TUC, CBI and MPs blast Bank of England over 'menopausal' economy comments - as it happened
Deputy BoE governor criticised after saying Britain's economy is in a "menopausal" phase after passing its productive peak.
- Latest: Broadbent apologises
- Critics: It's disappointing, lazy and sexist
- BoE deputy says UK in 'menopausal' phase
- Introduction: MPs lift lid on Carillion collapse
5.56pm BST
A number of European markets managed to edge higher by the close, but a notable exception was Italy. The FTSE MIB fell sharply after reports the planned coalition government wanted the ECB to write off a250bn worth of debt, a move which in the unlikely event it happened, would send ructions through the eurozone.
Elsewhere Wall Street benefited from a positive update from retailer Macy's, despite concerns about the renewed war of words between the US and North Korea. The final scores showed:
4.18pm BST
More on Carillion from Rachel Reeves MP, chair of the business committee:
Carillion's directors love to talk about how sorry they are, but being sorry won't help the people who have lost out. The directors were paid millions and could do something to help, but their faces in this video say it all: they won't. pic.twitter.com/t3FC5BGmRz
4.08pm BST
Back with Ben Broadbent and his "poor choice of language" earlier, and here is a Guardian Pass notes for him to enjoy:
Related: Menopausal: how an ill-advised analogy left the Bank of England deputy red faced
4.03pm BST
Italy could cast a dark cloud over markets, says Chris Beauchamp, chief market analyst at IG:
Italy should give investors pause for breath, although at present it is not quite having any real impact, since the likely coalition government seems set on upending the existing eurozone order. How far they plan to go remains a question that is yet to be solved, but it brings back uncomfortable memories of the eurozone crises of years past. Then, it was always said that the single currency union could survive the departure of Greece or Portugal, but that Italy would be the proverbial straw that broke the camel's back. Italian assets are diverging from their eurozone brethren today, but if things get worse and these plans move closer to reality then we can expect the contagion to spread.
3.49pm BST
Oil prices have recovered from their worst levels of the day after a bigger than expected fall in US crude stocks.
They dropped by 1.4m barrels last week compared to a forecast of a 0.8m barrel dip. Petrol demand over the past four weeks was up 0.7% compared to a year ago.
U.S. commercial crude #oil inventories for week ending 5/11/18 DOWN 1.4 million barrels, refinery utilization = 91.1% https://t.co/5CKkLwNaLn #WeeklyPetroleumStatusReport #energy
3.09pm BST
More on Italy, and it seems there may not be a move to ask the ECB to cancel a250bn in Italian bonds:
League's economic adviser Borghi rows back on the idea that the @ecb should cancel a250bn in Italian bonds. He adds 5 Star/League coalition would only ask that bonds bought under QE do not count for debt/GDP ratio - for all EZ countries (@repubblica) https://t.co/pmVO89KpfB
I'm sure a lot of the policy ideas in the #Italy putative coalition deal between MS5 and Lega won't make it into the final draft. But direction is clear - populist proposals which are totally unrealistic. Especially those which makes demands of #ECB and #EU. But will be popular.
2.47pm BST
US markets have managed to open marginally higher as a rise in retail shares (including Macy's after a forecast beating update) was offset by falls in energy shares.
The Dow Jones Industrial Average is currently up 16 points or 0.07% while the S&P 500 and Nasdaq Composite opened around the same amount higher.
Yesterday's retail sales figures showed a strong consumer sector and today's IP numbers further boost hopes of a strong bounce in 2Q economic activity.
US industrial production rose 0.7%MoM in April, a touch above the 0.6% market prediction while growth in March was revised up from 0.5%MoM to 0.7%. There was good news in all the components with manufacturing seeing output rise 0.5% while utilities rose 1.9% and mining was up 1.1%
US #manufacturing growth accelerated in April, as flagged in advance by our PMI. Correlation is 89%... pic.twitter.com/kS20g3SHOv
2.34pm BST
The UK Treasury is pumping an extra 4m into the Office for National Statistics - which has been under fire in recent years for the quality of its data - to "capture what is happening in the modern economy."
It brings investment in the ONS to 16m so far, and will allow it to improve its measurement of inflation, the labour market and the service sector, as well as setting up new PhDs and apprenticeships.
2.15pm BST
Meanwhile the continuing political uncertainty in Italy has sent the euro lower and the country's stock market down 2%. Fawad Razaqzada, market analyst at Forex.com, said:
Reports that the Five Star Movement and the League, which are in talks to form a coalition government, are considering a debt relief from ECB to the tune of a250 billion has stoked fears over Italy's creditworthiness. Italy's FTSE MIB has fallen sharply as a result, as too has the euro, and despite an otherwise bullish day for European stocks.
Italian bonds getting hammered today, but there may be good reasons to keep calm and carry on buying. Via @DharaRanasinghe@saikysays and @ritvikcarvalho https://t.co/MUNyq1c3EG pic.twitter.com/9LCUJpj9p9
BTPs open weak after the M5S-Lega program goes full Tsipras. pic.twitter.com/YrXi0myICI
2.12pm BST
Back to the news that the East Coast mainline will be temporarily nationalised after co-owners Virgin and Stagecoach could no longer meet promised payments. Analyst Joe Spooner at Jefferies says:
Reversion of East Coast to government operation will no doubt spark a cycle of press commentary about rail nationalisation and the political climate will no doubt fuel a public debate.
The more sober reality, we think, is that East Coast was a contract that commercially failed (it was [with hindsight] overbid for - but that's different to operational failure), Stagecoach has paid the price for that (funded its c.180m share of the contingent liabilities) and failure has to be an accepted risk if contracts are to be bid for.
Related: East coast mainline to be temporarily renationalised
1.56pm BST
The CBI have accused the MPs who drew up the Carillion report of going over the top.
Josh Hardie, CBI deputy director-general, claims the language in the report creates the "wholly inaccurate" impression that Britain's businesses are all greedy and reckless.
"Carillion was a painful lesson for business and government on the dangers of short-termism in public service contracts. This failure should act as a catalyst for a level-headed discussion about how the public and private sectors work together to deliver value to society, as they so often do.
"200,000 organisations play a vital role in delivering public services, providing much-needed innovation and investment - whether through building new classrooms or transforming frontline public services - often in very challenging circumstances.
1.41pm BST
Getting back to Carillion...... smaller construction firms are welcoming today's parliamentary report into the company's collapse.
The Specialist Engineering Contractors' (SEC) group, which represents engineering groups, says Carillion was not along in abusing its suppliers.
"Unfortunately Carillion is not alone. Payment and contractual abuse is rife in the construction industry."
1.27pm BST
Our financial editor, Nils Pratley, agrees that Ben Broadbent has blown his chance of succeeding Mark Carney:
The chancellor's job of choosing the next governor of the Bank of England just got slightly easier. A basic requirement of being the nation's senior central banker is an ability to avoid making crassly sexist remarks. Ben Broadbent, one of four deputy governors and thus an internal candidate for the big job, has just failed the test after describing the UK economy as "menopausal".
Related: Bank deputy fails test for top job with 'menopause' comment | Nils Pratley
1.13pm BST
Here's some reaction to the news that the Conservative government is bucking its traditional opposition to nationalisation.....
East Coast to be renamed London and North Eastern Railway, under public ownership from June 24
In 11 years, intercity east coast has gone... GNER -> National Express East Coast -> East Coast Trains -> Virgin Trains -> LNER
The irony is, if the East Coast Mainline had been a benefit claimant, the Tories would have made sure it passed its Work Capability Assessment #TakeBackTheTrack
extract from a speech in March praising free markets by Chris Grayling, who is about to nationalise a railway line pic.twitter.com/eh2kqQrEh9
1.04pm BST
Newsflash: Britain's East Coast main line, which run between London and Edinburgh, is being nationalised again.
The government has decided to terminate the existing East Coast rail franchise operated by Stagecoach and Virgin Trains, and take it back into public control.
East coast rail franchise to be brought back under public control - Politics live https://t.co/XyYsXLC65p
12.47pm BST
Ben Broadbent's comments may cloud his future at the Bank of England, says Bloomberg's Jill Ward.
Bank of England Deputy Governor Ben Broadbent was forced to apologize after describing the U.K. economy as "menopausal," putting the central bank in a new communications controversy.
The remarks in an interview with the Daily Telegraph sparked complaints about sexism and ageism. The timing was particularly unfortunate for the BOE, coming two days after Governor Mark Carney hosted a conference on diversity in central banking. They follow a slew of criticism over the bank's messaging on monetary policy, which dominated Carney's interest-rate press conference last week.
Didn't that go well.... https://t.co/fVzLHF762n via @economics @jillianfward @bankofengland pic.twitter.com/iE7cjsbjBU
12.37pm BST
Lauren Chiren, a menopausal coach, has written to Ben Broadbent - explaining why describing the UK economy as menopausal is a problem.
Chiren says:
This is another example of gender power and ignorance, and placing blame on women for something that they have no control over. It is appalling, that in 2018, women's issues are still being used as metaphors, and scapegoats, to avoid actually addressing the underlying issues that are really causing slumps in the economy.
Appalled by the comments on the '#menopausaleconomy' by #benbroadbent from @bankofengland. Ben, here is my open letter to you. I invite you to come along & do a session with me on menopause, so that you can educate yourself on the matter & why it's not ok to use it as a metaphor. pic.twitter.com/m8GCZ9sTRJ
12.23pm BST
Jayne-Anne Gadhia, the CEO of Virgin Money who led a government review into gender equality in the financial sector, offer some personal insight into the issue:
"When I read this I thought about my own menopause and was sure he meant that the future is hard work, challenging, renewing, worth fighting for, 100% positive and constantly HOT!"
12.05pm BST
Several politicians have also tweeted their criticism of deputy governor Ben Broadbent, which rather confirms that he may have sunk his chances of rising to the governorship.
Clare Perry, Britain's minister for Energy and Clean Growth, says the menopausal comment was out of order:
I can't be the only 50+ woman objecting to Ben Broadbent's pejorative description of the U.K. economy as 'menopausal'. I've never been more productive! How about 'andropausal' instead? Then you get declining potency and bonus grumpiness thrown in! https://t.co/DGFwmsRTDm
I agree Claire, it also demonstrates massive ignorance of the menopause and how it affects women in many different ways that can differ enormously from woman to woman.
Really this is a very poor choice of words. May surprise this journalist that menopausal and post menopausal times can be very productive! https://t.co/QthbZIWd85
11.53am BST
A former Bank of England policymaker, Dame Kate Barker, also believes Ben Broadbent's comments are out of line.
As reported I found them pretty offensive https://t.co/Z7tRmNf7KX
11.47am BST
Although Broadbent's apology was swift, it hasn't stopped the backlash.
Fran Boait of the Positive Money campaign group isn't impressed:
BoE's Broadbent apologises for describing UK economy as 'menopausal' seriously wtf is the matter with these people https://t.co/UZtppcHVz5
Menopausal? Really?
Have these people considered the grand-scale stability menopausal women have offered society over the millennia, supporting the young, looking after the old, working hard?
I wish on the UK a truly menopausal economy. https://t.co/dDEs8QiThE via @telebusiness
11.25am BST
The head of the CBI, Carolyn Fairbairn, has also criticised Ben Broadbent's comments.
Fairbairn says:
"This poor choice of words is very disappointing and distracts from the real issue at hand.
Productivity has been the UK's Achilles heel for far too long. Our priority should be tackling the low productivity that can lead to higher regional inequality.
10.22am BST
Broadbent's gaffe has reduced his chances of succeeding Mark Carney at the top of the Bank of England, says the FT's Chris Giles:
Carney is due to leave the BoE next summer, so the formal search for his successor will begin soon.
Ben Broadbent undermined his chances of becoming governor of the Bank of England on Wednesday after having to apologise for describing the UK economy as " menopausal "....
The embarrassment felt in Threadneedle Street for using gender-loaded language is all the more acute because the bank has been trying to extinguish such terms from daily use within the institution.
"his choice of words is unlikely to have done him any favours, particularly with Theresa May, the prime minister, who must approve the choice of the next governor." https://t.co/5mvozFndA1
9.47am BST
NEWSFLASH: Ben Broadbent has issued an apology.
The deputy governor says he's sorry for his 'poor choice of language' and regrets the offence caused by describing the UK economy as menopausal.
Bank of England dep governor Ben Broadbent apologises for telling the Telegraph the UK economy was "menopausal". Statement: pic.twitter.com/Hr6Di4Jqr3
9.38am BST
TUC General Secretary Frances O'Grady has criticised Ben Broadbent for comparing Britain's economic slowdown to the menopause.
She tells us:
"This kind of language is totally inappropriate. There's no need to resort to lazy, sexist comments to describe problems in the economy."
9.13am BST
Ben Broadbent, the deputy governor of the Bank of England, is facing heavy criticism this morning after declaring that the UK economy is entering a "menopausal" era.
Broadbent said the term applied by economic historians to describe such a slump was "climacteric", which he said essentially means "menopausal, but can apply to both genders. You've passed your productive peak."
His comments drew criticism on Twitter. Robert Peston, political editor of ITV, tweeted that Broadbent's language was "sloppy and potentially offensive".
Sloppy, empirically unsound and potentially offensive use of language by Bank of England deputy governor. There is no reason to think menopausal people are less productive or past their peak in any sense other than the bleedin' obvious one https://t.co/g7pplOyNHi
Or '50+-man-who-knows-he-has-not-fulfilled-expectations-despite-immense-privilege slump'? > 'Menopausal' UK economy risks once-in-a-century slump, warns deputy chief at Bank of England https://t.co/XANZuis9Bv via @telebusiness
Splutter. Bank of England Ben Broadbent's "menopausal economy" comment definitely brings out my inner Kate Reddy. Unintentional casual sexist ageism with yer cornflakes, anyone? Of course it might just be my age ;)
Ben Broadbent of The Bank of England used the "menopausal" metaphor for economies that were "past their peak and no longer so potent" - tell that to all the successful women over 50 #menopausalmoment https://t.co/wovvxqbtrj
For all the talk of change at the Bank of England these comments by deputy governor Ben Broadbent about a "menopausal economy" reveal how little culture change Mark Carney has actually delivered ... https://t.co/5X72adFwXy pic.twitter.com/1TjCtL0psR
"Mr Broadbent said financial experts used the 'menopausal' metaphor for economies that were past their peak."
Mr Broadbent et al. clearly need to grow up and conjur up some less sexist economic jargon. https://t.co/JRN0Hd6WOP
Deputy Bank of England governor talks about the economy being "menopausal". Besides the offensively gendered language, this suggests economy's woes are natural and unavoidable.
8.51am BST
The body which governs Britain's auditors has announced that it is making 'good progress' in its probe into Carillion.
Britain's Financial Reporting Council is examining Carillion's financial statements and audits over several years, to decide whether any disciplinary action is needed.
Given the clear public interest in this matter, the Financial Reporting Council (FRC) is providing an update on its investigation into Carillion. The main areas of focus for the investigations of KPMG's audit of Carillion (2014 - 2017) and of two finance directors Richard Adam and Zafar Khan are: contract accounting; reverse factoring; pensions; goodwill and going concern.
Good progress with the investigation is being made by the FRC's team of lawyers and forensic accountants.
Chronically passive, they do not seek to influence corporate decision-making with the realistic threat of intervention. Action is part of their brief. They require cultural change as well.
8.31am BST
Labour MP Rachel Reeves, who chairs the BEIS committee, is calling for Britain's Big Four accountancy firms to be broken up in the light of the Carillion crisis.
Today's report concludes that the auditors failed to spot Carillion's crippling financial problems because they were too focused on their own fees.
KMPG was paid 29 million to act as Carillion's auditor for 19 years. It did not once qualify its audit opinion, complacently signing off the directors' increasingly fantastical figures.
In failing to exercise professional scepticism towards Carillion's accounting judgements over the course of its tenure as Carilion's auditor, KPMG was complicit in them.
"The auditors should also be in the dock for this catastrophic crash.
"The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope.
Carillion's board lined their own pockets, boosting bonuses and dividends even when the company was on the brink of disaster. The thousands who lost their jobs and the small businesses facing ruin won't thank them for rewarding their own failure. https://t.co/0WHYtHPLnX
8.20am BST
We've gathered some of the best quotes from the report:
Related: What MPs said about the collapse of Carillion and its board
8.16am BST
Former Carillion finance director Richard Adam isn't best pleased with the MPs' report.
Adam, who was FD between 2007 and 2016, says:
Despite retiring over a year before Carillion went into insolvency, I am deeply saddened by the events that have since overtaken the company.
The reasons for the collapse are clearly complex, however, I reject the unwarranted conclusions the Committees have reached concerning my role at the company.
8.10am BST
You can read the full report here.
We have been examining what lessons can be learnt from the collapse of Carillion. Find out more here: https://t.co/rlomAZiIlO pic.twitter.com/gfrWcsemDx
8.07am BST
The MPs are especially critical of three top directors who steered Carillion towards its demise.
As the report puts it:
"The problems that caused the collapse of Carillion were long in the making, as too was the rotten corporate culture that allowed them to occur".
Three Carillion directors singled out in an official report into the debacle of the company's collapse - from @gillplimmer1's @FT rpt https://t.co/gsELbfraxG pic.twitter.com/Bqhiz8Wk4V
7.52am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Four months after UK outsourcing group Carillion spectacularly collapsed, the people behind its demise are being held to account.
Carillion used aggressive accounting policies to present a rosy picture to the markets. Maintaining stated contract margins in the face of evidence that showed they were optimistic, and accounting for revenue for work that not even been agreed, enabled it to maintain apparently healthy revenue flows.
It used its early payment facility for suppliers as a credit card, but did not account for it as borrowing. The only cash supporting its profits was that banked by denying money to suppliers. Whether or not all this was within the letter of accountancy law, it was intended to deceive lenders and investors. It was also entirely unsustainable: eventually, Carillion would need to get the cash in.
A damning 100-page report compiled by two select committees, published today, found that directors prioritised senior executive bonus payouts and dividends for shareholders even as the firm neared collapse, while treating pension payments as a "waste of money".
Frank Field, who chairs the work and pension committee, said: "Same old story. Same old greed. A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners."
Related: 'Recklessness, hubris and greed' - Carillion slammed by MPs
Emma Mercer is the only Carillion director to emerge from the collapse with any credit. She demonstrated a willingness to speak the truth and challenge the status quo, fundamental qualities in a director that were not evident in any of her colleagues.
Her individual actions should be taken into account by official investigations of the collapse of the company. We hope that her association with Carillion does not unfairly colour her future career.
Related: Whistleblower warned Carillion bosses about irregularities, MPs told
Carillion was the most spectacular corporate collapse for some time. The price will be high, in jobs, businesses, trust and reputation. Most companies are not run with Carillion's reckless short-termism, and most company directors are far more concerned by the wider consequences of their actions than the Carillion board.
But that should not obscure the fact that Carillion became a giant and unsustainable corporate time bomb in a regulatory and legal environment still in existence today.
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