Growth slowed to 1.9% in the fourth quarter of 2016 from 3.5% in the third, as weak exports weighed on the world’s largest economy
BT boss says Italian scandal is ‘under control’ as profits plunge
Tesco to buy Budgens owner Booker in £3.7bn deal
Tesco tops FTSE leader board as shares jump 10%
Philip Hammond: UK will respect EU rules as it seeks new trade deals
French consumer confidence hits a nine-year high
UK personal insolvencies jump 13% in 2016
That’s it for today. Thank you for reading the blog and for all the comments below the line.
Have a good weekend. AM
Kay Daniel Neufeld at the Centre for Economics and Business Research, looks back at the US economy under President Obama:
The mixed picture for GDP growth in 2016 has been characteristic of the economic performance of the outgoing Obama administration. Under Obama, the US managed to avoid a second Great Depression and embarked on a somewhat lacklustre recovery starting in 2010. But, although the economy added a fair amount of jobs and the economic situation of many US households has improved considerably after the crisis, some downsides remain.
Notably, the labour force participation rate has failed to pick up in line with what would be expected during the recovery of a sharp recession. Moreover, the US economy - similarly to the situation in the UK – is ailing from slow productivity growth. Most importantly, it seems that much of the increase in wages and job opportunities of the last six years has intensified already existing inequalities in the country.
The FTSE 100 is the only major European index making gains this afternoon, albeit small ones (up 8 points). Tesco is still the biggest riser, with shares up 10.5%.
Harm Bandholz, chief US economist at UniCredit Research is fairly positive about the outlook for the American economy.
We think that the economy is on track to expand by 2% to 2.25% in the first half of the year. Under the assumption that the new administration will pass a fiscal stimulus in time without derailing global trade, growth in the second half of 2017 will most likely be faster.
US markets have opened (very) slightly higher:
Ian Kernohan, economist at fund manager Royal London Asset Management, said the US economy could grow by more than 3% by 2018.
US GDP growth was estimated at 1.9% on an annualised basis in the final quarter of 2016, and just 1.6% for the calendar year. However, this relatively slow expansion was still sufficient to drive employment levels higher and unemployment lower, leading to a pick-up in wage growth.
Going forward, much will depend on the scale and timing of any fiscal stimulus by the new Trump administration, which could push US GDP growth to over 3% by 2018. We do not expect the Federal Reserve to raise interest rates again until May, when they will have greater visibility on the new administration’s plans.
US growth in 2016 overall was 1.6%, the slowest since 2011 and far weaker than the 2.6% growth achieved in 2015.
It was also a slower rate than the UK, which grew by 2% in 2016 - probably faster than any other G7 economy (we haven’t got all the figures yet).
Related: US economic growth slows to lowest rate since 2011
IG traders expect US markets to open higher
US Opening Calls:#DOW 20126 +0.13%#SPX 2299 +0.09%#NASDAQ 5159 +0.05%#IGOpeningCall
Rob Carnell, chief international economist at ING, says the slowdown in US growth will not deter the Federal Reserve from raising interest rates in March.
Q4 GDP of 1.9% is not a bad figure, when taken together with the unrevised 3.5% growth in Q3, and suggests that the US economy picked up momentum in the second half of the year.
With few shocks in the data, the main source of interest we think is the business investment figure, which rose by 3.1% (annualised quarter on quarter), following four quarters of declines.
Growth in the world’s largest economy was held back in the fourth quarter by plunging shipments of soybeans, which in turn dragged exports lower.
Household spending was a key driver of the 1.9% headline rate of economic growth, the US department of commerce said.
"The economy grew at a pace of 1.5 million per cent. Period." pic.twitter.com/2Fe5LafFSH
Breaking: Growth in the US slowed more than expected in the fourth quarter of 2016 to 1.9% from 3.5% in the third quarter.
Economists predicted growth of 2.2%. More soon.
Growth in the world’s largest economy slowed to 2.2% in the final quarter of 2016, from 3.5% in the third, figures out in less than an hour are expected to show.
It will provide investors with a steer on what shape the economy was in as Obama handed Trump the keys to the White House.
Failure to break the impasse of deadlocked bailout talks at Thursday’s Eurogroup meeting saw the Athens Stock Exchange shed 2.9% today with bank shares plummeting by more than 5%.
The next tranche of emergency funding from Greece’s third €86bn bailout hinges on the conclusion of a review by creditors of Greek progress on reforms.
Greek shares are down today after lack of progress between Greece and its fellow eurozone members at Thursday’s Eurogroup meeting.
Eurogroup President Jeroen Dijsselbloem called on Greece to move faster on reforms so that its creditors’ could return to Athens as soon as possible and resume negotiations about the next tranche of funding.
At presser #eurogroup @J_Dijsselbloem: quick finalisation of second review is in everybody's interest #greece
Dijsselbloem: We have encouraged #Greece & institutions to accelerate their work with a view to allow a return of the mission to Athens asap
Sticking with currencies, the European Central Bank has revealed that it withdrew about €17,000 worth of fake €500 bank notes from circulation in the second half of 2016.
Some 353,000 counterfeit euro banknotes were withdrawn from circulation in the second half of 2016, a slight increase compared with the first half of 2016 and 20.7% fewer than in the second half of 2015.
The number of counterfeits remains very low in comparison with the increasing number of genuine banknotes in circulation (over 19 billion during the second half of 2016).
Related: €500 'Bin Laden' banknotes to be axed
The pound has slipped from a five-week high this morning but is still on track for a weekly gain.
Investors have been encouraged by better-than-expected growth figures which showed the economy grew by 0.6% in the final quarter of 2016.
The number of individuals to be declared financially bust in 2013 rose 13% in 2016 to 90,930 (from 80,404).
The figures from the government’s Insolvency Service cover England and Wales.
While the government is rightly focused on those who are ‘just about managing’, these figures are a reminder that a smaller but growing number of households are not managing at all.
The rise in insolvencies in 2016 points to tougher times ahead for UK households. At National Debtline we are already seeing our busiest January in years, with calls up 17% on last January and a rise of 55% in the number people seeking advice online.
Not much sympathy for BT from blog readers commenting below the line... but shares are not suffering too much this morning, off 0.5%.
That said, they did fall off a cliff on Tuesday, down 21% wiping almost £8bn off the value of the company after the extent of the problems in Italy were laid bare. The share price graph tells the story:
Over in France, households don’t appear to be concerned about uncertainty surrounding elections, Brexit, the future of the eurozone, or anything else.
It is the first time since 2007 that French consumers have been that positive about the future. Consumer confidence has been improving since mid-2014, but it took until recently to see all components improving.
In January, consumers were particularly optimistic on the future of unemployment and on their purchase intentions, although their current capacity to save remains limited.
Here is our full story on the latest from BT, including a 37% slump in third-quarter profits.
Related: BT insists Italian scandal is under control as its profits plunge
Investors are clearly happy about Tesco’s £3.7bn deal with Booker. Tesco shares are now up almost 10%. Booker shares are up 16%.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says Tesco is taking “a bold new direction”.
The deal with Booker shows Tesco is not going to sit on its hands and wait for its dominant market position to slowly leak away to competitors.
The UK’s supermarkets are engaged in new strategies to cope with the brave new world, where the discounters have stolen market share and consumers have turned away from big superstores, preferring instead to do their shopping in convenience stores or on their mobile phones. Sainsbury bought Argos, Morrisons is flirting with Amazon, and now Tesco has revealed its plans to drive further growth.
Our instant reaction is that the Competition and Markets Authority will have a field day with this, as although Tesco is mainly a retailer in the UK and Booker a wholesaler, Tesco does own the One Stop convenience store chain that competes with Booker’s interest in symbol groups and convenience store retailing (via Premier and Londis etc), so it is by no means clear that the CMA will allow things to proceed very far without having a good look at the overlap.
The mystery behind Richard Cousins’ departure from Tesco has been solved...
Cousins, the chief executive of catering group Compass, quit as senior independent director of Tesco on 3 January just days before the supermarket chain revealed its Christmas trading figures.
Related: Richard Cousins' departure from Tesco board is a mystery
The John Lewis Partnership and pension trustee have agreed a 10-year plan to eliminate the pension deficit.
John Lewis reduced its defined benefit pension scheme to £479m (as at 31 March 2016), from a previous valuation of £840m.
Gavin Patterson, BT’s chief executive, has commented on what the accounting scandal might mean for his pay package (£5.3m last year):
[The issue is] for another day.
Some more comments from BT boss Gavin Patterson.
Frankly I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business.
The situation is now under control, we have already appointed new management and as you would expect we are proactively providing assistance for the Italian authorities.
Philip Hammond, UK chancellor, has arrived in Brussels for the Ecofin meeting of finance ministers.
Of course we want to strengthen our trade ties with the very many trade partners we have around the world. But we are very mindful of our obligations under the treaty and will follow them precisely.
Britain remains a fully engaged member of the European Union. We will continue to abide by the rules, regulations and the laws of the European Union for so long as we are members.
Most of Europe’s major markets are down in early trading. The FTSE 100 is the exception, but only just (up 5 points):
Tesco is at the top of the FTSE 100 leader board with shares up 8.3% after it revealed plans to by the food wholesaler, Booker, in a £3.7bn deal.
Back to Tesco’s deal to buy Booker...
Tesco’s chief executive Dave Lewis had this to say (he’s calling it a merger):
Tesco has made significant progress in turning around our UK retail business. This merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital.
Wherever food is prepared and eaten - ‘in home’ or ‘out of home’ - we will meet this opportunity with the widest choice and best service available.
Related: Tesco to buy Budgens and Londis owner Booker in £3.7bn deal
Also coming up...
Finance ministers of the European Union are gathering for the latest Ecofin meeting. We’ll bring you any interesting snippets from the sidelines.
Today’s first iteration of US Q4 GDP will be the final legacy of the Obama Presidency, and the economy that he has left for the new incumbent.
How the US economy performs from here will largely be down to Donald Trump, even if Obama laid the foundations.
Traders at IG in the City are predicting markets will open lower across Europe:
Our European opening calls:$FTSE 7159 down 2
$DAX 11839 down 9
$CAC 4858 down 9$IBEX 9493 down 20$MIB 19408 down 32
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some major corporate news this morning from two of the UK’s biggest firms.
Corrado is leaving the business, this happened on his watch.
BT has announced European chief Corrado Sciolla has left the company following accounting irregularities in its Italian division
We’ve undertaken extensive investigations into our Italian business, including an independent review by KPMG, and I am deeply disappointed with the unacceptable practices by some that we’ve found.
This has no place at BT, and it undermines the good work we’re doing elsewhere in the Group. We are committed to ensuring the highest standards across the whole of BT.