Business news live: Contactless payments cap could be scrapped, no interest rates cut

Morning all – we’re back again to bring you all things business and money, the latest economic updates, what our esteemed leaders are up to and how it all affects our pockets and bank accounts.

Stock market updates to come too as usual along the way, with Primark’s owner providing an update this morning.

The parent firm of Primark has said the retail chain saw trading improve in recent months despite “consumer caution”, as its UK and Ireland stores recovered ground.

Associated British Foods (ABF) said Primark sales are set to have grown by 1% over the half-year to September 13, as womenswear and more favourable weather conditions helped support UK stores.

George Weston, chief executive of ABF, said: “I’m pleased with how the group has performed in the second half of our financial year in what continues to be a challenging environment, characterised by consumer caution, geopolitical uncertainty and inflation.”

Primark opened 15 new stores including two in the UK.

Right now, you’re doubtless used to paying for things in contactless fashion: hover your card, waft your phone.

Only one of those has a spending limit though: you need a PIN to use your card for payments over £100, the cap which has been in place since 2021.

However, the FCA (who sets the rules) have proposed a change which could come into play in just a few months, whereby your bank will instead set the card contactless limit – which means it could in theory be limitless.

That would match paying by device, even though almost four in five (78%) of consumers said they didn’t want a change in rules.

“People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently,” said the FCA’s David Geale.

One expert has detailed how binning the contactless pay cap is intended to help us spend more, and more quickly… to help the economy of course.

Whether that’s something consumers actually want – or whether they even think about if they were spending £101 rather than £99 – is up for debate.

But the reminder is there that in fraudulent cases it’s the merchants on the line, not the card owner, so the onus is still on them to check if it’s a big payment or an unusual purchase.

“UK retailers may be hopeful that a further spending boost could come from an expected relaxation of contactless card payment limits,” said Susannah Streeter, head of money at Hargreaves Lansdown.

“The Financial Conduct Authority is proposing to scrap the £100 cap for potentially unlimited transactions, although these would still be set by banks and other providers.

“This is part of a red tape bonfire to try and reduce financial regulation and speed up growth. The idea is that it will be more efficient for retailers and customers alike and will make it easier for consumers to spend more, more quickly.

“This would bring the process more into line with mobile wallets, which can used already for higher-value transactions. There is the potential for increased fraud, but consumers will still have their money protected in the same way, when flagged to a bank.

“It’s the merchants who ultimately pay the price for fraudulent transactions, via the Chargeback process. So, investment in more advanced detection and prevention methods will be even more crucial, including real time monitoring and behavioural analytics to mitigate risks.

“These are investments larger retailers will be better placed to make, but small retailers are likely to be more reluctant to wave through big payments, without extra checks.’”

Housebuilder Vistry has seen half-year profits more than halve as buyer demand comes under pressure from worries over the wider economy and slower-than-hoped cuts to interest rates.

The group reported pre-tax profits tumbling 55% to £40.9 million in the six months to June 30.

Vistry – formerly Bovis Homes group – said its forward order book was lower than a year ago, standing at £4.3 billion against £5.1 billion this time last year.

It said it was looking to boost flagging demand with “sales and marketing initiatives”.

Analysts and markets alike are predicting that the Bank of England – or its MPC – may not vote to cut interest rates below 4% for the rest of 2025.

Higher inflation, an uncertain jobs market and the prospect of taxes in the Budget mean many have altered their expectations, with it previously expected the MPC would continue with this year’s pattern of one cut per quarter.

The MPC meets next week, then again in November and December.

HSBC and Pantheon Macroeconomics both now expect no cuts in any of those three meets, with Deutsche Bank switching to only a cut in December rather than the previously anticipated November.

Sticking with interest rates, earlier this week, Barclays analysts said in a research note that they are sticking with a November cut as their prediction:

“We see a November cut as finely balanced but, without upside news relative to our forecast in CPI outturns in the coming months, we think that balance continues to tip to a 25bp cut.”

However, they also cite “divergent views [within the MPC voters] and heightened uncertainty” due to the Budget as being big factors at play which could change matters quickly.

The note also points to Rachel Reeves’ big issue:

“We calculate the chancellor will have to find £26.5bn of fiscal consolidation … to meet her fiscal rule.”

Friday’s July GDP release is expected to come out to show no growth month to month, they add.

Pre-markets show some AI-based US stocks are set to rise later today, while the FTSE 100 on these shores is also up – though at 0.2 per cent, it’s being out-shone so far by France’s CAC 40 at 0.3 per cent in the green.

“European shares pushed ahead on a busy day for corporate news,” said Russ Mould, investment director at AJ Bell.

“A record-breaking day for Wall Street yesterday helped to calm investor nerves over Poland shooting down Russian drones that violated its airspace. Geopolitical concerns have been front and centre for multiple years, and investors had been hoping for tensions to ease.

“Oracle shares soared amid optimism about AI-related revenue, sending a strong message to the broader market that the tech revolution is still red hot. That had a positive read-across to Nvidia which advanced 2% in pre-market trading.

“The FTSE 100 advanced 0.2% to 9,263 as financials and healthcare stocks were in demand.”

The London Stock Exchange could get a real boost with 11 new firms looking to list on it.

A report in the FT says several firms are hoping to IPO within the next 12 months, including private equity businesses.

Beauty Tech Group announced their intention to join the LSE this week, with tech firm Visma one of the high-profile names aiming to go public next year.

Only seven companies have done so in London this year so far – the worst in almost three decades, says the FT.