Russian state energy giant Gazprom has declared force majeure on some of its gas supplies to Europe as Putin took a step closer to turning off the taps completely.
A letter from Gazprom, seen by Reuters, argues that the company cannot fulfil its supply obligations because of “extraordinary” circumstances.
It said the force majeure clause, which is used to shield a business from factors beyond its control, was retroactively effective for deliveries starting from June 14.
The letter is said to refer to supplies through the Nord Stream pipeline to Germany, which is currently shut for planned maintenance.
The move will fuel fears of a total cut-off in Russian gas supplies. Countries across Europe are racing to refill storage sites ahead of winter amid concerns shortages will lead to rationing and blackouts.
That’s all from us today, thank you for following on such a hot day. Before you go, have a look at the latest stories from our reporters:
FTSE 100 closes in the green
The FTSE 100 has closed in the green, lifted by commodity stocks and an upbeat global mood.
The index ended 0.9pc higher at 7,223 after rising as much as 1.5pc.
European markets trimmed some early gains after Russia’s Gazprom declared force majeure on gas supplies to Europe to at least one major customer.
“What we’re seeing is just the spillover effect from the Friday rebound,” said Michael Hewson at CMC Markets UK.
“We still have to be cautious about it because there are a lot of moving parts as can be seen from the story of Gazprom calling force majeure.”
Hundreds of millions of pounds needed to meet UK heat pump targets, warns National Grid
Plans to install millions of heat pumps to replace gas boilers are “insufficient” and risk missing the Government’s net zero targets, National Grid has warned. Matthew Field reports:
The UK is currently installing just 60,000 pumps per year, 90pc less than the Government’s target of installing 600,000 heat pumps annually by 2028, National Grid’s electricity system operator (ESO) said.
Meanwhile, it warned that government subsidies of £450m will only support 90,000 installations which could lead to a shortfall in heat pumps that risks slowing the UK’s efforts to cut carbon emissions.
Heat pumps take warm air from outside of a home and pump it inside, cutting out the need for a gas-powered heating boiler.
Microsoft president says labour squeeze caused by plummeting population growth
US companies are facing a “new era” in which fewer people are entering the workforce and pressure to pay higher salaries may become permanent, Microsoft’s president Brad Smith told Reuters in an interview.
Smith said that plummeting population growth in the US, Europe, China and Japan has contributed to today’s “greater economic turbulence”.
The US working age population had been expanding by five million people every five years since 1950, but between 2016 and 2020 the number was two million people, and this trend is slowing further.
Smith said: “That helps explain part of why you can have low growth and a labor shortage at the height at the same time. There just aren’t as many people entering the workforce.”
Luton Airport suspends flights
Luton Airport has suspended flights today due to a runway defect discovered amid high temperatures across the country.
That’s all from me for today – thanks for following! Handing over to Giulia Bottaro now.
Union spends three-day Royal Mail strike
Union bosses have called off a three-day strike by managers at Royal Mail as talks continue.
Almost two-thirds of Unite’s 2,400 members voted to accept a new proposal by the company on jobs, pay and conditions, meaning negotiations will resume.
The strikes had been scheduled to begin on Wednesday.
Mike Eatwell at Unite said:
Unite’s members today have accepted the senior management’s return to the negotiating table to improve upon the jobs already put back into the crucial delivery and collections services.
Royal Mail’s changed approach is noticeable but there is further to go.
BAE to work on the first new supersonic fighter jet in almost 40 years
BAE Systems is to begin work on its first supersonic fighter jet prototype in almost 40 years as part of its Tempest programme.
Howard Mustoe reports from Farnborough Air Show:
The defence giant will develop a sixth-generation warplane to replace the Eurofighter Typhoon. The flying prototype will be a venture between BAE and the Ministry of Defence – separate to the wider Tempest programme, which also involves Italy’s Leonardo.
Separately, the Government announced on Monday that the UK is conducting “joint concept analysis” with Japan. That could see the nation eventually join the Tempest fighter jet programme. Japan offers both considerable technology experience and financial weight.
Developing a prototype is seen as a key step in testing the planned design of the new fighter jet. BAE’s predecessor, British Aerospace, made a demonstrator in 1986, which was ultimately developed into the Typhoon. That was the last time the UK built a supersonic fighter prototype.
Herman Claesen, managing director of future combat air systems at BAE, said the new prototype could propel the company’s technology forward in similar-sized leaps to the development of the jet engine or the Concorde passenger jet.
EU to double gas deliveries from Azerbaijan
The EU has inked a deal to double its imports of natural gas from Azerbaijan as the bloc races to wean itself off Russian energy.
Ursula von der Leyen, European Commission President, said: “Today, with this new Memorandum of Understanding, we are opening a new chapter in our energy cooperation with Azerbaijan, a key partner in our efforts to move away from Russian fossil fuels.”
Imports from Azerbaijan will be raised to at least 20bn cubic metres a year by 2027.
It comes as Europe tries to find new sources of energy amid fears Putin could turn off the taps. Before its invasion of Ukraine, Russia accounted for around 40pc of the continent’s energy supplies.
The EU is turning to trustworthy energy suppliers.
Azerbaijan is one of them.
With today’s agreement, we commit to expanding the Southern Gas Corridor, to double gas supplies from Azerbaijan to the EU.
This is good news for our supplies of gas this winter and beyond. pic.twitter.com/j1sVcv10z6
— Ursula von der Leyen (@vonderleyen) July 18, 2022
Electricity to become cheaper on very windy or sunny days
Households will save money on their energy bills by using more electricity at off-peak times and on particularly windy or sunny days, under government plans.
Helen Cahill has more:
Customers will be given incentives for using electricity when more renewables are supplying energy to the grid as part of energy market reforms announced by ministers.
The Department for Business, Energy and Industrial Strategy (Beis) plans also include reducing household bills by decoupling electricity prices from gas prices.
Under the current system, the price of electricity for consumers is effectively determined by the wholesale cost of gas. The Government hopes to prevent a cost-of-living crisis in future years by severing the link between the two.
The reforms come after the price of wind power fell to a record low due to competition among wind farm developers. Energy companies have agreed to build new wind farms for a guaranteed electricity price of £37.35 per MWh, down from a price of £120 per MWh in 2015.
Wall Street rises as rate bets ease
Wall Street’s three main indices pushed higher in early trading as traders pared back bets on interest rate rises and digested the latest bank earnings.
Goldman Sachs jumped as much as 5pc even after its second-quarter profits halved. Bank of America also gained as its net interest income rose.
The benchmark S&P 500 was up 0.8pc, while the Dow Jones and Nasdaq both gained 0.9pc.
Judge orders review of Facebook’s forced Giphy sale
Judges have ordered the Competition and Markets Authority to take another look at its ruling that forced Meta to sell off GIF search engine Giphy.
In a victory for the social media giant – and embarrassing setback for the regulator – a judge quashed the ruling and said the CMA must reconsider whether the deal would reduce competition in the market for display advertising and social media services.
The CMA said it will aim to complete the review within three months.
Meta has been stuck in a dispute with the regulator since it was ordered to unwind its $315m takeover of Giphy. It was the first time a regulator has tried to force a Big Tech firm to undo a completed deal.
Petrol will be £10 a tank cheaper within a fortnight, AA says
The cost of filling up a car is set to be £10 cheaper within a fortnight as spiralling petrol and diesel prices finally begin to come down.
Laura Onita has more:
Motoring group AA said the price of petrol had dropped by 2.8p a litre from record highs, knocking £1.50 off the price of a tank of fuel.
Drivers are likely to fork out £10 less a tank in the coming weeks as wholesale prices continue to fall. Wholesale petrol peaked above £1 a litre on Jun 1 but fell below 80p a litre for much of last week. That indicates a fall of as much as a 20p a litre at the pump within a fortnight.
Luke Bosdet at the AA said: “Wholesale petrol’s trajectory, if sustained, would lead to savings from the record highs – providing the fuel trade is prepared to pass them on.
“So far this morning, even with oil rebounding, wholesale petrol remains below 80.5p a litre.”
Mr Bosdet added: “The problem is that, in many places, the price cuts are quite simply not happening despite more than six weeks of falling costs.”
Bank of America loan revenue rises as rates increase
The other set of major Wall Street results comes from Bank of America.
The lender posted an increase in net interest as it cashed in on higher interest rates, but its second-quarter results were hurt by higher expenses related to regulatory settlements.
Net interest income – a key source of revenue for the bank – rose 22pc to $12.4bn (£10.4bn) in the second quarter on higher rates and loan growth.
However, BoA’s non-interest expenses rose 1.5pc to $15.3bn, which it blamed on “certain regulatory matters”.
The bank is expected to pay a $200m fine related to a sweeping US probe into the use of unapproved personal devices, Bloomberg reports. That’s the same fine amount JPMorgan and Morgan Stanley have disclosed in the investigation.
Brian Moynihan, chief executive of BoA, said:
Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital-markets environment.
Uniper asks to increase loan after drawing down €2bn
Earlier, we reported that German gas giant Uniper had been forced to take out an emergency €2bn (£1.7bn) loan as it grapples with the fallout from the energy crisis.
Now it seems Uniper is looking for more. Bloomberg reports that the company, which is Europe’s largest buyer of Russian gas, has asked to increase the size of the credit facility with state-owned lender KfW Group.
It comes amid ongoing discussions between Uniper and the German Government about a potential state bailout.
Uniper has just summitted an application with the German government “to increase” the size of the KfW credit facility after fully drawing the €2 billion line.
— Javier Blas (@JavierBlas) July 18, 2022
Fresh rail strikes loom as Network Rail refuses to raise pay offer
Network Rail has insisted it will not improve its pay deal for staff in an ultimatum that raises the spectre of strike action lasting throughout the summer and into the autumn.
Oliver Gill has more:
Andrew Haines, chief executive of the state-backed owner of tracks and stations, has today told staff that there are “no significantly better deals”.
In an internal email to staff, seen by The Telegraph, Mr Haines said that last week’s pay offer of an average of 5pc is the best Network Rail can offer.
“Anyone who truly believes that there can be a pay offer that meets or exceeds the highest levels of inflation for a generation, is not being realistic,” he said.
The Rail, Maritime and Transport workers union (RMT), the protagonist of the industrial action to date, rejected the Network Rail deal and announced a fresh wave of walkouts on July 27, and August 18 and 20.
Drivers union Aslef will also strike on July 30.
Goldman Sachs profit nearly halves
Goldman Sachs’ profit nearly halved in the second quarter as dealmaking slumped, weakening the Wall Street giant’s investment banking business.
The bank reported profit of $2.8bn (£2.3bn) for the three months to the end of June, compared to $5.3bn last year.
Investment banking was weighed down by a plunge in underwriting activity and deals, which were stalled by a risk-averse sentiment that has swept across global markets.
However, faced with uncertainty due to an aggressive Federal Reserve looking to curb inflation and the Ukraine war, clients looked to rebalance their portfolios, boosting trading activity.
Net revenue stood at $11.9bn for the second quarter – 23pc lower than a year earlier.
Cinema chain Vue to be taken over by lenders
Cinema chain Vue is set to be taken over by a group of lenders in a restructuring deal for part of the company’s £700m debt pile.
Barings, Farallon Capital Management, Invesco, PGIM Investments and Lord Abbett & Co will swap a portion of the debt they own in the company for equity.
Meanwhile, Vue’s Canadian pension fund owners will exit the company, Bloomberg reports. They took control of the chain in 2013 in a £935m deal.
Vue, which has 228 sites across nine European countries, was among the cinema chains to suffer a sharp downturn during the pandemic.
As part of the agreement, the company will convert £465m of debt into equity and receive a cash injection of £75m to cover a funding gap that’s expected later this year, according to the report.
US futures rise ahead of more bank results
US futures are in positive territory this morning as traders scale back bets on interest rate rises and look ahead to more results from major Wall Street banks.
Upbeat results from Citigroup helped to boost sentiment on Friday, while comments from several Federal Reserve officials have eased worries about a 100 basis-point rise in rates.
All eyes will now be on Bank of America and Goldman Sachs, which are both expected to post a drop in quarterly profits.
Futures tracking the S&P 500 gained 1pc, while the Dow Jones was up 0.9pc. The tech-heavy Nasdaq jumped 1.2pc.
Russia Today broke broadcasting rules nearly 30 times
Russia Today broke impartiality rules nearly 30 times before it was pulled from the airwaves.
That’s according to new 525-page report from regulator Ofcom outlining the Kremlin-controlled channel’s coverage of Russia’s invasion of Ukraine.
The watchdog had launched 29 investigations into RT in late February and early March after complaints from viewers and its own monitoring of the channel.
Ofcom, which suspended RT’s licence in March, said: “Ofcom considers that these breaches were serious and repeated, and we are minded to consider them for the imposition of a statutory sanction.”
RT said: “The logic of these decisions mirrors the one guiding their delivery many months after Ofcom’s revocation of RT’s licence: it is a trial after a conviction.”
Sky News cancels Tory leadership debate
Sky News has been forced to cancel tomorrow’s debate between the Tory leadership contenders after two candidates backed out.
Former Chancellor Rishi Sunak and Foreign Secretary told the broadcaster they would not take part in the debate.
It comes amid concerns about the impact on the Conservative Party as the rivals launched attacks on one another during a series of TV debates.
The five remaining contenders went head-to-head on ITV last night and on Channel 4 on Friday.
NatWest unveils £1.25bn support package for farmers
NatWest has announced a £1.25bn package to help farmers cope with the soaring costs of energy and fertiliser, writes Patrick Mulholland.
The bank, the UK’s biggest for agriculture finance, will deploy funds through a series of measures, including loans, asset finance, and increased overdraft limits.
Farms are facing inflation far in excess of the headline figure of 9.1pc. NatWest, which has 40,000 farmers as customers, estimates that agricultural businesses are experiencing inflation closer to 25pc due to their sensitivity to changes in commodity prices.
The price of fertiliser and fuel is soaring as a result of the war in Ukraine, while the cost of a raft of other inputs, including feed, electricity, and seeds is also rising rapidly.
According to Farmer’s Weekly, the cost of nitrogen fertiliser has increased almost threefold to £750 per tonne over the last year.
Pound jumps 1pc as dollar weakens
Sterling has surged against a weakening dollar this morning as markets scaled back their bets on more Federal Reserve interest rate rises.
After hitting its lowest level in two years last week, the pound gained 1pc against the dollar to $1.1974 this morning. Against the euro, it edged up 0.3pc to 84.76p.
The decline in the dollar comes after several Fed officials said they didn’t support an acceleration in the pace of rate rises.
But the pound’s progress is still being curbed by political uncertainty following Boris Johnson’s departure, as well as fears Britain could be tipped into a recession.
Eurostar scoops up passengers amid airport chaos
With airports embroiled in travel chaos, more and more business passengers are taking the train.
Eurostar International said corporate customer numbers had rebounded to 70pc of pre-Covid levels, even though it’s still offering only 75pc of its 2019 timetable.
Francois Le Doze, chief commercial officer, said: “Business travel has resumed faster than we expected. We are confident that this trend will continue after the summer.”
It comes as airports including Heathrow, Gatwick, Amsterdam Schiphol and Paris Charles de Gaulle have been left reeling from widespread delays, cancellations and strikes.
Eurostar already controls 80pc of the direct travel market between London and both Paris and Brussels, but it’s targeting a bigger share on its new Amsterdam route with the introduction of a fourth daily round trip from September.
UK audit reform facing five-year delay, warns watchdog
Reform of the UK audit sector has been a long time coming, but the wait could get even longer.
That’s according to the head of the accounting watchdog, who warned political troubles and a lack of civil service capacity meant the reforms might not arrive before 2027.
Jon Thompson told Bloomberg: “There’s a problem over the civil service’s ability to do this.”
Mr Thompson, who took charge of the Financial Reporting Council in 2019 following the collapse of Carillion, pointed out that the Government’s audit reform proposals took a year to draft and will require complex legislation.
The recommendations include replacing the FRC with a more powerful regulator – the Audit, Reporting and Governance Authority.
They would said the Big Four – Deloitte, EY, KPMG and PwC – should be forced to split their audit and consulting arms.
Mr Thompson said he was told the ARGA would be set up by 2022, but Brexit, the pandemic and now the ousting of Boris Johnson had delayed the process.
Second-class stamp prices capped amid soaring inflation
The price of second-class stamps will be capped as part of new rules to modernise Royal Mail and protect consumers from soaring inflation.
Regulator Ofcom set out its guidelines for its oversight of the company over the next five years, which also included annual delivery targets.
Lindsey Fussell at Ofcom said:
Deliveries are part and parcel of our daily lives. But the customer service that some people have been getting when a delivery goes wrong simply hasn’t been good enough. So we’re strengthening our regulations to make sure people are treated fairly by delivery firms.
If we’re not satisfied with how parcel companies respond, they could face enforcement action or tighter rules in future.
UK to build world’s biggest drone superhighway
Britain is set to become home to world’s largest automated drone superhighway in the next two years.
The drones will be used on the 164-mile Skyway project connecting towns and cities including Cambridge and Rugby, the BBC reports.
It’s part of a £273m funding package for the aerospace sector due to be unveiled by Business Secretary Kwasi Kwarteng at Farnborough Air Show today.
Other projects include drones delivering mail to the Isles of Scilly and medication across Scotland.
Playtech rises on reports of fresh Eddie Jordan takeover bid
Playtech shares have pushed higher this morning following reports former Formula One boss Eddie Jordan is weighing up a second takeover approach.
Mr Jordan, who came close to making a 750p-per share offer for the FTSE 250 company earlier this year, is now considering a fresh bid, the Times reports.
It comes after Hong Kong consortium TTB Partners last week backed out of its takeover bid. That’s the second deal to fall through.
Shares in Playtech rose 7.6pc.
A Germany without Russian gas will be forced to put the brakes on its electric car dreams
Germany’s dependency on Russian gas is causing it a whole host of problems – not least for its electric vehicle push.
Howard Mustoe reports:
Germany’s addiction to Russian gas imports is threatening its car electrification ambitions as the prospect of Russian President Vladimir Putin cutting supplies becomes more realistic.
That could halt German production lines, with the ripple impact of wider economic harm.
A 10-day planned maintenance of the Nord Stream 1 pipeline, which can send more than 10pc of the EU’s typical annual demand, is due to end on July 21. But German officials admit they are preparing for a “difficult situation” of gas shortages amid uncertainty over if or when supplies will return.
About a quarter of Germany’s energy needs come from natural gas and about a third of its gas comes from Russia. A permanent cut off from Russia could tip Berlin’s precarious economy into recession, shrinking the economy by 2pc to 10pc, predicts Carsten Brzesky, chief economist at ING Germany.
“The German economy is already at the brink of recession,” he says. “It won’t need a lot more to really push it into a severe recession.”
H&M to pull out of Russia
Retailer H&M has become the latest major company to pull out of Russia in the wake of its invasion of Ukraine.
The Swedish retailer, which halted all sales in the country in March, expects to book costs of around 2bn krona (£161m) from the move.
It plans to reopen its shops in Russia for a limited time to sell off its remaining inventory.
Helena Helmersson, chief executive of H&M, said: “After careful consideration, we see it as impossible given the current situation to continue our business in Russia.”
H&M’s Russian business accounted for about 4pc of its sales during the last financial year.
In March its head of investor relations, Nils Vinge, said it was “no secret that Russia was one of the most important growth markets of the company”.
Direct Line and Admiral slump amid inflation fears
It’s a bad morning for insurance companies, which are feeling the heat from soaring inflation.
Direct Line fell as much as 14pc after it issued a profit warning as the rising price of spare parts pushed up the cost of claims.
It said claim costs had jumped 10pc – higher than expected and outstripping the growth in premiums.
That had a knock-on effect on Admiral, which slumped more than 8pc to linger just above the bottom of the FTSE 100.
It comes a week after rival Sabre warned on profits due to the rising cost of claims.
Euromoney snapped up in £1.6bn private equity takeover
Let’s take a closer look at the Euromoney deal, which has pushed the company to the top of the mid-cap index.
The financial news and information provider this morning said it’s inked a takeover by a private equity consortium worth around £1.6bn.
Euromoney investors will receive £14.61 per share from Luxembourg-based private equity manager Astorg Asset Management Sarl and British firm Epiris.
The deal is a 34pc premium to Euromoney’s share price on June 17 – the day before the discussions were disclosed.
The buyout companies will separate Euromoney into two businesses, hiving off commodity pricing data business Fastmarkets to become a stand-alone unit that will be owned by Astorg.
The remaining Euromoney businesses will be majority controlled by Epiris.
Shares in Euromoney jumped almost 10pc to the top of the FTSE 250.
FTSE risers and fallers
It’s a strong start to the week for the FTSE 100 as the mood picked up among global investors.
The blue-chip index gained more than 1pc in early trading, with commodities and banks pushing higher.
GSK spin-off Haleon started trading at 330p, giving it a market valuation of around £31bn in the biggest London listing in a decade. Shares in GSK tumbled 19pc to the bottom of the FTSE 100.
The domestically-focused FTSE 250 rose 0.9pc. Euromoney was the biggest riser, up 9.5pc after a £1.7bn takeover offer from French investment firm Astorg Asset Management.
Direct Line dropped 14pc after it issued a profit warning. This also dragged down FTSE 100 rival Admiral Group.
New Zealand inflation hits 30-year high
New Zealand’s inflation rate has surged to its highest in three decades, marking a fresh blow for Prime Minister Jacinda Ardern.
The consumer price index increased 7.3pc in the second quarter. That’s up from 6.9pc in the first three months of the year and marks the fastest rate of inflation since 1990.
The New Zealand dollar shot up 0.5pc on the back of the figures amid growing expectations that the Reserve Bank of New Zealand bank will raise rates in August.
Most economists expect the central to raise rates by 50 basis points next month but the hotter-than-expected inflation has fuelled speculation that it could follow global peers in delivering an even bigger hike.
EDF shareholders to sue France over nationalisation plan
A group of EDF employee shareholders is poised to sue the French state over its plan to nationalise the energy giant.
The association, dubbed “Energie en actions”, said: “Today the state needs to explain itself for the management as ultra-majority stakeholder of the company.”
It said the Government’s decision went against the interests of the company and minority shareholders.
France, which already owns 84pc of EDF, has announced plans to take full control of the company as it grapples with the energy crisis sparked by Russia’s invasion of Ukraine.
The Government has until tomorrow to outline details of the plan.
Johnson Matthew to build £80m UK gigafactory
Johnson Matthew has unveiled plans to build an £80m gigafactory at its existing site in Royston as it scales up production of hydrogen fuel cell components.
The plant, which is expected to open in the first half of 2024, will initially be capable of manufacturing 3GW of proton exchange membrane fuel cell components for hydrogen vehicles.
The Hertfordshire site is being built with customer deals already in place after the company’s expensive, speculative push into battery technology backfired.
FTSE 100 opens higher
The FTSE 100 has started the week on the front foot as traders turn their attention to more data this week that will give indications on the health of the economy.
The blue-chip index opened 0.8pc higher at 7,213 points.
GSK spins off £45bn Haleon in biggest European listing in a decade
GSK will today spin off its consumer health business in the biggest European listing in a decade.
The new company, dubbed Haleon, becomes the world’s biggest standalone consumer health business, home to brands including Sensodyne toothpaste and Advil painkillers.
Haleon shares will trade under the ticker “HLN” on the London Stock Exchange. It’s expected to be valued at about £45bn.
GSK, meanwhile, will become New GSK, focused solely on vaccines and prescription drugs. The new business has been buoyed by recent clinical trial successes, including its potential blockbuster RSV vaccine, and a cash boost from the consumer health spin-off.
With the split complete, all GSK shareholders receive one Haleon share for each GSK share they own.
GSK shares will trade excluding the value of the consumer healthcare business today, so its price will likely drop.
After close of trading, GSK will consolidate its share price, returning it to roughly the same as before the demerger.
Deliveroo slashes forecast as sales slow
Deliveroo has slashed its forecasts for sales growth this year as Brits begin to cut back on takeaways amid a squeeze on household budgets.
The London-based food delivery firm said gross transaction value was expected to rise by between 4pc and 12pc this year. That’s down from previous forecasts of between 15pc and 25pc.
The reduction comes after gross transaction value rose just 2pc in the second quarter – a marked slowdown from the 12pc growth recorded in the first three months of the year.
Shares in Deliveroo have plunged nearly 60pc this year as investors turn away from fast-growing and loss-making businesses.
The company is now ramping up efforts to turn a profit, rolling out an advertising platform as it looks to break even in the next few year.
Think tanks risk driving UK into recession
Britain could be plunged into recession if the Government gives in to trade unions’ excessive pay demands.
That’s according to the Institute of Economic Affairs, which warned large pay rises risked pushing up public sector borrowing, which in turn would lead to higher inflation and faster interest rate rises.
Len Shackleton at the IEA said pay rises of 4pc to 5pc may be bearable, but if ministers offer sums heading towards the double digits it risks turning dangerous.
Frances O’Grady, TUC General Secretary, said: “An economy can only grow if people keep spending”, adding that the next prime minister “must put real wage growth ahead of tax cuts for the wealthy”.
5 things to start your day
1) Christine Lagarde readies a new weapon to save the eurozone from debt crisis – Pressure is mounting ahead of next week’s crucial ECB meeting
2) TSB faces £800m legal battle over claims it charged ‘excessively high’ mortgage rates – Around 200 homeowners are taking TSB’s Whistletree brand to court for claims of overpaid interest
3) Fresh loans for businesses to be unleashed as recession looms – Whitehall sources expect the loan to be signed off by the Treasury in the coming days
4) Britain’s space industry at tipping point ahead of first satellite launch in half a century – UK to focus on building smaller, lower-cost satellites and growing the private sector’s ability to launch them into space
5) FTSE 100 engineer to build £60m hydrogen factory in the UK to supply carmakers – Johnson Matthey’s hydrogen gigafactory is expected to create hundreds of jobs
What happened overnight
Shares were higher in Asia this morning after Wall Street capped a week of losses with a broad rally for stocks Friday.
Hong Kong’s Hang Seng index climbed 1pc to 20,507.34, while the Shanghai Composite index gained 0.7pc to 3,251.54.
In Seoul, the Kospi rose 1.4pc to 2,363.36. and Australia’s S&P/ASX 500 added 0.5pc to 6,637.50.