legitimate rights and interests of the company.”
Wingtech said in a stock exchange filing that its control over Nexperia will be temporarily restricted due to the Dutch order and court rulings, affecting decision making and operational efficiency.
Nexperia’s Chinese chairman Zhang Xuezheng was suspended from Nexperia’s boards by an Amsterdam court order on 6 October, and an independent non-Chinese person with a “deciding vote” would be appointed in his place, Wingtech said.
Wingtech bought the firm, previously as subsidiary of Dutch giant Philips, in 2018.
It was placed on a list of potential national security concerns in the US last year but at the time it said it would comply with US rules arguing its Dutch operations were kept at arm’s length from Wingtech in Shanghai.
Wall Street rallies at the open
Wall Street has rallied at the open, after Friday’s heavy sell-off, as fears over a new trade war between the US and China eased.
The Dow Jones rose by 1%, the S&P 500 climbed by 1.2% and the Nasdaq jumped by 1.7% at the opening bell in New York.
With nearly a month to go before the deadline for the US and China to reach a deal in their trade war, goodwill between the two countries appears to have been swept off the table in recent days. China announced last week that it was once again restricting the export of critical minerals, prompting the US president, Donald Trump, to announce tariffs of 100% on US-bound Chinese exports. He then softened his language towards Beijing in a social media post on Sunday.
Global financial system vulnerable to shocks amid recent market surge, Bank of England chief warns
The global financial system is vulnerable to shocks amid a recent surge in the price of shares and other assets, Bank of England governor Andrew Bailey has warned.
Bailey, chairman of the Financial Stability Board (FSB), the fiscal risk watchdog for the G20 group of nations, urged greater multilateral co-operation between nations to help support global financial systems.
In a letter to G20 ministers, he said that increased debt levels and a failure to fully implement agreed financial reforms would lead to increased vulnerability.
Bailey cautioned that there could be a “disorderly adjustment”, i.e. a slump in asset prices from recent highs.
While most jurisdictions have seen a rebound in financial markets in recent months, valuations could now be at odds with the uncertain outlook, leaving markets susceptible to a disorderly adjustment.
His warning comes after Wall Street stocks fell at their fastest rate for six months following a strong period of increases. On Friday, stocks sold off after Donald Trump threatened new US tariffs on Chinese imports.
Jamie Dimon, the boss of JP Morgan, is among those who have warned that there is a significant risk of a slump in stock valuations in the next six months to two years. The chance of the US stock market crashing is far greater than many financiers believe, the head of America’s largest bank said last week.
Ahead of the latest International Monetary Fund (IMF) meeting in Washington and the release of its global outlook, Bailey said reforms by the FSB are key to ensuring continued financial stability.
The reforms put in place by the FSB and other standard-setting bodies since 2009 have helped contain the fallout from more recent crises, including the Covid-19 pandemic, Russia’s illegal full-scale invasion of Ukraine and the swift resolution of the 2023 banking turmoil.
The need for such global standards and co-operation is as clear today as it was 15 years ago - not just to prevent crises but because, ultimately, a resilient system allows for the efficient allocation of capital and supports G20 member economies in boosting growth.
Trio win Nobel economics prize for work on technology-driven growth
Our top story: Three experts in the power of technology to drive economic growth have been awarded this year’s Nobel prize in economics.
Joel Mokyr of Northwestern University secured half of the 11m Swedish kronor (£867,000) prize, with the rest split between two other academics: Philippe Aghion of the Collège de France, Insead business school and the London School of Economics; and Peter Howitt of Brown University.
Announcing the prize against a backdrop of rapid development in artificial intelligence and fierce debate over its impact on society and living standards, the Royal Swedish Academy of Sciences said the trio had pioneered the explanation of “innovation-driven economic growth”.
The award came as countries worldwide push to turn around years of lacklustre economic growth since the 2008 financial crisis, amid concerns over a slowdown in productivity gains, sluggish progress on raising living standards, and mounting political tensions.
Aghion, a French economist, warned that “dark clouds” were gathering amid increasing barriers to trade and openness fuelled by Donald Trump’s trade wars. He also said innovation in green industries, and blocking the rise of giant tech monopolies would be vital to stronger growth in future.
“I’m not welcoming the protectionist wave in the US, and that’s not good for world growth and innovation,” he said.
Here’s some reaction to the Nobel economics prize.
Brian Albrecht, chief economist at the International Centre for Law & Economics, said:
🚨 2025 Nobel Prize in Economics goes to Mokyr, Aghion and Howitt 🚨
— Brian Albrecht (@BrianCAlbrecht) October 13, 2025
"for having explained innovation-driven economic growht"
The best prize in years! pic.twitter.com/BNiw5VOq8N
Jostein Hauge, political economist and assistant professor at Cambridge University, said:
This year’s Nobel Prize in Economics is a farce.
— Jostein Hauge (@haugejostein) October 13, 2025
There’s an entire field of innovation studies — building on Schumpeter’s insights — that *actually* explains innovation-driven economic growth.
This field is full of brilliant economists. But apparently, they’re considered too… https://t.co/btd808RFXg
The Rockwool Foundation in Berlin said:
We sincerely congratulate Philippe Aghion, Peter Howitt & Joel Mokyr on winning this year’s #NobelPrize in Economic Sciences!
— ROCKWOOL Foundation Berlin (@RF_Berlin) October 13, 2025
Research and innovation are the roots of renewal — enabling the welfare state to bloom anew and create progress for all! pic.twitter.com/czo3JMlIOP
Lunchtime summary
Wall Street futures are pointing to a higher open, with the Dow Jones seen rising by 0.9%, the S&P 500 by 1.3% and the Nasdaq by 1.8%, as concerns over the US-China trade spat have eased, with Donald Trump softening his language towards Bejing yesterday. He is of course in Israel now, addressing the Knesset at the moment, where he declared the end of the “age of terror and death”.
The German, French, Italian and Spanish stock markets have increased by between 0.3% and 0.5%, while the FTSE 100 index has dipped slightly. In Asia, shares tumbled on concerns over trade tensions.
Here’s our full story on the markets:
Lloyds Bank has put aside an extra £800m to deal with possible compensation claims over the motor finance scandal, with its total provision rising to almost £2bn.
Our other stories today:
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Turning to AI, Aghion was optimistic that it would help boost economic growth, and that it will ultimately be positive for employment, despite fears of massive job losses.
AI has a big growth potential because AI automates tasks, both in the production of goods and services and in the production of ideas.
The problem is to harness this potential… If we don’t have appropriate competition policy, we will inhibit the growth potential.
Of course, there is a big fear that AI will destroy a lot of jobs, but that’s why it’s important to have a good education system because at school we learn to learn… We should emulate Sweden and Denmark on that front.
When you have a revolution like AI, there is the fear of unemployment, it’s true that machines substitute for humans, but on the other hand, it allows you to become much more productive, and therefore it increases the world market demand for your products, and that allows you to increase employment.
Aghion said he would use his quarter share of the prize money – a total of 11 million Swedish kronor – to fund projects at his research lab at the Collège de France, where he and his team of younger researchers look at growth and artificial intelligence, green growth and R&D policy.
He said:
Tariff barriers, those things are obstacles to growth, because you need a big market to grow more. A bigger market means more grants for innovators, more possibilities to exchange ideas, you can transfer technologies, it means more competition. So openness is a driver of growth. Anything that gets in the way of openness is an obstacle to growth. So I see dark clouds currently accumulating, pushing for barriers to trade and openness.
He then addressed green growth and AI.
Okay, so that’s one thing. The other, of course, concern is green growth – we want to reconcile growth with the environment. So how can we make sure that we will innovate greener? Firms do not spontaneously innovate green.
If they are used to innovating in dirty technologies, they will continue to innovate in dirty technologies. How can you redirect technical progress towards green carbon price, carbon tax, green industrial policy; how should we design these policies?
So that’s a fantastic challenge in front of us, and AI has fantastic growth potential, but we know that with inappropriate competition policy, the same as with IT can happen. Some superstar firms may end up dominating everything and inhibiting potential entry of new innovators. So how can we make sure that today’s innovators will not stifle future entry and future innovation?
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Nobel prize winner: US tariffs 'not good for world growth and innovation'
The committee phoned professor Philippe Aghion, who said that it was “quite a surprise” and he was “still speechless”. “I did not expect it at all.”
He was asked about about trade tariffs and their impact on economic growth. He said:
I’m not welcoming the protectionist wave in the US, okay? And that’s not good for world growth and innovation. But on the other hand, let’s look at the bright side. European countries have to realise that we should no longer let the US and China become technological leaders and lose to them.
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The Royal Swedish Academy of Sciences explained:
Over the last two centuries, for the first time in history, the world has seen sustained economic growth. This has lifted vast numbers of people out of poverty and laid the foundation of our prosperity. This year’s laureates in economic sciences, Joel Mokyr, Philippe Aghion and Peter Howitt, explain how innovation provides the impetus for further progress.
John Hassler, chair of the committee for the prize in economic sciences, said:
The laureates’ work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underlie creative destruction, so that we do not fall back into stagnation.
Nobel prize for economics goes to Joel Mokyr, Philippe Aghion and Peter Howitt
This year’s Nobel prize for economics is about “creation and destruction” said Hans Ellegren, secretary general of the Royal Swedish Academy of Sciences.
It has gone to Joel Mokyr, economics professor at Northwestern University in Chicago, the French economist Philippe Aghion of Collège de France, and Peter Howitt, economics professor at Brown University in Rhode Island, “for having explained innovation-driven economic growth”.
The Sveriges Riksbank prize in economic aciences in memory of Alfred Nobel was awarded “for having explained innovation-driven economic growth,” with one half to Mokyr “for having identified the prerequisites for sustained growth through technological progress” and the other half jointly to Aghion and Howitt “for the theory of sustained growth through creative destruction.”
Mokyr is a Dutch-born American-Israeli economic historian, professor of economics and history and the Robert H. Strotz Professor of Arts and Sciences at Northwestern University.
Aghion is a professor at the Collège de France, at INSEAD, at the London School of Economics, and at the Paris School of Economics.
Howitt is a Canadian economist, who has done most of his research in macroeconomics and monetary economics. He is one of the creators of the modern “Schumpeterian” approach to the theory of economic growth.
The Royal Swedish Academy of Sciences said:
Joel Mokyr used historical observations to identify the factors necessary for sustained growth based on technological innovations, Philippe Aghion and Peter Howitt have produced a mathematical model of creative destruction, an endless process in which new and better products replace the old.
With the understanding of the mechanisms of creative destruction provided by the laureates and the follow up research, we have a better chance to make sure growth can continue and be guided in the direction that benefits humankind.
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You can watch the press conference live here.
WATCH LIVE: Join us for the announcement of the 2025 prize in economic sciences.
— The Nobel Prize (@NobelPrize) October 13, 2025
Hear the breaking news first – see the live coverage from 11:45 CEST.
Where are you watching from?#NobelPrize
https://t.co/rD1qzzcxvI
The Nobel prize for economics is due to be announced shortly.
Big Yellow shares jump as Blackstone considers bid
Shares in Big Yellow Group jumped by more than 20% after the US fund manager Blackstone said it was considering a buyout of the UK self storage company.
New York-based Blackstone is in the early stages of considering a cash offer for the company, according to a statement. The move comes ahead of the budget on 26 November, it said.
Blackstone Funds’ evaluation of Big Yellow is at a preliminary stage and Blackstone is considering, amongst other factors, the macro-economic environment including the potential impact of the upcoming UK budget as it relates to the self-storage sector.
Shares in Big Yellow jumped more than 20% to £1.16, their biggest rise on record. The self storage company responded with a statement, saying:
The board of Big Yellow notes the announcement by Blackstone Europe that one or more of the investment funds advised by Blackstone or any of its affiliates is considering its position in relation to the company, which could include a cash offer for the entire issued, and to be issued, share capital of the company.
The board of Big Yellow notes the recent media speculation and confirms that it has held meetings with a small number of parties in relation to a range of potential options including a potential sale of the company.
The company is not in receipt of an approach and is not in discussions with any parties in respect of a potential sale of the company at the time of this announcement.
Blackstone has been on a buying spree in the UK, snapping up property assets.
The private equity firm bought Warehouse REIT (real estate investment trust) earlier this year and confirmed today that it taking a stake in Tritax Big Box REIT, which invests in ‘big box’ distribution centres, as part of a deal to sell a £1bn UK logistics portfolio to the company.
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National Lottery operator Allwyn to merge with Greece's OPAP in £14bn deal
The National Lottery operator Allwyn is to merge with Greece’s leading gambling company OPAP to create a global listed gaming giant worth about €16bn (£13.9bn).
Allwyn, which owns a near-52% controlling stake in Athens-headquartered OPAP, has agreed an all-share tie-up with OPAP that will see the combined group renamed Allwyn.
It will give Allwyn a presence on the stock market, with plans to retain OPAP’s Athens listing for the merged group, and to launch an additional stock market listing in either London or New York.
For many years OPAP was a state-owned gambling monopoly. The company holds the exclusive rights to run lotteries and sports betting in Greece.
In 2022, Camelot lost the licence to run the lottery in the UK to rival Allwyn. The billionaire media mogul Richard Desmond had also been bidding for the contract, and is suing the gambling regulator in a bitter dispute that opened at the high court last Thursday. He has brought a £1.3bn damages claim against the Gambling Commission.
Last year, the Guardian revealed that Allwyn was borrowing millions from Kremlin-owned banks when it won the UK’s largest public-sector contract. Allwyn is ultimately owned by the Czech billionaire Karel Komárek.
IFS warns Rachel Reeves against ‘half-baked dash for revenue’
Rachel Reeves must avoid “a half-baked dash for revenue” or risk damaging economic growth as the chancellor seeks to close a large gap in next month’s budget, the Institute for Fiscal Studies has said.
The tax and spending thinktank has warned there was a danger the chancellor would create “unnecessary economic damage” if she chooses to stitch together unrelated tax-raising measures to cut the shortfall in government revenues and keep within her fiscal rules.
In a chapter from a report due to be published later this month, the IFS said Reeves could raise tens of billions of pounds in extra revenue without breaking Labour’s manifesto pledges, but cautioned that higher rates on longstanding, poorly designed taxes would have a detrimental effect on incentives to work, productivity and economic growth.
‘Lab to fab’: are promises of a graphene revolution finally coming true?
Two decades after the material was first produced, some UK firms have reaped its potential but others are struggling. I’ve talked to some of them.
After graphene was first produced at the University of Manchester in 2004, it was hailed as a wonder material, stronger than steel but lighter than paper. But two decades on, not every UK graphene company has made the most of that potential. Some show promise but others are struggling.
Extracted from graphite, commonly used in pencils, graphene is a latticed sheet of carbon one atom thick, and is highly effective at conducting heat and electricity. China is the world’s biggest producer, using it to try to get ahead in the global race to produce microchips and in sectors such as construction.
In the UK, a graphene-enhanced, low-carbon concrete was laid at a Northumbrian Water site in July, developed by the Graphene Engineering Innovation Centre (GEIC) at the University of Manchester and Cemex UK.
“The material when it came out of academia was hyped to death … but the challenge is going from lab to fab,” says Ben Jensen, the chief executive of 2D Photonics, a startup spun out from the University of Cambridge that makes graphene-based photonic technology for datacentres.
Jensen also invented Vantablack coatings, made of carbon nanotubes – rolled-up sheets of graphene – and known as the world’s “blackest black” because it absorbs 99.96% of light, at the UK company Surrey NanoSystems that he founded in 2007. The material’s artistic rights were sold exclusively to the sculptor Anish Kapoor, and BMW used it on its X6 coupe to create the “blackest black car” six years ago.
Victoria Scholar, head of investment at the trading platform interactive investor, has looked at the moves in markets this morning.
The FTSE 100 has opened higher, although it is logging more modest gains than the DAX and CAC 40. Defence stocks are under pressure with Babcock, BAE Systems and Rolls-Royce at the bottom of the UK basket. Fresnillo is the top gainer on the FTSE 100 after a short squeeze for silver.
In France, Sébastien Lecornu announced a new cabinet on Sunday after his reappointment as prime minister last week, helping to at least temporarily avoid a full-blown political crisis in Paris.
Fears of escalating trade tensions between the US and China have pushed stocks in Asia into the red again with the Hang Seng and the CSI300 falling sharply. This is outweighing better than expected trade data from China with forecast topping imports and exports failing to lift sentiment.
US markets fell sharply on Friday with the S&P 500 shedding 2.7%, its biggest drop since April and the Nasdaq plunging over 3.5% with tech stocks hit hardest because of their reliance on rare earths from China. Although futures are pointing to a partial rebound at the US market open.
Gold and silver prices are also scaling new highs. Spot gold rose more than 2% earlier and is now up 1.3% at $4,071 an ounce. The precious metal logged its eighth week of gains last week.
Meanwhile silver is up nearly 5% today, and platinum has risen by 2.7% amid a rally in precious metals. Scholar said:
The flight to safety trade has continued to propel gold and silver, fuelled by Trump’s unpredictability with the threat of fresh tariffs on China that raises concerns about an escalating trade war between the two superpowers. The developments sparked a heavy sell-off on Wall Street driven by tech stocks, with investors buying gold and silver instead.
Uncertainty has also weighed on the US dollar this year, with greenback weakness further underpinning gains for gold and silver. Central bank buying and Fed rate cuts have provided further tailwinds for gold. Silver has also been subject to a short squeeze, extending this year’s rally. Then the US government shutdown provides further uncertainty pushing up demand for safety assets. And there’s a feeling that many investors, unsure where to put there money, have been watching gold’s appreciation and have hopped on the bandwagon hoping not to miss out on the latest exciting investment idea.
One of Europe’s biggest farm machinery firms halts US exports over ‘hidden’ tariffs
One of Europe’s biggest farm machinery companies, Krone, has been forced to pause exports of large equipment to the US because of “alarming” and little-known new tariffs that are hitting hundreds of products from knitting needles and hair dryers to combine harvesters.
Among the products on the steel derivatives list drawn up in consultation with US manufacturers, Donald Trump is taxing 407 specific products ranging from tiny embroidery stilettos to cooker hoods, barbecues, fridges, freezers, dishwashers, hair curling tongs, grills, elevators, bridge and railway structures, agriculture equipment and wind turbines.
It has meant that since 18 August, companies such as Krone and the construction company Liebherr in Germany have to provide an unprecedented level of detail to customs border authorities certifying the origin, weight and value of any steel in their products right down to nuts and bolts.
If the US is determined to go its own way, China will resolutely take corresponding measures to safeguard its legitimate rights and interests, the Chinese foreign ministry said today, Reuters reports.
China urges the US to swiftly correct its “wrong practices”, ministry spokesperson Lin Jian said during a regular press briefing, when asked about Donald Trump’s plan to impose additional 100% tariffs on Chinese goods on 1 November.
The Chinese side urges the US to act on the basis of equality, respect and mutual benefit, Lin added.
Richard Hunter, head of markets at the trading platform interactive investor, said:
If investors had been hoping for a reason to let some air out of the tyres after a valuation-stretching run, the US president duly delivered.
His latest salvo reignited the war of words with the Chinese as he threatened further 100% tariffs given their current position on rare earth metals and was a stark reminder of the ongoing fractious relationship between the world’s two largest economies. Large technology shares found themselves at the eye of the storm given a large exposure to and relationship with the Chinese as customers, sending the Nasdaq some 3.6% lower, led by declines of nearly 5% for Nvidia and almost 8% for Advanced Micro Devices [on Friday].
The president’s propensity to shoot from the hip unsettles the investment environment, even though some are already speculating that the TACO trade is alive and well. His subsequent comments on social media over the weekend were decidedly more conciliatory, and at this very early stage, Dow futures are pointing to a brisk recovery which would lessen the blow of Friday’s bruising session.
European stocks open modestly higher; Taco trade 'alive and well'
Stock markets in the UK and the rest of Europe have shrugged off the latest trade sabre-rattling from the US and China and opened modestly higher.
The UK’s FTSE 100 index rose by 15 points, or nearly 0.2%, to 9,442, while markets in France, Spain, Germany are all up by around 0.5%, after Friday’s sell-off, when the pan-European Stoxx 600 index dropped by 1.3%.
Investors are hoping that Washington will temper its latest escalation of the trade war with Beijing after Friday’s sell-off on Wall Street. US stock futures are pointing to a rally on Wall Street later.
Donald Trump indicated yesterday that the door was open to a trade deal, writing a more conciliatory post on social media.
Mining shares are leading the gains in London, with Fresnillo up by 4.8%, Endeavour Mining 4% ahead, and Antofagasta 1.2% ahead.
Sterling, which tends to benefit from risk appetite, much like the Australian dollar, stocks or crypto currencies, was up 0.24% at $1.3365, making it one of the better performing major currencies against the US dollar.
The dollar has slipped 0.1% against a basket of major currencies.
Tim Kelleher, head of institutional foreign exchange sales at Commonwealth Bank in Auckland, told Reuters:
Certainly, it’s pretty nervous out there.
If you look at the US and China stuff, it looks like Trump has done a bit of a TACO again and softened his tone.
He was referring to the trading adage that “Trump always chickens out”.
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Lloyds puts aside extra £800m for car finance scandal
Lloyds Banking Group has put aside an extra £800m to deal with possible compensation claims over the motor finance scandal, taking its total provision to almost £2bn.
The bank, which is one of the most exposed to an ongoing scandal in which drivers were overcharged for loans as a result of commission paid to car dealers, had previously set aside £1.15bn to deal with potential costs.
However, it said an additional charge of £800m reflects an increased likelihood of more historical cases, particularly those affected by “discretionary commission arrangements”, being eligible for compensation.
The new estimate comes after the Financial Conduct Authority published a 360-page consultation paper for its redress scheme. The regulator said last week that the mis-selling scandal would cost banks £11bn overall, though it could rise to £12.4bn if all victims apply and secure payouts as part of the scheme.
Lloyds said the ultimate outcome may “evolve in response to representations made by various parties as well as further legal proceedings and complaints or any other broader implications fo the Supreme Court judgement”.
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Introduction: Asian stocks tumble on fresh US-China trade spat; Chinese exports top forecasts
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Stock markets in Asia have tumbled, after the latest US tariff threat on China prompted Beijing to warn Washington of retaliation.
Hong Kong’s Hang Seng lost 2.1%, the Taiwanese market fell by 1.4% and the Thai exchange declined by 2%. In mainland China, the Shenzhen exchange fell by 1% and the Shanghai market slipped 0.2%. Japan’s Nikkei is closed.
Beijing has told the US it will retaliate if Donald Trump fails to back down on his threat to impose 100% tariffs on Chinese imports as investors brace for another bout of trade war turmoil.
China’s commerce ministry blamed Washington for raising trade tensions between the two countries after the US president announced on Friday that he would impose the additional tariffs on China’s exports to the US, along with new controls on critical software, by 1 November in a tit-for-tat, after China said it would restrict rare earth exports.
However, Trump and senior US administration officials opened a door to a China trade deal on Sunday when market futures showed another US stock market drop, but they have since bounced back and are now pointing to a higher open on Wall Street later. Trump wrote on Truth Social:
Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!
Despite the trade tensions, Chinese exports bounced back in September, topping forecasts after the world’s second-largest economy diversified its markets.
China’s exports rose by 8.3% year on year last month, according to customs data. This was the fastest growth since March, and beat a 6% increase forecast by economists polled by Reuters. It comes after a 4.4% increase in August.
Lynn Song, chief economist Greater China at ING, said:
China’s exports continued to beat forecasts in September, but the bigger surprise was the surge of imports to hit a 17-month high. This resilience shows that China has strengthened trade with the rest of the world amid US protectionism.
Chinese imports growth jumped to 7.4%, from 1.3% in August. This came as a surprise given the recent signs of relatively weak domestic demand.
Julian Evans-Pritchard, economist at Capital Economics, said:
While China’s economy has proven more resilient in the face of US tariffs than many had feared, there is still significant potential downside from a deeper rift with the US.
The Agenda
IMF/World Bank meetings start in Washington
Columbus Day in the US: stock markets open, bond markets shut
10.30am BST: Dieselgate trial starts in UK’s high court
11am BST: Nobel prize for economics
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