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Summary

  1. FTSE closes lower after record mid-session high on Tuesday
  2. Pound rises back above $1.22 and €1.11
  3. Lloyds bank to cut 1,230 jobs
  4. Monarch keeps licence after £165m injection
  5. Samsung warns on profits after Note 7 pulled

Live Reporting

By Russell Hotten

All times stated are UK

Get involved

That's all from today's live page. We are off to stock up on Marmite in case it runs out.

Night, night.

Tesco vs Unilever: mutual dependency means a deal will be found

Emma Simpson

Business correspondent, BBC News

Pots of Pot Noodle
Tesco

Who should absorb the increase in costs as a result of the weaker pound? It’s the question that retailers have consistently been asked these last few months as import prices start to rise. 

Now this debate has exploded into the open with a stand-off between Britain’s biggest consumer goods company and its largest retailer, Tesco. Household staples, from Ben & Jerry’s ice cream and Pot Noodles, to Persil and Dove soap, are at stake. The extra spice to this story is that Tesco’s boss, Dave Lewis, spent most of his career at Unilever before being poached by Tesco. 

In the cut-throat world of grocery shopping, retailers are reluctant to pass on price rises to shoppers. But many suppliers are already seeing input costs rise because of the fall in the pound, although many will also have hedged their currency positions until at least the start of next year. 

So who ultimately takes the hit? One grocery insider says in the case of Unilever, the weak currency was a smokescreen to raise prices, as some of the products are made in the UK. Whatever the truth, this relationship is too important for the two sides not to reach a deal in the end.

Will the other big grocers follow suit?

Ice cream prices will rise, warns Unilever boss - before Brexit vote

Here's what the maker of Ben & Jerry's told Channel 4 News before June's referendum

Tesco: a wider problem

Tesco in dispute with Unilever over prices

Leading retail analyst Richard Hyman tells the BBC: "This shines a light on something that is going to be happening all the time. The problem is that retailers can't just put up their prices and get away with it.

"Over-supply of retailers means that for the past 24 months there has been food-price deflation. What makes them think they can just push prices higher?"

Silver lining? Probably not

Resolution Group head of research tweets:

And it other news...

Away from the Tesco story for a moment

Skyline of the City of London
Reuters

The still-tarnished image of City bankers may queer the pitch for the UK's Brexit negotiations, especially in relation to the financial services industry.

Says who? Says John McFarlane, who leads the lobby group TheCityUK. 

He told the Reuters news agency: "The financial services industry has not covered itself in glory. I will use the words "potentially politically toxic" in some of its aspect."

"The government is in a difficult position... coming out wearing on your sleeves 'we've got to save the financial services industry', is not politically smart" he added.

Poacher turned gamekeeper

Sky News senior political correspondent tweets:

Battle of the brands

Ben & Jerry's ice cream tubs
Tesco

It's still not entirely clear if Tesco is running low of Unilever products because there have been no deliveries, or if Britain's biggest supermarket has taken some off the shelves.

But it's not just in-store items that are affected. Brands including Marmite, Surf washing powder and Comfort fabric conditioner, mayonnaise maker Hellmann's, Pot Noodle and Ben & Jerry's Ice Cream are not available to buy on Tesco's website.

To re-cap: There are widespread reports that Unilever wants to increase prices because the fall in the value of sterling has increased its costs. Tesco, like all supermarkets, is under intense pressure to keep costs down. Tesco will only say it has "availability issues". Unilever has yet to comment.

What does the Fed think?

The financial world's most tedious guessing game rumbles on. When will the US central bank - the Federal Reserve - raise interest rates?

According to minutes of the Fed's September meeting (when nothing changed) some Fed members are leaning in favour of a rise soon.

"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded... as expected."  

By which they mean, if the US economy keeps on growing and employment keeps on rising.

Shoppers warned of price increases

Former Sainsbury's boss Justin King
Getty Images

The former boss of Sainsbury's is warning shoppers to expect higher prices. Justin King says supermarkets won't be able to absorb the extra cost of imported goods caused by the plummeting value of the pound.

According to a Guardian report of a conference speech by Mr King, he said: “Retailers’ margins are already squeezed. So there is no room to absorb input price pressures and costs will need to be passed on.

"But no one wants to be the first to break cover. No business wants to be the first to blame Brexit for a rise in prices. But once someone does, there will be a flood of companies because they will all be suffering.”

However, the tensions created by the falling pound, down 20% against the dollar and 22% against the euro since June's Brexit vote, emerged earlier this evening.

Tesco appears to be in dispute with Unilever over a plan by the consumer products giant to raise prices. There are reports that Tesco has pulled some brands from its shelves. Tesco says only that it is "experiencing availability issues".

400 jobs to go following Ed’s Diner acqusition

Ed's Easy Diner
Ed's Easy Diner

Ranjit Boparan, the owner of Giraffe and other restaurant chains, has acquired Ed’s Easy Diner, saving the group from administration. 

The deal includes 33 of the chain’s restaurants, but the remaining 26 will close, resulting in around 400 job losses. 

Ed's was launched in London's Soho in 1987 and expanded rapidly during the last decade, growing from three outlets to 59. However, it has suffered weaker trading more recently and was put up for sale earlier this year.

The deal comes after Mr Boparan bought turkey producer Bernard Matthews last month.

Getting older - food for thought

Two old people
EPA

Tomorrow the former CBI boss John Cridland publishes his initial report after being asked by the government to review the state pension age. Should it keep on going up? 

The insurance firm Aviva draws our attention to some figures published earlier today by the Office for National Statistics (ONS).

These suggest that the percentage of the UK population aged 65 or over - currently 18% - will rise by just over a fifth between 2015 and 2025.

The biggest increase in this particular age group will be in London: up by a quarter.

Tesco vs Unilever: Hard bargaining

Battle of the brands over Unilever plan to raise prices

pot of Ben & Jerry's ice cream
Unilever

The Financial Times thinks Tesco may have been actually pulling Unilever products from its shelves, rather than just running out of stock.

Here's what analyst Bruno Monteyne, from Bernstein, tells the FT: “That’s the way you have to negotiate. You have to draw a line in the sand and say, ‘OK, we’re going to delist you.’”  

Although Tesco’s size gave it a strong negotiating position, the grocer would ultimately be forced to reach a compromise, he believes.

“Unilever is very big and Tesco can’t get around not working with them,” Mr Monteyne says. “Dave Lewis [Tesco's chief executive] might be wanting to show he’s not shying away from his former employer, but really, there’s much more at stake.”

FTSE 100: why it matters to you

The FTSE 100 has hit a record high but what is it and why does it matter? Our team of financial experts explains.

This clip is originally from Wake Up To Money on Wednesday 12 October 2016.

'Most banks not planning to quit London'

Treasury mandarin appears before select committee

Most banks are not making plans to leave London because of Brexit, permanent secretary at the Treasury Tom Scholar told a committee earlier. 

They are instead waiting to "see how the debate evolves".

But he accepted many were worried and some were making "noises" - as they should be - adding that the Treasury was in close contact with them all. 

"We will be very keen indeed to make sure that the final [Brexit] agreement gives the proper placer to financial services. It will have a high priority in our discussions," he said. 

You'll either like this or hate it

Marmite jars
Unilever

More on Tesco running low of some products...

If reports are true, Tesco's stock shortage of some Unilever brands is because of a dispute over prices following sterling's fall against the euro.

Apparently, Unilever wants to raise prices by around 10%. Tesco will only say that it is "experiencing availability issues". No word yet from Unilever.

Product shortages are said to include Marmite, Persil, Ben & Jerry's ice cream (oh no!), Flora, Pot Noodle, and many more.

Tesco shortage

BBC presenter tweets:

It's not only sterling that is moving...

'Disgraceful and patronising'

A Lloyds high street bank
Reuters

Broker Hargreaves Lansdown has written to the government to protest about the potential exclusion of retail investors from the sale of its remaining stake in Lloyds Banking Group.

UK Financial Investments Limited, which manages the government's stake in the bailed-out bank, said on Friday it would look at selling stock to institutional investors over the next 12 months. 

But it recommended scrapping plans to sell off some shares via a discounted offer to the general public, a decision Hargreaves said risked disappointing thousands of small investors hoping to cash in on growth at Britain's biggest mortgage lender.

Ian Gorham, Hargreaves' chief executive, says: “We urge the government that a rethink would be a victory for common sense. Money from taxpaying working people bailed out Lloyds Plc. Not giving them the opportunity to participate in its sale is disgraceful and patronising.”