ECB halves stimulus programme; UK suffers falling retail sales and car production - as it happened

The eurozone's central bank has halved the pace of its money-printing programme, and extended it for another nine months

• Summary: Mario Draghi's press conference
• NEWSFLASH: ECB has cuts its stimulus programme
• QE will run until at least September 2018

Earlier:

• NEWSFLASH: UK retail sales balance tumbles
• 50% of retailers report falling sales, vs just 15% with rising sales
• UK car production tumbled in September
• Fourth piece of bad auto news this month
• SMMT: No-deal Brexit would be our worst outcome

3.53pm BST

Crumbs, what a busy day. Here's a quick recap of the main events.

The European Central Bank has halved its asset purchase stimulus programme, to a30bn per month, for another nine months. But the ECB also left little doubt that it intends to keep buying bonds for even longer than announced today, in an attempt to get inflation.

Related: Alarm sounds over state of UK high street as sales crash

Related: Barclays bank boss defends strategy as share price tumbles

Related: UK gender pay gap narrows to lowest for 20 years - but is still 9.1%

3.31pm BST

Ian Stewart, chief economist at Deloitte, has a good take on Mario Draghi's comments:

"This is softly, softly tapering. William McChesney Martin, a previous Fed Chairman, once said that the job of the Fed was 'to take away the punchbowl just as the party gets going.'

The ECB certainly isn't taking away the punchbowl, Mr Draghi is saying that so long everyone keeps having a good time they plan to put less punch in."

"Ten years on from the financial crash, the era of quantitative easing is yet to run its course in Europe. Draghi confirmed that the bond buying programme would be tapered, but it has hardly come to an end.

This slow, steady and widely predicted approach hopes to rein in the Euro from rising further, which is limiting the earnings capacity of European exporters, at the same time as avoiding a European taper tantrum in the markets. Whether one can be achieved without the other remains to be seen.

In our view, the tightening of European monetary policy will continue be a very gradual process, with further comments made today that there are no plans for a cliff-edge end to the bond purchase programme.

As Mario Draghi himself put it during today's press conference, the reinvestment of principal payments will be 'massive', and it's worth remembering that despite the squeeze on liquidity entering the markets, the ECB will still be buying a30 billion per month.

"Investors in Europe should consider hedging their fixed income exposures, now that the ECB is cutting back asset purchases from the start of 2018.

"German bunds could now be in the firing line, as the cut back could spark a taper tantrum in Europe.

3.14pm BST

Mario Draghi has done a good job of talking down the euro too.

The single currency has now shed one cent against the US dollar to $1.172, a three-week low.

#Euro extends losses following #ECB meeting. pic.twitter.com/WxOAOWKutK

3.01pm BST

That was a pretty dovish performance from Mario Draghi. An effective performance too, as the ECB president makes it clear that he expects maintain loose monetary policy for some time, despite the economic recovery.

The decision today is for an open-ended programme ... it's not going to stop suddenly. The large majority of the Governing Council expresses a preference for keeping it open-ended.

There is still a large amount of uncertainty, so it was only prudent.

#ECB Draghi presser ends as it has begun: w/ dovish tone. Says reduction in monthly purchases is not tapering.

"The latest data and survey results point to unabated growth momentum in the second half of this year."

All the members mentioned growth momentum, improving employment ...investment is actually picking up. The earning capacity of households is picking up, so disposable income is increasing.

"Domestic price pressures are still muted overall and theeconomic outlook and the path of inflation remain conditional oncontinued support from monetary policy. Therefore, an ampledegree of monetary stimulus remains necessary."

"It is very difficult to comment on developments that change every day. We are following what is happening ... to conclude now that there will be instability is premature."

2.35pm BST

Q: Last year, when the ECB cut QE from a80bn to a60bn per month, you insisted that you weren't 'tapering' your bond buying programme. So is today's announcement tapering?

No, Draghi replies. That underlines how the programme is likely to keep running beyond next September (but possibly at a lower rate than a30bn per month).

2.30pm BST

Draghi's insistence that QE is 'open-ended' is fuelling speculation that the ECB could keep buying government bonds until 2019.

And that would mean interest rates could remain at their current record lows until 2020!

The chances of #Draghi leaving the #ECB (=> October 2019) without hiking rates once have gone up dramatically today.

#Draghi: QE is not going to stop suddenly =>net asset purchases will go on beyond September 2018 => first rate hike Q2 2019 at the earliest?

2.27pm BST

Q: If the eurozone recovery turns out to be stronger than you expect, might you reduce the pace of the asset purchase scheme?

This is today's decision, Draghi shoots back, adding "This is our commitment, we don't foresee changes now."

Q: what about if economy becomes more favorable?
Draghi: this is today's decision.

2.24pm BST

Q: The US Federal Reserve raised interest rates 15 months after ending its bond-purchase programme - might the ECB take a similar approach?

We don't have a fixed timeframe, Draghi replies. Comparisons with other jurisdictions aren't really appropriate.

2.21pm BST

Q: What might happen to the ECB's stimulus programme after September 2018?

Mario Draghi says the programme is "open-ended", meaning it won't suddenly stop buying bonds next October.

Draghi says the magic word: QE is still "open ended." And when and if it ends, "it's not going to stop suddenly"

#Draghi's significant statement: also in September 2018 the program will not end abruptly, so he says the purchases will continue after then

2.18pm BST

Q: Is political uncertainty in Catalonia a risk to financial stability in Spain, and in the euro area at a whole?

Mario Draghi says the ECB is following developments with "great attention", but it is "very difficult to comment on developments that change every day".

To conclude now that there will be financial stability risks would be premature. We have to see what will happen....

2.15pm BST

Q: Why has the ECB decided to keep expanding its asset purchase programme, at a time when the US Federal Reserve is cutting its own QE scheme?

Draghi doesn't accept the suggestion that the ECB is wrong to keep buying bonds.

2.08pm BST

Some reaction to Draghi's comments:

'communication has been pretty effective' - Draghi pic.twitter.com/4HTgkZ8P6N

#ECB decision not unanimous. Not a surprise. I guess some have issue with length and open-ended. Majority went for open-ended, so not all!!

2.07pm BST

Q: Was today's decision unanimous?

No, there were different viewpoints, Draghi replies.

2.05pm BST

Q: How did the ECB go about preparing the public for today's changes?

My understanding is that the market reaction was pretty muted, Draghi replies, even though the policy announcement was fairly important.

2.03pm BST

Draghi says there are global factors influencing inflation...but the ECB is focused on the factors closer to home, which it can influence.

He points out that the eurozone has created more than seven million jobs in the last four years - a sign that his policies are bearing fruit.

2.00pm BST

Draghi is hammering home that the ECB will continue to reinvest the stock of existing assets bought under QE since 2015.

This has become "more and more important" as we've bought "a lot of bonds" smiles Draghi:

Draghi: The stock of purchased assets has become more and more important

When I announced the reinvestment policy in December 2015 "there was no reaction", says #Draghi with a very telling smile.

1.52pm BST

#Draghi: "atmosphere was positive in governing council" (growth side) "different on inflation" (energy prices) #ECB pic.twitter.com/cnaysxRdU6

1.52pm BST

Q: Did you discuss alternative courses of action, before deciding to cut the pace of the APP to a30bn per month?

No, says Draghi. The "atmosphere was pretty positive" at today's meeting, thanks to the increase in employment across the eurozone and rising wages.

1.49pm BST

Onto questions.

Q: Did the ECB discuss changing the composition of the assets bought under your stimulus programme?

1.47pm BST

Mario Draghi then issues his tradition call on eurozone politicians to do better.

In order to reap the full benefits from our monetary policy, other parties must also act, he says.

1.43pm BST

Economic growth in the eurozone continued "unabated", declares Draghi proudly.

He says there has been an upswing in business investment. Construction investment has also improved, and eurozone exports are benefitting from the improved picture in the global economy.

Draghi says eurozone growth has continued "unabated." New word in his vocabulary.

Draghi talking about the eurozone economic recovery like a proud dad

1.39pm BST

Draghi is talking about how the ECB has 'recalibrated' its bond-purchase programme.

It's recalibration and not tapering! #ECB #Draghi #QE #EUR

1.38pm BST

Turning to the economic picture, Draghi says that domestic prices pressures are still muted.

Thus, "continued monetary policy support" is needed to underpin the economic outlook and keep inflation on track.

1.37pm BST

Mario Draghi begins by telling reporters that his governing council conducted a "thorough" analysis of the outlook for inflation in the eurozone today.

Draghi confirms that the ECB decided to leave interest rates at their current record low, and expects to leave borrowing costs at these levels for an extended period.

Today's monetary policy decisions were taken to preserve the very favourable financing conditions that are still needed for a sustained return of inflation to levels that are close to, but below 2%.

1.33pm BST

1.30pm BST

Over in Frankfurt, ECB president Mario Draghi is explaining today's decisions to the press pack.

You can watch it live here:

1.18pm BST

Anna Stupnytska, global economist at Fidelity International, reckons the ECB was right to maintain its QE programme for another nine months.

She writes:

"The Euro area recovery is certainly becoming more entrenched, with broad-based growth across countries and sectors of the economy. The euro strength seen so far is unlikely to derail the growth story or pave way for a return of deflationary worries.

At the same time, however, given the remaining slack in the labour market, inflation is far below the target and is likely to rise only at a very sluggish pace.

1.09pm BST

German conservative MEP Markus Ferber has heavily criticised the ECB's decision to extend its stimulus programme.

Ferber argues that there's no justification for buying tens of billions of government and corporate bonds each month, with newly created money.

"The Eurozone is growing strongly, inflation is picking up, and downside risks are minimal. It seems like the textbook case for the right time to phase out quantitative easing and start a normalisation of monetary policy.

Instead the ECB locks in their flawed monetary policy approach for the months to come and defers normalisation indefinitely. I am disappointed that the ECB missed yet another chance to initialise a normalisation of monetary policy. The asset purchasing program will keep distorting the market and lays the foundations for the next crisis."

1.07pm BST

1.02pm BST

The euro has dropped by half a cent against the US dollar since the ECB announcement, to $1.176.

That suggests that some traders had expected a more dramatic cut to the Bank's stimulus programme.

12.58pm BST

My colleague Richard Partington tweets:

ECB says it plans to cut asset purchases from a60bn to a30bn from Jan. Keeping a30bn until Sept 2018. Slow withdrawal from QE.

#ECB extends #QE for 9 months at EUR30bn per month, in line with our expectation. $EURUSD pic.twitter.com/EhKabFjblA

12.50pm BST

BREAKING: The European Central Bank has slowed the pace of its stimulus programme.

From January 2018, the ECB will buy a30bn of new bonds each month -- that's down from a60bn per month at present.

From January 2018 the net asset purchases are intended to continue at a monthly pace of a30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the APP [Asset Purchase Programme] in terms of size and/or duration.

12.41pm BST

After a busy morning, City traders are now turning their attention to Frankfurt.

The European Central Bank is poised to announce the decisions taken at today's governing council meeting. We're expecting the ECB to leave interest rates at their record lows, but also outline how it could slow its bond-buying programme (our opening blogpost has more details).

12.40pm BST

Labour MP Anneliese Dodds, who represents Oxford East, tweets:

.@CBItweets monthly survey: Retail sales have suffered sharpest monthly decline since fin crisis. Symptom of falling real pay under Tories.

12.35pm BST

In other bad news...the Unite union in Northern Ireland has warned that aerospace company Bombardier is planning to cut 280 jobs at its Belfast plant.

"The jobs to be lost are functional as opposed to operational meaning losses will be concentrated outside the main production lines but this will be devastating news for the workers concerned and their families in the run-up to the end of the year.

Unite is calling on management to review this decision.

12.33pm BST

Laith Khalaf, senior analyst at Hargreaves Lansdown, says UK retailers will be hoping the Bank of England doesn't raise interest rates at its November meeting:

These latest numbers from the CBI will only add to the mixed economic signals to be digested by the Bank of England next week when it decides whether to increase interest rates for the first time in over a decade. Retailers will breathe a sigh of relief if the bank chooses not to increase rates and further burden consumers with additional mortgage costs, at a time when they are already feeling a bit of a pinch.

As we enter the key Christmas trading period, the retail industry is desperately in need of some festive cheer.

12.21pm BST

If you're just tuning in, here's our news story on the retail sales figures:

The fastest monthly fall in high street sales since the height of the recession in 2009 has raised fears for the retail sector ahead of the crucial Christmas trading period.

A survey by the the CBI found that 50% of retailers suffered declining sales in September while only 15% benefited from an increase, leaving a rounded balance of -36%, the lowest since March 2009.

Related: Alarm sounds over state of UK high street as sales crash

12.20pm BST

Debenhams, the UK department store chain, has added to the uncertainty in the UK retail sector today.

It reported a 44% slide in pre-tax profits at the company over the last 12 months, and warned that the retail environment is challenging.

The environment remains uncertain and we face tough comparatives over the key Christmas weeks.

12.11pm BST

Hannah Maundrell, editor in chief of money.co.uk, says Britain's cost of living squeeze is hurting the retail sector:

"These results are definitely worrying for retailers as they are clearly starting to feel the impact of inflation.

"This survey doesn't cover the whole market, however it could be a good indication that consumers are being more wary in the run up to Christmas and aren't willing to part with the shiny new pounds in their pocket quite as quickly as before. Wages aren't rising in line with the inflation which could be one reason why sales are down.

11.56am BST

The news that UK retailers suffered an October sales slide could weigh on sterling.

The pound has lost almost half a cent today, to $1.322.

Shocker in the CBI retail sales survey today: -36%, worst since '09. Squeaky bum time if you're a BOE ratesetter on the fence about a hike. pic.twitter.com/PqSx2OFWvF

11.50am BST

'Non-specialist' goods shops, such as department stores, suffered the brunt of the spending slowdown this month.

Britons also cut back on furniture and carpets, in another sign that consumers are reining in their spending.

Sales volumes expanded in other normal goods (74%), recreational goods (+64%) and hardware & DIY (43%). Meanwhile, sales volumes decreased in specialist food & drink (-32%) and non-specialised goods (i.e. department stores (-45%).

11.40am BST

Economist Sam Tombs of Pantheon has been forced to redraw his graph to capture the tumble in retail sales this month!

The CBI's reported sales bal. was so weak in Oct I had to adjust my chart's scales - never a good sign. Thankfully the bal. often misleads pic.twitter.com/2ylzo7qmzI

11.33am BST

The decline in UK retail sales shows that consumers are cutting back, says Howard Archer of the EY Item Club. It's a bad sign for growth....

Very weak Oct #CBI #distributive trades survey reinforces our suspicion #UK #GDP growth likely to remain muted despite slight Q3 pick up

11.28am BST

Today's CBI retail sales report is much weaker than the City expected.

Analysts had expected a majority of firms to report rising sales. So the news that only 15% of retailers are seeing a pick-up in demand, while 50% are suffering a decline, is a worry.

11.19am BST

Here's the details of the retail sales slump:

UK CBI Retailing Reported Sales Oct: -36 (est 23; prev 42) pic.twitter.com/b672wsOnQv

11.16am BST

BREAKING: UK retail sales have suffered their sharpest monthly decline since the financial crisis.

That's according to the CBI's monthly survey of the UK retail sector.

"It's clear retailers are beginning to really feel the pinch from higher inflation.

While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.

UK cbi retail sales index just fell off a cliff pic.twitter.com/q98qsGbGWk

11.14am BST

Deep cuts in inward migration from other EU countries after Brexit would seriously hit Scotland's economy, the Scottish government has warned, after new projections showed it would lead to a fall in the country's working age population.

New data from the National Records of Scotland published on Thursday shows all future population growth depends on continued inward migration from the rest of the UK and overseas, because birthrates are projected to fall while numbers of pensionable adults to increase by 25% by 2041.

"The stark reality outlined in today's figures is that projected growth in Scotland's population will slow significantly if levels of EU migration are reduced. And in that scenario the population is also predicted to start declining again within the next 25 years.

"That would have a significant negative impact on Scotland's economy and our ability to fund the public services we will need for an ageing population."

10.43am BST

Britain's gender pay gap remains too high, and is falling too slowly, says TUC General Secretary Frances O'Grady.

Here's her take on today's pay figures:

"The full-time gender pay gap has inched a bit smaller. But there is still a chasm between men and women's earnings.

"At this rate it'll take decades for women to get paid the same as men.

That's the length of a whole career. Another whole generation of women getting paid less than men. Unacceptable.

10.28am BST

Good news! Britain's gender pay gap has hit its lowest level in at least two decades.

Bad news! Women are still being paid over 9% less than men.

Nuanced but broadly positive gender pay gap picture. Overall gap up, but due to falling (+'ve) FT and (-'ve) PT gaps & shift towards FT work pic.twitter.com/5Ohz2N2mJB

What's the #GenderPayGap for your job? Find out with our explorer https://t.co/MVTBLNJXIa pic.twitter.com/nMiJ0PiqhG

10.08am BST

Brexit is a particular worry to the UK auto industry because components typically cross the channel several times before a car finally rolls off the production line.

The Financial Times did a good piece on this last year, pointing out that the bumper for a new Bentley could be made in Europe, checked in Crewe, painted in Germany, and then assembled in Britain.

A very good illustration by @FT how integrated for instance the car industry is with the single market. #Brexit. https://t.co/9MnOhSgq8b pic.twitter.com/mTWmB05DMX

This part uses steel from Europe which is machined in the UK before going to Germany for special heat treatment. The injector is then assembled at Delphi's UK plant in Stonehouse, Gloucestershire, before being sold on to truckmakers based in Sweden, France or Germany.

If the resulting truck is sold into the UK market, the component or materials used in it will have crossed the Channel five times before the lorry is ever driven by the customer. If tariffs are applied at each stage, the cost could be substantial.

9.45am BST

Getting back to cars, here's a table showing how Britain's factories churned out 4% fewer vehicles in September.

UK car manufacturing falls in September, as output declines -4.1% to 153,224 units https://t.co/2ae1hSqNbb pic.twitter.com/Kazl02gtcl

9.41am BST

Barclays CEO Jes Staley won't enjoy today's share price fall.... and he won't get much relief from browsing through today's analyst notes either.

Investment bank Keefe, Bruyette & Woods are particularly cutting, following the drop in Barclay's investment bank income.

'we had thought #Barclays would struggle to disappoint low Q3 expectations. It looks like they have succeeded' punchy from KBW

Litigation still remains a risk for Barclays, with more than 20 separate investigations ongoing, not least one relating to CEO Jes Staley's attempt to uncover a whisteblower in his own ranks.....

After making some good progress, Barclays appears to be stalling somewhat and it's now touch and go whether the bank will break even in 2017. With the bank's restructuring complete, Jes Staley will want to recover some momentum as we move forward into next year.'

Markets revenues down 30% yoy for Barclays. Only 5.1% ROE - hardly encouraging figures for investors https://t.co/XtDcAuIq2b

9.33am BST

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9.26am BST

Shares in Barclays have slumped to the bottom of the FTSE 100 this morning, after its latest financial results disappointed traders.

The third quarter was clearly a difficult one for our Markets business within Barclays International. A lack of volume and volatility in FICC [Fixed Income, Currencies and Commodities] hit Markets revenues hard across the industry, and we were no exception to this trend.

Barclays share price set for biggest fall since Brexit after Q3 profit hit by weak markets business https://t.co/x1px00lhZa pic.twitter.com/x1HytkdkqC

8.49am BST

Today's drop in UK car production is the fourth blow to the auto industry in recent weeks.

We've also seen that:

8.31am BST

Inchcape, the new and used car dealer, has also warned that Britain's car sector is deteriorating.

In its latest financial results, released this morning, it says:

UK market slowing, as expected, resulting in continuing margin pressure on vehicles.

8.15am BST

The storm clouds gathering over Britain's car industry have darkened this morning, after manufacturers suffered a sharp fall in production.

Output shrank by 4.1% in September, new figures from the motor industry show.

"With UK car manufacturing falling for a fifth month this year, it's clear that declining consumer and business confidence is affecting domestic demand and hence production volumes. Uncertainty regarding the national air quality plans also didn't help the domestic market for diesel cars, despite the fact that these new vehicles will face no extra charges or restrictions across theUK.

Brexit is the greatest challenge of our times and yet we still don't have any clarity on what our future relationship with our biggest trading partner will look like, nor detail of the transitional deal being sought. Leaving the EU with no deal would be the worst outcome for our sector so we urge government to deliver on its commitments and safeguard the competitiveness of the industry."

Related: Toyota seeks clarity over Brexit 'fog' amid fears over Derbyshire plant

Worth noting this morning that fall in UK car production mirrors global inflection in trend. Far from clear from the data that fall is #Brexit-related pic.twitter.com/I7sYGLSkMm

7.57am BST

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

Good Taper Day morning from Frankfurt. #ECB

We expect a reduction in monthly asset purchases to perhaps a45 billion euros in January from the current a60 billion. The ECB will probably refrain from a firm commitment to an end-date for its program at tomorrow's decision; we expect purchases to continue until at least the third quarter of 2018.

Following the numerous signals from President Draghi and colleagues over recent months, the market is well primed for some form of taper announcement. But there is still a delicate balance to strike.

Taper too quickly and the markets might worry that the ECB's historically hawkish instincts - typified by the premature (and subsequently reversed) interest rate hikes of 2011 - may be resurfacing. One obvious consequence could be an undesirable rise in the euro. But too tentative a move could fuel concerns that the ECB has little confidence in the economic outlook and the effectiveness of its previous policy measures.

European Opening Calls:#FTSE 7462 +0.19%#DAX 12972 +0.14%#CAC 5382 +0.13%#MIB 22483 +0.16%#IBEX 10146 -0.07%