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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Oil plunges to 10-month low as Saudi Arabia ‘considers Opec+ production increase’ – as it happened

Jeremy Hunt CBI Tony Danker Inflation Economy Office for Budget Responsibility ​​Rishi Sunak
Saudi Aramco's Ras Tanura oil refinery and oil terminal.
Saudi Aramco's Ras Tanura oil refinery and oil terminal. Photograph: Ahmed Jadallah/Reuters

Summary

Time to wrap up – here are today’s main stories:

Key event

Brent crude oil prices are now at their lowest level since before the Ukraine war began.

Today’s talk of an Opec production increase has emerged after US president Joe Biden’s administration told a federal court judge that Saudi Crown Prince Mohammed bin Salman should have sovereign immunity from a U.S. federal lawsuit related to the killing of Saudi journalist Jamal Khashoggi.

In a filing released on late on Thursday night, the Biden administration said the crown prince’s recent promotion to the role of prime minister meant that he was “the sitting head of government and, accordingly, immune” from the lawsuit.

The immunity decision amounted to a concession to Prince Mohammed, bolstering his standing as the kingdom’s de facto ruler after the Biden administration tried for months to isolate him, the Wall Street Journal said.

US crude has also fallen over 4%, on hopes that Opec might decide to turn their production taps up again.

Oil hits 10-month low

Brent crude has now slumped to its lowest since January, down 5% at $83.24 per barrel.

The selloff accelerated following the news that Saudi Arabia and other OPEC oil producers are reportedly discussing an output increase. That would keep energy supplies runnning even as the G7 and the European Union try to curb Russian supplies.

Such a sharp drop, if it holds, could help ease inflationary pressures – helping families and businesses this winter.

The Brent crude oil price over the last year
The Brent crude oil price over the last year Photograph: Refinitiv

Updated

Disney shares surge 8%, adding $14bn to value

Shares in entertainment giant Disney have surged over 8% at the start of New York trading.

Disney’s stock has hit $99.47, up from $91.80 on Friday night, as investors welcome the return of former boss Bob Iger as CEO again.

That adds around $14bn to Disney’s value, lifting its market capitalisation from $167bn to over $180bn.

As covered earlier, traders are hopeful that Iger can set a “strategic direction for renewed growth”, as Disney’s board pledged as they ousted Bob Chapek after less than three years.

My colleague Jasper Jolly writes:

Disney highlighted a fivefold market value increase under Iger’s previous leadership. The company said Iger had a “mandate from the board to set the strategic direction for renewed growth”, while also looking once more for a long-term successor.

Under Iger, Disney made a series of big acquisitions, including the Marvel film franchise, the Pixar animation studio and the Star Wars film franchise.

WSJ: Saudi Arabia eyes OPEC+ production increase

The oil price is falling sharply, on reports that Saudi Arabia is considering whether the Opec+ group should increase crude production.

According to the Wall Street Journal, an increase of up to 500,000 barrels per day is being discussed by Saudi Arabia and other OPEC oil producers.

Such a move would partly reduce the 2m barrel-per-day cut which Opec and its allies signed off in October, and has sent Brent crude to a near eight-week low.

If the cartel now lifts production, it could help heal a rift with the Biden administration and keep energy flowing

Opec members are due to meet on 4th December – a day before the European Union has said it would impose an embargo on Russian oil, and the Group of Seven wealthy nations’ plans to launch a price cap on Russian crude sales.

Here’s the full story:

Saudi Arabia Eyes OPEC+ Production Increase Ahead of Embargo, Price Cap on Russian Oil

Brent crude has now shed around 4% to $84.27 per barrel, a drop of over $3 per barrel, the lowest since 27 September.

Just in: Inflation has prompted the Bank of Israel to raise interest rates.

Israel’s central bank raised its benchmark rate by half a point, the sixth rise in a row, to 3.25% from 2.75%.

Today’s rise came after inflation rose to 5.1% in October, close to a 14-year high.

US economic activity slowed, according to the latest data from the Federal Reserve Bank of Chicago.

The Chicago Fed’s National Activity Index fell into negative territory in October, coming in at -0.05, down from 0.17 in September.

That indicates that US growth was below trend.

China and Qatar signs 27-year LNG deal

Important energy news….China and Qatar have sealed one of the biggest-ever liquified natural gas deals.

QatarEnergy has signed a 27-year deal to supply China’s Sinopec with liquefied natural gas (LNG).

It’s the longest such LNG agreement so far, according to Reuters, as volatile markets drive buyers to seek long-term deals.

It will also put pressure on Europe, points out Bloomberg’s energy reporter Stephen Stapczynski.

Although European countries filled their storage early this year, at a heavy price, the region could struggle next year now, as the Nord Stream pipelines have been sabotaged.

The chair of the John Lewis Partnership has said that consumers are starting to budget and are more conscious of spending, despite being eager to celebrate the first “normal” Christmas in three years.

Speaking at a panel debate at the CBI’s annual conference, Dame Sharon White said there were signs of shoppers changing their habits as a result of cost-of-living pressures.

She told the conference:

“This is the first Christmas for three years that people get to spend with family, friends and loved ones, and I think people will be really excited to have a proper Christmas.
“But you can see all sorts of things going on with consumer spending.

“We have got some customers who are doing their shopping early and have booked their Waitrose delivery slots in advance.

“On the other hand, you can see other customers starting to budget, and shopping is more phased.

“People are sticking more with own-brand, value ranges, and buying fewer branded products.

“Customers are also shopping a bit less online and are going more into stores in order to enjoy that shopping trip experience.”

Christmas tree decorations at Heathrow terminal 2.
Christmas tree decorations at Heathrow terminal 2. Photograph: Amer Ghazzal/REX/Shutterstock

The chief executive of Heathrow Airport is not expecting caps on passenger numbers next year – with airlines more worried about how demand will hold up.

John Holland-Kaye, who runs the UK’s busiest airport, says that the darkening economic outlook could

He told reporters at the Airlines 2022 conference today that:

“Airlines are concerned about the nature of demand.”

Heathrow was forced to limit passenger numbers to 100,000 per day this summer, after staff shortages led to long delays, flight cancellations and a lost luggage mountain.

Holland-Kaye is hopeful that such limits won’t be needed in 2023, saying:

“We’re working on the basis that we’ll have no caps next summer.”

Back on Disney….Rich Greenfield, an analyst at LightShed Partners, has said the reappointment of Bob Iger was “strange in light of the board’s recent renewal” of Bob Chapek’s contract.

Greenfield says Iger will also need to make tough decisions about whether to spin off the ESPN sports television network and buy out Comcast’s stake in the Hulu streaming service. More here.

The pound has dipped back below the $1.18 mark, as investors move into the safety of the US dollar.

Sterling hit a three-month high of $1.20 last week, but has been edging lower since as the City anticipates a long UK recession.

Matthew Ryan, head of market strategy at global financial services firm Ebury, reckons traders are under-estimating how quickly the Bank of England will raise interest rates.

He told clients:

“The labour report last week out of the UK supported our view that the UK recession will be short and shallow. Payrolls continue to increase at a healthy pace even while unemployment numbers are consistent with an economy at or perhaps above full employment, with no hint of job destruction as yet. Inflation soared more than expected in October, to 11.1%, its highest level since 1981. It would have been even higher if not for the government’s Energy Price Guarantee which capped household energy bills.

“The Fiscal Statement contained aggressive deficit cuts, as expected, but for the most part, they were back loaded and should have little effect in the short and medium term. We think market expectations that the Bank of England can stop hiking rates well short of 5% are fanciful and expect the sterling to outperform as market consensus moves closer to our view.”

City traders will be turning away from their monitors soon to focus on the Khalifa International Stadium in Doha, where England are taking on Iran from 1pm UK time.

The London market is already subdued, with the FTSE 100 index of blue-chip shares up 0.1%, and the domestically-focused FTSE 250 index 0.4% higher.

Ocado are the top faller, shedding 7.5% as its recent rally unwinds. The online grocer’s shares surged from below £5 at the end of October to over £9 last week, after it signed a deal with South Korea’s Lotte Shopping. But they’re now back at 628p.

England’s stock of office space is falling at the fastest rate for 20 years, new data shows.

Office availability is shrinking as employers struggle to fill their desks as employees continue to work from home, with construction of new commercial buildings also slowing.

The FT has the story:

Close to 20mn sq ft of workspace was lost to use in the year to the end of March — just over 2% of the total market — according to an analysis of business rates data by law firm Boodle Hatfield.

That is the biggest annual drop since this data was first collected in 2001.

The contraction comes as employers consider how much space they need in the post-pandemic world and accelerates a trend that has seen overall floorspace decline by more than 6% since 2014.

Updated

In the transport sector, Virgin Atlantic has withdrawn its support for Heathrow’s third runway plans.

The change of heart comes amid an ongoing row over the cost of flying from Britain’s biggest airport.

The carrier had been one of the most prominent airline backers of expansion before the pandemic. But on Monday its chief executive, Shai Weiss, hit out at Heathrow’s proposal to increase landing charges by 120% and called on the aviation regulator, the CAA, to reform a “broken” system and “pay closer attention to the abuse of power by a de facto monopolistic airport”.

Weiss added:

“Until that happens, it is difficult to see how expansion at Heathrow can be supported.”

The deputy chief of China’s central bank has added to the gloom, warning that the foundations of economic recovery are not yet secure.

Reuters reports that:

China’s major economic indicators recovered and stabilised recently but the foundation of the country’s economic recovery is not solid yet, deputy governor of the central bank Xuan Changneng said at the Annual Conference of Financial Street Forum on Monday.

Grimsby Fish Docks.
Grimsby Fish Docks. Photograph: Gary Calton/The Observer

Brexit trade problems are being blamed for the closure of a major Grimsby seafood processor.

Around 200 jobs are at risk, with Icelandic Seafood International deciding to close the former Five Star Fish facility.

Group chief executive Bjarni Ármannsson explained last Friday that the UK operation is no longer a strategic fit for Iceland Seafood, with the pandemic also disrupting the business.

“Iceland Seafood UK invested in operating facilities in Grimsby and merged its operations from Bradford and Grimsby into this location.

The investment and decision of the merger was completed in March 2020, just before Covid-19 started, and the renovation and installation of the factory was very much affected by Covid and later Brexit along with difficulties in overall operations.

“Iceland Seafood has now decided that it plans to exit this market from a value-added perspective and has mandated MAR advisors to support the process.

The cost of living squeeze meant the average British household was £142 worse off in October year-on-year.

That’s mainly due to the steep rise in energy costs, supermarket group Asda reports.

Asda’s monthly Income Tracker survey, produced with the Centre for Economics and Business Research, shows that the average household had £203 left over after paying tax and essential bills last month, the lowest amount since August 2018.

The return of Bob Iger to the CEO’s chair is “excellent news” for Disney’s shareholders, says Naeem Aslam chief market analyst at Avatrade.

Bob Iger is back; this is all investors need to know regarding Disney stock. The board has decided it is time to bring him back immediately and let him use his vast experience to help the money in this difficult period.

For investors, this is excellent news as they know that Bob Igor not only commands the best skills but also has superior knowledge to shape the company under the current challenging times when everyone is thinking about spending and recession.

City watchdog takes aim at gamification of trading

Britain’s markets watchdog has warned operators of stock trading apps to review and potentially change “game-like” elements which could encourage customers to invest beyond their means.

The Financial Conduct Authority is concerned about feaures such as celebratory messages for making trade, points and badges, which could encourage reckless trading.

The FCA says:

“Consumers using apps with these kind of features were more likely to invest in products beyond their risk appetite.

Many people were encouraged into trading during the pandemic, when very loose monetary and fiscal policy helped to fuel the stock market boom.

They may have lost their appetite already this year, after the heavy losses on markets since January (global stocks are down around 18%).

Fears of UK and eurozone recession hit oil

Demand concerns are hitting the oil price today, after a “hellish week” for the black stuff last week.

So says Marios Hadjikyriacos, senior investment analyst at XM, adding that the looming recession in the UK and Europe will also hit energy demand.

The outlook for global fuel demand continues to deteriorate, with China’s intensifying covid outbreaks and nearly every piece of incoming data pointing to a recession in the Eurozone and United Kingdom.

On the supply side, even though OPEC has announced plans to slash production, it was not enough to nullify the prospect of demand destruction.

There is also chatter that Europe is overloaded with oil, as refiners ordered as much as possible ahead of the ban on Russian crude that will come into force early next month.

As expected (see earlier post) CBI chief Tony Danker is using his speech to press the government to allow more immigration, to help companies grow.

Danker’s plan to revive economic growth is based on more immigration, more trade, and reforming the planning system to make it easier to build.

He also urges the UK and EU to get round the table and agree a deal on the Northern Ireland protocol, and warned Brexiteers that the best guarantee of Brexit success is a country that grows.

Danker also thanked the conference’s sponsors for continuing to stick with the CBI “despite Peppa Pig” – referring to Boris Johnson’s notorious effort last year.

Rishi Sunak will speak next – our Politics Liveblog will be tracking the PM:

Updated

Over in Birmingham, CBI director-general Tony Danker is about to open its annual conference – with a call for a new growth push.

We covered the key points earlier in the blog (here and here), and you can watch it online here:

Emerging market shares have fallen more than 1% today, on worries that the rise in Covid-19 cases in China will hit economic growth.

MSCI’s index of emerging market shares has dropped 1.4%, wiping out a little of its 11% gains during November.

Some currencies have also been knocked; China’s yuan is down half a percent, while South Africa’s rand is down 1% and Malaysia’s ringgit fell as much as 0.8%.

In another sign that China’s economy may be weakening, the country’s central bank and insurance regulator has asked commercial lenders to step up credit support for the economy today.

With its share price close to the lows of the 2020 Covid market crash, it’s no wonder that Disney has parted ways with Bob Chapek as chief executive.

So says Russ Mould, investment director at AJ Bell:

“The real dissatisfaction with Chapek’s performance lies with the decisions made in the aftermath of the pandemic.

“Chapek has gone against all the historic values that defined Disney. The company creates ‘magical experiences’ for individuals and families, be it through cartoons, films or theme parks. In contrast, Chapek has created poor experiences for staff and customers.

“He has riled those working for the company by getting rid of well-respected TV content executive Peter Rice and deciding to move some staff from California to Disney, causing bad morale and a lack of trust.

Customers have had to suffer large price hikes and a big rise in stoppages to rides in its theme parks.

The latest set of quarterly results were the final straw for Chapek. Disney missed expectations for sales and profits, with both the park and media divisions missing estimates.

But can returning CEO Bob Iger make enough of a difference? Mould says he should be able to steady the ship, and maybe learn from some of his own mistakes:

“When he stood down as CEO in 2020, one of the things Iger regretted was the decision to release so many Star Wars films in a short period, saying that less is more.

Perhaps he might now focus on quality of experience, not quantity, and give Disney a tighter focus on getting things right rather than churning anything out. That could apply to the theme park initiatives as well as its media operations.”

Disney shares surge as Iger returns

Shares in Disney are surging in premarket trading, as investors hail the surprise return of Bob Iger to run the show.

They’re on track to open 9% higher, recovering some of the 40% slump during 2022.

My colleague Jasper Jolly has looked into the story, and writes:

Chapek has overseen a difficult period for Disney, with disruption from the pandemic – which forced its theme parks to close – followed by concerns over the profitability of its streaming service, Disney+. Disney+ is competing in a crowded field, and has spent billions of dollars to create new content as it tries to beat Netflix and Amazon Prime Video. While Disney’s platform has grown subscriber numbers rapidly, it has come at the cost of steep operating losses in the streaming division.

Disney has also faced pressure at its Florida base, after its public opposition to “don’t say gay” laws that ban classroom discussion of sexual orientation and gender identity in certain grades. Disney publicly opposed the laws, seen by many activists and teachers as repressive, prompting the rightwing Florida governor, Ron DeSantis, to try to strip the company of its privileges in the state.

The company’s market value has slumped by more than 40% during 2022, much worse than the 17% decline in the S&P 500 index of large US companies.

Here’s the full story:

Adrian Smith, senior director of operations at recruiter Randstad UK, points out that rehiring the old boss doesn’t guarantee success:

“Comebacks by leaders are not unknown - the late Steve Jobs’s return to Apple is the most celebrated example.

But Jobs was the exception, not the rule. If you rehire people you’ve let go, you’re more likely to be bringing back a Jack Dorsey than a Steve Jobs.”

Dorsey, the founder of Twitter, returned to run the social-media site back in 2015, but only part-time – which can’t have been ideal for the company to focus through the years dominated by Donald Trump’s tweeting.

Oil weakens on China Covid worries and Goldman forecasts

The oil price is weakening this morning, hit by rising Covid-19 cases in China and a downgrade from Goldman Sachs.

Brent crude, the oil benchmark, has dropped towards the seven-week low hit on Friday, down $1 at $86.67 per barrel.

The Brent crude oil price this year
The Brent crude oil price this year Photograph: Refinitiv

Hopes that China might be moving away from its zero-Covid policies have been knocked by the news of first deaths of Covid-19 patients in nearly six months, and a surge in cases.

There were 26,824 new infections reported on Sunday, according to the National Health Commission – the highest daily number since mid-April.

Neil Wilson of Markets.com says:

Rising Covid cases and deaths – the first in months - in China, with the authorities telling millions to stay home, seems to be dampening the mood for risk.

Seems to be viewed as pushing back the full reopening and end to zero covid by a notch or several.

Pierre Veyret, technical analyst at ActivTrades, concurs:

Risk appetite is on the downside this morning as investors digested the latest virus development from China where rising Covid deaths are sparking worries of tighter restrictions in the region.

Concerns about China have prompted Goldman Sachs to lower their oil price forecast by $10 to $100 per barrel for the fourth quarter of 2022. They also cited the lack of clarity over the Group of Seven nations’ plan to cap Russian oil prices.

Goldman economists including Jeffrey Currie wrote that:

“The market is right to be anxious about forward fundamentals, due to significant Covid cases in China and a lack of clarity on the implementation of the G7′s price cap,”

More lockdowns in China would be equivalent to the deep production cuts imposed by OPEC+ of 2 million barrels a day, they estimated.

The euro has weakened this morning, following the surprisingly sharp drop in German producer prices last month (see earlier post).

Lower PPI may encourage the European Central Bank to raise interest rates more slowly, but it could also signal a recession.

CBI's Danker: Increased immigration would help UK grow

CBI director-general Tony Danker is calling for immigration to “plug the gap” in the economy, to help firms fill job vacancies.

Speaking on BBC Radio 4’s Today programme, Danker argued that Conservative ministers must recognise that allowing in more workers from overseas will help the economy grow.

“When it comes to immigration, it’s quite interesting, when you look at the OBR report on Thursday, they said the only thing that’s really moved the needle on growth is by allowing in a bit more immigration.

The reason why it’s so important is we have literally over a million vacancies in this country, we have 600,000 people who are now long-term unwell, who aren’t coming back to the labour market any time soon.

“That’s why we have to get this shortage occupation list - the list of people that we’re really missing that we aren’t going to get in Britain any time soon - and we have to get them to plug the gap while we re-calibrate the labour market in the medium term.

“I’m afraid it’s one of those levers that does help you grow, doesn’t cost money, but I recognise it’s a tough political choice for Conservative politicians.”

Over in Germany, the prices charged for industrial products have plunged – in a sign that inflation may finally be peaking.

Producer prices fell by 4.2% in October, the first monthly drop since May 2020 during the first Covid-19 lockdowns.

Energy prices were the main cause, dropping by 10.4% thanks to a dip in electricity and natural gas costs.

Such a sharp fall raises hopes that inflation is gradually peaking:

LBBW economist Jens-Oliver Niklasch says it is:

“Perhaps the first signal of a certain cyclical easing of price pressure.”

Our economics editor Larry Elliott wrote yesterday about the absence of a long-term plan from the current government, let alone a vision for the UK:

There are similarities between the current crisis and the state of Britain when Thatcher arrived in Downing Street in 1979: high inflation caused by repeated supply side shocks, and a sense of pessimism that longstanding economic weaknesses will ever be addressed.

The model that Thatcher created collapsed in the global financial crisis of 2008-09 and nothing has taken its place. Conservative governments since 2010 have talked about their mission to green the economy and level up, but have promised far more than they have delivered.

Only twice since the second world war – the Clement Attlee-led government in 1945 and Thatcher in 1979 – has an administration come to power in Britain with a plan for fundamental change and stuck to it. For the rest of the time, the tendency has been to muddle through and hope for the best. Hunt and Sunak appear to be firmly part of that tradition.

UK restaurants going bankrupt at faster rate than during Covid

Chairs stacked up inside a restaurant.
Chairs stacked up inside a restaurant. Photograph: Yui Mok/PA

UK restaurants are going bust at a faster rate than during the Covid crisis owing to a “toxic mix” of surging energy costs, staff shortages and falling bookings.

Closures in the sector rose by 60%, with 1,567 insolvencies over 2021-22, up from 984 during 2020-21, according to a study by the advisory firm Mazars.

The figure includes 453 over the past three months, up from 395 in the previous quarter.

“Insolvencies of restaurant businesses are now happening at a far faster rate than during Covid,” Rebecca Dacre, a partner at Mazars, said.

“It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restaurateurs have not seen this combination of negative factors before.”

Iger 'has track record of success'

The news of Bob Iger’s return to run Disney is equally surprising and unsurprising, says Victoria Scholar, head of investment at Interactive Investor.

She pounts out that ousted CEO Bob Chapek has had a tough time navigating the pandemic and the acutely competitive world of streaming.

Clearly Chapek was struggling, given the more than 40% share price plunge this year and the company’s operating losses from streaming surging by $800m to $1.5bn in the third quarter announced this month and clearly Disney is struggling to find an obvious successor.

Iger is someone who knows the company probably better than anyone and is well placed to help find the next CEO

Iger nearly left Disney on four occasions, delaying his retirement each time so I am sure he will be pleased to enjoy two more years with the entertainment giant again. He has a track record of success with Disney and may be tasked to make tough cost-centric decisions as a time when the economic downturn is weighing on streaming demand and advertising budgets are getting slashed.”

Updated

Bob Iger returns to Disney as Chapek ousted

Bob Iger speaks next to Minnie Mouse at the unveiling of her star on the Hollywood Walk of Fame in 2018
Bob Iger speaks next to Minnie Mouse at the unveiling of her star on the Hollywood Walk of Fame in 2018 Photograph: Mario Anzuoni/Reuters

The big business news of the morning is that Disney has reappointed Bob Iger as its chief executive, and ousted his hand-picked successor Bob Chapek.

Iger, who served as Disney chief executive for 15 years, is returning for another two-year stint in the job that made him one of the world’s most successful business leaders.

In a statement, Disney said that Iger has “a mandate from the Board to set the strategic direction for renewed growth”. He will also work closely with the board to find a successor.

Iger retired from leading Disney in 2020, after delaying his exit several times to guide the company through the early stages of the coronavirus pandemic

Disney’s shares have slumped over 40% this year, as investors fretted about the high costs of its streaming business, as many families cut back on such services to save money.

Michael Antonelli, market strategist at financial firm Baird, has compared Iger’s return to Steve Jobs’ highly successful second stint at Apple:

The CBI conference takes place against reports that the UK could seek a Swiss-style deal with Brussels, my colleagues Aubrey Allegretti and Lisa O’Carroll write.

Ahead of the prime minister’s address to business leaders in Birmingham on Monday morning, Downing Street tried to dampen down speculation that a deal similar to Theresa May’s “Chequers” plan could be adopted, claiming it was “categorically untrue”.

There has been renewed focus on the effects of Brexit given the UK is the only G7 country still lagging behind pre-pandemic growth levels, and the chancellor, Jeremy Hunt, recently suggested that removing trade barriers would boost growth.

Senior government figures were said by the Sunday Times to be revisiting a Brexit trading arrangement offered by the EU last year, which would get rid of 80% of the checks between Great Britain and Northern Ireland and open up access to the single market.

But the move would require the UK to pledge alignment, at least temporarily, on food and agriculture standards. Doing so would be anathema to champions of a hard Brexit, including Boris Johnson’s chief negotiator David Frost, as well as MP

Danker will also urge ministers to resolve the festering row over the Northern Ireland protocol, to boost trade.

He’ll say:

Right now, our trade as a percentage of GDP is the lowest in the G7.

Boris Johnson achieved a deal with the EU that allows us to continue to trade tariff- and quota-free with our biggest trading partner. There’s some good stuff in there. Currently locked up.

“But still, we argue over the Northern Ireland Protocol. Still, we argue over sovereignty. Get round the table; do the deal; unlock the TCA. I say to Brexiteers, the best guarantor of Brexit is an economy that grows. Its biggest risk is one that doesn’t.

“Now I know that some of these things will not be popular with politicians. But while, I have no problem with Government taking tough choices to bring stability, I want them to also take tough choices for growth.

Rishi Sunak promised Joe Biden last week that a deal will be reached with the EU over the Northern Ireland protocol – which regulates trade between Great Britain and Northern Ireland – will be reached in time of the 25th anniversary of the Good Friday agreement next year.

Tony Danker is also expected to lay out a three-pronged approach to prod the economy into higher growth.

Here are the likely key points:

1) He wants the government to be the “great unlocker of private sector investment”.

Many business groups are disappointed that Jeremy Hunt didn’t extend the super-deduction allowance, introduced by Rishi Sunak, which provided 130% relief on purchases of equipment, beyond next April.

Danker will argue that Hunt should have maintained this incentive – rather than simply hitting business with higher taxes, saying:

When Rishi told me he was announcing the super-deduction alongside the increase in corporation tax, the principle was clear. If you choose as a firm to invest less and make a bigger profit today, that is your choice. But you’ll pay more tax. If you choose to invest more in your long-term future, and that of the UK – you’ll pay less.

“Corporation tax rates will jump 6 points overnight in April – but now without the incentives – yet that principle should be staying the same. CBI analysis shows that a permanent full allowances regime alongside that jump – would unlock an extra £50bn in capital investment per year by the end of the decade. The Government should have taken this path.

He’ll also argue that the government should use its balance sheet to help build industries such as hydrogen and Sustainable Aviation Fuel.

2) Government must “change economic rules” to overcome political barriers.

Danker will call for economic migration in areas where firms can’t find people with the right skills, as well as the removal of regulatory barriers holding back growth, and reform of the planning system.

3.) Businesses must show even greater ingenuity.

Danker will argue:

You here in this room. Entrepreneurs, business owners, growing businesses, multinationals. In the past two years you have shown more resilience, imagination, bravery and agility than ever. The bad news is you can’t take a break. Greater business ingenuity has to become the new normal for UK plc.

Introduction: CBI to warn Hunt lacks growth plan

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

A chill is gripping the economy after chancellor Jeremy Hunt bluntly laid out a future of low growth, high taxation and a record fall in living standards in last week’s autumn statement.

Hunt’s £55bn package of spending cuts and tax rises may have calmed the markets, but it was conspicuously light on measures to boost the economy.

And today, Britain’s top business leaders will hear that Hunt’s statement has failed to address the UK’s fundamental growth problem. They’re gathering in Birmingham for the CBI Annual Conference, where CBI director-general Tony Danker will warn that people’s lives will get worse without a push on growth.

Danker (who had praised the pro-growth measures in the ill-fated mini-budget) will applaud Hunt’s efforts to get inflation down, but warn that the growth part of the puzzle is missing.

He’s expected to say:

The painful reality about growth is that it can’t be stimulated overnight. That’s what the mini budget got wrong. Across the board tax cuts. Immediate demand stimulus. Relying on the old British strength − consumption − at the expense of the perennial British weakness − investment − has given growth a bad name.

“But growth is good. Growth is a precondition to a stable society. Without growth the NHS gets worse not better. People’s lives get worse not better. And we lack the resources we need to transform ourselves to a zero-carbon world.

“Yet Britain’s had 15 years of low growth and flatlining productivity. We can’t afford a repeat.

The Office for Budget Responsibility forecast last week that the UK has fallen into a recession that will last for over a year, with GDP expected to shrink by 1.4% in 2023.

That’s only half the problem; Danker will also warn that Britain is in the middle of stagflation – hit with rocketing inflation as well as negative growth.

Policymakers can’t just choose to fight one or the other, he’ll argue:

“The predictable reaction is to choose which ‘evil’ is worst. But that just leads to different kinds of problem. Ignore inflation to get growth going and we’ve seen what happens. Immediate trauma. Ignore growth to get inflation down?

Prolonged pain. I reject the idea that you have to choose. I say you daren’t choose.

The OBR reckons that inflation may be peaking – but price pressures will remain intense for many months more before finally easing towards the end of next year.

Danker rolled the pitch on Sunday, telling the BBC that Hunt’s statement had been “all about fighting inflation and getting the government budget in some decent shape and that does need to be done”.

But he added that:

There was really nothing there that tells us the economy is going to avoid another decade of low productivity and low growth”.

Danker will give his speech at 10am, followed by Rishi Sunak. He shouldn’t struggle improve on Boris Johnson’s effort last year, when the then-PM stumbled through his speech, hailed Peppa Pig World, and delivered a grunting impression of an acceleratinng car.

Top economists will give their verdict on the autumn statement to MPs this afternoon.

The Treasury committee will hear from Dr Linda Yueh, Fellow of St Edmund Hall, Oxford University, Mike Brewer, chief economist of Resolution Foundation, Samuel Tombs, chief UK economist of Pantheon Economics, and Carl Emmerson, deputy director of the Institute for Fiscal Studies.

Financial markets are edgy, as investors fret about fresh Covid-19 restrictions in China.

Beijing’s most populous district is urging residents to stay at home today after a rise in caes, with at least one district in Guangzhou being locked down for five days.

The agenda

  • 9am GMT: Jon Cunliffe: Keynote speech on ‘The Challenges & Opportunities for Policy Makers’ from digital currencies.

  • 10am GMT: Director-general Tony Danker speech to CBI annual conference

  • 10.15am GMT: PM Rishi Sunak to address CBI annual conference

  • 3.15pm GMT: Treasury committee hearing on the autumn statement

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