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Version 12 Version 13
Brexit recession feared as UK corporate confidence slumps – as it happened Brexit recession feared as UK corporate confidence slumps – as it happened
(about 1 month later)
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Closing summaryClosing summary
That’s all for tonight.That’s all for tonight.
A quick reminder of the key points:A quick reminder of the key points:
We’ll be back tomorrow, so find out if the Bank of England has cut UK interest rates to fresh record lows. Goodnight! GWWe’ll be back tomorrow, so find out if the Bank of England has cut UK interest rates to fresh record lows. Goodnight! GW
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European stock markets close in the redEuropean stock markets close in the red
The stock markets never really burst into life today. And now they’ve closed, slightly in the red.The stock markets never really burst into life today. And now they’ve closed, slightly in the red.
The FTSE 100 closed down 10 points at 6670, while the FSTE 250 index shed 0.3%.The FTSE 100 closed down 10 points at 6670, while the FSTE 250 index shed 0.3%.
European markets were pretty mixed, while Italy’s FSTE MIB shed another 1% as worries over its banking sector build up.European markets were pretty mixed, while Italy’s FSTE MIB shed another 1% as worries over its banking sector build up.
The pound has dipped this afternoon too, now down 0.5% at $1.3182.The pound has dipped this afternoon too, now down 0.5% at $1.3182.
City investors have mainly been watching events unfold at Downing Street, as David Cameron tenders his resignation to the Queen.City investors have mainly been watching events unfold at Downing Street, as David Cameron tenders his resignation to the Queen.
Chris Beauchamp of IG reports:Chris Beauchamp of IG reports:
Today will be remembered for political considerations more than anything, with Cameron vacating No.10 in exchange for the UK’s second female Prime Minister. Arguably it was the appointment of Ms May that sparked this week’s sterling resurgence, for which holiday makers will be thanking Andrea Leadsom.Today will be remembered for political considerations more than anything, with Cameron vacating No.10 in exchange for the UK’s second female Prime Minister. Arguably it was the appointment of Ms May that sparked this week’s sterling resurgence, for which holiday makers will be thanking Andrea Leadsom.
After all the political dramatics of late, it feels as though we have reached a conclusion with the appointment of Theresa May.After all the political dramatics of late, it feels as though we have reached a conclusion with the appointment of Theresa May.
Tomorrow, we’ll be staring at the Bank of England instead, to see if UK interest rates are cut to fresh record lows.Tomorrow, we’ll be staring at the Bank of England instead, to see if UK interest rates are cut to fresh record lows.
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Speculation continues to swirl that Phillip Hammond will be Britain’s next chancellor (see earlier).Speculation continues to swirl that Phillip Hammond will be Britain’s next chancellor (see earlier).
Thee other top jobs could go to high-flying Conservative women, though, such as energy secretary Amber Rudd and development secretary Justine Greening:Thee other top jobs could go to high-flying Conservative women, though, such as energy secretary Amber Rudd and development secretary Justine Greening:
Latest goss: Hammond chancellor, Greening foreign, Rudd home, Milton chief whip, Grayling Brexit. 75% of 4 great offices for women, if trueLatest goss: Hammond chancellor, Greening foreign, Rudd home, Milton chief whip, Grayling Brexit. 75% of 4 great offices for women, if true
Our politics liveblog has all the details:Our politics liveblog has all the details:
Related: David Cameron to visit the Queen at 5pm to formally resign - Politics live
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Brexit blamed as Bank of Canada cuts growth forecastsBrexit blamed as Bank of Canada cuts growth forecasts
Just in: The Bank of Canada has slashed its growth forecast, and put some of the blame on Britain’s vote to leave the EU.Just in: The Bank of Canada has slashed its growth forecast, and put some of the blame on Britain’s vote to leave the EU.
The BoC now only expects the Canadian economy to expand by 1.3% this year, down from 1.7% just three months ago - before the EU referendum spooked the global economy.The BoC now only expects the Canadian economy to expand by 1.3% this year, down from 1.7% just three months ago - before the EU referendum spooked the global economy.
Bank of Canada cuts 2016 GDP growth forecast to 1.3% from 1.7%Bank of Canada cuts 2016 GDP growth forecast to 1.3% from 1.7%
And it estimates that Brexit will wipe 0.1% off Canadian growth, as confidence, trade links and financial conditions all suffer.And it estimates that Brexit will wipe 0.1% off Canadian growth, as confidence, trade links and financial conditions all suffer.
In a statement, the BoC warns:In a statement, the BoC warns:
In the wake of Brexit, global markets have materially re-priced a number of asset classes. Financial conditions, already accommodative, have become even more so....In the wake of Brexit, global markets have materially re-priced a number of asset classes. Financial conditions, already accommodative, have become even more so....
Overall, the risks to the profile for inflation are roughly balanced, although the implications of the Brexit vote are highly uncertain and difficult to forecast.Overall, the risks to the profile for inflation are roughly balanced, although the implications of the Brexit vote are highly uncertain and difficult to forecast.
The BoC also left interest rates on hold, at the current record low of 0.5%.The BoC also left interest rates on hold, at the current record low of 0.5%.
Here’s a handy box with more details:Here’s a handy box with more details:
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US shares hit new record highsUS shares hit new record highs
Boom! The US stock market has hit fresh record highs at the start of trading in New York.Boom! The US stock market has hit fresh record highs at the start of trading in New York.
The Dow Jones index reached 18,382 points for the first time, while the S&P 500 index also hit a new intra-day high.The Dow Jones index reached 18,382 points for the first time, while the S&P 500 index also hit a new intra-day high.
Brexit fears seem to have been pushed to one side, for the moment, as traders lick their lips and expect more stimulus measures from the Bank of England and the Bank of Japan.Brexit fears seem to have been pushed to one side, for the moment, as traders lick their lips and expect more stimulus measures from the Bank of England and the Bank of Japan.
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If he is appointed chancellor, Philip Hammond’s first act will probably be ditching George Osborne’s target of a fiscal surplus by the end of the parliament (once he’s shaken paws with Larry the cat).If he is appointed chancellor, Philip Hammond’s first act will probably be ditching George Osborne’s target of a fiscal surplus by the end of the parliament (once he’s shaken paws with Larry the cat).
“Balancing the books” is another casualty of the Brexit vote. With Britain sliding towards recession, the sensible move is to relax fiscal policy and nurse the economy into better health.“Balancing the books” is another casualty of the Brexit vote. With Britain sliding towards recession, the sensible move is to relax fiscal policy and nurse the economy into better health.
Some Tories are now talking about borrowing to invest in the future, which is sensible, given that investors will pay to lend to Britain. But it’s quite a turnaround from 2015, when Labour was damned as fiscally irresponsible for such notions.Some Tories are now talking about borrowing to invest in the future, which is sensible, given that investors will pay to lend to Britain. But it’s quite a turnaround from 2015, when Labour was damned as fiscally irresponsible for such notions.
Don't worry: Downing Street's chief mouser remains Larry the cat https://t.co/kKUCwigJ3U pic.twitter.com/M9W8oFy5BdDon't worry: Downing Street's chief mouser remains Larry the cat https://t.co/kKUCwigJ3U pic.twitter.com/M9W8oFy5Bd
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George Osborne’s tenure as chancellor may soon be over ...George Osborne’s tenure as chancellor may soon be over ...
Philip Hammond expected to be named chancellor by #TheresaMayPM, reports @Peston https://t.co/TSSoHKI44p pic.twitter.com/wa7hMEMljUPhilip Hammond expected to be named chancellor by #TheresaMayPM, reports @Peston https://t.co/TSSoHKI44p pic.twitter.com/wa7hMEMljU
PHILIP HAMMOND EXPECTED TO BE NAMED U.K. CHANCELLOR, ITV SAYSPHILIP HAMMOND EXPECTED TO BE NAMED U.K. CHANCELLOR, ITV SAYS
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The pound’s tumble after the Brexit vote last month has come at a very bad time for British holidaymakers.The pound’s tumble after the Brexit vote last month has come at a very bad time for British holidaymakers.
Sterling has lost about 10% against the US dollar, hitting a 31-year low. It is down a similar amount against the euro, at €1.197.Sterling has lost about 10% against the US dollar, hitting a 31-year low. It is down a similar amount against the euro, at €1.197.
At least, that’s the value on my Reuters terminal. Out in the real world, you’ll get rather less.At least, that’s the value on my Reuters terminal. Out in the real world, you’ll get rather less.
Related: £1 buys just €1 in some UK airports
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UK economy "to shrink 1% in 2017"UK economy "to shrink 1% in 2017"
Investment bank Credit Suisse has sounded the alarm, predicting that Britain will slide into recession next year.Investment bank Credit Suisse has sounded the alarm, predicting that Britain will slide into recession next year.
Its economics team have predicted that UK GDP will contract by 1% in 2017, as the impact of the Brexit vote hits confidence and business spending.Its economics team have predicted that UK GDP will contract by 1% in 2017, as the impact of the Brexit vote hits confidence and business spending.
Credit Suisse said:Credit Suisse said:
We fear that, ahead of the referendum, two of the best lead indicators for UK growth – service PMI new orders and vacancy growth – were already consistent with a mild recession.We fear that, ahead of the referendum, two of the best lead indicators for UK growth – service PMI new orders and vacancy growth – were already consistent with a mild recession.
This chart shows its forecasts: the two dots showing slowing growth this year, and a contraction next year.This chart shows its forecasts: the two dots showing slowing growth this year, and a contraction next year.
And it cites five reasons why:And it cites five reasons why:
Other economists are a little less pessimistic, though; the consensus is that the economy will grow by 0.5% in 2017, down from almost 2% before the referendum.Other economists are a little less pessimistic, though; the consensus is that the economy will grow by 0.5% in 2017, down from almost 2% before the referendum.
Did something happen? Consensus forecast for 2017 UK growth. pic.twitter.com/qGlX2Fm2GiDid something happen? Consensus forecast for 2017 UK growth. pic.twitter.com/qGlX2Fm2Gi
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Phillip InmanPhillip Inman
A group of economists who backed the leave campaign have said Theresa May should embrace quitting the single market.A group of economists who backed the leave campaign have said Theresa May should embrace quitting the single market.
They argue that this would allow Britain to enjoy the benefits of free trade with Europe and the rest of the world.They argue that this would allow Britain to enjoy the benefits of free trade with Europe and the rest of the world.
Economists for Brexit, a group of economists who campaigned for the UK to leave the EU, warned that article 50 negotiations with Brussels to extract concessions for British businesses would be undermined without the real threat of abandoning the EU customs union.Economists for Brexit, a group of economists who campaigned for the UK to leave the EU, warned that article 50 negotiations with Brussels to extract concessions for British businesses would be undermined without the real threat of abandoning the EU customs union.
At a press conference held by the 13-strong group at the Institute of Directors in London, Gerald Lyons said an EU-lite policy “would not be the best economically and is likely to disappoint the electorate”.At a press conference held by the 13-strong group at the Institute of Directors in London, Gerald Lyons said an EU-lite policy “would not be the best economically and is likely to disappoint the electorate”.
At Economists for Brexit event I'm told all bad things are due to scaremongering and that future is bright (1/2) pic.twitter.com/gJnJQSZlFzAt Economists for Brexit event I'm told all bad things are due to scaremongering and that future is bright (1/2) pic.twitter.com/gJnJQSZlFz
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One of the UK property funds that banned investors from taking money out after the Brexit vote has lifted the suspension.One of the UK property funds that banned investors from taking money out after the Brexit vote has lifted the suspension.
Aberdeen Asset Management announced the move this morning, eight days after being forced to gate its fund after a flood of redemption requests.Aberdeen Asset Management announced the move this morning, eight days after being forced to gate its fund after a flood of redemption requests.
It has already cut the value of the fund, which invests in supermarkets, offices and warehouses, by 17%.It has already cut the value of the fund, which invests in supermarkets, offices and warehouses, by 17%.
Aberdeen’s chief executive, Martin Gilbert, is warning that the value of the fund could be volatile for a while as the market adjusts to the consequences of Brexit.Aberdeen’s chief executive, Martin Gilbert, is warning that the value of the fund could be volatile for a while as the market adjusts to the consequences of Brexit.
Investors should be aware that the price may be adjusted on a daily basis to reflect the fund’s requirement to provide liquidity and the need to protect all investors.Investors should be aware that the price may be adjusted on a daily basis to reflect the fund’s requirement to provide liquidity and the need to protect all investors.
Aberdeen, along with several other property trusts, is now trying to sell real estate assets to generate funds to repay investors. It’s a tough market: Sky News reported last night that commercial property prices have fallen by 10%-15%.Aberdeen, along with several other property trusts, is now trying to sell real estate assets to generate funds to repay investors. It’s a tough market: Sky News reported last night that commercial property prices have fallen by 10%-15%.
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Will Bank of England give sterling a shunt?Will Bank of England give sterling a shunt?
City analysts are predicting that the pound may suffer fresh losses soon, perhaps as early as tomorrow, when the Bank of England announces its decision on UK interest rates.City analysts are predicting that the pound may suffer fresh losses soon, perhaps as early as tomorrow, when the Bank of England announces its decision on UK interest rates.
Sterling is currently rising for the fifth day running, but Paresh Davdra of RationalFX reckons that the “Theresa May bounce” might not last long.Sterling is currently rising for the fifth day running, but Paresh Davdra of RationalFX reckons that the “Theresa May bounce” might not last long.
Although recent political events have boosted the pound somewhat, it is important to remember that the UK is not out of the woods yet.Although recent political events have boosted the pound somewhat, it is important to remember that the UK is not out of the woods yet.
The monetary policy committee decision to take place tomorrow will ultimately determine the short-term future of the currency – a fall in interest rates will, in turn, mean a tumbling pound. With 80% predicting a reduced bank rate tomorrow, it is likely sterling has not yet escaped the Brexit haze.The monetary policy committee decision to take place tomorrow will ultimately determine the short-term future of the currency – a fall in interest rates will, in turn, mean a tumbling pound. With 80% predicting a reduced bank rate tomorrow, it is likely sterling has not yet escaped the Brexit haze.
Of course, the Bank of England may decide not to cut interest rates at the moment.Of course, the Bank of England may decide not to cut interest rates at the moment.
Jeremy Cook, the chief economist at World First, reckons that the UK’s central bank should hold fire until the consequences of Brexit are clear:Jeremy Cook, the chief economist at World First, reckons that the UK’s central bank should hold fire until the consequences of Brexit are clear:
I believe it would be unwise for a CB to fire its remaining rounds with little knowledge or certainty as to the size of the enemy it faces.I believe it would be unwise for a CB to fire its remaining rounds with little knowledge or certainty as to the size of the enemy it faces.
That being said, there is merit in heading problems off as soon as practicableThat being said, there is merit in heading problems off as soon as practicable
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More drama in the bond market. Britain has sold more than £1bn of inflation-linked bonds at a negative interest rate.More drama in the bond market. Britain has sold more than £1bn of inflation-linked bonds at a negative interest rate.
Here’s the proof:Here’s the proof:
UK govt just sold £1.25bn of 10yr index linked (eg inflation proof) bonds at an interest rate of -1.578%Yes, minus pic.twitter.com/0A4ZwKl2AjUK govt just sold £1.25bn of 10yr index linked (eg inflation proof) bonds at an interest rate of -1.578%Yes, minus pic.twitter.com/0A4ZwKl2Aj
As with Germany’s bond sale, it means that investors are worried about growth prospects and don’t fancy putting their money into riskier assets.As with Germany’s bond sale, it means that investors are worried about growth prospects and don’t fancy putting their money into riskier assets.
OK, it also means that they don’t expect Britain to default. But that’s never a realistic danger, as the UK controls its own currency (so can print as many pounds as it needs to pay off its debts).OK, it also means that they don’t expect Britain to default. But that’s never a realistic danger, as the UK controls its own currency (so can print as many pounds as it needs to pay off its debts).
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