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| Pound falls below $1.31 as pressure mounts on Theresa May over Brexit - business live | Pound falls below $1.31 as pressure mounts on Theresa May over Brexit - business live |
| (about 1 hour later) | |
| John Redwood MP is under fire after financial bloggers pointed out that the pro-Brexit politician has been advising his clients at Charles Stanley to consider investing abroad..... | |
| Time for a recap. | Time for a recap. |
| The pound has dropped against major currencies today, as concerns grow over the stability of Theresa May’s government. | The pound has dropped against major currencies today, as concerns grow over the stability of Theresa May’s government. |
| Sterling ha shed a cent against the US dollar, to below $1.31, and a similar amount against the euro to €1.122. The selloff came as MPs from across the political spectrum mobilised as the EU withdrawal bill headed back to parliament. | Sterling ha shed a cent against the US dollar, to below $1.31, and a similar amount against the euro to €1.122. The selloff came as MPs from across the political spectrum mobilised as the EU withdrawal bill headed back to parliament. |
| #GBPUSD and #GBPEUR under downside pressure following talks of no confidence in Theresa May pic.twitter.com/72RWsc7rtC | #GBPUSD and #GBPEUR under downside pressure following talks of no confidence in Theresa May pic.twitter.com/72RWsc7rtC |
| Some City analysts fear that political jitters, and Brexit developments, could push the pound lower in the weeks ahead. | Some City analysts fear that political jitters, and Brexit developments, could push the pound lower in the weeks ahead. |
| Lukman Otunuga, research analyst at FXTM, says the ‘mounting political uncertainty’ in the UK gripped the currency markets today. | Lukman Otunuga, research analyst at FXTM, says the ‘mounting political uncertainty’ in the UK gripped the currency markets today. |
| The Sunday Times newspaper reported over the weekend, that as many as 40 Conservative MPs have agreed to sign a letter of no-confidence in Theresa May. | The Sunday Times newspaper reported over the weekend, that as many as 40 Conservative MPs have agreed to sign a letter of no-confidence in Theresa May. |
| Although this was eight short of the signatures needed to trigger a formal leadership challenge, this is likely to add to the bucket load of uncertainty, translating into more pain for the British Pound. With political instability at home stimulating concerns over May’s ability to govern and deliver Brexit, Sterling may have a very rough and rocky road ahead. | Although this was eight short of the signatures needed to trigger a formal leadership challenge, this is likely to add to the bucket load of uncertainty, translating into more pain for the British Pound. With political instability at home stimulating concerns over May’s ability to govern and deliver Brexit, Sterling may have a very rough and rocky road ahead. |
| Business leaders have met the PM today, and urged her to move talks forwards before Christmas. The CBI warns that jobs and investment depend on it. | Business leaders have met the PM today, and urged her to move talks forwards before Christmas. The CBI warns that jobs and investment depend on it. |
| The IMF has also weighed in, saying that the EU and UK will both suffer if a Brexit deal isn’t agreed. | The IMF has also weighed in, saying that the EU and UK will both suffer if a Brexit deal isn’t agreed. |
| The Resolution Foundation has warned that the UK’s potential productivity growth will probably be revised down in next week’s budget. This will drag on growth, and hurt wage increases. | The Resolution Foundation has warned that the UK’s potential productivity growth will probably be revised down in next week’s budget. This will drag on growth, and hurt wage increases. |
| European stock markets have fallen into the red, and Wall Street is likely to follow suit. | European stock markets have fallen into the red, and Wall Street is likely to follow suit. |
| Rough start to the week is taking shape early https://t.co/m0O18af6Iy pic.twitter.com/nT6aDzALUW | Rough start to the week is taking shape early https://t.co/m0O18af6Iy pic.twitter.com/nT6aDzALUW |
| Brexit uncertainty seems to be hitting Europe’s stock markets. | Brexit uncertainty seems to be hitting Europe’s stock markets. |
| The main EU indices are down around 1%, as the rise in the euro against the pound hits the value of exporters. | The main EU indices are down around 1%, as the rise in the euro against the pound hits the value of exporters. |
| Any sign that Theresa May’s authority is weakening will worry investors, especially given the two-week deadline for an agreement on financial payments to the EU. | Any sign that Theresa May’s authority is weakening will worry investors, especially given the two-week deadline for an agreement on financial payments to the EU. |
| In London, defence stocks are falling on fears that government cutbacks are biting. | In London, defence stocks are falling on fears that government cutbacks are biting. |
| Ultra Electronics, the FTSE 250-listed defence firm, plunged by fifth after a profits warning. | Ultra Electronics, the FTSE 250-listed defence firm, plunged by fifth after a profits warning. |
| It told shareholders that | It told shareholders that |
| There are mounting pressures in the funding of UK defence programmes and this has resulted in the UK MoD pausing, cancelling or delaying numerous programmes. | There are mounting pressures in the funding of UK defence programmes and this has resulted in the UK MoD pausing, cancelling or delaying numerous programmes. |
| BAE Systems, which produces weapons and military equipment for air, land and sea have fallen by 3% while Babcock are down 7%. | BAE Systems, which produces weapons and military equipment for air, land and sea have fallen by 3% while Babcock are down 7%. |
| Investors around the world will be watching the House of Commons, as the EU Withdrawal Bill debate resumes this week. | Investors around the world will be watching the House of Commons, as the EU Withdrawal Bill debate resumes this week. |
| Wolf Piccoli of Teneo Intelligence says the government needs to be nimble to avoid defeat on one of the many (many!) amendments. | Wolf Piccoli of Teneo Intelligence says the government needs to be nimble to avoid defeat on one of the many (many!) amendments. |
| Given the large number of amendments tabled, the government of PM Theresa May will have to tread carefully to avoid defeat. The most controversial proposal will likely only be decided at a later stage: a final say for Westminster on the EU exit deal. | Given the large number of amendments tabled, the government of PM Theresa May will have to tread carefully to avoid defeat. The most controversial proposal will likely only be decided at a later stage: a final say for Westminster on the EU exit deal. |
| May might have to accept such a vote, but regardless, the offer from Brussels will likely be a take-it-or-leave-it deal. | May might have to accept such a vote, but regardless, the offer from Brussels will likely be a take-it-or-leave-it deal. |
| EU (Withdrawal) Bill - latest list from the clerks to MPs this morning reveals there are now 471 amendments tabled to it. Yes, 471. Surely a record. | EU (Withdrawal) Bill - latest list from the clerks to MPs this morning reveals there are now 471 amendments tabled to it. Yes, 471. Surely a record. |
| Top UK business leaders have just urged Theresa May to deliver a breakthrough in the Brexit talks before Christmas. | Top UK business leaders have just urged Theresa May to deliver a breakthrough in the Brexit talks before Christmas. |
| The group met with the PM at Downing Street this morning, and warned that the economy would suffer serious harm if a Brexit deal isn’t agreed. | The group met with the PM at Downing Street this morning, and warned that the economy would suffer serious harm if a Brexit deal isn’t agreed. |
| The CBI, which represents Britain’s bosses, hopes that negotiations can move onto Britain’s future relationship with Europe soon, before nervous companies start to trigger their contingency plans. | The CBI, which represents Britain’s bosses, hopes that negotiations can move onto Britain’s future relationship with Europe soon, before nervous companies start to trigger their contingency plans. |
| Carolyn Fairbairn, CBI Director-General, says: | Carolyn Fairbairn, CBI Director-General, says: |
| “With UK-EU trade worth more than €600bn each year, business groups from across Europe used today’s meeting with the Prime Minister as a welcome opportunity to highlight the mutual importance of seeing real progress before Christmas. All business organisations present reiterated the damage a ‘no-deal’ scenario would do to trade. | “With UK-EU trade worth more than €600bn each year, business groups from across Europe used today’s meeting with the Prime Minister as a welcome opportunity to highlight the mutual importance of seeing real progress before Christmas. All business organisations present reiterated the damage a ‘no-deal’ scenario would do to trade. |
| “A transition period reflecting the current arrangements remains the priority on both sides of the Channel. While businesses welcomed the Prime Minister’s Florence speech, we now need to move beyond warm words if jobs, investment and living standards are to be protected. | “A transition period reflecting the current arrangements remains the priority on both sides of the Channel. While businesses welcomed the Prime Minister’s Florence speech, we now need to move beyond warm words if jobs, investment and living standards are to be protected. |
| “Moving to the next phase will enable discussions to gather momentum, so negotiators can focus on the future economic relationship. It’s in everyone’s interests that a good, unique final deal reflects the strength and depth of our existing relationship and integration. This will help promote prosperity and better living standards right across Europe for generations to come.” | “Moving to the next phase will enable discussions to gather momentum, so negotiators can focus on the future economic relationship. It’s in everyone’s interests that a good, unique final deal reflects the strength and depth of our existing relationship and integration. This will help promote prosperity and better living standards right across Europe for generations to come.” |
| The latest UK political tensions will not have gone unnoticed in Europe. | The latest UK political tensions will not have gone unnoticed in Europe. |
| Any weakening of Theresa May’s position fuels concern that the PM might struggle to get support for her Brexit plans, or even be ousted from office before March 2019. | Any weakening of Theresa May’s position fuels concern that the PM might struggle to get support for her Brexit plans, or even be ousted from office before March 2019. |
| Over in Berlin, German government spokesman Steffen Seibert has warned that the situation is now urgent. | Over in Berlin, German government spokesman Steffen Seibert has warned that the situation is now urgent. |
| Seibert told reporters (via Reuters) that: | Seibert told reporters (via Reuters) that: |
| More progress is required as time is ticking. | More progress is required as time is ticking. |
| It is understandable that the (EU) chief negotiator (Michel) Barnier stresses how urgent it is for Britain to act promptly, to make proposals.” | It is understandable that the (EU) chief negotiator (Michel) Barnier stresses how urgent it is for Britain to act promptly, to make proposals.” |
| Deputy Finance Minister Thomas Steffen has also weighed in, saying people should be prepared for a ‘no deal’ Brexit.... | Deputy Finance Minister Thomas Steffen has also weighed in, saying people should be prepared for a ‘no deal’ Brexit.... |
| Senior German finance ministry offical Thomas Steffen has warned "we should all be prepared" for a no deal Brexit scenario but says he hopes for alternative "but today I do not see it" | Senior German finance ministry offical Thomas Steffen has warned "we should all be prepared" for a no deal Brexit scenario but says he hopes for alternative "but today I do not see it" |
| Newsflash: Convenience chain Nisa has agreed to be taken over by the Co-op, following a vote by its storeowners. | Newsflash: Convenience chain Nisa has agreed to be taken over by the Co-op, following a vote by its storeowners. |
| But the vote was close. The Co-op needed to get 75% support, and it barely squeaked over the line at a meeting at Leeds United football club... | But the vote was close. The Co-op needed to get 75% support, and it barely squeaked over the line at a meeting at Leeds United football club... |
| Co-op successful in its offer for Nisa. | Co-op successful in its offer for Nisa. |
| Looks like Co-op has clinched its Nisa takeover . 75.8% of members have voted in favour | Looks like Co-op has clinched its Nisa takeover . 75.8% of members have voted in favour |
| Some Nisa members had argued against the deal, worried that it would damage their independence (as we reported this morning). | Some Nisa members had argued against the deal, worried that it would damage their independence (as we reported this morning). |
| Last Friday, the Brexit negotiations intensified another notch when EU negotiator Michel Barnier set the British government a two-week deadline to clarity its position on its ‘exit bill’. | Last Friday, the Brexit negotiations intensified another notch when EU negotiator Michel Barnier set the British government a two-week deadline to clarity its position on its ‘exit bill’. |
| MPs will get the chance to grill Brexit secretary David Davis about the situation later today, when he gives a statement to the House of Commons. | MPs will get the chance to grill Brexit secretary David Davis about the situation later today, when he gives a statement to the House of Commons. |
| My colleague Andrew Sparrow is covering events in parliament here: | My colleague Andrew Sparrow is covering events in parliament here: |
| Here’s another chart from the Resolution Foundation’s Budget pre-briefing, predicting the worst wage squeeze since shortly after the Battle of Waterloo: | Here’s another chart from the Resolution Foundation’s Budget pre-briefing, predicting the worst wage squeeze since shortly after the Battle of Waterloo: |
| Resolution say chancellor Hammond could help the situation, by cutting the cap on public sector pay rises. | Resolution say chancellor Hammond could help the situation, by cutting the cap on public sector pay rises. |
| Here are their four priorities for next week’s Budget: | Here are their four priorities for next week’s Budget: |
| Housing, going well beyond the additional Help-to-Buy funding already trailed. The government should take advantage of today’s ultra-low borrowing costs to embark on a large-scale programme of state investment in housebuilding – revising the fiscal rules to allow this to happen | Housing, going well beyond the additional Help-to-Buy funding already trailed. The government should take advantage of today’s ultra-low borrowing costs to embark on a large-scale programme of state investment in housebuilding – revising the fiscal rules to allow this to happen |
| Revising social security plans, not only to shorten the six week wait in Universal Credit but to also reverse cuts to the new benefit and undo a deeper than expected benefit freeze | Revising social security plans, not only to shorten the six week wait in Universal Credit but to also reverse cuts to the new benefit and undo a deeper than expected benefit freeze |
| Supporting the ending of the public sector pay cap with additional resources – especially for the NHS | Supporting the ending of the public sector pay cap with additional resources – especially for the NHS |
| Ending the expensive and regressive policy of raising income tax thresholds now that the goal of a £12,500 personal allowance is within sight, instead raising revenues via freezes to income tax thresholds later this parliament | Ending the expensive and regressive policy of raising income tax thresholds now that the goal of a £12,500 personal allowance is within sight, instead raising revenues via freezes to income tax thresholds later this parliament |
| Investors have been jolted out of their ‘autumnal slumber’ by the latest outbreak of infighting in the UK cabinet, and the loss of two senior ministers (Priti Patel and Sir Michael Fallon) this month. | Investors have been jolted out of their ‘autumnal slumber’ by the latest outbreak of infighting in the UK cabinet, and the loss of two senior ministers (Priti Patel and Sir Michael Fallon) this month. |
| So says Kathleen Brooks of City index, who points out that sterling volatility has jumped today. | So says Kathleen Brooks of City index, who points out that sterling volatility has jumped today. |
| She writes: | She writes: |
| Firstly, today’s move tells us that the markets are on alert for political risks emanating out of the UK, and if there is a party coup to replace Theresa May then political turbulence is likely to weigh on the pound further. | Firstly, today’s move tells us that the markets are on alert for political risks emanating out of the UK, and if there is a party coup to replace Theresa May then political turbulence is likely to weigh on the pound further. |
| Secondly, even though the pound has had a jolty start to the week, volatility and technical signals do not suggest to us that the pound is about to fall off a cliff just yet, we may need this story to develop further to get another big move lower in sterling. | Secondly, even though the pound has had a jolty start to the week, volatility and technical signals do not suggest to us that the pound is about to fall off a cliff just yet, we may need this story to develop further to get another big move lower in sterling. |
| Thirdly, don’t get too complacent about the pound, the political and Brexit situations remain fluid and can throw up surprises. In future, when volatility is low in the pound investors should be on their guard that a pullback is likely. | Thirdly, don’t get too complacent about the pound, the political and Brexit situations remain fluid and can throw up surprises. In future, when volatility is low in the pound investors should be on their guard that a pullback is likely. |
| This chart from Reuters’s Jamie McGeever highlights how the pound has become more volatile, compared to the euro: | This chart from Reuters’s Jamie McGeever highlights how the pound has become more volatile, compared to the euro: |
| UK political chaos seeping into sterling - UK pound most volatile relative to euro since May. Chart shows spread between 1-month GBP/USD and EUR/USD implied vol, widest since May. pic.twitter.com/ZWc9xBuAKE | UK political chaos seeping into sterling - UK pound most volatile relative to euro since May. Chart shows spread between 1-month GBP/USD and EUR/USD implied vol, widest since May. pic.twitter.com/ZWc9xBuAKE |
| As if the UK government didn’t have enough on its plate already, Philip Hammond has a budget to prepare. | As if the UK government didn’t have enough on its plate already, Philip Hammond has a budget to prepare. |
| And it may be a depressing event. | And it may be a depressing event. |
| The Resolution Foundation have just published a new report, warning that UK productivity will probably be revised down next week (the budget is on Thursday). | The Resolution Foundation have just published a new report, warning that UK productivity will probably be revised down next week (the budget is on Thursday). |
| That will make a dent in the public finances - it means lower growth, and thus less progress in cutting the UK’s deficit. | That will make a dent in the public finances - it means lower growth, and thus less progress in cutting the UK’s deficit. |
| But Resolution also warn that it will hurt households in the pocket, as weak productivity means less chance of significant wage increases. | But Resolution also warn that it will hurt households in the pocket, as weak productivity means less chance of significant wage increases. |
| Matt Whittaker, Chief Economist at the Resolution Foundation, said: | Matt Whittaker, Chief Economist at the Resolution Foundation, said: |
| “Budget day looks set to bring bad news about what we have the potential to produce as a country. It looks likely that we are currently living through the worst decade for productivity growth since the start of the 19th century. | “Budget day looks set to bring bad news about what we have the potential to produce as a country. It looks likely that we are currently living through the worst decade for productivity growth since the start of the 19th century. |
| Highlights from @resfoundation Budget forecast:UK on course for worst productivity growth in decade to 2017 since Napoleon tried to invade Russia Britain on course for worst decade on pay growth for 200 years | Highlights from @resfoundation Budget forecast:UK on course for worst productivity growth in decade to 2017 since Napoleon tried to invade Russia Britain on course for worst decade on pay growth for 200 years |
| Resolution reckons that weekly pay will be almost £25 lower in 2022 than previously expected, still £22.70 below the pre-crisis peak. | Resolution reckons that weekly pay will be almost £25 lower in 2022 than previously expected, still £22.70 below the pre-crisis peak. |
| Here’s a chart from their report: | Here’s a chart from their report: |