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Heads Turn to No. 10 as UK Economy Contracts: The London Rush

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(Bloomberg) — After the coronavirus crisis, inflation crisis, government crisis and gilt-markets crisis, you would be forgiven for feeling exhausted at the news that today’s GDP data only marks the start of what is expected to be a long recession. Yet we must only wait a few more days to find out what the men in charge of the state’s finances, Rishi Sunak and Jeremy Hunt, have in store to navigate the economy out of its malaise. Something to look forward to over the weekend?

 Here’s the key business news from London this morning:

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In The City

GDP: The UK economy shrank in the third quarter, marking the start of what is expected to be a protracted recession.

  • Gross domestic product fell 0.2%, meaning Britain is the only Group of Seven economy that has yet to fully recover from the pandemic with output 0.4% below pre-Covid levels

Heathrow: The UK’s largest airport said it won’t need another passenger cap over the Christmas period, despite potential strike action in a number of areas, including the border force.

  • That return to operations is being supported by the airport’s efforts to recruit and train around 16,000 members of staff over the last year, setting it up to return to pre-pandemic employment levels by next summer

Pennon Group Plc: South West Water will refund customers in Cornwall £30 if they manage to reduce consumption enough to return the Colliford reservoir to 30% capacity by the end of the year.

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  • In total, the incentive scheme would reduce Pennon’s revenue by about £10 million, but relieve pressure on water resources in Cornwall that have been impacted by a very hot summer and elevated customer demand 

Redrow Plc: The homebuilder expects its revenue to be flat year on year, although it’ll take a hit to its operating margin. 

  • Chairman Richard Akers said the recent instability in financial markets has had a “negative impact” on the housing market, echoing comments from other homebuilders

In Westminster

Rishi Sunak faces an extraordinary balancing act in his autumn budget next week. He needs to appease financial markets with a package of spending cuts and tax increases, while also winning over disgruntled voters. Jeremy Hunt is planning a spending freeze after Britain’s next general election, a person familiar with the chancellor’s thinking told Bloomberg. Here’s what else might be announced on Thursday. 

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Meanwhile, Sunak said he is “confident” that the post-Brexit dispute over Northern Ireland can be resolved, a latest positive note as UK-EU relations continue to thaw.

In Case You Missed It 

Britons are sacrificing nights out and new clothes for gym memberships and streaming subscriptions, a new survey shows. 

Crypto can survive the possible demise of FTX, writes Bloomberg Opinion’s Tyler Cowen. 

Elsewhere, along with owning half of the world’s largest energy-drink company and two Formula One racing teams, Mark Mateschitz holds another distinction: Europe’s richest millennial.

Looking Ahead 

UK inflation data are due Wednesday, one day before the government delivers its Autumn Statement. 

Next week will also see a slew of FTSE 100 companies report results, including Vodafone Group Plc, Imperial Brands Plc and Burberry Group Plc. 

For a news fix when the day is done, sign up to The Readout with Allegra Stratton, to make sense of the day’s events.

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