The FTSE 100 has hit a six-week low this morning

By Suzanne Evans, Director, Political Insight

The FTSE 100 has hit a six-week low this morning, falling 1.1% after opening as recession fears spooked investors. The CAC also tumbled 1% in Paris, and the Frankfurt DAX was 0.8% lower. The pound also tumbled to its lowest level against the US dollar since the pandemic crash in March 2020. Sterling dropped as low as $1.1565 this morning, making August its worst month against the dollar since October 2016. Wall Street stocks also fell yesterday amid concern about big interest rate hikes: the S&P 500 was down 0.6%; theDow Jones shed 0.4%, and the Nasdaq was 1% lower, dips which contributed to their weakest August performance since 2015.  Federal Reserve chairman Jerome Powell said on Friday that monetary policy could be kept tight "for some time", dashing hopes that rate hikes might be more modest. The US central bank has already overseen three consecutive increases of 75 basis points in a bid to deal with high inflation.
 
The Office for National Statistics (ONS) has said that the £400 “discount” on energy bills offered to UK households this winter will not count as a price cut, but instead be treated as a current transfer from the central government to the household sector. The decision means inflation is almost certain to rise more sharply: if he ONS had decided that the measures counted as a reduction in the price of energy as opposed to a discount, the headline rate of inflation would only rise to 11.2% in October, instead of 13.3%, according to Pantheon Macroeconomics. Deutsche Bank said RPI would have been 2.7 percentage points lower in October if the ONS had made a different decision. The ruling will also hike the cost of services linked to inflation, such as mobile phone and broadband contracts, Yahoo Finance says. Inflation-linked benefits will also rise by more. 
 
Inflation in the eurozone hit its highest ever level this month, pushed up to 9.1% by soaring energy costs exacerbated by the war in Ukraine. It is the ninth consecutive month to set a record rate for inflation in Europe, with consumer prices rising steadily since November 2021, Sky News says. The UK currently has the worst inflation of all the G7 countries, hitting 10.1% in the 12 months to July. Energy was the main instigator of Europe’s surging inflation, topping an annual inflation rate of 38.3%, according to Eurostat, the statistics authority. Food, alcohol, and tobacco also rose to 10.6%, compared to 9.8% in July. Within the EU, some countries have already blown past the bloc’s headline inflation rate. Estonia - one of the poorer countries in the union - has the eurozone’s highest inflation rate at 25.2%, followed by Lithuania at 21.1% and Latvia at 20.8%.
 
Russia halted gas supplies via Europe's key supply route yesterday, it says for maintenance, intensifying an economic battle between Moscow and Brussels and raising the prospects of recession and energy rationing in some of the region's richest countries. Reuters says European governments fear Moscow could extend the Nord Stream I Pipeline outage in retaliation for Western sanctions imposed after it invaded Ukraine and have accused Russia of using energy supplies as a "weapon of war". Moscow denies doing this and has cited technical reasons for supply cuts.
 
UK business confidence sunk for the third consecutive month in August, and is now at its lowest since March 2021, according to the Lloyds Bank’s monthly business barometer, which dropped to 16% in August from 25% in July. Over 70% of businesses said that the impact of inflation was one of their biggest concerns, particularly in relation to raw materials and energy costs, while almost 40% were concerned about slower UK and global growth. However, 38% of businesses intend to increase their headcount in the year ahead, but the number of businesses anticipating at least a 3% wage increase for their employees has decreased. The survey also showed 51% of firms expect to increase their prices in the coming year, slightly down on July. 5% still expect to lower their prices.
 
The TUC claims that two in five (41%) of Black and minority ethnic (BME) workers have faced racism at work in the last five years, but that most do not report it. Discrimination reported ranged from racist bullying and harassment to more “hidden” racism like jokes, stereotypes or being treated differently at work. The figures are even higher among younger workers, with more than half (52%) of BME employees aged 25 to 34 old experiencing racism at work. Only 1 in 5 (19%) of those who have experienced harassment told the TUC that they had reported the most recent incident to their employer, and of those who did, nearly half (48%) were not satisfied with how it was handled. More than 2 in 5 (44%) didn’t report the incident because they didn’t believe it would be taken seriously, and 1 in 4 (25%) told the TUC that they were worried about the impact on their working relationship with colleagues.
 
BrewDog has announced it will close six of its pubs, blaming spiralling costs and a "clueless government," Sky News says. The craft beer firm will shut the Hop and Anchor in Aberdeen, Smithfield Market Arms in London, Hop Hub in Motherwell and its BrewDog bars in Dalston, east London; Old Street, east London; and Peterhead, Scotland. James Watt, founder and chief executive of the company, said in a LinkedIn post that the hospitality sector faces "sheer 'rabbit in the headlights' paralysis of this zombie government" as rocketing costs threaten the future of many pubs, restaurants and bars. He said it was "heart-breaking" to lose the six pubs but added: "Reality in the hospitalityspace is starting to bite and bite hard. And the government needs to get a grip, now. If nothing happens, the UK looks set to lose half of its pubs and bars and all the millions of jobs these locations provide, as well as the vital role they play in local communities.” A spokesman for the company said staff at the affected pubs had been redeployed in other venues, and no jobs would be lost. Two weeks ago, BrewDog opened its largest bar in London's Waterloo station, with Mr Watt saying this location had received more than 20,000 visitors since then.
 
John Lewis says it will recruit more than 10,000 temporary Christmas workers to meet demand.  2,000 temporary workers will be added across the 34 British John Lewis stores, while 4,000 will join Waitrose. Another 4,000 roles will be available in the company’s distribution and supply chain including warehouse workers and drivers. John Lewis added that it will offer free food to all permanent staff and temporary workers from 3 October to 6 January to help with the cost-of-living crisis.
 
NatWest must refund hundreds of business customers after it “forced” them to open a fee-paying business bank account in order to secure a loan, The Competition and Markets Authority (CMA) has ruled. The practice, known as 'bundling', breached its rules over a three-year period, the CMA said, and the bank will now issue a total of £600,000 in refunds. The CMA said the bank "should have known better" as a total of 956 NatWest customers were affected. 702 are set to receive refunds.
 
FTSE 100 miner Rio Tinto has agreed to buy the remaining 51% of shares in Turquoise Hill Resources it does not already own for $3.3bn. At CAD43 per share, this is a 67% premium to the Turquoise closing share price on 11 March, the last day before Rio's initial public non-binding proposal to buy the company. Its principal and only material mineral resource interest is a 66% share of theOyu Tolgoi Copper-Gold Mine in Southern Mongolia. Rio's chief executive Jakob Stausholm said: "Rio Tinto is committed to moving Oyu Tolgoi forward in direct partnership with the Government of Mongolia to realise its full potential for all stakeholders.
 
Communications and advertising giant WPP is to acquire Netherlands-based european e-commerce consultancy Newcraft for an undisclosed sum. WPP said the addition will unlock business opportunities for its global clients by combining transformation strategy with operational commerce expertise to deliver "growth and tangible business results".
 
FTSE 250 government services provider Serco has agreed to acquire ORS, a specialist provider of immigration services to public sector customers in Switzerland, Germany, Austria, and Italy. Serco is paying CHF 44m (£39.0m) for ORS, which generated CHF 110m (£97m) in the twelve months to the end of December 2021. Serco Chief executive Rupert Soames said: "We have a deep expertise in providing immigration services with care and respect. This strategic acquisition will enable us to work with and support government customers across Europe who have a continuous and growing requirement for immigration and asylum seeker support services. "The acquisition will also support our objective of strengthening our European business, roughly doubling its size and increasing the range of services provided."
 
Barclays is selling its remaining 7.4% interest in South African bank Absa in a placing. The 63m Absa shares are being offered to institutional investors by way of an accelerated bookbuild placing, which is open with immediate effect, Barclays said yesterday.
 
ABI's British-made electronic diagnostic and reverse engineering systems have been chosen by an international organisation to support the country's F-16 fighter jet program following a 3-year-long assessment of ABI's capabilities. No other details are currently available. 
 
Starbucks’ bosses are being sued by a conservative US think tank over their company's diversity policies. The National Center for Public Policy Research (NCPPR) – a Starbucks shareholder - has filed a complaint at the Spokane County Superior Court, saying it objects to the diversity goals covering hiring, contracts, and executive pay, on the grounds that they benefit minorities and violate federal and state civil rights laws. It "benefits (the bosses) personally to pose as virtuous advocates of 'inclusion, diversity, and equity', even as it harms the company and its owners", the NCPPR said. Thirty-five current and former Starbucks executives and directors, including interim chief executive Howard Schultz, are among the defendants. Seattle-based Starbucks, which has more than 17,000 stores in North America, has not commented on the case. In 2020, it announced a push for black, indigenous and other people of colour to hold at least 30% of US corporate jobs and 40% of US retail jobs by 2025, also vowing to link executive pay to these efforts,Yahoo Finance says. Then in January this year, Starbucks said it would double spending with diverse suppliers, also allocating 15% of the year's advertising budget to minority-owned and "targeted" media companies. The NCPPR wants all of these policies axed and for the defendants or their insurers to pay damages to the company.
 
Snapchat parent Snap is reportedly planning to cut 20% of its workforce to cut costs. According to The Verge, the layoffs - which Snap has been planning for the past several weeks – began yesterday. The company's ad sales organisation is also being restructured with Jeremi Gorman, Snap's chief business officer, departing to run ads for Netflix.
 
US regulators have selected e-commerce majors Alibaba Group Holding Ltd and JD.com Inc among other US-listed Chinese companies for audit inspection starting next month, Reuters reports. The move follows a landmark audit deal between Beijing and Washington on Friday allowing American regulators to vet accounting firms in mainland China and Hong Kong, potentially ending a long-running dispute that threatened to boot more than 200 Chinese companies from US stock exchanges.

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