BUSNESS LIVE: Wage growth slows; BT slashes pension deficit; Vodafone profits slump

UK interest rates will be cut as soon as May and fall to 4.25 per cent by the end of next year, analysts at Morgan Stanley have forecast.

The Wall Street bank’s prediction points to a faster series of cuts than predicted by the wider market – and could spell relief for millions of hard-pressed borrowers.

Divisions have opened up at the Bank of England over when the first cut should come.

The Bank’s chief economist Huw Pill said last week that it ‘doesn’t seem totally unreasonable’ to expect it to happen next August.

Vodafone saw a 44.2 per cent slump in operating profits in the first half year to €1.7billion (£1.5billion), as a result of business disposals, ‘adverse’ foreign exchange movements, and a weaker performance from its associates and joint ventures businesses.

But the telecoms giant reported an acceleration in service revenue in the second quarter after Germany, its biggest market, returned to growth.

Vodafone, which announced the sale of its Spanish business and the merger of its UK unit with Hutchison’s Three in the last six months, reiterated its guidance for adjusted earnings to be broadly flat at roughly £12billion for the full year.

Chief Executive Margherita Della Valle said Vodafone had delivered improved revenue growth in nearly all of its markets in the first half of its financial year.

‘Our focus on customers and simplifying our business is beginning to bear fruit, although much more needs to be done,’ she said.

BT Group has valued its pension funding deficit at £3.7billion, well down from £8billion in 2020, and the telecoms firm has said its annual contribution amounts will remain unchanged.

BT will pay £600million into one of the country’s biggest pension schemes each financial year until 2030, plus £180million under an asset-backed funding arrangement.

Otto Thoresen, chairman of the BT Pension Scheme, said it remained on course to be fully funded by 2030, due to a framework that was agreed in 2020.

‘The BTPS continues to be on track to fulfil its commitments to members, despite high levels of macroeconomic volatility and uncertainty,” he said in a statement.

‘Our deficit is reducing, funding levels have improved and we remain on course to be fully funded by 2030.’

Heathrow Airport has become the fourth busiest airport in the world after a bumper half-term.

Some 7m passengers travelled through the west London airport last month. This was up 19 per cent compared to October 2022 when 5.9m flew through the airport.

UK wage growth slowed to 7.7 per cent in the three months to September in a fresh boost for the Bank of England’s fight against inflation.

Office for National Statistics data shows wage growth was in line with forecasts in the third quarter, slowing from 7.9 per cent in the previous three months when the rate was at its highest since the data collection began in 2001.

Separate data shows the labour market was largely unchanged for the quarter.