LONDON’S BUSINESS NEWSPAPER
YOU BOUGHT IT, YOU OWN IT VIAGOGO CHIEF ON WHY TICKET PLATFORM IS GOOD FOR FANS P11
LISBON LIVING INSIDE EUROPE’S HOTTEST CITY WEEKEND P16-17
PARTIES SET FOR BATTLE OVER RATES
MONDAY 26 JUNE 2023
ISSUE 4,001
CITYAM.COM
FREE
TORIES AND LABOUR CLASH OVER MORTGAGE PRESSURE JACK BARNETT AND STAFF PRIME Minister Rishi Sunak has urged the country to “hold our nerve” with sky high interest rates in order to beat down scorching inflation. Speaking on the BBC’s Sunday with Laura Kuenssberg programme, Sunak gave his full backing to the Bank of England’s latest interest rate rise as Tory backbenchers slammed governor Andrew Bailey for being “asleep at the wheel”. “The Bank of England is doing the right thing. The Bank of England has my total support,” the PM said, adding that “inflation is the enemy”. Fears have mounted in recent weeks over elevated borrowing costs tipping the UK into a recession. Members of the ninestrong Monetary Policy Committee (MPC) last week jacked up offi-
cial rates 50 basis points to five per cent, their highest level since 2008. But financial markets think the Bank will have to go further to strain inflation out of the UK economy, betting that rates will peak at more than six per cent. “I get that this is challenging, but we’ve got to stick to the course,” Sunak said. “I want people to be reassured that we’ve got to hold our nerve, stick to the plan and we will get through this,” the PM added. Inflation remained stuck at 8.7 per cent in May despite Bailey and co already lifting rates 12 times in a row in the most aggressive tightening cycle since the 1980s. Last Thursday’s rate rise was the 13th straight jump. Tory backbencher Sir Jake Berry laid into the Bank yesterday, saying it had pursued ‘blobonomics’ and accused Bailey of being
“asleep at the wheel”. Senior Labour figures said the government’s deal with mortgage lenders to slow the speed of repossessions would need to be mandatory to have any impact. And Lisa Nandy also increased pressure on Britain’s banks, saying that if Labour were in power the party would mandate banks pass on higher interest rates to savers. Currently the gap between savings rates and lending rates, banks’ net interest margin, sits at around three percentage points. “What we are proposing is that the government ensures that those [interest rate] rises are passed on so that it’s more attractive for people to put money into savings in order to help cool the economy,” Nandy said. The shadow communities secretary argued that this would help bring inflation down because people would be more likely to save money rather than spend it.
CITY ON SHOW Tourism vital to Square Mile’s economic future JAMES SILVER THE CITY of London cannot “overlook” the value of tourism and leisure in the post-pandemic rebuild of the Square Mile’s economic engine, the historic area’s most senior policymaker has said. Writing for City A.M., Chris Hayward, the policy chair of the Corporation of
the City of London, says the next chapter of the Square Mile’s history will “be one that finally acknowledges that tourism is important for the City, and the City is important for tourism”. Visitor numbers are increasing, helping to make up for lost office workers on some days of the week. £ CHRIS HAYWARD: PAGE 14
Wagner’s aborted Russian revolution set to unsettle already touchy markets JAMES SILVER THE UPRISING launched by Russian mercenary group Wagner against members of Vladimir Putin’s government at the weekend – which was called off almost as suddenly as it began – is likely to give traders pause as they return to their
terminals this morning, analysts reckon. Wagner chief Yevgeny Prigozhin organised an unprecedented challenge to the Kremlin’s authority late on Friday evening, taking effective control of at least one major Russian city, before calling for his mercenary troops to
withdraw after a peace deal brokered by Belarussian leader and Putin puppet Aleksandr Lukashenko. Analysts suggested the uprising’s swift end would alleviate some concerns, but the uncertainty about Putin’s regime and the war in
Ukraine was unlikely to help global stock markets. "Markets typically do not respond well to events that are unfolding and are uncertain," particularly relating to Putin and Russia, Quincy Krosby, chief global strategist at
LPL Financial, told Reuters. And Michael Hewson, chief markets analyst at CMC Markets, told City A.M. that the peace deal would take the heat out of a “dicey” open but “it won’t have done anything to alleviate uncertainty facing the global economy, after last week’s losses on stock markets”.
INSIDE ‘JOB NOT DONE’ ON RATES P3 BANKERS WARN ON RISKS OF ‘BRITCOIN’ P4 ONSHORE WIND MORE POPULAR THAN BEYONCE P10 MARKETS: WEEK AHEAD P12 SPORT P18