Market Loop - Another day, another rate rise

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23rd September 2022

Bite-sized business news from the UK and beyond

Good morning After narrowly escaping extinction in 2019, HMV is staging a music making comeback as it announced yesterday that it would launch its own record label called 1921 Records. The entertainment retailer has signed its first artist in more than 20 years and music will be sold exclusively in its high street and online stores.

Today's stories

Another day, another rate rise
London immersive events firm snapped up in $100m deal

ECONOMY
Another day, another rate rise

What happened?
Yesterday the Bank of England raised interest rates by 0.5% to 2.25% - the highest since 2008 - and teed up a bigger hike in November.

The Bank’s decision came as no surprise
Inflation has been running at close to 10% or a 40-year high since the summer. To try to bring it back down to the 2% target, the Bank has raised interest rates seven times in a row since December. Higher base rates means credit cards, loans and mortgages will get pricier thereby cooling demand and deflating the economy.

Recent government policy is expected to keep a lid on inflation in the short term
The Bank’s judgement is that government decisions — including the already announce energy bill subsidies for consumers and businesses and much trailed £200bn spending package, to be outlined today —will slice the top off sky-high inflation forecasts; rate-setters now see a peak of less than 11%, compared to 13% in previous projections.

But the discount on household energy bills could also support consumer spending and thus increase inflationary pressure in the medium-term.

While many worry that increasing interest rates could lead to a recession (or already has), inflation nevertheless presents a slew of issues for the economy. The Bank is betting that the lesser of two evils is to go all-in combating inflation despite the cost.

Zooming out: In total, about 90 central banks have raised interest rates this year. Within a 24-hour period this week alone, 16 banks have made rate decisions. But with countries all slamming the economic brakes at the same time, a global recession could hit next year, the World Bank warned.

Other stories to keep you in the loop

Real living wage raised early to help workers navigate cost of living crisis
National Insurance rise to be reversed in November
Universal credit rules to be tightened under chancellor's plans
JD Sports ‘cautious’ over outlook amid inflation rise and strike threats
SoftBank seeking ‘strategic alliance’ between chipmaker Arm and Samsung
Asset manager to sell £100m Starling Bank stake at big discount to valuation
Credit Suisse considers splitting investment bank in three

LEISURE
London events firm snapped up in $100m deal

What happened?
Secret Cinema, the London based immersive experience provider, has been bought by a US ticketing firm for $100m.

How did we get here?
Secret Cinema has taken the capital by storm since launching in 2007, selling over 1m tickets to more than 70 shows and producing experiences with major film studios including Marvel, Universal and Netflix.

A typical event takes audiences to secret locations, encouraging them to dress as part of the cast, and become part of the story from a films or TV series. Recent productions include Stranger Things, Bridgerton and Star Wars with events costing around $10m to stage.

New owners TodayTix hopes to take the company global starting in the US with the search for a permanent location in Los Angeles in progress.

The sale also means a windfall for British taxpayers
The UK government took a £4m stake in Secret Cinema in 2020 as part of the Future Fund - a pandemic support scheme for innovative businesses run by the state owned British Business Bank.

The sale of Secret Cinema would be a major success for the BBB as many of the 1,190 early-stage businesses that received investment have struggled. More than 60% of returns have come from just 6% of investments, according to the BBB.

Stat of the day

Tesla is recalling nearly 1.1m cars in the US because the windows might close too fast and pinch people's fingers

Interesting links from around the web

The science behind forming the perfect queue
How to make small talk when you hate small talk
13 therapist-backed tips for warding off procrastination and getting tasks started

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Market Loop - Another day, another rate rise

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