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| Pound hits 18-month low against US dollar as Brexit confusion swirls - business live | |
| (37 minutes later) | |
| Three statement from 330pm - you’d think this was a pretty clear hint that they’re going to try to pull tomorrow’s Meaningful Vote1. PM - Exiting the EU2. Leadsom - Business Statement 3. Barclay - ECJ ruling on Art 50 | |
| The chaos in Westminster is hurting the stock market too. | |
| Shares in house builders, who are vulnerable to an economic slowdown, are falling. Barratt Development are down 3%, Taylor Wimpey has lost 2%, and Crest Nicholson down 7%. | |
| Other UK-focused companies are suffering too, such as Primark-owner ABF (down 2%), ITV (down 3.5%) and the AA (down 5.5%). | |
| Britain’s FTSE 250 index, which contains UK-focused companies, has fallen by 1% today. | |
| The blue-chip FTSE 100, though, is up 7 points, thanks to the weakening pound (which boosts the overseas earnings of multinational companies). | |
| No prizes for spotting the moment when traders heard that the Brexit vote might be off.... | |
| Sterling is on the slide again. Down below $1.27. Lowest for 18 months or so. pic.twitter.com/CWKIZtnU08 | |
| This chart shows how the pound has now dropped to its lowest level against the US dollar since June 2017 | |
| City traders are scrambling to keep up with events in Westminster. The latest news is that Theresa May will address parliament this afternoon.... | |
| Breaking: The Prime Minister will be making an oral statement today at 330pm titled “Exiting the European Union”. | |
| Investors had been preparing for major volatility on Tuesday night, when the Meaningful Vote took place. Instead, the drama is coming a day early. | |
| Hamish Muress, currency analyst at OFX, said: | |
| The confusion over whether tomorrow’s Brexit vote will go ahead provides the market an insight into the chaos and disagreement within Downing Street. Rumours that Theresa May is set to pull tomorrow’s vote contradict those of a Downing Street spokesperson, and the fact the news was broken over a conference call instead of in a cabinet meeting speaks volumes. | |
| “Many predicted that tomorrow would be the big day for any movement in the pound. However, it has already reached three-month lows against the euro and, depending on whether the vote tomorrow goes ahead, could hit lows last seen against the dollar in August.” | |
| Back in the financial markets, the pound is suddenly sliding amid reports that the government will cancel tomorrow’s parliamentary vote on the Brexit withdrawal deal. | Back in the financial markets, the pound is suddenly sliding amid reports that the government will cancel tomorrow’s parliamentary vote on the Brexit withdrawal deal. |
| Theresa May is holding a conference call with ministers right now; some have apparently revealed that the vote, due on Tuesday night, has been ditched. | Theresa May is holding a conference call with ministers right now; some have apparently revealed that the vote, due on Tuesday night, has been ditched. |
| Two cabinet sources tell me vote being pulled - not, repeat not, yet officially confirmed | Two cabinet sources tell me vote being pulled - not, repeat not, yet officially confirmed |
| Such a move would plunge Westminster into even deeper confusion (although it’s hard to believe that further depths can be plumbed). | Such a move would plunge Westminster into even deeper confusion (although it’s hard to believe that further depths can be plumbed). |
| It’s got the City worried. Sterling has just slumped its lowest level against the US dollar since June 2017, down 0.5% at below $1.2660. | It’s got the City worried. Sterling has just slumped its lowest level against the US dollar since June 2017, down 0.5% at below $1.2660. |
| The pound has also hit a three-month low against the euro, down 0.7% at €1.1096. | The pound has also hit a three-month low against the euro, down 0.7% at €1.1096. |
| Neil Wilson of Markets.com says the situation remains very fluid... | Neil Wilson of Markets.com says the situation remains very fluid... |
| If she is pulling the vote to go back to Brussels it could suggest a renegotiation of the backstop, or at least clarification. We must note that the EU has categorically said this is the only deal and it seems unlikely it would revisit. | If she is pulling the vote to go back to Brussels it could suggest a renegotiation of the backstop, or at least clarification. We must note that the EU has categorically said this is the only deal and it seems unlikely it would revisit. |
| Alternatively, this opens up the prospect of May herself going for a second referendum, with voters asked whether they accept this deal or no deal. A complete shambles is about the only way to describe this situation and investors are right to be very cautious about UK assets. | Alternatively, this opens up the prospect of May herself going for a second referendum, with voters asked whether they accept this deal or no deal. A complete shambles is about the only way to describe this situation and investors are right to be very cautious about UK assets. |
| The only known is that the uncertainty has increased and we are faced with more volatility for sterling and UK assets. | The only known is that the uncertainty has increased and we are faced with more volatility for sterling and UK assets. |
| My colleague Andy Sparrow is tracking all the political drama: | My colleague Andy Sparrow is tracking all the political drama: |
| Brexit: May in talks with cabinet amid speculation vote could be cancelled – Politics live | Brexit: May in talks with cabinet amid speculation vote could be cancelled – Politics live |
| S.M. Lodha, chairman of UK insulation firm Western Thermal Group, fears that the UK economy will continue to struggle until Brexit is resolved: | S.M. Lodha, chairman of UK insulation firm Western Thermal Group, fears that the UK economy will continue to struggle until Brexit is resolved: |
| It is evident that this economic slowdown has been impacted by the extremely low business confidence levels amongst businesses and entrepreneurs in the UK with the ongoing Brexit negotiations leaving businesses in a state of hesitancy and reluctance to invest in opportunities or growth. | It is evident that this economic slowdown has been impacted by the extremely low business confidence levels amongst businesses and entrepreneurs in the UK with the ongoing Brexit negotiations leaving businesses in a state of hesitancy and reluctance to invest in opportunities or growth. |
| As long as the UK’s future continues to be uncertain, the more business growth will be stagnated.” | As long as the UK’s future continues to be uncertain, the more business growth will be stagnated.” |
| Another reason to worry.... | Another reason to worry.... |
| The composite leading indicator (CLI) is an OECD measure of economic turning points, sometimes called an early recession warning system. Higher is better (more growth), lower is worse. The UK's CLI now comfortably the lowest in the G7 and still heading south... pic.twitter.com/zaoJe2le8U | The composite leading indicator (CLI) is an OECD measure of economic turning points, sometimes called an early recession warning system. Higher is better (more growth), lower is worse. The UK's CLI now comfortably the lowest in the G7 and still heading south... pic.twitter.com/zaoJe2le8U |
| Marina Mensah-Afoakwah, senior economist at the CEBR think tank, also blame Brexit for the UK’s slowing economy: | Marina Mensah-Afoakwah, senior economist at the CEBR think tank, also blame Brexit for the UK’s slowing economy: |
| “Today’s data show that the UK economy has continued its slowdown into Autumn, as business and consumer confidence take a hit amidst Brexit uncertainty. | “Today’s data show that the UK economy has continued its slowdown into Autumn, as business and consumer confidence take a hit amidst Brexit uncertainty. |
| She also points out that the service sector provided most of the growth in the last few months, while manufacturing contracted last month: | She also points out that the service sector provided most of the growth in the last few months, while manufacturing contracted last month: |
| October’s GDP growth was mainly driven by services. Rolling three-month growth in the sector was 0.3% in October, which contributed 0.23 percentage points to overall GDP growth. This was largely as a result of growth in IT and professional services, which grew by 1.7% and 1.3% respectively. Construction also contributed positive growth, up 1.2% in October. | October’s GDP growth was mainly driven by services. Rolling three-month growth in the sector was 0.3% in October, which contributed 0.23 percentage points to overall GDP growth. This was largely as a result of growth in IT and professional services, which grew by 1.7% and 1.3% respectively. Construction also contributed positive growth, up 1.2% in October. |
| However, the manufacturing sector saw no growth at all in the three months to October, mainly due to a decline in the pharmaceutical industry. While in the three months to October growth in the manufacturing industry was flat, monthly figures for October show that sector actually contracted by 0.9%. | However, the manufacturing sector saw no growth at all in the three months to October, mainly due to a decline in the pharmaceutical industry. While in the three months to October growth in the manufacturing industry was flat, monthly figures for October show that sector actually contracted by 0.9%. |
| Economist Rupert Seggins has analysed today’s growth figures, and pulled out some key points: | Economist Rupert Seggins has analysed today’s growth figures, and pulled out some key points: |
| 1. UK economy grew 1.5%y/y (4th month in a row) or 0.4%q/q in the three months to October. Main contributions came from: professional services, info & comms services, wholesale & retail and construction. Manufacturing's boost to growth has faded. pic.twitter.com/S5Fk8jwY0E | 1. UK economy grew 1.5%y/y (4th month in a row) or 0.4%q/q in the three months to October. Main contributions came from: professional services, info & comms services, wholesale & retail and construction. Manufacturing's boost to growth has faded. pic.twitter.com/S5Fk8jwY0E |
| 2. Production sectors as a whole grew by 0.3%q/q in the three months to October. Main contributions to growth came from gas & electric and mining & quarrying. 0% chnge in manufacturing output on the previous three months. pic.twitter.com/fnC4FHMA1U | 2. Production sectors as a whole grew by 0.3%q/q in the three months to October. Main contributions to growth came from gas & electric and mining & quarrying. 0% chnge in manufacturing output on the previous three months. pic.twitter.com/fnC4FHMA1U |
| 3. In the construction sector, we had overall growth in output of 1.2%q/q growth in the three months to October. Main thing holding up the numbers was house building and infrastructure. Repeair & maintenance, office and factory & warehouse construction all dragged on growth. pic.twitter.com/iGh8pZNupV | 3. In the construction sector, we had overall growth in output of 1.2%q/q growth in the three months to October. Main thing holding up the numbers was house building and infrastructure. Repeair & maintenance, office and factory & warehouse construction all dragged on growth. pic.twitter.com/iGh8pZNupV |
| Although monthly GDP figures are volatile, it’s clear that the UK economy has slowed since the summer: | Although monthly GDP figures are volatile, it’s clear that the UK economy has slowed since the summer: |
| The British Chambers of Commerce, which represents UK firms, has no doubt what to blame for the slowdown -- BREXIT. | The British Chambers of Commerce, which represents UK firms, has no doubt what to blame for the slowdown -- BREXIT. |
| Suren Thiru, head of economics at the BCC, says rising cost pressures (due to the weak pound) and the “drag effect of persistent Brexit uncertainty” is taking its toll on the UK economy. | Suren Thiru, head of economics at the BCC, says rising cost pressures (due to the weak pound) and the “drag effect of persistent Brexit uncertainty” is taking its toll on the UK economy. |
| “The slowdown on the underlying three-month measure of GDP was largely driven by weaker service sector growth as car sales fell. That said, the service sector still made the largest contribution to overall economic activity, with manufacturing and construction adding little to overall UK growth. | “The slowdown on the underlying three-month measure of GDP was largely driven by weaker service sector growth as car sales fell. That said, the service sector still made the largest contribution to overall economic activity, with manufacturing and construction adding little to overall UK growth. |
| Thiru also warns that UK factories are suffering from higher import costs: | Thiru also warns that UK factories are suffering from higher import costs: |
| “The widening in the UK’s trade deficit is a concern and reflects a sharp rise in goods imports. Trading conditions for UK exporters are deteriorating amid moderating global growth and uncertainty over Brexit. | “The widening in the UK’s trade deficit is a concern and reflects a sharp rise in goods imports. Trading conditions for UK exporters are deteriorating amid moderating global growth and uncertainty over Brexit. |
| Businesses continue to report that the persistent weakness in sterling is hurting as much as its helping, with the weakening currency raising input costs. | Businesses continue to report that the persistent weakness in sterling is hurting as much as its helping, with the weakening currency raising input costs. |
| In another blow, Britain’s trade gap with the rest of the world has widened. | In another blow, Britain’s trade gap with the rest of the world has widened. |
| The ONS reports that the total trade deficit in goods and services widened by £3.1bn in August-October to £10.3bn. | The ONS reports that the total trade deficit in goods and services widened by £3.1bn in August-October to £10.3bn. |
| Britain’s goods deficit widened by £1.7bn during the quarter, as imports increased £3.6 billion, while exports increased by a lesser £1.9 billion. | Britain’s goods deficit widened by £1.7bn during the quarter, as imports increased £3.6 billion, while exports increased by a lesser £1.9 billion. |
| The traditional services surplus shrank by £1.3bn, due to a £1bn fall in exports and £0.3bn increase in imports. | The traditional services surplus shrank by £1.3bn, due to a £1bn fall in exports and £0.3bn increase in imports. |
| The ONS says: | The ONS says: |
| The UK’s trade in goods deficit with the EU has actually narrowed over the last year, by £2.8bn,. | The UK’s trade in goods deficit with the EU has actually narrowed over the last year, by £2.8bn,. |
| However, this was wiped out by a £3.2bn increase in the deficit with non-EU countries. | However, this was wiped out by a £3.2bn increase in the deficit with non-EU countries. |
| Geoff Tily, senior economist at the TUC, is concerned that the UK has barely posted any growth since the summer: | Geoff Tily, senior economist at the TUC, is concerned that the UK has barely posted any growth since the summer: |
| ONS monthly GDP shows third consecutive weak figure, suggesting UK economy slowed significantly from August. Manufacturing declined 0.9 per cent in October, with a 6.6% reduction in motor vehicle production. pic.twitter.com/1tr9a7uu82 | ONS monthly GDP shows third consecutive weak figure, suggesting UK economy slowed significantly from August. Manufacturing declined 0.9 per cent in October, with a 6.6% reduction in motor vehicle production. pic.twitter.com/1tr9a7uu82 |
| Howard Archer of EY Item Club has summed up the data: | Howard Archer of EY Item Club has summed up the data: |
| #UK #economy got off to lacklustre start to Q4 as #GDP edged up 0.1% m/m in October. 3-month growth rate slowed to 0.4% from 0.6% in September (Q3). #Services output rose 0.2% m/m but #industrial production fell 0.6% m/m. #Construction output down 0.2% after recent healthy gains | #UK #economy got off to lacklustre start to Q4 as #GDP edged up 0.1% m/m in October. 3-month growth rate slowed to 0.4% from 0.6% in September (Q3). #Services output rose 0.2% m/m but #industrial production fell 0.6% m/m. #Construction output down 0.2% after recent healthy gains |
| Naeem Aslam of Think Markets blames the Brexit saga for the slowdown: | Naeem Aslam of Think Markets blames the Brexit saga for the slowdown: |
| There is no doubt that the UK’s economic data has deteriorated and the confidence has shattered among entrepreneurs. The ongoing Brexit saga has created nothing but the bad environment. | There is no doubt that the UK’s economic data has deteriorated and the confidence has shattered among entrepreneurs. The ongoing Brexit saga has created nothing but the bad environment. |
| This chart shows how the UK’s growth rate has petered out, as the bumper consumer spending boost in July drops out of the data. | This chart shows how the UK’s growth rate has petered out, as the bumper consumer spending boost in July drops out of the data. |
| [Each data point compares a three-month growth period to the previous quarter] | [Each data point compares a three-month growth period to the previous quarter] |