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| Bank of England deputy opposes rate hike, as UK house prices rebound - business live | Bank of England deputy opposes rate hike, as UK house prices rebound - business live |
| (35 minutes later) | |
| 1.48pm BST | |
| 13:48 | |
| Euro slides as ECB sources get to work | |
| Ha! The European Central Bank have been quietly briefing that investors got the wrong end of the stick about Mario Draghi’s speech yesterday. | |
| It’s an attempt to calm speculation that the ECB might tighten monetary policy soon. | |
| Reuters have the details: | |
| European Central Bank President Mario Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, when his comments sent the euro higher this week, sources familiar with Draghi’s thinking said. | |
| The ECB declined to comment. | |
| But the markets don’t need an official ECB quote... they’ve already sold the euro, sending it down sharply.... | |
| Euro dips as the ECB reportedly sees the market as misjudging Draghi's speech https://t.co/FmcPPzqKeZ pic.twitter.com/u4IpDC4kKx | |
| You’d almost think that the ECB weren’t happy to see the euro at a one-year high against the US dollar..... | |
| Those ECB sources do have a point, though -- yesterday, Draghi spoke about the need for “persistence and prudence”, but traders mainly focused on his upbeat assessment of the eurozone economy, and hints that it might adjust its stimulus programme. | |
| Those who stopped reading #Draghi after the "reflationary" line are being taught a lesson: every word counts in central bank communication. | |
| 1.29pm BST | 1.29pm BST |
| 13:29 | 13:29 |
| Lunchtime summary | Lunchtime summary |
| Time for a quick recap | Time for a quick recap |
| The split at the Bank of England over when to start raising interest rates has deepened, after deputy governor Sir Jon Cunliffe declared his hand. Cunliffe is firmly in the ‘not yet’ camp, putting him alongside boss Mark Carney, but in opposition to at least two other policymakers. | The split at the Bank of England over when to start raising interest rates has deepened, after deputy governor Sir Jon Cunliffe declared his hand. Cunliffe is firmly in the ‘not yet’ camp, putting him alongside boss Mark Carney, but in opposition to at least two other policymakers. |
| City economists are expecting some tense meeting at the Bank of England in the months ahead, as the central bank tries to juggle high inflation and slowing consumer spending. | City economists are expecting some tense meeting at the Bank of England in the months ahead, as the central bank tries to juggle high inflation and slowing consumer spending. |
| Marc Ostwald of ADM Investor Services says: | Marc Ostwald of ADM Investor Services says: |
| The Bank of England is clearly very divided, with deputy governor Cunliffe this morning sending rather mixed signals, ostensibly backing Carney by saying this was not the time to raise interest rates, but also noting “(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves” - ‘a bit of time’ being the key observation. | The Bank of England is clearly very divided, with deputy governor Cunliffe this morning sending rather mixed signals, ostensibly backing Carney by saying this was not the time to raise interest rates, but also noting “(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves” - ‘a bit of time’ being the key observation. |
| UK house prices have reversed three months of falls, by rising 1.1% in June. Housing experts say that a lack of supply is supporting prices (Britain’s record low interest rates must be helping, too!) | UK house prices have reversed three months of falls, by rising 1.1% in June. Housing experts say that a lack of supply is supporting prices (Britain’s record low interest rates must be helping, too!) |
| However, price rises in London have slowed to the lowest rate since 2012. | However, price rises in London have slowed to the lowest rate since 2012. |
| It’s been a bad morning for Tesco workers; one in four of its head office staff are being axed under a cost-cutting drive. | It’s been a bad morning for Tesco workers; one in four of its head office staff are being axed under a cost-cutting drive. |
| Britain’s Co-operative Group will be left with just a 1% stake in the Co-op Bank after a deal was clinched with hedge funds and other investors to pump £700m into the loss-making lender. | Britain’s Co-operative Group will be left with just a 1% stake in the Co-op Bank after a deal was clinched with hedge funds and other investors to pump £700m into the loss-making lender. |
| In the markets, the euro has hit a one-year high against the US dollar following confident noises from the European Central Bank this week. | In the markets, the euro has hit a one-year high against the US dollar following confident noises from the European Central Bank this week. |
| Some experts, though, think the markets have got carried away - and that Mario Draghi wasn’t as hawkish as reported. | Some experts, though, think the markets have got carried away - and that Mario Draghi wasn’t as hawkish as reported. |
| Still getting lots of questions re Draghi’s speech in Sintra. Hawkish market reaction largely unjustified imo. 1/nhttps://t.co/guYqjfEdCW | Still getting lots of questions re Draghi’s speech in Sintra. Hawkish market reaction largely unjustified imo. 1/nhttps://t.co/guYqjfEdCW |
| The FTSE 100 is failing to provide any drama, though; it’s currently up one solitary point at 7436. | The FTSE 100 is failing to provide any drama, though; it’s currently up one solitary point at 7436. |
| 1.25pm BST | 1.25pm BST |
| 13:25 | 13:25 |
| Helena Smith | Helena Smith |
| Meanwhile, in what amounts to the first public sign that light is finally at the end of the seemingly never-ending Greek crisis tunnel, creditors have announced that the country could tap international capital markets by the end of the year. | Meanwhile, in what amounts to the first public sign that light is finally at the end of the seemingly never-ending Greek crisis tunnel, creditors have announced that the country could tap international capital markets by the end of the year. |
| Helena Smith reports | Helena Smith reports |
| “Greece is entering the final year of the program with a real opportunity to regain market access and actually end the program on schedule in August next year,” the EU Commission’s Greek mission chief Declan Costello told a conference outside Athens. | “Greece is entering the final year of the program with a real opportunity to regain market access and actually end the program on schedule in August next year,” the EU Commission’s Greek mission chief Declan Costello told a conference outside Athens. |
| But there were also warnings: | But there were also warnings: |
| Nicola Giammarioli, who is Greece mission chief for the euro zone’s rescue fund, the European Stability Mechanism, cautioned that reforms weren’t enough. After legislating them, Athens had to implement them, she said. | Nicola Giammarioli, who is Greece mission chief for the euro zone’s rescue fund, the European Stability Mechanism, cautioned that reforms weren’t enough. After legislating them, Athens had to implement them, she said. |
| “We are half-way. We have a good framework for (non-performing loan) management. Now its time for NPLs [non-performing loans] to be reduced. Greece has created an independent tax authority. Now it’s time to collect taxes … A privatisation and asset fund has been set up. | “We are half-way. We have a good framework for (non-performing loan) management. Now its time for NPLs [non-performing loans] to be reduced. Greece has created an independent tax authority. Now it’s time to collect taxes … A privatisation and asset fund has been set up. |
| Now it’s time to privatize and generate value.” | Now it’s time to privatize and generate value.” |
| Greek bonds have already been rallying recently, on hopes that the country could return to the financial markets. Earlier this week its benchmark 10-year debt hit its highest levels since the debt crisis began. | Greek bonds have already been rallying recently, on hopes that the country could return to the financial markets. Earlier this week its benchmark 10-year debt hit its highest levels since the debt crisis began. |
| Updated | Updated |
| at 1.39pm BST | at 1.39pm BST |
| 12.52pm BST | 12.52pm BST |
| 12:52 | 12:52 |
| Greek businesses create a stink over rubbish workers' strike | Greek businesses create a stink over rubbish workers' strike |
| Helena Smith | Helena Smith |
| Ouch! Over in a sweltering Athens it’s not only the temperature that is rising. | Ouch! Over in a sweltering Athens it’s not only the temperature that is rising. |
| Greek businessmen are now sounding the alarm after striking refuse workers decided to continue their walkout last night. | Greek businessmen are now sounding the alarm after striking refuse workers decided to continue their walkout last night. |
| With rubbish continuing to pile up at an alarming rate on the sweltering streets, will Greece’s tourist industry take a hit? | With rubbish continuing to pile up at an alarming rate on the sweltering streets, will Greece’s tourist industry take a hit? |
| Helena Smith reports from the Greek capital | Helena Smith reports from the Greek capital |
| With mounds of rubbish now turning into mountains of rubbish across the capital, the Athens Chamber of Tradesman has waded in with an appeal to all sides to make the concessions needed to end the strike. | With mounds of rubbish now turning into mountains of rubbish across the capital, the Athens Chamber of Tradesman has waded in with an appeal to all sides to make the concessions needed to end the strike. |
| The 11-day walk-out was prolonged last night after municipal workers rejected prime minister Alexis Tsipras’ proposed compromise of improved work conditions, including permanent jobs and thousands of new hirings, as insufficient. | The 11-day walk-out was prolonged last night after municipal workers rejected prime minister Alexis Tsipras’ proposed compromise of improved work conditions, including permanent jobs and thousands of new hirings, as insufficient. |
| In a sharply-worded statement the Chamber warned of the growing risk of the rubbish becoming a public health “bomb” and accused strikers of holding millions of citizens, tourists and tradesman hostage to their demands. | In a sharply-worded statement the Chamber warned of the growing risk of the rubbish becoming a public health “bomb” and accused strikers of holding millions of citizens, tourists and tradesman hostage to their demands. |
| “The images are disheartening. The tons of rubbish now on the roads conjure a third world country, definitely not a European Union state. Tourists, who have chosen Greece as their holiday destination, walk amid mountains of rubbish while the combination of the heat wave and rubbish is a direct threat to public health. | “The images are disheartening. The tons of rubbish now on the roads conjure a third world country, definitely not a European Union state. Tourists, who have chosen Greece as their holiday destination, walk amid mountains of rubbish while the combination of the heat wave and rubbish is a direct threat to public health. |
| The economic damage for thousands of professional restaurateurs and tourist enterprises is huge.” | The economic damage for thousands of professional restaurateurs and tourist enterprises is huge.” |
| Athens mayor Giorgos Kaminis has also intervened calling the unionists’ demands “excessive” and saying a government amendment legislating labour reforms more than met what they had been hoping for. | Athens mayor Giorgos Kaminis has also intervened calling the unionists’ demands “excessive” and saying a government amendment legislating labour reforms more than met what they had been hoping for. |
| With debt-stricken Greece dependent on international bailout funds, Tsipras told unionists he could not openly defy creditors who have demanded strict streamlining of government-controlled bodies. | With debt-stricken Greece dependent on international bailout funds, Tsipras told unionists he could not openly defy creditors who have demanded strict streamlining of government-controlled bodies. |
| The striking workers have vowed to continue the strike until Thursday when rallies are also expected. In northern Thessaloniki, Greece’s second biggest city, local authorities announced that they would outsource garbage collection to the private sector. | The striking workers have vowed to continue the strike until Thursday when rallies are also expected. In northern Thessaloniki, Greece’s second biggest city, local authorities announced that they would outsource garbage collection to the private sector. |
| “We have documents from the department of health and Kelpno (the Hellenic centre for disease control and prevention) saying that there is a serious danger for public health. Today we will start spraying,” said Thomas Psarras in charge of public cleanliness for the municipality. | “We have documents from the department of health and Kelpno (the Hellenic centre for disease control and prevention) saying that there is a serious danger for public health. Today we will start spraying,” said Thomas Psarras in charge of public cleanliness for the municipality. |
| Temperatures are expected to rise to 43 degrees Celsius by Friday as Greece swlters under its first summer heatwave. | Temperatures are expected to rise to 43 degrees Celsius by Friday as Greece swlters under its first summer heatwave. |
| Greek journalist Omaira Gill reports that life goes on, but the situation is hardly ideal: | Greek journalist Omaira Gill reports that life goes on, but the situation is hardly ideal: |
| Last Saturday I had the 1st date of the whole year with my husband amid the sultry summer evening breeze & stinking garbage #romance https://t.co/fpRPhX8TdP | Last Saturday I had the 1st date of the whole year with my husband amid the sultry summer evening breeze & stinking garbage #romance https://t.co/fpRPhX8TdP |
| In the last few minutes, there is now chatter that the government could forcibly mobilising municipal workers to collect rubbish. | In the last few minutes, there is now chatter that the government could forcibly mobilising municipal workers to collect rubbish. |
| Spokesman Dimitris Tzanakopoulos has just ruled out but said while “the government will not allow the endangering of public health,” it won’t agree to “private interests” replacing the strikers. | Spokesman Dimitris Tzanakopoulos has just ruled out but said while “the government will not allow the endangering of public health,” it won’t agree to “private interests” replacing the strikers. |
| Updated | Updated |
| at 1.05pm BST | at 1.05pm BST |
| 12.08pm BST | 12.08pm BST |
| 12:08 | 12:08 |
| Here’s some speedy reaction to Tesco’s job cuts plans, from Hannah Maundrell, Editor in Chief of money.co.uk : | Here’s some speedy reaction to Tesco’s job cuts plans, from Hannah Maundrell, Editor in Chief of money.co.uk : |
| “It’s sad but not surprising that Tesco are making job cuts at its head office. Last week Tesco said they needed to remain “sustainable and cost effective” and this is evidently their way of streamlining the business. | “It’s sad but not surprising that Tesco are making job cuts at its head office. Last week Tesco said they needed to remain “sustainable and cost effective” and this is evidently their way of streamlining the business. |
| “It’s undoubtedly distressing news for employees of Tesco and their families. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case. | “It’s undoubtedly distressing news for employees of Tesco and their families. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case. |
| “It’s also worth checking what support from the government you’d be entitled to if you’ve been left out of work and do a bit of an overhaul of your finances so you know how your budget will cope if you’re faced with a temporary gap in employment.” | “It’s also worth checking what support from the government you’d be entitled to if you’ve been left out of work and do a bit of an overhaul of your finances so you know how your budget will cope if you’re faced with a temporary gap in employment.” |
| Money.co.uk have also published this guide to redundancy rights in the UK. | Money.co.uk have also published this guide to redundancy rights in the UK. |
| Here’s our story on the job cuts: | Here’s our story on the job cuts: |
| Tesco to cut 1,200 head office jobs https://t.co/XgPvl9aEVK | Tesco to cut 1,200 head office jobs https://t.co/XgPvl9aEVK |
| 12.01pm BST | 12.01pm BST |
| 12:01 | 12:01 |
| Tesco cuts 1,200 head office jobs | Tesco cuts 1,200 head office jobs |
| Another newsflash: Tesco is reportedly axing 1,200 jobs at its head office. | Another newsflash: Tesco is reportedly axing 1,200 jobs at its head office. |
| That’s a big blow to the supermarket chain’s workforce, as bosses press on with efforts to cut costs. | That’s a big blow to the supermarket chain’s workforce, as bosses press on with efforts to cut costs. |
| This means that one in four staff at Tesco’s offices at Welwyn Garden City and Hatfield would go, according to the Press Association. | This means that one in four staff at Tesco’s offices at Welwyn Garden City and Hatfield would go, according to the Press Association. |
| This comes hot on the heels of the planned closure of Tesco’s Cardiff call centre, which could eliminate 1,100 jobs. | This comes hot on the heels of the planned closure of Tesco’s Cardiff call centre, which could eliminate 1,100 jobs. |
| PA reporting Tesco is axing 1,200 head office jobs. After the 1,100 call centre jobs hit last week. Just as things were looking up for them | PA reporting Tesco is axing 1,200 head office jobs. After the 1,100 call centre jobs hit last week. Just as things were looking up for them |
| 11.56am BST | 11.56am BST |
| 11:56 | 11:56 |
| Co-op rescue deal finally agreed. | Co-op rescue deal finally agreed. |
| Jill Treanor | Jill Treanor |
| Newsflash: At long last, Britain’s troubled Co-operative Bank has finally agreed a capital raising plan. | Newsflash: At long last, Britain’s troubled Co-operative Bank has finally agreed a capital raising plan. |
| After months of negotiations, Co-Op Bank will receive £700m of fresh capital, and the Co-operative Group’s stake the company will fall to just 1%. | After months of negotiations, Co-Op Bank will receive £700m of fresh capital, and the Co-operative Group’s stake the company will fall to just 1%. |
| My colleague Jill Treanor has the details: | My colleague Jill Treanor has the details: |
| A rescue deal for the Co-operative Bank has been clinched under which hedge funds and other investors will pump £700m into the loss-making operation. | A rescue deal for the Co-operative Bank has been clinched under which hedge funds and other investors will pump £700m into the loss-making operation. |
| The capital injection by means that the bank, which has 4m customers, will continue as a standalone entity after it abandoned efforts to find a buyer. | The capital injection by means that the bank, which has 4m customers, will continue as a standalone entity after it abandoned efforts to find a buyer. |
| However, the structure of deal means that the Co-operative Group of supermarkets and funeral homes that used to own the bank will be left with a 1% stake in the bank. The mutual’s stake had already fallen to 20% after previous rescue operations, the first of which was in 2013 when the scale of the problems in the bank were uncovered, and it refused to put more money in this time. | However, the structure of deal means that the Co-operative Group of supermarkets and funeral homes that used to own the bank will be left with a 1% stake in the bank. The mutual’s stake had already fallen to 20% after previous rescue operations, the first of which was in 2013 when the scale of the problems in the bank were uncovered, and it refused to put more money in this time. |
| The bank - which put itself up for sale in February - said that despite the tiny stake owed by the Group, its “name, brand and commitment to co-operative values, set out in its ethical policy, will continue unaffected”. | The bank - which put itself up for sale in February - said that despite the tiny stake owed by the Group, its “name, brand and commitment to co-operative values, set out in its ethical policy, will continue unaffected”. |
| Dennis Holt, chairman said: “The board is pleased to confirm this proposal for a recapitalisation which will mean that the Co-operative Bank can continue as a viable stand-alone entity, with values and ethics at its heart. It is a great outcome for our customers. Our investors share our commitment to building our distinctive ethical franchise and see strong future growth potential for The Co-operative Bank.” | Dennis Holt, chairman said: “The board is pleased to confirm this proposal for a recapitalisation which will mean that the Co-operative Bank can continue as a viable stand-alone entity, with values and ethics at its heart. It is a great outcome for our customers. Our investors share our commitment to building our distinctive ethical franchise and see strong future growth potential for The Co-operative Bank.” |
| The deal follows a failed attempt to sell Co-op Bank, which has suffered years of losses and ran up a £1.5bn capital blackhole following a flawed merger with Britannia Building Society in 2009. | The deal follows a failed attempt to sell Co-op Bank, which has suffered years of losses and ran up a £1.5bn capital blackhole following a flawed merger with Britannia Building Society in 2009. |
| 11.49am BST | 11.49am BST |
| 11:49 | 11:49 |
| Euro hits one-year high as Deutsche tears up its forecasts | Euro hits one-year high as Deutsche tears up its forecasts |
| Deutsche Bank’s foreign exchange strategist have been forced into a screeching u-turn this morning. | Deutsche Bank’s foreign exchange strategist have been forced into a screeching u-turn this morning. |
| They have abandoned their forecast that the euro would end the year close to parity with the US dollar, at just $1.03. They now expect it to have strengthened to $1.16 by the end of 2017. | They have abandoned their forecast that the euro would end the year close to parity with the US dollar, at just $1.03. They now expect it to have strengthened to $1.16 by the end of 2017. |
| Deutsche threw in the towel after hearing ECB president Mario Draghi give an optimistic assessment of the eurozone yesterday, saying that growth was broadening amid moew reflationary pressures. | Deutsche threw in the towel after hearing ECB president Mario Draghi give an optimistic assessment of the eurozone yesterday, saying that growth was broadening amid moew reflationary pressures. |
| The bank says: | The bank says: |
| We are completely revising our euro outlook for the rest of the year. The speech is not the fundamental driver behind the change in view, but it aptly marks the culmination of a number of developments that have caused us to change our forecasts. | We are completely revising our euro outlook for the rest of the year. The speech is not the fundamental driver behind the change in view, but it aptly marks the culmination of a number of developments that have caused us to change our forecasts. |
| Arguably Deutsche are a little late to the non-parity party; the euro has been climbing steadily against the US dollar this year, and indeed hit a one-year high of $1.136 this morning. | Arguably Deutsche are a little late to the non-parity party; the euro has been climbing steadily against the US dollar this year, and indeed hit a one-year high of $1.136 this morning. |
| Jamie McGeever of Reuters tweets: | Jamie McGeever of Reuters tweets: |
| A turning point? The biggest euro bear throws in the towel. Deutsche Bank sees $1.16 or higher by year end. That forecast was once $0.85. | A turning point? The biggest euro bear throws in the towel. Deutsche Bank sees $1.16 or higher by year end. That forecast was once $0.85. |
| Deutsche Bank's "euroglut" theory looks shot to pieces. In 2015 the bank forecast euro at $0.85 by end-2017. They now see $1.16 or higher. | Deutsche Bank's "euroglut" theory looks shot to pieces. In 2015 the bank forecast euro at $0.85 by end-2017. They now see $1.16 or higher. |
| 10.52am BST | 10.52am BST |
| 10:52 | 10:52 |
| Sir Jon Cunliffe’s reluctance to vote for an early interest rate rise is keeping the pound at its highest level against the US dollar since the general election. | Sir Jon Cunliffe’s reluctance to vote for an early interest rate rise is keeping the pound at its highest level against the US dollar since the general election. |
| Sterling jumped over $1.283 this morning, it highest point since the shock exit polls showed Britain had voted for a hung parliament. | Sterling jumped over $1.283 this morning, it highest point since the shock exit polls showed Britain had voted for a hung parliament. |
| There’s not much other drama in the City, though. Distribution firm Bunzl is the biggest riser on the FTSE 100, up almost 4%, but the wider FSTE 100 is now flat. | There’s not much other drama in the City, though. Distribution firm Bunzl is the biggest riser on the FTSE 100, up almost 4%, but the wider FSTE 100 is now flat. |
| Joshua Mahony, market analyst at IG, says: | Joshua Mahony, market analyst at IG, says: |
| The FTSE has been moving lower once more this morning, with a dovish comment from BoE deputy governor Jon Cunliffe helping recover much of the initial selling at the open | The FTSE has been moving lower once more this morning, with a dovish comment from BoE deputy governor Jon Cunliffe helping recover much of the initial selling at the open |
| 10.34am BST | 10.34am BST |
| 10:34 | 10:34 |
| The news that UK house prices rose by 1.1% this month (but not in London!) has caused plenty of chatter in the City. | The news that UK house prices rose by 1.1% this month (but not in London!) has caused plenty of chatter in the City. |
| Caroline Simmons, Deputy Head of the UK Investment Office at UBS Wealth Management, predicts that prices will only rise modestly over the next year. | Caroline Simmons, Deputy Head of the UK Investment Office at UBS Wealth Management, predicts that prices will only rise modestly over the next year. |
| “Whilst house price growth bounced back in June the figures still point to a slowing picture overall with annual house price growth now at just 3%. Going forward, recent political uncertainty from Theresa May’s minority government and Brexit negotiations is likely to weigh on consumer confidence, denting UK house sales in the near term. There was a notable decline in new buyer enquiries following the General Election, which we expect to persist over the short term. | “Whilst house price growth bounced back in June the figures still point to a slowing picture overall with annual house price growth now at just 3%. Going forward, recent political uncertainty from Theresa May’s minority government and Brexit negotiations is likely to weigh on consumer confidence, denting UK house sales in the near term. There was a notable decline in new buyer enquiries following the General Election, which we expect to persist over the short term. |
| “Over the medium-term the picture looks slightly rosier. Structural demand remains supportive given household formation rates and credit conditions remain supportive for house prices. The banks’ increased capital strength and ability to lend, alongside persistently low interest rates aiding home owners’ ability to service mortgages, should continue to support house price growth. | “Over the medium-term the picture looks slightly rosier. Structural demand remains supportive given household formation rates and credit conditions remain supportive for house prices. The banks’ increased capital strength and ability to lend, alongside persistently low interest rates aiding home owners’ ability to service mortgages, should continue to support house price growth. |
| “We are forecasting 2-3% house price growth over the next 12 months. | “We are forecasting 2-3% house price growth over the next 12 months. |
| This chart from Nationwide shows how London is now the second-slowest region for house price growth: | This chart from Nationwide shows how London is now the second-slowest region for house price growth: |