Bank of England expected to hold interest rates at noon as it assesses fallout from Iran war – business live
Key events
French economy shows zero growth in Q1; Spanish GDP slows
France’s economy did not grow at all during the first quarter, with households spending less and a slump in exports.
GDP was unchanged between January and March, after 0.2% growth in the fourth quarter, according to figures from the French statistics office Insee.
Household consumption declined slightly (-0.1% after +0.4%), and investment fell back (-0.4% after +0.3%). Overall, the contribution of domestic demand (excluding inventories) to GDP growth was zero this quarter, after it added 0.4 points to fourth-quarter GDP.
The contribution of foreign trade to growth was strongly negative this quarter (-0.7 points after +0.6 points): exports fell sharply (-3.8% after +0.8%), while imports declined again (-1.7% after -0.8%).
Total production, of goods and services, was once again sluggish, rising by 0.1%, after a 0.2% gain in the previous quarter.
Meanwhile, Spain’s economic growth slowed to 0.6% in the first quarter from 0.8% expansion in the previous quarter, preliminary data from the National Statistics Institute showed. However, this was slightly better than expected.
Spain’s economy has been one of the top performers in Europe, in part thanks to record tourist numbers, and grew 2.8% last year.
The Spanish government still expects the economy to grow 2.2% this year, although it said earlier this week that uncertainty triggered by the US-Israeli war on Iran could affect the forecast.
Whitbread to cut 3,800 jobs
Joanna Partridge
Premier Inn owner Whitbread is to cut about 3,800 jobs in the UK and Ireland as it resets its five-year business strategy, after tax rises and pressure from a US activist investor.
The cuts will affected about 12% of Whitbread’s 30,000-strong workforce in the UK and Ireland working in its Beefeater and Brewers Fayre restaurants, which are usually located next to or inside Premier Inn hotels. The company said consultations with affected employees would begin immediately.
Whitbread said it expected to retain a “significant proportion” of those affected and would try to find alternative roles for them, given it hires about 15,000 people each year.
The cuts come after Whitbread began a fresh review of its business in November, a year after it first announced its five-year plan, after it was hit by higher costs in the chancellor’s budget.
Britain’s largest hotel operator had already been in the process of converting some of its underperforming Beefeater and Brewers Fayre restaurants, usually located next to or inside its Premier Inn hotels, into hotel rooms.
Whitbread warned after Rachel Reeves’s 2025 budget that tax changes would cost it an additional £50m this year, amid changes to the way business rates are calculated. This came hot on the heels of an earlier cost squeeze due to higher wage bills and rising food prices.
Whitbread’s new strategy means it will become a pure hotel business, about seven years after it sold the Costa Coffee chain to soft drinks giant Coca-Cola in a near-£4bn deal.
This means that as it stands the Beefeater restaurant brand – established in 1974 in known for serving steaks and classic pub dishes – will disappear from UK high streets.
Introduction: Bank of England expected to hold interest rates as it assesses fallout from Iran war
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Bank of England is expected to keep interest rates on hold at noon, as policymakers assess the economic fallout from the Iran war.
Economists will be looking for any clues on future rate policy in the statement and the subsequent press conference. The nine-member rate-setting panel, led by central bank governor Andrew Bailey, could hint at rate hikes in the months ahead if the conflict in the Middle East — where a shaky ceasefire is in place — drives inflation higher.
For now, the monetary policy committee is expected to keep the bank’s main rate at 3.75%, while one or two members could vote for a quarter-point hike as a preemptive move to ward off higher inflation.
Before the US and Israel began their attacks on Iran on 28 February, the central bank had been expected to cut borrowing costs this year, as inflation was predicted to fall back toward its 2% target during the spring. The war has since upended the bank’s predictions.
Sandra Horsfield, an economist at Investec, said the “repercussions of the conflict are still keenly felt and uncertainty about how the situation could evolve also remains high”.
The European Central Bank is also set to keep rates unchanged on Thursday, but is also likely to signal that a rate hike, perhaps as soon as June, could be on the cards to tackle an energy-driven surge in consumer prices.
In the United States, the Federal Reserve on Wednesday left interest rates unchanged for the third time this year, despite Donald Trump’s insistent demands for rate cuts.
Oil prices jumped a further 7% on Thursday to the highest since March 2022, after a report that the US is considering military options against Iran to break the deadlock in stalled negotiations to end the war.
Donald Trump is set to receive a briefing today (from Centcom commander Adm. Brad Cooper) on plans for a series of military strikes on Iran to force it back to negotiations over its nuclear programme, according to a report from the US news outlet Axios.
Brent crude futures for June are now 5.3% higher at $124.58 a barrel, after hitting $126.41 a barrel earlier. On Wednesday, oil gained 6.1%. The June contract, up for a ninth day, expires on Thursday and the July contract rose 3% to $113.78 a barrel, after gaining 5.8% yesterday.
US West Texas Intermediate futures for June rose 2.3% to $109.35 a barrel, after hitting $110.93 a barrel earlier, and climbing 7% on Wednesday.
Both oil benchmarks are on track for their fourth month of gains. Brent has more than doubled since the start of the year while WTI is more than 90% higher.
Asian stock markets declined, with Japan’s Nikkei losing 1.06% and Hong Kong’s Hang Seng down 1.2%.
The Agenda
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9am BST: Germany GDP for Q1
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10am BST: Eurozone GDP for Q1, inflation for April
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Noon BST: Bank of England interest rate decision
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1.15pm BST: European Central Bank interest rate decision
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1.30pm BST: US GDP for Q1
