Good morning, and welcome to our rolling coverage of economics, the financial markets and the world economy.UK pay growth has accelerated at the end of last year, bringing relief to workers and a headache for the Bank of EnglandThe latest employment data, just released, shows that total pay rose by 6% per year in the October-December quarter – up from 4.4% in July-September, and a little faster than City economists expected.Regular pay (excluding bonuses) rose by 5.9% in the Oct-Dec quarter, down from 4.

9% in the previous three months,These increases mean earnings continued to rise faster than inflation, meaning real wages rose,Adjusted for the CPI inflation rate, both real regular and total pay rose by 3,4% on the year,That is likely to cause some concerns at the BoE – the Bank cut interest rates earlier this month, but some policymakers remain worried that inflationary pressures are still bubbling.

ONS director of economic statistics Liz McKeown says:“Growth in pay, excluding bonuses, rose for a third consecutive time, with increases seen in both the private and public sector.After taking account of inflation, real pay growth also increased slightly.Today’s jobs report also shows that both employment and unemployment rose in the quarter, while the number of people out of the labour market (economically inactive) dipped.Here’s the details:The UK employment rate for people aged 16 to 64 years was estimated at 74.9% in October to December 2024.

This is above estimates of a year ago, and up in the latest quarter,The UK unemployment rate for people aged 16 years and over was estimated at 4,4% in October to December 2024,This is above estimates of a year ago, and up in the latest quarter,The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.

5% in October to December 2024,This is below estimates of a year ago, and down in the latest quarter,The UK Claimant Count for January 2025 increased on the month and is up on the year, at 1,750 million,7am GMT: UK labour market force report9.

30am GMT: ONS Productivity flash estimate and overview for the UKMorning: Court ruling on Thames Water debt dealTime to wrap up:The number of people going financially insolvent across England and Wales jumped by 12% in January compared with the same month a year earlier, according to Insolvency Service figures.More businesses also failed, with analysts warning that high taxes and a slow economy could lead to more insolvencies through this year.Thames Water has avoided collapse, with a high court judge today giving approval for up to £3bn of high-cost borrowing.But campaigners are vowing to fight the decision – arguing that Thames should be put into a special administration.A rival group of creditors who had pushed an alternative package are also planning to appeal.

Elsewhere in economics, UK wage growth accelerated at the end of last year – with total pay rising 6% in October-December.Bank of England governor Andrew Bailey, though, has insisted that this doesn’t change the BoE’s view of the economy.UK energy customers have been warned that bills are likely to jump by 5% in April, when the price cap is next adjusted.Steel giant Tata has welcomed planning approval for its proposals for huge changes to steelmaking at its biggest plant.Neath Port Talbot Council’s planning committee gave the go-ahead at a meeting on Tuesday to the way steel is produced at the South Wales site.

Tata has closed blast furnaces and is switching to an electric arc furnace-based steelmaking process which is greener, but needs fewer workers,Almost 2,000 jobs will be lost, although the company and the Government have announced plans to help find new jobs for those affected and Tata says thousands of jobs will be preserved,Rajesh Nair, chief executive of Tata Steel UK, said:“We are very pleased to have secured approval to build sustainable steelmaking in Port Talbot,“Amidst a challenging global market, this is a significant milestone for the project and we are committed to begin large-scale work on site this summer, ahead of the Electric Arc Furnace starting up from the end of 2027,“This £1.

25 billion investment is the most significant investment made in the UK steel industry in decades,“The facility will secure high-quality steel production, preserve thousands of jobs, and safeguard steel making in Port Talbot for generations to come,”The closure of the last blast furnace at Port Talbot last year has led to job losses and higher rates of mental illness, with unions warning that for every job that goes in the steel plant, about three or four jobs are supported in the wider community,Ouch! Confidence among US homebuilders has dropped, on concerns over president Trump’s plans to impose tariffs on imports,A gauge of housing market conditions produced by the National Association of Home Builders and Wells Fargo fell 5 points to 42, the lowest since September.

Worres about high mortgage rates are also weighing on the housing market, the survey shows, with the US Federal Reserve not expected to cut interest rates for several months yet.NAHB Housing Survey with a decent miss, lower than anyone was expecting.Trump policy agenda uncertainty is going to slow down real activity in the economy while the Fed is going to sit on its hands before being in a position to provide any further accommodation at this time.… https://t.co/9hh84a4ZluDespite today’s High Court ruling, “the ongoing financial drama at Thames Water shows no sign of abating”, says.

Mark Lloyd, chief executive of The Rivers Trust.Indeed, Lloyd adds, it merely adds to “the public despair and lack of trust” in the water industry.He says:“The astounding level of debt and punitive interest rates agreed mean that a large proportion of customer bills will be spent on paying financiers rather than improving the environment, when we know that Thames Water are already not delivering many of their promised environmental improvements.This is a reflection of poor regulation over decades, which has driven companies to debt rather than equity finance, and some very greedy owners who siphoned too much funding out of the company to make themselves rich rather than fix our creaking infrastructure.Back in Germany, auto supplier Continental has announced plans to cut a further 3,000 jobs by the end of 2026.

The job reductions will be in research and development, it said, with less than half of the cuts will be in Germany.Continental said the cuts would “to a large extent” take place via natural turnover, such as from retirement.Philipp von Hirschheydt, head of the automotive division at Continental, says:“We are continuously improving our competitive strengths in the interest of our sustainable market success.”Continental had already announced plans last February to cut 7,150 jobs by 2025.Farmers have expressed their “disappointment” and “fury” following a meeting with the government over the planned changes to inheritance tax for agricultural properties.

Tom Bradshaw, the president of the National Farmers’ Union (NFU) which represents 40,000 farmers across England and Wales, said he had taken proposals to the Treasury to reduce the impact of the changes to agricultural and business property relief on family farms,However he said the exchequer secretary James Murray, and farming minister Daniel Zeichner were not receptive to their proposals,“Disappointment doesn’t describe how I feel at the moment,” said Bradshaw, adding:“There is no movement, the government resolutely believes that they are correct in the decision they have made and that they are generous in the exemptions they are giving us,They don’t care about the human impact, they don’t care about the intergenerational impact,”Farmers have been protesting against the planned changes to agricultural property relief and business property relief since they were announced in October’s budget, which would see farms and other business property fall within inheritance tax from April 2026.

Inheritors would have to pay 20% of the value of agricultural and business property above, which the government said would raise money to help improve public services.The NFU and farming groups have warned that the proposed changes would push up food prices, impact domestic food supply and force many family farms to sell up to pay their tax bill.Bradshaw told reporters he and representatives from other farming and countryside groups - the Tenant Farmers’ Association (TFA), Country Land and Business Association (CLA), and Central Association of Agricultural Valuers (CAAV) - proposed a “clawback” mechanism.The clawback would see those inheriting a farming business only eligible for paying tax if they decided to sell the business within a certain time period after inheritance, which the NFU says would be at a time when cash was available to pay the tax bill.“We are offering them a solution which still raises the funds, but at the moment the door is shut from Treasury,” Bradshaw said.

“The reaction from our members is going to be one of fury, one of real anger, one of desperation,”He added:“We recognise the fiscal hole that the country faces and we recognise the challenges that government are under”,Bradshaw insisted the prime minister was “disingenuous” to suggest that there was a choice between inheritance tax and funding the NHSThe meeting came just days after Keir Starmer cut short a visit to a housing development in Bedfordshire after it was interrupted by a protest of tractor-driving farmers,That day, Stamer defended the introduction of inheritance tax for farms as necessary for the sustainability of public services such as the NHS,Victoria Vyvyan, president of the CLA, said she left the meeting with “boiling blood”.

“They were adamant and deaf to what we trying to say,” she said,The Treasury has been contacted for comment,Just in: Thames Water’s Class B creditors have been granted permission to appeal today’s court ruling in favour of their rival Class A creditors,The Class B creditors are lower-ranked in the pecking order, meaning they would be repaid after the As,The Bs had proposed a rival debt restructuring plan to the one approved today – which had a lower interest rate.

The judge, though, was withering in his assessment of the Class B’s offer.He wrote in his judgment that “I am very far from satisfied that the Class B AHG have made a binding commitment” for their own £3bn plan.He also wrote that he was “less than impressed” by the evidence of one of the class B investors, an investor from hedge fund Polus Capital.Newsflash: Millions of households acrss Britain face a greater than expected increase to their energy bills of £85 a year from April after Europe’s gas storage levels slumped, according to analysts.The average gas and electricity bill for households across England, Scotland and Wales is expected to rise by nearly 5% from April to £1,823 a year for a typical household under the energy regulator’s price cap.

The forecast by the influential consulting firm Cornwall Insight is higher than its earlier prediction that prices would rise to £1,785 a year this spring after colder weather and limited renewables caused gas storage levels to fall across Europe.The energy industry regulator for Great Britain, Ofgem, will confirm the figure for the energy price cap covering the three months from 1 April on 25 February.The regulator increased the cap in January by 1.2% to a rate equivalent to £1,738.Dr Craig Lowrey, Principal Consultant at Cornwall Insight, says:“Households have been hit hard over the past few months, and with bills set to rise for a third consecutive time the pressure is not letting up.

While we’re not seeing a return to the peak of the energy crisis, the market is more volatile than it has been in quite some time, and households are bearing the brunt of cold weather and low gas storage levels across Europe,Over in Germany, investor morale has risen at the fastest rate in two years this month, on hopes that the economy will pick up under a new government after Sunday’s election,The ZEW economic reseach institute has reported that investor morale improved this month; its economic sentiment index increased to 26,0 points from 10,3 points in January.

Analysts polled by Reuters had pointed to a reading of 20,0,ZEW president Achim Wambach says:“This rising optimism is probably due to hopes for a new German government capable of action,”📈 #ZEWEconomicSentiment improves significantly in February 2025 and stands at 26,0 points.

“This rising #optimism is probably due to hopes for a new German #government capable of action,” comments #ZEW President @AchimWambach.https://t.co/LVGlr5Ou5P pic.twitter.com/0CBNVkRmDQThe centre-right CDU party are leading in the polls, followed by the far-right AfD, with current chancellor Olaf Scholz’s SPD party third.

A Liberal Democrat MP is vowing to appeal against today’s High Court judge’s decision to approve plans for a £3bn rescue loan for Thames Water from some of its existing creditors.Charlie Maynard, MP for Witney in Oxfordshire, has claimed that the restructuring approved today was “simply throwing good money after bad”.Maynard had led a group of clean river campaigners arguing that Thames Water should be put into a government-handled administration, rather than getting a loan lifeline.At a hearing in London earlier this month, lawyers for Maynard said that the company plan was a “poor short-term fix” and a “bridge to nowhere”, and that the company should be put into special administration (SAR) instead.And today, Maynard says (via PA Media):“I stand by my evidence to the court that allowing Thames Water to take on £3 billion more debt is not in the interests of their millions of customers.

“They will all be paying the price for this futile, expensive and extremely short-term bailout.“This restructuring is simply throwing good money after bad.The money from our bills which is being spent on interest repayments is desperately needed to repair water infrastructure, improve customer service and clean up our rivers.“I intend to keep fighting for Thames Water’s customers by appealing this judgment.“The only way to get Thames out from under this mountain of debt and back onto a stable financial footing at this point is to put the company into special administration with a swift exit plan.

”The number of companies and individuals falling into insolvency in England and Wales jumped, year-on-year, last month,New data from the Insolvency Service shows there were 1,971 registered company insolvencies in England and Wales in January 2025, 6% higher than in December 2024,and 11% higher than in January 2024,This included 269 compulsory liquidations, 1,546 creditors’ voluntary liquidations (CVLs), 142 administrations and 14 company voluntary arrangements (CVAs),Company insolvencies over the past year have been slightly lower than in 2023, which saw a 30-year high annual number, but have remained high relative to historical levels, the Insolvency Service says