Bank of England holds interest rate at 4.5% amid trade war uncertainty

Published

2 weeks ago

March 20, 2025

admin

The Bank of England has kept interest rates on hold as it warned of growing economic uncertainty linked to Donald Trump’s trade war.

The central bank’s monetary policy committee, which meets every six weeks to set borrowing costs, voted 8-1 to keep the bank rate unchanged at 4.5%.

Although the decision was widely expected, the vote was more unified than many assumed.

Just one member of the committee, Swati Dhingra, voted to cut rates by 25 basis points. In what may come as a surprise to some, Catherine Mann, who voted for an outsized 50 basis points cut last month, opted to hold.

The Bank kept its guidance unchanged, pointing to “a gradual and careful approach” to rate cuts, but warned it was prepared to keep borrowing rates higher for longer if wage and price growth continues to persist.

Concerns about constrained supply in the economy – which limits the economy’s ability to grow without sparking inflation – have been playing on policymakers’ minds.

The Bank echoed these concerns again today, alongside warnings about “second-round effects” from higher wages and prices, which could cause inflation to spiral. “This would warrant a relatively tighter monetary path,” it said.

Trade war concerns

Central bankers said they were also contending with an increasingly uncertain global outlook.

In minutes of the meeting published alongside the announcement, the Bank said: “Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded.

“Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally.”

The Bank was relatively sanguine about the impact of Trump’s tariff policy on the economic growth in the UK but said it could not be certain about the consequences for inflation.

Last night the US Federal Reserve kept its key borrowing rate on hold while downgrading growth forecasts and upgrading its inflation projections.

Central bankers in the UK are also contending with heightened policy uncertainty – both at home and abroad – which means they have been cautious in their approach.

Bank governor Andrew Bailey said: “We have to be quite careful at this point in how we calibrate our response because we’re still seeing a very gradual fall in inflation. We need to accumulate the evidence.”

The Bank started cutting rates in August but, since then, it has reduced the bank rate just three times as policymakers evaluate a mixed economic picture.

Along with fears about supply constraints in the economy, inflation has climbed back above the Bank of England’s 2% target and wage growth continues to outstrip inflation.

Average weekly earnings, including bonuses, did cool from 6.1 % to 5.8% in the three months to January but the figure is still considerably higher than the inflation rate of 3%.

Central bankers keep a close eye on wage growth as they fear wage pressures fuel price pressures in the economy.

Inflationary pressures still exist in the economy but the Bank is balancing that against signs of an economic slowdown.

The economy contracted by 0.1 % at the beginning of the year and the labour market is cooling. Recruiters are warning of a sharper slowdown when the chancellor’s national insurance contribution increases kick in next month.

The Bank of England reiterated this today, warning that business surveys “generally continue to suggest weakness in growth and particularly employment intentions”.

Where to for inflation?

There are also reasons to be sanguine on inflation.

While the headline rate jumped to 3% in January, the increase was driven by one-off factors and base effects, including VAT on private schools and a jump in airfares because of a shift in the timing of the Christmas holidays.

Food inflation also rose but food prices can be volatile.

The Bank is more interested in services inflation, which gives a better indication of domestically generated pressures. This came in at 5%, which was below the Bank’s forecast.

While the headline rate is expected to hit 3.7% by the summer, policymakers have indicated that this is likely to be a bump in the road – driven by a temporary jump in energy prices and rising water and council tax bills from April.

While these will eventually drop out of the inflation rate calculation, that will offer little relief to consumers who will still have to contend with a sustained rise in the price level.

Business

Trump’s Scotland course will not host Open Championship because of commercial ‘challenges’

Published

2 hours ago

March 31, 2025

admin

Trump's Scotland course will not host Open Championship because of commercial 'challenges'

Donald Trump’s dreams of hosting golf’s Open Championship at his Turnberry course in Scotland will not be realised until the course is logistically and commercially viable, the game’s governing body has said.

Mark Darbon, chief executive of the R&A, told Sky News Turnberry is a “challenging” venue and, despite suggestions of diplomatic pressure from London and Washington, it has no immediate plans to schedule a championship at the Ayrshire venue.

Mr Trump has made no secret of his desire to return the Open to a course he bought in 2014, with his son Eric Trump leading efforts for it to stage a first championship since 2009.

Sources close to Mr Trump’s golf interests have told Sky News the Open would be a valuable bargaining tool in the UK’s trade negotiations with the US, and the King went as far as to mention Turnberry in the invitation for a state visit hand delivered by the prime minister last month.

In his first broadcast interview since becoming chief executive last November, Mr Darbon said logistics and finances currently rule out a course that may have been outgrown by the demands of a modern Open.

“The area where there’s a bit of challenge is around the logistical and commercial side. The last time we were at Turnbury in 2009 we had 120,000 people there,” he said.

“These days a modern Open caters for 250,000 people-plus, and so we need the road and rail infrastructure to get our fan base there. We need hotel accommodation for the 60,000 bed nights we need to stage our championship and it’s challenging at that venue.”

Mr Darbon did not deny there was pressure to consider Turnberry, and indicated that politics, and the prospect of Mr Trump overshadowing any event, would also be a factor.

“We need to be confident that the focus will be on the sport and we need to ensure that the venue works for our requirement,” he added.

Competition for Turnberry is likely to increase from larger, less remote facilities.

The R&A draws Open venues from a rota of courses, with Royal Portrush staging this year’s championship following a sellout return after almost 70 years in 2019. Mr Darbon confirmed Portmarnock near Dublin is being actively considered for the first-ever Open outside the UK.

Maximising income from the Open matters because the R&A, which governs the game everywhere save the US, uses the revenue to fund a grassroots game still enjoying a post-COVID boom.

“We work with over 140 countries around the world, and in those markets there are now more than 62 million golfers, more than ever before,” Mr Darbon said.

“Some 40-odd million are playing golf regularly on nine and 18-hole golf courses, another 20 million are playing what we would call non-traditional formats like driving ranges, adventure golf, simulator golf. So the game is actually in rude health and our job is to continue to foster that and support it over time.”

He is optimistic too that an end may be in sight for golf’s own trade war, between the US PGA Tour and the Saudi Arabian-funded LIV Golf league, a multi-billion dollar schism in the men’s professional game that has enriched scores of players while alienating many fans.

“There’s been too much talk about cash and not enough talk about competition and courses and all the other wonderful things that underpin our sport. So we’re optimistic for some positive change on that front. We’re not a negotiating table, but our job is to try and influence those discussions,” he said.

The Open and golf’s other major championships, including next month’s Masters, have benefitted from the dispute as the only platforms for all of the best male players, and Mr Darbon says the game retains its lucrative appeal to business & sponsors.

“I think golf is maintaining its commercial appeal and I think there are a number of things that support that,” he said.

“The game has a really rich history and heritage, the values of the sport are really strong, and brands of businesses can continue to tell really rich stories about the game of golf that links to their own products and services. On top of that, golf has a genuinely global audience.”

Among them is the world’s most powerful man, his ambitions to host the Open still unfulfilled.

Business

Coulthard and Humphrey-backed TV producer Whisper screens bidders

Published

2 days ago

March 29, 2025

admin

The television production company founded by broadcaster Jake Humphrey and former racing driver David Coulthard is in talks with potential buyers about a sale.

Sky News has learnt that Whisper Group, which was established in 2010 and won a BAFTA for its coverage of the Women’s Euros in 2022, is working with advisers on a deal.

The company is said to be open to a range of options, including the sale of a majority or minority stake to either financial investors or a strategic buyer.

Corporate financiers at KPMG are orchestrating talks with potential bidders.

Whisper is already 30%-owned by Sony Pictures Television, which acquired the stake in 2020.

It replaced Channel 4’s Indie Growth Fund as an investor in the business.

A majority of the shares in Whisper are owned by its founders and management team.

The company is best-known for its sports productions, and is responsible for Channel 4’s Formula One coverage as well as international cricket, boxing and the Paralympics.

Whisper employs about 300 people, and has operations in London, Cardiff, Manchester and Riyadh.

Its chief executive, Sunil Patel, co-founded the producer alongside Mr Coulthard and Mr Humphrey.

It is said to be plotting further expansion in sport in the form of bigger events and rightsholders, as well as in events, where its clients include Red Bull.

Whisper is also focused on growing its presence in the US, where it currently works with Tom Brady’s Religion of Sport, and the Middle East, where it is partnered with Neom and Saudi Pro League teams.

Outside of sports rights, it has produced documentaries about Ben Stokes, the England Test cricket captain, and Sven-Goran Eriksson, the late England football manager.

It has also diversified into entertainment programming, producing the Wheel of Fortune gameshow hosted by Graham Norton.

Its most recent accounts disclosed a £4.3m pre-tax profit for the year to March 31, 2024.

“Whisper has successful diversified into factual, entertainment and events to complement the wider blend of work across its sports broadcast contracts,” it said in a statement accompanying the accounts.

“It has been another successful year for contract wins, with a series of renewals with key clients and a new range of significant projects which will help ensure visibility over the next few years.”

The sale process comes as ITV holds talks about a merger of its Studios arm with RedBird IMI-owned All3Media, one of Britain’s biggest production companies.

A combination of the two businesses could be announced during the spring, according to banking sources.

This weekend, a spokesman for Whisper declined to comment.

Business

WH Smith high street arm sold to Hobbycraft owner in £76m deal

Published

3 days ago

March 28, 2025

admin

WH Smith high street arm sold to Hobbycraft owner in £76m deal

WH Smith has sold its 233-year old high street business to the owner of Hobbycraft in a £76m deal.

Sky News revealed in January how a sales process was under way for the arm, which employs roughly 5,000 people and has 480 stores.

Modella Capital won the final stage of the auction process in a run off against Alteri investors – both specialists in turning around troubled retailers.

Money latest: Time running out for EV drivers to save £195

The deal will see the WH Smith name erased from town centres to become TGJones.

The sale allows the WH Smith business to focus fully on its lucrative travel retail arm.

That has around 1,200 stores, based mainly at airports and railway stations, in 32 countries globally and accounts for 85% of group profits.

Chief executive Carl Cowling said: “Given our rapid international growth, now is the right time for a new owner to take the High Street business forward and for the WH Smith leadership team to focus exclusively on our Travel business”.

There was no word on what the new owners may do to bolster profitability, with a question mark firmly hanging over employment and the store estate – often the subject of criticism over a perceived lack of investment.

WH Smith’s statement said: “All stores, colleagues, assets and liabilities of the High Street business will move under Modella Capital’s ownership as part of the Transaction.

“Under this new ownership, the business will be led by Sean Toal, currently CEO of the High Street business. The High Street business will operate for a short transitional period under the WHSmith brand whilst the business rebrands as TGJones.”

The sale to Modella represents an enterprise value of £76m on a cash and debt-free basis but will see WH Smith secure an estimated £25m on a net basis after several costs associated with the sale are accounted for.

Shares fell by more than 1% at the open.