The greatest trouble with Soft Brexit is the fact that it isn’t attainable

In the very first of two extracts using their new book, Liam Halligan and Gerard Lyons repeat the generally held thought that Britain are the best off within the single market and customs union is misconceived

There’s been much talk of “Hard Brexit” versus “Soft Brexit”. Such labels are ubiquitous over these Article 50 negotiations – used freely through the broadcast media – yet they’re partisan and deeply misleading. Hard Brexit makes departing the Eu seem extreme and damaging, suggesting isola­tion along with a bleak economic future. Soft Brexit, on the other hand, conveys an appropriate, ongoing relationship using the EU, with Britain still “part from the club”.

Departing the only market and also the customs union is easy Brexit – whether or not the name is deliberately created to seem painful. It’s just Brexit. Remaining within the EU’s two primary legal constructs, meanwhile, isn’t a harmonious Soft Brexit. It amounts, rather, to some deliberate and cynical failure to apply the 2016 referendum result.

Government wins vote on EU Withdrawal BillGovernment wins election on EU Withdrawal Bill 00:42

A political narrative is promoting that Britain would clearly be much better off remaining within the single market and customs union. As a result, anybody attempting to really implement Brexit, by departing both, is viewed to become obsessed just with sovereignty and immigration – and eager for that economy to suffer, as lengthy because they obtain way.

Remaining part of the only market and/or even the customs union, in comparison, is presented being an enlightened “Soft Brexit” compromise, an account balance between your Leave side’s “hard” ide­ology and turn into campaigners’ good sense. Fundamental essentials the UK’s Brexit debate, as viewed by a lot of our political and media class once we go into the fall of 2017 which EU negotiations warm up. Yet they’re wrong on every level.

Soft-headed

Many Parliamentarians say they “respect the referendum result” but want “Soft Brexit”. Trying to negotiate this kind of outcome, though, would seriously damage the United kingdom, the EU and also the vital ongoing relationship together.

Soft Brexit could leave Britain inside a harmful midway house. Within the single market, the United kingdom would be a “rule-taker” – still susceptible to rulings from the highly politicised European Court of Justice. We’d be bound by huge limitations on the economic and political freedom, but unable to election on or influence individuals rules, even when these were altered to Britain’s disadvantage.

And, obviously, single market membership means ongoing multi-billion pound annual payments to The city and “freedom of movement”. This isn’t Brexit ­­– and could be viewed by countless voters being an affront towards the referendum result.

The economic advantages of single market “membership” are, anyway, extremely overstated and might be negative. Membership means all United kingdom firms – such as the 95pc that do not export towards the EU – must adhere to frequently unnecessary and costly EU rules. Also, the only market in services barely exists, despite much rhetoric on the contrary. Many EU nations won’t drop barriers to imports of certain services – which seriously penalises the United kingdom, the world’s second-largest services exporter.

Pm Theresa May Credit: AP Photo/Kirsty Wigglesworth

We don’t have to be “in” the only sell to do business with the EU. The United States conducted almost one fourth of the trillion dollars of EU exchange 2016 from outdoors – without accepting ECJ jurisdiction, freedom of motion or making large annual payments. The United kingdom can perform exactly the same. If Britain cuts an EU free-trade agreement, tariff-free trade can continue.

Otherwise, we are able to do business with the EU under World Trade Organisation rules, having to pay relatively low tariffs – along with the united states, China, Japan and each other major non-EU economy.

Since 1999, the proportion of United kingdom do business with the EU has fallen from 61pc to simply over 40pc. When the single marketplace is so great for that United kingdom, so why do we trade less using the EU compared to all of those other world? Exactly why is our EU trade shrinking and our non-EU trade expanding? So why do there exists a large deficit on the EU trade, however a significant surplus on the trade outdoors the EU?

Being within the EU’s customs union can also be wrongly presented as economic nirvana. Membership means the United kingdom must charge tariffs on non-EU goods. So British shoppers are having to pay more for a variety of imports, including food, frequently to defend uncompetitive producers in other EU states from cheaper global prices.

And since 80pc of those tariffs are delivered to The city, and also the United kingdom does more non-EU trade than every other EU member, Britain makes up about an unfairly high share from the EU’s combined tariff revenues. Again, this burden is shouldered by consumers.

The United kingdom does more non-EU trade than every other EU member Credit: OLI SCARFF/AFP/Getty Images

Customs union membership also prevents Britain from striking trade handles nations outdoors the EU – countries comprising four-fifths from the global economy. This can be a serious disadvantage for that United kingdom, given our deep cultural and historic links with a multitude of nations. Because the global center of economy gravity shifts decisively east, it is essential for that our future success that Britain engages more using the world’s fastest-growing and many populous markets.

Outdoors the customs union, the United kingdom is not area of the EU’s trade handles various nations – frequently presented like a huge sacrifice. Within the six decades because the EU began, though, The city has unsuccessful to chop an offer with the world’s top economies. The EU doesn’t have trade agreement using the US, China, India or Japan. (The current, very preliminary agreement with Tokyo, japan was nothing more than an announcement). The EU’s 50 approximately trade deals cover under 10pc from the global economy, being mostly with small countries.

The EU isn’t in a position to barter trade contracts, containing numerous member states, frequently with conflicting objectives. The deals it’s struck also have generally preferred French farming and German manufacturing exports, instead of United kingdom services. Nations acting alone – for example Europe, Singapore and Columbia – have guaranteed much more important trade deals, covering an even bigger share from the global economy, than has got the EU.

In 2013, Europe struck a trade cope with China after 3 years of talks – the United kingdom can perform exactly the same. Not even close to being “at the rear of the queue”, Britain is well-placed to achieve a contract using the US. And India has proven curiousity about a United kingdom trade deal. The significant nations which do have EU trade contracts – including Mexico, Nigeria and Columbia – also have indicated they need United kingdom-equivalent contracts, supplying an chance for Britain to change existing contracts to the advantage.

Chopper's Brexit Podcast Episode 21Chopper’s Brexit Podcast Episode 21 46:09

While Soft Brexit is frequently presented as liberal and progressive, the only market promotes the interests of producers over consumers while entrenching the benefits of large corporations – that are much better able than smaller sized rivals to handle complex regulation. Freedom of motion rules provide big firms having a ready stream of cheap, easily exploitable work, while suppressing the wages from the UK’s most financially insecure workers. The only market also facilitates large-scale corporate tax avoidance.

The customs union, meanwhile, is really a bad deal for United kingdom consumers. On the top of this, the EU’s tariff wall, particularly on farming goods, combined with ghastly Common Farming Policy, seriously hinders the introduction of most of the world’s poorest countries.

Possibly the greatest trouble with Soft Brexit is it is unobtainable. In December 2016, the EU’s chief negotiator Michel Barnier stated: “The single market and it is four freedoms are indivisible – cherry-picking isn’t an option.” Yet this is exactly what the Soft Brexiteers try, breaching EU rules by seeking single market membership plus a special dispensation from freedom of motion that not one other country has.

That is why “Soft Brexit” will really finish up being “Messy Brexit”. Pushing with this outcome puts the United kingdom in direct and absolute conflict using the EU’s core concepts – which, if seriously breached, could tear the bloc apart, as others demand exactly the same deal. Probably the most likely Soft Brexit outcome will be a diplomatic stand-off, together with chronic uncertainty for citizens, investors and companies, risking serious economic and political damage.

A professional-Brexit demonstration outdoors parliament Credit: Charlotte now Ball/PA Wire

In late This summer 2017, this time is made with devastating clearness by Fabian Zuleeg, an insurance policy analyst carefully from the European Commission.

“What is missing during these discussions is indeed a appreciation from the view from sleep issues from the Funnel,” stated Zuleeg. “Allowing cherry-picking of advantages would behave as an indication to other people that the Europe à la carte is accessible, opening the Pandora’s box of disintegration.”

That’s why Theresa May did the best factor in her own Lancaster House speech in The month of january 2017 – confirming in the start that Britain really wants to leave both single market and customs union. We refer to this as approach “Clean Brexit”.

This enables the United kingdom rapidly to seize control of sensitive issues associated with our borders, laws and regulations and trade – because we’re not negotiating over such issues inside a bid to remain inside any EU legal construct. Knowing we are outdoors both single market and customs union in the start also gives Britain time for you to prepare in front of March 2019 whenever we leave the EU – creating new facilities for mix-Funnel customs clearance, for example.

By staying away from cherry-picking, Clean Brexit is much better for Britain, the EU as well as their broader relationship – using the United kingdom not attempting to upend EU rules, growing the likelihood of ongoing United kingdom-EU co-operation across a variety of headings. Soft Brexit, in comparison, trying to downside single market membership against freedom of motion rules, would maximise “cliff-edge” dangers and business uncertainty – and could cause a disastrous diplomatic stalemate, while risking a systemic crisis.

A powerful hands

Despite prevalent negativity, the United kingdom includes a strong hands to experience during these Article 50 negotiations. Our £69bn EU trade deficit represents profits and jobs across thousands of EU firms. Germany ran a United kingdom goods surplus of £32bn in 2016. Effective business interests cash to get rid of if Britain imposes tariffs on such exports. The BDI German employers’ union states it might be “very, very foolish” for that EU to impose high trade barriers from the United kingdom. BDI represents around 100,000 companies, employing one fifth from the workforce.

France may also be portrayed as attempting to “punish” the United kingdom for departing the EU. President Macron has described Brexit like a “crime”, vowing to consider an uncompromising method of deter other member states from “killing the ecu idea”. Yet, for French maqui berry farmers and winemakers, the United kingdom is a big market. Numerous French firms, and also the French government itself, have strong commercial interests in great britan, with investments across sectors including transport, automotive manufacturing and nuclear power. Holland may also desire a zero-tariff cope with Britain so Rotterdam, Europe’s largest port, remains a United kingdom trade hub.

While European president Jean-Claude Juncker beats his chest and issues fiery rhet­oric, influential business groups are going to limit trade limitations between your United kingdom and also the Continent. By declaring Clean Brexit, maintaining we’ll be outdoors the only market and also the customs union, Britain advantages of effective EU business lobbies advocating their governments to strike a favourable United kingdom trade deal, know­ing they’ll otherwise face reciprocated WTO tariffs.

European president Jean-Claude Juncker Credit: Environmental protection agency/OLIVIER HOSLET

Ideally, the United kingdom will agree what Theresa May has referred to as a “deep and comprehensive” EU free trade deal throughout the Article 50 period. Yet, settling an intricate, multi-sector agreement with 27 governments, which must then be ratified by national parliaments and also the European parliament, is most likely impossible in front of March 2019. That is why the United kingdom must prepare to trade under WTO rules, reoccupying our seat in the Geneva-based trade court and adopting our very own tariff schedules.

Trading under WTO rules is frequently portrayed like a disaster. Yet most trade around the world is carried out largely under WTO rules. The United States along with other leading economies do business with the EU about this basis, with every side having to pay tariffs which are generally really low. As a result, it’s in no way required for the United kingdom to strike a totally free-trade agreement using the EU in front of March 2019. Neglecting to grasp this comes down to a significant proper error.

“No deal really is preferable to a poor deal.” The United kingdom should condition this clearly and frequently. “No deal” only denotes we don’t strike an EU free trade agreement before March 2019 – which really brings benefits. Under “no deal”, Britain’s EU trade deficit would generate substantial internet tariff revenues, that could be employed to compensate United kingdom exporters.

More essentially, negotiating facing a tough deadline means the relation to any resulting agreement, which we have to accept for a long time, could be far worse than the usual deal settled under a shorter period pressure – when the Article 50 deadline has transpired. Unless of course “no deal” is viewed as a possible option, though, britain’s negotiating hands is going to be seriously undermined – so that all formulations should be made how to trade under WTO rules.

Decoded: Boris Johnson's Five Key ThemesDecoded: Boris Johnson’s Five Key Styles 03:57

WTO rules are portrayed as “crashing from the EU” to pressure the United kingdom to simply accept an unfavourable trade deal before Article 50 expires. Yet “no deal” is definitely an entirely coherent position and acceptable outcome for Britain. Buying and selling under WTO rules will give you a platform to strike a much better lengthy-term EU trade agreement, on the terms as well as in our very own time, after Brexit has happened. The EU has more incentive to achieve that than Britain, given its large United kingdom trade surplus.

Accepting “no deal” on trade is totally different from “just walking away” – meaning neglecting to settle administrative issues like the mutual recognition contracts on products which facilitate trade. Nobody is promoting this. It’s unthinkable that existing and uncontroversial EU protocols granted to numerous other non-EU people wouldn’t affect the United kingdom, most famously once we leave the EU fully compliant. For The city to deny Britain such legal rights would breach both WTO and EU law, while incensing EU companies and voters by threatening vast amounts of euros of profit and numerous EU jobs.

The United kingdom will, obviously, still trade and collaborate using the EU ex­tensively after Brexit. Complaints that we’re “cutting ourselves off” or “pulling in the drawbridge” are infantile and absurd. Having a hung parliament, though, and also the Conservatives vulnerable within the Commons and also the Lords, the Soft Brexiteers sense this really is their moment.

Not even close to “respecting the referendum result”, they’re promoting an unobtainable outcome and sowing parliamentary chaos. Their purpose is certainly not under to turn back June 2016 referendum and, by doing this, topple the federal government.

‘Clean Brexit – Steps to make successful of departing the EU’ by Liam Halligan and Gerard Lyons is printed by Biteback Publishing at £20.00. To buy your copy visit books.telegraph.co.united kingdom

Stanley Fischer: US Fed vice-chair resigns year before terms ends citing &apospersonal reasons&apos

Stanley Fischer, the vice-chair of america central bank, has resigned annually before his term was because of finish, citing “personal reasons”.

Inside a letter to President Trump Mr Fischer, 73, stated he’d step lower in the Fed “around 13 October”.

Mr Fischer was hired by former The President in 2014 and the term would ordinarily have led to June 2018.

The word of the present chair from the Given, Jesse Yellen, is a result of finish in Feb 2018. Mr Trump has stated she might be re-hired, though other candidates will also be into consideration.

“The markets will jump towards the conclusion this lowers the chances of President Jesse Trump nominating Yellen for any second term as Chair,” stated Paul Ashworth of Capital Financial aspects.

“Yellen and Fischer are thought to be staying close and appearance to talk about much the same thoughts about both financial policy outlook and regulatory issues.”

Mr Fischer is really a highly influential former financial aspects professor in the Massachusetts Institute of Technology.

He was Governor from the Bank of Israel between 2004 and 2013.

Gary Cohn, Mr Trump’s top economic consultant, who’s Jewish, is reported to possess seriously considered resigning following the President defended neo-Nazi protestors recently.

Mr Fischer also lately criticised attempts through the Trump administration to dismantle a few of the publish-economic crisis regulation and stress testing people banks as “very, very harmful”.

In the resignation letter Mr Fischer authored: “Informed through the training from the recent economic crisis, we’ve built upon earlier making the economic climate more powerful and much more resilient and able to better supply the credit so fundamental to the success in our country’s households and companies”.

Also, he stated it absolutely was a “great privilege” to do business with Ms Yellen.

Ms Yellen stated: “I am personally grateful for his friendship and the service. We’ll miss his wise counsel, good humor, and dry wit.”

Mark Carney, the Governor from the Bank of England, also compensated a glowing tribute to Mr Fischer.

“The mixture of his encyclopaedic understanding of financial aspects, outstanding judgment, quiet leadership and the perennial good humour helps policymakers all over the world to navigate probably the most challenging periods within the global economy,” Mr Carney stated inside a statement.

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Seoul pleads with Putin to assist tame North Korea

South Korea’s president, Moon Jae-in, has cautioned the crisis around the Korean peninsula risks becoming “uncontrollable” as Asia-Off-shore stocks tumbled for that third day running.

“The global political situation is becoming serious because of North Korea’s repeated provocations,” Moon told the Russian president, Vladimir Putin, during bilateral talks in Vladivostok on Wednesday.

Q&A

What threat does North Korea pose to Columbia?

Its Northern Border might have found a method to create a nuclear warhead sufficiently small to use a missile, but firing one in the South will probably provoke retaliation in kind, which may finish the regime. 

Pyongyang has enough conventional artillery to complete significant harm to Seoul, but the caliber of its gunners and munitions is dubious, and also the same issue – retaliation in the South and it is allies – remains.

In case of a non-nuclear attack, Seoul’s residents would act upon experience of civil defence drills, and hurry towards the explosive device shelters dotted round the city, growing their likelihood of survival.

Based on South Korean media, Moon requested Putin to assist “tame” North Korea, because the worldwide community views its reaction to Pyongyang’s sixth nuclear test on Sunday.

There is further evidence that North Korea had made significant progress in the nuclear programme, with Japan saying it’d revised upwards the believed yield from Sunday’s explosive device to 160 kilotons – which makes it greater than 10 occasions larger than the Hiroshima explosive device.

“This is much more effective than their nuclear tests previously,Inches Japan’s defence minister, Itsunori Onodera, told reporters.

Moon Jae-in and Vladimir Putin in Vladivostok on Wednesday. Moon Jae-in and Vladimir Putin in Vladivostok on Wednesday. Photograph: Sputnik/Reuters

The figure took it’s origin from a revised magnitude through the Comprehensive Nuclear Test Ban Agreement Organisation.

Japan’s revised estimate is way more than the 50-100 kiloton yield provided by the United nations security council. The council is a result of election on Monday on the resolution condemning the North’s recent test, but you will find indications of division over how you can respond.

Putin has stated he opposes fresh economic measures from the regime. As they condemned North Korea’s provocations, Putin stated further sanctions could be useless and ineffective, describing the measures like a “road to nowhere”.

China, too, opposes any measure – namely an oil embargo preferred through the US and Japan – that may foment a domestic crisis large enough topple North Korea’s leader, Kim Jong-united nations, and potentially finish the country’s status like a buffer between China and Columbia, where US forces are based.

Japan’s prime minister, Shinzo Abe, arrives in Vladivostok, where he will meet Vladimir Putin. Japan’s pm, Shinzo Abe, comes to Vladivostok, where he’ll meet Vladimir Putin. Photograph: Alexander Ryumin/Tass

Japan’s pm, Shinzō Abe, is anticipated to broach sanctions with Putin once they meet in Vladivostok on Thursday.

“We need to make North Korea change its current policy and realize that there’s no vibrant future if North Korea continues the current policy,” Abe told reporters before he left Tokyo, japan.

The United kingdom defence secretary, Michael Fallon, told BBC Radio 4’s Today programme on Wednesday: “The US is perfectly titled to create all of the formulations it must safeguard its people, its bases, its very own homeland. They’re clearly doing that right now to make certain obama has all options he needs.”

He stated the united states defence secretary, James Mattis, “and I yet others over the administration make it obvious we must absolutely exhaust every possible diplomatic avenue to obtain this case in check.

“That means working intensively in New You are able to within the next couple of days to obtain a new resolution. This means searching in the existing sanctions and ensuring they’re correctly enforced. This means searching in the Eu level to see what sanctions does apply there and most importantly this means putting more pressure on China to cope with its neighbour. This last test only agreed to be 50 miles in the border of China.”

Geopolitical concerns ongoing to simmer following a nuclear test on Sunday, and among North Korea’s most senior diplomats saying the united states would receive more “gift packages” in the regime.

Han Tae-song, the country’s ambassador towards the Un in Geneva, confirmed that North Korea had effectively conducted its sixth and largest nuclear explosive device test on Sunday.

“The recent self-defence measures by my country … really are a gift package addressed to the one and only the united states,Inches Han told a disarmament conference in Geneva on Tuesday. “The US will get more ‘gift packages’ … as lengthy because it depends on reckless provocations and futile tries to put pressure on [North Korea].”

Tensions between your US and North Korea ongoing to consider their toll on markets in the area on Wednesday. The Nikkei share average fell .7% to some four-month lower in Tokyo, japan at the begining of buying and selling but had mounted a small recovery by mid-mid-day. In Sydney, the ASX200 benchmark index stepped through the same margin as investors chosen safe havens for example gold and government bonds.

The South Korean benchmark index – the Kospi – was .35% lower on Wednesday within the fifth successive day’s losses. Shanghai dropped .4% while Hong Kong’s Hang Seng retreated 1%.

The FTSE100 is a result of slip by .4% if this opens on Wednesday morning. The losses in Asia adopted a selloff on Wall Street in which the Dow jones Johnson industrial average fell 1.1% to 21,753.31 in the worst day in almost three days.

Bank shares brought the slide as bond yields slumped around the increase of money into treasuries. Technology stocks, the greatest gainers this season, also pulled the marketplace lower. Place gold was .2% greater at $1,341.31 an oz after touching $1,344.21 overnight, its greatest since September 2016.

“The risk-off trade is really North Korea front and center,” stated Shaun Zipper, md of investments at US Bank Private Wealth Management. “Also you will find the hurricane a week ago and also the approaching Hurricane Irma, so there is a lot around the plate for that sell to digest.”

The Nikkei endured heavy selling if this opened up for business on Wednesday, falling to 19,254.67, the cheapest level since 1 May. It retrieved to 19,349 points within the mid-day session or lower .2%, however the ongoing strength from the yen, that is having up through the US dollar’s ongoing weakness, is weighing around the Nikkei’s export-heavy listings.

Republicans and Democrats urge Trump to not break ‘vital’ cope with Columbia

some pot statement Tuesday protecting the 5-year-old U.S.-Korea Free Trade Agreementwhich business leaders say has boosted the workers who voted Trump in to the White-colored House.

“South Korea is really a significant economic partner, our seventh largest export market, along with a vital customer for U.S. manufacturers, services providers, maqui berry farmers, and ranchers,” the lawmakers authored.

Doubts about the way forward for the deal first surfaced Saturday following the Washington Publish reported Trump officials were thinking about a withdrawal. Each day later, North Korea announced it’d tested a hydrogen explosive device that may be installed on an intercontinental missile.

The lawmakers’ statement echoed a disagreement from Sen. Ben Sasse (R-Neb.), who also challenged Trump a few days ago.

“His Administration holds 18th-century views of trade like a zero-sum game,” Sasse stated inside a tweeted statement. “I affiliate with our maqui berry farmers and ranchers who’re feeding the planet now.”

By Tuesday, Trump had yet to achieve a choice on how to handle the trade agreement with Columbia, a senior White-colored House official stated.

Negotiations for that free trade deal started under President George W. Plant, and Congress approved the agreement this year. KORUS has since created mixed results: the U.S. trade deficit with Columbia has greater than bending because the deal required effect, but certain industries have flourished.

Major industries that will feel an instantaneous sting if Trump made a decision to back from the deal include beef and dairy, two Midwest’s largest employers, that have seen exports surge to Columbia since KORUS knocked lower trade barriers. You will find roughly 913,000 cattle operations within the U . s . States. Dairy employs about 977,000 workers.

U.S. beef has particularly taken advantage of business with Koreans during the last 5 years.  Under KORUS, which decreased tariffs on U.S. meat, beef producers have recorded an 82 % rise in annual sales to Columbia,  jumping to $1.06 billion this past year from from $582 million this year.

Columbia is the second biggest export marketplace for U.S. beef, behind Japan, based on the nation’s Cattlemen’s Beef Association. (It is also in the throes of what the U.S. Meat Export Federation calls “a craft hamburger craze.”)

Reducing use of Korean buyers would lower the interest in beef and zap profits over the industry, stated Kent Bacus, director of worldwide trade and market access at NCBA. 

“The last 5 years, we’ve been reaping the advantages,Inches Bacus stated. “For obama to threaten to leave behind this — it’s very harmful for the business. It’s harmful for maqui berry farmers and ranchers who depend around the value they cope with exports so that you can pay their bills.”

One particular rancher is Beginning Caldwell, co-who owns Caldwell Cattle in Edgar, Neb. She and her husband, Matt, have a tendency to about 150 cows on roughly 900 acres of land — a little operation by beef industry standards.

She fears withdrawing from KORUS could put her bankrupt.

“We’d be less in a position to absorb the outcome,Inches she stated. “And it might become so terrible where I must sell my great-grandmother’s land to among the bigger operations. That will completely break me.Inches

The dairy industry, too, stands to consider a blow if Trump decides to scrap KORUS.

South Koreans bought $170 million price of American-made cheese in 2016, stated Michael Dykes, president from the Worldwide Dairy Products Association. The nation may be the 4th largest marketplace for U.S. dairy exports.

Abandoning the offer, Dykes stated, would put dairy farmers at chance of facing steep tariffs, which added 36 percent towards the cost of cheese offered in Korea.

“We’ll return to about 36 percent while our competitors far away continuously go duty free,” he stated.

Josh Meltzer, senior fellow in global economy and development in the Brookings Institution, stated reduced earnings which come from less exchange these farming industries could spark layoffs across rural America.  (The greatest producers of beef and dairy include Wisconsin, Nebraska, Iowa, Indiana and Illinois.)

“You tight on exports, less sales and potentially an excuse for less workers,” he stated.

One sector from the economy that’s less threatened through the potential finish of KORUS is the steel industry, whose representatives have accused China of dumping cheap, government-subsidized steel in to the country by means of Columbia.

Two cases around the matter sit prior to the Worldwide Trade Commission, stated an attorney who represents the U.S. steel industry and who spoke on the health of anonymity due to pending litigation. The want to see Trump eliminate the issue, which, representatives say, pushes American steelworkers from jobs.

Trump’s corporate tax plan will prove to add trillions to all of us debt, report finds

Jesse Trump’s intends to lessen the corporate tax rate from 35% to twentyPercent can lead to an income lack of $3tn to $7tn for the us government more than a decade and therefore are unlikely to produce the guaranteed boom in jobs, according to a different report in the non-partisan Committee for any Responsible Federal Budget.

Trump and Paul Ryan, Speaker of the home of Representatives, happen to be pushing challenging for the program. Obama travels to Missouri on Wednesday to advertise the program and Ryan has had to the direction to venues including Boeing’s headquarters, where Ryan promised to help make the cuts through the finish of the season.

discovered that their effective tax rate was 21.2%. In a minumum of one year, 100 compensated compensated no tax whatsoever. From 2008 until 2015, 30 companies compensated a highly effective rate of 6.9%, and eight compensated next to nothing. Individuals in specific industries (retailing) fared considerably worse than the others (utilities), although some companies (McDonald’s) compensated vastly greater than their rivals. It’s fair to state the corporate tax code is really a mess.

The studies claim that the tax rates are not associated with job creation. While researchers in the Institute for Policy Studies didn’t read the fate of tax savings on the dollar-for-dollar basis, “we recognized that these companies had huge sums of cash which were entering stock buybacks,” states Sarah Anderson, director from the Global Economy Project in the institute and also the report’s author.

Jesse J. Trump (@realDonaldTrump)

The huge TAX CUTS/REFORM which i have posted is moving along along the way perfectly, really in front of schedule. Big advantages to all!

May 29, 2017

She and her colleagues calculated, according to openly disclosed data, the 10 firms that cut probably the most jobs each spent $45bn during the last nine many years to repurchase their stock. That reduces the amount of shares outstanding, growing the income per share calculation and therefore the need for every individual share. Theoretically, the stock exchange should recognize this by delivering the stock cost greater. Clearly, the beneficiaries were shareholders, instead of employees or potential employees.

The report’s authors also learned that companies with lower-than-average tax rates rewarded their CEOs with greater than average paychecks and raises. The typical Chief executive officer of those 92 firms saw their pay rise 18% between 2008 and 2016, that can be a of individuals in most companies within the Standard & Poor’s 500 Index rose 13%. (The typical worker, meanwhile, had a 4% wage hike between 2008 and 2016.) The greater they did at cutting jobs, the greater the CEO’s earning power, the Institute for Policy Studies calculated. The 48 CEOs who eliminated probably the most jobs earned typically $14.9m, 14% greater than the typical Chief executive officer.

Boeing may be the beneficiary of among the greatest regulations and tax breaks seen within the country’s history, an offer it struck using the condition of Washington after threatening to construct its new plant outdoors the condition. Meanwhile, its average federal tax rate during the last ten years continues to be only 3.2%, also it compensated only 23% – by its very own calculation – this past year.

Soon after the offer using the condition – which unsuccessful to insist upon employment guarantees – was brokered, Boeing started to announce massive job cuts, quarrelling it must depend more about automation to be able to contend with Airbus. Greater than 15% of their Washington workforce continues to be let go because the big condition tax deal was announced in 2013.

Strong eurozone data drags pound to fresh eight-year low against the euro; ad giant WPP weighs on FTSE 100

Market report

Investors slammed the brakes on rising risk appetite yesterday as US president Donald Trump’s threat in front of a raucous rally of grassroots supporters to rip up the North American Free Trade Agreement and shutdown the government to secure funding for his Mexican wall pulled down stock markets.

The Dow Jones retreated into the red once again just a day after investors in the US cheered reports that a breakthrough had been made in tax reform talks between the president’s close team and Republican congressional figureheads.

In Europe, the imminence of the Jackson Hole central banking conference kept traders sitting on their hands and, with ECB president Mario Draghi’s speech in Lindau, Germany, yesterday offering up few clues to the markets, it was left to Mr Trump to swing market sentiment.

In the aftermath of Mr Trump’s speech, the dollar’s fresh weakness against the euro compounded on the sapping market sentiment to send big European exporters sliding with the DAX closing 0.3pc down and CAC 40 slipping 0.5pc. Meanwhile in London, the pound’s persistent softness salvaged the FTSE 100, which closed flat, rising 0.91 points at 7382.65.

Healthcare giants were the biggest beneficiaries from the renewed tax reform hopes hinting that Mr Trump could push through some of his agenda. Troubled pharma firm AstraZeneca nudged up 61p to £44.95 while blue-chip rival GlaxoSmithKline gained 13p to £15.17.

Fallout from Tuesday’s earnings continued to stoke movement with Provident Financial nosediving a further 8.4pc in intraday trade before reversing its losses to finish the top gainer on the blue-chip index. Analysts piled in on the doorstep seller’s catastrophic 66pc slide following its interim results on Tuesday with Liberum warning that the “pain is not over” and Barclays and JP Morgan downgrading the company.

Despite being bombarded by a wave of grim broker notes, Provident rallied to finish 71.5p higher at 661p.

Advertising giant WPP weighed heaviest on the UK’s benchmark index, diving 174p to £14.20, an 11pc fall, after a tough second quarter pulled down its sales growth forecast. Concerns that WPP’s difficulties were indicative of the sector meant ad-reliant broadcaster ITV slumped 3.1p at 162.6p.

Elsewhere on the FTSE 250, Meggitt climbed 12.5p to 510p after Jefferies upgraded the technology group once stalked by activist investor Elliott Advisors to “buy”, arguing that the fruits of the company’s turnaround should be apparent within a year.

Although its “rejuvenation has taken a lot more than a good night’s sleep” and will not be complete for years, the company will start to see revenue gain momentum from the second half of 2017, it told clients.

5:49PM

Markets wrap: Trump threats pull down market sentiment

The Dow Jones has nudged down into the red following Mr Trump’s speech to supporters

US president Donald Trump’s threat to end the North American Free Trade Agreement and cause a government shutdown to secure funding for his wall on the Mexican border has pulled down investor sentiment on the markets today.

After rallying strongly on tax reform hopes yesterday, the major US indices have slipped back into the red following Mr Trump’s speech in front of a crowd of grassroots supporters in Arizona last night.

On the FTSE 100, advertising giant WPP’s 11pc fall after it slashed its full-year sales growth forecast after a tough second quarter almost single-handedly stopped the index from breaking beyond flat territory with it closing just 0.91 point higher at 7382.65. Stock indices in Europe fared worse with the DAX retreating 0.5pc and the CAC 40 falling 0.3pc.

Doorstep lender Provident Financial rebounded from yesterday’s colossal fall to finish 12pc higher while NMC Health finished the top FTSE 250 riser after reporting a 34pc revenue increase.

Meanwhile on the currency markets, the pound drifted downwards to an eight-year low against the euro after a strong set of eurozone PMI readings indicated that growth in the region remains impressive.

Here’s IG market analyst Joshua Mahony’s take on today’s play:

“US markets are following their European markets lower today, with Trump once again proving himself to be the number one source of unpredictable volatility.

“The risk of a government shutdown appeared to have lessened when we saw Steve Bannon leave the White House, yet Trump’s confrontational stance appears to be alive and kicking given his announcement that he would be willing to cause a shutdown unless he receives funding for a wall.”

4:50PM

FTSE 100 stagnates in flat territory while Europe and US retreat into the red

The FTSE 100 has inched up 0.01pc today

Markets in Europe are now closed and the FTSE 100 has comfortably outperformed its European counterparts despite closing in flat territory, just 0.01pc higher.

US stocks have continued to struggle this afternoon with the Dow Jones stabilising at around 0.2pc down for the session. We’ll provide a summary of today’s events and the market report shortly…

4:23PM

First time buyers snap up properties in affordable Scotland, Wales and Northern Ireland   

New homeowners are driving the buoyant housing markets in Scotland, Wale and Northern Ireland, taking advantage of low interest rates to get onto the ladder.

Growth rates in those areas are twice as high as those in London in the second quarter of 2017 as young would-be owners struggle to pay the larger sums needed to purchase property in the capital.

First-time buyer numbers grew by 29pc in Scotland in the quarter, 26pc in Wales and 15pc in Northern Ireland, compared with only 8pc in London, according to figures from UK Finance, the new industry group that replaced organisations including the Council of Mortgage Lenders.

Read Tim Wallace’s full report here

3:59PM

China’s Great Wall reverses away from potential purchase of Jeep from Fiat Chrysler

Jeep had been focus of Great Wall’s interest in Fiat Chrysler

Speculation that Great Wall Motor Company will attempt to buy Fiat Chrysler’s Jeep marque has been dampened down by the Chinese automotive business.

In a statement to the Shanghai stock exchange, Great Wall said it had not held any talks with FCA, adding that its approaches had “not generated concrete progress as of now”.

Just one day after the company said “there is an intention to make the purchase”, Great Wall rowed back, noting there were “big uncertainties” surrounding any potential deal.

FCA shares have been driven up more than 10pc over the past fortnight to €11.50 as dealers responded to rumours that part of the business could be sold. Attempts were made to identify the potential buyer before Great Wall outed itself on Monday.

Read Alan Tovey’s full report here

3:40PM

Mixed set of US data shows house market slowing but sharp rise in business activity 

Overall private sector activity grew at its fastest rate since May 2015

The US private sector experienced a sharp increase in business activity in August despite a slowdown in the manufacturing industry, IHS Markit’s composite PMI survey showed this afternoon.

A sharp uptick in the services figure helped buoy the overall figure to 56.9 in August from 54.7 the previous month, the fastest growth of overall activity since May 2015.

IHS Markit’s director Rob Dobson said this on the latest figures:

“The US economic growth story remained a tale of two sectors in August. The overall rate of expansion accelerated to a 27-month record, driven higher by strong and improved growth of business activity in the vast services economy.

“In contrast, the performance of manufacturing remained sluggish in comparison, with production volumes rising to the weakest extent in over a year. “Nonetheless, the acceleration signalled for the economy as a whole suggests that GDP growth is still gaining momentum during the third quarter.”

Meanwhile in the other major economics release, new house sales in the US stuttered in July, dipping far below expectations. While economists expected sales to drop to 610,000, the figures showed a sharper slowdown at 571,000 sales, a 9.4pc retreat from June’s number.

The data hasn’t done much for the pound’s performance against the dollar today. Sterling has stabilised at $1.2795 against the greenback this afternoon.

3:20PM

Enquest hit by delays at North Sea oil project

Enquest shares plunged 10pc after it revealed trouble with its Kraken oil field

North Sea oil company Enquest has taken a 10pc blow to its market value after telling investors that delays to a cornerstone project have cut into to its production for this year.

The heavily indebted independent was relying on oil flows from the Kraken project to bring in a $700m (£546m) a year boom to help erode its £1.5bn of debt after a major financial restructuring last year.

But the oil minnow’s latest trading update revealed that Kraken, which began production earlier this year, has failed to reach its full production rate and could drag the average rate for this year down by almost a quarter.

In addition lower global oil prices could wipe a further 10pc from the project’s revenues.

The group’s shares plunged over 10pc to 29p, its lowest ebb since last November.

Read Jillian Ambrose’s full report here

2:58PM

US indices dip into the red following Trump speech on NAFTA 

Trump threatens to 'shut down government' to build Mexico wallTrump threatens to ‘shut down government’ to build Mexico wall 00:57

The Dow Jones and co have slumped following the opening bell in New York as investor sentiment weakens once again on the latest pledge from Donald Trump.

After provoking a global sell-off a few weeks ago after he ratcheted up tensions with North Korea, Mr Trump has pulled equities back into the red following a speech in Arizona, in which he threatened to end the North American Free Trade Agreement and shut down the government in order to secure funding for his border wall with Mexico.

The Dow Jones, the S&P 500 and Nasdaq have dropped 0.3p early on.

2:25PM

US markets preview

The Dow Jones is expected to open lower this afternoon

The major US stock indices rallied strongly yesterday with the benchmark Dow Jones jumping just under 1pc despite Donald Trump sending a mix of sentiment-driving messages to the markets.

Investors cheered reports that the president’s team and senior Republican figures had made big steps forward on tax reform talks but his latest appeal to grass root supporters, which has included threats to end the North American Free Trade Agreement and shutdown the government to get funding for his wall on the Mexican border, has soured the mood a little. As a result, the Dow is expected to nudge a little lower when it opens.

Here’s IG chief market analyst Chris Beauchamp’s take on how the markets might interpret goings-on at the White House:

“Yesterday the headlines were all about how presidential Mr Trump had suddenly become, as he announced a continuation and expansion of the US commitment to Afghanistan. However, last night in Phoenix, we had a return to the Trump we became used to on the campaign trail.

“Evidently he feels the need to shore up his support base, and the warning about provoking a government shutdown in order to advance the Mexican wall has undercut the soothing tone put forth by Mitch McConnell yesterday. Plus there’s his warning about ‘terminating’ NAFTA. Hopes for calm look to have been dashed once more. “

Of the US economics releases this afternoon, PMI figures due at 14.45pm and new home sales data scheduled for release just a quarter of an hour later will be the main catalysts on the currency markets.

2:01PM

BHP Billiton unveils board shake-up as two directors depart

Former Ford boss Jac Nasser is standing down as BHP chair

The world’s largest mining company is to shake up its board after two directors announced they would be stepping down – one after just six months.

BHP Billiton said that Grant King, former chief executive of Australian firm Origin Energy, would not be seeking re-election at its AGMs later this year “owing to concerns expressed by some investors”.

Mr King, who had been considered a front runner to replace outgoing chair Jac Nasser, led Origin for 16 years until 2016. At the time of his appointment in February, Mr Nasser said the move “reflected the board’s commitment to a structured and rigorous approach to board succession and planning”.

Read Jon Yeomans’ full report here

1:46PM

Bupa sells 122 care homes for £300m

HC-One becomes the biggest UK operator of residential homes through the deal

HC-One has completed the £300m acquisition of 122 care homes from Bupa, in a deal that makes it the biggest UK operator of residential homes.

HC-One, formed out of the collapse of Southern Cross six years ago and run by chairman and former NHS doctor Chai Patel, will expand to around 350 homes with 22,000 care beds through the deal.

It has been expanding since being acquired by investors Court Cavendish, Formation Capital and Safanad in 2014.

Over the last three years it has already bought a total of 50 homes from care providers Meridan and Helen McArdle Care.

Read Iain Withers’ full report here

1:27PM

How low can the pound go against the euro?

Sterling has slipped to its lowest level against the euro in eight years but many will be wondering how low can it go? Parity?

Not much further, according to Dean Turner at UBS Wealth Management.

Here’s his prognosis on what he deems an “extremely undervalued” currency:

“I am often asked how much further the pound can fall. “Don’t fight the tape” is a phrase that springs to mind. Nonetheless, sterling looks extremely undervalued on most measures. Brexit will change the UK’s current trade relationship with the EU, but everything has its price.

“Indicators for the manufacturing sector show that the weaker currency is boosting export demand. It should also make the UK a relatively attractive place for foreign companies to invest. Political noise ebbs and flows and, with it, exchange rates. Eventually, economic fundamentals assert themselves, and they suggest that the pound’s journey south against the euro is probably closer to the end than the beginning.”

The reaction on the currency markets to Mario Draghi’s speech at the Jackson Hole conference on Friday will be when we likely find out if the pound has bottomed out against its European counterpart. 

1:14PM

From Tarot readings to cryotherapy: How retailers are trying to lure you into their stores

From Tarot readings to cryotherapy: How retailers are trying to lure you into their stores

There has been a general shift in consumer spending over the past few years away from “things” to experiences. To cater for this, British retailers are increasingly introducing fun and unusual services to encourage new customers through their doors, and to keep the ones they have inside longer and spending more money.

Sophie Christie takes a look at the strangest ways retailers try to lure you in.

12:35PM

Lunchtime update: Advertising giant WPP weighs heavily on the FTSE 100

WPP is the sharpest faller on the FTSE 100, which is treading water in flat territory

The FTSE 100 is treading water in flat territory today with advertising giant WPP’s 11pc plunge after it slashed its full-year sales growth forecast almost single-handedly holding back the blue-chip index.

A stronger euro is weighing on equities on the continent while renewed tax reform hopes in the US and president Donald Trump’s threat to end the North American Free Trade Agreement and shut down the government to get funding for his Mexican wall is pulling investor sentiment in different directions.

On the currency markets, the pound has slipped to a fresh eight-year low against the euro this morning after strong eurozone PMI readings indicated that robust growth in the region will continue. Meanwhile against the dollar, the pound has just touched back over $1.28 following a morning dip blamed on persistent Brexit fears.

Henry Croft, research analyst at Accendo Markets, provided this analysis of today’s markets:

“Global equities are marginally lower heading into this afternoon as macroeconomic data and corporate results drive market sentiment. Strong Manufacturing PMI readings from Western Europe – including the headline economic area’s print – have awoken Euro bulls after this week’s sell-off, consequently clipping the US dollar’s wings.

“As a result, the German DAX’s numerous exporters are holding back the index, while the FTSE is being dragged lower as yet another stock suffers severely after a corporate update. “

Here’s the current state of play in Europe: 

FTSE 100: -0.01pc

DAX: -0.07pc

CAC 40: -0.02pc

IBEX: -0.48pc

12:17PM

Mario Draghi speech swerves monetary policy to frustrate traders

US Federal Reserve chair Janet Yellen and ECB president Mario Draghi will give speeches at Jackson Hole on Friday

Mario Draghi didn’t give much away in this morning’s speech ahead of his much anticipated appearance at the Jackson Hole central banking conference. Traders will be waiting a little longer for some ECB monetary policy clues but here are some of the best parts picked out by Bloomberg from today’s appearance:

In a speech that avoided any specific signals on the European Central Bank’s current deliberations, the institution’s president said officials must be “unencumbered by the defense of previously held paradigms that have lost any explanatory power.” 

“When the world changes as it did ten years ago, policies, especially monetary policy, need to be adjusted,” he said in a prepared text. He then added in an unscripted remark that “that’s obvious for most people, but not for everybody.”

Here’s what he had to say about quantitative easing:

“My view is that the unconventional actions that the Federal Reserve took in the early stages of the crisis were extremely effective as a major lender of last resort,” he said in a Bloomberg TV interview with Francine Lacqua.

“The subsequent quantitative easing I don’t think was harmful, I think it may have been somewhat helpful, but I don’t think it’s been a major powerful instrument of monetary policy.”

“You need serious conceptual analysis and base policy on that, not on prejudice, or — even worse — on moral grounds,” he told reporters after his speech. “Some people say ‘Oh, QE is immoral, because it creates money out of nothing.”

On the markets traders are “sitting on their hands” ahead of the big speeches at Jackson Hole on Friday, according to CMC Markets analyst David Madden.

Mr Madden commented:

“Equity markets in Europe are broadly unchanged this morning after a strong finish in the US last night. The buying momentum that we saw in Europe yesterday has dissipated, and traders are looking ahead to the Jackson Hole symposium which kicks off tomorrow.

“The President of the European Central Bank, Mario Draghi, didn’t give much away during his speech this morning. Mr Draghi talked about the recovery in the region, but he didn’t drop any clues about what lies ahead for monetary policy. We will have to have wait for his speech at the Jackson Hole symposium.”

11:43AM

Game Digital shares rocket on better than expected trading

Game issued a profit warning earlier this year

Shares in video game retailer Game Digital soared by more than 35pc in early trading as the company revealed better-than-expected sales and hinted it may offload the digital branch of gaming events division Multiplay.

Sales in the second half of the financial year grew by 9pc in the UK and 26pc in Spain as the company was boosted by the popularity of the Nintendo Switch console. However, full-year sales in the UK were still down by 7pc.

In a strategic update, Game said it was further prioritising its e-sport activities following a review, and “evaluating strategic options” for its Multiplay Digital division, which hosts servers for gaming.

The suggestion that it may sell the division has helped send shares soaring, with Liberum analyst Adam Tomlinson saying it would be a “sensible” move.

Read Sam Dean’s full report here

11:30AM

FTSE stuck in flat territory; WPP-related ad concerns pull down ITV

Concerns about advertising revenues following WPP’s figures has pulled down ITV this morning

It’s about time we had a quick sitrep on the other big movers in London this morning. Other than WPP’s fall, movement on the FTSE 100 has been fairly muted with the overall index stuck in flat territory.

The concerning advertising figures coming out of WPP have pulled down ad-reliant broadcaster ITV while the housebuilders have retreated from yesterday’s highs inspired by Persimmon’s strong figures.

At the other end, Big Four supermarket Tesco’s strong performance in yesterday’s Kantar Worldpanel sales figures and the opening of a compensation scheme for 10,000 shareholders who were misled by the company overstating its profits in 2014 has lifted it 1.9pc.

Meanwhile on the FTSE 250, NMC Health has risen 4.7pc on its latest earnings and engineering group Meggitt has popped 3.7pc thanks to a broker upgrade from Jefferies.

10:59AM

WPP 12pc slide reaction: Cut sales forecast could be the sign of a trend

WPP’s chief executive Martin Sorrell

Advertising giant WPP is still marooned at the bottom of the FTSE 100 after sliding 12pc on its disappointing interim results this morning and now the analysts are giving their two cents on the plunge.

Chris Beauchamp, chief market analyst at IG, pointed out that WPP is seen as a bellwether for the global economy and that “the news sounds a warning about growth in developed markets, putting a significant dent in the bullish case for stocks”.

WPP’s woes could continue, according to CMC Markets analyst David Madden:

“The advertising giant cited falling demand from its clients as a reason for the reduced revenue forecast. This is the second time the sale forecast has been trimmed this year, and that is a warning sign to traders, as it could be the start of a trend.

“In 2017, the share price has created a series of lower lows and lower highs, which is a worrying sign.”

 Investec’s Steve Liechti gave this summary of the results: 

“Not a complete surprise given peer trading/commentary, but first half like-for-like figures are poor, with the second quarter below forecast and July down also.”

The Twitterati has been incredibly sympathetic as always…

10:31AM

Laura Ashley sales drop as weak pound causes profit plunge

Laura Ashley issued a profit warning earlier this month

Profits at Laura Ashley plummeted by more than 70pc as the retailer blamed the weakness of sterling for its troubles and scrapped its dividend.

In results posted a week after it issued a stark profit warning, Laura Ashley said profits before tax had fallen from £22.8m to £6.3m in the full year, a fall of 72pc. However, the comparable period for the previous financial year was 74 weeks.

On a like-for-like basis, the company’s retail sales were down 3.1pc. It will not recommend a final dividend.

Laura Ashley said its sales were affected by the closure of 22 concessions in Homebase following the takeover of the DIY chain by Australia’s Wesfarmers group.

Shares have retreated 4.1pc this morning.

Read Sam Dean’s full report here

10:23AM

Pound slides 0.5pc against the euro to a fresh eight-year low

The pound hit its lowest level against the euro at the end of 2008

Despite the tight-lipped Draghi speech in Germany, the pound has had a really poor morning against the euro. It has fallen 0.5pc to €1.0858, an eight-year low.

There has been a lot of talk following the EU referendum of the pound reaching parity with the euro but we’ve come closer before. In December 2008 the pound dropped to €1.0201 against euro and had recovered to above €1.40 only by 2015.

Mario Draghi signalling soon the tightening of monetary policy could tip the balance in the euro’s favour but one has to also assume that the very strong economics data coming out of the eurozone of late will slow at some point.

Pantheon Macro believes that there has been “excessive optimism” over the recovery:

“The main driver of the depreciation has been a huge shift in sentiment in favour of the eurozone, as the region’s recovery finally has gathered pace.

“Eurozone GDP rose by 0.5% and 0.6% quarter- on-quarter in Q1 and Q2, respectively, virtually guaranteeing that year-over-year growth will exceed 2% this year for the first time since 2010. Investors now are overwhelmingly net long the euro, following several years of shorting it,

10:09AM

Eurozone PMI reaction: Slight fall in momentum due in third quarter

The PMI figure has been too optimistic in recent quarters, says Pantheon Macro

Strong manufacturing did the heavy lifting in this morning’s robust eurozone PMI figures but a dip in the third quarter reading will indicate a slightly slowing region, according to Pantheon Macro.

Its eurozone economist Claus Vistesen commented:

“Overall, we think the EZ composite PMI probably will fall slightly in Q3 compared with Q2, signalling a modest loss of momentum following the brisk pace in the first half of the year.

“But it does not change the main message from the survey that GDP growth in the euro area will stay resilient in the near term.”

9:53AM

ECB’s Draghi gives little away ahead of Jackson Hole; pound slips below $1.28 against the dollar

Mario Draghi could signal a shift in policy at the Jackson Hole conference this weekend

ECB president Mario Draghi gave little away over the central bank’s next steps regarding monetary policy in his speech in Lindau, Germany, this morning.

Traders were hoping for small clues on when the ECB might taper its quantitative easing programme ahead of the Jackson Hole conference this weekend.

Mr Draghi was originally expected to indicate a change in policy at Jackson Hole from the ECB’s €60bn-a-month bond buying programme but reports surfaced last week that he would remain tight-lipped. There are fears that a surge in the euro if Mr Draghi signalled the tightening of monetary policy would weigh on inflation and actually slow down the the ECB’s normalisation plans.

Elsewhere on the currency markets, the pound has slipped below $1.28 against the dollar for the first time since the end of June with the usual Brexit-related fears pinned on today’s slide.

9:29AM

WPP drags on FTSE 100; UK division a bright spot in its figures

The FTSE 100 has recovered to flat territory following this morning’s dip but advertising giant WPP’s 10pc fall is almost single-handedly stopping the index from advancing.

Investors are punishing the company for slashing its sales growth forecast on a tougher second quarter with July’s like-for-like revenue growth falling to -4.1pc.

Although WPP has pinned part of the blame on rising populism in places such as the UK, its division here was one of the few regions, along with Latin American and Central and Eastern Europe, where revenue actually held up. 

Spreadex analyst Connor Cambpell commented that the company is now on course for its worse year since the 2009 “ad recession”.

He said:

“Much of that drag came from Martin Sorrell’s WPP, which plunged 8% this Wednesday after the advertising giant was forced to cut its full year forecasts. The firm now expects annual revenue and net sales growth of between zero and 1%, down from the 2% stated in March (and the 3% suggested before that), leaving it on track for its worse year since the 2009 ad recession.

“That’s because reduced client spending, itself thanks to macro-economic uncertainty, meant net sales in the first half of 2017 fell by 0.5%, far worse than the 0.6% to 0.7% growth anticipated by analysts, including an especially alarming 1.7% drop in Q2 net sales.”

9:13AM

Eurozone PMI figures indicate strong momentum in the currency bloc

Eurozone PMI figures indicate continued strong momentum in the region

The eurozone’s composite PMI beat expectations to nudge up slightly to 55.8 in August, according to figures from IHS Markit, indicating that the currency bloc’s strong momentum hasn’t let up.

Although growth in the services sector cooled, a rise in the manufacturing reading offset the small services dip with new orders exports rising at its fastest in six-and-a-half years helping to lift the figures.

Earlier, stronger-than-expected German and French PMI figures gave a hint that the region’s composite reading would come in stronger with the French figures almost exactly mirroring the currency bloc’s overall trend.

Here’s what IHS Markit’s associate director Andrew Harker had to say on the figures:

“The latest PMI readings for the eurozone signal a continuation of the recent strong performance of the currency bloc’s economy. This stabilisation in the rate of expansion is pleasing, following signs of growth easing in recent months.

“The survey data over the first two months of the quarter are consistent with only a fractional easing in the rate of growth of GDP from the 0.6% rise in Q2.

“Overall, this is another positive set of numbers for the euro area, which continues to enjoy its best growth spell for a number of years.”

Since the PMI figures started to trickle through and ECB president Mario Draghi started speaking, the pound has dropped to €1.0876, down 0.4pc for the day.

8:53AM

WPP dives 11pc on FTSE 100; blames ‘rising social, political and economic volatility’

WPP’s sales growth was now expected to be between 0-1pc

Advertising giant WPP has dived nearly 11pc this morning after revealing that a tough second quarter will hold back its growth this year. 

Sales growth was now expected to be between 0-1pc, down from forecasts of 2pc.

The company said that the “increasing social, political and economic volatility” and the “rise in populism” meant that “growth has become even more difficult to find”.

It said: “The group’s performance in the first seven months of the new financial year has been much tougher, as worldwide GDP growth, both nominal and real, seems to have slowed in the second half of last year and into the new year.”

Here’s what Hargreaves Landsdown select funds manager Steve Clayton’s take on WPP’s interim results this morning:

“Life is getting tougher in the media world, with WPP experiencing a slowdown in trading in June and July, spread across much of the world and in many different media sectors.

“Forecasts will inevitably be trimmed to reflect the new guidance but we don’t expect to see the numbers move by much overall. It is hard going for all players in media-land at the moment; clients are keeping a tight lid on spending and procurement departments are ruthless in the way they push agencies to lower prices.”

8:33AM

Agenda: Rising risk appetite halted by Trump’s threat to NAFTA; WPP dives on FTSE 100

Concerns that Mr Trump will try and end the North American Free Trade Agreement put the brakes on rising investor sentiment

Trump giveth and Trump taketh away. Overnight, US president Donald Trump’s scattergun approach caught the markets in two minds as renewed hopes that he can push through tax reforms lifted equities but his threat to end the North American Free Trade Agreement and shut down the US government if he does not receive funding for his wall along the Mexican border put the brakes on the rising risk appetite.

That stopped the pound drifting any lower against the dollar but it still remains stuck at $1.2820 with a dearth of UK economics data available to change the momentum. Sterling might have better luck against the euro with PMI figures from the eurozone due and ECB president Mario Draghi speaking this morning. The pound has slipped to an eight-year low against the euro this week.

After yesterday’s strong gains, the FTSE 100 has retreated into the red once again, nudging down 0.1pc early on. Advertising giant WPP is this morning biggest laggard, diving 8.7pc, after cutting its growth forecast.

Interim results: Hansteen Holdings, WPP Group, Carillion, Vedanta Resources

AGM: Independent News & Media, Doriemus, Triad Group

Economics: Flash PMI (EU), New home sales (US)