This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
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
The article has changed 17 times. There is an RSS feed of changes available.
| Version 14 | Version 15 |
|---|---|
| Pound hits seven-month low as UK political uncertainty hits markets - as it happened | |
| (35 minutes later) | |
| 4.42pm BST | |
| 16:42 | |
| Afternoon summary: Brexit worries haunt the markets | |
| Time for a quick recap | |
| Sterling has lost ground today as fresh signs of UK political instability rattled investors. The pound has hit a seven-month low against the euro and is close to an eight-week low against the US dollar. | |
| Here’s today’s lows: | |
| £1 = €1.1280, lowest since November 2016 | |
| £1 = $1.1265, close to the eight-week low set in Friday | |
| The selloff came as rumours swirled through Westminster that next Monday’s Queen’s Speech might be postponed. This has highlighted that Theresa May’s position in Downing Street remains vulnerable (and potentially creates a very awkward diary clash with the monarch’s duties at Royal Ascot.) | |
| Political insiders are also reporting that the cabinet is split, with some members pushing for a softer Brexit plan. | |
| Our second edition @EveningStandard has more on Cabinet splits + on the Queen's Speech delay before it was confirmed - quite extraordinary. pic.twitter.com/qKdcEHRR2d | |
| Business leaders have warned that confidence has been badly hit by the hung parliament delivered by last week’s general election, which has left May chasing some sort of deal with the Democratic Unionist Party, which won 10 seats in Northern Ireland. | |
| The Institute for Directors said: | |
| “It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy. | |
| The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new government. | |
| Rating agencies have weighed in too. Moody’s warned that the hung parliament was ‘credit negative’ for the UK; a hint that Britain’s credit rating could be downgraded. | |
| They said: | |
| Election result heightens uncertainty over Brexit negotiations and increases fiscal risks, a credit negative”. | |
| S&P’s chief economist predicted that UK growth would be hurt. | |
| Harvard University added to the mix, with a study finding that most businesses want to remain in the single market. | |
| The Resolution Foundation warned that UK firms are worryingly unprepared for migration curbs. | |
| Meanwhile on Wall Street, US technology giants are suffering a second day of losses, with the Nasdaq down 1% in early trading. Is it the end of the tech boom?... | |
| ...not necessarily! Chris Beauchamp of IG says: | |
| Attention is concentrated on the ongoing rout in US tech stocks. Having been such a one-way bet so far this year, this sudden turn to the downside will have caught out more than a few over-eager latecomers. | |
| However, those rushing to proclaim the demise of one of the big rallies of not only the past year but the past eight years too need to be careful – there will be plenty of dip buyers out there who have been waiting for a pullback of this kind of size. | |
| And in Europe, the markets have just closed for the day. | |
| The FTSE 100 shed 15 points, or 0.25%, to 7511 - failing to get any benefit from the cheaper pound. | |
| The the German DAX shed almost 1% and the French CAC lost 1.2% | |
| That’s all for tonight. Thanks for reading and commenting. GW | |
| Updated | |
| at 4.51pm BST | |
| 4.16pm BST | 4.16pm BST |
| 16:16 | 16:16 |
| Dr Mike Ellington of the University of Liverpool has written an interesting article on how sterling will suffer from the political crisis in Westminster. | Dr Mike Ellington of the University of Liverpool has written an interesting article on how sterling will suffer from the political crisis in Westminster. |
| He’s analysed UK economic uncertainty (measured by recording how many articles on economic and political unrest appear in the media each day), and tracked it against the value of the pound. | He’s analysed UK economic uncertainty (measured by recording how many articles on economic and political unrest appear in the media each day), and tracked it against the value of the pound. |
| He conclude that there is a ‘negative relationship’ between the two, with sterling suffering losses whenever | He conclude that there is a ‘negative relationship’ between the two, with sterling suffering losses whenever |
| It is clear that the negative relationship between policy uncertainty and the euro to sterling exchange rate is intensifying. This implies that increases in economic policy uncertainty are met with depreciations in the sterling to euro exchange rate running up to June 9, 2017. | It is clear that the negative relationship between policy uncertainty and the euro to sterling exchange rate is intensifying. This implies that increases in economic policy uncertainty are met with depreciations in the sterling to euro exchange rate running up to June 9, 2017. |
| This indicates that currency markets do not feel the government has a strong negotiation position for Brexit (otherwise sterling wouldn’t be so volatile). | This indicates that currency markets do not feel the government has a strong negotiation position for Brexit (otherwise sterling wouldn’t be so volatile). |
| Ellington concludes that this means trouble ahead.... | Ellington concludes that this means trouble ahead.... |
| This, coupled with May’s lack of support in the general election, should put her leadership into question, particularly when it comes to entering divorce talks with the EU. | This, coupled with May’s lack of support in the general election, should put her leadership into question, particularly when it comes to entering divorce talks with the EU. |
| The very fact that the domestic political landscape of the UK is shrouded by yet another layer of uncertainty suggests that economic policy, the exchange rate, and indeed the wider economy, is in for a rough ride. | The very fact that the domestic political landscape of the UK is shrouded by yet another layer of uncertainty suggests that economic policy, the exchange rate, and indeed the wider economy, is in for a rough ride. |
| Here’s the full piece: | Here’s the full piece: |
| Why the hung parliament spells economic turbulence for the UK economy | Why the hung parliament spells economic turbulence for the UK economy |
| 3.50pm BST | 3.50pm BST |
| 15:50 | 15:50 |
| UK business confidence slumps: Expert reaction | UK business confidence slumps: Expert reaction |
| The Institute of Director’s warning that UK business confidence has plunged since the general election has caused quite a stir. | The Institute of Director’s warning that UK business confidence has plunged since the general election has caused quite a stir. |
| Here’s some of the best reaction: | Here’s some of the best reaction: |
| Markus Kuger, senior economist at business services firm Dun & Bradstreet | Markus Kuger, senior economist at business services firm Dun & Bradstreet |
| “After the surprising election result, political and economic uncertainty in the UK has risen considerably. The election outcome looks set to further complicate the process of negotiating the UK’s departure from the EU, as the government only has a narrow majority in parliament – and even this looks vulnerable in the context of Conservative MPs’ widely differing views on post-Brexit UK-EU relations. Given the backdrop of an already slowing economy (the UK posted the lowest real GDP growth of all 28 EU economies in Q1 2017), it is not surprising that businesses are beginning to express a lack of confidence. We believe it’s highly unlikely that the first round of Brexit talks between the British government and the EU (scheduled for 19/20 June) will deliver more clarity or significant results. This means that companies will have to wait even longer to assess the impact of these negotiations on their business. | “After the surprising election result, political and economic uncertainty in the UK has risen considerably. The election outcome looks set to further complicate the process of negotiating the UK’s departure from the EU, as the government only has a narrow majority in parliament – and even this looks vulnerable in the context of Conservative MPs’ widely differing views on post-Brexit UK-EU relations. Given the backdrop of an already slowing economy (the UK posted the lowest real GDP growth of all 28 EU economies in Q1 2017), it is not surprising that businesses are beginning to express a lack of confidence. We believe it’s highly unlikely that the first round of Brexit talks between the British government and the EU (scheduled for 19/20 June) will deliver more clarity or significant results. This means that companies will have to wait even longer to assess the impact of these negotiations on their business. |
| “Our analysis indicates that uncertainty will remain high in the next 18 months, regardless of what happens in the wake of the election, and we are maintaining our risk rating of DB2d and our ‘deteriorating’ risk outlook for the UK economy. We predict that, in the long run, the election result could make a ‘hard’ Brexit - which we believe would be harmful for the British economy - impossible. | “Our analysis indicates that uncertainty will remain high in the next 18 months, regardless of what happens in the wake of the election, and we are maintaining our risk rating of DB2d and our ‘deteriorating’ risk outlook for the UK economy. We predict that, in the long run, the election result could make a ‘hard’ Brexit - which we believe would be harmful for the British economy - impossible. |
| Jenni Hibbert, Managing Partner for Financial Services Europe & Africa at executive headhunters Heidrick & Struggles | Jenni Hibbert, Managing Partner for Financial Services Europe & Africa at executive headhunters Heidrick & Struggles |
| “Worries about the future are not just relegated to those in financial services: we recently conducted a wide-ranging survey with hospitality CEOs, the UK’s fourth largest employer accounting for 180,000 businesses in the UK, with less than one in ten confident about the future and almost half describing themselves as concerned.” | “Worries about the future are not just relegated to those in financial services: we recently conducted a wide-ranging survey with hospitality CEOs, the UK’s fourth largest employer accounting for 180,000 businesses in the UK, with less than one in ten confident about the future and almost half describing themselves as concerned.” |
| 3.12pm BST | 3.12pm BST |
| 15:12 | 15:12 |
| Former UK shadow chancellor Ed Balls has also weighed in on Brexit today by co-authoring a report which found that a bad deal would be a disaster for the UK. | Former UK shadow chancellor Ed Balls has also weighed in on Brexit today by co-authoring a report which found that a bad deal would be a disaster for the UK. |
| A survey of small UK businesses by Harvard University found that “almost all” business leaders wanted to retain membership of the single market and customs union, to make it easier to keep trading with the EU. | A survey of small UK businesses by Harvard University found that “almost all” business leaders wanted to retain membership of the single market and customs union, to make it easier to keep trading with the EU. |
| Balls says: | Balls says: |
| “At the time of the referendum, many British companies thought that Brexit might lead to a reduced regulatory burden. But now they’re worried that if Britain leaves the single market and the customs union, the opposite will be true.” | “At the time of the referendum, many British companies thought that Brexit might lead to a reduced regulatory burden. But now they’re worried that if Britain leaves the single market and the customs union, the opposite will be true.” |
| Here’s the full story: | Here’s the full story: |
| Guardian report on our Harvard paper - why 'No Deal' is a disaster for jobs and business investment https://t.co/3z4CXtxX8B | Guardian report on our Harvard paper - why 'No Deal' is a disaster for jobs and business investment https://t.co/3z4CXtxX8B |
| During the election campaign, both the Labour and Conservative leadership said Britain would leave the single market after Brexit - in order to impose migration controls. | During the election campaign, both the Labour and Conservative leadership said Britain would leave the single market after Brexit - in order to impose migration controls. |
| However, Labour’s Brexit secretary, Sir Kier Starmer, has suggested today that the UK could stay inside the single market; a reminder that there are differing views on Brexit in both major parties... | However, Labour’s Brexit secretary, Sir Kier Starmer, has suggested today that the UK could stay inside the single market; a reminder that there are differing views on Brexit in both major parties... |
| 2.37pm BST | 2.37pm BST |
| 14:37 | 14:37 |
| Newsflash: Shares in tech companies are falling again at the start of trading on Wall Street. | Newsflash: Shares in tech companies are falling again at the start of trading on Wall Street. |
| The Nasdaq has shed 1%, losing 64 points to 6,143, at the start of trading. That adds to Friday’s 1.8% tumble, | The Nasdaq has shed 1%, losing 64 points to 6,143, at the start of trading. That adds to Friday’s 1.8% tumble, |
| Amazon, Alphabet/Google and Apple are all leading the fallers, as concerns grow that these tech giants have become overvalue. | Amazon, Alphabet/Google and Apple are all leading the fallers, as concerns grow that these tech giants have become overvalue. |
| Dow dips 20 points. Tech selloff continues with Nasdaq off 1%. Apple falls 3%. Google and Amazon each slip 2%. https://t.co/A9OlUXl3FI | Dow dips 20 points. Tech selloff continues with Nasdaq off 1%. Apple falls 3%. Google and Amazon each slip 2%. https://t.co/A9OlUXl3FI |
| 2.17pm BST | 2.17pm BST |
| 14:17 | 14:17 |
| Pound hits seven-month low | 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. | 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 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. | 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. | 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. | 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. | 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. | 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 |
| Sign up to our email | Sign up to our email |
| Guardian Business has launched a daily email. | Guardian Business has launched a daily email. |
| Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day. | Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day. |
| For your morning shot of financial news, sign up here: | For your morning shot of financial news, sign up here: |
| 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) |