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| Italian bank rescue hopes build, as Renzi set to resign – business live | Italian bank rescue hopes build, as Renzi set to resign – business live |
| (35 minutes later) | |
| 5.30pm GMT | |
| 17:30 | |
| Helena Smith | |
| In Greece tensions over reforms are once again mounting with creditors – this time over an IMF demand that shops remain open for business on Sundays. Helena Smith reports: | |
| Most EU member states would relish overhauling a relic of old times like the ban on Sunday shopping. In Greece, though, it is the sort of measure that makes for front-page splashes, conspiracy theory and cries of protest. | |
| But the International Monetary Fund, in the spirit of further opening up one of the continent’s most sclerotic economies, is not letting go. Instead the Washington-based body, which is still negotiating its participation in Greece’s latest bailout, has stepped up demands for trade to be liberalised saying shops should remain open on Sundays. Moreover, it argues, the reform will give people work in a nation hobbled by record levels of unemployment. | |
| In its splash today, the daily Ethnos newspaper, citing a leaked email from the IMF, reports that closure of an ongoing review of the economy by creditors – the second since Athens received its third bailout last summer – is now contingent on shops opening up for commerce on Sundays. The organisation wants the measure to be signed and sealed this month. So far the response has been negative. Ministry of finance officials told the paper that, instead, they will push through an amendment that will allow shops in specially defined tourist areas to stay open. That’s unlikely to pass muster with lenders who have signalled they are going to rachet up the pressure on Greece to enforce the sort of reforms that will make it more competitive. Ideologically, the governing leftwing Syriza party is said to be against the move on the grounds that it will not only benefit bigger stores but is an infringement of basic workers’ rights. | |
| The Greek Orthodox Church has already likened the step to a sin and shop employees, who have already taken to the streets, are girding for further battle. | |
| 4.33pm GMT | 4.33pm GMT |
| 16:33 | 16:33 |
| And here’s our full story on Matteo Renzi planning to resign later as Italian prime minister: | And here’s our full story on Matteo Renzi planning to resign later as Italian prime minister: |
| 4.13pm GMT | 4.13pm GMT |
| 16:13 | 16:13 |
| One of the factors supporting the market rally is the expectation that the European Central Bank could announce an extension of its bond buying programme following its latest meeting on Thursday: | One of the factors supporting the market rally is the expectation that the European Central Bank could announce an extension of its bond buying programme following its latest meeting on Thursday: |
| Goldman expects ECB to deliver dovish message at Thur's meeting by extending APP until Dec2017 at curr pace of €80bn as real rates has risen pic.twitter.com/QrIaSdUGYB | Goldman expects ECB to deliver dovish message at Thur's meeting by extending APP until Dec2017 at curr pace of €80bn as real rates has risen pic.twitter.com/QrIaSdUGYB |
| [APP is the asset purchase programme] | [APP is the asset purchase programme] |
| That hope, and optimism that Italy’s struggling banks can somehow be recapitalised, have combined to send European markets higher, with Germany’s Dax up 1.8%, France’s Cac 1.1%, the FTSE 100 1.6% and Italy’s FTSE MIB 1.5%. | That hope, and optimism that Italy’s struggling banks can somehow be recapitalised, have combined to send European markets higher, with Germany’s Dax up 1.8%, France’s Cac 1.1%, the FTSE 100 1.6% and Italy’s FTSE MIB 1.5%. |
| On Wall Street the Dow Jones Industrial Average has hit a new intra-day record of 19,276, despite concerns about healthcare companies after Donald Trump said he would look at drug pricing. | On Wall Street the Dow Jones Industrial Average has hit a new intra-day record of 19,276, despite concerns about healthcare companies after Donald Trump said he would look at drug pricing. |
| 3.42pm GMT | 3.42pm GMT |
| 15:42 | 15:42 |
| Tata Steel commits to Port Talbot | Tata Steel commits to Port Talbot |
| Back in the UK and some good news for steel workers at Port Talbot: | Back in the UK and some good news for steel workers at Port Talbot: |
| Steel unions say Tata Steel has committed to blast furnaces at Port Talbot and will invest £1bn into business, saving thousands of jobs | Steel unions say Tata Steel has committed to blast furnaces at Port Talbot and will invest £1bn into business, saving thousands of jobs |
| Unions also say Tata has committed to no compulsory redundancies for at least five years in UK business | Unions also say Tata has committed to no compulsory redundancies for at least five years in UK business |
| Tata Steel will close the British Steel pension scheme and launch new a defined contribution scheme | Tata Steel will close the British Steel pension scheme and launch new a defined contribution scheme |
| 3.21pm GMT | 3.21pm GMT |
| 15:21 | 15:21 |
| Markets continue to be buoyed by hopes of a resolution to Italy’s banking problems. Connor Campbell, financial analyst at Spreadex, said: | Markets continue to be buoyed by hopes of a resolution to Italy’s banking problems. Connor Campbell, financial analyst at Spreadex, said: |
| With the Italian government passing its 2017 budget, and Mario Renzi confirming he will resign this evening, the European markets maintained their banking-boosted growth this Wednesday. | With the Italian government passing its 2017 budget, and Mario Renzi confirming he will resign this evening, the European markets maintained their banking-boosted growth this Wednesday. |
| The continued lack of fuss following the Italian referendum result, combined with the prospect of a Monte dei Paschi bailout (potentially as soon as this week), has led the European indices to a bevy of highs this afternoon. The CAC is still at an 11 month peak, while the DAX, following a near 200 point rise, is at its best price in exactly a year. | The continued lack of fuss following the Italian referendum result, combined with the prospect of a Monte dei Paschi bailout (potentially as soon as this week), has led the European indices to a bevy of highs this afternoon. The CAC is still at an 11 month peak, while the DAX, following a near 200 point rise, is at its best price in exactly a year. |
| The highs hit by the FTSE were a bit less impressive, though its 110 point increase does leave the UK index just 10 points away from 6900, a level it hasn’t seen since November 10th. While most of the pan-European growth has been inspired by the rallying banking sector, the FTSE has also benefited from a commodity stock rebound and the latest pound-plunge, with sterling shedding 0.8% against the dollar and 1.1% against the euro. | The highs hit by the FTSE were a bit less impressive, though its 110 point increase does leave the UK index just 10 points away from 6900, a level it hasn’t seen since November 10th. While most of the pan-European growth has been inspired by the rallying banking sector, the FTSE has also benefited from a commodity stock rebound and the latest pound-plunge, with sterling shedding 0.8% against the dollar and 1.1% against the euro. |
| But Michael Hewson, chief market analyst at CMC Markets UK, warned markets could be getting ahead of themselves: | But Michael Hewson, chief market analyst at CMC Markets UK, warned markets could be getting ahead of themselves: |
| Talk that the Italian banking system could be on the verge of a €15bn bailout from the European Stability Mechanism has pushed equity markets in Europe to their highest levels in several months... | Talk that the Italian banking system could be on the verge of a €15bn bailout from the European Stability Mechanism has pushed equity markets in Europe to their highest levels in several months... |
| While the reports of a bailout request have been denied the usual rule of thumb when these sorts of reports do the rounds is that there is usually an element of truth to them, even if we don’t know the exact mechanics, and markets are responding to that. | While the reports of a bailout request have been denied the usual rule of thumb when these sorts of reports do the rounds is that there is usually an element of truth to them, even if we don’t know the exact mechanics, and markets are responding to that. |
| As with most things the devil is likely to be in the detail, and the likely strings that are likely to be attached to any aid request, if and when it comes. It is here that markets could be getting ahead of themselves. | As with most things the devil is likely to be in the detail, and the likely strings that are likely to be attached to any aid request, if and when it comes. It is here that markets could be getting ahead of themselves. |
| Updated | Updated |
| at 3.24pm GMT | at 3.24pm GMT |
| 3.02pm GMT | 3.02pm GMT |
| 15:02 | 15:02 |
| Renzi set to resign as Italian PM | Renzi set to resign as Italian PM |
| Well it seems Matteo Renzi will not be staying on as Italian prime minister after all and plans to resign this evening now the budget has been passed. He tweeted: | Well it seems Matteo Renzi will not be staying on as Italian prime minister after all and plans to resign this evening now the budget has been passed. He tweeted: |
| Legge di bilancio approvata. Alle 19 le dimissioni formali. Grazie a tutti e viva l'Italiahttps://t.co/PLsLxcrPGS | Legge di bilancio approvata. Alle 19 le dimissioni formali. Grazie a tutti e viva l'Italiahttps://t.co/PLsLxcrPGS |
| AP reports: | AP reports: |
| Italian Premier Matteo Renzi says he’ll resign now that Parliament has completed approval of the 2017 national budget. | Italian Premier Matteo Renzi says he’ll resign now that Parliament has completed approval of the 2017 national budget. |
| Renzi had offered his resignation two days earlier to President Sergio Mattarella following his humiliating defeat in a government-backed voter referendum on reforms. | Renzi had offered his resignation two days earlier to President Sergio Mattarella following his humiliating defeat in a government-backed voter referendum on reforms. |
| But Mattarella told him to stay in office until passage of the budget law, which was done Wednesday afternoon. | But Mattarella told him to stay in office until passage of the budget law, which was done Wednesday afternoon. |
| Renzi tweeted that he plans to go to the president to resign at 7 p.m. (1800 GMT). | Renzi tweeted that he plans to go to the president to resign at 7 p.m. (1800 GMT). |
| Updated | Updated |
| at 3.09pm GMT | at 3.09pm GMT |
| 3.00pm GMT | 3.00pm GMT |
| 15:00 | 15:00 |
| UK economic growth flat, says NIESR | UK economic growth flat, says NIESR |
| Following the poor UK manufacturing figures earlier, comes news that the economy’s growth has flattened in the last few weeks, according to a leading think tank. | Following the poor UK manufacturing figures earlier, comes news that the economy’s growth has flattened in the last few weeks, according to a leading think tank. |
| The National Institute of Economic and Social Reseach has estimated that UK output grew by 0.4% in the three months to the end of November, the same as in the three months to October. But it warned a slowdown was ahead. | The National Institute of Economic and Social Reseach has estimated that UK output grew by 0.4% in the three months to the end of November, the same as in the three months to October. But it warned a slowdown was ahead. |
| The think tank said the economy was being supported by the service sector, which was borne out by the earlier weak manufacturing figures. Rebecca Piggott, research fellow at NIESR, said: | The think tank said the economy was being supported by the service sector, which was borne out by the earlier weak manufacturing figures. Rebecca Piggott, research fellow at NIESR, said: |
| Recent economic growth has been driven almost entirely by the UK’s broad service sector, supported by robust consumer spending. In stark contrast, the official figures suggest that the production and construction sectors of the economy have declined over recent months. | Recent economic growth has been driven almost entirely by the UK’s broad service sector, supported by robust consumer spending. In stark contrast, the official figures suggest that the production and construction sectors of the economy have declined over recent months. |
| Looking ahead, we do not expect such buoyant consumer spending growth to persist. Sterling’s pronounced depreciation this year is expected to pass through to the consumer prices throughout the course of 2017 and 2018, eroding the purchasing power of households substantially. | Looking ahead, we do not expect such buoyant consumer spending growth to persist. Sterling’s pronounced depreciation this year is expected to pass through to the consumer prices throughout the course of 2017 and 2018, eroding the purchasing power of households substantially. |
| NIESR’s latest quarterly forecast published just over a month ago forecast GDP growth of 2% per annum in 2016 and 1.4% in 2017. CPI inflation was expected to reach 3.8% at the end of 2017. | NIESR’s latest quarterly forecast published just over a month ago forecast GDP growth of 2% per annum in 2016 and 1.4% in 2017. CPI inflation was expected to reach 3.8% at the end of 2017. |
| Updated | Updated |
| at 3.03pm GMT | at 3.03pm GMT |
| 2.49pm GMT | 2.49pm GMT |
| 14:49 | 14:49 |
| Another area likely to be hit by the uncertainty of the UK leaving the EU is the Irish banking sector, according to ratings agency Fitch. It said: | Another area likely to be hit by the uncertainty of the UK leaving the EU is the Irish banking sector, according to ratings agency Fitch. It said: |
| Fitch Ratings has revised the 2017 sector outlook for Irish banks to stable from positive, as the UK’s vote to leave the EU increases uncertainty for the operating environment. Ireland’s economic recovery should remain strong in the short term, underpinning the stable sector outlook. The rating outlook on Irish banks is positive, reflecting our expectation that improving bank credit fundamentals should outweigh these challenges. | Fitch Ratings has revised the 2017 sector outlook for Irish banks to stable from positive, as the UK’s vote to leave the EU increases uncertainty for the operating environment. Ireland’s economic recovery should remain strong in the short term, underpinning the stable sector outlook. The rating outlook on Irish banks is positive, reflecting our expectation that improving bank credit fundamentals should outweigh these challenges. |
| Brexit is negative for Ireland’s long-term economic and political prospects, putting pressure on GDP growth and creating uncertainty around relations with Northern Ireland. The extent of any weakening of the bank operating environment, triggered by a slowdown of GDP growth in the UK, sterling depreciation, or potential trade barriers, will become clear only as EU-UK negotiations develop. A deterioration in the operating environment could slow any improvements in the asset quality and capitalisation of Irish banks... | Brexit is negative for Ireland’s long-term economic and political prospects, putting pressure on GDP growth and creating uncertainty around relations with Northern Ireland. The extent of any weakening of the bank operating environment, triggered by a slowdown of GDP growth in the UK, sterling depreciation, or potential trade barriers, will become clear only as EU-UK negotiations develop. A deterioration in the operating environment could slow any improvements in the asset quality and capitalisation of Irish banks... |
| Capitalisation, although improving, remains vulnerable. We expect capital ratios to strengthen in 2017, despite pressure from volatility in pension fund deficits and foreign-exchange markets. Fully-loaded regulatory capital ratios remain weaker than international peers, primarily due to large amounts of deferred tax assets; these assets are reducing slowly because of Ireland’s low corporate tax rate and relatively low levels of profitability compared to the size of the balance sheet. Large, albeit reducing, stocks of unreserved problem assets also leave Irish banks’ capitalisation more exposed if the operating environment deteriorates. | Capitalisation, although improving, remains vulnerable. We expect capital ratios to strengthen in 2017, despite pressure from volatility in pension fund deficits and foreign-exchange markets. Fully-loaded regulatory capital ratios remain weaker than international peers, primarily due to large amounts of deferred tax assets; these assets are reducing slowly because of Ireland’s low corporate tax rate and relatively low levels of profitability compared to the size of the balance sheet. Large, albeit reducing, stocks of unreserved problem assets also leave Irish banks’ capitalisation more exposed if the operating environment deteriorates. |
| Further improvements in asset quality and capitalisation would improve the banks’ risk profiles and may result in ratings upgrades; this is why the ratings outlook for Irish banks is positive. Although uncertainty as regards the operating environment has increased, we believe credit fundamentals will improve in 2017, as the sector continues to work through its backlog of impaired loans. | Further improvements in asset quality and capitalisation would improve the banks’ risk profiles and may result in ratings upgrades; this is why the ratings outlook for Irish banks is positive. Although uncertainty as regards the operating environment has increased, we believe credit fundamentals will improve in 2017, as the sector continues to work through its backlog of impaired loans. |
| 2.24pm GMT | 2.24pm GMT |
| 14:24 | 14:24 |
| But... Bloomberg is reporting that Renzi might be having second thoughts about stepping down. | But... Bloomberg is reporting that Renzi might be having second thoughts about stepping down. |
| They say: | They say: |
| Matteo Renzi is wavering on whether to stay on as Italian prime minister despite his resignation offer after Sunday’s referendum defeat, according to a senior state official. | Matteo Renzi is wavering on whether to stay on as Italian prime minister despite his resignation offer after Sunday’s referendum defeat, according to a senior state official. |
| President Sergio Mattarella wants Renzi to reconsider his decision in order to provide political and economic stability, said the official, who asked not to be named because the issue is confidential. | President Sergio Mattarella wants Renzi to reconsider his decision in order to provide political and economic stability, said the official, who asked not to be named because the issue is confidential. |
| Here’s the full story. | Here’s the full story. |
| 1.52pm GMT | 1.52pm GMT |
| 13:52 | 13:52 |
| 1.28pm GMT | 1.28pm GMT |
| 13:28 | 13:28 |
| Italian senate approves 2017 budget | Italian senate approves 2017 budget |
| Newsflash! After a debate today. the Italian Senate just approved the country’s 2017 budget. | Newsflash! After a debate today. the Italian Senate just approved the country’s 2017 budget. |
| That’s the last order of business before Matteo Renzi can formally step down as prime minister. | That’s the last order of business before Matteo Renzi can formally step down as prime minister. |
| ITALY SENATE VOTED 173 VS 108 IN FAVOR OF GOVT ON BUDGET LAW | ITALY SENATE VOTED 173 VS 108 IN FAVOR OF GOVT ON BUDGET LAW |
| Renzi now also expected to meet with senior members of his Democratic Party this afternoon, to discuss the next steps - including whether he remains as party leader. | Renzi now also expected to meet with senior members of his Democratic Party this afternoon, to discuss the next steps - including whether he remains as party leader. |
| Updated | Updated |
| at 1.28pm GMT | at 1.28pm GMT |
| 12.26pm GMT | 12.26pm GMT |
| 12:26 | 12:26 |
| Back in the markets, European stocks are hitting multi-month highs on continued optimism that Italy’s banking sector will receive much-needed fresh capital soon. | Back in the markets, European stocks are hitting multi-month highs on continued optimism that Italy’s banking sector will receive much-needed fresh capital soon. |
| Every index is sharply higher today, with some traders speculating that the fabled “Santa Rally” might be kicking off (stock markets often rally in the run-up to Christmas). | Every index is sharply higher today, with some traders speculating that the fabled “Santa Rally” might be kicking off (stock markets often rally in the run-up to Christmas). |
| Over in Milan, Monte dei Paschi is still having a good day, up 8%, following the reports that the Italian government could take a €2bn stake in the bank. | Over in Milan, Monte dei Paschi is still having a good day, up 8%, following the reports that the Italian government could take a €2bn stake in the bank. |
| Banca Monte Paschi waking up this morning... pic.twitter.com/f61XIbLsqM | Banca Monte Paschi waking up this morning... pic.twitter.com/f61XIbLsqM |
| And the suggestions that Rome could turn to the ESM for a €15bn bank bailout continues to calm fears of an imminent financial crisis. | And the suggestions that Rome could turn to the ESM for a €15bn bank bailout continues to calm fears of an imminent financial crisis. |
| Kathleen Brooks of City Index says: | Kathleen Brooks of City Index says: |
| Even the prospect of a nationalisation [of Monte dei Paschi], potentially as early as this weekend, isn’t spooking the markets as it may avoid retail bondholders having to take any losses. | Even the prospect of a nationalisation [of Monte dei Paschi], potentially as early as this weekend, isn’t spooking the markets as it may avoid retail bondholders having to take any losses. |
| The FTSE 100 index is now up by 100 points, or 1.5% at 6880 -- a chunky rise. However, that’s partly because the pound fell at 9.30am when October’s weak UK manufacturing data were released. | The FTSE 100 index is now up by 100 points, or 1.5% at 6880 -- a chunky rise. However, that’s partly because the pound fell at 9.30am when October’s weak UK manufacturing data were released. |
| The German Dax is still at a one-year high, the French CAC is at its highest level since January, and Italy’s FTSE MIB it at its highest level since June. | The German Dax is still at a one-year high, the French CAC is at its highest level since January, and Italy’s FTSE MIB it at its highest level since June. |
| 11.45am GMT | 11.45am GMT |
| 11:45 | 11:45 |
| EC antitrust commissioner Margrethe Vestager declined to comment directly on the Monte dei Paschi rescue talks. | EC antitrust commissioner Margrethe Vestager declined to comment directly on the Monte dei Paschi rescue talks. |
| But she did point out that the commission is keen to support citizens who have been missold financial products. | But she did point out that the commission is keen to support citizens who have been missold financial products. |
| That could be significant, as the small retail investors who own Italian bank bonds may argue that they were deceived about the risk of being possibly ‘bailed into’ a rescue. And some analysts reckon the Italian government could circumvent those new bail-in rules by compensating these small investors. | That could be significant, as the small retail investors who own Italian bank bonds may argue that they were deceived about the risk of being possibly ‘bailed into’ a rescue. And some analysts reckon the Italian government could circumvent those new bail-in rules by compensating these small investors. |
| Vestager told reporters in Brussels that: | Vestager told reporters in Brussels that: |
| “One of the things that we are working with is tools to enable governments to compensate for mis-selling of different kinds. | “One of the things that we are working with is tools to enable governments to compensate for mis-selling of different kinds. |
| “It is something we have set up before. We will work with governments again if they want to set up schemes that can allow citizens to be compensated if mis-selling has been taking place.” | “It is something we have set up before. We will work with governments again if they want to set up schemes that can allow citizens to be compensated if mis-selling has been taking place.” |