Bad loans at UK banks forecast to hit £47bn as recession looms, says Credit Suisse – The Telegraph

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UK banks may have to write off £47bn of bad loans over the coming years as the economic outlook darkens, Credit Suisse has warned.
Analysts at the Swiss lender lifted their worst-case estimates for 2023-2025 from £41bn previously.
They said provisions in a severe recession would equate to 35pc of pre-tax profit for 2023.
However, Credit Suisse added that UK bank valuations remained attractive based on a mild to sharp recession and “sticky” interest rates.
Major UK banks including Barclays, Lloyds and NatWest have together put aside £1.3bn to cover loan losses in their recent trading updates.
Read the latest updates below.
Harriett Baldwin has won election as chairman of the Treasury Select Committee, vanquishing four opponents in a contest among MPs.
The Conservative member for West Worcestershire takes over from Mel Stride, who is now secretary of state for work and pensions.
The powerful backbench committee routinely interrogates the Chancellor and the Governor of the Bank of England, with upcoming sessions examining the Autumn Statement and the latest monetary policy report.
She called it “a privilege to be elected as the chair of such a prestigious and influential Committee”, after defeating contenders including former Business Secretary Andrea Leadsom.
“With the Chancellor’s Autumn Statement around the corner, interest rates on the rise and inflation well above target, the role of the Committee has never been more important. As chair, I will hold the Treasury to account and scrutinise the Bank of England and our regulators without fear or favour,” said Ms Baldwin. 
“The Treasury Committee will continue to play a vital role in safeguarding our nation’s economy. We will investigate the key issues, ask tough questions, and provide constructive challenge. The hard work begins today, and I cannot wait to get started.”
Britain is “exceptionally well-placed to make trade deals” as it liberalises its regulatory regime, according to the 2022 Sustainable Trade index.
Only New Zealand ranks ahead of Britain, according to the list of 30 nations compiled by the Institute for Management Development (IMD) and the Hinrich Foundation.
Professor Arturo Bris, Director of the IMD World Competitiveness Center said: “For global trade to adapt to the new realities of climate change, sustainable development, and prosperity, countries need to be careful to identify the social and environmental costs of their actions.
“The UK is, in this sense, a pioneering country, following the steps of other European economies. It shows excellence in the way it deals with carbon emissions and energy intensity and marks the way for other countries in its area of influence to follow suit.”
That’s all from me today – thanks for following! Handing over to Tim Wallace now.
Sterling has extended its slide against the dollar as the US currency pusher higher amid uncertain results from the midterm elections.
The pound was down 1.5pc at $1.1359.
Wall Street has opened in the red following midterm elections that failed to yield a Republican sweep.
Investors had eyed prospects of a Republican comeback in Congress, with GOP taking control of both the House of Representatives and Senate. 
But US voters delivered a mixed verdict, with Republicans heading for control of the House by smaller margins than forecast and the race for Senate still wide open. That left Thursday’s inflation report the next catalyst for markets. 
The S&P 500 and Dow Jones both fell 0.6pc, while the tech-heavy Nasdaq lost 0.8pc.
Cryptocurrencies have suffered a second day of sharp declines as investors continue to fret about the stability of the sector and the financial health of major exchange FTX despite plans for a rescue deal from bigger rival Binance.
Crypto giant Binance signed a nonbinding agreement last night to buy FTX’s non-US unit to help cover a "liquidity crunch" at the rival exchange.
The proposed deal between high-profile rivals followed week-long speculation about FTX’s financial health that snowballed into $6bn of withdrawals in the 72 hours before yesterday’s deal, raising questions about the solvency of one of the world’s largest crypto exchanges.
FTX and Binance did not disclose the terms of their agreement, and markets face fresh uncertainty over whether it will proceed.
Bitcoin, the biggest cryptocurrency by market value, was down 5.3pc at $17,559 after a 10pc plunge on Tuesday that marked its worst day since mid-August. Ether, the next largest, extended losses to hit its lowest since July.
Even Morrisons’ most ardent supporters concede that the supermarket has been operating “with the wind in its face for a bit”, writes Oliver Gill.
Once Britain’s fourth biggest supermarket, it is now the country’s fifth largest. 
Having been overtaken by Aldi, Morrisons is now nervously looking over its shoulder at another German discounter, sixth-place Lidl.
Figures released yesterday reveal Morrisons had 9pc of the grocery market compared with 10pc a year ago. Morrisons sales have fallen 4.6pc, with only two brands experiencing a year-on-year sales contraction – the other one is Waitrose, falling 1.9pc – in the 12 weeks to October 30, according to Kantar.
It is against this backdrop that Fortress Investments, the American private equity firm co-founded by Aston Villa football co-owner Wes Edens, may be counting its blessing for coming second in a protracted bidding war for the supermarket last summer.
Read Ollie’s full story here
UK banks could have to write off £47bn of bad loans over the next two years as the economic outlook darkens, Credit Suisse has warned.
Analysts at the Swiss lender lifted their worst-case estimates for 2023-2025 from £41bn previously.
They said provisions in a severe recession would equate to 35pc of pre-tax profit for 2023.
That said, Credit Suisse added that UK bank valuations remained attractive based on a mild to sharp recession and "sticky" interest rates.
US futures ticked lower as investors kept a close eye on the results from a tightly-contested midterm election in expectation of a divided Congress that would make it harder for the passage of drastic policy changes.
Early indications suggested the Republicans looked set to take control of the House of Representatives, while the Senate results were a toss-up with many of the most competitive races uncalled.
A split government, with a Democrat in the White House, has historically been favorable for stock markets as it paves the way for partisan standoffs on contentious policy changes such as the federal debt limit, which could usher in worries of a US default.
Futures tracking the S&P 500 dipped 0.05pc, while Dow Jones was down 0.2pc. The Nasdaq gained 0.08pc.
Here’s more from Mark Zuckerberg’s note to staff as he announced the mass sacking of 11,000 employees:
At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. 
Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.
Avanti, the under-fire intercity train operator, is entitled to a multi-million-pound performance fee from taxpayers despite repeatedly apologising for poor service, writes Oliver Gill.
The company, which operates trains between London, Manchester and Glasgow, ran just one in three services over the summer after becoming embroiled in a spat with unions.
Avanti has been branded “a disgrace” by Liberal Democrat leader Ed Davey and “useless” by Greater Manchester mayor Andy Burnham.
The operator has been given six months to “drastically improve services” or be stripped of its contract by the Government.

Train operators are paid a fixed fee by taxpayers to run services following the ending of franchising in May 2021. On top, they are contractually entitled to a bonus “performance fee” for going above and beyond minimum service standards.

But despite passengers on the line suffering from significant disruption, Avanti’s owners today disclosed they were entitled to a performance fee.
Read Ollie’s full story here
After a hesitant start to trading, sterling has taken a sharp turn downwards.
The pound slumped 1.1pc against the dollar to $1.1419. It comes as results from the US midterm elections start to roll in, with the Democrats doing better than expected.
The owner of London Southend airport has begun a strategic review that could see parts of its business put up for sale.
Esken, formerly known as Stobart Group, said it will consider all options for its operating activities "in the best interests of all stakeholders".
This could include a sale or partial sale of one or both of the renewables or aviation divisions.
Southend, which is trying to establish itself as London’s sixth commercial airport, had drawn half a dozen airlines before the pandemic upended travel.
Airlines including Wizz Air and Ryanair have since pulled out, leaving only a thing summer service offered by easyJet.
Vodafone has sold a stake in its mobile towers business that values the company at €16.2bn (£14.2bn).
The telecoms firm said it has entered a joint venture with private equity firms KKR and Global Infrastructure partners to hold its 81.7pc stake in Vantage Towers.
The deal values the firm at €32 per share – of €16.2bn.Voadone will make minimum cash proceeds of €3.2bn.
The new joint venture will also launch a voluntary takeover offer for the outstanding shares in Vantage Towers held by minority shareholders. This will be funded through €1.6bn of debt and equity from KKR and GIP.
Adidas slashed its 2022 outlook even further today as it weighed the impact of its split from Kanye West, while sluggish demand in China continued to impact sales.
The German sports brand now expects its revenue to grow at a low-single-digit rate in 2022, down from a previously forecast mid-single-digit rate. It expects an operating margin of around 2.5pc, rather than 4pc. Shares fell 2.8pc.
Adidas last month warned it would take a €250m hit after cutting ties with the rapper, now known as Ye, following a string of anti-Semitic remarks.
Sterling is treading water this morning after three days of gains as investors take stock of the outlook for inflation and interest rates.
Traders will have a close eye on Bank of England MPC members Jon Cunliffe and Jonathan Haskel, who are both due to speak later.
It comes after chief economist Huw Pill suggested the pandemic stimulus programme was a mistake and contributed to inflation.
The pound was little changed against the dollar at $1.154.
ITV shares have dropped in early trading even as the broadcaster posted a rise in revenues for the first nine months of the year.
The ‘I’m a Celebrity’ broadcaster said total revenue was up 6pc to £2.5bn in the year to the end of September.
This was driven by a 16pc jump in revenues from its studios business thanks to new and returning programmes including A Spy Among Friends and Hell’s Kitchen USA.
But markets focused on the 2pc slide in advertising revenue amid a looming downturn in the market. Shares fell more than 6pc.
The update came as ITV prepares for the launch of its new streaming service ITVX, which will combine its catch-up player ITV Hub and subscription service BritBox with a slate of new shows.
ITV said the platform will launch on December 8. That’s later than original plans to launch before the World Cup.
Swapping Downing Street for Down Under… welcome your new Campmate, @MattHancock #ImACeleb
Elon Musk has sold almost $4bn (£3.5bn) of Tesla stock just days after closing his tumultuous takeover of Twitter.
The world’s richest person offloaded 19.5m shares for a total of $3.95bn earlier this month, according to new filings.
Mr Musk completed his takeover of Twitter in October after trying for months to get out of it. He has since sacked roughly half the workforce and announced a string of major changes to the social media site.
He sold $7bn of his Tesla stock in August as he worked to finance the deal. At the time, the billionaire said he was done offloading Tesla stock and that it was important to avoid an “emergency sale” of the shares.
It is still not clear how the $44bn acquisition was funded, beyond the roughly $13bn of debt commitments from Wall Street banks.
However, Twitter is losing money and now faces huge annual interest payments, while several major brands have halted advertising on the platform.
The FTSE 100 is on the back foot this morning following losses in Asia on the back of weak Chinese data.
The blue-chip index fell 0.3pc, with markets also focused on US midterm election results.
Paddy Power and Betfair owner Flutter was the biggest laggard, down 1pc even after it lifted its US revenue forecast. Insurer Aviva was also in the red following its third-quarter figures.
Engineer Smiths Group bucked the trend, rising more than 5pc to the top of the index following a strong trading update.
The domestically-focused FTSE 250 fell 0.4pc, with ITV tumbling 5pc.
JD Wetherspoon has revealed slowing sales and warned it was facing "substantially higher" costs across the group.
The no-frills pub chain said like-for-like sales dropped 1.1pc in the five weeks to November 6 compared to pre-pandemic levels. They had risen by 1.5pc in the previous nine weeks.
Spoons said trading was "broadly" in line with its expectations but that October had been a slower month, with labour, food and repair costs rising.
Boss Tim Martin said the firm remained "cautiously optimistic" despite the cost pressures hammering the hospitality sector.
He said he previously set out "various threats to the hospitality industry and these continue to apply".
"Those caveats aside, in the absence of further lockdowns or restrictions, the company remains cautiously optimistic about future prospects."
TikTok is said to have slashed its global revenue targets for the year by at least $2bn as it becomes the latest tech firm to feel the impact of an advertising slowdown.
Chief executive Shou Zi Chew cut targets by 20pc at a virtual meeting in late September, the Financial Times reports.
TikTok originally predicted revenues between $12bn and $14.5bn this year, but actual revenue is now believed to be closer to $10bn.
During the meeting, staff were blamed for not driving enough sales in both advertising and ecommerce. But several current and former employees told the FT that TikTok had overspent in other areas, from salaries to social events.
The FTSE 100 has slipped at the open as results for the US midterm elections start to the roll in.
The blue-chip index was down 0.3pc as markets opened at 7,282 points.
Taylor Wimpey has revealed a slowdown in sales – a day after a similar warning from rival Persimmon.
The housebuilder reported a net private sales rate of 0.51 homes per outlet per week in the second half of the year, down from 0.91 in 2021.
Its cancellation rate for the second half of the year to date stood at 24pc, compared to 14pc year on year.
It’s the latest sign that the property market is facing a sharp slowdown as mortgage rates rise and wider economic gloom hits demand.
Taylor Wimpey cited "customer response to heightened levels of economic uncertainty" for its woes.
Marks & Spencer saw its profits tumble by almost a quarter in the first half of the year as the upmarket retailer absorbed some of the impact of recent cost increases.
The high street stalwart reported a 23.7pc tumble in underlying pre-tax profits to £205.5m in the six months to October as surging inflation ate into margins in its food business, as well as more difficult trading in its Ocado retail joint venture.
Profits were also knocked by the cost of higher property taxes and its exit from Russia.
M&S said like-for-like sales jumped 13.7pc across its resurgent clothing and home division, while comparable sales lifted 3pc in its food business.
But the group warned of "more challenging" trading ahead in the cost crisis and said it was looking to cut costs by around £150m in the coming financial year to offset soaring inflation and help it weather the storm.
Stuart Machin, chief executive of M&S, said:
Trading in the first half has been robust, with both businesses growing ahead of the market, reflecting the beginnings of a reshaped M&S.
This progress means we face into the current market headwinds with an increased resilience and level of confidence.
Looking beyond the current stormy weather, much is in our control and our mandate is clear – to step up the pace, accelerate change, drive a simpler, leaner business and invest in growth opportunities to build a reshaped M&S.
Next has swooped to buy up the brand as the online furniture retailer collapsed into administration.
The high street fashion chain has agreed to buy the brand, domain names and intellectual property of Other assets will be sold by the administrators in due course to repay creditors.
The collapse puts 500 jobs at risk and leaves uncertainty over whether customers will receive their orders.
The company said it had appointed PwC as administrator.
Susanne Given, Chair of, said:
Having run an extensive process to secure the future of the business, we are deeply disappointed that we have reached this point and how it will affect all our stakeholders, including employees, customers, suppliers and shareholders. 
We appreciate and deeply regret the frustration that MDL going into administration will have caused for everyone.
I want to sincerely thank all our employees, customers, suppliers and partners for your support throughout the past 12 years and especially during this difficult time where we have tried so hard to find a workable solution for the Company and all its stakeholders.
An "operational incident" has been reported at the Fawley oil refinery, with flares spotted by people from miles away.
ExxonMobil said it was dealing with the incident at the site in Hampshire. A spokesman told the BBC that no-one had been reported injured, adding its teams were "working to address the situation".
The company said the flares were part of standard safety procedure and a siren might also be heard.
L👀king towards #Fawley #ExxonMobil Oil Refinery 🔥🔥🔥 tonight from across The Solent in #Cowes #IsleofWight @iwcponline @iwightradio @dailyecho @wave105radio @BBC_Hampshire @itvmeridian
Elon Musk has sold off almost $4bn in Tesla stock just days after completing his takeover of Twitter.
The world’s richest person offloaded 19.5m shares at the beginning of this month, according to SEC filings.
Mr Musk completed his $44bn acquisition of Twitter in October after trying for months to get out of it. He’s sparked controversy by sacking around half the workforce in a bid to cut costs.
The billionaire has said he paid too much for Twitter. The company is making a loss and now faces hefty interest payments.
1) The Bank of England has warned that a surge in early retirement means more interest rate rises will be needed despite mounting signs of recession
2) Qatar is investing millions of pounds in expanding a major gas terminal in Wales, as the Government ramps up its reliance on shipments of the liquefied fuel imported from overseas
3) Canadian billionaire Lawrence Stroll has tightened his grip on sports car maker Aston Martin, leading a £30m investment in its shares
4) The risk of energy shortages in Britain and across the Channel this winter is growing as French state energy giant EDF faces fresh problems with its nuclear power stations
5) Primark is considering shutting stores in Germany as it struggles to attract shoppers in the same numbers as prior to the pandemic
China and Hong Kong stocks slid this morning as producer prices fell for the first time since December 2020 underscoring faltering domestic demand amid Covid-19 curbs, while investors awaited US inflation data and mid-term election results.
China’s blue-chip CSI 300 Index fell 0.75pc, while the Shanghai Composite Index edged down 0.35pc. Hong Kong’s Hang Seng Index dropped 1.5pc and the Hang Seng China Enterprises Index declined 1.4pc.
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