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France says US banks plan to leave Brexit Britain - business live France says US banks plan to leave Brexit Britain - business live
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Berenberg’s “chart of the week” is entitled migration to Germany: beyond the big surge.
The German bank says the number of new arrivals has fallen sharply this year for a number of reasons, including the German government’s decision to tighten its policies since early 2016. It follows a huge surge in 2015, when about 890,000 asylum seekers went to Germany, adding 1.1% to the resident population.
The equivalent annual number for 2016 is about 160,000-170,000, which the bank says should be manageable in “economic, fiscal and political terms”.
Here is the chart:
Holger Schmieding, chief economist, says:
Providing for the migrants and refugees is adding to German government spending. Partly as a result of this, the growth rate of government consumption in Germany has risen from an average of 2.5% year on year in the first half of 2015 to 4.1% in the first half of 2016.
This amounts to a fiscal stimulus worth 0.3% of GDP. The mostly state-financed consumer spending of migrants and refugees and the impact on housing construction add to that.
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The pound has fallen below $1.22, currently down 0.6% at $1.2176.The pound has fallen below $1.22, currently down 0.6% at $1.2176.
Connor Campbell, financial analyst at Spreadex, says the Brexit comments from French finance minister Michel Sapin, and those from Donald Tusk on Thursday (“it’s hard Brexit or no Brexit”) are weighing on the pound:Connor Campbell, financial analyst at Spreadex, says the Brexit comments from French finance minister Michel Sapin, and those from Donald Tusk on Thursday (“it’s hard Brexit or no Brexit”) are weighing on the pound:
The President of the European Council (Donald Tusk) poured cold water on the idea, propounded by Boris Johnson, that Britain could potentially strike a better deal with the EU post-Brexit, claiming that a hard exit is the only offer on the table. Sapin, the French finance minister, then stated this morning that some US banks are already looking to move their operations out of London in favour of the continent.The President of the European Council (Donald Tusk) poured cold water on the idea, propounded by Boris Johnson, that Britain could potentially strike a better deal with the EU post-Brexit, claiming that a hard exit is the only offer on the table. Sapin, the French finance minister, then stated this morning that some US banks are already looking to move their operations out of London in favour of the continent.
Unsurprisingly this kind of rhetoric hasn’t been welcomed by the pound, which has fallen half a percent against the dollar and 0.1% against the euro. While this keeps sterling above the week’s (and, indeed, decades’) lows, that fact will provide mere crumbs of comfort for the currency.Unsurprisingly this kind of rhetoric hasn’t been welcomed by the pound, which has fallen half a percent against the dollar and 0.1% against the euro. While this keeps sterling above the week’s (and, indeed, decades’) lows, that fact will provide mere crumbs of comfort for the currency.
The FTSE 100 is faring better, as Campbell points out:The FTSE 100 is faring better, as Campbell points out:
As for the FTSE, the abrupt end to Marmite-gate last night, with Tesco and Unilever coming to a price agreement, and a rebound from its mining stocks has allowed the UK index to climb back above the 7000 mark.As for the FTSE, the abrupt end to Marmite-gate last night, with Tesco and Unilever coming to a price agreement, and a rebound from its mining stocks has allowed the UK index to climb back above the 7000 mark.
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China: inflation rises more than expectedChina: inflation rises more than expected
Higher food prices pushed official inflation in China to 1.9% in September, from 1.3% in August.Higher food prices pushed official inflation in China to 1.9% in September, from 1.3% in August.
It was higher than the 1.6% predicted by economists, and helped to ease investor fears about the health of the world’s second largest economy after disappointing trade data on Thursday unnerved global markets.It was higher than the 1.6% predicted by economists, and helped to ease investor fears about the health of the world’s second largest economy after disappointing trade data on Thursday unnerved global markets.
Producer prices (or factory gate prices) also rose unexpectedly in September for the first time in almost five years because of higher commodity prices.Producer prices (or factory gate prices) also rose unexpectedly in September for the first time in almost five years because of higher commodity prices.
Michael Hewson, chief market analyst at CMC Markets UK, said it was good news:Michael Hewson, chief market analyst at CMC Markets UK, said it was good news:
In an encouraging sign this morning’s Chinese consumer prices inflation data does appear to show that inflation is gaining traction, with CPI coming in at 1.9%, above expectations.In an encouraging sign this morning’s Chinese consumer prices inflation data does appear to show that inflation is gaining traction, with CPI coming in at 1.9%, above expectations.
Factory gate prices still remain sluggish, though they have finally made it into positive territory at 0.1%, the first time that has happened since February 2012. Chinese PPi prices have been slowly improving for several months now so this return to positive territory is welcome news, especially so when prices were -5.9% at the beginning of this year.Factory gate prices still remain sluggish, though they have finally made it into positive territory at 0.1%, the first time that has happened since February 2012. Chinese PPi prices have been slowly improving for several months now so this return to positive territory is welcome news, especially so when prices were -5.9% at the beginning of this year.
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FTSE 100 climbs back above 7,000FTSE 100 climbs back above 7,000
After hitting an record intraday high on Tuesday, the FTSE 100 slipped back below 7,000 on Thursday when disappointing trade data from China hit mining stocks.After hitting an record intraday high on Tuesday, the FTSE 100 slipped back below 7,000 on Thursday when disappointing trade data from China hit mining stocks.
It’s a different story this morning, with European markets up across the board:It’s a different story this morning, with European markets up across the board:
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Ratings agency Standard & Poor’s says the pound could lose its status as a save haven currency following the Brexit vote.Ratings agency Standard & Poor’s says the pound could lose its status as a save haven currency following the Brexit vote.
Ravi Bhatia, S&P’s director of sovereign ratings for Britain, told the Telegraph:Ravi Bhatia, S&P’s director of sovereign ratings for Britain, told the Telegraph:
To be a reserve currency means that the world has trust in you and is happy to hold its savings in your currency. It creates a pool of available capital. If you lose this and sterling becomes just another currency, a key advantage is lost.To be a reserve currency means that the world has trust in you and is happy to hold its savings in your currency. It creates a pool of available capital. If you lose this and sterling becomes just another currency, a key advantage is lost.
He also suggested some complacency on the part of the UK government as it prepares to negotiate its way out of the EU:He also suggested some complacency on the part of the UK government as it prepares to negotiate its way out of the EU:
There seems to be this view that ‘we’re a big important economy, the Europeans export a lot to us, so they have got to give us what we want’, but is that really true?There seems to be this view that ‘we’re a big important economy, the Europeans export a lot to us, so they have got to give us what we want’, but is that really true?
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Pound hovers around $1.22Pound hovers around $1.22
The pound is down slightly against the dollar this morning, by 0.4%, but is just about managing to stay above the $1.22 level. It is currently at $1.2206.The pound is down slightly against the dollar this morning, by 0.4%, but is just about managing to stay above the $1.22 level. It is currently at $1.2206.
It is also holding steady against the euro, down -0.1% at €1.1075.It is also holding steady against the euro, down -0.1% at €1.1075.
European markets have opened higher. Full details to follow.European markets have opened higher. Full details to follow.
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Introduction: France says London will lose US banksIntroduction: France says London will lose US banks
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.
Marmite-gate might have been settled for now (read here how yesterday’s dramatic events unfolded), but there are other tales this morning of how Brexit might negatively affect Britain.Marmite-gate might have been settled for now (read here how yesterday’s dramatic events unfolded), but there are other tales this morning of how Brexit might negatively affect Britain.
The French finance minister Michel Sapin has told a press conference in Paris that US banks are definitely pressing ahead with plans to move some operations out of the UK in favour of other European countries.The French finance minister Michel Sapin has told a press conference in Paris that US banks are definitely pressing ahead with plans to move some operations out of the UK in favour of other European countries.
Sapin was in Washington last week for the IMF meetings and he says that now that Britain’s exit form the EU seems certain, US banks are busy making plans to leave the UK.Sapin was in Washington last week for the IMF meetings and he says that now that Britain’s exit form the EU seems certain, US banks are busy making plans to leave the UK.
Paris, of course, would welcome the banks with open arms, but it will undoubtedly encounter stiff competition from other cities such as Frankfurt.Paris, of course, would welcome the banks with open arms, but it will undoubtedly encounter stiff competition from other cities such as Frankfurt.
Of course we’ve heard it all before that banks will consider moving out of London, but Sapin suggests the plans have moved up a gear.Of course we’ve heard it all before that banks will consider moving out of London, but Sapin suggests the plans have moved up a gear.
Here is what he had to say about US banks:Here is what he had to say about US banks:
For them, until now, the question was ‘will Brexit take place? Will it really be implemented? You talk about two years but maybe it will last three or four years?’.For them, until now, the question was ‘will Brexit take place? Will it really be implemented? You talk about two years but maybe it will last three or four years?’.
That’s over now, there’s no more of that. It’s no longer ‘will there be’ or ‘if’ there’s a Brexit. It’s ‘there will be a Brexit in two years and after two years we will have to take decisions.That’s over now, there’s no more of that. It’s no longer ‘will there be’ or ‘if’ there’s a Brexit. It’s ‘there will be a Brexit in two years and after two years we will have to take decisions.
Sapin said some banks had already decided that activities will be transferred to the continent.Sapin said some banks had already decided that activities will be transferred to the continent.
Those are their words, not mine. [It is an] inevitable outcome, whatever the result of the Brexit negotiations.Those are their words, not mine. [It is an] inevitable outcome, whatever the result of the Brexit negotiations.
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