Rail fares in England to rise 4.9%; UK economy on brink of recession; US PCE inflation slows – as it happened

Right, with London’s stock market closed until the 27th December, it’s time to wrap up for today.

And what a day it has been, with Britain’s economy sliding closer to the long-feared recession after growth fell slightly in the July-September quarter.

Should the economy also contract in October-December, the UK will be in a technical recession.

Here’s the full story, and our analysis:

Here’s our news story on the latest fare rises which will hit passengers in England next March:

And here’s the rest of today’s stories:

We’ll be back after the festive break, next week. Have a lovely Christmas! Good luck if you’re trying to get home. GW

Larry Elliott: GDP downgrade shows economy going nowhere

Larry Elliott

The UK is perilously close to meeting the technical definition of a recession after GDP shrank in July-September, our economics editor Larry Elliott writes, adding:

Whether or not a recession materialises, the bigger picture is that since growing by 0.5% in the first quarter of 2022 the economy has gone nowhere. In the second and fourth quarters of 2022 it grew by 0.1%; in the third quarter it fell by 0.1%. Growth of 0.3% in the first three months of 2023 has been followed by the weakness in the second and third quarters.

The GDP figures are bad news for Rishi Sunak. At the start of 2023, one of the prime minister’s five pledges was that he would have the economy growing by the end of the year. That pledge has not been met, and it will be of little comfort to the prime minister that other European countries are also recession candidates.

More here.

Workers at UK car dealership Lookers have just received some sickening pre-Christmas news.

Lookers said today it may cut about 945 jobs, or 14.5% of its total workforce, as part of an ongoing strategic review following a deal to sell itself to Global Auto Holdings, Reuters reports.

Lookers, which sells new and used cars and vans, in July agreed to a buyout offer of £504.2m from Global Auto, the entity related to privately owned Canadian car dealer Alpha Auto Group.

The company said in a statement that:

“(Global Auto and Lookers) have to date identified areas that require restructuring and which will require a redundancy programme to be undertaken,”

Mark Raban will step down as CEO and Oliver Laird as CFO, Looker said.

There’s still time for more important economic data before we shut down for Christmas.

And over in the US, the Federal Reserve’s favourite inflation measure has just shown that price pressures are easing.

The PCE price index measure rose by 2.6% in the year to November, down from 2.9% in October. On a monthly basis, prices fell by 0.1% during November.

Core PCE (which excludes food and energy) slowed to an annual rate of 3.2%, down from 3.4% in October. That may cheer the Fed, as it looks for signs that it is winning the battle against inflation.

London’s stock market has closed for Christmas, although we didn’t get much of a Santa Rally today.

The FTSE 100 index of blue-chip shares has closed just 2.8% higher tonight at 7697, up 0.04%.

Retail stocks dragged on the index, after Nike alarmed traders by revising down its sales forecast last night. JD Sports remained the top faller, down 5.1%.

The more UK-focused FTSE 250 index of medium-sized stocks gained 60 points, or 0.3%, even though the UK economy is on the brink of recession.

Danni Hewson, AJ Bell head of financial analysis, says:

“Santa might be coming to town, but investors aren’t really feeling the festive spirit.

“Gloomy UK data and one eye on core inflation numbers due out in the US later are sending stocks lower.

“It’s no surprise to see a whole host of retailer’s shares tumbling this morning with JD Sports and Frasers group two of the biggest losers.

“Both are also likely to be feeling the whiplash from Nike’s dismal predictions and its plans to shave a whopping $2 billion of costs in a bid to shore up its finances.

“Sales over the last quarter have looked rather subdued as retailers kept backroom stock levels low and the Chinese consumer turned to domestic competitors as relations between the US and China remained frosty.

“Nike has an incredibly powerful brand but it has saturated the market, so cutting back on the number of products it makes would seem sensible and could create more hunger for its products from an uber savvy consumer.”

More transport news: rail customers in England can expect many rail fares to rise by almost 5% next spring.

The Department for Transport has announced that regulated rail fares in England will increase by up to 4.9% from March 3 next year.

Rail passengers may question whether the service is 4.9% better (especially if they were caught up at the chaos at Euston yesterday).

But the government points out that this is a smaller rise than a year earlier, when fares rose by 5.9%.

They are calling today’s announcement “a significant intervention”, as the increase is lower than last summer’s inflation rate, which has been used to set rail fares in the past.

Transport Secretary Mark Harper said:

“Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.

“Changed working patterns after the pandemic mean that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.

“We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.”

Regulated rail fare increases have traditionally been linked July’s reading of the retail prices index inflation measure, which was 9.0%.

The UK are also making changes to protect Britain’s small mammals, by relaxing rules around where small wildlife warning signs can be put up.

The DfT has also spruced up the small animal warning sign, adding white quills to the hedgehog’s back to make it more noticable.

Harper announced the move on a visit to Tiggywinkles Wildlife Hospital in Buckinghamshire….

China’s BYD announces Hungarian electric vehicle factory

Jasper Jolly

Chinese Tesla rival BYD has said it will build a new vehicle factory in Hungary, in a sign of the carmaker’s increasing focus on the European market, my colleague Jasper Jolly writes.

The manufacturer, which is the world’s second-largest producer of electric cars, said it would create thousands of jobs in the city of Szeged, southern Hungary, in a statement on its official WeChat account on Friday morning.

BYD, which is backed by US investor Warren Buffett, is one of the companies leading the race to dominate the industry for electric vehicles as countries rapidly move away from fossil fuel cars. It has set its sights on being the biggest seller of electric cars in Europe.

The manufacturer already produces a wide array of products in China, ranging from hybrid cars that combine a battery and an internal combustion engine, to buses and lorries powered by its batteries. It is also a key supplier of batteries to other car companies.

However, its planned assault on the European car market has caught the attention of local rivals as well as European politicians who fear that jobs could be lost to China.

The EU has launched an investigation into Chinese state subsidies for electric vehicles, a move that could eventually allow it to impose restrictions on imports. A factory within the EU could allow BYD to avoid some measures. BYD’s talks with the Hungarian government were first reported by the Financial Times.

BYD already has a bus factory in Hungary. Some analysts expect it to overtake Tesla as the world’s biggest maker of pure battery electric vehicles. It already makes more cars than Tesla when including hybrids.

Full story: UK at risk of recession after economy shrinks in third quarter

Phillip Inman

Fears that the UK has fallen into recession have been heightened after official figures were revised to show that the economy shrank slightly in the July to September period.

The assessment that gross domestic product (GDP) fell by 0.1% in the third quarter – down from the previous estimate of no growth – will be a blow to Rishi Sunak, who has promised to get the economy growing as one of his fives pledges to voters before an expected general election next year.

The Office for National Statistics (ONS) said a poorer than previously assessed performance by small companies, film production, engineering and design and telecommunication and the IT sector accounted for much of the revision.

More here.