Bank of England policymaker says rates could be cut
Michael Saunders, the newest member of the Bank of England’s monetary policy committee, voted to keep interest rates on hold last week. But in an interview with the Financial Times he said he was ready to call for a cut if unemployment picked up. He said:
At the moment I think the economy still has some slack left in the labour market, you can see that in the subdued pace of pay growth. If the jobless rate were to rise, increasing labour market slack further, then that would be an argument in favour of lower interest rates.
On the other hand he believed the UK economy was set for a less severe slowdown than most economists expect. He said:
In the near term, the next year or two, I think the economy will slow, but perhaps not slow as much as the consensus has been expecting. This is partly because of the support from loose financial conditions, partly because of the underlying advantages - including supply side flexibility - of the UK economy.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back again tomorrow for a day of central bank rate decisions.
Updated
European markets nervous ahead of Fed
With investors unsure what lies in store on Wednesday from the Bank of Japan and US Federal Reserve interest rate meetings, European markets have lost some of their early gains and ended in rather a mixed fashion. The final scores showed:
- The FTSE 100 finished up 17.24 points or 0.25% at 6830.79
- Germany’s Dax edged up 0.19% to 10,393.86
- France’s Cac closed down 0.13% at 4388.60
- Italy’s FTSE MIB fell 1.17% to 16,207.10
- Spain’s Ibex ended down 0.34% at 8686.1
- In Greece, the Athens market added 0.56% to 560.59
On Wall Street the Dow Jones Industrial Average is currently up 32 points or 0.18%.
Bank of Japan - what could it do?
Ahead of the US Federal Reserve decision comes the latest from the Bank of Japan, with the results of its comprehensive review of monetary policy expected.
Analysts are uncertain what this might bring in practise, whether it be a further push into negative rate territory or further economic stimulus. But most believe there will be no change to the Bank of Japan’s inflation target of 2%. James Stanley, currency analyst at DailyFX, said:
The big question is whether this review will lead-in to more stimulus or an introduction of monetary prudence. Many are questioning Japan’s ability to do more stimulus given the size of their programs over the past four years; although in that last Bank of Japan press conference [governor Haruhiko] Kuroda addressed this head on, sharing his view that the BoJ hasn’t yet hit the limits of monetary expansion.
But there are some very big peripheral questions to be answered by the BoJ in this review, as in what are they going to do about the 2% target that they announced in April 2013 that they said they expected to hit in 2 years? That was April of 2015, or approximately 17 months ago, and yet we’re still very far away from that target being realistically met. Also at issue are negative rates...would they dare to do more here given that results have been non-existent? And in terms of asset purchases: The BoJ has been buying ¥80 Trillion a year in assets for a few years now. They’re already cornering their own government bond market. Does the BoJ dare do more after four years have shown little hope of actually kick-starting inflation?
So, nobody really knows what the BoJ will say during this review to be released tonight. This could lead to hazardous conditions if trading around the Yen as markets are appearing to approach tonight’s event rather tepidly under the same guise of uncertainty that we are.
Simon MacAdam at Capital Economics said:
We expect the BoJ to cut its policy rate deeper into negative territory today which, according to the Overnight Index Swap market, does not appear to be expected until early next year.
Admittedly, it is more difficult to gauge where we sit relative to the market on the prospects for further unconventional policy easing in Japan. But we suspect that we are more dovish.
[There has been] speculation that there will be a policy shift away from asset purchases. Indeed, the yield curve has steepened recently in anticipation of the BoJ adopting this stance: long-dated yields have hit six-month highs this month.
We believe, though, that the BoJ’s Comprehensive Policy Review will throw open the door to innovative policy measures. Rather than scale back its asset purchases, we think that the Bank may increase them and is more likely to find other ways to support systemically-important institutions, such as lending to commercial banks at negative interest rates.
Pound hits five year low against the dollar
The pound has hit a five year low against the dollar, weighed down by concerns about the economic risks of Brexit.
Sterling fell as low as $1.2948 and is currently down 0.55% at $1.2950 amid worries about the outcome of talks about Britain leaving the European Union, especially with some EU members promising there would be no easy ride.
The strength of the dollar is also a factor, with the outside chance of a US rate rise at this week’s Federal Reserve meeting. Investors are also nervous ahead of the forthcoming Bank of Japan meeting.
Currency markets are also unnerved by the prospect that Donald Trump may win the forthcoming US election. Neil Wilson, markets analyst at ETX Capital, said:
The pound seems to be a victim of some skittishness ahead the major central bank meetings this week in Japan and the US. Markets anticipate the Fed will keep rates on hold but a hike is not being ruled out, which may be rattling traders.
Moreover, even if the US central bank holds fire, traders seem primed for a ‘hawkish hold’ where the Fed would effectively give the green light for the fed funds rate to increase later this year, probably in December. All eyes are on whether long-time dove Boston Fed president Eric Rosengren shifts his stance and votes for a hike, as some have speculated he might.
Despite talk of a Brexit bounce, the pound has come under pressure of late. It’s now trading close to 5 cents off its high of September 6th. The pace of the sell-off picked up markedly after the Bank of England said last week that it still expects to cut rates again this year. If UK data continues to remain solid, the Bank might have row back on that prediction, which could be positive for the pound.
Updated
Here’s a neat explanation of why the Federal Reserve has struggled to raise interest rates:
New #WordOfTheDay courtesy of @BenEisen of @wsj. Ruction. I thought it was a typo. (Even my iPhone just tried to autocorrect it) pic.twitter.com/pxEie6BHFe
— Keith Akre (@KeithAkre) September 20, 2016
Back in the UK, the Bank of England has bought up £1.17bn of long-dated government bonds from investors.
That’s part of its plan to support the UK economy following the EU referendum - pushing down the interest rate on these gilts, and encouraging riskier lending.
Some heavy duty QE today as the Bank of England has just bought some £1.17 billion of long and ultra-long Gilts #BoE
— Shaun Richards (@notayesmansecon) September 20, 2016
What a difference nine months, some weak economic data, and a Brexit vote makes...
remember when the #Fed thought it could raise rates 4 times this year....?
— Neil Wilson (@neilwilson_etx) September 20, 2016
Updated
But not everyone on Wall Street expects the Fed to hold interest rates.
BNP Paribas and Barclays are both predicting that policymakers will take the plunge, and raise borrowing costs.
Laura Rosner, senior U.S. economist in New York at BNP, argues that economic conditions are good enough to justify a hike.
“There is no perfect time -- there will always be some uncertainties in the data,” said
“Despite a multitude of shocks through the last nine months, which have delayed the Fed, hiring has continued to be robust. There is a window of opportunity for the Fed to continue normalizing, and we think it’ll take it.”
Two Fed Reserve's primary dealers Barclays Plc and BNP Paribas SA are forecasting rate hike this week https://t.co/Yk4X44kTu3 via @markets
— Anthony Crudele (@AnthonyCrudele) September 20, 2016
Updated
US interest rates have been on hold since last December, at just 0.25%-0.5%.
The Fed initially expected to manage four rate hikes this year - now, one hike looks like their limit.
So the normalisation process is taking an awfully long time, as Reuters’ Jamie McGeever points out:
Assuming a December hike, at the pace of one hike a year US rates won't reach pre-crisis 5.25% level for another 20 years. HT @reutersMikeD
— Jamie McGeever (@ReutersJamie) September 20, 2016
Updated
Markets rise as Fed hike fears subside
Ding ding! The Wall Street opening bell has been rung for the last full trading session before America’s central bank sets monetary policy.
And shares are rallying in New York, and in Europe, as investors wager that the US Federal Reserve will decide not to raise interest rates tomorrow.
The Dow Jones industrial average has gained 104 points, or 0.6%, in early trading to 18,224. Nearly every company on the index has risen. The broader S&P 500 index has gained 0.5%.
Twenty-eight of 30 components contributing to 99-point Dow advance https://t.co/3T8bVCQxZy
— MarketWatch (@MarketWatch) September 20, 2016
European markets have also had a good day (apart from Italy, where fears over its banking sector have pushed shares down). London’s FTSE 100 has gained 40 points, on top of Monday’s 103-point jump.
Today’s weak-looking US housing data has left many traders concluding that the Fed won’t risk a shock hike tomorrow.
Analysts at RBC Capital Markets explain why:
- The September FOMC meeting is finally upon us. It has been the subject of considerable speculation along the way, especially in late August when various Fed speakers were signaling a desire to raise rates.
- However, U.S. economic data has since cooled as twin ISM numbers printed weakly and a sprinkling of other measures also disappointed expectations. Accordingly, market expectations have drifted down to around a 20% chance of a rate increase from the current 0.375% level at this meeting.
- Historically, the Fed has never raised rates unless the market has assigned a likelihood of 60% or higher. As such, a rate hike is now quite unlikely for September.
However... a couple of Wall Street dealers believe the Fed could defy expectations, and vote to raise interest rates.....
BBH 3/3: for the first time in this cycle, there is a disagreement among primary dealers, with two holding out the likelihood of a hike #Fed
— Francesc Riverola (@Francesc_Forex) September 20, 2016
Don’t forget that the Bank of Japan also holds a crucial monetary policy meeting overnight. But investors are genuinely baffled about what the BoJ might do - and how the markets might react.
Newsflash from America: The number of new house-building projects slumped by 5.8% in August. And the number of permits for new properties shrank by 0.4%, following an 0.8% decline in July.
That’s important, because it’s another reason for the US central bank, the Fed, not to raise interest rates at its meeting on Wednesday.
88% of @CNBC Fed Survey respondents expect rate hike in December, while 90% say no hike this week https://t.co/NERPMO1lzj pic.twitter.com/i1leYzxNiY
— Elizabeth Schulze (@eschulze9) September 20, 2016
When Mike Ashley described himself as a PR nightmare, this may be what he had in mind:
7am Sports Direct launches independent probe into working practices
— Dan Bloom (@danbloom1) September 20, 2016
8am Mike Ashley defends flying to work by planehttps://t.co/8he8Xwib6U
Mike Ashley protests he knew nothing about problems at Sports Direct, urging people to consider him incompetent rather than just plain nasty
— HaveIGotNewsForYou (@haveigotnews) September 20, 2016
BEIS Department welcomes Sports Direct move
Theresa May made some bold promises about improving labour rights on her swift march to Downing Street, including putting workers on company boards [which Sports Direct will now do].
So it’s not too surprising that that Department of Business, Energy and Industrial Strategy has welcomed the firm’s pledge to change.
A spokeswoman says:
“The Government is clear that everybody deserves to be treated with respect and employers have a responsibility to ensure that pay is fair no matter who you are or what you do.
Both the Business Select Committee report and Sports Direct’s review into their own working practices detailed some concerning findings, so it is right that they take decisive action to resolve these internal issues as quickly as possible.”
Updated
Breaking away from Sports Direct.... there’s a lot of chat about the impact of the Brexit vote on Ireland today.
Our correspondent Henry McDonald reports:
Ireland should woo UK firms who want to remain trading in the EU to relocate to cities like Dublin, Cork and Limerick, the British-Irish Chamber of Commerce said today.
The Anglo-Irish trade body’s Director General John McGrane said the Republic should follow the lead of other EU states and cities that were seeking to persuade UK firms to set up bases within the Eurozone post-Brexit.
McGrane also warned that Ireland – with its land border with Northern Ireland and the fact that its single biggest trading partner is the UK – is the most exposed EU country to Brexit. He was speaking a seminar on Brexit and Ireland organised by the main opposition party in the Dail, Fianna Fail, in Carlow today.
Accepting and respecting the UK vote on Brexit, McGrade told the think-in:
“Enterprises think about multi-location and so Ireland should rightly be the natural first choice for UK employers looking for a guaranteed EU base and equally Irish firms looking to secure trade with the UK should consider a UK base. With other EU cities encouraging migration of UK firms, we shouldn’t be shy to lay out our own advantages and to encourage investment in Ireland from anyone looking to trade inside the EU.”
He also called on the Irish government to implement a “National Brexit Strategy Plan” to cope with the shocks of the UK outside the EU.
Meanwhile in Belfast, Ryanair boss Michael O’Leary has warned that investment will suffer while the Brexit drama plays out.
O'Leary says Brexit uncertainty means he can't risk putting more Ryanair investment in UK/NI in next 2 yrs while politicians 'screw around'
— Symon Ross (@SymonRoss) September 20, 2016
@Ryanair 'Those who voted for #Brexit couldn't control a sweet shop never mind borders'. #CBI @CBI_NI pic.twitter.com/tZB3nj7lGf
— Deirdre Heenan (@deirdreheenan) September 20, 2016
Relations between Sports Direct and the unions have long been fraught.
But Janet Williamson, chair of the Trade Union Share Owners, suggests that the new independent review is a good opportunity for a fresh start.
“This is good news for Sports Direct workers, especially young workers who make up a large part of their staff but too often get a poor deal at work.
“The board should now consult both shareholders and trade unions in finalising the plans for the independent review. Trade unions representing workers at Sports Direct stand ready to work with the company to ensure a successful future that is fair for its staff.”
Unions will presumably be pushing Ashley to offer permanent contracts to the 4,000-ish agency workers, who are employed at Shirebrook on effectively zero-hours contracts.
Updated
We don’t often find the City singing from the same hymn sheet as Britain’s unions. But the two sides are united today.
After putting pressure on Ashley for months, investors are generally welcoming the decision to hold a properly independent review of Sports Direct’s operations.
Paul Lee, head of corporate governance at Aberdeen Asset Management, called it a “good start”:
The fact that the review will now be undertaken by an independent party provides comfort and I am sure all shareholders will welcome the opportunity to offer constructive thoughts on the remit of the review.
There is much more work to be done but hopefully today is the first step on the long journey to rebuild investor trust and to rectify the problems at SportsDirect. All shareholders want a well governed, sustainable business.”
Andy Griffiths, executive director of the Investor Forum, is also pleased:
Our Members believe this is an opportunity to bring about meaningful and lasting change, and are committed to working constructively with the Board and the independent reviewer to ensure it can be a turning point in rebuilding trust.”
Relations between Mike Ashley and the City hit a nadir this month when investors voted against chairman Keith Hellawell’s reappointment.
They are also unhappy that Mike Ashley’s brother has a deal to deliver Sports Direct products abroad.
Eyebrows have also been raised over the appointment of Michael Murray, boyfriend of Ashley’s elder daughter Anna, as a property consultant.
The Unite union reckon Mike Ashley has now “grasped” the need to tackle the employment problems at Sports Direct.
They are also pushing the government to outlaw zero-hours contracts (reminder: Ashley is offering permanent contracts to all workers at his retail shops, but not to agency staff at the retailer’s Derbyshire warehouse).
Unite assistant general secretary Steve Turner says:
“Increasingly businesses are recognising that they have no place in the modern workplace and are bad for workers, bad for business and bad for the economy. The government should now show leadership and follow the lead of government’s like New Zealand and ban zero-hours contracts.”
Updated
Jon Tricket, Labour’s shadow business secretary, has criticised Mike Ashley for dragging his feet over allowing an independent review of Sports Direct.
He says:
“News that Sports Direct is finally responding to its shareholder wishes and agreeing to an independent review of its working practices and corporate governance is a step in the right direction towards ridding the company of its exploitative practices once and for all.
“Apparent resistance by Mr Ashley has made this process harder than it needed to be. Labour are looking at ways to improve corporate governance to avoid such scandals in the future, and to ensure that the highest standards apply in British industry.”
Updated
The Press Association has a good write-up of Mike Ashley’s TV performance, by Aine Fox.
‘PR NIGHTMARE’ MIKE ASHLEY DEFENDS FLYING TO WORK BY HELICOPTER
Sports Direct boss Mike Ashley said he is being “real” when he chooses to travel by helicopter, and disclosed that a cleaning lady at the company was paid an £80,000 bonus.
Speaking after the firm announced it would have an independent review of its working practices and corporate governance, he reiterated his apology for things that had gone wrong but insisted there have also been positives at the retailer.
He defended his expensive method of travel, and said the government is responsible for workers being paid the minimum wage, not him.
He told BBC Breakfast:
“I do fly to work by helicopter, it’s a reality. So when people say, ‘Oh be real’, that’s how I travel.”
He added:
“People will say, ‘How can you have a plane when your workers are on minimum wage?’
“I said, ‘But I don’t set the minimum wage.’ If the minimum wage would be the living wage, then the government who set the rules should set it at the living wage. That’s as I look at it.”
Mr Ashley put the poor practices discovered at the business down to a “rotten apple in the barrel” and said there are a lot of good things about the firm.
He said:
“I can tell you in the last five years Sports Direct will have paid out over 200 million in bonuses. So I can tell you the cleaning lady got an £80,000 bonus on top of her normal pay. Nobody in the UK has done that.
“What we’ve got to do is focus on getting the bits we’ve got wrong, to the extreme highs of the bits we’ve got right.
“And paying out that kind of money doesn’t mean you’re allowed to get these bits wrong, where clearly I’ve taken my eye off the ball.
“I’ve said sorry, I’ve said I’m going to fix it, and I will.”
Describing himself as a bit of a “PR nightmare”, he referred to the moment he joked that he had been to the casino after he pulled a wad of cash from his pocket when he was showing investors and journalists around the Shirebrook warehouse earlier this month.
He said:
“The one thing people didn’t say to me was, ‘Mike, have you checked how much money you’ve got in your pocket?’ And of course nobody thought to ask me whether or not I had genuinely been to the casino a few days earlier.”
Updated
Joey Barton, the oft-banned footballer, has given us an insight into Ashley’s treatment of his workers (and that helicopter).
Our sports writer Donald McRae explains:
Barton skewers Mike Ashley, Newcastle United’s owner, with a simple story. When Barton was released from prison on bail he was placed in the care of Peter Kay in Southampton – and only allowed out between 7am and 7pm. Kay had convinced the judge that, while he would counsel Barton, the footballer would be more balanced if he played the game he loved.
“Ashley offered me his helicopter,” Barton remembers, “as my curfew meant Pete and I needed to fly to and from training in Newcastle. It seemed really generous until I got an eye‑boggling invoice. It was business after all.”
Green party: government must reopen employment review
The Green party hopes Sports Direct’s U-turn signals a fundamental shift towards workers’ rights.
They are pushing the government to breathe new life into a review of working conditions, which stalled two years ago. Recent problems at Deliveroo and Uber show that workers are still being exploited, the party argues.
Here’s Jonathan Bartley, the co-leader:
“Sports Direct has continually dragged its feet and tried to avoid the fully independent review into working practices that’s so desperately needed, so this announcement is as welcome as it is overdue. This is only the beginning of a process which must see the end of exploitation at Britain’s biggest sports firm.
“Slowly but surely we’re seeing trade unions, shareholders and campaigners force big firms to address the profound injustice being faced by so many workers in Britain. Only time will tell whether working conditions in Sports Direct’s Shirebrook warehouse – which has been compared to a Victorian workhouse – will really improve in practice. Our focus must then broaden to root out the many other firms who are reaping the benefits from the so-called ‘gig economy’ at the expense of workers.”
“The government must now reopen the Employment Review launched in 2014 [1], which could clarify and strengthen the employment status of up to a million British workers. It should also act quickly to crack down on employers like Sports Direct. Ending zero-hour contracts, guaranteeing trade union access to all workplaces and introducing a genuine living wage are just a few steps which would make a huge difference to millions of working people’s lives.”
Updated
Reaction to Mike Ashley’s interview, and the new independent inquiry into his company, is still coming in.
Lecturer and consultant Hayley Lewis says the “I didn’t know” defence simply isn’t acceptable.
"I didn't know" is not OK reason. A good CEO will always take the time to know what's going on with employees. #leadership https://t.co/tVJucFkbUY
— Hayley Lewis (@Haypsych) September 20, 2016
(Although Ashley isn’t actually the chief executive, he does in effect run the company and owns a majority stake).
Retail analyst Paul Mitchell is more positive:
Is the culture at @SportsDirectUK changing? Ashley caves into demand for independent inquiry into corporate governance. Smart move by Mike.
— Paul Mitchell (@PaulTMRetail) September 20, 2016
And the Daily Mail’s Henry Deedes provides the fashion angle – Ashley has produced a new tie for his big day:
Massive upheaval at Sports Direct . Mike Ashley has actually worn a different tie to his usual Newcastle one.
— Deedes (@HenryDeedes) September 20, 2016
Updated
The City has welcomed Sports Direct’s decision to get an independent review of its working practices.
Shares in the company have risen by 2% this morning, making it one of the best-performing companies on the London stock market.
Sports Direct share price rose 2% after agreeing to part take in an independent review of working practices
— Fiona Paton (@fiona_verdict) September 20, 2016
Updated
Ashley's interview: What the experts say
Labour MP Angela Rayner isn’t impressed by Mike Ashley’s defence for only paying the bare minimum to his workers:
Mmmmm🤔 Mike Ashley is a PR nightmare. Won't pay a living wage as gov't didn't demand it! https://t.co/y2eT7YkSFZ
— Angela Rayner MP (@AngelaRayner) September 20, 2016
James Wilmore of Retail Week thinks Ashley’s rotten apple defence smells fishy.
Mike Ashley appeared to be blaming warehouse issues on 'rotten apples'. So not a cultural issue?
— James Wilmore (@jamescwilmore) September 20, 2016
PR consultant Julie Fuge reckons Ashley had been coached before his ordeal on the red sofa, but he couldn’t stick to the script:
You could see the quotes he was trained on and those where he went off piste. And he says he's never been good at PR. #sportsdirect https://t.co/GqsknEWOJq
— julie fuge (@juliefuge) September 20, 2016
And here’s Helen Cahill of City AM’s verdict:
Mike Ashley went on TV this morning and it looked something like this https://t.co/PZOEtsQjUi pic.twitter.com/0Lvk3FRj4l
— Helen Cahill (@HelCahill) September 20, 2016
Updated
Mike Ashley’s claim that a few “bad apples” caused the problems at Sports Direct doesn’t really add up.
Two weeks ago, his own lawyers concluded that there had been “serious shortcomings” in working practices at its warehouse, for which the company apologised.
That included the notorious “six strikes” which its agencies operated – meaning the army of casual staff at Shirebrook risked being sanctioned if they chatted too much, wore the “wrong” branded clothes, or were simply off ill.
And a “bad apple” can hardly be blamed for the laborious search operations that meant staff in effect received less than the minimum wage.
Ashley admitted this morning that he didn’t have a firm grip on HR issues – that’s a structural failing, not a few rogue employees.
Updated
Mike Ashley's interview: snap summary
Mike Ashley used to have a reputation as a particularly secretive business chief (before surprisingly buying Newcastle United in 2007). So today’s outing on the BBC Breakfast sofas was a rare experience.
But what did we actually learn?
Ashley is sticking to his position that he didn’t know how workers were being mistreated across his empire. Clearly, any competent boss should have known, or at least cared, about how their main warehouse operated. But Ashley can’t be fired, as he owns more than half of Sports Direct; he can just promise to do better.
He’s trying to buy himself a lot of time. Phrases like: “It’ll still need fixing when I’m dead,” suggest that Sports Direct is a kind of retailing Forth Bridge, forever dogged by peeling paint and a neverending fight against decay.
He’s playing for public support. Ashley claims to be a PR nightmare – then tantalises the audience by revealing that he paid a cleaning lady an £80k bonus. What a decent chap, eh?
But the mask did slip… Ashley was on his very best behaviour (unlike at this month’s AGM when he lashed out at the unions). But towards the end of the interview, he basically claimed it was the government’s fault that Sports Direct paid its workers so little, as they set the minimum wage.
Someone should probably remind Mike that he’s allowed to pay more than the legal minimum …
Updated
Ashley: Our cleaning lady got an £80k bonus
Q: Are you confident that, five years down the line, Sports Direct will be a very different place to the “Victorian workhouse” conditions workers have suffered?
Ashley: In the last five years, Sports Direct have paid out more than £200m in bonuses.
The cleaning lady got an £80,000 bonus on top of her normal pay. No ne in the UK has done that.
We need to get the bits we’ve got wrong up to the level of the extreme bits we’ve got right, Ashley adds.
And he concludes with a pledge to get the job done:
Clearly I’ve taken my eye off the ball. I’ve said sorry, I’ve said I’m going to fix it and I will.
And that’s the end of the BBC interview.
Updated
Ashley then defends his use of private planes and helicopters to do business, saying it’s wrong to compare his lifestyle to an ordinary worker’s.
I don’t get paid a salary, but I do like to go by private plane – it saves a lot of time and is very efficient.
Then people say: ‘How can you have a plane when your workers are on minimum wage?’.
I don’t set the minimum wage, Ashley adds, arguing that if the minimum wage should be the living wage, then the government should set it at that level.
Updated
Now on to Ashley’s public relations gaffe last week, when he produced a massive wad of £50 notes during a security search at his factory.
Q: Wasn’t that a massive PR disaster?
That’s why I’ve never tried to do PR, Ashley grins. I’m a nightmare for PR.
He explains that no one asked me to check his pockets “in case I’d just been to the casino”, before he had to empty his pockets in front of a crowd of journalists.
Updated
Ashley: Fixing Sports Direct will never stop
Now we move on to Mike Ashley’s future at the company he founded.
Q: Your reputation is on the line here – so how long are you giving yourself to turn Sports Direct around?
Ashley says that he’s trying to improve Sports Direct’s stores, and also fix the problems on the personnel side.
We want a culture of being One Sports Direct family.
Q: So if you haven’t done that in a year, you’ll go?
Ashley rebuffs this timescale, insisting that “a year is too soon” to fix everything that’s wrong.
Instead, it sounds like a neverending task. Ashley says:
You get to the top of a mountain and then you see there’s another mountain. It will never stop. Even when I’m dead it will never stop.
Updated
Ashley: I should have done better
With hindsight, I should have done a better job overseeing corporate governance and HR issues, Mike Ashley admits.
Q: How can you make serious changes, though, when you have exactly the same board in place?
Ashley says that he’s now taking a more hands-on role.
He insists the board is absolutely serious about turning the company around, pointing out that CEO Dave Forsey lost a bonus worth almost £4m last year.
Q: Why are you only offering workers just 12 hours’ work a week (rather than a zero-hours contract)?
People who already work a full working week will continue to do so if they take a new contract, Ashley promises.
We’re trying to get people into two categories – those who want a minimum guarantee each week and those who don’t, he adds.
Updated
Q: So were you appalled when you heard what was happening?
My initial reaction was that these things couldn’t be happening at Sports Direct, Mike Ashley says.
He argues that Sports Direct has suffered from “odd isolated instances”, the “rotten apple in the barrel” which needs to be dug out.
Q: Isn’t your reputation in tatters?
Askley repeats his line that a few “rotten apples” are to blame
Mike Ashley interview begins: I didn't know what was going on
Mike Ashley is speaking on BBC One now, being interviewed by Dan Walker.
Q: Isn’t it incredibly damaging that MPs have decribed your warehouse conditions as “Victorian”?
Undoubtedly yes, says Mike Ashley. There were definitely some things we had to fix – we’ve fixed some over the first 90 days, but there’s more to fix, and some things that will always need fixing.
Q: You’re the founder of this company – didn’t you know what was going on?
You’d be surprised how little I knew – and that’s where the failing was, says Ashley.
He explains that he can’t watch every night shift, or see what’s happening at his company during the weekend.
There’s lots of hours in the week when I’m not there, he adds.
Should I known more, yes? Did I know what was happening? Absolutely not.
Sports Direct boss Mike Ashley tells @BBCBreakfast 'you'd be surprised at how little I knew of what was going on in the warehouse.' pic.twitter.com/buf7Pz5J0M
— Ben Thompson (@BBCBenThompson) September 20, 2016
Updated
Sports Direct says it has already fixed some of the serious problems at Shirebrook, such as the security searches conducted after workers’ paid shifts have ended.
But the independent team will want to check whether the other problems, which led to Shirebook being labelled “the gulag” are being addressed:
Updated
Sports Direct’s decision is being welcomed as a major win for shareholders and campaigners.
Here’s Ian Smith of Investors Chronicle:
A win for shareholders as Sports Direct decides independent review of its working practices will now not be carried out by legal adviser RPC
— Ian Smith (@iankmsmith) September 20, 2016
All Sports Direct staff will vote in the election of a worker representative to the board. It's that shareholder society a-coming
— Ian Smith (@iankmsmith) September 20, 2016
Deirdre Hipwell of the Times says it’s a major climbdown by Mike Ashley:
A big climb down from sports direct this morning.retailer says it will allow an independent party to carry out a review of governance
— Deirdre Hipwell (@DeirdreHipwell) September 20, 2016
Antonia Bance, head of campaigns at the TUC union, is also pleased:
Well done @unitetheunion! Mike Ashley announces *independent* review of working practices at Sports Direct! #r4today
— Antonia Bance (@antoniabance) September 20, 2016
Updated
Sports Direct agrees to independent review
Big news from Sports Direct this morning – the retailer has agreed to hold an independent review of its working practices and corporate governance.
This looks like a U-turn from founder Mike Ashley. He had originally planned to use his own lawyers, RPC, to conduct the inquiry, but has been pressured by large shareholders to get a fully independent team involved instead.
Today the company bowed to that pressure, telling shareholders that:
Sports Direct today announces that the forthcoming ‘360-degree’ review of working practices and corporate governance which was announced on 6 September 2016 and which was to be led by RPC will now be led by an independent party other than RPC.
RPC has already conducted one review of Sports Direct, which concluded there were serious deficiencies in the way its workers were treated. Ashley has promised to put things right, after seeing a major City backlash against his chairman following the revelations.
Here’s our news story on today’s announcement:
We’re expecting to hear from Mike Ashley shortly, on the BBC 1 Breakfast show…
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GSK names female CEO
Newsflash: the City is getting another female chief executive.
Pharmaceuticals giant GlaxoSmithKline has promoted Emma Walmsley, currently the head of its Consumer Healthcare division, to replace Andrew Witty as CEO.
It makes her the most powerful woman in the City, I reckon – at £80bn, GSK is the sixth-largest company on the FTSE 100.
Today we’ve announced Emma Walmsley will succeed Sir Andrew Witty as CEO of GSK. Read more: https://t.co/amyuIRK1uJ pic.twitter.com/Z7awbyPKt3
— GSK (@GSK) September 20, 2016
Walmsley says:
I am delighted and honoured to be appointed GSK’s next CEO. GSK is a company that leads both in science and in the way it does business.
We have momentum in the group and as the demand for medical innovation and trusted healthcare products continues to rise, we have the opportunity and the potential to create meaningful benefits for patients, consumers and our shareholders. I’m looking forward to working with Andrew and other leaders over the next few months to ensure a smooth handover and to develop plans for 2017 and beyond.
There are currently just five women running FTSE 100 companies, I reckon.
Here’s some reaction from the GSK workforce:
Brilliant!
— Tess Morris (@Perform_Science) September 20, 2016
Proud to work for a company who has a female CEO.@sherylsandberg @Arianahuff https://t.co/7WgU86oi2l
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The agenda: markets await central bank Wednesday
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After yesterday’s rally, Europe’s stock markets look remarkably subdued this morning. Investors are waiting nervously for tomorrow’s splurge of central bank news, with the Bank of Japan and the US Federal Reserve setting monetary policy.
The markets reckon there’s only a 20% chance that the Fed will hike interest rates, but a shock can’t be ruled out. And no one’s really confident about which way the Bank of Japan might jump.
Analysts at Danske Bank predict that Japan will shake up its stimulus programme a little:
We do not expect the BoJ to ease monetary policy as such but expect it to adjust its policy framework by (1) changing its wording on when it expects to achieve its 2% inflation target and (2) adding some flexibility to its government bond purchase programme while maintaining its negative interest rate policy.
Due to those pesky timezones, most of Europe will be tucked up in bed when the BoJ does its thing. So trades have an edgy day ahead…
We are called flat at the start of trading in Europe https://t.co/PinxrfO474 pic.twitter.com/FVdtwX1UQs
— CNBC International (@CNBCi) September 20, 2016
Also coming up today....
UK companies Kingfisher (which runs that B&Q DIY chain) and French Connection are reporting to the City.
On the economic front, the latest German producer prices figures are out – showing that factories charged less for their goods last month. That suggests eurozone inflation remains subdued.
Nein! Deflation ist back. German PPI -0.1% in Aug vs flat est v +0.2% Jul, although annual deflation eased from -2.0% to -1.6% as expected
— Mike van Dulken (@Accendo_Mike) September 20, 2016
And at 1.30pm BST, we get the latest US housing starts data, showing the health of the American building sector.
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