Andrew Bailey warned about the risks of bets by hedge funds in the UK debt market - Chris Ratcliffe/Bloomberg The Bank of England has sounded the alarm about foreign hedge funds buying up UK debt, warning that their speculative trades could spark a crisis.
The British Government is becoming increasingly reliant on a small group of opaque foreign investors to finance its large deficit, Threadneedle Street officials warned.
Buying UK government bonds, known as gilts, allows hedge funds to bet on tiny differentials between current and future prices.
However, they also often borrow against the same gilts to juice the returns on their investments.
Hedge funds borrowed £100bn secured against gilts in November – the highest since records began in 2017.
The Bank is worried that this could all collapse like a house of cards in response to a financial shock, potentially sparking a doom loop of fire sales as hedge funds offload gilts to cover losses on these loans.
“The small number of funds running crowded and heavily leveraged trades in the gilt repo market increases the potential risk of sharp moves as funds could need simultaneously to deleverage in response to a shock,” the Bank said in its financial stability report.
Andrew Bailey, the Governor, said he was considering placing limits on the scale of bets that hedge funds can make on movements in the UK debt market to bring down the risks of a dramatic sell-off.
The Bank has published a discussion paper that could place minimum margin requirements on the bets made by investors that use leverage.
Mr Bailey insisted officials were not considering the plan “on a whim”.
“The reason that we would come out with a conclusion that it was sensible to have haircuts and to have margining, would be because of the risks in the system,” he said.
07:03pm
Signing off...
Thanks for joining us. That’s all we have for today.
The Bank of England warned that foreign hedge funds buying UK debt could spark a crisis.
UK stocks closed relatively flat after the Bank of England warned that cyber attacks are one of the biggest risks to the UK’s financial system.
Bitcoin rose to above the $90,000 threshold following a month of declines.
06:35pm
Boeing expects to generate billions in positive cash flow next year
Boeing said it expects to generate positive cash flow in 2026 as it gets ready to deliver more passenger jets per month.
The world’s biggest aerospace company anticipated positive free cash flow in the “low-single digits” billions of dollars next year. It would follow an anticipated negative cash flow of about $2.5bn for 2025.
The positive outlook boosted shares in Boeing by over 9pc, their highest level in about a month after it reported a loss of $4.9bn in October, owing to the latest delay of its 777X aircraft and posted worse-than-expected results for the third quarter.
繼續閱讀 Boeing said it anticipates negative cash flow of about $2.5bn for 2025 - REUTERS/Amr Alfiky/Reuters 06:08pm
The hidden £1.3tn debt bomb in the Budget
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Rachel Reeves will saddle the UK with a £1.3tn “debt mountain” over the course of this parliament after hiding an extra tranche of borrowing in her Budget, a report has found.
The Chancellor claimed that she is cutting debt and borrowing in her tax-raising Budget, telling the House of Commons last Wednesday: “My fiscal rules will get borrowing down while supporting investment ... I said we would cut the debt and we are.
“Those are my choices. Not austerity, not reckless borrowing, but cutting the debt.”
Yet analysis by Sir John Redwood, Margaret Thatcher’s former senior economics adviser, shows that both debt and borrowing will continue to rise under Labour.
06:04pm
Jaguar Land Rover designer behind woke rebrand ‘escorted from office’
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The designer behind Jaguar’s controversial “woke” rebrand has reportedly been dismissed from the carmaker just days after a new chief executive took over.
Gerry McGovern, who was formerly Jaguar Land Rover’s (JLR) chief creative officer, was told he was being dismissed with immediate effect on Monday.
He was then escorted out of the office, according to reports, although details of his exit remain unclear.
JLR, which is owned by Indian conglomerate Tata, declined to comment.
06:00pm
Trump to enact a full travel ban on 30 countries
The Trump administration is likely to enact a full travel ban on 30 new countries after two National Guard members were shot in Washington DC last week.
There is already a current block on people travelling from 12 countries, including Afghanistan, Cuba and Haiti, and a partial ban on travellers from seven others.
A list of the new additions is expected to arrive soon, according to the US Department of Homeland Security.
Rahmanullah Lakanwal, 29, a special forces commander in the Afghan army who worked alongside US troops, was identified by Federal authorities as the gunman.
Trump responded to the shooting by announcing his intentions to further curb migration into the US and to stop issuing visas to citizens from certain nations.
The Trump administration is expected to announce a new travel ban on 30 countries. - REUTERS/Brian Snyder/Reuters 05:34pm
Trump announces he’ll reveal new Fed Chair ‘early next year’
President Donald Trump said he will announce his decision for the next head of the Federal Reserve at the start of 2026.
“We’ll be announcing somebody, probably early next year, for the new chairman of the Fed,” Trump said at the White House during a Cabinet meeting.
He previously told reporters on Sunday that he knew who he would appoint.
National Economic Council Director Kevin Hassett is one of the names being put forward as the most likely to replace current Fed Chair Jerome Powell. Other suggestions include BlackRock’s chief investment officer of global fixed income, Rick Rieder, and Fed Governors Christopher Waller and Michelle Bowman.
05:19pm
US billionaire donates $6bn to fund ‘Trump accounts’ for children
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An American technology billionaire has pledged $6.25bn (£4.7bn) to help fund millions of child investment accounts set up by Donald Trump.
Michael Dell, the founder of PC-maker Dell, and his wife, Susan, have agreed to offer $250 to 25 million children, with the cash set to be paid into “Trump accounts” to invest in the US stock market.
The donation – which will be available to under-10s from families with a median income under $150,000 – is believed to be the single biggest philanthropic gift to American children.
However, it is also a sign of support for Mr Trump, whose administration unveiled the so-called Invest America programme earlier this year. This will see $1,000 paid into an investment account for every child born in 2025 or later.
05:07pm
Ham prices to soar this Christmas amid swine fever outbreak
Ham prices are set to soar this Christmas after an African swine fever outbreak in Spain threatened to squeeze supplies.
Imports of pork products such as chorizo and Serrano ham have been temporarily banned by the British Government due to the crisis, increasing the risk of empty shelves over the festive period, industry leaders warn.
Lizzie Wilson, chief executive of the British Pig Association, said that Spanish pork products being stuck at ports “will start to push prices up and consumers should definitely expect availability issues”.
05:01pm
FTSE closes flat
UK and European stocks were muted at the close.
FTSE 100 shed 0.01pc, with banks representing most of the top risers after the Bank of England eased capital rules for lenders. Mid-cap FTSE 250 was down 0.2pc. Both declines follow Andrew Bailey, the Bank’s chief, announcing that cyber attacks represent one of the biggest risks to the UK’s financial system.
France’s Cac 40 fell by 0.3pc, while Germany’s Dax was up 0.5pc at the closing bell.
04:40pm
Wall Street activist blocks merger to escalate war with UK fund giant
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A Wall Street activist has escalated its war with one of Britain’s investment giants by derailing a planned merger between two of its funds.
Baillie Gifford criticised Boaz Weinstein’s Saba Capital on Tuesday for blocking a planned tie-up between US Growth Trust and Edinburgh Worldwide Investment Trust (EWI).
It said Saba’s rejection of the deal will stop shareholders from cashing out, while also preventing Baillie Gifford from creating a larger firm focused on US companies.
04:35pm
Amazon launches new AI chip amid efforts to challenge Nvidia
Amazon Web Services unveiled its new AI chips, marking the latest attempt to challenge rival Nvidia’s dominance in the artificial intelligence chips market.
The Trainium3 UltraServers are four times faster and are more energy efficient than the previous model, according to Amazon.
Nvidia currently has about an 80 to 90pc share if the AI chip market, becoming the world’s first $5 trillion company at the end of October.
The move by Amazon comes after last week it was reported that Facebook’s owner, Meta, would use Google AI chips in data centres instead of Nvidia’s.
04:15pm
Bitcoin bounces back
Bitcoin has started to stabilise after a sell-off in Japanese bonds driven by the Bank of Japan hinting that it was considering raising interest rates hit markets worldwide.
The cryptocurrency rose 8pc to $91,167 a token, yet is still remarkably below gains made in early October, when it hit a record of over $126,000.
Meanwhile, ether jumped about 11pc to $3,020, down 22pc in the past month.
03:58pm
Cyber attacks cited as one of the biggest threats to UK’s financial system
The Governor of the Bank of England has warned that cyber attacks are amongst the most significant risks to the UK’s financial system.
Businesses that faced major breaches this year include Marks & Spencer, which was forced to shut down online sales for weeks, costing the retailer an estimated £300m, and Jaguar Land Rover, which announced a £1.5bn decline in sales after an attack disrupted its car-making operations.
The Bank’s Financial Stability Report (FSR) revealed that a record amount of firms cited cyber incidents as one of the biggest threats to Britain’s financial stability.
Andrew Bailey, chair of the central bank, said: “If you look at the league table of risks post the financial crisis and asked the question, what risk has come up the league table most sharply in that period, I’m afraid that cyber would be up there for me, right at the top.
“It never goes away. We have to be, I’m afraid, very straightforward and frank about this. You can’t mitigate cyber risk in a way that just takes it off the table.”
Marks & Spencer lost an estimated £300m from a major cyber attack earlier this year. - Holly Williams/PA Wire/PA Wire 03:26pm
Downing Street denies NHS faces £3bn bill after tariff deal
Downing Street insisted a deal that gives the US zero tariffs on its imports of UK pharmaceuticals in return for the NHS raising spending on medicines will cost £1bn rather than £3bn.
The NHS has agreed to pay 25pc more for new medicines to escape Donald Trump’s sweeping new tariffs on drugs.
The US president unveiled a new pharmaceutical trade deal with Britain on Monday, striking an agreement to impose zero import tariffs on medical products from the UK.
The Prime Minister’s spokesman dismissed reports that the move would cost the NHS some £3bn a year on average by 2029, saying the figure would be around £1bn by that time.
He said the cost would gradually climb as the National Institute for Health and Care Excellence (NICE) approves treatments.
“Costs will start smaller but will increase over time as NICE approves more life-improving and life-saving medicines.
“Total costs over the spending review period are expected to be around £1bn, but the final costs clearly depend on which medicines Nice decides to approve, and the actual uptake of these.
“It’s not something we can pre-empt, because it depends on which drugs come to market and which are assessed as approved for use on the NHS accordingly.”
03:07pm
Euro strengthens amid rising inflation
The pound was down against the euro after eurozone inflation figures cemented the view that the European Central Bank will not cut interest rates further.
The euro rose 0.1pc against the pound to just under 88p after data showed inflation in the single currency area accelerated to 2.2pc last month, up from 2.1pc in October.
Joe Nellis, economic adviser at MHA, said: “The ECB will not cut when they meet for a final time this year in December, and it would be a surprise if they cut again at all.
“Interest rates of 2pc are already low and in the current economic climate we are unlikely to see central banks in the western economies move much lower.”
Sterling rose more than 1pc last week against the dollar, marking its largest weekly gain since early August, after Rachel Reeves raised her Budget headroom to nearly £22bn, reassuring markets.
02:42pm
Wall Street rises amid hopes for rate cuts
US stocks opened higher as traders bet that the US Federal Reserve will cut interest rates ahead of fresh inflation data later this week.
The Dow Jones Industrial Average rose 127.6 points, or 0.3pc, at the open to 47,416.91 ahead of the personal consumption expenditures (PCE) data due on Friday, which is the Fed’s preferred measure of inflation.
The S&P 500 rose 18.3 points, or 0.3pc, to 6,830.96​, while the Nasdaq Composite rose 103.8 points, or 0.5pc, to 23,379.75.
02:31pm
Largest hedge funds allowed to borrow even more to juice returns
The world’s largest hedge funds are being allowed to use “very high levels of leverage” to ramp up returns on their bets in the gilts market, the Bank of International Settlements (BIS) said.
The global watchdog based in Switzerland said raised the alarm on the miniscule scale of the so-called “haircuts” on these bets – the difference between the market value of collateral put up and the cash lent.
BIS said the 10 biggest hedge funds were effectively being give a haircut close to zero, meaning they were able to even borrow even more to juice returns.
It comes after the Bank of England warned that hedge funds could trigger a sell-off in UK government debt in the event of a market shock that made the debt levels on their bets unsustainable.
02:13pm
Borrowing costs rise after Bank of England’s hedge fund warning
The cost of government borrowing rose again today as the Bank of England issued a warning about debt-fuelled trading of UK bonds by hedge funds.
The yield on 10-year UK gilts – as UK bonds are known – has risen by two basis points to tip back above 4.5pc. The 10-year yield is a benchmark for the return the Treasury offers to buyers of its debt.
It comes after the Bank of England said it was concerned the high levels of debt being used hedge funds to boost returns on gilt trades could lead to a sharp sell-off in the event of a shock to markets.
Yields had fallen following the Budget last week after Rachel Reeves increased her budget headroom to nearly £22bn, leaving her less at the mercy to changes in borrowing costs on bond markets.
01:50pm
Partner pay plummets at BDO as accountancy giant battles weak economy
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One of Britain’s biggest accountancy firms has cut partner pay by £92,000, as it blamed falling profits on a downturn in the UK economy.
BDO announced on Tuesday that annual partner payouts were down 13.5pc in 2024, falling from £681,000 to £589,000.
This stemmed from company-wide profits falling by 7.5pc to £210m, with revenues flat at £1bn as it struggled with a drop in activity across both its audit and deals advisory divisions.
01:22pm
FTSE 100 rises after Bank of England eases restraint on banks
The FTSE 100 rose as the Bank of England lowered its requirements for the cash buffers held by banks in the event of a crisis.
The UK’s flagship stock index was up 0.2pc as bank stocks made gains of 0.8pc. HSBC, the second largest UK-listed stock, helped push up the FTSE 100 as it rose by 0.6pc. Lloyds Banking Group was up 1.2pc and Barclays climbed 1.1pc.
The Bank of England said lenders had passed its stress tests and would now only be required to hold 13pc of risk-weighted assets in reserve, compared to 14pc before today.
Fiona Cincotta, an analyst at City Index, said: “The central bank cut its estimate of how much capital UK banks need for the first time in a decade and signalled the consultation, which could help free up extra lending and higher payouts to shareholders.”
12:50pm
Pound slips as Bank of England issues debt market warning
The value of the pound fell after the Governor of the Bank of England warned about the “risks in the system” posed by some debt-fuelled bets by hedge funds in UK bond markets.
Sterling edged down 0.1pc against the dollar to $1.32 as Andrew Bailey said he was considering imposing limits on the scale of leverage that could be used in bets by foreign hedge funds on movements in gilts.
The pound was down 0.1pc against the euro to €1.137.
12:19pm
Wall Street on track to rebound from crypto sell-off
US stocks were poised to rebound from their weak start to the month after a fresh sell-off of Bitcoin.
Wall Street kicked off December with the three main indexes marking their first daily losses in more than one week.
It came as crypto-related stocks were marginally higher as bitcoin prices showed signs of stabilising after its largest dollar loss since May 2021 on Monday.
A key event for markets later in the week will be the personal consumption expenditures (PCE) index on Friday, which is the US Federal Reserve’s preferred gauge of inflation.
Money markets indicate there is a 95pc chance that the Fed will cut rates later this month.
In premarket trading, the Dow Jones Industrial Average was up 0.1pc, the S&P 500 rose 0.3pc and the Nasdaq 100 gained 0.4pc.
11:58am
Bailey: UK stocks at risk of ‘spillover’ from bursting AI bubble
Britain’s stock market is at risk of a “spillover” from a downturn caused by an AI bubble bursting on Wall Street, the Governor of the Bank of England said.
Andrew Bailey warned that there were “very stretched valuations” in the US stock market, which has become “very concentrated”.
While he admitted many AI companies have “positive cashflows” unlike the dotcom bubble, that “doesn’t mean to say everybody’s going to win”.
He said it was possible for that to be the case even if AI leads to huge gains in productivity around the world.
He said: “It is quite consistent with that outcome and still having a bubble because the job of markets is to price the future stream of earnings.
“Those future stream of earnings could be very positive but they could still get it wrong. They could still be too much on the upside. We have to be very cognisant of that.
“On the UK, one of the things we’ve highlighted is even though the UK doesn’t have those concentrations, you could get spillover quite easily.
“We’ve seen equity markets spillover many times in the past, and so you could get something that starts in a particular part of say, the US market, that spills over into world markets and we have to be sensitive to that.”
11:25am
Bank considers limits on bets made by hedge funds in UK debt market
The Bank of England has examined placing limits on the scale of bets that hedge funds can make on movements in the UK debt market to bring down the risks of a dramatic sell-off.
The Bank has published a discussion paper that could place minimum margin requirements on the bets made by investors that use leverage.
The risk is that these bets could be unwound swiftly in the event of a shock to the market, sparking a sell-off in gilts, which would send UK borrowing costs surging.
Andrew Bailey insisted the Bank of England would not impose limits on bets made by hedge funds “on a whim” amid concerns such a move could discourage overseas investors from trading in the gilt market.
“The reason that we would come out with a conclusion that it was sensible to have haircuts and to have margining, would be because of the risks in the system,” he said.
Deputy Governor Sarah Breeden said such limits would be similar to how banks are required to hold large amounts of cash in reserve to protect against the risk of collapse.
She said: “It’s the exact same question as the level of bank capital. The level of bank capital needs to be set with an eye to the cost of a crisis versus the impact on activity in normal times.
“That exact same process needs to be thought about in the context of the resilience of the gilt market.”
11:12am
Hedge funds risking UK debt sell-off, warns Bank of England
The Bank of England has sounded the alarm about foreign hedge funds buying up UK debt, warning that their speculative trades could spark a crisis.
The British Government is becoming increasingly reliant on a small group of opaque foreign investors to finance its large deficit, Threadneedle Street officials warned.
Buying UK government bonds, known as gilts, allows hedge funds to bet on tiny differentials between current and future prices.
However, they also often borrow against the same gilts to juice the returns on their investments.
Hedge funds borrowed £100bn secured against gilts in November – the highest since records began in 2017.
The Bank is worried that this could all collapse like a house of cards in response to a financial shock, potentially sparking a doom loop of fire sales as hedge funds offload gilts to cover losses on these loans.
“The small number of funds running crowded and heavily leveraged trades in the gilt repo market increases the potential risk of sharp moves as funds could need simultaneously to deleverage in response to a shock,” the Bank said in its financial stability report.
11:00am
Bailey suggests businesses were cautious before Budget
Andrew Bailey suggested businesses were cautious in the run-up to the Budget.
He said: “Were businesses cautious more generally until they saw what was in the Budget? I think there was a lot of expectation building up about what would be in the Budget.
“That’s not a point about what was said this day, what was said the next day. This is a point about the general significance of this budget, which I think was very clearly established.
“Businesses now know what is in the Budget and can go forward on that basis.”
10:54am
Budget tax rises ‘more backloaded than expected’ warns OBR
The OECD has said tax measures in the UK Budget were “more backloaded than we had expected” but indicated that deregulation efforts could boost longer-term growth prospects.
Rachel Reeves announced £26bn of tax rises in her speech last week, but most of the measures do not come into force until at least 2028.
Luiz De Mello, director in the OECD’s economics department, said: “We all heard the new Budget last week – it has a consolidation path that is somewhat more backloaded than we had expected.
“There are some increases in spending that are relatively frontloaded.
“All in all, it is a Budget that will allow for the continued consolidation of the public finances in the UK, and the reduction in that over time.
“We also cannot lose sight of the structural reforms, which can play a very important part in lifting growth rates over time.
“In the case of the UK, all the efforts which have to do with deregulating, reducing the burden on enterprises, facilitating the processes of permitting and licensing for new investment - all that has huge potential to make sure the business sector in the UK is more dynamic, that growth comes stronger on the back of greater efficiency in the private sector.”
10:48am
Bailey warns against attacks on the OBR after boss quits
The Governor of the Bank of England warned against political attacks on the Office for Budget Responsibility (OBR) a day after the head of the fiscal watchdog quit over the accidental early publishing of its budget assessment.
Andrew Bailey insisted it was not for the Bank to “get involved in the day to day affairs” of the forecaster but said he was against the “principle” of attacks on the independent body.
The head of the fiscal watchdog was forced out on Monday as the Chancellor battled to save her political career.
Richard Hughes, the chairman of the Office for Budget Responsibility (OBR), resigned amid a fiasco that saw his organisation leak the Budget and Rachel Reeves accused of misrepresenting its forecasts.
In response to our economics correspondent Eir Nolsøe, Mr Bailey said: “What is important, and the reason the OBR was created, was to ensure there was a source of independent forecasting and independent assessment of fiscal policy. And that’s important. It’s important in many countries. Britain’s not unique in this.
“All the arrangements differ slightly but there’s nothing unusual about this core principle. You’ll remember it was done by George Osborne when he was chancellor, and I think it was a sensible thing to do and remains a sensible thing to do because that’s an important foundation of the arrangement.
“Attacks on the OBR, in terms of the principle, I would say no, because can we please remember why it was done and the principles underlying it.
“But it’s not for us to get involved in the day to day affairs of that.”
Andrew Bailey said he was against the principle of political attacks on the OBR - Yui Mok/Pool Photo via AP 10:30am
Bailey urges banks to boost economy after loosening rules against collapse
Andrew Bailey has urged banks to use new looser capital controls to lend money into the economy in a bid to boost growth.
The level of cash reserves that banks must hold to protect against their collapse will be lowered from about 14pc to 13pc of risk-weighted assets, under the Bank’s proposals.
The Governor of the Bank of England said the move was the “sensible thing to do” and was “consistent with the evolution of the financial system, including a reduction in the systemic importance of some banks and improvements in risk measurement”.
However he had a warning for banks when asked if he could stop lenders using their new freedom to return more money to shareholders.
He said: “It’s not for us to dictate to banks how they run their businesses... but I would emphasise that there is a two-way relationship here.
“If the banks support the economy by lending, that will strengthen the economy and the banks will benefit from that in terms of their own performance and their own returns.
“I would expect they would have that very much in mind when they think about the consequences of this.”
10:17am
UK banks reporting ‘robust’ earnings
Britain’s lenders would be able to support the economy even in the event of a major downturn, the Bank of England has said.
Andrew Bailey told a press conference that: “Major UK banks continue to report robust earnings.”
He added: “The UK banking system would continue to be able to support the economy even if economic conditions turned out materially worse than expected.”
10:11am
Bank of England to examine private markets
The Bank of England will launch an investigation into the risks of private markets following the high profile collapses of firms in the US.
Andrew Bailey, the Governor, said private markets are now a “significant source of funding” in the UK.
He warned several features of the sector could risk financial stability in the event of a downturn.
“Features such as opacity, high leverage, complex interactions and weaker underwriting standards, and a high degree of reliance on credit rating agencies illustrate how corporate defaults could impact bank resilience and credit markets simultaneously,” he said.
Mr Bailey added that “two high profile credit defaults in the US have intensifed the focus on these issues,” following the collapses of car parts maker First Brands and subprime US car lender Tricolor.
10:03am
Bailey: Risks to stability have increased this year
Andrew Bailey said risks to financial stability “have increased” during this year.
The Governor of the Bank of England, who apologised for the “state of” his hoarse voice at the start of a press conference, said the AI sector was a “particular hotspot” as the role of debt financing increases.
A sharp asset price correction could lead to losses on lending which could disrupt financial stability, Mr Bailey said.
10:00am
Unemployment to keep rising under Labour, warns OECD
Unemployment will keep rising under Labour as Rachel Reeves’s tax raid drags on the economy.The number of people out of work will soon reach levels last seen during the pandemic, rising to around two million, according to the Organisation for Economic Co-operation and Development (OECD).This is largely owing to the Chancellor’s decision to increase employer National Insurance rates alongside a raft of other taxes.The Paris-based think tank also predicted that inflation would remain stubbornly high, warning that growth of 1.4pc in 2025 would be as good as it gets in the coming years.UK growth is expected to slow to 1.2pc next year and 1.3pc in 2027, according to the OECD, which said that the world-beating expansion in the first half of the year was mainly driven by fears of higher tariffs and future tax raids.The official rate of unemployment is already running at 5pc, and there are widespread fears it will rise further as Labour starts to implement its flagship workers’ rights bill.
09:38am
Private sector employers warn over job cuts and hiring freeze
Britain’s private sector is expected to accelerate jobs cuts and freeze recruitment following the Budget as employment costs weigh on businesses, according to a new study.
On Tuesday, the Confederation of British Industry’s (CBI) monthly survey for November showed bosses expect to reduce both hiring and the number of roles over the next three months amid a continued slump for the private sector.
With a decline now pencilled in until at least February, it means private sector activity has been falling for over a year. CBI data show that business hiring intentions started to dip into negative territory in November 2024 – and have maintained the decline since then.
Report finds businesses have faced a backdrop of ‘persistent cost pressures’ over the last year - Adrian Dennis/POOL/AFP via Getty Images 09:13am
People least confident about job security since May 2023
Workers in Britain feel the least secure in their jobs in two and a half years as households were gripped by uncertainty around the Budget.
People’s perception of their job security over the last month fell according to the YouGov/Cebr consumer confidence index.
Households were also the least confident about the outlook for house prices since June 2024, the survey showed.
Sam Miley of the Cebr said: “Uncertainty in the run-up to the Autumn Budget likely drove the dip in consumer confidence in November.
“Other economic developments may have compounded the decline. For instance, the simultaneous falls in the home value indices may have been the result of the Bank of England’s decision to hold interest rates early in the month.
“Meanwhile, the unemployment rate recently reached a four-year high, weakening perceptions of current and future job security.”
09:05am
Bank of England cuts cash buffers lenders need to protect against collapse
The Bank of England has cut its estimate for the level of cash reserves that banks must hold to protect against their collapse, in a significant loosening of post-financial crisis regulations.
The new capital requirements for banks will be lowered from about 14pc to 13pc of risk-weighted assets, under the Bank’s proposals.
This refers to the amount that banks must set aside as a buffer against risky lending and investments, to cushion against any losses.
The rules were introduced in the aftermath of the 2008 financial crisis to help prevent banks from excessive risk-taking and protect them from failure.
The Bank’s Financial Policy Committee (FPC) said the reduced benchmark should mean banks have more certainty and confidence to use their capital to lend to UK households and businesses.
Its judgement was “consistent with the evolution of the financial system” since it first assessed capital requirements a decade ago.
UK banks typically have less risk on their balance sheets now than since the beginning of 2016, the FPC found in its review.
08:42am
Bank of England sounds ‘dotcom bubble’ warning on US tech stocks
The Bank of England has warned that stock valuations in the US are close to being the most stretched since the “dotcom bubble” as fears of a shock in AI shares linger.
The central bank said in its latest Financial Stability Report (FSR) that there was a heightened “risk of a sharp correction” a day after stocks started December with a downturn on Wall Street.
The Bank said stocks were also most stretched in Britain since the 2008 financial crisis, as it said that risks to stability have increased in 2025.
It comes as tech stocks have surged this year, with AI chipmaker Nvidia briefly becoming the world’s first $5 trillion company last month.
However, stocks in the tech-heavy Nasdaq Composite on Wall Street dropped in November for the first time in eight months as investors became concerned that companies were becoming too overvalued. The downturn continued on the first day of trading in December on Monday.
Meanwhile the FTSE 100 has hit fresh record highs this year, outpacing the rises in the benchmark S&P 500 on Wall Street.
The Bank said: “Equity valuations in the US are close to the most stretched they have been since the dotcom bubble, and in the UK since the global financial crisis. This heightens the risk of a sharp correction.”
The Bank’s experts also highlighted that AI companies have been taking on ever greater debt to fund infrastructure projects, with one estimate putting such spending over the next five years at $5 trillion.
This heightens the risk of a nasty financial shock, the Bank warned, as “should an asset price correction occur, losses on lending could increase financial stability risks.”
08:11am
UK stocks subdued at the open
The FTSE 100 was flat in early trading after the slowdown in house price growth in Britain.
The UK’s flagship stock index was little changed at 9,703.15 as investors were wary following a recent drop in Bitcoin and a jump in bond yields.
The mid-cap FTSE 250, which is more focused on the UK economy, was also flat at 22,015.29.
08:04am
House prices to ‘accelerate’ after Budget uncertainty
House prices “should accelerate over the course of the next year now that the Budget is behind us,” economists have said.
Pantheon Macroeconomics said “data on the housing market is holding up well” after house prices grew by 1.8pc in the year to November.
Senior UK economist Elliott Jordan-Doak said the latest figures suggest “ fundamental demand remains robust”.
“The passing of the Budget will provide certainty for homeowners to enter the market, helping to build on that already-healthy activity data,” he said.
He warned the mansion tax on £2m homes would “disproportionately affect homeowners in London, and weigh slightly on overall house price inflation”.
He added: “Affordability for homebuyers should also improve in the coming months if the Bank of England cuts interest rates in December, as we expect.”
07:45am
Confidence can rebuild now Budget behind us, say estate agents
Estate agents were hopeful that confidence in the housing market could be rebuilt as buyers no longer have to face the uncertainty created by the Budget.
Guy Gittins, chief executive of Foxtons, said: “The latest Nationwide figures show that, despite the uncertainty surrounding the Autumn Budget, the market has remained resilient.
“With Budget-related uncertainty now behind us and no changes to property taxes for the vast majority of the market, confidence is expected to rebuild as more households feel ready to resume their moving plans over the coming months.”
Verona Frankish, chief executive of Yopa, said: “A monthly increase in property values between October and November demonstrates just how robust the housing market has been, during a year that has been anything but settled when taking a wider view of the economic landscape.”
07:39am
House prices ‘more resilient to Budget’ than feared
House prices may be boosted in the coming months as the impact of the Budget on the market was not as bad as feared, economists said.
The slowdown in annual house price growth was not as severe as the drop from 2.4pc to 1.6pc that had been forecast by analysts.
Economists had also predicted prices would grow by just 0.1pc between October and November, compared to the 0.3pc achieved.
However, Nationwide downgraded growth between September and October from 0.3pc to 0.2pc.
Ashley Webb, UK economist at Capital Economics, said the data “provides more evidence that actual house prices have been more resilient to Budget uncertainty” than some market indicators implied.
“To the extent that some activity was postponed in anticipation of the Budget, the bigger Budget bark than the Budget bite may prompt a boost in prices in the coming months,” he said.
“With house prices on the alternative Halifax measure having risen by 0.6pc month on month in October, it’s clear that prices have held up against Budget uncertainty better than the drop in buyer sentiment indicators suggested.”
He added that the “continued gradual decline in mortgage rates” should support a further rise in prices over the coming months.
07:24am
‘Economic anxiety’ rocked house buyers, say estate agents
The trade body for estate agents said it “uncertainty” around the Budget was behind the slowdown in house price growth.
Nathan Emerson, chief executive of Propertymark, said: “With so much anticipation built up ahead of the Autumn Budget and continued uncertainty affecting both homeowners and landlords, an easing in house price growth annually is unsurprising.
“Economic anxiety has clearly influenced decision-making, and the market has responded accordingly.
“Even so, the priority now is to fully restore stability heading into the New Year. Expected Stamp Duty reforms were shelved last month, and the thresholds introduced in April have, according to many reports, contributed to weaker prices throughout 2025.
“With more clarity now available on the incoming mansion tax, we hope this will help rebuild confidence among those looking to move.
“However, a slight uplift in house prices month on month is a positive sign given the crucial role that housing plays in driving the UK economy. A confident and active market supports wider economic growth, which is welcome at this point in the year.
“With inflation likely to ease in the coming months, consumer affordability should gradually improve. When the economic position allows, further reductions in interest rates will help revitalise mortgage lending and support a healthier market.”
07:20am
Mansion tax ‘unlikely to have significant impact’
House prices slowed down last month as confidence was hit by reports of a mansion tax in the Budget.
However, Nationwide said it thinks the mansion tax announced by Rachel Reeves is “unlikely to have a significant impact” on the market overall.
Reports of a council tax surcharge on homes worth more than £2m first emerged in late October.
During her speech last week, the Chancellor announced the surcharge in England on homes above £2m would come in from April 2028.
There will be four price bands with the surcharge starting at £2,500-a-year for properties worth more than £2m, and rising to £7,500 for properties worth more than £5m.
Nationwide’s chief economist Robert Gardner said: “The changes to property taxes announced in the Budget are unlikely to have a significant impact on the housing market.
“The high value council tax surcharge, which is not being introduced until April 2028, will apply to less than 1pc of properties in England and around 3pc in London.”
07:10am
Good morning
Thanks for joining me. House prices rose at a slower pace in the lead up to the Budget as confidence was “subdued” ahead of the Chancellor’s speech.
The typical home increased in value by 1.8pc in the year to November, the lowest rate in 17 months and a slowdown from the 2.4pc growth in the 12 months to October, according to the Nationwide house price index.
Prices edged up at a slightly faster pace from month month, rising by 0.3pc between October an November, compared to 0.2pc the previous month. The average home was worth £272,998.
The slowdown in annual price rises came after reports emerged of a council tax surcharge on homes worth more than £2m.
Nationwide’s chief economist Robert Gardner said: “Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.”
The Chancellor eventually announced in her speech last week that a surcharge starting at £2,500-a-year will be imposed on properties worth more than £2m from April 2028, rising to £7,500 for properties worth more than £5m. Here is what you need to know.
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What happened overnight
Asian shares mostly rebounded after US stocks gave back some of last week’s rally amid pressure from rising global bond yields.
Tokyo’s Nikkei 225 gained 0.5pc to 49,534.36, with financial shares the biggest gainers after the Governor of the Bank of Japan hinted at a possible increase to interest rates this month.
Japan’s 10-year bond yield touched a 17-year peak of 1.88pc, while 30-year yields reached an all-time high.
In Hong Kong, the Hang Seng jumped 0.7pc to 26,209.07, while the Shanghai Composite index slipped 0.3pc to 3,902.78.
Australia’s S&P/ASX 200 added 0.2pc to 8,582.80.
The Kospi in South Korea jumped 1.5pc to 3,977.85, led by buying of technology shares such as Samsung, which surged 2.8pc. Chip maker SK Hynix leaped 3.4pc.
Taiwan’s benchmark Taiex climbed 1pc, while the Sensex in India edged 0.1pc lower.
In the US, the Dow Jones Industrial Average was down 0.9pc at the close, while the benchmark S&P 500 declined 0.5pc and the tech-heavy Nasdaq Composite plunged 0.4pc at the closing bell.
Meanwhile, US Treasury yields edged higher. The 10-year yield increased seven basis points to 4.09pc and the two-year yield rose four basis points to 3.5pc.
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