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A UK recession is “in the balance” but there are signs growth is starting to pick up, the governor of the Bank of England has said.

Andrew Bailey made the comments as he hailed Wednesday’s inflation data – which revealed it remained at 4% in January – as “quite encouraging” amid the Bank’s ongoing attempts to bring the rate down to its target of 2%.

“That’s good news, as far as I can tell,” he told the House of Lords economic affairs committee on Wednesday afternoon.

However, the governor added the figure did not fundamentally alter the Bank’s outlook on potentially cutting interest rates in the months ahead.

“I think it leaves us broadly where we thought we were going to be. But that’s obviously encouraging relative to where we could have been,” Mr Bailey said.

The UK’s central bank had forecast inflation would rise slightly to 4.1%, while economists polled by Reuters expected it to creep up to 4.2%.

The rate of inflation has been on a downward trend in recent months – except for a surprise rise in December.

The Bank has held interest rates at 5.25% four times in a row and Mr Bailey previously told Sky News that he expects its next move to be a cut. However, the Bank has yet to decide when this will be.

Economy is flatlining – tackling unproductivity is our way out



Arthi Nachiappan

Technology correspondent

The UK economy shrunk by 0.1% between July and September last year and it is expected to have shrunk by around the same amount between October and December last year.

If this is the case, then the UK will have met the criteria of a recession, which is two consecutive quarters of negative growth.

There are various reasons for this. The economy has struggled to gain any momentum since the pandemic after persistent inflation eroded the value of earnings and squeezed spending.

Looking more closely at the end of last year, we also had storms that kept shoppers at home and strike action that reduced the number of days worked.

The important thing to note is that there is a lot of disagreement among economists about whether this way of measuring a recession really tells us very much.

We could be entering a recession in name but it won’t necessarily change anything in terms of people’s lived experience as we continue to face a crisis in living costs.

Unemployment is close to a historic low at 3.8%, which is less than half the level we had during the recession that followed the 2008 financial crisis

So, rather than a huge contraction, the best way to think about this is that the economy is flatlining and it needs a boost.

As to where this boost comes from, we have had meagre growth in productivity since the financial crisis, and making improvements here is the real source of long term improvements in living standards.

It comes ahead of new growth figures on Thursday morning – which could show that the UK has tipped into a recession, which is defined as two consecutive quarters of negative growth.

The Office for National Statistics (ONS) previously estimated that gross domestic product (GDP) contracted by 0.1% in the three months from July to September.

Economists polled by Reuters believe Thursday’s figures will show it again shrank by 0.1% in the fourth quarter.

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Mr Bailey told the committee it was “in the balance” whether the UK would enter a “technical recession” on Thursday.

“Last year, overall GDP was basically flat… It wouldn’t take much to tip it either way, frankly,” he added.

However, the governor expressed some optimism for the year ahead.

“Going forward, and I think this is in some ways more significant, we are now seeing some signs of the beginning of a pick-up in some of the surveys, for instance… we’ve got a modest pick-up this year which continues thereafter,” he told the committee.

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M&S tells agency workers to stay at home after cyberattack

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M&S tells agency workers to stay at home after cyberattack

Marks & Spencer (M&S) has ordered hundreds of agency workers at its main distribution centre to stay at home as it grapples with the unfolding impact of a cyberattack on Britain’s best-known retailer.

Sky News has learnt that roughly 200 people who had been due to undertake shift work at M&S’s vast Castle Donington clothing and homewares logistics centre in the East Midlands have been told not to come in amid the escalating crisis.

Agency staff make up about 20% of Castle Donington’s workforce, according to a source close to M&S.

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The retailer’s own employees who work at the site have been told to come in as usual, the source added.

“There is work for them to do,” they said.

M&S disclosed last week that it was suspending online orders as a result of the cyberattack, but has provided few other details about the nature and extent of the incident.

In its latest update to investors, the company said on Friday that its product range was “available to browse online, and our stores remain open and ready to welcome and serve customers”.

“We continue to manage the incident proactively and the M&S team – supported by leading experts – is working extremely hard to restore online operations and continue to serve customers well,” it added.

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It was unclear on Monday how long the disruption to M&S’s e-commerce operations would last, although retail executives said the cyberattack was “extensive” and that it could take the company some time to fully resolve its impact.

Shares in M&S slid a further 2.4% on Monday morning, following a sharp fall last week, as investors reacted to the absence of positive news about the incident.

M&S declined to comment further.

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Deliveroo shares surge 17% as £2.7bn takeover looms

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Deliveroo shares surge 17% as £2.7bn takeover looms

Shares in meal delivery platform Deliveroo have surged by 17% as investors react to news of a £2.7bn takeover proposal.

The company revealed after the market had closed on Friday that it had been in talks since 5 April with US rival DoorDash.

Deliveroo suggested then it was likely the 180p per share offer would be recommended, though full terms were yet to be agreed.

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At that price, the company’s founder and chief executive, Will Shu, would be in line for a windfall of more than £170m.

Deliveroo further announced, before trading on Monday, that it had suspended its £100m share buyback programme.

The opening share price reaction took the value to 171p per share – still shy of the 180p on the table – and well under the 390p per share flotation price seen in 2021.

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Deliveroo’s shares have weakened nearly 50% since their market debut.

The deal is not expected to face regulatory hurdles as it provides DoorDash access to 10 new markets where it currently has no presence.

But a takeover would likely represent a blow to the City of London given the anticipated loss of a tech-focused player.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “If the deal is done at that price, the company will fail to shake off the ‘Floperoo’ tag it was saddled with after its disastrous IPO debut in 2021.

“Even though Deliveroo has finally broken through into profitable territory, the prolonged bout of indigestion around its share price has continued.

“The surge in demand for home deliveries during the pandemic waned just as competition heated up. Deliveroo’s foray into grocery deliveries has helped it turn a profit but it’s still facing fierce rivals.”

She added: “The DoorDash Deliveroo deal will be unappetising for the government which has been trying to boost the number of tech companies listed in London.

“If Deliveroo is purchased it would join a stream of companies leaving the London Stock Exchange, with too few IPOs [initial public offerings] in the pipeline to make up the numbers.”

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US trade deal ‘possible’ but not ‘certain’, says senior minister

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US trade deal 'possible' but not 'certain', says senior minister

A trade deal with the US is “possible” but not “certain”, a senior minister has said as he struck a cautious tone about negotiations with the White House.

Pat McFadden, the Chancellor of the Duchy of Lancaster, told Sunday Morning with Trevor Phillips there was “a serious level of engagement going on at high levels” to secure a UK-US trade deal.

However, Mr McFadden, a key ally of Sir Keir Starmer, struck a more cautious tone than Chancellor Rachel Reeves on the prospect of a US trade deal, saying: “I think an agreement is possible – I don’t think it’s certain, and I don’t want to say it’s certain, but I think it’s possible.”

He went on to say the government wanted an “agreement in the UK’s interests” and not a “hasty deal”, amid fears from critics that Number 10 could acquiesce a deal that lowers food standards, for example, or changes certain taxes in a bid to persuade Donald Trump to lower some of the tariffs that have been placed on British goods.

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And asked about the timing of the deal – following recent reports an agreement was imminent – Mr McFadden said: “We’ll keep working with the United States and keep trying to get to an agreement in the coming weeks.”

As well as talks with the US, the UK has also ramped up its efforts with the EU, with suggestions it could include a new EU youth mobility scheme that would allow under-30s from the bloc to live, work and study in the UK and vice versa.

Mr McFadden said he believed the government could “improve upon” the Brexit deal struck by Boris Johnson, saying it had caused “an awful lot of bureaucracy and costs here in the UK”.

He said “first and foremost” on the government’s agenda was securing a food and agriculture and a veterinary agreement, saying it was “such an important area for the UK and an area where we’ve had so much extra cost and bureaucracy because of Brexit”.

He added: “But again, as with the United States, there’s no point in calling the game before it’s done. We’ve still got work to do, and we’re doing that work with our partners in the EU.”

The Cabinet Office minister also rejected suggestions the UK would have to choose between pursuing a trade deal with the US and one with the EU – the latter of which has banned chlorinated chicken in its markets – as has the UK – but which the US has historically wanted.

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On the issue of chlorinated chicken, Mr McFadden said the government had “made clear we will not water down animal welfare standards with either party”.

“But I don’t agree that it’s some fundamental choice beyond where we have to pick one trading partner rather than another. I think that’s to misunderstand the nature of the UK economy, and I don’t think would be in our interests to put all our eggs in one basket.”

Also speaking to Trevor Phillips was Tory leader Kemi Badenoch, who said the government should be close to closing the deal with the US “because we got very close last time President Trump was in office”.

She also insisted food standards should not be watered down in order to get a deal, saying she did not reach an agreement with Canada when she was in government for that reason.

“What Labour needs to do now is show that they can get a deal that isn’t making concessions, so we can have what we had last month before the trade tariffs, and we need serious people doing this,” she said.

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