The CBI, the ailing business group, has acknowledged its financial travails for the first time as it postponed what was set to be a crucial annual meeting this week, says Sky News’s Mark Kleinman.

He adds:

The AGM postponement is the latest chaotic chapter in a dire year for what was once Britain’s most influential business group, which was brought to its knees in the spring by a wide-ranging sexual misconduct scandal.

Instead of holding their annual meeting, the CBI are instead offering members an audience with its president, Brian McBride and director general, Rain Newton-Smith, tomorrow morning.

In what looks to be a fireside chat with members, McBride and Newton-Smith will:

• Outline the work we’re doing to advocate on your behalf through the autumn.

• Share their thoughts on the current political and economic environment, and what it means for your business.

• Update you on the latest developments at the CBI.

Online specialist Naked Wines has warned of a “material uncertainty” that may cast “significant doubt” on the group’s ability to continue as a going concern.

Chairman Rowan Gormley said:

“Make no mistake, trading conditions are tough.”

Gormley said high inflation, higher taxes on alcohol and falling disposable incomes had put pressure on sales, costs and cash flow while the number of new customers signing up had fallen as shoppers return to high streets and supermarkets after the pandemic lockdowns.

Naked said trading in the three months from April 2023 was below expectations, with total sales 18% lower than the same period a year before, sales to new customers 41% down and repeat customers falling 15%. The company said that if trading worsened it may not be able to generate sufficient cash to meet the conditions on some of its debts.

The listed wine merchant had a $60m lending facility – half of which was provided by the failed Silicon Valley Bank - which has now been taken on by First Citizens Bank - which requires it to have a minimum cash balance of $20m.

Naked said if could foresee a potential “severe but plausible downside” of not enough customers making repeat orders so that it would not have enough cash to meet its lenders’ requirements. It said the scale of the asset-backed lending facility could also be limited because it is partly based on the value of its US-based wine stocks.

Henry Boot has become the latest construction, land promotion and housebuilding company to feel the hit from a slowing housing market and economy.

It has reported a 38% slump in profits for the six months to the end of June. Its construction division is “trading below management’s expectations” as projects have been delayed.

All new construction work fell by 2.1%, including a 6.7% drop in private housing. However, revenues rose by a quarter to nearly £180m as the company sold more land and built more houses. Its Stonebridge Homes division builds upmarket five-bedroom homes priced at £500,000, on average, in Yorkshire, although some cost over £800,000.

It is on track to build 250 homes this year, up from 180 last year, and wants to ramp this up to 600 homes a year, eventually. Tim Roberts, the chief executive, said its customers tend to be partners of accountancy firms, lawyers and successful businesspeople.

Since the Covid pandemic, which led to more people working from home, the builder has been installing pitched roofs on detached garages to create an office space – although one customer chose to turn this into a James Bond-themed room.

Kemi Badenoch, secretary of state for business and trade, is up in front of MPs on the business and trade committee.

She has been discussing the £500m UK government support package agreed last week, which will secure the future of the huge Port Talbot steelworks in south Wales, but could lead to up to 3,000 workers losing their jobs.

The deal will also see owner Tata also put in about £725m to help it transition to greener production methods.

Badenoch said:

“The problem we are trying to solve is how do we make sure we don’t create a catastrophe in Port Talbot where everybody loses their jobs, that includes not just the 8,000 people that work for Tata but the rest of the supply chain, how do we regenerate the area, how do we make sure that we’re hitting carbon emissions. And this deal was the one that ticked all those boxes.”

David Bickerton, director general of the business group at the department for business and trade, said Tata expected to close the plant, so UK officials worked to create a “model which an economically rational investor would remain invested in for the long term”.

Tata bosses are due to meet with unions in London tomorrow (as we flagged earlier)

In New York, shares have opened a little lower as investors await tomorrow’s interest rate decision from the US Federal Reserve.

The Dow Jones industrial average, which tracks 30 large US companies, has slipped by 48 points or 0.14% to 34,576.

The broader S&P 500 is 0.15% lower.

But shares in energy producers are getting a boost from the rising oil price, with Exxon up 0.5% and Chevron gaining 0.8%.

In a boost to consumers, the corn price has dropped to a three-year low today.

The most-active corn contract on the Chicago Board of Trade has dipped by 0.7% today to around $4.68 a bushel this morning, after touching a near three-year low for a second straight session.

Reuters has the details:

Chicago corn slipped on Tuesday to remain at its lowest levels since December 2020 as an advancing U.S. harvest kept attention on ample international supply following a record Brazilian crop.

Wheat futures extended losses from Monday as competitive Russian prices and moves to load grain from war-torn Ukraine underscored ongoing competition from Black Sea supplies.

Soybeans slipped to a one-month low, pressured by the early stages of the U.S. harvest as well as monthly crushing data that disappointed traders.

Consultancy Agritel said.

“Corn and soybeans are slipping back as harvest pressure begins in the United States.”

Just hours after publishing its scoop on the FCA’s inquiry into debanking, the Financial Times now have a column on the issue from the regulator’s CEO himself.

Nikhil Rathi, chief executive of the Financial Conduct Authority, writes that the regulator “decided to revisit the issue” of debanking after a flurry of reports that banks were closing accounts based on their customers’ political beliefs.

Rathi says the FCA will carry out more work, having its initial review found politicians were not being denied accounts because of their views.

He writes:

So far, data from 34 banks, building societies and payment companies does not point to a systemic problem of people being de-banked because of their political views. According to that information it has not been the primary driver for any personal account closures.

We will undertake further checks to be doubly sure and to understand more about what are described as “reputational” factors behind a number of closures.

Rathi says banks need to get the balance right, when considering concerns about financial crime and their tolerance for risk.

He warns:

In the face of rising financial crime, the FCA is working with the government and others to clamp down on the misuse of financial services. There is a risk, however, that as parliament introduces measures such as a new offence of failing to prevent fraud, banks err on the side of caution.

It’s official: The UK’s financial regulator has found no evidence showing banks have shut or denied accounts to customers based primarily on their political beliefs.

That’s according to a preliminary review launched in the wake of the Nigel Farage debanking row, which has just been published.

As flagged this morning… despite growing concerns that customers have been quietly discriminated against due to their political views, the Financial Conduct Authority’s (FCA) said initial findings showed the primary reason for accounts being closed, suspended, or denied was either that the account was inactive, or that they had concerns that the customer was involved in financial crime.

The FCA’s chief executive Nikhil Rathi said.

“While no bank, building society or payment firm reported to us that they had closed accounts primarily due to someone’s political views, further work is needed for us to be sure.

That will involve verifying the initial data gathered from 34 banks, building societies and payment companies, covering the year to June, including cases where accounts were closed because the customers posed a “reputational risk”.

Conservative MP Danny Kruger, though, isn’t impressed with the FCA’s work:

We’ll find out tomorrow morning how the UK’s inflation rate compared with that of the eurozone.

The UK’s annual CPI index is expected to rise to 7.0% in August, up from 6.8% in July, driven by an increase in clothing costs and higher wages.

Here’s Charles Hepworth, investment director of GAM Investments, on this morning’s eurozone inflation data:

“The final reading for EU CPI in August slowed just a little bit more than the previous initial estimate, which indicated inflation on an annualised basis fell to 5.2% versus the initial reading of 5.3%.

It still remains stubbornly above the European Central Bank’s target rate of 2%, and with an accompanying oil price spike seen over the last few months, this will continue to raise headaches for the ECB’s Governing Council. The direction of travel however in inflation will undoubtedly be the welcome silver lining amid this cloud of inflation uncertainty.

Rates are now at the expected peak level in the Eurozone and we should expect them to remain at this level for some time.”

The OECD has also predicted that the UK will see the highest inflation rate of the world’s G7 advanced economies this year.

In its new forecasts, just released, the OECD predicts UK inflation of 7.2% for 2023, increasing its previous forecast of 6.9% from June.

This would be the fastest rate across the G7 and third fastest across the G20.

Chancellor of the Exchequer Jeremy Hunt said:

“Today the OECD have set out a challenging global picture, but it is good news that they expect UK inflation to drop below 3% next year.

“It is only by halving inflation that we can deliver higher growth and living standards.

“We were among the fastest in the G7 to recover from the pandemic, and the IMF (International Monetary Fund) have said we will grow faster than Germany, France and Italy in the long term.”

But Liberal Democrat spokeswoman for Treasury and business Sarah Olney is unimpressed by the OECD’s prediction that the UK will only grow by 0.3% this year (the third slowest in the G20, after Germany and Argentina).

Olney says:

“This damning report shows that under the Conservatives the UK economy is stuck in the slow lane.

“We’ve had zero apology from Liz Truss for trashing the economy, and now zero plan from Rishi Sunak to fix it.

“It’s time for a proper plan to grow the economy and tackle the cost of living.”

The rising oil price threatens to undermine the falling inflation rate in the eurozone, warns Richard Flax, chief investment officer at Moneyfarm.

Flax says:

Eurozone inflation fell faster than initially expected in August 2023, with the final data reading 5.2%. This is down from 5.3% in July and lower than the initial estimate of 5.3%. Compared to July, inflation fell across 15 countries, rose in 11, and remained stable in one. The significant contributors were food, alcohol, and tobacco (9.7% in August vs 10.8% in July) and services (5.5% in August vs 5.6% in July), while energy prices declined by 3.3% YoY.

However, a fresh inflationary headwind is on the horizon globally with oil prices continuing the climb towards $100 a barrel for the first time in a year. Brent crude is currently at an upwards of $95 a barrel, driven by concerns of a supply constrains after output reductions from Saudi Arabia and Russia have been extended to the end of the year. With OPEC+ announcing a deficit of 3 million barrels for Q4 2023, $100 per barrel remains very much in sight.

The elevated cost of energy will be concerning for central banks as this can add to the inflationary pressures at a time when they are aiming to end the tightening cycle.

There is a strong consensus that the Fed may leave borrowing costs unchanged tomorrow and not rule out a future hike, but the BoE may favour a rate hike on Thursday.

The drop in eurozone inflation to 5.2% last month could encourage the European Central Bank to stop raising interest rates, having lifted them to record highs last week.

Craig Erlam, senior market analyst for UK & EMEA at OANDA, says:

Eurozone headline inflation was slightly lower than initially reported in August while core was unrevised and is now modestly higher.

Both are expected to fall going into next year and today’s revisions are unlikely to alter the view of the ECB which has already decided that no more rate hikes will likely be needed. As with all favourable data though, it may come as a small relief that surprises in the data are finally in the right direction.

Core inflation across the eurozone, which strips out energy, food, alcohol and tobacco, dropped to 5.3% per year in August, from 5.5% in July.

Although the rate of eurozone inflation fell last month, that doesn’t mean prices are falling, of course.

On a monthly basis, eurozone consumer prices rose by 0.5% during August.

On the rising oil price, Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

Oil prices are still staying stubbornly high, with the benchmark Brent Crude creeping up further, hovering around $95 a barrel as concerns wash around about just how tight supply will be over the coming months, particularly if China’s economy stops stumbling and gets on a more even footing.

Forecasts from the US Energy Information Administration that shale production is set to fall for a third month in a row in key regions is adding to the upwards pressure on oil prices.

The International Monetary Fund and the World Bank are pressing on with their plan to meet in Marrakech next month, despite the devastating earthquake that has killed almost 3,000 people.

The meeting will take place from October 9th to 15th in Marrakech, just 45 miles (72 km) from the site of the 6.8-magnitude earthquake.

In a joint statement, World Bank President Ajay Banga; International Monetary Fund (IMF) managing director Kristalina Georgieva; and Kingdom of Morocco minister of economy and finance Nadia Fettah Alaoui, says:

“Since the devastating earthquake in Morocco on September 8, the World Bank and the IMF staff have worked in close coordination with the Moroccan authorities and a team of experts to thoroughly assess Marrakech’s capacity to host the 2023 Annual Meetings. In undertaking this assessment, key considerations were that the Meetings would not disrupt vital relief and reconstruction efforts, and that the safety of the participants can be assured.

Based on a careful review of the findings, the Managements of the World Bank and IMF, together with the Moroccan authorities, have agreed to proceed with holding the 2023 Annual Meetings in Marrakech from October 9 to 15, adapting the content to the circumstances.

As we look ahead to the Meetings, it is of utmost importance that we conduct them in a way that does not hamper the relief efforts under way and that is respectful to the victims and the Moroccan people. At this very difficult time, we believe that the Annual Meetings also provide an opportunity for the international community to stand by Morocco and its people, who have once again shown resilience in the face of tragedy. We also remain committed to ensuring the safety of all participants.”

In the City, B&Q owner Kingfisher has cut its full-year earnings outlook after being hit by wet weather and low consumer confidence.

Pre-tax profits at Kingfisher dropped by a third in the six months to 31 July, the company reported this morning, to £317m from £474m. Like-for-like sales were down 2.2%.

Thierry Garnier, chief executive officer, says:

“Our LFL sales in H1 were slightly ahead of expectations, against a backdrop of unseasonal weather and ongoing macroeconomic challenges in our markets.

Although sales in the UK & Ireland were up 1.7%, they fell 3.8% in France and by almost 11% in Poland.

Josh Warner, market analyst at City Index, says:

Kingfisher missed the mark in the first half and warned profits will fall further than previously anticipated over the full year. Analysts already had doubts over its annual goal but the cut today was much sharper than hoped thanks to tepid sales and because the inflationary environment is weighing on margins.

The options markets are now pricing a 45% probability of Brent staying above $90/bbl by January 2024, reports Stephen Innes, managing partner at SPI Asset Management.

There is also a tail risk that oil is repriced higher, Innes says, adding:

Still, many in the oil markets think OPEC+ is unlikely to pursue prices over $100/bbl, but they see near-term bullish risks to their forecasts from recent developments.

The recent surge in oil prices, which have reached a 10-month high of $95 per barrel (bbl), is causing ripples across the global economy and financial markets. One of the contributing factors to this surge is the extended unilateral output cuts implemented by major oil-producing nations like Saudi Arabia and Russia. These cuts have effectively tightened the global oil supply, pushing prices higher.

This rise in oil prices carries significant implications for inflation. Oil plays a crucial role in various industries, and as energy costs increase, it tends to lead to higher prices for goods and services. Consequently, there’s a growing concern about the potential inflationary pressures this could exert on the global economy, potentially leading to an unfavourable shift in the global growth/inflation balance.

The main story at the start of this week has been the “relentless rise” in the oil price, says Jim Reid, strategist at Deutsche Bank.

Reid told clients this morning:

The recent rises are already filtering through into retail gasoline prices, with the US daily average from the AAA at an 11-month high of $3.88/gallon on Sunday.

Given those fresh signs of inflationary pressures, investors moved to price in that interest rates would remain higher for longer into 2024.

For instance, the rate priced in for the Fed’s June 2024 meeting hit a new high for this cycle at 5.16%, suggesting that investors don’t expect much in the way of cuts anytime soon. It was the same story for other central banks, with the June 2024 rate for the ECB (+7.9bps) and the BoE (+2.2bps) also moving higher.