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| Manufacturers 'in despair' over Brexit, as pound hits one-week low - business live | Manufacturers 'in despair' over Brexit, as pound hits one-week low - business live |
| (about 1 hour later) | |
| Professor Costas Milas of Liverpool University is concerned that the pound has become a “hostage to political uncertainty”. | |
| Rather than reflecting economic fundamentals, sterling’s value has been buffered by events in Westminster and Brussels. | |
| He tells us: | |
| Sterling, our most precious measure of international confidence in the UK economy, has sadly become a hostage to Brexit-related policy uncertainty and will continue to be so as we are moving closer to a cliff-edge Brexit scenario. | |
| He’s also created this chart, showing the massive negative impact that policy uncertainty (measured by articles in 11 newspapers) has on the pound. | |
| Professor Milas explains: | |
| Surges in uncertainty trigger £ falls. Forget what we teach our students in economics. Quite sadly, policy uncertainty has overtaken economic fundamentals (such as monetary policy developments in the UK and abroad) in affecting and indeed driving down investor confidence in £. Quite an achievement for our political establishment... | |
| Shares in UK housebuilders have taken a thump, since Theresa May announced she was only seeking a short Brexit extension. | |
| Persimmon has slid by 3.6%, with Taylor Wimpey and Berkeley Group both losing 3%. | |
| Brexit-sensitive FTSE Housebuilders all LOD amid Brexit confusion | |
| Catherine McGuinness, policy chair at the City of London Corporation, hopes the EU helps the UK avoid the “catastrophic own goal” of a no-deal Brexit. | |
| We urge the EU to agree to an extension. But even if this is granted, it should not simply paper over the cracks as we risk facing another cliff-edge just around the corner. | |
| “More than ever, politicians on both sides of the Channel need to be pragmatic and co-operate in order to find a long-term solution to the current impasse. We cannot continue driving down this road to nowhere.” | |
| Andy Scott, associate director at risk management consultancy JCRA, says today’s Brexit developments have spooked some investors: | Andy Scott, associate director at risk management consultancy JCRA, says today’s Brexit developments have spooked some investors: |
| Theresa May formally requested an extension to the Brexit process until June 30 and ruled out a longer delay. The EU Commission said that this would be legally and politically difficult, suggesting either a short delay until May 23, or until at least the end of 2019. | Theresa May formally requested an extension to the Brexit process until June 30 and ruled out a longer delay. The EU Commission said that this would be legally and politically difficult, suggesting either a short delay until May 23, or until at least the end of 2019. |
| “This latest differing on views comes at a time where the EU and many UK MPs are increasingly frustrated with Theresa May’s uncompromising approach to Brexit. While her spokesman says this shows the strength of her resolve and determination to deliver Brexit, it increases the risk of the UK crashing out of the EU next week (though still unlikely) and that Theresa May is forced out of Downing Street (growing more likely). | “This latest differing on views comes at a time where the EU and many UK MPs are increasingly frustrated with Theresa May’s uncompromising approach to Brexit. While her spokesman says this shows the strength of her resolve and determination to deliver Brexit, it increases the risk of the UK crashing out of the EU next week (though still unlikely) and that Theresa May is forced out of Downing Street (growing more likely). |
| “The market became very optimistic last week, when hard Brexit risks had all but disappeared after the UK parliament rejected a no-deal outcome. This lead to Sterling reaching its highest level in almost a year. The market may have to reassess the no deal risk as without even short a pier to walk on to, the cliff edge remains a real danger! We expect GBP to remain very volatile in the remaining days until the current deadline of March 29 as the market continues to react to Brexit headlines.” | “The market became very optimistic last week, when hard Brexit risks had all but disappeared after the UK parliament rejected a no-deal outcome. This lead to Sterling reaching its highest level in almost a year. The market may have to reassess the no deal risk as without even short a pier to walk on to, the cliff edge remains a real danger! We expect GBP to remain very volatile in the remaining days until the current deadline of March 29 as the market continues to react to Brexit headlines.” |
| Here’s Hamish Muress, currency analyst at OFX, on the pound’s wobble (it’s still down a whole cent against the dollar). | Here’s Hamish Muress, currency analyst at OFX, on the pound’s wobble (it’s still down a whole cent against the dollar). |
| “The pound has continued to tumble today as the conflict between the European Union and Theresa May over the length of the Brexit extension has come to the fore. Reports that the EU are already finding the date of June 30th difficult to swallow has seen investors’ confidence in Theresa May’s current approach plummet. | “The pound has continued to tumble today as the conflict between the European Union and Theresa May over the length of the Brexit extension has come to the fore. Reports that the EU are already finding the date of June 30th difficult to swallow has seen investors’ confidence in Theresa May’s current approach plummet. |
| How likely is she to get further concessions out of the EU at this stage? | How likely is she to get further concessions out of the EU at this stage? |
| Despite the House of Commons rejecting the notion of a ‘no deal’ Brexit last week, there is still the possibility of the UK accidentally crashing out of the EU next week, which could mean further significant losses for the pound” | Despite the House of Commons rejecting the notion of a ‘no deal’ Brexit last week, there is still the possibility of the UK accidentally crashing out of the EU next week, which could mean further significant losses for the pound” |
| The pound began falling as some EU sources pushed back against the UK’s request for a three-month Brexit extension. | The pound began falling as some EU sources pushed back against the UK’s request for a three-month Brexit extension. |
| For example, here’s Norbert Röttgen, the head of the German parliament’s foreign affairs committee: | For example, here’s Norbert Röttgen, the head of the German parliament’s foreign affairs committee: |
| #May just asked #EU for short #Brexit extension. But without backing by cabinet and parliament her request is meaningless. @JunckerEU is right: EU leaders should defer decision until #UK presents an approved plan. EU cannot become accomplice of May’s internal tactical manoeuvres. | #May just asked #EU for short #Brexit extension. But without backing by cabinet and parliament her request is meaningless. @JunckerEU is right: EU leaders should defer decision until #UK presents an approved plan. EU cannot become accomplice of May’s internal tactical manoeuvres. |
| However, Angela Merkel’s office is more positive. | However, Angela Merkel’s office is more positive. |
| German government spokesman Steffen Seibert has welcomed the request from London, adding that a disorderly Brexit would not be in anyone’s interests. | German government spokesman Steffen Seibert has welcomed the request from London, adding that a disorderly Brexit would not be in anyone’s interests. |
| But... there are also reports that European Commission president Jean-Claude Juncker wants the extension to only run until mid-May, not the end of June, because of EU parliamentary elections. | But... there are also reports that European Commission president Jean-Claude Juncker wants the extension to only run until mid-May, not the end of June, because of EU parliamentary elections. |
| .@JunckerEU thinks it is good that @theresa_may sets out her thoughts ahead of #EUCO; warned her in phone call against including a date for the extension that is after #EUelections2019. #Brexit has to be complete before 23 May - otherwise #EUelections2019 have to be held in UK. | .@JunckerEU thinks it is good that @theresa_may sets out her thoughts ahead of #EUCO; warned her in phone call against including a date for the extension that is after #EUelections2019. #Brexit has to be complete before 23 May - otherwise #EUelections2019 have to be held in UK. |
| Here’s our news story about the PM’s move: | Here’s our news story about the PM’s move: |
| Theresa May asks EU for Brexit delay until 30 June | Theresa May asks EU for Brexit delay until 30 June |
| The sterling selloff is gathering pace - the pound’s now down over one cent at a one-week low around $1.316. | The sterling selloff is gathering pace - the pound’s now down over one cent at a one-week low around $1.316. |
| Sterling reaction to May confirming short delay feels like market finally waking up to the fact that the risk of no deal by accident has increased substantially this week. pic.twitter.com/lsUQqUquFo | Sterling reaction to May confirming short delay feels like market finally waking up to the fact that the risk of no deal by accident has increased substantially this week. pic.twitter.com/lsUQqUquFo |
| Here’s my colleague Philip Inman on the slowdown in the UK housing market: | Here’s my colleague Philip Inman on the slowdown in the UK housing market: |
| House prices grew at the slowest rate since 2013 in January, according to official figures that signalled the UK was heading later this year for the first fall in property values since the financial crash. | House prices grew at the slowest rate since 2013 in January, according to official figures that signalled the UK was heading later this year for the first fall in property values since the financial crash. |
| Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December 2018 and 5.1% in October 2017, the Office for National Statistics said. | Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December 2018 and 5.1% in October 2017, the Office for National Statistics said. |
| If the trajectory of sliding prices over the past two years continues, the UK is expected to suffer its first fall in prices since the post-crash property slump of 2011 before the end of this year. | If the trajectory of sliding prices over the past two years continues, the UK is expected to suffer its first fall in prices since the post-crash property slump of 2011 before the end of this year. |
| House price growth at six-year low and inflation rises to 1.9% | House price growth at six-year low and inflation rises to 1.9% |
| The pound is dropping further, as Theresa May tells MPs that she is seeking to extend Brexit until 30 June. | The pound is dropping further, as Theresa May tells MPs that she is seeking to extend Brexit until 30 June. |
| Sterling has now lost almost three quarters of a cent, dipping below $1.32.. | Sterling has now lost almost three quarters of a cent, dipping below $1.32.. |
| That suggests traders are disappointed the government isn’t seeking a longer extension, and concerned that Britain could yet crash out of the EU. | That suggests traders are disappointed the government isn’t seeking a longer extension, and concerned that Britain could yet crash out of the EU. |
| Here’s the letter which the PM has sent to Donald Tusk. | Here’s the letter which the PM has sent to Donald Tusk. |
| Theresa May's letter to Donald Tusk #pmqs pic.twitter.com/sN2UZKeDWs | Theresa May's letter to Donald Tusk #pmqs pic.twitter.com/sN2UZKeDWs |
| Our Politics Live blog has all the details: | Our Politics Live blog has all the details: |
| PMQs: May says she doesn't want a long Brexit delay as No 10 releases letter to EU – Politics live | PMQs: May says she doesn't want a long Brexit delay as No 10 releases letter to EU – Politics live |
| The CBI’s monthly survey of UK factories shows how activity and output has slowed in the last few months. | The CBI’s monthly survey of UK factories shows how activity and output has slowed in the last few months. |
| But as you can see, industry actually held up well after the EU referendum -- partly due to the weaker pound helping exports. | But as you can see, industry actually held up well after the EU referendum -- partly due to the weaker pound helping exports. |
| Nicole Sykes of the CBI explains why UK bosses are in despair over Brexit: | Nicole Sykes of the CBI explains why UK bosses are in despair over Brexit: |
| Honestly, spare a thought for all those people within businesses having to dial into the weekly global team call, fly out to Germany each month for board meetings or compile fortnightly briefing packs for Japan and having to explain all of this *points at UK politics* | Honestly, spare a thought for all those people within businesses having to dial into the weekly global team call, fly out to Germany each month for board meetings or compile fortnightly briefing packs for Japan and having to explain all of this *points at UK politics* |
| The CBI has also asked UK firms about Brexit -- and many confirmed that they’ve been hoarding raw materials and components. | The CBI has also asked UK firms about Brexit -- and many confirmed that they’ve been hoarding raw materials and components. |
| A quarter of respondents to this month’s industrial trends report reported stockbuilding, with others mentioning depressed investment and demand due to uncertainty, and the difficulty in obtaining export orders. | A quarter of respondents to this month’s industrial trends report reported stockbuilding, with others mentioning depressed investment and demand due to uncertainty, and the difficulty in obtaining export orders. |
| Tom Crotty, group director of chemicals firm INEOS, says UK factories are suffering from the prolonged Brexit crisis. | Tom Crotty, group director of chemicals firm INEOS, says UK factories are suffering from the prolonged Brexit crisis. |
| “Manufacturers are in despair at the unacceptable failure of politicians to end the Brexit impasse. Every day that goes by without a resolution results in more businesses putting off investment and stockpiling goods in order to soften the blow from a potentially disastrous “no deal” Brexit scenario. | “Manufacturers are in despair at the unacceptable failure of politicians to end the Brexit impasse. Every day that goes by without a resolution results in more businesses putting off investment and stockpiling goods in order to soften the blow from a potentially disastrous “no deal” Brexit scenario. |
| “It is crucial that Brexit uncertainty is lifted as a matter of urgency. Only then can manufacturers begin to move forward and shift our attention on to resolving the long-term challenges facing the sector – such as solving our skills challenge and raising productivity.” | “It is crucial that Brexit uncertainty is lifted as a matter of urgency. Only then can manufacturers begin to move forward and shift our attention on to resolving the long-term challenges facing the sector – such as solving our skills challenge and raising productivity.” |
| Just in: UK factory growth has hit its lowest rate in almost a year. | Just in: UK factory growth has hit its lowest rate in almost a year. |
| Manufacturing output growth in the quarter to March was at its weakest since May 2018, according to the latest monthly CBI Industrial Trends Survey. | Manufacturing output growth in the quarter to March was at its weakest since May 2018, according to the latest monthly CBI Industrial Trends Survey. |
| Manufacturers reported that order books weakened a little - although exports picked up. | Manufacturers reported that order books weakened a little - although exports picked up. |
| The CBI says: | The CBI says: |
| Output volumes expanded in 11 out of 17 sub-sectors, with growth driven predominantly by the food, drink, & tobacco, chemicals, and metal manufacture sub-sectors. Meanwhile, the mechanical engineering, paper, printing & media, and motor vehicles & transport equipment sub-sectors were the main drags on growth. | Output volumes expanded in 11 out of 17 sub-sectors, with growth driven predominantly by the food, drink, & tobacco, chemicals, and metal manufacture sub-sectors. Meanwhile, the mechanical engineering, paper, printing & media, and motor vehicles & transport equipment sub-sectors were the main drags on growth. |