finance

Risk of reversal

Source: Bloomberg Business

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Morning, I'm Louise Moon from Bloomberg UK's breaking news team, bringing you up to speed on today's top business stories.

Just as it was reaching more stable footing, the UK economy is at risk of stumbling.

British consumer confidence has plunged to a four-month low since the war in Iran broke out, and economists warn inflation could rise to more than double the Bank of England's target. Plus, there are questions over whether support for energy bills -- hinted at by Starmer and Reeves -- is even affordable, and how much extra borrowing markets will tolerate.

About eight in 10 are worried inflation will rise, according to a Barclays survey that gives the first indication of how the Iran war is impacting sentiment. The biggest concerns are fuel and energy bills. Almost half are taking actions to adjust, such as cutting energy use or saving more.

Given spending drives about 60% of economic activity, changes are rather crucial. The year had started off a little brighter, with inflation easing and confidence on the rise.

"A new, prolonged bout of uncertainty risks snuffing that out before it has had a chance to really get going," said Jack Meaning, Barclays' chief UK economist.

What's your take? Ping me on X, LinkedIn or drop me an email at lmoon13@bloomberg.net. Oh, and do subscribe to Bloomberg.com for unlimited access to trusted business journalism on the UK, and beyond.

What We're Watching

Housebuilder Persimmon cited "supportive" housing market conditions and expected benefits of government planning reforms, as it reported higher annual sales and profits. It said it's monitoring the Iran conflict, and the impact that could have on cost inflation and interest rates. Shares surged in early trading.
Domino's Pizza Group got a last minute boost from the Christmas period, helping 2025 sales rise marginally. While it says that positivity has carried over into the start of this year, the chain is still contending with a tough consumer backdrop, plus higher investments and supply chain costs. Shares rose 5.5%, having shed about 36% over the past 12 months.
In an unintended consequence, finance workers could benefit from changes to employment rights designed to protect those in low-paying or insecure jobs. The financial cap on unfair dismissal claims will be scrapped from January, in turn giving high-earners more incentives to take their former employers to court. That's according to the government's own economic analysis.
Plus, all but two FTSE 100 firms had at least one ethnic minority board member last year, a record representation, according to a government-backed study. Ethnic minorities now hold 20% of UK blue-chip board seats, while 10 years ago more than half were all-White.

Global Catch-Up

Markets buffeted by war, AI stress and private credit cracks all at once.
Senior bankers in Asia quit for rivals as talent fight intensifies on deal flow.
Australia gives asylum to five Iranian female footballers on safety fears.

Markets Today: Rapid Reversal

Here's your daily snap analysis from Bloomberg UK's Markets Today blog:

Those who subscribe to the mantra of not panicking may feel a degree of vindication today as US President Donald Trump's comments signaling the war Iran war may be coming to an end spark a cooling in oil and gas prices and all that goes with them.

Stocks are rebounding in Asia, with Europe set to follow suit and assets that had been under pressure like gold are unwinding their declines. The dollar is weaker and peer currencies, including the pound are strengthening once again.

New from Bloomberg Weekend

Key to the UK is what it means for inflation. Yesterday's oil price spike accelerated a dramatic repricing of bets on the Bank of England's rate path, swinging to fully price in a rate hike for this year at one point. Today, easing energy prices have prompted a rethink, with more than a 50% chance of a reduction again seen. It's not the two cuts that were seen at the start of the month, but it takes things back to where they were towards the end of last week. Swaps used to price mortgages are also falling once again.

The instability is by no means over, but it's another reminder that things can change very quickly indeed.

What's Next

A host of smaller firms are reporting tomorrow, as earnings season winds down. Watch for full-year numbers from recruiter Robert Walters, after findings show the jobs market slowdown is easing, builder Balfour Beatty, whose new finance chief starts later this year, and Hochschild Mining.

Pub Quiz

Nscale announced a $2 billion raise yesterday, placing it among Europe's most valuable startups. The AI data centre developer also named some high-profile business leaders as directors, including former Meta executive Sheryl Sandberg. Which other ex-Meta colleague also joined?

Clue: his pre-Silicon Valley life was as an MP.

[Yesterday's answer: The pub near Chancery Lane named after a 1970's Saatchi & Saatchi ad is called The Pregnant Man.]