Biggest drop in UK manufacturing confidence since March 2020; eurozone inflation hits three-year low – as it happened

Time for a recap:

Worries about this month’s budget, and the Middle East crisis, have hit confidence across UK manufacturing last month.

The oil price has jumped following a warning from a US official that Iran is “preparing to imminently launch a ballistic missile attack against Israel”.

Inflation across the eurozone has fallen below the official 2% target for the first time in three years, sparking speculation that the European Central Bank will cut interest rates again this month.

Some of the busiest ports in the US were braced for crippling disruption after about 45,000 port workers represented by the International Longshoremen’s Association (ILA) began walking off the job after their contracts expired at midnight.

The Horizon IT scandal inquiry has heard that there could be a repeat unless the so-called “untouchable” investigators and executives involved in the prosecution of subpostmasters not fired before the organisation rolls out its new IT system.

UK domestic energy costs have jumped 10% as the new price cap kicks in.

Prices in UK shops are falling at the fastest rate since 2021 despite an increase in fresh food inflation as wet weather hit UK production while the cost of olive oil and sugary snacks continues to be affected by the climate crisis.

The oil price has now firmly shaken off its earlier losses, and pushed higher, following reports that the US believes that Iran is “preparing to imminently launch a ballistic missile attack against Israel”.

Associated Press has reported that a senior U.S. administration official has said Iran is preparing to “imminently” launch a ballistic missile attack on Israel, and warned Tuesday of “severe consequences” should it take place.

AP reports:

The official, who spoke on the condition of anonymity to discuss the intelligence, said the U.S. is actively supporting Israeli defensive preparations. This comes after the Israeli military on Tuesday warned people to evacuate nearly two dozen Lebanese border communities hours after announcing what it said were limited ground operations against Hezbollah.

White House officials did not immediately offer any evidence backing its intelligence finding. The official added that the administration was confident in the determination.

Iran’s state media has not suggested any attack is imminent. Iranian officials could not be immediately reached for comment.

Iran already launched an unprecedented direct attack on Israel in April, but few of the Iranian projectiles reached their targets. Many were shot down by a U.S.-led coalition, while others apparently failed at launch or crashed while in flight. Even those that reached Israel appeared to miss their marks, experts and an AP analysis in September showed.

Our liveblog has full coverage of the crisis:

Brent crude, which had been down over 1% earlier, briefly below $70/barrel, is now up over 2.6% at $73.61 per barrel.

The US dollar, a classic safe-haven asset, is also rallying, as are government bonds.

Airline shares are now falling, while shares in weapons maker BAE Systems are up 2.5%.

Sky News are reporting that Rachel Reeves, the chancellor, is drawing up plans for a visit to China early next year.

They say the trip would include resuming a key financial services trade summit for the first time since 2019.

As Sky point out, it would be Reeves’ first trip to China since Labour’s general election victory, at a time when Britain is weighing up whether it should follow the EU and US by also imposing tariffs on electric vehicle imports from China.

A government spokesperson said:

“Last week, the chancellor spoke with vice premier He Lifeng to discuss enhancing economic and financial cooperation and communication.

“They agreed to take forward discussions on timings and areas that could be covered in future engagement.”

UK-China relations have deteriorated in recent years, following Beijing’s crackdown on democratic freedoms in Hong Kong, concerns about human rights abuses against the Uyghur community in Xinjiang and national security worries about Chinese involvement in UK critical infrastructure.

The Middle East conflict won’t hit global oil market, one of the world’s biggest oil traders has claimed.

Torbjörn Törnqvist, the CEO of Gunvor Group, has said he was “very confident” that the escalating conflict would not have “any impact at all on oil supply”.

Törnqvist told the Gulf Intelligence Energy:

“I’m very confident that this will not have any impact at all on oil supply.

“We have a situation around the Red Sea, Yemen, but by and large it’s more like a nuisance, but not really disruptive in any way.

Törnqvist also flagged that the market was more worried about weak demand.

Back in the markets, the oil price has now recovered from its earlier losses, with Brent crude now flat at $72.31 per barrel.

Despite recent falls in UK business confidence, City firm Columbia Threadneedle has predicted the pound will recover to its highest level since the 2016 Brexit vote.

Bloomberg reports that Steven Bell, Columbia Threadneedle’s chief EMEA economist, has predicted that sterling will move toward $1.50 next year.

The forecast is based on the prospect that the UK will have comparatively high interest rates, as the Bank of England is more cautious about cutting borrowing costs due to inflation fears.

Bloomberg explain:

Bell’s prediction implies the pound stands to strengthen almost 13% from its current level around $1.33, already near the highest in two and a half years. The UK currency is the best-performer in the G-10 this year, advancing nearly 5% versus the greenback.

Bell shrugged off concerns that the tax hikes and austerity measures expected in the UK budget at the end of the month will derail the pound’s gains. With higher taxes likely centered around capital gains, their impact on demand will be limited and are unlikely to shake consumer confidence, he said.

On the night of the EU referendum eight years ago, the pond briefly touched $1.50, before plunging to $1.32, and then to $1.20 by January 2017.

After the mini-budget two years ago, it briefly hit an alltime low of $1.038.

Dangers of another IT scandal unless Post Office ‘untouchables’ rooted out, inquiry hears

Mark Sweney

The former chair of the Post Office has warned of another Horizon-style scandal if the s0-called “untouchable” investigators and executives involved in the prosecution of subpostmasters are not fired before the organisation rolls out its new IT system.

Henry Staunton, who was sacked by the former business secretary Kemi Badenoch in January, told the inquiry into the scandal on Tuesday that there remains millions of pounds still in dispute between what subpostmasters have recorded and what the Post Office has in their records.

Staunton said that before the replacement for the Horizon system is implemented in the future, which itself is full of bugs and has seen projected costs double to more than £800m, the Post Office must deal with staff involved in wrongful prosecution of more than 700 subpostmasters.

“This is not something that relates to the past, it is something that relates to the future,” he said:

“Before we implement [the new] Horizon we will be doing a path-clearing exercise. There are millions of pounds in dispute between postmasters and what is on their records and what is in the Post Office account.”

The inquiry has previously heard about the so-called “untouchables” within the organisation, a phrase attributed to outgoing chief executive Nick Read, referring to a group of Post Office investigators who would never face disciplinary action relating to the Horizon IT scandal.

Saf Ismail, one of two subpostmasters who sit on the current board of the Post Office, has also referred to a “red” list of 23 other employees deemed high-risk given their involvement in the scandal in one way or other, none of whom who have even been suspended.

“There are these people called the ‘Untouchables’ in the investigations team, or ‘reds’ or whatever,” said Staunton.

He explained:

“[They were] Involved with all the issues in the past of finding postmasters guilty. I am very afraid if [subpostmasters] are investigated [after the new IT system is implemented] by the so-called untouchables we could have another debacle – not to the same extent – but we could have hundreds of subpostmasters having to pay out monies. This is a big issue going forward, the involvement of the untouchables.”

Staunton said that Read, who is due to appear at the inquiry for three days next week, had used the phrase “Untouchables” to him in a private conversation.

He added that Read also used the phrase in a meeting with all of the Post Office’s non-executive directors.

Asked by counsel for the inquiry what exactly he understood an “Untouchable” employee was, Staunton said:

“They are people that were involved in prosecuting postmasters previously and are still in their roles,” he said.

“And therefore would be involved in any future investigations. [They were] classified under various colours, the same as so-called reds, and would be involved in future investigations. And that seems utterly wrong.”

There are 48 people employed in the investigations team, the inquiry heard, although how many of them are considered “Untouchables” is unknown.

Garden centre group Dobbies is to shut 17 stores, in a move which will hit 465 jobs, PA Media reports.

Dobbies Garden Centres said the proposed closures are part of a restructuring plan to help return the business to profit and reduce its rent bill.

The plan, which will need approval by creditors, will see the firm shut 11 larger Dobbies sites and six little Dobbies by the end of the year.

Sites will continue to operate as normal until the restructuring process is given the green light.

Sarah Butler

Mothercare has suspended trading in its shares as the maternity and babywear brand has been forced to delay publication of its annual accounts while it attempts to finalise a refinancing package.

The group, which no longer has its own stores in the UK – only outlets in Boots stores – but trades from more than 500 stores and 50 websites run by franchise partners across 32 countries, said it was unable to publish its annual results by a deadline of 30 September but expected to do so “in the next few weeks”.

The company said it was looking to raise funds from the sale of “certain IP assets”, likely to include some brand names, as well as talking to its lender.

Mothercare, which is listed on London’s Aim junior stock market, has been attempting to renegotiate the terms of a lending facility to reduce costs for at least a year. The group, which was once a stalwart of UK high streets before it shut all stores in the country in 2019, has seen its share price has slump more than 50% in the past year to just 3.4p, valuing it at just £20m.

In a previous statement issued in May, the company said the loan had reached £19.7m, up from £19.5m last September, on which it was paying 19.2% interest and which would require waivers on lending terms given poor sales in its key middle east market which now accounts for nearly half the group’s sales.

The company said in May it was also looking at financing alternatives to including offering lenders a stake in the business.

On Tuesday it added: “the challenges facing our Middle Eastern operations” remained “broadly unchanged”.

Horizon IT inquiry hears government “dragged their feet” over compensation

Mark Sweney

Over at the Horizon IT Inquiry, the former chair of the Post Office has said that there was no interest at all in the exoneration of postmasters, and that the organisation and the government “dragged their feet” making compensation payments.

Henry Staunton, who was sacked by the former business secretary Kemi Badenoch in January, said that his first impression upon taking up the role in late 2022 was that there wasn’t an acceptance among management of the conclusions of damning High Court judgements that the Post Office had been wrong to pursue prosecutions.

“They didn’t fully accept it, that was my impression, that somehow the case hadn’t been put well or whatever,” said Staunton, giving testimony at the public inquiry into the Horizon IT scandal on Tuesday.

“There wasn’t a feeling that this was absolutely wrong, [what] had happened. It was a feeling across the piece with the team.”

He also said that from his first meeting it was obvious that the Horizon IT system was “completely and utterly unreliable”.

Staunton, who has accused the last government of wanting to delay payments to postmasters until after the general election, said that his second takeaway when he started was that there was “No appetite at all for exoneration.Those were the two things that came through strongly to me”.

He described the Post Office’s investigations department as “powerful” and “quite brutal” in the way they dealt with subpostmasters.

Staunton said that he was shocked at the attitude of the remediation process designed to evaluate and compensate postmasters.

He cited examples including a reluctance to “pause” subpostmasters having to repay money while they were being evaluated in the scheme as that might result in more subpostmasters coming forward to join the scheme.

“What surprised me was we shouldn’t not be doing something because it would generate claims,” he said. “That is not the basis the remediation committee should be working. I formed a view over a period of months regarding bureaucracy and an unsympathetic and adversarial approach.”

This same attitude was taken when a discussion about expanding the scheme relating to a death in the family of a postmaster.

He said:

“The view was if we widened the principles we open ourselves up to more claims.

That seemed pretty unsympathetic to me.

With respect to remediation the government and Post Office were dragging their heels.”

Staunton added that one Post Office executive said that the organisation did not owe the same duty of care to subpostmasters as it did to the organisation’s own employees.

After all they have been through “we owed them a greater duty of care compared to our own employees,” Staunton said.