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| Bank of England warns Brexit uncertainty is hurting the economy – business live | Bank of England warns Brexit uncertainty is hurting the economy – business live |
| (35 minutes later) | |
| 5.21pm BST | |
| 17:21 | |
| Greece set for €7.5bn loan go-ahead | |
| Over in Greece, the country is likely to get the formal go-ahead for a €7.5bn loan tranche on Friday, after it met all the requirements demanded by creditors. | |
| Eurogroup president Jeroen Dijsselbloem said Greece had met all the prior actions necessary, while the country’s finance minister Euclid Tsakalotos said the first review of Greece’s bailout programme was now essentially completed. | |
| On Friday the European Stability Mechanism is set to ratify the payment. Tsakalotos said, as reported by the Athens-Macedonian news agency: | |
| I appreciate that for many Greeks things are still very difficult, since we passed a lot of difficult measures. I feel a need to say that the next year must not just be the year when we exit the crisis through growth, but a time when we place emphasis on the qualitative aspects of this growth. | |
| 4.50pm BST | 4.50pm BST |
| 16:50 | 16:50 |
| The market worries about the UK leaving the EU may be overdone, says Julian Jessop at Capital Economics: | The market worries about the UK leaving the EU may be overdone, says Julian Jessop at Capital Economics: |
| Nervousness about Brexit has obviously been having an increasing impact on sentiment in global markets. This is perhaps seen most clearly in the strong performance of safe havens such as the Japanese yen and the price of gold, which have been tracking the latest referendum odds closely. However, this may not last much longer – for three main reasons. | Nervousness about Brexit has obviously been having an increasing impact on sentiment in global markets. This is perhaps seen most clearly in the strong performance of safe havens such as the Japanese yen and the price of gold, which have been tracking the latest referendum odds closely. However, this may not last much longer – for three main reasons. |
| First, to some extent the nervousness in the markets simply reflects the fact that no-one yet knows the result of the referendum on the 23rd, which is too close to call... | First, to some extent the nervousness in the markets simply reflects the fact that no-one yet knows the result of the referendum on the 23rd, which is too close to call... |
| Second, even if the vote is for Brexit, the UK would probably remain a member of the EU for several years. The result of the referendum would only be advisory. While UK politicians cannot ignore the views of the electorate completely, most favour Remain and could drag the process out or try to find a relationship which replicates EU membership in all but name... | Second, even if the vote is for Brexit, the UK would probably remain a member of the EU for several years. The result of the referendum would only be advisory. While UK politicians cannot ignore the views of the electorate completely, most favour Remain and could drag the process out or try to find a relationship which replicates EU membership in all but name... |
| Third, the rhetoric of global policy-makers is likely to change dramatically. Currently those favouring Remain have an incentive to talk up the risks of Brexit in an attempt to influence the electorate. But once the votes have been cast, we would expect them to seek to reassure businesses and investors instead. | Third, the rhetoric of global policy-makers is likely to change dramatically. Currently those favouring Remain have an incentive to talk up the risks of Brexit in an attempt to influence the electorate. But once the votes have been cast, we would expect them to seek to reassure businesses and investors instead. |
| Admittedly, a UK vote for Brexit (or even a narrow majority for Remain) might embolden EU-sceptics elsewhere in Europe. Other governments may not be able to resist pressure for their own referendums. Brexit could conceivably be the first step towards the break-up of the EU, or the exit of one or more countries from the euro... | Admittedly, a UK vote for Brexit (or even a narrow majority for Remain) might embolden EU-sceptics elsewhere in Europe. Other governments may not be able to resist pressure for their own referendums. Brexit could conceivably be the first step towards the break-up of the EU, or the exit of one or more countries from the euro... |
| The upshot is that the initial market turmoil created by a Brexit vote may be both smaller and shorter-lived than many fear. Indeed, even sterling may not react in the way that many expect. It is likely that worries about the impact on the UK economy would initially cause the pound to weaken – perhaps to as low as $1.20. | The upshot is that the initial market turmoil created by a Brexit vote may be both smaller and shorter-lived than many fear. Indeed, even sterling may not react in the way that many expect. It is likely that worries about the impact on the UK economy would initially cause the pound to weaken – perhaps to as low as $1.20. |
| Meanwhile Capital Economics has been rehearsing the various outcomes of the referendum in more detail: | Meanwhile Capital Economics has been rehearsing the various outcomes of the referendum in more detail: |
| Regardless of which way #EUref vote goes, whether it is won by big or small margin will have implications. (1/2) pic.twitter.com/oNjVjjGoqw | Regardless of which way #EUref vote goes, whether it is won by big or small margin will have implications. (1/2) pic.twitter.com/oNjVjjGoqw |
| 4.34pm BST | 4.34pm BST |
| 16:34 | 16:34 |
| But the pound has recovered from lows after England won the Euro 2016 match against Wales. Coincidence? Or was it that brokers were watching the match and weren’t around to halt the slide? | But the pound has recovered from lows after England won the Euro 2016 match against Wales. Coincidence? Or was it that brokers were watching the match and weren’t around to halt the slide? |
| Cable snaps back after Euro 2016 game ends https://t.co/hZzNnPXWWB #forex, #forextrading | Cable snaps back after Euro 2016 game ends https://t.co/hZzNnPXWWB #forex, #forextrading |
| And this: | And this: |
| FTSE 100 cheers for England: Traded 5,915 at kick-off,5,918 when Wales scored, 5,920 after England win and 5,962 as fans celebrate. #ENGWAL | FTSE 100 cheers for England: Traded 5,915 at kick-off,5,918 when Wales scored, 5,920 after England win and 5,962 as fans celebrate. #ENGWAL |
| Updated | Updated |
| at 4.40pm BST | at 4.40pm BST |
| 4.29pm BST | 4.29pm BST |
| 16:29 | 16:29 |
| Gold at near two year highs | Gold at near two year highs |
| Sterling is under pressure, shares are falling, oil and base metals are down, but gold continues to be a haven for investors. | Sterling is under pressure, shares are falling, oil and base metals are down, but gold continues to be a haven for investors. |
| Gold has jumped from $1292 an ounce to $1311, a near two year high, on worries about Brexit, as well as the US Federal Reserve’s caution about the global economy. | Gold has jumped from $1292 an ounce to $1311, a near two year high, on worries about Brexit, as well as the US Federal Reserve’s caution about the global economy. |
| 4.26pm BST | 4.26pm BST |
| 16:26 | 16:26 |
| A survey of companies finds 35% of them think that the UK leaving the EU would be harmful, writes Katie Allen: | A survey of companies finds 35% of them think that the UK leaving the EU would be harmful, writes Katie Allen: |
| A third of businesses in the UK think Brexit would be bad for the economy, according to a poll that also shows company bosses in London and Scotland are most worried about a vote to leave the EU in next week’s referendum. | A third of businesses in the UK think Brexit would be bad for the economy, according to a poll that also shows company bosses in London and Scotland are most worried about a vote to leave the EU in next week’s referendum. |
| The survey of 3,394 business owners and finance directors found those in the Midlands, east of England and northern England were the most optimistic about Brexit being helpful to the economy. | The survey of 3,394 business owners and finance directors found those in the Midlands, east of England and northern England were the most optimistic about Brexit being helpful to the economy. |
| The survey, by Charterhouse Research consultancy, found 35% of respondents thought Brexit would be harmful, 25% thought it would be good for the economy and 39% did not think it would make any difference. | The survey, by Charterhouse Research consultancy, found 35% of respondents thought Brexit would be harmful, 25% thought it would be good for the economy and 39% did not think it would make any difference. |
| The full story is here: | The full story is here: |
| Related: A third of UK businesses think Brexit would be bad for economy | Related: A third of UK businesses think Brexit would be bad for economy |
| 4.09pm BST | 4.09pm BST |
| 16:09 | 16:09 |
| Despite the poll lead for the Leave campaign, some spread betting clients appear to take the opposite view, according to Spreadex financial analyst Connor Campbell: | Despite the poll lead for the Leave campaign, some spread betting clients appear to take the opposite view, according to Spreadex financial analyst Connor Campbell: |
| Interestingly for all the Brexit-fear currently plaguing the markets, Spreadex has seen a consistent trend of clients opting to put their money behind the Remainers. In both size and frequency of bet choosing to stay in the EU has come out on top, that support by and large continuing throughout the last fortnight despite the deluge of polls having Vote Leave pulling ahead. Of course this is no guarantee that Britain will still be in the EU come Friday 24 June. However, in the run up to the general election last year Spreadex’s clients consistently backed a Conservative majority even as the polls predicted the tightest race in decades, so it isn’t hard to imagine a similar outcome this time around. | Interestingly for all the Brexit-fear currently plaguing the markets, Spreadex has seen a consistent trend of clients opting to put their money behind the Remainers. In both size and frequency of bet choosing to stay in the EU has come out on top, that support by and large continuing throughout the last fortnight despite the deluge of polls having Vote Leave pulling ahead. Of course this is no guarantee that Britain will still be in the EU come Friday 24 June. However, in the run up to the general election last year Spreadex’s clients consistently backed a Conservative majority even as the polls predicted the tightest race in decades, so it isn’t hard to imagine a similar outcome this time around. |
| 3.03pm BST | 3.03pm BST |
| 15:03 | 15:03 |
| Britain leaving the EU would not have a direct effect on the Russian economy, said the country’s central bank governor Elvira Nabiullina, repeating comments she made a week or so ago. | Britain leaving the EU would not have a direct effect on the Russian economy, said the country’s central bank governor Elvira Nabiullina, repeating comments she made a week or so ago. |
| In an interview with CNBC (transcript here ) ahead of her appearance at the St. Petersburg International Economic Forum, she said foreign investors’ perception of the Russian economy has improved. | In an interview with CNBC (transcript here ) ahead of her appearance at the St. Petersburg International Economic Forum, she said foreign investors’ perception of the Russian economy has improved. |
| And after last week’s rate cut she said the central bank might reduce its key rate further. | And after last week’s rate cut she said the central bank might reduce its key rate further. |
| 2.58pm BST | 2.58pm BST |
| 14:58 | 14:58 |
| Wall Street opens lower | Wall Street opens lower |
| In line with other global markets, US shares have come under pressure on fears of Brexit and the Federal Reserve’s caution about the global economy. | In line with other global markets, US shares have come under pressure on fears of Brexit and the Federal Reserve’s caution about the global economy. |
| The Dow Jones Industrial Average is down 130 points or 0.7%, while the S&P 500 opened 0.38% lower and Nasdaq down 0.5%. | The Dow Jones Industrial Average is down 130 points or 0.7%, while the S&P 500 opened 0.38% lower and Nasdaq down 0.5%. |
| The US opening fall has seen the declines in other markets accelerate, with the FTSE 100 now down 62 points or 1%. Germany’s Dax is down 1.3% and France’s Cac has lost 0.95%. | The US opening fall has seen the declines in other markets accelerate, with the FTSE 100 now down 62 points or 1%. Germany’s Dax is down 1.3% and France’s Cac has lost 0.95%. |
| 1.55pm BST | 1.55pm BST |
| 13:55 | 13:55 |
| Mixed US data | Mixed US data |
| Meanwhile there have been some mixed economic numbers from the US. | Meanwhile there have been some mixed economic numbers from the US. |
| Consumer price inflation rose 0.2%% in May, down on the April figure of 0.4%. Analysts had expected a rise of 0.3%. Core inflation was unchanged at +0.2% | Consumer price inflation rose 0.2%% in May, down on the April figure of 0.4%. Analysts had expected a rise of 0.3%. Core inflation was unchanged at +0.2% |
| Weekly jobless claims jumped to 277,000, compared to expectations of a 267,000 increase, while the Philadelphia Federal Reserve business conditions index came in at 4.7 compared to expectations of a flat performance. David Morrison, senior market strategist at Spread Co, said: | Weekly jobless claims jumped to 277,000, compared to expectations of a 267,000 increase, while the Philadelphia Federal Reserve business conditions index came in at 4.7 compared to expectations of a flat performance. David Morrison, senior market strategist at Spread Co, said: |
| The dollar fell in the immediate aftermath of the releases while stock index futures also declined. | The dollar fell in the immediate aftermath of the releases while stock index futures also declined. |
| Referendum or no referendum, there’s a growing feeling that the Fed has lost the plot when it comes to monetary policy. The US central bank switches from dovish to hawkish and back again with worrying regularity and has thrown the notion of “data dependence” out of the window. It is becoming obvious to an increasing number of investors that the Fed cannot bring itself to raise rates, yet is taking all measures to attempt to hide this fact from the market. It’s in a corner where hiking raises the prospect of a violent stock market sell-off, whereas a failure to tighten monetary policy suggests deep-rooted economic problems. | Referendum or no referendum, there’s a growing feeling that the Fed has lost the plot when it comes to monetary policy. The US central bank switches from dovish to hawkish and back again with worrying regularity and has thrown the notion of “data dependence” out of the window. It is becoming obvious to an increasing number of investors that the Fed cannot bring itself to raise rates, yet is taking all measures to attempt to hide this fact from the market. It’s in a corner where hiking raises the prospect of a violent stock market sell-off, whereas a failure to tighten monetary policy suggests deep-rooted economic problems. |
| Updated | Updated |
| at 1.56pm BST | at 1.56pm BST |
| 1.47pm BST | 1.47pm BST |
| 13:47 | 13:47 |
| FTSE 100 falls to lowest level since mid-February | FTSE 100 falls to lowest level since mid-February |
| The continuing uncertainty over a possible Brexit, with polls continuing to show the Leave campaign on the front foot, has sent London’s leading shares to their lowest level since the middle of February. | The continuing uncertainty over a possible Brexit, with polls continuing to show the Leave campaign on the front foot, has sent London’s leading shares to their lowest level since the middle of February. |
| The FTSE 100 is currently down 0.9% at 5911, a low not seen since February 17. As well as Brexit, the cautious comments from the US Federal Reserve about the global economy are also having an impact. | The FTSE 100 is currently down 0.9% at 5911, a low not seen since February 17. As well as Brexit, the cautious comments from the US Federal Reserve about the global economy are also having an impact. |
| Mining shares are among the main fallers, with copper prices down more than 2% and oil 1.5% lower. However precious metal specialists such as Randgold Resources and Fresnillo are on the rise, as investors seek out gold and silver as havens for their cash. | Mining shares are among the main fallers, with copper prices down more than 2% and oil 1.5% lower. However precious metal specialists such as Randgold Resources and Fresnillo are on the rise, as investors seek out gold and silver as havens for their cash. |
| Banks are also under pressure on fears they would be hard hit by a Brexit decision. | Banks are also under pressure on fears they would be hard hit by a Brexit decision. |
| On the foreign exchange markets the pound is down around a cent at $1.41, a near two month low. | On the foreign exchange markets the pound is down around a cent at $1.41, a near two month low. |
| 1.19pm BST | 1.19pm BST |
| 13:19 | 13:19 |
| Still on interest rates, economist Sam Alderson at the Centre for Economics and Business Research said: | Still on interest rates, economist Sam Alderson at the Centre for Economics and Business Research said: |
| In the absence of a vote to leave later this month, interest rates look unlikely to change for some time to come. Given a generally softening domestic economy and relatively gradual recovery in inflation, we wouldn’t expect the MPC to raise rates until the middle of 2017 at the earliest. However, the currency impact of a leave vote is likely to have a notable impact on the outlook for inflation. This in turn will clearly affect the Bank’s monetary policy stance in the months that follow. | In the absence of a vote to leave later this month, interest rates look unlikely to change for some time to come. Given a generally softening domestic economy and relatively gradual recovery in inflation, we wouldn’t expect the MPC to raise rates until the middle of 2017 at the earliest. However, the currency impact of a leave vote is likely to have a notable impact on the outlook for inflation. This in turn will clearly affect the Bank’s monetary policy stance in the months that follow. |
| 1.16pm BST | 1.16pm BST |
| 13:16 | 13:16 |
| UK interest rates would be cut close to zero in the event of a vote to leave the EU, says RBC Europe’s senior UK economist Sam Hill: | UK interest rates would be cut close to zero in the event of a vote to leave the EU, says RBC Europe’s senior UK economist Sam Hill: |
| The minutes continue to be non-committal on the direction of a change in monetary policy following a Leave vote even though the Committee acknowledge it could “materially alter the outlook”. Although the MPC only go as far as saying the direction of any move in policy “will depend on the relative magnitudes of the demand, supply and exchange rate effects” we are of the view that Bank Rate would be cut “towards zero” in the event of Brexit. Any short-term spike in inflation following a decline in the exchange rate we would expect to give way to downward pressure on inflation in the medium term – which is the MPC’s policy-relevant horizon – as weak demand is likely to weigh on output. | The minutes continue to be non-committal on the direction of a change in monetary policy following a Leave vote even though the Committee acknowledge it could “materially alter the outlook”. Although the MPC only go as far as saying the direction of any move in policy “will depend on the relative magnitudes of the demand, supply and exchange rate effects” we are of the view that Bank Rate would be cut “towards zero” in the event of Brexit. Any short-term spike in inflation following a decline in the exchange rate we would expect to give way to downward pressure on inflation in the medium term – which is the MPC’s policy-relevant horizon – as weak demand is likely to weigh on output. |
| The one change [in the minutes] which was discernable was an increased emphasis on the international implications. Firstly on referendum uncertainty (“The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets.”) and secondly on the event of a Brexit outcome (“Through financial market and confidence channels, there were also risks of adverse spillovers to the global economy.”). There was also reference to a further fall in sterling “perhaps sharply” in a Leave scenario but in the grand scheme of things these minutes don’t add much to what the MPC has already said on the EU referendum. | The one change [in the minutes] which was discernable was an increased emphasis on the international implications. Firstly on referendum uncertainty (“The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets.”) and secondly on the event of a Brexit outcome (“Through financial market and confidence channels, there were also risks of adverse spillovers to the global economy.”). There was also reference to a further fall in sterling “perhaps sharply” in a Leave scenario but in the grand scheme of things these minutes don’t add much to what the MPC has already said on the EU referendum. |
| The outlook for policy in the Remain scenario – effectively the scenario on which the May Inflation Report was conditioned – isn’t likely to be presented with greater clarity until August at the earliest. However, at this stage news since May “had done relatively little to change the MPC’s assessment of the economic outlook”. The Committee has been clear that data are difficult to interpret due to potential referendum effects. The same will be true until such time as it is thought any such effects have unwound after a Remain vote. We concluded last week... that any Remain rebound in economic activity may be underwhelming. | The outlook for policy in the Remain scenario – effectively the scenario on which the May Inflation Report was conditioned – isn’t likely to be presented with greater clarity until August at the earliest. However, at this stage news since May “had done relatively little to change the MPC’s assessment of the economic outlook”. The Committee has been clear that data are difficult to interpret due to potential referendum effects. The same will be true until such time as it is thought any such effects have unwound after a Remain vote. We concluded last week... that any Remain rebound in economic activity may be underwhelming. |
| So, whilst in that scenario our central case is for a 25 basis point Bank Rate hike in February 2017, the skew of risks is now clearly to a more dovish profile rather than a tightening in 2016. | So, whilst in that scenario our central case is for a 25 basis point Bank Rate hike in February 2017, the skew of risks is now clearly to a more dovish profile rather than a tightening in 2016. |
| 1.08pm BST | 1.08pm BST |
| 13:08 | 13:08 |
| Katie Allen | Katie Allen |
| Here’s our report on the Bank of England comments: | Here’s our report on the Bank of England comments: |
| The Bank of England has issued a fresh warning that a vote to leave the EU in next week’s referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy. | The Bank of England has issued a fresh warning that a vote to leave the EU in next week’s referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy. |
| Against the backdrop of jittery financial markets, the Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week. | Against the backdrop of jittery financial markets, the Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week. |
| Announcing its decision to keep interest rates at their record low of 0.5%, the Bank said the referendum on 23 June was the biggest immediate risk to UK financial markets, and perhaps those overseas, and that the current uncertainty was already denting spending. The pound has weakened in the run-up to the vote as opinion polls have pointed to a lead for the leave vote and the Bank warned in minutes to its latest rate-setting meeting that it would fall further in the event of Brexit. | Announcing its decision to keep interest rates at their record low of 0.5%, the Bank said the referendum on 23 June was the biggest immediate risk to UK financial markets, and perhaps those overseas, and that the current uncertainty was already denting spending. The pound has weakened in the run-up to the vote as opinion polls have pointed to a lead for the leave vote and the Bank warned in minutes to its latest rate-setting meeting that it would fall further in the event of Brexit. |
| “The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets,” said the minutes. In addition: “On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.” | “The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets,” said the minutes. In addition: “On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.” |
| The full story is here: | The full story is here: |
| Related: Bank of England: economy will be hit hard if Britain leaves EU | Related: Bank of England: economy will be hit hard if Britain leaves EU |
| 1.05pm BST | 1.05pm BST |
| 13:05 | 13:05 |
| But alternatively, a remain vote could mean a rate rise, some believe: | But alternatively, a remain vote could mean a rate rise, some believe: |
| #MPC gives strong warning on #Brexit risks in today's minutes. But a vote to stay would in our view make a turn-of-the-year rate hike likely | #MPC gives strong warning on #Brexit risks in today's minutes. But a vote to stay would in our view make a turn-of-the-year rate hike likely |