Time to wrap up... here’s all today’s stories.

Goodnight. GW

The pound had a strong day, hitting a one-month high against the US dollar.

Sterling jumped over $1.38 for the first time since 17th September, as the City continues to anticipate a rise in UK interest rates before Christmas.

The pound also hit a 20-month high against the euro, touching €1.187 for the first time since the early stages of the pandemic, in February 2020.

Fawad Razaqzada, market analyst at ThinkMarkets, says traders are “buying the pound across the board”, after Bank of England governor Andrew Bailey warned that the Bank may have to take steps to rein in inflation.

Investors have bought the pound aggressively this week, suggesting they expect interest rates to rise very soon.

Although Bailey has acknowledged that monetary policy cannot solve supply-side problems, the BoE must try and tame inflation nonetheless, if policymakers see a risk “particularly to medium-term inflation and to medium-term inflation expectations.”

The money markets are currently pricing in a more than 80% chance of a rate hike in November, up from record lows of 0.1% to 0.25%.

Further rises are expected next year:

But the situation is something of a communications mess, as the Bank had only recently been arguing that inflation pressures were transitory, and that higher borrowing costs wouldn’t address the supply chain problems or the energy crunch.

Now some policymakers including Bailey seem to be pushing for rates to rise, although other Monetary Policy Committee members have argued against a hike at this stage.

My colleague Richard Partington explains that the Bank’s credibility is now in the spotlight....

With the lack of a stronger steer from the governor, rates are expected to rise by more in the next 10 months than at any point in the past 10 years; rising from its historic low to 1% by August, the highest since the 2008 financial crisis.

Britain has, however, been here before, only to leave Mark Carney compared to an “unreliable boyfriend” for stepping back from the brink of rate rises in 2014. Now economists say his successor could be at risk of history repeating, if lack of action next month leaves the City befuddled by Bailey.

Andrew Sentance, a member of the MPC between 2006 and 2011, said the governor could be readily accused of obfuscation after sending mixed messages. “I don’t think he comes across as managing communications very well. The message he sends often seems to come out by accident rather than by design,” he said.

Although advocating for interest rates to rise, Sentance said it was unlikely that the Bank would move rates in November or December. “It seems to me that their most likely first move is in February. Acting now would send a signal that the MPC feels like it’s behind the curve. It would be admitting it.”

Morrisons investors have given the green light for the supermarket chain to be taken over by private equity giant Clayton, Dubilier & Rice (CD&R).

Shareholders in Britain’s fourth-largest supermarket chain have voted to back CD&R’s £7bn bid, after it beat another consortium led by rival Fortress in a takeover auction last month.

Morrisons told the City that 99% of shares cast were in favour of the deal.

Andrew Higginson, chair of Morrisons, said:

We thank shareholders for the strong support received at today’s meetings.

We remain confident that CD&R will be a responsible, thoughtful and careful owner of Morrisons and we will now move forward with the remaining steps in the acquisition process.”

Opposition politicians and unions are concerned that the Morrisons takeover could see the company loaded with debt or stripped of its assets such as its valuable store estates.

Sir Terry Leahy, senior adviser to CD&R funds (and the former boss of Tesco), pledged to be ‘very mindful’ of Morrisons heritage, culture and operating model:

“We are very pleased to have received the approval of shareholders and are excited at the opportunity that lies ahead. The particular heritage, culture and operating model of Morrisons are key features of the company and we will be very mindful of these during our tenure as owners.

We very much look forward to working with the Morrisons team, not just to preserve the company’s many strengths - but to build on these, with innovation, capital and new technology - helping the business realise its full potential and delivering for all of its stakeholders.”

The UK government announced plans to launch a £400m package of investment alongside the US billionaire Bill Gates to boost the development of new green technologies, my colleague Rupert Neate reports.

Boris Johnson said the deal would help power a “green industrial revolution” and develop emerging technologies that were currently too expensive to be commercially successful but were essential to hitting the government’s climate goals.

Speaking at a Global Investment Summit at the Science Museum in London on Tuesday, the prime minister said the partnership would help develop UK technology related to carbon capture and storage, long-term battery life, jet zero (zero-carbon aviation) and green hydrogen technology.

Johnson said:

“I think these are all technologies that have massive potential but are currently underinvested in, by comparison with some others.”

“We will only achieve our ambitious climate goals if we rapidly scale up new technologies in areas like green hydrogen and sustainable aviation fuels – technologies that seemed impossible just a few years ago.”

The UK has already pledged at least £200m to the development of new British green technologies. Gates announced on Tuesday that he would match the commitment via Breakthrough Energy Catalyst, a coalition of private investors he leads in funding innovative approaches to tackling the climate crisis.

Here’s the full story:

The Treasury also warns that the temporary boost from a carbon tax are unlikely to fully offset the general decline in tax revenues as the UK decarbonises.

In their report on the move to net zero, the Treasury lays out that revenues from fossil fuels, principally Fuel Duty and Vehicle Excise Duty, will decline as the UK moves to electric cars.

Those duties brought in £37bn in 2019-20 – equivalent to 1.7% of GDP, so a significant amount of revenue to make up.

The Treasury argues that this will create “a significant and permanent fiscal pressure”, which may not be offset by the temporary revenues from making polluters pay more through expanded carbon pricing.

Carbon tax revenues will also “quickly decline” as the economy decarbonises and the number of polluters drops, it explains:

Without action to offset these pressures the public finances will be put in an “unsustainable position”, argues the Treasury -- so motoring taxes must ‘keep pace’ with changes.

Therefore, delivering net zero sustainably and consistently with the government’s fiscal strategy requires expanding carbon pricing and ensuring motoring taxes keep pace with these changes during the transition.

The document adds that extra borrowing isn’t the answer:

If there is to be additional public spending, the government may need to consider changes to existing taxes and new sources of revenue throughout the transition in order to deliver net zero sustainably, and consistently with the government’s fiscal principles.

Seeking to pass the costs onto future taxpayers through borrowing would deviate from the polluter pays principle, would not be consistent with intergenerational fairness nor fiscal sustainability, and could blunt incentives. This could also push up the economic cost of the transition.

Currently, pure battery electric vehicles are exempt from VED while plug-in hybrids attract a lower rate.

This means the move to electric cars is already hitting government revenues (but helping the environment), which has already prompted warnings that road taxes might be needed to fill the shortfall.

Back in July, the UK’s fiscal watchdog warned that global climate crisis would add 21% of GDP to the national debt by 2050, or £469bn in today’s terms. But that cost will be lower if the government acts quickly.

Back at the UK’s global investment summit, the head of the World Trade Organisation has called for a new push to develop a global carbon price.

WTO director-general Ngozi Okonjo-Iweala says the current situation is very fragmented, with 68 or 69 jurisdictions having a different approach to carbon tax.

Those regimes differ from charging less than a dollar per tonne of carbon dioxide in Ukraine to $130 per tonne in Sweden.

Navigating this system is “a bit of a nightmare” for businesses, Dr Okonjo-Iweala says.

So, she is advocating that world leaders, perhaps through the G20, should task the International Monetary Fund, the World Bank, the WTO and the OECD to develop a common methodology to a global carbon price.

Okonjo-Iweala explains that this would even boost government revenues:

This would really help business, it would help households, it would even help finance ministers - I used to be one.

This is a new approach, and i’m very excited about the possibilities.

Back in June, the IMF proposed that companies with high greenhouse gas emissions should be subject to a carbon price of $75 a tonne of CO₂.

The UK government has formed a partnership with Bill Gates to invest in ‘next generation’ green technologies.

The partnership, announced at the Global Investment Summit, will pump money into green technologies that aren’t attracting as much support from investors.

This will include green hydrogen (obtained from electrolysis of water), long term energy storage, sustainable aviation fuels and direct air capture of carbon dioxide.

The UK government and Gates are putting in £200m each, Downing Street says.

Although, there’s some confusion about the size of the project. Johnson double-checked the numbers with Bill Gates on stage, and the Microsoft founder glibly replied that it’s actually £400m each.

This display of the business acumen that made Gates one of the world’s richest people startled the PM...

...After joking that he’ll need go back to the chancellor Rishi Sunak for the extra cash, Johnson explains that these technologies could offer ‘real, real hope to humanity’.

We want to support direct air capture, longterm battery life, jet zero, and green hydrogen.

These are all technologies that have massive potential but they are currently underinvested in, compared to some others.

The Government has already committed at least £200m for the development, demonstration and deployment of UK projects in these areas -- and Gates is now matching that cost through his Breakthrough Energy Catalyst project.

Gates explains that the “Green Premium” for these technologies are currently very high, (making them currently uneconomic).

But by making investments in the UK, in partnership with the government, Gates argues it should be possible to cut the costs of clean technologies so they can compete with and replace the high-emitting products we use today.

Gates says:

“We will scale those up and bring down that cost, so we’ll get these to the same place we are today with solar and onshore wind, and so they can be scaled up to reduce emissions,.

Breakthrough Energy Catalyst brings together a coalition of private investors who want to back innovation to tackle climate change.

Johnson calls on business leaders to heed the growing consumer demand for environmentally friendly properties.

The market is going green, the PM insists. People know we have technological solutions, and they want to buy them.

Johnson says that consumers know that the price of electric vehicles, heat pumps and solar panels will come down sharply, as we’ve already seen with microwaves and mobile phones.

The PM adds that when he was a child, 80% of UK energy came from coal, now it’s less than 1%. [although it hit a one-month high last week, when weak wind speeds hit renewable output].

Johnson hails AstraZeneca, Pfizer, Moderna, and the Welsh bottling plant which got the Oxford Covid vaccine out to the public.

That factory in Wrexham is owned by the Indian firm Wockhardt, who Johnson says it named after the founder’s family motto to work hard.

It was that spirit of hard work that made the vaccine success possible, Johnson continues, arguing that the investors, shareholders, bankers also played a role.

It was free market capitalism that helped the world develop the most effective vaccines, Johnson declares.

The formula of “Innovation, capitalism, and a strong government lead” is needed again to tackle an even bigger challenge -- climate change.

Pointing to the Cop26 summit in Glasgow, Johnson says.

The lesson of Covid is absolutely clear. We have to listen to the scientists, they’ve very often right you know.

We need urgent government action.

But we must mobilise the markets, we must bring in the private sector.

I can deploy billions, with the approval of the chancellor*, Johnson deadpans.

But the investors here today represent $24trn -- and the PM says each of those dollars is “very welcome to the UK”.

* - That’s not a joke. Confidential documents leaked to the Observer last weekend showed an extraordinary rift between Johnson and Rishi Sunak over the potential economic effects of moving towards a zero-carbon economy.

The Treasury is warning of serious economic damage to the UK economy and future tax rises if the UK overspends on, or misdirects, green investment, which green experts warn is a ‘one-sided’ view that doesn’t take in benefits such as green jobs, lower energy bills and avoiding the disastrous impact of global heating.

Prime minister Boris Johnson is speaking at the Summit now.

He starts by citing the display at the Science Museum, such as the Spinning Jenny, as an example of successful innovation.

They are the cornflakes that got to the top of the packet, like those of you in the audience, says Johnson, trying to charm the global investors attending today’s shindig.

He hails the UK’s development of the Covid-19 vaccine within a year -- it is thanks to that vaccine protection that can meet at the summit and even shake hands again.

The ‘lightning speed’ of the vaccine rollout was due to several factors, Johnson says.

Scientists at a great university (my own, Johnson mentions immodestly) created an affordable room-temperature vaccine, the government struck a ‘fantastic deal’ that will see 1.5bn doses sent overseas, and the NHS and volunteers who injected it into the nations arms.

But there was another factor: Free-market capitalism - the willingness to spend masses sums at risk on something which might not come off.

Johnson also argues that ‘vaccine-induced confidence’ is causing the current stresses and strains in global supply chains, with demand surging as economies reopen.

And he says the UK is on track for the fastest growth in any advanced economy next year, according to the OECD.

[However, that follows one of the worst slumps of any advanced economy in 2020, and the IMF warned last week that the coronavirus crisis will bring more longer-lasting damage to the UK economy than any other country in the G7]

Ministers have unveiled plans for £5,000 grants to allow people to install home heat pumps and other low-carbon boiler replacements as part of a wider heat and buildings strategy that some campaigners warned lacked sufficient ambition and funding.

Labour also condemned the plans as “more of Boris Johnson’s hot air”, without sufficient substance.

Details for the scheme, to be formally set out on Tuesday alongside the government’s net-zero strategy, include £450m committed towards grants to replace boilers, with a pledge that the fund will mean heat pumps should cost no more than boilers to install or run.

More widely, the heat and buildings strategy contains a commitment to funding totalling £3.9bn to decarbonise buildings and how they are heated, with a confirmed 2035 target for all new heating systems in UK homes to be energy-efficient.

With the crucial Cop26 climate summit in Glasgow starting in a fortnight, the business and energy secretary, Kwasi Kwarteng, said recent gas price rises “have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade”.

He said:

“As the technology improves and costs plummet over the next decade, we expect low-carbon heating systems will become the obvious, affordable choice for consumers.”

However, some environmental groups said more urgent action was needed. Caroline Jones, of Greenpeace UK, said efforts to decarbonise housing were being hampered by “unambitious policies and inadequate funding”. She said:

“More money must be provided to rapidly increase the number of homeowners switching to heat pumps over the next few years, with full costs covered for families on low incomes.

“A clearer signal would have been a phase-out of new boilers before 2035. And all of this must be delivered with a fully funded, nationwide programme to insulate our homes at a scale and speed that the government hasn’t fully grasped.”

British households will be £1,000 worse off next year from a cost of living squeeze created by rising energy prices and shortages of workers and supplies caused by Covid and Brexit, a leading thinktank has warned.

The Resolution Foundation said higher levels of inflation would weigh down workers’ earnings next year, contributing to a hit to the average household income in Britain at a time when the government is cutting benefits and raising taxes.

It said the average household disposable income, after adjusting for inflation, would be about 2% lower by the end of 2022 relative to forecasts made in March by the Office for Budget Responsibility (OBR), before the surge in shop and energy bill prices.

Although the OBR had predicted that household disposable income would rise in 2022, the Resolution Foundation said soaring inflation would mean households would have £1,000 less than originally forecast.

“Higher inflation reduces the amount of goods and services that households are able to afford, eroding the real value of incomes.”

Boris Johnson has given an interview to Bloomberg, in which he warns that the COP 26 global climate talks taking place in Glasgow at the end of the month will be “extremely tough”.

Asked about his goals for the summit (which China’s Xi Jinping seems unlikely to attend), Johnson says he’s hoping for a “good turnout”, and to “keep 1.5 alive” (the goal of limiting global temperature increases to 1.5 degrees celsius).

Johnsons says:

I think COP was always going to be extremely tough, we’re hoping that we’ll get a good turnout in spite of the pandemic. What we want people to focus on is their nationally determined contributions, in reducing their CO2, making those hard pledges. Plus we want commitments on coal, cars, cash and trees. So we want the world to move away from coal by 2040 (2030 for the developed nations).

We want to make sure that everyone stops using hydrocarbon-fueled internal combustion engine cars and the U.K.’s in the lead there, we said that we would stop that by 2030. We want a big package for the developing world to help countries that haven’t been historic emitters to cut their carbon so we need that 100 billion dollars a year, we need that 100 billion dollars, and the last thing is we want to make sure we plant millions and millions of trees to help to fix the carbon and to restore the balance of nature so those are the -- we need the nationally determined contributions, we need to keep 1.5 alive, we need to restrict the growth in temperatures to 1.5 degrees by the end of the century.

We think that with the commitments that we’re seeing we could, we could do it but we’re going to need to see some real action from the participants in Glasgow.

However, the signs ahead of Cop26 are’t encouraging, with some sponsors unhappy that the climate summit is “mismanaged” and “very last minute”...

The UK’s aviation regulator is curbing Heathrow’s bid to sharply raise passenger charges, as the country’s busiest airport tried to recover from the economic shock of the pandemic.

The Civil Aviation Authority has proposed this morning that Heathrow could raise its price per passenger to between £24.50 and £34.40 over the next five years.

The range is planned to come in effect from summer 2022, with an interim cap of £30 being introduced at the beginning of the year.

Previously the charge was set at £22, so this is still a significant increase - which will ultimately be paid by passengers as airlines add the cost to the price of tickets.

But, Heathrow has been pushing for the cap be set at between £32 and £43 per passenger, as it looks to rebound from the plunge in revenues during the pandemic.

That move, though, was opposed by airlines who didn’t want to face raising ticket prices to cover higher airport charges, as they also try to recover from Covid-19.

The CAA said its proposals, which will be finalised next year, struck the right balance between consumer interests and the airport.

Richard Moriarty, Chief Executive at the UK Civil Aviation Authority, said:

“While international air travel is still recovering, setting a price control for Heathrow Airport against the backdrop of so much uncertainty means we have had to adapt our approach.

Our principal objective is to further the interests of consumers while recognising the challenges the industry has faced throughout the Covid-19 pandemic. These initial proposals seek to protect consumers against unfair charges, and will allow Heathrow to continue to appropriately invest in keeping the airport resilient, efficient and one that provides a good experience for passengers.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Some of the biggest names in business are in town today as the UK pushes for foreign investment in green industries of the future.

Boris Johnson is hosting a one-day Global Investment Summit (GIS) where Britain will try to secure global partnerships to support green growth, with more than 200 of the world’s financiers and executives expected to attend.

Bill Gates, Goldman Sachs boss, David Solomon; JP Morgan’s Jamie Dimon, Barclays CEO, Jes Staley, BlackRock’s Larry Fink and Blackstone’s Stephen Schwarzman are among the attendees.

Prime minister Boris Johnson will be pitching the case for global investment in UK companies, based on green technology and finance.

Johnson is due to announce £9.7bn of “new foreign investment” in the UK has been secured at the Global Investment Summit, creating at least 30,000 new jobs.

However, the top three “green growth” projects highlighted by the prime minister - and worth a combined £8.5bn - have already been announced by the companies involved.

The list includes Spanish utility group Iberdrola investing £6bn in the East Anglia Hub offshore windfarm through its ScottishPower Renewables. The plan, which is said to create 7,000 jobs, was reported back in February -- and is subject to securing planning consent and a government subsidy contract (a Contract for Difference).

Iberdrola’s Chairman, Ignacio Galán, says this project would help the UK hit its climate goals:

We share the ambition of the Prime Minister’s Ten Point Plan and, following the stable and predictable UK framework, we are committed to playing our part. Our £6bn investment in the East Anglia Hub would be a significant step to achieving enough offshore wind to power every UK home by 2030.

Johnson hopes to get more deals nailed down:

We will see new partnerships for green growth forged at today’s Global Investment Summit, as we look ahead to COP26 and beyond.

Last night, the PM hosted an exclusive dinner for some of the world’s most influential business leaders on Monday evening as he urges them to provide a “rocket boost” for “global Britain”.

He looked to woo top investors with a power dinner prepared by the Michelin three-star chef Clare Smyth, which included canapés of jellied eel, chicken liver parfait, pumpkin and white truffle gougères.

Smyth’s signature starter of potato and roe, a main course of venison cooked with 16-year-old whisky, and lemon and pear meringue was also on the menu.

Also coming up today...

Shareholders in supermarket group Morrisons are expected on Tuesday to approve a £7bn billion pound offer by U.S. private equity firm Clayton, Dubilier & Rice, ending a long takeover battle

The Business, Energy and Industrial Strategy (BEIS) Committee will question representatives of the UK’s haulage, manufacturing and food and drink industries on the UK’s supply chain disruption and shortages, and their impact on households and companies.

The agenda

• 9am: UK hosts Global Investment Summit
• 10.30am BST: BEIS committee hearing on the impact of supply chain delays on UK businesses and consumers
• 1.30pm BST: US building permits and housing starts for September