Rail fares to rise by 4.9% from next March
More transport news: UK rail customers can expect many rail fares to rise by almost 5% next spring.
The Department for Transport has announced that regulated rail fares in England will increase by up to 4.9% from March 3 next year.
Rail passengers may question whether the service is 4.9% better (especially if they were caught up at the chaos at Euston yesterday).
But the government points out that this is a smaller rise than a year earlier, when fares rose by 5.9%.
They are calling today’s announcement “a significant intervention”, as the increase is lower than last summer’s inflation rate, which has been used to set rail fares in the past.
Transport Secretary Mark Harper said:
“Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.
“Changed working patterns after the pandemic mean that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.
“We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.”
Regulated rail fare increases have traditionally been linked July’s reading of the retail prices index inflation measure, which was 9.0%.
The UK are also making changes to protect Britain’s small mammals, by relaxing rules around where small wildlife warning signs can be put up.
The DfT has also spruced up the small animal warning sign, adding white quills to the hedgehog’s back to make it more noticable.
Harper announced the move on a visit to Tiggywinkles Wildlife Hospital in Buckinghamshire….
Key events
Watchdog London TravelWatch is calling for reforms to the UK rail fare system, following the news of a 4.9% price hike in March.
A spokesman for London TravelWatch said:
“These new rail fares will see already hard-pressed passengers hit with another unwelcome price hike.
“Reform to rail fares and ticketing could not be more urgent now.
“Government needs to set out an alternative vision that makes public transport appealing – this includes affordable fares, rolling out contactless payment options, and improving train service punctuality so passengers are getting real value-for-money.”
The 4.9% increase announced today relates to regulated fares, which make up around 45% of rail fares.
They include commuter fares such as season tickets and shorter distance peak singles and returns, and also longer-distance off peak singles and returns.
Unregulated fares are set by train operators, although their decisions are heavily influenced by the Government due to contracts introduced following the coronavirus pandemic.
Rail fares to rise by 4.9% from next March
More transport news: UK rail customers can expect many rail fares to rise by almost 5% next spring.
The Department for Transport has announced that regulated rail fares in England will increase by up to 4.9% from March 3 next year.
Rail passengers may question whether the service is 4.9% better (especially if they were caught up at the chaos at Euston yesterday).
But the government points out that this is a smaller rise than a year earlier, when fares rose by 5.9%.
They are calling today’s announcement “a significant intervention”, as the increase is lower than last summer’s inflation rate, which has been used to set rail fares in the past.
Transport Secretary Mark Harper said:
“Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.
“Changed working patterns after the pandemic mean that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.
“We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.”
Regulated rail fare increases have traditionally been linked July’s reading of the retail prices index inflation measure, which was 9.0%.
The UK are also making changes to protect Britain’s small mammals, by relaxing rules around where small wildlife warning signs can be put up.
The DfT has also spruced up the small animal warning sign, adding white quills to the hedgehog’s back to make it more noticable.
Harper announced the move on a visit to Tiggywinkles Wildlife Hospital in Buckinghamshire….
The broader picture for the UK economy is significantly bleaker than suggested by the 1.3% month-on-month rise in retail sales in November (see 7.10am post), says Cameron Misson, economist at the CEBR.
Misson explains:
“November’s rise in retail sales were markedly stronger than consensus expectations, which will be welcome news for the sector ahead of the all-important festive period.
The contraction in output in Q3 2023 suggests that the economy is on the verge of a technical recession. Cebr previously forecasted a technical recession across Q4 2023 and Q1 2024, however, today’s downward revisions suggest that the contractionary period has started one quarter sooner than expected.”
At the risk of dampening the Christmas mood further, London Underground workers ae set to stage a series of strikes in the new year in a dispute over pay.
Members of the Rail, Maritime and Transport union (RMT) have voted overwhelmingly to take industrial action over a 5% pay offer.
Engineering and maintenance workers will be taking action over January 5/6, with no rest-day working or overtime until January 12.
London Underground control centre and power/control members will be taking action over January 7/8, and fleet workers will walk out on January 8.
Signallers and service controller members will take action on January 9 and 12 while all fleet, stations and trains grades will walk out on January 10.
RMT general secretary Mick Lynch said Tube workers who help bring “vast amounts of value” to the London economy were not going to put up with senior managers and commissioners “raking it in”, while they were given “modest below-inflation offers”.
Similar planned strikes have been called off in recent months; in October, a walkout was cancelled after negotiations at Acas made progress. But if not, commuters and Londoners could face a tricky start to the new year.
@RMTunion has made it clear that the latest pay offer of 5% from London Underground is unacceptable when @TfL has created a bonus pot of £13 million for senior managers and the commissioner took an 11 per cent pay rise in 2023 taking his salary up to £395,000.
— RMT (@RMTunion) December 22, 2023
Engineering and maintenance workers will be taking action over January 5/6, 2024 with no rest day working or overtime until January 12.
Control Centre and Power/Control members will be taking action over January 7/8, 2024 and all Fleet will walk out on Monday January 8.— RMT (@RMTunion) December 22, 2023
Signallers and Service Controller members will take action on January 9 and 12 while all Fleet, Stations and Trains grades will walk out on January 10.
— RMT (@RMTunion) December 22, 2023
Joshua Mahony, chief market analyst at Scope Markets, says the -0.1% drop in UK GDP in the third quarter is a warning that we could yet see the widely anticipated UK recession in 2023.
Mahony adds:
A year ago, markets were looking towards the UK as a likely source of economic weakness, with both the IMF and Bank of England predicting the UK economy to shrink over the course of 2023. For the most part the UK has outperformed expectations, with the Germany instead looking at risk of a recession this year.
Nonetheless, the third quarter -0.1% decline now sees the UK treading the same pathway as the German, French and wider eurozone economies.
From a monetary policy standpoint, this does feed into the narrative that we will see a more dovish narrative from the ECB and Bank of England, with the current growth and inflation trajectory allowing for a pivot next year.
China’s BYD announces Hungarian electric vehicle factory
Jasper Jolly
Chinese Tesla rival BYD has said it will build a new vehicle factory in Hungary, in a sign of the carmaker’s increasing focus on the European market, my colleague Jasper Jolly writes.
The manufacturer, which is the world’s second-largest producer of electric cars, said it would create thousands of jobs in the city of Szeged, southern Hungary, in a statement on its official WeChat account on Friday morning.
BYD, which is backed by US investor Warren Buffett, is one of the companies leading the race to dominate the industry for electric vehicles as countries rapidly move away from fossil fuel cars. It has set its sights on being the biggest seller of electric cars in Europe.
The manufacturer already produces a wide array of products in China, ranging from hybrid cars that combine a battery and an internal combustion engine, to buses and lorries powered by its batteries. It is also a key supplier of batteries to other car companies.
However, its planned assault on the European car market has caught the attention of local rivals as well as European politicians who fear that jobs could be lost to China.
The EU has launched an investigation into Chinese state subsidies for electric vehicles, a move that could eventually allow it to impose restrictions on imports. A factory within the EU could allow BYD to avoid some measures. BYD’s talks with the Hungarian government were first reported by the Financial Times.
BYD already has a bus factory in Hungary. Some analysts expect it to overtake Tesla as the world’s biggest maker of pure battery electric vehicles. It already makes more cars than Tesla when including hybrids.
Bloomberg’s Tom Rees points out just how poorly the UK economy has done this year:
Today’s revised figures mean it’s a big fat fail on Sunak’s pledge to grow the economy so far. After those Q2 and Q3 GDP downgrades, GDP is up just 0.2% when compared to the end of last year.
Some heroics needed in Q4 for him to credibly claim to have made any progress on this pic.twitter.com/j2EYuQXwp2— Tom Rees (@tomelleryrees) December 22, 2023
Full story: UK at risk of recession after economy shrinks in third quarter
![Phillip Inman](https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/contributor/2007/09/28/phillip_inman_140x140.jpg?width=300&quality=85&auto=format&fit=max&s=ff3dad18a53e7f4c53a0f9e4e844fabf)
Phillip Inman
Fears that the UK has fallen into recession have been heightened after official figures were revised to show that the economy shrank slightly in the July to September period.
The assessment that gross domestic product (GDP) fell by 0.1% in the third quarter – down from the previous estimate of no growth – will be a blow to Rishi Sunak, who has promised to get the economy growing as one of his fives pledges to voters before an expected general election next year.
The Office for National Statistics (ONS) said a poorer than previously assessed performance by small companies, film production, engineering and design and telecommunication and the IT sector accounted for much of the revision.
More here.
TUC General Secretary Paul Nowak has warned that the UK economy is in a “doom loop”, after GDP shrank by 0.1% in July-September.
Nowak says:
“This year ends with another set of dismal growth figures and with the UK teetering on the brink of recession.
“We can’t go on like this. Our economy is stuck in a doom loop and working people are paying the price as unemployment rises and living standards fall.
“The Conservatives got us into this mess. They don’t have a plan for getting us out of it.
German house prices in record 10.2% fall
Economic warning lights are also flashing in Germany this morning.
House prices in Europe’s largest economy have fallen at the fastest rate in at least 23 years, plunging by 10.2% year-on-year in the third quarter of 2023.
That’s the fastest decline in residential property prices compared to a previous quarter since the time series began in 2000, following a 6.8% drop in Janary-March, and 9.6% in April-June.
Statistics body Destatis has also reported that new orders in Germany’s construction sector slumped by 6.3% in October, month-on-month.
This was driven by a 14.9% drop in building construction, which more than countered a 2.4% rise in civil engineering orders.
Over in the stock market, shares in UK retailers are sliding in early trading, after gloomy financial results from Nike last night.
JD Sports is leading the FTSE 100 risers, down 5%, while Frasers (which owns Sports Direct) is down 1.3% and discount retailer B&M has lost 1%.
Last night, sportswear giant Nike cut its annual sales forecast blaming cautious consumer spending, a weaker online business and more promotions, and said it would cut costs by $2bn over the next three years.
Victoria Scholar, head of investment at interactive investor, explains:
“Nike has cut its full-year sales forecast, sending shares sharply lower, down by nearly 12% after hours, wiping out its gains from the past month. It expects fiscal full-year revenue to increase by around 1%, below its previous guidance and analysts’ estimates for around 3-4%. It reported quarterly net income of $1.6 billion, beating estimates but revenue hit $13.39 billion, just shy of estimates.
The sportswear giant is aiming to achieve $2 billion in savings over the next three years and it is launching new styles to try to boost customer demand. Nike said there was a ‘bifurcation’ in performance with some periods of weakness and others of strength, particularly around key shopping events like Singles Day and Black Friday.
Currently, the FTSE 100 share index is up just 2 points, or 0.03% – so not much sign of the traditional Santa rally….
The UK economy is on both the naughty and nice list following this morning’s data, says Investec economist Ellie Henderson.
Henderson says this morning’s national accounts (showing a fall in GDP), and November’s retail sales figures (showing 1.3% month-on-month growth), are “a tale of two halves”, adding:
The national accounts release indicated an economy which is progressing slower than was first reported, making a winter recession far more likely, but the retail sales report for November sprinkled a little bit of festive cheer, blasting past consensus.
On the GDP side, growth in Q3 has been revised down, now reporting negative quarterly growth, at -0.1%. Although this means a winter recession is far more probable, this really is a matter of semantics: to two decimal places, the original release had in fact already shown GDP to have contracted by -0.03%.
The story remains that economic growth has been subdued. Quarterly GDP growth for Q2 was also revised down, now reporting no growth on the quarter (prior: +0.2%).
Professor Costas Milas, of the Management School at the University of Liverpool, has spotted another worrying point in today’s GDP report:
Today’s GDP revision, which indicates the potential start of a recession in the third quarter of 2023, will worry policymakers for an additional reason: the ONS has revised downwards 2023Q3 four-quarter GDP growth by 0.3 percentage points (from 0.6% to 0.3%, that is). Historically (from 1973 onwards, that is), the ONS has revised four-quarter GDP growth upwards by an annual average of 0.7 percentage points!
Today’s GDP reading goes against the historical “norm” which adds extra uncertainty about the future outlook of the UK economy and, in my view, strengthens the voice of those, including myself, who believe that an interest rate cut will be on the cards by March 2024!
The fall in UK GDP in July-September will reinforce expectations in the City of London that the Bank of England will cut interest rates several times in 2024.
This morning, the money markets are predicting that UK interest rates will be cut by 1.4 percentage points in 2024.
That implies that rates could be cut as low as 3.75% by December 2024, down from 5.25% today.
Today’s quarterly national accounts shows that GDP per head shrank by 0.3% in July-September, worse than the headline fall of 0.1% in GDP.
In April-June, when the economy stagnated, GDP per capita fell by 0.1%.
Today’s GDP data also show that Gross Domestic Product per capita – a much better measure of living standards than the headline number – fell by 0.3% in q3, following a 0.1% fall in q1.
Biggest fall since the pandemic. pic.twitter.com/dh9FAUXPiW— Ed Conway (@EdConwaySky) December 22, 2023
Btw it’s quite possible those latest GDP per capita falls are understating the scale of the fall because as I understand it they are based on population figs that predate the latest much-higher-than-expected net migration figures.
Higher population -> weaker GDP per head— Ed Conway (@EdConwaySky) December 22, 2023
Today’s updated GDP report shows that household spending fell in July-September.
There was a fall of 0.5% in real household expenditure in Quarter 3 2023, revised down from a first estimate fall of 0.4%, the ONS says.
This was driven by lower spending on miscellaneous goods and services, spending on restaurants and hotels, spending on food and non-alcoholic drink, and spending on furniture and household equipment.
Several experts are warning that the UK is at real risk of a “technical recession” – defined as two quarters of falling GDP in a row.
Here’s Interactive Investor’s Victoria Scholar:
UK GDP Q3 revised down to -0.1% vs previous est. 0%
UK GDP Q2 revised down from 0.2% to 0%
Growing risk of a technical recession now in the UK by the end of this quarter— Victoria Scholar (@VictoriaS_ii) December 22, 2023
And Sky News’s Ed Conway:
However… definitions of a recession vary, with some analysts arguing that it means more than just a few months of contraction.
In the US, the National Bureau of Economic Research gets to decide when the US economy is in recession – and can make this declaration long after the downturn has actually hit.
The Financial Times now takes the same approach – here’s the FT’s Chris Giles.
Style note
If the UK is now nearly at the end of a second consecutive consecutive quarter of GDP contraction. It is not in recession
2023 q3: -0.1%
2023 q4: ??V glad to say the @FT style guide now makes this very clear pic.twitter.com/5Cv6smJcx6
— Chris Giles (@ChrisGiles_) December 22, 2023
Today’s GDP downgrades show that Britain has barely avoided a recession so far this year.
Richard Carter, head of fixed interest research at Quilter Cheviot, warns that growth is moving in the wrong direction (given we also know GDP shrank in October).
Carter says:
“ONS data this morning reveals UK GDP fell by a surprise 0.1% in Q3 compared to the previous quarter, revised down from a first estimate of no growth, highlighting just how much of a strain there currently is on the UK economy.
Q2 was also revised down and is now estimated to have shown no growth compared to the 0.2% increase previously estimated, meaning the UK has barely scraped by without a recession in 2023.
“Growth is weakening and interest rates are really beginning to bite and while a recession has just been avoided to date, there is no guarantee one will be avoided in 2024. You just have to look at October’s -0.3% reading to see that growth is trending further in the wrong direction. Inflation has eased more than anticipated and interest rate predictions are suggesting more easing than originally thought in 2024, but the damage may already have been done.
Certainly, Rishi Sunak’s pledge to grow the economy is now severely in doubt.