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EU referendum: IMF warns brexit would send shockwaves through UK economy - business live US retail sales rise at fatest pace in a year - business live
(about 1 hour later)
1.52pm BST
13:52
The monthly 1.3% jump in April retail sales was the biggest increase in more than a year.
The number for March was also revised up, to show a 0.3% rise and not the 0.4% drop previously estimated.
The increase was broad-based across different kinds of goods, but car sales were particularly strong.
1.32pm BST
13:32
US retail sales rise more than expected
Breaking: US retail sales jumped 1.3% in April, beating expectations of a 0.8% increase.
Excluding cars, sales were up 0.8%, again beating expectations of a 0.5% increase.
The figures will bring relief to worried investors...
Updated
at 1.32pm BST
12.35pm BST12.35pm BST
12:3512:35
US stock index futures are lower as investors await April retail sales data from the world’s largest economy.US stock index futures are lower as investors await April retail sales data from the world’s largest economy.
Economists are expecting to see a 0.8% rise in US retail sales over the month, and will be closely watching when the figures are published at 13.30 UK time.Economists are expecting to see a 0.8% rise in US retail sales over the month, and will be closely watching when the figures are published at 13.30 UK time.
Weak earnings from retailers - including department store Macy’s - have put investors on edge, not least because consumer spending accounts for more than two thirds of the US economy.Weak earnings from retailers - including department store Macy’s - have put investors on edge, not least because consumer spending accounts for more than two thirds of the US economy.
12.25pm BST12.25pm BST
12:2512:25
John McDonnell has had a word to say about the weak UK construction numbers.John McDonnell has had a word to say about the weak UK construction numbers.
Labour’s shadow chancellor said:Labour’s shadow chancellor said:
It is deeply disappointing that despite George Osborne’s rhetoric on construction the industry shrank by 1.1 per cent in the first quarter of the year.It is deeply disappointing that despite George Osborne’s rhetoric on construction the industry shrank by 1.1 per cent in the first quarter of the year.
Output in the construction industry has fallen since Osborne claimed at last year’s Tory party conference that ‘we are the builders’, and comes on the back of ONS figures earlier this week showing UK industrial production in recession. This is further evidence that Osborne’s recovery is one built on sand.Output in the construction industry has fallen since Osborne claimed at last year’s Tory party conference that ‘we are the builders’, and comes on the back of ONS figures earlier this week showing UK industrial production in recession. This is further evidence that Osborne’s recovery is one built on sand.
12.09pm BST12.09pm BST
12:0912:09
Most international business would like the UK to stay in the EU, according to an Ipsos Mori poll.Most international business would like the UK to stay in the EU, according to an Ipsos Mori poll.
Most companies - 78% - from seven countries including Germany and China said Brexit would be negative and lead them to cut investment.Most companies - 78% - from seven countries including Germany and China said Brexit would be negative and lead them to cut investment.
Only 5% felt it would be positive for their business, and the rest said the impact would be neutral or they didn’t know.Only 5% felt it would be positive for their business, and the rest said the impact would be neutral or they didn’t know.
The countries involved were France, Canada, Spain, Italy, Sweden, Germany and China.The countries involved were France, Canada, Spain, Italy, Sweden, Germany and China.
11.48am BST11.48am BST
11:4811:48
Michael O’Leary, Ryanair’s chief executive, has also been speaking about Brexit and the potential impact.Michael O’Leary, Ryanair’s chief executive, has also been speaking about Brexit and the potential impact.
He says fares would probably drop in the shorter term, comparing the impact in terms of air travel to other crises, including 9/11.He says fares would probably drop in the shorter term, comparing the impact in terms of air travel to other crises, including 9/11.
Reuters quotes O’Leary:Reuters quotes O’Leary:
After 9/11, after every crisis Ryanair is selling cheaper fares, we keep people flying.After 9/11, after every crisis Ryanair is selling cheaper fares, we keep people flying.
So the fact is we would have a downward effect on our pricing for 6 to 12 months, but we will keep people flying.So the fact is we would have a downward effect on our pricing for 6 to 12 months, but we will keep people flying.
O’Leary said that over the longer term, Brexit would prompt Ryanair to move investments out of the UK.O’Leary said that over the longer term, Brexit would prompt Ryanair to move investments out of the UK.
The longer term effect is we will invest less in the UK.The longer term effect is we will invest less in the UK.
We will certainly switch some of our existing UK investment into other European countries because we want to continue to invest in the European Union and it will bad for air travel and British tourism.We will certainly switch some of our existing UK investment into other European countries because we want to continue to invest in the European Union and it will bad for air travel and British tourism.
11.03am BST11.03am BST
11:0311:03
Lagarde has also been making the point today that Brexit is not purely a domestic issue.Lagarde has also been making the point today that Brexit is not purely a domestic issue.
I know it is a big domestic issue for many of you, but it’s an international issue.I know it is a big domestic issue for many of you, but it’s an international issue.
I don’t think that in the last six months, I have visited a country anywhere in the world where I have not been asked: ‘what will be the economic consequences of Brexit.I don’t think that in the last six months, I have visited a country anywhere in the world where I have not been asked: ‘what will be the economic consequences of Brexit.
And in addition to Greece, Ukraine and a few others, what will be the outcome if the UK was to leave the European Union.And in addition to Greece, Ukraine and a few others, what will be the outcome if the UK was to leave the European Union.
You will appreciate the level of anxiety there is around the world as a result of that particular potential decision.You will appreciate the level of anxiety there is around the world as a result of that particular potential decision.
IMF Managing Director @Lagarde says the EU referendum is "not just a domestic issue" https://t.co/J6m2KlD5PZIMF Managing Director @Lagarde says the EU referendum is "not just a domestic issue" https://t.co/J6m2KlD5PZ
10.51am BST10.51am BST
10:5110:51
Chancellor: IMF makes it clear Brexit would cost us moneyChancellor: IMF makes it clear Brexit would cost us money
George Osborne has been speaking following the IMF’s damning report on the potential impact of Brexit.George Osborne has been speaking following the IMF’s damning report on the potential impact of Brexit.
He said the Fund makes it clear a UK exit from EU would “cost us money”.He said the Fund makes it clear a UK exit from EU would “cost us money”.
That’s less to spend on public services like schools and the NHS.That’s less to spend on public services like schools and the NHS.
Chancellor says IMF has "put to rest the fallacy" that leaving EU will make more money available for public services https://t.co/SMpvk9J6iHChancellor says IMF has "put to rest the fallacy" that leaving EU will make more money available for public services https://t.co/SMpvk9J6iH
UpdatedUpdated
at 11.30am BSTat 11.30am BST
10.36am BST10.36am BST
10:3610:36
Lagarde insists the IMF’s view on Brexit is completely independent.Lagarde insists the IMF’s view on Brexit is completely independent.
Christine Lagarde: "We are not into politics. It is our duty to lay out the facts. #IMF #EUref pic.twitter.com/4Ro6cUWQPoChristine Lagarde: "We are not into politics. It is our duty to lay out the facts. #IMF #EUref pic.twitter.com/4Ro6cUWQPo
10.34am BST10.34am BST
10:3410:34
IMF boss Christine Lagarde says IMF will complete a more comprehensive report on the impact of Brexit in time for the Fund’s next board meeting on 15 June. This will include more detailed numbers.IMF boss Christine Lagarde says IMF will complete a more comprehensive report on the impact of Brexit in time for the Fund’s next board meeting on 15 June. This will include more detailed numbers.
“If there are no leaks, the papers should get it on the 16th, 17th”, she says.“If there are no leaks, the papers should get it on the 16th, 17th”, she says.
IMF's Christine Lagarde at speaking at Treasury says outcomes of Brexit range from "pretty bad to very bad"IMF's Christine Lagarde at speaking at Treasury says outcomes of Brexit range from "pretty bad to very bad"
UpdatedUpdated
at 10.38am BSTat 10.38am BST
10.22am BST10.22am BST
10:2210:22
Larry ElliottLarry Elliott
Different location, same story. On Thursday it was Mark Carney sitting in Threadneedle Street issuing a warning from the Bank of England about the perils of Brexit. Less than 24 hours later it was Christine Lagarde, the managing director of the International Monetary Fund delivering the same message.Different location, same story. On Thursday it was Mark Carney sitting in Threadneedle Street issuing a warning from the Bank of England about the perils of Brexit. Less than 24 hours later it was Christine Lagarde, the managing director of the International Monetary Fund delivering the same message.
The approach being taken by the Government to the referendum appears to be similar to the tactics adopted by the British high command on the Western Front during the Great War: soften up the enemy with a constant and ferocious pounding.The approach being taken by the Government to the referendum appears to be similar to the tactics adopted by the British high command on the Western Front during the Great War: soften up the enemy with a constant and ferocious pounding.
Opinion polls suggest that the pounding is having only a limited effect, with the Brexiteers snug in their positions and largely oblivious to the ordnance being rained down on them.Opinion polls suggest that the pounding is having only a limited effect, with the Brexiteers snug in their positions and largely oblivious to the ordnance being rained down on them.
The Government’s hope is that eventually the war of attrition will pay off, as perhaps it might. Lagarde certainly went for what she sees as a soft spot in the enemy’s defences - the risk that a no vote on June 23 could lead to a crash in house prices.The Government’s hope is that eventually the war of attrition will pay off, as perhaps it might. Lagarde certainly went for what she sees as a soft spot in the enemy’s defences - the risk that a no vote on June 23 could lead to a crash in house prices.
This is a cunning tactic. While there is scant evidence that the British public is moved by the difference between the Swiss model, the Norwegian model or the WTO model when it comes to Britain’s post-EU trading arrangements, the threat to house prices is a different matter altogether.This is a cunning tactic. While there is scant evidence that the British public is moved by the difference between the Swiss model, the Norwegian model or the WTO model when it comes to Britain’s post-EU trading arrangements, the threat to house prices is a different matter altogether.
(Full comment here.)(Full comment here.)
UpdatedUpdated
at 11.20am BSTat 11.20am BST
10.18am BST
10:18
Christine Lagarde is now addressing journalists at the Treasury.
The IMF appears to have considerably stepped up its warning on the impact of Brexit.
Phillip Inman, the Guardian’s economics correspondent, reports:
A stock market crash and steep fall in house prices could follow a vote to leave the EU, the International Monetary Fund warned on Friday.
A panic among investors about the future path of the UK economy would trigger shockwaves throughout the economy, it warned, sending shares and property prices into a spin.
In a report that is clearly helpful to campaigners for Britian to remain in the EU, the IMF said that over the longer term, growth would be depressed.
The stark warning was coupled with analysis that found a vote to remain in the EU would spur a rebound in growth in the second half of the year, bringing to an end more than a year of stagnant output and falling business confidence.
Full story here.
Updated
at 11.12am BST
10.14am BST
10:14
Eurozone growth revised down
Eurozone growth for the first quarter has been revised down slightly, to 0.5% from an initial estimate of 0.6%.
It followed 0.3% growth in the final quarter of 2015.
Annual growth slowed slightly, to 1.5% from 1.6% in the previous quarter.
10.02am BST
10:02
IMF: Brexit impact would be 'negative and substantial'
The International Monetary Fund is wading back in to the Brexit debate.
In it’s annual health check of the UK economy, the IMF says that the British public are facing “a momentous decision” over the country’s membership of the EU. Brexit, it says, is the biggest risk to the UK economy.
The IMF had already put its boot firmly in the Remain camp, and strengthens its warning today.
A vote to leave, the IMF says, would hit growth, lower living standards, and prompt market volatility. Britain would be adversely affected in the short-term, but in the longer term too.
Extracts from the report:
The largest risks and uncertainties relate to the upcoming EU referendum. A vote to leave the EU would create uncertainty about the nature of the UK’s long-term economic relationship with the EU and the rest of the world.
A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output.
The long-run effects on UK output and incomes would also likely be negative and substantial.
London’s status as a global financial center could also be eroded, as UK-based firms may lose their “passporting” rights to provide financial services to the rest of the EU and much euro- denominated business may over time move to the continent.
IMF head Christine Lagarde is due to speak shortly.
9.54am BST
09:54
The sharp fall in construction output in March means that the sector contracted by 1.1% in the first quarter overall.
Last month, when the ONS published its first estimate of Q1 growth (0.4%), it pencilled in a smaller drop in construction output of 0.9%. That was before it had the data for March.
In the first quarter, all new building work fell by 0.6%, while repair and maintenance dropped 1.9%.
House building was the bright spot, growing by 4.8% in the first quarter. Infrastructure fell 5.6%.
UK construction output fell -1.1% in Q1. House building was up, but a big fall in factory & warehouse building. pic.twitter.com/2d1YZc5FHH
Weak UK data continues, construction showing largest drop since Dec 2012... how long can we keep blaming Brexit?! pic.twitter.com/JtHdK6qvdX
9.36am BST
09:36
UK construction falls sharply in March
Breaking news: A shocking number for UK construction output - down 3.6%.
It was a much sharper fall than the 2.5% drop forecast by economists, and followed a 0.3% drop in February according to the Office for National Statistics.
One way of looking at it:
Shorter UK Construction numbers pic.twitter.com/bwTB690r1L
9.09am BST
09:09
Tesco boss handed £4.6m pay
Dave Lewis, the chief executive of Tesco, was paid £4.6m including a £3m bonus after the crisis-hit supermarket returned to profit.
The payout was revealed in Tesco’s annual report. The UK’s biggest supermarket chain made a pre-tax profit of £167m in the year to 27 February, after making the biggest ever high street loss the years before - £6.4bn. Read our full story on the payout here.
As Tesco’s new boss in 2014, Lewis has had to deal with Tesco’s £263m accounting scandal, which came to light just weeks after he took over from ousted boss Philip Clarke.
Hear from the man himself:
Dave Lewis, Tesco CEO, presents the Annual Report and explains how the business has made unprecedented changeshttps://t.co/eFhvQWkZyq
Updated
at 9.10am BST
8.45am BST
08:45
Oil prices fall
Oil is down on a stronger dollar and a warning from Russia that a global oversupply of crude could last into next year.
The dollar has recovered by about 2.5% from its May lows against a basket of leading currencies. Oil is traded in dollars so the stronger the currency, the more expensive fuel imports are for countries using other currencies.
Brent crude is down 0.7% at $47.76 a barrel. US West Texas Intermediate crude futures were down 54 cents or 1.2% at $4616 a barrel.
8.26am BST
08:26
European markets open lower
Will there be any horror stories for markets on Friday 13th?
Germany’s better than expected growth has failed to cheer investors this morning.
General fears of a potential global slowdown and an empty central bank tool box to deal with it appear to be weighing on investor sentiment.
Mark Carney’s comments on Brexit at the inflation report press conference on Thursday will not have helped.
The Bank of England governor said the economy could slide back into recession should the UK vote to leave the EU.
Europe’s major markets are all down this morning. The FTSE 100 is down 29 points or 0.5% at 6,075.
Updated
at 8.28am BST
8.04am BST
08:04
Carsten Brzeski, economist at ING, describes Germany’s economic performance over recent months as “very impressive”.
Brzeski believes the makeup of Europe’s largest economy is changing. Is Germany losing its industrial might?
During this lucky streak, the growth drivers have changed. Initially boosted by strong industrial production and exports, the economy is currently much more driven by private consumption, construction and a bit of exports.
The industrial backbone has weakened significantly. Looking ahead, at least in the near term, this new growth mix should further support growth.
Brzeski also believes Germany might be getting a little complacent about its growth credentials:
Today’s data are another sign of Germany’s economic strength. At least at first glance. The economy defied the financial market turmoil at the start of the year as well as the Chinese slowdown.
Even if many Germans don’t want to hear it, strong domestic activity is also the result of the ECB’s loose monetary policy. At second glance, however, the strong growth performance also shows what currently is the biggest risk for the German economy: complacency.
7.49am BST
07:49
The agenda: eurozone growth and IMF's verdict on the UK
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some upbeat news to kickstart the day. The German economy grew by 0.7% in the first quarter, more than double the 0.3% growth rate in the previous quarter.
Economists polled by Reuters were expecting a 0.6% increase in GDP in the first three months of the year.
Destatis, the German statistics office, said growth was driven by domestic demand, with households and the government both spending more over the period.
Foreign trade on the other hand was a drag on growth, with imports rising more sharply than exports. The construction sector was boosted by the mild winter weather.
Destatis said:
The quarter-on-quarter comparison – following price, seasonal and calendar adjustment – shows that positive contributions mainly came from domestic demand, according to provisional calculations.
The final consumption expenditure of both households and general government increased at the beginning of the year.
Capital formation was higher, too. Due to the continued mild weather, fixed capital formation in construction as well as machinery and equipment was markedly up compared with the fourth quarter of 2015.
Later this morning Eurostat will give a second take on eurozone growth in the first quarter, following an initial estimate of 0.6% growth.
Investors will be relieved that Germany, it’s largest economy, did not deliver any nasty shocks to the downside.
As UK stutters, Germany's GDP grows 0.7% for the first three months of the year. Now likely to be fastest growing economy in G7
Also this morning, the head of the IMF Christine Lagarde will deliver the IMF’s latest verdict on the UK at a press conference at the Treasury.
We will keep you updated on events throughout the day.
Updated
at 7.57am BST