National papers lead this morning on the impact of the Bank of England yesterday cutting interest rates by a quarter of a percentage point to 4.5%, the first reduction since November.
Chancellor Rachel Reeves’s plans for economic growth were dealt a significant blow after the Bank of England also halved its forecast for the year and hinted at a fresh squeeze on living standards, reports The Times. The Bank made the rate cut in a bid to stimulate the economy as it warned that growth is weak and productivity is “tepid”. The markets have priced in three more cuts this year.
The FTSE 100 ended the day up 103.99 points, or 1.1%, at 8,727.28, its best day since 17 January, and bringing its gain since the start of the year to 6.8% as the central bank reduced the base rate, The Times also reports. The cut was widely expected but two members of the Bank’s nine-strong monetary policy committee said a bigger half a percentage point cut was needed to boost economic growth and a cooling labour market.
The Bank slashed its forecast for economic growth, forecasting that the economy will skirt clear of a formal recession only by the narrowest margin in the coming months, and downgraded its estimate of the economy’s ability to generate income, reports Sky News.
The Bank’s grim snapshot of the UK economy raised fresh concerns about the government’s efforts to lift growth, as it forecast weaker activity, higher inflation, rising unemployment and a sharp deterioration in Britain’s output potential, says the Financial Times.
London’s premier index closed at a new record high after soaring 103.99 points to 8727.28, says The Mail. It also hit a new intraday record of 8,767.50 earlier as investors cheered a ‘dovish’ Bank of England base rate cut, despite forecast of a worsening economic outlook and warnings of ‘stagflation’.
While it cut its growth forecast for this year, the Bank upgraded its predictions for both 2026 and 2027, says the BBC. The economy is now expected to grow by 1.5% in both of those years, the Bank said, up from 1.25%.
Tim Wallace for The Telegraph posits that the Bank’s forecasts have revealed the devastating impact of the Chancellor’s economic philosophy.
The Bank also said a global trade war where the UK avoids being hit by tariffs from President Trump would still hurt economic growth in the UK and could accelerate disinflation, says another report in The Times.
The Independent says Reeves has been dealt a further blow in her bid to fulfil Labour’s primary mission of reigniting economic growth, as a downgraded forecast overshadowed news of an interest rate cut.
An analysis in The Standard asks why the rates were cut and what it means, and in a separate piece warns recession alarm bells are ringing.
Bargain-hunting shoppers gave retailers a welcome boost in January following a disappointing festive period, reports The Standard. Total UK footfall increased by 6.6% year on year in January, a significant jump from December when retailers saw 2.2% fewer shoppers than the previous Christmas, according to British Retail Consortium (BRC)-Sensormatic data.
Pernod Ricard has been forced to downgrade its guidance as it faces the twin challenges of a worsening outlook in China and uncertainty over US tariffs, says The Times. In its first-half results, released a week earlier than planned, Pernod Ricard told investors that it was now forecasting a “low single-digit” decline in organic sales, having previously expected to return to sales growth.
The Financial Times also reports that Pernod Ricard has cut its sales guidance because of uncertainty over tariffs and a slowdown in China, where government anti-dumping measures have hit demand for its cognac brand Martell. The French spirits group, whose brands also include Absolut Vodka and Havana Club rum, said it was expecting a “low single-digit” fall in organic sales this year, having previously forecast a return to growth.
An analysis in The Independent asks how Trump’s tariffs could affect UK companies.
Read The Grocer’s analysis of what’s at stake for the UK in Trump’s tariff showdown later this morning on TheGrocer.co.uk.
Marks and Spencer is braced for an annual hit of £40mn from sustainability taxes, laying bare the mounting costs UK retailers face beyond those arising from Labour’s October Budget, according to the Financial Times. The FTSE 100 retailer’s estimated yearly bill stems from packaging levies that will kick in from October under Extended Producer Responsibility (EPR) rules, according to two people familiar with the costs.
The cost to the industry of looming environmental legislation including EPR is a topic The Grocer has been following closely.
The fashion boss who led a turnaround of Marks & Spencer’s clothing division is to step down and be replaced by the former chief executive of Boohoo, according to The Times. Richard Price, who joined the retailer as managing director of clothing, home and beauty in 2020, said he was leaving to pursue a “portfolio” career and “step away from full-time executive life”.
The retailer has appointed the former head of Boohoo to run its clothing, home and beauty divisions as it presses ahead with its turnaround, reports the Financial Times.
Employees of Riverford will share in a payout of £1.3m after the organic vegetable box company more than doubled profits last year, says The Guardian. More than 1,000 staff at the Devon-based group, which began making deliveries from an old Citroën in 1993, will receive about £1,000 each as the employee-owned company nearly tripled its annual payout to workers.
Read the story in The Grocer.
Amazon missed sales expectations for its cloud computing business, fuelling concerns about the tens of billions of dollars it has invested in artificial intelligence infrastructure, according to The Times. Amazon Web Services, the cloud computing business, reported fourth-quarter revenue of $28.79 billion, below Wall Street estimates of $28.84 billion.
The boss of beauty company L’Oréal has said it is “crunch time” for Europe to boost its competitiveness and prevent a deepening of the continent’s economic divergence from the US, reports the Financial Times. Nicolas Hieronimus, chief executive of one of Europe’s biggest companies, with a market value of €186bn, called on political leaders to step up their support for industry, streamline regulation and boost productivity, noting Donald Trump’s moves to deregulate and foster growth in the US economy.
Finally, a feature in The Guardian asks: will the long black soon be the UK’s favourite coffee order? Sales of the long black have been steadily rising in the UK, it says. In 2023, according to one small survey, it was London’s fifth most popular coffee order, and accounted for 9% of all sales in the capital.
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