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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/18/uk-economy-firms-slash-spending-financial-news-brexit-arm-holdings-softbank-live
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| Bank of England policymaker says no rush to cut interest rates – business live | |
| (35 minutes later) | |
| 9.59am BST | |
| 09:59 | |
| BoE policymaker says interest rates may not be cut next month | |
| Bank of England policymaker Martin Weale has just fired a warning shot at the City, saying interest rates might not be cut in August. | |
| Speaking in London, Weale revealed that he is not convinced - yet anyway - that rates need to be slashed from 0.5% to fresh record lows to calm Brexit fears. | |
| Weale (who has previously voted to raise interest rates), says: the Bank shouldn’t be worried about disappointing the markets. | |
| The Old Lady of Threadneedle Street is not a nurse to markets. | |
| People who trade in markets know that the Monetary Policy Committee sets policy month by month in the way that its members think appropriate. It does sometimes, as we did in our July meeting, give an indication of where policy may go in the future. But that is no more than the best judgement at the time and not in any sense a commitment; the public understand that. | |
| Weale also argues that the Bank doesn’t need to act early to reassure households and businesses. | |
| In contrast to the experience of 2008, I do not have any sense that either consumers or businesses are panic-struck and, as I observed, there have been no material signs of financial panic. | |
| Martin Weale giving his final major speech as an MPC member. Doesn’t sound like he’ll be voting for a cut next month pic.twitter.com/TamfZKPKD6 | |
| Last week, the Bank of England surprised many economists by voting to leave interest rates on hold. The minutes of the meeting showed that many members of its monetary policy committee expect to agree on a new stimulus package in August. | |
| However, that might not necessarily include a rate cut. The MPC could vote to boost quantitative easing (buying bonds from banks with newly created money), or launch new measures to encourage banks to lend to businesses and consumers. | |
| #Weale (largely hawkish) indicates not sure will vote for #BOE #interest #rate cut at his final #MPC meeting in Aug https://t.co/R85upKydVX | |
| 9.33am BST | |
| 09:33 | |
| Brexit vote will drive UK into recession – EY Item Club | |
| The UK will fall into a “short, shallow recession” around the turn of the year as Brexit hits house prices, jobs and spending, according to forecasters at the EY Item Club. | |
| In another dose of gloom, they have slashed their 2017 growth estimate to 0.4% from 2.6%, and warned that Britain’s economy will suffer permanent harm from the decision to leave the EU. | |
| The group says: | |
| “There are likely to be severe confidence effects on spending, only partially cushioned by a fall in the pound. | |
| “We would expect a permanent reduction in the level of U.K. output and productivity.” | |
| 9.28am BST | 9.28am BST |
| 09:28 | 09:28 |
| Britain’s new digital minister is also backing the ARM takeover, underlying that SoftBank are not going to be blocked by Westminster. | Britain’s new digital minister is also backing the ARM takeover, underlying that SoftBank are not going to be blocked by Westminster. |
| The proposed investment of £24bn in ARM by SoftBank highlights Britain's capability to grow & build world-beating Tech companies | The proposed investment of £24bn in ARM by SoftBank highlights Britain's capability to grow & build world-beating Tech companies |
| “Investment” is a funny way of describing a takeover bid -- surely Hancock knows that the money goes to ARM’s shareholders? | “Investment” is a funny way of describing a takeover bid -- surely Hancock knows that the money goes to ARM’s shareholders? |
| The government’s eagerness to support the deal is also ironic, as prime minister Theresa May has pledged to protect UK firms in ‘strategic’ industries from foreign takeovers. | The government’s eagerness to support the deal is also ironic, as prime minister Theresa May has pledged to protect UK firms in ‘strategic’ industries from foreign takeovers. |
| July 11: Theresa May says govt will block takeovers of key UK firmsJuly 18: Govt welcomes takeover of Arm, UK's most important tech company | July 11: Theresa May says govt will block takeovers of key UK firmsJuly 18: Govt welcomes takeover of Arm, UK's most important tech company |
| Proof that a week really is a long time in politics... | Proof that a week really is a long time in politics... |
| 9.18am BST | 9.18am BST |
| 09:18 | 09:18 |
| Brexit fears have now hit Britain’s housing market, according to the latest data from Rightmove. | Brexit fears have now hit Britain’s housing market, according to the latest data from Rightmove. |
| UK property asking prices have dropped 0.9% over the last month, suggesting that the EU referendum is hitting demand for property. Some sellers may also be trying to get a deal before Britain’s economy has deteriorated. | UK property asking prices have dropped 0.9% over the last month, suggesting that the EU referendum is hitting demand for property. Some sellers may also be trying to get a deal before Britain’s economy has deteriorated. |
| Related: UK property asking prices drop 0.9% since June | Related: UK property asking prices drop 0.9% since June |
| Jeremy Duncombe, director of the Legal & General Mortgage Club, reckons its not a reason to panic: | Jeremy Duncombe, director of the Legal & General Mortgage Club, reckons its not a reason to panic: |
| “Given the uncertainty that has followed the UK’s decision to leave the EU, it’s not surprising that house prices have decreased month-on-month for the first time in a while. | “Given the uncertainty that has followed the UK’s decision to leave the EU, it’s not surprising that house prices have decreased month-on-month for the first time in a while. |
| We need however to look at the annual trend and not a month in isolation. House prices are still rising faster much than inflation over a 12 month period, and a slowing of this growth is not necessarily a bad thing. | We need however to look at the annual trend and not a month in isolation. House prices are still rising faster much than inflation over a 12 month period, and a slowing of this growth is not necessarily a bad thing. |
| 9.01am BST | 9.01am BST |
| 09:01 | 09:01 |
| Turkish stock market slides after coup failure | Turkish stock market slides after coup failure |
| Turkey’s stock market has slumped by 3% in early trading, failing to match the gains in other markets. | Turkey’s stock market has slumped by 3% in early trading, failing to match the gains in other markets. |
| Traders at the Istanbul Stock Exchange are understandably nervous following last weekend’s failed coup, which is likely to deter businesses from investing in Turkey and holidaymakers from visiting the country. | Traders at the Istanbul Stock Exchange are understandably nervous following last weekend’s failed coup, which is likely to deter businesses from investing in Turkey and holidaymakers from visiting the country. |
| There’s huge trading in the Turkish lira too. It tumbled on Friday night as military officers tried to overthrow president Erdoğan, falling from 2.88 lira to the $1 to 3.04. | There’s huge trading in the Turkish lira too. It tumbled on Friday night as military officers tried to overthrow president Erdoğan, falling from 2.88 lira to the $1 to 3.04. |
| The lira has now bounced back a bit, as Turkey’s government rounds up thousands of suspected coup plotters. | The lira has now bounced back a bit, as Turkey’s government rounds up thousands of suspected coup plotters. |
| Turkish lira claws back half of losses from coup attempt https://t.co/lZ74MBcavi pic.twitter.com/Knxungxgrq | Turkish lira claws back half of losses from coup attempt https://t.co/lZ74MBcavi pic.twitter.com/Knxungxgrq |
| Trading volume in Turkish lira "double normal" | Trading volume in Turkish lira "double normal" |
| Wolfango Piccoli of Teneo Intelligence fears Turkey faces further instability: | Wolfango Piccoli of Teneo Intelligence fears Turkey faces further instability: |
| This highlights that Erdogan is eager to exploit the event to expand his power and continue the witch-hunt, further worsening the state of Turkey’s crumbling democracy. | This highlights that Erdogan is eager to exploit the event to expand his power and continue the witch-hunt, further worsening the state of Turkey’s crumbling democracy. |
| Moreover, there is a growing risk of a snap election, as the AKP might seize the opportunity to enlarge its parliamentary majority with the aim of introducing an executive presidency via a constitutional revision. With two opposition parties (the MHP and the HDP) undergoing significant internal turmoil, an early election could deliver the necessary numbers for Erdogan’s dream to be fulfilled. | Moreover, there is a growing risk of a snap election, as the AKP might seize the opportunity to enlarge its parliamentary majority with the aim of introducing an executive presidency via a constitutional revision. With two opposition parties (the MHP and the HDP) undergoing significant internal turmoil, an early election could deliver the necessary numbers for Erdogan’s dream to be fulfilled. |
| On the external front, the already strained relationship with the US could worsen as a result of Ankara’s increased determination to request the extradition of Fethullah Gulen, who has been quickly accused by the Turkish government of being behind the failed putsch. | On the external front, the already strained relationship with the US could worsen as a result of Ankara’s increased determination to request the extradition of Fethullah Gulen, who has been quickly accused by the Turkish government of being behind the failed putsch. |
| 8.40am BST | 8.40am BST |
| 08:40 | 08:40 |
| ARM’s soaring share price has helped to drive the FTSE 100 towards the 11-month intraday high hit last week. | ARM’s soaring share price has helped to drive the FTSE 100 towards the 11-month intraday high hit last week. |
| The Footsie is up 45 points in early trading to 6715, while the smaller FTSE 250 has gained 1%. | The Footsie is up 45 points in early trading to 6715, while the smaller FTSE 250 has gained 1%. |
| Other European stock markets are also up in early trading, as traders remain sanguine despite Brexit concerns and the instability in Turkey. | Other European stock markets are also up in early trading, as traders remain sanguine despite Brexit concerns and the instability in Turkey. |
| 8.26am BST | 8.26am BST |
| 08:26 | 08:26 |
| Overnight, a top City fund manager warned that Brexit will be “horrible” for the UK economy. | Overnight, a top City fund manager warned that Brexit will be “horrible” for the UK economy. |
| Richard Buxton, the chief executive and head of UK equities at Old Mutual Global Investors (OMGI), says the referendum vote is “stupendously final.” | Richard Buxton, the chief executive and head of UK equities at Old Mutual Global Investors (OMGI), says the referendum vote is “stupendously final.” |
| “I don’t always agree with Martin Wolf [the Financial Times columnist], but when he wrote the day after that this is probably the single worst event in British postwar history, yeah, I don’t disagree | “I don’t always agree with Martin Wolf [the Financial Times columnist], but when he wrote the day after that this is probably the single worst event in British postwar history, yeah, I don’t disagree |
| Buxton also laid into the Leave campaign for failing to have a strategy for actually leaving the EU: | Buxton also laid into the Leave campaign for failing to have a strategy for actually leaving the EU: |
| “You can criticise the Brexit team for a) an utterly mendacious campaign and b) not expecting that they would really win, so never having a plan. I mean the whole thing is literally unbelievable. It is extraordinary how we have ended up where we are.” | “You can criticise the Brexit team for a) an utterly mendacious campaign and b) not expecting that they would really win, so never having a plan. I mean the whole thing is literally unbelievable. It is extraordinary how we have ended up where we are.” |
| Related: Brexit impact is going to be horrible, says leading City fund manager | Related: Brexit impact is going to be horrible, says leading City fund manager |
| 8.16am BST | 8.16am BST |
| 08:16 | 08:16 |
| Shares in chipmaker ARM Holdings have surged by 45% at the start of trading, as the City reacts to SoftBank’s takeover offer. | Shares in chipmaker ARM Holdings have surged by 45% at the start of trading, as the City reacts to SoftBank’s takeover offer. |
| They’re changing hands for £17.32 each, slightly over the Softbank offer of £17. | They’re changing hands for £17.32 each, slightly over the Softbank offer of £17. |
| That suggests investors expect the deal to go through, and there may be some speculation of a rival offer (even though Softbank are paying a 43% premium). | That suggests investors expect the deal to go through, and there may be some speculation of a rival offer (even though Softbank are paying a 43% premium). |
| Updated | Updated |
| at 9.05am BST | at 9.05am BST |
| 8.09am BST | 8.09am BST |
| 08:09 | 08:09 |
| UK government back ARM takeover | UK government back ARM takeover |
| Britain’s new finance minister has decided that the takeover of ARM Holdings by SoftBank is a jolly good thing. | Britain’s new finance minister has decided that the takeover of ARM Holdings by SoftBank is a jolly good thing. |
| Philip Hammond argues that the deal shows that the Brexit vote hasn’t hurt Britain’s place in the world, saying: | Philip Hammond argues that the deal shows that the Brexit vote hasn’t hurt Britain’s place in the world, saying: |
| “Britain has lost none of its allure to international investors. Britain is open for business - and open to foreign investment.” | “Britain has lost none of its allure to international investors. Britain is open for business - and open to foreign investment.” |
| He’s tweeting the same message: | He’s tweeting the same message: |
| Decision by SoftBank to invest in @ARMHoldings shows UK has lost none of its allure to global investors - Britain is open for business | Decision by SoftBank to invest in @ARMHoldings shows UK has lost none of its allure to global investors - Britain is open for business |
| This would be largest ever Asian investment into the UK & would double size of ARM's UK workforce.Big vote of confidence in British business | This would be largest ever Asian investment into the UK & would double size of ARM's UK workforce.Big vote of confidence in British business |
| However... the deal is also a reminder that the slump in the pound makes UK assets more affordable to overseas investors. The yen has surged by almost a third against the pound over the last year, including a 12% spike since the referendum. | However... the deal is also a reminder that the slump in the pound makes UK assets more affordable to overseas investors. The yen has surged by almost a third against the pound over the last year, including a 12% spike since the referendum. |
| Softbank's purchase of Arm largely facilitated by FX shifts, with GBPJPY falling around 30% over the past 12 months | Softbank's purchase of Arm largely facilitated by FX shifts, with GBPJPY falling around 30% over the past 12 months |
| Updated | Updated |
| at 9.05am BST | at 9.05am BST |
| 8.01am BST | 8.01am BST |
| 08:01 | 08:01 |
| Brexit vote drives business pessimism to record high | Brexit vote drives business pessimism to record high |
| British firms are slashing their spending plans in the face of uncertainty following last month’s EU referendum vote. | British firms are slashing their spending plans in the face of uncertainty following last month’s EU referendum vote. |
| In a worrying signal, anxiety among UK bosses has hit a five year high, according to accountancy firm Deloitte. | In a worrying signal, anxiety among UK bosses has hit a five year high, according to accountancy firm Deloitte. |
| Its survey found that 82% of chief financial officers from FTSE 350 and large private companies are planning to cut capital spending in the next year. | Its survey found that 82% of chief financial officers from FTSE 350 and large private companies are planning to cut capital spending in the next year. |
| That’s the biggest amount since the survey began a decade ago, up from 34 percent in the first quarter. | That’s the biggest amount since the survey began a decade ago, up from 34 percent in the first quarter. |
| And 83% are planning to rein in their hiring plans, in a blow to workers seeking new jobs. | And 83% are planning to rein in their hiring plans, in a blow to workers seeking new jobs. |
| How Brexit works: 82% of top UK firms shelve spending plans after EU vote - Deloitte https://t.co/XS5mFj3Gh3 | How Brexit works: 82% of top UK firms shelve spending plans after EU vote - Deloitte https://t.co/XS5mFj3Gh3 |
| Alarmingly, businesses are more pessimistic than after the financial crisis in 2008. | Alarmingly, businesses are more pessimistic than after the financial crisis in 2008. |
| Ian Stewart, Deloitte’s chief economist, sums up the situation: | Ian Stewart, Deloitte’s chief economist, sums up the situation: |
| “Perceptions of uncertainty have soared to levels last associated with the euro crisis five years ago. | “Perceptions of uncertainty have soared to levels last associated with the euro crisis five years ago. |
| “The spike in uncertainty has had a toxic effect on business sentiment, with optimism dropping to the lowest level since our survey started in 2007 -- lower, even, than in the wake of the failure of Lehman in late 2008.” | “The spike in uncertainty has had a toxic effect on business sentiment, with optimism dropping to the lowest level since our survey started in 2007 -- lower, even, than in the wake of the failure of Lehman in late 2008.” |
| Updated | Updated |
| at 8.02am BST | at 8.02am BST |
| 7.46am BST | 7.46am BST |
| 07:46 | 07:46 |
| The Agenda: Brexit, ARM and Turkey | The Agenda: Brexit, ARM and Turkey |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| There are three things on the agenda in the City today. Firstly, the Brexit vote, as companies continue to chew through the implications of last month’s EU referendum. | There are three things on the agenda in the City today. Firstly, the Brexit vote, as companies continue to chew through the implications of last month’s EU referendum. |
| Second, investors are watching the situation in Turkey closely after last weekend’s failed coup attempt. | Second, investors are watching the situation in Turkey closely after last weekend’s failed coup attempt. |
| President Erdoğan remains in power, and is now pledging to purge the Turkish state of dissidents. But the sight of tanks on the streets may shake confidence in the country, which is already facing high inflation and a troubled tourism industry. | President Erdoğan remains in power, and is now pledging to purge the Turkish state of dissidents. But the sight of tanks on the streets may shake confidence in the country, which is already facing high inflation and a troubled tourism industry. |
| Analysts at RBC Capital Markets explain: | Analysts at RBC Capital Markets explain: |
| Following a turbulent weekend, markets are actually quite calm. The weekend’s main highlight was the failed attempt to overthrow the Turkish government in a military coup d’etat and the subsequent mass detentions of military and judiciary personal. | Following a turbulent weekend, markets are actually quite calm. The weekend’s main highlight was the failed attempt to overthrow the Turkish government in a military coup d’etat and the subsequent mass detentions of military and judiciary personal. |
| Related: Recep Tayyip Erdoğan mourns coup casualties – and vows retribution | Related: Recep Tayyip Erdoğan mourns coup casualties – and vows retribution |
| And thirdly, we have some early morning takeover action. ARM Holdings, Britain’s biggest technology company, is being taken over by Japan’s SoftBank in a £24bn deal. | And thirdly, we have some early morning takeover action. ARM Holdings, Britain’s biggest technology company, is being taken over by Japan’s SoftBank in a £24bn deal. |
| Encouragingly, SoftBank are promising to at least double the number of UK employees at ARM, in what looks a massive bet on the Internet of Things [the idea that every object will be linked to the web] | Encouragingly, SoftBank are promising to at least double the number of UK employees at ARM, in what looks a massive bet on the Internet of Things [the idea that every object will be linked to the web] |
| Related: ARM Holdings to be sold to Japan's SoftBank for £24bn | Related: ARM Holdings to be sold to Japan's SoftBank for £24bn |
| Watch shares of @ARMHoldings at open...#Softbank offers £24b = 45% premium to current £16.7b market cap pic.twitter.com/PpolzamMYt | Watch shares of @ARMHoldings at open...#Softbank offers £24b = 45% premium to current £16.7b market cap pic.twitter.com/PpolzamMYt |
| We’ll be tracking all the main developments through the day. | We’ll be tracking all the main developments through the day. |
| Updated | Updated |
| at 9.05am BST | at 9.05am BST |