The GBP EUR exchange rate rallied into the weekend after the UK’s GDP was revised higher meaning the economy was only 3.3% lower than its pre-virus highs. In a week light on economic data, the pair will look to news headlines and analysts will consider the rate situation after last week’s inflation in Germany and Europe came in at 4.1% and 1.9% respectively.
The GBP to EUR trades at 1.1690 and is pressing the 1.1700 level once again.
UK business confidence ‘falls off a cliff’ to lockdown levels in face of rising costs
The confidence of company bosses in the UK economy “fell off a cliff” in recent weeks over uncertainty and rising costs, according to a survey.
The Institute of Directors (IoD) said that the confidence barometer had tumbled back to levels last seen in February, at the height of the third lockdown.
Three quarters of the 635 directors surveyed said they expected business costs to be higher in the next 12 months compared with last year.
The IoD blamed the government’s decision to break its tax pledge and increase national insurance contributions of both workers and employers to fund health and social care. Businesses have said that this will act as a drag on hiring, at the same time as the coronavirus furlough support scheme stops.
Kitty Ussher, chief economist at the IoD, said the business environment has deteriorated “dramatically” recently.
“Following a period of optimism in the early summer, people running small and medium-sized businesses across the UK are now far less certain about the overall economic situation, and the IoD Directors’ Economic Confidence Index fell off a cliff in September. A higher proportion of our members expect costs to rise in the next year than expect revenues to rise,” she said.
“This is not helped by the government’s recent decision to raise employers’ national insurance contributions, which acts as a disincentive to hire just when the furlough scheme is ending.”
Boris urges businesses to raise worker’s wages
The Prime Minister urged Britain’s bosses to give the country a pay rise – as he warned the era of importing cheap foreign labour was done.
Boris Johnson said that low wages were playing a key role in the crippling shortages currently affecting everything from fuel supplies to supermarket supplies.
And he admitted for the first time that the UK’s supply problems could continue up to Christmas.
The PM said that the festive period would be ‘considerably better’ than it was last year when millions were banned from seeing their families, but he refused to rule out the possibility of supply shortages on our shelves.
Foreign Secretary Liz Truss insisted the Government should not be blamed if shortages wreck Christmas, saying: “I don’t believe in a command-and-control economy, so I don’t believe the Prime Minister is responsible for what’s in the shops.”
The GBP v EUR is looking to try the 1.1700 level again after twice failing above 1.1800 this year.