Apple sales climb but Chinese business shrinks
In This Article:
Apple’s sales have grown at the fastest pace for two years amid growing demand for its new iPhones, although the tech giant continued to struggle in China.
The Silicon Valley giant reported a 6pc increase in revenue to $94.9bn (￡73.6bn) in the three months to the end of September.
Sales of the iPhone, the company’s best selling product, were up 5.5pc, reversing two consecutive quarters of falling sales.
However, Apple’s business in China shrunk for a fifth consecutive set of quarterly results. Sales in the country fell by just 0.3pc, but had been expected to rise after a year of falling revenues.
Apple chief executive Tim Cook has mounted a diplomatic offensive in China in recent months in an attempt to reverse its decline, seeking to protect the company’s operations in the country from an escalating trade war and the revived threat from Huawei
Last week he told the country’s IT minister that he planned to boost investment in the country. It comes despite Apple increasingly assembling its iPhones in countries such as India amid the looming threat of Chinese tariffs spiking under a Trump presidency.
Overall, Apple’s profits fell by 36pc to $14.7bn as the company booked the €13bn (￡11bn) cost of a tax penalty in Ireland, having recently lost a decade-long fight with the European Commission in September.
Shares in the company, the world’s biggest by market value, fell slightly after the results were released.
The figures included the first few days after Apple’s latest iPhone 16 went on sale at the end of September. Apple is hoping that new artificial intelligence capabilities in the devices will provide a boost to sales, although many of the features the company has promised are not yet available.
Mr Cook said the new AI system “supercharges our lineup heading into the holiday season”.
Sales of Apple’s Macs and iPads also grew, while revenues from the company’s multibillion-dollar services business, made up of software such as the App Store and Apple Music, rose.
It came as Intel, the embattled American microchip giant, enjoyed a share price leap despite the company reporting an enormous loss.
The company reported a 6pc drop in revenue to $13.3bn and a $16.6bn net loss - the biggest in the company’s history. Intel booked billions in restructuring and impairment charges as it lays off thousands of staff and writes down the value of manufacturing operations.
However, it forecast an improvement in the final quarter of the year, sending shares up by more than 13pc.
Intel, which has received billions in grants and loans from the Biden administration’s attempt to revive US semiconductor manufacturing, has been considering breaking itself up as part of a radical effort to regain its place at the cutting edge.
The company has been squeezed by dominant Taiwanese manufacturer TSMC and the rise of AI chips from Nvidia.
08:55 PM GMT
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08:17 PM GMT
Apple sales speed up but Chinese business shrinks
Apple’s sales have grown at the fastest pace for two years amid growing demand for its new iPhones, although the tech giant continued to struggle in China.
The Silicon Valley giant reported a 6pc increase in revenue to $94.9bn (￡73.6bn) in the three months to the end of September.
Sales of the iPhone, the company’s best selling product, were up 5.5pc, reversing two consecutive quarters of falling sales.
However, Apple’s business in China shrunk for a fifth consecutive set of quarterly results. Sales in the country fell by just 0.3pc, but had been expected to rise after a year of falling revenues.
Apple chief executive Tim Cook has mounted a diplomatic offensive in China in recent months in an attempt to reverse its decline, seeking to protect the company’s operations in the country from an escalating trade war and the revived threat from Huawei
Last week he told the country’s IT minister that he planned to boost investment in the country. It comes despite Apple increasingly assembling its iPhones in countries such as India amid the looming threat of Chinese tariffs spiking under a Trump presidency.
Overall, Apple’s profits fell by 36pc to $14.7bn as the company booked the €13bn (￡11bn) cost of a tax penalty in Ireland, having recently lost a decade-long fight with the European Commission in September.
Shares in the company, the world’s biggest by market value, fell slightly after the results were released.
The figures included the first few days after Apple’s latest iPhone 16 went on sale at the end of September. Apple is hoping that new artificial intelligence capabilities in the devices will provide a boost to sales, although many of the features the company has promised are not yet available.
Mr Cook said the new AI system “supercharges our lineup heading into the holiday season”.
Sales of Apple’s Macs and iPads also grew, while revenues from the company’s multibillion-dollar services business, made up of software such as the App Store and Apple Music, rose.
08:15 PM GMT
Amazon stock soars after record profit
Amazon recorded a record profit in the third quarter of the year on the back of a consumer spending boom, sending shares soaring.
The world’s biggest online retailer said revenues rose 11pc to $158.9bn (￡123.2bn). Net income rose to $15.3bn, surpassing the record quarterly profit Amazon reported in the Christmas quarter of 2021, when online shopping was boosted by Covid restrictions.
The sales jump was in part due to continued growth at Amazon Web Services, the company’s cloud computing division.
The company also predicted that sales in the fourth quarter of the year would climb to between $181.5bn and $188.5bn, which would mark a new record.
Shares rose by almost 5pc in after-hours trading.
Amazon’s chief executive Andy Jassy, who took over from founder Jeff Bezos three years ago, recently ordered employees back to the office five days a week, a move that has provoked an outcry from staff.
Investors have raised concerns about heavy spending on artificial intelligence systems and when they will lead to profits. Shares in Microsoft and Meta both fell on Thursday after the two companies reported quarterly results earlier in the week that disappointed Wall Street.
Intel, the embattled American microchip giant, also saw a share price leap despite the company reporting an enormous loss.
The company reported a 6pc drop in revenue to $13.3bn and a $16.6bn loss. The company booked billions in restructuring and impairment charges as it lays off thousands of staff and writes down the value of manufacturing operations.
However, it forecast an improvement in the final quarter of the year, sending shares up by more than 13pc.
Intel, which has received billions in grants and loans from the Biden administration’s attempt to revive US semiconductor manufacturing, has been considering breaking itself up as part of a radical effort to regain its place at the cutting edge.
The company has been squeezed by dominant Taiwanese manufacturer TSMC and the rise of AI chips from Nvidia.
07:38 PM GMT
Value for money tsar to get equivalent of ￡250k annual salary
Labour’s newly appointed value for money tsar will be paid the equivalent of a ￡247,000 annual salary, the Government has disclosed, significantly more than the Prime Minister’s pay.
David Goldstone, announced in the Budget as chairman of the Office for Value for Money, will be paid ￡950 a day for an average commitment of one day a week, the Treasury said on Thursday.
The compensation amounts to ￡49,400 over the course of a year – equivalent to a full-time salary of ￡247,000 and significantly more than Sir Keir Starmer’s ￡166,786 salary.
He has been appointed to the role on a 12-month basis.
Mr Goldstone previously oversaw delivery of the London Olympics, where costs spiralled to ￡9.35bn.
That was almost four times the initial ￡2.45bn estimate, based on figures cited by the Labour government in the run-up to the 2012 Games.
Following the Olympics Mr Goldstone moved on to run the London Legacy Development Corporation, where projects including the London Stadium and East Bank cultural district have also reported cost overruns.
07:24 PM GMT
Selfridges’ losses more than double to ￡340m as interest costs climb
The owner of Selfridges has seen its losses more than double after it was hit by soaring distribution and borrowing costs.
Cambridge Retail Group, which owns Selfridges as well as department stores Brown Thomas and Arnotts in Ireland and De Bijenkorf in the Netherlands, posted a pre-tax loss of ￡340m in the year to February.
The losses, which deepened from ￡126m the previous year, came as the retail giant booked a sharp rise in its distribution and administrative costs, as well as a surge in finance expenses amid high interest rates.
The group also recorded a ￡156m writedown on its Dutch business after slashing sales forecasts for De Bijenkorf.
The ballooning costs offset a sharp rise in revenues, which almost doubled to ￡1.57bn from ￡804m in the previous 12 months, according to recently filed accounts.
Separate accounts for Selfridges Retail, which covers the business’s four UK stores, its website and its mobile app, show losses increased from ￡39m to ￡42m. Revenues also slipped marginally to ￡834m.
It comes after a turbulent period for Selfridges, which has changed hands twice over the last three years.
A spokesman for Selfridges said: “We are pleased with our performance last year which saw a million more visits to our stores, reflecting how much customers enjoy spending time with us.
“This year we are trading in line with expectations, footfall is up again, and we have seen a strong response to many of our investments, launches and activations including our newly renovated Oxford Street Beauty Hall and Sportopia, our huge celebration of sport over the summer.”
06:54 PM GMT
Former NHS chief hits out at failure to fix university funding in Budget
A former NHS chief executive has hit out at the lack of university funding in the Budget, branding it “point one of b----- all”.
Lord Stevens of Birmingham noted that there was “no great reference” to universities in the Budget at all, despite a stark funding gap for scientific research in the sector.
He argued that the current situation was leading to the “slow and inexorable decline” in UK science and research.
Lord Stevens, who is also the incoming chairman of King’s College London and chairman of Cancer Research UK, argued that universities are the providers of “research excellence” and “the science and technological progress that we all want to see”.
The crossbench peer told the House of Lords: “The reality is, unfortunately, that in yesterday’s Budget universities got what we can now describe as a POBA - point one of b----- all.
“There was essentially no great reference to universities, no attempt - yesterday, at least - to deal with the underlying funding pressures, the opaque cross-subsidies that are just about keeping the show on the road but nevertheless constitute the slow and inexorable decline in the relative performance of UK science and research compared with other countries internationally, as measured by most of the relevant league tables.
“The funding gap between the cost of research undertaken and the resourcing to deliver it is estimated at only 69p on the ￡1 being funded across the sector...
“There is a huge wedge that is being cross-subsidised through international students and other mechanisms.
“That can’t continue over the next decade if we are to see the kind of progress that we want.”
06:38 PM GMT
Jump in cost of borrowing ‘worrying’, says top economist
The spike in UK bond prices is “worrying”, a leading economist has said.
Julian Jessop wrote on X: “It’s premature to talk about a ‘meltdown’, but today’s jump in the cost of UK government borrowing is worrying (especially when yields in other advanced economies are flat or down slightly)
06:30 PM GMT
Architect of Corbynomics attacks Reeves’s Budget
A professor of accounting who is credited as the guru behind Jeremy Corbyn’s economics has attacked the Budget, saying that it will harm young people.
Richard Murphy said: “I would have loved to say that Rachel Reeves took me by surprise and got everything right yesterday. But she didn’t. In a budget dominated by her obsession to balance her books she got most things wrong. And that‘s bad news for Labour, the economy, and us all...
“It might go down in Labour history as the most unfriendly budget towards the employment of young and lower paid people that a Labour Chancellor has ever been responsible for.
“I welcome the fact that Rachel Reeves has increased the minimum wage ... But, this move, coupled with an increase in national insurance charges for those employers who are in particular employing a lot of people on low wages, will see a massive increase in their tax burden, and that is going to have a serious knock-on effect for the employment of young people and the employment of people on low levels of income.”
06:19 PM GMT
Market ‘isn’t convinced’ in Reeves’s investment plan
Markets are unconvinced by the likely success of Labour’s plans for growth, a City analyst has said.
Megum Muhic, a strategist at RBC Capital Markets, said: “It seems like the market isn’t convinced the spending measures announced will be able to drive growth in the UK.”
It comes on a day when investors sold UK government bonds and pushed down stock market prices.
Laurence Mutkin, at BMO Capital Markets in the City, said: “We reckon the sell-off in gilts has further to go.”
06:11 PM GMT
Budget ‘no way to treat’ farmers and food producers, says MP
Yesterday’s Budget is “no way to treat” farmers and food producers, MPs have heard.
Conservative MP Neil Hudson claimed in the Commons today that the Government had broken its promises to farmers.
Treasury minister James Murray said on Thursday that changes to the agricultural property relief from inheritance tax will still allow family farms to pass down through the generations.
According to Budget papers, from April 2026 farmers will be able to claim a 100pc relief from inheritance tax on the first ￡1 million of combined agricultural and business assets, falling to 50pc beyond that.
The Government is “restricting the generosity of agricultural relief” in a bid to make the inheritance tax system “fairer”.
It will also put almost ￡600m towards flood defences and farm schemes in 2024/25, but warned “it is necessary to review these plans” for future years.
But Mr Hudson warned “the last thing this sector needed was to learn it will now not get the stability and the support of investment that is so desperately needed”.
He told MPs: “To state in the Budget document that farm schemes and flood defence funding are going to be ‘reviewed’ is no way to treat our farmers and rural communities.
“We’ve heard a lot today about agricultural property relief but changes to agricultural property relief could devastate our farming sector, risking decimation of the sector we rely on to feed us and to support our environment.
“The impact of this policy on family farms, the tenanted sector and our food security would be untold.
06:01 PM GMT
Shoppers told to expect higher prices after ‘shameless’ tax raid on farmers
The price of fresh vegetables grown in Britain could rise by as much as 20pc after Labour launched a “shameless” tax raid on farmers.
Growers of British berries, tomatoes, cucumbers, broccoli and peppers have warned they will be forced to push up prices in the wake of the Budget.
Farmers are among the businesses facing steeper employment costs following an increase in the minimum wage as well as an increase in employer National Insurance contributions (NICs).
The Lea Valley Growers Association (LVGA), whose members grow three-quarters of Britain’s cucumber, aubergine and sweet pepper crop, said higher costs “cannot be absorbed by growers so will be passed on to shoppers”.
Lee Stiles, from the LVGA, said: “Prices for next year had already been agreed with supermarkets prior to the Budget. However, these will now have to be revisited.”
He said wages were the biggest overhead cost for farmers, meaning Ms Reeves’ decision to increase the cost of employing workers would necessarily impact prices.
Mr Stiles said: “The additional tax burden imposed by the Government could result in prices rising for cucumbers, tomatoes, peppers and aubergines by an additional 10-20pc.”
05:57 PM GMT
Reeves jobs tax raid will not raise ‘anything like’ ￡25bn, says IFS
Rachel Reeves’s tax raid on employer national insurance contributions will not raise “anything like” the ￡25bn claimed by the Chancellor, the Institute for Fiscal Studies (IFS) has said.
Paul Johnson, director of the IFS said the jobs tax raid will result in lower wages, reducing the amount of revenue raised from employer National Insurance contributions.
Lower wages will also reduce the amount of tax collected from employee National Insurance contributions (NICs) and income tax.
This means that the Government will raise only ￡10bn after accounting for lower pay awards and its decision to shield public sector workers.
Mr Johnson said: “This increase will not actually get the Treasury anything like the ￡25bn stated on the scorecard.
“So, not quite such the big revenue raiser as it looks at first glance.”
His comments echo warnings from the Office for Budget Responsibility on Wednesday that Labour’s increase in employer NICs reduces its net revenue to raise ￡10bn.
Mr Johnson said that public finance figures “still look shaky” despite Labour’s spending and tax raising plans.
He said the Chancellor will struggle to comply with her new rule to balance the current budget by a margin of ￡10bn because of failure to increase fuel duties and changes to interest rate expectations.
The think tank estimated that this will cost ￡5bn a year by the end of Parliament, wiping out much of that headroom.
It means that Labour will need to find an extra ￡9bn to avoid cutting spending on unprotected departments such as transport and the environment, Mr Johnson added.
05:34 PM GMT
Budget optimism ‘has evaporated’, says broker
Government borrowing costs jumped today after markets reacted negatively to Rachel Reeves’s first Budget.
British government bond prices tumbled for a second day as investors sold them, as investors judged finance minister Rachel Reeves’ first budget would boost inflation and cause the Bank of England to cut interest rates more slowly.
The premium that Britain pays above Germany to service its debt spiked to its largest level since Liz Truss’s mini-Budget, while investors also sent share prices and the value of the pound down.
The yield premium of 10-year UK gilts over 10-year German Bunds rose above 2.08 percentage points and closed at its highest since Oct 2022 when markets were still in turmoil after the mini-Budget.
Ten-year gilt yields hit a one-year high of 4.526pc during trading today.
Britain’s budget watchdog said Ms Reeves’s plans would boost economic growth in the short run, but it expected inflation would average 2.6pc next year compared with a previous 1.5pc forecast.
That prompted investors to reel in bets that the Bank of England would reduce interest rates rapidly over the next year.
The pound was set for its worst two-day loss against the euro in two years.
“The quiet optimism that appeared to be spreading during Rachel Reeves’ speech has evaporated and a higher risk premium has returned for UK debt,” said Susannah Streeter, head of money and markets at brokers Hargreaves Lansdown.
05:21 PM GMT
Downing Street declines to comment on the market’s reaction
Downing Street would not be drawn on the market reaction to Chancellor Rachel Reeves’ Budget after bond yields rose to their highest point in a year.
“It’s a matter of Government policy not to comment on market fluctuations,” the Prime Minister’s official spokeswoman said.
Asked if the Government is disappointed about the reaction after time was spent rolling the pitch before the Budget, she said: “The approach, as we’ve said earlier in the week, the approach that we took, was to ensure that there was the proper context around the steps that we were taking ... what this Budget does first and foremost is restore economic stability. I think that people have heard that direct from the Chancellor.”
05:17 PM GMT
Homeowners could ‘see mortgages creeping up again’, warns broker
Traders still believe that the Bank of England will cut interest rates by a quarter of a percentage point in November - but “we might start to see mortgages creeping up again”, a broker has claimed.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Based on what’s happened to the two-year gilt, we might start to see mortgages creeping up again, just when borrowers thought we were on a firmly downward path.”
DeAnne Julius, a former member of the Monetary Policy Committee, told Bloomberg that the Budget “definitely keeps [the Bank of England] on a cautious track. This one has quite a significant net financial loosening, especially in the first couple of years, so my judgment would be it is net inflationary.”
05:11 PM GMT
Budget ‘biggest-ever assult on competiveness’, says Hunt
Jeremy Hunt has accused Labour of “the biggest-ever assault on our economic competitiveness”.
During a Commons Budget debate on Thursday, the Conservative shadow chancellor confessed he liked “neither” the 2022 mini-budget during Liz Truss’s premiership nor the tax and spend plans which Chancellor Rachel Reeves unveiled this week.
But Mr Hunt himself faced allegations of a “dereliction of duty” from Cabinet Office minister Pat McFadden, who described Labour’s approach as “investment and reform together” and pointed to “a hospital building programme brought from fiction to reality”.
The shadow chancellor said: “Without remorse and without hesitation, a triumphalist Government has ripped up the pre-election promises they made in the biggest-ever assault on our economic competitiveness since the 1970s.
“Let’s look at the promises cast aside so casually. The Chancellor said she would not change the debt target because - her words - ‘I’m not going to try to fiddle the figures or make something different to get better results’. Yesterday, she did exactly that.”
Mr Hunt added: “When we said in the election taxes would go up by ￡2,000 per household over four years the Prime Minister (Sir Keir Starmer) accused (former prime minister Rishi Sunak) of a deliberate lie. Three months on, they will not go up by ￡2,000 over four years, they will go up by ￡2,000 every year.”
Asked by Liberal Democrat MP Max Wilkinson whether he preferred the 2022 mini-budget or Labour’s approach, he replied: “I actually like neither.
“I was the person who reversed the decisions made in the mini-budget, but I will say this, at least Liz Truss wanted to grow the economy and said so explicitly.
“What we had yesterday is a Budget where the Government’s official forecaster said the impact would be lower growth. It will mean fewer jobs, lower investment.”
05:09 PM GMT
Reeves attempts to reassure markets after sell-off
Rachel Reeves sought to reassure the markets after Budget caused a sell-off. In an interview with Bloomberg TV, she said that the “number one commitment” of the government was “economic and fiscal stability.”
She added: “We have more headroom than the previous government left us, and that is important. We have now put our public finances on a stable and a solid trajectory.”
05:06 PM GMT
Housing market faces ‘softer demand’ after Budget
The housing market will be hit by “softer demand” as a result of the Budget, a leading economics consultancy has said.
Capital Economics told clients: “While neither the increase in the stamp duty surcharge nor the end of the higher nil band thresholds dramatically worsen the outlook for affordability, at the margin those decisions will lead to softer demand. But the timing of demand will change, with some activity brought forward to before the nil band thresholds are reduced at the end of March 2025.
“Instead, we think the main risk for housing demand as a result of the Budget stems from the indirect impact on households’ incomes and mortgage rates. We know that the tax rises announced in the Budget will mean that real household incomes are lower than otherwise.”
05:03 PM GMT
FTSE indexes slide to near three-month lows on Budget angst
The UK’s main stock indexes fell to a near three-month low on Thursday as investors scaled back bets of rate cuts from the Bank of England following Rachel Reeves’s new big-spending plans which has revived worries about inflation.
The blue-chip FTSE 100 dropped 0.6pc, while the domestically focused FTSE 250 fell 1.5pc. Both the indexes touched their weakest level since August 8 and looked set for monthly losses.
Rate-sensitive homebuilder stocks tumbled about 6% as British short-term borrowing costs jumped.
Rachel Reeves announced the biggest tax increases in three decades in her first budget on Wednesday, saying she needed to spend heavily to repair the country’s public services.
Britain’s independent budget forecaster said her plans would boost the size of the world’s sixth-largest economy in the short run but raise inflation too, prompting investors to rein in bets that the Bank of England will reduce rates rapidly over the next year.
05:02 PM GMT
Chancellor’s vape tap increase will ‘hurt working people’ says Labour MP
A Labour MP has hit out at the Chancellor’s tax increase on vape liquid, warning it will discourage people from quitting smoking.
Mary Glindon argued the increase, which will occur in October 2026, is “unsustainably high” and will “hurt working people” who rely on vapes.
According to the Newcastle upon Tyne East and Wallsend MP, the cost of vaping liquid is expected to rise by 267pc, as a result of the Labour Government’s proposals.
During the Budget debate in the Commons, Ms Glindon said: “As chair for the APPG (All-Party Parliamentary Group) on responsible vaping, I have concerns about the announced tax on vaping liquid from 2026.
“There are still six million smokers who are yet to make the switch to vaping, to now put a tax on vaping will only serve to discourage these smokers to quit.
“The vaping tax proposed by the Chancellor is unsustainably high, at 22p per millilitre of vape liquid this will make the UK’s tax one of the highest in Europe.
“This tax will also hurt working people throughout the North East who rely on vaping to keep them off cigarettes.
“Currently, many stores will sell vaping liquid for refillable devices for 99p, under the Chancellor’s proposals this will increase by 267pc to ￡3.64.
“Access to vaping liquids is not what is driving youth vaping, the Government is already looking to address this through the Tobacco and Vapes Bill.”
Ms Glindon said many people’s decision to “switch from smoking to the less-harmful alternative” has saved the NHS “tens of thousands of pounds per person”.
In the Budget, Chancellor Rachel Reeves also set out increases of 2pc on tobacco and 10pc for hand-rolled tobacco.
05:01 PM GMT
Voters woke up on Halloween ‘with fear and a feeling of betrayal’, says Tory frontbencher
Debating the Budget today, Tory shadow minister Gareth Davies told the Commons: “Our country has woken up this morning to a new but darker dawn with fear and a feeling of betrayal. They have woken up to a number of headlines I’m not sure the Chancellor (Rachel Reeves) was expecting or hoping for.
“Just to name a few: ‘Halloween Horror Show’ (Daily Express), a ‘￡40 billion tax bombshell for Britain’s strivers’ (Daily Mail), ‘Things can only debt better’ (Metro) which I particularly liked, and even The Guardian laments the ‘Return of Labour’s tax and spend’ (sic).
“It is indeed a Budget that has broken our economic fundamentals. They performed their biggest U-turn yet and reversed our economic recovery. Let us never forget, they inherited the fastest growth in the G7, inflation at target and a deficit which is half what we inherited from them.
“Their first act was to ‘spook’ consumer and business confidence which fell more sharply than at any time since the pandemic, and now we see those worst fears being realised.
“Of course, almost every conceivable metric, the latest figures on our economy make for grim reading even for Halloween - the highest tax burden in history, debt up, rising as a share of GDP in every year of the forecast, and debt interest payments above ￡100 billion in every year of the forecast.”
04:55 PM GMT
FTSE closes down
The FTSE 100 closed down 0.6pc today.
The top riser was packaging giant DS Smith, up 14.3pc, followed by Shell, up 3.5pc.
At the other end of the index, hip replacement maker Smith & Nephew dropped 12.5pc, followed by housebuilder Persimmon, which lost 7.5pc.
Meanwhile, the mid-cap FTSE 250 fell 1.5pc. TBC Bank was the biggest riser, gaining 4.6pc, followed by Wag Payments, which rose 3.6pc.
The biggest faller was IT group Kainos, which lost 12.6pc, followed by housebuilder Bellway, which lost 7pc.
04:43 PM GMT
Microsoft hit by loss from OpenAI
Microsoft has warned investors of a $1.5bn hit on its profits thanks to the tech giant’s $13bn bet on artificial intelligence start-up OpenAI.
On the company’s earnings call, Microsoft chief financial officer, Amy Hood, admitted the company’s “other income” would be “roughly negative $1.5bn primarily driven by our share of the expected loss from OpenAI”.
The $3 trillion technology company has invested heavily in OpenAI, which expects to lose billions of dollars this year as it attempts to convince businesses and consumers to pay for its digital chatbot technology.
The Silicon Valley AI start-up has spent heavily on computing power to “train” an updated version of its ChatGPT technology.
Despite the loss, Ms Hood insisted that Microsoft’s deal with OpenAI had been “pivotal in building and scaling our AI business”. Earlier this month, OpenAI was valued at $157bn by investors after raising $6.6bn from investors.
On Wednesday night, Microsoft reported an increase in revenues of 16pc to almost $65.6bn, while its net income climbed 11pc to $24.7bn. Microsoft has launched a series of chatbots and AI tools, branded Copilot, which provide digital assistants to businesses and consumers.
“Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” said Satya Nadella, Microsoft chief executive.
However, despite the surge in profits Microsoft’s shares fell by 5.5pc as spending on AI threatened to eat into the tech giant’s profits.
04:37 PM GMT
Wall Street slides as Meta and Microsoft trigger fears over AI costs
Wall Street fell this afternoon, after warnings from Microsoft and Facebook owner Meta Platforms about escalating AI costs curtailed enthusiasm for technology stocks, which have driven the market rally this year.
Shares of Facebook-owner Meta Platforms dropped 4.1pc, while Microsoft fell 5.5pc, despite both companies beating earnings estimates in results reported after the market closed on Wednesday.
Quincy Krosby, chief global strategist for LPL Financial, said: “The market, overall, has been disappointed with mega tech guidance, especially with regard to Meta’s AI expenditures as well as slower-than-anticipated integration of AI into Microsoft’s cloud platform.”
04:32 PM GMT
Sainsbury’s sells Argos credit card business for ￡720m
Sainsbury’s has agreed to sell its Argos credit cards business for ￡720m as the chain continues to retreat from financial services and home in on food.
The card portfolio will be acquired by credit provider NewDay Group.
Argos, which is owned by Sainsbury’s, sees about 20pc of all its sales supported by its credit cards, which are held by some two million customers.
The cards offer credit plans and buy now, pay later options for shoppers to manage the cost of their purchases.
Customers are charged 34.9pc interest on any remaining balance if they do not pay in full on time.
Argos card customers will not need to take any action as a result of the announcement, the firms said.
Sainsbury’s said the expected ￡720m purchase price should reflect the net value of loan balances and provisions at the end of March next year, when the acquisition is set to complete.
The agreement comes several months after Sainsbury’s struck a deal with NatWest to sell the bulk of its banking business, including personal loans, credit card balances and customer deposits.
04:14 PM GMT
UK markets hit by ‘inflation panic’, warns Japanese bank
UK markets have reacted negatively to the Budget today, with stocks, bonds and Sterling all down.
Evelyne Gomez-Liechti, a strategist at Mizuho International, told Bloomberg: “There seems to be an inflation panic at the moment. [Investors are] still worried about how inflationary the budget may be, how loose it is, and how much it can change the [Bank of England’s] reaction in cutting rates.”
04:11 PM GMT
Sterling spirals as investors fret over the Budget
The pound fell on Thursday, set for its worst two-day loss against the euro in two years, after investors were spooked by Rachel Reeves’s tax-and-spend Budget that could reignite inflation and weigh on growth.
Sterling was heading for a two-day loss of 0.7pc against the euro, the largest since September 2022, when then-prime minister Liz Truss unleashed turmoil on UK financial markets.
Ms Reeves’ budget on Wednesday contained the biggest tax increases since 1993 as she sought to repair Britain’s public services, and she also changed the Government’s fiscal rules to increase borrowing for investment to boost the economy.
Giving the euro an extra boost against the pound was data on Wednesday that showed a surprise pick-up in the German economy, which has flatlined for months, while the dollar got a lift from yet more evidence on Thursday of the strength of the US economy.
“A lot of news over the last day or two from Europe and the US and so it’s perhaps more difficult to remove just the UK effect from that, so it makes the movements a little more opaque,” Rabobank currency strategist Jane Foley said.
“But we can certainly see that this Budget has had a large effect,” she said.
The Office for Budget Responsibility (OBR), whose forecasts underpin British government budgets, now expects inflation will average 2.6pc next year, compared with a previous 1.5pc forecast.
A sell-off in UK government bonds accelerated on Thursday, sending two-year gilt yields up to their highest since May.
04:06 PM GMT
Bank of England will cut rates more slowly because of Budget, says Capital Economics
A leading economics consultancy has said that the Budget means higher interest rates than would otherwise be the case. But it believes the market is now being too pessimistic about rate cuts.
Capital Economics told clients: “We think there are valid reasons for the Bank to move slower than the ECB [European Central Bank] and the [US} Fed, including the policies in the UK Budget. That said, we still think rates will fall below the 4pc priced into the market....
“Since fiscal policy is being tightened by less than the previous government’s plans, the Bank will conclude that demand will be stronger than otherwise.
“And since any boost to supply from public investment being higher than previously planned will take a number of years to come through, the Bank will conclude that the Budget raises demand relative to supply and supports inflation over the next few years.
“Other things being equal, that would increase the chances that interest rates need to be more restrictive to generate more slack to compensate.”
03:57 PM GMT
Reeves’s Budget offers ‘gloom and decline’, says economist
The Budget offers “doom and decline” in service to “an ideology that punishes the aspirers and the achievers”, an economist has claimed.
Madsen Pirie, president of the Adam Smith Institute, said: “Many economists have rightly pointed out that the budget represents a triumph of ideology over opportunity.
“Inevitably there is a comparison with the postwar Attlee government which could have pursued policies to rebuild a war-torn economy, as happened with the defeated powers Germany and Japan. Instead it was squandered on nationalisation and welfare policies that discouraged effort and enterprise.
“It has now happened again. Investment through pension funds and savings could have sparked the growth that can create wealth. Instead they have been punished.
“Business activity that can create jobs has been clobbered with higher taxes.
“Neither the civil service nor the NHS can promote growth. They represent the real black hole in the economy, sucking in money without improving productivity.
“In the name of an ideology that punishes the aspirers and the achievers, the opportunity has been lost to rebuild a vibrant UK that could face the future with confidence. Gloom and decline have prevailed instead.”
03:55 PM GMT
Cinema chain labels Budget ‘an absolute disaster’
A cinema group has attacked the Budget, saying that it will mean fewer jobs.
Adam Cunard, managing director of the Picturedrome group, told Bloomberg: “This is an absolute disaster. All it’s going to mean is fewer jobs, and fewer decent jobs because we won’t be able to offer the hours.”
Bloomberg reported that he employs 110 people, mostly part-time and that addition costs on employing people would knock 30pc from his company’s bottom line.
03:46 PM GMT
Bond market’s reaction ‘akin to the Liz Truss budget’
Kathleen Brooks, research director at investment platform XTB, said: “The Budget has not been well received by the bond market ... This is another sign that the Chancellor overestimated the market’s desire to absorb more sovereign debt issuance from the UK.
“While it is true that bond yields are rising around Europe and the US, the UK is the clear under-performer today. The 10-year Gilt yield is now at the highest level of the year so far, as the bond market gives its verdict on the first Labour budget.
“There is a sense of panic around this budget, which is akin to the Liz Truss budget. Jeremy Hunt stabilised the ship back in 2022, now it is swaying around, without the anchor of fiscal prudence. How high will UK yields go? Now they have breached the 4.5pc level, what is to stop them surging further? Will the BOE need to step in, like they did in 2022?
“The risk is to the pensions market and the mortgage market, which could materially impact UK economic growth. Today’s move in bond yields will add millions to the UK’s debt bill, it will also push up mortgage rates for thousands of homeowners. The budget has also triggered a rapid recalibration of rate cut expectations in the UK...
“The question now is, will the government perform some sort of U-turn? They will not want to do so politically, but they may be forced too financially. If we continue to see UK yields rise at this pace, then Reeves may find she does not last long in her job.”
03:40 PM GMT
Budget will destroy hundreds of thousands of jobs, claim family businesses
A campaign group representing family businesses has attacked the Budget, saying that it will “force many to be sold or cease trading with hundreds of thousands of jobs lost across the country”.
Family Business UK said that the tax changes “will mean that for most family businesses the effective tax rate on succession will be nearly 40pc, not the 20pc detailed in the Budget changes”.
It added: “Family business owners typically retain 90pc of their wealth in the business so, in most cases, those inheriting the business will not be able to afford the tax levied. In this case money would be taken out of the business through a dividend payment – resulting in a much higher rate of tax.”
Peter White, founder of Nova Laboratories, which employs over 200 staff, said: “Following the Chancellor’s announcement, my son will now need to personally generate approximately ￡26 million of liquid cash on my death, to continue to own and manage our pharmaceutical company. This is 40 times his personal wealth, including the value of his family’s home and all possessions.”
“Unless the legitimate use of reliefs on family business shares are maintained in full, the incentive to create and grow a successful business, continually re-invest in the business, and provide smooth and stable succession will be completely lost in the UK.”
03:31 PM GMT
Interest rates ‘a big risk’ for the Chancellor, says OBR chairman
Richard Hughes, chairman of the Office for Budget Responsibility, speaking at the Resolution Foundation today, said: “Net debt, at least on one measure, the measure the previous Chancellor was targeting, is rising every year.
“As a consequence of that, and the fact that interest rates in this country have remained stubbornly high and have been rising recently, you have got an interest bill which never falls below ￡100bn, in our forecast. I think that is pretty much the first time ever we have had a forecast where debt interest cost for the Government never fell below ￡100bn.
“Just because you are not targeting net debt doesn’t mean it does not matter - you have still got to service that debt that you have got. What happens to interest rates going forward is also a big risk, and potential claim on that margin for risk that the Chancellor has set aside.”
03:23 PM GMT
Handing over
That’s all from me today, I’ll leave you in the hands of business reporter Alex Singleton.
I’ll leave you with the comments of James Smith, economist at the Resolution Foundation, from this morning when we only knew about yesterday’s rise in gilt yields.
“There has been a really big increase in borrowing here. Debt is going up. There is something like ￡150bn more borrowing here, debt to GDP is going up by about four percentage points as a result of that, and that is really a big change.
03:16 PM GMT
Budget pushes Britain’s borrowing costs to 12-month high
Britain’s borrowing costs have surged to a 12-month high amid concerns that Rachel Reeves’ Budget will keep interest rates higher for longer.
Benchmark ten-year borrowing costs rose have surged to 4.52pc, its highest level since October 2023.
It reflects increasing alarm among investors about the Chancellor’s ￡32bn-a-year increase in borrowing, which analysts highlighted would not all be used to fund investment.
Meanwhile, the pound has further weakened against the dollar this afternoon, dropping 0.8pc to $1.285.
03:02 PM GMT
Labour’s ‘pretence’ over taxes on working people undermines trust, says IFS
Labour’s “pretence” that the Budget tax rises will not affect working people risks harming the public trust, an independent economics think tank
Paul Johnson, director of the Institute for Fiscal Studies, said it is “disappointing” that Labour’s Red Book contains claims that the Government is not increasing National Insurance contributions.
He said: “The continued pretence that these changes will not affect working people risks further undermining trust.”
Mr Johnson also urged Ms Reeves to “reflect on the damage” caused by allowing pre-Budget rumours to circulate for so long.
This included speculation that Labour was preparing to change the income tax treatment of pensions, spurring savers to withdraw tax-free cash lump sums from their pensions early.
02:47 PM GMT
Budget fallout leaves FTSE in the red
British stocks have slumped amid concerns that Rachel Reeves’ tax rises will hamper UK growth.
The FTSE 100 is down 1pc at 8,073.02, while the FTSE 250 midcap index has fallen by 1.7pc 20,336.33
Meanwhile, the pound has fallen sharply against the dollar. Sterling dropped to a low of $1.288 this afternoon before paring back losses. The pound has yet to recover to the pre-Budget level of $1.30.
02:34 PM GMT
Budget leaves Britain with ‘no wiggle room’ on new borrowing targets
Rachel Reeves has given herself “almost no wiggle room” despite redrawing fiscal rules to unleash ￡100bn for public investment in schools, rail, and hospitals.
Paul Johnson, director of the Institute for Fiscal Studies, said: “There is almost no wiggle room against the two new fiscal targets, even after changing the definition of debt.
“Ms Reeves has almost as little headroom against her debt target as Jeremy Hunt had against his.
“She’s meeting her borrowing target only by repeating the same silly manoeuvres as her predecessors used to make it look as if the books were balanced.”
Mr Johnson predicted that the Chancellor’s spending plans will “not survive contact with her Cabinet colleagues”.
The Chancellor on Wednesday set a new fiscal rule defining debt as public sector net financial liabilities, or “net financial debt”. This measure incorporates not only the Government’s liabilities but also its financial assets.
The Office for Budget Responsibility on Wednesday cuts its growth forecasts for most of this decade in response to the Budget, as economists warned that higher spending would provide a temporary boost but ultimately leave Britain with years of lower growth and higher prices.
Mr Johnson said: “What we didn’t see in this Budget was something that’s going to make a big difference to growth over this parliament.”
02:11 PM GMT
IFS accuses Rachel Reeves of playing ‘silly games’
Paul Johnson, director of the Institute for Fiscal Studies, has accused the Chancellor of playing “the same silly games” in her maiden Budget.
His comments were in response to Labour’s spending plans, which see day-to-day spending rising rapidly by 4.3pc this year and 2.6pc next year before slowing down to just 1.3pc per year from 2026.
Mr Johnson warned that keeping spending to just a 1.3pc increase will be “extremely challenging, to put it mildly”. He said:
“I am willing to bet a substantial sum that day-to-day public service spending will in fact increase considerably more quickly than supposedly planned after next year.
01:58 PM GMT
Borrowing costs hit highest level this year in wake of Budget
UK borrowing costs have hit their highest levels this year as economists warned that Rachel Reeves’ borrowing binge to fund public spending will keep interest rates higher for longer.
Benchmark ten-year borrowing costs rose by almost 0.1 percentage points to 4.44pc on Thursday as nervous investors fretted about the Chancellor’s ￡32bn-a-year increase in borrowing, which analysts highlighted would not all be used to fund investment.
Two-year yields, which most closely reflect bets on Bank of England interest rates, rose by a similar amount to 4.43pc, the highest since June.
01:31 PM GMT
Rachel Reeves’ borrowing binge will keep interest rates higher for longer, economists warn
Analysts at Goldman Sachs and JP Morgan said they now only expected only one more interest rate cut this year given “much higher spending” pencilled in by Ms Reeves, which will fuel inflation.
Allan Monks, chief UK economist at JP Morgan, said: “The Bank will still likely cut in November even after incorporating the fiscal changes into its forecasts.
“But we are now more confident it will hold in December, barring downside surprises in wages and services inflation. We continue to forecast rates at 3.75pc by the end of next year. That had been looking too high, but the Budget takes out a lot of the downside risk.”
He warned that Ms Reeves’ decision to fund some of her day-to-day spending commitments by borrowing more would be inflationary and require the Bank to keep rates higher for longer.
“The impact of this might not have been so consequential for the Bank if a good portion of it was investment,” he said. “However, public investment accounts for only a third of the ￡60bn to ￡70bn increase in the path for government spending over the coming years.”
While inflation is currently below the Bank of England’s 2pc target, the Office for Budget Responsibility (OBR), the Government’s tax and spending watchdog, expects it to rise and does not believe the Bank to hit its 2pc inflation target again until 2029.
Gabriella Dickens and David Page at Axa Investment Managers added that the huge amount of debt the UK planned to issue also posed a risk to growth. Higher borrowing risks driving up debt costs and could hobble the economy as more of our tax revenues are used to service that debt.
Britain’s debt interest bill is forecast by the OBR to be more than ￡100bn a year for the next five years, hitting ￡122bn by the end of the decade. This is larger than the education budget.
Ms Dickens and Mr Page said: “Gilt issuance [is] extremely elevated. As a percent of GDP, gilt sales this year are estimated to total 5.6pc of GDP.
“However, allowing for the fact that the BoE is also running down its gilt holdings with passive maturities and active sale, the net effect is closer to 9pc of GDP – a level of supply that is comparable to 2008-09.”
12:48 PM GMT
Kremlin repeats calls for Google to pay $20 decillion fine
Russia has repeated calls for Google to remove its ban on Russian TV channels broadcasting on YouTube after fining the technology giant around $20 decillion.
Google has blocked more than 1,000 Russian channels on YouTube including state-sponsored news, and over 5.5m videos. The US company stopped serving adverts to users in Russia in 2022 and paused monetisation of content deemed to exploit, dismiss or condone Russia’s war in Ukraine.
Judges in Moscow are now seeking around $20 decillion in compensation from the technology giant, a figure which is many times the estimated $100-trillion size of the global economy. If written out in full, the fine would be 20 followed by 33 zeros.
Kremlin spokesman Dmitry Peskov on Thursday said the enormous sum is symbolic. He said:
“These demands - they simply demonstrate the essence of our channels’ claims against Google.
Google said that the ongoing legal matters will not have a material adverse effect on the company.
Matthew Field, senior technology reporter, explains how the astronomical sums were calculated.
12:32 PM GMT
Pound strengthens as traders expect fewer interest rate cuts
The British pound has slightly strengthened against the dollar as the Budget fuels expectations of fewer interest rate cuts.
Sterling this morning rose as much as 0.16pc to $1.299, after ending yesterday at $1.297. Meanwhile, the pound advanced slightly against the euro at 83.655 pence.
Sterling fell initially against the dollar during Rachel Reeves’ speech on Wednesday, from $1.30 to $1.294.
Money markets are predicting an 80pc chance that the Bank of England will lower interest rates by 25 basis points at its meeting next week.
However, traders now expect fewer than four rate cuts over the next year - down from nearly five quarter-point reductions as forecasted before the Budget.
12:15 PM GMT
Labour tax hikes will leave businesses ‘vulnerable to cyber attacks’, industry body warns
Rachel Reeves’ tax rises could leave small businesses exposed to cyber attacks, the British Computer Society has warned.
The professional society for workers in IT and software engineering sectors expressed “deep concern” that small businesses hit by Labour’s tax rises will save costs by cutting spending on cyber security.
Alina Timofeeva, a board member for the British Computer Society, said: “The increased tax burden on small businesses will inevitably lead to reduced investment in critical areas like AI security, cyber security and innovation.
“This could leave them more vulnerable to cyber attacks, which are on the rise and stifling innovation and growth.”
11:50 AM GMT
Most of Budget tax rises will be passed on to private sector employees, says IFS
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said that workers in the private sector are likely to bear the brunt of tax rises in the Budget.
He warned that businesses will pass most costs onto employees, which could result in fewer pay rises and reduced hiring.
This means that the public sector could end up hiring more people who would otherwise have worked in the private sector.
However, Mr Johnson said this doesn’t mean a public sector employee will end up being paid a lot more.
He said: “You would expect in the medium term, public sector pay to track that in the private sector. So this is not necessarily a great boom to public sector employees.”
11:28 AM GMT
GB News fined ￡100,000 for breaking impartiality rules
GB News has been fined ￡100,000 for an “egregious” breach of impartiality rules when hosting a debate with Rishi Sunak, the former prime minister.
Ofcom, the media regulator, said the TV channel had failed to maintain balance during the hour-long question and answer programme, People’s Forum: The Prime Minister.
It said Mr Sunak had largely been able to air his views in an “uncontested” format in February in the run up to the General Election.
Here’s what Angelos Frangopoulos, chief executive of GB News, had to say in response...
11:23 AM GMT
Government will need to raise taxes further, IFS warns
Rising debt interest payments mean the Government will need to raise substantially more in tax than it spends on public services, a leading think tank has warned.
Britain’s borrowing costs have surged to their highest level in nearly a year after the Chancellor’s debt-fuelled spending spree spooked bond markets.
Rachel Reeves on Wednesday announced plans to plans to sell nearly ￡300bn of gilts this year – more than the ￡278bn predicted by the UK debt office in April. It means that UK borrowing will increase on average by ￡28bn per year over the course of Parliament, or ￡142bn in total.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), warned that higher borrowing costs will result in higher taxes.
“We need to run substantial primary surpluses to avoid debt running away.
He added that rising debt interest was “part of the genuinely difficult inheritance” the new Government had, saying the previous government “must take a lot of the responsibility”.
10:53 AM GMT
Budget document contains “nonsense” claims on NI, say IFS researchers
The Treasury has been accused of including “clearly” untrue “nonsense” claims in its Budget document after insisting that National Insurance contributions rates will not rise.
Helen Miller, deputy director and head of tax at the Institute for Fiscal Studies (IFS), said the claims are “clearly not true”
Her colleague Ben Zaranko, a senior research economist at the IFS, criticised the claims as “nonsense” and questioned whether they breach civil service rules.
10:33 AM GMT
Budget is a ‘step backwards’ for Britain, says Canary Wharf chairman
Sir Nigel Wilson has said that Rachel Reeves’ Budget represented a step backwards for Britain’s economic growth and urged the Government to get a plan in place for attracting investors put off by her tax changes.
Mr Wilson, who is chairman of Canary Wharf Group, said on BBC Radio 4’s Today programme that the Budget did not recognise the role that the private sector could play in driving real wage increases and investment into projects.
Mr Wilson, who was previously chief executive of Legal & General, said Britain has “stepped backwards in terms of economic growth and money in people’s pockets”.
He said: “In the short term, [the Budget is] not good for business investment.”
Mr Wilson added that he did not think the building projects the Government is currently focusing on “are going to make much of a difference to the economy”.
He said: “We have all these embryonic growth industries in the UK, but we’re too small. We’re falling way behind America in terms of our growth and ambition.
“We’re simply not investing enough in UK growth. There wasn’t really any plans about housing [or] energy. We have the highest energy price in Europe, which is shocking, but we have, potentially, low-cost energy sitting everywhere across the UK. Wind, solar, nuclear fusion, even.”
Mr Wilson said Britain has ￡6 trillion of long-term capital in the UK that needed to be redeployed into growth assets.
For Mr Wilson, a “detailed plan” is now needed as to how the private sector can drive growth and attract investment from domestic and international funds.
He said: “People have a very positive disposition towards the UK, it’s a great place to invest. London’s the best city in the world. But that’s not the message that we’re giving out to the investment community.
“We’re actually [saying] it’s gonna be all these complicated changes to our tax system and our working arrangements. This is going to discourage investors initially, but we have to reverse that on a grow-forward basis.”
10:28 AM GMT
Budget boost is a ‘temporary sugar rush’, warns OBR
Rachel Reeves’ spending plans will only provide a “temporary” boost to the economy, the spending watchdog has warned.
Richard Hughes, chairman of the Office for Budget Responsibility (OBR), said that although growth is forecasted to rise to 2pc next year, much of this growth is a “temporary sugar rush” from the Chancellor’s plans to increase borrowing.
He said: “That delivers a cash injection into an economy which is already pretty close to full capacity. And so you get a stimulus to demand, but pushes it above supply. That puts pressure on interest rates - both in the gilt markets, but also the Bank of England to try and bring the demand back into line of supply and bring inflation back to target.
Mr Huges said that the Budget does not make a “material difference” to the potential economic output in the medium term.
10:04 AM GMT
Income tax increases would have been ‘wrong choice’, says Reeves
Rachel Reeves has admitted there were “other choices” she could have made other than raising National Insurance for employers.
The Chancellor said that raising employer National Insurance contributions 1.2 percentage points to 15pc was necessary to address the “huge pressures” on public finances and public services.
She told the BBC Today programme: “There were other choices available. I could have increased income tax on national insurance on employees, but I felt that after the cost of living crisis over the last few years, that would have been the wrong choice.”
09:54 AM GMT
Vauxhall and Fiat owner hit by production issues and EV slowdown
The owner of Vauxhall has seen sales plunge by more than a quarter amid production issues and an electric vehicle (EV) slowdown in Europe.
Stellantis, which also owns Citroen, Fiat and Peugeot, said revenues slumped from €45.1bn (￡37.6bn) to €33bn in the third quarter of 2024.
At the same time, the number of vehicles shipped by the company slipped from 1.5m to 1.3m over the period.
Bosses blamed delayed launches and tough competition in Europe as well as the lower numbers of cars shipped to the US, where the company is seeking to shift a surplus of cars that have piled up in sales lots.
In Europe, Stellantis and other car makers have complained they face tough new regulations aimed at boosting takeup of EVs even as inflation has battered households and cooled demand for the cars.
Citi analyst Harald Hendrikse said although Stellantis’ new car models may help stabilise sales next year, investors still need a “new longer-term strategy”.
09:42 AM GMT
Shell calls for ‘long-term certainty’ after Labour increases energy windfall tax
Energy giant Shell has called for more “long-term certainty” over North Sea tax policy after Labour announced a new tax raid on the profits of offshore oil and gas producers.
Chancellor Rachel Reeves’ budget yesterday confirmed plans to add 3pc to the windfall tax imposed by the last government - bringing the total tax rate on offshore oil and gas profits to 78pc. She also removed some of the sector’s tax break.
Sinaead Gorman, Shell’s chief financial officer, said: ““Elected officials just have to balance budgets in the best way they see fit [but] we have to look for policies that provide certainty… We invest over the long term.
She added: “We have seen a number of changes in the fiscal policy… in the last few years, but we continue to engage constructively with the Government on alternative fiscal regimes to support the future of the North Sea and that energy transition in the UK.”
Ms Gorman made her comments while announcing the company’s latest quarterly results. Adjusted earnings of $6bn (￡4.64bn) comfortably beating analysts’ predictions of $5.4bn (￡4.1bn) - largely due to better-than-expected earnings from its gas business.
Gas production was up 4.5% on the same period last year, while liquefaction volumes – turning natural gas into liquid – were up 9pc.
Shell said it would give more returns to investors by buying back a further $3.5bn (￡2.69 billion) of its shares.
It marks the twelfth consecutive quarter that Shell has rewarded shareholders with more than three billion dollars (￡2.31bn) in buybacks.
09:09 AM GMT
Employers warn of crisis as Reeves increases NI contributions
Corporate Britain has sounded a warning about hiring freezes and pay cuts after emerging as the biggest loser of a ￡40bn tax raid.
Bosses lashed out at plans to increase employers’ National Insurance by 1.2 percentage points to 15pc from April. As part of plans to raise ￡25bn, the Government is also lowering the level at which they have to start paying it.
Pubs, restaurants and cafes which rely on part-time staff could see their tax bills rise by a collective ￡1bn as a result of the changes, UKHospitality warned, as firms will have to start paying National Insurance Contributions (NICs) for staff who earn more than ￡5,000 a year.
It is feared that the changes will ultimately lead companies to create fewer jobs and give out smaller pay rises.
08:58 AM GMT
Labour ‘mortgaging future of the NHS’, warns shadow chancellor
Jeremy Hunt has accused the Government of “mortgaging the future of the NHS” in its Budget.
The shadow chancellor said that Rachel Reeves took the “easy route” in her spending plans by choosing to “pick the pockets of businesses that don’t have a vote”.
Mr Hunt said that the “difficult choice” would have been to find more money for the NHS through welfare reforms and public sector productivity savings.
Speaking on the BBC Today programme, Mr Hunt said: “In the end, the way you pay for the NHS, the police, schools, the armed forces is actually with a strong economy, and let’s be blunt, with a strong private sector, it is businesses paying their taxes that, in the end, pay for our public services.
“And what we did not hear yesterday was a plan to grow the economy, and that is what we needed.”
Ms Reeves pledged to increase the NHS’s day-today budget by ￡22bn and promised a ￡3.1bn increase in capital spending this year and next.
08:46 AM GMT
The Budget will delay interest rate cuts, says Goldman Sachs
Borrowing costs are unlikely to fall in December following the Chancellor’s decision to increase borrowing in her Budget, analysts have said.
Goldman Sachs said that it now expects the Bank of England to maintain interest rates at its meeting in December, revising its previous forecast of a 25-basis-point rate reduction.
“Prospects for stronger 2025 growth are likely to reduce the urgency for sequential cuts in the near term,” according to the bank’s economists.
“While a cut remains possible with large downside surprises to the data between now and December - particularly on inflation - we now believe that a pause is more likely.”
Goldman Sachs still expects the Bank of England to reduce borrowing costs by 25-basis-point next week because of previous communication and faster than expected progress on inflation.
08:34 AM GMT
Budweiser-brewing giant hit by China slump
The brewer behind Budweiser and Stella Artois has posted weaker beer sales after a slowdown in China.
AB InBev said recorded a 2.4pc decline in beer sales over the third quarter of 2024, compared with a year earlier.
The Belgian-Brazilian said that revenue from beer was weighed down by “soft” sales activity in China.
Meanwhile, the Camden Town Brewery owner said that said revenues were “flattish” in Europe, as customers buying more premium brands helped to offset lower sales volumes.
Total revenues increased 2.1pc during the period, partly driven by price increases.
08:11 AM GMT
FTSE slumps in Budget aftermath
The FTSE 100 has opened lower as trading resumes following yesterday’s Budget.
Britain’s blue-chip index opened 0.7pc lower at 8,102.31, before slightly recovering.
The FTSE 250 midcap index is down 0.4pc at 20,605.20.
08:06 AM GMT
National Insurance rises will hit profits, warns Reeves
Businesses’ profits will be hit by National Insurance rises, the Chancellor has warned.
Rachel Reeves told BBC Breakfast: “I said that it will have consequences. It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.
The Chancellor on Wednesday announced that employer National Insurance contributions will increase by 1.2 percentage points to 15pc from next April.
However, Ms Reeves noted that the Office of Budget Responsibility on Wednesday forecast that household incomes will increase during this Parliament.
She said: “That is a world away from the last Parliament, which was the worst Parliament ever for living standards.”
07:58 AM GMT
Brace for further tax rises, warns IFS
British households should brace for further tax rises, a leading think tank has warned.
Paul Johnson, director of The Institute for Fiscal Studies (IFS), has said that Labour’s spending plans “don’t look like the generous ones they immediately appear to be.”
Rachel Reeves on Wednesday unveiled a “significant and sustained increase in public spending”, including ￡25bn for the NHS and just under ￡12bn for schools over the next two years.
The Chancellor also vowed to “restore stability” to the British economy as she unveiled ￡40bn of tax rises in Labour’s first Budget in 14 years.
Mr Johnson said that although the Chancellor has planned for a “remarkable amount of additional spending” this year and further spending next year, spending plans grow “implausibly slowly” from 2026-27 onwards.
He argued that this could mean that Labour will be forced to further increase taxes from next year.
Speaking on the BBC’s Today programme, he said:
“It’s possible to argue on that we’ll be in a world in which spending rises so much this year and next that no more money will be needed for the next three years of this Parliament, but I bet an awful lot that that’s not what’s going to happen, particularly given the problems that Chancellor has clearly had selling this to her Cabinet colleagues this time around.
Mr Johnson also warned that most of the Budget’s National Insurance rises will certainly appear in lower wages.
The Chancellor on Wednesday unveiled plans to increase employer National Insurance contributions by ￡25bn.
Employers’ NI contributions will rise by 1.2 percentage points to 15pc from April 2025. The threshold at which companies start to pay contributions on an employee’s salary will also be lowered from from ￡9,100 per year to ￡5,000.
Speaking to the BBC Today programme, Mr Johnson said: “My employer might write the cheque for the National Insurance contributions, but I’ll effectively be paying for most of it because it’ll cost my employer more to employ me, and so my wages will be less than they otherwise would have been.”
07:48 AM GMT
Jeremy Hunt: Budget tax rises will hamper ‘strong economy’
Jeremy Hunt has claimed that tax rises in the Budget will hamper a “successful, strong economy”.
The shadow chancellor told BBC Breakfast: “We are going to have lower living standards, we are going to have higher prices, fewer jobs, more expensive mortgages, life is going to get tougher for ordinary people.”
He also claimed that the public is “very angry” about the Budget because Labour promises not to increase taxes beyond those contained in the Labour election manifesto.
He said: “Many people thought this was a new Labour prospectus, not a traditional tax and spend prospectus, and they have woken up to a Chancellor who has given us the biggest tax-raising Budget in history.”
07:32 AM GMT
Rachel Reeves: ‘Budget wiped the slate clean’
Rachel Reeves said she did not want to repeat the choices made in her first Budget “ever again” but could not guarantee she would raise income tax thresholds in future.
Asked if she could guarantee they will rise in line with inflation after this, the Chancellor told Times Radio:
“I’m not going to be able to write future budgets, but look, this was an exceptional Budget.
07:30 AM GMT
Good morning
5 things to start your day
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Budget 2024 summary: Key points from Rachel Reeves’s speech | A summary of the main takeaways from the Chancellor’s speech
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Lord Mandelson leads exodus at bank founded by Labour party donor | Reshuffle comes after bank was hit by surprise winding up petition from HMRC
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We still use fax machines because unions insist we do, claims rail operator | Northern Rail says it would find shift to more modern alternative difficult
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Saudi Arabia’s start-up airline places ￡6bn plane order in challenge to Gulf rivals | Riyadh Air strikes deal to buy 60 short-haul jets as it takes on Emirates and Qatar
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Roger Bootle: There are at least three ways Labour could boost growth – the Budget missed them all | Reeves appears to want to mimic the sclerotic economies across the Channel
What happened overnight
On Wall Street, the Dow Jones Industrial Average fell 0.2pc, to 42,141.54, the S&P 500 fell 0.3pc, to 5,813.67, and the Nasdaq Composite fell 0.6pc, to 18,607.93.
The benchmark 10-year US Treasury yield was 4.303pc last night, after reaching a nearly four-month peak of 4.339pc on Tuesday.
Asian equities fell Thursday after US stocks and government bonds dropped as robust economic data blurred the picture for imminent Federal Reserve rate cuts.
Shares in Australia and Japan opened lower, and a gauge of US-listed Chinese companies slipped in New York trading on Wednesday.
Treasuries were steady in Asian trading, while Australian and New Zealand yields rose. A measure of the global bond market fell to the lowest level in almost three months on Wednesday. Traders trimmed bets on policy easing after data showed that the US economy expanded at a robust pace in the third quarter, helped along by accelerating household purchases and defence spending.
The prospect of a Donald Trump victory in next week’s US presidential election prompted some to voice concerns over inflation.
Elsewhere in Asia, the yen was little changed at around 153 per dollar ahead of the Bank of Japan’s interest rate decision, where it is expected to stand pat at 0.25pc. Taiwan will suspend trading on its stock exchange Thursday as a powerful typhoon barrels toward the archipelago.