Eurozone unemployment falls to record low; UK businesses push for closer relations with EU – business live

Newsflash: unemployment across the eurozone has fallen to a new record low, a week before Europeans head to the polls for the European Parliament elections.

Statistics body Eurostat reports that the seasonally-adjusted unemployment rate across the euro area fell to 6.4% in April, down from 6.5% in March. That’s the lowest since the single currency was created, Eurostat data shows.

In the wider EU, the jobless rate remained at 6%.

This suggests that the higher interest rates imposed by the European Central Bank to fight inflation is not hurting the labour market.

Eurostat estimates that 13.149 million persons in the EU, of whom 10.998 million in the euro area, were unemployed in April, adding:

• Compared with March 2024, unemployment decreased by 103 thousand in the EU and by 100 thousand in the euro area.

• Compared with April 2023, unemployment increased by 95 thousand in the EU and decreased by 101 thousand in the euro area.

Across the EU, unemployment was highest in Spain (at 11.7%) and Greece (10.8%) in April, and lowest in Czechia (2.7%) and Poland (3%).

At its peak, during the eurozone crisis in 2013, eurozone unemployment rose over 12%, but then fell steadily – before a brief spike in the Covid-19 pandemic.

The Bank of England has been doing its best to keep out of the general election campaign.

Earlier this week it cancelled all speeches by its policymakers for the duration of the upcoming 4 July General Election, meaning we shouldn’t hear any public statements from central bank officials until the public has voted.

That would prevent the Bank committing news, by commenting on the state of the economy, or hinting when it might lower borrowing costs.

Now, though, Rishi Sunak has piled into the void by claiming that a vote for the Tories is a vote for cuts to interest rates.

Sunak told The Times:

“Of course it is, because we are the party who has committed to bringing down inflation, which is a necessary condition for bringing down interest rates.

And I think people can see we have delivered that. And that allows us to think about the future in a more positive and confident way.”

Inflation is a funny beast – politicians are desperate to blame global factors when it’s going up, but rush to take the credit when it falls.

And either way, as the Bank of England is independent, it gets the credit for controlling prices (and the blame for losing control).

Anyway, Labour are warning that they would be starting from a difficult position if they win the election.

Darren Jones, Labour’s shadow Treasury minister, ruled out rises to income tax, national insurance or VAT, adding:

The fiscal inheritance is going to be really hard, it’ll be the worst that any party has inherited since the second world war.

A “do not travel” alert has been issued after a freight train derailed on a major route between England and Scotland, PA Media reports.

Services are being cancelled and delayed because of the incident on the West Coast Main Line between Carlisle and Oxenholme Lake District on Wednesday night, National Rail Enquiries added.

National Rail says:

A derailed freight train between Carlisle and Oxenholme Lake District means some lines are blocked.

Trains may be cancelled, revised or severely delayed by up to 60 minutes.

Major disruption is expected until 14:00.

Train operators Avanti West Coast and TransPennine Express issued the “do not travel” alert, urging passengers not to attempt to use their services for journeys between Preston and Scotland on Thursday.

Ticket holders can delay journeys until Friday or travel with other operators.

The cost rises hammering UK households has slowed in the last quarter.

The Office for National Statistics reports that UK household costs, as measured by the Household Costs Index (HCI), rose 4.4%, slowing from the annual rate of 5.3% in January 2024.

That chimes with the latest inflation data, which showed a slowdown in price rises this year.

Here’s the details:

• By comparison, household costs rose 5.0% for high-income households (decile 9) and 3.9% for low-income households (decile 2).

• By tenure type, mortgage and other owner occupier households had the highest annual inflation rate of 5.5%, reflecting rising mortgage interest payments; by contrast, the rate for outright owner occupiers was the lowest at 3.3%.

• Private renters’ HCI inflation rate was higher than social and other renters, at 4.6% and 4.3% respectively; this follows a period between October 2023 and January 2024 where the two groups had similar inflation rates.

• Non-retired households continued to experience a higher annual rate of inflation (4.8%) than retired households (3.4%).

• Households with children’s annual inflation rate fell to 4.8% while households without children fell to 4.2%.

In the property sector, the number of homes for sale in the UK is at the highest level in eight years, according to website Zoopla.

Zoopla reports that the supply of homes for sale is 20% higher than this time last year, with £230bn worth of housing for sale, up £45bn on this time last year.

This is likely to keep a lid on house price rises this year, Zoopla suspects, even though the upcoming general election could slow the pace of new sales in the coming weeks.

Zoopla also reports that there were modest house price falls across Southern England, as the north/south divide in annual house price growth continues.

They say:

This split in house price inflation is most evident at a city level with the the strongest house price growth in Belfast (+3.6%), Burnley (+2.5%) and Bolton (2.4%), and the highest house price falls in Ipswich (-3%), Hastings (-2.7%) and Norwich (-2.4%).

TSB: Issue is resolved

Kalyeena Makortoff

Those IT problems at TSB appear to be solved!

A TSB spokesperson tells us:

“We’re aware some customers had issues logging into our app and online banking this morning. This issue is now resolved and we’re sorry for any inconvenience it caused.”

Another day, another problem with Britain’s banking apps.

Today it’s TSB whose customers are reporting problems accessing their accounts.

According to Downdetector, there was a spike in reports of glitches at TSB Bank this morning.

Many customers are posting on social media that they can’t get their app, or internet banking, to work:

TSB is telling customers that it’s aware they are experiencing issues with its digital services, and working hard to resolve it.

A TSB spokesperson says:

“We’re aware that some customers have had difficulty logging into the app and online banking. We’re sorry for any inconvenience and are working hard to resolve it as soon as possible.”

They added that the issues were “intermittent” meaning that in some cases, customers were blocked but later able to get through on subsequent login attempts.

On Tuesday, NatWest’s banking app crashed for several hours, leaving thousands of frustrated customers across the UK without access to their accounts.

TSB customers are used to technical problems; in 2018, a planned IT upgrade turned into a full-scale crisis, with up to 1.9 million customers locked out of their accounts for days.

City regulators later fined TSB £48m for “widespread and serious” failings in its IT migration.

South Africa’s rand has fallen over 1% against the US dollar today, as early results from the South African general election come in.

Early results from yesterday’s poll in South Africa’s election suggest the governing African National Congress (ANC) party could lose its majority, although it is still expected to remain as the largest party.

Reuters has the details:

With results in from 10% of polling stations, the ANC’s share of the vote in Wednesday’s election stood at 42.3%, with the pro-business Democratic Alliance (DA) on 26.3% and the Marxist Economic Freedom Fighters (EFF) on 8.1%, data from the electoral commission showed.

If the final results were to resemble the early picture, the ANC would be forced to make a deal with one or more other parties to govern – a situation that could lead to unprecedented political volatility in the coming weeks or months.

The rand is down 1.2%, at 18.67 to the US dollar.

UK businesses are urging the next government to make improving relations with the European Union a key part of its drive to revive the economy.

The British Chambers of Commerce Election Manifesto, published today, cites improved relations with the EU as one of its five priorities, saying this would help lower costs and boost trade.

The BCC, which operates over 50 UK Chambers across the country, is calling for:

Shevaun Haviland, director general of the BCC, says this isn’t about reversing Brexit, explaining….

“The EU is the UK’s biggest market, so we urgently need to get a better trading relationship with our closest neighbour. It’s not about rewriting the referendum result, it’s about cutting red-tape and promoting trade.

Both the Conservatives and Labour have been criticised for not focusing on the impact of leaving the EU in this referendum, with former deputy prime minister Michael Heseltine warning the election campaign will be the “most dishonest in modern times”.

UK food importers of food from the EU have warned that new post-Brexit checks introduced this spring will push up costs, and create painful delays at the border.

Jamie Dimon, the head of JP Morgan, has caused further jitters by warning yesterday that the US economy risks stagnation – the toxic mix of rising prices and slow growth.

Speaking at a Wall Street conference yesterday, Dimon warned that the past five years of massive fiscal and monetary stimulus risked tipping the US into deflation.

Dimon said:

“I’m not saying it’s going to happen, I just give the odds much higher than other people,” Dimon added. “I look at the amount of fiscal and monetary stimulus that has taken place over the last five years—it has been so extraordinary, how can you tell me it won’t lead to stagflation?”

“It might not….But I, for one, am quite prepared for it.”

Dimon also explained that JP Morgan is prepared both for a soft landing, and something rather bumpier, saying:

“If we have a soft landing and rates stay where they are, come down a little bit—which is what the world expects, everyone’s fine.

If you have a harder landing with stagflation you’re going to see a lot of stress and strain in the system from banks to leveraged companies to real estate to a whole bunch of stuff.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Fears over sticky inflation – and even the dreaded stagflation – are hitting the markets this week.

Investors are growing more anxious that global interest rates will stay higher for longer, a worry that has knocked shares in recent days, as the yields – or rate of return – on government bonds push higher.

Last night, the UK’s FTSE 100 index fell for the sixth day in a row and traders are bracing for further losses today.

Central banks are attempting to slow growth through high interest rates to dampen inflation, but without cooling their economies so much that unemployment jumps.

But with US inflation running at 3.4% last month, still well over the 2% target, confidence that this soft landing can be achieved is faltering. Yesterday, inflation in Germany came in higher than forecast.

As Mizuho Bank said in a commentary:

“Hotter and stickier than expected global inflation appears to be taking the air out of asset markets.

In other words, “Goldilocks” coming undone. And worries about adverse demand impact from higher rates seeping through.”

Yesterday, a surpringly weak auction of US debt sent fresh jitters through trading floors, with buyers demanding higher rates as they bid for the bonds.

Kyle Rodda, senior financial market analyst at capital.com, explains:

A rise in global yields is forcing a re-rating in global equity prices, with Wall Street falling further overnight. Upward pressure on yields was compounded by a weak seven-year auction, reigniting fears about how the US will fund its rising deficit.

Although the European Central Ban seems certain to cut interest rate next week, both the US Federal Reserve and the Bank of England are expected to delay their first cuts until the autumn.

The agenda

• 8am BST: Swiss GDP report for Q1 2024

• 10am BST: Eurozone unemployment report for April

• 10am BST: Eurozone confidence stats for May

• 10am BST: Statistics on EU trade with Ukraine

• 1.30pm BST: Second estimate of US GDP for Q1 2024

• 1.30pm BST: US jobless claims