Full story: A £14bn class action against Mastercard for allegedly overcharging 46 million British consumers during a 15-year period has been given the green light to proceed, my colleague Shane Hicky writes.

Almost every adult in the UK – even if they never had a Mastercard – could receive a payout of up to £300 from the credit card company after a supreme court ruling paved the way for the class action lawsuit.

The legal action taken by the former financial ombudsman Walter Merricks claims that 46 million UK consumers paid higher prices in shops over a 16-year period because of allegedly excessive transaction fees charged by the company.

The judgment upholds a decision by the court of appeal last year and sets the scene for a mass consumer claim.

The supreme court dismissed an appeal by Mastercard in the latest chapter of the vast, complex case, which was brought after the company lost a drawn-out appeal against a 2007 European commission ruling that its fees were anti-competitive.

Mericks said:

Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on UK consumers.

He added that the prices of “everything we all bought from 1992 to 2008 were higher than they should have been”.

DATA FLASH: US producer prices barely budged in November, with the PPI index showing a 0.1% monthly rise.

That compares to a 0.3% rise in October, and marked the smallest gain since April. It is also lower than economist expectations for a 0.2% increase.

However, the produce price index rose 0.8% on a 12-month basis, compared to 0.5% in October.

The pound is now at its lowest level since mid-November against the US dollar at 1.314.

But Brexit fears are also impacting Euro zone bond yields.

Core euro zone government bonds fell by 3-5 basis points on Friday as investors turned to safe haven assets that would be better shielded from the volatility caused by the threat of a no-deal Brexit.

Germany’s benchmark 10-yer bond yield even hit a one-month low of -0.639% about an hour ago, down 4 basis points on the day.

Meanwhile, Spain’s 10-year yield went into negative territory for the first time ever, hitting -0.001%.

Ireland’s 10-year yield also hit a record low, at -0.33%.

It’s lunchtime! So if you need a break from markets news, our team have put together a Christmas business quiz to put your memory to the test.

How well do you remember some of the biggest (and quirkiest) business stories of the year?

Another note on oil prices, which are paring losses. Brent crude is now down just 0.2%, bringing it back up above $50 per barrel and putting it on track for its highest weekly close since early March.

But Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu says another correction could be right around the corner:

Although optimism is certainly justified as the vaccine has removed uncertainty for the market in the mid-term, the short-term crude demand remains anything but given as winter is fast-approaching and governments warn of a third wave of cases in the northern hemisphere, while we are still handling the consequences of the second-wave.

A correction could be across the corner once the consequences of winter’s lockdown are more evident, possibly in further stocks build and real-time traffic data that will hint the hit road fuels are currently getting.

Nevertheless, the very fact that prices broke the 50-dollar ceiling this week is positive for the market. The market has been in a low-price reality for a while, so even if some gains are trimmed today, looking at the weekly performance and at the overall trend, oil is in a much better position than earlier in the year and optimism has returned for the future.

Clarification: We’ve amended two posts here and here to make clear that the US FDA has yet to formally approve the Pfizer vaccine, but that it is on track to do so after an advisory panel to the FDA recommended doing so.

The news has yet to lift the FTSE 350 travel and leisure index, but governments across the UK to set announce a reduction in the coronavirus self-isolation period, from 14 to 10 days.

Our political correspondent Peter Walker explains that the change will be helped by the mass use of rapid coronavirus tests, which can help reassure people without symptoms that they are not carrying the virus.

The FTSE 350 travel and leisure index, which includes stocks like Tui, EasyJet, and InterContinental Hotels Group, is still down 1.3%.

You can read more here:

Heathrow could lose 2,000 retail jobs because of the government’s decision not to offer tax-free shopping for tourists, my colleague Mark Sweney writes.

The airport’s chief executive John Holland-Kaye said the move, which will make the UK the only country in Europe to have a “tourist tax” on international visitors, could be the “final nail in the coffin” for many struggling businesses in the retail and hospitality sectors.

He said:

2021 should be the year of Britain’s economic recovery but recent announcements, such as the tourist tax, could be the final nail in the coffin for struggling businesses such as restaurants, hotels and theatres that rely on inbound tourists, as well as for retailers.

Passenger numbers at Heathrow fell by 88% in November as travel restrictions and a second coronavirus lockdown took their toll. Cargo flights were also well down.

The airport said that based on current forecasts and a continued decline in passengers, it had decided that Terminal 4 would remain non-operational until the end of next year.

Holland-Kaye said the industry needed government support including full business rates relief for all UK airports and abandoning the “tourist tax”.

Oil prices are also taking a hit today. Brent crude prices were holding steady above $50 per barrel this morning but are now down 0.8% at $49.85.

It follows sharp gains for oil prices on the back of vaccine progress, which raised hopes that there would soon be a rise in demand for fuel once social distancing rules are relaxed.

Despite the raised likelihood of formal US approval of the Pfizer vaccine overnight, there has been news of a setback for a rival vaccine.

Reuters reported that an experimental vaccine developed by Sanofi and Britain’s GlaxoSmithKline showed an insufficient immune response in clinical trial results.

GSK shares are up marginally by 0.2%

Read more here:

Clarification: This post has been amended to clarify that the US FDA has yet to make a formal decision on approving the Pfizer vaccine, though its advisory panel has recommended it do so.

Correction: Our previous post on the Bank of England’s stance on mortgage lending been amended to reflect that the central bank was discussing capping mortgage distribution on a loan-to-income basis, rather than loan-to-value, as originally suggested. You can see the updated post here (might require refreshing your browser).

US futures are pointing to a weak start on Wall Street this afternoon:

• S&P 500 futures are down 0.9%
• Nasdaq futures are down 0.9%
• Dow futures are down 0.8%

Europe’s Stoxx 600 has also touched 3-week low after falling 1.5%, and the FTSE 100 is down nearly 1%, nearing session lows.

Full story: EU leaders have been told by Ursula von der Leyen that Britain exiting the transition period without a trade and security deal is now the most likely outcome, our Brussels bureau chief Daniel Boffey writes.

During a 10-minute briefing at the end of an all-night summit in Brussels, the European commission president refused to put a percentage on the chances of agreement but told the leaders there was a “higher probability for no deal than deal”, sources said.

With the Sunday deadline agreed by Von der Leyen and Boris Johnson looming, Spain’s prime minister, Pedro Sánchez, said all capitals should agree a common line in the event of the negotiations ending in failure over the weekend.

Read more here:

You can follow also the political play-by-play ahead of Sunday’s Brexit deadline on our Politics live blog with Andrew Sparrow.

BREAKING: The UK’s Supreme Court has said it will allow an £14bn British class action suit against Mastercard to proceed.

It upholds last year’s Court of Appeal ruling on the case and sets the stage for the UK’s first ever mass consumer claim.

Claimants are suing Mastercard for allegedly overcharging fees on consumer card transaction affecting 46 million people in the UK over 15-years

Almost every adult in the UK could receive a payout of up to £300 from Mastercard if the case is successful.

More to follow...

The growing odds of a no-deal Brexit are also dragging on the FTSE 100 which has extended losses this morning.

Within the past hour, the FTSE 100 was down as much as 0.9% but is now trading 0.5% lower.

The domestically-focused FTSE 250 is taking a harder hit, having fallen more than 1% before trading closer to 0.7%.

Banks are among the biggest losers on the blue chip index:

• Rolls Royce is down 5.7%
• NatWest Group is down 4.7%
• Lloyds Banking Group is down 1.1%
• Barclays is down 4%

Bank stocks are down despite hopes that big lenders will restart dividends in the new year after the Bank of England lifted the temporary ban on payouts last night.

Even announcements from the central banks that lenders are strong enough to weather the pandemic have clearly not been enough to warrant a spike in shares.

Rolls Royce, meanwhile, has lost ground after downgrading this year’s cash outflow forecast to £4.2bn from £4bn, and warning of a challenging outlook due to the drop in air travel. The company’s engines usually help power Boeing 787s and Airbus A350s, and help with income through flying hours.

Negative rates are also in discussion at the Bank of England press conference.

Andrew Bailey has said they are undertaking “extensive work” with banks on the practical question of negative rates, but noted that most countries that have gone in that direction have not applied them to retail deposits,

Last month, HSBC sparked controversy by suggesting it would consider charging for current accounts in countries like the UK to help make up for low or negative rates.

Bank of England governor Andrew Bailey has been holding a press conference this morning following the release of the Financial Stability Report.

It would have been far more eventful if the central had been able to put out its notice that it was allowing banks to re-start dividends - within limits - in the new year.

However, the dividend news was rushed out last night after a reporter at Sky News obtained an early copy of the release. You can read the full story here:

As for Bailey’s message this morning? UK banks are resilient enough to keep lending.

However, he said business borrower will have stretched balance sheets due to Covid and will need to access equity - rather than debt - to strengthen their balance sheets.

But Bailey also said the UK government was doing the right thing on business lending schemes - referring to the Coronavirus Business Interruption Loans (BBCLS) and Bounce Back Loan (BBLS) schemes, which are distributed by UK lenders.

Threadneedle Street is reviewing rules capping the proportion of higher loan-to-income mortgages banks can sell, in a development that could make it easier for first time buyers and homeowners to borrow money.

The Bank currently applies an affordability cap, forcing lenders to assess if a customer can continue to repay their mortgage if it was 3 percentage points higher. It also limits banks to selling no more than 15% of new mortgages above 4.5 times a borrowers’ income.

Although the central bank reckons these rules have not damaged the availability of higher loan-to-value mortgages, first-time buyers have had a much tougher time getting on the property ladder since the pandemic struck.

It said this was mainly because banks fear losing money on these riskier mortgages, and because it became harder to process high loan-to-value loans with large numbers of staff working from home.

However, there have been other big changes in the mortgage market this year that it wants to review - not least further cuts to interest rates and expectations in the City of London that the cost of borrowing will remain much lower for longer.

This is one to watch, especially as it’s become a big political issue this year - after Boris Johnson promised to help first-time buyers with low deposits.

The Bank will publish its review next year.

Correction: This post has been amended to reflect that the Bank of England was discussing capping mortgage distribution on a loan-to-income basis, rather than loan-to-value, as originally suggested.

The UK competition has launched a full in-depth investigation into the £31bn merger of Virgin Media and O2, our media business correspondent Mark Sweney writes.

Liberty Global and Telefonica, the respective owners of Virgin Media and O2, struck a deal to merge their UK operations in May.

The Competition and Markets Authority said that it made the decision after the companies requested it fast-track to a phase 2 investigation of the merger last month.

The CMA said that it is moving to a full investigation because the merger could impact competition in the telecommunications market:

There is sufficient evidence at an early stage of the investigation for the CMA to conclude that there is a realistic prospect that the transaction would result in a substantial lessening of competition in one or more markets.

The CMA said that it is “concerned” that following the merger Virgin Media and O2 may have an incentive to raise prices or reduce the quality of those services “ultimately leading to a worse deal for UK consumers”.

The deal will create a new telecoms heavyweight by combining the UK’s second-largest broadband network with the largest mobile operator. Virgin Media has 5.3 million broadband, pay-TV and mobile users, while O2 has 34 million mobile customers.

Virgin Media and O2 provide wholesale services to other mobile operators in the UK.

Time to plan your first coffee break this morning:

The Bank of England also reiterated that banks are able to absorb more than £200bn worth of losses, which is much more than would be expected based on the Monetary Policy Committee’s central forecast.

And that takes Brexit into account.

Financial services are largely outside of current trade talks, and while the central bank said it has largely mitigated any risks to financial stability, there are some lingering concerns about market disruption in the new year.

The BoE said:

Some market volatility and disruption to financial services, particularly to EU-based clients, could arise.

Market volatility could be reinforced in the event that some derivative users are not fully ready to trade with EU counterparties or on EU or EU-recognised trading venues. Financial institutions should continue taking measures to minimise disruption.

All eyes will be on how markets function on 4 January 2021, which will be the first trading day after the Brexit transition period ends. Regulators will likely be monitoring developments from home, as they have since the pandemic hit.

The central bank stressed that:

Irrespective of the particular form of the UK’s future relationship with the EU, and consistent with its statutory responsibilities, the FPC remains committed to the implementation of robust prudential standards in the UK.