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UK retail sales suffer biggest fall since 2009 – business live European Central Bank decision on QE stimulus and interest rates - business live
(35 minutes later)
12.33pm BST
12:33
Laith Khalaf, senior analyst at Hargreaves Lansdown, says UK retailers will be hoping the Bank of England doesn’t raise interest rates at its November meeting:
These latest numbers from the CBI will only add to the mixed economic signals to be digested by the Bank of England next week when it decides whether to increase interest rates for the first time in over a decade. Retailers will breathe a sigh of relief if the bank chooses not to increase rates and further burden consumers with additional mortgage costs, at a time when they are already feeling a bit of a pinch.
As we enter the key Christmas trading period, the retail industry is desperately in need of some festive cheer.’
12.21pm BST
12:21
Full story: Alarm sounds over state of UK high street
If you’re just tuning in, here’s our news story on the retail sales figures:
The fastest monthly fall in high street sales since the height of the recession in 2009 has raised fears for the retail sector ahead of the crucial Christmas trading period.
A survey by the the CBI found that 50% of retailers suffered declining sales in September while only 15% benefited from an increase, leaving a rounded balance of -36%, the lowest since March 2009.
The business lobby group said the survey showed retailers were “feeling the pinch” from rising inflation, which has eaten into consumer incomes and squeezed profit margins.
Rain Newton-Smith, the CBI chief economist, said: “While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
The gloomy CBI survey came as Debenhams warned of an “uncertain” environment on the high street in the run up to Christmas after suffering a 44% dive in profits.
The department store confirmed the closure of two stores, in Eltham, south London, and at Farnborough, Hampshire, affecting about 80 jobs, as sales on the high street continue to fall. They are the first of up to 10 UK branches that Debenhams has earmarked for closure....
More here:
12.20pm BST
12:20
Debenhams, the UK department store chain, has added to the uncertainty in the UK retail sector today.
It reported a 44% slide in pre-tax profits at the company over the last 12 months, and warned that the retail environment is challenging.
Sergio Bucher, CEO, says:
The environment remains uncertain and we face tough comparatives over the key Christmas weeks.
12.11pm BST
12:11
Hannah Maundrell, editor in chief of money.co.uk, says Britain’s cost of living squeeze is hurting the retail sector:
“These results are definitely worrying for retailers as they are clearly starting to feel the impact of inflation.
“This survey doesn’t cover the whole market, however it could be a good indication that consumers are being more wary in the run up to Christmas and aren’t willing to part with the shiny new pounds in their pocket quite as quickly as before. Wages aren’t rising in line with the inflation which could be one reason why sales are down.
“In the run up to Christmas it’s important people don’t overspend and stick to a tight budget, however after the results of this survey businesses will be counting on us splashing out at Christmas.”
Updated
at 12.11pm BST
11.56am BST11.56am BST
11:5611:56
Pound hit by retail sales slidePound hit by retail sales slide
Sterling is falling against the dollar, following the news that UK retailers suffered an October sales slide.Sterling is falling against the dollar, following the news that UK retailers suffered an October sales slide.
The pound has lost almost half a cent, to $1.322.The pound has lost almost half a cent, to $1.322.
It’s also down 0.3% against the euro at €1.119.It’s also down 0.3% against the euro at €1.119.
Consumer spending has been a key driver of UK growth this year. Thus, today’s retail slowdown may worry Bank of England policymakers, who must decide whether to raise interest rates next week.Consumer spending has been a key driver of UK growth this year. Thus, today’s retail slowdown may worry Bank of England policymakers, who must decide whether to raise interest rates next week.
Shocker in the CBI retail sales survey today: -36%, worst since '09. Squeaky bum time if you're a BOE ratesetter on the fence about a hike. pic.twitter.com/PqSx2OFWvFShocker in the CBI retail sales survey today: -36%, worst since '09. Squeaky bum time if you're a BOE ratesetter on the fence about a hike. pic.twitter.com/PqSx2OFWvF
11.50am BST11.50am BST
11:5011:50
‘Non-specialist’ goods shops, such as department stores, suffered the brunt of the spending slowdown this month.‘Non-specialist’ goods shops, such as department stores, suffered the brunt of the spending slowdown this month.
Britons also cut back on furniture and carpets, in another sign that consumers are reining in their spending.Britons also cut back on furniture and carpets, in another sign that consumers are reining in their spending.
Here’s the details:Here’s the details:
The CBI says:The CBI says:
Sales volumes expanded in other normal goods (74%), recreational goods (+64%) and hardware & DIY (43%). Meanwhile, sales volumes decreased in specialist food & drink (-32%) and non-specialised goods (i.e. department stores (-45%).Sales volumes expanded in other normal goods (74%), recreational goods (+64%) and hardware & DIY (43%). Meanwhile, sales volumes decreased in specialist food & drink (-32%) and non-specialised goods (i.e. department stores (-45%).
11.40am BST11.40am BST
11:4011:40
Economist Sam Tombs of Pantheon has been forced to redraw his graph to capture the tumble in retail sales this month!Economist Sam Tombs of Pantheon has been forced to redraw his graph to capture the tumble in retail sales this month!
The CBI's reported sales bal. was so weak in Oct I had to adjust my chart's scales - never a good sign. Thankfully the bal. often misleads pic.twitter.com/2ylzo7qmzIThe CBI's reported sales bal. was so weak in Oct I had to adjust my chart's scales - never a good sign. Thankfully the bal. often misleads pic.twitter.com/2ylzo7qmzI
11.33am BST11.33am BST
11:3311:33
The decline in UK retail sales shows that consumers are cutting back, says Howard Archer of the EY Item Club. It’s a bad sign for growth....The decline in UK retail sales shows that consumers are cutting back, says Howard Archer of the EY Item Club. It’s a bad sign for growth....
Very weak Oct #CBI #distributive trades survey reinforces our suspicion #UK #GDP growth likely to remain muted despite slight Q3 pick upVery weak Oct #CBI #distributive trades survey reinforces our suspicion #UK #GDP growth likely to remain muted despite slight Q3 pick up
11.28am BST11.28am BST
11:2811:28
Today’s CBI retail sales report is much weaker than the City expected.Today’s CBI retail sales report is much weaker than the City expected.
Analysts had expected a majority of firms to report rising sales. So the news that only 15% of retailers are seeing a pick-up in demand, while 50% are suffering a decline, is a worry.Analysts had expected a majority of firms to report rising sales. So the news that only 15% of retailers are seeing a pick-up in demand, while 50% are suffering a decline, is a worry.
UpdatedUpdated
at 11.28am BSTat 11.28am BST
11.19am BST11.19am BST
11:1911:19
Here’s the details of the retail sales slump:Here’s the details of the retail sales slump:
UK CBI Retailing Reported Sales Oct: -36 (est 23; prev 42) pic.twitter.com/b672wsOnQvUK CBI Retailing Reported Sales Oct: -36 (est 23; prev 42) pic.twitter.com/b672wsOnQv
11.16am BST11.16am BST
11:1611:16
UK retail sales fall off a cliffUK retail sales fall off a cliff
BREAKING: UK retail sales have suffered their sharpest monthly decline since the financial crisis.BREAKING: UK retail sales have suffered their sharpest monthly decline since the financial crisis.
That’s according to the CBI’s monthly survey of the UK retail sector.That’s according to the CBI’s monthly survey of the UK retail sector.
It found that just 15% of retailers reported that sales volumes were up in October on a year ago, whilst 50% said they were down. That gives a rounded balance of -36%, the worst reading since March 2009 - when Britain had fallen into recession after the financial crisis.It found that just 15% of retailers reported that sales volumes were up in October on a year ago, whilst 50% said they were down. That gives a rounded balance of -36%, the worst reading since March 2009 - when Britain had fallen into recession after the financial crisis.
Firms reported that sales were below average for the time of year. Suppliers have also been hit -- with orders dropping at the fastest rate since March 2009.Firms reported that sales were below average for the time of year. Suppliers have also been hit -- with orders dropping at the fastest rate since March 2009.
Here are the key findings from the report:Here are the key findings from the report:
15% of retailers said that sales volumes were up in October on a year ago, whilst 50% said they were down, giving a rounded balance of -36%. This significantly undershot expectations (+23%), and was the steepest fall in sales volumes since March 2009 (-44%), during the financial crisis15% of retailers said that sales volumes were up in October on a year ago, whilst 50% said they were down, giving a rounded balance of -36%. This significantly undershot expectations (+23%), and was the steepest fall in sales volumes since March 2009 (-44%), during the financial crisis
14% of respondents expect sales volumes to increase next month, with 12% expecting a decrease, giving a rounded balance of +3%14% of respondents expect sales volumes to increase next month, with 12% expecting a decrease, giving a rounded balance of +3%
14% of retailers placed more orders with suppliers than they did a year ago, whilst 57% placed fewer orders, giving a balance of -43%. This was the fastest decline since March 2009 (-47%)14% of retailers placed more orders with suppliers than they did a year ago, whilst 57% placed fewer orders, giving a balance of -43%. This was the fastest decline since March 2009 (-47%)
Rain Newton-Smith, CBI Chief Economist, blames the cost of living squeeze, due to the slump in the pound since the Brexit vote.Rain Newton-Smith, CBI Chief Economist, blames the cost of living squeeze, due to the slump in the pound since the Brexit vote.
“It’s clear retailers are beginning to really feel the pinch from higher inflation.“It’s clear retailers are beginning to really feel the pinch from higher inflation.
While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.
The survey only covers 106 firms, including 49 retailers, so it needs treating with some caution. But such a sharp decline is certainly worth noting...The survey only covers 106 firms, including 49 retailers, so it needs treating with some caution. But such a sharp decline is certainly worth noting...
UK cbi retail sales index just fell off a cliff pic.twitter.com/q98qsGbGWkUK cbi retail sales index just fell off a cliff pic.twitter.com/q98qsGbGWk
UpdatedUpdated
at 11.28am BSTat 11.28am BST
11.14am BST11.14am BST
11:1411:14
Scottish government: Growth will suffer if migration fallsScottish government: Growth will suffer if migration falls
Severin CarrellSeverin Carrell
Deep cuts in inward migration from other EU countries after Brexit would seriously hit Scotland’s economy, the Scottish government has warned, after new projections showed it would lead to a fall in the country’s working age population.Deep cuts in inward migration from other EU countries after Brexit would seriously hit Scotland’s economy, the Scottish government has warned, after new projections showed it would lead to a fall in the country’s working age population.
New data from the National Records of Scotland published on Thursday shows all future population growth depends on continued inward migration from the rest of the UK and overseas, because birthrates are projected to fall while numbers of pensionable adults to increase by 25% by 2041.New data from the National Records of Scotland published on Thursday shows all future population growth depends on continued inward migration from the rest of the UK and overseas, because birthrates are projected to fall while numbers of pensionable adults to increase by 25% by 2041.
Based on existing trends, the NRS, a government agency that monitors population figures, said Scotland’s population will rise from 5.40 million in 2016 to 5.58 million in 2026 – an increase entirely due to net inwards migration. By 2041, Scotland will have 1.32m pensioners, it said, but the number of working Scots would rise by just 1%.Based on existing trends, the NRS, a government agency that monitors population figures, said Scotland’s population will rise from 5.40 million in 2016 to 5.58 million in 2026 – an increase entirely due to net inwards migration. By 2041, Scotland will have 1.32m pensioners, it said, but the number of working Scots would rise by just 1%.
In a separate paper, the NRS also modelled the impact of a 50% cut in EU inwards migration, and said that would cut a population rise to 4%, while an end to EU migration would see Scotland’s population peak in 2032 and decline afterwards. Under that scenario, Scotland’s wage-earning population would fall by 3%.In a separate paper, the NRS also modelled the impact of a 50% cut in EU inwards migration, and said that would cut a population rise to 4%, while an end to EU migration would see Scotland’s population peak in 2032 and decline afterwards. Under that scenario, Scotland’s wage-earning population would fall by 3%.
The NRS made clear these figures were illustrative and not official data (a distinction the Scottish government’s press release did not highlight) but Fiona Hyslop, the Scottish culture and external affairs secretary, said they underlined “the critical importance of maintaining inward migration to Scotland.”The NRS made clear these figures were illustrative and not official data (a distinction the Scottish government’s press release did not highlight) but Fiona Hyslop, the Scottish culture and external affairs secretary, said they underlined “the critical importance of maintaining inward migration to Scotland.”
Hyslop said:Hyslop said:
“The stark reality outlined in today’s figures is that projected growth in Scotland’s population will slow significantly if levels of EU migration are reduced. And in that scenario the population is also predicted to start declining again within the next 25 years.“The stark reality outlined in today’s figures is that projected growth in Scotland’s population will slow significantly if levels of EU migration are reduced. And in that scenario the population is also predicted to start declining again within the next 25 years.
“That would have a significant negative impact on Scotland’s economy and our ability to fund the public services we will need for an ageing population.”“That would have a significant negative impact on Scotland’s economy and our ability to fund the public services we will need for an ageing population.”
10.43am BST10.43am BST
10:4310:43
Britain’s gender pay gap remains too high, and is falling too slowly, says TUC General Secretary Frances O’Grady.Britain’s gender pay gap remains too high, and is falling too slowly, says TUC General Secretary Frances O’Grady.
Here’s her take on today’s pay figures:Here’s her take on today’s pay figures:
“The full-time gender pay gap has inched a bit smaller. But there is still a chasm between men and women’s earnings.“The full-time gender pay gap has inched a bit smaller. But there is still a chasm between men and women’s earnings.
“At this rate it’ll take decades for women to get paid the same as men.“At this rate it’ll take decades for women to get paid the same as men.
“The government needs to crank up the pressure on employers. Companies shouldn’t just be made to publish their gender pay gaps. They should be forced to explain how they’ll close them.“The government needs to crank up the pressure on employers. Companies shouldn’t just be made to publish their gender pay gaps. They should be forced to explain how they’ll close them.
“And those bosses who flout the law should be fined.”“And those bosses who flout the law should be fined.”
That's the length of a whole career. Another whole generation of women getting paid less than men. Unacceptable.That's the length of a whole career. Another whole generation of women getting paid less than men. Unacceptable.
10.28am BST
10:28
UK gender pay gap hits record low
Good news! Britain’s gender pay gap has hit its lowest level in at least two decades.
Bad news! Women are still being paid over 9% less than men.
That’s according to the latest Annual Survey of Hours and Earnings from the Office for National Statistics.
It found that the gender pay gap for full-time staff dropped to 9.1% in the year to April, down from 9.4%. That’s the lowest level since the survey began in 1997, as this chart shows:
Nuanced but broadly positive gender pay gap picture. Overall gap up, but due to falling (+'ve) FT and (-'ve) PT gaps & shift towards FT work pic.twitter.com/5Ohz2N2mJB
It’s illegal to pay a woman less than a man for doing the same job. But still, the gender pay gap persists. The ONS says there are several reasons, including:
more women work in lower-paid jobs or sectors
women are more likely to work part-time, which can mean a lower rate of pay
women are under-represented in senior roles -this may be due to attitudes about gender roles, lack of flexible working or women taking time to look after their family
It also varies widely between different industries and jobs. Assemblers and metal workers see the biggest pay gap, and there’s also a sharp difference for senior roles like financial managers, directors, and CEOs.
What's the #GenderPayGap for your job? Find out with our explorer https://t.co/MVTBLNJXIa pic.twitter.com/nMiJ0PiqhG
Updated
at 10.42am BST
10.08am BST
10:08
Why carmakers fear a no-deal Brexit
Brexit is a particular worry to the UK auto industry because components typically cross the channel several times before a car finally rolls off the production line.
The Financial Times did a good piece on this last year, pointing out that the bumper for a new Bentley could be made in Europe, checked in Crewe, painted in Germany, and then assembled in Britain.
A fuel injector built by US component maker Delphi, used in diesel lorries, takes a similarly long trip....
A very good illustration by @FT how integrated for instance the car industry is with the single market. #Brexit. https://t.co/9MnOhSgq8b pic.twitter.com/mTWmB05DMX
The FT’s Peter Campbell explained:
This part uses steel from Europe which is machined in the UK before going to Germany for special heat treatment. The injector is then assembled at Delphi’s UK plant in Stonehouse, Gloucestershire, before being sold on to truckmakers based in Sweden, France or Germany.
If the resulting truck is sold into the UK market, the component or materials used in it will have crossed the Channel five times before the lorry is ever driven by the customer. If tariffs are applied at each stage, the cost could be substantial.
Updated
at 10.08am BST
9.45am BST
09:45
Getting back to cars, here’s a table showing how Britain’s factories churned out 4% fewer vehicles in September.
UK car manufacturing falls in September, as output declines -4.1% to 153,224 units https://t.co/2ae1hSqNbb pic.twitter.com/Kazl02gtcl
9.41am BST
09:41
Barclays CEO Jes Staley won’t enjoy today’s share price fall.... and he won’t get much relief from browsing through today’s analyst notes either.
Investment bank Keefe, Bruyette & Woods are particularly cutting, following the drop in Barclay’s investment bank income.
'we had thought #Barclays would struggle to disappoint low Q3 expectations. It looks like they have succeeded' punchy from KBW
Laith Khalaf of Hargreaves Lansdown agrees that Q3 ‘wasn’t a pretty quarter’ for Barclays International, adding:
Litigation still remains a risk for Barclays, with more than 20 separate investigations ongoing, not least one relating to CEO Jes Staley’s attempt to uncover a whisteblower in his own ranks.....
After making some good progress, Barclays appears to be stalling somewhat and it’s now touch and go whether the bank will break even in 2017. With the bank’s restructuring complete, Jes Staley will want to recover some momentum as we move forward into next year.’
Markets revenues down 30% yoy for Barclays. Only 5.1% ROE - hardly encouraging figures for investors https://t.co/XtDcAuIq2b
9.33am BST
09:33
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9.26am BST
09:26
Shares in Barclays have slumped to the bottom of the FTSE 100 this morning, after its latest financial results disappointed traders.
Barclays have fallen by 7%, on track for their worst daily fall since the EU referendum in June 2016.
Barclay’s investment bank is going through a bad time - income from trading bonds, foreign exchange and commodities shrank by 14%, partly down to the decline in market volatility.
CEO Jes Staley says:
The third quarter was clearly a difficult one for our Markets business within Barclays International. A lack of volume and volatility in FICC [Fixed Income, Currencies and Commodities] hit Markets revenues hard across the industry, and we were no exception to this trend.
Overall, Barclays grew its pre-tax profits by 19% over the last nine months, to £3.44bn.
Staley says he has now turned Barclays into a “Transatlantic Consumer and Wholesale Bank”. It’s made up of Barclays UK and Barclays International (mainly the investment bank), following the sale of various international assets including Barclay’s Africa division.
The City, though, doesn’t seem impressed....
Barclays share price set for biggest fall since Brexit after Q3 profit hit by weak markets business https://t.co/x1px00lhZa pic.twitter.com/x1HytkdkqC
8.49am BST
08:49
Today’s drop in UK car production is the fourth blow to the auto industry in recent weeks.
We’ve also seen that:
Car sales have fallen for six months running, including a 9% drop in September
Vauxhall is cutting 400 jobs at its Ellesmere Port plant, after seeing falling demand for the Astra
Pendragon, the leading car dealership group, issued a profits warning after suffering a sharp fall in demand and falling prices.
8.31am BST
08:31
Inchcape, the new and used car dealer, has also warned that Britain’s car sector is deteriorating.
In its latest financial results, released this morning, it says:
UK market slowing, as expected, resulting in continuing margin pressure on vehicles.
In other words, we’re buying fewer cars, forcing dealers to cut prices to get a sale.
8.15am BST
08:15
UK car production falls as Brexit fears mount
The storm clouds gathering over Britain’s car industry have darkened this morning, after manufacturers suffered a sharp fall in production.
Output shrank by 4.1% in September, new figures from the motor industry show.
Alarmingly, domestic demand tumbled by 14.2%, while there was also a 1.1% decline in production for exports.
In total, 6,500 fewer cars were produced last month than in September 2016. That has helped to drag production during 2017 down by 2.2%:
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, says the industry is suffering from falling confidence - and a government clampdown on diesel cars.
Hawes says the industry’s big fear is that Britain leaves the EU without a deal, which would disrupt the car industry’s ability to buy and sell cars and components across the channel.
“With UK car manufacturing falling for a fifth month this year, it’s clear that declining consumer and business confidence is affecting domestic demand and hence production volumes. Uncertainty regarding the national air quality plans also didn’t help the domestic market for diesel cars, despite the fact that these new vehicles will face no extra charges or restrictions across theUK.
Brexit is the greatest challenge of our times and yet we still don’t have any clarity on what our future relationship with our biggest trading partner will look like, nor detail of the transitional deal being sought. Leaving the EU with no deal would be the worst outcome for our sector so we urge government to deliver on its commitments and safeguard the competitiveness of the industry.”
These disappointing figures come a day after Japanese manufacturer Toyota urged the government to raise the ‘fog’ of Brexit uncertainty.
City analyst Simon French of Panmure Gordon points out that car production has gone into reverse in other countries too......
Worth noting this morning that fall in UK car production mirrors global inflection in trend. Far from clear from the data that fall is #Brexit-related pic.twitter.com/I7sYGLSkMm
Updated
at 8.26am BST
7.57am BST
07:57
The agenda: IT'S ECB DAY!
Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.
All eyes will be on the European Central Bank today, as the eurozone’s top central bankers meet to set monetary policy. And it could be a red letter day, with the ECB likely to turn down the gas on its money-printing programme.
With Europe’s economy firing on all cylinders, the ECB is likely to decide to cut the pace of its bond-buying stimulus scheme, which is currently creating €60bn of new money each month.
But, inflation is still below target, so the ECB won’t feel under pressure to slam the brakes. Instead, it will probably cut the pace of quantitative easing...but by how much?
No-one’s really sure, so prepare for drama when ECB chief Mario Draghi reveals how he plans to slow, or ‘taper’, the stimulus plan.
Good Taper Day morning from Frankfurt. #ECB
Financial group PNC predicts that the ECB will lop €15bn off its QE programme, and keep buying government and corporate bonds until next autumn.
They say:
We expect a reduction in monthly asset purchases to perhaps €45 billion euros in January from the current €60 billion. The ECB will probably refrain from a firm commitment to an end-date for its program at tomorrow’s decision; we expect purchases to continue until at least the third quarter of 2018.
Draghi’s challenge is to avoid alarming the markets, sparking a crash in bond prices or a surge in the euro.
Capital Economics say he must strike a delicate balance:
Following the numerous signals from President Draghi and colleagues over recent months, the market is well primed for some form of taper announcement. But there is still a delicate balance to strike.
Taper too quickly and the markets might worry that the ECB’s historically hawkish instincts – typified by the premature (and subsequently reversed) interest rate hikes of 2011 – may be resurfacing. One obvious consequence could be an undesirable rise in the euro. But too tentative a move could fuel concerns that the ECB has little confidence in the economic outlook and the effectiveness of its previous policy measures.
European stock markets are expected to rise a little, while traders wait for the ECB’s announcement at lunchtime.
European Opening Calls:#FTSE 7462 +0.19%#DAX 12972 +0.14%#CAC 5382 +0.13%#MIB 22483 +0.16%#IBEX 10146 -0.07%
Also today.... Barclays Bank and high street retailer Debenhams are reporting results this morning. We also get a new survey of retail spending from the CBI.
The agenda:
11am BST: CBI’s survey of retail sales in October
12.45pm BST: ECB interest rate decision
1.30pm BST: ECB president Mario Draghi’s press conference
1.30pm BST: US trade figures for September