Time to wrap up... here’s today’s stories so far:

Britain’s biggest retailer Tesco has made a new pay offer to trade union Usdaw, following the threat of strike action by distribution centre workers in the run-up to Christmas.

Usdaw has announced that it has secured a “new and much improved pay offer from Tesco” and will be balloting members in nine distribution sites from tomorrow.

Planned industrial action in the week before Christmas Eve has been suspended pending the ballot result.

Joanne McGuinness, Usdaw national officer, says:

“After the overwhelming vote in favour of industrial action, Tesco reopened pay negotiations with Usdaw. I am pleased to say that we have been successful in achieving a significantly improved offer and Usdaw is recommending that members accept it in the ballot.

“Full details of the offer will be shared from noon on Wednesday, when the ballot opens. Having reached this improved offer, we have withdrawn notice of strike action.

“I want to thank our members for their support and determination during the industrial action ballot. This is a clear demonstration of what can be achieved when we collectively stand together.”

The dispute began when the Unite union rejected a 4% pay increase, which it called “offensive” as it was below the retail price index inflation rate of 6%. Usdaw then followed, lifting the number of distribution centres facing staff walkouts from 4 to 13.

Unite accepted a revised pay offer last week.

A Tesco spokesperson said:

“We’re pleased to have agreed a pay deal with Usdaw that it recommends to its members.

“Colleagues at these centres will no longer be taking industrial action. We look forward to delivering a fantastic Christmas for customers.”

Back in the UK, National Express and rival Stagecoach have sealed an all-share deal that will forge a £1.9bn transport operating group.

The proposed merger is expected to be completed in late 2022, bringing Stagecoach’s UK local bus operations together with National Express’s intercity coach network.

Stagecoach, which shrank back after selling its US operations and being squeezed out of UK rail, will be valued at about £500m, a third of National Express. Its Megabus intercity coach operation will be sold off, to alleviate any competition concerns.

The group will be headquartered at National Express’s home in the West Midlands, where it runs most bus services. The combined group will have a 40,000-strong vehicle fleet and employ about 70,000 people. National Express also exited UK rail after selling its last franchise in 2017 but still runs trains in Germany and buses in the US, Canada, Morocco and Spain.

Stagecoach was launched by Sir Brian Souter and his sister, Dame Ann Gloag, in 1980. The takeover marks the end of the Souter family’s long interest in the sector, having grown from buying out a small local bus company to one of the main players in Britain’s privatised bus and rail industries.

The IMF has also warned that the UK faces more post-Brexit trade problems, when new post-Brexit customs checks are introduced on January 1st.

The head of the International Monetary Fund, Kristalina Georgieva, told reporters that:

“Trade with the EU has dropped significantly and we expect there will be more impact ahead as the custom checks are going to be introduced in UK in the beginning of next year.”

This chimes with a warning from the Institute of Directors yesterday, that nearly a third of British companies that import goods from the EU are “not at all prepared” for full post-Brexit customs checks.

The chancellor, Rishi Sunak, should be drawing up contingency plans for a mini-furlough in the event that the Omicron variant forces the government into closing parts of the economy, the International Monetary Fund has said.

In its annual health check of the UK, the Washington-based IMF warned the fast-spreading new strain of the Covid-19 virus posed a fresh threat to the economy after what had been a “challenging year”.

The IMF said with strong policy support the economy had proved to be resilient, but it stressed a return of some of the measures that prevented mass unemployment and large-scale business failures might soon be needed.

The IMF said in its assessment that:

“In the event of a virulent Covid-19 wave requiring widespread mandated closures, the authorities should be ready to redeploy a subset of the most successful previous exceptional programmes (such as a furlough scheme and targeted support to the most vulnerable households and small businesses), but with due attention to lessons learned about their design (including tapering and timely sunset),”

While praising the UK for its “overall impressive, coordinated and extended policy response”, the IMF said was “clear that Covid-19 and the behavioural changes it has caused will not fade quickly”.

The IMF said it expected the UK economy to grow by 6.8% in 2021 and 5% in 2022, but the faster-than-expected recovery would be accompanied by rising inflation.

Supply bottlenecks would send the annual inflation rate to about 5.5% by next spring, the IMF said in its Article IV report.

“The outlook suggests that growth will remain strong in the near-term, but so too will price pressures.”

Unemployment in the UK fell in October despite the end of the furlough scheme, according to official figures, as companies continued to hire amid record numbers of staff vacancies.

The Office for National Statistics said the unemployment rate fell to 4.2% in the three months to the end of October, representing about 1.4 million people, down from 4.3% in the three months to the end of September.

Reflecting a continued recovery in the labour market after the end of the Treasury’s multibillion-pound job support scheme in September, it said the number of workers on company payrolls rose by 257,000 in November from a month earlier to stand at 29.4 million – almost half a million higher than pre-Covid levels.

The ONS said it was likely that some furloughed workers could yet move into unemployment because they might be working out their notice periods, but that the early responses to its business surveys suggest the numbers being made redundant were likely to be small.

Darren Morgan, the director of economic statistics at the ONS, said:

“With still no sign of the end of the furlough scheme hitting the number of jobs, the total of employees on payroll continued to grow strongly in November, although it could include people recently made redundant but still working out their notice.”

Here’s the full story:

The Omicron variant will dent global demand for oil, but not derail it, the International Energy Agency has predicted.

The IEA has trimmed its forecast for oil demand this year and the next by 100,000 bpd each, mostly because new travel curbs will hit demand for jet fuel.

In its latest monthly report, the IEA predicts that Omicron will have a more muted impact than earlier variants:

“The surge in new COVID-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway.

“New containment measures put in place to halt the spread of the virus are likely to have a more muted impact on the economy versus previous COVID waves.”

But in the short term, there could be an oil glut in early 2022, with output set to exceed demand this month and soar next year.

The IEA has lowered forecasts for global oil demand in the first quarter by 600,000 barrels a day. So the market could be temporarily oversupplied, if suppliers continue to pump more oil (the Opec+ group will add another 400,000 bpd in January).

The billionaire Patrick Drahi has increased his stake in BT to 18%, prompting the government to warn it could step in to block a full potential takeover of the British telecoms giant.

Drahi’s telecoms group Altice UK, which in June paid £2.2bn for a 12.1% stake to become BT’s largest shareholder, has paid about another £1bn to further boost its shareholding.

“We are pleased to take this opportunity to increase our shareholding in BT,” said Drahi.

“Over recent months we have engaged constructively with the board and management of BT and look forward to continuing that dialogue.”

Drahi, who had been blocked under UK takeover rules from making a further move until 11 December, played down the stake-building and reiterated that he did not intend to make an offer for BT, but said that could change if circumstances did – including if a third party made an offer.

Drahi said:

We continue to hold them in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full-fibre broadband network; an investment programme which is so important to both BT and to the UK,”

A government spokesperson said it would “not hesitate to act” to protect BT from foreign takeover if necessary....

Pubs and restaurants predict that Christmas cancellations made following the introduction of measures to limit the spread of the Omicron variant of Covid-19 in England will cut their festive takings by 40%.

While hospitality venues have not yet been forced to reimpose measures such as social distancing or mandatory mask-wearing, industry leaders said tougher restrictions had already caused irreparable damage to trade, especially in city centres.

Trade body UK Hospitality has forecast that takings will be down by as much as 40% for December, usually the most lucrative month for venues by far, after hard data from last week revealed early signs that customers were staying away.

Here’s the full story:

Despite the rise in payrolled workers in recent months, there are still 567,000 fewer people in employment than before the pandemic.

More people left the labour market in the last quarter too - pushing up the UK’s economic inactivity rate by 0.1 percentage point, to 21.2%.

Kitty Ussher, chief economist at the Institute of Directors, says this rise in economic inactivity among people of working age is a concern.

Since the summer this appears to have been more to do with increased long-term sickness than from early retirement.

Early in the pandemic we had also seen a fall in the number of people citing ‘looking after family/home’ as a reason for economic inactivity, perhaps as homeworking became easier, but that trend is now less clear as the economy settles.”

The Institute for Employment Studies estimates more than one million fewer people now in the labour market than on pre-crisis trends, driven by older people leaving work (and also by lower migration).

Tony Wilson, IES director, says the government must do more to help people into work:

“On the face of it, today’s figures are some rare good news for the government, with unemployment now dropping fast towards pre-crisis levels, employment rising and more than twice as many vacancies as there were last Christmas. But beneath the headlines there is plenty here that will be concerning the government and Bank of England.

Despite record vacancies and the tightest labour market in our lifetimes, the number of people out of work and not looking for work is rising, perhaps pushed up by people leaving the labour market entirely at the end of furlough. We estimate that there’s now one million fewer people in the jobs market than there would have been on pre-crisis trends, with more than half of this explained by fewer older people in work. At the same time, the number of people out of work due to ill health has hit its highest since 2005, at 2.5 million. As we said last month, these problems just won’t fix themselves.

And with the prospect of tighter Covid restrictions in the new year, the government needs to be planning now for more support to help people get back into work as well as to protect those jobs that may be at risk in a Plan C lockdown.”

Otherwise, firms will still struggle to fill vacancies, as Stephen Evans, chief executive of Learning and Work Institute, points out:

We face an uncertain winter, with economic growth slowing and uncertainty around the impact of Omicron. We need to boost our efforts to match people with the available jobs and ensure they have the skills needed.”

Chancellor of the Exchequer, Rishi Sunak, is calling for people to get their Covid-19 booster jabs, to protect the economic recovery.

“The jobs outlook remains strong thanks to our £400bn economic support package, Plan for Jobs and fantastic vaccine programme; the unemployment rate fell to 4.2%, employee numbers grew at a record rate in November and redundancies are below pre-pandemic levels.

“To keep safeguarding our economic recovery and the lives and livelihoods of the British people, I am now calling on everyone to keep playing their part and Get Boosted Now.”

Yesterday there were long queues outside vaccination centres, as people flocked to get jabbed, with reports that the NHS booking site repeatedly crashing under huge demand.

And here’s minister for employment Mims Davies MP:

“With the number of people on payrolls now above pre-pandemic levels across every region and age group, including the biggest monthly increase on record in November, it’s clear our Plan for Jobs is working.

“As we look ahead to next year, we remain wholeheartedly committed to helping employers recruit for the record number of opportunities out there and to giving people – at any age and any career stage – the support and skills they need to confidently land their next role.”

The rise in payroll employment and falling unemployment shows the UK jobs market has continued to rebound strongly, says Suren Thiru, head of economics at the British Chambers of Commerce, despite a slowing recovery and the end of furlough.

But with 1.2m vacancies unfilled, firms are clearly struggling to hire staff, he says:

“Record vacancies underscore the severe recruitment crunch facing businesses.

Although the changes to Covid self-isolation rules are welcome, with coronavirus and Brexit driving a structural decline in available labour, staff shortages may persistently constrain economic activity.

The UK’s new Covid ‘plan B’ restrictions could damage the jobs recovery, particularly in hospitality and retail - where firms need more help, Thiru added:

“More support is urgently needed to aid those firms worst effected by Plan B, including returning VAT for hospitality and tourism back to its emergency rate of 5%, reinstating full business rates relief for these firms and making additional grant funding available.”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Unemployment across the UK has dropped again as firms continued to take on more staff despite the ending of the furlough scheme in September.

The unemployment total fell by 127,000 in the August-October quarter, new data shows, lowering the jobless total to 1.423m.

This pulled the UK’s jobless rate down to 4.2% in the three months to October, down from 4.3% a month ago.

It suggests that the labour market remained solid this autumn, even though firms could not longer use the Coronavirus Job Retention Scheme to cover the wages of temporarily sidelined staff.

However, the emergence of the Omicron variant has now darkened the economic outlook, leading unions to call for furlough to be reinstated for hard-hit sectors.

The Office for National Statistics also reports that companies added more workers to their payroll; an extra 257,000 people were in payrolled employment in November 2021 than the previous month.

The number of people in work jumped by 149,000, to 32.5 million.

And vacancies hit a new record high of 1.219m in September to November 2021. That’s 434,500 more than before the pandemic, with 13 of the 18 industry sectors showing record highs.

But the growth in vacancies has slowed -- rising by 17.9% in September-November, down from 35% in the previous quarter. The largest quarterly increase was seen in Human health and social work, where vacancies rose by 26,000 (15.2%).

The Bank of England had been looking for a strong jobs report today, before deciding whether to raise interest rates at its next meeting on Thursday, and this could certainly fit the bill.

However....the emergence of the Omicron variant has now disrupted that plan, and could encourage policymakers to wait until early 2022.

Last night, the BoE announced plans to ease mortgage lending rules in a move that could help thousands of first-time buyers get on to the property ladder.

Removing a requirement that forces borrowers to be able to afford a three-percentage-point rise in interest rates before they can be approved for a home loan could help around 50,000 renters onto the housing ladder, and allow some borrowers to get higher loans.

The agenda

• 7am GMT: UK labour force survey
• 9am GMT: IEA’s monthly oil market report
• 10am GMT: Eurozone industrial production data for October
• 1.30pm GMT: US producer prices index for November