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Bank of England made ‘persistent and systematic’ errors, official admits

The Bank of England made 'persistent and systematic' errors with its forecasts, one of its officials has admitted
The Bank of England made 'persistent and systematic' errors with its forecasts, one of its officials has admitted - TOLGA AKMEN/EPA-EFE/Shutterstock

The Bank of England made “persistent and systematic” errors in its forecasts about inflation, one of its policymakers has said.

Swati Dhingra, an external member of the Monetary Policy Committee, was one of two officials to vote for a reduction in interest rates from 5.25pc to 5pc on Thursday. In the event, rates were kept on hold.

Ms Dhingra was speaking at a conference hosted by King’s College London following former Federal Reserve chair Ben Bernanke’s review into the Bank of England’s forecasting errors.

Inflation surged to 11.1pc in October 2022, leading the Bank of England to raise interest rates to 16-year highs.

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Ms Dhingra said: “At the end of the day even these statistical models will systematically over predict or under predict ... when a turning point comes they are going to do exactly the opposite.

“Even the best forecasting models, they will always have inherent and some level of uncertainty and inaccuracy.”

Her comments come as the Bank of England’s chief economist warned about the risk of being “seduced” by data showing a slowdown in inflation after his boss said interest rate cuts will be needed soon.

Huw Pill, who voted for interest rates to remain at 5.25pc, said the Monetary Policy Committee which sets rates must make sure “that we ensure that inflation is at target on a lasting and sustainable basis”.

Mr Pill was speaking a day after Governor Andrew Bailey said that interest rate cuts will be needed and could happen faster than markets anticipate.

It comes as Britain exited recession with faster-than-expected growth at the start of the year.

Money markets traders are currently betting that there is a 60pc chance of a rate cut happening in June.

Inflation has fallen to 3.2pc and Mr Bailey said that the Bank believes inflation may already be at its 2pc target following a drop in the energy price cap.

Read the latest updates below.


06:07 PM BST

Signing off

Thanks for joining us on the Markets blog on a gloriously sunny day here in London, which saw the FTSE 100 close on a record high for a fifth straight session. Investors were cheered by the Bank of England’s dovish tone while the British economy grew more than expected in the first quarter of the year.

My colleague Chris Price will be back on Monday morning before the London markets open to report on all the latest from the City and further afield.


06:04 PM BST

How Friday became a non-working day

Fridays are the most popular day to work from home.

But the trend benefits the wealthy, reports Ben Butcher, with the figures that professionals are 18 times more likely to be at home or elsewhere than workers doing elementary jobs, according to an Office for National Statistics (ONS) survey conducted at the start of last year.

Read the full report...


05:28 PM BST

European shares close at record high amid rate cut optimism

Europe’s main stock index closed at a record high on Friday - just like the FTSE 100 - and is on track for its biggest weekly gain since late January. It came amid growing bets on interest rate cuts across the continent and a strong earnings season.

The pan-European Stoxx 600, which includes UK businesses such as Vodafone and BAE Systems, ended 0.7pc higher, with indexes in major economies Germany and France finishing at record highs.

European shares have resumed their record-breaking rally, with the Stoxx 600 notching a 3pc weekly gain, after investors took a breather in April.

The euphoria around artificial intelligence and monetary policy easing, among others, had sparked bumper gains in the region’s stocks since late 2023.

Highlighting Europe’s divergence from the US Federal Reserve and boosting equities, the Bank of England hinted at summer rate cuts and Sweden’s Riksbank delivered its first cut since 2016 earlier this week.

Minutes from the ECB’s April policy meeting showed that policymakers favoured kicking off the monetary policy easing cycle in June, while remaining confident that inflation is on track to fall back to 2pc next year.

Carsten Brzeski of ING Research said:

Looking beyond June, the path for the bank is anything but clear. The risk of reflation has clearly increased.

Any signs of reflation and also stronger economic activity would limit the ECB’s room for manoeuvre.


04:54 PM BST

Footsie closes up

The FTSE 100 hit another record after better than expected GDP figures. It closed up 0.6pc, with St James’s Place the biggest riser, up 3.2pc, followed by Spirax-Sarco Engineering, up 3.pc. The biggest faller was Rightmove, down 5.5pc, followed by Rolls-Royce, down 2.4pc.

Meanwhile, the mid-cap FTSE 250 likewise rose 0.6pc. The top riser was magazing publisher Future, up 7.1pc, followed by landscaping supplier Marshalls, up 6pc. The worst performer today was Auction Technology, down 3.6pc, followed by BBGI Global Infrastructure, down 3.4pc.


04:38 PM BST

Economic growth likely to be constrained, economist warns

Despite a strong start to the year, the economy risks being constrined by a failure to boost productivity growth. Yael Selfin, chief economist at KPMG UK, said:

Despite the better near-term outlook, the improvement in GDP growth looks likely to be constrained by the ongoing weakness in productivity growth as well as reduced scope to increase employment levels.

GDP per head rose for the first time in two years in the first quarter, up 0.4pc, but was 0.7pc lower than a year earlier, highlighting the ongoing squeeze on living standards and Britain’s struggle to boost productivity.

Gora Suri, economist at PwC, said:

In per capita terms, it could be said that UK households have seen little meaningful improvement in living standards in the last two years.


04:26 PM BST

Gordon Ramsay hit by £3.4m loss at restaurant empire

Gordon Ramsay’s restaurant empire has suffered a £3.4m loss as it battles soaring costs and uncertainty triggered by the wars in Gaza and Ukraine. Daniel Woolfson reports:

Losses at the celebrity chef’s company, which includes the three star Michelin restaurant bearing his name in Chelsea, West London, more than tripled in the year to 27 August compared with almost £1.1m a year earlier.

It came despite a 21pc increase in sales to almost £96m during the period, latest accounts showed.

Andy Wenlock, managing director at Gordon Ramsay Restaurants, said: “The UK economy continues to see significant impacts and risks arising from geopolitical issues, with international tensions and wars across the Middle East, Asia and Europe, together with global supply chain challenges and inflationary pressures impacting commodity, food and utility prices for both the group, and consumers in general.”

Founded by Ramsay in 1998, the group is one of the UK’s largest private restaurant companies with 34 restaurants in the UK and a further 22 overseas under licence.

Read the full story...

Gordon Ramsay at his Versailles restaurant, 2008
Gordon Ramsay at his Versailles restaurant, 2008 - Stephane de Sakutin/AFP/Getty Images

04:12 PM BST

President Biden could impose new tariffs on Chinese cars next week, reports suggest

America could be about to impose hefty new tariffs on key Chinese exports, including electric vechicles, according to reports.

Reuters said that the Biden administration is poised to unveil a sweeping decision on China tariffs as soon as next week, one that’s expected to target key sectors while rejecting the across-the-board hikes sought by Donald Trump, according to sources it has spoken with.

The decision is the culmination of a review of so-called Section 301 tariffs first put into place under Trump starting in 2018. The new tariffs are understood to focus on industries including electric vehicles, batteries and solar cells, with existing levies largely being maintained. An announcement is scheduled for Tuesday, two sources said.

While a decision could be delayed, it nonetheless represents one of Mr Biden’s biggest moves in the economic race with China. It builds on his call last month to hike tariffs on Chinese steel and aluminum, and the formal launch of a fresh probe into China’s shipbuilding industry.

The yuan weakened on the news, while the CSI 300 Index of Chinese shares fell as much as 0.6pc in early trading before paring about half of its decline.

“It’ll definitely cause investors to pause on stocks that are potentially exposed,” said Xin-Yao Ng, director of investment at abrdn, adding that many green-tech brands such as battery giant Contemporary Amperex Technology Company have already limited their US exposure. “Everyone knows it’s a risk.”


04:05 PM BST

Why Britain’s ‘gangbusters’ growth could sting Sunak

Good news on the economy could deliver a “sting in the tail for the Prime Minister”, senior economics reporter Tim Wallace says in his latest report:

Hours after official figures confirmed that Britain was out of recession and back to growth, Rishi Sunak declared that “things are starting to feel better”.

Speaking at a visit to a business in Oxfordshire, the Prime Minister said: “After undoubtedly a difficult couple of years that the country has had, actually now things are starting to feel better.

“Confidence is returning to the economy and the country, and I hope that you’re starting to feel that too.”

The economy is certainly growing strongly by recent standards. GDP expanded by 0.6pc in the first three months of the year, ending an official recession that had lasted for the second half of 2023.

Grant Fitzner, chief economist at the Office for National Statistics, used the word “gangbusters” to describe the performance, noting that almost every part of the services industry is growing while trade also contributed to the rebound.

But there’s a downside. Read the full analysis...

Rishi Sunak speaks during a visit to Siemens Healthineers in Eynsham in Oxfordshire today
Rishi Sunak speaks during a visit to Siemens Healthineers in Eynsham in Oxfordshire today - Jacob King/Pool via AP

03:59 PM BST

Motors.co.uk could buy troubled Cazoo

Motors.co.uk is considering buying troubled second hand car website Cazoo, a report has suggested.

Sky News reported that Motors.co.uk is “a leading contender” to acquire Cazoo’s brand and intellectual property assets.

The potential buyer was founded in 2007 by Daily Mail and General Trust, which sold the website three years later. It is now owned by O3 Industries, a private equity firm, and Novum Capital.

Motors.co.uk and Cazoo declined to comment.

Earlier this week, we reported that Cazoo had filed a notice that it intends to appoint administrators at the High Court.


03:44 PM BST

Japanese carmaker Honda reports booming profit amid rising Chinese competition

Honda’s profit for the financial year to March jumped 70pc as vehicle sales grew and a weak yen buoyed overseas earnings, the Japanese automaker reported Friday.

Annual profit at Honda Motor Co totaled 1.1 trillion yen (£5.6bn) as sales surged nearly 21pc to 20.4 billion yen.

Honda sold more than 2.8 million vehicles globally, up from 2.3 million a year earlier, with sales growing in Japan, the US and Europe.

The maker of the Accord was less optimistic about this fiscal year, forecasting that its profit will decline nearly 10pc to 1 trillion yen, as research and development spending was expected to increase.

All the Japanese automakers are investing in R&D, given the global shift to electric vehicles, using the profit gains they have racked up lately thanks to the blessings of a weak yen to invest in the future.

Honda’s Japanese rivals, Toyota and Nissan, which had already reported their results, racked up robust increases in profit, but also stressed they were investing in research.

Honda chief executive Toshihiro Mibe told reporters there was “anxiety due to uncertainty about electrification” at the company, despite its latest robust profits.

Japanese carmakers have scored great success with traditional petrol-powered vehicles and hybrids.

But they have lagged rivals such as BYD of China and Tesla of the US in the drive toward battery electric vehicles.

The Honda headquarters in Toyko
The Honda headquarters in Toyko - Kimimasa Mayama/EPA-EFE/Shutterstock

03:37 PM BST

Handing over

That’s all from me after another eventful day in which it has been confirmed that Britain has exited recession.

It has seen the FTSE 100 and several European markets hit fresh record highs amid hopes for interest rate cuts after the Bank of England shifted its stance towards lowering borrowing costs in the coming months.

Until the end of the day, Alex Singleton will make sure you are kept up to speed with how markets close out the week.


03:26 PM BST

China EV maker poised to surge as shares list in US

Shares of a China-based electric-vehicle maker were indicated to open up to 19pc above their initial public offering price  in New York today.

It gives Zeekr Intelligent Technology a fully diluted valuation of $6.55bn (£5.2bn) in the biggest US listing by a China-based company since 2021.


03:16 PM BST

We made ‘persistent and systematic’ forecasting errors, says Bank of England official

The Bank of England made “persistent and systematic” errors in its forecasts about inflation, one of its policymaker has said.

Swati Dhingra, an external member of the Monetary Policy Committee, was one of two officials to vote for a reduction in interest rates from 5.25pc to 5pc on Thursday. In the event, rates were kept on hold.

Ms Dhingra was speaking at a conference hosted by King’s College London following former Federal Reserve chair Ben Bernanke’s review into the Bank of England’s forecasting errors.

Inflation surged to 11.1pc in October 2022, leading the Bank of England to raise interest rates to 16-year highs.

Ms Dhingra said:

At the end of the day even these statistical models will systematically over predict or under predict ... when a turning point comes they are going to do exactly the opposite.

Even the best forecasting models, they will always have inherent and some level of uncertainty and inaccuracy.


03:04 PM BST

Morrisons workers to go on strike in pensions dispute

Workers at supermarket giant Morrisons are to strike in a dispute over pensions.

Unite said almost 1,000 of its members working as warehouse stock controllers, canteen staff and administrators voted overwhelmingly to take industrial action.

The workers, based in Cheshire and Wakefield, will strike from May 23 to 26 and from June 13 to 16.

The union said changes to pension contributions could leave workers £500 worse off.

Unite general secretary Sharon Graham said: “Unite is focused on our members’ jobs, pay and conditions and these unmerited changes to workers’ pensions will leave our members worse off every month.”

Morrisons has been approached for comment.

Morrisons supermarket staff have voted to take industrial action
Morrisons supermarket staff have voted to take industrial action - Ian West/PA Wire

02:49 PM BST

Telegraph readers: ‘Slowly but surely, Sunak is turning things around’

Rishi Sunak “inherited a total mess and is doing a very good job” according to some Telegraph readers, who have been debating what Britain’s exit from recession means for them and for the country.

Here is a selection of some of the viewpoints - and you can join the debate, below, by clicking here.


02:37 PM BST

US markets rise at the opening bell

Wall Street’s main indexes opened higher after economic data this week supported bets of interest rate cuts.

The Dow Jones Industrial Average rose 78.8 points, or 0.2pc, at the open to 39466.52.

The S&P 500 rose 11.4 points, or 0.2pc, at the open to 5225.49​, while the Nasdaq Composite rose 42.8 points, or 0.3pc, to 16389.024 at the opening bell.


02:10 PM BST

Fed should move ‘carefully’ towards inflation target, says policymaker

The US Federal Reserve should proceed “carefully and deliberately” as inflation moves towards its 2pc target, a policymaker has urged.

Governor Michelle Bowman echoed calls made this week by colleagues for interest rates to stay higher for longer as the American economy proves resilient.

In a speech in Texas, she said:

It is of utmost importance that we maintain credibility in pursuing our fight against inflation by proceeding carefully and deliberately to achieve our 2pc goal.

Michelle Bowman, governor of the US Federal Reserve, said policymakers had to retain 'credibility' in the fight against inflation
Michelle Bowman, governor of the US Federal Reserve, said policymakers had to retain 'credibility' in the fight against inflation - Julia Nikhinson/Bloomberg

01:54 PM BST

PM: Things are starting to feel better

Rishi Sunak has insisted that “things are starting to feel better” and that confidence in the economy is growing after the UK economy moved out of recession.

The Prime Minister reiterated his view that the Government’s economic plan was working as he visited a business facility in Eynsham, Oxfordshire.

It comes after the Office for National Statistics (ONS) said gross domestic product (GDP) is estimated to have risen by 0.6pc over the first quarter of 2024, following two quarters of decline last year.

Mr Sunak was joined the Chancellor Jeremy Hunt and Conservative MP for Witney Robert Courts as he was shown around the Siemens Healthineers factory, which manufactures magnets used inside MRI scanners.

Speaking to Siemens staff during a PM Connect event at the facility, Mr Sunak said:

After undoubtedly a difficult couple of years that the country has had, actually now things are starting to feel better.

Confidence is returning to the economy and the country, and I hope that you’re starting to feel that too.

Rishi Sunak and Jeremy Hunt visited the Siemens Healthineers medical scanning equipment factory near Oxford
Rishi Sunak and Jeremy Hunt visited the Siemens Healthineers medical scanning equipment factory near Oxford - JACOB KING/POOL/AFP via Getty Images

01:30 PM BST

Pictured: Protesters arrested after storming Tesla factory

Police have arrested a number of protesters who have stormed the Tesla gigafactory near Berlin.

Images show officers detaining campaigners at the scene. Local police have been contacted for more information.

There are reports on social media that some protesters have been injured.

More than 1,500 campaigners were expected to gather at the site in opposition to Tesla’s plan to expand its factory onto nearby forest.

Police officers detain an activist during the protest at the Tesla Grünheide factory
Police officers detain an activist during the protest at the Tesla Grünheide factory - REUTERS/Christian Mang
Activists oppose the expansion of the Tesla factory onto nearby woodland
Activists oppose the expansion of the Tesla factory onto nearby woodland - REUTERS/Christian Mang
Protesters broke through police lines and began running towards the facility
Protesters broke through police lines and began running towards the facility - REUTERS/Christian Mang

01:19 PM BST

We must not be ‘seduced’ into interest rate cuts, suggests Bank of England official

The chief economist at the Bank of England has warned about the risk of being “seduced” by data showing a slowdown in inflation after his boss said interest rate cuts will be needed soon.

Huw Pill, who voted for interest rates to remain at 5.25pc, said the Monetary Policy Committee which sets rates must make sure “that we ensure that inflation is at target on a lasting and sustainable basis”.

He was speaking a day after Governor Andrew Bailey said that interest rate cuts will be needed and could happen faster than markets anticipate. Markets put a 60pc chance of a rate cut happening in June.

Mr Pill told a web event: “We shouldn’t be seduced into drawing too much comfort from developments in inflation that are largely driven by factors that are external to us.”

Inflation has fallen to 3.2pc and Mr Bailey said that the Bank believes inflation may already be at its 2pc target following a drop in the energy price cap.

Bank of England chief economist Huw Pill said policymakers must not be 'seduced' by falling measures of inflation
Bank of England chief economist Huw Pill said policymakers must not be 'seduced' by falling measures of inflation - Hollie Adams/Bloomberg

12:58 PM BST

Watch: Eco-protesters storm Tesla gigafactory

Environmental protesters have broken through police lines and stormed the Tesla gigafactory in Berlin, posts on social media show.

Campaigners had gathered outside the site on Thursday in opposition to the electric vehicle maker’s plans to expand the site onto nearby forest. More than 1,500 people were expected to arrive at the site.

Images show protesters running towards the factory, with police offers trying to hold them back by spraying what appears to be mace.

Karolina Drzewo, a spokesman for the campaigners said: “At this camp we are working together to protect forests and water and for a real transport transition, beyond Tesla.”

Tesla has been contacted for comment.


12:39 PM BST

Novavax shares poised to rocket when US trading begins

Novavax shares have more than tripled in value in premarket trading in the US after it agreed a deal to sell its Covid vaccine with French pharmaceutical giant Sanofi.

The struggling American drugmaker’s stock has rocketed by as much as 217pc after the announcement of the licensing deal worth up to $1.2bn (£958m).

The agreement means the companies will co-commercialise Novavax’s Covid vaccine worldwide, except in some countries including India, Japan and South Korea, where the US firm already has partnership agreements.

Novavax will receive an upfront payment of $500m and up to $700m if it reaches certain milestones while Sanofi will take a 5pc stake in the US company.

It comes as stock markets are poised to move higher when the opening bell sounds on Wall Street later amid renewed hopes for interest rate cuts.

Traders are currently pricing in 46 basis points of rate cuts by the end of 2024, according to LSEG’s rate probabilities tool, with the first cut of a quarter of a percentage point expected in September.

In premarket trading, the Dow Jones Industrial Average was up 0.2pc, the S&P 500 had gained 0.3pc and futures on the Nasdaq 100 had gained 0.4pc.

Sanofi and Novavax have signed a licensing agreement worth up to $1.2bn to commercialise a combined Covid-19 vaccine
Sanofi and Novavax have signed a licensing agreement worth up to $1.2bn to commercialise a combined Covid-19 vaccine - ALAIN JOCARDJUSTIN TALLIS/AFP via Getty Images

12:16 PM BST

Jaguar Land Rover hits profits record

Jaguar Land Rover reported its highest annual profit in nine years amid “sustained global demand” for its high-end vehicles.

The luxury car maker made a pre-tax profit before exceptional items of £2.2bn - the most since 2015 - as it secured all-time peak revenues of £29bn.

It was boosted by record revenues of £7.9bn in the fourth quarter, taking its order book to 133,000 vehicles at the end of the financial year.

Some 76pc of orders were for Range Rover, Range Rover Sport and Defender models, while it has 28,700 sign ups to the waiting list for its Range Rover Electric.

Chief executive Adrian Mardell said:

This has been a year of great strategic progress at JLR and I would like to thank our clients, our people, our suppliers and partners for their role in our success.

We have delivered a record financial performance for the company, generating free cashflow of £2.3bn, enabling us to reduce net debt to £700m.

The foundation of this performance was the sustained global demand for our modern luxury vehicles, led by our Range Rover and Defender brands, underpinned by a consistent focus on operational improvement.

Jaguar Land Rover made record profits last year
Jaguar Land Rover made record profits last year - REUTERS/Phil Noble

11:50 AM BST

Leaky basement delays opening of flagship Ikea store on Oxford Street

Ikea has delayed the opening of its new flagship store on Oxford Street for a second time after discovering leaks in the building’s basement during renovation work.

Our retail editor Hannah Boland has the story:

The Swedish retailer said it was now planning to open the store next spring rather than this autumn. It means the project is around 18 months behind schedule.

Ikea had initially planned the opening of the flagship West End store for autumn 2023 as part of plans to reduce its reliance on out-of-town shops.

The latest delay comes after new issues emerged during the renovation of the former Topshop store, which has sat empty since 2021 when the retailer’s owner Arcadia collapsed into administration.

The London site is now owned by the investment arm of Ingka, the largest franchisee of Ikea.

Read how the delays is a further blow to Oxford Street.

Ikea's Oxford Street store in London is currently under renovation
Ikea's Oxford Street store in London is currently under renovation - David Parry/PA Wire

11:25 AM BST

Lidl raises staff pay for third time in 12 months ahead of store expansion

Lidl is increasing staff pay for the third time in a year as it prepares to open hundreds of new supermarkets across the country.

Our retail editor Hannah Boland has the details:

The German discounter said it was making its pay more competitive ahead of a hiring drive, piling pressure on traditional rivals by raising hourly rates to £12.40 from £12 outside of London and to £13.65 from £13.55 in the capital.

It claimed this represented the best hourly pay in the sector, following previous increases in September last year and in March.

The latest pay bump also comes just weeks after Lidl launched a fresh challenge to established British grocers by unveiling plans to open hundreds more stores.

The company said it was targeting cities such as Edinburgh and Leeds and suburban towns like Didcot and Woking.

It follows a period of slower expansion for the business, as Lidl had prioritised investment in bolstering its warehouses.

However, Richard Taylor, chief development officer at Lidl’s UK business, said the business was now positioned for further expansion.

German supermarket group Lidl will increase staff pay for the third time in a year
German supermarket group Lidl will increase staff pay for the third time in a year - JUSTIN TALLIS/AFP/Getty Images

11:04 AM BST

Housing market will improve this year, says Rightmove

Rightmove is expecting improvements in the UK property market this year, forecasting that its customer numbers will grow slightly compared to 2023.

The UK’s largest property portal said it expects the number of customers to increase by 2pc year-on-year, compared to an earlier forecast of a “slight decrease”.

It said that while ongoing high mortgage rates and long completion times on transactions continue to weigh on the market, customers are “now increasingly looking to transact”.

Sales agreed between January and April were 17pc higher than the same period last year, with 1.1m sales forecast to take place over 2024.

The company said its house price index indicates annual house price growth of 1.7pc, the highest for 12 months.

Rightmove released the data as part of a trading update on Friday ahead of its annual shareholder meeting.

The statistics, released ahead of Rightmove’s annual shareholder meeting, appear to support analysis by Halifax earlier this week, which suggested house hunters are adapting to a radically different market to that of a few years ago.

On Wednesday, Amanda Bryden, head of mortgages at Halifax, said the housing market was “finding its feet in an era of higher interest rates”.

Rightmove thinks the property market will pick up this year
Rightmove thinks the property market will pick up this year - Stringer/Anadolu via Getty Images

10:45 AM BST

Oil rises amid hopes for interest rate cuts

Oil advanced for a third day to trade at a one-week high as US jobs data supported the case for Federal Reserve rate cuts this year.

Brent crude, the international benchmark, rose 0.4pc to push above $84 a barrel after a two-day climb that added about 1pc.

US-produced West Texas Intermediate neared $80.

It comes after initial applications for US unemployment benefits increased to the highest level since August, supporting the case for looser monetary policy.

Meanwhile, the Bank of England also indicated it is expecting to make interest rate cuts soon, giving encouragement to investors.


10:26 AM BST

UK recovery is surprisingly strong, say economists

To recap some of the views about today’s GDP figures, economists have said the British economy bounced back in “surprisingly strong” fashion in the first three months of the year, bringing to an end Britain’s technical recession.

The growth of 0.6pc in the first quarter was higher than the 0.4pc predicted by analysts.

George Lagarias, chief economist at Mazars, said the UK economy is “rebounding” and there is “no doubt that the British economy is mending”.

Hetal Mehta, head of economic research at asset manager St James’s Place, said “the very mild recession has ended with a bang” but warned it could mean an interest rate cut in June “now would look even more premature”.

Debapratim De, director of economic research at Deloitte, added:

Today’s GDP release confirms what business and consumer surveys have been pointing to for some time - that the UK is out of the recession it slipped into last year.

This is a surprisingly strong recovery and a likely turning point for the economy. If price pressures continue to ease this year, quarterly growth is expected to keep pace with the UK’s long-term trend.

This would mark an end to the period of low-to-no growth we have endured for almost two years.


10:08 AM BST

French and German stocks hit record highs

It is not just the FTSE 100 hitting record highs today.

Growing hopes that the Bank of England, US Federal Reserve and other central banks are close to cutting interest rates helped to also push stock indexes in Germany and France to records, while Asian markets also chalked up healthy gains.

The Cac 40 in Paris has risen 0.8pc to 8,250.26 while the Dax in Frankfurt was up 0.8pc to 18,830.79.

Overnight, Hong Kong continued an impressive run that has seen it enter a bull market after climbing more than 20pc from its January lows.

There were also gains in Tokyo, Sydney, Seoul, Mumbai, Singapore, Taipei, Wellington and Manila. Shanghai was flat.


09:59 AM BST

S4 Capital jumps as Sorrell hints at AI boom

In corporate news, digital marketing company S4 Capital has revealed its sales fell by a fifth after its boss Sir Martin Sorrell sounded a warning over an advertising slump.

However, shares in the company jumped 17pc after its boss said it was cashing in on artificial intelligence (AI) projects.

S4 reported revenues totalling £210m for the first three months of the year, down 20pc on a reported basis compared with the £262m generated this time last year.

One of the biggest drags on sales came from its technology services, which dropped by more than 30pc year on year.

Executive chairman Sir Martin, who founded the world’s largest advertising company WPP, has been vocal about the challenges facing the wider digital advertising world over the past year.

He emphasised that the sales slump reflects “volatile global macroeconomic conditions” and “general client caution”, particularly among its technology customers.

Looking ahead, he said: “In addition to significant new business activity, we continue to capitalise on our prominent AI positioning, developing multiple initial assignments as clients start to experiment with and implement applications.”

S4 Capital, which has worked on campaigns for brands including Google, Meta and BMW through its content division Media.Monks, axed its workforce by about 13pc last year to save costs.

S4 Capital executive chairman Sir Martin Sorrel said the agency is continuing to 'capitalise on our prominent AI positioning'
S4 Capital executive chairman Sir Martin Sorrel said the agency is continuing to 'capitalise on our prominent AI positioning' - REUTERS/Eric Gaillard

09:46 AM BST

FTSE 100 hits new record high

The FTSE 100 has extended its push into new record highs amid hopes for interest rate cuts.

The blue-chip stock index gained 0.6pc to an unprecedented 8,431.89.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:

Confidence breeds more optimism, and with the economy showing signs of repairing and the FTSE 100 rallying higher, the glass half full sentiment is settling in.

The blue-chip index has powered higher in early trade and set fresh records, after a sheen of positivity has descended on the UK.

Russ Mould, investment director at AJ Bell, said: “It feels as if the mood music on rates is changing. The UK market still feels very cheap on earnings and it’s still very unloved. If people decide to change their minds, it could be quite interesting.”


09:38 AM BST

Economy is ‘going gangbusters’, suggests Office for National Statistics

Britain’s economy is “going gangbusters,” the UK’s statistics office has said, as Britain escaped recession.

The Office for National Statistics (ONS) hailed the performance of the economy as gross domestic product (GDP) expanded by 0.6pc in the first quarter of 2024.

The expansion was ahead of analyst estimates of growth of 0.4pc and meant that the UK is no longer in recession after two consecutive quarters of contraction at the end of 2023.

ONS chief economist Grant Fitzner said: “To paraphrase the former Australian Prime Minister Paul Keating, you could say the economy is going gangbusters.”


09:20 AM BST

Gas prices rise amid rising demand for cooling

On the energy markets, the price of wholesale gas has edged higher and is on course for a second consecutive week of gains.

Europe’s benchmark contract has risen as much as 1.4pc today as heatwaves around the world increase demand for air conditioning.

Meanwhile, ongoing maintenance at facilities in Norway pose a risk to supply if the works overrun.

The UK’s equivalent gas contract has gained as much as 1.6pc in early trading.


09:02 AM BST

Truss government’s mistakes have been corrected, say Hunt

Chancellor Jeremy Hunt said the Government’s plan to cut national insurance is “an ambition” and that Liz Truss’s disastrous mini-budget was a mistake that has been corrected.

On the BBC Radio 4’s Today programme, Mr Hunt was asked about the 2022 mini-Budget that triggered market turmoil and how voters would respond to the news that the country’s GDP had grown by 0.6pc between January and March when they may still be facing mortgage rates that are edging up.

“There were mistakes made, it was wrong to do what was done and we corrected them within weeks,” Mr Hunt said.

He added that the Government does not yet have a timescale for its plan to cut national insurance and called it “an ambition”, rather than a policy.

The Conservatives are now focusing on bringing down the tax burden after having put it up to handle the pandemic and the cost-of-living crisis, he said.

Chancellor Jeremy Hunt said the mistakes of the Truss government have been 'corrected'
Chancellor Jeremy Hunt said the mistakes of the Truss government have been 'corrected' - REUTERS/Toby Melville

08:58 AM BST

Tories out of touch for celebrating end of recession, says Cooper

The shadow home secretary has labelled the Conservatives as “out of touch” for celebrating the UK exiting recession.

Yvette Cooper told Sky News:

The Government seems to think we should be grateful for the fact that we are no longer in recession and have low growth instead.

I think this still reflects the fact that working people are still worse off than they were 14 years ago, that people are still paying more on their mortgages, prices are still much higher and actually people are feeling really squeezed.

The idea of the Conservatives trying to do a victory lap on all of this and expecting everyone to think: ‘It’s all wonderful and we’ve never had it so good,’ just shows how out of touch they are.

Ms Cooper said the UK needed to focus on economic growth.

She said: “We need to get growth back on track. That means you need to get stability, you need to also get investment, you need to have that partnership with business, a proper industrial strategy, the proper support, the apprenticeships we need across the country, the investment in clean energy and in the new technologies we need for the future.”


08:38 AM BST

FTSE 100 hits record high as economy exits recession

The FTSE 100 has hit a fresh record high after the Bank of England signalled that it will make interest rate cuts soon and the economy grew faster-than-expected in the first three months of this year.

The blue-chip index climbed 0.5pc, notching an all-new peak and breaching the 8,400 mark. The mid-cap FTSE 250 inched up 0.3pc.

Both indexes were set to log a third consecutive week of gains, aided by a weaker pound.

The British economy exited a recession with a better-than-expected 0.6pc growth in the first quarter.

The figures came a day after Andrew Bailey, the Governor of the Bank of England, said interest rates could be cut at a pace that is “possibly more so than currently priced in market rates”.

He said that rate cuts in June were “neither ruled out nor a fait accompli”.

Precious metal miners were the top gainers among the FTSE 350 as gold prices rose 1pc.

Anglo American jumped 1.6pc after Rio Tinto considered an offer for the miner, according to a report in the Australian Financial Review.

IAG gained 0.7pc after the British Airways owner reported better-than-expected first-quarter earnings.


08:23 AM BST

British Airways owner’s profits soar as travel rebounds

In corporate news, the owner of airlines British Airways and Aer Lingus has said its earnings have soared in recent months thanks to higher sales and lower fuel costs.

International Airlines Group (IAG) said it was continuing to see a rebound in leisure travel.

It reported an operating profit for the first three months of the year of €68m (£58.5m), up from the €9m (£7.7m) reported this time last year.

Total revenues also jumped to €6.4bn (£5.5bn), up from €5.9bn (£5.1bn) last year, while fuel costs were about 5pc lower than the previous year, due to lower average prices and more efficient aircraft deliveries.

IAG said the improved profits and sales had been driven by stronger demand across its airlines, which also include Iberia and Vueling.

It highlighted demand for travel between major European cities, particularly for leisure, while business travel has recovered more slowly.

But conflict in the Middle East affected flying by most of its airlines to the region.

Shares rose 0.7pc in early trading.

British Airways owner IAG revealed soaring profits amid falling fuel costs
British Airways owner IAG revealed soaring profits amid falling fuel costs - Steve Parsons/PA Wire

08:17 AM BST

Hunt: We must continue to make difficult decisions

Chancellor Jeremy Hunt said the UK’s GDP growth shows that the Government’s decisions are paying off.

He said it was “encouraging” that the economy is growing faster than Germany, France, Italy and the United States.

“For families who have been having a really tough time this is an indication that difficult decisions that we have taken over recent years are beginning to pay off and we need to stick with them,” he told Sky News.

Asked how he expects voters to respond, he said: “We’re seeing that inflation is falling faster and I think people recognise it has been a very, very challenging period but they don’t vote for Conservative governments for us to do popular things, they trust is to do the right thing for the long-term benefit of the economy.”

He said the argument his party will be making for the upcoming election is that “we need to continue to make difficult decisions” to make the most of the potential for the country, for example in the labour market.

He said there was no date for the planned National Insurance cut, saying it would happen “when it’s affordable”.

He said the Government wants to “do the hard work” to bring taxes down, saying it will lead to more money being available for services such as the NHS and armed forces.


08:03 AM BST

UK markets open higher as economy grows

The FTSE 100 has begun the day higher as Britain’s economy expanded at a faster pace than expected.

The UK’s blue chip index rose by 0.4pc to 8,412.29 while the midcap FTSE 250 gained 0.3pc to 20,581.88.


07:58 AM BST

Britain has third fastest growth in G7 since Brexit vote

A good spot by Panmure Gordon chief economist Simon French about the pace of the UK’s economic growth since 2016 - the year of the Brexit vote:


07:52 AM BST

Bank of England will not rush to cut rates, say economists

The Bank of England will not be in a rush to cut interest rates after the economy grew faster than expected in the first three months of the year, according to economists.

Ruth Gregory, deputy chief UK economist at consultancy Capital Economics, said the 0.6pc increase in GDP suggests that the “recovery will be stronger than most forecasters anticipate”.

However, she added that economic growth “will be strong enough to prevent inflation from falling further and the Bank from cutting rates to 3pc next year”.

Money markets indicate that there is a 57pc chance that interest rates will be cut in June, with a cut priced in by August at the latest.

Ms Gregory said:

Admittedly, the increase in GDP in Q1 followed contraction of 0.3pc in Q4. And Q1 GDP was only 0.2pc higher than a year ago. So the economy is still fairly weak.

Even so, all the early indicators suggest that GDP growth rose robustly in April as well.

At the margin, this may mean the Bank of England doesn’t need to rush to cut interest rates.But the timing of the first interest rate cut will ultimately be determined by the next inflation and labour market releases.


07:42 AM BST

Pound rises as economy grows

The pound has gained after the economy exited recession at the start of the year.

Sterling has risen 0.1pc versus the dollar to $1.254, even after the Governor of the Bank of England signalled on Thursday that interest rate cuts will be needed this year.

The pound was up 0.1pc against the euro to €1.162.


07:33 AM BST

Sunak: The economy has turned a corner

The Prime Minister has, as you might expected, used the data showing Britain exited recession as evidence that his “plan is working”:


07:27 AM BST

Escaping recession is ‘hollow victory’, economists warn

As the UK economy returned to growth, ICAEW economics director Suren Thiru said:

These figures confirm an easy exit from the shallowest of recessions for the UK, as lower inflation helped return the economy to growth in the first quarter.

The UK’s escape from recession is a rather hollow victory because the big picture remains one of an economy struggling with stagnation, as poor productivity and high economic inactivity limits our growth potential.

The economy could struggle to kick on further in the second quarter as the boost to people’s incomes from weaker inflation is partly curtailed by renewed caution to spend and invest, amid higher unemployment and ongoing political uncertainty.

The strong exit from recession may inadvertently keep UK interest rates higher for longer by giving those policymakers still worried about underlying inflationary pressures enough comfort on economic conditions to continue putting off cutting rates.

Mohamed El-Erian, chief economic adviser at Allianz and president of Queens’ College, Cambridge, added:


07:20 AM BST

UK economy will continue to grow this year, say economists

Yael Selfin, chief economist at KPMG UK, said he expects the UK economy to continue to grow for the rest of the year. He said:

The UK economy grew by 0.6pc in the first quarter of 2024, emerging from the shallow technical recession it entered in the second half of 2023.

We expect to see continued growth for the rest of this year, supported by a more favourable economic backdrop.

Falling inflation and real pay increases should help repair some of the damage to household incomes and support households’ consumption.

Growth prospects have also improved in Europe, which could spur a recovery in exports.  

Despite the better near-term outlook, the improvement in GDP growth looks likely to be constrained by the ongoing weakness in productivity growth as well as reduced scope to increase employment levels.

This could see annual GDP growth in the region of just 1pc per year in the medium term.


07:12 AM BST

Hunt: We have proof the economy is returning to full health

As the economy exited recession, Chancellor Jeremy Hunt said:

There is no doubt it has been a difficult few years, but today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic.

We’re growing this year and have the best outlook among European G7 countries over the next six years, with wages growing faster than inflation, energy prices falling and tax cuts worth £900 to the average worker hitting bank accounts.


07:11 AM BST

Services industries lead growth in UK economy, says ONS

ONS director of economic statistics Liz McKeown said:

After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year.

There was broad-based strength across the services industries with retail, public transport and haulage, and health all performing well.

Car manufacturers also had a good quarter.

These were only a little offset by another weak quarter for construction.

In the month of March the economy grew robustly led, again, by services with wholesalers, the health sector and hospitality all doing well.


07:05 AM BST

Britain escapes recession after growth jumps

Britain has escaped recession after the economy grew at the start of the year, official figures show.

Gross domestic product (GDP) expanded by 0.6pc in the first quarter of 2024, according to the Office for National Statistics, which was ahead of analyst estimates of 0.4pc.

It means the UK is no longer in recession after two consecutive quarters of contraction at the end of 2023, when the economy shrank by 0.1pc in the third quarter and 0.3pc in the final three months of the year.

GDP grew by 0.4pc in March, by an upwardly-revised 0.2pc in February and by 0.3pc in January.


07:00 AM BST

Good morning

Thanks for joining me. After the excitement of the Governor of the Bank of England saying interest rate cuts are needed, today the latest official figures show Britain has exited recession.

Gross domestic product grew by 0.6pc during the first quarter, according to the Office for National Statistics.

5 things to start your day

1) Soaring immigration is fuelling Britain’s housing crisis, says Bank’s chief economist | Huw Pill said higher interest rates were not responsible for record hikes in rental costs

2) HSBC pushes Sunak to ease China crackdown | Banks fear new security rules will make doing business in Beijing more difficult

3) Trump ‘offered to block electric car rollout’ as he asked oil bosses for $1bn | Presidential candidate promises to dismantle Biden’s ‘ridiculous’ environmental rules

4) London’s stock market collapse is ‘massively overstated’, says Hunt | Chancellor attempts to assuage rising fears over Square Mile exodus

5) The charts that point to a summer interest rate cut | Easing inflation and a cooling jobs market suggest lower borrowing costs on the horizon

What happened overnight

Asian stocks rose and are on course for a third week of gains as the Bank of England helped stoke renewed confidence in markets.

Sterling was steady at $1.2515, having touched a more than two-week low of $1.2446 on Thursday after Bank of England paved the way for the start of rate cuts as soon as next month.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7pc and was on course for a nearly 1pc gain for the week, its third straight week of gains. Japan’s Nikkei was 0.4pc higher.

China stocks were lower, with blue-chip shares down 0.3pc as geopolitical concerns weighed on sentiment following a trade restriction list issued by the Biden administration and potential new China tariff.

Hong Kong’s Hang Seng Index though rose 2pc, having touched an eight-month high in early trading.

In America on Thursday, the Dow Jones Industrial Average rose 0.9pc, closing at 39,387.76, while the S&P 500 was up 0.5pc at 5,214.08 and the Nasdaq Composite rose 0.3pc, reaching 16,346.26 at close.

In the bond market, the yield on the 10-year Treasury bonds eased to 4.45pc from 4.50pc late on Wednesday.