Yahoo Finance 
UK has most stubborn inflation in developed world, Bank of America warns - latest updates
- Oops!Something went wrong.Please try again later.
- BAC
Britain has the biggest problem with persistent inflation in the developed world, Bank of America's chief UK economist has said.
Robert Wood predicted the Bank of England will increase interest rates in June once again in June as food prices rise at their fastest pace in 45 years.
Bank of America had previously expected no more rate increases after May but changed its call after more "hawkish-than-expected forecasts" in Thursday's Monetary Policy Report, in which the Bank of England lifted its growth forecast for the UK by a record amount.
Mr Wood said he is anticipating a further 25 basis-point rise for June, taking rates to 4.75pc. He added that he had "low conviction" on this timing and level, as the Bank of England has "left all options open".
He said: “Big picture, however, in our view, the UK has probably the biggest persistent inflation problem among developed market economies.
"The UK has experienced the greatest acceleration in wage growth and the strongest evidence, in our view, of inflation expectations de-anchoring modestly to the upside."
It comes after the Bank of England's chief economist Huw Pill said inflation has hit a "turning point" in Britain and is likely to fall.
Mr Pill said inflation, which stands at 10.1pc, should start to tumble as the effects of huge rises in energy prices a year ago start to fall out of the calculations.
Read the latest updates below.
03:54 PM
Church of England fund manager urges Amazon to recognise unions
A £14bn asset manager that invests Church of England funds has called on Amazon to recognise the union rights of its warehouse workers as the tech giant braces for a series of shareholder rebellions.
Senior technology reporter Matthew Field has the details:
CCLA Investment Management, which supervises billions of pounds for Church of England parishes, dioceses and charities, is backing a shareholder motion demanding Amazon conduct a third-party audit into allegations of union busting.
It came as the GMB union claimed it had reached the legal threshold for mandatory recognition at Amazon’s Coventry warehouse.
GMB said it had gathered the support of 700 members at the fulfilment centre, over the 51pc needed to secure official recognition.
The Telegraph understands CCLA wrote to Amazon on Friday urging it to recognise the Coventry union and demonstrate its commitment to collective bargaining rights.
Click here for the full story...
03:32 PM
Handing over
And with that, I will sign off for the week and leave you in the capable hands of Adam Mawardi.
I leave you with this warning about the fight to bring down inflation around the world:
03:28 PM
Inflation at a 'turning point' and likely to fall, Bank of England says
Inflation has hit a "turning point" and is likely to fall, the Bank of England's chief economist has said, indicating its sequence of 12 straight interest rate rises is nearing its end.
Huw Pill said inflation should start to tumble as the effects of huge rises in energy prices a year ago start to fall out of the calculations.
He added that domestic demand in the economy is likely to weaken as mortgage holders feel the impact of higher borrowing costs when their fixed-term deals finish.
His comments come after the Bank of England raised interest rates by a quarter of a percentage point to 4.5pc on Thursday - their highest level since October 2008.
However, the Bank also upgraded its growth outlook for the UK economy by a record amount.
Mr Pill, who last month said Britons need to accept they have become poorer, said the "crucial question" is whether the slowdown in demand will be sufficient to bring inflation back to target.
Food prices rose at their fastest rate in more than 45 years in the year to March, according to the Office for National Statistics.
03:19 PM
Import prices lift slightly in US
US import prices increased in April for the first time since late 2022 amid higher fuel costs, but imported inflation pressures remained subdued.
Import prices rose 0.4pc last month after dropping 0.8pc in March, the Labor Department said. Last month's increase was the first since December 2022.
However, import prices in the 12 months to April fell 4.8pc, matching the decline in March. Import prices have now dropped for three straight months on a year-on-year basis.
The government reported this week that the annual increases in consumer and producer prices in April were the smallest in more than two years, bolstering expectations the Federal Reserve would pause its interest rate increases at a meeting next month.
03:00 PM
Amazon workers to vote on strikes at two more warehouses
Amazon faces new strikes at two more of its warehouses in a dispute over pay.
As many as 150 workers at its fulfilment centres in Mansfield and Rugeley will begin voting today on whether to walkout, with the ballot running until June 9.
The fresh votes follow 14 days of strike action at the retail giant's Coventry depot, which saw as many as 700 workers down tools in the UK's first strike at an Amazon fulfilment centre.
Amanda Gearing, senior organiser at the GMB union, which is organising the industrial action, said: "mazon workers are fighting back against a pay rise of pennies from one of the world's wealthiest corporations."
02:50 PM
BBC journalists to strike during local election coverage
Journalists at BBC Northern Ireland have announced a 24-hour strike that will span two days of counting in the region's local government elections.
Almost 83pc of those who voted in a recent National Union of Journalists ballot backed strike action in opposition to cutbacks at Radio Foyle.
It comes after the station's flagship morning show was axed last month and replaced with a half-hour news programme.
The walkout will begin at 12.15pm on Friday, May 19 and finish at the same time the following day.
Voters go to the polls in Northern Ireland on Thursday, May 18, with the count taking place on Friday and Saturday at centres across the region.
Paul Siegert, NUJ national broadcasting organiser, said the BBC is "pursuing savings and drastic changes at the expense of quality journalism".
02:38 PM
Wall Street rises as markets open
US markets have begun brightly at the opening bell as a series of data indicated the world's largest economy is cooling, potentially allowing the US Federal Reserve to pause its series of interest rate rises.
The Dow Jones Industrial Average has risen 0.2pc to 33,371.36. The broad-based S&P 500 has climbed 0.3pc to 4,141.05 and the Nasdaq Composite has lifted 0.2pc to 12,354.50.
02:21 PM
NBCUniversal announces departure of advertising head linked to Twitter job
NBCUniversal has confirmed its head of advertising, Linda Yaccarino, will leave the company, effective immediately.
Ms Yaccarino is in talks to become the new chief executive of Twitter, the Wall Street Journal reported on Thursday.
Advertising President Mark Marshall will step in as interim chairman of NBCUniversal's advertising and partnerships group.
Here is the latest on the expected new Twitter boss.
01:58 PM
Still some uncertainty about when Treasury will run out of cash, admits Yellen
Treasury Secretary Janet Yellen has said there is still uncertainty about exactly when the US would run out of cash to pay the the government's debts.
Ms Yellen said she would keep Congress apprised of any change in the date, which could come as early as June 1.
She added that she would meet with senior Wall Street bankers on the federal debt ceiling next week, and she viewed it as appropriate for them to speak out about how the debate over the debt limit was affecting the US economy.
Speaking on the sidelines of the G7 finance leaders' meeting in Japan, Ms Yellen reiterated that failure by Congress to raise the $31.4trn debt (£25.1trn) limit would result in economic and financial catastrophe.
Unlike most developed countries, the US sets a ceiling on how much it can borrow. Because the government spends more than it takes in, Congress must periodically raise that cap, as it has done nearly 80 times since 1960.
Ms Yellen told Bloomberg TV: "We've not discussed what to do if that doesn't occur with the president. Our focus is getting it done.
"There remains a level of uncertainty about precisely when we would run out of cash to pay the government's bills."
01:39 PM
Tesla refuses to make cars for UK roads
Tesla drivers on Britain's roads will have to make do with left-hand drive versions of the company's Model S and X vehicles.
The carmaker's website had made it clear that it does not offer right-hand drive versions of the premium marques.
It has left some road users unhappy:
01:16 PM
Wall Street expected to rise at the opening bell
US markets are on course to start the day higher when trading begins later amid investor hopes of a pause in interest rate rises after data showed a moderation in economic growth.
Both consumer and producer prices cooled a bit, while weekly jobless claims posted their sharpest rise in one and a half years. Data on consumer sentiment and import prices are due later in the day.
The University of Michigan's preliminary reading on the overall index of consumer sentiment is expected to come in at 63 this month, down from 63.5 in April.
Tim Waterer, chief market analyst at KCM Trade, said: "While the results of the latest inflation gauges are open to interpretation, the move south rather than north in the inflation rate supports the case for a June pause by the FOMC at the very least."
Tesla rose 1.5pc in premarket trading and was the top gainer among its growth peers as the EV maker raised the US prices of its Model S, X, and Y vehicles and boss Elon Musk said he has found a new chief executive for Twitter.
Regional bank stocks steadied after the KBW Regional Banking index ended its fourth straight session lower on Thursday on concerns over the sector's health following the collapse of three regional lenders.
The Dow Jones Industrial Average and S&P 500 are on track to open 0.3pc higher, while the Nasdaq 100 is poised to move up 0.1pc.
01:01 PM
Transatlantic travel poised to return to near pre-pandemic levels this month
Transatlantic travel is projected to hit 99pc of pre-pandemic levels in May, according to data from aviation analytics firm Cirium, with 4,414 flights scheduled to depart Britain for the United States this month.
Cirium said that compared to 4,456 flights in May 2019, before widespread travel restrictions were put in place to slow the spread of Covid-19.
Transatlantic flights from Britain to the United States are up 22pc compared to May last year and up 493pc compared with May 2021, Cirium said, as business and leisure trips resume.
From today, non-citizens arriving in the United States no longer need to show proof of being fully vaccinated against Covid.
12:42 PM
Oil struggles for direction amid signs of slow growth
Oil swung between losses and modest gains amid concerns about sluggish economic growth.
International benchmark Brent crude was last up about 0.3pc to over $75 a barrel, while US produced West Texas Intermediate was up 0.4pc to more than $71.
The physical market is showing signs of weakness amid poor refining margins and lacklustre buying in some areas.
The two biggest economies showed further evidence of cooling this week, with US jobless claims rising and China's recovery waning.
Meanwhile, Iraq expects to restart northern oil exports on Saturday pumping 500,000 barrels per day, the Iraqi oil minister told reporters during a visit to a southern oilfield in Basra.
He also said that Iraq did not get a reply from the Turkish BOTAS company on the request to resume oil flow.
12:15 PM
Tesco boss paid 197 times supermarket's average worker
The boss of Tesco received a £4.4m pay packet for the past year, it has been revealed as shoppers continue to face record rises in food prices.
Nevertheless, the payout for chief executive Ken Murphy was less than the £4.75m package he was given a year earlier.
The supermarket giant's latest annual report shows Mr Murphy got a total pay deal including bonuses and other benefits that is around 197 times that of the average Tesco worker for the year to February.
The deal included a base salary of £1.37m for the year, while Mr Murphy also received £2.73m in an annual bonus, alongside other benefits and pension payments.
Meanwhile, the group's finance chief Imran Nawaz received a £3m total pay package for the year, including £1.36m in bonuses.
Mr Murphy will see his base salary increase by 3pc next year, while Mr Nawaz will get a 4pc increase.
It comes after Tesco reported a roughly £1bn profit for the year to February last month.
12:06 PM
Britain suffers worst growth in G7 as workforce stays at home
Britain is suffering the worst post-Covid economic recovery in the G7 as its workforce stays at home, official data shows.
Quarterly gross domestic product in the first three months of this year was still 0.5pc below its pre-pandemic level, as public sector strikes hit growth, according to the Office for National Statistics.
This makes the UK the only member of the G7 whose economy has not exceeded its pre-Covid peak, according to analysis by Pantheon Macroeconomics.
The figures were in stark contrast to the US, where quarterly GDP was up by 5.3pc compared to the last three months of 2019.
In Italy and France, GDP was up by 2.4pc and 1.3pc respectively over the same period.
Although in Germany GDP was down by 0.1pc compared to at the end of 2019, the German economy surpassed its pre-pandemic level earlier in 2022. In the UK, by contrast, quarterly GDP is still yet to exceed the 2019 benchmark.
Strikes were key in holding back economic growth at the start of this year, the ONS said. Education, health, public administration and defence and transport and storage – the sectors that saw industrial action during the first three months of the year – recorded respective declines of 0.7pc, 0.5pc, 0.7pc and 1pc.
The blow is likely to get worse, warned Samuel Tombs, of Pantheon Macroeconomics. "Public sector strikes look set to weigh a little more heavily on GDP in Q2 than in Q1," he said.
11:43 AM
Royal Mail boss steps down after clash with workers
The boss of the Royal Mail has quit amid a row over deliveries and after a year-long clash with workers over pay.
Simon Thompson, who has spent two years at the helm of the postal service, informed the board of his intention to step down after the clashes with unions in recent weeks, parent company International Distributions Services announced today.
He will carry on until the end of October, with the company already in the "advanced stages" of hiring a successor.
Mr Thompson's tenure has been marred by a year of clashes with union chiefs over pay and working conditions. Members of the CWU were on strike for a total of 18 days during the second half of last year.
Royal Mail has also been accused of failing to meet its universal service obligation under Mr Thompson’s leadership.
He was also hauled before a parliamentary committee in February after being accused of misleading MPs over the treatment of workers and whether the postal service puts parcels ahead of letters.
International Distributions Services chairman Keith Williams said Mr Thompson had shown "leadership, resilience and unwavering drive" during his time as chief executive, adding the company has "set a clear path to turn the business around".
Mr Thompson said he had been "incredibly proud to lead Royal Mail during this crucial period in its 507 year history".
11:33 AM
Elon Musk to name former advertising boss Linda Yaccarino as new Twitter chief
Elon Musk is on the verge of appointing Linda Yaccarino, head of advertising at the US media giant NBC Universal, to replace him as Twitter's chief executive.
Technology editor James Titcomb has the latest:
Ms Yaccarino, who interviewed the Twitter owner at an advertising conference last month, is reportedly set to take the high-profile job in the coming weeks.
Mr Musk said on Thursday night that he had hired a new chief executive, adding that "she will be starting in [around] six weeks" without naming who he had appointed.
The Wall Street Journal reported that Ms Yaccarino, who has been at NBC Universal for more than a decade, was in talks to take the role.
NBC Universal, part of the media and telecoms giant Comcast, owns the Universal movie studio, the TV network NBC and the streaming service Peacock.
Read how Ms Yaccarino's expected appointment generated a backlash from some corners of Twitter.
11:17 AM
Growth data 'nothing to celebrate,' says Starmer
Sir Keir Starmer has said the latest economic growth figures were "nothing to celebrate" after UK gross domestic product (GDP) increased by 0.1pc between January and March.
Speaking to broadcasters during a visit to the Crick Institute in central London, the Labour leader said:
This is nothing to celebrate and is yet more low growth on the back of 13 years of low growth.
I think the essential question many people today will be asking themselves is, 'Do I feel any better off now than I did 13 years ago when this Government started?'
I think the resounding answer to that around the country will be, 'No, I don't'.
11:01 AM
Pound steadies after Bank of England rate increase
The pound has steadied after data showed the UK economy grew slightly in the first three months of the year, recovering from its biggest one-day drop since mid-April the previous day.
Sterling was last up 0.1pc against the dollar at just over $1.25. It fell nearly 1pc on Thursday after the Bank of England raised interest rates and said it would stay the course.
But with consumer inflation running at 10.1pc, investors had long prepared for a more aggressive stance from the Bank, whose move gave no new incentive to actively buy the pound, but also few to sell it.
ING strategist Francesco Pesole said:
The Bank of England's 25-basis point rate hike did not have any major implications for sterling.
The drop in cable yesterday was almost entirely due to the dollar rally and was in line with the move in other dollar crosses.
He said there was a case for more sterling weakness ahead, but this would most likely materialise in the euro/sterling rate, which is down 0.1pc at 87p.
10:46 AM
GSK cashes in £800m of shares in healthcare spin-off Haleon
Pharmaceutical giant GSK has sold more than £800m of shares in its spin-off healthcare group Haleon.
The FTSE 100-listed group said it has offloaded 240m shares - around a 2.6pc stake - a week after Pfizer announced it planned to sell its 32pc stake in the business.
GSK sold at 335p per share, meaning the stake went for a discount of about 2.3pc from the closing price of 342.85p on Thursday.
The discounted sale raised around £804m, GSK said.
The firm spun off its consumer healthcare business Haleon, which owns household brands including Sensodyne toothpaste and painkillers Panadol and Advil, in July last year.
Haleon, which employs around 22,000 staff around the world, floated on the London Stock Exchange in Europe's biggest listing for more than a decade.
In September, the firm reported a double-digit hike in revenue and profits in its first set of company results since splitting from GSK.
The company still has a 10.3pc stake in Haleon, while drugmaker Pfizer holds nearly a third of its shares.
10:31 AM
Autonomy founder Mike Lynch detained in US on fraud charges
Mike Lynch, the British software tycoon behind Autonomy, has been detained in the US to face multi-billion dollar fraud charges after flying into San Francisco.
Our technology editor James Titcomb has the latest:
Mr Lynch boarded a flight to California on Thursday to appear in front of a judge, ending a multi-year battle against being extradited from the UK.
He remained in custody this morning after the judge declared him a "serious" flight risk, setting a $100m (£80m) bail and requiring Mr Lynch to pay for armed security and video surveillance while under house arrest.
District Judge Charles Breyer said that Mr Lynch's "vast wealth" of between $400m and $450m, along with his lengthy fight against extradition, meant he "presents a serious and substantial risk of flight".
Read on for details amid the charges over the $11bn sale of the former FTSE 100 software company Autonomy to Hewlett Packard in 2011.
10:13 AM
Better to be listed in 'unpleasant' London than accept takeover, says THG boss
The founder and chief executive of THG has outlined why a takeover approach from private equity group Apollo was not in the "best interests" of the company, even though it is "unpleasant" being listed in London.
In a lengthy post on LinkedIn, Matthew Moulding set out why his business ended talks, saying Apollo wanted "controls, particularly across Beauty & Nutrition where they asked for controlling equity rights".
He said Apollo were told their bid valuation and structure was "unacceptable", adding the New York firm had "set out how they could raise their bid further, ahead of a deadline set by the takeover panel".
He added that "just about every major PE firm has enquired about taking THG private" although usually nobody finds out unless there is a leak forcing the takeover panel to make an announcement, which he said was the case with Apollo's approach.
Mr Moulding also said THG's "pain" on the London Stock Exchange "comes from the 35pc of 'fast money' shares actively trading". He added:
I've personally spent £39m since IPO, increasing my stake and reducing THG shares on the market. The most recent being £5m at 39p in late 2022.
Yes, it's unpleasant being listed in London. But I’ve spent 20 years building THG, from an idea while sat on my sofa, into a global group with sales of £2.2bn.
We've just completed a vast expansion of our tech and global infrastructure. We're just getting going.
09:54 AM
Credit Suisse no longer suffering outflows, says UBS boss
UBS chief executive Sergio Ermotti has said that the situation at Credit Suisse has stabilised and he does not think outflows at the embattled bank are continuing.
Addressing the Swiss Media Forum in Lucerne, Mr Ermotti also said he hoped there would be an investigation into the circumstances that pushed Credit Suisse to the brink of collapse and led to its takeover by UBS as part of a rescue orchestrated by the Swiss authorities.
Commenting on his decision to include the bank's former boss Ulrich Koerner in his new leadership team, Mr Ermotti said the bank's problems were rooted well in the past. He said:
In my opinion it is crystal clear, this situation did not develop in the last six weeks or six months but over the course of the last six, seven years.
I hope that, when there will be an investigation, it should be long enough to properly understand everything that happened.
Switzerland's attorney general said last month the country's federal prosecutor had opened an investigation into the takeover, looking into potential breaches of Swiss criminal law by government officials, regulators and executives at the two banks.
He also said UBS was on track to close the transaction within three months from its March 19 announcement.
09:36 AM
ECB may need to raise rates beyond summer, says bank chief
The European Central Bank may have to continue raising borrowing costs beyond the summer, according to Governing Council member Joachim Nagel.
Underlying inflation, which excludes food and energy costs, will not slow quickly, the Bundesbank chief said in Niigata, Japan, at the G7 meeting of finance and central-bank chiefs. He said:
There's consensus in the Governing Council that interest-rate hikes should continue.
The data don't allow us to consider changing our view that further rate hikes will be necessary, and that also applies for beyond the summer break.
Mr Nagel's remarks are his strongest signal yet that the two quarter-point rate increases that economists widely predict in June and July may not be sufficient to return inflation to 2pc from more than double that at present.
09:15 AM
Government wants to return TransPennine Express to private sector
The rail minister said the decision to nationalise TransPennine Express would allow the Government to look at the "whole structure of rail in the North".
However, Huw Merriman said he did not think it was a sign that further franchises would be needed to taken in-house, as ministers are aiming to return TransPennine to the private sector.
Asked on LBC whether more services could be nationalised, the Tory minister said:
No, I don't. I think those were matters particular to TransPennine Express.
We took the difficult decision to have a reset moment and transfer it over temporarily to the operator of last resort.
It is the first time we have had to do that for performance reasons; the other three occasions have been due to financial management matters.
We are looking to return it back to the private sector. It gives us an opportunity to look at the whole structure of rail in the North - we will take that opportunity but, quite frankly, we've got some really outdated agreements.
Mr Merriman urged unions to allow train drivers to work overtime again on TPE so new drivers could be trained more quickly in a bid to improve the service.
09:02 AM
Tesla recalls nearly all cars ever sold in China over braking issue
Tesla will need to fix almost every car it has ever sold in China due to an issue with the vehicles' acceleration systems.
Some 1.1m electric cars that Tesla made at its Shanghai factory or imported into China between January 2019 and April this year will need to be sent an over-the-air software fix to rectify the issue, according to a statement from the State Administration for Market Regulation.
The problem occurs when a driver takes their foot off the accelerator in order to slow down.
When that happens, what typically occurs is the additional power starts getting transferred to the car's battery to charge it up.
This makes the rate of deceleration somewhat uncertain, and could increase the risk of collision and pose a safety hazard, China's regulator said.
Because of this defect, drivers may mistakenly step on the accelerator pedal, thinking it's the brake.
Tesla will also be required to send an electronic notification to drivers when they depress the accelerator for too long a period.
08:44 AM
Markets bounce back after economy data
The FTSE 100 has bounced back after data showed that the UK economy grew in the first three months of 2023, while insurer Beazley surged to a more than one-month high on upbeat quarterly results.
The blue-chip index rose as much as 0.4pc, while the FTSE 250 added as much as 0.2pc. The FTSE 100 index ended 0.1pc lower on Thursday, in its third straight session of declines.
Beazley has risen 3.9pc after reporting a sharp jump in net premiums in the first quarter, lifting the nonlife insurance sector up 1.6pc.
Pearson jumped as much as 2.4pc after brokerage Morgan Stanley turned bullish on the stock.
Bucking the trend, THG slumped as much as 14pc after the retailer said it had terminated talks with Apollo Global Management for a buyout deal.
The pound has added 0.2pc against the dollar to $1.25 after the Office for National Statistics said the UK economy grew by 0.1pc in the first quarter of 2023.
08:36 AM
Economists question Bank of England over forecasts
The Bank of England's forecasts for the UK economy have evolved so radically over the past six months that they have sown confusion and forced it to answer questions about its credibility.
Last November, its Monetary Policy Committee warned that the UK would fall into recession with interest rates at just 3pc.
On Thursday, after raising rates to the far more punitive level of 4.5pc, the recession vanished from its outlook, while Governor Andrew Bailey said inflation had proven more "sticky" than expected, with food prices staying higher than expected.
Ross Walker, head of global macroeconomics at NatWest Markets, said inflation "somewhat incongruously undershoots the target during the relevant two-to-three year forecast horizon".
Governor Andrew Bailey was adamant that there was no "directional steer" on the Bank of England's, adding policymakers "will be driven by the evidence at each meeting".
Sanjay Raja, chief UK economist at Deutsche Bank Research, said the position meant the Bank is "captive to forthcoming growth, labor market, and inflation data".
08:22 AM
THG ends takeover talks with Apollo
THG has ended talks with New York-based private equity business Apollo Global Management in the latest failed takeover attempt of the struggling UK online retailer.
The British company, which operates hundreds of beauty and lifestyle websites, said that after a short discussion with the investor it has become clear there is "no longer any merit in continuing to engage with Apollo".
It said it had rejected Apollo's approach for the same reason it rebuffed others — "inadequate valuations and the nature of those offer structures".
Formerly known as The Hut Group, the company co-founded by chief executive Matthew Moulding has had a bumpy ride since its 2020 listing.
It has been rocked by governance concerns, the surging price of whey — which it uses in its protein shakes — and speculation over the future profitability of its Ingenuity unit, which helps other retailers sell online.
THG stock, which had initially risen on news of Apollo's interest last month, had fallen by about 22pc since it appeared that a formal offer may not be forthcoming.
They slumped a further 14pc in early trading to 64p, well below the £5 IPO price.
08:16 AM
GDP will bounce back strongly in April, says NIESR
NIESR associate economist Paula Bejarano Carbo said the GDP data is a sign of "low growth, rather than a much-needed jump-start". He said:
Encouragingly, the services, production, and construction sectors all saw quarter-on-quarter growth – a further sign that the economy as a whole is exhibiting more resilience than previously thought.
Though monthly GDP fell by 0.3pc in March following no growth in February, high-frequency data suggest that monthly GDP will bounce back strongly in April, likely driven by strong services performance.
It is worth bearing in mind, however, that monthly GDP remains only 0.1pc above its February 2020 level – what we are seeing at the start of this year is (welcome) low growth, rather than a much-needed jump-start.
08:04 AM
FTSE rises as UK economy grows
Markets have moved upwards after data showed the UK economy returned to growth in the first three months of the year.
The FTSE 100 rose by 0.4pc to 7,763.02 after the open while the domestically-focused FTSE 250 edged up 0.1pc to 19,291.08.
07:57 AM
Weak service sector a worrying sign for UK, say economists
Ruth Gregory, deputy chief UK economist at Capital Economics, said:
Some of the decline in GDP in March was probably due to temporary factors and may not last.
The unseasonably wet weather in March appears to have weighed on retail activity (which fell by 1.4pc month on month), food and accommodation output (down 0.8pc) and construction output (up 0.2pc).
What's more, strikes by civil servants, teachers and train workers are likely to have contributed to the 1.7pc month on month decline in transport output and the small 0.1pc month on month rise in education output.
But with activity in nine of the 14 services sub-sectors contracting in March and consumer-facing services as a whole declining by 0.8pc month on month there were also some worrying signs elsewhere.
This suggests that some of the fall was probably due to some underlying weakness as a result of weak real incomes and higher interest rates.
07:43 AM
Offer is there for unions, says rail minister
Rail minister Huw Merriman has urged train drivers' union Aslef and rail workers' union the RMT to put the Government's "fair and reasonable" pay offer to its members in a bid to avert further strikes.
He told Times Radio:
I'm very sorry for the inconvenience that passengers will have to bear. The sad reality of this situation is that there are offers on the table which have been given to both the train drivers' union and the RMT.
The leadership have chosen not to put those offers to their members and I feel if they did, there would be the opportunity for members to decide if they wish to take them.
If you look at the train driver situation, they are paid just under £60,000. The pay offer would take them to £65,000 for a 35-hour week.
We feel these are fair and reasonable, and we need to see those put to their members. So, it is not the case that there is not an offer there - the offer is there, we just need it put to members to see what they think about it.
Mr Merriman pointed to RMT members working for Network Rail having already accepted a "very similar" Government pay offer, adding: "If that's the case for someone who works on the tracks, why not their fellow workers who work on the trains? And that's what we're calling the RMT and Aslef's leadership to do."
07:39 AM
Retail sector hit by rainy March, says IoD
Although there was growth over the quarter as a whole, the economy shrank by 0.3pc in March. Kitty Ussher, chief economist at the Institute of Directors, said:
Manufacturing performed strongly coming out of the first quarter, but this was not enough to compensate for the difficulties experienced elsewhere in March, particularly by retailers and the motor trade.
There were also other weaknesses in the service sector, such as the creative industries and general business services.
The ONS suggests that the retail sector suffered from March being one of the wettest on record, reducing non-food sales compared to the previous month.
It also seems likely that some households have reduced discretionary spending as they re-budgeted for rising mortgage costs.
07:31 AM
Government acting in 'bad faith,' says rail union boss
The other big story for commuters unable to get to work is the strike action being held by train drivers across the country.
Aslef general secretary Mick Whelan has accused the Government of acting in "bad faith" during negotiations with the union.
He told BBC Breakfast:
At some point someone's going to realise these are Government-led strikes, the Government are interfering their free collective bargaining process and they want unrealistic targets.
They sent out a deal before Christmas that we'd never seen, we'd never negotiated and tried to force it through by the back door in a total act of bad faith, and even then we came back from the table.
We suspended all action in the hope of finding a way forward and then what happens?
We sit down for three months in good faith, we agree a process that we're going to undertake and then right at the end someone interferes, revokes it, and puts out a deal that would contain all the red lines we previously opposed in those talks, destining it to fail.
I don't think the Government and the companies want a solution.
07:28 AM
Economy 'holding up remarkably well,' says investment chief
Neil Birrell, chief investment officer at Premier Miton Investors, said:
With headlines of pain being felt in the consumer sector, it would be expected that GDP growth would be weaker, or maybe even showing signs of recession, but the economy is holding up remarkably well.
The Bank of England will be pleased with the data, but they will need to see inflation moderate significantly to avoid considering more recession-inducing interest rate hikes.
It is quite a balancing act they have on their hands; for now, the economy is behaving, but inflation has to as well.
07:23 AM
Budget made an important start toward growth, says Hunt
After the latest data on the UK economy, Chancellor Jeremy Hunt said:
It's good news that the economy is growing but to reach the Government's growth priority we need to stay focused on competitive taxes, labour supply and productivity.
The Bank of England Governor confirmed yesterday that the Budget has made an important start but we will keep going until the job is done and we have the high wage, high growth economy we need.
07:18 AM
Growth in first quarter impacted by strikes, says ONS
The Office for National Statistics' director of economic Statistics Darren Morgan said:
Despite the UK economy contracting in March, GDP grew a little over the first quarter as a whole.
The fall in March was driven by widespread decreases across the service sector.
Despite the launch of new number plates, cars sales were low by historic standards - continuing the trend seen since the start of the pandemic - with warehousing, distribution and retail also having a poor month.
These falls were partially offset by a strong month for manufacturing as well as growth in gas production and distribution and also in construction.
Across the quarter as a while, growth was driven by IT and construction, partially offset by falls in health, education and public administration, with these sectors affected by strikes.
07:09 AM
Bank of England wrong again as Britain's economy returns to growth
The Bank of England has been proved wrong again as the British economy outperformed the Bank's forecasts for the first three months of the year.
Quarterly real gross domestic product (GDP) rose by 0.1pc from January and March, according to the Office for National Statistics.
This matched the consensus expectation among economists of 0.1pc growth but exceeded the Bank of England's forecasts of 0pc across the first quarter.
But on a monthly basis, GDP in March fell by 0.3pc. This was a far larger drop than the consensus forecast of 0pc growth.
The quarterly growth rate was front-loaded in January, when GDP rose by 0.5pc. In February, growth was flat.
The March data lays bare the impact of successive public sector strikes.
Darren Morgan, ONS director of economic statistics, said: "Across the quarter as a whole growth was driven by IT and construction, partially offset by falls in health, education and public administration, with these sectors affected by strikes."
Without the impact of strikes, quarterly GDP growth in the first three months of the year would have been 0.2pc, the Bank said on Thursday.
Construction output rose by 0.7pc in the first three months of the year, which was the sixth consecutive quarter of positive growth.
The growth from January to March was driven by repair and maintenance, which grew by 4.9pc.
It comes after the Bank of England improved its outlook for growth in the UK economy by a record amount on Thursday as it raised interest rates to their highest level since 2008.
The rate-setting Monetary Policy Committee forecast that the economy will be 2.25pc larger in three years time than it predicted in February – the biggest growth upgrade in its history.
The Bank predicted a 0.2pc expansion for the first and second quarters only six months after predicting that the economy would not grow at all in 2023.
It also revised up its full-year forecast for 2023 to 0.25pc growth, compared to a prediction of a contraction of 0.3pc back in February.
The data showing a growth in the first quarter of 2023 comes after the UK economy narrowly avoided recession at the end of 2022.
The economy flatlined in the final three months of last year, having shrank by 0.3pc between July and September.
07:04 AM
Good morning
The UK economy grew by 0.1pc between January and March, according to data from the Office for National Statistics.
It comes after the economy flatlined at the end of 2022, having shrunk by 0.3pc between July and September last year.
5 things to start your day
1) Get ready for two more years of surging prices, says Bank of England | Andrew Bailey refuses to accept blame for cost of living crisis
2) 'Eye-watering' cost of regulation to blame for surging food prices, Treasury told | Supermarket chiefs have blamed meddling ministers for contributing to a surge in food prices
3) Elon Musk hires female boss to run Twitter | New chief executive joins the social media platform within six weeks
4) Adidas sparks gold rush with £870m sale of Kanye West’s Yeezy shoes | German fashion house looks to recoup some value from vast unsold stock of trainers
5) The glaring errors that left Britain mired in inflation | Bank of England forced to admit there will be no recession at all
What happened overnight
Asian shares were mixed as US equity futures rose and Treasuries held gains from the prior day as investors weighed signs of cooling in the jobs market and efforts to repair ties between Washington and Beijing.
Hong Kong-listed technology stocks rallied Friday while broader measures of Chinese shares fell. Japanese blue chips traded around 0.5pc higher.
Shares in Tokyo-listed SBI Shinsei Bank were in a trading halt after spiking higher following a Nikkei report that SBI Holdings was preparing to take the lender private.
Australia's S&P/ASX 200 was little changed, while Hong Kong's Hang Seng fell 0.3pc. The Shanghai Composite fell 0.8pc.
Wall Street stocks ended mostly down on Thursday as regional banks again came under pressure, struggling to shake off investor worries about the sector.
The mixed showing came as shares of regional bank PacWest slumped 22.7pc, after it reported seeing deposits drop around 9.5pc last week.
The Dow Jones Industrial Average closed 0.7pc lower at 33,309.84, while the broad-based S&P 500 nudged down 0.2pc to 4,130.57.
The tech-heavy Nasdaq Composite Index edged up 0.2pc to 12,328.51.
The better inflation outlook lowered Treasury yields on two-year notes, which can move in step with interest rate expectations, to 3.90pc. The yield on 10-year notes fell 5 basis points to 3.386pc.