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Markets concerned after crucial US healthcare vote delayed - business live Markets concerned after crucial US healthcare vote delayed - business live
(35 minutes later)
11.54am GMT
11:54
Pound could fall as low as $1.06, Deutsche Bank
The pound could fall by another 15% against the dollar and the euro this year according to Deutsche Bank.
Currency analysts at the German bank said sterling could fall as low as $1.06 - from a current level of $1.2492 - as the Brexit process weighs on growth. Meanwhile it could fall towards parity with the euro.
Commenting in a special report on Brexit, they wrote:
We do not see sterling (currently) fully pricing a hard Brexit outcome. Combined with limited adjustment in the UK’s current account deficit and slowing growth, we see further downside, and forecast $1.06 in by year-end.
11.39am GMT11.39am GMT
11:3911:39
Brexit watch: squeeze on living standards beginsBrexit watch: squeeze on living standards begins
The Guardian’s latest monthly analysis shows that the squeeze in UK living standards is on.The Guardian’s latest monthly analysis shows that the squeeze in UK living standards is on.
The Brexit vote’s blow to the pound is stoking inflation while pay packets are shrinking in real terms.The Brexit vote’s blow to the pound is stoking inflation while pay packets are shrinking in real terms.
My colleague Katie Allen explains:My colleague Katie Allen explains:
As Theresa May prepares to trigger article 50 next week, kicking off the formal process of the UK leaving the EU, the economy continues to defy the doomsayers who predicted a sudden downturn after the referendum. But signs of a slowdown are now emerging as higher prices put pressure on companies and consumers alike.As Theresa May prepares to trigger article 50 next week, kicking off the formal process of the UK leaving the EU, the economy continues to defy the doomsayers who predicted a sudden downturn after the referendum. But signs of a slowdown are now emerging as higher prices put pressure on companies and consumers alike.
Nine months on from the referendum, the Guardian’s monthly tracker of economic news shows inflation is at its highest level for more than three years, retail sales have lost momentum and pay growth has slowed significantly despite the lowest unemployment rate for more than a decade.Nine months on from the referendum, the Guardian’s monthly tracker of economic news shows inflation is at its highest level for more than three years, retail sales have lost momentum and pay growth has slowed significantly despite the lowest unemployment rate for more than a decade.
At 2.3% last month, inflation was the highest since September 2013 and above the Bank of England’s 2% target. It is expected to rise further this year thanks to higher crude oil prices and because the weaker pound is making imports such as food ingredients and fuel more expensive. The latest official snapshot of living costs showed fuel cost 19% more this February than a year ago.At 2.3% last month, inflation was the highest since September 2013 and above the Bank of England’s 2% target. It is expected to rise further this year thanks to higher crude oil prices and because the weaker pound is making imports such as food ingredients and fuel more expensive. The latest official snapshot of living costs showed fuel cost 19% more this February than a year ago.
Consumers also had to pay more for many groceries as a long period of food price deflation came to an end. The pound effect on imported food was compounded for some groceries by shortages after bad weather in southern Europe hit crops. The price of an iceberg lettuce, for example, jumped to an average 93p in February – from 54p in January – as supermarkets imposed restrictions on the number of lettuces per customer.Consumers also had to pay more for many groceries as a long period of food price deflation came to an end. The pound effect on imported food was compounded for some groceries by shortages after bad weather in southern Europe hit crops. The price of an iceberg lettuce, for example, jumped to an average 93p in February – from 54p in January – as supermarkets imposed restrictions on the number of lettuces per customer.
Read the full story here:Read the full story here:
11.20am GMT11.20am GMT
11:2011:20
Howard Archer, chief UK economist at IHS Markit, said the BBA report reflected the weaker backdrop facing consumers.Howard Archer, chief UK economist at IHS Markit, said the BBA report reflected the weaker backdrop facing consumers.
There are signs of an underlying slowdown in unsecured consumer borrowing from the peak levels seen around last October, which ties in with the impression that consumers are becoming more cautious as their purchasing power is increasingly diluted by rising inflation.There are signs of an underlying slowdown in unsecured consumer borrowing from the peak levels seen around last October, which ties in with the impression that consumers are becoming more cautious as their purchasing power is increasingly diluted by rising inflation.
It looks inevitable that the fundamentals for consumers will progressively weaken over the coming months with inflation rising markedly due to the weakened pound and companies likely increasingly looking to hold down pay to limit their total costs.It looks inevitable that the fundamentals for consumers will progressively weaken over the coming months with inflation rising markedly due to the weakened pound and companies likely increasingly looking to hold down pay to limit their total costs.
11.10am GMT11.10am GMT
11:1011:10
Mortgage approvals hit three-month lowMortgage approvals hit three-month low
Britain’s high street banks approved 42,613 mortgages for house purchase (excluding remortgages) in February, which was a three-month low.Britain’s high street banks approved 42,613 mortgages for house purchase (excluding remortgages) in February, which was a three-month low.
The British Bankers’ Association said the figure was 3.5% lower than January, and 4.6% lower than February 2016. Remortgaging numbers were also down.The British Bankers’ Association said the figure was 3.5% lower than January, and 4.6% lower than February 2016. Remortgaging numbers were also down.
The annual growth in consumer credit slowed slightly to 6.6% in February from 6.7%, while growth in business borrowing slowed considerably to 0.9% from 2.1% in January.The annual growth in consumer credit slowed slightly to 6.6% in February from 6.7%, while growth in business borrowing slowed considerably to 0.9% from 2.1% in January.
Eric Leenders, BBA Managing Director for Retail Banking said:Eric Leenders, BBA Managing Director for Retail Banking said:
“Elevated approval volumes for house purchases and re-mortgaging experienced during the winter months fell back in February, to average levels seen throughout most of last year. Consumers’ use of credit cards and personal loans reflect last month’s increased spending figures.“Elevated approval volumes for house purchases and re-mortgaging experienced during the winter months fell back in February, to average levels seen throughout most of last year. Consumers’ use of credit cards and personal loans reflect last month’s increased spending figures.
“Businesses continue to exercise a cautious approach to borrowing, using cash reserves and alternative lending sources to finance their operations.”“Businesses continue to exercise a cautious approach to borrowing, using cash reserves and alternative lending sources to finance their operations.”
UpdatedUpdated
at 11.29am GMTat 11.29am GMT
10.41am GMT10.41am GMT
10:4110:41
MPC's Vlieghe: inflation doesn't signal a rate riseMPC's Vlieghe: inflation doesn't signal a rate rise
The latest comments from a Bank of England policymaker are helping to drive the pound lower this morning.The latest comments from a Bank of England policymaker are helping to drive the pound lower this morning.
Gertjan Vlieghe, a member of the Bank’s rate-setting Monetary Policy Committee, has said that rising inflation does not automatically mean rates will rise.Gertjan Vlieghe, a member of the Bank’s rate-setting Monetary Policy Committee, has said that rising inflation does not automatically mean rates will rise.
In an interview with the Times(£), he said inflationary pressure is being driven by the fall in the value of the pound, and he expects inflation to peak at about 3% by the end of the year before starting to fall.In an interview with the Times(£), he said inflationary pressure is being driven by the fall in the value of the pound, and he expects inflation to peak at about 3% by the end of the year before starting to fall.
If it turns out the pass through of exchange rate to inflation is faster than our baseline estimate, that would mean inflation might go higher to 3 or even 3.5%.If it turns out the pass through of exchange rate to inflation is faster than our baseline estimate, that would mean inflation might go higher to 3 or even 3.5%.
But it would also mean it would come down faster afterwards. It is not at all obvious what the impact for monetary policy would be and it might not have one.But it would also mean it would come down faster afterwards. It is not at all obvious what the impact for monetary policy would be and it might not have one.
If that is the reason why inflation is higher than expected, it does not necessarily have an impact unless it also feeds in to inflation expectations.If that is the reason why inflation is higher than expected, it does not necessarily have an impact unless it also feeds in to inflation expectations.
If inflation is higher than expected because we think there is a general pick-up, then it is not just the exchange rate doing the work. That is absolutely something we need to respond to and I will be joining the response to that.If inflation is higher than expected because we think there is a general pick-up, then it is not just the exchange rate doing the work. That is absolutely something we need to respond to and I will be joining the response to that.
He said he would need to see evidence of strong wage growth before he would consider voting for a rate rise. And as we know, strong wage growth is not a feature of the economy at the current time:He said he would need to see evidence of strong wage growth before he would consider voting for a rate rise. And as we know, strong wage growth is not a feature of the economy at the current time:
10.20am GMT10.20am GMT
10:2010:20
Pound dips against dollar and euroPound dips against dollar and euro
The pound has not managed to hold on to gains made yesterday, when it was boosted by a stronger-than-expected jump in February retail sales.The pound has not managed to hold on to gains made yesterday, when it was boosted by a stronger-than-expected jump in February retail sales.
Against the dollar, the pound is down 0.2% at $1.249Against the dollar, the pound is down 0.2% at $1.249
Sterling is down 0.4% against the euro at €1.1561Sterling is down 0.4% against the euro at €1.1561
9.50am GMT9.50am GMT
09:5009:50
Eurozone PMI reaction: firms shrug off election uncertaintyEurozone PMI reaction: firms shrug off election uncertainty
Reaction to the stronger-than-expected eurozone data is coming in.Reaction to the stronger-than-expected eurozone data is coming in.
Bert Colijn, a senior eurozone economist at ING:Bert Colijn, a senior eurozone economist at ING:
While political uncertainty in the eurozone itself and among its larger trade partners continues to be high, sentiment among eurozone businesses about activity in the coming year continues to improve.While political uncertainty in the eurozone itself and among its larger trade partners continues to be high, sentiment among eurozone businesses about activity in the coming year continues to improve.
There are plenty of reasons to be optimistic though, as businesses indicate continued increases in new orders, the strongest output growth in near six years and employment is growing at a pace not seen for almost a decade. The acceleration of job growth will underpin improvements in domestic demand in the months ahead, which is in line with this month’s strong consumer confidence figures.There are plenty of reasons to be optimistic though, as businesses indicate continued increases in new orders, the strongest output growth in near six years and employment is growing at a pace not seen for almost a decade. The acceleration of job growth will underpin improvements in domestic demand in the months ahead, which is in line with this month’s strong consumer confidence figures.
Stephen Brown, European economist at Capital Economics, says the PMI suggests that the economy might have had its best quarter in two years:Stephen Brown, European economist at Capital Economics, says the PMI suggests that the economy might have had its best quarter in two years:
After a strong rise in March the euro-zone Composite PMI suggests that the economy might have had its strongest quarter in two years in Q1.After a strong rise in March the euro-zone Composite PMI suggests that the economy might have had its strongest quarter in two years in Q1.
In all then, some encouraging news for the region. But while the output prices index increased further, there is still slack in the labour market and wage growth is set to remain subdued. As such, policymakers at the European Central Bank are unlikely to be convinced that recent signs of a pick-up in activity will translate into sustained upward pressure on inflation.In all then, some encouraging news for the region. But while the output prices index increased further, there is still slack in the labour market and wage growth is set to remain subdued. As such, policymakers at the European Central Bank are unlikely to be convinced that recent signs of a pick-up in activity will translate into sustained upward pressure on inflation.
9.29am GMT9.29am GMT
09:2909:29
Eurozone growth hits six-year high in March, survey suggestsEurozone growth hits six-year high in March, survey suggests
The eurozone economy grew at the fastest rate in almost six years in March according to a survey of firms across the whole region.The eurozone economy grew at the fastest rate in almost six years in March according to a survey of firms across the whole region.
The flash PMI index measuring services and manufacturing output rose to 56.7 from 56 in February, taking it to the highest level since April 2011. Economists polled by Reuters had predicted a small dip in the index, to 55.8 (where anything above 50 signals growth).The flash PMI index measuring services and manufacturing output rose to 56.7 from 56 in February, taking it to the highest level since April 2011. Economists polled by Reuters had predicted a small dip in the index, to 55.8 (where anything above 50 signals growth).
As demand in the sectors picked up, firms hired workers at the fastest rate since July 2007.As demand in the sectors picked up, firms hired workers at the fastest rate since July 2007.
Chris Williamson, chief business economist at IHS Markit, said the survey suggested the eurozone was on course for a decent start to the second quarter of 2017:Chris Williamson, chief business economist at IHS Markit, said the survey suggested the eurozone was on course for a decent start to the second quarter of 2017:
The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter.The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter.
UpdatedUpdated
at 9.33am GMTat 9.33am GMT
9.11am GMT9.11am GMT
09:1109:11
Here are the specific numbers for those stronger-than-expected German and French PMIs.Here are the specific numbers for those stronger-than-expected German and French PMIs.
(Anything above 50 indicates growth.)(Anything above 50 indicates growth.)
Germany’s flash composite* PMI rose to 57 in March from 56 .1 in February.Germany’s flash composite* PMI rose to 57 in March from 56 .1 in February.
In France, the composite PMI rose to 57.6 in March from 55.9 in February.In France, the composite PMI rose to 57.6 in March from 55.9 in February.
Both signalled the fastest rate of growth since May 2011.Both signalled the fastest rate of growth since May 2011.
*composite combines the services and manufacturing sector.*composite combines the services and manufacturing sector.
The broad picture appears to that Europe’s two largest economies performed well in March, providing a boost to the overall performance in the third quarter.The broad picture appears to that Europe’s two largest economies performed well in March, providing a boost to the overall performance in the third quarter.
8.54am GMT8.54am GMT
08:5408:54
German and French firms report strongest growth in six yearsGerman and French firms report strongest growth in six years
Closely-watched surveys from Germany and France suggest Europe’s two largest economies enjoyed a strong March.Closely-watched surveys from Germany and France suggest Europe’s two largest economies enjoyed a strong March.
Growth accelerated in the manufacturing and services sectors in both countries compared with February according to the Markit PMI surveys, beating economists’ expectations.Growth accelerated in the manufacturing and services sectors in both countries compared with February according to the Markit PMI surveys, beating economists’ expectations.
Taking the two sectors together, the PMIs suggested the private sectors in both Germany and France grew at the fastest rate in almost six years.Taking the two sectors together, the PMIs suggested the private sectors in both Germany and France grew at the fastest rate in almost six years.
Trevor Balchin, senior economist at IHS Markit, said the surveys suggested Germany’s economy would grow at a faster rate in the first quarter than it did in the final quarter of 2016 (0.4%).Trevor Balchin, senior economist at IHS Markit, said the surveys suggested Germany’s economy would grow at a faster rate in the first quarter than it did in the final quarter of 2016 (0.4%).
The March flash PMI results rounded off a strong first quarter for the Germany economy, which enters the spring growing at the fastest rate in nearly six years. The PMI data strongly suggest that economic growth will accelerate in the first quarter.The March flash PMI results rounded off a strong first quarter for the Germany economy, which enters the spring growing at the fastest rate in nearly six years. The PMI data strongly suggest that economic growth will accelerate in the first quarter.
Commenting on the French data, Alex Gill, economist at IHS Markit said:Commenting on the French data, Alex Gill, economist at IHS Markit said:
These numbers paint a rosy picture of the French private sector, as we start to see the effect of various governmental reforms enacted over the last few years. Meanwhile, a high level of business optimism continues to have a positive influence on firms hiring decisions, and can be attributed to a widespread expectation of pro-business policies after May’s presidential elections.These numbers paint a rosy picture of the French private sector, as we start to see the effect of various governmental reforms enacted over the last few years. Meanwhile, a high level of business optimism continues to have a positive influence on firms hiring decisions, and can be attributed to a widespread expectation of pro-business policies after May’s presidential elections.
UpdatedUpdated
at 9.01am GMTat 9.01am GMT
8.30am GMT8.30am GMT
08:3008:30
European markets dip in early tradingEuropean markets dip in early trading
Caution on Wall Street last night has carried through to Europe this morning as a subdued trading session gets underway.Caution on Wall Street last night has carried through to Europe this morning as a subdued trading session gets underway.
Here are the early scores:Here are the early scores:
FTSE 100: -0.02% at 7,339FTSE 100: -0.02% at 7,339
Germany’s DAX: -0.1% at 12,034Germany’s DAX: -0.1% at 12,034
France’s CAC: -0.3% at 5,017France’s CAC: -0.3% at 5,017
Italy’s FTSE MIB: -0.3% at 20,113Italy’s FTSE MIB: -0.3% at 20,113
Spain’s IBEX: -0.3% at 10,291Spain’s IBEX: -0.3% at 10,291
Europe’s STOXX 600: -0.2% at 377Europe’s STOXX 600: -0.2% at 377
Investors are in wait and see mode as Trump engages in a major standoff with his fellow Republicans over the controversial healthcare bill to replace Obamacare.Investors are in wait and see mode as Trump engages in a major standoff with his fellow Republicans over the controversial healthcare bill to replace Obamacare.
8.04am GMT8.04am GMT
08:0408:04
Here’s our full story on Trump’s ultimatum:Here’s our full story on Trump’s ultimatum:
8.03am GMT8.03am GMT
08:0308:03
Wall Street closed down last down but it could have been a lot worse after Trump had to admit defeat (for the time being at least) on the US healthcare bill, which seeks to replace Obamacare.Wall Street closed down last down but it could have been a lot worse after Trump had to admit defeat (for the time being at least) on the US healthcare bill, which seeks to replace Obamacare.
Trump took gamble on Thursday by issuing an ultimatum: pass the bill in its current form or we’re sticking with Obamacare.Trump took gamble on Thursday by issuing an ultimatum: pass the bill in its current form or we’re sticking with Obamacare.
The Dow Jones was pretty much flat at the close, while the S&P 500 dipped 0.1% and the Nasdaq closed down 0.2%.The Dow Jones was pretty much flat at the close, while the S&P 500 dipped 0.1% and the Nasdaq closed down 0.2%.
We are taking action to #RepealANDReplace #Obamacare! Contact your Rep & tell them you support #AHCA. #PassTheBill https://t.co/opzrXJigGA pic.twitter.com/C7snoRafPIWe are taking action to #RepealANDReplace #Obamacare! Contact your Rep & tell them you support #AHCA. #PassTheBill https://t.co/opzrXJigGA pic.twitter.com/C7snoRafPI
7.40am GMT7.40am GMT
07:4007:40
Agenda: Snapshot of French and German economies dueAgenda: Snapshot of French and German economies due
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.
Another day, another wait to see if Donald Trump’s healthcare bill will pass muster after delays on Thursday. Markets are nervous that a failure could dent Trump’s tax and spending plans, which have been boosting share values ever since the election. But it may not be that simple. Ipek Ozkardeskaya, senior market analyst at London Capital Group, said:Another day, another wait to see if Donald Trump’s healthcare bill will pass muster after delays on Thursday. Markets are nervous that a failure could dent Trump’s tax and spending plans, which have been boosting share values ever since the election. But it may not be that simple. Ipek Ozkardeskaya, senior market analyst at London Capital Group, said:
A validation would ... grant Trump the credibility on his ability to pass through his fiscal policies, including tax reforms and large infrastructure spending. An eventual failure could let down investors, yet it is worth noting that the major market focus is still on the US’ fiscal plans and the Trump administration could carry on with its expansive fiscal plans regardless of a disappointment on the health-care bill.A validation would ... grant Trump the credibility on his ability to pass through his fiscal policies, including tax reforms and large infrastructure spending. An eventual failure could let down investors, yet it is worth noting that the major market focus is still on the US’ fiscal plans and the Trump administration could carry on with its expansive fiscal plans regardless of a disappointment on the health-care bill.
Meanwhile the eurozone is back in focus, or at least France and Germany. Initial readings for the manufacturing and service sectors for the two countries in March are due shortly. Michael Hewson at CMC Markets said:Meanwhile the eurozone is back in focus, or at least France and Germany. Initial readings for the manufacturing and service sectors for the two countries in March are due shortly. Michael Hewson at CMC Markets said:
We get to see whether the recent economic recovery in France and Germany has maintained its traction from January and February, with the latest flash PMI’s for March in the manufacturing and services sectors.We get to see whether the recent economic recovery in France and Germany has maintained its traction from January and February, with the latest flash PMI’s for March in the manufacturing and services sectors.
France in particular saw a strong performance in the services sector in February, and this looks like it could well be sustained in March with only a slight slowdown expected to 56.2 from 56.4. Manufacturing remains a slight laggard, but is still expected to come in at 52.4.France in particular saw a strong performance in the services sector in February, and this looks like it could well be sustained in March with only a slight slowdown expected to 56.2 from 56.4. Manufacturing remains a slight laggard, but is still expected to come in at 52.4.
German activity is expected to show similarly steady numbers of 56.6 for manufacturing and 54.5 for services.German activity is expected to show similarly steady numbers of 56.6 for manufacturing and 54.5 for services.
Later come US durable goods orders. Meanwhile here are the opening calls for European markets, courtesy of IG:Later come US durable goods orders. Meanwhile here are the opening calls for European markets, courtesy of IG:
Our European opening calls:$FTSE 7345 up 4$DAX 12047 up 8$CAC 5027 down 6$IBEX 10315 down 10$MIB 20147 down 20Our European opening calls:$FTSE 7345 up 4$DAX 12047 up 8$CAC 5027 down 6$IBEX 10315 down 10$MIB 20147 down 20