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Pound hits two-month high after £50bn Brexit bill reports – business live Pound hits two-month high after £50bn Brexit bill reports – business live
(35 minutes later)
German bank Berenberg has raised their forecasts for UK growth over the next couple of years, on optimism that a hard Brexit can be avoided.
They say:
We raise our calls for real GDP growth for 2018 and 2019 to 1.8% and 1.9% from 1.6% and 1.7% respectively, following modest increases to our growth projections for household consumption and business investment.
Our forecasts exceed Bloomberg consensus (29 November 2017) of 1.4% in 2018 and 1.6% in 2019. We see risks to the growth outlook as roughly balanced.
Foreign exchange news site DailyFX flags up that the pound has outperformed other currencies against the dollar today:
Best/worst performers - Majors vs USD today: GBP: 0.4% NZD: 0.0% EUR: -0.1% CHF: -0.2% JPY: -0.3% AUD: -0.4% pic.twitter.com/jt92QwLpRd
The price of bitcoin is going up even faster than Britain’s potential Brexit bill.The price of bitcoin is going up even faster than Britain’s potential Brexit bill.
The cryptocurrency smashed through the $10,000 mark overnight, and is currently changing hands at $10,900.The cryptocurrency smashed through the $10,000 mark overnight, and is currently changing hands at $10,900.
That means it’s risen by around 1,000% during 2017. Five years ago, you could have bought a bitcoin for only $12....That means it’s risen by around 1,000% during 2017. Five years ago, you could have bought a bitcoin for only $12....
Bitcoin - Over $10,000 todayUnder $1,000 on Jan. 1Up nearly 1,000% this year pic.twitter.com/SpE22fw3ZZBitcoin - Over $10,000 todayUnder $1,000 on Jan. 1Up nearly 1,000% this year pic.twitter.com/SpE22fw3ZZ
The higher bitcoin goes, the louder are the warnings that it’s an unsustainable speculative bubble. But then, I can remember the same warnings back in 2013!The higher bitcoin goes, the louder are the warnings that it’s an unsustainable speculative bubble. But then, I can remember the same warnings back in 2013!
Bitcoin vs other “bubbles”: on track to surpass the original Tulip mania pic.twitter.com/YCqMb1jeR6Bitcoin vs other “bubbles”: on track to surpass the original Tulip mania pic.twitter.com/YCqMb1jeR6
Sir Jon Cunliffe, the BoE deputy governor, has suggested that potential bitcoin investors should be cautious.Sir Jon Cunliffe, the BoE deputy governor, has suggested that potential bitcoin investors should be cautious.
He told BBC Radio 5 this morning that:He told BBC Radio 5 this morning that:
“This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me it’s much more like a commodity.“This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me it’s much more like a commodity.
“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework.”“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework.”
Back to Brexit, and the BBC’s Katya Adler reports that some EU officials are irritated that the £50bn settlement hit the headlines last night.Back to Brexit, and the BBC’s Katya Adler reports that some EU officials are irritated that the £50bn settlement hit the headlines last night.
Although they do want money from the UK, they don’t want to be bounced into an agreement. They also don’t accept that any payment will guarantee Britain the post-Brexit deal it wants...Although they do want money from the UK, they don’t want to be bounced into an agreement. They also don’t accept that any payment will guarantee Britain the post-Brexit deal it wants...
She writes:She writes:
If and when an agreement on the Brexit bill is made, the EU will push back hard at UK government assertions that Brexit financial payments be tied to a future trade and transition deal.If and when an agreement on the Brexit bill is made, the EU will push back hard at UK government assertions that Brexit financial payments be tied to a future trade and transition deal.
Brussels insists this is money the UK owes - dating back to commitments made on annual and long-term budgets while an EU member.Brussels insists this is money the UK owes - dating back to commitments made on annual and long-term budgets while an EU member.
“This is not blood money,” an EU civil servant told me.“This is not blood money,” an EU civil servant told me.
“This is money the UK must pay on leaving the EU. The new relationship post-Brexit Britain will have with the EU is something quite separate. Europe is not about to be blackmailed.”“This is money the UK must pay on leaving the EU. The new relationship post-Brexit Britain will have with the EU is something quite separate. Europe is not about to be blackmailed.”
#Brexit Bill doesn’t ‘buy’ a good trade deal .. The view - and my thoughts -from Brussels https://t.co/eQVmcsSluw#Brexit Bill doesn’t ‘buy’ a good trade deal .. The view - and my thoughts -from Brussels https://t.co/eQVmcsSluw
Breaking away from Brexit briefly, shipping company Clarksons has admitted it’s been hacked.Breaking away from Brexit briefly, shipping company Clarksons has admitted it’s been hacked.
Clarksons told the City that it has been working with the police since discovering a cybersecurity incident which involved “unauthorised access to the Company’s computer systems”.Clarksons told the City that it has been working with the police since discovering a cybersecurity incident which involved “unauthorised access to the Company’s computer systems”.
It warned shareholders that those responsible “may release some data” today.It warned shareholders that those responsible “may release some data” today.
Andi Case, CEO of Clarksons, has hinted that the company refused to pay the hackers to return stolen data, saying:Andi Case, CEO of Clarksons, has hinted that the company refused to pay the hackers to return stolen data, saying:
I hope our clients understand that we would not be held to ransom by criminals, and I would like to sincerely apologise for any concern this incident may have understandably raised.”I hope our clients understand that we would not be held to ransom by criminals, and I would like to sincerely apologise for any concern this incident may have understandably raised.”
More evidence that the eurozone economy is ending 2017 on a high, from the EC’s latest health check:More evidence that the eurozone economy is ending 2017 on a high, from the EC’s latest health check:
Euro-area companies are the most upbeat about the outlook than at any time since the financial crisis https://t.co/esMLyXRUKr via @ZSchneeweiss pic.twitter.com/M42Jef5w7JEuro-area companies are the most upbeat about the outlook than at any time since the financial crisis https://t.co/esMLyXRUKr via @ZSchneeweiss pic.twitter.com/M42Jef5w7J
Employment expectations for industry in the eurozone reach a THIRTY TWO YEAR HIGH (entire series history). #EUROBOOM deniers and haters will be forgiven, the boom is magnanimous. pic.twitter.com/dwoVMySHIWEmployment expectations for industry in the eurozone reach a THIRTY TWO YEAR HIGH (entire series history). #EUROBOOM deniers and haters will be forgiven, the boom is magnanimous. pic.twitter.com/dwoVMySHIW
#Eurozone economic sentiment indicator reached its highest level since October 2000❗️Survey points to solid and faster GDP growth in Q4, in line with PMIs. /via @nghrbi 🇪🇺 💶 pic.twitter.com/2eAk1whGdG#Eurozone economic sentiment indicator reached its highest level since October 2000❗️Survey points to solid and faster GDP growth in Q4, in line with PMIs. /via @nghrbi 🇪🇺 💶 pic.twitter.com/2eAk1whGdG
Despite Brexit uncertainty, individuals and businesses in Europe are increasingly optimistic.Despite Brexit uncertainty, individuals and businesses in Europe are increasingly optimistic.
New data from the European Commission shows that eurozone consumer and economic confidence jumped again in November, to their highest level in 17 years.New data from the European Commission shows that eurozone consumer and economic confidence jumped again in November, to their highest level in 17 years.
#European Commission report further rise in #Eurozone #business and #consumer confidence in Nov to highest level since Oct 2000. Confidence up in all business sectors except #retail. #Consumer confidence highest since January 2001#European Commission report further rise in #Eurozone #business and #consumer confidence in Nov to highest level since Oct 2000. Confidence up in all business sectors except #retail. #Consumer confidence highest since January 2001
Newsflash: UK households reined in their borrowing last month.Newsflash: UK households reined in their borrowing last month.
Unsecured consumer credit (such as borrowing on credit cards) grew by 9.6% in October compared to a year ago, down from 9.8% in September.Unsecured consumer credit (such as borrowing on credit cards) grew by 9.6% in October compared to a year ago, down from 9.8% in September.
That’s the smallest rise since April 2016, and follows concerns that people were being driven into debt by rising inflation and falling real wages.That’s the smallest rise since April 2016, and follows concerns that people were being driven into debt by rising inflation and falling real wages.
New Bank of England figures also show a fall in the number of mortgages approved by lenders, down to 64,575 in October from over 66,000 in September.New Bank of England figures also show a fall in the number of mortgages approved by lenders, down to 64,575 in October from over 66,000 in September.
Transport secretary Chris Grayling has defended the government against criticism that it might stump up £50bn to leave the EU.Transport secretary Chris Grayling has defended the government against criticism that it might stump up £50bn to leave the EU.
He told BBC Radio 4’s Today programme that the UK has financial obligations to settle, adding:He told BBC Radio 4’s Today programme that the UK has financial obligations to settle, adding:
“I don’t think people in this country would expect us to just walk away from things we’ve already said we’d pay for.”“I don’t think people in this country would expect us to just walk away from things we’ve already said we’d pay for.”
Bonus marks to anyone who spotted that on the side of a bus last year.Bonus marks to anyone who spotted that on the side of a bus last year.
Anyway, Andrew Sparrow’s Politics Live blog has all the action from Westminster today:Anyway, Andrew Sparrow’s Politics Live blog has all the action from Westminster today:
Grayling defends paying massively increased Brexit divorce bill, saying UK shouldn't 'just walk away' - Politics live https://t.co/uL7xSYssNDGrayling defends paying massively increased Brexit divorce bill, saying UK shouldn't 'just walk away' - Politics live https://t.co/uL7xSYssND
The EU’s chief negotiator, Michel Barnier, has sounded a cautious note about the £50bn figure.The EU’s chief negotiator, Michel Barnier, has sounded a cautious note about the £50bn figure.
Collared by reporters in Berlin this morning, Barnier suggested that a deal wasn’t agreed yet.Collared by reporters in Berlin this morning, Barnier suggested that a deal wasn’t agreed yet.
He said:He said:
“We are still working. ....I am working for an agreement.”“We are still working. ....I am working for an agreement.”
Barnier says Brexit bill reports are 'claims or rumours in the press' and 'we are continuing to work' on the subject, @AFP reporting from BerlinBarnier says Brexit bill reports are 'claims or rumours in the press' and 'we are continuing to work' on the subject, @AFP reporting from Berlin
The pound has rallied against “all of its 16 major” rival currencies this morning, reports Bloomberg.
Pound advances to two-month high after Brexit bill breakthrough https://t.co/uN6Jyg0bxz via @johnainger pic.twitter.com/6T2uMCByi0
Even if a £50bn bill is agreed, Britain faces several hurdles to jump before it can avoid a disorderly Brexit.
As well as the Irish question, Brussels also wants commitments on EU citizen rights beyond 2019. Plus, we don’t know that parliament will approve a hefty divorce bill.
Neil Wilson of City firm ETX Capital says:
First, can Theresa May sell this to voters and to her party. She seems to have some shaky consensus backing for a higher offer but this is contingent on getting a good trade deal – the EU will not have its hands tied in this way. Therefore we must be wary that the political consensus to pay a bigger bill could unravel; and paying a big bill does not by definition lead to a good trade deal. Capitulating to the EU in this regard carries its own risks for Theresa May, but the risk of a no-deal exit was ultimately too high.
Second, the Irish border is still a major stumbling block and it is uncertain whether sufficient progress has been made on this front. This is an even more sensitive topic than the divorce bill and is not as easy to solve with a bigger cheque.
The third key barrier for the EU is citizens’ rights and again it is unclear if there is sufficient progress in this regard.
Sterling has jumped by 1.4% against a basket of currencies, its biggest rise since April, according to Reuters data.
Christmas has come early for Brussels, says Kallum Pickering of Berenberg bank wryly.
He expects an official agreement on the Brexit bill next month, following the news that the UK has caved in to demands for a £50bn payment.
We expect UK PM Theresa May to present a formal offer on the Brexit bill, EU citizens rights, and the Irish border question at the upcoming 4 December dinner between May and EU Commission president Juncker. We expect the offer to meet the EU’s requirement for ‘sufficient progress’ on the Brexit divorce.
If such progress is made, expect the UK and the EU to move negotiations on to potential transitional arrangements and post-Brexit trade at the 14-15 December EU Summit.
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Britain’s exit bill is only one part of the Brexit puzzle, of course.
We still don’t have any idea how the Irish border question will be resolved; Dublin could block negotiations on trade unless its fears over a hard border are assuaged.
As Naeem Aslam of Think Markets puts it:
Picking up the Brexit bill has been the very thorny issue since day one and given that now the government has agreed to a respectable amount, the talks between the UK and the EU (which are set to resume next month) should be smoother. If the EU accepts the bill, then we will be moving to the next hurdle which is securing the EU rights [of citizens living in the UK.
It is important to keep in mind that we are no way close to be out of the woods when it comes to the smooth negotiation process because the Northern Ireland issue is still the thorny matter.
British Pound keeps rising as U.K. and EU agree to #Brexit divorce bill but Irish hurdle remains. https://t.co/sWa2VGOJGE pic.twitter.com/0sMgMAnwn4
The pound is continuing to climb against the US dollar as investors bet that the Brexit fog is clearing.
As Stephen Gallo at the Bank of Montreal put it (via the FT):
It’s a buy! The risk of snap election is down, the risk of a ‘hard Brexit’ is down, the path to a transition deal is clearing.
‘It’s a buy!’: Hopes for Brexit payment breakthrough lift sterling https://t.co/YHQgvIvdw3
The surge in the pound has hit shares in the City.
The FTSE 100 is down 31 points at 7429; a stronger sterling reduces the value of money earned overseas by UK-based multinationals.
The prospect that Britain and the EU might shake hands on a Brexit bill next month is exciting the City this morning.
£50bn is obviously a lot of money, even if split over many years. But traders think it could be worth it, if it opens the door to trade talks.
Konstantinos Anthis of brokerage firm ADS Securities explains:
Even though the agreement is not yet formal traders are clearly excited by the prospect of progress on this issue.
Traders are looking for any positive news in this area as it opens the way for trade negotiations, and are prepared to buy sterling in response.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Sterling is on a roll this morning, amid signs that Britain and the European Union are on the brink of a Brexit breakthrough.
The pound has jumped to $1.3406, up almost three quarters of a cent, to its highest level since the end of September.
It is also pushing higher against the euro, up 0.3% at €1.13.
The rally was triggered by reports that London could pay a £50bn exit bill, in an attempt to nudge European politicians into starting negotiations about trade.
A deal would ease fears that Britain could crash out of the EU in March 2019 in a disorderly Brexit.
Wednesday's GUARDIAN: UK faces £50bn divorce bill after bowing to EU demands #tomorrowspaperstoday pic.twitter.com/9TG9QRAIAe
EU leaders will decide next month whether this is enough to move negotiations onto trade, so this could be a very significant moment.
As my colleagues Daniel Boffey and Jennifer Rankin reported last night:
Non-stop behind-the-scenes negotiations have led to a broad agreement by the UK to a gross financial settlement of £89bn on leaving the bloc, although the British expect the final net bill to be half as much.
A senior EU official told the Guardian that the UK appeared ready to honour its share of the EU’s unpaid bills, loans, pension and other liabilities accrued over 44 years of membership. “We have heard the UK wants to come along with the money,” the official said. “We have understood it covers the liabilities and what we consider the real commitments. But we have to see the fine print.”
The bill could total £53bn to £58bn (€60bn to €65bn), although EU officials are not discussing numbers and the British government will fight hard to bring the total down.
Here’s the full story:
We’ll be tracking City reaction to the news, along with new data showing the state of the UK, US and eurozone economies.
The agenda:
9.30am GMT: UK consumer credit and mortgage approval figures for October
10am GMT: Eurozone consumer and economic confidence stats for November
1pm GMT: German inflation data for November
1.30pm GMT: The second estimate of US GDP for the third quarter of 2017