Inflation fell to 2.3% in April, down from 3.2% in March, according to the Office for National Statistics (ONS), its lowest level in nearly three years. The data impacted the value of the pound positively; it reached a two-month high against the US dollar earlier this morning; however the FTSE fell, as economists had expected a steeper drop to 2.1%, meaning the market is now pricing in a first interest rate cut for November. Earlier, an August cut to the Bank Rate was anticipated. Also, services inflation, a critical indicator for Bank of England (BoE) policymakers, dipped only slightly from 6% in March to 5.9pc in April, compared to forecasts of a drop to 5.4%; and core inflation, which strips out volatile food and energy prices, fell from 4.2% to 3.9%, higher than predictions of a drop to 3.6%.

Reaction to today’s inflation figures: A Treasury spokesman said: “We rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine sent bills skyrocketing - but it wouldn’t be fair to leave future generations to pick up the tab. That’s why we must stick to the plan to get debt falling.  The economy is turning a corner, with strong growth this quarter and inflation close to target, allowing us to cut taxes for the average worker by £900 a year”. Prime Minister Rishi Sunak said that inflation is “back to normal” and “brighter days are ahead”. “Thanks to everyone’s hard work and resilience, today we have reached a major milestone,” he added. Speaking to ITV’s Good Morning Britain, Chancellor Jeremy Hunt said: “When it comes to the important things that make a difference, the difficult decisions on having a flexible labour market, on getting taxes down so that we attract investment from overseas, a Conservative Government will continue to take those difficult decisions”. Shadow Chancellor Rachel Reeves wrote on X: “Inflation has fallen but now is not the time for Conservative ministers to be popping champagne corks. Prices have soared, mortgage bills have risen and taxes are at a seventy year high. Only Labour can be trusted to protect and improve family finances”. Meanwhile, Labour’s Shadow Treasury Minister Darren Jones acknowledged inflation had “come down a bit” when speaking to Sky News, but noted that core inflation is still hot, so Britain is “not out of the woods yet”. “The problem there is if something happens in the world and gas prices rocket again, we are going to be back into that inflationary environment with very high bills,” he added. Former Business Secretary Sir Jacob Rees-Mogg said the Bank of England should have already cut interest rates, which stand at 16-year highs of 5.25%, as “inflation is a lagging indicator.” Paul Scully MP and Mark Francois MP, both former Conservative ministers, agreed; the Bank of England should consider cutting the interest rate now, they said, the former adding that would “bring relief to many who are fixing their mortgages for the next few years”. Julian Jessop of think tank The Institute of Economic Affairs said he believed a rate cut in June is “still in play,” an opinion shared by ICAEW economics director Suren Thiru, who said a “summer rate cut is still possible”. Rob Morgan, chief investment analyst at Charles Stanley, disagrees. He said: “Cutting rates would add fuel to the inflationary embers, which is intuitively the right course of action if the economy is in recession but a far more difficult call if it is expanding at a decent clip”. Yael Selfin, chief economist at KPMG UK, agreed, saying the data would not convince the BoE’s more cautious rate-setting Monetary Policy Committee members given “wage growth remains elevated and economic growth momentum is strong”.

Government borrowing for April was also released by the ONS this morning, and the data shows it was higher than forecast at £20.5bn, the fourth-highest April since records began in 1993. Public sector net debt excluding public sector banks at the end of April 2024 was provisionally estimated at 97.9% of gross domestic product (GDP), 2.5% more than at the end of April 2023.

House price data also came courtesy of the ONS this morning. The official statistics body says the average house price increased by 1.8% in the 12 months to March, to £283,000. UK private rents also increased by 8.9% in the 12 months to April, the OBN said.

The International Monetary Fund (IMF) has revised its predictions for the British economy this year and next upwards, to 0.7% and 1.5% respectively, . The new predictions wither match or beat Germany, France and Italy. The IMF is also urging the Government to launch a tax raid on inheritances and charge drivers for using the roads, saying Chancellor Jeremy Hunt has not budgeted enough money for health, social care or net zero. The global financial watchdog said Hunt’s plans “do not appear to sufficiently account for” these “known pressures in public services” and that raising taxes by another 1% of GDP would help raise spending while stabilising debt.

The former Post Office boss Paul Vennells is giving evidence to the inquiry into the Horizon scandal, starting today and, it is anticipated, until the end of the week. So far, she has apologised for the wrongful convictions of postmasters in one of Britain's biggest miscarriages of justice, but said she didn't believe the scandal had been caused by a conspiracy at the organisation.

Going nuclear: Energy Secretary Claire Coutinho has announced that the “preferred site” for Britain’s third large new nuclear power station is North Wales, in Wylfa on the island of Anglesey.  A number of other sites had been proposed for the plant, which is expected the generate 7% of Britain’s electricity, among them Sellafield in Cumbria, Bradwell in Essex, Heysham in Lancashire, and Hartlepool in County Durham. Tom Greatrex, chief executive of the Nuclear Industry Association, described Wylfa as “the best site in Europe for a big nuclear project” given that it “has an existing grid connection, the hard bedrock ideal for a nuclear power station, superior cooling water access, and some work to clear the site for large-scale construction was already done by the previous developer”. A spokesman for French state-owned power firm EDF described Wylfa as a “fantastic site” and said it wanted to bid to build the new plant. EDF is already overseeing construction of the two other new plants, Hinckley Point C and Sizewell C. Alison Downes, of Stop Sizewell C, told The Telegraph: “The Government seems determined to double down on gigawatt nuclear, the slowest most expensive energy source to build, which the British public – in the form of taxpayers and consumers – will be forced to pay for. We send our empathy to the people of Anglesey who will be forced to fight yet another inappropriate development. Our advice is to take very little of what is promised in the form of ‘community benefits’ at face value”.

BT has been fined £2.8m by regulator Ofcom because its EE and Plusnet businesses failed to provide clear and simple contract information to 1.3m customers before they signed up. This breached consumer protection rules, which came into effect in 2022. Ofcom said the fine “reflects the seriousness of this breach,” and suggested that in some cases, BT deliberately chose not to comply with the rules on time for cost reasons. A BT spokesman said: “We’re sorry that some of our pre-contract information and contract summary documents were not available to some of our customers in a timely manner. We apologise for any inconvenience caused and have taken steps to proactively contact affected customers and arrange for them to receive the information and be refunded where applicable”.

Citigroup has been fined £61.6m for trading systems and controls failures that led to $1.4bn (£1.1bn) worth of European equities being sold by mistake by a London trader across European trading exchanges in 2022 because of “poor design” and “ineffective” real-time monitoring. The trader was able to send $189bn (£155bn) to a trading algorithm, despite intending to sell a basket of equities worth only $58m (£46m), before he cancelled the order. Citi’s controls blocking $255bn (£200bn) from progressing, the FCA said. The mistake triggered “a material short-term drop in some European indices which lasted a few minutes,” the Financial Conduct Authority FCA said. The FCA fined Citi £27.77m, while the Bank of England’s Prudential Regulatory Authority (PRA) fined it £33.88m for related matters between 2018 and 2022. Both fines were reduced by 30% after Citi agreed to settle and resolve the issue.

The Payment Systems Regulator (PSR) said in an interim report yesterday that Mastercard and Visa are not facing effective competition in the payment processing marketplace and so it is not working well. Highlighted was the provisional conclusion that the UK's two dominant payment card schemes have increased fees substantially over the last five years - by more than 30% in real terms, the PSR said - but without improving service quality. Yet, businesses have little choice but to pay the higher costs because of their dominance. Together, Mastercard and Visa process 95% of transactions using UK-issued cards. The regulator also said pricing in the market was complex and opaque; that acquirers (who enable merchants to accept card payments) faced difficulties accessing clear information about fees; and that there are frequent delays and insufficient notice periods for fee changes. To address the issues, the PSR said it was considering a number of remedies, including improving transparency so businesses and acquirers could make more informed decisions, and requiring Mastercard and Visa to explain and consult on price changes. Additionally, the PSR suggested greater reporting of financial information from Mastercard and Visa to enhance regulatory scrutiny.

Severn Trent says it delivered an "industry-leading performance" in its latest set of annual results, reporting group turnover of £2.34bn, up from £2.17bn the year before, driven mainly by higher revenues in the Regulated Water and Wastewater business. Profit before interest and tax hit £512m, up from £509m the year prior.  The water company said it invested £1.20bn during the year, up 63% on the £740m invested in the previous 12 months. The FTSE 100 plc proposed a final dividend of 70.1p per share, up from 64.09p the previous year, giving a full-year payout of 116.84p, up from 106.82p previously. "The extra £1bn we raised from our investors will help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service," said CEO Liv Garfield, who also heralded capital schemes to “deliver storm overflow solutions across 900 locations in the Midlands this year” which “once finished, will see a reduction of 20% of spills per year."

Marks and Spencer has posted a 58% rise in full-year profit before tax, easily beating analysts’ forecasts, as it appears CEO Stuart Machin’s turnaround plan is paying off. Revenue up 9.3% on last year, reaching £13bn, helped by demand for clothing and food lines, up 5.3% and 13% respectively. Machin said: “We are becoming more relevant, to more people, more of the time”. M&S shares have surged over 9% this morning on the news, making it the biggest riser in the FTSE 100 at the time of writing.

Cazoo, the online used car sales firm has gone into administration, as anticipated here yesterday. Cazoo founder Alex Chesterman confirmed the appointment of Teneo later in the day. The administrator will now seek a sale to save 200 jobs.

Superdry is said by Sky News to be preparing an emergency four-week sale process if creditors block its founder Julian Dunkerton’s plans to inject up to £10m of his own money into the fashion chain in a bid to stave off insolvency. It was understood the firm’s proposed restructuring plan, which will not entail immediate shop closures but will impose sizeable rent cuts on landlords of dozens of Superdry outlets, will need to be approved by creditors, including landlords, in the coming weeks. Last month, Sky News revealed that M&G, the asset manager which owns Superdry's flagship store in central London, was weighing a challenge to its rescue plan having been alarmed by the absence of any mechanism to allow creditors to benefit from any future recovery in the retailer's performance. Sources also told Sky the firm is also planning to pull out of a number of overseas markets, including the US.

Premiership Rugby is becoming more popular, it seems. According to the league’s figures, average match attendance has grown by almost 300 in the past year. Excluding one-off matches at the likes of Twickenham and Tottenham Hotspur Stadium, six of the 10 Premiership clubs enjoyed better attendances on average across their nine home matches. The average attendance for regular home games rose from 12,569 in the 2022-23 season to 12,843 this year. However stadium capacity occupation of 72% was down from last season. 

Mike Regnier, the CEO of Santander UK has told The Guardian he joined the Spanish bank, Britain’s fifth largest lender, from his previous role as CEO of the Yorkshire Building Society because the £3m a year job allowed him to work out of the office most of the time so he did not have to uproot his family. Regnier spends up to two days a week working in the bank’s main offices in Milton Keynes and London, and the rest of the week from his home in Harrogate, North Yorkshire, or travelling the country. Most of Santander UK’s 19,000 staff are also only expected to be in the office two days per week.

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