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European Central Bank decision on QE stimulus and interest rates - business live European Central Bank cuts QE stimulus programme to €30bn per month - business live
(35 minutes later)
1.09pm BST
13:09
German conservative MEP Markus Ferber has heavily criticised the ECB’s decision to extend its stimulus programme.
Ferber argues that there’s no justification for buying tens of billions of government and corporate bonds each month, with newly created money.
Ferber says:
“The Eurozone is growing strongly, inflation is picking up, and downside risks are minimal. It seems like the textbook case for the right time to phase out quantitative easing and start a normalisation of monetary policy.
Instead the ECB locks in their flawed monetary policy approach for the months to come and defers normalisation indefinitely. I am disappointed that the ECB missed yet another chance to initialise a normalisation of monetary policy. The asset purchasing program will keep distorting the market and lays the foundations for the next crisis.”
1.07pm BST
13:07
1.02pm BST
13:02
The euro has dropped by half a cent against the US dollar since the ECB announcement, to $1.176.
That suggests that some traders had expected a more dramatic cut to the Bank’s stimulus programme.
In theory, the ECB could have decided to buy even fewer bonds per month, or only extended the QE programme by another six months, rather than nine.
12.58pm BST
12:58
ECB cuts QE: Snap reaction
My colleague Richard Partington tweets:
ECB says it plans to cut asset purchases from €60bn to €30bn from Jan. Keeping €30bn until Sept 2018. Slow withdrawal from QE.
Danske Bank have helpfully summarised today’s ECB statement:
🇪🇺#ECB extends #QE for 9 months at EUR30bn per month, in line with our expectation. $EURUSD pic.twitter.com/EhKabFjblA
12.50pm BST
12:50
ECB cuts QE programme to €30bn per month
BREAKING: The European Central Bank has slowed the pace of its stimulus programme.
From January 2018, the ECB will buy €30bn of new bonds each month -- that’s down from €60bn per month at present.
The ECB’s governing council has decided to continue this quantitative easing programme for at least another nine months - or longer if needed.
That means the ECB has taken another step towards ending the era of ultra-loose monetary policy.
The ECB says:
From January 2018 the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the APP [Asset Purchase Programme] in terms of size and/or duration.
The ECB has also left borrowing costs unchanged.
That means the headline eurozone interest rate remains at 0.0%, and banks face a negative interest rate of -0.4% for leaving money in the central bank’s vaults.
Details and reaction to follow!
Updated
at 12.52pm BST
12.41pm BST
12:41
After a busy morning, City traders are now turning their attention to Frankfurt.
The European Central Bank is poised to announce the decisions taken at today’s governing council meeting. We’re expecting the ECB to leave interest rates at their record lows, but also outline how it could slow its bond-buying programme (our opening blogpost has more details).
The decision comes at 12.45pm BST, followed by a press conference with president Mario Draghi at 1.30pm.
12.40pm BST
12:40
Labour MP Anneliese Dodds, who represents Oxford East, tweets:
.@CBItweets monthly survey: Retail sales have suffered sharpest monthly decline since fin crisis. Symptom of falling real pay under Tories.
12.35pm BST
12:35
In other bad news...the Unite union in Northern Ireland has warned that aerospace company Bombardier is planning to cut 280 jobs at its Belfast plant.
Bombardier faces legal action in the United States from rival Boeing over the development of the C-Series jet.
Boeing alleges its Canadian competitor has been receiving unfair state subsidies to build the new plane. Unite point out however that only last month Bombardier announced a new business partnership with Airbus.
Davy Thompson, Unite’s regional co-ordinating officer said today:
“The jobs to be lost are functional as opposed to operational meaning losses will be concentrated outside the main production lines but this will be devastating news for the workers concerned and their families in the run-up to the end of the year.
Unite is calling on management to review this decision.
12.33pm BST12.33pm BST
12:3312:33
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: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.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.’ As we enter the key Christmas trading period, the retail industry is desperately in need of some festive cheer.
Updated
at 12.53pm BST
12.21pm BST12.21pm BST
12:2112:21
Full story: Alarm sounds over state of UK high streetFull 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: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.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.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.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.”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 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....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:More here:
12.20pm BST12.20pm BST
12:2012:20
Debenhams, the UK department store chain, has added to the uncertainty in the UK retail sector today.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.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:Sergio Bucher, CEO, says:
The environment remains uncertain and we face tough comparatives over the key Christmas weeks.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 BST
11:56
Pound hit by retail 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.
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.
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/PqSx2OFWvF
11.50am BST
11:50
‘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.
Here’s the details:
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%).
11.40am BST
11:40
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/2ylzo7qmzI
11.33am BST
11:33
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....
Very weak Oct #CBI #distributive trades survey reinforces our suspicion #UK #GDP growth likely to remain muted despite slight Q3 pick up
11.28am BST
11:28
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.
Updated
at 11.28am BST
11.19am BST
11:19
Here’s the details of the retail sales slump:
UK CBI Retailing Reported Sales Oct: -36 (est 23; prev 42) pic.twitter.com/b672wsOnQv
11.16am BST
11:16
UK retail sales fall off a cliff
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.
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.
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 crisis
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%)
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.
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...
UK cbi retail sales index just fell off a cliff pic.twitter.com/q98qsGbGWk
Updated
at 11.28am BST
11.14am BST
11:14
Scottish government: Growth will suffer if migration falls
Severin 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.
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%.
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.”
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.
“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 BST
10:43
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:
“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.
“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.”
That's the length of a whole career. Another whole generation of women getting paid less than men. Unacceptable.