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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/jun/12/business-optimism-plunges-political-uncertainty-markets-ftse-sterling-business-live
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| Pound hits seven-month low as credit rating agencies warn of UK political uncertainty - business live | |
| (35 minutes later) | |
| 2.17pm BST | |
| 14:17 | |
| Pound hits seven-month low | |
| Ouch! The pound has just hit a new seven-month low against the euro, and is falling further against the dollar too. | |
| Sterling dropped as low as €1.1280, down almost one euro cent today. That’s its lowest level since last November. | |
| Sterling is also continuing to lose ground against the US dollar; it’s now down 0.5% at $1.2671- close to the eight-week low hit after the general election. | |
| The selloff comes as Theresa May government fails to show a great deal of strength and stability - with the Queen’s speech reportedly postponed. | |
| FXTM Vice President of Market Research, Jameel Ahmad, argues that the pound will suffer fresh losses as Brexit talks begin next week. He isn’t convinced that a move towards a ‘softer Brexit’ will provide much support. | |
| I personally still see downside risks for the Sterling and see the potential for the market to become encouraged towards selling in the likelihood that the UK is set to begin negotiations next week and looks very unprepared for such complex negotiations. | |
| The whole reason for the UK election in the first place was so that Theresa May would have more powers to influence the Brexit process, but not only has this play backfired, the UK looks more unprepared than ever to go head-to-head with the EU as it currently stands. I personally remain bearish on the Sterling. | |
| 1.38pm BST | 1.38pm BST |
| 13:38 | 13:38 |
| Carolyn Fairbairn, the director-general of the Confederation of British Industry, has also weighed in on the issue of EU migrants. | Carolyn Fairbairn, the director-general of the Confederation of British Industry, has also weighed in on the issue of EU migrants. |
| She warns that British firms can’t be expected to replace EU nationals with UK citizens, at a time when employment in Britain is already at record high levels. | She warns that British firms can’t be expected to replace EU nationals with UK citizens, at a time when employment in Britain is already at record high levels. |
| Fairbairn also told the Resolution Foundation’s conference that politicians need to concentrate on the economy again.. | Fairbairn also told the Resolution Foundation’s conference that politicians need to concentrate on the economy again.. |
| Head of @CBItweets Carolyn Fairbairn: "economy has rather been pushed to the sidelines in recent weeks and months" #brexitjobs | Head of @CBItweets Carolyn Fairbairn: "economy has rather been pushed to the sidelines in recent weeks and months" #brexitjobs |
| Fairbairn @CBItweets must work on improving practice day2day in firms. Focus on "how ppl treated and not the kind of contract they are on" | Fairbairn @CBItweets must work on improving practice day2day in firms. Focus on "how ppl treated and not the kind of contract they are on" |
| Our key #Brexit message here is simple, say's @cbicarolyn as she addresses @resfoundation pic.twitter.com/f0XzwKPkUB | Our key #Brexit message here is simple, say's @cbicarolyn as she addresses @resfoundation pic.twitter.com/f0XzwKPkUB |
| 1.06pm BST | 1.06pm BST |
| 13:06 | 13:06 |
| Speaking of EU migration.... | Speaking of EU migration.... |
| Good grief https://t.co/puxdxpDfDa pic.twitter.com/1cvbAW8CYW | Good grief https://t.co/puxdxpDfDa pic.twitter.com/1cvbAW8CYW |
| 1.02pm BST | 1.02pm BST |
| 13:02 | 13:02 |
| UK firms 'totally unprepared' for migration rules post-Brexit | UK firms 'totally unprepared' for migration rules post-Brexit |
| Britain’s businesses are “totally unprepared” for the drop in migration after Brexit, according to a new report from the Resolution Foundation today. | Britain’s businesses are “totally unprepared” for the drop in migration after Brexit, according to a new report from the Resolution Foundation today. |
| The think tank polled more than 500 UK businesses who employ EU workers, and found that 17% expect no change to the current system of freedom of movement for EU/EEA nationals to the UK. | The think tank polled more than 500 UK businesses who employ EU workers, and found that 17% expect no change to the current system of freedom of movement for EU/EEA nationals to the UK. |
| Another 30% believe this system will be maintained for anyone from the EU who arrives in Britain with a job offer. | Another 30% believe this system will be maintained for anyone from the EU who arrives in Britain with a job offer. |
| These are “totally unrealistic expectations”, warns Resolution, because: | These are “totally unrealistic expectations”, warns Resolution, because: |
| The Prime Minister in contrast has ruled out either option, stating that her government – rather than firms’ demand for workers – will control migrant numbers. The Conservative Manifesto recommitted the government to reducing net migration down to the tens of thousands. | The Prime Minister in contrast has ruled out either option, stating that her government – rather than firms’ demand for workers – will control migrant numbers. The Conservative Manifesto recommitted the government to reducing net migration down to the tens of thousands. |
| Firms are largely unprepared for any fall in the availability of migrant labour, says @stephenlclarke. Unrealistic expectations. #brexitjobs pic.twitter.com/6ptBaefU5H | Firms are largely unprepared for any fall in the availability of migrant labour, says @stephenlclarke. Unrealistic expectations. #brexitjobs pic.twitter.com/6ptBaefU5H |
| The report was presented to a conference in London today, which also heard that the UK agriculture sector needs tens of thousands of season workers each year. | The report was presented to a conference in London today, which also heard that the UK agriculture sector needs tens of thousands of season workers each year. |
| The National Farmers Union is urging the government to consider this issue during the Brexit talks: | The National Farmers Union is urging the government to consider this issue during the Brexit talks: |
| At event on jobs post Brexit, @NFUtweets says govt must look at requirements for seasonal workers & permanent workers for food and farming | At event on jobs post Brexit, @NFUtweets says govt must look at requirements for seasonal workers & permanent workers for food and farming |
| No growth in number of U.K.Born workers, seen EU workers leaving, clients having sleepless nights, says @manpower analyst #brexitjobs | No growth in number of U.K.Born workers, seen EU workers leaving, clients having sleepless nights, says @manpower analyst #brexitjobs |
| @barford100 at the NFU says the UK needs 80,000 seasonal workers to maintain current food output. #brexitjobs | @barford100 at the NFU says the UK needs 80,000 seasonal workers to maintain current food output. #brexitjobs |
| Very remote location of many farms and food manufacturing sites must be taken into account when considering who can work there. #brexitjobs | Very remote location of many farms and food manufacturing sites must be taken into account when considering who can work there. #brexitjobs |
| Or to put it another way, the people aren't always where the sheep are https://t.co/RjCARwyd0P | Or to put it another way, the people aren't always where the sheep are https://t.co/RjCARwyd0P |
| Updated | Updated |
| at 1.13pm BST | at 1.13pm BST |
| 12.41pm BST | 12.41pm BST |
| 12:41 | 12:41 |
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| 12.28pm BST | 12.28pm BST |
| 12:28 | 12:28 |
| Another dollop of uncertainty has just landed on our plates; Downing Street are hinting that the Queen’s Speech might not take place next Monday after all. | Another dollop of uncertainty has just landed on our plates; Downing Street are hinting that the Queen’s Speech might not take place next Monday after all. |
| Our political liveblogger Andrew Sparrow has just returned from the regular lobby briefing with Theresa May’s spokesman, and reports: | Our political liveblogger Andrew Sparrow has just returned from the regular lobby briefing with Theresa May’s spokesman, and reports: |
| The spokesman said that the new leader of the Commons, Andrea Leadsom, would be making a statement about the date of the Queen’s speech in due course. The spokesman would not say anymore, but he would not confirm that it will go ahead as planned on Monday next week. | The spokesman said that the new leader of the Commons, Andrea Leadsom, would be making a statement about the date of the Queen’s speech in due course. The spokesman would not say anymore, but he would not confirm that it will go ahead as planned on Monday next week. |
| It may be that the government has decided to delay it until it has agreed its deal with the DUP. | It may be that the government has decided to delay it until it has agreed its deal with the DUP. |
| A delay would be most unusual - and rather irksome for Queen Elizabeth II, who is expecting to spend most of next week at the Royal Ascot races. | A delay would be most unusual - and rather irksome for Queen Elizabeth II, who is expecting to spend most of next week at the Royal Ascot races. |
| Queen's Speech could be delayed despite already in HM's diary for 19th. No10: "There will be an update from the Leader of the House shortly" | Queen's Speech could be delayed despite already in HM's diary for 19th. No10: "There will be an update from the Leader of the House shortly" |
| If it's pushed back to later next week, HM would have to pull out of Royal Ascot (Tue-Fri)... and that could leave her very unamused. https://t.co/Z8mMhAoBBU | If it's pushed back to later next week, HM would have to pull out of Royal Ascot (Tue-Fri)... and that could leave her very unamused. https://t.co/Z8mMhAoBBU |
| 12.18pm BST | 12.18pm BST |
| 12:18 | 12:18 |
| Sterling has fallen against every other major currency today, according to Bloomberg, which explains: | Sterling has fallen against every other major currency today, according to Bloomberg, which explains: |
| The pound fell against all its Group-of-10 peers on the prospect of an unstable coalition government heading into Brexit talks with the European Union in a week’s time. | The pound fell against all its Group-of-10 peers on the prospect of an unstable coalition government heading into Brexit talks with the European Union in a week’s time. |
| Pound falls below $1.27 on the prospect of Brexit talks being led by an unstable government https://t.co/qx8RvnUmWY pic.twitter.com/Jbd7T2jCE3 | Pound falls below $1.27 on the prospect of Brexit talks being led by an unstable government https://t.co/qx8RvnUmWY pic.twitter.com/Jbd7T2jCE3 |
| 11.57am BST | 11.57am BST |
| 11:57 | 11:57 |
| Betfair reckon there’s a one-in-three chance that Britain will hold a second general election this year. | Betfair reckon there’s a one-in-three chance that Britain will hold a second general election this year. |
| Here are the latest odds: | Here are the latest odds: |
| Year of Next General Election | Year of Next General Election |
| 2017 3.0 (2/1 or 33% chance) | 2017 3.0 (2/1 or 33% chance) |
| 2018 4.0 (3/1 or 25% chance) | 2018 4.0 (3/1 or 25% chance) |
| 2019 4.9 (4/1) | 2019 4.9 (4/1) |
| 2020 8.8 (8/1) | 2020 8.8 (8/1) |
| 2021 9.4 (17/2) | 2021 9.4 (17/2) |
| 2022 7.6 (13/2) | 2022 7.6 (13/2) |
| They’ve also provided some odds for Theresa May’s likely replacement: | They’ve also provided some odds for Theresa May’s likely replacement: |
| Next Conservative Leader | Next Conservative Leader |
| Boris Johnson 3.4 (12/5) | Boris Johnson 3.4 (12/5) |
| David Davis 4.7 (7/2) | David Davis 4.7 (7/2) |
| Amber Rudd 9.0 (8/1) | Amber Rudd 9.0 (8/1) |
| Ruth Davidson 10.0 (9/1) | Ruth Davidson 10.0 (9/1) |
| Phillip Hammond 17.5 (16/1) | Phillip Hammond 17.5 (16/1) |
| Michael Gove 23.0 (22/1) | Michael Gove 23.0 (22/1) |
| 11.46am BST | 11.46am BST |
| 11:46 | 11:46 |
| Speculation that Theresa May might change her Brexit stance is propping up sterling, says Lee Hardman, currency analyst at MUFG. | Speculation that Theresa May might change her Brexit stance is propping up sterling, says Lee Hardman, currency analyst at MUFG. |
| “The rise of softer Brexit speculation is another reason why the pound has not declined more sharply following the UK general election result”. | “The rise of softer Brexit speculation is another reason why the pound has not declined more sharply following the UK general election result”. |
| More here: | More here: |
| Sterling dips as investors digest election’s Brexit fallout https://t.co/7c3FSJItLH | Sterling dips as investors digest election’s Brexit fallout https://t.co/7c3FSJItLH |
| 11.30am BST | 11.30am BST |
| 11:30 | 11:30 |
| Britain’s unstable political situation means the pound will remain volatile for some times, says investment bank JP Morgan. | Britain’s unstable political situation means the pound will remain volatile for some times, says investment bank JP Morgan. |
| It told its clients that: | It told its clients that: |
| The UK delivered another electoral surprise this week with the Conservative party losing its majority in Parliament. This means the Conservatives would be reliant on the Northern Irish DUP with its 10 seats to establish a thin parliamentary majority. This raises questions about PM May’s ability to deliver a hard Brexit given the desire in Northern Ireland for a frictionless border with the Republic of Ireland. | The UK delivered another electoral surprise this week with the Conservative party losing its majority in Parliament. This means the Conservatives would be reliant on the Northern Irish DUP with its 10 seats to establish a thin parliamentary majority. This raises questions about PM May’s ability to deliver a hard Brexit given the desire in Northern Ireland for a frictionless border with the Republic of Ireland. |
| For sterling rates, this means markets are likely to be caught between the opposing forces of political instability associated with a Conservative minority government, and a potential softening of the Brexit stance. | For sterling rates, this means markets are likely to be caught between the opposing forces of political instability associated with a Conservative minority government, and a potential softening of the Brexit stance. |
| 11.13am BST | 11.13am BST |
| 11:13 | 11:13 |
| Moody’s gloomy report on the UK’s election has knocked the pound, says Neil Wilson of ETX Capital: | Moody’s gloomy report on the UK’s election has knocked the pound, says Neil Wilson of ETX Capital: |
| “Sentiment around the pound took a bit of a dive in morning trading in London. After treading water around $1.274 for the last few days since the election, cable eased back below the $1.27 handle after Moody’s warned that the election result is ‘credit negative’ for the UK. | “Sentiment around the pound took a bit of a dive in morning trading in London. After treading water around $1.274 for the last few days since the election, cable eased back below the $1.27 handle after Moody’s warned that the election result is ‘credit negative’ for the UK. |
| This seems to have woken traders from their slumber and the pound is on the defensive as we start the week. It wouldn’t take much bad news from the UK political scene to force cable to take another leg lower. Still there is plenty of bid to catch on the way down as the dips are being viewed as short-term buying opportunities. | This seems to have woken traders from their slumber and the pound is on the defensive as we start the week. It wouldn’t take much bad news from the UK political scene to force cable to take another leg lower. Still there is plenty of bid to catch on the way down as the dips are being viewed as short-term buying opportunities. |
| Sentiment remains pretty bearish. As Moody’s points out there is a chance of a softer Brexit but we must also think there is a heightened risk of a cliff-edge exit from the EU.” | Sentiment remains pretty bearish. As Moody’s points out there is a chance of a softer Brexit but we must also think there is a heightened risk of a cliff-edge exit from the EU.” |
| 11.02am BST | 11.02am BST |
| 11:02 | 11:02 |
| Sterling is also dropping against the euro, losing 0.6% to €1.1322. | Sterling is also dropping against the euro, losing 0.6% to €1.1322. |
| On Friday it hit an eight-month low of €1.1285 before recovering a little. | On Friday it hit an eight-month low of €1.1285 before recovering a little. |
| 10.55am BST | 10.55am BST |
| 10:55 | 10:55 |
| Update: the pound had now dropped below $1.27, towards the eight-week low struck on Friday morning as the election results came in. | Update: the pound had now dropped below $1.27, towards the eight-week low struck on Friday morning as the election results came in. |
| 10.37am BST | 10.37am BST |
| 10:37 | 10:37 |
| Pound edging lower towards $1.27 now. pic.twitter.com/CAbGTAn9Z0 | Pound edging lower towards $1.27 now. pic.twitter.com/CAbGTAn9Z0 |
| 10.36am BST | 10.36am BST |
| 10:36 | 10:36 |
| The pound is dipping back towards $1.27, down 0.2% today, as investors analyse these warnings from Moody’s and S&P and wait for developments in Westminster. | The pound is dipping back towards $1.27, down 0.2% today, as investors analyse these warnings from Moody’s and S&P and wait for developments in Westminster. |
| Joshua Mahony, market analyst at IG, says the drop in business confidence, and the slowdown in household spending, are worrying the City: | Joshua Mahony, market analyst at IG, says the drop in business confidence, and the slowdown in household spending, are worrying the City: |
| This decline in economic indicators may have been a long time coming, yet with a weakened political mandate and Brexit negotiations about to start, it is likely that we will see the UK continue to struggle. | This decline in economic indicators may have been a long time coming, yet with a weakened political mandate and Brexit negotiations about to start, it is likely that we will see the UK continue to struggle. |
| The fallout from the UK election continues and will remain key to expectations for the pound. | The fallout from the UK election continues and will remain key to expectations for the pound. |
| Updated | Updated |
| at 11.40am BST | at 11.40am BST |
| 10.17am BST | 10.17am BST |
| 10:17 | 10:17 |
| Newsflash from the Bank of England: Andy Haldane, the BoE’s chief economist, has been reappointed to the Monetary Policy Committee. | Newsflash from the Bank of England: Andy Haldane, the BoE’s chief economist, has been reappointed to the Monetary Policy Committee. |
| That means Haldane will continue to vote on UK interest rates and the Bank’s stimulus programme until 2020. | That means Haldane will continue to vote on UK interest rates and the Bank’s stimulus programme until 2020. |
| News from @bankofengland : now election is out the way (sort of) reappointment of Andy Haldane to MPC for 3 more Yrs has been confirmed | News from @bankofengland : now election is out the way (sort of) reappointment of Andy Haldane to MPC for 3 more Yrs has been confirmed |
| It’s not a big surprise, but it is worth noting as Haldane is one of the most dovish members of the committee. | It’s not a big surprise, but it is worth noting as Haldane is one of the most dovish members of the committee. |
| Prospects of more QE in the UK and negative interest-rates nudge a bit higher... #BoE https://t.co/IdAnCrSjN0 | Prospects of more QE in the UK and negative interest-rates nudge a bit higher... #BoE https://t.co/IdAnCrSjN0 |
| 10.04am BST | 10.04am BST |
| 10:04 | 10:04 |
| Speaking of Brexit delays..... | Speaking of Brexit delays..... |
| #UK #BREXIT MINISTER DAVIS SAYS BREXIT TALKS WILL BEGIN NEXT WEEK BUT MAY NOT BE ON MONDAY 19 JUNE - RTRS | #UK #BREXIT MINISTER DAVIS SAYS BREXIT TALKS WILL BEGIN NEXT WEEK BUT MAY NOT BE ON MONDAY 19 JUNE - RTRS |
| The formal Brexit talks are due to begin on 19 June, the same day as the Queen’s speech.... | The formal Brexit talks are due to begin on 19 June, the same day as the Queen’s speech.... |
| 9.35am BST | 9.35am BST |
| 09:35 | 09:35 |
| Moody's: Election result is credit negative | Moody's: Election result is credit negative |
| Rating agency Moody’s has also issued a report on the UK election, and it’s not very cheery reading. | Rating agency Moody’s has also issued a report on the UK election, and it’s not very cheery reading. |
| It is titled: | It is titled: |
| “Election result heightens uncertainty over Brexit negotiations and increases fiscal risks, a credit negative”. | “Election result heightens uncertainty over Brexit negotiations and increases fiscal risks, a credit negative”. |
| And it warns that negotiating to leave the EU will now be a more complicated process. | And it warns that negotiating to leave the EU will now be a more complicated process. |
| Moody’s fears that those talks (which are due to start next week) may be delayed, or may not focus on “substantive issues” for a while as the Conservative Party tries to agree a deal with the Democratic Unionist Party. | Moody’s fears that those talks (which are due to start next week) may be delayed, or may not focus on “substantive issues” for a while as the Conservative Party tries to agree a deal with the Democratic Unionist Party. |
| Moody’s is also worried that Britain’s national debt will keep rising for longer, as the government wrestles with a slowing economy and the public backlash against austerity. That could be bad for Britain’s credit rating, which is currently Aa1 with Moody’s, one notch below AAA. | Moody’s is also worried that Britain’s national debt will keep rising for longer, as the government wrestles with a slowing economy and the public backlash against austerity. That could be bad for Britain’s credit rating, which is currently Aa1 with Moody’s, one notch below AAA. |
| But.... Moody’s also suspects that Theresa May (or her successor) will now steer away from a hard Brexit, which would be good for Britain’s credit rating. | But.... Moody’s also suspects that Theresa May (or her successor) will now steer away from a hard Brexit, which would be good for Britain’s credit rating. |
| Here are the key points from the report | Here are the key points from the report |
| Inconclusive election outcome will complicate and probably delay Brexit negotiations, a credit negative. The negotiations with the EU were due to begin on 19 June, but we now expect a delay to the start of those negotiations or at least a period during which no substantive issues will be discussed. The time frame for the UK’s withdrawal from the EU in March 2019 remains unchanged, reducing still further the time available to achieve the transition agreement needed to avoid a ‘hard’ Brexit. | Inconclusive election outcome will complicate and probably delay Brexit negotiations, a credit negative. The negotiations with the EU were due to begin on 19 June, but we now expect a delay to the start of those negotiations or at least a period during which no substantive issues will be discussed. The time frame for the UK’s withdrawal from the EU in March 2019 remains unchanged, reducing still further the time available to achieve the transition agreement needed to avoid a ‘hard’ Brexit. |
| We expect fiscal risks to increase because consolidation will have a lower priority, a credit negative. In our view, the budget deficit will increase this year and next, as the government reacts to the economic slowdown under way. The election outcome, with significant gains for the Labour Party which had campaigned for increased public spending, will likely be seen as a “vote against austerity”. The public debt ratio will rise further and for longer than we had expected, placing the UK among the few highly rated European sovereigns whose public debt is still rising. | We expect fiscal risks to increase because consolidation will have a lower priority, a credit negative. In our view, the budget deficit will increase this year and next, as the government reacts to the economic slowdown under way. The election outcome, with significant gains for the Labour Party which had campaigned for increased public spending, will likely be seen as a “vote against austerity”. The public debt ratio will rise further and for longer than we had expected, placing the UK among the few highly rated European sovereigns whose public debt is still rising. |
| However, the election outcome also means that the government may now consider “softer” Brexit options, which could be credit positive. While we still expect Brexit to happen and the “cliff” risk of sudden exit remains, the election result suggests an electoral shift away from the “hard” Brexit that the Prime Minister had ostensibly sought. Hence, a move towards “softer” versions of Brexit – potentially with continued access of some sort to the Single Market – might now be considered. | However, the election outcome also means that the government may now consider “softer” Brexit options, which could be credit positive. While we still expect Brexit to happen and the “cliff” risk of sudden exit remains, the election result suggests an electoral shift away from the “hard” Brexit that the Prime Minister had ostensibly sought. Hence, a move towards “softer” versions of Brexit – potentially with continued access of some sort to the Single Market – might now be considered. |
| And here’s a chart showing why Moody’s is worried about Britain’s national debt: | And here’s a chart showing why Moody’s is worried about Britain’s national debt: |