Fitch: Autumn statement shows fiscal challenge of Brexit vote – business live
All the day's economic and financial news, as new GDP data shows that German exports fell in the last quarter
- Fitch: Autumn Statement Highlights UK's Fiscal Challenge
- IFS says UK faces biggest pay squeeze in 70 years
Earlier:
4.56pm GMT
Thank goodness that's over.
The day after a UK budget or autumn statement is often quiet in the market, as political reaction tends to dominate. Today's been extra slow, thanks to our US cousins' turkey-related activities.
The Eurozone indices were pretty drab this Thursday, the DAX and CAC managing a meagre 0.1% increase as the day went on. The impact of Germany's measly 0.2% growth in Q3 seems to have been mitigated by a decent pair of business and consumer climate readings from the country; while they failed to improve month-on-month, the figures from the Ifo and Gfk at least suggest Germany wasn't too bothered by the US election result.
3.14pm GMT
Rating agency Fitch has just declared that Philip Hammond's autumn statement shows that Britain's economy will suffer from the vote to leave the EU.
In its first official reaction, Fitch says that the forecasts and spending plans outlined yesterday show that the task of bringing Britain's debts under control has become even harder.
The Chancellor's Autumn Statement underlines the challenges for the UK government to stabilise the public debt trajectory in the context of heightened economic uncertainty following the Brexit vote, Fitch Ratings says.
Official forecasts by the Office for Budget Responsibility (OBR) point to a substantially lower path for economic growth compared to the pre-referendum projections underpinning the March budget. The OBR expects GDP growth to be cumulatively 1.4pp lower over its forecast period to 2021. Consumer price inflation will be higher due to a weaker exchange rate. The OBR also believes potential growth in the UK economy will be lower due to a combination of lower assumed productivity and falling net migration.
We think this increases medium-term fiscal flexibility, and the OBR's latest projections indicate that these new objectives will be met, and that the public sector debt ratio will peak in FY18. However, even if the public debt ratio peaks in the near term, any subsequent decline is likely to be slow, and the UK will still have one of the highest debt ratios among highly rated (AAA and AA) sovereigns.
3.01pm GMT
You can catch up with all the news, analysis and comment on the autumn statement here, in our comprehensive guide
Related: A guide to the Guardian's full autumn statement coverage
2.48pm GMT
The IFS has also highlighted that pensions are being relatively protected in the autumn statement....
Pensioners will feel earnings squeeze less, and more protected than working-age households when prices rise #AutumnStatement pic.twitter.com/XOlSZPc7Ik
Next few years will see benefits cuts for low-income working households on top of lower earnings and higher prices #autumnstatement pic.twitter.com/h1NBtcfF7E
1.20pm GMT
The IFS is presenting its autumn statement verdict now:
IFS chief Paul Johnson confirms Hammond is basically following @edballs economics now. Borrow to invest, take a bit more time to cut deficit
"It wouldn't be far from the truth to say the new fiscal plans aren't Osborne's, they're Balls'." - Paul Johnson, IFS
.@TheIFS chief Paul Johnson: "Capital spend plans are significant...around 2.3% of GDP...well above the average over the last 30 years."
.@theIFS say real wages will still below 2008 levels in 2021, based on OBR projections. That's quite astonishing.
IFS head Paul Johnson suggests Philip Hammond won't be able to ignore calls for extra NHS cash for much longer.
1.15pm GMT
Here we go...
Workers in Britain face the biggest squeeze on their pay for 70 years as a Brexit blow to the economy knocks wage growth and stokes inflation
"One cannot stress how dreadful that is - more than a decade without real earnings growth. We have certainly not seen a period remotely like it in the last 70 years."
Related: UK living standards squeeze 'will be worse than after global crash'
1.07pm GMT
Newsflash: The Institute for Fiscal Studies is delivering its verdict on the autumn statement right now! And it's a stinker....
#Breaking British workers set for "dreadful" prospect of more than a decade without real wage growth, @TheIFS warns#AutumnStatement pic.twitter.com/FNihNDE6Jq
12.59pm GMT
Shares in Countrywide Holdings have fallen to a record low after the estate agent hit investors with a profits warning.
It admitted that sales in London have slumped by 29% in the last quarter, blaming the Brexit effect and the recent hike in stamp duty.
"No one can really show them what the future is. There's a real lack of clarity on what post-Brexit Britain looks like."
Related: Countrywide warns over profits amid housing slowdown
12.27pm GMT
Consumer confidence in Germany has inched up this month, according to the latest healthcheck from GfK.
GfK reports that Germans are "more optimistic about overall economic prospects", and a little more willing to spend.
German GFK Consumer Confidence (Dec) 9.8 versus 9.7 expected, previous 9.7
12.05pm GMT
Europe's stock markets are showing all the verve and vigour of a Thanksgiving turkey today.
Britain's FTSE 100 has dipped by 24 points to 6793; it's been bobbing around these levels for a couple of weeks now.
The usual Thanksgiving calm has descended across markets, as European investors reconcile themselves to a day of low volumes and quiet trading.
With the US out of the picture currencies such as sterling and the euro have managed to recover and move higher, and while stock markets have recovered from yesterday's lows there is still a sensation that there is not much more than hope to support valuations at current levels.
11.27am GMT
This chart shows how German bosses have taken the triple-whammy of Brexit, Trump and lower growth in their stride this month.
German business confidence holds at highest level since 2014 https://t.co/UKqcZg01Ry pic.twitter.com/370BWB9QJG
11.14am GMT
Newsflash from Ankara: Turkey's central bank has hiked its benchmark interest rate to 8%, from 7.5%.
The overnight lending rate has also been raised, to 8.5% from 8.25%.
Lira shoots higher after Turkey raises interest rates in November https://t.co/LtKDu00tRO pic.twitter.com/tmfAoOPE7d
I am calling on lenders: please reduce interest rates to reasonable levels. Look at unemployment in the country. If we want growth, we need employment, investment and competition. Unemployment is above 11 percent; is this what this country deserves?
11.04am GMT
The pound has crept to a two-month high against a basket of currencies today, helped by a 0.4% rise against the US dollar to $1.247.
Traders continue to yesterday's autumn statement in their stride. It's remarkable really -- Philip Hammond abandoned the goal of eliminating the deficit this parliament, and the City just shrugged.
Pound highest for more than 2 months (since 22nd Sept) against basket of major currencies - the sterling effective index #AutumnStatement
The Autumn Statement saw more modest downward revisions to growth forecasts than expected, but the cumulative upward revision to the budget deficit path is GBP 122bn by 2020/21. That is more relevant for the Gilt market than for the pound, but there will be heightened concerns about the UK's credit rating. A lower /$ exchange rate is likely
10.09am GMT
The euro is bobbing around its lowest level against the pound since mid-September this morning, at around 84.8p (having hit 92p in October)
"The euro is today at a 72 day low against the pound.
This is good news for people planning a trip to Europe and businesses importing goods. People planning to buy their Christmas gifts at a European market can now get approximately 30 euros more when changing 500 than they would have done three weeks ago.
9.32am GMT
Just in: German business optimism has dropped slightly, as corporate leaders watch Britain's exit from the EU and Donald Trump's US election victory.
The IFO Institute reports that its business expectations index has dipped to 105.5 from 105.9 in October.
#German Ifo buisness climate index stable in Nov as current conditions index up to 55-month high but expectations dip from Oct 29-month high
"Confidence in the German economy continues to be good
The German economy seems to be unfazed by the election ofDonald Trump as U.S. president."
German Ifo business climate drops to 110.4 in Nov vs 110.5 exp as Ifo expectations showed slight miss. BUT German Econ upturn remains intact pic.twitter.com/8zRyUA5rNp
9.11am GMT
Philip Hammond has just defended the Office for Budget Responsibility following criticism over its latest economic forecasts.
Hammond says forecasting is not a precise science. The OBR itself says there is a large degree of uncertainty. The government should not ignore these forecasts. It should include them in the range of possibilities for which it plans. It should not ignore the strengths of the economy. And it is right to keep something aside.
There is a wide degree of uncertainty, says Hammond.
Hammond says there are many factors causing uncertainty.
Related: Ministers defend OBR after pro-Brexit Tories accuse it of scaremongering - Politics live
8.58am GMT
Paul Johnson, director of the Institute for Fiscal Studies, has given an early verdict on yesterday's autumn statement.
He told BBC Radio 4's Today Programme that:
Philip Hammond has decided to spend more. He's made a very clear choice about how he wants to spend more. He's not given any more money to the NHS or social care, he has not unwound most of the cuts to benefit spending, so there's no jam today, but he has increased quite a lot - and this really is I think quite significant - he has increased infrastructure spending, spending on research and development as a way of investing in the economy and hoping that that in improves growth in the longer run. So he's investing in the future rather than helping people in the short term.
We're looking at about a 10% growth in investment spending, we're looking at capital spending by the government close to or a little bit above actually what the Labour party was aiming for at the end of its period in office, before the financial crisis hit and the level of investment spending that we have here is well above the average for the last 30 years or so. So on all those measures, actually for once the reality comes close to matching the rhetoric. Investment spending has been relatively protected and these are quite big increases over the next five years.
8.46am GMT
Bloomberg flags up that Germany's growth rate has hit a one-year low:
Germany's economic growth was supported by domestic demand last quarter as a slump in exports slowed the expansion to its weakest pace in a year.
Government spending climbed 1% and private consumption rose 0.4% in the three months through September, while exports contracted 0.4%, the Federal Statistics Office in Wiesbaden said on Thursday.
Germany's economy expands at weakest pace in a year after exports slump https://t.co/ESUePYU0Ev pic.twitter.com/0BsvZxIpyL
8.43am GMT
We also have confirmation that Spain's economy grew by 0.7% in the third quarter of 2006.
That's a slight slowdown on Q2's 0.8% growth, but much faster than the eurozone average of 0.3%.
LATEST: Spanish GDP growth falls to 0.7% in third quarter, says INE, compared to 0.8% in second quarter. pic.twitter.com/LevisrAzcr
8.39am GMT
Donald Trump's plans to spend $1trn on rebuilding America's infrastructure is also pushing the euro down against the US dollar.
Kathleen Brooks of City Index explains:
The prospect of fiscal largesse under a Donald Trump Presidency, and a multi billion stimulus plan, potentially as early as next year, is a key driver of the stronger dollar right now, as it could free up the Fed to hike interest rates in 2017 at a faster pace than most in the market (60%) think is likely.
8.26am GMT
The euro has fallen to its lowest level against the US dollar since March 2015 in early trading.
The single currency has dropped by 0.25% at the open to $1.052, a 20-month low.
#Euro keeps falling. Hit 1y low at $1.0525, next stop $1.0463. pic.twitter.com/W3hdf2xGcz
8.07am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The German economic data released today has shown that domestic demand has picked up during the third quarter- a sign of improving demand. Having said that the German final GDP number came in line with the forecast of 0.2%.
More encouraging signs were in the public spending and construction investment. Given that Germany is very much export based economy, and the export number dropped by 0.4%, it shows that global growth is still weak.
Related: Brexit will blow 59bn hole in public finances, admits Hammond
The pound rose slightly during the announcement, with high value investments such as funding local growth in the north and midlands, as well as funds for innovation and productivity, striking a positive note with the markets.
However this optimism did not last long as the uncertainty that still remains over the future of the UK's economy due to Brexit still appears too great for the pound to escape.
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