Moody's joins Bank of England's Broadbent and S&P with Brexit warnings - as it happened
BoE deputy governor Ben Broadbent warns that Britain and EU would suffer lower exports, and higher prices, if trade links are weakened
- Latest: Moody's adds to chorus of Brexit warnings
- Broadbent on how UK trade could suffer from Brexit
- Britain would face lower quality, higher prices if EU trade curtailed
- Broadbent: Poor suffer most from expensive imports
- What the experts say
- Read Broadbent's speech here
- S&P: Inflation and Brexit will hurt growth
8.12pm BST
Kathrin Muehlbronner, a Moody's Senior Vice President, explains that the agency is worried that Britain will exit the EU without a good agreement.
While the negotiations with the EU have recently started, it remains unclear whether the UK government can eventually deliver a reasonably good outcome for the UK.
The likelihood of an abrupt - and damaging - exit with no agreement and reversion to WTO trading rules has increased compared to our expectation directly after the referendum, with the government so far pursuing objectives that imply a 'hard' exit."
8.01pm BST
A late PS: Rating agency Moody's added to the chorus of gloom today by warning that Brexit-related uncertainty is putting the UK's credit rating at risk.
In a statement, Moody's says that the UK's creditworthiness is under pressure following last summer's vote to leave EU, and ongoing uncertainty over how the negotiations will play out.
The UK economy has started to slow, and Moody's expects the UK economy to weaken significantly through the remainder of this year, with the baseline scenario seeing growth declining to 1.5% this year and 1.0% in 2018, compared to 1.8% in 2016.
Just in: "#UK's creditworthiness under pressure from #Brexit-related
uncertainty; political and fiscal risks rising", Moody's says. @welt
Moody's: UK sovereign rating could be downgraded if the "core elements" of the UK's current access to EU Single Market aren't maintained. pic.twitter.com/Fe91GyGt7f
6.57pm BST
And finally... European stock markets all fell today.
In London, the FTSE ended down 40 points, or 0.55%m, at 7,329.
Mr Broadbent discussed international trade, but not his views on interest rates. Dealers were disappointed with the lack of monetary policy remarks, so they had little reason to be long the pound.
6.15pm BST
Over in Greece, the country's bank governor Yiannis Stournaras has poured cold water on the government's aim of returning to the financial markets imminently.
Many Greek newspapers are saying Stournaras has put a "break" on the plan to tap markets following the conclusion of tortuous bailout negotiations with creditors
"I think it would be even better, for instance, if Greece proceeds with two or three emblematic privatizations in the period to come. That would be more helpful to tap markets later."
3.16pm BST
Szu Ping Chan of the Telegraph has covered Broadbent's speech.
Here's a flavour (more here).
The Government must protect the City in Brexit negotiations and keep EU trade links open if it is to safeguard growth and maintain UK living standards, a top Bank of England official has signalled.
Ben Broadbent, deputy governor for monetary policy, warned that a pivot away from exports to the EU would force Britain to "shift away from producing the things it's been relatively good at", such as financial services.
Protect EU trade and financial services to safeguard economy, Bank of England official warns https://t.co/NHkszEMnzu pic.twitter.com/SnDxXwyFS4
3.12pm BST
Over in America, the latest employment stats have just landed.
They show that the number of vacancies across the US fell by around 300,000 in May, to 5.7 million. That could be a bad sign for the economy.
JOLTS headline is down (from an all-time high) but the hires line is one of the strongest on record (2nd-highest of the cycle?) #jobs
Job openings decrease in May; hires and separations both increase https://t.co/hll2Uc4FZt #JOLTS #BLSdata
3.08pm BST
Kathleen Brooks of City Index suspects that Broadbent is still firmly in the 'no change' camp at the Bank of England.
She says:
His speech in Aberdeen, the seat of the UK oil industry, gave no direct reference to his views on the outlook for UK monetary policy, however, he was very concerned about the UK's trade prospects after Brexit, something that is most likely shared by the export-orientated audience in Aberdeen.
It doesn't seem like a stretch to assume that if Broadbent is concerned about Brexit's impact on trade then he is unlikely to make things harder for exporters by voting to raise interest rates any time soon. Thus, the hawks on the committee, now just McClafferty and Saunders, could remain in the minority for some time.
3.02pm BST
City trader Stewart Hampton has a good take on the Broadbent speech, and why he didn't cover interest rates.
1/ That #BOE Broadbent declined the opportunity to address monpol directly might be understandable given the recent carnage.
2/ However, with many BOE rate setters highlighting that rate rises are contingent upon a smooth(ish) Brexit....
3/ Broadbent's speech may well be telling. Choosing instead to highlight the potential (likely) damage to UK economy from Brexit ....
4/ sticks him firmly in the 'wait and see' camp on monpol imo
2.57pm BST
Here's one last chart from Ben Broadbent's speech, which looks at globalisation.
It shows how world trade slumped in the great depression and during the second world war (no surprise really), and then grew, in fits and starts, after WW2 ended.
2.30pm BST
Ben Broadbent's speech is a full-throated defence of the benefits of trade, say City experts.
Mohammad Jamei of UK Finance, the trade body, is tweeting the key points:
Ben Broadbent's speech on globalisation and Brexit: UK will need to get better at producing stuff it imports (crude materials, live animals) pic.twitter.com/p01cK5L2G3
Arguably the most important part of Ben Broadbent's speech: Brexit likely to reduce UK's income and raise costs as we lose benefits of trade pic.twitter.com/WDLtjVB5kn
That Brexit is an act of gross economic self-sabotage not really a matter of contention any more. But it's always sad to see it reconfirmed.
Well at least we definitely know where Broadbent stands on trade pic.twitter.com/qUvnlQgDXh
Shorter Broadbent: I agree with Ricardo. pic.twitter.com/tkEtUgqrK6
Anyone who has ever uttered the phrase "losers from globalisation" should read this Ben Broadbent speech.https://t.co/fKSQPMaR8w pic.twitter.com/WnppH1iUlh
2.15pm BST
Ben Broadbent also outlines how the poorest Britons would suffer if trade with the EU was badly damaged by Brexit.
He starts by reminding his audience in Aberdeen about the Corn Laws, which drove up the cost of food from abroad - lining landowners pockets but hurting the less well-off (whose meagre incomers were swallowed up by essentials)
Much of the work on trade and inequality focuses on the potentially differential effect on wages and employment. The gross costs of trade may not be evenly distributed.
As Chart 11 demonstrates, however, the gross benefits of lower import prices are probably skewed as well. On average, things that are more tradable are also consumed disproportionately by the less well-off.
2.09pm BST
I'm no fashion expert, but Ben Broadbent's tie does remind me of the Queen's anti-Brexit hat. It's certainly a similar share of EU blue.....
1.59pm BST
Ben Broadbent has also brushed up his grasp of the UK economy by visiting a Scotch whisky distillery.
Thanks to @gordon_macphail for hosting Deputy Governor Ben Broadbent @Benromach today, interesting discussion on business conditions pic.twitter.com/aSaw03rPgU
1.58pm BST
The pound has also shed its early gains against the euro, falling back to 88.5p, from 88.25p.
Broadbent doesn't echo recent hawkish #BoE talk, as he doesn't mentions monetary policy at all - #EURGBP moves higher pic.twitter.com/RsH3CrszNP
1.50pm BST
Ben Broadbent's failure to discuss interest rates in Aberdeen may be a sign that he's planning to vote for 'no change' next month.
Larry Elliott, our economics editor, explains:
Those looking for clues as to how Ben Broadbent will vote in next month's crunch meeting of the Bank of England's monetary policy committee from his speech in Aberdeen needed the detective skills of Sherlock Holmes.
Threadneedle Street's deputy governor was expected to provide his thoughts on whether interest rates should be raised or left at their current level of 0.25%, but instead devoted his address to the benefits of international trade.
You have to scrape barrel to get Broadbent's views ahead of Aug MPC. If scraping I wld say points to n/c vote given recent weak exports data
1.43pm BST
After all that build-up, Ben Broadbent's speech doesn't actually discuss UK monetary policy at all!
The pound had shed all its early gains, falling back below $1.29, on disappointment that the deputy governor hasn't given any hints about when he might vote to raise interest rates.
Nothing on monetary policy from BoE's Broadbent which has disappointed a few GBP longs
1.33pm BST
Breaking! Ben Broadbent, deputy governor of the Bank of England, is on his feet in Aberdeen now.
And his message to the Scottish Council for Development and Industry is that Britain will suffer if its existing trade links with the EU are weakened by Brexit.
What matters for trading patterns, he explained, was not just absolute advantage - whether a domestic sector was more productive than its peers in other countries - but also its productivity relative to other sectors at home ("comparative advantage").This was important, because it meant that, in principle, a country could have lower productivity across the board, in the production of every good, and still end up as a net exporter of some of them.
Well, obviously the EU economies are highly developed, so our trade with Europe - which is extensive - is less skewed towards labour intensive goods and services than that with developing economies. Nevertheless, it has allowed for a great deal of specialisation. And if the theme of this talk is that the benefits of trade involve imports as much as they do exports, the same point applies. Put simply, a significant curtailment of trade with Europe would force the UK to shift away from producing the things it's been relatively good at, and therefore tends to export to the EU, and towards the things it currently imports and is relatively less good at.
All else equal, the first shift (i.e. away from services exports) would tend to lower UK income, the second to raise certain costs (that is, of food and machinery). And, albeit on a smaller scale, relative to their (much larger) GDP, the same would be true for the EU16.
Trade really is mutually beneficial and less of it costs us all. That these truths are a couple of centuries old, and not always widely accepted, doesn't make them any less true.
1.22pm BST
Excitement is building in the City as investors await Ben Broadbent's speech.
The pound is a little higher, at $1.2915, up nearly half a cent today.
Tough to see #BOE Broadbent deviating from Carney, but, they have been surprising us of late.
GBP starting to move ahead of Broadbent - who is an enigma now. If he sounds hawkish GBP will pop
12.56pm BST
The Bank of England's session on the importance of numeracy hasn't yielded much hard news, I'm afraid.
The best I can find is this warning from BoE chief economist, Andy Haldane:
Andy Haldane @Nat_Numeracy: UK only country in OECD where numeracy of 16-24year olds no better than 55-65 year olds
12.54pm BST
Over in Greece the finance ministry has embarked on plans to return to bond markets - possibly as early as next week - following the disbursement yesterday of a7.7bn in bailout funds.
12.46pm BST
Construction and support services firm Carillion is having another bad day after yesterday's profit warning, which sent the shares plunging 39%.
The shares are down a further 20% today, slumping to 93p - their lowest level since 2000 - and wiping out half the company's market value since Monday morning's announcement. It is now worth just over 400m.
11.56am BST
Over in Paris, some of the world's top bankers have been discussing their plans for Brexit at a financial forum.
Stuart Gulliver, CEO of HSBC, told the audience that HSBC would move 1,000 jobs from the City of London to France if Britain left the single market (reiterating comments made in January).
"There is about 1,000 jobs out of 43,000 that are employed in the UK that will be unlawful for our activities to be carried out of the UK, if it's hard Brexit,"
"The package of reforms suggested last week is very, very positive."
Jamie Dimon @jpmorgan "we want to be ready for day one" as we need to prepare for the worst in @BREXIT
Jamie Dimon @jpmorgan "we have the licenses in Frankfurt" we might however also move people elsewhere @BREXIT
JP Morgan's Jamie Dimon on Brexit "I don't think the British people know what it means." 1/2
Dimon on Brexit: "They voted out of something they don't know what they voted into."
11.33am BST
Boris Glass, senior economist at S&P Global Ratings, has a gloomy take on Britain's economic prospects in today's report.
Glass says:
"Growth is set to remain on a moderate trajectory as imported inflation squeezes household budgets and uncertainty about the outcome of the EU exit negotiations dampens investment."
11.11am BST
My colleague Zoe Wood has spotted protests outside Marks & Spencer's AGM, and a light-fingered investors inside the meeting!
Here's peeps from Global Justice Now (I think) who want M&S to pull ads from Daily Mail pic.twitter.com/Tnf71xkXM0
M&S update just saw shareholder sweep tray of Bourbon biscuits into her handbag#brazen
11.01am BST
Credit rating agency Standard & Poor's has just added its voice to the chorus of anxiety around Britain's economy.
10.18am BST
#BOE Broadbent speech delayed till 13.30 BST
10.12am BST
Ben Broadbent's speech has just been pushed back to 1.30pm, from noon.
Here's the latest from the Bank of England:
Ben Broadbent: Speech at the Scottish Council for Development and Industry during regional visit to Scotland (13:30), Aberdeen. Text to be released. (Private, invitation only)
10.04am BST
Pearson and Marks & Spencer have helped to drag the FTSE 100 into the red this morning.
The blue-chip index is down 49 points, or 0.7%, at 7320. That means its underperforming the rest of Europe.
In what looks like is going to be a pretty dull day, sterling may end up being the focus given that the main events are a panel appearance from Bank of England chief economist Andy Haldane and a speech from deputy governor Ben Broadbent.
The former sparked a sterling surge in June after switching from dove to hawk, while the latter is yet to make his stance clear, meaning any rate hike titbits could be of great interest to the pound.
9.55am BST
Publishing group Pearson has slumped to the bottom of the FTSE 100 fallers, after selling 22% of its Penguin Random House, the world's biggest publisher, to Bertelsmann.
The sale has yielded almost $1bn for Pearson, which is planning to return 300m to shareholders.
Related: Pearson sells slice of Penguin for $1bn
9.28am BST
Sterling has crept higher this morning as traders get ready for Ben Broadbent's Aberdeen speech to hit the wires at noon precisely.
The pound has risen by 0.2% against the US dollar, to $1.2904. It's up a similar amount against the euro, at a1.132.
Haldane has recently voiced his preference for higher UK rates to cool down the inflationary pressures.
His speech could give a boost to the pound-bulls, yet may not suffice to gain over the critical $1.3045 resistance.
9.15am BST
We have encouraging news from Italy.
Italian industrial production rose by 0.7% in May, beating forecasts of a 0.5% rise and reversing April's 0.5% decline.
Strong Italian Ind Prod growth in May; back around 2017 highs
Italy Industrial Output w.d.a (YoY) came in at 2.8%, above expectations (2.2%) in May https://t.co/Do7cMlW2Ch pic.twitter.com/6KWHnETn4o
9.06am BST
In the City, shares in Marks & Spencer have dropped by 1.5% after it released an underwhelming statement ahead of today's shareholder meeting.
Marks & Sparks 1Q lfl clothing & home -1.2% food -0.1%
Oh
Those food figs poor given food booming elsewhere.
The best way to sum up M&S's Q1 sales was disappointing. Not only did the clothing and homewares sector see another 1.2% drop in sales, the second consecutive decline, but the all-important food sector also saw a decline in sales, dropping 0.1%, whereas estimates had looked for a pick-up of 0.6%.
Unsurprisingly, the share price has dropped at the UK open, as investors' lose confidence in the outlook for the UK high street stalwart.
8.56am BST
Reuters have done a preview of the Ben Broadbent speech:
Bank of England Deputy Governor Ben Broadbent will deliver a speech on Tuesday, giving investors a chance to hear the views of an interest-rate setter who has not yet commented publicly since a narrow vote to keep rates unchanged last month.
Broadbent is due to speak in Aberdeen during a regional visit to Scotland, the BoE said in its weekly schedule of speaking events by top officials.
"BoE's Broadbent to Speak on Tuesday Amid Rate Hike Speculation" by REUTERS via NYT https://t.co/8TWnNlubaL
8.45am BST
Ahead of Ben Broadbent's speech, here's a reminder of what his colleagues on the Monetary Policy Committee have said recently.
Andy Haldane: If the data holds up, there's a case for withdrawing some stimulus later this year #hawkish
8.28am BST
Kit Juckes of Socii(C)ti(C) Gi(C)ni(C)rale agrees that Ben Broadbent's speech in Aberdeen today could shift the pound, if he drops any interest rate hints:
Mr Broadbent is potentially a market-mover as we watch to see if anyone else is switching to a more hawkish bias on UK monetary policy.
7.50am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
At this stage we would anticipate that Mark Carney, Jan Cunliffe and Gertjan Vlieghe will vote for an unchanged Bank Rate at the August meeting, with Andy Haldane, Michael Saunders and Ian McCafferty expected to vote for a hike.
This has put the focus clearly on Broadbent, whose post-election purdah views remain unknown up to this point. If Broadbent signals his views are more aligned with the hawks, short-term UK interest rate expectations are likely to jump again. Conversely, if the Deputy Governor maintains a balanced emphasis to his comments the risk of a near-term rate hike in the UK should recede a little.
Related: Pound jumps after Haldane turns hawkish and UK deficit falls - as it happened
The letter we're taking to @marksandspencer AGM today signed by 72 different anti-racist & migrant solidarity groups https://t.co/1yNuF5LZtJ pic.twitter.com/zAnfC4fy6v
Looking ahead, highlights include US JOLTS, APIs, BoE's Haldane, Broadbent, ECB's Coeure, Constancio, Fed's Brainard and Kashkari
Our European opening calls:$FTSE 7379 +0.12%
$DAX 12476 +0.24%
$CAC 5179 +0.26%$IBEX 10533 +0.22%$MIB 21231 +0.19%