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/dec/21/uk-public-finances-deficit-brexit-stock-markets-dow-business-live
The article has changed 14 times. There is an RSS feed of changes available.
| Version 8 | Version 9 |
|---|---|
| UK runs up £12.6bn deficit in November – business live | UK runs up £12.6bn deficit in November – business live |
| (35 minutes later) | |
| 3.24pm GMT | |
| 15:24 | |
| Analyst welcomed the improvement in European consumer confidence, but there was some caution over the future outlook. Dennis de Jong, managing director at UFX.com, said: | |
| European consumers appear to have shrugged off concerns including Brexit, the Italian banking crisis and the upcoming inauguration of President Trump to post the year’s strongest confidence figures for December, albeit still firmly in negative territory. | |
| While today’s data will encourage ECB chief Mario Draghi, the Christmas cheer may not last long, especially if markets start to waver as Brexit negotiations begin in earnest next year. | |
| Draghi must be congratulated for steering Europe’s economy through choppy waters during what has been a particularly testing 12 months. But now the real challenge begins: delivering substantive growth in 2017. | |
| Economist Howard Archer at IHS Markit said: | |
| An encouraging boost to Eurozone growth prospects as consumer confidence rose for a fourth month running in December to reach a 20-month high. Furthermore, consumer confidence is now at a very decent level compared to long-term norms. Consumers across the Eurozone are currently benefiting from pretty decent fundamentals overall, notably including higher employment and still limited inflation. | |
| This reinforces hopes that the Eurozone will have seen some pick-up in GDP growth in the fourth quarter and is set to see a decent start to 2017... | |
| While there are no details available, it seems reasonable suspect that the marked rise in Eurozone consumer confidence in December was due to improved perceptions on the economic situation and outlook. It is also likely that job concerns eased further across the Eurozone after a marked dip in November (following increased worries during August-October). Significantly, latest data showed that Eurozone unemployment dropped at an increased rate in October and September after labour markets had shown signs of losing momentum over the summer. | |
| Any improvement in Eurozone consumer confidence – particularly a decent increase – is to be welcomed as the consumer clearly is vital to Eurozone growth prospects... | |
| However, there is the danger that an increasingly uncertain political and economic environment could cause companies to become more cautious over employment during 2017. | |
| Furthermore, consumer confidence in the Eurozone could very well be pressurised by increasing political uncertainty over the coming months, especially given that the UK’s Brexit vote in June and November’s election of Donald Trump as US President fuels concern over potential political shocks in the Eurozone. General elections are due 2017 in the Netherlands (in March), France (in April/May) and Germany (around September), and may also well occur in Italy after the December referendum defeat on constitutional reform. | |
| 3.13pm GMT | |
| 15:13 | |
| Eurozone consumer confidence rises | |
| Eurozone consumer confidence has improved so far in December. | |
| The provisional reading for the month from the European Commission shows a rise of 1.1 points to -5.1, compared to expectations of a figure of -6. The Commission said: | |
| In December 2016, the...flash estimate of the consumer confidence indicator increased markedly in both the euro area (by 1.1 points to -5.1) and the EU (by 1.2 points to -4.6) compared to November. | |
| Updated | |
| at 3.13pm GMT | |
| 3.10pm GMT | |
| 15:10 | |
| On the home sales, Lawrence Yun, the association’s chief economist, said the last three months had been outstanding for the housing market. He said: | |
| The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months. Furthermore, it’s no coincidence that home shoppers in the Northeast — where price growth has been tame all year — had the most success last month. | |
| Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017. Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country. | |
| 3.05pm GMT | |
| 15:05 | |
| US home sales at near 10 year high | |
| US existing home sales unexpectedly jumped in November, hitting their highest level in nearly ten years. | |
| Sales rose 0.7% to an annualised 5.61m units, the best since February 2007, according to the National Association of Realtors. Analysts had been expecting a fall from October’s figure of 5.57m units - itself revised down from 5.6m - to 5.5m. | |
| Updated | |
| at 3.08pm GMT | |
| 2.51pm GMT | |
| 14:51 | |
| Well that didn’t last. The Dow is now down 14 points as investors shy away from pushing it above 20,000. For the moment at least. | |
| 2.36pm GMT | 2.36pm GMT |
| 14:36 | 14:36 |
| Dow edges closer to 20,000 as Wall Street opens | Dow edges closer to 20,000 as Wall Street opens |
| After an initial dip, the Dow Jones Industrial Average is slightly higher, edging ever nearer to the 20,000 barrier. But the trend is not exactly certain in early trading. | After an initial dip, the Dow Jones Industrial Average is slightly higher, edging ever nearer to the 20,000 barrier. But the trend is not exactly certain in early trading. |
| The Dow is currently at 19,982, up 8 points. Elsewhere the S&P 500 opened down just 1.55 points while the Nasdaq Composite dipped 0.05%. | The Dow is currently at 19,982, up 8 points. Elsewhere the S&P 500 opened down just 1.55 points while the Nasdaq Composite dipped 0.05%. |
| Updated | Updated |
| at 2.36pm GMT | at 2.36pm GMT |
| 2.08pm GMT | 2.08pm GMT |
| 14:08 | 14:08 |
| Analysts have been waiting for a few days now for the Dow Jones Industrial Average to break the 20,000 barrier for the first time, and on Tuesday it came tantalisingly close at 19,987 before closing at 19.974. | Analysts have been waiting for a few days now for the Dow Jones Industrial Average to break the 20,000 barrier for the first time, and on Tuesday it came tantalisingly close at 19,987 before closing at 19.974. |
| Could today be the day? The futures are indicating a slight rise, so it looks like edging ever closer. Kit Juckes at Societe Generale said: | Could today be the day? The futures are indicating a slight rise, so it looks like edging ever closer. Kit Juckes at Societe Generale said: |
| I have no insight into what happens once the Dow breaks 20,000 but some people see this as a major milestone. And until it is broken it acts as Pied Piper, or perhaps Rudolph’s nose, lighting the way for the risk-hungry and those scared of being left behind. | I have no insight into what happens once the Dow breaks 20,000 but some people see this as a major milestone. And until it is broken it acts as Pied Piper, or perhaps Rudolph’s nose, lighting the way for the risk-hungry and those scared of being left behind. |
| 1.36pm GMT | 1.36pm GMT |
| 13:36 | 13:36 |
| The Guardian’s monthly Brexit Watch has just been published. It shows how the impact June’s vote is now hitting the economy, with inflation up and retail sales growth slowing. | The Guardian’s monthly Brexit Watch has just been published. It shows how the impact June’s vote is now hitting the economy, with inflation up and retail sales growth slowing. |
| Economists Danny Blanchflower and Andrew Sentance both agree that growth is slowing: | Economists Danny Blanchflower and Andrew Sentance both agree that growth is slowing: |
| 1.12pm GMT | 1.12pm GMT |
| 13:12 | 13:12 |
| OBR: UK borrowing to rise over next four months | OBR: UK borrowing to rise over next four months |
| Britain’s fiscal watchdog, the Office for Budget Responsibility, has just warned that public borrowing in the final four months of this financial year will be slightly higher than a year ago. | Britain’s fiscal watchdog, the Office for Budget Responsibility, has just warned that public borrowing in the final four months of this financial year will be slightly higher than a year ago. |
| In its official response to today’s public finance data, the OBR warns that tax receipts may weaken in the December-March period, while government spending will pick up. | In its official response to today’s public finance data, the OBR warns that tax receipts may weaken in the December-March period, while government spending will pick up. |
| The OBR says: | The OBR says: |
| “Considerable uncertainty remains over prospects for borrowing in the remaining third of the year, but we expect public sector net borrowing to rise slightly relative to the same period in 2015-16. This is due to: | “Considerable uncertainty remains over prospects for borrowing in the remaining third of the year, but we expect public sector net borrowing to rise slightly relative to the same period in 2015-16. This is due to: |
| However (as flagged earlier), Britain’s borrowing since April is down by £7.7bn, so the annual deficit should still fall. | However (as flagged earlier), Britain’s borrowing since April is down by £7.7bn, so the annual deficit should still fall. |
| Data revisions improve public finances - read the latest commentary at https://t.co/k0nGloBMMW pic.twitter.com/gM3KrXEaaT | Data revisions improve public finances - read the latest commentary at https://t.co/k0nGloBMMW pic.twitter.com/gM3KrXEaaT |
| 12.42pm GMT | 12.42pm GMT |
| 12:42 | 12:42 |
| Helena Smith | Helena Smith |
| Over in Greece, relations with creditors remain awkward and tense following Monday’s inconclusive euro working group (representing Greek creditors) | Over in Greece, relations with creditors remain awkward and tense following Monday’s inconclusive euro working group (representing Greek creditors) |
| Our correspondent Helena Smith reports from Athens: | Our correspondent Helena Smith reports from Athens: |
| The tensions stirred by the announcement of relief measures for those hardest hit by the country’s seemingly relentless economic crisis show no sign of abating. | The tensions stirred by the announcement of relief measures for those hardest hit by the country’s seemingly relentless economic crisis show no sign of abating. |
| Monday’s euro group meeting was a test case in humiliation for the embattled Greek government with Athens being forced to accept in writing that the bonus proclaimed by prime minister Alexis Tsipras for pensioners is a “one off” that will never be repeated. | Monday’s euro group meeting was a test case in humiliation for the embattled Greek government with Athens being forced to accept in writing that the bonus proclaimed by prime minister Alexis Tsipras for pensioners is a “one off” that will never be repeated. |
| Germany, the main contributor to the emergency bailouts keeping the debt-stricken economy afloat, apparently remains unconvinced that the pre-Christmas gifts (including exempting Aegean islands from a planned sales tax) will not throw the economy off-course. The leftist-led government insists that fiscal targets can be met because the supplementary help will be extracted from the primary surplus Athens, by dint of hard effort, has managed to achieve. | Germany, the main contributor to the emergency bailouts keeping the debt-stricken economy afloat, apparently remains unconvinced that the pre-Christmas gifts (including exempting Aegean islands from a planned sales tax) will not throw the economy off-course. The leftist-led government insists that fiscal targets can be met because the supplementary help will be extracted from the primary surplus Athens, by dint of hard effort, has managed to achieve. |
| The deputy prime minister Yiannis Dragasakis highlighted the tensions on Tuesday evening saying it was the country’s “sovereign right” to distribute the excess surplus as it felt fit. | The deputy prime minister Yiannis Dragasakis highlighted the tensions on Tuesday evening saying it was the country’s “sovereign right” to distribute the excess surplus as it felt fit. |
| Finance ministry sources say with the handwringing still ongoing, Athens has yet to send the letter. Without it, euro zone partners have said the retaliatory decision to freeze short-term debt relief measures – a huge setback for Athens – cannot be lifted. | Finance ministry sources say with the handwringing still ongoing, Athens has yet to send the letter. Without it, euro zone partners have said the retaliatory decision to freeze short-term debt relief measures – a huge setback for Athens – cannot be lifted. |
| 12.13pm GMT | 12.13pm GMT |
| 12:13 | 12:13 |
| One of Monte dei Paschi’s riskier bonds has tumbled in value today, in another sign that investors believe its €5bn cash call will fail. | One of Monte dei Paschi’s riskier bonds has tumbled in value today, in another sign that investors believe its €5bn cash call will fail. |
| Monte dei Paschi's E2bn retail bond looks to be pricing in something unpleasant in the near future. pic.twitter.com/h7FR73JOtO | Monte dei Paschi's E2bn retail bond looks to be pricing in something unpleasant in the near future. pic.twitter.com/h7FR73JOtO |
| That capital raising exercise ends tomorrow afternoon; if it hasn’t attracted enough support, Italy’s government might then step in and ‘bail in’ some bond holders, making them share the cost of a rescue. | That capital raising exercise ends tomorrow afternoon; if it hasn’t attracted enough support, Italy’s government might then step in and ‘bail in’ some bond holders, making them share the cost of a rescue. |
| 11.39am GMT | 11.39am GMT |
| 11:39 | 11:39 |
| Back in Italy, shares in Monte dei Paschi bank have taken an almighty dive - only to bounce right back up again | Back in Italy, shares in Monte dei Paschi bank have taken an almighty dive - only to bounce right back up again |
| They initially slumped by 18% in a panicky selloff, as news broke that the bank might run out of liquidity within four months. | They initially slumped by 18% in a panicky selloff, as news broke that the bank might run out of liquidity within four months. |
| Monte dei Paschi shares today - Start trading, limit down, trading halted, start trading, limit down, trading halted pic.twitter.com/YF2hEv1o7g | Monte dei Paschi shares today - Start trading, limit down, trading halted, start trading, limit down, trading halted pic.twitter.com/YF2hEv1o7g |
| BUT then they rallies sharply, after Italian MPs approved plans to borrow an extra €20bn to fund bank bailouts (potentially starting with Monte dei Paschi) | BUT then they rallies sharply, after Italian MPs approved plans to borrow an extra €20bn to fund bank bailouts (potentially starting with Monte dei Paschi) |
| Now practically flat, thank you for playing. pic.twitter.com/owIw4uVzgc | Now practically flat, thank you for playing. pic.twitter.com/owIw4uVzgc |
| Italy agrees to raise debt ceiling by 21 billion dollars - making room for potentially imminent Monte dei Paschi bailout. | Italy agrees to raise debt ceiling by 21 billion dollars - making room for potentially imminent Monte dei Paschi bailout. |
| It’s not clear, though, that shareholders would be left with much if the Rome government is forced to intervene -- which is why shares are down 99.8% from their record high.... | It’s not clear, though, that shareholders would be left with much if the Rome government is forced to intervene -- which is why shares are down 99.8% from their record high.... |
| 11.06am GMT | 11.06am GMT |
| 11:06 | 11:06 |
| Britain’t tax receipts have risen by 4.4% this financial year, or £17.8bn, to £421.8bn. | Britain’t tax receipts have risen by 4.4% this financial year, or £17.8bn, to £421.8bn. |
| That helped to pull borrowing down since April -- but not by enough to prevent the national debt hitting record highs. | That helped to pull borrowing down since April -- but not by enough to prevent the national debt hitting record highs. |
| Suren Thiru, head of economics at the British Chambers of Commerce (BCC), is concerned that the UK tax take isn’t growing faster: | Suren Thiru, head of economics at the British Chambers of Commerce (BCC), is concerned that the UK tax take isn’t growing faster: |
| “Government borrowing in November, while higher than expected, was still marginally lower in annual terms. Despite the slight improvement, debt levels remain unsustainably high. | “Government borrowing in November, while higher than expected, was still marginally lower in annual terms. Despite the slight improvement, debt levels remain unsustainably high. |
| “2017 is likely to be a challenging period for the UK’s public finances, with economic growth likely to soften, which will hamper the UK’s ability to generate tax receipts. | “2017 is likely to be a challenging period for the UK’s public finances, with economic growth likely to soften, which will hamper the UK’s ability to generate tax receipts. |
| The more flexible approach to deficit reduction announced in the Autumn Statement is a sensible step given the broader uncertainty. However, the acid test for the Chancellor’s new fiscal rules will be whether they are able to reverse the ongoing shortfall in tax revenue, which has persistently hampered previous attempts to reduce the deficit.” | The more flexible approach to deficit reduction announced in the Autumn Statement is a sensible step given the broader uncertainty. However, the acid test for the Chancellor’s new fiscal rules will be whether they are able to reverse the ongoing shortfall in tax revenue, which has persistently hampered previous attempts to reduce the deficit.” |
| 10.28am GMT | 10.28am GMT |
| 10:28 | 10:28 |
| Public finances provide reassurance to chancellor Hammond | Public finances provide reassurance to chancellor Hammond |
| Chancellor Philip Hammond may find some Christmas cheer in today’s public finances. | Chancellor Philip Hammond may find some Christmas cheer in today’s public finances. |
| Even though the deficit was higher than expected, Britain seems to be on track to hit the (new) budget targets which were announced in November’s autumn statement. | Even though the deficit was higher than expected, Britain seems to be on track to hit the (new) budget targets which were announced in November’s autumn statement. |
| Howard Archer of IHS Global Insight says its “welcome news” for Hammond. | Howard Archer of IHS Global Insight says its “welcome news” for Hammond. |
| Reassuring news for the Chancellor as the public finances saw modest improvement in November compared to a year earlier – thereby keeping the government on track to meet – or even slightly undershoot - its upwardly revised target for 2016/17 contained in November’s Autumn Statement. | Reassuring news for the Chancellor as the public finances saw modest improvement in November compared to a year earlier – thereby keeping the government on track to meet – or even slightly undershoot - its upwardly revised target for 2016/17 contained in November’s Autumn Statement. |
| It would have been somewhat embarrassing if the first set of public finance figures after the November Statement had immediately put question markets over his new fiscal targets. | It would have been somewhat embarrassing if the first set of public finance figures after the November Statement had immediately put question markets over his new fiscal targets. |
| Howard has also crunched through today’s data, and reports that: | Howard has also crunched through today’s data, and reports that: |
| There was a slowdown in growth in tax receipts in November, primarily due to income tax related receipts dipping 1.1% year-on-year. ONS data show that employment growth has slowed recently, although it needs to be borne in mind that the tax data can be erratic from month to month, partly depending on when exactly the receipts come in. It is also notable that national insurance contributions were up 6.3% year-on-year. | There was a slowdown in growth in tax receipts in November, primarily due to income tax related receipts dipping 1.1% year-on-year. ONS data show that employment growth has slowed recently, although it needs to be borne in mind that the tax data can be erratic from month to month, partly depending on when exactly the receipts come in. It is also notable that national insurance contributions were up 6.3% year-on-year. |
| VAT receipts were up 4.4% year-on-year in November and corporation tax receipts were up 22.9% year-on-year, which points to still resilient economic activity. | VAT receipts were up 4.4% year-on-year in November and corporation tax receipts were up 22.9% year-on-year, which points to still resilient economic activity. |
| 10.04am GMT | 10.04am GMT |
| 10:04 | 10:04 |
| UK public finances: What the experts say | UK public finances: What the experts say |
| City experts aren’t impressed that Britain’s net borrowing spiked to £12.6bn last month, up from just £4.2bn in October. | City experts aren’t impressed that Britain’s net borrowing spiked to £12.6bn last month, up from just £4.2bn in October. |
| Paul Sirani, chief market analyst at Xtrade, says: | Paul Sirani, chief market analyst at Xtrade, says: |
| “The outlook for the UK heading into the new year is a rather bearish one and investors are unlikely to be flying in with both feet as uncertainty continues to swirl. | “The outlook for the UK heading into the new year is a rather bearish one and investors are unlikely to be flying in with both feet as uncertainty continues to swirl. |
| And here’s Dennis de Jong, managing director at UFX.com, | And here’s Dennis de Jong, managing director at UFX.com, |
| “The gap between UK government spending and income has risen sharply in November, raising a number of red flags with investors who will interpret this as a sign that a significant economic slowdown is coming in the new year. | “The gap between UK government spending and income has risen sharply in November, raising a number of red flags with investors who will interpret this as a sign that a significant economic slowdown is coming in the new year. |
| “Chancellor Philip Hammond has announced the final spring budget for early March where he will attempt to plan for an uncertain future, with the triggering of Article 50 set for later that month. | “Chancellor Philip Hammond has announced the final spring budget for early March where he will attempt to plan for an uncertain future, with the triggering of Article 50 set for later that month. |
| “If borrowing levels continues to rise at this rate, Hammond may not have too much room for manoeuvre when setting out his fiscal policy.” | “If borrowing levels continues to rise at this rate, Hammond may not have too much room for manoeuvre when setting out his fiscal policy.” |
| 9.49am GMT | 9.49am GMT |
| 09:49 | 09:49 |
| UK borrowing: the key charts | UK borrowing: the key charts |
| This chart, from today’s public finances, shows how Britain’s national debt hit a new record high in November - up to £1.655bn from £1.641bn in October. | This chart, from today’s public finances, shows how Britain’s national debt hit a new record high in November - up to £1.655bn from £1.641bn in October. |
| And this chart shows how net borrowing this financial year has fallen by £7.7bn, compared to 2015-2016. | And this chart shows how net borrowing this financial year has fallen by £7.7bn, compared to 2015-2016. |
| Updated | Updated |
| at 10.11am GMT | at 10.11am GMT |