Global public debt to hit $100tn this year, says IMF; oil price slumps – business live

The global oil market is heading towards a “sizeable surplus in the new year”, the International Energy Agency has predicted.

In its monthly oil market report, the IEA points out that the global oil market looks “adequately supplied”.

They predict that global oil demand is expected to grow by just under 900 kb/d in 2024 and by around 1 mb/d in 2025, significantly lower than the 2 mb/d seen in 2023.

But oil suppy is set to rise faster, with non-Opec members set to increase supply by 1.5 million barrels per day this year, and in 2025.

The IEA says:

The United States, Brazil, Guyana and Canada are set to account for most of the increase, boosting output by over 1 mb/d both years, which will more than cover expected demand growth.

The IEA also points out that it could act quickly, if there is significant disruption to supplies, saying:

IEA public stocks alone are over 1.2 billion barrels, with an additional half a billion barrels of stocks held under industry obligations. China holds a further 1.1 billion barrels of crude oil stocks, enough to cover 75 days of domestic refinery runs at current rates.

For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year.

Economic confidence in Germany has improved this month, even though current conditions have worsened.

Economic research institute ZEW has reported that hopes of stable inflation, and cuts to eurozone interest rates, lifted optimism this month.

There are also hopes of a pick-up in exports to the eurozone, the USA, and China.

This has lifted the ZEW Indicator of Economic Sentiment for Germany to 13.1 points this month, a 9.5-point increase on September.

But, the assessment of the economic situation in Germany continued to worsen – dropping by 2.4 points to -86.9 points. Nearly nine out of ten respondents assessing the current economic situation as negative.

I missed this earlier, but the estimate for total pay growth across Britain in May-July has been revised up to 4.1%, up from 4.0% reported last month.

That’s not insignificant, as this is the earnings data used to set the pensions triple lock.

Last month, we calculated that a 4% rise would lift pensions by £460 a year….

… If it’s 4.1%, that would mean a £471 increase to the annual pension.

UK business failures are on track to hit a 12-year high this year, new research shows.

Allianz Trade has predicted that UK business insolvencies will rise by 5% this year to over 29,000, a 12-year high and around 30% higher than pre-pandemic levels.

Insolvencies are then set to plateau, predicted to dip to 27,500 in 2025 and 26,300 in 2026.

Alllianz Trade says:

Firms have been struggling over the past years due to the succession of shocks and challenges, from Brexit-related issues and the Covid-19 shock, to strong monetary tightening and sticky inflation

As the UK’s growth momentum should recover heading into 2025, we expect a gradual relief for firms that would translate into slightly lower number of business insolvencies.

Their latest global insolvency report also flags that major insolvencies have also reached a new record high level, with Western Europe leading this trend. This also poses a major threat to employment, particularly in Europe and North America, they point out.

Newsflash: The OECD Working Group on Bribery has cancelled a high-level mission to Hungary today, saying Budapest failed to engage with the visit.

The OECD Working Group on Bribery had been due to visit the Hungarian capital today and tomorrow, but scrapped the trip “after the Government of Hungary was unable to secure sufficient representation of Ministers and senior officials for the meeting”.

This is the first time a high-level mission has been cancelled, the OECD says.

The visit was set up to address the Government of Hungary’s failure to make tangible progress in addressing long-standing recommendations on bribery, it says.

The OECD explains:

These recommendations relate to the Government of Hungary’s lack of understanding of foreign bribery risk exposure, absence of strategy for proactively detecting and investigating foreign bribery cases, inadequate time to apply investigative measures and lack of legal clarity in relation to corporate responsibility for foreign bribery.

The Working Group also remains seriously concerned about Hungary’s low level of foreign bribery enforcement.

Back in January 2023, the OECD said Hungary should urgently implement long-standing OECD Anti-Bribery recommendations, enforce its foreign bribery laws and improve its engagement with the Working Group on Bribery. It warned then that no significant case of foreign bribery has been detected or investigated since March 2012.

There seemed to be enough in this morning’s UK employment data to justify a rate cut in November, says analyst Neil Wilson of Markets.com.

Wilson writes:

Average earnings declined to 4.9% from 5.1%; and whilst the unemployment rate ticked down, employment fell by 35k, and vacancies were down; at 841k now 36% below the March 2022 peak.

Look around and you can see the end of the worker power in terms of openings and pay growth.

Analysis: Cooling labour market adds to Reeves’s tax-raising dilemma

Larry Elliott

Today’s UK jobs report gives a clear sign that the labour market is cooling.

And that adds to the dilemma facing chancellor Rachel Reeves, as she ponders how she can raise taxes to pay for better public services.

Yesterday, Reeves appeared to hint that she will raise employer national insurance contributions in the budget later this month.

But that would push up the cost of employing staff, just as demand for workers appears to be falling.

Our economics editor Larry Elliott writes:

Make no mistake, the labour market is in pretty good shape. There are a record number of people in work and the jobless rate stands at 4%. The 14 consecutive increases in interest rates between December 2021 and August last year have proved less damaging to jobs than expected.

That said, dearer borrowing costs have still had an impact and that has arrived – as it usually does – after a lag. The number of job vacancies fell by 34,000 between July and September – the 27th drop in a row and 36% below its peak in May 2022.

Meanwhile, the number of payrolled employees dropped slightly in September. The latest figures also suggest companies have put hiring on hold until they know what Reeves has in store on 30 October. The British Chambers of Commerce and the Institute of Directors have said businesses were particularly worried about a possible NI increase in the budget.

Slower earnings growth reflects weaker demand for labour. Annual total pay growth – including basic pay and bonuses – stood at 3.8% in the three months to August, down from 4.1% for the previous month and less than half the 8% a year earlier.

Here’s Larry’s analysis:

The crude oil price has fallen sharply this morning, as fears ease that Israel might attack Iran’s oil facilities.

Brent crude, the international benchmark, has fallen by 4% this morning to $74.30 per barrel, a drop of over $3 per barrel. That’s its lowest level in almost two weeks.

US crude is also down around 4% at $70.80 per barrel.

The fall comes after the Washington Post reported that Israel’s prime minister Benjamin Netanyahu told US President Joe Biden that Israel’s retaliation against Iran for its ballistic missile attack earlier this month will not include strikes on non-military sites.

That suggests Israel is willing not to strike Iranian oil targets, which eased fears of disruption to supplies from the Middle East.

Traders are also pricing in weaker demand for energy, after the Opec cartel yesterday cut its forecast for demand growth this year, mainly due to weaker growth in China.

Shares in oil companies have fallen this morning, with BP down 3.35% and Shell losing 2.4% in early trading.

Airline shares are soaring, though, with EasyJet up 4.3% and IAG (which owns British Airways) 3.4% higher.

A falling oil price will also help to ease inflationary pressures, making it easier for central banks to lower interest rates.