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Pound tumbles amid Brexit cliff-edge fears; factory output slumps - business live Pound tumbles amid Brexit cliff-edge fears; factory output slumps - business live
(32 minutes later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
An independent report has slammed the “poor culture” at Persimmon, one of the UK’s biggest housebuilders, which has come under heavy criticism for its shoddy workmanship and paying a £75m bonus to its former chief executive last year. In particular, the report highlighted the firm’s failure to install properly cavity barriers at its timber-framed houses, a key fire safety measure.
The review, led by Stephanie Barwise QC of law firm Atkin Chambers, called on the company to reconsider its purpose and ambition, and to fundamentally change its culture. Persimmon commissioned the review in April and took other steps to rebuild its tarnished reputation. Its last annual profit topped £1bn, the biggest ever made by a UK housebuilder, and a big chunk of it was related to the taxpayer-funded help-to-buy scheme.
The report said Persimmon’s issue with “missing or improperly fitted cavity barriers is a systemic nationwide problem, which is a manifestation of poor culture coupled with the lack of a group build process”.
The barriers are designed to stop fire spreading. Persimmon said it had checked 16,000 homes and fixed the majority of those affected, and is inspecting more than 500 homes a week. Two-fifths of the houses it builds every year are timber frame.
Persimmon said it was taking the issue very seriously and had taken “extensive action,” after discovering failings at various stages in the installation of cavity barriers at some properties. There has been inadequate supervision by the company and the approved building control inspector, NHBC, it said. Persimmon appointed fire engineering firm Arup in November to assess any further steps it should take.
Over here, the FTSE 100 is trading some 16 points lower at 7,502.51, a 0.22% fall. Germany’s Dax has lost 0.57% and France’s CAC is down 0.25% while Italy’s FTSE MiB has bucked the negative trend with a 0.7% rise.
The opening bell has rung on Wall Street. Stocks are largely flat, as expected, staying close to yesterday’s record closing levels.
Dow Jones down 8.39 points, or 0.03%, at 28,227.50
S&P 500 up 3.65 points, or 0.1%, at 3,195.1
Nasdaq up 15.49 points, or 0.18%, at 8,827.72
The pound is still trading down 1.4% against the dollar, at $1.3147 – signalling that the ‘Boris Bounce’ is over. Investors are back to worrying that Britain will fail to agree a new trade deal with the EU by the end of next year.
Looking ahead to the Wall Street open, stocks are expected to open close to yesterday’s record closing levels. Boeing, however, is set for its worst open since August after the US aircraft maker decided to halt production of its grounded 737 Max plane.
Back to the US, which has released more data, this time on industrial production. Output from manufacturers, miners and utilities rose 1.1% in November, which was better than expected, and a strong bounceback from October’s decline of 0.9%.
Manufacturing alone also posted 1.1% growth, following a 0.7% drop in October.
Sadly, another UK retailer has gone into administration, just a week before Christmas. The online and pop-up bookseller The Book People appointed administrators at PricewaterhouseCoopers, putting almost 400 jobs at risk.Sadly, another UK retailer has gone into administration, just a week before Christmas. The online and pop-up bookseller The Book People appointed administrators at PricewaterhouseCoopers, putting almost 400 jobs at risk.
At least, there will be no immediate job losses, according to the administrators, who also promised that Christmas orders already placed by customers will be fulfilled. PwC are now looking for a buyer of the business.At least, there will be no immediate job losses, according to the administrators, who also promised that Christmas orders already placed by customers will be fulfilled. PwC are now looking for a buyer of the business.
My colleague Sarah Butler writes:My colleague Sarah Butler writes:
He also said that the US needed to reduce its trade gap with Europe to get its global trade deficit down, and that it must find ways to sell more goods to the EU.He also said that the US needed to reduce its trade gap with Europe to get its global trade deficit down, and that it must find ways to sell more goods to the EU.
The US trade representative, Robert Lighthizer, has given an interview to Fox Business Network. He said that a trade between the US and the UK is a priority for Washington and negotiations will be launched soon.The US trade representative, Robert Lighthizer, has given an interview to Fox Business Network. He said that a trade between the US and the UK is a priority for Washington and negotiations will be launched soon.
The US housing market is benefiting from low mortgage rates, and is propping up the wider economy. Construction of single-family houses – the largest share of the housing market – rose 2.4% to 938,000 units, the highest level since January. The number of multi-family homes started jumped 4.9% to 427,000.
US housing starts rose more than expected last month, and permits for future home construction jumped to a 12 1/2 year high, according to data just released by the US Commerce Department.
The figures painted a rosy picture of the American housing market. The number of houses started rose 3.2% to 1.365m last month, with single-family construction reaching a 10-month high. Building permits increased 1.4% to 1.482m in November, the highest level since May 2007.
Here is more reaction to the poor factory numbers from the CBI. Howard Archer, chief economic adviser to the EY Item Club forecasting group, says:
Time for a quick recap.
The pound has suffered a sharp tumble as the government prepares to pass legislation that could cause a “cliff-edge” Brexit at the end of next year. Sterling has slumped by nearly 1.5 cents today to below $1.32, back towards levels seen before Thursday’s general election.
The Boris Bounce in the stock market has also fizzled out. Share in banks and housebuilders are among the big fallers today, with Lloyds down 5%.
Britain’s factories have suffered their worst slump in activity since the financial crisis a decade ago. Orders also took a worrying tumble, suggesting manufacturing’s recession isn’t over.
The latest UK labour market statistics are a mixed bag. Unemployment is down (good) and employment is up (also good), but wage growth has slowed (bad) and vacancies are down too (worrying).
The CBI’s director general, Carolyn Fairbairn, has issued a statement pledging to help Boris Johnson secure a new trade deal with the EU by the end of next year.
She says:
In the past, the CBI - which opposed Brexit in 2016 - has sounded more critical about the issue. Last month, MPs attacked it for not applying for funds to help businesses with their no-deal preparations.
The CBI also resisted commenting on whether it thinks achieving a trade deal by December 2020 is achievable. Former Trade secretary Liam Fox has said today that it’s possible....
Fawad Razaqzada, market analyst at Forex.com, says he pound was hit by a double whammy of bad news this morning.
And here’s the result:
Here’s our news story on today’s UK jobs report:
Today’s dire UK factory data haven’t helped the pound - it’s still wallowing around $1.32, down a cent this morning.
Deutsche Bank has warned its clients that the pound is likely to weaken in 2020, as renewed Brexit uncertainty threaten to drag the economy into a recession.
UK manufacturers are crying out for some economic certainty, says Anna Leach, the CBI’s deputy chief economist.
Here’s her take on this morning’s worrying factory data: