- Sunak is endangering Britain's energy security with windfall tax, warns BP chief
- Ardent critic of Brexit appointed to key Bank of England role
- FTSE 100 opens 0.8pc higher
- Ambrose Evans-Pritchard: Emmanuel Macron’s ‘Confederation’ may be the perfect home for Brexit Britain
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Senior Tory MPs have launched an attack on the Bank of England for “consistently” misjudging the inflation threat.
In a speech last night, former defence secretary Liam Fox called for an investigation into why the central bank “comprehensively underestimated” the risks of surging prices.
Mr Fox said: “It is the duty of central banks to safeguard the value of our money and our savings. The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transient.”
Meanwhile, Robert Jenrick, a former Treasury minister, told the Financial Times the Bank had “missed the opportunity to gain control over inflation last year”, adding: “We are now in danger of entering a new inflationary era.”
The comments pile further pressure on Governor Andrew Bailey at a time when households are facing a huge strain on their budgets. The Bank has lifted interest rates to 1pc and expects inflation to top 10pc before the end of the year.
KPMG fined £14m over Carillion audit scandal
KPMG has been hit with a fine of more than £14m over misconduct on major work it carried out for collapsed Carillion and data services company Regenersis – the latest in a long list of audit scandals engulfing the company.
The Financial Reporting Council asked a tribunal to fine the firm as much as £20m at the start of a two-day hearing in London.
It said KPMG had agreed to a reduced penalty of £14.4m for admissions and mitigating factors, with the company also paying for all costs from the case.
The audit watchdog also proposed sanctions against five former KPMG staff. It asked for a £400,000 pound fine for Peter Meehan, KPMG’s audit engagement partner at the time, and for him to be excluded as a qualified accountant for 15 years.
Three senior managers – Alistair Wright, Richard Kitchen and Adam Bennett – should be fined £100,000 apiece and excluded for 12 years, with audit junior Pratik Paw excluded for four years and facing a £50,000 fine, it said. A decision on the final amount will be delivered in the coming months.
Chinese stocks rise as Shanghai says it's close to 'victory' against Covid
Chinese stocks gained ground this morning as Shanghai said it was getting closer to "victory" in its battle against the country's biggest ever Covid outbreak.
The city said it aimed to reach zero Covid cases in areas outside its tightly regulated quarantine zones this month, while authorities' pledges to support the economy also lifted sentiment.
The blue-chip CSI300 index rose 0.8pc, while the Shanghai Composite Index gained 1pc.
Millions of homeowners face negative equity trap from property collapse
Millions of homeowners face negative equity as interest rates rise and property prices collapse, leaving them unable to sell, writes Tim Wallace.
Britain’s post-credit crunch age of rock-bottom borrowing costs is at an end, while interest rates on some mortgages have doubled in a matter of months. The housing market faces a reckoning.
Prices are up more than 10pc in the past year, rocketing to a record 5.5 times the average wage - and even higher in London. Yet the looming end of ultra-cheap mortgages means buyers who have over-stretched themselves to the extreme are vulnerable to a spike in costs.
Worse still, those who bought recently and are buoyed by cheap debt could be heavily exposed to falling prices, which could send them into negative equity: when a property is worth less than the mortgage taken out on it, making it hard to move house or remortgage.
The phrase alone strikes fear into anyone who experienced the crunch of the 1990s when the property boom turned to bust.
Gas prices steady as traders wait for Russia's next move
Gas prices held steady this morning as traders nervously awaited Russia's next move in an escalating row with Germany over supplies.
Benchmark European prices are headed for their third weekly gain after disruptions at a key transit route through Ukraine and Moscow hit Germany with sanctions that curbed supplies.
Russian shipments through Ukraine have dropped this week, but remained broadly stable this morning, near their lowest since late April.
The tensions come as payment deadlines approach for key European buyers – the first under Putin's new demand for roubles.
Sage cashes in on cloud demand
Software giant Sage has posted a rise in sales over the last six months as more small and medium-sized businesses bought into its cloud services.
The group said organic revenue grew by 8pc in the half-year to the end of March as firms adopted its "digital solutions".
Profits also reached £184m – beating analysts' expectations of £180m – and its cloud services accounted for around a quarter of its recurring revenue.
Steve Hare, chief executive of Sage, issued an upbeat view on the outlook, saying wider economic troubles had not yet affected sales. Shares rose as much as 3.6pc.
Mr Hare said:
While we are mindful of increased macroeconomic and geopolitical uncertainties, our customers remain confident and resilient.
Our aim is to knock down barriers to their success, delivering solutions that make their lives easier, and we continue to make good progress against our strategic objectives.
FTSE risers and fallers
The FTSE 100 has rebounded at the end of a volatile week, even as investors continued to grapple with concerns over inflation and an economic slowdown.
The blue-chip index rose 0.9pc in early trading, led by gains for oil and banking stocks, though it's still down 1.4pc for the week.
Oil giant BP and Shell gained 1.9pc and 1.3pc respectively, tracking a rise in oil prices. Banks recovered most of their losses from yesterday's session, with HSBC rising 2.3pc.
Sage Group was the biggest risers, up as much as 3.6pc after the software company posted a strong performance for the first half of the year.
The domestically-focused FTSE 250 rose 1pc, but was still on track for its sixth weekly decline.
EU considers delay to Russian oil ban
Some EU countries are starting to consider a delay on the planned Russian oil ban if the bloc can't persuade Hungary to back the move.
Diplomats are still hoping a deal can be reached with Hungary when EU foreign ministers meets in Brussels next week.
But the idea of dropping the oil ban and focusing on other sanctions is gaining support, Bloomberg reports. That said, other countries are worried it would be a sign of weakness.
The stalemate highlights further divisions in the bloc after Hungary's Viktor Orban said an oil embargo would be too damaging for his country's economy.
The EU's proposal aims to ban Russian crude over the next six months. The bloc had offered to extend this deadline for Hungary, Slovakia and the Czech Republic, but has still failed to secure an agreement.
Tesco boss handed £4.7m pay packet
The boss of Tesco was handed a £4.7m pay packet last year as the supermarket giant's profits more than tripled.
Ken Murphy, who took over as chief executive in October 2020, was paid a basic salary of £1.5m in the year to February, according to Tesco's annual report.
This was boosted by around £3.2m in performance-related bonuses after the company bounced back strongly from the pandemic.
While Tesco has cashed in on booming demand over recent months, it warned it faced a struggle to keep down costs and prices as the cost-of-living crisis deepens.
Rees-Mogg: Tighter monetary policy is right response to inflation
Jacob Rees-Mogg has dismissed the idea of an emergency Budget, saying that tighter monetary policy and lower Government spending were the right response to surging prices.
The Cabinet minister told Times Radio:
The right responses are tighter monetary policy, which is the responsibility of the Bank of England, and constrained fiscal policy.
An emergency budget is not likely to be an answer to this. What is going to be an answer are essentially long-term measures combined with the immediate help that's been given to people who are particularly affected.
Nuclear power plans may push up energy bills, warns Kwasi Kwarteng
The Government's plans to ramp up nuclear power may push up energy bills in the short term, Kwasi Kwarteng has admitted.
The Business Secretary said the push to build new nuclear power stations as part of a wider energy strategy may have a "small effect" on bills.
But he told the BBC that nuclear was "back on the table" because the Government sees it as a sustainable energy source, adding that it would provide cheaper power in the long run.
The Government last month unveiled its new energy strategy in an effort to bring down surging prices, reduce reliance on Russian oil and gas and accelerate the shift away from fossil fuels.
Pressure mounts on Bank of England
With the cost-of-living crisis deepening, MPs are starting to turn on the Bank of England.
Liam Fox and Robert Jenrick have both pointed the finger at the Old Lady of Threadneedle Street, which has had operational independence over monetary policy for 25 years.
The attacks will make for uncomfortable reading for Governor Andrew Bailey, who's set to be grilled by MPs on the Treasury select committee next week over the Bank's approach to tackling inflation.
It comes a day after Rishi Sunak appointed arch-Brexit critic Dr Swati Dhingra to the Bank's Monetary Policy Committee – an appointment that also risks sparking a political row.
Read more on this story: Ardent critic of Brexit appointed to key Bank of England role
Bank of England plunged into fresh row
The Bank of England is facing an escalating political row after a top Tory MP attacked the central bank for failing to tackle inflation.
Liam Fox, former defence secretary said the Bank had "consistently" misjudged the danger of soaring prices and called for an investigation into the matter.
He said: “It is the duty of central banks to safeguard the value of our money and our savings. The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transient.”
The comments threaten to pit the Tory party against Governor Andrew Bailey as the cost-of-living crisis deepens.
The Bank of England has been forced to aggressively raise interest rates and has warned inflation will top 10pc by the end of the year.
5 things to start your day
1) Millions of homeowners face negative equity trap from property collapse Recent buyers could be at risk of owning a property that is worth less than the mortgage taken out on it
2) Water companies to be fined for leaving a 'plague of potholes' on roads Department for Transport to issue fines amid crackdown on utility firms and broadband providers
3) Get ready for more repeats and less drama, says BBC chief Director General Tim Davie says corporation will be forced to cut back on original programming
4) Cryptocurrencies collapse after 'Black Wednesday' for blockchain Instability plagues so-called 'stablecoins' with almost $200bn knocked off all crypto
5)KPMG fined £14m for forging documents over Carillion collapse Auditor hit with biggest ever penalty over false spreadsheets and fabricated meeting minutes
What happened overnight
Asian equities were mostly up following a tumultuous trading period on Wall Street, which rebounded at the close after investors calmed down about US policies to counter surging inflation. In Asia, Hong Kong, Tokyo, Seoul, Singapore and Sydney opened higher, while Wellington traded in the negatives.
Coming up today
- Corporate: ContourGlobal, Sage Group (interims)
- Economics: Industrial production (EU), Michigan Consumer Sentiment Index (US)