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| French growth beats forecasts despite gilet jaunes protests - business live | |
| (34 minutes later) | |
| The Yellow Vest protests forced French president Emmanuel Macron to announce a swathe of spending plans last month, including a higher minimum wage and tax breaks for pensioners and low income workers. | |
| That package will cost €10bn, but may keep the economy on track in 2019. | |
| Sabrina Khanniche of Pictet Asset Management tweets: | |
| In France 🇫🇷, despite the #giletsjaunes protests Q4 GDP came at a descent0.3%. Net trade saved growth as private consumption – the main engine of growth made a null contribution...but should be temporary. Government measures meant to support household’s purchasing power. pic.twitter.com/F04tQORMzo | |
| France’s stock market has risen this morning, as traders welcome today’s GDP figures. | |
| The CAC 40 index of leading French companies has risen by 0.4%, outperforming Germany (down 0.2%). | |
| In London, the FTSE 100 is pushing higher too thanks to the pound’s decline last night after the Brexit votes. | |
| Pound falls after Commons vote spurs no-deal Brexit fears | |
| The Footsie has gained 50 points, led by exporters such as British American Tobacco and Burberry, and mining stock including Glencore and Fresnillo. Their overseas earnings become more valuable, in sterling terms, when the pound weakens. | |
| Back in the UK, businesses are increasingly nervous about Brexit after parliament voted to change Theresa May’s deal - despite the lack of appetite from Europe to reopen it. | Back in the UK, businesses are increasingly nervous about Brexit after parliament voted to change Theresa May’s deal - despite the lack of appetite from Europe to reopen it. |
| Carolyn Fairbairn, the chief executive of the CBI business group, has expressed deep concern at last night’s Brexit votes, which saw MPs back the ‘Brady Amendment’ to change the Irish backstop. | Carolyn Fairbairn, the chief executive of the CBI business group, has expressed deep concern at last night’s Brexit votes, which saw MPs back the ‘Brady Amendment’ to change the Irish backstop. |
| Talking on BBC Radio 4’s Today programme this morning, she said no-deal has not been taken off the table. | Talking on BBC Radio 4’s Today programme this morning, she said no-deal has not been taken off the table. |
| She warned that many businesses, in particular manufacturers, insurers and small firms, were not ready for a hard, “cliff edge” Brexit on 29 March – although banks and other financial services firms certainly are prepared. | She warned that many businesses, in particular manufacturers, insurers and small firms, were not ready for a hard, “cliff edge” Brexit on 29 March – although banks and other financial services firms certainly are prepared. |
| She said: | She said: |
| “The reaction of business today will be one of rising frustration and concern. The main objective that business has is to avoid no deal. Did yesterday do anything to move us further away from no deal? And I think the answer feels as though it is no.” | “The reaction of business today will be one of rising frustration and concern. The main objective that business has is to avoid no deal. Did yesterday do anything to move us further away from no deal? And I think the answer feels as though it is no.” |
| Asked about the non-binding amendment tabled by Labour’s Jack Dromey and the Conservative Caroline Spelman to rule out a no-deal outcome, Fairbairn said: | Asked about the non-binding amendment tabled by Labour’s Jack Dromey and the Conservative Caroline Spelman to rule out a no-deal outcome, Fairbairn said: |
| “It is welcome to see that there is a consensus against no deal… But it is not binding, it does nothing practically to take no deal off the table and it does feel like hope rather than strategy. | “It is welcome to see that there is a consensus against no deal… But it is not binding, it does nothing practically to take no deal off the table and it does feel like hope rather than strategy. |
| “I don’t think there will be a single business this morning who is stopping or halting their no deal planning as a result of what happened yesterday. | “I don’t think there will be a single business this morning who is stopping or halting their no deal planning as a result of what happened yesterday. |
| And I fear they may even be accelerating it, because the other [Brady] amendment feels like a real throw of the dice to be returning to renegotiate something that has been so difficult to negotiate. If the renegotiation goes ahead which it sounds as though it will let’s move very quickly so we know the outcome.” | And I fear they may even be accelerating it, because the other [Brady] amendment feels like a real throw of the dice to be returning to renegotiate something that has been so difficult to negotiate. If the renegotiation goes ahead which it sounds as though it will let’s move very quickly so we know the outcome.” |
| She said some businesses were ready for a hard Brexit/no deal Brexit, but only 10% of small and medium-sized firms had drawn up contingency plans. | She said some businesses were ready for a hard Brexit/no deal Brexit, but only 10% of small and medium-sized firms had drawn up contingency plans. |
| “There are some businesses who are ready. Financial services have been able to prepare a long time in advance and it hasn’t been comfortable and they spent a lot of money on it but they are broadly ready. The real areas of concern now are around manufacturing, other services, broadcasting actually insurance is still not in great shape, they are deeply concerned. | “There are some businesses who are ready. Financial services have been able to prepare a long time in advance and it hasn’t been comfortable and they spent a lot of money on it but they are broadly ready. The real areas of concern now are around manufacturing, other services, broadcasting actually insurance is still not in great shape, they are deeply concerned. |
| “We said before no deal is just not manageable at this stage.” | “We said before no deal is just not manageable at this stage.” |
| Given all the anxiety over trade wars, the 2.4% surge in French exports in the last quarter is a little surprising. | Given all the anxiety over trade wars, the 2.4% surge in French exports in the last quarter is a little surprising. |
| According to INSEE, France’s manufacturers racked up more “aeronautic and naval equipment deliveries” in the last quarter. | According to INSEE, France’s manufacturers racked up more “aeronautic and naval equipment deliveries” in the last quarter. |
| 🇫🇷 #France | Exports Contribution to GDP growth reached 0.74% ❗in 4Q18 (highest since 2Q17)*According to INSEE, "exports accelerated significantly because of dynamic aeronautic and naval equipment deliveries". pic.twitter.com/wHBjntjokE | 🇫🇷 #France | Exports Contribution to GDP growth reached 0.74% ❗in 4Q18 (highest since 2Q17)*According to INSEE, "exports accelerated significantly because of dynamic aeronautic and naval equipment deliveries". pic.twitter.com/wHBjntjokE |
| Despite the impressive jump in exports, many City experts are concerned about weakness in the French economy. | Despite the impressive jump in exports, many City experts are concerned about weakness in the French economy. |
| Philippe Waechter, chief economist at Ostrum Asset Management, points out that French domestic demand has faltered: | Philippe Waechter, chief economist at Ostrum Asset Management, points out that French domestic demand has faltered: |
| The French #GDP increased by 0.3% in the fourth quarter (as in the third quarter). For 2018, the average growth is 1.5% after 2.3% in 2017. In the last quarter of 2018, domestic demand was weaker with a 0.1% contribution to quarterly GDP growth. Consumption stalled and investment | The French #GDP increased by 0.3% in the fourth quarter (as in the third quarter). For 2018, the average growth is 1.5% after 2.3% in 2017. In the last quarter of 2018, domestic demand was weaker with a 0.1% contribution to quarterly GDP growth. Consumption stalled and investment |
| Economist Christophe Barraud has spotted that French consumer spending - a key measure of domestic confidence - has dropped sharply. | Economist Christophe Barraud has spotted that French consumer spending - a key measure of domestic confidence - has dropped sharply. |
| 🇫🇷 #FRANCE DEC CONSUMER SPENDING M/M: -1.5% V -0.3%E; Y/Y: -2.3% V -0.7%E *Consumption of durable goods fell sharply in December (−3.8%, after +0.1% in November).*Link: https://t.co/qy2TWUaTAp pic.twitter.com/8DnaBDC1Xa | 🇫🇷 #FRANCE DEC CONSUMER SPENDING M/M: -1.5% V -0.3%E; Y/Y: -2.3% V -0.7%E *Consumption of durable goods fell sharply in December (−3.8%, after +0.1% in November).*Link: https://t.co/qy2TWUaTAp pic.twitter.com/8DnaBDC1Xa |
| Economics blogger Jeroen Blokland hopes that France’s economy may pick up in 2019 | Economics blogger Jeroen Blokland hopes that France’s economy may pick up in 2019 |
| #France's #GDP growth for Q4 2018 equaled 0.3%, better than expected! YoY growth, however is down to 0.9% the slowest pace since Q3 2015. Yet part of the soft spot may be behind us. pic.twitter.com/stsKstzjWj | #France's #GDP growth for Q4 2018 equaled 0.3%, better than expected! YoY growth, however is down to 0.9% the slowest pace since Q3 2015. Yet part of the soft spot may be behind us. pic.twitter.com/stsKstzjWj |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| With gloom gathering over Europe, France has given the eurozone a much-needed boost by beating growth forecasts for the last quarter. | With gloom gathering over Europe, France has given the eurozone a much-needed boost by beating growth forecasts for the last quarter. |
| French GDP expanded by 0.3% during October-December, new figures show, crushing fears that growth could have fallen to just 0.1%. | French GDP expanded by 0.3% during October-December, new figures show, crushing fears that growth could have fallen to just 0.1%. |
| That matches France’s growth in the third-quarter, easing fears of a downturn. | That matches France’s growth in the third-quarter, easing fears of a downturn. |
| Economists had been braced for bad numbers, following the ‘gilet jaunes’ protests that have gripped Paris for many weeks, with mass demonstrations, running battles with police, roadblocks and attacks on shops and cars | Economists had been braced for bad numbers, following the ‘gilet jaunes’ protests that have gripped Paris for many weeks, with mass demonstrations, running battles with police, roadblocks and attacks on shops and cars |
| And indeed, consumer spending and investing did drop in the last quarter. | And indeed, consumer spending and investing did drop in the last quarter. |
| But France’s economy still pushed on, the INSEE stats office reports, thanks to a jump in exports. | But France’s economy still pushed on, the INSEE stats office reports, thanks to a jump in exports. |
| INSEE reports: | INSEE reports: |
| Household consumption expenditures decelerated (0.0% after +0.4%), likewise total gross fixed capital formation slowed down (GFCF: +0.2% after +1.0%). Overall, final domestic demand excluding inventory changes decelerated: it contributed 0.1 points to GDP growth, after 0.5 points in the previous quarter. | Household consumption expenditures decelerated (0.0% after +0.4%), likewise total gross fixed capital formation slowed down (GFCF: +0.2% after +1.0%). Overall, final domestic demand excluding inventory changes decelerated: it contributed 0.1 points to GDP growth, after 0.5 points in the previous quarter. |
| Imports bounced back in Q4 (+1.6% after −0.7%) and exports accelerated significantly (+2.4% after +0.2%). All in all, foreign trade balance contributed positively to GDP growth again: +0.2 points, after +0.3 points in Q3. Conversely, changes in inventories contributed negatively to GDP growth (−0.1 points after −0.5 points). | Imports bounced back in Q4 (+1.6% after −0.7%) and exports accelerated significantly (+2.4% after +0.2%). All in all, foreign trade balance contributed positively to GDP growth again: +0.2 points, after +0.3 points in Q3. Conversely, changes in inventories contributed negatively to GDP growth (−0.1 points after −0.5 points). |
| The figures aren’t exactly superbe -- France’s annual growth rate has dropped to 1.5% for 2018, from 2.3% in 2017. That highlight how the ‘euroboom’ has fizzled out. | The figures aren’t exactly superbe -- France’s annual growth rate has dropped to 1.5% for 2018, from 2.3% in 2017. That highlight how the ‘euroboom’ has fizzled out. |
| Reaction to follow.... | Reaction to follow.... |
| Also coming up today | Also coming up today |
| US and China are due to resume their trade talks today; overshadowed by the criminal charges against Huawei. | US and China are due to resume their trade talks today; overshadowed by the criminal charges against Huawei. |
| The pound could be volatile today after MPs voted for Theresa May to return to Brussels to renegotiate the Irish backstop in her Brexit deal - something the EU has already said non, nein, and nee to. | The pound could be volatile today after MPs voted for Theresa May to return to Brussels to renegotiate the Irish backstop in her Brexit deal - something the EU has already said non, nein, and nee to. |
| Top notch front page by the Independent pic.twitter.com/efJunXyo7a | Top notch front page by the Independent pic.twitter.com/efJunXyo7a |
| Sterling took a small tumble last night, losing one cent against the US dollar as traders calculated that a no-deal Brexit is now more likely. | Sterling took a small tumble last night, losing one cent against the US dollar as traders calculated that a no-deal Brexit is now more likely. |
| Brexit: May goes back to Brussels but EU says nothing has changed | Brexit: May goes back to Brussels but EU says nothing has changed |
| That’s likely to push shares in London up this morning (as a weak pound boosts overseas earnings). | That’s likely to push shares in London up this morning (as a weak pound boosts overseas earnings). |
| America’s central bank is meeting to set monetary policy tonight. The Fed is likely to leave interest rates on hold, but it could highlight how the US government shutdown has hurt the economy. | America’s central bank is meeting to set monetary policy tonight. The Fed is likely to leave interest rates on hold, but it could highlight how the US government shutdown has hurt the economy. |
| Plus we get new UK borrowing data which may show a drop in mortgage approvals last month. | Plus we get new UK borrowing data which may show a drop in mortgage approvals last month. |
| The agenda | The agenda |
| 9.30am GMT: UK consumer credit and mortgage approvals data | 9.30am GMT: UK consumer credit and mortgage approvals data |
| 10am GMT: Eurozone consumer confidence | 10am GMT: Eurozone consumer confidence |
| 7pm GMT: US Federal Reserve sets interest rates | 7pm GMT: US Federal Reserve sets interest rates |