🔗Economy grows in October but recession still looms

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13th December 2022

Bite-sized business news from the UK and beyond

Good morning South Korea is known for incredible skincare products, but now the country has found perhaps its most effective anti-aging solution: it’s passed a new law that will make all citizens officially one or two years younger from next year.

Today's stories

Economy grows in October but recession still looms
Microsoft buys stake in London Stock Exchange

ECONOMY
Economy grows in October but recession still looms

What happened?
Official data released yesterday showed that the UK economy grew by 0.5% in October compared to September however economists still expect the country to tip into a prolonged recession.

How did we get here?
The economy shrunk by 0.6% in September mainly due to the extra bank holiday for the late Queen’s funeral.

The return to the normal level of working days in October, as well a rebound in car sales and construction, helped boost output from the previous month but on a three-month basis the picture is less rosy - the economy has declined by 0.3% since the summer indicating the country’s underlying economic strength is shaky.

Economists expect the UK to enter a two-year recession imminently, driven by 40-year high inflation of 11.1%, rising energy bills and housing costs triggering a slowdown in consumer spending.

The Bank of England is likely to raise borrowing costs for the ninth time in a row on Thursday in a bid to cool inflation. However November inflation data, due tomorrow, is expected to show that pricing pressure is curbing, which could bring into question just how much interest rates need to rise. If the Bank raises rates too much it risks a harsher than needed recession and if it does too little then high inflation could be stubborn to shift.

Next up: All eyes will be on November and December economic figures, which will be released next year. If they show the economy contracted then the UK will be officially in recession. And with the series of strikes across the country grinding many sectors to a halt and dampening economic activity, a recession seems even more likely.

Other stories to keep you in the loop

National Grid asks two coal plants to fire up amid big freeze
Metro Bank fined £10m for misleading investors
Train strikes: RMT members reject latest Network Rail pay offer
New York law firm ups pay for newly trained London lawyers to £165,000 a year
Party season returns with a bang for Kurt Geiger as sales double
Goldman Sachs plans hundreds of job cuts

TECH
Microsoft buys stake in London Stock Exchange

What happened?
Yesterday Microsoft announced it will buy a 4% stake in the London Stock Exchange Group (LSEG) in a £2.3bn deal that will see the companies collaborate on data analytics and cloud technology.

How did we get here?
LSEG is best known for running the London Stock Exchange and the FTSE 100, but it generates two-thirds of its revenue from the data and analytics it provides to investors and analysts. Last year it bought data company Refinitiv for $27bn making the group the world’s second largest financial data company after Bloomberg.

It’s all part of a growing demand from investors for information that gives them an edge in increasingly fast electronic financial markets.

Under the new partnership LSEG will:

Migrate its data management and cloud services on to Microsoft
Use Microsoft’s office-working software, like Teams, Excel and PowerPoint, to create a one-stop shop for data, analytics and collaboration tools that it can sell to finance professionals

The deal is a huge win for both sides
Microsoft expects to make $5bn in revenue as it gains a large cloud contract with access to Refinitiv’s 40,000 customers, as well as a stake in Bloomberg’s rival.

LSEG gets the tech know-how and financial backing of one of world’s biggest cloud companies. The company says the deal will “increase revenue growth meaningfully over time as new products come on-stream”.

Microsoft isn’t the only Big Tech name moving into financial markets
Last year Google invested $1bn in CME, a Chicago-based stock exchange, as part of a decade-long cloud computing deal. Around the same time New York-based Nasdaq and Amazon agreed a similar partnership.

Stat of the day

Sunday night was the coldest night of the year with temperatures reaching -15C in northern Scotland

Interesting links from around the web

The 12 rules of Christmas cooking
99 ways to sleep better
Inside China's declining population

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🔗Economy grows in October but recession still looms

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