News

US dockworkers have agreed to end a three-day strike that brought shipping to a standstill along the east and Gulf coasts, after reaching a tentative six-year pay deal with the United States Maritime Alliance (USMX).

The strike, which began on October 1, halted container traffic at 36 ports from Maine to Texas, affecting major hubs like New York, Baltimore, and Houston.

Members of the International Longshoremen’s Association (ILA) union, representing 45,000 workers, walked out for the first time since 1977. The economic cost of the strike was estimated at up to $5 billion per day by JP Morgan analysts. Workers returned to their posts after the USMX agreed to a wage increase of 62% over six years. The deal represents a significant improvement over the employers’ earlier offer of a 50% rise.

Despite this resolution, the dockworkers have only suspended their strike until January. The union has said it will return to the bargaining table to negotiate on other issues, particularly automation, which the ILA fears will lead to widespread job losses.

President Joe Biden welcomed the agreement, emphasizing the importance of the dockworkers to the nation’s economy. “Today’s tentative agreement on a record wage and an extension of the collective bargaining process represents critical progress towards a strong contract,” Biden said. Vice-President Kamala Harris also praised the deal, reiterating the power of collective bargaining and the importance of fair wages for essential workers.

The strike began amid frustrations over automation projects at certain ports, which the ILA claims threaten employment. ILA President Harold Daggett, a vocal critic of these automation initiatives, warned the shipping lines that workers were indispensable. “We’re going to show these greedy bastards you can’t survive without us,” he said at the start of the walkout.

The strike exacerbated supply shortages, particularly in southern states struggling to recover from Hurricane Helene. Shipping lines and port operators were under pressure to resolve the dispute to ensure critical supplies reached affected areas. By midday on the third day, shipping companies agreed to the improved wage offer, paving the way for the tentative agreement.

The ILA’s success in securing a significant pay rise has drawn attention, as many dockworkers already earn six-figure salaries. Over half of the workers at the New York-New Jersey port reportedly earn more than $150,000 annually, with some earning more than $250,000. ILA President Daggett himself earned more than $900,000 last year and is known for his luxurious lifestyle, including owning a Bentley and a 76-foot yacht.

While the pay deal has averted an immediate crisis, negotiations over the future of automation at the ports are expected to be contentious as the union seeks to protect jobs amid evolving industry practices.

Read more:
US dockworkers end strike after securing six-year, 62% pay rise

The price of oil has surged this week, marking its largest weekly gain in over a year as investors react to escalating tensions in the Middle East.

Brent crude, the international benchmark, rose 0.8% on Friday to reach $78.24, capping a 9% weekly increase and approaching the $80 mark last seen in August. West Texas Intermediate (WTI), another key benchmark, climbed 0.75% to $74.26.

The sharp rise in oil prices follows heightened conflict between Israel and Hezbollah, which is inching closer to full-scale war. Iran’s military has fired nearly 200 ballistic missiles at Israel, the most significant direct attack to date, raising fears of a broader regional conflict. In response, the United States and Israel have warned Iran of “severe consequences,” and discussions are reportedly underway about potential retaliatory strikes on Iranian oil facilities.

Oil prices had been trending lower earlier in the month due to concerns over weak global demand and a potential increase in supply. However, the latest developments in the Middle East have reignited market fears over supply disruptions, driving prices higher.

Shares of major oil companies have benefitted from the rally. Shell’s stock increased by 0.5% to £25.77½, while BP rose by 1.9% to 416¾p, with both companies seeing gains of over 5% throughout the week.

Before the escalation, oil had been trading near a two-week low, driven by expectations of weak demand, particularly from China, and a decision by Opec to gradually bring back production. The cartel has agreed to increase daily output by 180,000 barrels starting in December, after delaying production cuts by two months.

Market analysts have revised their forecasts for Brent crude, projecting it to average $81.52 per barrel this year, down from earlier expectations of $82.86. Both Opec and the International Energy Agency (IEA) have also downgraded their outlooks for global oil demand. Opec now expects demand to grow by 2.03 million barrels per day this year, slightly down from previous estimates, while the IEA has revised its forecast to 900,000 barrels per day, reflecting weaker demand growth.

The surge in oil prices has triggered inflation concerns, pushing the yield on 10-year UK government bonds to 4.07%, its highest level since July. Gold, a traditional safe haven during times of instability, has also seen a price increase, rising by $2.86 to $2,657.86 per troy ounce.

Meanwhile, the rise in oil prices has negatively impacted the airline industry. Shares of London-listed airlines such as Wizz Air and easyJet fell sharply, with Wizz Air dropping 3.7% to £12.74 and easyJet falling by 2.6% to 493p.

The ongoing uncertainty in the Middle East continues to drive volatility in oil markets, with investors closely watching for further developments that could impact global supply and demand.

Read more:
Oil prices see biggest weekly surge in a year as middle east tensions escalate

Private equity firms are circling Evelyn Partners’ accountancy division, which has been put up for sale and is attracting significant interest despite rising regulatory scrutiny.

Among the interested parties is Apax, which is reportedly considering a bid for the professional services division that offers accounting and tax services. The unit could be valued at over £500 million, with a deadline for first-round bids fast approaching.

Inflexion, another buyout firm, is also understood to have reviewed the business but is unlikely to submit an offer. Last month, it was revealed that investment bankers from Evercore had been hired to manage the sale process for Evelyn’s accounting division. The wealth management group, based in London, oversees £62.2 billion in assets and is owned by private equity firms Permira and Warburg Pincus.

The sale of the accountancy unit is expected to pave the way for an even larger transaction, with Permira and Warburg Pincus considering a potential sale of Evelyn Partners in the future. The private equity interest in Evelyn’s accounting business comes as the sector as a whole has increasingly drawn attention from buyout firms, which see fragmented industries as ripe for roll-up strategies. These strategies involve acquiring smaller businesses and merging them into larger entities to increase value.

However, the growing involvement of private equity in the accounting and audit sectors has caught the attention of the Financial Reporting Council (FRC), the UK’s accounting regulator. Last month, the FRC issued a warning to accounting firms, stating that while it is not opposed to external private capital participation in the UK audit market, it acknowledges the “important risks” that must be managed carefully. The FRC stressed that any change in ownership structure must uphold and enhance the public interest in audit quality.

Private equity’s increasing interest in accounting firms comes at a time when regulators are becoming more concerned about the potential impact of profit-driven ownership structures on the integrity of professional services. As Evelyn’s sale progresses, regulatory oversight is likely to remain a significant factor in any deal-making.

Neither Evelyn, Apax, nor Inflexion have commented.

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Private equity firms target Evelyn Partners’ accountancy division despite regulatory concerns

The European Union has voted to impose tariffs of up to 35% on Chinese electric vehicles, a decision that has divided member states and raised concerns about a potential trade war with China.

The move comes as the EU seeks to address what it sees as unfair subsidies for Chinese electric vehicles, but the decision has faced strong opposition from Germany, the EU’s largest economy and car manufacturer.

France, Italy, Poland, and seven other countries pushed the tariffs through in a vote on Friday, while Germany, Hungary, Slovakia, Slovenia, and Malta voted against the measure. Twelve member states, including Spain, abstained. The tariffs, which range from 7.8% on Tesla vehicles to as much as 35.3% on cars made by SAIC, will be in place for up to five years, unless the EU revises its stance following negotiations with China.

Germany has led the opposition to the tariffs, with its automotive industry warning that the measure could trigger a damaging trade conflict. BMW CEO Oliver Zipse described the tariffs as a “fatal signal” for the European car industry, urging a swift settlement between the European Commission and China to avoid a trade war that would harm both sides. Despite the vote, Zipse emphasised that Germany’s opposition sent a positive signal, increasing the chances for a negotiated resolution.

The French automotive industry, by contrast, supported the tariffs as a necessary step to protect European manufacturers from unfair competition. “We are in favour of free trade but within the framework of fair rules,” a spokesman for Plateforme Automobile, which represents carmakers, stated.

China has already signalled its intent to retaliate, threatening tariffs on European brandy imports and launching investigations into European pork and dairy products. Its commerce ministry condemned the EU’s actions as protectionist and urged the bloc to return to “the right track.”

EU diplomats anticipate that the tariffs could be revised downwards after further negotiations with China. The new duties are expected to drive increased investment from Chinese electric vehicle and battery manufacturers, who are likely to set up factories within the EU to bypass the tariffs.

As Brussels continues to engage with Beijing, the potential for a trade war remains a significant concern for European automakers, particularly in Germany, where the electric vehicle market is heavily intertwined with China. The EU has until the end of the month to continue discussions with China in an attempt to resolve the issue and prevent further escalation.

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EU votes to impose tariffs on Chinese electric vehicles despite opposition from Germany

In today’s competitive landscape, effective business development hinges on your entire team representing your brand with conviction and clarity.

Simple right?

Well… not really. The challenge is, many leaders aren’t confident business developers themselves, so empowering their teams to ‘do BD’ is often goes in the ‘too hard’ basket.

Here’s a few quick tips for leaders to get more comfortable with business development and, in turn, create a culture of business development that empowers everyone in the business to hunt down new opportunities and bring them through the door.

So, what is a culture of business development and how do you create one?

I’ll let you into a little secret…it’s not a one-page cheat sheet with the core messages you want your team to parrot out to whoever will listen.

Creating a culture of business development begins with your team possessing a deep understanding of your organisation’s identity – its vision, purpose and core values – and genuinely buying into it.

Everyone should be clear on your long-term growth objectives and the type of clients and projects you are targeting. And everyone should be equipped with the skills to identify opportunities and convert prospects into clients – regardless of how tenuous those opportunities may appear.

With all these components in place you have the basis for a thriving and exciting business development culture.

The dreaded Elevator Pitch

Even as a leader, initiating conversations aimed at generating positive outcomes can be daunting.

How comfortable are you at succinctly introducing yourself and your business? Are you confident your team could do the same?

If the thought of this makes you squirm, it’s time to take action!

Opportunities to connect can arise unexpectedly – whether in a social setting or casual encounter, your ability to articulate your role and introduce your company succinctly is essential. The most coined phrase for this interaction is an elevator pitch – and no, you don’t have to be in an elevator to do it!

So, what are the components of a good intro elevator pitch?

Be succinct: you have 30 seconds max to give a quick overview of who you are (in a professional capacity – we’re not interested in star signs at this point!), your role, your company and the challenges you solve or value you create. Don’t get too specific at this stage, we’re looking for a brief overview, nothing more.
Body Language Matters: Maintain open and confident body language. Make eye contact and adopt a posture that invites trust and engagement – no arms crossed!
Authenticity is Key: Be genuine. People prefer to engage with those who come across as relatable rather than overly scripted.
Cultivate Curiosity: Conclude your introduction with an open-ended question to encourage dialogue. Listening attentively allows you to tailor your responses effectively.
Aim for an Outcome: Every interaction should lead to a tangible result, whether it’s exchanging contact details, scheduling a meeting, or identifying a potential project, try and come away with something useful.

First impressions matter

In a world where first impressions count, the art of confidently introducing yourself and engaging others in genuine dialogue is imperative.

When you have the opportunity to initiate contact, a warm greeting can pave the way for a quicker outcome because you can tailor your intro (elevator pitch) to your audience, leading with elements about your role or organisation which are more relevant.

A warm intro can literally be as simple as, “Hi, I’m XYZ, what’s your name?”, then be curious and ask some open questions to continue the conversation. If you’re at a networking event I can guarantee that you’re not the only person in the room feeling daunted, so be bold, break the ice and say hi, you’ve got nothing to lose and everything to gain.

You don’t need to have all the answers

So, you’re in full flow having a great chat with a new or existing contact and they ask you a question about something you don’t know the answer to, don’t panic!

Don’t try and fudge the answer if you don’t know it. It’s much better to respond with something like, “I’m not 100% on that but I would love to introduce you to XYZ person in the office who could provide that insight for you”, or simply “I don’t know the answer to that off of the top of my head but I’ll find out and either drop you an email or we can meet up and I can go through it with you”. Either of these responses can still generate a positive outcome.

Don’t let your guard down, loose lips sink ships

You might be having a lovely chat with someone and be well on your way to generating a positive outcome but don’t get complacent. Sometimes there are confidential things you should never share outside of your organisation, so you  need to be conscious of what you’re divulging.

For example, if you’re working on a top secret project that’s under NDA (Non-Disclosure Agreement), it is imperative that you keep that under wraps, no matter how much someone may probe you for intel or how much you’d love to share your excitement about it. One slip and you could ruin your client relationship, damage your company reputation or even face legal ramifications.

Another example might be around some company news which hasn’t yet been announced externally, for example, promotions/expansion/lay-offs, by sharing this information in an unplanned way can be detrimental both internally and externally.

But how do you know what you can/can’t say? Again, this is down to the leadership team to clarify. If you’re not sure, ask your boss before discussing outside of your organisation.

Diversion tactics

But what do you do if you’re being relentlessly quizzed by someone on something you know you can’t disclose?

Well, there are some simple rebuffs. For example, you could simply say, “I’m not at liberty to discuss that”, or, “I’m really not sure, but I can put you in touch with XYZ leader who may be able to provide some insight on this for you” thereby passing the tricky question to your leadership team who should be well-versed in dealing with diverting away from sensitive information.

No matter what, if you know you can’t share something, don’t share it. It is not worth yours or your company’s reputation.

Final Thoughts

Fundamentally, your team is already representing your business with every interaction they have with contacts and clients. Business development happens everywhere, and everyone is playing their part. As a leader, it’s your responsibility to ensure you support and guide them in this vital endeavour.

When you create a company where purpose is clear, culture and values are lived, and your people understand their roles, you position yourself for success.

By empowering your team with the knowledge of what they can and cannot share outside your organisation, you lay the groundwork for proactive business development.

In this environment, every team member becomes an ambassador for your brand, driving growth and forging meaningful connections. Embrace this potential, invest in your people, and watch as they turn everyday interactions into powerful opportunities for engagement and success. The future of your business depends not just on strategies and goals, but on the collective efforts of a motivated and informed team empowered to support your organisation to thrive.

Read more:
Business Development, dark art to team sport

A new duty on employers to take reasonable steps to prevent sexual harassment is imminent. What do businesses need to do to prepare?

From 26 October 2024, employers will be under a new duty to take reasonable steps to prevent sexual harassment of their workers. This new preventative duty is contained in the Worker Protection (Amendment of Equality Act 2010) Act 2023.

The preventative duty relates only to sexual harassment and not other “protected characteristics” included in the Equality Act 2010. It is in addition to the current protection from discrimination, harassment and victimisation contained in that Act.

On 26 September 2024, the Equality and Human Rights Commission (EHRC) published comprehensive updated Technical Guidance for employers and an Employer 8-step guide: Preventing sexual harassment at work which are well-worth looking at.

What is sexual harassment?

The Equality Act 2010 defines this as unwanted conduct of a sexual nature which has the purpose or effect of either violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them.

Examples include unwelcome physical contact, sexual jokes or comments, sexual advances, sending sexually explicit emails/texts and displaying sexually graphic images.

What is the preventative duty?

The Guidance describes it as “a positive and proactive duty designed to transform workplace cultures”.

Employers should anticipate scenarios when their workers may be subject to sexual harassment in the course of their employment and take action to prevent it.
If sexual harassment has taken place, employers should take action to stop it from happening again.
The preventative duty applies to third-party harassment (unlike the Equality Act 2010) from, for example, clients, customers, service users, or members of the public.
An individual cannot bring a standalone claim for breach of the preventative duty itself, but where there has been a breach, this can impact the amount of compensation, which is considered below.

Reasonable steps

The Guidance makes it clear that there is no prescribed minimum. What is reasonable will vary depending on the employer, and relevant factors include:

Employer’s size, resources and sector
Risks in that workplace
Contact with third parties
The likely effect of taking a particular step and whether an alternative step could be more effective
Time, cost and potential disruption of a particular step weighed against the benefit

Factors to consider in a risk assessment

Significantly, the Guidance states that employers are unlikely to be able to meet the preventative duty if they do not carry out a risk assessment.

It is not a static duty, and employers must review their preventative steps regularly.

The Guidance refers to various risk factors that may increase the risk of sexual harassment in the workplace, and these include:

A male-dominated workforce
A workplace culture that permits crude/sexist “banter”
Gendered-power imbalances
Lone or isolated working
Workplaces that permit alcohol consumption
A casual workforce
There are no policies or procedures to deal with sexual harassment

Consequences for breach of the new duty

If a worker successfully claims sexual harassment and compensation is awarded by the Employment Tribunal, the Tribunal must consider whether the employer has breached the preventative duty. If they have, the Tribunal can order a compensation uplift of up to 25%. Compensation for sexual harassment is unlimited and includes past and future loss of earnings and injury to feelings; consequently, the compensation uplift could be considerable. Note that the EHRC can also take enforcement action against the employer.

With only a few weeks before the preventative duty takes effect, what can employers do to prepare?

Carry out a risk assessment

Consider the risks of sexual harassment, the steps that would mitigate those risks and which steps are reasonable to implement.

Educate workers about sexual harassment and what actions amount to such conduct.

Refer to the Equality Act 2010 definition and provide examples of what would constitute unwanted sexual conduct.

Foster an inclusive culture in the workplace

Implement a zero-tolerance approach to sexual harassment, which will help instil a respectful and inclusive environment. Management and senior leaders have a critical role to play.

Implement a clear anti-harassment policy

Encourage staff to report sexual harassment and establish an effective complaints procedure. Make it clear that harassment can lead to disciplinary action. Publicise the policy and ensure that it is easily accessible and reviewed regularly. Provide support for complainants.

Provide training to workers and managers

Tailor this for the specific workplace and target audience. Where third-party harassment is a risk, the training should address this. Keep records of who has received training, and crucially, refresh it regularly.

Detect sexual harassment

Be proactive and look for warning signs in the workplace, such as sickness, absence, a dip in performance, behavioural change or resignations.

Read more:
A guide to the new legal duty on employers to prevent workplace sexual harassment

The motor industry is calling on the UK government to cut VAT on new electric vehicles (EVs) and public charging points in an effort to counter a slowdown in the EV market.

The Society of Motor Manufacturers and Traders (SMMT) has written an open letter to the Chancellor, urging for a VAT reduction on electric cars and charging infrastructure for the next three years.

The letter comes as manufacturers struggle to meet the government’s stringent zero-emission vehicle sales targets, which mandate that 22% of all new car sales and 10% of van sales must be electric this year. Despite a record 56,362 battery electric vehicle (BEV) registrations in September, BEVs account for just 17.8% of the market this year, a figure expected to rise to 18.5% by the year’s end—still shy of the government’s target.

The SMMT noted that private demand for electric vehicles is down 6.3% year-to-date, even as manufacturers have offered unprecedented discounts to drive sales. These price cuts are expected to cost the industry over £2 billion by the end of 2023. Although petrol and diesel vehicle sales continue to decline, they still represent the choice of 56.4% of buyers in September.

To stimulate EV uptake, the SMMT has called for a 50% VAT reduction on new electric vehicle purchases, a measure it estimates could cost the Treasury £7.7 billion by the end of 2026. Additionally, the industry body is advocating for VAT on public charging points to be lowered to 5%, in line with the rate applied to home charging. They have also requested that the government introduce mandatory infrastructure targets for charging points to support the growing fleet of electric vehicles on UK roads.

The SMMT has also recommended delaying the introduction of road tax for EVs, currently set to begin next year, and extending the subsidy for commercial electric vans beyond its planned end in March.

This push for VAT reductions and extended subsidies comes as the global EV market faces challenges. Manufacturers like Volvo, Ford, and Toyota have scaled back their EV ambitions, with Toyota announcing delays to US EV production and Tesla missing its quarterly delivery targets. Governments across Europe are also scaling back their support for the sector, with France cutting EV subsidies for higher-income buyers by 20%, and Germany ending its subsidy programme altogether.

While the UK has ended most grants for electric vehicle purchases, business buyers can still benefit from tax incentives for EVs used as company cars. However, industry leaders are warning that without further government intervention, the market may struggle to meet its ambitious targets for zero-emission vehicles.

Read more:
Motor Industry calls for VAT cut on electric cars and charging points to boost EV market

Starling Bank has been fined £29 million by the Financial Conduct Authority (FCA) for “shockingly lax” financial crime controls that left the UK’s financial system exposed to criminals and sanctioned individuals.

The FCA’s investigation revealed that the digital bank failed to design and implement adequate systems to mitigate financial crime risks, particularly as it rapidly grew from its first account in 2016 to 3.6 million customers by 2023.

The FCA raised serious concerns about Starling’s anti-money laundering (AML) and financial sanctions controls as early as 2021 during a review of fast-growing challenger banks. In response, Starling agreed to halt opening new accounts for high-risk customers until its systems were improved. However, the bank breached this agreement, opening more than 54,000 accounts for nearly 50,000 high-risk customers, a direct violation of FCA requirements.

A further failure in Starling’s automated screening system between 2017 and 2023 meant that only a fraction of customers subject to financial sanctions were properly screened. This oversight exposed the bank to a “material risk” that individuals under sanctions may have opened or continued to hold accounts with Starling.

The regulator’s findings raise serious questions about Starling’s leadership under its founder, Anne Boden, who stepped down as CEO in June 2023 and left the board the following year. The bank had hired a consultancy firm to investigate its compliance issues, which reported in September 2023 that Starling’s senior management lacked the necessary experience to enforce compliance with the FCA’s agreement.

Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, criticised the bank’s failings, stating: “Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions.”

Starling has since apologised for its failings, with chairman David Sproul stating that the bank has “invested heavily to put things right, including strengthening our board governance and capabilities.” Despite these efforts, the fine raises concerns about Starling’s planned pursuit of a London stock market listing.

The scandal has also led to rival banks considering legal action against Starling for fraud reimbursement costs related to fraudulent payments made to Starling customers. In June, The Times reported that the FCA had opened a separate investigation into Starling’s compliance with the UK’s anti-money laundering rules.

Starling has expressed regret for the failures that occurred between 2019 and 2023, but the fine represents a significant blow to the reputation of the once highly regarded digital bank, casting doubt on its future leadership and regulatory compliance.

Read more:
Starling Bank fined £29m for ‘shockingly lax’ financial crime controls

The UK’s equity markets have taken a hit as the Labour government’s pessimistic portrayal of the country’s economic outlook reverses a brief recovery in investor interest.

New figures from Calastone, a global fund network, show that UK-focused funds suffered net withdrawals of £666 million in September, while other geographically focused fund sectors recorded inflows.

Overall, global investors pulled a net £564 million from fund holdings, marking the end of a ten-month streak of near-record inflows. Equity income funds, which have significant exposure to UK equities, lost £416 million in capital. According to Calastone, UK-focused equity funds have not seen positive net inflows since 2021.

The decline in investor sentiment comes amid criticism of Labour’s portrayal of the UK economy since taking office in July. Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer have faced backlash from the City for painting what some consider an overly negative picture of the public finances. Reeves has stated that the government inherited the worst economic conditions since World War II, citing a £22 billion “black hole” in public finances left by the previous Conservative administration.

Edward Glyn, head of global markets at Calastone, remarked that the government’s “rather pessimistic commentary” has dampened the nascent revival of interest in UK equities observed in July. “UK-focused funds seem to be off the menu for investors for the time being,” Glyn said.

This bearish shift in sentiment is reinforced by other recent data. A long-standing consumer confidence index plunged to its lowest level since January, while optimism among manufacturers has declined at the fastest rate since the pandemic began.

Adding to the financial turbulence, Calastone also reported the “biggest outflows from fixed income funds on its ten-year record” since the start of August, driven by expectations of interest rate cuts by central banks. The combined net outflows of £1.3 billion have largely been reallocated to safer assets.

The global trend towards loosening monetary policy has played a role in this shift. Last month, the US Federal Reserve lowered borrowing costs by 50 basis points, and it is expected to continue easing policy, along with the European Central Bank. The Bank of England is also forecast to cut its base rate by another 25 basis points in November, as inflation eases.

With the budget approaching on 30th October, Rachel Reeves is expected to raise taxes, but the fiscal tightening will be partly offset by increased public investment spending. The government’s strategy will be closely watched by investors who remain cautious about UK equities amidst the gloomy economic narrative.

Read more:
Labour’s economic pessimism halts UK equity market recovery, triggering significant outflows

Andrew Bailey, Governor of the Bank of England, has indicated that the Bank may take a more aggressive stance on cutting interest rates if inflation continues to decline.

However, he cautioned that escalating tensions in the Middle East could lead to a sharp rise in oil prices, which would complicate the Bank’s policy outlook.

Speaking to The Guardian, Bailey suggested that the Monetary Policy Committee (MPC) could quicken the pace of policy loosening should inflationary pressures continue to ease. “There’s a possibility we could be a bit more aggressive in lowering rates if inflation keeps dissipating,” he said. This has already put downward pressure on the pound, which fell by 1.05 per cent to $1.31, although part of this drop was attributed to traders seeking safer assets amidst the intensifying conflict between Israel and Iran.

Bailey, who has been at the helm of the Bank since 2020, voiced concerns about the situation in the Middle East, warning of the potential for a 1970s-style oil crisis if tensions escalate further. “The conversations I’ve had with counterparts in the region suggest there’s currently a strong commitment to keep the market stable,” Bailey said, but he added that control over oil markets could deteriorate if the conflict worsens. He pointed to past experiences where oil price surges significantly impacted monetary policy, noting the role that oil played in driving inflation during the 1970s.

The UK has experienced a sharp drop in inflation, which peaked at 11.1 per cent in October 2022 but has since fallen to 2.2 per cent. Despite this progress, oil prices have surged in recent days, driven by the latest developments in the Middle East. Brent Crude and WTI, the global benchmarks, both climbed to over $70 a barrel following Israel’s incursion into southern Lebanon and Iran’s retaliatory missile strikes.

These rising prices come after a year of declining demand from China and speculation that Saudi Arabia could increase supply, trends that had been pushing prices down earlier in 2023. The current uncertainty has prompted the MPC to adopt a cautious approach. The Committee voted 8-1 to hold the UK base rate at 5 per cent during its last meeting, and although they implemented a 25-basis-point cut in August—the first reduction since March 2020—traders are expecting another cut next month.

Bailey also responded to criticism from former Prime Minister Liz Truss, who accused him of being part of a left-wing economic cabal that undermined her brief premiership. Referring to the pension crisis triggered by Truss’s mini-budget, Bailey remarked, “We came in and used our intervention tools to deal with the financial stability issue. It’s ironic that someone critical of regulators then says the problem was that the Bank of England wasn’t regulating enough.”

The pension crisis followed Truss’s controversial £45 billion package of unfunded tax cuts, which caused a sharp rise in interest rates and forced down bond prices, creating liquidity issues for pension funds. The Bank of England was compelled to step in with a limited bond-buying programme to restore market stability.

Looking ahead, Bailey praised Chancellor Rachel Reeves for her focus on encouraging capital investment to address climate change and stagnant productivity growth. He also acknowledged the challenges posed by Labour’s handling of the economy since taking office in July, as the government prepares for its first Budget on 30th October. While taxes are expected to rise, the Chancellor plans to mitigate the impact through greater public investment in key sectors.

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Bank of England may cut rates more aggressively as inflation eases, warns Andrew Bailey