Crypto News: Sticking around

Hi, I'm Phil Aldrick, Bloomberg's senior economics reporter based in London. Here's today's Readout.

The easiest of Rishi Sunak's five new year pledges has just got a little bit harder to deliver. Inflation, he pledged in January, would be halved by the end of the year. Two months later, it's unchanged at 10.1% and making trouble for the Bank of England.

After Tuesday's strong wage growth, the consumer prices overshoot means a quarter point interest rate rise to 4.5% on May 11 is inevitable. Kitty Ussher, chief economist at the Institute of Directors, didn't mince her words: "The Monetary Policy Committee needs to raise rates again." Markets lifted their bets and now expect 5% by the end of the year.

The MPC's nine members didn't want this. They recently changed their guidance to give them a chance to end what has been the most aggressive rate rise cycle in 40 years. A seventh consecutive month of double-digit inflation put paid to those plans.

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The stories you need to know about this evening

The UK said a report of an alleged secret Chinese police station in south London is of "great concern."
AstraZeneca has said the UK and EU should do more to attract investment from the pharmaceutical industry and prevent companies going elsewhere.
Glencore said it's willing to raise its bid for Teck Resources with just one week to go before a pivotal vote on the Canadian miner's future.

Perhaps the most striking aspect of Britain's inflation is how sticky it is. In the UK, inflation is where it started the year. In Germany, it has fallen from 9.2% to 7.8%, in France from 7% to 6.6%, in the eurozone from 8.5% to 6.9%, and in the US from 6% to 5%.

Photographer: Hollie Adams/Bloomberg

A fairer comparison is not quite so stark. Because the UK energy price cap fixes household bills for three months, recent steep falls in natural gas prices lag those on the continent where pricing is more flexible.

Karen Ward, chief market strategist for Europe at JPMorgan Asset Management, reckons gas prices knocked 1.5 percentage points off eurozone inflation over February and March. Britain's moment, when the BOE can breathe a sigh of relief, will be in the April data, due next month. She thinks the household bills reset will automatically lower headline consumer prices by 2 percentage points.

If only that was the whole story. Unfortunately, core inflation that strips out volatile food and energy prices is higher in the UK than the eurozone and wages are rising faster than in the US. Last year's observation that Britain has the worst of both worlds — both heavily exposed to Europe's gas price shock and struggling with tight labor markets like the US — is truer than ever.

Not that the City's bankers care. Many are uprooting from London and resettling in Paris. The number of investment bankers and traders in France earning more than €1 million is up almost 80% since 2017.

Paris is making inroads into London's status as Europe's financial center due to Brexit, which ended the UK's passporting privileges. Speaking at the Bloomberg New Economy Gateway Europe conference in Dublin, Kristine Braden, chief executive officer of Citibank Europe, said the bank will be shifting more business from London to Europe as new regulations come into force.

On the same panel, Ryanair's chief executive Michael O'Leary agreed that Brexit will continue to be a "net negative" as the UK replaces EU rules this year and lamented the UK's "broken" labor market. There is hope for an improvement in EU relations, he said, if you look far enough ahead.

"In the next five to 10 years, quite a number of the Brexiteers will die. A huge majority of the younger people in the UK coming through are much more pro-European."

The London Stock Exchange has been a symbol of Britain's free-market economy since the 1980s, and is home to companies that dominate global industries.

However, trading volume has slumped in recent years and some British companies have picked other markets to list their shares. It appears to fit the narrative of a nation whose economy has run into trouble, hit by under-investment and the jolt to trade from Brexit.

But this piece from Bloomberg Quicktake sets out the complex factors at play.

Get ahead of the curve

London's housing crisis. Sales and construction completion levels for newly-built properties in London have plummeted to their lowest level in around a decade.

Unexpected jump. Morgan Stanley's traders beat estimates amid volatile markets in the first quarter as investment bankers and wealth managers also outperformed expectations.

Once-in-a-lifetime trip. French space balloon startup Zephalto is offering passengers the chance to travel to the stratosphere in a balloon, starting at €120,000 per person in 2025.

End of an era. Netflix is shutting down its original business of delivering DVDs by mail, 25 years after introducing a revolution in at-home TV viewing.

Another property purchase. Amancio Ortega, the billionaire founder of the Zara fashion brand, acquired an office building in central London for £82 million to add to his portfolio of prime real estate.

Ahead of next week's energy summit. A group of 40 European Union lawmakers have called on UK Prime Minister Rishi Sunak to scrap plans to develop the Rosebank oil and gas field.

1.4286 billion

India's population has surpassed this figure making it the world's most populous nation, overtaking China's 1.4257 billion people.

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Denham Place's history and close proximity to central London could push the price higher than £75 million. Mel Yates Photography

Business tycoon Mike Jatania is looking to sell a 12-bedroom mansion just west of London, in what would be one of the UK's biggest ever country house deals.