More travel chaos looms as thousands of Network Rail staff threaten new strike – live updates

While stocks are regaining some composure this morning, cryptocurrencies are having another torrid day.

Bitcoin delivered another wild ride for investors, crashing 10pc before paring most of its losses as markets struggled to price in the prospect of Federal Reserve interest rate rises.

The largest digital token rebounded from a $2,386 intraday drop to trade only marginally lower. Ether also trimmed its losses.

Notoriously volatile cryptocurrencies are among the biggest losers as investors flee risky assets amid a tightening of monetary policy by central banks around the world.

ITV has bought a majority stake in the production company behind Hostile Planet and Night on Earth as it looks to fend off competition from streaming rivals such as Netflix.

The broadcaster acquired a 79.5pc stake in Plimsoll Productions in a deal worth around £103.5m.

The Bristol-based natural history programme maker was formerly owned by private equity firm LDC, founder Grant Mansfield and other existing shareholders.

ITV also has the option to acquire the remaining 20.5pc in Plimsoll in future for up to £79.5m, with the final price dependent on its profit performance over the next four-and-a-half years.

Plimsoll has also made series behind series including Tiny World and Giant World for Apple+, Hostile Planet and Supernatural Planet for Disney, and ITV’s forthcoming A Year On Planet Earth.

The head of Britain’s fastest-growing petrol forecourt operator has accused supermarkets of profiteering at the pumps as prices leap to fresh highs.

Oliver Gill has the story:

Darren Briggs, chief executive of Ascona Group, said companies such as Tesco, Sainsbury’s, Morrisons and Asda are failing to pass on savings to drivers despite buying in fuel more cheaply than independent rivals.

But Asda hit back, saying it is the “price leader” and was the first forecourt operator to pass on cuts to fuel duty.

Mr Briggs welcomed a competition inquiry into forecourt pricing, yet criticised Boris Johnson for making petrol station operators a “scapegoat” of the ongoing energy crisis.

He said that the amount of verbal abuse directed towards his staff had risen since the Prime Minister pledged to crack down on “rip-off” prices at the pumps.

Read Ollie’s full story here

Confidence in the German economy has picked up slightly, but Europe’s biggest economy remains mired in pessimism as investors brace for a further deterioration.

The ZEW institute’s expectations gauge rose to -28 in June, missing estimates but an improvement on the previous month. An index of current expectations also gained.

Achim Wambach, ZEW President, said: “The economy is still exposed to numerous risks, such as the effects of the sanctions against Russia, the unclear pandemic situation in China and the gradual change of course in monetary policy.

“Although expectations have improved, they are still deep in negative territory.”

Sterling has edged back up from its two-year low against the dollar as markets regained some composure following yesterday’s sell-off.

The pound crashed to its lowest since May 2020 at the beginning of the week as lacklustre GDP data showed a slowdown in the economy.

It regained some ground today, but the currency remains on the backfoot after the latest jobs data boosted expectations of a 25 basis-point interest rate rise by the Bank of England, rather than a more aggressive 50 point increase.

The pound rose 0.3pc against the dollar to $1.2170. Against the euro, it was down 0.2pc to 85.90p.

Petrol and diesel prices rose to fresh record highs yesterday – just as the Government said it was killing off the last remaining subsidies for electric vehicles.

Average pump prices for petrol rose to 185.44p a litre yesterday, while diesel hit 191.21p, according to the latest AA figures.

The Department for Transport said the £300m grant programme was closing to new orders today, adding that the move would free up cash to expand the charging network and encourage sales of other battery-powered vehicles, such as vans, taxis and motorcycles.

Edmund King, AA president, said:

The latest plug-in grant of £1,500 for EVs costing under £32,000 has been essential for many drivers making the switch from petrol and diesel. The plug has been pulled at the wrong time on this important grant before many users, still waiting for delayed EVs due to global shortages, have made the change.

The numbers of drivers, and indeed many fleets, planning to make the switch to EV accelerated due to the rising pump price. They may now back out until they can find more cash.

With record prices at the pumps and households budgets already stretched, removing the last incentive to go electric could stall this important move to electrification and helping drivers to escape the fossil-fuel-price nightmare once and for all.

Transport giant FirstGroup has reported a boost to profits as it cut costs and cashed in on rising passenger numbers.

The train and bus operator posted adjusted operating profits of £226.8m for the year to March 26, up from £220.2m in the previous year. Revenues fell to £5.6bn from £6.8bn a year earlier, due to disposals.

FirstGroup said profit from continuing operations – which accounted for the sale of its US Greyhound coach business – surpassed its expectations for the year thanks to rising bus and rail passengers.

It also inked a new three-year contract for its Great Western Railway division.

The positive update comes a week after the company rejected a £1.2bn takeover proposal from an American serial suitor, Miami-based I Squared Capital Advisors, for being too low.

Mims Davies, Minister for Employment, has issued her response to today’s labour figures.

Today the unemployment rate remains close to a 50-year low, and still below pre-pandemic levels, with almost 2m more women in work than 2010. That’s fantastic news, but there’s more to do. 

Work is the best way for people to provide for their families – those going into full time employment could be at least £6,000 better off than out of work on benefits. That’s why we’ve launched the Way to Work campaign to get half a million more people into jobs.

From job opportunities in Jobcentres to skills bootcamps for people considering a new industry, there’s a huge amount of help out there, and our Work Coaches are working tirelessly to get people at any age, or career stage, into fulfilling and stable employment.

We’re also focused on helping people on the lowest incomes with the rising cost of living, including through changes to Universal Credit and rise in the National Living Wage.

David Buttress made his name as the founder of Just Eat, but now he’s been handed an even bigger challenge to deliver: finding ways to soften the blow of the cost-of-living crunch.

Mr Buttress, who’ll take up the title of cost-of-living business czar, will work with the private sector to develop “business-led initiatives” to help consumers, the Cabinet Office said. That includes setting up new product offers of price discounts.

It comes as Boris Johnson faces mounting pressure to do more to shield consumers from the squeeze on household budgets, which has been fuelled by soaring energy prices.

Mr Buttress started Just Eat’s UK operation in 2006 and was its chief executive between 2013 and 2017. He is an angel investor and is currently a venture partner at 83North.

Housebuilder Crest Nicholson has revealed it was pushed to a loss in the first half of the year after pledging to fix safety issues on tower blocks.

The company reported a loss before tax of £52.5m for the six months to April after recording an exceptional charge of £105m.

That wiped out growth in sales and prices as the UK’s new-build housing market boom continued even as rising rates and a cost-of-living squeeze threaten to damp demand. 

The UK’s biggest housebuilders have pledged to cover part of the billions of pounds in costs required to fix unsafe cladding in the wake of the Grenfell Tower fire.

Peter Truscott, chief executive of Crest Nicholson, said:

We are pleased to have reached a resolution with the government by signing the Building Safety Pledge.

We hope this now provides comfort and assurance to affected residents and stakeholders. It also allows the group to move forward in remediating the affected buildings directly or through another party as soon as possible.

Elon Musk will speak to Twitter employees for the first time since launching his troubled $44bn (£36bn) takeover bid.

A company-wide meeting is scheduled for Thursday, and Mr Musk will take questions directly from Twitter staff. It comes after the social media company last week said it expected a shareholder vote on the sale by early August.

Ever since the Tesla billionaire launched his takeover efforts, many Twitter employees have expressed concerns that his erratic behaviour could destabilise the business and hurt it financially.

Chief executive Parag Agrawal was forced to field angry questions during a company-wide meeting in April, where staff demanded answers to how managers planned to handle an anticipated mass exodus prompted by Musk.

The FTSE 100 has steadied in early trading after economic woes dragged shares down for the fifth straight session of losses.

The blue-chip index pared early gains to settle 0.3pc higher, with a boost from financial stocks and some strong corporate results.

HSBC was the biggest driving force behind the gains, rising 2.8pc. Lloyds, Barclays and Standard Chartered also pushed higher.

Oil giants BP and Shell also provided a boost as they tracked commodity prices higher.

The domestically-focused FTSE 250 was up 0.4pc, with Crest Nicholson jumping 6pc even after it swung to a loss in the first half of the year.

Asian shares slid sharply and the safe-haven dollar is holding near a two-decade high after Wall Street tumbled into a bear market on fears aggressive interest rate hikes would push the US into recession.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5pc in volatile trade, clawing back some of its earlier losses.

Australia’s benchmark S&P/ASX200 closed 3.6pc lower while Japan’s Nikkei stock index was down 1.3pc, having fallen as much as 2pc earlier in the session.

The negative tone in Asia followed a bleak US session last night, which saw Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve’s next policy meeting tomorrow.

However, investors appeared to be shaking off the gloom heading in European trade. The pan-European Stoxx 600 is up 0.7pc, while the FTSE has also pushed higher.

Shares in Go-Ahead are flying high this morning amid a potential bidding war for the transport group.

The rail operator, which runs the Govia Thameslink franchise, accepted a £648m takeover bid from a consortium backed by Australian rival Kinetic.

Meanwhile, another Australian transport firm Kelsian is assessing whether to make an offer.

Shares in Go-Ahead jumped as much as 14pc.

Thousands more workers at Network Rail will be ballotted over strike action, threatening even more travel chaos this summer.

Rail union TSSA has served notice to ballot over 6,000 staff members in an escalating dispute over pay, conditions and job security.

TSSA, whose members are engineers and other safety workers, is demanding a guarantee of no compulsory redundancies for 2022, no unagreed changes to terms and conditions, and a pay increase which reflects the rising cost of living. 

If approved, a strike could start as early as July 25. It comes on top of a walkout planned across rail services and the Tube next week that’s been described as the biggest industrial action on the railways since 1989.

Manuel Cortes, TSSA general secretary, said:

We could be seeing a summer of discontent across our railways if Network Rail don’t see sense and come to the table to face the concerns of their staff.

Hugh Gimber at JP Morgan Asset Management says there’s a “conundrum” facing the Bank of England this week.

The good news for policymakers on Threadneedle Street is that they are not the only central bank in a tight spot – most of their peers are being forced to deal with the same challenge.

Inflation stands at multi-decade highs, and while typically the textbooks would suggest that monetary policy should try and look through supply-driven shocks, very strong labour markets are making it impossible for policymakers to stand pat.

Central banks are therefore being forced to tighten at a time when there are already clear signs that growth is slowing. Today’s uptick in the unemployment rate may offer a little comfort that the labour market isn’t overheating, but robust levels of wage growth will definitely have been noted.

The bad news for the Bank is that the combination of risks in the UK economy are arguably larger on a relative basis. Inflation is unlikely to peak until after the summer, GDP has fallen for the second month running, and the economy remains very vulnerable to another spike in energy prices given the high dependence on natural gas.

Looking ahead to Thursday, there is a good chance that the Bank will feel it necessary to ramp up the size of rate hikes and deliver a 50 basis point increase to base rates.

Neil Carberry, chief executive of the Recruitment & Employment Confederation, says the latest numbers show “what a great time it is to be looking for work”.

Another record number of vacancies, and pay is growing strongly as companies seek to attract people to work for them.

Temporary work continues to play a big part in the labour market, helping companies fill roles and people to find work quickly.

But employment is still lower than pre-pandemic, and while economic inactivity is down this quarter, it is still much higher than two years ago.

There is not yet any sign of the economic slowdown affecting the jobs market, but if we don’t address the fact that there are not enough people looking for work, this could put another dampener on the UK’s economic growth.

The FTSE 100 has started the day strongly on the front foot, in a sign markets will look to recover some of yesterday’s sharp losses.

The blue-chip index jumped 0.7pc at the opening bell to 7,255 points.

Wages failed to keep up with prices in April as the cost of living crisis reached new intensity, raising hopes a much-feared wage-price spiral may be avoided, writes my colleague Tim Wallace.

Andrew Bailey, the Governor of the Bank of England, has stressed one reason he is raising interest rates is to deter pay from chasing prices in a dangerous and self-reinforcing 1970s-style spiral.

Average pay in the month was up 4.8pc compared with April 2021, according to the Office for National Statistics, the slowest rise since November. By contrast prices rose 9pc over the same period, the sharpest increase since the early 1980s.

It comes as workers also face higher taxes in the form of increased national insurance payments.

It may prove a further setback to expectations of a streak of interest rate hikes as the Bank of England has stressed the need to increase borrowing costs to stop a wage-price spiral

A rise in bonuses across much of the private sector has kept pay growth above prices for the past three months as a whole, but there are signs those short-term boosts to earnings may now be fading.

Weaker pay growth came despite employers advertising 1.3m vacancies in May, down a touch from the record 1.35m in April but still extremely high by historical standards.

The number of people in employment climbed by 177,000 in the three months to April, and was up by 75,000 compared to the three months to March, narrowing the gap with pre-pandemic levels.

There are now 32.7m people in work in the UK, compared to almost 33.1m on the eve of the pandemic.

At the same time the number unemployed also increased, rising by 41,000 compared with the three months to March. It takes the unemployment rate up a touch from 3.7pc to 3.8pc, which is still close to the lowest rate since the mid-1970s.

Kitty Ussher, chief economist at the Institute of Directors, says companies are continuing to hire as quickly as they can.

Today’s data shows firms are continuing to hire as fast as they can, with the number of people on payroll, and the number of vacancies, both rising in the last month. This suggests order books remain strong and there is still plenty of demand in the economy.

Encouragingly for businesses struggling with staff shortages, more people are now also being tempted to re-join the labour market having slipped into inactivity during the pandemic: the employment rate is up 0.2pc on the previous quarter. If this trend continues, it should make future vacancies easier to fill, and also reduce inflationary pressure.

However, there are also early signs that the labour market is beginning to settle, with the rate of unemployment steadying at its new low level in recent months, a small increase in short-term unemployment, and a slowing of the rate of increase in vacancies.

The ONS figures also highlighted the difficulties faced by businesses in hiring staff.

The number of payrolled employees rose by 90,000 in May – more than forecast. Employment also rose to 75.6pc between February and April.

But there were 41,000 more people without work but looking for a job, the first increase since the three months to December. Meanwhile, vacancies hit a new record of 1.3m.

Paul Dales, chief UK economist at Capital Economics, says the latest figures could mark the first signs the labour market is easing.

The labour market didn’t appear to tighten further in April, which may push the Bank of England a little closer to raising interest rates by 25bps on Thursday rather than by 50bps. We’re sticking with our 50bps forecast, but it’s going to be mighty close.

Of course, the labour market is still very tight, with the unemployment rate still close to its recent 47-year low, the three-month average of vacancies still at a record high and nominal wage growth unusually strong (although it is still falling in real terms).

And we shouldn’t read too much into one month’s release. But it is possible that this is the very first signs that the weakening in economic activity since the start of the year is filtering through into a less tight labour market.

That won’t be anywhere near enough to prevent the Bank from raising interest rates on Thursday. But together with the fall in GDP in April revealed yesterday, it may tilt the decision towards a 25bps rather than 50bps hike.

That said, the possibility of a 75bps hike from the Fed tonight and the latest weakening in the pound to $1.22 is pushing in the other direction. We’re sticking with our 50bps forecast and still think that rates will need to rise from 1pc now to 3pc next year.

Sam Beckett, head of economic statistics at the ONS, says the latest figures “continue to show a mixed picture for the labour market”.

While the number of people in employment is up again in the three months to April, the figure remains below pre-pandemic levels.

Moreover, although the number of people neither in work nor looking for a job has fallen slightly in the latest period, that remains well up on where it was before Covid-19 struck.

At the same time, unemployment is close to a 50-year low point and there was a record low number of redundancies.

Job vacancies are still slowly rising, too. At a new record level of 1.3m, this is over half a million more than before the onset of the pandemic.

The high level of bonuses continues to cushion the effect of rising prices on total earnings for some workers, but if you exclude bonuses, pay in real terms is falling at its fastest rate in over a decade.

Good morning.

We start the day with a stark reminder of how the cost-of-living crisis is eating away at household budgets.

Real-terms pay excluding bonuses tumbled 3.4pc in April, marking the biggest decline since records began in 2001, according to the latest ONS figures.

Over the three months to April, they fell 2.2pc, which is the biggest drop in a decade. While bonuses are helping to cushion some of the blow, not all workers are benefiting.

The numbers show how pay rises are failing to keep pace with soaring prices, with overall earnings rising at less than half the rate of inflation.

The figures highlight the challenge faced by the Bank of England ahead of this week’s interest rate decision, as the MPC looks to balance spiralling inflation with the risk of a recession.

5 things to start your day 

1) Booming housing market creates 36,000 millionaires in a year  Britain now boasts 609,000 high-net-worth individuals 

2) Shell plans to expand amid energy market chaos  The FTSE 100 company plans to invest £20bn-£25bn in the UK 

3) How the Bank of England got it wrong again on Britain’s slide towards recession  Britain’s recovery from the pandemic has been derailed by the cost of living crisis 

4) Binance ‘pauses’ Bitcoin withdrawals amid market collapse  Markets in chaos as Bitcoin falls to its lowest level since December 2020

5) Tesco accused of ripping off Lidl logo to ‘ride on discounter’s coattails’  Grocer hits back that the yellow circle trademark is ‘a figment of Lidl’s legal imagination’

What happened overnight 

Equity markets tumbled again on Tuesday to extend a global rout fuelled by fears of recession, with the Federal Reserve preparing to ramp up interest rates as inflation shows no sign of slowing. 

That has ramped up fears that the world’s top economy is heading for a recession, and on Monday Wall Street plunged with the broad-based S&P 500 sinking into a bear market after dropping more than 20 percent from its recent peak.

And the selling continued in Asia, with Sydney tanking five percent at one point as it reopened after a holiday weekend to catch up with Monday’s drama, while Tokyo was off around two percent and Wellington more than three percent.

Hong Kong, Shanghai, Seoul, Singapore, Taipei and Manila were also deep in the red.

Coming up today

• Corporate: Ashtead Group, FirstGroup, Oxford Instruments, Paragon Banking Group (full-year results); Crest Nicholson, discoverIE Group, Ferguson (interims); Bellway (trading statement)
• Economics: Unemployment rate (UK), claimant count change (UK), average earnings (UK), inflation (Ger), economic sentiment (EU), producer price index (US)