Key events
Elsewhere in retail, the UK’s financial services watchdog has launched an investigation into WH Smiths over the accounting error that wiped almost £600m off the company’s stock market value overnight this summer.
WH Smiths told the City this morning that the Financial Conduct Authority (FCA) has begun an investigation into the company over its compliance with UK stock market listing rules.
WH Smith also revealed it will try to take back as much as £7m in bonuses from former executives….
France in danger if 2026 deficit not contained, central bank chief warns
France’s central bank governor has warned there could be market turmoil if the country can’t bring its budget deficit down.
Francois Villeroy de Galhau has told Le Figaro that France could face a market backlash if it fails to bring its deficit within 5% of economic output next year.
Villeroy said:
“Beyond a 5% deficit, France would clearly put itself in danger.
“The apparent calm of the markets can, in my experience, turn abruptly.”
After another year of political turmoil, France’s parliament is yet to agree a full budget for 2026.
Fourteen lawmakers from the French National Assembly and Senate are set to sit down in a joint committee on Friday to try to hammer out a deal on the state budget, Politico reports.
However, forging a consensus will prove difficult given the radical disagreements between political parties and the two chambers of the French legislature on budget priorities.
One bright spot in the UK economy today is that consumer confidence has risen in the run-up to Christmas.
The closely watched Consumer Confidence Index from GfK has improved by two points in December, to minus 17.
The research showed that all five of the survey’s measures increased for the month, bouncing back from a weak November which had been impacted by pre-Budget caution.
Neil Bellamy, consumer insights director at GfK, said:
“It’s tempting to see festive cheer in December’s two-point improvement in consumer confidence.
“This is a surprise finding for the UK high street because it contrasts with the Black Friday sales slump we reported on earlier this month.”
AI likely to displace jobs, Bank of England governor warns
The governor of the Bank of England has warned that the widespread adoption of Artificial Intelligence (AI) is “likely” to displace people from jobs in a similar way seen during the Industrial Revolution.
Andrew Bailey has told Radio 4’s Today programme:
“As you saw in the Industrial Revolution, now over time, I think we can now sort of look back and say it didn’t cause mass unemployment, but it did displace people from jobs and this is important.
“My guess would be that it’s most likely that AI may well have a similar effect. So we need to be prepared for that, in a sense.”
Back in October, the governor argued that the emergence of AI would not lead to a wave of job losses in the UK, but would require workers to be retrained.
Now, he points out that younger, inexperienced professionals are finding it difficult to secure entry-level roles due to AI.
Bailey explained:
“We do have to think about, what is it doing to the pipeline of people? Is it changing it or not?”
“I think if it’s people working with AI, I’m not sure it will change the pipeline, but I think we’re right to have a have an eye on that point.”
This morning’s borrowing figures show that the UK’s net debt-to-GDP ratio remains at levels last seen in the early 1960s:
The net debt-to-GDP ratio at the end of November 2025 was provisionally estimated at 95.6%, which is 0.3 percentage points more than a year ago.
November’s retail sales and public finances data reveal some tentative signs of improvement, says Paul Dales, chief UK economist at Capital Economics.
However, both are coming too late to make much difference to retailers in the so-called “Golden Quarter” and for the Chancellor after she tightened policy in the Budget in late-November, Dales adds.
Non-food retailers, such as department stores and clothing shops, bucked the downward trend last monh with a 1% rise in sales volumes.
The ONS says:
Department stores’ sales volumes rose, which some retailers attributed to longer Black Friday discounting, while retailers of footwear and leather goods also did well. Sales of automotive fuel recovered from last month’s fall, returning to just above September 2025 levels.
Retail sales fall as Black Friday effect fades
Retail sales across Great Britain fell in November, as cautious consumers cut back on their shopping ove the Black Friday period.
Retail sales volumes are estimated to have fallen by 0.1% in November, the Office for National Statistics reports, which may intensify fears that uncertainty ahead of the budget on 26 November cooled the economy.
Spending at non-store (online) retailers fell, while supermarket sales volumes fell for their fourth consecutive month, the ONS says, with retailers reporting low footfall. It suspects the “Black Friday effect” on the retail sector was was slightly weaker than usual.
ONS senior statistician Hannah Finselbach said:
“Retail continued to grow in the three months to November, helped by a strong performance from clothing and tech shops.
“This year November’s Black Friday discounts did not boost sales as much as in some recent years, meaning that once we adjust for usual seasonality, our headline figures fell a little on the month.
November’s drop follows a fall of 0.9% in October and a rise of 0.8% in September.
Introduction: UK government borrowing hits four-year low in November
Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s government borrowing has dropped to a four-year low in November, as higher tax receipts boosted the public coffers.
The Office for National Statistics has reported that UK borrowing – the difference between total public sector spending and income – dipped to £11.7bn in November; £1.9bn less than November 2024 and the lowest for any November since 2021.
This gap narrowed thanks to a £2.5bn increase in tax receipts to £63.5bn, including increases of £1.2bn in income tax, £400m in value added tax (VAT) and £400m in corporation tax receipts.
ONS senior statistician Tom Davies says:
“Despite an increase in spending, this month’s borrowing was the lowest November for four years. The main reason for the drop from last year was increased receipts from taxes and National Insurance contributions.
“However, across the financial year to date as a whole, borrowing is higher than last year.”
However, November’s borrowing is above forecasts – economists had expected borrowing to drop to £10bn.
And so far this financial year (since April), UK government borrowing has now risen to £132.3bn, £10.0bn more than in the same period in 2024.
The agenda
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7am GMT: UK retail sales for November
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7am GMT: UK public finances for November
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10.30am GMT: Russia’s interest rate decision
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11am GMT: CBI distributive trades
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3pm GMT: US home sales for November
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3pm GMT: University of Michigan US consumer confidence index
