Main events
Network Rail Chief Negotiator: Agreement within ‘touching distance’
Tim Shoveller, the chief negotiator for Network Rail, which also maintains the track, is optimistic that a deal can be reached in the long-running rail dispute between unions led by the RMT and Network Rail. He told BBC Radio 4’s Today programme:
What we are saying to the RMT is that we know which areas have been misunderstood by some of our staff, their members, and we want to make sure that we can work with the RMT now to clarify where there has been misunderstanding and to decide deal again.
We only need 2,000 people who voted ‘no’ last night to change their vote and the deal will go through, so we think it’s within touching distance.
Meanwhile, the head of RMT Mick Lynchwho is in a box line at Euston station in London this morning, has again accused the government of blocking a deal.
Investors should brace themselves for another tumultuous year
Graeme Worthen
Investors should brace for another turbulent year in financial markets, economists have warned as central banks battle inflation, China reopens its economy after Covid-19 restrictions and the Ukraine war pushes the global economy into recession.
The first half of the new year is likely to be bumpy, according to Wall Street forecasts, as global markets suffered their worst decline since the 2008 financial crisis last year.
But the US S&P 500 is still expected to end 2023 slightly higher than it started the year. The average target of 22 strategists polled by Bloomberg has the S&P 500 ending 2023 at 4,078 points — about 6% higher than where it ended 2022.
Economists predict the US Federal Reserve will slow interest rate hikes this year as the outlook for America’s economy worsens. US inflation has fallen from its peak last summer, while the Fed’s series of rate hikes in 2022 has also cooled the housing market.
“We believe that a period of below-trend growth is inevitable and recession risks are high as the lagged effects of tighter monetary policy work their way through the economy,” it said. Brian Rosesenior US economist at UBS Global Wealth Management.
Most UK train services are out of action as five days of strikes begin
White Topham
Rail strikes in the UK also continue, with tens of thousands of rail workers walking out today as a row over pay, jobs and working conditions remains unresolved. Our transport correspondent Gwyn Topham reports:
The first of five consecutive days of national rail strikes have begun, shutting down most of Britain’s rail network and leaving only a skeleton service for commuters on urban and intercity lines.
Passengers were asked to try to travel only if necessary, with around 20% of trains expected to run and scheduled operating hours reduced to between 7.30am and 6.30pm.
Members of the Network Rail, Maritime and Transport union and 14 train operators are on strike for two 48-hour periods, starting on Tuesday and again on Friday.
With signal staff among the RMT’s 40,000 members on strike, much of the rail in Wales, Scotland and less populated regions of England will not operate at all, while service frequencies will typically be reduced to one train an hour on the routes main.
The latest action comes with no immediate resolution in sight to the long-running dispute over wages, jobs and working conditions at the railway. Unions claimed on Monday that rail companies were “in despair” over the government’s handling of the pay dispute, with the Treasury now effectively controlling what settlement can be made.
Mick LynchRMT general secretary, said there had been “radio silence” from the government since a meeting in mid-December.
Introduction: China’s factory slide intensifies; Economists say the UK faces the worst recession in the G7
Good morning and welcome to our regular coverage of business, financial markets and the world economy.
The New Year has started with a warning from the head of the International Monetary Fund, Kristalina Georgieva, that a third of the global economy will be in recession this year and that 2023 will be tougher than last year. Economists are warning that the UK faces the worst and longest recession among the G7 countries.
According to the Financial Times’ annual survey of leading UK-based economists (a poll of 101 analysts), a clear majority said the inflationary shock caused by the Covid pandemic and Russia’s war in Ukraine would last longer in the UK than elsewhere , forcing the Bank of England to keep interest rates high and the government to run a tight fiscal ship. More than four-fifths expect the UK to lag behind other major economies, with the UK economy already shrinking.
John Philpottan independent labor market economist told the FT:
The recession of 2023 will be felt much worse than the economic impact of the pandemic.
In China, factory activity fell at a sharper pace in December as a surge in Covid infections disrupted production and held back demand as Beijing lifted most Covid restrictions, according to a survey.
The Caixin/Markit manufacturing purchasing managers’ index fell to 49 in December from 49.4 in November. It has been below the 50 mark that separates growth from contraction for five months. The reading was the lowest since September, but slightly better than expected. China’s biggest official PMIM survey on Saturday showed a much sharper contraction, with the activity index falling to the lowest level in nearly three years.
In the first week of the year, we will get the minutes of the last US Federal Reserve meeting (Wednesday), US jobs data on Friday and the OPEC oil cartel will also meet.
Some Asian stock markets rebounded from earlier losses, with Hong Kong’s Hang Seng up 1.6% and the Shanghai Composite up 0.9% while Japan was closed for a holiday. However, the Australian market lost 1.3% and South Korea’s Kospi fell 0.3%.
Naeem Aslamchief market analyst at trading platform Ava Trade, says:
2023 has begun with further escalation of tensions between Russia and Ukraine after a missile attack on a Russian military facility in occupied territory in Ukraine killed 63 troops. This is more than likely to have an even more aggressive response from Russia. Overall, it doesn’t look like 2023 has started with an easing of tensions between the two countries, and it’s more than likely that the situation may actually get worse after the current incident before it gets better.
Agenda
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8.55 GMT: German unemployment for December (forecast: 15,000, rate 5.6%)
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9:30 GMT: S&P Global/CIPS UK Manufacturing PMI for December (forecast: 44.7)
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13:00 GTM: German inflation for December (forecast: 9.1%)
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2:45pm GMT: US S&P Global Manufacturing PMI out for December
