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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Bulb Energy takeover by Octopus cleared; anger over HSBC branch closures; food inflation at record – as it happened

China United Kingdom United States Economy Inflation Huw Pill BRC
Octopus Energy’s takeover of collapsed rival Bulb has been given a competion date by a London judge.
Octopus Energy’s takeover of collapsed rival Bulb has been given a competion date by a London judge. Photograph: Bulb/PA

Closing summary

Time to wrap up after a busy day… in which Octopus’s takeover of Bulb got the legal green light, HSBC announced plans to shut over 100 branches, and Britons faced a ‘bleak winter’ as food inflation hit a record high.

While eurozone inflation may have peaked, investors also learned that China’s economic downturn worsened this month, while US companies took on fewer new staff.

Here’s our main stories:

More strike news: Rail union TSSA says its members will hold two 48-hour strikes on Avanti West Coast next month, as part of the ongoing dispute over pay, job security and conditions.

Strikes will take place at Avanti West Coast on 13, 14, 16 and 17 December (as well as ASOS from 18 December).

It will involve Avanti who work in a range of operational, station, revenue, on-board and management roles.

In addition, TSSA members will carry out only contractually required duties at other train operators in the run-up to Christmas, which will prevent them covering for other striking staff.

A spokesperson for Octopus Energy says, following today’s hearing:

“The High Court has rightly given the green light for the transfer to go ahead in December.

“Taxpayers will be saved from millions - even billions - of costs that could have been incurred if the process was dragged out.

“This is positive news for Bulb’s customers and staff, and starts to bring to an end the huge financial exposures for Government and taxpayers.”

Some early reaction to the Bulb decision:

Updated

Bulb takeover by Octopus approved by London court

The takeover of collapsed energy supplier Bulb by Octopus Energy has been approved in a London court.

Octopus agreed last month to buy Bulb out of a government-handled administration process which has lasted for nearly a year.

Judge Antony Zacaroli was deciding whether to approve the Energy Transfer Scheme which will transfer some of Bulb’s assets into a new separate entity, and when to set a date for the transfer.

“I have made a decision that I should and will set an effective date” of 20 December, he said.

The decision comes despite rivals E.ON, Centrica and Scottish Power lodging separate judicial reviews yesterday, arguing there is a lack of transparency around the deal between Octopus and the government.

Zacaroli said the judicial review proceedings were for an administrative court to decide and can run separately. The review could still delay or block the takeover.

The scrutiny around the collapse of Bulb and the deal with Octopus has increased since the Office for Budget Responsibility said the cost of running the business in administration had hit £6.5bn. The government disputes this figure.

Updated

US job vacancies still over 10m

Just in: there are still more that 10 million unfilled job opportunities across the US.

The number of job openings in America dropped to 10.33m in October, the JOLTS report shows.

That’s down from 10.687m in Setember, but still a historically very high amount.

Job openings fell at state and local government offices (excluding education), at factories making non-durable goods, and at federal government.

The quits rate, which meaasures how many people chose to leave their jobs, dipped slightly to 2.6% from 2.7%.

The JOLTS report had been seen as an arcane piece of economic data, but it has grown sharply in importance as the US Federal Reserve tries to get its finger on the pulse of the jobs market. Reuters have a nice piece about it here.

Unions criticise HSBC branch closures

Local communities across the UK will be abandoned by HSBC once their local branch closes, the Unite union says.

Unite national officer Dominic Hook says the union is “appalled” that HSBC is “walking away” from customers and communities who most need access to local banking services.

Hook says:

“Unite is calling on HSBC to reconsider these branch closures during the consultation process before they abandon the most vulnerable in our society and leave them without a neighbourhood bank served by experienced knowledgeable staff.

Of the total 114 closures proposed today the vast majority (108) of the closures will result in no HSBC branch within 3 miles and it is disgraceful that 25 communities will be left to travel over 15 miles to the nearest branch.

HSBC’s branch closures will hurt elderly customers, who may not have moved to online banking, or those without transport to get to another site, points out the Daily Mirror’s Graham Hiscott.

More economic news: The US economy grew a little faster than first thought in July-September.

US GDP grew at an annual rate of 2.9%, up from a first estimate of 2.6%. That’s equal to quarterly growth of over 0.7%, as America bounced back from a technical recession in the first half of this year.

In contrast, the UK contracted by 0.2% in the third quarter, while the eurozone grew by 0.2%.

US hiring slows as interest rate rises bite

Just in: US companies hired fewer new staff than expected this month, which may show that America’s labor market is slowing.

And that could be significant for the global economy, if it encourages the US Federal Reserve to slow its interest rate increases.

Payroll provider ADP has reported there were 127,000 new hires in November, sharply down on 239,000 a month earlier. It’s the biggest slowdown in job creation since January 2021, led by construction and other interest rate-sensitive sectors.

Nela Richardson, ADP’s chief economist, says:

Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains.

In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.

The official US jobs report is released in two days time.

Updated

Full list of the 114 HSBC branches set to close

Here is a list of all the HSBC branches which are due for closure next year, and when they will shut.

  • Blandford Forum - April 18

  • Bexhill-on-Sea - April 18

  • Abergavenny - April 18

  • Cromer - April 18

  • St Ives - April 18

  • St Austell - April 18

  • Bristol Downend - April 25

  • Leominster - April 25

  • Market Bosworth - April 25

  • Alton - April 25

  • Shaftesbury - April 25

  • Wilmslow - May 2

  • Whitley Bay - May 2

  • Coleraine - May 2

  • Bideford - May 2

  • Gainsborough - May 2

  • Launceston - May 2

  • Arnold - May 9

  • Didcot - May 9

  • Brecon - May 9

  • Minehead - May 9

  • Dover - May 9

  • Stamford - May 16

  • Whitby - May 16

  • Halesowen - May 16

  • Stroud - May 16

  • Brighouse - May 16

  • Bridport - May 23

  • Hove - May 23

  • Fakenham - May 23

  • Sudbury - May 23

  • Liskeard - May 23

  • Bristol Filton - May 30

  • Dundee - May 30

  • Waltham Cross - May 30

  • Hinckley Road, Leicester - May 30

  • Market Harborough - May 30

  • Stourport-on-Severn - May 30

  • Stirling - June 6

  • Pocklington - June 6

  • Chepstow - June 6

  • Knutsford - June 6

  • Frome - June 6

  • Portadown - June 6

  • Penarth - June 13

  • Ilkley - June 13

  • South Shields - June 13

  • Skipton - June 13

  • Honiton - June 13

  • Sleaford - June 13

  • Twickenham - June 20

  • Ross-on-Wye - June 20

  • Hertford - June 20

  • Wells - June 20

  • Bicester - June 20

  • Oakham - June 20

  • New Milton - June 27

  • Lewes - June 27

  • Pontypool - June 27

  • Beccles - June 27

  • St Neots - June 27

  • Wadebridge - June 27

  • Portishead - July 4

  • Droitwich - July 4

  • Leatherhead - July 4

  • Palmers Green - July 4

  • Coalville - July 4

  • Park Gate - July 11

  • Wetherby - July 11

  • Port Talbot - July 11

  • Kingswinford - July 11

  • Long Eaton - July 11

  • Horsforth - July 18

  • Gosforth - July 18

  • Harpenden - July 18

  • Bognor Regis - July 18

  • Marlow - July 18

  • Bromborough - July 18

  • Christchurch - July 25

  • Seaford - July 25

  • Blackwood - July 25

  • Norwich Mile Cross - July 25

  • Ripley - July 25

  • Tonbridge - July 25

  • Bristol Westbury on Trym - August 1

  • Ormskirk - August 1

  • Putney - August 1

  • Ashton under Lyne - August 1

  • Kenilworth - August 1

  • Reigate - August 8

  • North Finchley - August 8

  • Cirencester - August 8

  • Henley on Thames - August 8

  • Denbigh - August 8

  • Finchley Road, London - August 15

  • Chippenham - August 15

  • Bethnal Green - August 15

  • Hornchurch - August 15

  • Colwyn Bay - August 15

  • Dorchester - August 22

  • Morley - August 22

  • Wymondham - August 22

  • Ryde - August 22

  • Windsor - August 22

  • Cardiff Rhyd y Penau - August 29

  • Leighton Buzzard - August 29

  • Eastwood - August 29

  • Oxted - date TBC

  • Epworth - date TBC

  • Holsworthy - date TBC

  • Tenby - date TBC

  • Hythe - date TBC

  • Cowbridge - date TBC

  • Settle - date TBC

Updated

100 jobs at risk as HSBC plans 114 branch closures

Banking giant HSBC has said that around 100 staff could leave the bank as a result of plans to axe 114 UK branches from April next year (see earlier post).

The group stressed that it hopes to redeploy all its employees at affected branches to other roles within HSBC, either to other branches or to a different position.

It plans to speak to all staff in the branches due to close but it estimates that around 100 employees could leave.

It comes as the bank said it has seen a significant decline in customers visiting their local branch since the pandemic, many of whom have turned to digital banking services instead.

Jackie Uhi, HSBC UK’s managing director of UK distribution, said:

“People are changing the way they bank and footfall in many branches is at an all-time low, with no signs of it returning. Banking remotely is becoming the norm for the vast majority of us.

But the closures could hurt those who haven’t moved to online banking, such as older customers and those still without web access or a smartphone.

Victoria Scholar, head of investment at interactive investor tells us:

According to HSBC, the number of people visiting branches has slumped by 65% over five years. The pandemic expedited the shift towards online banking when lockdowns and government restrictions meant that branches were forced to close, prompting customers to switch to online banking whether they liked it or not. HSBC said 97.5% of all its transactions now take place online.

Today’s decision is part of HSBC’s strategic move towards digital banking and serves as a way for the lender to cut costs by reducing its number of bricks and mortar physical stores.

High streets across Britain have been facing a deepening crisis in recent years with footfall on the slide amid the rapid expansion of online shopping with banking services just one piece of this broader puzzle.

Banking apps and websites have become increasingly user friendly with more and more services on offer, resulting in a sharp decline in the requirement for branches. However, this could unfairly impact certain pockets of society such as those without internet access or the elderly who can sometimes struggle with technology.

Eurostar security staff to strike in run-up to Christmas

Eurostar train carriages at St Pancras International station in London.

Security staff on Eurostar are to strike for four days next month in a dispute over pay.

Members of the Rail, Maritime and Transport (RMT) union employed by a private contractor will walk out on December 16, 18, 22 and 23 after voting in favour of industrial action, by around four to one.

The RMT said the strike will “severely affect” Eurostar services and travel plans for people over the pre-Christmas period.

More than 100 security staff, employed by facilities management company Mitie, are involved in the dispute.

RMT general secretary Mick Lynch says it’s “disgraceful” that Eurostar security staff are not being paid a decent wage, and urges Mitie and Eurostar to come to a negotiated settlement with the union as soon as possible.

The strikes will coincide with other walkouts on the railway in the run-up to Christmas. RMT members working for Network Rail and 14 train operating companies will strike on 13-14 and 16-17 December.

Updated

We’re keen to to hear how soaring prices are affecting the Christmas plans of people in the UK.

Are you planning to have a leaner Christmas this year? Whether you’ve decided to buy fewer presents, do a less elaborate Christmas dinner than you usually would or whether you will go ahead with a traditional Christmas with all its trimmings despite the higher cost this year, we’d like to hear about it.

You can get in touch here.

HSBC to close 114 branches

Banking giant HSBC has announced plans to shut a further 114 UK branches.

The sites will shut from April next year, with HSBC saying customer use has fallen significantly since the pandemic, as more people turn to online banking.

Updated

H&M’s plan to cut 1500 jobs highlights the problems facing the fashion retail sector in the cost of living crisis, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown:

Keeping the lights and heating on in vast stores is becoming increasingly unaffordable with energy prices so volatile. With shoppers also becoming impressively price sensitive as cost-of-living headwinds continue to whip up, retailers are finding it more difficult to pass on increase in input costs.

Shoppers are showing signs of trading down and hunting out bargains, so the pressure is on H&M to compete with chains seen as offering greater value, from Primark in high streets to Boohoo and Shein online.

H&M has undergone an admirable shift to online, making shop assistants in store increasingly redundant, and this trend is clearly set to continue.”

Brexit partly to blame for high UK inflation, BoE chief economist says

Back in the UK, the Bank of England’s chief economist has warned that Brexit is partly to blame for Britain’s high inflation.

Chief economist Huw Pill explained that leaving the European Union had caused job shortages, strengthened pricing pressure among firms and weakened the economy.

He was speaking at today’s conference organised by accountancy body ICAEW, where he also predicted UK interest rates would keep rising (see earlier post)

Bloomberg has the details:

Ending free movement with the EU has made it more difficult for companies to hire people from overseas, requiring them to support visas. Pill said that while overall migration has not been affected, the nationality of migrant workers has shifted toward more people from outside the EU.

“Whether those those people are as immediately productive and fungible in the labor market, I think is at least open to question,” Pill said.

Pill also flagged that Brexit has changed competition between companies, which has probably led to faster price rises.

He added:

“Brexit plays a part, but I don’t think it’s the whole story and probably only part of the story. But to my mind it has had some effect.”

Updated

H&M to cut 1,500 jobs as demand weakens

A rainbow-colored logo of H&M at a store in Zurich, Switzerland.
A rainbow-colored logo of H&M at a store in Zurich, Switzerland. Photograph: Arnd Wiegmann/Reuters

Swedish fashion giant H&M has become the first big European retailer to start layoffs as the economy wekans, by announcing 1,500 job cuts.

H&M is shedding staff due to softening demand, as soaring inflation hits consumer spending and pushes up its own costs.

Reuters has the details:

The cuts by the company, which employs roughly 155,000 people, are part of a plan launched in September to save 2 billion Swedish crowns per year.

The company said the savings would start to kick in from the second half of next year, while it will take a restructuring charge of 800 million Swedish crowns (£63m) in the fourth quarter.

“We are in a big transition and the whole retail industry is facing a lot of challenges,” H&M’s investor relations head Nils Vinge told Reuters, pointing to headwinds from the pandemic, the Ukraine war and rising input, freight and energy costs.

“It’s very clear that when consumers have paid for their food ... energy, gas, and so on there is less to spend. So what is obvious is that demand for value for money increases”.

The lion’s part of the cuts would be made in Sweden, Vinge said.

Eurozone inflation falls for first time in 17 months

Has the eurozone’s inflation crisis peaked?

Inflation across the single currency block dropped to 10% in the year to November, a new estimate from statistics body Eurostat show.

It’s the first drop in eurozone inflation in 17 months, mainly due to an easing in the energy crisis.

Energy inflation slowed to an annual rate of 34.9%, compared with 41.5% in October.

But food, alcohol & tobacco inflation jumped, to 13.6%, from 13.1% in October, and core inflation stuck at 5%.

Bert Colijn, senior eurozone economist at ING, says this is a “tentative” sign that inflation could be peaking.

Colijn adds that it could encourage the European Central Bank to slow the pace of its interest rate increases, following a historic three-quarter point rise in October.

While we’re far from out of the woods yet, it does look like the current economic environment could push the European Central Bank to a smaller 50bp hike next month.

Updated

Charities 'fear for future' as cost of living crisis bites

More than half of charities say they are worried about their ability to survive due to the rising cost of living, a survey of 700 voluntary organisations has found.

The Charities Aid Foundation surveyed 700 UK charities, and found that the number struggling to cope has risen since April, as they face a triple threat of soaring demand, falling donations, and rising costs.

Inflation is driving up running costs for charities, they say, with nearly three-fifths (58%) of charities say their most pressing concern is increasing costs, such as energy.

Declining income from fundraising is another worry, as households cut back to cover their own bills.

Ths is threatening their ability to offer services such as mental health and disability support, or to provide food – which are in growing demand in the cost of living crisis.

Only half of the charities surveyed in November feel confident that they have the funds to meet current demand for their services, compared to 58% in October.

Neil Heslop OBE, chief executive of Charities Aid Foundation, said:

“Charities are at the heart of our communities and are carrying the weight of the worst effects of the cost-of-living crisis.

The Government needs to recognise the critical role that charities are playing to care for those who are most vulnerable in our communities. As a start, these organisations should be placed first in the queue to receive additional support for energy bills from April.”

Bank of England has 'more to do' on interest rates

The Bank of England has “more to do” on interest rates, its chief economist warns.

Huw Pill has indicated that borrowing costs will continue to rise to control inflation, but probably not by as much as the financial markets expected – echoing comments from BoE governor Andrew Bailey earlier this month.

Pill also told a conference organised by accountancy body ICAEW that UK inflation should start falling next year, assuming natural gas prices stabilize and then start to drop.

He said:

“We are expecting to see headline inflation tail off in the second half of next year, in fact quite rapidly, on account of those base effects.

There’s a lot of uncertainty around the outlook for gas price developments.”

Royal Mail postal workers on strike in Leeds, Britain, today
Royal Mail postal workers on strike in Leeds, Britain, today Photograph: Adam Vaughan/EPA

A fresh wave of strikes are being held today, as UK workers push for pay increases to protect them from soaring inflation.

Postal workers at Royal Mail have begun a fresh 48-hour strike in a row over pay and conditions, and are picketing outside some delivery offices.

University lecturers and sixth-form college staff are also taking action on one of the biggest walkouts on the same day.

Former Labour leader Jeremy Corbyn has joined a National Education Union (NEU) picket line outside a sixth form college in north London.

Speaking outside City and Islington College, Mr Corbyn told PA Media he is there to “support the students because of my concerns about under-funding by the Government to post-16 education”.

Corbyn is also supporting teachers “in their perfectly reasonable demand” for at least a pay rise that keeps up with inflation.

“They have dedicated themselves to our students, they have taught through all the difficulties of Covid and they should be rewarded with at least a cost-of-living pay increase.”

Germany’s unemployment total has jumped by 17,000 in November, on a seasonally adjusted basis, lifting the country’s jobless rate to 5.6%.

The UK isn’t alone – food prices have also risen alarmingly fast in Germany:

Sky News: Joules administrator on brink of rescue deal

The Nantwich branch of Joules clothing store.
The Nantwich branch of Joules clothing store. Photograph: Christopher Furlong/Getty Images

The administrator to Joules, the collapsed fashion retailer, could be close to a rescue deal to save some jobs.

According to Sky News, South Africa’s The Foschini Group (TFG) is close to securing an agreement to buy the majority of Joules’ stores and assets.

They say:

One source said a deal could be struck as soon as Wednesday afternoon.

If completed, it is likely to see roughly a quarter of Joules’ 132 shops closed, with the loss of “several hundred” jobs.

More here.

Mulberry sales hit by economic woes

Mulberry handbags for sale in the Dundrum branch of Brown Thomas in Dublin
Mulberry handbags for sale in the Dundrum branch of Brown Thomas in Dublin
 Photograph: Clodagh Kilcoyne/Reuters

British luxury goods maker Mulberry has warned that sales have been hit by the economic slowdown, as it fell into the red.

Mulberry has reported a pre-tax loss of £3.8m for the six months to 1st October, down from a pre-tax profit of £10.2m a year ago.

It told shareholders that UK retail sales had been “impacted by the broader economic environment”, adding that “uncertainty in the economic and geopolitical environment” was weighing on sales.

Shares in Mulberry have tumbled 17.5% in early trading.

Ben Laidler, global markets strategist at social investing network eToro, says:

“Mulberry’s half-year results show that the cost-of-living crisis is now hitting the luxury end of the fashion market.

“International sales have stalled, while there has been a sharp drop in activity in the UK, where households are battling 40-year high inflation and rising interest rates. The one bright spot is China, where sales have grown year-on-year as a result of increased consumer spending.

Inflation in France remains at a record high, but lower than in the UK thanks to a cap on French energy bills.

Consumer prices in the eurozone’s second-largest member rose by 7.1% per year this month, the same as October, dashing hopes of a small fall.

Analysts had expected French CPI would fall to 7%.

Even so, that’s lower than in the UK where prices jumped by 11.1% over the year to October.

French families were protected from the surge in gas and electricity prices this year, because president Macron set a 4% cap on price rises at state-owned EDF.

Ofgem proposes new price controls for local electricity networks

The operators of Britain’s local energy networks will be forced to spend more of their profits on investing to future-proof the country’s electricity grid, as Ofgem said it would not allow any rises in customer bills.

In a new set of price controls which will run from 2023 to 2028, the regulator said that it would keep costs to consumers at around £100 per year. This is no change from today.

Ofgem is pushing those networks to develop cheaper and cleaner local grids at no extra cost to consumers, by investing to support the move away from imported fossil fuels,

To do this companies will have to invest a larger portion of their profits and slash operating costs.

The companies impacted include Scottish and Southern Electricity Networks, Northern Powergrid, SP Energy Networks, Electricity North West, National Grid and UK Power Networks.

Finland on brink of recession

Just in: Finland has suffered a deeper-than-expected contraction as rising inflation hit its economy.

Finland’s GDP shrank by 0.3% in the July-September quarter, new data shows, which ends a five-quarter run of growth

Private spending fell, as Europe’s cost of living squeeze hit households.

Finland is now on the brink of recession, as Timo Hirvonen, Helsinki-based chief economist at Svenska Handelsbanken AB, said on Twitter.

“We expect to see a contraction also in the fourth quarter, which would technically mean a recession for the Finnish economy,”

Clampdown on international students could hurt university credit ratings

A UK government clampdown on international student visas would have a negative effect on the financial standing of British universities, according to the credit rating agency Moody’s.

Zoe Jankel, a senior analyst at Moody’s, said:

“If implemented, the policy would be credit negative for the UK university sector because of a drop in revenues and margins due to international students paying much higher fees than domestic students.”

Moody’s said universities with high international rankings such as Oxford “would likely fall outside the scope of the restrictions, however, because of their strong market positions thanks to their ability to attract consistently high demand from students and research funding”, our education editor Richard Adams reports.

However, Moody’s picked out Keele University and De Montfort University in Leicester as vulnerable to changes in policy, saying they…

“would be more exposed, particularly De Montfort University because of its higher reliance on international tuition fees, which accounted for 25% of its total income in fiscal 2021.”

[Last week, Downing Street said that prime minister Rishi Sunak was considering curbs on foreign students taking “low quality” degrees (which they didn’t define) and restricting visas for students’ dependants.]

Moody’s said the University of Manchester and University College London were the most dependent on revenue from international students, bringing in 32% and 31% of their total income in 2020-21, but added:

“Their excellent market positions, however, mean they are unlikely to be the targets of the government’s proposal.”

Moody’s also noted universities were under pressure from the freezing of domestic tuition fees in England since 2017 and higher staff costs, as well as rising inflation that “may reduce already slim operating margins”.

Updated

Poorer students over £1,000 worse off this year, warns IFS

England’s poorest students will be more than £1,000 worse off this academic year than the last, due to soaring inflation.

New analysis has warned that many students face “significant hardship” this winter, because prices have been rising faster than expected.

According to the Institute for Fiscal Studies (IFS), the reduction – which means students from the poorest families will be £125 out of pocket each month – is due to the falling value of maintenance loans, which students take out to cover their living costs.

The problem – maintenance loans are adjusted in line with inflation forecasts rather than inflation itself, which has been much higher than expected this year.

Here’s the full story, by our education correspondent Sally Weale.

Updated

UK businesses confidence drops as outlook darkens

UK businesses confidence has weakened, as bosses fear a looming recession as inflation continues to grip the economy.

The Confederation of British Industry reports that optimism fell across the services sector for the third consecutive quarter, with business and professional services firms particularly gloomy.

With costs soaring, company profits are being hit, they say.

Charlotte Dendy, head of economic surveys at the CBI ,said firms also want to see more pro-growth policies from the government:

“Strong cost and price pressures are continuing to hurt services firms, damaging optimism and investment intentions and hitting profitability.

“While firms welcomed aspects of the Autumn Statement, the sector is looking for longer-term measures from Government to spur business investment and bolster confidence into 2023 and beyond. In particular, firms want Government to focus on growth by fighting inflation and the recession together.

A separate survey from Lloyds Bank found that business confidence is now the lowest since February 2021.

Soaring food prices unfairly hit poorest hardest

Soaring food prices hit the poorest hardest, as they spend a greater proportion of their income on essentials such as food and energy.

They could also spur the Bank of England to raise interest rates again, at its next meeting in mid-December.

That would be another blow to many households, pushing up the cost of credit and ther borrowing, as the BoE tries to squeeze out inflationary pressures.

Victoria Scholar, head of investment at interactive investor, tells us:

The BRC-Nielsen IQ Shop Price Index points to record highs all round as rising costs across the board from wages to energy and agriculture are being passed on to consumers in terms of higher prices, especially for meat, eggs, and dairy.

Increasing essential food prices are adding to the cost-of-living crisis, unfairly impacting those at the lower at of the income spectrum more acutely.

Families will be forced to make tough spending choices this festive season, with many opting for a slimmed down version of Christmas this year.

The Bank of England continues its combat against inflation, with another hike expected at its next meeting in December as the central bank desperately attempts to slow the rising cost of living.”

With food prices rising so fast, the cost of Christmas will be higher this year.

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, says:

Shoppers will be managing their budgets more closely than at any time since the start of cost-of-living crisis.

Retailers are now responding by offering seasonal savings and price cuts and will be hopeful of an uptick in shopper spend as we move into December.”

Earlier this week, a survey commissioned by the Salvation Army found that older people are particularly worried about paying for Christmas dinner.

Some 16% of households are planning to use a food bank to get items for their festive meal, while 38% are likely to skip meals if they have an unexpected expense such as a broken boiler.

The Salvation Army’s Lieutenant Colonel Dean Pallant said:

“Christmas should be the season of joy, not sorrow.

“If so many people are worried they can’t even afford one of the most important meals of the year, it’s a red flag that poverty is creeping further into our communities.”

UK faces bleak winter ahead as food prices rocket

UK households face a ‘bleak winter’ as prices in the shops continue to accelerate, driven by food.

Food inflation has surged to a new record, with prices jumping by 12.4% over the last 12 months.

Items such as eggs, meat, dairy products and coffee shot up, according to the latest data from the British Retail Consortium (BRC). This lifted fresh food inflation to 14.3%, up from 13.3% last month.

These soaring prices are a heavy blow to shoppers in the run-up to Christmas, particularly poorer households, on top of higher energy bills and falling real wages.

UK shop inflation, to November 2022

Overall shop prices are now 7.4% higher than last November, up from 6.6% in October, the highest since the BRC started crunching its numbers in 2005.

Helen Dickinson OBE, CEO of the BRC, warns that Christmas will be pricier this year too.

“Winter looks increasingly bleak as pressures on prices continue unabated. Food prices have continued to soar, especially for meat, eggs and dairy, which have been hit by rocketing energy costs, and rising costs of animal feed and transport.

Coffee prices also shot up on last month as high input costs filtered through to price tags. Christmas gifting is also set to become more expensive than in previous years, with sports and recreation equipment seeing particularly high increases.

Rising inflation means the UK is expected to suffer its worst fall in living standards since at least the 1950s.

Dickinson predicts that many households will cut back on seasonal spending in order to prioritise the essentials.

Retailers continue to do all they can to support their customers and ensure everyone can enjoy the festive season by fixing prices of many essentials, offering discounts to vulnerable groups, raising pay for their own people, and expanding their value ranges.”

Here’s the full story:

Updated

Introduction: China PMIs hit seven-month low as economy weakens

Employees work at EGING Photovoltaic solar panels factory in Changzhou, Jiangsu Province, China.
Employees work at EGING Photovoltaic solar panels factory in Changzhou, Jiangsu Province, China. Photograph: Alex Plavevski/EPA

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

Today we have fresh evidence that China’s economy is struggling, as strict COVID-19 restrictions and rising infections drag growth down.

Activity at China’s manufacturing and services companies shrank again this month, at the fastest pace in seven months. Output, employment and delivery times all weakened, while measures of new orders, and new export demand, also fell further.

The official manufacturing purchasing managers’ index (PMI) fell to 48.0 for November against 49.2 in the previous month, the lowest reading since April.

The non-manufacturing PMI, which tracks service sector activity, fell to 46.7 from 48.7 in October. Any reading below 50 shows a contraction.

Economists fear China’s economy will struggle next year, with policymakers sticking to their zero-Covid strategy despite protests on the streets last weekend.

Sheana Yue, China economist at Capital Economics, warned that China’s economy may struggle for months:

“Downside risks continue to grow as the virus situation continues to worsen and will weigh heavily on the economy into 2023.”

As we covered yesterday, several carmakers have cut production due to the clampdown on the virus. Apple could miss out on production of as many as 6 million units of its premium iPhone 14 Pro models this quarter, due to disruption at Foxconn’s Zhengzhou plans.

Stephen Innes, managing partner at SPI Asset Management, agrees that the first half of 2023 will be weak:

The activity data continues to cement the view that the Chinese economy is expected to display a distinct “two halves” next year, where a brutal winter will likely continue to weaken economic data in December and the first quarter following.

Still, it will give way to above-consensus growth in H2 as the economy reopens.

Also coming up today.

We’ll hear from the Bank of England’s chief economist, Huw Pill, when he speaks at a conference organised by the Institute of Chartered Accountants in England and Wales.

Yesterday, BoE governor Andrew Bailey revealed the Bank had been left in the dark about Kwasi Kwarteng’s disastrous mini-budget, describing an “extraordinary process” with “no formal communication” in advance between the central bank and the Treasury.

European markets are set to open higher, ahead of the flash eurozone inflation report for this month. It may show that inflationary pressures are peaking.

We also find out how many workers were hired by US companies last month, how many vacancies are unfilled, and how India’s economy fared in the last quarter.

The agenda:

  • 7.45am GMT: France’s inflation report for November

  • 8.30am GMT: Bank of England chief economist Huw Pill speaks at a conference of the Institute of Chartered Accountants of England and Wales (ICAEW)

  • 8.55am GMT: German unemployment report

  • 10am GMT: Eurozone flash inflation report for November

  • Noon GMT: India’s Q3 GDP report

  • Noon GMT: US weekly mortgage applications

  • 1.15pm GMT: ADP survey of US company payrolls in November

  • 1.30pm GMT: US Q3 GDP report (second estimate)

  • 3pm GMT: JOLTS survey of US jobs openings

Updated

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