This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2016/oct/05/brexit-fears-pound-lows-dollar-euro-service-sector-imf-business-live
The article has changed 17 times. There is an RSS feed of changes available.
| Version 4 | Version 5 |
|---|---|
| Brexit recession fears fade as UK service sector beats forecasts – Business Live | Brexit recession fears fade as UK service sector beats forecasts – Business Live |
| (35 minutes later) | |
| 11.55am BST | |
| 11:55 | |
| There’s a subdued feeling on City trading floor today, after the FTSE 100 failed (just) to hit a new alltime high yesterday. | |
| The blue-chip index has shed almost 0.6%, or 40 points, to 7034 - despite Tesco soaring higher after impressing investors with its financial results today. | |
| And the smaller FTSE 250, which did hit a record high last night, has lost 0.7%. | |
| European stock markets are also in the red, today, following reports that the European Central Bank might wind back its bond-buying stimulus programme. | |
| Currently, the ECB is creating €80bn of new money each month to buy new bonds. Bloomberg says that policymakers have considered tapering it -- steadily trimming the monthly purchases. | |
| Although the ECB denies discussing tapering, the prospect of the easy money tap being turned down has depressed the markets. | |
| Joshua Mahony, market analyst at IG, explains: | |
| The bullish sentiment that drove yesterday’s sensational rise in the FTSE has been dampened today, with markets largely responding to the fears that perhaps the seemingly unlimited ECB QE could be limited after all. Rumours of exit plans being drawn up at the ECB highlight the growing feeling that Draghi & co are facing up to a exhaustion of monetary policy policies and effectiveness. | |
| 11.04am BST | 11.04am BST |
| 11:04 | 11:04 |
| Bank of England deputy governor on the Brexit vote | Bank of England deputy governor on the Brexit vote |
| Bank of England deputy governor Ben Broadbent has weighed in on the Brexit issue, saying June’s vote has caused rather less economic damage than feared. | Bank of England deputy governor Ben Broadbent has weighed in on the Brexit issue, saying June’s vote has caused rather less economic damage than feared. |
| In a speech this morning, Broadbent says: | In a speech this morning, Broadbent says: |
| There’s little doubt that the economy has performed better than surveys suggested immediately after the referendum and, although we aimed off those significantly, somewhat more strongly than our near-term forecasts as well. | There’s little doubt that the economy has performed better than surveys suggested immediately after the referendum and, although we aimed off those significantly, somewhat more strongly than our near-term forecasts as well. |
| Why? Broadbent suggests the UK economy had more ‘underlying momentum than expected’. Second, the housing market may hold be better than feared. | Why? Broadbent suggests the UK economy had more ‘underlying momentum than expected’. Second, the housing market may hold be better than feared. |
| And there’s also the possibility that the weak pound is supporting the economy. | And there’s also the possibility that the weak pound is supporting the economy. |
| Broadbent says: | Broadbent says: |
| The foreign exchange market attempts to price long-run risk and, to my mind, the currency fell after the referendum for fear of what the result might ultimately mean for the UK’s access to global markets. | The foreign exchange market attempts to price long-run risk and, to my mind, the currency fell after the referendum for fear of what the result might ultimately mean for the UK’s access to global markets. |
| But if that is a risk for the longer term, once the UK’s new trading arrangements come into force, those arrangements are for the time being unchanged. Against that backdrop, the fall in the exchange rate will help to support activity, cushioning the impact of greater uncertainty. While that was expected, the effect could be coming through faster than we’d anticipated. | But if that is a risk for the longer term, once the UK’s new trading arrangements come into force, those arrangements are for the time being unchanged. Against that backdrop, the fall in the exchange rate will help to support activity, cushioning the impact of greater uncertainty. While that was expected, the effect could be coming through faster than we’d anticipated. |
| The speech also takes a good look at the impact, and causes, of record low bond yields (a massive headache for pension funds), and the wider issue of economic uncertainty. It’s online here. | The speech also takes a good look at the impact, and causes, of record low bond yields (a massive headache for pension funds), and the wider issue of economic uncertainty. It’s online here. |
| Really good speech by @bankofengland Ben Broadbent https://t.co/5Tibyb4COl | Really good speech by @bankofengland Ben Broadbent https://t.co/5Tibyb4COl |
| 10.25am BST | 10.25am BST |
| 10:25 | 10:25 |
| This isn’t how Theresa May would like her first conference as Tory leader to be remembered. | This isn’t how Theresa May would like her first conference as Tory leader to be remembered. |
| But it appears that the slump in the pound vs the euro this week means Britain has fallen to sixth place in the list of the world’s biggest economies, behind our old friends France. | But it appears that the slump in the pound vs the euro this week means Britain has fallen to sixth place in the list of the world’s biggest economies, behind our old friends France. |
| The FT’s Chris Giles has crunched the numbers, and explains: | The FT’s Chris Giles has crunched the numbers, and explains: |
| International Monetary Fund estimates of the size of economies in 2016 puts the UK at £1,932bn with France weighing in at €2,228bn, putting the UK ahead so long as a pound buys more than €1.153. | International Monetary Fund estimates of the size of economies in 2016 puts the UK at £1,932bn with France weighing in at €2,228bn, putting the UK ahead so long as a pound buys more than €1.153. |
| At the start of the week, the prime minister, chancellor, foreign secretary and Brexit secretary all boasted that Britain would get a good deal in EU talks because Britain was the fifth-largest economy in the world. At that stage their words could be justified with sterling worth €1.16 at the end of last week. | At the start of the week, the prime minister, chancellor, foreign secretary and Brexit secretary all boasted that Britain would get a good deal in EU talks because Britain was the fifth-largest economy in the world. At that stage their words could be justified with sterling worth €1.16 at the end of last week. |
| The paradox of the tough talk — with suggestions that Britain will leave the single market and clamp down heavily on immigration — has been to pull the rug from under sterling, leaving it at a post-Brexit low of €1.14 on Wednesday and below the point at which it is the fifth-largest economy. | The paradox of the tough talk — with suggestions that Britain will leave the single market and clamp down heavily on immigration — has been to pull the rug from under sterling, leaving it at a post-Brexit low of €1.14 on Wednesday and below the point at which it is the fifth-largest economy. |
| £ fall vs euro, during Conservative conference, relegates UK to worlds 6th biggest economy behind France, calcs @FT https://t.co/Pl4DF6LtsY | £ fall vs euro, during Conservative conference, relegates UK to worlds 6th biggest economy behind France, calcs @FT https://t.co/Pl4DF6LtsY |
| The pound is currently hovering around €1.134, having hit a five-year low this morning. | The pound is currently hovering around €1.134, having hit a five-year low this morning. |
| 10.13am BST | 10.13am BST |
| 10:13 | 10:13 |
| The encouraging service sector PMI has given the poor old pound a bit of relief. | The encouraging service sector PMI has given the poor old pound a bit of relief. |
| Sterling has now struggled back from its early morning selloff, and is now back around $1.2740 against the US dollar. | Sterling has now struggled back from its early morning selloff, and is now back around $1.2740 against the US dollar. |
| 10.06am BST | 10.06am BST |
| 10:06 | 10:06 |
| We’ve now had three months worth of PMI data, since the UK referendum. | We’ve now had three months worth of PMI data, since the UK referendum. |
| And they suggest that the economy did deteriorate in July, before bouncing back in August and September. | And they suggest that the economy did deteriorate in July, before bouncing back in August and September. |
| UK PMIs for Q3. Given the hard data for services for July showed growth, this picture could turn out to be a slight underestimate of reality pic.twitter.com/s6i8agBbdC | UK PMIs for Q3. Given the hard data for services for July showed growth, this picture could turn out to be a slight underestimate of reality pic.twitter.com/s6i8agBbdC |
| 10.01am BST | 10.01am BST |
| 10:01 | 10:01 |
| David Noble, CEO at the Chartered Institute of Procurement & Supply, is also encouraged by September’s service sector report. | David Noble, CEO at the Chartered Institute of Procurement & Supply, is also encouraged by September’s service sector report. |
| Policymakers were offered much-needed positive news for September after the recent Brexit upheaval, as the service sector reported the fastest increase in new business since February this year. Though the overall activity index still remained below its long-term average and had dipped slightly compared to August, it reflected a modest revival of fortunes for services businesses. | Policymakers were offered much-needed positive news for September after the recent Brexit upheaval, as the service sector reported the fastest increase in new business since February this year. Though the overall activity index still remained below its long-term average and had dipped slightly compared to August, it reflected a modest revival of fortunes for services businesses. |
| But although firms took on more workers in September, “disquiet” around Brexit still remains, Noble says: | But although firms took on more workers in September, “disquiet” around Brexit still remains, Noble says: |
| The sector concentrated on stabilising rather than forging ahead with confidence, as optimism stayed below the long- term average.” | The sector concentrated on stabilising rather than forging ahead with confidence, as optimism stayed below the long- term average.” |
| 9.50am BST | 9.50am BST |
| 09:50 | 09:50 |
| Fears that Britain could be falling into recession have faded, following today’s service sector data. | Fears that Britain could be falling into recession have faded, following today’s service sector data. |
| Chris Williamson, chief business economist at IHS Markit, believes the UK has regained “modest growth momentum” | Chris Williamson, chief business economist at IHS Markit, believes the UK has regained “modest growth momentum” |
| “Across the three sectors [Services, Construction and Manufacturing] the pace of economic growth signalled was the strongest since January, fuelling greater job creation as companies shrugged off short-term Brexit worries and enjoyed the benefits of a weaker currency. | “Across the three sectors [Services, Construction and Manufacturing] the pace of economic growth signalled was the strongest since January, fuelling greater job creation as companies shrugged off short-term Brexit worries and enjoyed the benefits of a weaker currency. |
| “The improvement suggests the economy has regained a growth rate of approximately 0.3% after recovering from the initial shock of the EU referendum in late-June. If July’s low is included, the PMI surveys point to a mere 0.1% expansion of GDP in the third quarter, but this probably overstates the weakening in the rate of growth. | “The improvement suggests the economy has regained a growth rate of approximately 0.3% after recovering from the initial shock of the EU referendum in late-June. If July’s low is included, the PMI surveys point to a mere 0.1% expansion of GDP in the third quarter, but this probably overstates the weakening in the rate of growth. |
| 9.38am BST | 9.38am BST |
| 09:38 | 09:38 |
| UK Services sector beats forecasts | UK Services sector beats forecasts |
| Breaking: Britain’s services sector grew faster than expected last month, as firms shake off the shock of June’s Eu referendum. | Breaking: Britain’s services sector grew faster than expected last month, as firms shake off the shock of June’s Eu referendum. |
| The Service Sector PMI, produced by data firm Markit, has come in at 52.6. | The Service Sector PMI, produced by data firm Markit, has come in at 52.6. |
| That shows slightly slower growth than August (52.9), but comfortably ahead of estimates. | That shows slightly slower growth than August (52.9), but comfortably ahead of estimates. |
| Markit reports that: | Markit reports that: |
| Service sector firms reported that new business rose at the fastest pace since February, as customer enquiries picked up and confidence recovered. | Service sector firms reported that new business rose at the fastest pace since February, as customer enquiries picked up and confidence recovered. |
| There was also “rising demand from overseas clients” linked to the weak pound. | There was also “rising demand from overseas clients” linked to the weak pound. |
| However, there are also worries that the slump in sterling is driving up import costs. | However, there are also worries that the slump in sterling is driving up import costs. |
| Markit says: | Markit says: |
| The UK service sector continued to recover from July’s EU referendum-induced shock, | The UK service sector continued to recover from July’s EU referendum-induced shock, |
| However, future expectations remained very low by historical standards and the survey recorded the sharpest increase in service sector input prices in over three-and-a-half years. | However, future expectations remained very low by historical standards and the survey recorded the sharpest increase in service sector input prices in over three-and-a-half years. |
| More to follow.... | More to follow.... |
| Updated | Updated |
| at 9.39am BST | at 9.39am BST |
| 9.29am BST | 9.29am BST |
| 09:29 | 09:29 |
| Britain’s car industry seems to have ridden out the Brexit storm, so far anyway. | Britain’s car industry seems to have ridden out the Brexit storm, so far anyway. |
| New car registrations in the UK rose 1.6% in September to hit a new record, according to new data from the Society of Motor Manufacturers and Traders. | New car registrations in the UK rose 1.6% in September to hit a new record, according to new data from the Society of Motor Manufacturers and Traders. |
| But SMMT chief executive Mike Hawes warns that the industry could yet be damaged: | But SMMT chief executive Mike Hawes warns that the industry could yet be damaged: |
| “The ability of the market to maintain this record level of demand will depend on the ability of government to overcome political uncertainty and safeguard the conditions that underpin consumer appetite” | “The ability of the market to maintain this record level of demand will depend on the ability of government to overcome political uncertainty and safeguard the conditions that underpin consumer appetite” |
| 9.17am BST | 9.17am BST |
| 09:17 | 09:17 |
| Report: Hard Brexit could cost 70,000 City jobs | Report: Hard Brexit could cost 70,000 City jobs |
| How bad would a ‘Hard Brexit’ be? | How bad would a ‘Hard Brexit’ be? |
| Well, according to a new report, 70,000 financial services jobs could be lost if the UK leaves the single market. Up to £10bn of tax revenue could be wiped out too -- if British firms lost the ability to sell services across the European single market. | Well, according to a new report, 70,000 financial services jobs could be lost if the UK leaves the single market. Up to £10bn of tax revenue could be wiped out too -- if British firms lost the ability to sell services across the European single market. |
| The key is whether Britain retains its ‘passporting’ rights, which currently allow City firms to operate in every EU country without separate licences or offices on the ground. | The key is whether Britain retains its ‘passporting’ rights, which currently allow City firms to operate in every EU country without separate licences or offices on the ground. |
| The report, by consultancy group Oliver Wyman for TheCityUK lobby group, says that Britain would only suffer a ‘modest reduction’ in activity, if it retained access to the single market. | The report, by consultancy group Oliver Wyman for TheCityUK lobby group, says that Britain would only suffer a ‘modest reduction’ in activity, if it retained access to the single market. |
| In this scenario, revenues are predicted to decline by up to £2BN (2% of total wholesale and international business), 4,000 jobs would be at risk, and tax revenues would fall by less than £0.5BN per annum. | In this scenario, revenues are predicted to decline by up to £2BN (2% of total wholesale and international business), 4,000 jobs would be at risk, and tax revenues would fall by less than £0.5BN per annum. |
| However, losing access to the single market would be much more serious ... | However, losing access to the single market would be much more serious ... |
| Under conditions where the UK moves to a third country arrangement with the EU, without any regulatory equivalence and its relationship with the EU is defined by terms set out under the World Trade Organization, up to 50% of EU-related activity (£20BN in revenue) and an estimated 35,000 jobs could be at risk, along with £5BN of tax revenues per annum. | Under conditions where the UK moves to a third country arrangement with the EU, without any regulatory equivalence and its relationship with the EU is defined by terms set out under the World Trade Organization, up to 50% of EU-related activity (£20BN in revenue) and an estimated 35,000 jobs could be at risk, along with £5BN of tax revenues per annum. |
| When taking into consideration the knock-on impact to the whole financial services ecosystem – the possibility of shifting of entire business units, or the closure of lines of business due to increased costs it could almost double the effect of Brexit. | When taking into consideration the knock-on impact to the whole financial services ecosystem – the possibility of shifting of entire business units, or the closure of lines of business due to increased costs it could almost double the effect of Brexit. |
| The Conservatives are promising a hard line on immigration -- so it’s hard to see how they can restrict the movement of people into the UK, while retaining the movement of capital out of it... | The Conservatives are promising a hard line on immigration -- so it’s hard to see how they can restrict the movement of people into the UK, while retaining the movement of capital out of it... |
| Wednesday's i front page:'British jobs for British workers'#tomorrowspaperstoday #bbcpapers pic.twitter.com/CUkC6b82MB | Wednesday's i front page:'British jobs for British workers'#tomorrowspaperstoday #bbcpapers pic.twitter.com/CUkC6b82MB |
| 9.08am BST | 9.08am BST |
| 09:08 | 09:08 |
| Eurozone private sector growth hits 20-month low | Eurozone private sector growth hits 20-month low |
| Just in: growth in the eurozone’s private sector slowed in September, suggesting Europe’s economy may have hit a soft patch. | Just in: growth in the eurozone’s private sector slowed in September, suggesting Europe’s economy may have hit a soft patch. |
| The monthly Eurozone Service sector PMI, from Markit, has dropped to 52.2, from 52.8 in August. That shows the slowest growth in activity since December 2014. | The monthly Eurozone Service sector PMI, from Markit, has dropped to 52.2, from 52.8 in August. That shows the slowest growth in activity since December 2014. |
| And the wider ‘composite’ measure, including manufacturing, shows growth slowed to its weakest since January 2015. | And the wider ‘composite’ measure, including manufacturing, shows growth slowed to its weakest since January 2015. |
| Growth picked up in France (hurrah!), but dipped in Germany, Ireland and Spain (boo) | Growth picked up in France (hurrah!), but dipped in Germany, Ireland and Spain (boo) |