Draghi defends ECB in Bild interview
Greek crisis escalating again....
Osborne: Investment being delayed by EU risks
Economists: Can’t just blame Brexit
Breaking: UK growth slows to 0.4%
Service sector grows, everything else shrinks
6.01pm BST
Another rise in the oil price helped lift stock markets, even though crude came off its best levels following a bigger than expected rise in US inventories.
UK GDP was in line with forecasts, while there was a positive reaction to a number of company results including Barclays and GlaxoSmithKline. Apple’s disappointing figures however left technology shares flagging, and investors remained cautious ahead of the latest rate setting meetings from the US Federal Reserve and the Bank of Japan. The final scores showed:
5.57pm BST
Citi has come up with forecasts for interest rates in the UK, eurozone and Japan:
Citi expects deeper neg rates for Eurozone & Japan. Sees ECB to cut depo rate to -0.5%, BOJ to cut pol rate to -0.5% pic.twitter.com/bBnEfMxW51
5.53pm BST
Here’s Reuters latest story on the situation between Greece and its creditors:
Greece accused the International Monetary Fund on Wednesday of undermining negotiations over the release of more bailout funds needed in the next few weeks to repay debt.
At issue is what measures Athens would take if it fails to reach fiscal targets by 2018. Creditors, including the IMF and European institutions, want those measures made law immediately.
4.47pm BST
More on Greece:
Tsipras & @eucopresident to speak again Thurs after today's call, says Greek PM's office. Tsipras wants EZ summit if no €group in next days
4.39pm BST
The interview closes with Draghi saying it will be his pleasure to go to the Bundestag.
4.37pm BST
On the prospect of Britain leaving the European Union, Draghi says:
I cannot and do not wish to believe that the British would vote to leave, because we are stronger together. But if they do, it should be clear: they would lose the benefits of the single market.
4.33pm BST
Draghi was also asked about Greece:
BILD: Mr Draghi, in your first interview with BILD four years ago, we spoke a lot about Greece. The country has still not got back on its feet, even though it has received hundreds of billions in emergency loans. When will the madness end?
Draghi: Clearly, last year was an economic setback for Greece. Now everyone is aware that there can be no growth without reforms. And what the country and its citizen need above all is growth. Greece has implemented many reforms in the past months and is committed to the path of reforms.
4.31pm BST
Ahead of a visit to the German parliament, ECB president Mario Draghi has given an interview to Bild newspaper.
Draghi has been criticised in Germany for the ECB’s low interest rate policy, which has affected the country’s savers, and has also been attacked by German finance minister Wolfgang Schäuble.
Draghi: We are well aware of the situation for savers. And it’s not only in Germany that people have to face low interest rates. But interest rates are low because growth is low and inflation is too low. Think about the alternative: if we raised rates now, it would be bad for the economy and we would unleash deflation, unemployment and recession. The interest on savings comes from growth, so the interest of savers is that inflation stabilises and growth becomes more robust. Besides, many savers benefit from low interest rates as they are also homebuyers, taxpayers, entrepreneurs and workers whose companies are benefiting.
BILD: In Germany the adverse effects are predominant. Making provision for retirement is becoming increasingly difficult…
One thing is clear: the ECB obeys the law, not the politicians. Or, as one of my predecessors put it, it is normal for politicians to comment on our actions. But it would be abnormal if we listened to them.
But we must be patient; investor confidence has not yet been fully restored. For two years, the economy in the euro area has been growing month by month, banks are lending and unemployment is steadily falling,. Meanwhile, euro area countries are now able to buy more German exports again, which, for German companies, is partly making up for the decline in trade with China. But it is a slow process because the crisis was more severe than anything we had since the Second World War.
Quite simple: when the economy is growing more strongly again and inflation rises closer to our objective. Low interest rates today will lead to higher rates tomorrow.
4.17pm BST
The US Treasury secretary undersecretary for international affairs, Nathan Sheets, has been speaking to a House financial committee, and made some comments on the situation in Greece. Reuters reports:
[He] said that Greece would not have access to the International Monetary Fund’s exceptional lending facilities in the next phase of its bailout, adding that the Treasury supports the IMF’s insistence that the bailout be restructured to make Greece’s debt sustainable with more reforms from Athens and debt relief from European lenders.
3.59pm BST
US CRUDE STOCKS rose +2.0 million bbl to 540.6 million bbl in what *should* be their seasonal peak last week or this pic.twitter.com/8R8O6BshS5
3.53pm BST
David Morrison, senior market strategist at SpreadCo said:
The latest crude inventories from the EIA showed a build of 2 million barrels last week... Crude fell sharply on the news. Yesterday the American Petroleum Institute reported a draw of nearly 1.1 million barrels in US inventories last week. Oil soared on the news as analysts had expected a build of 2.4 million barrels.
Both WTI and Brent are trading at their best levels since November last year. The trigger for the latest leg of this rally was talk of an output freeze by OPEC and non-OPEC producers. But all hopes for a deal collapsed ten days ago in Doha amid general recriminations. Nevertheless, crude has continued to push higher as analysts predict that supply and demand will come into balance earlier than previously calculated.
3.46pm BST
US crude stocks rose by more than expected last week, up by 2m barrels to 540.6m barrels.
Analysts had expected an increase of around 1.75m barrels, and the US Energy Information Administration said: “US crude oil inventories are at historically high levels for this time of year.”
EIA Weekly Oil Inventories (Apr 22)
Crude +2.00 Mln v +1.75 Mln exp, prev +2.08 Mln
Cushing +1.75 Mln v +0.24 Mln exp, prev -0.25 Mln
Gasoline +1.61 Mln v -1.00 Mln exp, prev -0.11 Mln
Distillate -1.70 Mln v -0.75 Mln exp, prev -3.55 Mln
3.16pm BST
More data for the US Federal Reserve to contemplate as they meet to discuss their latest views on interest rates and the economy.
Home sales rose by more than expected in March, according to the National Association of Realtors. Its pending home sales index climbed 1.4% month on month to 110.5, the highest level since last May and better than the 0.5% increase expected.
US Pending Home Sales Data (Mar)
Pending Home Sales M/M +1.4% v +0.5% exp, prev +3.4%
Pending Home Sales Y/Y +2.9% v +0.8% exp, prev +5.0%
Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March. This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth.
In the short-term, the healthy labor market and favorable borrowing costs should lead to sustained buyer demand and a durable pace of sales. However, Yun says the consequences from a failure to construct more single-family homes in recent years are starting to impact some top job producing markets, where endless supply shortages continue to limit choices for buyers and are driving up prices beyond what a growing share of households can comfortably afford.
“Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38 percent in the past three years,” adds Yun. “As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace.”
3.05pm BST
Apple is currently the biggest faller in the Dow Jones Industrial Average:
2.50pm BST
Despite European markets holding onto to their - slight - gains, Wall Street is slipping lower in early trading.
The Dow Jones Industrial Average is down 20 points or 0.11% while the S&P 500 has fallen 0.22% at the open and Nasdaq 0.66%.
2.42pm BST
And here (in Greek) is the call from Greek prime minister Alexis Tsipras for a European summit.
2.17pm BST
Here’s the statement from European Council president Donald Tusk:
.@eucopresident statement on #Greece and #Eurogroup https://t.co/kOXl2hjKXb
2.05pm BST
Buckle up, folks, the Greek debt crisis is roaring back over the horizon.
We have to avoid situation of renewed uncertainty for Greece. We need date for Eurogroup meeting in not distant future. In days, not weeks
Greece accused the International Monetary Fund on Wednesday of undermining efforts to broker an accord over its funding options, after talks on a review to unlock fresh bailout aid stalled.
Athens would be willing to discuss the introduction of a mechanism to automatically cut spending, Government Spokeswoman Olga Gerovasili said. Greece could not go beyond that, she said.
Juncker says contingency plan demanded by creditors to #Greece is both unreasonable & unconstitutional. #Greece crisis - Season 5, Episode 3
@Brenda_Kelly Game on. It's all kickin' off... #Greece pic.twitter.com/M047rDUWo5
Athens stock market drops 4.5% after reports that Greece wants an EU summit to discuss bailout... pic.twitter.com/7bSb5pE22A
Greek gov't spox Gerovasili says talks with lenders will continue later today at technical level #Greece
1.40pm BST
Here’s our news story on today’s UK slowdown:
Related: UK GDP growth slows to 0.4% in first quarter of 2016
1.18pm BST
There are some interesting developments around BHS today.
First up, Sky’s Mark Kleinman reports that the stricken high street retailer received a demand for £2.6m in unpaid VAT last week, shortly before it fell into administration.
Revealed: Bhs hit by £2.6m VAT demand from taxman days before collapse - with a further £10m due by the end of June. https://t.co/t13iJUQ5Li
Dominic Chappell tells @standardcity "I want to buy back BHS" and defends the Swedish transaction https://t.co/JBXsOQWeXv
12.59pm BST
Care to guess the fastest growing area of the UK economy in the last 25 years?
Royal Bank of Scotland have crunched the numbers, and report that management consulting and head office activities have swelled by 500% since 1990*
The changing shape of the UK economy. Here's the 20 fastest growing sectors since 1990. pic.twitter.com/fpOVu5t0iV
What we do a lot less of. Here's the 20 sectors of the UK economy with the biggest output falls since 1990. pic.twitter.com/4sZbGTToCn
12.20pm BST
There’s little cheer in the City today about the latest UK growth figures.
11.54am BST
It’s politically convenient for George Osborne to blame June’s EU referendum for weakness in the UK economy.
But economists are warning that the problems run deeper.
Firstly, the consumer economy is coming off the boil. Retail sales volumes have fallen for two consecutive months on the latest ONS data. Rising inflation later this year and into 2017 will take further steam out of the household-led recovery, as will signs of a softening in the labour market with some high profile companies announcing job cuts in recent weeks.
The UK´s international trade position is also a major concern. The current account data released last month showed a record high deficit of 7% of GDP at the end of last year - now greater than the fiscal deficit. Essentially, the country’s poor position on exports and overseas investments means that the UK is now borrowing a huge sum of money from the rest of the world each year. Unless financial markets respond to this and sterling sharply depreciates it is hard to see this being resolved anytime soon.
“Brexit anxiety could certainly be behind some of the slowdown in GDP growth, but the truth is the recovery remains lacklustre. Growth has failed to return to the pre-crisis trend on a sustained basis, and the government’s excessively tight fiscal policy is largely at fault.
“On top of that, wage growth is anaemic and the labour market appears to be slowing down, meaning the macro outlook is as uncertain as it has been for years.
11.33am BST
More gloom:
Amid the BHS and Tata Steel chaos, printing company Polestar has gone into administration with PwC. 1,500 jobs at risk
11.20am BST
In another worrying sign, UK retail sales have fallen at the fastest rate in four years.
The CBI reports that the recent cold weather hurt demand for clothes, footwear and leather good this month.
“Cold weather put a chill in sales of spring and summer ranges with a reported dip in retail sales in the year to April.
But with the near-term outlook for household spending holding up the sector expects a modest rise in sales next month.
11.03am BST
OECD chief Ángel Gurría is now warning reporters in London that the is “no economic upside” for the UK outside the EU.
It’s “delusional” to claim that Brexit would give Britain a stronger trading position, Gurría adds, warning that some firms would quit the UK.
Some unexpected personal insight from Gurria 'my wife and I still take baths together 42 yrs on' ... A little too much info
10.51am BST
The OECD has now joined the chorus of international bodies arguing against Brexit, claiming it will hit us in the pocket.
My colleague Larry Elliott reports:
The west’s leading economics thinktank has warned that a British decision to leave the EU in this summer’s referendum would cost each household £2,200 by the end of a decade and continue to impose “a persistent and rising shock” on the UK in the following years.
Adding its voice to negative assessments by the Treasury and the International Monetary Fund, the Paris-based Organisation for Economic Cooperation and Development said a so-called Brexit vote on 23 June would provide a major negative shock to Britain and have ripple effects on the rest of Europe.
Related: Brexit would cost UK households £2,200 by 2020, says OECD
10.35am BST
Britain’s economy has hit a ‘soft patch’, warns John Hawksworth, chief economist at PwC.
He blames:
...heightened uncertainties about the global economy at the start of the year, which hit the export-oriented manufacturing sector and also took the wind out of the sails of the key business and financial services sector, where growth slowed from 0.7% in the final quarter of 2015 to just 0.3% in the first quarter of 2016.
“Uncertainty about the EU referendum outcome may also have had an impact from late February onwards as it became clear there would be an early vote in June. This may have led to some delay in major investment decisions, as indicated by weak construction output in the first quarter.
UK economy hit a soft patch in early 2016 but @PwC_UK chief economist John Hawksworth is cautiously optimistic: https://t.co/iu2bYpBJvL #GDP
10.26am BST
Today’s report shows that growth in the business services and finance slowed to +0.3%, from +0.7% in the last quarter of 2013.
This is the main reason that total Services growth slowed from 0.8% to 0.6%, the ONS says.
10.09am BST
Ms Lee Hopley, chief economist at EEF, questions whether Brexit is really to blame:
The effects of global financial market volatility, stuttering world trade growth and challenges on the high street feel like more obvious explanations for the slowdown.
Still, referendum wobbles could make themselves felt in the coming months, highlighting the continuing downside risks for the economy this year”
10.01am BST
Here’s Chancellor George Osborne’s official response to the news that Britain’s economy is slowing....
“It’s good news that Britain continues to grow, but there are warnings today that the threat of leaving the EU is weighing on our economy.
“Investments and building are being delayed, and another group of international experts, the OECD, confirms British families would be worse off if we leave the EU.
9.56am BST
James Knightley of ING Bank fears that growth is continuing to weaken in the run-up to June’s referendum.
He says:
We suspect that second-quarter GDP growth will be even weaker given the threat of Brexit is negatively impacting business sentiment, leading to a reduction in risks appetite regarding hiring and investment decisions.
Indeed, unemployment actually rose in the three months to February while consumer confidence is also coming under pressure.
9.54am BST
City economist Alan Clarke, of Scotiabank, reckons we can’t blame Brexit fears for the economic slowdown, yet....
Instead, he argues that the financial market turbulence at the start of 2016 hurt confidence.
That is not to say that Brexit uncertainty won’t have an impact on GDP growth – it will.
However, this is likely to be visible via reduced investment and hiring and will show up in Q2 GDP. The first estimate of that will come out in late-July – a month after the actual vote.
9.48am BST
As predicted, the chancellor has claimed that uncertainty over Britain’s EU membership is hurting the economy:
GDP is up 0.4%. UK continues to grow but OECD warns today that threat of a vote to Leave the EU is weighing on economy
9.45am BST
ONS chief economist Joe Grice says:
“Today’s figures suggest growth has slowed as compared with the pace up to the middle of last year.
Services continue to underpin the economy but other sectors have shown falling output this quarter.
9.39am BST
Britain’s service sector was the only part of the economy to grow in the last quarter!
Manufacturing, building and farming all contracted, leaving the UK even more reliant on the already dominant service sector.
9.36am BST
9.30am BST
Breaking: UK economic growth has slowed to 0.4% in the first three months of this year.
That’s a sharp slowdown, compared to the 0.6% recorded between October and December last year.
9.14am BST
CNBC also predicts that Brexit fears are weighing on UK growth:
The UK economy is expected to post a sharp slowdown in growth in the first quarter amid concerns that a forthcoming vote on the country’s membership of the European Union is scaring investors and industry.
Market analysts believe that preliminary gross domestic product (GDP) estimates released on Wednesday morning will show a slowdown in the first quarter to 0.4 percent, down from 0.6 percent in the previous quarter.
UK GDP expected to show slowdown as Brexit fear bites https://t.co/dIwTCCATR2 pic.twitter.com/8nm91t4Dma
8.52am BST
Shares in Barclays have jumped almost 4% to the top of the London stock market leaderboard.
Although Barclays posted a 33% drop in pre-tax profits this morning, traders are encouraged that the bank has received approaches for its African business (former CEO Bob Diamond is interested, for starters)
Related: Barclays reports 25% profit slump and confirms interest in Africa arm
Strip out £374m charge in its non-core results, and #Barclays performance not so bad say analysts, ROE core = 9.9% pic.twitter.com/9HB7Tdv4V4
8.33am BST
Here’s what City economists are saying about this morning’s growth figures, due in an hour’s time.
Howard Archer of IHS Global insight, predicts EU referendum fears will knock back growth to 0.3% for the first quarter (down from 0.6%)
“In particular, this is expected to weigh down on business investment and employment, and it may well also limit consumers’ willingness to splash out on big-ticket items.
Muted global growth and recent financial market volatility will also hamper UK economic activity in the near term at least.”
We’ve got UK GDP data later this morning and with the Brexit effect having been seen in other Q1 metrics, this is likely to reflect badly on the headline figures but the market may well be willing to overlook any wobbles here, given the evolving sentiment.
UK Q1 GDP up at 9:30am - getting ready for the excuses that Brexit risk weighing on economy, even though global GDP has also slowed. #gbp
8.08am BST
The Organisation for Economic Co-operation and Development (OECD) has become the latest international body to warn Britain against leaving the EU.
They are publishing a new Brexit report this morning, but OECD chief Ángel Gurría has broken his own embargo and spilled the beans on the Today Programme.
In the end we come out saying “Why are we spending so much time, so much effort, so much talent, trying to find ways to compensate for a bad decision that you don’t have to take.
.@A_Gurria of @OECD on @BBCr4today says #Brexit would constitue a heavy tax on #UK households already being felt pic.twitter.com/B6uPCOWjUA
8.00am BST
If today’s growth figures are bad, you can expect George Osborne to blame Brexit fears.
Chancellor George Osborne is set to repeat his argument that the EU referendum is already weighing down the UK economy.
The key measure of economic growth - the GDP figure for the first three months of this year - will be released later today.
Slowing economy - Weaker Q1 GDP number expected at 930 - Chancellor has been pointing to EU Referendum effect https://t.co/OT2h1UVunU
7.47am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We’re about to get a fresh healthcheck on the UK economy, and the results may not be too pretty.
Related: Apple reports slowdown in iPhone sales and first revenue decline in 13 years
Rotten Apple: Stock plunges 8% on earnings, revenue miss https://t.co/9pCoAy4sun pic.twitter.com/lzcleHwsEo
Here we go again: @tsipras_eu set to ask @eucopresident for an emergency summit on #Greece @MNIEurozone https://t.co/YtmuCWVUhW
Related: Spain faces new elections in June after parties fail to form a government
Continue reading...