The government has tried to strike a collaborative tone at a conference full of private equity and venture capital bosses this afternoon, despite tension over Labour’s plans to close a £500m tax loophole benefiting industry executives.

Speaking at the British Private Equity & Venture Capital Association (BVCA) Summit on Thursday, City minister Tulip Siddiq, issued a call for “action and collaboration” between government and the sector, saying:

“I really believe that it’s only by working together that we will deliver greater returns for private capital investors, scale up high growth innovative UK firms, and we will be able to deliver the change and the growth that our country desperately needs.”

However, she made no mention of Labour’s proposals to hike taxes on carried interest - which is the share of profits that fund managers in private equity and make on successful deals – to 45%, from 28% currently.

The party has said carried interest should be treated as income, since it is effectively a bonus for general partners, and should be taxed as such. It has estimated that doing so would help raise another £500m for government coffers.

However, the industry argues that carried interest is a key incentive for staff to find lucrative investment opportunities, including promising companies that are key to UK growth.

The government closed a four week consultation on the matter at the end of August, and is expected to announce its final decision on tax levels at the 30 October budget.

Time for a recap…

A teenager has been arrested following a cyberattack on London’s public transport body last week in which some personal customer data was accessed.

The 17-year-old male from Walsall was detained last week, and has been released on bail.

TfL said it was contacting about 5,000 customers as a precaution to warn that their email and bank account details could have been accessed. It is understood to relate to those who had applied for refunds on journeys made using Oyster cards.

News of the arrest came as BT reveals it identifies 2,000 signals indicating a potential cyber-attack across its networks every second.

The UK telco says an “AI arms” race is developing between businesses bolstering their defences and increasingly sophisticated hackers.

The European Central Bank has cut interest rates in the eurozone again, but also trimmed its growth forecasts.

Britain’s fiscal watchdog has warned that the national debt could almost triple over the next 50 years, as the rising cost of an aging population and climate change push up borrowing.

John Lewis has declared it is on track for “significantly higher” full-year profits, after narrowing its losses in the first half of the financial year.

The owners of the Grangemouth oil refinery have confirmed it will shut by the end of June next year, in a blow to Scotland’s industrial base and the site’s 500 employees.

Transport for London is warning customers that some personal data has been accessed through the hack.

TfL have emailed customers today, saying that they are “currently dealing with an ongoing cyber security incident” which was first detected on 1 September.

TfL says that “the situation is evolving”, and that it has identified that certain customer data has been accessed.

This includes some customer names and contact details, including email addresses and home addresses where provided.

Some Oyster card refund data may have also been accessed. This could include bank account numbers and sort codes for around 5,000 customers, TfL warns.

TfL adds:

If you are affected, we will contact you directly as soon as possible as a precautionary measure, and will offer you support and guidance.

Newsflash: A teenager has been arrested in Walsall by the National Crime Agency, as part of the investigation into a cyber security incident affecting Transport for London (TfL).

The 17-year-old male was detained on suspicion of Computer Misuse Act offences in relation to the attack, which was launched on TfL on 1 September.

The teenager, who was arrested on 5 September, was questioned by NCA officers and has been bailed.

The NCA, which is leading the law enforcement response, says it is working closely with the National Cyber Security Centre and TfL to manage the incident and minimise any risks.

Deputy Director Paul Foster, head of the NCA’s National Cyber Crime Unit, says:

“We have been working at pace to support Transport for London following a cyber attack on their network, and to identify the criminal actors responsible.

“Attacks on public infrastructure such as this can be hugely disruptive and lead to severe consequences for local communities and national systems.

“The swift response by TfL following the incident has enabled us to act quickly, and we are grateful for their continued co-operation with our investigation, which remains ongoing.

“The NCA leads the UK’s response to cybercrime. We work closely with partners to protect the public by ensuring cyber criminals cannot act with impunity, whether that be by bringing them before the courts or through other disruptive and preventative action.”

Last week, TFL was forced to cut some live data feeds serving travel apps such as Citymapper and TfL Go, as it dealt with the cyber-attack.

After Christine Lagarde reiterates the key points from her statement, we’re onto questions.

Q: Why did the ECB choose to cut its deposit rate by 25 basis points, rather than 50bp?

Lagarde says the decision to cut by 25 basis points (or a quarter of one percent) was unanimous, after the governing council had analysed the latest data.

That data gives the ECB confidence that inflation is heading towards its 2% target in a timely manner, she says.

[eurozone inflation fell to 2.2% in August].

Our interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission, Lagarde continues.

She declares:

We are not pre-committing to a particular rate path.

ECB president Christine Lagarde is holding a press conference now to explain why the central bank has cut its benchmark interest rate by a quarter of one percent today.

She’s reading out the statement released half an hour ago, which explained that the ECB believes it is now appropriate to take another step in “moderating the degree of monetary policy restriction,” due to the inflation outlook.

Lagarde explains that the ECB’s headline inflation forecasts are unchanged (as flagged earlier), but adds that projections for core inflation have been revised up slightly.

Lagarde then warns that earnings growth is pushing inflation in the eurozone:

Domestic inflation remains high as wages are still rising at an elevated pace. However, labour cost pressures are moderating, and profits are partially buffering the impact of higher wages on inflation

Europe’s “Faltering economic outlook” has spurred the ECB into action by cutting rates today, says Yael Selfin, chief economist at KPMG.

“Today’s decision to cut interest rates comes amidst a sluggish economic backdrop. Growth in the Eurozone has underperformed expectations with activity likely to weaken in the second half of the year. The ECB may have been wary of falling behind the curve, especially as growth in the Eurozone has lagged behind the US, with the Fed looking poised to cut rates next week.

Looking ahead, the path for interest rates remains uncertain, Selfin adds:

While there is widespread consensus on the Governing Council that policy restrictiveness should be eased, divergent views remain around the pace of cuts. We expect a further one in December this year, taking the deposit rate down to 3.25%. If the outlook weakens further, it will strengthen the case of more dovish policymakers to increase the pace of cuts in 2025, towards a terminal rate of around 2.25%.

President Lagarde once again gave little away in today’s statement, choosing instead to maintain flexibility ahead of the October and December meetings. This will allow the Governing Council to take stock of the data in the coming months as it considers its next move.”

Newsflash: The European Central Bank has cut borrowing costs across the eurozone, from the second time this year.

The interest rate on the ECB’s deposit facility, which banks can use to make overnight deposits with the Eurosystem, has fallen from 3.75% to 3.5%.

The ECB’s governing council says:

Based on the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to take another step in moderating the degree of monetary policy restriction.

This is the second rate cut by the ECB this summer; it started lowering rates from their record high of 4 per cent in June.

The ECB says it remains optimistic that inflation will drop towards its 2% target in 2025, explaining:

Staff see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026, as in the June projections.

Inflation is expected to rise again in the latter part of this year, partly because previous sharp falls in energy prices will drop out of the annual rates. Inflation should then decline towards our target over the second half of next year.

BT has revealed that it identifies 2,000 signals indicating a potential cyberattack across its networks every second, and warned of an “artificial intelligence (AI) arms race” as hackers become more sophisticated.

The telecoms company - which owns mobile operator EE, the Openreach subsidiary that runs the UK’s broadband network and has international business operations - said that hackers are increasingly looking to weaponise AI for cybercrime.

BT’s digital surveillance of its networks has identified a more than 1,200% increase in new malicious scanning “bots” attempting to access systems in the last year.

The company said the surge reflects how cyber criminals are increasingly scanning for vulnerabilities through automated, “one time use” disposable bots, in an attempt to evade existing blocking and security measures.

“Today, every business is a digital business,” said Tris Morgan, managing director, security at BT, at the company’s Secure Tomorrow conference on Thursday.

“Tools like AI provide new routes of attack, but they can also be the first line of defence.”

BT said its data showed that web-connected devices are scanned over 1,000 times a day by known malicious sources.

The company said that while just over a fifth of scans are for legitimate security monitoring, 78% were malicious indicating that hackers are looking for weaknesses in the online systems.

BT said that its analysis shows that while the IT, defence, and financial services sectors are the most popular targets for cyberattacks, sectors such as retail, education and hospitality are becoming an increasingly popular target for hackers.

Recent high-profile companies targeted by cyberattacks include Transport for London, which last week was forced to cut some live data feeds serving travel apps such as Citymapper and TfL Go as a result.

No customer data was accessed and TfL said the incident was not a ransomware attack.

In June, US ticketing giant Ticketmaster, which is embroiled in a backlash over its dynamic ticket pricing strategy for the Oasis reunion tour, was hit by an attack that had the potential to affect hundreds of millions of customers.

Ben Owen, the former spy who fronts Channel 4’s Hunted, said that AI has not only lowered the bar for “rookie” hackers but is increasing the volume of possible attacks overall.

“Businesses are connecting more devices and adopting new AI tools every day,” said Owen, speaking at the event being held at BT’s Adastral complex near Ipswich.

“But hackers are using the same tech to break their defences. It’s an AI arms race that companies can’t afford to lose.”

Scotland’s oil industry has just been dealt a blow.

Petroineos has confirmed it will close Scotland’s only oil refinery, at Grangemouth, in the second quarter of next year, a spokesperson for the company said on Thursday.

Around 400 jobs will be lost as a result of the closure of the 150,000 barrel per day capacity oil refinery, located on the Firth of Forth. A total of 75 jobs will be retained at the site for when it is converted into a fuels import terminal, Reuters reports.

Petroineos announced last November that the Grangemouth oil refinery would cease operations as soon as 2025.

But there were hopes that jobs could be saved, after Keir Starmer described Grangemouth as a “real priority” in July, on his first visit to Scotland since he was elected as prime minister.

Over in the UK’s Supreme Court, a union has won a battle over Tesco’s plans to “fire and rehire” workers on less favourable terms.

Five Supreme Court justices have ruled unanimously today that Tesco should be blocked from dismissing staff at some distribution centres and rehiring them on lower pay, PA Media reports.

The case arose after Tesco planned to close some of its distribution centres in 2007 and offered staff increased “retained pay” for them to relocate.

In 2021, the chain wished to bring “retained pay” to an end and told staff that the enhancement would be removed in return for a lump sum, or their contracts would be terminated and then re-offered on the same terms, but without the increased salary.

The Union of Shop Distributive and Allied Workers (Usdaw) took legal action over the supermarket chain’s proposals. The High Court ruled in the union’s favour in 2022, but Tesco successfully appealed the decision the same year.

The union then took the case to the country’s highest court, and was successful today.

Usdaw argued that “retained” pay was described as “permanent” in the staff’s contracts, meaning it could not be removed.

Tesco argued that bosses were using a “contractual mechanism” open to employers.

In a judgment backed by Lord Reed, Lord Leggatt and Lord Lloyd-Jones, Lord Burrows and Lady Simler said:

“Objectively, it is inconceivable that the mutual intention of the parties was that Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so.

“This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.”

Newflash: Britain’s national debt is on track to almost triple over the next 50 years, the UK’s fiscal watchdog has warned.

In its latest Fiscal risks and sustainability report, just released, the Office for Budget Rsponsibility warns that the UK – and other countries around the world – face several long-term pressures, such as an ageing population, climate change, and rising geopolitical tensions.

Based on current policy and the latest demographic projections, public debt is projected to almost triple from under 100% of GDP to over 270% of GDP over the next 50 years, the OBR says.

It explains that the UK public finances will be hit by:

• an ageing population, with a falling birth rate and the ‘baby-boom’ cohorts moving through retirement putting downward pressure on revenues and upward pressure on spending;

• climate change, including the fiscal costs of completing the transition to net zero while also coping with damage from rising temperatures and more severe weather; and

• rising geopolitical tensions, with both the previous and current UK Governments aspiring to raise defence spending to 2.5 per cent of GDP.

Those pressures, and other challenges, risk putting the UK public finances onto an “unstainable path” eventually, the OBR fears.

It says:

Over the next 50 years, public spending is projected to rise from 45% to over 60% of GDP, while revenues remain at around 40% of GDP. As a result, debt would rise rapidly from the late 2030s to 274% GDP in our baseline projection.

This chart shows the OBR’s projections.

The watchdog suggests that debt is projected to rise further to over 300% of GDP, when further shocks and pressures are taken into account [currently, the national debt is around 99.4% of GDP, or 91.9% of GDP if you exclude the Bank of England].

This is a sobering message for chancellor Rachel Reeves to digest as she draws up next month’s budget.

[Incidentally, last year the OBR warned that debt was on an accelerating trajectory to 310 per cent of GDP by the mid-2070s, so today’s forecasts aren’t a radical change].

The OBR suggests today that governments will need to take “mitigating policy action” to prevent a debt spiral taking hold. That means spending cuts or tax rises – or likely both.

The OBR says:

On our baseline projection, to return debt to its pre-pandemic levels would require an average fiscal tightening of 1.5 per cent of GDP per decade over the next 50 years.

European stock markets are rallying this morning, as traders anticipate an interest rate cut from the European Central Bank this afternoon.

Germany’s DAX index is up 1.1%, while France’s CAC 40 is 0.6% higher.

In London, the blue-chip FTSE 100 index hit a one-week high in early trading, and is currently up 71 points, or 0.9%, to 8265 points.

Analysts at RBC Capital Markets say it would be “a major surprise” if the ECB didn’t cut interest rates today by a quarter of one percent this afternoon.

They told clients:

The market is firmly priced for a 25bp rate cut at next week’, We and the analyst consensus are expecting a 25bp rate cut and most ECB speakers have already endorsed such a move.

Slowing economic growth in China has prompted the International Energy Agency to cuts its forecast for oil demand this year.

The IEA has trimmed its 2024 oil demand growth forecast by 70,000 barrels per day (bpd), or about 7.2%, to 900,000 bpd.

That’s sharply lower than in 2023, when oil consumption rose by 2.1 million barrels per day.

In its latest monthly oil market report, just released, the IEA cites a slowdown in Chinese demand as the main driver of weaker global demand growth.

The report says:

The recent slowdown in China has seen its oil consumption declining y-o-y for a fourth consecutive month in July, by 280 kb/d.

The IEA now expects Chinese demand to grow by only 180,000 bpd in 2024 – citing a “broad-based economic slowdown” and an accelerating substitution away from oil in favour of alternative fuels.

Budget airline passengers can look forward to lower fares this autumn.

Ryanair expects average fares to be 5% to 10% lower than last year for the remainder of this year, group chief executive Michael O’Leary told reporters before the Irish airline’s annual meeting on Thursday, Reuters reports.

John Lewis isn’t the only company citing bad weather this morning.

Fever-Tree, the mixer maker, has reported that “poor weather in the second quarter across the UK and Europe” hit its revenues in the first half of this year.

Temperatures in June were dubbed “disappointing” by the Met Office, which will have deterred some drinkers from an outdoor G&T or ginger ale.

The company has now cut its sales forecast – it now expects revenue growth of about 4% to 5% this year, down from previous expectations of growth of about 10%.

Tim Warrillow, CEO of Fever-Tree, says the company has seen a much more positive trading performance in July and August, and are optimistic that growth will accelerate in the second half of 2024.

Warrillow says:

“The Fever-Tree brand performed well against a tough market backdrop. We continued to deliver double digit revenue growth in the US at constant currency, as well as a strong performance in our ROW region.

The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived.

Shares in Fever-Tree have dropped almost 8% in early trading, to an eight-year low.

Sales of beauty products at John Lewis’s department stores rose in the last six months, today’s results show.

But fashion sales were hit by “unseasonal weather”, the company says, as well as the cost of living squeeze.

Other clothing retailers, such as Primark, have already reported that the wet and chilly summer hit sales.

Sales of homewear products were hit by lower demand for ‘big ticket’ items.

John Lewis adds that it “performed well in Technology”, particularly with sales of smart wearables and mobile phones.

John Lewis points out that it has historically delivered the majority of its profits in the second half of the year.

The company says:

As a result, we are confident that full year pre-exceptional profits should be significantly above the £42m we reported in 2023/24.

The stronger second-half performance is thanks to the Christmas sales boom (memorably driven by Monty the Penguin a decade ago), and the new year sales.

The value of artificial intelligence pioneer OpenAI appears to have almost doubled, according to reports, as the company seeks fresh resources in a new funding round.

Bloomberg reports that OpenAI – the organisation behind the ChatGPT chatbot and and the SearchGPT prototype – is in talks to raise $6.5bn from investors at a valuation of $150bn (£115bn).

The new valuation is significantly higher than the $86bn valuation achieved in a tender offer earlier this year, confirming OpenAI as one of the most valuable startups in the world.

It’s the latest sign that OpenAI has put last year’s boardroom disruption, which saw CEO Sam Altman fired and then rehired a few days later, behind it.

The increased valuation has been achieved despite concerns that the artificial intelligence bubble may have burst – given recent declines in tech share prices.

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

The John Lewis Partnership has declared it is on track to deliver “significantly higher profit” this financial year, as it tries to put a troubled period behind it.

In its latest financial results, John Lewis has reported that its losses halved in the first half of its financial year.

The company, which owns Waitrose as well as the John Lewis department stores, has made a pre-tax loss of £30m in the six months to 27 July, down from £59m a year earlier.

Strip out ‘exceptional items’, such as the cost of strategic restructuring and redundancy programmes, and losses are down by 91% to just £5m.

Nish Kankiwala, CEO of the John Lewis Partnership, says the company has achieved a “marked improvement” compared with two years ago.

These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.

We continue to invest heavily in quality, service and value, and customers are responding well - with more people shopping with us and customer satisfaction increasing. While we have much more to do, we’re well set up for a positive peak trading period and on target to significantly improve our performance for the full year.”

Looking across the company, Waitrose grew its sales by 5% in the first half of the year, but sales at its John Lewis department stores fell 3% – blamed on “a slower external environment for general merchandise”.

John Lewis returned to profit in the last financial year (to late January) after three years of losses.

Kankiwala says:

While we have much more to do, we’re well set up for a positive peak trading period and on target to significantly improve our performance for the full year.

The company is hoping that bringing back its “never knowingly undersold” price promise will help it win sales in the crucial Christmas period approaching soon…

The agenda

• This morning: Chancellor Rachel Reeves to meet with UK bank bosses

• 9.30am BST: UK’s Office for Budget Responsibility to release its OBR Fiscal Risks and Sustainability Report

• 1.15pm BST: European Central Bank interest rate decision

• 1.30pm BST: US weekly jobless claims

• 1.45pm BST: European Central Bank press conference