UK mortgage rates rising; Meta fined for breaching EU antitrust rules – as it happened

Time to recap.

Average UK mortgage rates have risen as major lenders hike their rates, despite the Bank of England’s cut to borrowing costs last week.

The European Commission has fined Meta almost €800m for breaching EU competition law with its classified ads service, Facebook Marketplace.

Luxury goods maker Burberry has posted its biggest share price jump in the last 20 years, after announcing a cost-cutting scheme and a turnaround plan.

The pound has recovered earlier losses, which saw it hit its lowest level against the US dollar since July.

Gas prices in the UK and Europe hit their highest level in a year, due to fears of supply disruption from Russia and the colder weather.

Shares in Disney have hit a six-month high, after it beat Wall Street expectations thanks to its Inside Out 2 and Deadpool & Wolverine films.

Rachel Reeves will announce plans to merge local government retirement schemes into “megafunds” as she tries to revive long-running efforts to overhaul the public pension system.

Burberry has posted its best day on the London stock market in at least the last 20 years.

Shares in the luxury goods maker have closed for the night up 18.6%, which is its biggest daily rise since at least November 2004 (my data doesn’t go any further back!).

The City are welcoming Burberry’s new £40m cost-cutting programme and turnaround plan to revive the fortunes of the ailing British luxury fashion brand.

Geopolitical uncertainties and rising costs are encouraging companies to ‘reshore’ their operations closer to home, a new survey from Bain & Company shows.

Bain’s biennial operations survey of CEOs and chief operating officers has found a rise in companies planning, or already investing in and executing, reshoring and near-shoring.

According to Bain, 81% of CEOs and COOs say their companies have plans to bring supply chains closer to home or to their main market, up from 63% in 2022.

There’s also increased interest in ‘split-shoring’, where businesses balance a mix of offshore production with other key manufacturing activity close to home.

One factor is that companies are trying to cut their dependence on China.

A second is Joe Biden’s 2022 Inflation Reduction Act, which provides US companies with subsidies and tax credits to incentivize reshoring and near-shoring.

Hernan Saenz, partner at Bain & Company and global head of its Performance Improvement practice, says:

“We believe the current acceleration of reshoring across key markets worldwide is a crucial trend that demands CEOs’ attention.

The multiple disruptions companies have grappled with since the pandemic mean the question for company leaders is no longer whether to reinvent supply chains but how to do that so their operations are made more cost-competitive, resilient, sustainable, and agile in responding to evolving markets and customer needs.”

The European Commission has fined Meta almost €800m for breaching EU competition law with its classified ads service, Facebook Marketplace.

The Commission fined Meta €797.72m for tying Marketplace to its Facebook social media platform, which meant consumers on Facebook were regularly exposed to Marketplace whether or not they wanted to be.

This gave Meta a “substantial distribution advantage” over rival classified ad platforms.

The ruling also said Meta had unilaterally imposed unfair trading conditions on other classified ads services providers who advertise on Meta’s platforms, including allowing Meta to use ad-related data generated by other advertisers for the benefit of Facebook Marketplace.

It orders Meta to bring the conduct to an end and refrain from repeating the infringement, in addition to the fine.

The Commission said that while market dominance was in itself not illegal under EU antitrust rules, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition.

Margrethe Vestager, executive vice-president of the Commission in charge of competition policy, says:

“Today we fine Meta 797.72 million euros for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms.

“Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers.

“It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules.

“Meta must now stop this behaviour.”

Shares in Disney have jumped almost 10% at the start of trading in New York, as traders welcome its forecast-beating results.

They’re up 9.8% at $112.77, their highest level since May.

The UK and Scottish governments are to pump £100m into new energy and economic regeneration projects around the closure-hit Grangemouth oil refinery and the neighbouring town of Falkirk.

The deal, which is being signed in Falkirk by Scottish and UK ministers today, includes a new “carbon utilisation” centre to reuse waste CO2, and a bioeconomy accelerator pilot project for the whisky and food sectors at Grangemouth, where Petro-Ineos plans to close down Scotland’s last oil refinery in June 2025.

Its closure, which will lead to more than 400 direct job losses and hit several thousand people in the wider economy, is the most serious immediate challenge to the UK government’s green jobs and energy transition agenda in Scotland, where the oil industry is a powerful force.

Highly skilled workers may emigrate, as most face significant uncertainty. There are proposals for carbon capture pilots, and sustainable aviation fuel and hydrogen production projects there but widespread scepticism about their likely success.

The Scottish and UK governments are co-investing £80m in the overall growth deal and £20m on new energy projects at Grangemouth; Falkirk council and Scottish Canals are spending a further £49m.

Forth Valley college will receive funding for a skills transition centre, while money will also be ploughed into regenerating brownfield sites in Grangemouth, new transport hubs and upgrading of the Forth and Clyde canal and its workshops, and an arts park alongside it.

Kate Forbes, Scotland’s deputy first minister, said:

“The growth deal will support the region to grasp the opportunities of the transition to net zero and remain at the forefront of innovation and manufacturing in Scotland, complemented by a community-led programme of projects in Grangemouth.”

Bank of England policymaker Catherine Mann is warning that the UK economy is likely to face elevated “macroeconomic volatility” in the next few years.

In a speech to the Annual Conference of the Society of Professional Economists in London this lunchtime, Mann is examining the last forty years of the ‘Great Moderation’, which brought low inflation and macroeconomic stability.

Mann points out that experts disagree on whether good policy or good luck was the prime cause of the Great Moderation (while central bankers tend to believe policy was responsible)

One risk that could help unwind the Great Moderation is climate change, she points out, saying:

The introduction of various uncoordinated climate mitigation policies may introduce volatility. Price-based instruments such as carbon taxes create volatility in output, and quantity-based instruments such as an ETS create price volatility. In addition, there is added uncertainty about future changes to policy stringency that may further accentuate macroeconomic volatility.

A second risk is global trade fragmentation, as shocks can be transmitted to the UK via the exchange rate, imports and exports, as well as financial markets.

Mann points out that uncertainty about trade policy in itself may have damaging economic effects and increase volatility, adding:

The latest political developments across the Atlantic have not made a disorderly trade scenario less likely, which would have consequences for output and inflation in the UK.

Financial Market volatility and policy-induced volatility and spillovers are also potential threats, she adds.

Mann – who opposed last week’s cut to UK interest rates – concludes that these risks, and uncertainty about the economic outlook, are a reason to leave borrowing costs on hold:

In the face of uncertainties about the outlook for inflation and output, waiting buys time to learn more about developments, to make a better assessment of whether the inflation risk has subsided sufficiently to justify changing the policy stance. In the current context, an activist stance holds the policy rate firmly until sufficient evidence on diminished inflation persistence is revealed; and then to move forcefully.