FTSE 100 rises as talks to call off UK rail strikes fail

·4 min read
Commuters at Waterloo station. The FTSE 100 was in the green ahead of the biggest outbreak of industrial action on the railways for a generation. Photo: Wiktor Szymanowicz/Anadolu Agency via Getty
Commuters at Waterloo station. The FTSE 100 was in the green ahead of the biggest outbreak of industrial action on the railways for a generation. Photo: Wiktor Szymanowicz/Anadolu Agency via Getty

European stocks were in the green on Monday as Britain faces up to surging inflation and the biggest rail walkout in three decades amid a row over pay, jobs and conditions.

The FTSE 100 (^FTSE) jumped 1.4% after a tumultuous trading week, France’s CAC (^FCHI) was up 0.4% and the DAX (^GDAXI) rose 0.9% in Germany.

Around 40,000 members of the Rail, Maritime and Transport (RMT) union at Network Rail and 13 train operators will walk out on Tuesday, Thursday and Saturday as last-ditch talks fail to resolve disputes.

Services across the country will start to be affected from Monday evening, with just one in five trains running on strike days, primarily on main lines and only for around 11 hours.

There had been some hopes of a breakthrough on Monday, but strikes have been confirmed to go ahead. The three 24-hour walkouts will include signallers, maintenance and train workers.

London Underground will also be crippled on Tuesday as the RMT and Unite unions also plan to hold a 24-hour walkout which is set to cause huge disruption to tube services.

Mick Lynch, boss of the RMT union, said: "The RMT national executive committee has now found both sets of proposals to be unacceptable and it is now confirmed that the strike action scheduled this week will go ahead. It is clear that the Tory government, after slashing £4bn ($4.9bn) of funding from National Rail and Transport for London, has now actively prevented a settlement to this dispute.

"The rail companies have now proposed pay rates that are massively under the relevant rates of inflation, coming on top of the pay freezes of the past few years. At the behest of the government, companies are also seeking to implement thousands of job cuts and have failed to give any guarantee against compulsory redundancies."

The Recruitment & employment Confederation and the Trades Union Congress (TUC) called on the government to abandon plans to change the law to allow agency workers to sub in for striking workers.

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A REC and TUC joint statement said: "The two organisations, representing both the agency sector and unions, think the plan is unworkable and oppose it in the strongest possible terms. They urge the government to leave the current ban in place as a key element of a sustainable national employment relations framework.

"Using agency staff to cover strikes will only prolong the conflict between employers and their staff. Strikes are industrial disputes within a single industry or firm."

Across the pond, US benchmarks posted their biggest weekly decline since the start of the pandemic, extending whipsaw moves that have injected fresh volatility into markets.

Stock markets in America were closed for trading on Monday for the Juneteenth holiday.

Wall Street’s S&P 500 (^GSPC) rose 8.07 points, or 5.8%, to 3674.84 on Friday. The tech-heavy Nasdaq (^IXIC) added 1.4%, while the Dow Jones (^DJI) declined 0.1%.

The S&P 500 fell 5.8% for the week, its biggest drop since March 2020. The Dow fell 4.8% for the week, its largest decline since October 2020.

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Michael Hewson, chief market analyst at CMC Markets, said: "Last week’s events appear to have prompted a sharp re-evaluation by central banks that far from being a temporary phenomenon that inflation is becoming more entrenched, it is starting to be much more persistent than originally thought, and that radical action is needed to tackle it.

"It is becoming even more clear now that the Federal Reserve was too slow in tapering its easing program, and the global economy is paying the price now in the form of runaway inflationary pressures.

"The risk now is that the Fed will need to be even more aggressive at its next few meetings to put the inflation genie back in its bottle."

Asian stocks were mixed overnight amid growing fears that the central bank's moves to rein in rampant inflation will induce a recession.

In Tokyo, the Nikkei (^N225) dipped 0.7%, while the Hang Seng (^HSI) edged 0.2% higher in Hong Kong and the Shanghai Composite (000001.SS) closed flat.

Watch: Britons urged to prepare for week of disruption during rail strikes

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