The FTSE 100 was down by 0.86% at 7,237.8 while the FTSE 250 was down by 0.05% at 18,811.4, weighed down by Chinese trade data, as the country’s trade surplus shrank thanks to shrinking demand and Covid-19 lockdowns. Fears of interest rate hikes in large economies continued to plague investors.
Prime Minister Liz Truss laid out plans to tackle soaring energy bills in Britain, which economists believe could reduce inflation to 5% by April, according to Barclays Research. The plans do not include a windfall tax on energy companies.
The scale of the economic challenges facing Truss was indicated in the currency markets, as the pound fell to a level not seen since 1985.
Speaking to MPs, the Bank of England’s Chief Economist Huw Pill said that the move could lower headline inflation.
Pill said, “One of the things that does seem to be under consideration is a change to the relationship between gas prices and retail gas prices in a direction that will lower headline inflation, relative to what we were forecasting, where that relationship was based on the mechanics of the Ofgem price gap.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “As politicians scramble to put sticking plasters on what looks set to be a longer-term energy crisis, the outlook for the global economy has darkened again, sending fresh jitters through financial markets.”
Cyber security firm NCC Group (GB:NCC) was one of the day’s biggest gainers, gaining almost 12% on the back of a report which showed revenues had grown by 17.9% to £314.8 million in the past year.
In the wake of Liz Truss’s announcement that energy firms would not face a windfall tax, firms such as SSE (GB:SSE) and Centrica (GB:CNA) rallied, with SSE gaining 4.38%.
British business news today
Pound sinks as financial markets digest scale of Truss’s economic challenges (FT)
British energy firms struggling to hedge against rising gas prices (The Times)
Putin threatens to ‘freeze’ Europe with total energy cut-off (Telegraph)
