- FTSE 100 closes 47 points lower at 8,369
- UK CPI inflation softened to 2.3% last month
- M&S profits beat forecasts after rising to decade high
5.18pm: General election confirmed for 4 July
After a short speech in the pouring rain outside 10 Downing Street, PM Rishi Sunak confirms: “We will have a general election on July 4th."
PM drenched. pic.twitter.com/M6OnlBP4K1
— Harry Cole (@MrHarryCole) May 22, 2024
Protesters playing Things Can Only Better during Rishi Sunak's speech announcing a general election for July 4
— LabourList (@LabourList) May 22, 2024
Soaked with rain and drowned out by Things Will Only Get Better ???? pic.twitter.com/dNBX0xLcbG
— General Boles (@GeneralBoles) May 22, 2024
4.35pm: FTSE 100 closes lower
The FTSE 100 saw a brief revival in the final 30 minutes of today’s trading session, but it was ultimately a bearish day for the blue-chip index, closing 47 points lower at 8,369.
The end-of-day burst came as reports emerged that Rishi Sunak will officially call for an early general election in July.
With a cabinet meeting underway, Sunak had yet to confirm the reports at the time of writing.
4.07pm: Strong reports of 4 July gen election
Various newspapers are reporting that a general election will take place on July 4.
PM Rishi Sunak is set to confirm the news tonight, they say.
3.58pm: Election-linked inflation?
The fact that Labour is expected to win the next UK election may be contributing to the current inflation rate, argues an economics prof at City, University of London.
Professor Michael Ben-Gad, Professor of Economics at City, University of London said: "Short-term fluctuations in inflation are affected by all sorts of outside factors, not related to government or central bank policy and long-term trends.
"Generally, as the impact of outside pressure has eased – such as energy prices – the expectation was that inflation would drop more quickly than it has."
Prof Ben-Gad notes that fiscal policy is less mentioned as a factor, but with the UK running substantial deficits these last few years, which is expected to be 3.1% of GDP this fiscal year, significantly more than the growth rate, "that puts pressure on prices".
He says: "Paradoxically, the expectation that the Labour party will in all likelihood win the upcoming elections and rely heavily on debt to finance their spending plans actually contributes to higher inflation now."
3.51pm: FTSE falling further
London's blue chips are sliding lower as the session moves towards the close.
The Footsie index is now down 73 points or 0.9% at just over 8343, with UK mid-caps also down 0.5% at 20,676.
Miners Antofagasta PLC (LSE:ANTO) down 7%, Glencore PLC (LSE:GLEN) down 4%, Fresnillo PLC (LSE:FRES) down 2.8% and Rio Tinto PLC down 2.4% are among the biggest fallers.
Rio is part of a FTSE top six that are all in the red.
Other big fallers include Ocado Group PLC (LSE:OCDO), down 4.1% on the M&S wrangle (below), while M&S is top riser but gains have been pared to 3.5%.
Housebuilders Persimmon {PLC, Barratt Developments PLC (LSE:BDEV) and Taylor Wimpey PLC (LSE:TW.) are down on the expected further push-back to rate hikes.
Ahead of results tomorrow shares in Rolls-Royce Holdings PLC (LSE:RR.) are down 1.6% amid reports of an upsurge in bullish investors taking leveraged positions in the British engineer, with a spike in customers going short Lloyds Banking Group PLC (LSE:LLOY), though its shares are up 0.8%.
3.40pm: Broker round-up
Looking around at today's broker output, Direct Line Insurance Group PLC's (LSE:DLG) capital market day on 10 July should act as a positive catalyst for the shares and highlight its scope for substantial shareholder payouts, says UBS.
Analysts at the Swiss bank predict the insurer will pay out 40% of its market cap in regular dividends and buybacks.
After ITV PLC (LSE:ITV) reported solid 12% advertising growth forecast for the second quarter, it gets a target upgrade from Deutsche Bank ahead of an expected Euro 24 ad boost.
The German bank sees "balanced risk-reward" and nudges up its share price target.
Barclays PLC (LSE:BARC) could be poised to deliver higher-than-expected revenue on stronger credit card and net interest income margins, Jefferies analysts believe.
At UBS they look at the pros and cons of Shell and its European oil peers moving to a US primary listing.
And more investment banks provided thoughts on the new growth plans from AstraZeneca PLC (LSE:AZN).
3.22pm: M&S and Ocado's JV wrangle
Another wrinkle in the Marks and Spencer story was that the retailer is adamant it does not need to make a final payment to Ocado over its share in the pair’s online joint venture.
Stuart Machin, M&S’s CEO, defended his company’s stance following the release of the group’s annual results.
"On the contingent payment the performance target is binary and it was dependent on ORL [Ocado Retail Ltd] meeting a specified level of earnings in the financial year and actually those earnings and that performance was not me," Machin said.
Ocado threatened to sue M&S back in February as it said it deserved the performance-based target of £191 million due in August.
3.17pm: US stocks flat, UK down
US stocks opened in the red but are now roughly flat.
The S&P 500 is up 0.01% and the Nasdaq Composite down 0.02% with the Dow Jone also just below flat.
Meanwhile, the FTSE 100 and 250 both continue to wallow in the red, down 0.7% and 0.4%.
3.08pm: August BoE cut, investment banks reckon
Goldman Sachs has added its name to the August call for the first BoE rate cut.
BNP Paribas economists also reckon August is the right call, after UK inflation dropped less than expected.
Goldman and BNP had both predicted a first cut in borrowing costs in June but both today pushed their cut prediction back to August.
Earlier, Barclays also said its previous June call was now no longer its "base case" prediction.
Goldman analyst Sven Jari Stehn said an August cut would allow two more rounds of UK CPI and labour market data to be published, "which we expect to show renewed inflation progress".
2.42pm: BHP gets extra week for Anglo talks
Anglo American PLC (LSE:AAL) has rejected a "third and final" offer from BHP Group but the bid deadline has been extended by a week as talks continue.
The board of the FTSE 100-listed miner said they received a third "highly conditional" takeover proposal from BHP on Monday.
Under this latest proposed deal was worth £29.34 per Anglo American share, up from the £27.53 first and second bids tabled by BHP.
BHP it has since been "engaging" with Anglo American and its advisors and "made progress on these topics".
The new extended put-up-or-shut-up (PUSU) deadline is 5pm on Wednesday 29 May.
2.15pm: Pound rises on UK election expectations
Having gained earlier when a lower fall in inflation pushed back Bank of England rate cut hopes, the pound has been climbing in the past hour.
Expectations that a UK general election could be called soon have lifted the currency. GBP/USD rose from 1.2708 to 1.2733 in the past hour.
PM Sunak said an election would not come before the second half of the year, meaning July is current hot favourite.
Political chatter is all about an emergency cabinet meeting for ministers, after earlier special advisers (SpAds) were summoned to a meeting without being told what was on the agenda.
Well-connected hack Robert 'Pestowire' Peston says on X: "For what it is worth, I think an earlier election is on. I can’t tell you why I now think that. This is not 100% certain but close enough for me to mention to you."
JOURNALESE COMMITTEE EMERGENCY RULING: Election speculation can now be described as "febrile". Please amend earlier descriptions of it as "mounting".
— Robert Hutton (@RobDotHutton) May 22, 2024
If there is an election announcement, then a rising pound suggests the market is comfortable with a change in leadership and a Labour government.
— kathleen brooks (@KATHLEENBROOKS) May 22, 2024
1.59pm: Global markets mostly in red
London's and other major European stock indices remain in the red, while futures markets indicate a mostly lower US open in just over half an hour.
The FTSE 100 is currently around its lowest point of the day, down 56 points at just over 8360, a 0.66% decline so far today, while mid-cap sibling FTSE 250 is down 0.41% at just under 20,700.
In Frankfurt and Milan the DAX and FTSE MIB are down around 0.32%, while in Paris the CAC-40 is down 0.73%. The IBEX 35 is down 0.16% in Madrid, while the wider Euro Stoxx 600 is 0.48% lower.
Earlier Asian markets mostly fell, though the Shanghai Composite was flat and India's Sensex rose 0.36%.
1.40pm: Pound gives up some gains
The pound has given back a significant proportion of the gains against the dollar made on the back of the not-as-good-as-expected inflation data this morning and Rabobank forex analyst Jane Foley says it should continue its "slow grind higher" unless there are any big political shocks in coming months.
While PM Rishi Sunak claimed the CPI data provides “proof that (his government’s) plan is working and that the difficult decisions we have taken are paying off", there is enough stickiness in the underlying figures breakdown to have pushed back market expectations regarding the timing of BoE rate cuts.
Foley says Rabobank still retains a preference for a first BoE rate cut in August, which is likely to come after an expected ECB cut in June and ahead of the US Fed, which her team is forecasting for September.
"Despite the difference in the timing of the first policy moves, we see scope that both the ECB and the BoE will have announced the same amount of rate cuts by year end."
GBP/USD is currently up 0.1% at 1.2722, while against the euro the pound is up 0.3%.
Rabobank is maintaining a six-to-12 month forecast of EUR/GBP at £0.64 based on the view that "a more stable UK political landscape will allow GBP to continue the slow, grinding recovery that has been in evidence since the start of 2023".
"The market’s obsession with the timing of central bank initial policy moves suggests that the releases of the UK labour data on June 11 and the May CPI inflation data on June 19 are likely to be closely watched," said Foley.
"Despite the fact that the UK is facing an election, most likely by year-end, the 20 pt lead in the polls that has been held by the Labour party for some time suggests limited room for surprises... Assuming that the UK political backdrop remains calm, we expect that GBP can continue its slow grind higher medium-term."
12.52pm: Wall Street to open lower
US stocks are heading mostly lower at the open, according to futures markets.
Dow Jones futures are down 0.17% and those for the S&P 500 are 0.13% lower.
Nasdaq futures are just above flat, up 0.03%.
Some big US retailers are repotting today, with closely-watched NVIDIA Corp earnings coming after the closing bell.
Shares in Target Corp are down 7% in premarket trading after the chain's first-quarter revenue declines 3.1% and earnings per share came in at $2.03 versus the consensus of $2.06, a first profit miss in six quarters.
Elsewhere in retail, Lululemon Athletica Inc is down 4% premarket after the company said its chief product officer is leaving.
Most of the 'Magnificent Seven' tech giants are modestly in the red, premarket, apart from Tesla Inc (NASDAQ:TSLA), which is down 2.2%.
12.30pm: Election in second half of 2024, says PM
PM Rishi Sunak has just confirmed that the UK general election will be held in the second half of this year.
This was his response when asked if there would be a vote this summer.
Many are saying July is looking very likely.
Rishi Sunak doesn’t deny he’s about to call general election????
SNP’s Stephen Flynn: “Does the PM intend to call a summer general election, or is he feart?”
PM: “There is going to be a general election in the second half of this year”.#PMQs
— Pippa Crerar (@PippaCrerar) May 22, 2024
12.20pm: Energy stories
Energy prices should fall further over the coming months, experts say, after UK CPI fell last month largely due to falling gas and electricity prices.
Analysts at Cornwall Insight expect Ofgem to cut the cap even further when the regulator announces the latest price for July this Friday.
Elsewhere in the energy sector, the UK is getting another new nuclear power station.
A former power plant site in Anglesey has been selected for the site, with talks now set to start with potential developers and operators.
The Wylfa plant, of a similar size to Hinkley in Somerset and Sizewell in Suffolk, could provide enough clean power for six million homes for 60 years, said the Department of Energy.
12.11pm: UK gets first physical crypto ETFs
The UK financial watchdog has given the green light for the UK's first 'physically backed' bitcoin and ethereum exchange-traded funds.
WisdomTree has received approval from the Financial Conduct Authority to list its two exchange-traded products on the London Stock Exchange.
Alexis Marinof, head of Europe at WisdomTree, said while UK-based professional investors are already able to allocate to crypto ETPs via German, Swiss, Paris and Amsterdam exchanges, the UKL launches will provide "a more convenient access point".
"FCA approval in this respect could result in greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty – we would expect FCA approval of our crypto ETPs’ prospectus to remove those barriers to entry," he said.
11.50am: Barclays on UK inflation
Before today's UK inflation data Barclays economists had been expecting a BoE rate cut in June as their 'base case'.
But CPI fell to 2.3% in April, less than the 2.1% that the Bank and markets expected, mainly due to services inflation.
"Given the importance of this metric for the BOE, a June rate cut is no longer our base case," said Jack Meaning, an economist at the bank's research unit.
He observed that the step down in CPI inflation was largely driven by "base effects" (ie comparison with last year) and the expected 12% fall in the Ofgem cap on household energy bills.
"The upside surprise relative to our forecast came entirely from services inflation, which printed at 5.9% y/y, only 10bp lower than the 6.0% in March, and well above consensus and Bank of England ...
11.44am: House prices 'green shoots'?
Following the official Land Registry house prices data earlier, Felicity Holloway, head of mortgages at Moneybox said “green shoots continue to emerge in the property market".
"This is a positive sign that confidence is starting to return and filter through to the housing market. With a further drop in UK inflation this month, demand will likely heat up as we move towards the summer months."
Not wanting to unduly rain on everyone's parade (the inflation number has already done that), but the official house price index is not only from two months ago but also lags other available measures from lenders Nationwide and Halifax because it measures prices at the mortgage completion stage, compared to mortgage approvals.
The jump in the official price index "shows what was happening a couple of months ago in the housing market, when mortgage interest rate falls in the early months of this year fed through to surging buyer interest," said economist Rob Wood at Pantheon Macro.
"With indicators from earlier in the purchase process suggesting price gains have cooled as markets have re-evaluated how rapidly the MPC will cut interest rates, the gains in the ONS index will likely slow in the coming months."
As Wood points out, the Nationwide measure of house prices, for instance, has fallen for two months in a row.
11.21am: Paula Vennells gives evidence to the Post Office inquiry
Former Post Office boss Paula Vennells has been giving evidence at the inquiry in Westminster, where around 150 or more former and current subpostmasters are in the room listening.
According to journalists covering the evidence, Vennells began with an apology, saying: "I would like to say how sorry I am for all that subpostmasters and their families and others have suffered".
Vennells says she "had no sense there was any conspiracy at all. My deep sorrow is that individuals, myself included, made mistakes, didn’t see things, didn't hear things... but conspiracy feels too far fetched".
The inquiry is shown text messages exchanged between Vennells and former Royal Mail CEO Moyà Greene, in which Greene says she no longer believes Vennells' denial of knowledge and says "I can no longer support you"
After being asked why she told MPs that every conviction based on Horizon was safe, Vennells appears to begin crying.
Vennells says she "fully accept now" that the Post Office "knew that" but "personally I didn't know that and I'm incredibly sorry that that happened to those people, and to so many others".
The inquiry is shown text messages exchanged between Vennells & former Royal Mail CEO Moyà Greene, in which MG makes it clear she no longer believes Vennells denial of knowledge & concludes “I can no longer support you” pic.twitter.com/VaBunhciQj
— Paul Kelso (@pkelso) May 22, 2024
Meanwhile, the FTSE 100's losses have been cut to 16 point and the index is back above 8400.
The FTSE 250 is also down less than 18 points at 20,765.
11.11am: Land Registry data
More housing market data, this time from the Land Registry, which provides information about the number and types of applications completed last month.
In April, Land Registry completed more than 1,953,640 applications to change or query the Land Register, with the South East topping the table of regional applications with 449,162, ahead of London with 362,233.
Applications in April were up from 1,865,589 in March and 1,595,150 in April last year.
I'm sure someone will find that interesting.
10.48am: Markets vs politicians
While markets and economists are saying an interest rate cut is looking less likely this summer, Tory politicians are calling for cuts.
Prime Minister Rishi Sunak (a former Goldman Sachs analyst) said inflation is "back to normal" and "brighter days are ahead" after the fall in CPI to 2.3% last month, the lowest since the summer of 2021.
Did he get a different set of figures to the rest of us?
*UK PRIME MINISTER SUNAK SAYS INFLATION IS `BACK TO NORMAL'
— Michael Brown (@MrMBrown) May 22, 2024
Understandably, the Conservative Party wants a boost for voters and the housing market that a rate cut would deliver, with the general election looming.
They are not the only ones, with two members of the Bank's MPC having voted for an immediate rate cut at this month’s policy meeting, and earlier this week a third member stated that a rate cut "some time" over the summer was "possible".
Jacob Rees-Mogg today told the Telegraph: "Interest rates ought to have been cut already as inflation is a lagging indicator."
Former minister Paul Scully told the right-leaning newspaper the BoE should cut rates as it would "bring relief to many who are fixing their mortgages for the next few years".
This is in conflict with the views of financial markets, which now sees barely any chance of a BoE cut in either June or August, and economists.
NIESR economist Paula Bejarano Carbo said: "Inflation has fallen to its lowest level in almost three years. While this is positive news, inflation is still above the Bank of England's 2 per cent target and core inflation remains higher than its historical average at 3.9 per cent.
"Paired with last week’s strong wage growth data, we believe that elevated services inflation will remain an upwards risk to inflationary pressures in the second half of this year.
"As a result, the MPC may exert caution at its upcoming meeting and hold interest rates, despite today’s encouraging fall in the headline rate."
10.21am: Oil prices hit Shell, BP
Oil prices sinking to two-month lows is hitting two of the Footsie's biggest companies, Shell and BP.
Futures for Brent crude are down 1.25% to $81.84 per barrel, around the lowest since mid-March.
Shell shares are down 0.9% and BP's are down 1.8%.
Analysts at Saxo say this comes amid softness in the physical market and after the API reported increases in crude and gasoline stocks.
9.54am: House prices turn up, rents ease
Official UK house price data from the Land Registry, via the ONS, has come in stronger than expected, with average UK house prices growing for the first time since last summer.
The house price index was up 1.8% for March, much higher than the 0.1% expected and a swing from a 0.2% decline the month before.
The unadjusted official house price index rose by 0.7% month-to-month in March. In seasonally adjusted terms, prices increased by 1.1% month-to-month, the strongest gain since July 2022.
Rents increased by 8.9% on average in the 12 months to April 2024, down from the record high of 9.2% in the 12 months to March 2024.
In England, average rents increased 8.9% to £1,293, in Wales they were up 8.2% to £730 and up 10% in Scotland to £952, with Northern Ireland up 10.4%.
ONS chief economist Grant Fitzner said: “Average UK house prices grew over the year for the first time since last summer.
“House prices saw an annual rise in every nation and region, except London and the South East, with Scotland seeing the fastest annual growth.
“After two years of unprecedented and generally accelerating annual growth, private rental price rises showed tentative signs of easing. Most nations and English regions saw a slowdown, with a notable easing in London.”
9.31am: Pub profits
As well as M&S, another big riser this morning is M&B, with the owner of All Bar One, Nicholsons and O'Neills owner frothing up 13.8% after reporting an extra measure of profits soar in the first six months of its financial year.
Helped by costs beginning to ease and sales remaining robust, pre-tax profits more than doubled to £108 million.
Mitchells & Butlers PLC (LSE:MAB) also noted how hikes to the national living wage were offset by both energy and food price deflation.
Boss Phil Urban was sanguine about the second half, seeing sales growth across all brands in the last month, with the Euro 2024 football tournament also due to help summer sales.
9.16am: Some economists still hope for August rate cut
More thoughts on the prospects of the BoE's Monetary Policy Committee cutting interest rates this summer.
Rob Wood, chief UK economist at Pantheon Macroeconomics, says: "An August interest rate cut looks much more likely than a June reduction after services inflation shockingly barely fell in April."
He says "Services inflation has likely taken on a larger weight in the MPC’s thinking, because labour market data have become unreliable, and this miss is big enough, we think, to shift their thinking. It’s hard to argue inflation is on a quick path sustainably back to target when services inflation is barely declining."
Capital Economics' chief UK economist, Paul Dales, said the smaller-than-expected fall in CPI "makes a June rate cut unlikely and casts some doubt over August too".
Dales says the release will be "a bit of a blow for the BoE and the Prime Minister" as the small fall in services inflation "suggests the persistence in domestic inflation is fading even slower than the BoE had assumed".
Dales points to inflation even rising at restaurants, hotels and cultural services such as concerts and cinemas, which "may mean that businesses are passing on some of the rise in the minimum wage since 1st April in their selling prices".
9am: BoE rates repricing
Markets are moving quickly to reprice rate cut expectations for the UK, says market analyst Kathleen Brooks at XTB, with only a 19% chance seen of a rate cut in June down from around 50% before.
She says the market is now expecting the first cut between September and November.
This followed the CPI annual headline rate falling to 2.3% in April from 3.2%, which is the lowest level since the summer of 2021 but not as low as was expected, with all readings of inflation on both a monthly and annual basis coming in stronger than expected.
Keenly watched service prices were also disappointing, with service price inflation moderating to a 5.9% annual rate while the market had been looking for a reading of 5.4%.
"The lack of deeper progress on price growth means that a June rate cut looks less likely today," Brooks says.
The pound has shot higher on the back of the inflation data, up 0.3% to $1.2745.
"It is also worth noting that owner occupiers housing costs, included in the CPIH report and not the CPI, rose on an annual basis in April to 6.6%, and is now at its highest level since July 1992," Brooks said.
"Although the CPIH rate is not used by the BOE to set policy, it does suggest that housing costs are still a massive burden for the consumer. Of course, the best way to ease this pressure would be rate cuts, but we may have to wait for those."
8.57am: Public finances limit Chancellor's tax cut headroom
The public finance figures show the new fiscal year "off to a shaky start and cast further doubt on the Chancellor’s ability to unveil big tax cuts at another pre-election fiscal event later this year" says Alex Kerr at Capital Economics.
April’s public sector net borrowing was above the OBR’s forecast and public borrowing in the 2023/24 fiscal year was also revised up, while debt interest payments also rose from £2.5 billion in March to £8.6 billion in April.
Despite the stronger-than-expected rise in nominal GDP in the first quarter, Kerr said it is "somewhat surprising" that total tax receipts came in below the OBR’s forecast.
"It is worth noting that while total government expenditure may be around £10 billion higher than expected because of the compensation payments to victims of the UK’s contaminated blood scandal, given the bulk of the cash is likely to be dispersed within the next five years, it is unlikely to have a big effect on the fiscal ‘headroom’ available to the Chancellor against his five-year ahead fiscal mandate."
Overall, Kerr said Jeremy Hunt will be disappointed.
"Moreover, we expect slower nominal GDP growth and wage growth to dampen tax receipts growth later this year. And the rise in market interest rates since March’s Budget alone suggests he may have even less fiscal ‘headroom’ (perhaps about £6.5bn) for tax cuts than the £8.9bn left over in March."
8.50am: Results round-up: Severn Trent, SSE, Close Bros
Looking around at some of the other results this morning, Severn Trent PLC (LSE:SVT) shares are down 0.8% after the water company said it missed a key target this year, with renewed scrutiny on the sector after parasites have been detected in the drinking supply.
In full year results on Wednesday, the FTSE 100-listed group said it was "green on the vast majority" of its water ODIs (outcome delivery incentives), it missed its compliance risk index (CRI) target, which is designed to show risks from treated water compliance failures in terms of supplies used by regulator Ofwat's Drinking Water Inspectorate.
This comes after diarrhoea-causing parasites have left dozens sick across Devon and Cornwall, where rival Pennon Group operates, following pollution incidents.
Elsewhere among the blue chips, SSE PLC (LSE:SSE) is down 1.7% despite what appears to be a mostly strong set of final results, with 60p dividend in line with guidance.
Adjusted EPS came in at 158.5p, and at the top end of the company’s guidance after a strong performance across the company’s diversified mix of businesses, combining renewables (offshore and onshore wind and hydro-electric power generation), thermal power generation and networks (transmission and distribution grid operations).
Among the mid-caps, with the FTSE 250 index also in the red, down 81 points or 0.4% at 20,702, the biggest faller is Close Brothers Group PLC (LSE:CBG), down almost 6%.
A third-quarter update from the merchant bank reported banking loans growing less than previously signalled and a slight reduction in the net interest margin, but the asset management arm growing assets under management and its Winterflood market making business returning to profit.
"Two items are less positive," said analyst Robert Sage at Peel Hunt, one being its motor finance division undergoing investigation for the FCA's industry-wide Borrowers in Financial Difficulty review, and the second being that central costs in the group are guided now to rise in the fourth quarter.
8.32am: Public finances
There was a second announcement from the ONS earlier, on April’s public finances.
April’s public sector net borrowing (excluding banking groups) totalled £20.5 billion, which is above the Office for Budget Responsibility’s forecast of £19.3 billion and the consensus forecast of £18.5 billion.
Public borrowing for the 2023/24 fiscal year was revised up to £121.4 billion, or 4.5% of GDP, from £120.7 billion, or 4.4% of GDP.
Tax receipts were £77.4 billion, up £1.2 billion on a year earlier but below the OBR’s forecast of £78.2 billion.
A rise in RPI inflation in February meant debt interest payments rose from £2.5 billion in March to £8.6 billion in April, also above the OBR’s forecast of £8.3 billion.
8.27am: BT fined by Ofcom
BT Group has been fined £2.8 million by regulator Ofcom after its EE and Plusnet businesses failed to provide clear contract information to over a million customers before they signed up.
This breach of consumer protection rules led to the fine, which Ofcom says reflects the seriousness of the violation.
Evidence gathered showed BT was aware from January 2022 that some sales wouldn't meet the June deadline, yet chose not to comply on time, Ofcom said.
The company must now find and reimburse customers wrongly charged exit fees, contact remaining customers to offer cancellation rights, and amend its sales processes to comply with regulations.
Shares in BT fell initially but are now up 1.6%.
8.19am: M&S tops Footsie leaderboard
The FTSE 100 is continuing to sink lower in early trading, but doing its best to limit this is the retail sector, with Marks & Spencer top of the FTSE leaderboard after its profits beat analysts' forecasts.
M&S shares are up almost 8% to 295.5p, around a six-year high, while Ocado is up 1.35%, B&M 1.2%, Sainsbury's 0.9% and Tesco 0.7%.
Peel Hunt analyst Jonathan Pritchard says it was a "small beat" at the pre-tax profit level for M&S though the results "showcased an exceptional year for the business, with significant strategic progress made".
The profit beat was primarily driven by a very strong food performance, he said, as like-for-like sales accelerated in the fourth quarter from 10% to 12%, and the margin performance "is pleasing, already ahead of the mid-term targets".
8.10am: FTSE tumbles
The FTSE 100 has tumbled lower at the open, falling 47 points to 8369.
Commodities stocks are a big drag, with miners Antofagasta, Fresnillo and Anglo American all down more than 1%, along with oil heavyweights BP and Shell also in the red.
Biggest faller is RS Group, the former Electrocomponents, down 8% after reporting a fall in annual profits, blamed on weakness in global industrial production and the unwinding of unusual post-pandemic trading tailwinds.
Housebuilders Persimmon and Taylor Wimpey are among the blue-chip fallers as the ONS inflation reading knocks back hopes for a rate cut and therefore mortgages too.
7.58am: M&S restores dividend
Marks and Spencer Group PLC (LSE:MKS) has restored its dividend after a four-year gap after reporting a bigger-than-expected jump in annual profits.
Profit before tax and adjusting items came to £716.4 million in the year to 30 March, up 58% on the previous year and versus the average analyst forecasts of around £685 million, as sales rose 9.4% to £13.1 billion.
Free cash flow from operations also more than tripled to £413.7 million, which allowed debt to be cut and the divided to be reinstated.
"Two years into our plan to Reshape for Growth we can see the beginnings of a new M&S," said chief executive Stuart Machin, hailing 12 consecutive quarters of sales growth for both the Food and Clothing & Home units.
He said the strength of the balance sheet and the sustained improvement in performance, "means we have the headroom and confidence to invest for future growth as well as introduce a 3p dividend".
7.34am: City watchdogs fine Citi
Citigroup Inc's (NYSE:C) Global Markets (CGML) arm has been fined over £60 million by the Financial Conduct Authority and Prudential Regulation Authority after its slow reaction to a mistake by one of its traders led to US$1.4 billion of equities "being sold in European markets when they should not have been" and a sharp drop in some European market indices.
The FCA said its fine of £40 million, reduced to just under £28 million due to early payment, was for "failures in systems and controls" over the actions of a CGML trader in May 2022.
The trader agreed to sell a basket of equities to the value of US$58 million but "made an inputting error" while entering the basket in an order management system, which resulted in a basket of US$444 billion being created.
In total, US$1.4 billion of equities were sold across European exchanges before the trader cancelled the order, leading to a material short-term drop in some European indices over several minutes.
7.28am: More on inflation
On the CPI print, ONS chief economist Grant Fitzner said the large fall in annual inflation was led by lower electricity and gas prices due to the reduction in the Ofgem energy price cap.
“Tobacco prices also helped pull down the rate, with no duty changes announced in the budget," he said. "Meanwhile food price inflation saw further falls over the year. These falls were partially offset by a small uptick in petrol prices."
“The prices of goods leaving factories have risen a little over the last year" Fitzer added, with the producer price index up 1.1% in the year to April, up from a revised increase of 0.7%.
"Meanwhile, the prices of raw materials and fuels grew in the last month, though they remain below where they were a year ago," he said, as input prices fell by 1.6% in the year to April, compared to a fall of 2.5% a month earlier.
James Smith, research director at the Resoltion Foundation said: "This is still the biggest fall in getting on for half a century over the past 18 months - but today's numbers will worry the BoE and suggest inflation is proving stickier than expected."
7.12am: FTSE 100 to start in red as UK CPI disappoints
The FTSE 100 is predicted to start in the red again on Wednesday as new UK inflation figures show prices did not ease as much as expected last month.
London’s blue-chip index was being called 30 points lower ahead of the open, extending losses after finishing down almost eight points at 8,416.45 yesterday.
The UK consumer price index in April was up 0.3% over the month, figures from the Office for National Statistics showed, which was not as big a reduction as the 0.1% monthly figure that economists expected, but less than the 0.6% in March.
This meant the headline annual CPI rate eased to 2.3% from 3.2% in March but not as low as the 2.1% the market expected.
Core CPI, which includes more volatile prices such as on fuel and food, also eased to 3.9% in April from 4.2%, but again not as much as forecast, with economists looking for a figure of 3.6%.
In the corporate results world, there are numbers from National Grid, water company Severn Trent, retailer Marks & Spencer and proderyty developer British Land out this morning, while many investors around the world will be looking forward to hearing the latest earnings from chipmaker NVIDIA after the closing bell in New York later.