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| UK economy 'stronger than expected' in February; ECB holds interest rates - business live | UK economy 'stronger than expected' in February; ECB holds interest rates - business live |
| (32 minutes later) | |
| Time for a recap. | |
| Fears that the Brexit crisis could drive the UK into a recession have eased today. New GDP figures showed that the British economy grew by 0.2% in December-February, as factory demand surged on the back of pre-Brexit stockpiling. | |
| UK economy grows as manufacturers stockpile before Brexit | |
| Economists say the economy is showing unexpected resilience...but a no-deal Brexit could yet spark a downturn. | |
| The news is a small boost for Theresa May, as she prepares to ask EU leaders for a longer Brexit extension. But while she just wants a couple of months, Europe could insist on a year! | |
| UK risks losing European commissioner role over Brexit delay | |
| The eurozone economy remains subdued, though, with European Central Bank chief Mario Draghi warning that risks remain to the downside. This has encouraged the ECB to leave interest rates on hold today, and probably for the rest of 2019 too. | |
| Draghi are keeping all options on the table.- overall Draghi on the soft side today, but overall not changing the grand scheme of ECB narrative currently.- tiering is not off the table. Def. part of their discussion. | |
| Draghi are keeping all options on the table.- overall Draghi on the soft side today, but overall not changing the grand scheme of ECB narrative currently.- tiering is not off the table. Def. part of their discussion. | |
| In the City, shares in security firm G4S are up 20% ahead of a possible takeover bid. | |
| Canada's Garda World considering a bid for outsourcer G4S | |
| Transport group Stagecoach are down 13%, though, after being banned from running several rail franchises in a row over pensions payments. | |
| Virgin trains will vanish from UK after ban on Stagecoach's bids | |
| Pharmaceutical firm Indivior are being crushed, though, down over 70% after being indicted by a US grand jury over charges of illegally profiting from the US opioid crisis. | |
| Indivior shares crash 74% after US charge over opioid scheme | |
| Back in the UK, the NIESR thinktank has predicted that Britain’s economy grew by 0.4% in the first three months of 2019. | Back in the UK, the NIESR thinktank has predicted that Britain’s economy grew by 0.4% in the first three months of 2019. |
| That’s based on this morning’s official GDP report for February, and ‘soft data’ from March. | That’s based on this morning’s official GDP report for February, and ‘soft data’ from March. |
| If NIESR are right, that would mean growth has accelerated in 2019 -- after the economy only expanded by 0.2% in October-December. | If NIESR are right, that would mean growth has accelerated in 2019 -- after the economy only expanded by 0.2% in October-December. |
| It’s not a sizzling growth rate, but it would certainly mean that the UK has continued to avoid recession. | It’s not a sizzling growth rate, but it would certainly mean that the UK has continued to avoid recession. |
| Garry Young, Head of Macroeconomic Modelling and Forecasting, says: | Garry Young, Head of Macroeconomic Modelling and Forecasting, says: |
| “The latest ONS data was better than we had expected, but recent survey evidence suggests that economic growth is likely to continue at a fairly modest pace for the first half of this year. | “The latest ONS data was better than we had expected, but recent survey evidence suggests that economic growth is likely to continue at a fairly modest pace for the first half of this year. |
| This reflects the impact of Brexit-related uncertainty and slower growth in the global economy outside of the United States. The near-term outlook for the UK economy continues to depend on the outcome of the Brexit negotiations”. | This reflects the impact of Brexit-related uncertainty and slower growth in the global economy outside of the United States. The near-term outlook for the UK economy continues to depend on the outcome of the Brexit negotiations”. |
| Draghi is then asked about Italy’s weak economy, after Rome slashed its 2019 growth forecast from 1% to just 0.2%. | Draghi is then asked about Italy’s weak economy, after Rome slashed its 2019 growth forecast from 1% to just 0.2%. |
| He says the move isn’t a surprise, and shows the need to boost growth in Italy...... without pushing up borrowing costs (that’s a criticism of its populist government, which spooked investors last year with its budget plans). | He says the move isn’t a surprise, and shows the need to boost growth in Italy...... without pushing up borrowing costs (that’s a criticism of its populist government, which spooked investors last year with its budget plans). |
| Draghi on Italy: "The data on the Italian economy didn’t come as a surprise. There have been already downgrades in the forecasts. So from this viewpoint it is not a surprise" (1/3) #Draghi #ECB | Draghi on Italy: "The data on the Italian economy didn’t come as a surprise. There have been already downgrades in the forecasts. So from this viewpoint it is not a surprise" (1/3) #Draghi #ECB |
| Draghi: "It is quite clear the priority is to restore growth and employment. Italy knows how to do it." (2/3) #Draghi #ECB | Draghi: "It is quite clear the priority is to restore growth and employment. Italy knows how to do it." (2/3) #Draghi #ECB |
| Draghi: "It is very important that these priorities are pursued without causing an increase in interest rates, because increases in interest rates are contractionary. That should be the aim of economic policy there." (3/3) #Draghi #ECB | Draghi: "It is very important that these priorities are pursued without causing an increase in interest rates, because increases in interest rates are contractionary. That should be the aim of economic policy there." (3/3) #Draghi #ECB |
| Q: Might you intervene and promote the merits of European Union in the run-up to European parliamentary elections? | Q: Might you intervene and promote the merits of European Union in the run-up to European parliamentary elections? |
| Draghi say that central banks don’t usually get involved in elections (with good reason!), and it wouldn’t be right to intervene. | Draghi say that central banks don’t usually get involved in elections (with good reason!), and it wouldn’t be right to intervene. |
| Draghi: Central banks don’t usually intervene in the political debate. On occasion the ECB can defend the European framework and point out ways to complete it and remedy weaknesses. | Draghi: Central banks don’t usually intervene in the political debate. On occasion the ECB can defend the European framework and point out ways to complete it and remedy weaknesses. |
| But on the broader point, the ECB president says the rise of global threats shows that European countries have “got to be together to be truly sovereign and masters of our destiny.” | But on the broader point, the ECB president says the rise of global threats shows that European countries have “got to be together to be truly sovereign and masters of our destiny.” |
| Q: European leaders may grant the UK a longer Brexit extension today - would you welcome this? | Q: European leaders may grant the UK a longer Brexit extension today - would you welcome this? |
| Draghi says it depends whether the UK leaves the EU in a managed way, or a disorderly one. There could be serious consequences for eurozone companies, and supply chains, depending how Brexit plays out. | Draghi says it depends whether the UK leaves the EU in a managed way, or a disorderly one. There could be serious consequences for eurozone companies, and supply chains, depending how Brexit plays out. |
| Brexit is part of a broader uncertainty hanging over the continent, he adds. | Brexit is part of a broader uncertainty hanging over the continent, he adds. |
| The risk of the eurozone falling into recession remains low, insists Mario Draghi, despite his earlier warning about weak economic data. | The risk of the eurozone falling into recession remains low, insists Mario Draghi, despite his earlier warning about weak economic data. |
| Piet P.H. Christiansen of Danske Bank agrees that Mario Draghi sounds cautiously dovish today. | Piet P.H. Christiansen of Danske Bank agrees that Mario Draghi sounds cautiously dovish today. |
| Draghi is overall on the soft side today. The assessment in inflation and growth are on the marginal soft side, i.e. more policy driven easing stance than data.TLTRO modalities will depend on the economic outlook and bank lending details | Draghi is overall on the soft side today. The assessment in inflation and growth are on the marginal soft side, i.e. more policy driven easing stance than data.TLTRO modalities will depend on the economic outlook and bank lending details |
| Donald Trump’s threats to impose tariffs on exports have hurt confidence in the eurozone, Draghi claims. | Donald Trump’s threats to impose tariffs on exports have hurt confidence in the eurozone, Draghi claims. |
| Draghi now referencing Trump threats. Just shows how much power Don's twitter has. One tweet on auto tariffs, along with those previously postulated, and that's it for Eurozone growth. | Draghi now referencing Trump threats. Just shows how much power Don's twitter has. One tweet on auto tariffs, along with those previously postulated, and that's it for Eurozone growth. |
| Draghi on Trump's protectionist threats: "Between words and deeds there is often a big gulf". Ouch! #Draghi #ECB | Draghi on Trump's protectionist threats: "Between words and deeds there is often a big gulf". Ouch! #Draghi #ECB |
| Asked about inflation expectations, president Draghi suggests that headline inflation may fall in the coming months. | Asked about inflation expectations, president Draghi suggests that headline inflation may fall in the coming months. |
| That’s quite a dovish statement, likely to weigh on the euro. | That’s quite a dovish statement, likely to weigh on the euro. |
| Draghi seems determined not to commit any news today. | Draghi seems determined not to commit any news today. |
| Asked about the upcoming TLTROs (cheap loans to eurozone banks), he says it’s “too early” to decide their terms. | Asked about the upcoming TLTROs (cheap loans to eurozone banks), he says it’s “too early” to decide their terms. |
| Draghi also says it’s too soon to decide whether to implement “tiering” for its negative interest rates (so that some banks excess reserves are exempt from the lowest rate) | Draghi also says it’s too soon to decide whether to implement “tiering” for its negative interest rates (so that some banks excess reserves are exempt from the lowest rate) |
| Mario Draghi ends his statement with his traditional call for more structural reforms in the euro area, and a renewed push to strengthen monetary union. | Mario Draghi ends his statement with his traditional call for more structural reforms in the euro area, and a renewed push to strengthen monetary union. |
| He makes this plea at every meeting, which gives you a clue about how much attention politicians pay to it. | He makes this plea at every meeting, which gives you a clue about how much attention politicians pay to it. |
| Striking a cautious note, Mario Draghi says that the risks to the eurozone economy remain tilted to the downside. | Striking a cautious note, Mario Draghi says that the risks to the eurozone economy remain tilted to the downside. |
| This has weakened the euro, and pushed investors into safe-haven German government debt, sending its price up and interest rate down: | This has weakened the euro, and pushed investors into safe-haven German government debt, sending its price up and interest rate down: |
| Mario Draghi speaks. German bunds listen. pic.twitter.com/5Ua1UROroA | Mario Draghi speaks. German bunds listen. pic.twitter.com/5Ua1UROroA |
| Draghi is now explaining that labour cost pressures in the eurozone have strengthened and broadened. | Draghi is now explaining that labour cost pressures in the eurozone have strengthened and broadened. |
| Good news for workers! | Good news for workers! |
| Draghi: wage pressures have strengthened | Draghi: wage pressures have strengthened |
| Mario Draghi warns that information received since the ECB’s last meeting has confirmed that eurozone growth has slowed. | Mario Draghi warns that information received since the ECB’s last meeting has confirmed that eurozone growth has slowed. |
| He blamed external factors (perhaps US-China trade wars, or Brexit?), plus specific problems in certain countries and sectors. | He blamed external factors (perhaps US-China trade wars, or Brexit?), plus specific problems in certain countries and sectors. |
| #Draghi says #ECB stands ready to adjust all monetary policy instruments as necessary. Says information since March meeting confirms slower growth. Says some domestic factors dampening Eurozone growth starting to fade but global headwinds continue to weigh | #Draghi says #ECB stands ready to adjust all monetary policy instruments as necessary. Says information since March meeting confirms slower growth. Says some domestic factors dampening Eurozone growth starting to fade but global headwinds continue to weigh |
| Over in Frankfurt, ECB president Mario Draghi is holding a press conference following today’s governing council meeting. | Over in Frankfurt, ECB president Mario Draghi is holding a press conference following today’s governing council meeting. |
| He confirms that the European Central Bank will leave interest rates on hold until at least the end of 2019. | He confirms that the European Central Bank will leave interest rates on hold until at least the end of 2019. |
| But what about the ECB’s new TLTRO loans (a new stimulus measure announced last month)? | But what about the ECB’s new TLTRO loans (a new stimulus measure announced last month)? |
| Draghi says details will be communicated at a forthcoming meeting (very helpful...), and that the ECB is looking into whether banks need more help to cope with negative interest rates. | Draghi says details will be communicated at a forthcoming meeting (very helpful...), and that the ECB is looking into whether banks need more help to cope with negative interest rates. |
| Back in the markets, the prospect of a takeover bid has sent shares in outsourcing firm G4S surging by almost 30%. | Back in the markets, the prospect of a takeover bid has sent shares in outsourcing firm G4S surging by almost 30%. |
| Canadian security firm Garda World has told the stock market that it is the “preliminary stages of considering an approach to the board of G4S regarding a possible cash offer” for G4S, or some parts of the company. | Canadian security firm Garda World has told the stock market that it is the “preliminary stages of considering an approach to the board of G4S regarding a possible cash offer” for G4S, or some parts of the company. |
| Garda World was forced to break cover by the Evening Standard, which reported its interest this morning. | Garda World was forced to break cover by the Evening Standard, which reported its interest this morning. |
| The Standard’s Simon English wrote rather gloriously: | The Standard’s Simon English wrote rather gloriously: |
| G4S’s treatment of its 570,000 staff, or ability to stop its vans being hijacked by armed gangs, might not win any awards, but City sources say that under different management it could be a cash machine. | G4S’s treatment of its 570,000 staff, or ability to stop its vans being hijacked by armed gangs, might not win any awards, but City sources say that under different management it could be a cash machine. |
| Headlines dubbing it “incompetent”, “amateurish” and “irresponsible” haven’t put the Canadians off, says the man in the City boozer who gets it right three times out of five, making him more reliable than G4S. | Headlines dubbing it “incompetent”, “amateurish” and “irresponsible” haven’t put the Canadians off, says the man in the City boozer who gets it right three times out of five, making him more reliable than G4S. |
| City reaction to the European Central Bank’s interest rate decision is muted. | City reaction to the European Central Bank’s interest rate decision is muted. |
| Naeem Aslam, chief market analyst of Think Markets, says: | Naeem Aslam, chief market analyst of Think Markets, says: |
| The ECB left the powder dry once again and the reason that the Euro is still in the positive territory is because a lot of bad news was already baked into the price. | The ECB left the powder dry once again and the reason that the Euro is still in the positive territory is because a lot of bad news was already baked into the price. |
| So, the ECB had to make significant changes to its monetary policy to push the euro lower (which we have not seen). All eyes will be on Draghi now, and if he adopts overly pessimistic tone, we could see the euro moving lower against the dollar | So, the ECB had to make significant changes to its monetary policy to push the euro lower (which we have not seen). All eyes will be on Draghi now, and if he adopts overly pessimistic tone, we could see the euro moving lower against the dollar |
| Foreign exchange consultant Marc-André Fongern of MAF Global Forex also sees little drama. | Foreign exchange consultant Marc-André Fongern of MAF Global Forex also sees little drama. |
| The most boring central bank acts soporific once again. The fact that the ECB sees ‘rates a present levels at least through the end of 2019’ should dampen any optimistic views on the Euro! | The most boring central bank acts soporific once again. The fact that the ECB sees ‘rates a present levels at least through the end of 2019’ should dampen any optimistic views on the Euro! |
| Bloomberg’s Lorcan Roche Kelly suggests the ECB is getting into the summer spirit early: | Bloomberg’s Lorcan Roche Kelly suggests the ECB is getting into the summer spirit early: |
| Does the @ecb think it's August or something? | Does the @ecb think it's August or something? |
| We’ll keep an eye on ECB president Mario Draghi’s press conference, starting in 20 minutes, for any extra drama. | We’ll keep an eye on ECB president Mario Draghi’s press conference, starting in 20 minutes, for any extra drama. |