Britain could be plunged into recession if the government gives in to excessive union wage demands. That’s according to the Institute of Economic Affairs, which warned that big wage rises risk pushing up public sector borrowing, which in turn will lead to higher inflation and faster interest rate rises. Len Shackleton at the IEA said pay rises of 4% to 5% could be bearable, but if ministers were to offer double-digit increases, it risked becoming dangerous. Frances O’Grady, General Secretary of the TUC, said: “An economy can only grow if people keep spending,” adding that the next Prime Minister “must put increasing real wages above tax cuts for the rich ».

5 things to start your day

  1. Christine Lagarde prepares new weapon to save euro zone from debt crisis – Pressure mounts ahead of crucial ECB meeting next week
  2. TSB faces £800m lawsuit over claims it charged ‘excessively high’ mortgage rates – Around 200 homeowners are taking TSB’s Whistletree brand to court over claims of overpaid interest
  3. New business loans to be released as recession approaches – Whitehall sources expect the loan to be signed off by the Treasury in the coming days
  4. Britain’s space industry at tipping point ahead of first satellite launch in half a century – The UK will focus on building smaller, lower-cost satellites and developing the private sector’s ability to launch them into space
  5. FTSE 100 engineer to build £60m hydrogen plant in UK to supply carmakers – Johnson Matthey’s hydrogen gigafactory expected to create hundreds of jobs

What happened in the night

Shares were higher in Asia this morning after Wall Street capped a week of losses with a broad stock rally on Friday. Hong Kong’s Hang Seng rose 1 percent to 20,507.34, while the Shanghai Composite gained 0.7 percent to 3,251.54. In Seoul, the Kospi rose 1.4% to 2,363.36 points. and Australia’s S&P/ASX 500 added 0.5% to 6,637.50.

It’s coming today

Finance: Rightmove House Price Index (UK) Corporate: No major updates planned.