Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 3.30pm) and Nick Fletcher

Pound rallies on £50bn Brexit bill hopes; US growth revised up – as it happened

Canary Wharf, London.
Canary Wharf, London. Photograph: Andy Rain/EPA

European markets edge up but FTSE falters

A mixed day for Europe, but with little real movement on most of the major markets. In the US, the Dow Jones Industrial Average has moved higher after positive remarks on the economy from Federal Reserve chair Janet Yellen, but technology stocks have come under pressure. Jonathan Mackay, investment strategist at Schroders, told Reuters:

What we’re seeing is a combination of defence positioning, with people taking some profit out of the high-growth areas, technology specifically, and rotating into sectors that should hold up better if we get any negative news on the tax bill or debt ceiling.

Meanwhile bitcoin is currently up nearly 9% at $10,741 although off the day’s highs of 11,395.

In Europe the final scores showed:

  • The FTSE 100 finished down 67.09 points or 0.9% at 7393.56
  • Germany’s Dax edged up 0.02% to 13,061.87
  • France’s Cac closed 0.14% higher at 5398.05
  • Italy’s FTSE MIB rose 0.15% to 22,325.94
  • Spain’s Ibex ended 1.22% better at 10,267.7
  • In Greece, the Athens market added 1.67% to 738.31

On Wall Street, the Dow Jones Industrial Average is currently up 67 points or 0.28%.

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

But there are some less positive developments in Greece, too. Helena Smith writes:

In Greece’s civil court, police have fired rounds of tear gas and been engaged in hand to hand battle with protestors opposing first electronic auctions demanded by creditors in bid to finally deal with Greece’s mountain of bad bank loans.

Protesters clash with riot police as they attempt to enter a courtroom in Athens
Protesters clash with riot police as they attempt to enter a courtroom in Athens Photograph: Louisa Gouliamaki/AFP/Getty Images
Clashes outside the court room in Athens.
Clashes outside the court room in Athens. Photograph: Thanassis Stavrakis/AP

Over in Greece, some positive developments. The country has announced that it has successfully completely a voluntary bond swap worth €30bn, writes Helena Smith:

Likening the bond swap to the country achieving a second foray into the bond market - barely four months after it dipped its toe back into the financial market in July - the government spokesman Dimitris Tzannakopoulos said the bond swap take-up had reached 86.1 %.

“It is a huge development ... and of huge significance for the country,” he told reporters this afternoon. “In reality it amounts to the second successful market foray afterJuly which is aimed at reprofiling [the country’s] debt so that it will be made more easily negotiable on international markets.”

Greece, meanwhile, has resumed bailout negotiations with auditors representing bailout creditors holding a first full day of talks in Athens. At stake is the third - and last - compliance review before Athens exits its third bailout programme in August next year.

More on the drop in technology stocks. Chris Beauchamp, chief market analyst at IG, said:

Hopes of tax reform continue to drive US markets higher, although the gains are concentrated in those firms which are expected to be significant beneficiaries. Tech is not in that exalted bracket, and as a result is taking heavy losses.

The caution is being amplified by comments from the German defence minister, who is arguing for tighter regulation for big tech firms. However, with Wall Street clocking up record highs, markets look vulnerable to some short-term reversals. Short-term reversals are exactly what we got last night on the North Korea news, and the rebound was equally rapid. No doubt there will be plenty of investors willing to buy this micro-dip in the FANG [tech] stocks, especially if they need to spruce up their performance ahead of year-end.

One exception in the US markets is the Nasdaq Composite, the technology heavy index which is now down almost 1%.

Part of the reason for the rise in US markets is a testimony from outgoing US Federal Reserve chair Janet Yellen to Congress. She made positive noises about the US economy, saying “the economic expansion is increasingly broad based across sectors as well as across much of the global economy.”

This makes a December rate rise even more likely, which has helped banking shares, and more increases could follow. Yellen said, “We continue to expect that gradual increases in the federal funds rate will be appropriate.”

Yellen at a hearing of the Joint Economic Committee on Capitol Hill
Yellen at the hearing of the Joint Economic Committee on Capitol Hill Photograph: Brendan Smialowski/AFP/Getty Images

Wall Street is continuing its surge higher. Connor Campbell, financial analyst at Spreadex, said:

After a relatively sluggish few weeks the Dow has burst into life in the last couple of sessions. Yesterday it added a whopping 250 points, while today it’s up another 80 points – who knows, by this evening it could even reach 24000. The thrust of this growth stems from Trump’s progress in pushing through his – increasingly unpopular – tax reforms, with the Republicans clearing the Senate Budget Committee obstacle on Tuesday. Wednesday’s cherry on top was the news that the US Q3 GDP reading had been revised higher, from 3.0% to 3.3% at the annualised rate.

What goes up... Bitcoin is now at $10,479, down from its peak today of $11,395 but still up from the $9,868 it opened at.

bitty29

Back in the UK, the national minimum wage received by the lowest-paid workers is in the spotlight.

The Low Pay Commission, which recommends the minimum wage rates, said in its annual report published this morning that the new rates for 18-20 and 21-24 year olds follow the biggest rise for both age groups in a decade.

We already know the rates, which were published last week as part of the budget, but analysis in the report that shows increases from 1 April 2018 of 4.7% and 5.4% respectively “will benefit between 260,000 and 360,000 young workers directly” after the largest up-rating since 2007.

A lower percentage rise has been applied to the National Living Wage (NLW), which covers those aged 25 years old and beyond, of 4.4 per cent. Forecasts for average earnings growth next year fall between 2.5% and 3% the commission said.

The weakest rise is being handed to 16 and 17 year olds, who must survive on £4.20, up 3.7% on this year.

The commission said:

“The new rates will boost the earnings of between 260,000 and 360,000 young workers directly, and many more young workers will benefit.

“This is for two reasons: firstly, these increases lead to ‘spillover’ effects further up the pay distribution; secondly, even though they are not entitled to it, some young workers benefit from increases in the NLW. We estimate that up to 45% of 18-24 year old workers – or 1.3 million young people – could receive a higher pay increase than they would have done in the absence of the NLW.”

Dow Jones and S&P 500 hit record highs

Boom! The US stock markets has hit fresh record highs at the start of trading.

The S&P 500 and the Dow Jones industrial average both climbed to new levels, following the upgrade in US growth in the last quarter.

The open of Wall Street today
The open of Wall Street today Photograph: Bloomberg

Jacob Deppe, Head of Trading at online trading platform, Infinox, sums up the mood:

“Today’s second estimate of US GDP shows the world’s largest economy is clearly firing on all cylinders.”

If Donald Trump takes his fingers off the retweet button, he’ll notice that the US economy appears to be doing pretty well on his watch.

Here’s Paul Ashworth of Capital Economics on the new growth figures:

Third-quarter GDP growth was revised up modestly to 3.3% annualised, from 3.0%, thanks to a stronger positive contribution from business investment and a much smaller drag from State and local government expenditure. The growth rate of final sales to domestic purchasers was revised up as well to 2.5%, from 2.3%.

Business investment growth is now estimated to have been 4.7% annualised, with equipment investment up by 10.4%. With borrowing costs still relatively low, confidence strong and capex intentions surveys at elevated levels, we expect another decent gain in the fourth quarter.

Bitcoin just smashed through $11,000, defying the doubters with their taunts about tulip bulbs....

Updated

Despite its summer surge, the US hasn’t grown quite as fast as the eurozone over the last year.

It’s comfortably outpacing Britain, though....

Economists are cheering the news that America’s economy expanded by 3.3% (annualised) in the last three months.

This upward revision suggests the US is in decent shape.

Here’s some early reaction:

US growth revised higher

BREAKING: America’s economy grew faster than expected in the third quarter of 2017.

Fresh figures from the Commerce Department shows that US GDP expanded at an annualised rate of 3.3% in July-September, up from a first estimate of 3.0%.

That’s equal to a quarterly growth rate of over 0.8% -- twice as fast as Britain’s 0.4% in Q3.

The new data shows that corporate profits boosted growth, jumping by 4.3% quarter-on-quarter.

Net trade also boosted growth, with exports up by 2.2% but imports down by 1.1%.

Reaction to follow....

Updated

German bank Berenberg has raised their forecasts for UK growth over the next couple of years, on optimism that a hard Brexit can be avoided.

They say:

We raise our calls for real GDP growth for 2018 and 2019 to 1.8% and 1.9% from 1.6% and 1.7% respectively, following modest increases to our growth projections for household consumption and business investment.

Our forecasts exceed Bloomberg consensus (29 November 2017) of 1.4% in 2018 and 1.6% in 2019. We see risks to the growth outlook as roughly balanced.

Foreign exchange news site DailyFX flags up that the pound has outperformed other currencies against the dollar today:

The price of bitcoin is going up even faster than Britain’s potential Brexit bill.

The cryptocurrency smashed through the $10,000 mark overnight, and is currently changing hands at $10,900.

That means it’s risen by around 1,000% during 2017. Five years ago, you could have bought a bitcoin for only $12....

The higher bitcoin goes, the louder are the warnings that it’s an unsustainable speculative bubble. But then, I can remember the same warnings back in 2013!

Sir Jon Cunliffe, the BoE deputy governor, has suggested that potential bitcoin investors should be cautious.

He told BBC Radio 5 this morning that:

“This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me it’s much more like a commodity.

“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework.”

Back to Brexit, and the BBC’s Katya Adler reports that some EU officials are irritated that the £50bn settlement hit the headlines last night.

Although they do want money from the UK, they don’t want to be bounced into an agreement. They also don’t accept that any payment will guarantee Britain the post-Brexit deal it wants...

She writes:

If and when an agreement on the Brexit bill is made, the EU will push back hard at UK government assertions that Brexit financial payments be tied to a future trade and transition deal.

Brussels insists this is money the UK owes - dating back to commitments made on annual and long-term budgets while an EU member.

“This is not blood money,” an EU civil servant told me.

“This is money the UK must pay on leaving the EU. The new relationship post-Brexit Britain will have with the EU is something quite separate. Europe is not about to be blackmailed.”

Breaking away from Brexit briefly, shipping company Clarksons has admitted it’s been hacked.

Clarksons told the City that it has been working with the police since discovering a cybersecurity incident which involved “unauthorised access to the Company’s computer systems”.

It warned shareholders that those responsible “may release some data” today.

Andi Case, CEO of Clarksons, has hinted that the company refused to pay the hackers to return stolen data, saying:

I hope our clients understand that we would not be held to ransom by criminals, and I would like to sincerely apologise for any concern this incident may have understandably raised.”

More evidence that the eurozone economy is ending 2017 on a high, from the EC’s latest health check:

Despite Brexit uncertainty, individuals and businesses in Europe are increasingly optimistic.

New data from the European Commission shows that eurozone consumer and economic confidence jumped again in November, to their highest level in 17 years.

Updated

UK consumer credit growth hits 18-month low

Newsflash: UK households reined in their borrowing last month.

Unsecured consumer credit (such as borrowing on credit cards) grew by 9.6% in October compared to a year ago, down from 9.8% in September.

That’s the smallest rise since April 2016, and follows concerns that people were being driven into debt by rising inflation and falling real wages.

New Bank of England figures also show a fall in the number of mortgages approved by lenders, down to 64,575 in October from over 66,000 in September.

Updated

Transport secretary Chris Grayling has defended the government against criticism that it might stump up £50bn to leave the EU.

He told BBC Radio 4’s Today programme that the UK has financial obligations to settle, adding:

“I don’t think people in this country would expect us to just walk away from things we’ve already said we’d pay for.”

Bonus marks to anyone who spotted that on the side of a bus last year.

Anyway, Andrew Sparrow’s Politics Live blog has all the action from Westminster today:

Barnier: We're still working on a deal

The EU’s chief negotiator for Brexit Michel Barnier speaking at the Berlin Security Conference this morning.
The EU’s chief negotiator for Brexit Michel Barnier speaking at the Berlin Security Conference this morning. Photograph: John Macdougall/AFP/Getty Images

The EU’s chief negotiator, Michel Barnier, has sounded a cautious note about the £50bn figure.

Collared by reporters in Berlin this morning, Barnier suggested that a deal wasn’t agreed yet.

He said:

“We are still working. ....I am working for an agreement.”

The pound has rallied against “all of its 16 major” rival currencies this morning, reports Bloomberg.

Three reasons to be cautious over Brexit

Even if a £50bn bill is agreed, Britain faces several hurdles to jump before it can avoid a disorderly Brexit.

As well as the Irish question, Brussels also wants commitments on EU citizen rights beyond 2019. Plus, we don’t know that parliament will approve a hefty divorce bill.

Neil Wilson of City firm ETX Capital says:

First, can Theresa May sell this to voters and to her party. She seems to have some shaky consensus backing for a higher offer but this is contingent on getting a good trade deal – the EU will not have its hands tied in this way. Therefore we must be wary that the political consensus to pay a bigger bill could unravel; and paying a big bill does not by definition lead to a good trade deal. Capitulating to the EU in this regard carries its own risks for Theresa May, but the risk of a no-deal exit was ultimately too high.

Second, the Irish border is still a major stumbling block and it is uncertain whether sufficient progress has been made on this front. This is an even more sensitive topic than the divorce bill and is not as easy to solve with a bigger cheque.

The third key barrier for the EU is citizens’ rights and again it is unclear if there is sufficient progress in this regard.

Sterling has jumped by 1.4% against a basket of currencies, its biggest rise since April, according to Reuters data.

Christmas has come early for Brussels, says Kallum Pickering of Berenberg bank wryly.

He expects an official agreement on the Brexit bill next month, following the news that the UK has caved in to demands for a £50bn payment.

We expect UK PM Theresa May to present a formal offer on the Brexit bill, EU citizens rights, and the Irish border question at the upcoming 4 December dinner between May and EU Commission president Juncker. We expect the offer to meet the EU’s requirement for ‘sufficient progress’ on the Brexit divorce.

If such progress is made, expect the UK and the EU to move negotiations on to potential transitional arrangements and post-Brexit trade at the 14-15 December EU Summit.

Updated

Sign up to our email

Guardian Business has launched a daily email.

Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.

For your morning shot of financial news, sign up here:

Britain’s exit bill is only one part of the Brexit puzzle, of course.

We still don’t have any idea how the Irish border question will be resolved; Dublin could block negotiations on trade unless its fears over a hard border are assuaged.

As Naeem Aslam of Think Markets puts it:

Picking up the Brexit bill has been the very thorny issue since day one and given that now the government has agreed to a respectable amount, the talks between the UK and the EU (which are set to resume next month) should be smoother. If the EU accepts the bill, then we will be moving to the next hurdle which is securing the EU rights [of citizens living in the UK.

It is important to keep in mind that we are no way close to be out of the woods when it comes to the smooth negotiation process because the Northern Ireland issue is still the thorny matter.

The pound is continuing to climb against the US dollar as investors bet that the Brexit fog is clearing.

As Stephen Gallo at the Bank of Montreal put it (via the FT):

It’s a buy! The risk of snap election is down, the risk of a ‘hard Brexit’ is down, the path to a transition deal is clearing.

Trading screens at ETX Capital.

The surge in the pound has hit shares in the City.

The FTSE 100 is down 31 points at 7429; a stronger sterling reduces the value of money earned overseas by UK-based multinationals.

Updated

The prospect that Britain and the EU might shake hands on a Brexit bill next month is exciting the City this morning.

£50bn is obviously a lot of money, even if split over many years. But traders think it could be worth it, if it opens the door to trade talks.

Konstantinos Anthis of brokerage firm ADS Securities explains:

Even though the agreement is not yet formal traders are clearly excited by the prospect of progress on this issue.

Traders are looking for any positive news in this area as it opens the way for trade negotiations, and are prepared to buy sterling in response.

The agenda: Pound boosted by Brexit bill reports

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

Sterling is on a roll this morning, amid signs that Britain and the European Union are on the brink of a Brexit breakthrough.

The pound has jumped to $1.3406, up almost three quarters of a cent, to its highest level since the end of September.

The pound-US dollar exchange rate over the last year
The pound-US dollar exchange rate over the last year Photograph: Thomson Reuters

It is also pushing higher against the euro, up 0.3% at €1.13.

The rally was triggered by reports that London could pay a £50bn exit bill, in an attempt to nudge European politicians into starting negotiations about trade.

A deal would ease fears that Britain could crash out of the EU in March 2019 in a disorderly Brexit.

EU leaders will decide next month whether this is enough to move negotiations onto trade, so this could be a very significant moment.

As my colleagues Daniel Boffey and Jennifer Rankin reported last night:

Non-stop behind-the-scenes negotiations have led to a broad agreement by the UK to a gross financial settlement of £89bn on leaving the bloc, although the British expect the final net bill to be half as much.

A senior EU official told the Guardian that the UK appeared ready to honour its share of the EU’s unpaid bills, loans, pension and other liabilities accrued over 44 years of membership. “We have heard the UK wants to come along with the money,” the official said. “We have understood it covers the liabilities and what we consider the real commitments. But we have to see the fine print.”

The bill could total £53bn to £58bn (€60bn to €65bn), although EU officials are not discussing numbers and the British government will fight hard to bring the total down.

Here’s the full story:

We’ll be tracking City reaction to the news, along with new data showing the state of the UK, US and eurozone economies.

The agenda:

  • 9.30am GMT: UK consumer credit and mortgage approval figures for October
  • 10am GMT: Eurozone consumer and economic confidence stats for November
  • 1pm GMT: German inflation data for November
  • 1.30pm GMT: The second estimate of US GDP for the third quarter of 2017

Updated

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Woman spots MAGA supporters at Disneyland. Then she catches them cutting in line for Mexican food: ‘The irony’
A woman allegedly saw MAGA supporters cutting in line at Disneyland to get Mexican food. The hypocrisy has many TikTok commenters fuming. 
The Mary Sue
The Mary Sue
Megan Fox hits back at wild ‘clone’ conspiracy after Instagram return
The actress returned to Instagram on Wednesday after an almost two year break from the platform
Evening Standard
Evening Standard
Benny Blanco's Hygiene History: Toe Kiss, Dirty Feet, No-Shower Confession, and Cheese Bath
Explore the viral toe kiss between Selena Gomez and Benny Blanco on the 'Friends Keep Secrets' podcast, along with fans' chatter about their quirky relationship and hygiene debates.
International Business Times UK
International Business Times UK
Influencer Jaclyn Hill shares how filler has ‘migrated’ across her face after weight loss
The influencer says she was ‘so happy’ when the ‘filler migration’ was confirmed by her doctor
The Independent UK
The Independent UK
Did the Epstein Files Mention Britney Spears 115 Times? Viral TikTok Claim Examined
Viral claims say Britney Spears is mentioned 115 times in Epstein files amid alleged neurological experiments. Here's what is verified.
International Business Times UK
International Business Times UK
YSL lights up Paris fashion week show with return of Le Smoking suit
Anthony Vaccarello marks decade at helm of fashion house with powered-up take on Yves Saint Laurent’s classic
The Guardian - UK
The Guardian - UK
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.
Download on the AppStore Get it on Google Play