Time to wrap up.

Trade friction caused by the Brexit deal has pushed down import and export volumes, and the problem is getting worse, a study has warned.

Aston University found there has been a 27% drop in UK exports and a 32% decline in imports from the EU since the UK-EU Trade and Cooperation Agreement (TCA) was implemented in 2021.

Lead author, Professor Jun Du of Aston University says:

“The Trade and Cooperation Agreement introduced substantial barriers and there are ongoing and marked declines in the value and variety of UK exports and imports. Without urgent policy interventions, the UK’s economic position and place in the global market will continue to weaken.”

The report came out hours before news broke that the full implementation of an EU entry-exit system introducing fingerprinting and facial recognition checks at ports and airports is expected to be delayed again amid fears over congestion and long queues.

Germany’s economic problems are also worsening, with investor confidence dropping to a near one-year-low this month.

In the technology sector, Microsoft has unveiled a huge $60bn share buyback programme…

…while analysts have warned that demand for Apple’s new iPhone may be lower than hoped….

…and Meta is putting Instagram users under the age of 18 into new “teen accounts” to allow parents greater control over their activities.

The US S&P 500 share index has hit a new alltime high, a day before the US Federal Reserve is expected to start cutting US interest rates.

The rally followed encouraging economic data today including a small rise in US retail sales and a pick-up in manufacturing output.

UK energy Ed Miliband has pledged to take on opponents to the government’s rollout of wind turbines, solar farms and pylons.

Shares have closed higher in London, with the FTSE 100 share index ending 31 points higher at 8309, up 0.4% today.

That’s its highest closing level in a fortnight.

US manufacturing output jumped last month, another sign that the economy wasn’t sliding into recession.

In August, US industrial production rose 0.8% after falling 0.9% in July, new data from the Federal Reserve shows.

The narrowed measure of manufacturing output rose by 0.9%, more than recovering from the 0.7% drop in July.

This was partly due to a recovery in production of motor vehicles and parts, which jumped nearly 10% in August after dropping roughly 9% in July.

Just in: US retail sales inched up by 0.1% last month.

That’s stronger than the 0.2% fall expected in August, and suggests consumer spending remained solid despite signs that the US economy has been weakening.

Michael Brown of brokerage Pepperstone says:

The headline beat represents the 5^th straight August in which retail sales has surprised to the upside. Meanwhile, the control group metric, which broadly represents the basket used in the GDP release, rose by 0.3% MoM for the second straight month.

In other media news….The Guardian’s parent company has announced that it is in formal negotiations with Tortoise Media over the potential sale of the Observer, the world’s oldest Sunday newspaper.

Guardian Media Group (GMG) told staff it was in negotiations with the Observer after being approached with an offer that was significant enough to look at in more detail.

The company said it had chosen to be transparent about the negotiations despite the fact that much of the detail of the talks remained commercially sensitive.

Observer staff were told the offer from Tortoise represented a significant investment in the title as a standalone product that would help safeguard its future.

The Guardian Media Group chief executive, Anna Bateson, said:

“This is an exciting strategic opportunity for the Guardian Media Group. It provides a chance to build the Observer’s future position with a significant investment and allow the Guardian to focus on its growth strategy to be more global, more digital and more reader-funded.”

Tesco is hiring 300 technology professionals a year as the supermarket’s boss Ken Murphy says that the latest Artificial Intelligence technology will “completely revolutionise how customers interact with retailers.”

Murphy told the FT Future of Retail conference in London:

“We’re very excited and a little nervous about what’s coming, while we’re in no doubt that is going to be pretty seismic when it comes.”

He said machine learning developed in the last 20 years had already “radically improved everything from supply chain efficiency to pricing, promotional models, the demand planning, forecasting and picking algorithms [for preparing parcels for online shopping].”

He said the technology had moved on dramatically in the past 12 months and was now less prone to making errors and able to learn and improve based on live information.

Generative AI now “moves the game on dramatically,” according to Murphy, and will help personalise communications and marketing with shoppers especially via the
supermarket chain’s Clubcard loyalty scheme.

He said the technology could analyse shopping patterns so that in future it could start “nudging” them so that they could, for example, stop wasting food by buying too much, be guided towards good deals on items they regularly bought, or reduce their salt intake.

Murphy said:

“How customers interact with us in the future will be truly powered and driven by AI
in almost every facet of their business.”

Murphy’s comments come amid an apparent surge in the use of AI in retail with Marks & Spencer recently revealing it is using the technology to advise shoppers on their outfit choices and write product descriptions for its website.

John Lewis, meanwhile, said AI had helped it relaunch a more targeted
version of its historic “never knowingly undersold” price promise.

Tesco already has 5,000 people in its technology team and Murphy said that number continued to grow rapidly as the group was often developing its own software. He said there was “a war for talent in technology, and particularly once you start moving into AI,” but Tesco was finding itself able to hire appropriate workers as competition from tech start-ups has diminished – with for example as fast track grocers, which bubbled up quickly during the pandemic and have largely disappeared.

He said that Tesco did not see AI as a replacement for people but as an “enhancer of what people do for the business and what they do for customers,” by helping take away “mundane tasks” so they could focus on service.

Meta is putting Instagram users under the age of 18 into new “teen accounts” to allow parents greater control over their activities, including the ability to block children from viewing the app at night.

In an announcement made a week after the Australian government proposed restricting children from accessing such platforms, Meta says it is launching teen accounts for Instagram that will apply to new users. The setting will then be extended to existing accounts held by teenagers over time.

Changes under the teen account setting include giving parents the ability to set daily time limits for using the app, block teens from using Instagram at certain times, see the accounts their child is messaging and viewing the content categories they are viewing.

Teenagers signing up to Instagram are already placed by default into the strictest privacy settings, which include barring adults from messaging teens who don’t follow them and muting notifications at night.

French power prices turn negative for several hours today, Bloomberg reports.

It’s due to low demand combines with an increase in wind generation and strong solar output.

Bloomberg says:

French intraday prices are trading as low as -€20 a megawatt-hour on the Epex Spot exchange. Electricity demand is persistently undershooting the daily estimates made by grid operator RTE as European economies struggle with little or no growth.

This is reminiscent of the drama of April 2020, when the price of US oil turned negative for the first time ever after demand dried up in the pandemic.

The culture secretary has said that the UK TV industry needs to hire more people from working-class backgrounds, and that it is “shameful” that programme-making remains rooted in London and the South East of England.

Lisa Nandy, giving her first major speech on media and broadcasting at the Royal Television Society conference on Tuesday, said that just 8% of those working in the UK TV industry identify as from a working class background.

Nandy said:

“For all of the efforts made by many of you in this room, it should shame us all that television is one of the most centralised and exclusive industries in the UK.

Eight per cent - the proportion of working class people in TV. Twenty three per cent - the proportion of commissions made by companies based outside of London. None of this is inevitable.”

Nandy said that while there have been significant moves in recent years by broadcasters to move staff and operations out of London, notably by the BBC and Channel 4, the decision-making often still remains in the capital.

“If you’ve moved jobs and people and content, but the heads of departments and commissioners are still in an office in London, do something about it,” she said, adding:

“It is my belief that an industry that belongs to the nation is an industry that will not just survive but thrive. That is what I want to see. We will do everything we can to put rocket boosters under your efforts, but that effort in the first place belongs to you all.”

In the energy sector, Ed Miliband has vowed to take on the nimbys opposed to the government’s rollout of wind turbines, solar farms and pylons across the UK as a matter of “national security” and “economic justice”.

The energy secretary used his first big public address on Tuesday to argue in favour of speedy consent for new energy infrastructure to break the UK’s reliance on fossil fuels and avoid a repeat of “a crisis of the scale we have been through, with such devastating effects” in future.

Miliband promised to “take on the blockers, the delayers, the obstructionists” which have opposed the new government’s plans to accelerate the UK’s progress towards a clean energy system by the end of the decade.

He told Energy UK’s annual conference in London on Tuesday that the government’s manifesto pledge was “the national security, energy security, economic justice fight of our time”.

Mike Childs, head of science, policy and research at Friends of the Earth, says the UK must press on with clean, green energy infrastructure:

“Energy bills are already sky high and are set to rise again from next month, because the UK is hooked on gas. For too many people this has meant making the choice between heating and eating. Ramping-up the deployment of cheap, homegrown renewables can make the UK more energy independent, cut harmful emissions and lower bills for good.

“Friends of the Earth analysis has shown we could produce 13 times more energy from onshore wind and solar farms in England even when protected landscapes such as national parks and areas of outstanding natural beauty are excluded.

“Opinion polling shows time and time again that most people support wind and solar, so whilst communities must have a voice in planning decisions and should directly benefit from clean energy projects, we can’t allow the voices of a minority to block necessary developments.

With devastating flooding hitting Europe this week, there is an urgent need to take action to prevent the worse of climate breakdown and boost energy security, this means the UK must get building the clean, green energy infrastructure that is essential to growing the economy and creating thousands of new, long-term jobs.”

Germany is the most unloved stock market in Europe, a new poll from Bank of America (BofA) shows.

BofA’s latest European Fund Manager Survey also found that the UK remains the most preferred equity market in Europe.

The survey also found that investors are “increasingly bearish” (ie, less optimistic) on European equities in the near term. It says:

A net 20% of investors see downside for European equities over the coming months, a year-to-date high, with a plurality of 35% seeing weakening growth momentum as the most likely catalyst for a correction.

A net 43% still project upside for the market over the coming twelve months, but this is down sharply from 62% last month.

Hopes of a recovery in Germany’s economy are fading, according to the latest poll of investor sentiment.

In a reminder that all isn’t rosy across the channel, the ZEW indicator of economic sentiment for Germany has fallen to just 3.6 points, down from 19.2 points in August. That’s the lowest reading since last October.

The survey found that economic optimism has “almost completely dwindled”, while investors’ assessment of the economic situation in Germany also worsened.

ZEW president professor Achim Wambach says:

“The hope for a swift improvement in the economic situation is visibly fading.

In the latest survey, we once again observe a noticeable decline in economic expectations for Germany. The number of optimists and pessimists is now evenly balanced.”

Germany’s economy is on the brink of recession, after shrinking slightly in the second quarter of the year. High energy costs have hit its industrial base, which is also struggling to cope from competition from Chinese carmakers.

Netflix co-chief Ted Sarandos has defended Baby Reindeer, which is the subject of a £133m ($170m) law suit filed by the real-life woman portrayed as the stalker in the hit show, saying that it is “abundantly clear” that it is a dramatised story.

The black comedy-drama, which picked up six Emmy awards on Sunday night, has become one of Netflix’s biggest hits of all time.

The series is the account of creator and star Richard Gadd, who plays the lead role of comedian Donny Dunn, and his experience with a stalker known as “Martha”.

Following the debut of the series, which opens with the line “This is a true story”, Fiona Harvey came forward identifying herself as the “real Martha”.

Harvey has filed a lawsuit in California against Netflix alleging defamation, intentional infliction of emotional distress, negligence, gross negligence and violations of her right of publicity.

“We are facilitating story tellers to tell their stories,” said Sarandos, speaking at the Royal Television Society conference in London this morning.

“This is Richard’s true story. Baby Reindeer is his story, he told his story, it is not a documentary.”

In an interview with journalist and writer Kirsty Wark he was asked if the controversy about Netflix labelling Baby Reindeer as a “true story” might lead to the streamer having a “stronger editorial grip”.

In the show, Gadd’s stalker was imprisoned. In real life, the alleged stalker says she has received no conviction.

“There are elements of the story that are dramatised,” said Sarandos.

“It is abundantly clear that there is dramatisation involved. This debate [about Baby Reindeer’s status as a true story] is not happening anywhere else in thew world. Just the UK.”

In his Emmy awards acceptance speech on Sunday, Gadd urged aspiring writers to “take risks”.

“The only constant across any success in television is good storytelling,” he told the audience.

“Good storytelling speaks to our times… take risks, push boundaries, explore the uncomfortable, dare to fail in order to achieve.”

On Tuesday, Sarandos said that Netflix has just completed a “first look” deal with Gadd for his next projects.

Last week, a federal judge in the US set the trial date for the Baby Reindeer case for 6 May next year.

The UK government has downgraded the risk rating on a variety of fruit and vegetables from the EU and Switzerland, meaning they can be imported without any checks or charges even once delayed checks finally come in.

And my colleague Jack Simpson has the list, complete with translations from Latin (for the benefit of any old Etonians reading.)

• Root and tubercle vegetables (not including ware or seed potatoes): Yams, beets, parsnips, turnips, rutabagas, carrots, yuca, kohlrabi, onions, garlic, celery root.

• Fruit of Fragaria L: Strawberries

• Fruits of Malus Mill: Apples

• Fruits of Persea americana Mill: Avocado

• Fruits of Pyrus L: Pear

• Fruit of Vaccinium L: cranberry, blueberry, bilberry (whortleberry), lingonberry (cowberry), and huckleberry.

• Fruit of Rubus L: Raspberries, blackberries, and dewberries

The change should mean there won’t be extra friction at the border when these fruit and vegetables are imported to the UK.

Jack reported last night that the planned post-Brexit checks on fruit and vegetables brought into Britain from the EU have been delayed for the third time, until next July, so ministers can judge the impact of the new rules.

The future of shipmaker Harland & Wolff remains uncertain today, after the company announced on Monday it expects to fall into administration soon.

The company’s interim executive chairman Russell Downs has said there is a strong case for keeping the company’s four shipyards under a single owner.

He told the BBC’s Today programme that keeping the yards together was “sensible from an operating perspective”.

He added:

“Some yards may be owned by one owner with other yards owned by another, so we’ll just have to see where the process gets to.”

Downs said all the yards currently have work ongoing, and a “strong and capable business plan”, that will see them flourish again in future, once the current financial difficulties have been overcome.

After months of fraught negotiations as Harland & Wolff scrambled to find funding to upgrade the shipyards, the company announced yesterday that it is insolvent and expects to appoint administrators from Teneo soon.

Red tape on British businesses created by the Brexit trade deal has led to a sharp fall in UK-EU goods trade, a new report shows.

Academics at Aston Business School have analysed the impact of the Trade and Cooperation Agreement (TCA) on UK-EU trade relations – and found that trade is down by over a quarter.

They say:

The findings reveal a sharp decline in both UK exports and imports with the EU, underscoring the enduring challenges posed by Brexit on the UK’s trade competitiveness.

Between 2021 and 2023, monthly data show a 27% drop in UK exports and a 32% reduction in imports to and from the EU, the report shows.

It also shows there has been a significant reduction in the range of goods the UK trades with the EU, due to the “profound and ongoing stifling” effects of the TCA.

This includes a “significant decline” in consumer goods exports to the EU and corresponding UK imports, which suggests the UK is dropping out of EU value chains.

However, the UK remains dependent on the EU for intermediate and capital goods.

And worryingly, these problems are expected to intensify.

The report says:

The study highlights that the negative impacts of the TCA have intensified over time, with 2023 showing more pronounced trade declines than previous years. This suggests that the transition in UK-EU trade relations post-Brexit is not merely a short-term disruption but reflects deeper structural changes likely to persist.

The key problem is that the TCA, agreed on Christmas Eve 202 by Boris Johnson’s government, has created many non-tariff measures (NTMs) – such as checks on goods - which have gummed up the flow of trade.

Agriculture and food products exports have been particularly impacted, the report shows.

Last night, we reported that planned post-Brexit checks on fruit and vegetables brought into Britain from the EU have been delayed for the third time, amid concerns from suppliers that they could lead to higher prices for shoppers.

Elsewhere in the tech sector, Amazon has announced it would require employees to return to the office five days a week, from the start of next year.

Andy Jassy, Amazon’s CEO, said in a note to employees.

“We’ve decided that we’re going to return to being in the office the way we were before the onset of COVID. When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant.”

The e-commerce giant’s previous office attendance requirement for its workers was three days a week. Amazon workers can claim “extenuating circumstances” or request exceptions from senior leadership, according to Jassy’s memo.

“If anything, the last 15 months we’ve been back in the office at least three days a week has strengthened our conviction about the benefits.”

He cited improved collaboration and connection between teams as reasons for the new requirement as well as the ability to “strengthen our culture”.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

It’s a tale of two tech companies this morning, as Microsoft announces a monster cash return to shareholders… and Apple is hit by fears of weak demand for its new iPhone 16.

Microsoft surprised Wall Street last night by unveiling a new $60bn (£45bn) stock-buyback program – a way of returning excess cash to investors – and raising its quarterly dividend by 10%.

The plan matches Microsoft’s largest ever share buyback plan, according to Bloomberg.

The scale of the move was unexpected, as Microsoft has been ramping up its investment to support artificial intelligence. The company had also disappointed shareholders at the end of July when it reported a slight slowdown in growth at its Azure cloud computing arm.

Its net income in the last year rose 22%, to $88bn, leaving it with over $75bn of cash on its books.

Microsoft is currently the world’s second largest company, worth around $3.2tn, behind Apple (at $3.3tn).

That gap narrowed yesterday, as Apple’s shares fell by 2.8% following analyst report that demand for the iPhone 16 was weaker than hoped.

Early pre-order data from BofA Global Research revealed shorter global shipping times for the iPhone 16 Pro models compared with last year’s 15 Pro models, in the first three days of pre-order sales.

TF International Securities’ analyst Ming-Chi Kuo calculated that pre-order sales for the iPhone 16 are around 12.7% lower than for last year’s iPhone 15.

Having analysed data on pre-order sales, delivery times and shipments, Kuo explained in a post on Medium:

The key factor is the lower-than-expected demand for the iPhone 16 Pro series.

However, not every analyst was concerned by the lack of meaningful growth in iPhone pre-orders.

D.A. Davidson analyst Gil Luria points out that the phone’s AI features are being rolled out gradually.

... which means the upgrade cycle will likely materialize over the next 12-18 months.”

The agenda

• 10am BST: ZEW index of German economic confidence

• 1.30pm BST: US retail sales for August

• 2.15pm BST: US industrial production for August

• 3pm BST: NAHB index of US housing market