UK business investment slide, but trade war optimism boosts stocks - business live

New GDP report shows that British bosses have cut back on buying new machinery and computers, as Brexit crisis hits confidence

• Latest: UK business investment has fallen for a year
• Households forced to borrow to make ends meet
• Balance of payments gap has widened
• English house prices are now falling

5.30pm GMT

Finally, business leaders have been expressing their concern and barely-contained anger over the Brexit crisis.

As the Institute of Directors puts it, Brexit is a merry-go-round that long ago stopped being fun (was it ever?!)

Related: Business leaders say they are fed up paying price of uncertainty

5.28pm GMT

The FTSE 100 has ended the week up 45 points, at 7279.

4.54pm GMT

Investors should recognise that the chances of a general election have risen, says Dean Turner, UK Economist at UBS Global Wealth Management.

"The third defeat of the Withdrawal Agreement crystallises the UK's departure date as 12th April. Before then, we expect MPs to converge on the view that more time will be needed in order to determine the path for Brexit. Therefore, a long extension to Article 50 looks increasingly likely, boosting the chances of a general election.

"Sterling hasn't responded favourably to today's result, likely interpreting an increased risk of a no-deal scenario two weeks hence. That said, our view remains that MPs will ultimately avoid this outcome."

4.46pm GMT

Mervyn King, who led the Bank of England in the run-up to the financial crisis, has argued that Britain shouldn't fear a no-deal Brexit...

Related: UK should leave EU with no deal, says former Bank of England governor

3.41pm GMT

The London stock market shrugged off the drama in Westminster, leaving the FTSE 100 up 36 points today at 7270.

Analyst Fiona Cincotta of www.cityindex.co.uk says trade war optimism is helping markets, following Treasury secretary Mnuchin's claim of 'constructive progress' at today's talks.

Optimism that the US and China were moving towards a trade agreement has boosted risk appetite. Whilst any agreement could still be some months in the making, Economic Advisor Larry Kudlow hinted that some tariffs on Chinese imports could be removed. Progress in the US - Sino trade dispute is ensuring a strong end to the quarter for equities, despite lingering concerns over the health of the global economy.

We have seen investors pile into riskier assets across this quarter thanks to positive trade talk developments and a more accommodative Fed. Whether the bulls stay in control in the coming quarter could depend largely on further developments in US - Sino trade talks. Particularly amid a lack of solid evidence.

3.39pm GMT

Jeremy Thomson-Cook, chief economist and head of currency strategy at WorldFirst, predicts that the pound will hover around $1.30 until we have some Brexit clarity.

GBP-USD is now at its centre of gravity around the $1.30 mark and that is where we expect it to stay until the next catalyst, which will likely be the second round of indicative votes next week."

2.58pm GMT

Newsflash: Sterling is weakening, after the government has lost its latest attempt to get Theresa May's Brexit deal through parliament.

The pound has fallen through $1.30 against the US dollar for the first time since 11 March, and is also weaker against the euro.

Related: Brexit: Donald Tusk calls emergency EU summit after May defeated again - live news

2.16pm GMT

As predicted, the US stock market is ending the week with gains - following the rally in China and then Europe today.

The Dow Jones industrial average is up roughly 100 points, or 0.4%, at 25,815 points. At that level, it's up almost 11% so far this year.

2.03pm GMT

Better economic news from the US: Nearly 5% more Americans managed a house in February, reversing most of the slump in January.

(USD) New Home Sales (MoM) (FEB),
Actual: 4.9%
Expected: 2.10%
Previous: -6.90% https://t.co/F0epTenDMe

1.44pm GMT

Canada has bucked the recent trend of disappointing growth, by posting its strongest monthly growth since last summer.

Canadian GDP rose by 0.3% in January, driven by a pick-up in manufacturing and construction. That beats a 0.1% expansion in December, and is the best reading since last May.

Canada's economy begins 2019 with its largest output gain in 8 months https://t.co/cc30AlEJm1 pic.twitter.com/yzWcZe2dIP

1.36pm GMT

Newsflash: The Chinese news service Xinhua is reporting that progress was made at today's negotiations between US officials Steven Mnuchin and Robert Lighthizer and Chinese vice premier Liu He.

Alas, we don't have concrete details on that progress.

1.03pm GMT

Back in the financial markets, Wall Street is expected to open higher as trade war optimism reaches New York.

Investors are cheered by this morning's tweet from Treasury secretary Steven Mnuchin, that his talks in Beijing today were 'constructive'.

It's been a choppy directionless week for US stocks but at the moment the Dow is forecast to open around +130 from Thursday's close, at the highs for the week. pic.twitter.com/XJLwwTypEG

12.56pm GMT

TUC General Secretary Frances O'Grady is urging ministers to address the weakness in Britain's economy.....

"Falling business investment, a low savings ratio and record unsecured household debt are very worrying - especially with growth already so weak.

"The government must get off the sidelines and take urgent action to protect livelihoods and the economy.

First, typical household incomes stagnated last year - with growth falling to zero (down from 1.9% the year before). pic.twitter.com/qCl4N8rdH1

Third, poverty rose. The number of children living in absolute increased by 200,000 - the first rise since 2012. Relative child poverty rose slightly before housing costs, but fell slightly after housing costs. Persistent poverty also increased. pic.twitter.com/UCTmivzjx8

12.40pm GMT

Economist Howard Archer of the EY Item Club is thoroughly unimpressed by today's healthcheck on the UK economy:

12.13pm GMT

In another blow, Britain has also suffered a fall in gross fixed capital formation (a broad measure of spending on new equipment, machinery, transport, property, etc).

GFCF shrank by 0.6% in the last quarter of 2018, today's growth report shows. It was mainly dragged down by the drop in business spending.

11.26am GMT

John McDonnell MP, Shadow Chancellor, is (predictably) unimpressed by the picture painted by today's economic data.

"Amidst the Government's Brexit bungling, the Chancellor has repeatedly failed to get a grip on tumbling business investment, high household borrowing, weak growth, and a widening current account deficit.

"We need a general election to bring an end to the Tories' chaotic management of Brexit and reckless economic management."

Related: Replacing May is not just a game for the entitled. We must all have a say | Gaby Hinsliff

11.17am GMT

Britain also continued to rely on the 'kindness of strangers' to support its financial position.

The UK's current account deficit widened to 4.4% of GDP in the final quarter of 2018, the ONS says.

11.06am GMT

Mark Tighe, CEO of R&D tax specialists Catax, says the "hideous and ongoing uncertainty over Brexit" is the main factor driving business investment down:

"This is the first time we've seen business investment crumble so badly since the financial crisis. It is a clear sign of dwindling business confidence and highlights the growing need for the UK economy to be put on a firmer footing.

10.54am GMT

Is it fair to blame Brexit for the steady fall in UK business investment in 2018?

Yes, according to this line from today's National Accounts report:

The latest Deloitte CFO Survey reports that perceptions of economic and financial uncertainty continued to rise in the final quarter of 2018 while the outlook for capital expenditure has deteriorated.

Recent analysis by the Bank of England finds that "almost 70% of the slowdown" in business investment could be accounted for by uncertainty around the UK's EU exit.

10.38am GMT

This doesn't sound good....

In 2016, households financed their borrowing through long-term loans and the disinvestment in mutual funds. More recently, there has been a sharp drop in deposits made to UK banks by households, while the net acquisition of long-term loans and the disinvestment in mutual funds continued throughout this period to help fund households' net borrowing.

10.34am GMT

Economist Rupert Seggins shows how UK households turned from net savers to net borrowers in the final quarter of 2016 (when the pound's tumble after the Brexit vote pushed inflation higher)

The household sector has been a net borrower for just over two years, which is unprecedented since records began in 1987. Also unprecedented is that over the same period, every domestic UK sector has been a net borrower (give or take a quarter for financial corporations). pic.twitter.com/vYNJDw9oF4

10.14am GMT

In another sign of mounting economic stress, UK households and businesses spent more than they earned in the final three months of 2018.

The UK government was also a net borrower in Q4, the ONS says.

Households have traditionally been a net lender. However, in recent times that has not been the case, as households have now been net borrowers for the ninth consecutive quarter, which is an unprecedented run.

Whilst early estimates can be prone to revision, the underlying downward trend provides a clear reflection that households have recently saved less to support spending in the face of the squeeze in real incomes. Household net borrowing was 0.6% of GDP in Quarter 4 (Oct to Dec) 2018, an improvement from 1.1% in the previous quarter, reflecting an increase in wages and salaries.

9.56am GMT

Worryingly, UK business investment fell in the last quarter of 2018, for the fourth quarter in a row.

Businesses spend 0.9% less on assets such as IT and machinery in October-December, today's growth report shows. On an annual basis, business investment shrank by 2.5%.

ICT equipment and other machinery and equipment made the biggest contribution to the 2.5% fall in business investment between Quarter 4 2017 and Quarter 4 2018, contributing negative 2.4 percentage points.

Transport equipment and intellectual property products also made negative contributions of negative 1.0 and negative 0.3 percentage points respectively. Other buildings and structures made the only positive contribution of 1.2 percentage points.

0.9% fall in Business Investment in Q4 2018 led by falls in 'ICT equipment' and 'other machinery and equipment' and 'intellectual property products'. Business investment fell in every quarter of 2018 https://t.co/VkYTzBHdZ9 pic.twitter.com/1Xhbj6HpDf

9.55am GMT

Once again, Britain is relying on its service sector for growth.

Services expanded by 0.5% in the last quarter of 2018, while production shrank by 0.8% and construction output fell by 0.5%.

9.42am GMT

Newsflash: Britain's economy grew even faster last summer than previously thought.

The Office for National Statistics has revised its forecast for growth in the third-quarter of 2018 to +0.7%, up from +0.6%.

9.34am GMT

Back in the UK, Sports Direct may be preparing to concede defeat in its pursuit of department store Debenhams.

It has just told the City that it is "giving further consideration" to yesterday's news that Debenhams creditors had agreed to back its restructuring plan.

Now the results of the vote are known and we have also been subsequently advised that the supportive HSBC are no longer part of Debenhams RCF, I think that if there were any justice in the world the majority of the advisors would be put in prison."

9.23am GMT

Asian markets have continued to rally, on hopes that the 'constructive talks' between the US and China will deliver the goods.

Shanghai surged 3.2 percent and Tokyo ended 0.8 percent higher, while Hong Kong added one percent.

Seoul and Singapore each added 0.6 percent, Sydney put on 0.1 percent and Wellington gained 0.8 percent. Taipei, Mumbai and Manila were also sharply higher.

9.03am GMT

We have fresh evidence today that Britain's housing market is cooling.

Prices across England fell by 0.7% in the last quarter, compared to a year ago, the first annual decline since 2012.

UK average house price growth of 0.7%y/y in March according to Nationwide, with prices reportedly falling in London & the S. East. The major house price indices are all suggesting that house price growth continues to fade. Halifax looking more and more like an odd outlier. pic.twitter.com/HgJNabTrm0

Related: House prices in England fall for first time since 2012

8.42am GMT

Despite TUI's profits warning, European stock markets are higher across the board.

8.24am GMT

Newsflash: Holiday company TUI has warned that the Boeing 737 Max crisis will cost it at least a200m.

In an unscheduled announcement, TUI says it has been forced to lease additional aircraft to cover holiday trips, after the 737 Max was grounded by aerospace regulators around the world.

This impact is especially attributable to costs related to the replacement of aircraft, higher fuel costs, other disruption costs, and the anticipated impact on trading.

Officials investigating the fatal crash of a Boeing 737 MAX in Ethiopia have reached a preliminary conclusion that a suspect flight-control feature automatically activated before the plane nose-dived into the ground.

8.16am GMT

Neil Wilson of Markets.com says Steven Mnuchin's tweet has cheered investors, as they wrap up the first quarter of 2019:

"US 10-year Treasury yields are at 2.39%, still on the back foot but off the weekly lows. Equity markets are displaying a bit more optimism again. There is some hope flickering again in terms of trade as Mnuchin and Lighthizer arrive in Beijing for more talks - a tweet this morning saying that these talks were 'constructive', with the Chinese vice-premier Liu He set to head to Washington next week for 'important' talks.

A nice excuse to bid up markets on the last day of the quarter if ever there was one.

8.08am GMT

Mining stocks are rallying in London in early trading, as trade war optimism bubbles away.

Glencore, BHP Billiton, Rio Tinto and Anglo American have all gained at least 2%, driving the FTSE 100 up up 45 points or 0.6% to 7278.

FTSE Miners +2.5% on China trade talk optimism; Copper +1%

7.58am GMT

Here are some photos of the US delegation arriving for today's 'constructive' talks:

7.49am GMT

Newsflash: Treasury secretary Mnuchin has tweeted that today's negotiations have wrapped up.

He says they were "constructive", and that vice premier Liu He will return to Washington next week for further talks.

.@USTradeRep and I concluded constructive trade talks in Beijing. I look forward to welcoming China's Vice Premier Liu He to continue these important discussions in Washington next week. #USEmbassyChina pic.twitter.com/ikfcDZ10IL

7.43am GMT

Optimism over a trade war breakthrough have sent stocks soaring in China.

The benchmark Shanghai composite index has leapt over 3%, on hopes that Beijing's 'unprecedented offer' to address Washington's concerns could end the deadlock.

Hello stocks! #China's #Shanghai Composite up 3.2%! pic.twitter.com/lW8VsMZcco

Sentiment was largely positive after reports that the trade negotiations between the US and China were improving. It was reported that Beijing made 'unprecedented' proposals to the US in relation to forced technology transfers, and that it is a major step forward, as the trade talks were never just about China buying more US goods.

7.36am GMT

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

"We had a very productive working dinner last night, and we are looking forward to meeting today."

"I think ultimately we will be rewarded with a deal of sorts which both sides will proclaim ... as a fantastic victory,"

"The thing to bear in mind is this is a process...Whatever we get out of this, it's nice to say 'right, okay we'll draw a line under this bit, now we have to look forward to all the other things that we haven't sorted out'."