Oil price tumbles after Opec deal; UK growth unexpectedly downgraded - as it happened
Britain's economy grew even slower than first expected in the first three months of 2017
- Latest: Former Greek PM injured
- Oil falls after Opec extends cuts
- UK grew slower than France, Germany, Spain...
- Newsflash: British GDP weaker than first expected
- Growth slows as inflation bites
- Introduction: Opec are meeting in Vienna today
6.22pm BST
European stock markets have lagged behind their US counterparts.
While New York's S&P 500 hit another record high, most continental bourses ended the day in the red.
UK and European markets have essentially traded in a sideways fashion for most of the week, and today is no exception.
While US markets clock up new highs Europe remains becalmed, despite the fact that European data has been much stronger of late than its US counterpart. Across the Atlantic, Amazon and Google find themselves locked in a race for $1000; tech firms continue to leave the old economy far behind, with momentum continuing to drive the sector higher. In a bull market, you buy the strongest performing assets - with the Nasdaq 100 nearly a fifth higher year-to-date, it is clear that momentum lies here, leaving the staid S&P 500 and FTSE 100 far behind.
6.19pm BST
Another former Greek prime minister, George Papandreou, has rushed to visit Lucas Papademos in hospital.
Former PM G. Papandreou, at the hospital, condemns attack, says "this is a man we asked to come back and help Greece".
From scene of blast that injured former PM Papademos
By @YorgosKarahalis #Greece #Papademos pic.twitter.com/FQthH5r1R0
5.59pm BST
The current governor of the Bank of Greece, Yannis Stournaras, is visiting his predecessor in hospital now.
Stournaras told reporters that the letter bomb attack on Lucas Papademos was "cowardly", the Kathimerini newspaper reports.
The attack "will not undermine our morale", says Yannis Stournaras, governor of the Bank of Greece, going in to visit L. Papademos.
5.49pm BST
The 4% plunge in the oil price tonight shows that Opec hasn't done enough to curb crude stockpiles.
Nizam Hamid, ETF Strategist in Europe at wealth manager WisdomTree, says:
"Opec's long-awaited meeting has disappointed investors, with oil prices giving up recent gains after members dashed expectations of deeper cuts to production and merely reiterated the status quo.
"The falls may provide a buying opportunity for investors who believe in the long-term story for oil, but they also highlight the environment of heightened volatility which the commodity is facing.
5.39pm BST
Greek TV are reporting that Lucas Papademos's injuries are not life-threatening, following this afternoon's explosion.
The ex-PM has been taken to a hospital in Athens.
5.28pm BST
The oil selloff is accelerating -- Brent crude is now down almost 4.5% at $51.60 per barrel.
That shows that the markets aren't impressed by the plan to extend existing output cuts for another nine months.
Oil pic.twitter.com/zfGG8mMnHC
OPEC members had a chance today but bottled it. A nine-month extension just isn't enough to really lift oil prices as we'll continue to see US shale fill the gap. Having said they'd do whatever it takes, OPEC is looking a bit toothless now.
Instead of deepening cuts they are continuing to tinker at the margins by curbing production by around 1.8m barrels/day along with several non-OPEC members. It also looks like no new non-OPEC members are joining the curbs, which would have helped.
5.05pm BST
Newsflash from Athens: There are reports that a bomb has gone off inside the car of former Greek prime minister Lucas Papademos.
Greek police say that Papademos and his driver have both been injured, but we don't have any more details. One report says it was a letter bomb.
Preliminary reports suggest ex-PM Lucas Papademos and his driver injured in car blast in central Athens #Greece
EXPLOSIVE DEVICE DETONATES INSIDE CAR OF FORMER GREEK CENTRAL BANKER LUCAS PAPADEMOS, INJURING HIM AND HIS DRIVER- GREEK POLICE
Press reports that Papademos opened letter bomb, injuring himself and his driver. Both rushed to Greeces largest hospital Evangelismos.
4.47pm BST
Oil prices are on the slide, following the news that Opec and non-Opec members have agreed to extend their production cuts until March 2018.
Brent crude is down 2% at $52.82, while New York crude has dropped by 2.7%, below $50 per barrel.
Oil prices fall below $50, tanking 3% as #OPEC output cut extension disappoints the market. #OOTT
Brent, WTI hits day's low; WTI drops below $50/bbl #OOTT #Oil #OPEC
4.16pm BST
Delegates are briefing reporters in Vienna that a nine-month extension has been agreed, by Opec and non-Opec members.
That means oil producers will continue to cut 1.8 million barrels per day off their combined output.
#BREAKING: #OPEC and non-OPEC agree 9-month oil-cuts extension: Delegates#OOTT #Oil
OPEC/non-OPEC agree 9-month oil cuts extension - delegate - BBG #OOTT
3.42pm BST
Energy reporters are racing around the Opec headquarter again, as the official announcement from oil cartel is imminent.
The rush upstairs for the 2nd time #OOTT #OPEC pic.twitter.com/OevbS3llpn
3.17pm BST
Over in New York, the S&P 500 has hit a fresh record high in early trading.
The technology-focused Nasdaq is also hitting all-time record levels
Traders arrived at their desks this morning having seen the Fed minutes warn of overvaluations in asset prices, and hint at further policy tightening later in the year, and yet were confronted with new record highs in the S&P 500 and the MSCI world index, while the US dollar is under pressure again. What an odd world we live in.
Fresh all-time highs for the S&P500 but Dow still not quite there yet - around 80 points to go. pic.twitter.com/POnJykV3Z1
3.03pm BST
Reuters are also reporting that Opec has agreed to curb supply levels for another months:
OPEC decided on Thursday to extend cuts in oil output by nine months to March 2018, OPEC delegates said, as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
The cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the Organization of the Petroleum Exporting Countries from January.
OPEC extends oil output cut by nine months to fight glut https://t.co/sio1ohJXRT pic.twitter.com/8WxTsb4aut
2.34pm BST
Newsflash from Vienna: The Opec meeting has finished.
The cartel are now being joined by non-Opec countries, to discuss whether they would also support today's rumoured deal to cut supplies for another nine months.
#OPEC meeting has finished - OPEC spokesperson
The first meeting is over; now time for non-opec to join #OOTT #OPEC
2.28pm BST
Dutch bank ING don't think Opec's supply cuts will work, as America's shale industry (which won't be part of the deal) can boost its own production levels.
The #OPEC production cut extension is half-baked and sounds like a stuck record. Safe to say ING's Hamza Khan is not impressed.#oil pic.twitter.com/Z9sYETOqYd
2.25pm BST
The latest US trade data is a little disappointing.
1.47pm BST
Back over in Vienna, Opec ministers have been hammering out an agreement to extend their existing production cuts.
There's nothing official yet, but the word on the ground is that the cartel will keep its current supply cuts for another nine months, through to March 2018.
Not everyone is impressed by OPEC's decision to extend cuts. The price of oil has fallen https://t.co/o6NVtlOHp7 pic.twitter.com/zFDzttVGiy
Why the #oil sell-off?
"Disappointment #OPEC hasn't done more to balance the market," says Olivier Jakob @Petromatrix.#OOTT #shale #Brent pic.twitter.com/Q7D0M3qpiw
1.10pm BST
George Buckley, UK economist at Nomura, is concerned that Britain's growth rate is now lagging behind European rivals.
He writes:
This is the first time in a year that UK growth failed to outpace that of the euro area (on average over the past 3-4 years the UK has grown a couple of tenths per quarter more strongly than the euro area).
While UK real GDP is broadly the same as that of Germany relative to where it was at the start of 2008, Germany has produced its 8.5% increase in aggregate output over that period with no change in its population, compared a 6% rise in UK headcount (though the UK has experienced a more sizable rise in its dependency ratio). On a per capita basis, UK GDP did not expand at all in the first quarter of this year (in separate figures also published today official net migration fell to its lowest in three years - 248k in 2016).
12.47pm BST
Housebuilding was a bright spot amidst the gloom spread by the unexpected downward revision to UK GDP today.
"Yes, the latest figures do indicate a marginal increase and we can see the signs of recovery starting in 2013, demonstrating the impact of the introduction of Help To Buy, which could suggest an element of cautious optimism that the industry has perhaps 'turned the corner' following the trough of 2009.
But if we are to reach the 200,000+ new build homes needed each year in England, there is still more momentum required."
12.28pm BST
Britain's weak growth means there's even less chance of UK interest rates rising soon, despite inflation surging over the Bank of England's 2% target.
Royal Bank of Canada's Sam Hill reckons borrowing costs will remain at record lows until early next year.
The Bank of England's 'backcast' has 0.4% q/q in for Q1, so this revised outturn of 0.2% q/q is marginal downside news for policymakers. In our view, this GDP report reinforces the existing case for not responding to above-target inflation.
Indeed, we continue to see the risk that the slowdown in activity becomes more entrenched and ultimately results in monetary policy being loosened in Q1 2018.
11.46am BST
The next government needs to boost investment and drive up wages, says TUC General Secretary Frances O'Grady.
Here's her take on the slowdown in UK growth in the last quarter:
"This is a very worrying sign of the squeeze that families are feeling. Prices are rising faster than earnings, and households are getting deeper into debt.
"The next government will inherit an economy that needs serious attention. An urgent priority must be to reverse the current fall in living standards. The minimum wage must go up faster, and the pay restrictions on public servants like nurses, firefighters and midwives must be ended.
11.13am BST
Uncertainty over Britain's looming exit from the European Union may have hit the economy, says ING's James Knightley:
We weren't expecting this: UK GDP growth revised lower (0.2% in Q117 v est 0.3%). But mixed messages - could be down to #Brexit uncertainty. pic.twitter.com/6HwDkzR29y
10.55am BST
Today's growth downgrade means that Britain was one of the worst-performing advanced economies in the first three months of this year.
Only Italy and America did as badly as the UK; they also grew by around 0.2% in Q1 2017.
10.46am BST
Sky News's Ed Conway has dug into today's GDP data, and discovered that things are even worse than we thought.
The UK actually grew by just 0.18% during Q1 (which was rounded up to 0.2%), which is the worst performance in over four years.
Actually, if you go back two decimal places, Q1 2017 GDP (0.18%) was weaker than Q1 2016 (0.19%). In fact it was the weakest since Q4 2012 pic.twitter.com/SQHATRE7cz
10.44am BST
John Hawksworth, chief economist at PwC, is concerned by the sharp slowdown in UK growth.
"Today's GDP data indicate that the economy slowed even more than previously estimated in the first quarter of 2017, as consumer spending power was squeezed by rising prices.
Excluding population growth, real GDP per head - the broadest measure of living standards in the economy - flatlined in the first quarter.
10.33am BST
Matt Whittaker of the Resolution Foundation confirms that Britain's growth rate was ZERO in the last quarter, once you adjust for population increases.
He also shows how Britain's growth since the financial crisis is rather less impressive on a per-capita basis (ie, growth per person).
(2/5)
Accounting for population growth, quarter-on-quarter growth in GDP per person drops to zero pic.twitter.com/Qujc124miS
(4/5)
Looking internationally, UK has performed relatively well in terms of overall GDP: third behind Canada & US in G7 since 2008 pic.twitter.com/KvdQFCsLTK
(5/5)
But adjusting for population growth in the same period drops the UK down the table - falling below Germany & Japan too pic.twitter.com/v47Y8qLSoq
10.26am BST
Today's growth report also shows that public sector workers are suffering the biggest impact from rising inflation (which hit 2.7% in April), as their wages are lagging behind the private sector.
The ONS says:
Compensation of employees, which includes wages and salaries and employers' social contributions, showed positive growth of 0.6% seasonally adjusted in Quarter 1 2017.
Non-seasonally adjusted, growth was chiefly driven by strong positive growth in private sector wages and salaries, in turn driven by bonus payments typically made at Quarter 1 and a smaller fall in growth in private sector jobs than seen in previous Quarter 1s'. This was partially offset by a small fall in public sector wages and salaries.
10.19am BST
Here's a handy chart showing how net trade (red) had a negative impact on growth in January-to-March:
Very poor #UK Q1 #GDP: net #exports dire despite fall, #consumption slows, #investment rise reflects valuables only #stocks prevent fall! pic.twitter.com/JaN9iiJSWw
10.06am BST
Britain's economy is suffering from the squeeze on real wages, as inflation overtakes earnings, says Ms Lee Hopley, chief economist at EEF, the manufacturers' organisation.
She explains:
"While the downward revision may have been unexpected, the reasons behind the weakness surely aren't. Sluggish household spending growth, a consequence of the squeeze on real incomes starting to kick in, and some pull back on export growth after an impressive end to last year.
"We expect the consumer weakness to persist as wage growth falls further behind rising prices, but there should be some turnaround on the trade front, driven by a brighter outlook in the rest of the world. For those on the hunt for some good news in the data it was to be found in the investment numbers. Business investment picked up at the start of this year and some big revisions to investment at the end of last year mean the investment picture isn't as dire as first thought. Still, we'll need to see this rebound continue and strengthen if for longer-term productivity prospects to improve."
"Just as expected higher inflation is squeezing incomes and spending.
High inflation is hitting consumers, but a weak pound and a recovering global economy are helping businesses. UK growth is likely to tilt away from the consumer towards exports, manufacturing and investment this year. This should keep the UK economy growing at a similar rate to last year."
#Brexit effect? UK Q1 GDP revised down to just 0.2% qoq. Only 1 of 42 economists in @ReutersPolls (median 0.3%) expected this. 1 said 0.4% pic.twitter.com/ys6179I0Cr
Latest #ONS data confirms that trade was a major drag on UK GDP growth in Q1, little sterling impact here! pic.twitter.com/Enq48Urvy2
This suggests productivity was even more dire in Q1 than we thought. We created a lot of jobs to produce that meagre 0.2% of extra GDP https://t.co/hOSQ0VoXdQ
UK economy still awaiting the uncertainty-driven investment apocalypse we were promised last year" pic.twitter.com/LgtbBlQTaA
9.54am BST
Britain's economy didn't grow at all in the last quarter, if you account for the increase in population.
Today's new figures show that GDP on a per-capita basis was flat in Q1 2017, compared to the final three months of 2016.
9.51am BST
The bad news is that net trade took a big bite out of Britain's growth rate.
Net trade wiped 1.4 percentage points off the growth rate, dashing hopes that the weaker pound would be a massive boost to exporters.
Within net trade, there has been a rise in total imports, which have contributed negatively to UK GDP, with a notable contribution from transport equipment, machinery and chemicals.
9.47am BST
The good news is that businesses invested more in new plants and machinery at the start of this year.
Gross fixed capital formation (GFCF) increased by 1.2% compared with Quarter 4 2016, today's GDP report shows.
9.42am BST
Today's growth figures confirm that UK households were hit by the impact of higher inflation, due to the weak pound.
The Office for National Statistics explains:
UK GDP growth slowed to 0.2% in Quarter 1 2017 as consumer facing industries such as retail and accommodation fell and household spending slowed. This was partly due to rising prices.
Construction and manufacturing also showed little growth, while business services & finance continued to grow strongly.
9.35am BST
NEWSFLASH: Britain's economic growth in the first quarter of this year was even weake than we thought.
Growth has been revised down to just 0.2% for January to March, down from the first estimate of 0.3%.
9.30am BST
As expected, Iraq is also backing a nine-month extension:
Iraqi minister says 9 month extension of cuts would be "best deal" which #OPEC will monitor pic.twitter.com/y13PO0xbIX
9.28am BST
Saudi Arabia's oil minister says that a nine-month cuts extension is 'highly likely' to be agreed today.
Khalid al-Falih adds that he doesn't expect any deeper cuts, though. That implies that the current agreement to shave 1.8m barrels-per-day off global outlook would be extended
Saudi's Al-Falih: `Highly likely' we'll roll over same cuts for 9 months #OOTT #OPEC #Oil
Saudi Energy Minister says #OPEC highly likely to roll over on same terms for nine months
Saudi min says shale will contribute to demand growth but won't do it on its own #OOTT #OPEC
9.24am BST
And we're off! A flurry of comments are hitting the wires as Opec ministers speak to reports.
Kuwait's energy minister says he expects a nine-month extensions to the current output cut deal, but doesn't expect any deeper cuts.
*Kuwait says no-one raised question of deeper cuts; deeper cuts unnecessary #OPEC #OOTT #Oil
9.12am BST
Here's a snap from inside the Opec meeting, via Algerian energy minister Noureddine Bouterfa.
Mr Boutarfa attends the 172nd Meeting of the Opec Conferencepic.twitter.com/UnLIZFROrz https://t.co/ITZS9EZ1rh
9.11am BST
No pushing at the back, please.
Getting ready for the Opec media...ahem... "gangbang" #OOTT pic.twitter.com/O4CF2kmdd9
Still waiting #OPEC #OOTT pic.twitter.com/Ik2KC4rK6E
9.05am BST
The journalists sent to Vienna to cover today's meeting are getting hot under the collar, literally.
They've been queuing, more-or-less patiently, in a stairwell for around an hour - waiting to be allowed into the opening session.
Current scene in stairwell outside #OPEC press centre - been here over an hour pic.twitter.com/zllPs3JAO2
8.54am BST
Some City analysts are sceptical about whether Opec can really influence the oil price, as many producers - such as America - aren't part of the cartel.
Marc Ostwald of ADM Investor Services says the markets "fully" expect a nine-month extension to the current deal.
Many are wondering if the group has any rabbits to pull of its hat to mitigate the risk of a buy the rumour, sell the fact reaction.
It is not actually certain that the extension will be 9 months rather than six, even if the noises have been in that direction, or if any other Non-OPEC countries do sign up, they are at best likely to be very marginal producers such as Tajikistan, and per se more an optical addition than 'game changers'
8.37am BST
Oil ministers are arriving at the Opec HQ now. There's a live webcast from the hotel here.
8.07am BST
Three Opec delegates have told Reuters that a nine-month output extension is the "most likely scenario". One says that a one-year extension (to June 2018) is an option.
Reuters' Amanda Cooper has the details:
One #OPEC delegate says a 1-year extension to the oil supply deal is "still an option" #OOTT
8.06am BST
Here's the full agenda of the Opec meeting (timings are in CEST, so knock off an hour for BST).
8.00am BST
Some background. Last November, Opec and non-Opec members agreed to cut their combined output by around 1.8 million barrels per day through the first six months of this year.
That deal did drive the oil price over $50 per barrel, but any hopes (or fears) that prices would push higher have been dashed (or allayed).
OPEC set to prolong cuts to help clear glut https://t.co/StVoACYbdo @JavierBlas2 #oil #OPEC pic.twitter.com/u2UrTxozoz
7.49am BST
Queues are forming outside Opec's headquarters in the Austrian capital, ahead of today's meeting:
Good morning from the OPEC Secretariat, where the fun is about to begin #opec #oott #oil #saudi #iran #iraq #venezuela #russia #nigeria #uae pic.twitter.com/dMOhGXLQsE
Outside #OPEC HQ #OOTT pic.twitter.com/SPH6YYuDfE
7.46am BST
The oil price is jumping this morning, on predictions that Opec will extend its existing output cuts today.
Brent crude has gained almost 1% to $54.45 per barrel, and New York crude is up 0.75% at $51.75 per barrel.
#Nigeria oil minister @IbeKachikwu says that #OPEC largely in agreement for 9-month cut extension (and an option for an extra 3 month) #OOTT
7.35am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The oil cartel meets today, and the market is expecting it to extend the period of production cuts by an extra nine months, through to March 2018. This has been widely signalled after Russia (a non-Opec member) and Saudi Arabia said that they would support an extension of the cuts last week.
There is a very small chance that some of the smaller, struggling members of Opec, including Venezuela and Nigeria, may resist the prospect of further cuts, overall we think that Saudi Arabia will ultimately get what it wants from this meeting.
OPEC talked up 9m cuts so much, anything less = disappointment. I hope they've been watching earnings season. Underpromise, overdeliver
It is expected that a much more modest contribution from the consumer will be behind the lower growth figure, as real household disposable incomes have been hit by rising prices.
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