ECONOMIC OUTLOOK

THE EU’s chief negotiator said UK financial services firms will definitely lose their “passporting rights” which enable them to do business in the EU after Brexit.

Michel Barnier said there would be no “opt-in” options for the UK, because “Brexit means Brexit”.

It risks more firms shifting operations to the continent so that they do not lose access to the EU’s 500 million consumers and 22 million businesses.

Inflation remained at a fiveyear high of 3% in October. The Office for National Statistics (ONS) said the pound’s weakness and rising food prices were the main contributors to keeping the CPI rate high.

However, a fall in the price of fuel helped keep a lid on inflationary pressures – and could be an early indicator that inflation has peaked and may start edging down in coming months.

Cheaper fuel helped reduce input costs for companies, a key influence on the price of goods produced by manufacturers.

Core CPI, which excludes volatile items such as petrol and food, also remained steady at 2.7%, below expectations of a rise to 2.8%.

UK wage growth continued to disappoint in the three months to September as real earnings growth remained negative. Weekly earnings grew at an annual rate of 2.2% between July and September, according to the ONS. Adjusted for inflation, real incomes fell by 0.5%, excluding bonuses.

Meanwhile, the unemployment rate held steady at 4.3%, its lowest level in 42 years, despite a slight fall in the number of people employed.

However, the Bank of England remains confident that the tight labour market will eventually result in wages being pushed up.

The Bank expects pay growth of 2-3% this year, and 2.5-3.5% in 2018. If inflation does begin to fall, this should mean wages start to grow in real terms again.

Retail sales were 0.3% lower in October compared with same month last year, the first annual fall since 2013, as higher inflation and warm weather dampened spending. Even so, sales were 0.3% higher than September, said the ONS.

“We are continuing to see an underlying picture of steady growth in retail sales, although this October suffered in comparison with a very strong October in 2016,” said ONS senior statistician Kate Davies.

Official figures for the housing market showed prices rising at 5.4% in the year to September, compared with 4.8% in August.

Property prices in the NorthWest and South-West of England saw the biggest increases of more than 6%. In London. However, annual house price growth slowed to 2.5%, from 2.7% previously.

The average UK house price was £226,000 in September, £11,000 higher than a year earlier.

In the capital, average property prices were lower for the second month in a row, at £484,000.