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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) | |
| Striking a cautious note, Mario Draghi says that the risks to the eurozone economy “remain 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: | |
| 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. | |
| Good news for workers! | |
| Draghi: wage pressures have strengthened | |
| 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. | |
| #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. | |
| 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)? | |
| 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%. | |
| 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. | |
| 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. | |
| 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. |
| Newsflash: The European Central Bank has pledged to leave interest rates unchanged until at least the end of 2019. | Newsflash: The European Central Bank has pledged to leave interest rates unchanged until at least the end of 2019. |
| The ECB’s governing council has also voted to leave borrowing costs at their current record lows - no surprise, given the weak growth seen in the eurozone recently. | The ECB’s governing council has also voted to leave borrowing costs at their current record lows - no surprise, given the weak growth seen in the eurozone recently. |
| That means the benchmark interest rate remains at zero, while banks will be charged negative interest rates for leaving money with the central bank rather than lending it. | That means the benchmark interest rate remains at zero, while banks will be charged negative interest rates for leaving money with the central bank rather than lending it. |
| The ECB says: | The ECB says: |
| At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. | At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. |
| The Governing Council expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. | The Governing Council expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. |
| Monetary policy decisions https://t.co/JXLNGkOx96 | Monetary policy decisions https://t.co/JXLNGkOx96 |
| The BBC’s Katie Hile has a tasty example of Brexit stockpiling - a London bakery which has been stacking up on cream cheese in case of supply problems: | The BBC’s Katie Hile has a tasty example of Brexit stockpiling - a London bakery which has been stacking up on cream cheese in case of supply problems: |
| What’s going on with #Brexit stockpiling? We’ve been to @lolascupcakes in Harlesden where they’ve spent more than £30k and ordered 10 times their usual order of German cream cheese. Have a watch @BBCNews at 1pm @BBCBusiness @KatyAustinNews pic.twitter.com/r3VPzRdXD8 | What’s going on with #Brexit stockpiling? We’ve been to @lolascupcakes in Harlesden where they’ve spent more than £30k and ordered 10 times their usual order of German cream cheese. Have a watch @BBCNews at 1pm @BBCBusiness @KatyAustinNews pic.twitter.com/r3VPzRdXD8 |
| Britain has suffered a slump in exports to countries outside the EU -- helping to worsen the UK’s persistent trade gap with the rest of the world. | Britain has suffered a slump in exports to countries outside the EU -- helping to worsen the UK’s persistent trade gap with the rest of the world. |
| The total trade deficit (both goods and services) widened by £5.5bn in the three months to February 2019, data released this morning shows. | The total trade deficit (both goods and services) widened by £5.5bn in the three months to February 2019, data released this morning shows. |
| That includes a £6.5bn increase in the goods deficit -- £1.3bn with EU countries and £5.2bn with non-EU countries during the quarter. | That includes a £6.5bn increase in the goods deficit -- £1.3bn with EU countries and £5.2bn with non-EU countries during the quarter. |
| The ONS explains that falling sales of UK cars was a factor: | The ONS explains that falling sales of UK cars was a factor: |
| Exports to non-EU countries decreased £3.1 billion, while imports from non-EU countries increased £2.1 billion in the three months to February 2019. Falling exports to non-EU countries were due largely to falling exports of fuels, and machinery and transport equipment. | Exports to non-EU countries decreased £3.1 billion, while imports from non-EU countries increased £2.1 billion in the three months to February 2019. Falling exports to non-EU countries were due largely to falling exports of fuels, and machinery and transport equipment. |
| Exports of fuels fell £1.2 billion while exports of machinery and transport equipment fell £1.1 billion, £1.0 billion of which was a result of falling car exports. | Exports of fuels fell £1.2 billion while exports of machinery and transport equipment fell £1.1 billion, £1.0 billion of which was a result of falling car exports. |
| The NIESR thinktank (which will release its own GDP forecasts later today) says UK growth looks “modest”: | The NIESR thinktank (which will release its own GDP forecasts later today) says UK growth looks “modest”: |
| The latest ONS #GDP data was better than we had expected, but recent survey evidence suggests that the #economicgrowth is likely to continue at a fairly modest pace for the first half of this year. Look out for our new #NIESRGDP Tracker at at 2pm... | The latest ONS #GDP data was better than we had expected, but recent survey evidence suggests that the #economicgrowth is likely to continue at a fairly modest pace for the first half of this year. Look out for our new #NIESRGDP Tracker at at 2pm... |
| John Hawksworth, chief economist at PwC, believes that stockpiling, and solid consumer demand, have helped Britain’s economy survive the political deadlock over Brexit. | John Hawksworth, chief economist at PwC, believes that stockpiling, and solid consumer demand, have helped Britain’s economy survive the political deadlock over Brexit. |
| Here’s his take on today’s growth report: | Here’s his take on today’s growth report: |
| “Despite ongoing uncertainty over Brexit, the UK economy held up relatively well in February, with GDP growth of 0.2% compared to January. Services continued to grow at a moderate pace, while manufacturing output seems to have been boosted to some degree by pre-Brexit stockpiling since January. | “Despite ongoing uncertainty over Brexit, the UK economy held up relatively well in February, with GDP growth of 0.2% compared to January. Services continued to grow at a moderate pace, while manufacturing output seems to have been boosted to some degree by pre-Brexit stockpiling since January. |
| The underlying trend over the past three months has been for GDP growth at an annualised rate of just over 1%. This is below trend and well down on the buoyant growth rates seen last summer, but there are no signs that Brexit-related uncertainty has pushed the economy as a whole into recession. | The underlying trend over the past three months has been for GDP growth at an annualised rate of just over 1%. This is below trend and well down on the buoyant growth rates seen last summer, but there are no signs that Brexit-related uncertainty has pushed the economy as a whole into recession. |
| The main reason why the economy has held up is that while business investment has been falling over the past year, consumer spending has fared much better on the back of continued strong jobs growth and a steady pick-up in real earnings growth. | The main reason why the economy has held up is that while business investment has been falling over the past year, consumer spending has fared much better on the back of continued strong jobs growth and a steady pick-up in real earnings growth. |
| The signs are that, if current uncertainties over Brexit can be resolved in an orderly way, paving the way for a recovery in business investment, then UK growth could pick up later this year and into 2020. On this basis, our main scenario is for UK GDP growth of 1.1% in 2019 and 1.6% in 2020.” | The signs are that, if current uncertainties over Brexit can be resolved in an orderly way, paving the way for a recovery in business investment, then UK growth could pick up later this year and into 2020. On this basis, our main scenario is for UK GDP growth of 1.1% in 2019 and 1.6% in 2020.” |
| Take note, borrowers. Economist Sam Tombs of City firm Pantheon suspects today’s GDP report increases the chances of a Bank of England interest rate rise during 2019. | Take note, borrowers. Economist Sam Tombs of City firm Pantheon suspects today’s GDP report increases the chances of a Bank of England interest rate rise during 2019. |
| "Resilience puts renewed pressure on the #MPC to hike rates this year." @samueltombs on U.K. #GDP, February #PantheonMacro | "Resilience puts renewed pressure on the #MPC to hike rates this year." @samueltombs on U.K. #GDP, February #PantheonMacro |
| Despite growing in February, Britain’s construction output has shrunk by 0.6% over the last quarter. | Despite growing in February, Britain’s construction output has shrunk by 0.6% over the last quarter. |
| Clive Docwra, managing director of construction consulting and design agency McBains, fears the sector will keep struggling this year. | Clive Docwra, managing director of construction consulting and design agency McBains, fears the sector will keep struggling this year. |
| “Given the continuing “will-we, won’t we” saga of when the UK will be leaving the EU, today’s figures buck the trend we were expecting. However, although there was moderate growth in February, the general trend is of slowing growth since mid-2018. | “Given the continuing “will-we, won’t we” saga of when the UK will be leaving the EU, today’s figures buck the trend we were expecting. However, although there was moderate growth in February, the general trend is of slowing growth since mid-2018. |
| “Indeed, the long term outlook is even gloomier as a weak UK economy, volatile pound and worries over the long term impact of Brexit mean caution from investors is the watchword, as evidenced by a fall in private commercial new work. We expect that will translate into a continued, more serious, contraction for the sector over the coming months.” | “Indeed, the long term outlook is even gloomier as a weak UK economy, volatile pound and worries over the long term impact of Brexit mean caution from investors is the watchword, as evidenced by a fall in private commercial new work. We expect that will translate into a continued, more serious, contraction for the sector over the coming months.” |
| 0.6% fall in construction output in the three months to February 2019. Both all new work (-0.4%) and repair & maintenance (-1.0%) saw decreases https://t.co/qJHYTd0hOW pic.twitter.com/MJeHWJBU8m | 0.6% fall in construction output in the three months to February 2019. Both all new work (-0.4%) and repair & maintenance (-1.0%) saw decreases https://t.co/qJHYTd0hOW pic.twitter.com/MJeHWJBU8m |
| Once again the initial estimate of #GDP was stronger than the survey evidence had suggested, providing a reassuring sign that up to February at least, the economy weathered the #Brexit chaos and overseas slowdown well. pic.twitter.com/mJWoKLqFdH | Once again the initial estimate of #GDP was stronger than the survey evidence had suggested, providing a reassuring sign that up to February at least, the economy weathered the #Brexit chaos and overseas slowdown well. pic.twitter.com/mJWoKLqFdH |
| Andy Bruce of Reuters has spotted fresh signs that Britain’s financial services sector is struggling: | Andy Bruce of Reuters has spotted fresh signs that Britain’s financial services sector is struggling: |
| Hardly controversial to say that finance has struggled since the Brexit vote.On 3m/3m basis, it's been 22 months since the sector saw growth pic.twitter.com/HYSWXn1zil | Hardly controversial to say that finance has struggled since the Brexit vote.On 3m/3m basis, it's been 22 months since the sector saw growth pic.twitter.com/HYSWXn1zil |
| Despite Brexit stockpiling, Britain’s manufacturing sector is still smaller than before the financial crisis, points out Newsnight’s Ben Chu: | Despite Brexit stockpiling, Britain’s manufacturing sector is still smaller than before the financial crisis, points out Newsnight’s Ben Chu: |
| Level of UK manufacturing output still lower than it was more than 10 years ago. #lostdecade pic.twitter.com/m2gioCqODC | Level of UK manufacturing output still lower than it was more than 10 years ago. #lostdecade pic.twitter.com/m2gioCqODC |
| UK manufacturing grew by 0.9% in February according to the @ONS today. But the level of output STILL remains below where it was 11 years ago.... pic.twitter.com/bB7ItsoADx | UK manufacturing grew by 0.9% in February according to the @ONS today. But the level of output STILL remains below where it was 11 years ago.... pic.twitter.com/bB7ItsoADx |