Boost for Reeves as inflation falls after No 10 refuses to rule out emergency budget: Live

While this morning has seen good news for the value of the pound and gilt yields, a further potential bump in the road is scheduled this afternoon.

United States inflation data is due at 1:30pm, and could send government borowing costs higher around the world, including in Britain.

Government interventions have been “quite unhelpful” in increasing costs for an “overburdened” retail sector, the chief executive of Currys has said, in an apparent swipe at the employers national insurance hike announced in the chancellor’s autumn Budget.

Asked on BBC Radio 4’s Today programme what he had heard from other retailers regarding their financial outlooks, Alex Baldock said: “It’s a mixed picture.

“So I mean, for us, our stores are really important alongside online – I mean, that’s how customers want to shop through a mix of both and so our stores remain really important to us and contributed well to a strong peak performance.

“On the other hand, of course, there are plenty of cost increases hitting retailers who employ large numbers of people, and as we said a few weeks ago, we think some of the Government interventions have been quite unhelpful in that respect, in loading more costs onto an already overburdened sector.

“But you know, if we have to run up and down escalators, so be it, we’re quite used to that over the past few years, and we at Currys have shown with these strong results that we can do so.”

Consumer confidence and spending “remains very patchy”, the chief executive of electrical retailer Currys has said.

Asked about his outlook for the high street chain for 2025, Alex Baldock, told BBC Radio 4’s Today programme: “We’re more confident in our businesses prospects.

“I mean, these are strong peak results building on a strong first half performance and as you said, we’re more confident in the profit outlook for our business.

“But I think that’s more to do with the work that we’ve done, rather than any help from the external environment, which remains very patchy in terms of consumer confidence and spending.”

In further good news for the chancellor, the cost of UK government borrowing fell slightly as the markets bet on a further Bank of England interest rate cut, following Wednesday’s surprise fall in inflation.

Traders now see around an 80 per cent change of a 25-basis point easing in February, up from around 60 per cent before the latest inflation data – in a shift which supported under-fire British government bonds, known as gilts.

In a boost for Downing Street, 10-year gilt yields dropped 6 basis points at 4.82 and the rate sensitive two-year yield was down nearly 8 basis points, outperforming German and US peers.

Gilts have been at the centre of a global government bond selloff this month as higher borrowing costs threaten the government’s strained finances.

British stocks have been given a boost after data showed UK inflation unexpectedly slowed in December and core measures of price growth fell more sharply.

The FTSE 100 added 0.7 per cent early on Wednesday morning, outpacing its European peers, while the FTSE 250 midcap index jumped 1.5 per cent.

Traders currently see a more than 82 per cent of the Bank of England cutting interest rates in February, and about 50 basis points of easing by the end of the year, Reuters reports, citing London Stock Exchange Group data.

“The Bank of England will likely feel emboldened to continue its easing cycle in February. And rate cut expectations further out should ease on the back of today’s data,” Sanjay Raja, Deutsche Bank’s chief UK economist told the news agency.

The surprise decline “provides some timely respite amid the financial markets turmoil”, said Suren Thiru, economics director for the Institute of Chartered Accountants.

But he added that “any relief could be short-lived” due to inflation pressure growing this year.

“Despite December’s unexpected decline, the near-term outlook for UK inflation remains ominous with higher energy bills likely to push the headline rate above 3 per cent over the coming months, aided by April’s expected rise on Ofgem’s energy price cap,” he said.

The pressure on Rachel Reeves over turmoil in the markets is “unfair”, the chief secretary to the Treasury has said.

“I think it’s unfair. Look, the chancellor is doing a brilliant job,” Darren Jones told LBC, adding that a lot of issues in the markets are down to “global movements”.

“The first thing to say, as I’m always reminded, is ministers don’t comment on market movements, but what I will say is that a lot of this is down to global movements in international markets. Other countries are facing similar challenges,” he said.

The chancellor’s fiscal rules are the “right approach from the chancellor in difficult global economic circumstances, and with a difficult inheritance that we had from the last government”, he said.

Chief Secretary to the Treasury Darren Jones acknowledged that “tough decisions” on spending would be required as the government grapples with high borrowing costs.

He told BBC Breakfast: “There’s a lot happening globally and as ministers we don’t give a running commentary on the market, because we take the price in the market, we do accept the price in the market.

“But there’s no denying that this government inherited an economy from the Conservatives that had a high amount of debt and low growth and that’s why we have got non-negotiable fiscal rules where under this government, day-to-day spending for public services must be met by tax receipts, not by borrowing.

“People at home know you can’t just keep borrowing every month to pay the bills. And where we do borrow to invest in the country’s infrastructure, the debt has to be falling as a size of the economy over the next five years.

“Those fiscal rules are non-negotiable. That means there are tough decisions for the Chancellor and this government to take. “