Pound tumbles as UK factory growth slows; RBS criticised over branch closures - as it happened

Graeme Wearden

from on 2018-05-01 18:01 (#3P3NJ)

All the day's economic and financial news, including a new healthcheck on UK manufacturing, as America announces a reprieve over steel tariffs

7.01pm BST

And finally.... RBS's decision to shut 162 branches across the country has caused a stir in Westminster

Jonathan Reynolds MP, Labour's Shadow City Minister, is concerned that customer will be left without a local branch - an issue brought into the spotlight by TSB's tech breakdown.

"It's extremely disappointing to see RBS closing yet more branches and putting more jobs at risk.

"These closures and job losses are devastating for RBS staff and the communities they serve. Concrete plans must be put in place to ensure vulnerable customers do not suffer as a result.

"In recent years, retail banks have made decisions to shrink their branch network on the grounds that more people are banking online. But branches remain vital for many, particularly vulnerable people and those in rural areas.

"As a result of RBS' decision, there is a risk of increased levels of financial exclusion. It's important for the Government to monitor this trend. If financial exclusion is increasing, the Government may be required to intervene."

3.26pm BST

Time for a recap:

The pound has fallen sharply to its lowest level since mid-January, as fresh signs of economic weakness undermine the case for raising UK interest rates.

"While adverse weather was partly to blame in February and March, there are no excuses for April's disappointing performance."

"UK Manufacturing PMI fell further than expected in April 2018. Having been resilient in the first quarter of 2018 this turning point shows a marked decline in manufacturing confidence. Output increased more slowly and new orders arrived at a slower rate than in Q1.

"Falling order backlogs mean that optimism is likely to remain lower for some months. However, on the positive side growth remained above the long-term average of 51.7 and represents almost two years of continuous growth in manufacturing output. Production rose due to strong customer confidence, new products and increased capacity.

In the context of the recent general #dollar strengthening, the depreciation of #Sterling is being compounded today by weak real #economy data -- amplifying the notable move down of the last couple of weeks (chart)#GBP #currency #fx #forex #pound #britishpound #economy #markets pic.twitter.com/PEgPKx0mVC

Stocks slip at the open as Wall Street awaits Apple earnings, Fed meeting kicks offhttps://t.co/5bWqG4zRpI pic.twitter.com/6pOBKFm1lK

3.05pm BST

Just in: Growth in America's manufacturing sector slowed a little last month, but remained robust, according to the latest data from the Institute for Supply Management.

USA ISM Manufacturing PMI announcement - Actual: 57.3, Expected: 58.3 pic.twitter.com/udNsnTqpYA

IHS Markit US Manufacturing PMI rises to highest level in over 3-and-a-half years, signalling a sharp improvement (56.5 vs. 55.6 prev). Output price inflation accelerates at quickest pace since June 2011. More here: https://t.co/QBRKRdXxjx pic.twitter.com/051LnkHAzK

2.26pm BST

Workers at fast food chain McDonalds have received the backing of Labour's shadow chancellor as they protest against working conditions.

McDonald's staff at five restaurants walked out today, as part of their ongoing campain for union recognition and a minimum wage of 10 per hour.

This is power. Cambridge is united behind higher wages, unions rights and an end to exploitive zero hours contracts. #McStrike locking down the parking lot of this McD's in support of #McStrike and the workers who have walked off the job. #MayDay pic.twitter.com/7R6K8SLDkD

I believe that every worker deserves what these workers are calling for:

1. A real living wage of at least 10 an hour,

This was the moment Blaz Mesner started the #MayDay #McStrike by walking out of McDonald's in #Manchester pic.twitter.com/wZ4tzKbHQd

2.03pm BST

Labour MP Chris Ruane is alarmed that Royal Bank of Scotland are planning to close 162 branches:

This is very concerning news. I am seeking urgent clarification on what this means for Natwest/RBS customers and employees in the Vale of Clwyd. I will provide an upate as soon as possible.https://t.co/6d3F51WyTR

RBS was happy to run the 314-strong W&G branch network (branded RBS) in tandem with its NatWest network in England & Wales for 18 years from 2000 onwards. How come they're suddenly cannibalising each other now? @DouglasBlakey https://t.co/OVzJgDAWTO

By Christmas, RBS will have only 110 branches in England and Wales - but 650 branches of NatWest. Feels like - south of the border - the RBS brand is being gently pushed aside

1.27pm BST

Newsflash: Royal Bank of Scotland has announced it is shutting 162 branches, with the loss of almost 800 jobs.

It's all because RBS is no longer spinning off its Williams & Glyn business as a separate entity with 300 branches.

"We are no longer launching Williams & Glyn as a challenger bank, and we now have two branch networks operating in close proximity to each other; NatWest and Royal Bank of Scotland, in England & Wales.

As a result we have had to review our overall branch footprint in England and Wales and we've made the difficult decision to close a number of Royal Bank of Scotland branches.

More than half of the remaining RBS branches in England & Wales to shut - 162 out of 275. Nearly 1,000 staff affected. Follow U-turn on plans to offload Williams & Glyn business.

1.10pm BST

Here's our economics editor Larry Elliott on the slowdown in factory growth...and what it means for UK interest rates.

12.32pm BST

Barclays are the only UK bank still funding climate wrecking pipelines. Today they hold their annual general meeting and Ocean Hyland, has travelled over 4,000 miles with one simple message - Stop funding tar sands pipelines! #BarclaysAGM #StopPipelines #StopKM pic.twitter.com/7gBhG1SYgt

12.24pm BST

A group of environmental activists have just disrupted Barclay's annual general meeting in London.

A group of climate change protesters stormed the meeting, and were forcibly removed after urging Barclays to stop financing environmentally damaging fossil fuel projects.

"Barclays bank, we said no! Fossil fuels have got to go!

Our students just disrupted the #BarclaysAGM calling on the bank to ditch all fossil fuel finance including coal, tar sands and #KinderMorgan pipeline now! #Divest #Barclays #fossilfree pic.twitter.com/CvueMmsY7c

"If built, Kinder Morgan's project will increase tanker traffic in the inlet 7 fold, bringing with it increased risks of oil spills and pollution. It will also enable the expansion of the Alberta Oil Sands which, in turn will accelerate climate change.

And that is why The Tsleil Waututh Nation will do whatever it takes to stop the Kinder Morgan project.

12.09pm BST

A final decision on whether to allow Rupert Murdoch's 21 Century Fox to buy Sky is close.....

The competition regulator has delivered its final report on the Fox/Sky takeover to @MattHancock. Culture secretary has up until 14 June to publish his decision pic.twitter.com/D6Zr1r0UA6

11.53am BST

In another worrying sign, UK consumer credit growth slowed sharply in March.

Phillip Inman, economics writer, explains that it could show that people are less confident about economic prospects:

"Consumers cut back sharply on their unsecured borrowing in March. The total borrowed on credit cards dropped from 700m in February to 100m in March, while the total borrowed for other forms of unsecured debt, primarily car loans and overdrafts, fell from 1bn to 100m

The dramatic decline in consumer borrowing follows a clampdown by the chief financial regulator, the Financial Conduct Authority, on bank lending to consumers, which grew by 10% or more on average between 2014 and 2017.

Consumer credit (lending on credit cards/unsecured loans) collapsed in March. Lowest levels in nearly six years! Either it's a blip, or another sign UK economy slowing quite sharply. BoE figs: pic.twitter.com/9aY0wWgIyk

"A decade on from the financial crisis, we must not lose sight of the impact of sustained pressure on already stretched household budgets in coping with the rising daily cost of living. We estimate that severe problem debt currently affects some 3.4 million people in the UK, so tackling and preventing vulnerable households from falling into problem debt should be high on the policymakers' agenda.

"While the financial system may not be at risk of history repeating itself in terms of systemic failure, at household finances level the risks are all too real.

11.47am BST

The CBI, which represents British business leaders, says Donald Trump has kicked the (steel) can down the road.

Ben Digby, international director at the CBI, says there is some relief that Europe was given a one-month exemption on steel tariffs - but a permanent deal is still needed.

"Businesses urgently need to know what would have to happen for the exemption to become permanent, to properly reflect the close trading relationship between the USA and the UK - the UK is the largest foreign investor in America, and British companies support over 1 million jobs in the USA, from Alaska to New York.

"Prolonging the uncertainty around these tariffs is a lose-lose for all concerned - it damages prosperity on both sides of the Atlantic. Firms cannot continue making investment decisions based on short-term uncertain deadlines, and we will continue to work closely with the U.S. Administration to protect British trade, jobs and growth."

11.31am BST

Getting back to the US tariffs.... and the French government have issued a statement reiterating the EU's displeasure at Trump's decision.

"The French Government takes note of the decision announced by the US authorities regarding the new temporary exemption of one month given to the EU on prices of aluminium and steel. We support the positions expressed by the European Commission.

"France will continue to advocate that the EU has a full exemption permanent and unconditioned. There is no reason that the EU is subject to unilateral increases in tariffs on steel and aluminum. France and the European Union are US allies. They are not the cause of global overcapacity in aluminum and steel and fully respect all the rules of the WTO.

10.42am BST

Britain's factories has suffered from the threat of a global trade war, says Stephen Cooper, head of industrial manufacturing at KPMG.

Here's his take on this morning's manufacturing PMI:

"The implications of the postponed US steel tariffs will also be in the back of manufacturers' minds. Trade wars are never welcome and whilst it's helpful that the decision has been delayed, this is another example of uncertainty, with other geopolitical risks such as Brexit, which is not good for business confidence.

10.28am BST

Sterling has slumped to a three-month low against the US dollar following April's disappointing manufacturing data.

The pound has shed a whole cent, and is languishing around $1.367, its weakest level since mid-January.

Sterling markets were pricing in a 73% chance of a May rate hike when Carney got on his plane to Washington 12 days ago. Now pricing it at 4%. #whipsaw #rates #GBP pic.twitter.com/5kdJgshMnp

10.10am BST

Lee Hopley, chief economist at EEF, the manufacturers' organisation, is also concerned by the slowdown at UK factories.

"The further slowdown in the rate of expansion in manufacturing activity suggests that the weaker official data seen last week wasn't a temporary aberration.

A weaker start to the second quarter with a more subdued pace of growth in new overseas business perhaps reflects concerns about the erection of new barriers to trade, the recent pick up in Sterling and a softer growth patch at the start of the year in European markets.

9.59am BST

Some snap reaction to the slowdown at Britain's factories last month:

Weak April manufacturing survey all the more disappointing for those who'd expected a rebound after poor weather in Feb/March - suggests Q2 activity remains mediocre

Yet more evidence of a weakening economy. Esp important since @bankofengland is paying more attention to these PMIs than the official GDP data. All eyes on services PMI on Thurs... https://t.co/oDDYicw1nR

Latest Markit manufacturing PMI hit a 17-month low of 53.9 in April. A rough indicator, but it suggests that manufacturing output growth may be coming off the boil. Following last week's GDP news, this is not a great start to Q2. pic.twitter.com/g75DVWWCtm

9.53am BST

Business optimism among UK factory bosses has dipped to a five-month low, according to Markit's survey.

It blames "concerns about Brexit, trade barriers and the overall economic climate".

9.52am BST

Britain's consumer goods industry had a particularly unimpressive April, says Duncan Brock of the Chartered Institute of Procurement & Supply:

"Any hopes for an improvement to last month's steady if unremarkable pace were dashed in April as new order growth was the slowest for ten months and the consumer goods sector was particularly hit reporting the first job losses since February 2017 and the fastest drop in hiring for six and a half years.

"It was left to stronger levels of export orders from Europe and the US to provide some succour to manufacturers as concerns over potential rate rises resulted in less client spending overall. This meant manufacturers were adrift with the highest growth of stock levels for ten months on the one hand but struggling to get key raw materials on the other. Higher demand and competition from other firms meant shortages returned to beset companies trying to cope with challenging delivery times as suppliers failed to complete.

9.40am BST

The slowdown in Britain's economy has gathered pace, with growth in the manufacturing sector hitting its lowest rate since autumn 2016.

Data firm Markit reports that factory output, new orders and job creation all rose at a slower pace in April - partly due to an easing in demand from overseas.

"While adverse weather was partly to blame in February and March, there are no excuses for April's disappointing performance, making the chances of a near term hike in interest rates by the Bank of England look increasingly remote.

"On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signalled by the opening quarter's GDP numbers.

9.30am BST

Newsflash: UK factory growth has hit a 17-month low.

More to follow.....

9.28am BST

9.13am BST

Back in the UK, Sainsbury's chastened CEO won't be breaking into song when he sees the latest supermarket sales figures.

Data firm Kantar reports that Sainsbury's only grew its sales by 0.2% in the last 12 weeks. Tesco managed 2.1% growth, Morrisons achieved 2.2%, while Asda's sales were up by 1.4%.

As Sainsbury's pounces on Asda, Kantar figures show its sales growth in 12 weeks to 23 April lags main rivals pic.twitter.com/Wb35ADn4z6

9.05am BST

Media news:

Ashley Highfield stands down after seven years as chief executive of Johnston Press for family reasons. Highlight: buys i newspaper. Unfinished business: 220m bond refinancing next year https://t.co/yw8r2LXLKV

8.57am BST

Germany's government has called for European countries should receive a permanent exemption from America's tariffs on aluminium and steel.

Echoing the comments from the EU, Berlin argues a deal needs to be reached when Europe's new extension expires in a month's time.

Neither the European Union nor the United States can have an interest in an escalation (in tensions) in trade relation.

Rather, both the U.S. and the EU would benefit from further deepening trade relations."

8.50am BST

Australia's stock market has hit a two-month high, driven by relief that Canberra has reached an "agreement-in-principle" with Washington to avoid steel and aluminium tariffs.

The ASX 200 rose 0.5% to its highest level since the end of February, as Australia's prime minister, Malcolm Turnbull, hailed the "unbreakable friendship" with America.

Trump deciding to extend the deadline for his steel and aluminium tariffs helped lift Australian shares to a 7-week high overnight. This is encouraging news and supports the notion that the tariffs are just a negotiating stance by Trump, who in fact has no intention of implementing them.

That said, there is still plenty of uncertainty over the US - China trading relations and the US - Iran nuclear deal to keep investors on edge.

8.20am BST

Labour MP Bill Esterson is also unimpressed:

Trump has delayed his decision on whether to put massive tariffs on UK steel. Government needs to work with EU to make sure tariffs are scrapped. Workers and investors need certainty. This delay doesn't help.

8.12am BST

Over in Brussels, there's real disappointment that Europe hasn't been given a full exemption from Trump's steel and aluminium tariffs.

The European Commission feels that the EU should have been given the same treatment as Australia, Argentina and Brazil.

"The US decision prolongs market uncertainty, which is already affecting business decisions. The EU should be fully and permanently exempted from these measures, as they cannot be justified on the grounds of national security.

"Overcapacity in the steel and aluminium sectors does not originate in the EU. On the contrary, the EU has over the past months engaged at all possible levels with the US and other partners to find a solution to this issue.

8.04am BST

The UK Government has welcomed the news that Europe has been given an extra month's exemption on steel tariffs -- and said it hopes to make the relief permanent.

A Department for International Trade spokesman warned that the tariffs could hurt global growth, saying:

"We remain concerned about the impact of these tariffs on global trade and will continue to work with the EU on a multilateral solution to the global problem of overcapacity, as well as to manage the impact on domestic markets."

Read the government's response to the USA decision on steel and aluminium tariffs: pic.twitter.com/VN2KOk6yAR

7.53am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

....reached agreements in principle with Argentina, Australia, and Brazil with respect to steel and aluminium, the details of which will be finalized shortly.

The Administration is also extending negotiations with Canada, Mexico, and the European Union for a final 30 days."

Trump, who ran on a nationalist "America first" agenda, claims the tariffs are needed to protect American metal producers from unfair competition and enhance national security amid a worldwide oversupply of steel and aluminum largely blamed on excess production in China.

At a joint press conference with Merkel at the White House last week, the president said: "We need a reciprocal relationship, which we don't have ... We're working on it and we want to make it more fair and the chancellor wants to make it more fair."

Sainsbury's CEO Mike Coupe singing 'We're in the money' while waiting for his ITV interview is everything. https://t.co/tSdjGc2xNh

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