Bank of England governor pledges to get inflation down to target; FTSE 100 at record high – business live | Business

February 9, 2023February 10, 2023 Stan

Bailey: We will get inflation down

Harriet Baldwin MP continues to challenge the Bank over its record in controlling inflation.

Q: Inflation was running at 6% in this country on the day Russia invaded Ukraine, and interest rates were at 0.5%. Do you think now that the risk to inflation was always more to the upside than downside, given monetary policy at the time?

Andrew Bailey says the Bank of England was still ‘wrestling’ with the question about how transitory the shocks hitting the UK economy would be.

We changed our view on that as we went through the summer, the BoE governor adds.

Q: How can people be confident that the Bank has made the right judgements, at the right time? Public polling shows there’s quite a high degree of public dissatisfaction over the Bank’s track record.

Governor Bailey says he can “quite understand” the public polling.

Our job is to get inflation back down to target.

The public will, of course, expect us to do that. And we will do it.

I’d expect that to be reflected in public polling, he adds:

I would, of course, expect the public to say ‘it’s your job to get inflation down to target’ and my response is ‘yes it is, and we will do it’.

Baldwin won’t let the governor get away with that!

“Actually, it’s your job not to let inflation get to this level of second-round effect”, she points out. [’second round effect’ mean the increase in wages as workers chase inflation-matching pay rises].

Bailey challenges this, insisting that there are plenty of first-round effects driving inflation at the moment.

The Bank expects annual inflation rate to fall this year, as ‘base effects’ unwind (as we catch up with price surges a year earlier).

Bailey predict inflation will be below 5% by the end of this year.

Please forgive the committee for being “slightly sceptical”, Baldwin shoots back, given how often the Bank’s projections have been incorrect in the past.

Key events

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Would that fuel wider inflation?","elementId":"b4c1c1e0-570a-4df9-a7ed-9ecfce498fc4"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Andrew Bailey says that there is “quite a big wedge” between public and private sector pay increases (with the public sector lagging far behind).","elementId":"ffdf55b7-15fd-468e-92b8-8bc31540f8e1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The impact of public sector pay rises, the governor explains, depend whether it is funded by borrowing or taxation.","elementId":"f7b45498-eb48-4728-887f-5f09b99d8e8f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey says:","elementId":"4a5bfa08-36ae-4aab-a1f0-d1dbe06d838c"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n In terms of demand effects, it does depend how it’s funded.\n</blockquote>","elementId":"1ddfa548-97f2-4a03-9c0f-a10a19ad9ef1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey says the Bank doesn’t want to wade into this territory, and he ‘isn’t advocating anything’, but…","elementId":"1eed5178-d7d7-4d3b-a369-052b8efb6586"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n The economics of it, depend whether you raise taxes or whether you borrow, frankly.\n</blockquote>","elementId":"c26ae8b6-806f-4e4d-b081-07b9675ccdd2"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675941071000,"blockCreatedOnDisplay":"06.11 EST","blockLastUpdated":1675941380000,"blockLastUpdatedDisplay":"06.16 EST","blockFirstPublished":1675941323000,"blockFirstPublishedDisplay":"06.15 EST","blockFirstPublishedDisplayNoTimezone":"06.15","title":"Bailey: inflationary impact of public sector pay rises depend on how it's funded","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4d2fd8f0827de57490727","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Silvana Tenreyro is then asked why she voted to leave interest rates at 3.5% at last month, opposing the rate rise to 4%.","elementId":"dd2b7bc1-e9b3-46ea-9661-8309f9df9966"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Tenreyro explains that monetary policy works with a lag – only a fifth of the previous monetary policy tightening have actually reached the real economy, she says.","elementId":"9c5de2bb-8b3f-4051-972c-3487c5355a10"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “In my view, yes, rates are too high right now.\n That’s why I didn’t support the vote.\n</blockquote>","elementId":"10abad4f-ac7e-411a-b2bc-ce4c3754a4f0"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675940605000,"blockCreatedOnDisplay":"06.03 EST","blockLastUpdated":1675940774000,"blockLastUpdatedDisplay":"06.06 EST","blockFirstPublished":1675940774000,"blockFirstPublishedDisplay":"06.06 EST","blockFirstPublishedDisplayNoTimezone":"06.06","title":"Tenreyro: interest rates are too high.","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4cdcf8f0827de574906e5","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Q: The Bank’s monetary policy report shows services inflation at a new high. Haven’t second-order effects become much more deeply embedded in the economy, and won’t they be much harder to remove?","elementId":"6b983bd0-3acc-40f0-ba8a-d469c68be6ad"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"MPC member Silvana Tenrehro explains that to hit the Bank’s 2% inflation target, services inflation must come down, from 6.8% at present to 5%. That is possible, she says, for three reasons.","elementId":"aa1dee75-4eed-4e90-9326-c9b1ec696168"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"She explains that inflation in areas of services which are not energy-intensive has been below 5%. Naturally, as energy prices fall, there will be a direct slowdown in services inflation, she explains.","elementId":"5a555043-12d5-4507-bd9c-9e522834f1d6"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Second, there’s already signs of a slowdown in wage growth.","elementId":"8556bc85-72e2-4bc2-be8c-555bc435f768"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Thirdly – monetary policy will cool demand.","elementId":"497e9a60-eae0-4342-8a8d-defed9bfdb8d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Professor Tenrehro explains:","elementId":"7ef42671-9c8e-4bb4-a63e-6b3042bfb17c"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n We have tightened policy significnatly over the last year, and that’s going to have a large impact on demand and on the labour market.\n</blockquote>","elementId":"08368ff3-aa19-491a-9c9a-d9ae29df4202"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"That’s why the Bank is forecasting inflation will be below its 2% target in its latest forecast, she explains.","elementId":"cbbeb747-a156-4f17-818d-0b9486ab7105"},{"_type":"model.dotcomrendering.pageElements.InteractiveBlockElement","url":"https://interactive.guim.co.uk/uploader/embed/2023/02/inflation-zip/giv-13425AmDRlqDcoNbD","alt":"The Bank of England's latest inflation forecasts","scriptUrl":"https://interactive.guim.co.uk/embed/iframe-wrapper/0.1/boot.js","isMandatory":false,"caption":"The Bank of England’s latest inflation forecasts","elementId":"7beed5c7-e575-407d-a6f0-309dded942fe"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675939279000,"blockCreatedOnDisplay":"05.41 EST","blockLastUpdated":1675939845000,"blockLastUpdatedDisplay":"05.50 EST","blockFirstPublished":1675939845000,"blockFirstPublishedDisplay":"05.50 EST","blockFirstPublishedDisplayNoTimezone":"05.50","title":"Tenrehro: Three reasons why inflation will come down","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4c5b38f08398676705986","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Harriet Baldwin MP continues to challenge the Bank over its record in controlling inflation.","elementId":"95f8175f-6ea8-48fd-a077-4c641354efdc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Q: Inflation was running at 6% in this country on the day Russia invaded Ukraine, and interest rates were at 0.5%. Do you think now that the risk to inflation was always more to the upside than downside, given monetary policy at the time?","elementId":"20ebdc5a-beb6-44f8-85d3-f12ff9090f0f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Andrew Bailey says the <a href=\"https://www.theguardian.com/business/bankofenglandgovernor\" data-component=\"auto-linked-tag\">Bank of England</a> was still ‘wrestling’ with the question about how transitory the shocks hitting the UK economy would be.","elementId":"04c82ff4-9598-45bb-ad3e-c329698dcdac"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"We changed our view on that as we went through the summer, the BoE governor adds.","elementId":"a938f4f9-ef71-4823-ba78-29324aa3d861"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Q: How can people be confident that the Bank has made the right judgements, at the right time? Public polling shows there’s quite a high degree of public dissatisfaction over the Bank’s track record.","elementId":"37762fbb-6deb-4d00-9efd-f380810924db"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Governor Bailey says he can “quite understand” the public polling.","elementId":"d5ae9759-41ea-4f05-a29d-f35e0cc710fd"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n Our job is to get inflation back down to target.\n The public will, of course, expect us to do that. And we will do it.\n</blockquote>","elementId":"d6f7885e-ae77-4a3a-8ecd-5f53c35a134f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"I’d expect that to be reflected in public polling, he adds:","elementId":"99bf9a55-b696-4fca-af48-7b460a5747cb"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n I would, of course, expect the public to say ‘it’s your job to get inflation down to target’ and my response is ‘yes it is, and we will do it’.\n</blockquote>","elementId":"232a534f-0642-4bd8-afad-ce4c139c761b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Baldwin won’t let the governor get away with that!","elementId":"994b65c6-dcb6-422c-bf8b-40d494c16d47"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"“Actually, it’s your job not to let inflation get to this level of second-round effect”, she points out. [’second round effect’ mean the increase in wages as workers chase inflation-matching pay rises].","elementId":"f63e55a3-e93d-431d-900a-ca58b6b76210"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey challenges this, insisting that there are plenty of first-round effects driving inflation at the moment.","elementId":"6e4fe1fd-dc43-4bc6-95eb-f74cb48e911a"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Bank expects annual inflation rate to fall this year, as ‘base effects’ unwind (as we catch up with price surges a year earlier).","elementId":"ac9f0994-28a9-4772-8cae-9b918a41500d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey predict inflation will be below 5% by the end of this year.","elementId":"145c43d6-a21f-4e37-9288-27480d2b92ac"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Please forgive the committee for being “slightly sceptical”, Baldwin shoots back, given how often the Bank’s projections have been incorrect in the past.","elementId":"a8d0dd2f-d919-4897-9bdf-52abe4b33bce"}],"attributes":{"pinned":true,"keyEvent":true,"summary":false},"blockCreatedOn":1675937203000,"blockCreatedOnDisplay":"05.06 EST","blockLastUpdated":1675938058000,"blockLastUpdatedDisplay":"05.20 EST","blockFirstPublished":1675937945000,"blockFirstPublishedDisplay":"05.19 EST","blockFirstPublishedDisplayNoTimezone":"05.19","title":"Bailey: We will get inflation down","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4c20a8f0827de57490688","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Treasury committee chair Harriet Baldwin begins, by reminding the Bank of England’s top brass that inflation is five-times over their 2% target, with food inflation over 16%.","elementId":"0401aad5-6058-4509-adc8-5009282967fc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Q: Do you accept that the Bank has made mistakes in this tightening cycle, and raised rates too late and too slowly, so it will be harder to bring inflation back to target?","elementId":"0391041c-3525-4d12-b2d4-00d5cc040bee"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Governor Andrew Bailey says the Bank doesn’t have the benefit of setting policy with hindsight, and embarks on a long defence of the Bank’s strategy.","elementId":"71502fca-9780-4ae5-bd29-d22d8b37cff5"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"There have been several ‘very big shocks’ hitting the economy in the last three years, he points out. He cites the “supply chain shock” when the recovery from Covid began.","elementId":"1a0d4adf-1f3f-461f-a0b7-5239373ca919"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"That shock peaked at the end of 2021, he says.","elementId":"a3d73330-cb73-478b-9289-8c901ca2e9da"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"But, two other big shocks also hit the economy – including the Russia-Ukraine war, which has been the ‘dominating’ shock this year. He doesn’t think anyone could have predicted this conflict, until close to it actually happening.","elementId":"fe9c6f3c-db48-4e7d-8863-5304cb0801db"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Inflation is still expected to fall rapidly this year, Bailey says.","elementId":"eed5f564-d02b-49b3-9b82-c6ca519ac56a"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The third shock, Bailey says, is the UK’s labour market, where there has been a decline in labour market participation.","elementId":"4da2bb2b-f5e3-4008-a435-c78559fabd45"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey tells MPs:","elementId":"bf507771-0144-4bc5-9e1e-00f3b239f6cb"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n We’ve got a very tight labour market, We’ve had a fall in participation and it hasn’t recovered.\n</blockquote>","elementId":"6f954662-8bfe-4464-a812-08fc79a20e15"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Baldwin challenges this argument, pointing out that Bailey told the committee in May 2021 that there were “hotspots” in the economy. And yet the Bank left interest rates at the record low of 0.1% until the end of 2021, and kept its quantitative easing stimulus programme.","elementId":"30b52b07-e8fa-4c52-bf64-bd20f962af16"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey says these hotspots were due to the global supply chain shock, and the reopening of the UK economy. The Bank felt they were tempory, transient, effects, rather than permanent.","elementId":"d36c4894-fe04-437a-a0d3-37defb35ac49"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"But, Baldwin points out, inflation had hit 5.1% by November – then the governor said he was ‘very uneasy’ about the situation, but the Bank left rates at 0.1% until December.","elementId":"c4b08e59-c255-4c4e-aa42-078facfba17c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey says the Bank was watching for the impact of ending the pandemic furlough scheme, and the effect of the Omicron, at the end of 2021.","elementId":"e5aad136-92d3-4649-9918-3ab3c516f705"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"He says the Bank has faced some ‘very difficult’ judgements, telling the committee:","elementId":"40737ca1-82fe-4441-96bf-a222e725edf0"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n We were seeking to balance these various conflicting and countervailing presures at that time, and to assess what was happening in the labour market as the million jobs on furlough unwound.\n Those were very difficult judgements.\n</blockquote>","elementId":"9c7e2fd2-2628-4861-a7f9-c4c67e329aef"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey adds that the Bank of England was the first major central bank to start tightening monetary policy (when it raised rates to 0.25% in December 2021). Other central banks were facing these multiple shocks too.","elementId":"4f5b53cf-6aae-4f72-be32-10f8927a65b5"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n This was a challenge that others were having too.\n</blockquote>","elementId":"5709817b-f842-4674-bf3c-82beae9e7add"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675936266000,"blockCreatedOnDisplay":"04.51 EST","blockLastUpdated":1675937198000,"blockLastUpdatedDisplay":"05.06 EST","blockFirstPublished":1675937198000,"blockFirstPublishedDisplay":"05.06 EST","blockFirstPublishedDisplayNoTimezone":"05.06","title":"Governor Bailey: Judgements have been 'very difficult' amid several shocks","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4be7f8f0839867670593c","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Over in parliament, the Treasury Committee is starging to quiz some of the Bank of England’s top officials.","elementId":"0479a5ba-48d5-4a1d-aa0c-f137ee93fd28"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"MPs will be questioning the BoE over last week’s monetary policy report, and its decision to <a href=\"https://www.theguardian.com/business/2023/feb/02/bank-of-england-raises-uk-interest-rates-to-4\">raise UK interest rates to 4%</a>, the highest since 2008.","elementId":"6e5c1237-d6b6-4467-8d18-4fa47d129371"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"At the witness table, we have governor Andrew Bailey, chief economist Huw Pill, and two external policymakers (ie experts recruited from outside the Bank) - professor Silvana Tenreyro and professor Jonathan Haskel.","elementId":"1c8bade9-2e62-432c-bc04-6d6aca1a3908"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"<a href=\"https://www.theguardian.com/business/live/2023/feb/09/bank-of-england-interest-rates-inflation-housing-market-weakens-redrow-rics-business-live?filterKeyEvents=false&page=with:block-63e492108f083986767057e9#block-63e492108f083986767057e9\">As flagged in the introduction</a>, MPs plan to discuss the Bank’s record on combatting the outbreak of double-digit inflation, and whether we have reached its peak.","elementId":"aa1592ba-c5c8-4409-bbd2-f88afaebd245"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The committee adds:","elementId":"a466d581-bb04-4ae7-89cb-eef9bf7d068e"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n MPs are likely to explore the outlook, risks and expectations for inflation, and the likelihood of future interest rate rises, as well as exploring dissenting views on interest rate policy within the MPC and the risks of over-tightening.\n Other likely topics for discussion include how energy and commodity prices are impacting inflation, the Bank’s forecast of a UK recession and slow recovery, and the MPC’s approach to the sale of the £875bn it held in Government bonds, known as <a href=\"https://www.bankofengland.co.uk/monetary-policy/quantitative-easing\">quantitative tightening</a>.\n</blockquote>","elementId":"5cf6aa68-88eb-47c1-ac1a-38d38d4f4628"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">📣 On Thursday, we’re holding a session with the Governor of the <a href=\"https://twitter.com/bankofengland?ref_src=twsrc%5Etfw\">@bankofengland</a> and MPC members Huw Pill, Jonathan Haskel and Silvana Tenreyro on the February 2023 Monetary Policy Report. 🔎 Learn more about the session here 👇<a href=\"https://t.co/66LWfkQCm6\">https://t.co/66LWfkQCm6</a> <a href=\"https://t.co/b4IJLNfLbs\">pic.twitter.com/b4IJLNfLbs</a>— Treasury Committee (@CommonsTreasury) <a href=\"https://twitter.com/CommonsTreasury/status/1623339654333210625?ref_src=twsrc%5Etfw\">February 8, 2023</a></blockquote>\n","url":"https://twitter.com/CommonsTreasury/status/1623339654333210625","id":"1623339654333210625","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"e1726883-df03-44da-ba90-45abb1fb06ea"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675935359000,"blockCreatedOnDisplay":"04.35 EST","blockLastUpdated":1675936249000,"blockLastUpdatedDisplay":"04.50 EST","blockFirstPublished":1675936249000,"blockFirstPublishedDisplay":"04.50 EST","blockFirstPublishedDisplayNoTimezone":"04.50","title":"Bank of England session begins","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4bfcc8f0827de5749067d","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"At the current rate, we could see the <a href=\"https://www.theguardian.com/business/ftse\" data-component=\"auto-linked-tag\">FTSE</a> 100 break through the 8,000 level by early next week,says Russ Mould, investment director at AJ Bell.","elementId":"7812b792-634d-440f-bef0-ffff122bb01c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"This would represent “a long-overdue victory for the UK stock market,” Mould says.","elementId":"9345d098-c348-46b4-804f-214bc2087813"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"He explains that “renewed takeover chatter in the banking sector, a well-received set of results from AstraZeneca and another leg up from the energy sector” <a href=\"https://www.theguardian.com/business/live/2023/feb/09/bank-of-england-interest-rates-inflation-housing-market-weakens-redrow-rics-business-live?filterKeyEvents=false&page=with:block-63e4b0bc8f083986767058dc#block-63e4b0bc8f083986767058dc\">lifted the blue-chip index to a fresh record (now 7945 points) today</a>.","elementId":"2de8ce8b-3e2f-431a-bf7b-a2d1a8df3744"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Mould says:","elementId":"a67ef18b-212f-4dad-84c3-c9c9aef38ee3"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “Reports suggest First Abu Dhabi Bank is still interested in buying Standard Chartered, despite guidance to the contrary last month.\n “If successful, it would represent yet another UK stock acquired by a foreign player. It would also play to the theory that industry players are more likely to buy UK-listed companies than private equity in the current environment.\n “Whereas the sharp rise in the cost of debt has made life harder for private equity to do leveraged deals, a lot of businesses have come out of the pandemic in a robust financial shape and have plenty of cash on their books to buy rivals in their respective sectors.”\n</blockquote>","elementId":"b55aac09-559e-403a-99bb-613802f2ce89"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675935692000,"blockCreatedOnDisplay":"04.41 EST","blockLastUpdated":1675935820000,"blockLastUpdatedDisplay":"04.43 EST","blockFirstPublished":1675935804000,"blockFirstPublishedDisplay":"04.43 EST","blockFirstPublishedDisplayNoTimezone":"04.43","title":"Next stop 8,000 points on the Footsie?","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4b0bc8f083986767058dc","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The <a href=\"https://www.theguardian.com/business/ftse\" data-component=\"auto-linked-tag\">FTSE</a> 100 share index has just hit a new record high as takeover speculation swirls in the City.","elementId":"0a6ae62c-5682-48de-8f19-26d0a1bddd1b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The blue-chip share index has jumped by 0.65% this morning to 7937.33 points, above yesterday’s intraday high of 7934.30.","elementId":"83af60b7-2ac4-4092-8c92-3b6a3a0c04fb"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Asia-Pacific focused bank Standard Chartered is the top riser, jumping over 7% this morning.","elementId":"c95823d5-8ded-43db-b450-62212a86640d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"This follows a Bloomberg report that First Abu Dhabi Bank (FAB) is pressing ahead with a potential offer for Standard Chartered, as it tries to become a global financial powerhouse.","elementId":"ab612fa7-f634-46a3-a00f-25477712182c"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">Fab news for their share price...+10% on the session... *FAB SAID TO WEIGH STANCHART BID AFTER UK TAKEOVER RULES ELAPSE— Michael Brown (@MrMBrown) <a href=\"https://twitter.com/MrMBrown/status/1623597447300759554?ref_src=twsrc%5Etfw\">February 9, 2023</a></blockquote>\n","url":"https://twitter.com/MrMBrown/status/1623597447300759554","id":"1623597447300759554","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"bae43acd-24bb-433b-9bc3-38d1be198b74"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"According to Bloomberg, FAB — which is worth about twice as much as Standard Chartered — is exploring an all-cash bid of in the range of $30bn to $35bn, according to sources.","elementId":"be67a5c7-0d35-47ed-83ee-24c8232d5c00"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bloomberg say:","elementId":"bb5fecdb-2422-4f74-b3d9-9efec1463d06"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n Under the code name Silver-Foxtrot, officials at the Abu Dhabi bank are working under the radar on a possible bid once a cooling off period required by UK takeover rules elapses, according to people familiar with the matter.\n FAB, as the bank is known, recently completed due diligence on the London-based lender, the people said, asking not to be identified because the matter is private. Any deal would be dependent on market conditions and the performance of Standard Chartered’s share price, they said.\n</blockquote>","elementId":"25ce5855-e1ec-43b6-b969-c456213b7da4"},{"_type":"model.dotcomrendering.pageElements.SubheadingBlockElement","html":"<h2>More here: <a href=\"https://www.bloomberg.com/news/articles/2023-02-09/standard-chartered-is-still-in-play-with-fab-s-operation-foxtrot?sref=Xl91GI8N\">StanChart Is Still in Play as Abu Dhabi’s FAB Explores $35 Billion Offer</a></h2>","elementId":"b46f0708-a93e-4cf0-a5f8-4f24d6f0578a"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Gambling firm Entain is weighing on the FTSE 100, though. Entain shares are down 10%, after MGM Resorts confirmed that it has “moved on” regarding its interest in Entain, <a href=\"https://casinobeats.com/2023/02/09/mgm-moves-on-from-entain/\">according to reports</a>.","elementId":"a64494af-5418-43ca-a001-edeadce6fb1d"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675931836000,"blockCreatedOnDisplay":"03.37 EST","blockLastUpdated":1675932948000,"blockLastUpdatedDisplay":"03.55 EST","blockFirstPublished":1675932479000,"blockFirstPublishedDisplay":"03.47 EST","blockFirstPublishedDisplayNoTimezone":"03.47","title":"FTSE 100 hits record high as takeover talk lifts Standard Chartered","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4ac758f08f78448b048a8","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Consumer goods maker Unilever has warned that cost inflation will continue this year, which will concern the <a href=\"https://www.theguardian.com/business/bankofenglandgovernor\" data-component=\"auto-linked-tag\">Bank of England</a> as it tries to tackle the cost of living.","elementId":"cf0a6eb8-0b69-49d2-9df6-3e58af44a855"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Unilever, which makes Marmite, Hellmann’s mayonnaise and Magnum ice creams, has already hit consumers with higher costs in the shops.","elementId":"13b957f7-4d18-4038-9d08-270ed0242eb8"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Unilever’s final results for 2022, released this morning, shows that prices jumped by 11.3% over the last year. Sales volumes fell by 2.1%, as customers sought out cheaper alternatives, but that still gave the company underlying sales growth of 9%.","elementId":"cb48f832-1f09-4201-accd-a8bb79e7551e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Outgoing CEO Alan Jope says:","elementId":"026d0442-3f80-4dbf-8639-e9a11e72ceff"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “Unilever delivered a year of strong topline growth in challenging macroeconomic conditions. Underlying sales growth was 9.0%, driven by disciplined pricing action in response to high input cost inflation\n</blockquote>","elementId":"e4ce4bce-90fc-4370-acce-9d30232b4fe0"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Unilever expects its costs to rise by around €1.5bn in the first half of 2023. Cost inflation is expected to slow in the second half, but Unilever does not expect cost deflation.","elementId":"91b4f09b-0530-461e-a1b3-73fa19ae395e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Unilever shares have risen slightly this morning, up 0.4%.","elementId":"a47bd760-94d5-427c-9094-06f5da95423a"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\" data-conversation=\"none\">Unilever profits topped €8bn but it warned that while inflation is tempering, there are most cost increases to come this year.<a href=\"https://twitter.com/search?q=%24ULVR&src=ctag&ref_src=twsrc%5Etfw\">$ULVR</a> narrowly up on opening this morning <a href=\"https://t.co/HZqjAzuia8\">pic.twitter.com/HZqjAzuia8</a>— IG (@IGcom) <a href=\"https://twitter.com/IGcom/status/1623596333893398532?ref_src=twsrc%5Etfw\">February 9, 2023</a></blockquote>\n","url":"https://twitter.com/IGcom/status/1623596333893398532","id":"1623596333893398532","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"5c6becf5-7373-4c60-b128-2cd16e17021b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Jope will be succeeded by Hein Schumacher, head of a Dutch dairy co-operative.","elementId":"94b78200-1db0-4f1c-9fa8-1fc93a49880e"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/nils-pratley-on-finance/2023/jan/30/unilevers-new-dutch-milkman-needs-to-deliver-quickly","text":"Unilever’s new Dutch milkman needs to deliver quickly","prefix":"Related: ","role":"thumbnail","elementId":"ab9727a4-d5f2-4392-b032-a074b2aa6826"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Richard Hunter, head of markets at interactive investor, says Unilever has, again, provide steady growth without “shooting the lights out”.","elementId":"cf095fec-e3ef-4282-9840-0040e444f97e"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n The incoming CEO may have set his sights on revitalising business performance, but in the meantime Unilever continues to play to its strengths in a reliable manner.\n The sheer pricing power of the group’s portfolio of household brands enables a good proportion of costs to be passed onto consumers, without overly affecting volumes.\n</blockquote>","elementId":"15b8d19a-aed4-4f10-a679-c9e70295b405"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675930741000,"blockCreatedOnDisplay":"03.19 EST","blockLastUpdated":1675931522000,"blockLastUpdatedDisplay":"03.32 EST","blockFirstPublished":1675931523000,"blockFirstPublishedDisplay":"03.32 EST","blockFirstPublishedDisplayNoTimezone":"03.32","title":"Consumer goods giant Unilever expects price growth throughout 2023","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4a8518f08f78448b04889","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"A second housebuilder, Bellway, has also reported that demand slowed at the second half of last year.","elementId":"9b3398cf-67ee-494d-b3ec-ccccbbbdd2e6"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bellway has told the City this morning that its reservation rate fell by almost a third in the August-January period, to 138 per week, down from 202 a year earlier, due to “weaker private demand”.","elementId":"a8519bbf-c70b-4588-9783-f89207f92684"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bellway says:","elementId":"8612a61b-61d3-41ac-851a-0b4c3b5321cc"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n Elevated mortgage rates and the end of Help-to-Buy have contributed to a 43.8% decrease in the private reservation rate to 91 per week.\n</blockquote>","elementId":"655eda83-5d30-416f-97d6-320537e06d7f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"This was partly balanced by Bellway “accelerating the construction of social homes.”","elementId":"5869924d-b7c5-4618-b9b0-078bd4b8c3fc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bellway now plans to build fewer houses this financial year. Around 11,000 homes are expected to be constructed in the year to 31 July, down from 11,198 a year earlier.","elementId":"10792c75-6e60-4f5f-91d5-df86e24906be"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"And due to the uncertain near-term economic outlook remains uncertain, Bellway has imposed a freeze on new recruitment and is limiting land approvals.","elementId":"2b5d2f60-d9ed-4cc0-b223-fd8ca3b76f34"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Jason Honeyman, Bellway chief executive, explains:","elementId":"b7513487-09a5-46e0-875d-878329a4aab1"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n Following our Preliminary Results in October 2022, we experienced a period of weaker trading through to the end of December, with affordability constrained by higher mortgage rates and economic uncertainty affecting consumer confidence.\n Since the start of the new calendar year, mortgage rates have fallen from their recent peak, and we have been encouraged by a seasonal increase in visitor levels and an improvement in reservations.\n</blockquote>","elementId":"5a9d0fb3-d0c4-4eb0-a426-f02db4543df3"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675929681000,"blockCreatedOnDisplay":"03.01 EST","blockLastUpdated":1675930419000,"blockLastUpdatedDisplay":"03.13 EST","blockFirstPublished":1675930419000,"blockFirstPublishedDisplay":"03.13 EST","blockFirstPublishedDisplayNoTimezone":"03.13","title":"UK's Bellway cuts back on homebuilding plans amid tough market conditions","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e4a2548f0839867670586e","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"UK housebuilder Redrow has withdrawn its financial guidance for 2024 due to changing market conditions, and warned that this year will be ‘challenging’.","elementId":"a52de1f8-c0fa-400d-8e8f-f27a7db861a2"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Redrow has told the City that “economic and political uncertainty” led to a fall in sales in the second half of 2022.","elementId":"0c341459-87a7-414a-9efc-97976b248f08"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Its sales rate fell to 0.38 private reservations per outlet per week in July-December 2022, down from 0.64 a year earlier. Mortgage rates rose sharply last autumn, <a href=\"https://www.theguardian.com/money/2023/jan/31/uk-mortgages-interest-rates-buyers-bank-of-england-savings\">hitting demand</a>, as the disastrous mini-budget spooked the City.","elementId":"003bf74f-1efb-4bb6-8b12-c4af6ca022dc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Revenues in the second half of last year dropped by £21m to £1.031bn, while pretax profits shrank by £5m to £198m, Redrow reports.","elementId":"6933bb8f-66e8-4d84-ba2a-67169d4373f3"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Redrow says demand has picked up so far this year, to 0.51 private reservations per outlet per week, which it calls an “encouraging start” to the second half of its financial year.","elementId":"936c75c1-2cad-4570-a654-1455dc0825be"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">Redrow half-year report: "Our net private reservation rate for the first 5 weeks of the second half was an encouraging 0.51 compared to 0.38 in the first half". - 2022 full year rate was 0.68, 2021 rate was 0.70 - First half was 6 months to 1/1/23— Neal Hudson (@resi_analyst) <a href=\"https://twitter.com/resi_analyst/status/1623585162570219521?ref_src=twsrc%5Etfw\">February 9, 2023</a></blockquote>\n","url":"https://twitter.com/resi_analyst/status/1623585162570219521","id":"1623585162570219521","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"2571f71b-3fb4-4cdc-935e-c1c93e083394"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"But, the housebuilder has trimmed its forecast for revenues in the full financial year (to the end of June) to £2.05bn from £2.1bn previously.","elementId":"250478e8-7045-403d-99ad-b4621dbee3bb"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"It adds:","elementId":"7a572bab-1e1b-4aee-ac85-d484d3a1eec6"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n Due to the recent change in market conditions the Company has withdrawn its guidance for 2024.\n</blockquote>","elementId":"d6f756da-16dd-4fe3-a28b-b10093681d32"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Matthew Pratt, chief executive of Redrow, says:","elementId":"3218094a-b085-48c9-b959-56a016b12e67"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n We have experienced a positive start to second half trading. Whilst 2023 will be a challenging year as the market resets, early indications are better than anticipated and the market appears to be finding a new, natural level.\n</blockquote>","elementId":"f5ceee09-5fea-4789-87d6-e8e784cf6257"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">Redrow reservation rate fell by nearly half during six month trading period to December, from 0.64 per site per week to 0.38, before recovering this year to 0.51. Otherwise solid set of results. See below. <a href=\"https://t.co/5zy8ksekoa\">pic.twitter.com/5zy8ksekoa</a>— Peter Bill (@peterproperty) <a href=\"https://twitter.com/peterproperty/status/1623582824031813633?ref_src=twsrc%5Etfw\">February 9, 2023</a></blockquote>\n","url":"https://twitter.com/peterproperty/status/1623582824031813633","id":"1623582824031813633","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"a87c8c5f-2ae2-47c6-9846-ec99961df1a9"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675928148000,"blockCreatedOnDisplay":"02.35 EST","blockLastUpdated":1675929821000,"blockLastUpdatedDisplay":"03.03 EST","blockFirstPublished":1675928994000,"blockFirstPublishedDisplay":"02.49 EST","blockFirstPublishedDisplayNoTimezone":"02.49","title":"Housebuilder Redrow withdraws its guidance for 2024","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e49ff68f08398676705851","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"<a href=\"https://www.theguardian.com/business/live/2023/feb/09/bank-of-england-interest-rates-inflation-housing-market-weakens-redrow-rics-business-live?filterKeyEvents=false&page=with:block-63e49f448f0839867670584f#block-63e49f448f0839867670584f\">UK house prices are falling</a> as the market adjusts to falling demand and rising mortgage rates, economists say.","elementId":"449e8f06-244d-4629-95fb-ca4ef32fe0f1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Simon Rubinsohn, chief economist at RICS, says today’s poll of surveyors shows that the market remained muted in January:","elementId":"422ffe74-eeec-41e1-abaa-f8843ce700f8"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.\n “Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.\n “However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.\n</blockquote>","elementId":"4ea9ee12-775d-415a-a6a4-a1dd53e7484d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Victoria Scholar, head of investment at <a href=\"https://www.ii.co.uk/\">interactive investor</a>, predicts borrowing could pick up later this year:","elementId":"b4848049-d7eb-4804-a3b8-8e575f345fb0"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “The Royal Institution of Chartered Surveyors (RICS) house price balance fell to -47 from -42 in December. The data fell to the lowest level since April 2009 as potential buyers hold off amid expectations that property prices will cool further this year and borrowing rates will ease.\n While house prices look set to fall this year, a chronic shortage of supply and an improving view on the outlook for the UK economy look set to prevent a more painful slide. With the Bank of England approaching the peak for interest rates and mortgage lenders having to price competitively amid the drop in demand, there could be a pick up in borrowing later this year, particularly if inflationary pressures on the cost-of-living continue to ease.”\n</blockquote>","elementId":"c3b3916b-a6f8-46e3-937e-09777a354cee"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Jeremy Leaf, north London estate agent, confirms that demand has weakened:","elementId":"73286e0d-f05d-4a72-92dd-f94f268e830d"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n ’There’s no doubt that demand is not what it was just a few months ago following sharp rises in interest rates and lives costs particularly.\n ‘However, on the ground, we’ve noticed more need to, rather than want to, move buyers as mortgage repayment and job prospects become less daunting than previously envisaged.\n ’There is some serious haggling underway but we’ve seen a softening in prices rather than a correction while supply is slowly improving. Reduced competition means transaction numbers are down, taking longer and are more fragile.’\n</blockquote>","elementId":"340b0009-fc15-4e34-a17b-96a0a822cea9"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"But, Tom Bill, head of UK residential research at estate agents Knight Frank, says the market has calmed this year:","elementId":"5b540e6f-9684-4524-b417-b5df8edd2534"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n “The first few weeks of 2023 bear little resemblance to the chaotic final three months of last year in the UK housing market.\n Mortgage rates have stabilised, pre-existing buyers are cautiously reactivating plans and new buyers are coming to terms with the ‘new normal’ in the lending market. Some of the house price growth that took place during the pandemic will unwind but as the shock of the mini-Budget fades, demand is proving more resilient than expected.”\n</blockquote>","elementId":"0d9f9382-6919-4ef0-a76f-8566f5ed6230"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675928083000,"blockCreatedOnDisplay":"02.34 EST","blockLastUpdated":1675929366000,"blockLastUpdatedDisplay":"02.56 EST","blockFirstPublished":1675928286000,"blockFirstPublishedDisplay":"02.38 EST","blockFirstPublishedDisplayNoTimezone":"02.38","title":"UK housing market cools: what the experts say","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e49f448f0839867670584f","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Property sales and house prices continued to decline across the UK in January, surveyors have reported.","elementId":"889acd59-7d50-429f-9cd8-586593781397"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Demand from new buyers and fresh listings were also down last month, the latest monthly snapshot from the Royal Institution of Chartered Surveyors (Rics) shows.","elementId":"aa8eb8dd-9fc0-4b9c-a216-687de387529e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"This is the ninth monthly fall in new buyer inquiries in a row, while <a href=\"https://www.reuters.com/markets/europe/uk-housing-market-hit-by-widest-prices-falls-since-2009-rics-2023-02-09/\">price falls were the most widespread since 2009</a>.","elementId":"ce84f980-40e1-4aa4-8ee3-ff9c4772ad54"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">UK housing market hit by widest prices falls since 2009 - RICS <a href=\"https://t.co/CgGtOrLKvO\">https://t.co/CgGtOrLKvO</a> <a href=\"https://t.co/XDKC8NU3Yk\">pic.twitter.com/XDKC8NU3Yk</a>— Reuters (@Reuters) <a href=\"https://twitter.com/Reuters/status/1623572408442445825?ref_src=twsrc%5Etfw\">February 9, 2023</a></blockquote>\n","url":"https://twitter.com/Reuters/status/1623572408442445825","id":"1623572408442445825","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"756831b1-2d96-4ccf-9fe6-41cbd2bedaf2"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Rics said all the indicators point to a further slowdown in the housing market in the coming months, as borrowing costs have risen sharply.","elementId":"74d96130-7da0-4d67-bcfb-bd3263de41ab"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Its monthly poll found that:","elementId":"5a77e898-f27e-4e63-9ec8-f385ff64ddea"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"<ul>\n <li>Buyer enquiries, agreed sales and new instructions remain on a downward trend</li>\n <li>Tenant demand sees an increase at the same time as landlord instructions fall</li>\n <li>House prices decline further in all regions with the sharpest decline found in the East Midlands and South East</li>\n</ul>","elementId":"b226e642-d5ff-42f1-b92b-8e26535bda6c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"My colleague Julia Kollewe explains:","elementId":"a77679da-c6a0-4557-b7e3-5d1d72deae51"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"<blockquote class=\"quoted\">\n The Rics survey measures the difference between the number of estate agents and property surveyors reporting increases and those experiencing decreases in different areas of the property market.\n The volume of fresh listings coming on to the market was also down, according to the survey, with a net balance of -14% respondents reporting a decline in new instructions during January.\n Meanwhile, the latest feedback on national house prices points to another monthly decline, as the net balance weakened further to -47% compared with a reading of -42% in December.\n All regions of England are seeing house prices retreat at present, with the sharpest drops reported across the east Midlands and the south-east.\n</blockquote>","elementId":"c6413435-3a38-4d33-84b1-ee9d8f40b637"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/2023/feb/09/uk-property-demand-house-prices-england-rics","text":"UK property demand declines as house prices in England fall","prefix":"Related: ","role":"thumbnail","elementId":"8b4756e5-245c-460f-90dc-48f2df0de3e6"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675928083000,"blockCreatedOnDisplay":"02.34 EST","blockLastUpdated":1675928122000,"blockLastUpdatedDisplay":"02.35 EST","blockFirstPublished":1675928122000,"blockFirstPublishedDisplay":"02.35 EST","blockFirstPublishedDisplayNoTimezone":"02.35","title":"UK property demand declines as house prices in England fall, says RICS","contributors":[{"name":"Julia Kollewe","imageUrl":"https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/contributor/2014/10/15/1413385261859/Julia-Kollewe.jpg?width=300&quality=85&auto=format&fit=max&s=1fd976c7e16b5325a5b81f24809000f7","largeImageUrl":"https://i.guim.co.uk/img/uploads/2017/10/06/Julia-Kollewe,-L.png?width=300&quality=85&auto=format&fit=max&s=23f212ea863acfa1e5744c02a3c246fd"}],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"},{"id":"63e492108f083986767057e9","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.","elementId":"6d5e6f40-30f2-4329-8f53-13c1f4d067bb"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"MPs are to quiz the Bank of England this morning, after the UK central bank<a href=\"https://www.theguardian.com/business/2023/feb/02/bank-of-england-raises-uk-interest-rates-to-4\"> raised interest rates for the 10th time in a row last week</a>.","elementId":"9f8a49d7-f5b7-4a4b-b645-d2ceea7909e5"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Treasury Committee are concerned that the Bank may be “behind the curve on inflation”, after it climbed to double-digit levels last autumn.","elementId":"97ce4bbd-5d14-46c3-a3af-5a11650b0444"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"MPs are likely to explore the outlook for inflation, and the chances of future interest rate rises. They may also touch on the dissent at the Bank – as only 7 of the 9 members of the Monetary Policy Committee supported last Thursday’s rate rise to 4%.","elementId":"4ea61d43-1c6f-417f-8f48-b8d3d4cab7df"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Other likely topics for discussion include how energy and commodity prices are impacting inflation, the Bank’s forecast of a UK recession and slow recovery, and how the MPC will handle the sale of the £875bn of government bonds on its books (the process known as quantitative tightening).","elementId":"23119a77-cfe9-4e7a-b275-53d4820e6cb2"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"BoE governor Andrew Bailey will be in the hot seat, alongside chief economist Huw Pill, and policymakers Silvana Tenreyro (who voted to hold interest rates at 3.5%) and Jonathan Haskel. The session begins at 9.45am.","elementId":"b3ae2ff6-d259-4394-8560-fbb632a26569"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"<blockquote class=\"twitter-tweet\">📣 On Thursday, we’re holding a session with the Governor of the <a href=\"https://twitter.com/bankofengland?ref_src=twsrc%5Etfw\">@bankofengland</a> and MPC members Huw Pill, Jonathan Haskel and Silvana Tenreyro on the February 2023 Monetary Policy Report. 🔎 Learn more about the session here 👇<a href=\"https://t.co/66LWfkQCm6\">https://t.co/66LWfkQCm6</a> <a href=\"https://t.co/b4IJLNfLbs\">pic.twitter.com/b4IJLNfLbs</a>— Treasury Committee (@CommonsTreasury) <a href=\"https://twitter.com/CommonsTreasury/status/1623339654333210625?ref_src=twsrc%5Etfw\">February 8, 2023</a></blockquote>\n","url":"https://twitter.com/CommonsTreasury/status/1623339654333210625","id":"1623339654333210625","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"7b26d188-8162-4fde-85f9-7c253cca72cb"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Since last week’s rate rise, <a href=\"https://www.theguardian.com/business/2023/feb/03/bank-of-england-must-not-push-interest-rates-too-high-its-chief-economist-says-huw-pill\">Pill has warned against raising borrowing costs too high</a>, while MPC member Catherine Mann has predicted the Bank could keep raising interest rates to prevent high levels of inflation from becoming entrenched in the economy.","elementId":"ff2743ab-354c-4465-85e2-9d2fe8d01f1c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Yesterday, the NIESR thinktank predicted the UK could avoid recession this year (the Bank, though, forecasts a contraction), but it may still feel like a recession to millions of households.","elementId":"71542f7f-e197-4c83-a8bb-3c244bb703bd"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The average middle-income household faces a hit to their personal disposable income of 13%, NIESR says, reaching up to £4,000 in the next financial year.","elementId":"f92189a1-9055-433e-b6c8-769bbb6a93f3"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/2023/feb/08/uk-households-to-suffer-4k-blow-to-finances-this-year-says-report?CMP=Share_iOSApp_Other","text":"UK households to suffer £4k blow to finances this year, says report","prefix":"Related: ","role":"thumbnail","elementId":"da172104-fd28-40e6-8995-b3417034d89e"},{"_type":"model.dotcomrendering.pageElements.SubheadingBlockElement","html":"<h2>The agenda</h2>","elementId":"3389b03e-51f1-4b3d-914d-c10fc3e089a8"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"<ul>\n <li>7am GMT: German inflation report for January</li>\n <li>8.30am GMT: Sweden’s Riksbank interest rate decision</li>\n <li>9.30am GMT: Latest UK economic and business activity data</li>\n <li>9.45am GMT: Treasury Committee question the Governor of the <a href=\"https://www.theguardian.com/business/bankofenglandgovernor\" data-component=\"auto-linked-tag\">Bank of England</a> and members of the Monetary Policy Committee</li>\n <li>1.30pm GMT: US weekly jobless data</li>\n</ul>","elementId":"5a0cef5d-821b-4086-8d3b-95083d6fd8f5"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1675928083000,"blockCreatedOnDisplay":"02.34 EST","blockLastUpdated":1675926952000,"blockLastUpdatedDisplay":"02.15 EST","blockFirstPublished":1675928083000,"blockFirstPublishedDisplay":"02.34 EST","blockFirstPublishedDisplayNoTimezone":"02.34","title":"Introduction: Bank of England faces grilling at parliament","contributors":[],"primaryDateLine":"Thu 9 Feb 2023 06.32 EST","secondaryDateLine":"First published on Thu 9 Feb 2023 02.34 EST"}],"filterKeyEvents":false,"id":"key-events-carousel-mobile"}">

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It’s not unreasonable to look for perfection from the Bank of England, says chief economist Huw Pill.

Pill, who joined the Bank in September 2021, tells the committee:

Of course we strive for perfection, but we will fall short.

Pill argues that the Bank has got “the big questions right” – by starting to raise interest rates at the end of 2021, and then accelerating that tightening in response to the energy shock.

Pill then warns of the risk of doing too much on interest rates, and ‘oversteering’ the economy.

Q: What would be the impact on inflation if the government agreed inflation-matching public sector wage claims, paid for through borrowing?

Andrew Bailey says this would cause a stimulation, due to fiscal effects. And the Bank would have to take that into account in its decisions.

Bailey says:

So yes, it would have an effect if we do that.

Q: Would that effect include higher interest rates?

Bailey says he only wants to “lay out the channels”, as this is a “very sensitive subject”. He’s not advocating government policy.

Bailey: inflationary impact of public sector pay rises depend on how it’s funded

Q: What are the inflationary risks from public sector pay rises? Would that fuel wider inflation?

Andrew Bailey says that there is “quite a big wedge” between public and private sector pay increases (with the public sector lagging far behind).

The impact of public sector pay rises, the governor explains, depend whether it is funded by borrowing or taxation.

Bailey says:

In terms of demand effects, it does depend how it’s funded.

Bailey says the Bank doesn’t want to wade into this territory, and he ‘isn’t advocating anything’, but…

The economics of it, depend whether you raise taxes or whether you borrow, frankly.

Andrew Bailey then defends last week’s interest rate increase, saying there is “substantial remaining uncertainty” over domestic inflation.

He cites the rise in inactivity in the labour market, as some workers (often the over-50s) have left the jobs market. That will lead to upward pressure on wages, as firms try to find workers.

Bailey says he does believe the UK has ‘turned the corner’ on inflation, but needs to see more evidence that this is happening.

Tenreyro: interest rates are too high.

Silvana Tenreyro is then asked why she voted to leave interest rates at 3.5% at last month, opposing the rate rise to 4%.

Tenreyro explains that monetary policy works with a lag – only a fifth of the previous monetary policy tightening have actually reached the real economy, she says.

“In my view, yes, rates are too high right now.

That’s why I didn’t support the vote.

Q: How confident is the Bank that inflation will fall this year, Conservative MP Anthony Browne asks.

Jonathan Haskel says the Bank’s forecasts, released last week, show inflation dropping from 10% at the start of 2022 to around 4% by the end.

We can be ‘reasonably confident’ that energy prices will fall, due to the way Ofgem’s price cap works, Haskel says.

But if there were another significant shock (as Andrew Bailey warned earlier), inflation could pan out differently.

Silvana Tenreyro agrees that the fall in GDP is pretty much guaranteed, due to the factors she explained earlier – unless there is an external shock.

Tenreyro says:

“Unless there is another big development that we don’t know about – and we have a massive energy shock or something that is not on the cards – then I think they fall in inflation is pretty much guaranteed.”

MPC member Jonathan Haskel points out that the Bank of England was worried about the Omicron variant of Covid-19 last winter.

Haskel reminds the committee that Omicron was a “major threat” at that time.

We now know that the vaccine was robust against Omicron, but we didn’t know that then.

Haskel explains that the Bank took advice from England’s chief medical officer, Chris Whitty, “the best advice in the land”.

Haskel says he asked Whitty what would happen if Omicron had escaped the vaccine, as had been feared when it emerged in South Africa.

Whitty explained that if that happened, the vaccine would need to be reengineered, which would take three to six months, and the vaccination programme would need to begin again. Fortunately that didn’t happen.

Tenrehro: Three reasons why inflation will come down

Q: The Bank’s monetary policy report shows services inflation at a new high. Haven’t second-order effects become much more deeply embedded in the economy, and won’t they be much harder to remove?

MPC member Silvana Tenrehro explains that to hit the Bank’s 2% inflation target, services inflation must come down, from 6.8% at present to 5%. That is possible, she says, for three reasons.

She explains that inflation in areas of services which are not energy-intensive has been below 5%. Naturally, as energy prices fall, there will be a direct slowdown in services inflation, she explains.

Second, there’s already signs of a slowdown in wage growth.

Thirdly – monetary policy will cool demand.

Professor Tenrehro explains:

We have tightened policy significnatly over the last year, and that’s going to have a large impact on demand and on the labour market.

That’s why the Bank is forecasting inflation will be below its 2% target in its latest forecast, she explains.

The Bank of England’s latest inflation forecasts

MPC policymaker Silvana Tenreyro tells the committee that the energy shock, not the tight labour market, was the main factor driving up inflation last year.

When inflation hit at 11% last year, eight percentage points came from energy. The remaining three percentage points came from services, she tells the committee.

So, to have inflation at the 2% target last year, service sector inflation would have been deeply negative – at around -15%, she has calculated.

Tenreyro explains to MPs that this would have required a major slump:

As you can imagine, deflation of 15% in services would require a massive recession, much bigger than after the great financial crisis.

Chief economist Huw Pill is now quizzed about his written testimony to the committee today, which points out that the Bank’s agents were flagging labour market tightness in autumn 2021 (leading to higher wage settlements), when the Bank was resisting raising rates.

Pill insists his testimony is consistent with Andrew Bailey’s explanation a few minutes ago for why the Bank didn’t start to raise interest rates until December 2021.

Pill says there were concerns that ending the furlough scheme would push up unemployment, with an estimated three-quarters of a million people on the programme.

Looking back…we faced a very specific and very uncertain environment in the labour market, associated with the end of the furlough scheme.

Pill says he favoured waiting for official unemployment data to come in, at the end of 2021, which showed that ending furlough had not pushed up joblessness.

Baldwin’s point is that there was contemporaneous evidence, from the Bank’s own agents around the UK, that the labour market was strong.

Bailey: We will get inflation down

Harriet Baldwin MP continues to challenge the Bank over its record in controlling inflation.

Andrew Bailey says the Bank of England was still ‘wrestling’ with the question about how transitory the shocks hitting the UK economy would be.

We changed our view on that as we went through the summer, the BoE governor adds.

Governor Bailey says he can “quite understand” the public polling.

Our job is to get inflation back down to target.

The public will, of course, expect us to do that. And we will do it.

I’d expect that to be reflected in public polling, he adds:

I would, of course, expect the public to say ‘it’s your job to get inflation down to target’ and my response is ‘yes it is, and we will do it’.

Baldwin won’t let the governor get away with that!

Bailey challenges this, insisting that there are plenty of first-round effects driving inflation at the moment.

The Bank expects annual inflation rate to fall this year, as ‘base effects’ unwind (as we catch up with price surges a year earlier).

Bailey predict inflation will be below 5% by the end of this year.

Please forgive the committee for being “slightly sceptical”, Baldwin shoots back, given how often the Bank’s projections have been incorrect in the past.

Governor Bailey: Judgements have been ‘very difficult’ amid several shocks

Treasury committee chair Harriet Baldwin begins, by reminding the Bank of England’s top brass that inflation is five-times over their 2% target, with food inflation over 16%.

Q: Do you accept that the Bank has made mistakes in this tightening cycle, and raised rates too late and too slowly, so it will be harder to bring inflation back to target?

Governor Andrew Bailey says the Bank doesn’t have the benefit of setting policy with hindsight, and embarks on a long defence of the Bank’s strategy.

There have been several ‘very big shocks’ hitting the economy in the last three years, he points out. He cites the “supply chain shock” when the recovery from Covid began.

That shock peaked at the end of 2021, he says.

But, two other big shocks also hit the economy – including the Russia-Ukraine war, which has been the ‘dominating’ shock this year. He doesn’t think anyone could have predicted this conflict, until close to it actually happening.

Inflation is still expected to fall rapidly this year, Bailey says.

The third shock, Bailey says, is the UK’s labour market, where there has been a decline in labour market participation.

Bailey tells MPs:

We’ve got a very tight labour market, We’ve had a fall in participation and it hasn’t recovered.

Baldwin challenges this argument, pointing out that Bailey told the committee in May 2021 that there were “hotspots” in the economy. And yet the Bank left interest rates at the record low of 0.1% until the end of 2021, and kept its quantitative easing stimulus programme.

Bailey says these hotspots were due to the global supply chain shock, and the reopening of the UK economy. The Bank felt they were tempory, transient, effects, rather than permanent.

But, Baldwin points out, inflation had hit 5.1% by November – then the governor said he was ‘very uneasy’ about the situation, but the Bank left rates at 0.1% until December.

Bailey says the Bank was watching for the impact of ending the pandemic furlough scheme, and the effect of the Omicron, at the end of 2021.

He says the Bank has faced some ‘very difficult’ judgements, telling the committee:

We were seeking to balance these various conflicting and countervailing presures at that time, and to assess what was happening in the labour market as the million jobs on furlough unwound.

Those were very difficult judgements.

Bailey adds that the Bank of England was the first major central bank to start tightening monetary policy (when it raised rates to 0.25% in December 2021). Other central banks were facing these multiple shocks too.