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China accuses US of 'naked economic terrorism' in trade dispute – business live China accuses US of 'naked economic terrorism' in trade dispute – business live
(about 1 hour later)
Labour party leader Jeremy Corbyn has been in talks with Irish taioseach Leo Varadkar – he said they had “positive discussions”, Reuters reported.
Corbyn said he does not back a re-run of the 2016 EU referendum, but said that Labour will do whatever it can to avoid a no-deal Brexit. That commitment will be important if enough Conservatives such as Philip Hammond are prepared to break the whip and vote against no deal.
Corbyn also said that his main priority is getting an election, and that as prime minister he would go to the EU and ask them to seriously consider entering into a customs union with the UK.
Alexandra Brodie, a partner at law firm Gowling WLG, said:Alexandra Brodie, a partner at law firm Gowling WLG, said:
What can seem like clever word-play often amounts to trade mark infringement and so this issue is a timely reminder to do your brand clearance alongside your product development. Not only can an infringing product name cost you in legal fees and damages, but the delay caused by the need to rebrand your product and very fact of rebranding will also result in wasted money on lost advertising and the need to pay more money to rebrand and readvertise.What can seem like clever word-play often amounts to trade mark infringement and so this issue is a timely reminder to do your brand clearance alongside your product development. Not only can an infringing product name cost you in legal fees and damages, but the delay caused by the need to rebrand your product and very fact of rebranding will also result in wasted money on lost advertising and the need to pay more money to rebrand and readvertise.
Coupled with the delay in revenue stream due to the delay in bringing product to market means the word play starts to look less amusing.Coupled with the delay in revenue stream due to the delay in bringing product to market means the word play starts to look less amusing.
Heavy metal band Iron Maiden is making headlines today – for its defence of intellectual property rights.Heavy metal band Iron Maiden is making headlines today – for its defence of intellectual property rights.
The band, who hail from Leyton in East London, is suing video game company 3D Realms over the game Ion Maiden, which they describe as an “incredibly blatant” infringement on their trademark.The band, who hail from Leyton in East London, is suing video game company 3D Realms over the game Ion Maiden, which they describe as an “incredibly blatant” infringement on their trademark.
The lawsuit, which demands $2m (£1.58m) in damages, argues that the game’s title will cause “confusion among consumers”. And yes, before you ask, Iron Maiden does already have a video game: Legacy of the Beast.The lawsuit, which demands $2m (£1.58m) in damages, argues that the game’s title will cause “confusion among consumers”. And yes, before you ask, Iron Maiden does already have a video game: Legacy of the Beast.
You can read more here:You can read more here:
Iron Maiden sue video game company for $2m over Ion Maiden gameIron Maiden sue video game company for $2m over Ion Maiden game
Watches of Switzerland is enjoying a good start to its life as a public company.Watches of Switzerland is enjoying a good start to its life as a public company.
The retailer’s shares are up by 13% at £3.04 as we approach midday.The retailer’s shares are up by 13% at £3.04 as we approach midday.
WoS, which owns brands such as Goldsmiths, Mappin & Webb and Watch Shop, made £14.5m in profits in the year ending 29 April 2018, the latest available accounts, but it has also started to push into the US.WoS, which owns brands such as Goldsmiths, Mappin & Webb and Watch Shop, made £14.5m in profits in the year ending 29 April 2018, the latest available accounts, but it has also started to push into the US.
Banking regulators have fined Raphaels Bank £1.89m for repeated failings to do with assessing risks to outsourcing partners.Banking regulators have fined Raphaels Bank £1.89m for repeated failings to do with assessing risks to outsourcing partners.
The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) said that Raphaels failed to properly understand how their card service providers would react to a meltdown before a failure on Christmas Eve in 2015 shut out more than 3,000 customers.The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) said that Raphaels failed to properly understand how their card service providers would react to a meltdown before a failure on Christmas Eve in 2015 shut out more than 3,000 customers.
Seasonal workers, who depended on their cards to receive their wages, may have been among the users of prepaid cards affected by the incident.Seasonal workers, who depended on their cards to receive their wages, may have been among the users of prepaid cards affected by the incident.
Sam Woods, a Bank of England deputy governor and the chief executive of the PRA, said:Sam Woods, a Bank of England deputy governor and the chief executive of the PRA, said:
Firms’ ability to manage outsourcing of any critical activities is a vital part of maintaining their safety and soundness. Such outsourcing is an important part of a firm’s operational resilience, and particularly so in the case of Raphaels given the level of reliance on outsourcing in its business model.Firms’ ability to manage outsourcing of any critical activities is a vital part of maintaining their safety and soundness. Such outsourcing is an important part of a firm’s operational resilience, and particularly so in the case of Raphaels given the level of reliance on outsourcing in its business model.
In addition, this was a repeat failing which demonstrates a lack of adequate and timely remediation. This is a significant aggravating factor in this case, leading to an uplift in the penalty.In addition, this was a repeat failing which demonstrates a lack of adequate and timely remediation. This is a significant aggravating factor in this case, leading to an uplift in the penalty.
After yesterday’s heavy falls, the FTSE 100 is enjoying a more positive day, with a gentle gain of 0.4% in late morning trading.After yesterday’s heavy falls, the FTSE 100 is enjoying a more positive day, with a gentle gain of 0.4% in late morning trading.
That increase is matched across most of the rest of Europe, with only the Swiss and Swedish spoiling the mood.That increase is matched across most of the rest of Europe, with only the Swiss and Swedish spoiling the mood.
Here’s some more from the chancellor, who was speaking in London this morning. The Guardian’s Larry Elliott was there:Here’s some more from the chancellor, who was speaking in London this morning. The Guardian’s Larry Elliott was there:
Philip Hammond says tackling low pay is needed to rebuild faith in the politics of the centre. Speaking at the Resolution Foundation think tank the chancellor said:Philip Hammond says tackling low pay is needed to rebuild faith in the politics of the centre. Speaking at the Resolution Foundation think tank the chancellor said:
Whoever the new prime minister is one of their central tasks will be to convince a new and somewhat sceptical generation that a properly regulated market economy remains the most powerful force open to us to meet aspirations and to raise living standards. An increasing minimum wage is part of that.Whoever the new prime minister is one of their central tasks will be to convince a new and somewhat sceptical generation that a properly regulated market economy remains the most powerful force open to us to meet aspirations and to raise living standards. An increasing minimum wage is part of that.
Hammond has commissioned a review from US academic Arun Dube into the possibility of ensuring that all workers earn two-thirds of median earnings by the mid 2020s.Hammond has commissioned a review from US academic Arun Dube into the possibility of ensuring that all workers earn two-thirds of median earnings by the mid 2020s.
Mike Hawes, SMMT chief executive, said:Mike Hawes, SMMT chief executive, said:
While April’s decline is significant, production shutdowns make it an exceptional month, and the cyclical nature of the sector means caution is always advised when making monthly comparisons.While April’s decline is significant, production shutdowns make it an exceptional month, and the cyclical nature of the sector means caution is always advised when making monthly comparisons.
With overall production still driven by exports – the majority to the EU – for this vital sector to thrive, we need to restore confidence and stability, and this means securing a free and frictionless trade deal with our biggest customer.With overall production still driven by exports – the majority to the EU – for this vital sector to thrive, we need to restore confidence and stability, and this means securing a free and frictionless trade deal with our biggest customer.
If you thought that the car production figures were bad, brace yourself for the commercial vehicle numbers.If you thought that the car production figures were bad, brace yourself for the commercial vehicle numbers.
Production of lorries, vans, and buses fell by 71% in April compared to the year before, with only 2,162 made during the month, according to the Society for Motor Manufacturers and Traders (SMMT), the industry body.Production of lorries, vans, and buses fell by 71% in April compared to the year before, with only 2,162 made during the month, according to the Society for Motor Manufacturers and Traders (SMMT), the industry body.
The proportion of exported commercial vehicles fell to 24.3%, the lowest level on record.The proportion of exported commercial vehicles fell to 24.3%, the lowest level on record.
The reason for the massive drop was Vauxhall’s halt to manufacturing of its Vivaro van, the last remaining bulk producer of commercial vehicles in the UK. Vauxhall, which is owned by France’s Peugeot, shut down production temporarily as it switched to a new version of the van.The reason for the massive drop was Vauxhall’s halt to manufacturing of its Vivaro van, the last remaining bulk producer of commercial vehicles in the UK. Vauxhall, which is owned by France’s Peugeot, shut down production temporarily as it switched to a new version of the van.
Vauxhall have previously insisted the timing of the move was not driven by Brexit, but it coincided with shutdowns across carmakers.Vauxhall have previously insisted the timing of the move was not driven by Brexit, but it coincided with shutdowns across carmakers.
Other commercial vehicle manufacturers in the UK include Leyland Trucks, owned by Holland’s DAF, and Wrightbus, the independent London bus manufacturer based in Ballymena, Northern Ireland.Other commercial vehicle manufacturers in the UK include Leyland Trucks, owned by Holland’s DAF, and Wrightbus, the independent London bus manufacturer based in Ballymena, Northern Ireland.
However, Stuart Apperley, head of UK automotive at Lloyds Bank Commercial Banking, says there are some reasons to take the numbers with a pinch of salt.However, Stuart Apperley, head of UK automotive at Lloyds Bank Commercial Banking, says there are some reasons to take the numbers with a pinch of salt.
Car production figures have fallen for 11 consecutive months, but the latest plunge compared with the same month last year is likely to be a one-off. He said:Car production figures have fallen for 11 consecutive months, but the latest plunge compared with the same month last year is likely to be a one-off. He said:
On the face of it these figures make for stark reading, but things may not be as bleak as they first appear. A significant dip in output has always been on the cards for April as a result of the planned summer factory shutdowns being brought forward. With this in mind, we expect a clearer picture to emerge in the coming months when the impact of the shutdowns has worked its way through.On the face of it these figures make for stark reading, but things may not be as bleak as they first appear. A significant dip in output has always been on the cards for April as a result of the planned summer factory shutdowns being brought forward. With this in mind, we expect a clearer picture to emerge in the coming months when the impact of the shutdowns has worked its way through.
There is no avoiding that the UK’s car industry remains particularly susceptible to any vulnerabilities the wider economy faces. It also has its own challenges – from record levels of stockpiling to falling confidence affecting demand on the continent, and China’s continued slump in sales.There is no avoiding that the UK’s car industry remains particularly susceptible to any vulnerabilities the wider economy faces. It also has its own challenges – from record levels of stockpiling to falling confidence affecting demand on the continent, and China’s continued slump in sales.
Unite, Britain’s biggest union, said the government should stop playing “dangerous electoral games with people’s jobs” by threatening a no-deal Brexit in light of the car production fall.
Steve Turner, Unite’s assistant general secretary for manufacturing, said the figures were not a huge surprise – given that it was well documented that carmakers had rescheduled shutdowns to coincide with a potential no-deal Brexit on 29 March. However, the same uncertainty persists now that the departure date has been delayed until 31 October.
The continued Brexit uncertainty “will simply delay or divert desperately needed investment decisions, causing further anxiety across the auto sector, its workforce, supply chain and communities,” Turner said.
It will be a travesty for the economy and a betrayal of a workforce that has positioned the sector as the jewel in the crown of UK manufacturing if we see our jobs go to competitor countries where those governments get the importance of their role in underpinning their manufacturing industry.
No serious candidate to be prime minister should be promising to plunge out of our biggest trading partner with no deal because this would devastate manufacturing communities.
There’s some reaction coming in to the big economic news that came in overnight: the slump in car production in April due to Brexit shutdowns.
Car production plunged by nearly half in April as factories shut down to prepare for a Brexit date that never came, prompting renewed anguish from the UK motor industry at the “untold damage” done by prolonged uncertainty, writes the Guardian’s Rob Davies.
In a slump that the Society of Motor Manufacturers and Traders (SMMT) described as “extraordinary”, 70,971 vehicles rolled off the production lines in April, down 44.5% from 127,970 in the same month of last year.
You can read more here:
Brexit: UK car production plunges amid 'untold damage' of EU leave date chaos
Let’s take another look at FirstGroup, which is the biggest riser on the FTSE 350 (up by 5%) following its announcement that it plans to sell Greyhound, which runs intercity coaches in the US.
British people may know FirstGroup for its trains and buses in the UK, but the company is seeking to focus in the future on its North American school bus and contract bus businesses.
As well as the start of the Greyhound sale, FirstGroup also announced that it is “pursuing structural alternatives” to separate its British bus operations – which have a fifth of the market outside London.
However, FirstGroup said there are “limited synergies” between the UK bus operations and the rest of the company, so it wants to offload the business and get more value for shareholders.
Shares in the publisher of the Daily Mail have risen by 8% after it reported stronger-than-expected profits.
Daily Mail and General Trust recorded statutory profit before tax of £50m in the six months to the end of March. While this was down from £113m in the same period last year, the company said that underlying profits (excluding one-off impairments) rose by 19%.
DMGT said its consumer media division – which includes the Mail newspapers and the MailOnline, as well as the Metro – was the driver of the adjusted profits rise. MailOnline revenues rose by 16% year-on-year on an underlying basis, although revenues from the newpapers fell by 5%.
Perhaps more interestingly, Ramsden also suggests that markets may be too sanguine about the risks facing them – and that when investors finally wake up to the dangers it could make for more dramatic market moves.
The key piece of evidence he cites is the divergence between policy uncertainty and the Vix – the so-called fear index which measures the volatility of trading on the S&P 500.
Ramsden said:
The Vix has risen far less than the policy uncertainty index in recent months, suggesting market participants see relatively little risk of major disruption. It has picked up a little in the recent data as US-China trade tensions intensified, but has also fallen back to below historical averages.
This apparent disconnect does not necessarily mean that markets are complacent – the policy uncertainty index might be more sensitive to short-term political developments, while market indices could also be factoring in a belief that monetary policy might be able to offset the impact of shocks. But if market participants are underestimating the extent of political risks materialising, that suggests the potential for sharp price corrections if those shocks do come about.
Dave Ramsden, the Bank of England deputy governor with a mandate for markets and banking, is currently making a speech on “resilience” following the financial crisis.
First up, on Brexit he is unsurprisingly cautious. Ramsden would want to wait and see on the effects of a no-deal Brexit before changing monetary policy.
A no-deal Brexit – with no transition to trade on World Trade Organisation rules – is “unarguably [the] biggest risk to the UK economy and UK financial stability”, he said.
But Ramsden (an outside shot at the top job once Mark Carney leaves) also reiterated the Bank’s position that the financial sector would be resilient (there’s the title) to the shock.
Shares in De La Rue – the loser in the battle to make the UK’s post-Brexit blue passports – have fallen to their lowest level since September 2005 in early trading after the departure of the chief executive.
De La Rue has lost 22%, trading at 356p, after boss Martin Sutherland stepped down amid a 77% plunge in pre-tax profits.
The company, which also makes banknotes, lost a highly publicised battle for a £490m contract to print the UK’s post-Brexit passport in 2018. The contract went to Franco-Dutch company Gemalto.
You can read more here:
De La Rue boss to step down after losing UK passport print contract
Chancellor Philip Hammond’s days in the UK’s top finance job may be numbered, given Theresa May’s imminent departure as prime minister – and the palpable dislike of Brexit-backing MPs for his support for remaining in the EU.
He appears to be enjoying a little more freedom, given comments this morning to Sky News suggesting he could not serve in a no-deal Brexit cabinet. He said:
I couldn’t support a government policy stance that said as a matter of choice we are going to pursue a no-deal exit.
Hammond – who says he has never defied the Conservative whip in 22 years as an MP – also did not rule out voting against a Tory government to block no deal. He said:
The national interest trumps party interest. If I am presented with a difficult choice, I will act with what I believe will be the best interests of the country.
The FTSE 100 is up by about 0.1% at the open across Europe, while the Euro Stoxx 600 has gained 0.2%.
France’s Cac 40 and Spain’s Ibex index are both up by 0.4%.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some economists are uneasy with describing an economic dispute as a “trade war”. But when senior diplomats – usually so, well, diplomatic – start throwing around terms like “terrorism”, investors generally take note.
Provoking trade disputes is “naked economic terrorism”, a senior Chinese diplomat said on Thursday, in a clear escalation of rhetoric which signals that there is likely a long way to go for investors awaiting an easing of tensions.
When asked about the trade war with the United States in Beijing, Chinese vice foreign minister Zhang Hanhui gave a clear message on the country’s willingness to fight back. According to Reuters, he said:
We oppose a trade war but are not afraid of a trade war. This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying.
Concerns over trade have weighed on markets so far this week, provoking steep stock market falls yesterday after rare earth minerals appeared likely to become the latest front in the dispute. With two more trading days left in May, the S&P 500 is heading for a loss of 5.5% – its first monthly loss since December.
Asian markets were for the most part in negative territory (with the exception of South Korea’s Kospi 200 index, which gained 1%) on Thursday. Japan’s Topix and Nikkei 225 indices fell by 0.3%, while the CSI 300 index, which tracks the biggest companies traded in Shanghai and Shenzhen, fell by 0.8% at the time of writing.
In corporate news, British transport company FirstGroup is planning to sell off its Greyhound bus operator in the US as well as reviewing options for its UK bus arm. Future commitments to the British rail industry will also be dependent on the government’s attitude, it said, amid pressure from investors to ditch UK trains altogether.
And Watches of Switzerland, which sells what it says on the tin, priced an initial public offering at 270p. That would value Britain’s biggest watch-vendor at about £647m, while raising £220m.
The agenda
8:30am BST: Speech by Bank of England’s Dave Ramsden
1pm BST: Brazil GDP growth rate (first quarter)
1:30pm BST: US GDP growth rate second estimate (first quarter)