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| Eurozone growth slows sharply as French and Italian economies shrink – business live | Eurozone growth slows sharply as French and Italian economies shrink – business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news, as France’s economy contracts by 0.1% in the last quarter | Rolling coverage of the latest economic and financial news, as France’s economy contracts by 0.1% in the last quarter |
| In another blow to households, inflation across the eurozone has picked up. | |
| Consumer prices rose by 1.4% year-on-year in December, up from 1.3%, due to rising food, alcohol and tobacco prices. | |
| Some snap reaction to the eurozone slowdown: | |
| Newsflash: Growth across the eurozone, and the European Union, slowed sharply in the last quarter. | Newsflash: Growth across the eurozone, and the European Union, slowed sharply in the last quarter. |
| Eurozone and EU GDP both only rose by 0.1% in October-December, down from 0.3% in July-September, dragged down by Italy (-0.3%) and France (-0.1%). | Eurozone and EU GDP both only rose by 0.1% in October-December, down from 0.3% in July-September, dragged down by Italy (-0.3%) and France (-0.1%). |
| Economists had expected the eurozone to grow by 0.2% in the last quarter, in the face of weak global growth and trade tensions. | Economists had expected the eurozone to grow by 0.2% in the last quarter, in the face of weak global growth and trade tensions. |
| On an annual basis, the eurozone economy is only 1% larger than a year ago -- a weak performance. | On an annual basis, the eurozone economy is only 1% larger than a year ago -- a weak performance. |
| We don’t yet know how Germany, the region’s biggest economy, performed - that data comes out next month, as does UK GDP. | |
| Eurostat, which compiles the survey, adds: | Eurostat, which compiles the survey, adds: |
| In a fresh sign of a Boris Bounce, UK mortgage approvals have hit their highest level since mid-2017. | In a fresh sign of a Boris Bounce, UK mortgage approvals have hit their highest level since mid-2017. |
| Some 67,241 mortgages were signed off in December, up from 65,514 in November, and higher than expected. That may show the housing market is heating up, after being dragged back by Brexit uncertainty and political deadlock. | Some 67,241 mortgages were signed off in December, up from 65,514 in November, and higher than expected. That may show the housing market is heating up, after being dragged back by Brexit uncertainty and political deadlock. |
| City news: Aston Martin has been rescued in a £500m deal, partly funded by billionaire Lawrence Stroll. | City news: Aston Martin has been rescued in a £500m deal, partly funded by billionaire Lawrence Stroll. |
| As part of the deal, the luxury carmaker will enter Formula One (where Stroll’s son Lance currently wizzes about). | As part of the deal, the luxury carmaker will enter Formula One (where Stroll’s son Lance currently wizzes about). |
| Aston Martin is also tapping up its long-suffering shareholders through a rights issue, letting them buy new stock at £4 -- compared to the £19 they paid when it floated in 2018. Hopefully Aston Martin’s new F1 cars will do a little better. | Aston Martin is also tapping up its long-suffering shareholders through a rights issue, letting them buy new stock at £4 -- compared to the £19 they paid when it floated in 2018. Hopefully Aston Martin’s new F1 cars will do a little better. |
| While Europe’s economies stumble, the British pound is enjoying a little rally as the Brexit hour approaches. | While Europe’s economies stumble, the British pound is enjoying a little rally as the Brexit hour approaches. |
| Sterling is up around 0.3% this morning, hitting €1.192 against the euro for the first time since mid-December. | Sterling is up around 0.3% this morning, hitting €1.192 against the euro for the first time since mid-December. |
| The pound is benefitting from yesterday’s Bank of England decision to leave interest rates on hold, dashing expectations of a cut. | The pound is benefitting from yesterday’s Bank of England decision to leave interest rates on hold, dashing expectations of a cut. |
| Traders are also looking ahead to the UK’s trade negotiations. Prime minister Boris Johnson is expected to indicate on Monday that he will push for a basic trade deal based on that between the EU and Canada. Such a deal could be easier to agree by the end of the transition period in December. | Traders are also looking ahead to the UK’s trade negotiations. Prime minister Boris Johnson is expected to indicate on Monday that he will push for a basic trade deal based on that between the EU and Canada. Such a deal could be easier to agree by the end of the transition period in December. |
| But Downing Street has been warned that another crucial deal, with America, will be tricky.Kim Darroch, the outgoing British ambassador to Washington, has told the Guardian that Donald Trump will demand higher NHS drugs prices -- and questioned whether the UK can really negotiate with the US and EU at the same time.... | But Downing Street has been warned that another crucial deal, with America, will be tricky.Kim Darroch, the outgoing British ambassador to Washington, has told the Guardian that Donald Trump will demand higher NHS drugs prices -- and questioned whether the UK can really negotiate with the US and EU at the same time.... |
| https://www.theguardian.com/politics/2020/jan/31/trump-will-put-us-interests-first-in-trade-talks-says-kim-darroch-ambassador | https://www.theguardian.com/politics/2020/jan/31/trump-will-put-us-interests-first-in-trade-talks-says-kim-darroch-ambassador |
| Newsflash: Italy’s economy has also contracted, raising further concerns over the health of the eurozone. | Newsflash: Italy’s economy has also contracted, raising further concerns over the health of the eurozone. |
| Italian GDP shrank by 0.3% in the final three months of 2019, new figures show. That’s the worst quarterly performance since early 2013. | Italian GDP shrank by 0.3% in the final three months of 2019, new figures show. That’s the worst quarterly performance since early 2013. |
| ISTAT, Italy’s statistics body, blamed weak domestic demand, with industry and agriculture shrinking and services broadly flat. | ISTAT, Italy’s statistics body, blamed weak domestic demand, with industry and agriculture shrinking and services broadly flat. |
| Economists had expected the economy to stagnate, but not actually shrink, so this is a blow to Rome. | Economists had expected the economy to stagnate, but not actually shrink, so this is a blow to Rome. |
| On a year-on-year basis, GDP was unchanged compared to the fourth quarter of 2018 - further highlighting Italy’s weak economy. | On a year-on-year basis, GDP was unchanged compared to the fourth quarter of 2018 - further highlighting Italy’s weak economy. |
| With France also shrinking, this is turning into a bad morning for the eurozone.... | With France also shrinking, this is turning into a bad morning for the eurozone.... |
| Asia-Pacific stock markets have suffered fresh losses today, as traders continue to be gripped by coronavirus fears. | Asia-Pacific stock markets have suffered fresh losses today, as traders continue to be gripped by coronavirus fears. |
| South Korea’s KOSPI index continued to bear the brunt, down another 1.3% -- having lost around 2.8% on both Wednesday and Thursday following the Lunar new year. | South Korea’s KOSPI index continued to bear the brunt, down another 1.3% -- having lost around 2.8% on both Wednesday and Thursday following the Lunar new year. |
| With China’s markets still shut, Hong Kong lost another 0.5%. | With China’s markets still shut, Hong Kong lost another 0.5%. |
| Japan, though, rallied 0.5% - but still posted its worst weak in six months. | Japan, though, rallied 0.5% - but still posted its worst weak in six months. |
| It may not be all bad news for France. | It may not be all bad news for France. |
| Derek Halpenny of MUFG suggests growth could pick up this quarter, if firms restock after running down their inventories at the end of 2019: | Derek Halpenny of MUFG suggests growth could pick up this quarter, if firms restock after running down their inventories at the end of 2019: |
| Better news: Spain’s economy has grown by 0.5% in the last quarter of 2019 | Better news: Spain’s economy has grown by 0.5% in the last quarter of 2019 |
| That’s up from 0.4% in Q3, partly making up for France’s decline. | That’s up from 0.4% in Q3, partly making up for France’s decline. |
| Today’s weak French GDP report is a blow to Emmanuel Macron, says Bloomberg: | Today’s weak French GDP report is a blow to Emmanuel Macron, says Bloomberg: |
| European economists are disappointed to see that France’s economy has contracted. | European economists are disappointed to see that France’s economy has contracted. |
| UBS’s Filip Lipev says the GDP data is worst than expected, due to weak domestic demand....and a bad start to the day. | UBS’s Filip Lipev says the GDP data is worst than expected, due to weak domestic demand....and a bad start to the day. |
| Ludovic Subran, chief economist at Allianz, blames the anti-government strikes that have gripped Paris for many months: | Ludovic Subran, chief economist at Allianz, blames the anti-government strikes that have gripped Paris for many months: |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| France’s economy has suffered a shock contraction, raising fresh concerns about the heart of the Eurozone — on the day Britain leaves the EU. | France’s economy has suffered a shock contraction, raising fresh concerns about the heart of the Eurozone — on the day Britain leaves the EU. |
| French GDP contracted by 0.1% in the fourth quarter of 2019, new figures from statistics body INSEE show. That’s down from 0.3% growth in July-September, and much worse than the 0.2% forecast. | French GDP contracted by 0.1% in the fourth quarter of 2019, new figures from statistics body INSEE show. That’s down from 0.3% growth in July-September, and much worse than the 0.2% forecast. |
| The decline was driven by a slowdown in consumer spending, and a sharp drop in business investment growth.. Companies also ran down their inventory stocks, suggesting nervousness about the future. | The decline was driven by a slowdown in consumer spending, and a sharp drop in business investment growth.. Companies also ran down their inventory stocks, suggesting nervousness about the future. |
| Imports and exports both declined -- a worrying sign for the health of the economy. | Imports and exports both declined -- a worrying sign for the health of the economy. |
| President Macron will surely be concerned -- this is the first time France’s economy has contacted since he took office. | President Macron will surely be concerned -- this is the first time France’s economy has contacted since he took office. |
| INSES says: | INSES says: |
| France is the first major European country to post GDP figures for the last quarter, so this is a worrying sign - especially as Germany only narrowly avoided recession last year. | France is the first major European country to post GDP figures for the last quarter, so this is a worrying sign - especially as Germany only narrowly avoided recession last year. |
| It means France’s economy only grew by 1.2% in 2019, down from 1.7% in 2018. | It means France’s economy only grew by 1.2% in 2019, down from 1.7% in 2018. |
| We’ll find out later this morning how Italy fared, and then how the overall eurozone performed during the last quarter. | We’ll find out later this morning how Italy fared, and then how the overall eurozone performed during the last quarter. |
| Reaction to follow.... | Reaction to follow.... |
| The agenda | The agenda |
| 9am GMT: First estimate of Italian GDP for Q4 2019 | 9am GMT: First estimate of Italian GDP for Q4 2019 |
| 9.30am GMT: UK mortgage approvals figures for December | 9.30am GMT: UK mortgage approvals figures for December |
| 10am GMT: First estimate of Eurozone GDP for Q4 2019 | 10am GMT: First estimate of Eurozone GDP for Q4 2019 |