And finally..... Sky News has an interesting tale about Brexit and the banking sector....
Here’s a flavour:
The boss of JPMorgan warned Theresa May and Philip Hammond on Wednesday that the French government is intensifying efforts to lure British banking jobs across the Channel, even as he hailed greater clarity about the UK’s post-Brexit planning.
Sky News has learnt that Jamie Dimon, the Wall Street banking giant’s chairman and chief executive, held private talks with the Prime Minister and Chancellor in Downing Street on Wednesday.
It was the latest in a series of meetings between one of the global banking sector’s most powerful executives and British Cabinet ministers amid efforts to persuade the Government to provide firm evidence of how it intends a transition period to work.
Sources familiar with the meeting, which was also attended by Daniel Pinto, who runs JPMorgan’s investment bank globally, said the bankers had committed to retaining “a large proportion” of their existing UK operations after Brexit.
JPMorgan employs roughly 15,000 people in the UK.
Exclusive: JPMorgan chief Jamie Dimon warned May, Hammond of French raid on City jobs during Downing St talks today. https://t.co/3c6JW5pYAd
— Mark Kleinman (@MarkKleinmanSky) November 8, 2017
That’s all for today. Thanks for reading and commenting. GW
Here’s our news story about the pressure building on UK wages as firms struggle to find staff:
In the media world, one of Rupert Murdoch’s key allies has sold his stake in the mogul’s 21st Century Fox.
The move could strengthen those shareholders who are unhappy about the Murdoch clan’s domination of the group, and agitating for change.
My colleague Graham Ruddick explains:
Prince Alwaleed bin Talal, who controls the investment firm Kingdom Holding and is one of the world’s richest men, at one stage owned more than 6% of Fox and has consistently backed the Murdochs in shareholder votes about the family’s control of the company.
He has been a shareholder in Murdoch companies – including Fox and News Corp, the owner of the Sun, Times and Wall Street Journal – for two decades and expressed public support for the family after the phone-hacking scandal at the News of the World in 2011.
Regulatory filings in New York show Prince Alwaleed reduced his stake to 4.98% in December 2015, and an analysis of Bloomberg data shows the stake has fallen to zero since the end of the last financial quarter, on 30 September.
It is not clear why he sold the stake or to whom. The sale represents the loss of an ally for the Murdochs and adds an extra twist to reports this week that Fox held talks with Disney about selling most of the company...
More here:
The UK’s blue-chip index, the FTSE 100, has closed 16 points higher at 7529
#FTSE100 closed today at 7529.7
— Redmayne-Bentley (@redmaynebentley) November 8, 2017
+0.22%
Unions have warned they will not accept job cuts if the proposed merger between SSE and NPower goes through.
UNISON national energy officer Matt Lay says staff are feeling pretty nervous following the tie-up:
“This bolt from the blue will have left many of the companies’ employees feeling decidedly anxious.
“With the merger only just announced, there’s no detail yet as to the number of jobs that may go, the posts most affected, or the sites at risk.
Stock markets are taking a breather today, it seems.
Wall Street has opened calmly, with the Dow, S&P 500 and Nasdaq all dipping slightly.
Snap, the social platform, has slumped by 10% though after posting disappointing results last night. It is now planning to redesign its app, after failing to hit analyst forecasts for user growth or revenues.
China’s Tencent, which operates the Wechat messaging platform WeChat, has now built a more than $2bn stake in Snap....
Stocks open flat. Snap dives 10% as mounting losses overshadow investment by Tencent. Wendy's off 4% on sales miss. https://t.co/A9OlUXl3FI
— CNNMoney (@CNNMoney) November 8, 2017
In London, the FTSE 100 is up 11 points, or +0.1%, while the French CAC is down 0.2% and the German DAX is unchanged.
Updated
The pound has been under pressure today as traders try to keep up with another day of political drama in the UK.
International development secretary Priti Patel is flying back to the UK as the row over her ‘working holiday’ in Israel escalates.
Could she be sacked today? Has she already been fired? Political hacks are glued to Flightradar24 for the latest.
More than 22,000 users are currently tracking flight #KQ100 en route to London.
— Flightradar24 (@flightradar24) November 8, 2017
According to media #PritiPatel is on board this flight.https://t.co/3GXUkQw0e3 pic.twitter.com/8uzL9usnRc
Foreign secretary Boris Johnson is in familiar hot water too, facing calls to quit after wrongly stating last week that imprisoned UK citizen Nazanin Zaghari-Ratcliffe had been training journalist in Iran.
It all leaves Theresa May’s government looking anything but strong and stable, which isn’t great for sterling. The pound is down 0.5% at $1.3105 vs the dollar, and €1.1305 against the euro.
Paresh Davdra, CEO and Co-Founder of RationalFX, explains:
“The pound slipped against the dollar and the euro today as the next round of Brexit negotiations approach, amid fresh political controversy at Westminster.
Progress in negotiations has so far remained incremental, but the markets are hopeful on the back of renewed discussion of a transition period from the government. Following last week’s allegations that resulted in the resignation of the defence secretary, fresh controversy over Secretary of State for International Development Priti Patel’s conduct overseas and Foreign Secretary Boris Johnson’s comments have put immense pressure on Downing Street.
If the situation worsens today sterling could potentially be pressured lower.
Irish house prices inflation has hit a two-year high, driving prices back to their highest level since the financial crisis.
House prices across the Republic rose by 12.8% per annum in September, up from 11.8% in August.
The Central Statistics Office explains:
Dublin house prices increased 12.4%. Apartments in Dublin increased 11.4% in the same period. The highest house price growth was in Dublin City, at 13.9%. In contrast, the lowest growth was in Dun Laoghaire-Rathdown, with house prices rising 9.9%.
This pushes the CSO’s index of Irish house prices up to 99.9, a whisker away from their level in 2005, and the highest level since April 2009.
If British firms do cut back on investment, it will make it even harder to hit the UK’s research and development goals.
The UK government’s goal is to get R&D spending up to to the OECD target of 2.4% within a decade, and to 3% in the long term.
But in 2015, UK R&D spending was £31.6bn, or just 1.7% of GDP - well shy of the target.
A report issued yesterday by The Royal Society showed how Britain is lagging behind.
The report warned:
Increasing overall R&D investment is the target.
To deliver this we need to create a vibrant environment that fosters research and innovation throughout UK public services, universities, charities and businesses and attracts global investment, incentivising companies to locate their R&D here.
A strategic approach, alongside an Industrial Strategy, will be key to realising our ambition. Only by doing this will we improve the health and wealth of the nation.
UK recruitment firms say British employers are having to offer bigger pay rises, to cope with a shortage in workers from the EU.
Reuters has the details:
The Recruitment and Employment Confederation said its monthly survey showed starting salaries rose in October at the second-quickest rate since November 2015.
“We already know that EU workers are leaving because of the uncertainties they are facing right now,” REC chief executive Kevin Green said.
“We therefore need clarity around what future immigration systems will look like. Otherwise, the situation will get worse and employers will face even more staff shortages.”
British workers really do need a pay rise.
As these chart shows, real wages have been shrinking since the spring as inflation has rattled up to 3% - mainly due to the slump in the pound after the EU referendum.
Real wages are falling, making it even more important that benefits keep up with prices. It's time to #endthefreeze https://t.co/HueEFDrsRN pic.twitter.com/VwZuvCdd70
— Joseph Rowntree Fdn. (@jrf_uk) October 30, 2017
UK inflation: @CEP_LSE evidence that Brexit has pushed up prices, esp of food, & led to return of falling real wages https://t.co/ITE3whPCzg pic.twitter.com/pGnJf3Tm8o
— Romesh Vaitilingam (@econromesh) November 1, 2017
UK firms seem to be particularly reluctant to commit to new offices and factories.
The Bank of England’s agents found that firms expect to invest less in 2019 and 2020, as they await more clarity about Britain’s economic future and how Brexit will play out.
The agents’ report says:
Firms in the survey expected investment growth to be little changed over the next twelve months, relative to the past twelve months.
However, investment growth was expected to be somewhat weaker over the following two years.
Expectations for investment growth in the coming twelve months were strongest for business services contacts, and were weakest — at broadly unchanged levels — for construction.
This chart confirms that firms expect to spend less:
Bank also shows most firms saying they expect investment growth to be little changed in 2018, before weakening over following two years pic.twitter.com/7TS1QAPUL7
— Matt Whittaker (@MattWhittakerRF) November 8, 2017
This report is based on interviews with 375 businesses, who employ 578,000 people in the UK.
UK firms plan pay rises amid recruitment struggle
Breaking: UK companies are struggling to recruit new staff, and expect to hand over larger pay rises next year.
That’s according to the latest survey from the Bank of England’s regional agents, just released.
The agents found that :
Recruitment difficulties had intensified and were above normal in a range of activities, alongside continued modest employment growth. As a result, pay growth had edged up and was expected to be somewhat higher in 2018 than this year.
Firms suggested that pay settlements next year could be clustered around 2½%–3½% rather than 2%–3% during 2017.
If they’re right, then Britain’s cost of living squeeze could end next year. The latest figures show that basic pay is only rising by 2.1%, while inflation has hit 3%.
Our robot overlords are clearly biding their time. Latest Agents survey reports firms facing increased recruitment difficulties. pic.twitter.com/zfi21FjQCz
— Rupert Seggins (@Rupert_Seggins) November 8, 2017
The agents also found that firms’ expectations of investment growth in the following two years were weaker than last month.
Many blamed economic uncertainty, due to Brexit and concerns about the future availability of overseas labour.
The report says:
Investment plans were being boosted by companies’ desire to increase their efficiency and to meet expected increases in demand, but expectations about the United Kingdom’s future trading relationships were dragging on spending.
The BoE’s agents also reported that growth in activity remains “broadly stable”, adding:
Manufacturing output growth had risen again, with export supply chains supported by the past fall in sterling and some signs of increased domestic sourcing. But construction output growth had eased. Services turnover growth remained moderate.
Updated
Anne-Sylvaine Chassany, the FT’s Paris bureau chief, reports that Bank of America is pressing on with its plans to move 300 staff from London:
The superb Parisian building where 300 Bank of America traders will be relocated from London (bank planning up to 1,000) #Brexit pic.twitter.com/UNvXDliDmy
— Anne-S Chassany (@ChassNews) November 8, 2017
Britain’s Big Six could soon be the Big Five.
No, not in the football (before any long-suffering Arsenal fans cry foul), but in the energy market.
SSE and Npower have now agreed terms to merge their household supply businesses in Britain, creating a new supplier with over 11 million customers, more than anyone else.
The deal, which was reported yesterday, is likely to stir worries about competition and could yet be blocked by regulators. SSE is the second largest supplier, while nPower is joint-4th largest.
Mike van Dulken of Accendo Market says the deal will face “intense competition scrutiny”....
Especially after the government’s recent pledge to control price increases for the most vulnerable to fix what many regard as a broken market, where prices continue to rise despite a move towards renewables. Big six to big five doesn’t exactly scream “consumer benefit”.
Marks & Spencer also reports that its food sales -- usually so buoyant - dropped by 0.1% in the last six months.
Rising food inflation took a bite out of profitability too, leaving M&S hoping that its new Christmas advert starring Paddington Bear is a hit.
Laith Khalaf of Hargreaves Lansdown sees little to celebrate:
The food business has been keeping M&S afloat in recent years, but now progress seems to be flagging here, the clothing division needs to start pulling its own weight. The festive period also looks set to be challenging for the high street. Real wages are around 0.5% lower than they were last year, and the recent interest rate rise might well make consumers think twice about loading up on debt to fund the annual Christmas splurge.
For M&S it’s still early days in the turnaround plan, and it’s unfortunate that the retailer’s structural issues have been compounded by tough times in the industry as a whole. There won’t be any champagne accompanying the marmalade sandwiches at M&S HQ, it’s a quick brew, then back to work.’
Over in the City, shares in Marks & Spencer have dropped by more than 2% after it announced it is speeding up its turnaround plan.
Chief executive Steve Rowe warned that M&S still faces “many structural issues”. The firms now plans to open fewer new Simply Food outlets, and accelerate the closure of other stores.
CFO Helen Weir is also moving on.
M&S CFO Helen Weir to step down, accelerates plan to close 30 U.K. stores
— Peter Hoskins (@PeterHoskinsTV) November 8, 2017
Here’s the full story:
FT: Wall St warns Trump team of Brexit fears
Brexit continues to loom over the City of London, as the clock ticks towards 31 March 2019 when the UK is scheduled to leave the EU.
The Financial Times reports that major banks warned the US commerce secretary last week that they will soon start shifting jobs out of London, unless there is more clarity.
The Wall Street titans, including JP Morgan and Goldman Sachs, reportedly cited Britain’s unstable government and the lack of progress in planning Britain’s future.
Collectively they employ tens of thousands of people in the City.
Crucially, they warned Wilbur Ross that they are approaching the “point of no return” -- where they have to trigger their Hard Brexit contingency plans and begin shifting jobs, capital and infrastructure overseas.
Those briefed on the talks, which were held over lunch at Wilton’s restaurant in London’s exclusive St James’s district, said the banks were particularly concerned by the failure of Britain to provide clarity over whether it will secure a transition deal to smooth the changing regulatory regime after the UK leaves the EU.
They warned they had even less clarity over what a final Brexit deal will look like.
Absent clarity from the government about post-Brexit plans, the executives said jobs would move back to the US or to other European capitals as banks begin to enact their worst-case contingency plans, the sources said.
”There was broad discussion around the lack of progress in the Brexit talks and some discussion around various political scenarios,” one person briefed on the talks said.
Donald Trump warned of our chaos.
— Jo Maugham QC (@JolyonMaugham) November 7, 2017
Just let that sink in. pic.twitter.com/Y5dAbCiJtw
UK business chiefs have also been urging Theresa May’s government to nail a transition deal by the end of this year. So, with Wall Street’s major players getting nervous, the pressure is growing....
Updated
China’s trade figures landed shortly before Donald Trump touched down in Beijing for a state visit.
And I’m sure the president will want to know that China posted a trade surplus of $26.6bn with the US in October. That’s $1.5bn less than in September, but 12% higher than in October 2016.
It means that China has racked up a trade surplus with the US of $223 billion so far this year, on track to match 2016’s total, despite Trump’s promises to trim it.
US and Chinese companies are expected to sign several commercial deals during Trump’s visit (these agreements are typically lined up to give politicians some good news to share).
The South China Posts says Beijing has four key goals:
- Persuade Washington to lift export restrictions on hi-tech products, so US firms could sell more to China
- Create more cooperation between the US and China in research and development in fields such as space and aviation
- Boost US participation in China’s Belt and Road Initiative - a massive economic expansion drive - and Asian Infrastructure Investment Bank
- Press the US to tone down its probe into alleged Chinese IP violation
Updated
The agenda: Chinese trade data disappoints
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
New trade figures from China have missed expectations, which may be a sign that global growth isn’t as punchy as we hoped.
Chinese export growth slowed to 6.9% in October, below expectations of 7.2% growth, and down on September’s robust 8.1%.
Import growth also slower, rising by 17.2% last month after a blistering 18.7% in September.
#China both #exports and #imports growth moderated in October pic.twitter.com/OUsILQOkHM
— Gianclaudio Torlizzi (@TCommodity) November 8, 2017
The figures could signal that China’s economy, after a solid year, is flagging a little this autumn -- as Beijing cracks down on pollution and tries to shift from manufacturing to services.
Capital Economics China economist Julian Evans-Pritchard says:
“The big picture is that both outbound and inbound shipments have softened recently, a trend that continued last month.
“We suspect that this reflects a slight easing of growth in other emerging markets along with weaker domestic demand as a result of slower infrastructure spending.”
Mubina Kapasi, analyst at ET Now, points out that China imported less iron ore than usual, and also shipped out less steel.
China's Oct Iron ore imports fall to lowest in 2.5 yrs, Steel exports drop 3%
— Mubina Kapasi (@MubinaKapasi) November 8, 2017
& I can practically fill in the most important points of China's trade data but then its not all very relevant..I still have characters left..Not sure what to write..More characters..& more...Ok done😋
Given China’s key role in the world economy, these trade figures may weigh on European stock markets today.
David Madden of CMC Markets says:
China is making a concerted effort to move towards a more service focused economy. That being said, their demand for minerals is still a major driver of commodity prices and mining companies.
The agenda:
High street retailer Marks & Spencer, housebuilder Persimmon, energy group SSE and pub chain JD Wetherspoons are all reporting results.
- 9.30am GMT: Bank of England publishes its agents’ Summary of Business Conditions for November
- 3.30pm GMT: US oil inventories report
