UK interest rate cut ‘remains some way off’ says Bank of England chief economist – as it happened | Business

Time for a recap.

Bank of England chief economist Huw Pill has said he thinks the bank is still “some way off” cutting interest rates.

In a speech to Cardiff University Business School, Pill said:

In my baseline scenario the time for cutting Bank Rate remains some way off.

Pill said he wanted to see “more compelling evidence” that the persistent factors pushing up inflation were being squeezed, and cautioned against “being lulled into a false sense of security” from lower headline inflation in the coming months.

A survey of UK factories found that costs are being driven by up Red Sea disruption, which may hamper the battle to bring down inflation.

UK manufacturing production fell for the twelfth month running in February, according to S&P Global’s monthly poll of UK purchasing managers, with new orders, output, employment levels and stocks of purchases all dropping.

Hopes of looming interest rate cuts have helped to boost activity in the housing market, where prices rose on an annual basis in February for the first time in over a year.

Marks & Spencer has claimed victory after Michael Gove’s decision to block a controversial plan to raze and redevelop its main store on London’s Oxford Street was ruled to be unlawful.

ITV has sold its 50% stake in BritBox International, the streaming service that offers programmes such as Line of Duty outside the UK, to BBC Studios for £255m in cash.

Low taxation on petrol SUVs in the UK compared with much of Europe is inviting a glut of large, polluting luxury cars, according to an analysis by a green thinktank.

Elon Musk has filed a lawsuit accusing OpenAI and its chief executive, Sam Altman, of breaching its foundational mission by putting the pursuit of profit ahead of the benefit of humanity.

The cost of first and second-class stamps is to go up again next month, after Royal Mail announced price rises of 10p a letter.

Bosses at the UK haulage company Wincanton have thrown their support behind a £762m takeover offer from the US logistics business GXO and dropped their backing for a rival bid.

The annual pay package of the boss of GlaxoSmithKline, Emma Walmsley, has jumped by 50% to £12.7m, mainly because of a higher share bonus payout reflecting the British drugmaker’s improved performance.

Over in the US, consumer sentiment has dipped as people grew gloomier about current economic conditions, and the prospects for the future.

The University of Michigan’s consumer sentiment index has slipped to 76.9 for February, down from January’s reading of 79.0, and also worse than the preliminary reading of 79.6 taken duting last month.

The Current Economic Conditions index fell by 3.1%, to 79.4 from 81.9.

The Index of Consumer Expectations lost 2.5%, to 75.2 from 77.1.

Surveys of Consumers director Joanne Hsu says:

Consumer sentiment moved sideways this month, slipping just two index points below January and holding the gains in sentiment seen over the past three months.

Expected business conditions remained substantially higher than last autumn, with short-run expectations now 63% above and long-run expectations 46% above November 2023 readings. For all but one index component, readings this month were higher than all values between mid-2021 and the end of 2023.

Consumers perceived few changes in the state of the economy since the start of the new year, and they appear to be assured that inflation will continue on a favorable trajectory. Sentiment is currently 8 points shy of the historical average since 1978.

The body behind Scotland’s biggest nuclear clean-up project has been served with an “improvement notice” after the nuclear industry regulator found failures in its storage methods.

The Office for Nuclear Regulation (ONR) said there were shortfalls in arrangements for storing alkali metals at Nuclear Restoration Services’ (NRS) Dounreay site on the coast of northern Scotland.

The ONR said:

“Buildings used to store alkali metals, predominantly sodium, were leaking in rainwater – with pools observed where containers of these metals were being kept.”

The regulator’s inspectors found that a prolonged period of exposure to moist and damp conditions had resulted in “degradation of the barriers for safe storage of these chemicals” at the Caithness site.

No one was harmed and there was “no radiological consequences” but there “was the potential for serious personal injury, if workers had been exposed to these hazardous materials”, the ONR said.

“The storage arrangements for these materials were inadequate and fell below legal compliance and the high standards that we expect to see,” said Ian Phillips, ONR’s head of safety regulation for decommissioning, fuel and waste sites.

The ONR will monitor the response to the notice at Dounreay, which is run by NRS, formerly known as Magnox.

Dounreay was the UK’s centre for fast reactor research and development from 1955 until 1994.

The decommissioning of nuclear sites in Britain was put in the spotlight late last year when the Guardian published Nuclear Leaks, a year-long investigation into cybersecurity, safety and allegations of a “toxic” culture at Sellafield, the vast nuclear waste site in Cumbria.

In his speech in Cardiff, Huw Pill says there were three reasons he voted to leave interest rates on hold at 5.25% last month:

First, while economic activity remains weak in the UK – with real GDP contracting in the second half of last year according to the latest vintage of data – I attribute a significant part of this weakness to developments on the supply side.

Second, I expect to see headline consumer price inflation continue to fall in the coming months, and likely to approach or even fall below the 2% inflation target this spring. Of itself, that is good news. But the drivers of this decline in annual headline inflation are a combination of base and external effects. We need to guard against being lulled into a false sense of security about inflation developments over the medium term by the mechanical effects of high monthly inflation a year ago dropping out of the calculation of annual rates and / or the impact of downside surprises in international commodity prices, notably for energy and food.

Third – and reflecting this last point – in coming to a view on monetary policy, my focus remains on the persistent component of consumer price inflation. It is this persistent component that will still be there at the 12-to-24-month horizon when monetary policy decisions taken today have their greatest impact on inflation.

Newsflash: The Bank of England’s chief economist says he believes the central bank is “some way off” cutting interest rates.

In a speech at Cardiff University Business School now, Huw Pill explains that he needs to see “more compelling evidence” that the underlying persistent component of UK CPI inflation is being squeezed down, so that inflation will sustainably hit its 2% inflation target.

Pill was one of six policymakers who voted to leave interest rates on hold last month at 5.25% (two wanted to raise to 5.5%, and the ninth wanted a cut to 5%).

Pill explains today that he believes the signs of a downward shift in the persistent component of inflation dynamics are early, and “tentative”.

He says:

In my view, we have some way to go before such evidence becomes conclusive.

While that persistent component of inflation continues to threaten the lasting and sustainable achievement of the 2% inflation target, the MPC will need to maintain a degree of restrictiveness in its monetary policy stance to squeeze this persistent component out of the system.

Pill points out that monetary policy could still be restrictive, even if Bank Rate was cut from its current 16 year highs.

He adds:

Nonetheless, in my baseline scenario the time for cutting Bank Rate remains some way off.

I need to see more compelling evidence that the underlying persistent component of UK CPI inflation is being squeezed down to rates consistent with a lasting and sustainable achievement of the 2% inflation target before voting to lower Bank Rate.

Full story: M&S wins legal challenge over Gove’s block on Oxford Street store revamp

Zoe Wood

Marks & Spencer has claimed victory after Michael Gove’s decision to block a controversial plan to raze and redevelop its main store on London’s Oxford Street was ruled to be unlawful.

The levelling up secretary refused permission to redevelop the store near Marble Arch in the West End in July last year, in a win for campaigners concerned about the carbon footprint of the plan.

In August M&S mounted a legal challenge to that decision and on Friday morning a high court judgment revealed the judge had sided with the retailer.

The M&S operations director, Sacha Berendji, said the “judgment couldn’t be clearer”.

Berendji added:

“The court has agreed with our arguments on five out of the six counts we brought forward and ruled that the secretary of state’s decision to block the redevelopment of our Marble Arch store was unlawful.”

More here.

Today’s ruling that the government’s decision to block Marks & Spencer from rebuilding its flagship store in Marble Arch in central London was unlawful is online here.

It shows that M&S brought its case against the blocking of its demolition plan on six counts.

• Ground One – the SoS erred in respect of paragraph 152 of the National Planning Policy Framework (“NPPF”) when he said in DL 24 that there is a “strong presumption in favour of repurposing and reusing buildings”;

• Ground Two – the SoS erred in respect of the consideration of alternatives;

• Ground Three – the SoS erred in the balance of public benefits as against the heritage impacts;

• Ground Four – the SoS’s conclusion on the harm to the vitality and viability of Oxford Street, had no evidential basis;

• Ground Five – the SoS made an error of fact in respect of the embodied carbon, and misapplied policy in respect of embodied carbon;

• Ground Six – the SoS erred in his approach to analysing the impact of the proposals on the setting of Selfridges and the Stratford Place CA

Judge Nathalie Lieven ruled in favour of M&S on grounds one to four.

On ground 5, she says Gove “appears to have become thoroughly confused” about the rules for carbon offsetting, and thought they applied to embodied carbon rather than just to operational carbon.

Judge Lieven says that if the secretary of state had properly understood the policy he might have come to a different conclusion; but in any event, she is quashing the decision on the first four Grounds.

On the sixth point, related to heritage issues, she dismissed M&S’s argument.