Introduction: ECB expected to cut interest rates today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Interest rates across the eurozone are likely to be cut today, as the European Central Bank attempts to support the euro economy as it reels from the damage caused by Donald Trump’s trade wars.
The ECB is widely expected to cut its key interest rates by a quarter of one percentage point. That would lower its deposit facility rate to 2%, and would be the eighth cut in a year.
A cut looks nailed on, after inflation across the eurozone fell to 1.9% last month, below the ECB’s 2% target for the first time since last September.
Markets are pricing almost a 100% probability of a quarter-point cut, reports Ronald Temple, chief market strategist at Lazard Asset Management, adding:
With ongoing declines in inflation and consistently dovish language from ECB members, a rate cut appears to be a done deal. The ECB has previously described 1.75%–2.25% as the range that would be considered neutral monetary policy. Any signals of a change in this view would be surprising.
I continue to expect rates to be reduced to 1.5% by year end given a more aggressive US trade posture against the European Union. Markets suggest a slightly less dovish outlook with rates ending the year just below 1.6%.”
Today, investors will also be interested to hear the ECB’s latest forecasts – economists expect cuts to its growth and inflation projections for next year.
The ECB may also signal that it could pause its rate cutting cycle over the summer, before reassessing the situation in September.
Christine Lagarde can also expect questions about her claim last month that the euro could take on a more global role, as the dollar loses influence amid the current trade turmoil.
Lagarde’s future could also come up, following claims that she has discussed cutting short her term as European Central Bank president to become chair of the World Economic Forum.
The agenda
-
7am: German factory orders for April
-
9am BST: UK new car sales report for May
-
9.30am BST: UK construction PMI report
-
1.15pm BST: European Central Bank interest rate decision
-
1.30pm BST: US trade data for April
-
1.30pm BST: US weekly jobless claims data
-
1.45pm BST: European Central Bank press conference
Key events
P&G to cut 7,000 jobs
Consumer goods giant Procter & Gamble has announced plans to cut 7,000 non-manufacturing jobs as part of an effort to improve productivity and fend off economic uncertainty.
P&G says it plans to cut 15% of its current non-manufacturing workforce over the next two years, but is not yet revealing how the axe will fall across its sites. P&G’s brands include Pantene hair products, Pampers nappies, Ariel and Lenor washing products and Fairy liquid.
Andre Schulten, P&G’s chief financial officer, and Shailesh Jejurikar, chief operating officer, revealed the plan at a Deutsche Bank conference.
They said:
Plans will be implemented over the next two fiscal years, allowing us appropriately sequence the delivery of important innovation and operational projects.
As we do this, our top priority remains delivering balanced growth and value creation to delight consumers, customers, employees, society and shareowners alike.
UK car sales: What the experts say
Here’s some reaction to this morning’s data showing that UK car sales rose in May, but Tesla registrations slumped by a third.
Ian Plummer, commercial director at Auto Trader:
“Despite recent geopolitical volatility, the fundamentals of the car market remain sound and the sharp rise in electric vehicle sales against last year demonstrates real momentum. Electric demand is being driven by new affordable models like the Renault 5 and the Hyundai Inster, along with fast growing Chinese brands like BYD and OMODA-JAECOO, which will be key to mass market adoption.
Around one in four of all new cars viewed on our website is electric and we know that when the price is right, drivers are keen to make the switch.”
John Cassidy, managing director of sales at Close Brothers Motor Finance:
“A slight uptick in new registrations could provide manufacturers with some optimism following a tough 6 months.
“Electric vehicle (EV) registrations continue to grow at a strong pace; though fleet registrations still skew the numbers, which still fall short of the Zero Emission Vehicle (ZEV) mandate targets. However, despite increased taxes and the removal of incentives, consumer appetite for EVs does appear to be increasing, boosted by an influx of new models coming to the market as Chinese manufacturers gain a larger market share. If the Government is to achieve its targets, it needs to ensure it doesn’t introduce any further measures which could deter potential EV buyers.”
James Hosking, managing director of AA Cars:
“The UK’s new car market delivered a solid performance in May, with registrations climbing as the industry begins to find its feet following a challenging start to the year. This growth suggests that buyers are slowly regaining confidence, aided by lower interest rates and attractive new car offers.
“The May uplift likely reflects a combination of pent-up demand from earlier in the year, strong fleet appetite, and the pull of the new 25-plate registration. These factors often combine to lift sales around this time of year, particularly for company cars and business fleets looking to take advantage of tax efficiencies.
“Private buyers remain more cautious, but the gradual improvement in borrowing conditions is helping to reduce monthly finance costs, making new models more accessible to a broader audience. It’s a fragile recovery, but a recovery nonetheless.
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA):
“The impact of pressures such as Employers’ National Insurance, the extension of Vehicle Exercise Duty and the Expensive Car Supplement to electric vehicles will be closely monitored moving forward as well as the uncertainty regarding the blocking/unblocking of US tariffs.
“Looking ahead, we are likely to see pressure on the new vehicle market, due to weak economic growth. We expect electric vehicles sales to continue to increase, however they still remain someway off the ZEV Mandate targets for 2025. Over many years franchised dealers have proven their resilience and this current period of economic turbulence is no difference.
“NFDA is looking ahead to the Government’s Spending Review next week and it provides a prime opportunity to clarify its objectives to reach the ZEV Mandate and wider net zero targets.”
Photo: Reynolds and Šefčovič in Brussels
UK construction firms cut jobs at fastest pace since August 2020
Ouch. UK construction companies are cutting jobs at the fastest rate since the first Covid-19 lockdowns.
Employment numbers across UK construction firms fell at the fastest pace since August 2020 last month, as builders shed workers following a slowdown in activity.
The use of subcontractors fell by the most since May 2020.
The latest S&P Global UK Construction PMI, just released, also shows that activity fell at a slower rate last month, as output and new orders both continued to decline.
House building was the weakest-performing segment, indicating that the government’s efforts to drive a surge of new homes is struggling.
The construction PMI has risen to 47.9 in May, up from 46.6 in April, showing that the sector shrank again, but at a slower rate (50 points signals stagnation).
Tim Moore, economics director at S&P Global Market Intelligence, says:
“The construction sector continued to adjust to weaker order books in May, which led to sustained reductions in output, staff hiring and purchasing. However, the worst phase of spending cutbacks may have passed as total new work fell at a much slower pace than the near five-year record in February.
Housing activity was the weakest-performing segment in May as demand remained constrained by elevated borrowing costs and subdued confidence. Commercial work was close to stabilisation after a marked decline in April, suggesting that fears about domestic economic prospects have abated after the initial shock of US tariff announcements.
Construction output continues to trudge along, last month at a slightly less dismal pace than previous months, largely due to commercial work picking up its workload. Meanwhile, new housing sped up its output descent in response to weak demand. As a result the construction sector… pic.twitter.com/qLYOTPEd54
— Emma Fildes (@emmafildes) June 5, 2025
Lisa O’Carroll
UK trade secretary Jonathan Reynolds has also called for reforms of the WTO, including changes to the much criticised dispute resolutions system which can also take years to settle disputes between trading nations.
Reynolds told the European Policy Centre security conference in Brussels:
“We do recognise that reforming and repositioning the WTO so that it can respond more effectively to the challenges of today is the only way to safeguard long term stability and growth tomorrow.
“Our eyes are fixed on greater flexibility in decision making, greater openness in the east of plurilaterals and building a fully functioning dispute settlement system,”
“Whilst the world has changed, it is changing, and it’s going to change more quickly in future, and that climate is uncertain and volatile.”
Arguing stronger ties with the EU and other allies were now more vital than ever, Reynolds added:
“the trees that survive the storms aren’t the tallest. They’re the ones whose roots are intertwined with their lives.
Šefčovič calls for WTO reform following Trump attacks
Lisa O’Carroll
The EU’s trade commissioner Maroš Šefčovič has called for deep reform of World Trade Organisation rules in the face of the continuing assault on the global rules based system by Donald Trump.
Just days after a series of meetings with the US, India, Australia and others, he said many developed economies were agreed that it was long overdue, my colleague Lisa O’Carroll reports from Brussels.
While the US trashes the rules based system, the rest of the world is pushing ahead with strengthening, but changing trade rules, was his message.
Šefčovič says:
“Just in the past two days, during the OECD trade ministerial [summit] the message was clear and unequivocal – deep reform of the World Trade Organisation is long overdue and urgently needed to match today’s realities.”
Speaking at the European Police Centre conference in Brussels, Šefčovič said the EU was “doubling down on the rules-based approach to trade” rather than joining Trump’s attack on decades old trading systems.
While the US seeks to coerce trading partners into deals, the EU was keeping an orderly position with the aim to improving prosperity, Šefčovič insisted, saying “We are here to improve the system, not to bend it to the point of breaking and certainly not to abandon it.”
He added the EU’s approach was this:
“We negotiate. We do not isolate. We do not leave the table… trade agreements are more than transactions. They are upgrades that empower our partners, helping them grow with us and creating a cycle of shared prosperity.”
He also warned that “China’s impressive rise must not come at the expense of the European economy” and that the EU was “rebalancing this relationship and establishing a level playing field in trade and investment, with symmetrical market opening.”
Earlier this week, Bank of England governor Andrew Bailey warned MPs that “the rules-based system is sort of dead”, which would have very serious consequences for the global economy unless policymakers can rebuild it.
UK car sales rise, but Tesla sales slide
The UK car market has returned to growth, new data shows, but sales of Teslas have fallen by a third.
Overall car registrations rose by 1.6% in May, to 150,070 units, according to the Society of Motor Manufacturers and Traders (SMMT). That’s the strongest May for new car sales since 2021, but 18% below pre-Covid levels.
The SMMT points out that this is only the second month of growth this year, “reflecting brittle consumer confidence and economic turbulence”.
May was another difficult month for Tesla. Registrations fell by 36% year-on-year, the SMMT reports, with just 2,016 cars sold, down from 3,152 in May 2024.
That’s despite rising demand for battery-powered cars, with BEV registrations up by a quarter year-on-year, to 32,738, up from 26,031 in May 2024.
Chinese electric carmaker BYD grew its UK registrations by 400% year-on-year, up from 596 last May to 3,025 this year.
Tesla has faced a consumer backlash this year due to Elon Musk’s support for Donald Trump – although Musk has been savaging Trump’s tax and spending bill this week – and for Germany’s far-right Alternative für Deutschland (AfD) party.
But demand for Teslas has also weakened ahead of a refresh of its popular Model Y car.
A Tesla spokesman told The Times yesterday that demand for the new version of the Model Y, which was Europe’s bestselling car as recently as 2023, would boost sales in June when UK deliveries start.
Mitie Group in takeover bid for Lord Ashcroft-founded Marlowe
Outsourcing group Mitie Group has launched a £366m takeover bid for smaller rival Marlowe.
Mitie, which provides security, cleaning and engineering services to public sector clients and private companies, has agreed a cash and share deal with Marlowe, which produces business-critical services and software.
Marlowe was co-founded by former Conservative Party deputy chairman Lord Ashcroft, and Alex Dacre, son of former Daily Mail editor Paul Dacre.
The deal values Marlowe’s shares at 466p. They’ve jumped by 8% this morning to 439p, having already surged yesterday following reports that the two companies were in talks.
Phil Bentley, chief executive officer of Mitie, says the deal will help Mitie transform into a “Facilities Compliance provider”:
With growing legislation around Fire, Security and Water & Air Quality, our clients need a partner who can also offer a broad range of Facilities Compliance capabilities. In a growing Testing, Inspection and Certification (TIC) market valued at £7.6 billion per annum, Marlowe stands out as a leader in Fire & Security and Water & Air and Asbestos compliance.
Adding Marlowe’s c.3,000 highly respected colleagues to Mitie’s capabilities and providing access to Mitie’s clients will generate significant revenue growth opportunities as well as immediate cost efficiencies.
Marlowe shareholders will get 1.1 New Mitie Shares and 290p in cash once the deal goes through. Mitie’s shares have fallen by 10% this morning, which will erode the value of the deal.
Lord A owns 19.5% of Marlowe’s shares, so he should receive around £44m in cash plus shares in Mitie worth roughly £25m.
Car tax error overstated UK inflation, ONS admits
The UK’s Office for National Statistics has admitted that UK inflation was overstated in April, due to an error in car tax data provided by the British government.
The consumer price inflation rate was overstated by 0.1 percentage points for the year to April, the ONS reports, because of an error in the Vehicle Excise Duty (VED) data provided by the Department for Transport, which is used to calculate consumer prices inflation.
The incorrect data overstates the number of vehicles subject to Vehicle Excise Duty (VED) rates applicable in the first year of registration.
This helped to push UK CPI inflation up to 3.5% in April, higher than expected.
The error could be expensive, as it also added 0.1 percentage points to the retail price index, which is used to set payments on index-linked UK government bonds.
The ONS does not plan to revise its inflation data, but will use the correctly weighted data now on, meaning no further statistics will be affected.
Wizz Air shares tumble after plane groundings hit profits
Budget airline Wizz Air has reported a plunge in profits, after almost a fiifth of its fleet were grounded last year due to engine problems.
Wizz Air’s shares have dropped by 24% this morning, after it reported that operating profits fell by 61% to €167.5m in the last financial year.
Wizz says it was “a year of significant challenges”, as an average of 44 aircraft were parked during the year, owing to issues with Pratt & Whitney’s Geared Turbofan (GTF) engines, which power many of its Airbus A320NEO planes.
József Váradi, Wizz Air’s CEO, says:
“I describe our fiscal year F25 with two words: resilience and transformation.
In an environment where rare challenges have become recurrent, Wizz Air has evolved structurally, embedding increased flexibility into our standard operating model. While often dismissed as ‘easier said than done,’ the past year’s events tested both our company and management. We emerged stronger, wiser, and better prepared.”
May was the busiest month for UK house sales since March 2022, new data from Rightmove this morning shows.
Across Great Britain, the number of sales agreed is now 6% ahead of the same period last year, Rightmove reports. But London is lagging, with sales just 1% higher than a year ago.
May is typically a busy month in the year for agreed sales, and last month’s was the busiest May since 2021.
Rightmove argues that May’s data suggests market conditions have improved, as home-movers carry on following the stamp duty increase at the start of April.
UK fintech Wise to switch main stock market listing to New York
UK fintech Wise has joined the ranks of companies looking to migrate to the US stock markets.
Wise, which floated in London less than four years ago, told shareholders this morning that it plans to switch its primary listing to New York, the latest blow to the London market.
Wise’s CEO, Kristo Käärmann, told the City:
As part of our next step on that journey, today we are announcing our intention to dual list our shares in the US and UK. We believe the addition of a primary US listing would help us accelerate our mission and bring substantial strategic and capital market benefits to Wise and our Owners.
These include helping us drive greater awareness of Wise in the US, the biggest market opportunity in the world for our products today, and enabling better access to the world’s deepest and most liquid capital market.
Wise was formerly known as TransferWise, which became the largest tech listing in the UK when it was valued at nearly £9bn after its 2021 stock market debut.
Käärmann adds that Wise plans to maintain a secondary listing on the London stock exchange, saying:
“A dual listing would also enable us to continue serving our UK-based Owners effectively, as part of our ongoing commitment to the UK. The UK is home to some of the best talent in the world in financial services and technology, and we will continue to invest in our presence here to fuel our UK and global growth.”
Several other UK-listed companies have recently shifted their listing to New York, including construction rental company Ashtead Group, and gambling giant Flutter.
German factory orders rise unexpectedly
German factory orders have jumped unexpectedly, defying forecasts that they would fall as Donald Trump’s tariffs disrupted trade.
Orders at German manufacturers rose by 0.6% in April, official data this morning shows, beating forecasts of a 1% fall.
Statistics body Destatis also reported that foreign orders declined by 0.3%, despite a 0.5% rise in orders from within the eurozone. Domestic orders increased by 2.2%.
Demand for data processing equipment, electronic, and optical products increased, while there was also a rise in new orders for transport equipment, and for metal products.
Introduction: ECB expected to cut interest rates today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Interest rates across the eurozone are likely to be cut today, as the European Central Bank attempts to support the euro economy as it reels from the damage caused by Donald Trump’s trade wars.
The ECB is widely expected to cut its key interest rates by a quarter of one percentage point. That would lower its deposit facility rate to 2%, and would be the eighth cut in a year.
A cut looks nailed on, after inflation across the eurozone fell to 1.9% last month, below the ECB’s 2% target for the first time since last September.
Markets are pricing almost a 100% probability of a quarter-point cut, reports Ronald Temple, chief market strategist at Lazard Asset Management, adding:
With ongoing declines in inflation and consistently dovish language from ECB members, a rate cut appears to be a done deal. The ECB has previously described 1.75%–2.25% as the range that would be considered neutral monetary policy. Any signals of a change in this view would be surprising.
I continue to expect rates to be reduced to 1.5% by year end given a more aggressive US trade posture against the European Union. Markets suggest a slightly less dovish outlook with rates ending the year just below 1.6%.”
Today, investors will also be interested to hear the ECB’s latest forecasts – economists expect cuts to its growth and inflation projections for next year.
The ECB may also signal that it could pause its rate cutting cycle over the summer, before reassessing the situation in September.
Christine Lagarde can also expect questions about her claim last month that the euro could take on a more global role, as the dollar loses influence amid the current trade turmoil.
Lagarde’s future could also come up, following claims that she has discussed cutting short her term as European Central Bank president to become chair of the World Economic Forum.
The agenda
-
7am: German factory orders for April
-
9am BST: UK new car sales report for May
-
9.30am BST: UK construction PMI report
-
1.15pm BST: European Central Bank interest rate decision
-
1.30pm BST: US trade data for April
-
1.30pm BST: US weekly jobless claims data
-
1.45pm BST: European Central Bank press conference
