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You can find the current article at its original source at https://www.theguardian.com/business/live/2020/jan/31/french-gdp-shrinks-eurozone-gdp-economy-italy-business-live
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| Version 12 | Version 13 |
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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 |
| (about 1 hour 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 |
| Time for a quick recap | |
| Growth in the eurozone has almost fizzled out in the last quarter, hit by weak internal demand and a slowing global economy. | |
| Eurozone GDP only expanded by 0.1% in October-December, down from 0.3% in July-September. It’s the weakest performance since 2013, and raises the prospect that some countries will fall into recession this year. | |
| France disappointed, with GDP falling by 0.1% in Q4. Finance minister Bruno Le Maire blamed the protests that have hurt its economy in recent months. | |
| Italy was another laggard, shrinking by 0.3%. But Spain outperformed its neighbours, growing by 0.5%. | |
| Economists have warned that the eurozone could struggle this year, having been wounded by trade conflicts in recent quarters. | |
| But there are brighter signs in the UK, with mortgage approvals rising sharply in December. | |
| Global stock markets are falling again today, as the coronavirus crisis continues to alarm investors. | |
| Goldman Sachs has predicted that the efforts to contain the virus will knock China’s growth down to 5.5% this year, from 5.9%, with a small impact on the US economy too. | |
| Britain’s friends over the channel are threatening to block the rescue of British Steel. | |
| The French government aren’t happy about China’s Jingy Group buying British Steel - which owns a factory making steel tracks for France’s railways. | |
| Not a great advert for entante cordials after Brexit (due in 8 hours...) | |
| Brexit uncertainty may has hurt UK productivity and investment, and held back growth, but it hasn’t harmed David Cameron’s bank balance.... | |
| Coronavirus fears have hit Wall Street again. | |
| The Dow Jones industrial average has fallen by 264 points, or 0.9%, to 28,595 points. | |
| Energy firms Exxon Mobile and Chevron are leading the fallers. The oil price has been hit by forecasts of lower growth due to the epidemic which reached the UK today . | |
| The S&P 500 has lost 0.5%, and the tech-focused Nasdaq is 0.4% lower. | |
| Brad Bechtel of Jefferies reckons the market reaction is overdone: | |
| Newsflash: Airline manufacturer Airbus has ben hit with fines totalling €3.592 to cover a series of bribery cases. | Newsflash: Airline manufacturer Airbus has ben hit with fines totalling €3.592 to cover a series of bribery cases. |
| France’s financial prosecutor has just announced the penalties, which include more than €2bn to settle corruption charges in France. | France’s financial prosecutor has just announced the penalties, which include more than €2bn to settle corruption charges in France. |
| The planemaker has been investigated by French and British authorities for suspected corruption over jet sales dating back over a decade. It has also faced U.S. investigations over suspected violations of export controls. | The planemaker has been investigated by French and British authorities for suspected corruption over jet sales dating back over a decade. It has also faced U.S. investigations over suspected violations of export controls. |
| Back in the City, investment services platform Hargeaves Lansdown are the biggest FTSE 100 faller, down almost 7%. | Back in the City, investment services platform Hargeaves Lansdown are the biggest FTSE 100 faller, down almost 7%. |
| HL reported that its net new business declined 9% year-on-year in the last quarter. That’s partly due to the scandal around Neil Woodford’s funds, which HL had promoted as “best buy” options. | HL reported that its net new business declined 9% year-on-year in the last quarter. That’s partly due to the scandal around Neil Woodford’s funds, which HL had promoted as “best buy” options. |
| “Best avoid” would have been better advice, given the huge losses which investors face. | “Best avoid” would have been better advice, given the huge losses which investors face. |
| HL’s CEO, Chris Hill, says it has been a tough few months: | HL’s CEO, Chris Hill, says it has been a tough few months: |
| Paul Mumford, fund manager at Cavendish Asset Management, suggests 2020 will also be bumpy for Hargeaves Lansdown: | Paul Mumford, fund manager at Cavendish Asset Management, suggests 2020 will also be bumpy for Hargeaves Lansdown: |
| France’s finance minister has blamed the industrial action and protests against the French government for the slump in growth in the last quarter. | France’s finance minister has blamed the industrial action and protests against the French government for the slump in growth in the last quarter. |
| Insisting that the underlying economy is strong, Le Maire says: | Insisting that the underlying economy is strong, Le Maire says: |
| Le Maire has a point - as explained earlier, consumer spending and investment was still positive. The 0.1% drop in growth was due to businesses running down inventories. | Le Maire has a point - as explained earlier, consumer spending and investment was still positive. The 0.1% drop in growth was due to businesses running down inventories. |
| But, if those firms remain nervous, they could move onto cutting orders and axing staff.... | But, if those firms remain nervous, they could move onto cutting orders and axing staff.... |
| Capital Economics are also gloomy -- predicting that 2020 will be a weaker year than hoped. | Capital Economics are also gloomy -- predicting that 2020 will be a weaker year than hoped. |
| Christoph Weil, economist at Commerzbank, reckons the European Central Bank will be very concerned by the eurozone slowdown - which could spur it into more stimulus measures. | Christoph Weil, economist at Commerzbank, reckons the European Central Bank will be very concerned by the eurozone slowdown - which could spur it into more stimulus measures. |
| Weil says (via the FT): | Weil says (via the FT): |
| The eurozone growth slump is partly due to Donald Trump trade wars, says Barret Kupelian, senior economist at PwC. | The eurozone growth slump is partly due to Donald Trump trade wars, says Barret Kupelian, senior economist at PwC. |
| We don’t yet know how the UK fared in the last quarter; the most recent figures show 0.1% growth in September-November. | We don’t yet know how the UK fared in the last quarter; the most recent figures show 0.1% growth in September-November. |
| But Kupelian points out that the eurozone has actually outperformed the UK since the Brexit vote -- as Britain “missed out on the synchronised upswing in economic activity in 2016/17.” | But Kupelian points out that the eurozone has actually outperformed the UK since the Brexit vote -- as Britain “missed out on the synchronised upswing in economic activity in 2016/17.” |
| European stock markets are sliding again today, hit by the unexpectedly weak growth figures and the ongoing coronavirus crisis. | European stock markets are sliding again today, hit by the unexpectedly weak growth figures and the ongoing coronavirus crisis. |
| Every index is down, led by Italy (down 1.4%) and Spain (-1%). | Every index is down, led by Italy (down 1.4%) and Spain (-1%). |
| In London, the FTSE 100 is also suffering, down 60 points or 0.8% to a six-week low. | In London, the FTSE 100 is also suffering, down 60 points or 0.8% to a six-week low. |
| The news that Britain now has two coronavirus cases is also worrying traders (and the rest of the public too, I suspect). | The news that Britain now has two coronavirus cases is also worrying traders (and the rest of the public too, I suspect). |
| Josie Dent, Senior Economist at the CEBR, points out that France and Italy are now half-way into recession following their contractions last quarter. | Josie Dent, Senior Economist at the CEBR, points out that France and Italy are now half-way into recession following their contractions last quarter. |
| Here’s Reuters’ take on today’s growth reports: | Here’s Reuters’ take on today’s growth reports: |
| In another blow to households, inflation across the eurozone has picked up. | 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. | 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: | 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. | 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: |