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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 2pm) and Nick Fletcher

British firms suffer Brexit impact, as ECB's Draghi warns on US protectionism – as it happened

The City of London Skyline
The City of London Skyline Photograph: Alamy

European markets slip back

Worries about the forthcoming elections in France and Germany helped send European markets lower, with ECB president Mario Draghi’s dovish comments on monetary policy dented the euro. The FTSE 100 outperformed, helped by the performance of precious metal miners as investors sought havens such as gold. The final scores showed:

  • The FTSE 100 finished down 0.22% or 16.15 points at 7172.15
  • Germany’s Dax dropped 1.22% to 11,509.84 as chancellor Angela Merkel’s CDU party fell into second place in a new poll
  • France’s Cac closed 0.98% lower at 4778.08 after Marine Le Pen launched her presidential campaign
  • Italy’s FTSE MIB fell 2.21% to 18,693.65
  • Spain’s Ibex ended down 1.11% at 9357.3
  • In Greece, the Athens market fell 1.3% to 620.75

On Wall Street, the Dow Jones Industrial Average is currently down 29 points or 0.15%.

On that note, it’s time to shut for the evening. Thanks for all your comments, and we’ll be back tomorrow.

ECB president Mario Draghi used his latest appearance at the European parliament to maintain that, contrary to US claims, Germany and the central bank were not currency manipulators. He also said the idea of rowing back on financial regulation - another proposal from the Trump administration - was “worrisome.” Bloomberg’s take on it:

Mario Draghi took the Trump administration to task, rebutting recent assertions that Germany is a currency manipulator and warning against the rollback of post-crisis financial regulation.

Speaking at a hearing of European lawmakers in Brussels on Monday, the European Central Bank president responded to the charge by U.S. National Trade Council Director Peter Navarro and others that Germany is using a “grossly undervalued” euro to gain an unfair trade advantage.

“The ECB has not intervened in the foreign exchange markets since 2011,” Draghi said, adding that Germany’s trade surplus was the result of productivity gains. “Germany has a significant bilateral trade surplus with the U.S., a material current account surplus, but it has not engaged in persistent one-sided intervention in the foreign exchange market.”

In a question-and-answer session punctuated with lawmakers’ concerns over the shifts in global economic and financial policy brought about by the change of government in Washington, Draghi also hit out at Trump’s moves to begin dismantling the Dodd-Frank Act. Rolling back the compendium of financial rules intended to prevent a repeat of the 2008 financial crisis would be “very worrisome,” he said.

“The last thing we need at this point in time is a relaxation in regulation,” Draghi said. “Frankly I don’t see any reason to relax the present regulatory stance which has produced a stronger banking and financial services industry than before the crisis.”

Mario Draghi attends a hearing of the European Parliament Committee
Mario Draghi attends a hearing of the European Parliament Committee Photograph: Stephanie Lecocq/EPA

Commenting on Mario Draghi’s appearance at the European parliament Howard Archer, chief European and UK cconomist at IHS Global Insight, said:

Mario Draghi does not look like a man intending to change tack on monetary policy any time soon. He stuck like glue to the current ECB script.Indeed, the ECB seemingly retains an easing bias in its policy stance despite the recent jump in Eurozone inflation to 1.8% in January (and improved GDP growth of 0.5% quarter-on-quarter in the fourth quarter of 2016).

The only potential change of ECB monetary policy that Mr. Draghi mentioned in his testimony to the European parliament was that the size and/or duration of the bank’s monthly asset purchase program could be increased if inflation developments become less favourable or monetary conditions less helpful to a sustainable achievement of the inflation target. There was no mention of the ECB reducing its asset purchase programme following December’s adjustments....

Mr. Draghi’s testimony fuels belief that the ECB will not be making any changes to its monetary policy for some time to come, following its December manoeuvres. The ECB clearly wants to see sustained, decisive evidence that underling inflationary pressures are picking up. And while the ECB is relatively upbeat on Eurozone growth prospects, it is very aware that there are appreciable uncertainties ahead, especially political ones (elections in Netherlands, France and Germany, the Brexit process starting and Trump’s presidency in the US)...

We suspect the ECB will end up extending its monthly asset purchases into 2018, but at a reducing rate.

On Greece, Draghi said there had been many changes made in Greece, significant progress had been made.

He added that the conclusion of the second review depended on a number of factors: for a positive assessment of debt sustainability, there should be a 3.5% primary surplus for a long period of time, that is one point of negotiation; the second point concerns the closing of fiscal gap for 2018; the third point concerns a certain set of structural reforms - labour market reform, judiciary, energy. I would add one, the non performing loan handling, to give renewed strength of the banking system.

And with that Draghi’s testimony is at an end.

Draghi leaves after his testimony
Draghi leaves after his testimony Photograph: European Parliament

For inflation to be 2%, it will have to be higher in Germany (since it will be lower elsewhere). So what level would you like to see?

Inflation differentials are not a new thing. Our objective is defined as the inflation rate for whole eurozone not individual countries.

On Greece, Draghi said:

Updated

Back with Draghi at the European Parliament.

Question on when the ECB will exit its current monetary policy programme.

Draghi effectively repeats previous answers, saying our objective is an inflation rate close but below 2% in medium term. We have to be convinced of a durable convergence to that objective. And it has to be for the whole of the eurozone, these are the questions we look at for changing monetary policy.

And another on the Trump administration’s comments on financial regulation.

Draghi says we have to see what exactly US wants to do, but I repeat, the combination of easy money and financial deregulation was exactly the ground on whch the financial crisis developed. I don’t see any reason to relax the present regulatory stance.

Speaking of the euro, analysts at JP Morgan have said the single currency could fall by up to 10% if Marine Le Pen wins the French presidential election.

On the euro’s moves during Draghi’s testimony, financial analyst Connor Campbell at Spreadex said:

The ECB chief reiterated that while the Eurozone’s headline inflation may have picked up, the underlying CPI readings remains muted, meaning that for the time being the region is still in need of the stimulus being pumped into it every month. This was received poorly by the euro, which sank by half a percent against the dollar, giving up much of the growth it managed at the end of January; against the pound, however, the currency actually saw its losses shrink to just 0.1%, down from the 0.3% it had seen earlier in the session. Interestingly it wasn’t just the euro perturbed by Draghi’s statement; both the DAX and CAC fell around 1% as the day went on, though admittedly the German and, especially, French indices may also be troubled by the launch of Marine Le Pen’s presidential campaign.

Question about the future of clearing post-Brexit.

Draghi says its too early to take a stance on the regulatory framework necessary [for clearing] when the UK leaves the EU.

The US Federal Reserve has raised rates, should it be a model for others? What is the situation with relations with the Federal Reserve and the US (in the light of the letter from the new US administration to the Fed about putting America first)?

Draghi says he cannot comment on other regulators but adds, if I was sent a similar letter, I would say we all benefit from having a central bank, and regulators, with the input of public consultations. This has produced extremely valuable results, with much more robust financial system. Given such interlinkage today we especially need this. But are the central banks, the supervisors etc the ones who have the final say. No, it is always the legislators who have ultimate say.


In a question about the future of the euro and whether it is reversible, Draghi says it is not.

ECB not a currency manipulator - Draghi

Question referring to whether the euro is being manipulated, as Donald Trump’s trade advisor last week accused Germany of doing.

Draghi responds by quoting a US document: In 2016, the US treasury said Germany does not manipulate its currency, since it does not fit the criteria.

Updated

Question from Netherlands: is ECB monetary policy data driven not date driven (similar to the Fed)?

Draghi says we need an inflation rate which satisfies the four conditions needed. Suppose we withdraw our support, what will happen. Will inflation drop or continue its convergence to target. If second, we can start withdrawing support.

Is cyber security high enough up on agenda?

We definitely need to step up our efforts, says Draghi. In all sectors we’ve been severely underprepared. A quantum leap is needed in all sectors, including in financial sector. And there is no set benchmark, since progress of cyber crime is always moving. We have to work hard to develop safer and better standards.

Last thing we need is relaxation of financial regulations - Draghi

What should be Europe’s strategy in light of US comments last week (ie, the proposal from Donald Trump to row back Dodd-Frank banking regulations).

Draghi says again, it is still early to say. But looking at the historical experience, what were the main reasons for the financial crisis? ....A combination of too expansive monetary policy and a dismantling of financial regulations. Now we have expansive monetary policy, so the last thing we need at this point is a relaxation of regulations.

The fact we are not seeing significant financial stability risks is the reward of the actions that regulators and legislators have been undertaking since the financial crisis erupted. Financial intermediaries are now stronger, so the idea of repeating the situation in place before crisis is very worrisome.

Updated

We worry about protectionist signs - Draghi

And after a little applause, the questions. There are signs of global trade moving from liberalism to protectionism in some important countries, how do you see these risks?

Draghi says it is too early to say, we would look with worry about potential announcements about protectionist measures. The EU was created on the foundation of free trade, on the four freedoms. We will judge when we see what has been announced.

Updated

Draghi says he sees no signs of asset bubbles:

Currently, we do not see compelling evidence at the euro area level of stretched asset valuations. Both corporate bond spreads and equity prices appear to be broadly in line with fundamentals.

Similarly, real estate price growth remains moderate in the area as a whole, although significant cross-country heterogeneity is observable. This assessment is corroborated by the fact that credit growth is still modest, which suggests that asset price developments are not accompanied by increasing leverage.

Nevertheless, the longer the accommodative measures need to be kept in place, the greater the risks of unwarranted side effects on the financial system become. For instance, asset prices may increase to levels that are not in line with fundamentals because investors might be tempted to take on more risk during times of low yields.

Such developments are best addressed by enacting appropriate macro and micro prudential policies.

Following the release of Draghi’s comments, the euro has hit a one week low against the dollar. Draghi noted that the ECB was prepared to increase its asset purchase programme if necessary in terms of both size and duration.

Draghi at the European Parliament
Draghi at the European Parliament Photograph: European Parliament

Updated

Draghi concludes by repeating his call for political reforms:

As I argued last week in Ljubljana, and as the crisis has shown, the benefits of the single currency can only be fully reaped if we have policies and institutions at national and European level that ensure it works for everyone.

In the run-up to the launch of the euro, there was a strong commitment to advancing along the path of institutional and economic convergence. The crisis showed that this commitment cannot be relaxed. In fact, it remains fully relevant today as we seek to strengthen EMU and the EU in the face of current uncertainties and in preparation for future challenges.

The euro area’s resilience in 2016 despite a range of negative shocks shows that we are on the right track. It also suggests that reforms at national and European level are paying off in terms of economic growth.

As the economic situation improves, and even though challenges in other policy realms have understandably been the recent focus of our attention, we should not stop our efforts to make EMU more resilient and prosperous. We can and should address the remaining, well-identified fragilities at national and European level. On the latter point, I look forward to the continued support of the European Parliament in the second half of this legislative term.

ECB prepared to increase QE programme if necessary - Draghi

There have been signs of inflationary pressures in the eurozone, prompting speculation that the ECB might have to rein in its stimulus measures. But Draghi said:

Our December decisions strike a balance between our growing confidence that the euro area’s economic prospects are firming up, and – at the same time – the lack of a clear sign of sustained convergence of inflation rates towards the desired level.

On the one hand, the evidence suggests that the acute deflation risks have disappeared and that inflation is set to pick up over the coming years. And contrary to a widespread perception, euro area economic conditions have also been steadily improving. Euro area GDP growth has been solid in every quarter since the beginning of 2015, averaging 1.9 percent in annualised terms. Compared to 2013, there are 3.5 million fewer unemployed in the euro area, a decrease by more than 18%. And in the last quarter, the recovery has been broadening across sectors and across countries. Indeed, the dispersion of value added growth across euro area countries and sectors has declined sharply and stands close to its lowest level since the introduction of the euro.

But support from our monetary policy measures is still needed if inflation rates are to converge towards our objective with sufficient confidence and in a sustained manner. The pickup in headline inflation in December and in January largely reflects sizeable upward base effects and recent increases in energy prices. So far underlying inflation pressures remain very subdued and are expected to pick up only gradually as we go on. This lack of momentum in underlying inflation reflects largely weak domestic cost pressures. The still significant degree of labour market slack and weak productivity developments are weighing down on wage growth.

As I have argued before, our monetary policy strategy prescribes that we should not react to individual data points and short-lived increases in inflation. Our relevant policy horizon is the medium term. We therefore continue to look through changes in HICP {headline] inflation if we believe they do not durably affect the medium-term outlook for price stability.

He added:

Looking ahead, risks to the euro area outlook remain tilted to the downside and relate predominantly to global factors. Our current monetary policy stance foresees that, if the inflation 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 is prepared to increase the asset purchase programme in terms of size and/or duration.

Updated

As European Bank president Mario Draghi appears before the European parliament, his speech has been released here.

Lunchtime summary

Time for a quick recap.

More than half of UK business leaders have reported that Brexit is already hurting their businesses, even before article 50 is triggered.

IPSOS Mori found that 58% of top executives at Britain’s largest companies have experienced a negative impact, with most 65% expecting things to be worse in five years.

Ben Page, CEO of Ipsos MORI, says:

Unfortunately, it looks like business in this country is already feeling the pain of the economic upheaval of leaving the EU, with 58% of Captains of Industry stating that their business has suffered negatively since the referendum. According to respondents there is no sign that this is likely to ease this year, with two thirds saying they thought their business situation would get worse in the next 12 months.

More encouragingly, almost all business leaders are confident they’ll adapt to Brexit.

Here are the key slides:

In a Monday morning blizzard of Brexit-related news, we’ve also learned that

And in Europe:

Updated

Firms are right to worry that the Brexit vote will hurt their businesses over the next couple of years, argues Mihir Kapadia, CEO of Sun Global Investments, a wealth manager.

He says:

Though it is a little disheartening, the reality is that Brexit is already having a filtered down effect on the UK market. While we are yet to receive clarity on the long term effect, businesses appear worried about the changing landscape ahead primarily on concerns over access to skilled labour and the single market.

The weakening pound has benefited British exports and the stocks of those companies where exports are significant part of earnings. However, the other side of this is costlier imports and therefore higher inflationary pressures, businesses and consumers will have a tough time finding common ground until further clarity emerges on the market dynamics.”

Updated

French bonds hit by Le Pen fears

The possibility of a Brexit or Trump-style shock in France’s presidential elections this spring are reverberating through the financial markets today.

Investors are selling French government debt, and seeking safety in German bonds instead.

The moves aren’t massive -- French 10-year borrowing costs are up from 1.08% to 1.12%, while the German equivalent is down from 0.41% to 0.38%.

But that widens the gap between Berlin and Paris’s borrowing costs to the widest level in almost four years, and means investors see French debt as riskier.

The moves come after Marine Le Pen, head of the far-right National Front party, launched her presidential bid with promises to leave the eurozone, tax imports, raise benefits and enforce a “French first” policy on jobs and social housing.

The polls currently suggest Le Pen might win the first round of voting, before being defeated by in the head-to-head second round (most likely by centrist Emmanuel Macron, who also held a rally over the weekend).

Emmanuel Macron’s political campaign rally in Lyon on Saturday.
Emmanuel Macron’s political campaign rally in Lyon on Saturday. Photograph: BONY/SIPA/REX/Shutterstock

Updated

Back to Hilary Benn’s Brexit discussion....where the Labour MP criticised government ministers for undermining the UK’s standing through their divisive rhetoric.

My colleague Rajeev Syal reports that Benn singled out comments on overseas students and doctors:

The former shadow foreign secretary said the Conservative party’s annual conference was an “absolute disaster” because senior politicians portrayed an image of the UK that was insular and aggressive towards foreigners.

Indicating that such language could influence negotiations with the EU, Benn said making pronouncements about what the government would achieve from its discussions would harden attitudes towards the UK among European politicians and officials.

Speaking at the Institute for Government’s headquarters in central London, Benn said: “When I reflect upon a certain week in Birmingham in the autumn, where people of a particular political party gathered and made speeches, I thought that was a disastrous week for Britain’s reputation in the world. Absolutely disastrous.”

More here:

Hermes: Very hard to reach Brexit deal in two years

I mentioned earlier that many UK business leaders see securing a free trade deal with Europe as a top priority.

The best option might be a deal that gives Britain tariff-free access to the customs union, but not full membership, argues Neil Williams, chief economist at Hermes Investment Management.

He writes:

Turkey and Canada have enjoyed customs-union access with the EU without membership. Canada’s in 2016 came after seven years of negotiation. And, needing sign-off by all EU states, it was stalled by the Belgian region of Wallonia!

Chancellor Hammond’s threat that without access, much lower UK corporate tax rates will be needed to maintain FDI and competitiveness (which risks a European ‘chase to the bottom’) looks an early stick to achieving similar privileges.

But getting such a deal within two years -- the window created by Article 50 -- will be very tough, Williams adds:

First, the deal when struck will need Parliamentary approval, and then be subject to a ‘phasing in’ period (Mr Hammond has suggested two years) to allow firms, consumers and officials to adjust to the new arrangements. A second independence referendum in pro-EU Scotland, though not precluding Brexit, could also provide an extra hurdle to completing it before the General Election scheduled for May 2020.

Second, the UK is relying on a cooperative sign-off by its 27 EU peers. The only real precedent we have is Greenland’s exit in 1985. This was a ‘soft’ exit, but it took three years. We, larger and 44 years entwined in the EU, will need longer.

We’re opening the ‘trapdoor’ in a highly-charged political year. Voters facing national elections in Germany, France, The Netherlands and probably Italy may want to approach it as protest to six years of euro-zone austerity. In the ‘peripheral’ economies, reform fatigue and populist parties are building. Therefore, incumbents may be reluctant to condone an easy UK exit that puts its economy ahead of their own.

UK MPs will get down to the nitty-gritty of Brexit today, as they debate the government’s bill allowing ministers to trigger article 50.

Our political correspondent Peter Walker explains:

This is the period when amendments are debated, and there are many dozens of them tabled. Today is more focused on amendments connected to process, with the more fundamental ones – notably on the rights of EU citizens in the UK, and whether parliament gets a final say over the eventual Brexit deal – coming tomorrow.

But today should see signs of whether any Conservative MPs are mustering a rebellion on either of those issues, especially now the government has indicated it is not minded to back down unilaterally.

Peter is tracking all the action in Politics Live:

Meanwhile, the government is taking a tough line on any attempts to derail Brexit....

Updated

The 5.2% surge in German factory orders in December shows that Europe’s economy entered this year in good spirits, argues Marc Ostwald of ADM Investor Services:

This underlines that domestic demand in Germany and the Eurozone as a whole looks considerably more robust than many forecasters are assuming, and with such solid momentum going into Q1, the consensus 1.4% y/y forecast for 2017 German GDP looks to be under-clubbed, 1.7%/1.8% looks more likely and 2.0% is a distinct possibility.

That would be good news for UK exporters too, as Germany is the second largest export market for British firms (after the US).

A pint of real ale.

The slide in the pound since the Brexit vote has been a blow to Britain’s beer industry.

Craft brewers, for example, are worried that imported hops and malt will simply be too expensive, while some big brewers have been hiking prices.

Now Camra, which represents beer lovers, is pushing the government to cut the duty on a pint; 1p may not make a big difference, though. More here:

A leaked report has shown that Britons won’t benefit from a new clampdown on mobile phone roaming costs within the EU once Brexit has been implemented.

Our Brussels bureau chief Daniel Boffey explains:

British tourists will have to pay mobile phone operators’ roaming charges when they travel in the EU after Brexit, according to the European parliament committee that helped pioneer the legislation.

Despite a ban on the practice, holidaymakers and business travellers will face hefty bills if they use their phone within the EU from 2019, unless the British government strikes a favourable deal with the union.

Last week the European commission announced that, from June this year, “consumers will be able to call, send SMS or surf on their mobile at the same price they pay at home” when travelling in the EU.

The move, which has been years in the making, would significantly reduce travel costs. However, a leaked analysis on UK withdrawal from the EU confirmed this would not apply to Britons post-Brexit....

More here:

Hilary Benn, the Labour MP who chairs parliament’s Brexit select committee, has been discussing Britain’s exit for the EU at an event organised by the Institute for Government.

Sophie Gaston of Demos has been tweeting:

Lucy Campbell of the IFG is also there:

UK car sales hit 12-year high, but price rises loom

A newly built Mini is driven off of the assembly line at the BMW Mini car production plant in Oxford.

Britain’s auto industry didn’t suffer any obvious Brexit impact last month, but a slowdown may be coming.

Car sales jumped 2.9% year-on-year in January to 174,564, the best performance in any January since 2005. The Society of Motor Manufacturers and Traders also reports that electric car sales were particularly strong during the month.

Mike Hawes, SMMT Chief Executive, says:

After record growth in 2016, some cooling is anticipated over the coming months, but provided interest rates remain low and the economy stable, the market is in a good position to withstand its short-term challenges.”

Economist Howard Archer of IHS Global Insight fears a difficult year for the industry -- with the cost of imported cars likely to rise.

Consumers seem certain to find their purchasing power being increasingly diluted during 2017. Furthermore, a likely weakening economy and more uncertain outlook may well make businesses more circumspect in their car purchases – perhaps taking longer to replace fleets.

Meanwhile, the sharp weakening of the pound makes it more difficult for car dealers to offer attractive deals on imported cars – with the result that some car manufacturers have raised prices and more increases seem inevitable during 2017 .

Updated

Ryanair fears Brexit slowdown, as fares tumble 17%

A Ryanair aircraft takes off during a foggy day at Riga International Airport.

Michael O’Leary was one of the loudest business voices backing the Remain campaign (in vain) last year.

And today, the boss of Ryanair has blamed the impact of the Brexit vote for a 17% tumble in average fares in the last quarter of 2016.

O’Leary said the “sharp decline in Sterling following the Brexit vote” had eaten into profit margins, eroding the benefits of a 16% rise in customers.

The airline is also fears disruption as the Brexit negotiations unfold, telling the City that:

While it appears that we are heading for a “hard” Brexit, there is still significant uncertainty in relation to what exactly this will entail. This uncertainty will continue to represent a challenge for our business for the remainder of the 2017 financial year, and 2018.

We expect Sterling to remain volatile for some time and we may see a slowdown in economic growth in both the UK and Europe as we move closer to Brexit.

Here’s some reaction to this morning’s survey showing that more than half UK firms are suffering from the Brexit vote, from Robin Bew of the Economist Intelligence Unit:

And here’s Reuters’ take:

More than half of British business leaders believe the vote to leave the European Union has had a negative impact on their companies but most firms are confident they can survive the change, according to a survey on Monday.

Britain’s economy has performed more strongly than expected since the Brexit vote last June, but an Ipsos Mori survey of more than 100 of the country’s top 500 firms found that 58 percent felt the vote to leave had taken a toll.

Management consultancy firm Bain and Company has put out an interesting report on Brexit today.

It predicts that Britain’s pharmaceutical and aerospace sectors could get a £200m boost from leaving the EU, as WTO rules protect them from tariffs. That would allow them to get the benefit of the weak pound, without also suffering new export penalties.

However... Bain also warns that a “hard Brexit” could cut the profits of UK manufacturers by 30%.

Bain partner Michael Garstka is on Bloomberg TV now, explaining that Britain’s exit from the EU will cause significant disruption.

Supply chains between Britain, Europe and the US have been built around a certain set of rules for the last 40 years; that is now ‘up in the air’, he says.

Brexit, whether hard or soft, will have a significant effect on supply chain decisions, Garstka warns.

Bain's Michael Garstka on Bloomberg T

UK firms face labour shortages after Brexit

UK firms could struggle to find enough skilled workers after Brexit, according to a report from consultancy firm Mercer.

It has found that Britain’s working population will grow slowly from 2020, or even contract, due to the ageing population and the prospect of fewer migrants entering the UK.

Mercer has modelled several scenarios, depending whether the UK cuts net migration to 100,000 per year, 40,000 year, or an actual an outflow of EU-born and Non-EU born workers caused by “an unwelcome social environment in the UK”.

Mercer forecasts

The base case scenario is that net migration will fall from 335,000 per year to 185,000 from 2020, as the government forecasts. Even that would create a growing divide between the population total (in green, above) and the number of workers (in blue):

Gary Simmons, partner at Mercer, says businesses need to wake up to looming labour shortages now -- by doing more to help people into work, and considering whether some tasks can be automated.

“Both the government and businesses have a Herculean task ahead of them in determining how we respond to the changing shape of our society. We hope that our modelling is a wake-up call to the business community. There is a tremendous opportunity for far-sighted organisations to begin determining and implementing clear plans in response. If they do not act now, they could potentially find they do not have their share of the people and skills they need in future. The solution lies in analysis, automation and accessibility. Companies should analyse and understand the make-up of their workforce.

They should look to increase retention of current staff and be accessible: employing sectors of UK society that might be under-represented in the workforce - women, disabled, the long-term unemployed. They should also be investing heavily in automation where possible as well as improving employee productivity, through training and skills.”

German factory order growth hits 2.5 year high

The Mercedes-Benz assembly line in Bremen, Germany.
The Mercedes-Benz assembly line in Bremen, Germany. Photograph: Alexander Koerner/Getty Images

There’s no sign of Brexit damage in the latest manufacturing figures from Germany.

German factory orders, released this morning, have smashed forecasts by growing by a whopping 5.2% in December. That’s the best result since July 2014, and crushing the 0.5% expected by economists.

The economy ministry reports that domestic orders jumped by 6.7% during the month, while foreign orders rallied by 3.9%. Demand from eurozone countries was particularly robust, soaring by 10%.

However..November’s figures have been revised down to a 3.6% fall, from 2.5% previously.

Updated

The Brexit vote is also going to drive up prices in the shops this year.

A majority of firms surveyed by the British Chambers of Commerce are planning to hike prices in 2017, due to the slump in the pound last year.

The survey also punctures the idea that weaker sterling is a pure boost to exporters; instead, many are also having to pay higher prices for raw materials from abroad.

Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), explains:

“The depreciation of Sterling in recent months has been the main tangible impact that firms have had to grapple with since the EU referendum vote.

“Our research shows that the falling pound has been a double-edged sword for many UK businesses. Nearly as many exporters say the low pound is damaging them as benefiting them. For firms that import, it’s now more expensive, and companies may find themselves locked into contracts with suppliers and unable to be responsive to currency fluctuations.

Business chiefs: Brexit already having negative effect

More than half of Britain’s biggest companies are now suffering from the public vote to leave the European Union last June.

A new survey of business leaders found that 58% said the Brexit vote was already having a negative impact on their firm. Just 11% said it had helped business.

And stormclouds also appear to be gathering over the economy, with two-third of corporate chiefs leaders predicting that their business situation will be more negative once Britain leaves the EU.

In the long term.... 32% predict a positive impact on their business in five years’ time and 45% expected to feel a negative impact.

The survey was conducted by Ipsos Mori, who polled 114 chairmen, CEOs, managing directors and finance chiefs from Britain’s largest 500 firms

Ben Page, chief executive of Ipsos Mori, says that the survey shows that businesses are already feeling the pain of the economic upheaval of leaving the EU,.

Page added:

According to respondents there is no sign that this is likely to ease this year, with two thirds saying they thought their business situation would get worse in the next 12 months.

The survey also found that business leaders are particularly worried about losing access to skilled workers.

Asked what Britain’s priorities should be in the Brexit negotiations, the business chiefs said:

  • Movement/access of skilled labour (54%),
  • securing free trade/single market (47%),
  • passporting rights (16%),
  • controlled/clarity on immigration (13%),
  • continuing being a trading partner with Europe (9%),
  • tariff agreement (9%)

The agenda: Data, select committees, and Draghi

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

The new week kicks off with lots of economic data, two important UK select committee hearings, and the prospect of more drama in Europe.

On the data front, we’re finding out how German manufacturers and UK car sellers fared last month, and getting a gauge on investor confidence across the region:

  • 07:00 GMT German Factory Orders
  • 9am GMT: New UK Car Registrations
  • 9:30am GMT: Euro-Zone Sentix Investor Confidence

Over in parliament, MPs on the Work and Pensions committee are holding a hearing into Britain’s Gig economy, from 3.45pm. They’ll hear from seven workers, including a Hermes driver who lost work after seeking time off to take his terminally ill wife to hospital.

Committee chairman Frank Field tells us the seven workers are all “incredibly brave”, given some still work for the likes of Uber, Deliveroo and Hermes.

Down the corridor, the Transport select committee will be investigating problems with Vauxhall Zafira cars, which have a nasty habit of overheating and catching fire.

According to the Daily Telegraph, Vauxhall executives will face a grilling (not literally, we trust) over the problems.

On the eurozone front, European Central Bank chief Mario Draghi testifying in Brussels from 2pm GMT. He’s likely to face calls from German MEPs to slow his stimulus programme, now that inflation is finally headint upwards.

We’ll also have an eye on the eurozone, where Greece’s bailout talks are still deadlocked and France is rattling towards its presidential elections.

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‘SNL UK’ Feels Like a Return to the New York Comedy Staple. Can the Flagship Show Take Notes?
There are already some great sketches!
The Mary Sue
The Mary Sue
The Supplement Myth: Why Your Daily Vitamin Routine Might Be Doing More Harm Than Good
Walking down the health aisle can feel like a promise of eternal energy and perfect immunity. Bright bottles and celebrity endorsements suggest that your diet is inherently broken and needs fixing. You aren’t failing at nutrition; the supplement myth is a multi-billion dollar machine designed to make you feel incomplete.
Budget and the Bees
Budget and the Bees
Kelly Osbourne, Sid Wilson Split: 'Struggling' Star Reportedly Calls Off Engagement 7 Months After Backstage Proposal
Kelly Osbourne has reportedly called off her engagement to Slipknot musician Sid Wilson seven months after his backstage proposal, amid claims she has been struggling with grief and relationship 'challenges'.
International Business Times UK
International Business Times UK
"He said: 'Hold it! Keep playing that, don't stop!' He comes down in his undershorts and grabs his guitar, then completes the riff." How London’s famous clock tower and a flirtatious groupie inspired Jimi Hendrix's last great song
A story of Hawaiian volcanoes and Mick Jagger's bloody finger
Louder
Louder
E. coli cases are on the rise in the United States, and the internet rightfully blames RFK Jr.
Who wants raw milk anyway?
The Mary Sue
The Mary Sue
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