Closing summary
With that, we are closing up for the day. Thank you for all your great comments, and we’ll be back tomorrow.
- At a two-hour press conference in Wolfsburg, Volkswagen VW admitted that a culture that tolerated rule-breaking and flawed processes were key factors in allowing some workers to install ‘cheat software’ on millions of cars. The board isn’t carrying the can, however. Read more here.
- The Bank of England left its base rate at 0.5%, where it’s been since 2009, with only one member of the monetary policy committee (Ian McCafferty) voting for a rate hike at the monthly meeting. Read the full story here.
- More than £500m was wiped off Sports Direct’s market value this morning, after the retail chain controlled by billionaire Mike Ashley reported lacklustre results and the City reacted to criticisms of the way its warehouse workers are treated. You can read the full story here.
Here in London, Anglo-African financial firm Old Mutual is the biggest faller on FTSE 100 index. It has slid 11% to 174p after South Africa’s finance minister was sacked, pushing the rand to a record low.
South African bank and asset manager Investec is also down, tumbling 11% to 489.8p the worst day for the shares since 2009.
South African president Jacob Zuma ousted finance minister Nhlanhla Nene, sending the rand down 5% to its lowest level ever.
Updated
With regard to the Volkswagen emissions-rigging scandal, the carmaker’s management reiterated today that only a small group of employees were responsible.
Despite the scandal, orders so far this year are up 3.5% and chief executive Matthias Müller said he was confident that buyers would overcome their reluctance to buy the group’s cars in coming weeks. The board is still unable to estimate the scandal’s legal costs.
Lucy Jameson, chief executsive of UK advertising firm Grey London, has sent us her views.
- The rot always goes deeper than the leadership. VW needs to return to its core values, the reason it came into being in the first place: The People’s Car. They need to make their own people internally believe in caring about that again so that their customers believe it.
- When a business has been solely focused on profit for too long, it is to the loss of all other things. VW has been ‘doing what it measures’ for too long, hitting the only target that has mattered to it; a financial one. People who work in any business want to feel useful so it has to contend with a workforce feeling severely let down. The leadership needs to show it is going back to basics.
- Finally, to the wider business community, shareholders and most importantly, customers, VW needs to show it is making visible change. The pendulum needs to swing all the way to show it is putting in new checks & balances, fail safes to ensure it can’t happen again. It needs to show action on the above to work on regaining trust - which will take a long time.
Back to the Bank of England. Investec’s chief economist Philip Shaw has sent us his thoughts:
Although the minutes once again reported a ‘range of views’ on the committee, an increase in the pace of domestic cost growth will need to be evident before a majority on the MPC is prepared to raise interest rates, particularly bearing in mind the background of subdued international commodity price trends.
In this respect we continue to expect the first move to occur in Q2 next year, but we will place a lot of weight on the direction of the wage numbers (note that October’s figures are out next week) and trends in sterling. However although the pound has slipped back recently it remains almost 1% firmer on its trade weighted basket since the inflation report, which is perhaps a reminder that there is no guarantee that the current period of ‘lowflation’ will be shortlived.”
He noted that as the Christmas lull approaches, the Bank of England’s deputy governor Minouche Shafik is due to speak on monetary policy on Monday, which might cast more light on some of the key issues being considered by the committee.
And here is our story on Volkswagen, following this morning’s press conference. My colleague Graham Ruddick writes:
Volkswagen has admitted for the first time that the diesel emissions scandal was the result of systematic failures within the company, rather than just the actions of rogue engineers.
Hans Dieter Pötsch, the VW chairman, said there had been a “whole chain” of errors at the German carmaker rather than a “one-off”. There was a mindset within the company that tolerated rule-breaking, he said.
The most interesting discussion in the minutes was about the recent slowing in average weekly earnings growth, says Allan Monks, UK economist at JPMorgan.
The MPC noted the slowdown may reflect the large drop in average hours worked reported at the same time. The MPC also concluded that this source of weaker pay does not affect the outlook for unit wage cost growth and, hence, the inflation outlook. The committee said it would revisit in February the issue of why average hours have dropped.
The interpretation of the decline matters for how much slack the MPC perceives there to be. As before, MPC rhetoric in the coming months will be sensitive to developments in inflation and the labour market. Commodity prices may have fallen this week, but core inflation moved up in the last release. Some surveys for 4Q also suggest that employment growth is set to strengthen. Depending on how average hours move, this may indicate that productivity growth has slowed in 4Q following the strong gains reported in 2Q/3Q.”
You can read our full story on the Bank of England here, by my colleague Katie Allen.
Martin Beck, senior economic advisor to the Ernst & Young ITEM Club, has interpreted the MPC minutes in a different way, focusing on pay.
Despite falling unemployment, pay growth appears to have recently levelled off at a rate below what the committee was expecting in November. MPC members speculated on possible explanations, including a shift in the composition of employees towards lower-skilled and lower-paid workers or very low inflation feeding into modest pay rises. Beck says:
Our view is that the unemployment/inflation trade-off has continued to shift in a favourable direction, reflecting past strong growth in the supply of workers and the effect of labour market policies.
With the likelihood that these factors will continue to keep pay growth down, we remain confident that the MPC will not hike interest rates until the end of next year.”
Updated
Analyst: Q2 rate hike still in play, despite some dovish comments
More on the Bank of England, which did nothing today, as expected. The only dissenter on the nine-strong monetary policy committee was Ian McCafferty, who voted for a quarter-point rate hike.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, says:
The markets have interpreted the minutes as markedly dovish, and the committee’s statement that there is “no mechanical link” between its and other central banks’ monetary policy seems to be an attempt to stamp on the view that Fed rate hikes will force the MPC’s hand. The committee also refrained from passing further judgement on the low level of market interest rate expectations, even though last month’s strong inflation report forecasts seemed to be an attempt to steer markets towards expecting an earlier hike.”
Nonetheless, Tombs noted that the committee argued that, while pay growth had “flattened off”, this could just reflect short-term volatility or a change in the employment mix, rather than a sign of weaker underlying price pressures. It also cited evidence that households’ capacity to cope with higher interest rates had improved.
We still think that the MPC is likely to hike in Q2, about six months earlier than markets expect now. Oil prices haven’t fallen enough to prevent CPI inflation picking up, perhaps to about 1% by March, and they will have little bearing on inflation in two years’ time, which is the relevant horizon for monetary policy. The fiscal squeeze and high debt levels will require the MPC to be cautious, but the continued tightening of the labour market and the likely downward pressure on sterling when the U.S Fed starts to hike suggest that the MPC will decide by May that interest rates need to rise. We see Bank Rate at 1% by the end of 2016 and 2% by the end of 2017.
The chart shows that the MPC was not unanimous at the start of two of the last three tightening cycles, suggesting that a dovish minority is unlikely to delay lift-off.
Snap summary: VW lifts lid on the scandal
What did we learn in that two-hour press conference in Wolfsburg?
1) The emissions scandal wasn’t just a few bad apples. VW admitted that a culture that tolerated rule-breaking was a key factor in allowing some workers to install ‘cheat software’ on millions of cars. Flawed process were also to blame.
2) A major probe is underway. Investors are crawling over VW’s internal systems, checking millions of emails and putting thousands of staff in the spotlight.
3) The board isn’t carrying the can. Chairman Hans Dieter Pötsch says there is no sign that top managers and board directors knew what was afoot.
4) The EU recall will start next month. VW has found solutions to bring cars sold in Europe into line - some just need a software reboot, others need a device fixed. It will last for most of 2016.
5) European Customers should get compensation, but we don’t know what. CEO Matthias Müller said that an appropriate package would be provided, to reflect the fact that VW
6) VW is struggling to get a fix for US cars. Muller hinted at frustration in dealing with American regulators, saying he wants to agree a solution fast. But given what VW has been up to, it can’t call the tune.
7) Sales are suffering. Müller tried to sound optimistic, saying that there hasn’t been a massive slump in VW’s financial performance. But he admitted that managers are trying to ‘stabilise’ the sales situation.
8) VW faces a taste of austerity. You know a company is getting serious about costs when it puts its private jet on the market. VW executives who enjoy pontificating on swanky-sounding committees should be worried - Müller wants them to get their hands dirty helping design new cars.
And that’s the end of the press conference. If you missed it, don’t fret, as VW are promising to have a recording online shortly (here)
Here are the minutes from the Bank of England’s meeting, explaining why interest rates aren’t going up yet.
Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion
Back to Volkswagen, and Müller appears to confirms that he *will* attend the Detroit Motor show (it runs from January 11 to 24).
Back to Britain briefly, and the Bank of England has left interest rates unchanged at today’s meeting.
Once again, only one policymaker (Ian McCafferty) voted to hike borrowing costs to 0.75%.
Bank of England leaves bank rate at 0.5% in 8-1 vote following December MPC meeting
— Ian King Live Team (@SkyIanKingLive) December 10, 2015
Another questioner wants proper details from VW:
Q: Which part of Volkswagen actually knew about the emissions cheating? And you must have known that meeting the US emissions targets would have been difficult {and thus might lead to rule-breaking]
You’ll have to wait until we report our full findings, Pötsch says. That’s when we’ll say who knew what, when.
Q: This scandal dates back to 2005, so what is VW doing about the staff and board members who were involved then?
Chairman Hans Dieter Pötsch says....
We are investigating... trying to find out who knew what, when. Ask us again in a few months when investigators have reported.
Updated
Q: Why hasn’t VW got a fix for its US cars, and will it provide more help to American dealers who are suffering?
We are impatient and want to speed up the process, Müller replies, but we can’t set deadlines to the US authorities who are handling the issue.
That’s EPA (the Environmental Protection Agency) and CARB (California Environmental Protection Agency)
We are committed to completing it as soon as possible, but we can’t set a date, Müller adds.
Updated
Q: More details on the sales impact, please.
Müller says that sales to China have picked up recently, compensating for drop-offs in Europe.
And “reluctance” to buying VW cars is likely to drop away in a few weeks
Q: Is VW going to squeeze its suppliers to help cover the cost of the crisis?
We are not going to “torture” our suppliers and force them to lower their prices. That is not our style.
Q: And does diesel still have a future, given how its image has been tainted by the crisis.
Matthias Müller agrees that diesel’s image has been tarnished.
But electric cars aren’t as popular as some would like, so diesel cars are still needed to hit emissions targets in 2020.
We will launch a pro-diesel campaign, and there is no need so make diesel look bad, as longer as the NOx emissions are OK, which they are (now).
Q: What will Volkswagen do to compensate customers across Europe who fear they have been left with a car whose second-hand value has fallen because of the scandal?
Müller replies that he’s already said VW will offer appropriate packages to customers in each market. And yes, that will include some compensation for reduced resale values.
He’s not more specific, though.
@Volkswagen boss Mueller on compensation for Europen Volkswagen customers: We going to prepare right package for all regions, including UK
— Greg Kable (@GregKable) December 10, 2015
Muller indicating a compensation package WILL be offered in UK to make up for reduced resale values. #Volkswagen #dieselgate
— Andrew Brady (@MR_AndrewBrady) December 10, 2015
Q: Will Matthias Muller travel to the US soon? Perhaps to the Detroit Motor Show to kneel before the US public?
Müller confirms that he’s not visited America since becoming VW CEO, as the company’s staff there have the situation under control.
I will be scheduling a visit to the US. Won’t say if I’ll be kneeling down - I’ll apologise, but also be self-confident, and optimistic about the future.
Updated
Q: Is Volkswagen setting aside any contingency reserves to tackle litigation in the US? Presumably you will be pleading guilty?
We have not taken any litigation provisions on the balance sheet yet, says VW chairman Pötsch.
It’s premature to say whether we will add an item to this year’s balance sheet to reflect this legal risk, but it will probably be added at some point.
Q: What did VW’s shareholders in Qatar says to Matthias Muller when he visited them recently? Did they criticise VW’s corporate governance failings?
Müller says he was surprised to read in the newspapers that he was given a dressing down in Qatar. Talks were constructive, and we will probably ‘intensify’ co-operation with the Qataris.
Q: Could some of VW’s 12 brands be trimmed down (even if not sold off)?
I’d love to know why you think some parts are more “sacrosanct” than others, Müller jokes. All 12 brands are successful.
Updated
Q: Any update on possible staff cuts?
CEO Müller insists that permanent staff at VW shouldn’t worry - “job security, stable jobs, is key”.
But temporary staff may suffer. They are “a way of ensuring flexibility”, he adds.
Autoweek have published an excellent guide to the fix which VW has created to solve the emissions scandal:
Here’s how VW will fix its 1.6- and 2.0-liter diesel engines (in Europe)
Here’s a flavour:
VW are tweeting from their press conference:
High media interesst at press conference on status of investigations at #VWGroup pic.twitter.com/7rMz4DM0y1
— Volkswagen Group (@vwgroup_en) December 10, 2015
Volkswagen making good progress with its investigation, technical solutions, and Group realignment #VWGroup https://t.co/Xb64MhLxhi
— Volkswagen Group (@vwgroup_en) December 10, 2015
Q: Could VW be forced to sell assets if its sales fall sharply?
Muller says that VW isn’t planning to sell any assets. Orders are up 3.5% so far this year.
Volkswagen CEO Matthias Mueller defends the company's sprawling network of 12 vehicle brands: "We are happy to have those brands."
— Nathan Bomey (@NathanBomey) December 10, 2015
Updated
VW board chairman: Board didn't know about the scandal
Q: What mistakes did VW’s supervisory board make to cause the emissions crisis?
Board chairman, Hans Dieter Pötsch, takes this question, and says:
It has become apparent that we can assume that a relatively small group of people actually made mistakes, acted irresponsibly.
There are no indications that the supervisory board was involved.
Volkswagen chairman Hans-Dieter Potsch says there are "no indications" that top executives or board members were involved in the scandal.
— Nathan Bomey (@NathanBomey) December 10, 2015
So, the board didn’t know what was going on. But surely they should?
Q: What impact will the fixes have on fuel efficiency?
It will be marginal, Matthias Müller replies, customers won’t feel it.
Q: US customers are getting a very generous compensation package, will European customers get the same?
MM: We will ensure the process is as ‘pleasant’ as possible. We’re not going to charge customers for the work either.
On to questions:
Q: Has VW found a successor to Winfried Vahland, the recently named head of Volkswagen’s North American business, who left the company before taking up his new job?
Matthias Müller says Vahland’s decision was a disappointment and VW is looking for a quality replacement.
Updated
VW: We're fighting for every customer
Finally, the sales impact of the crisis.
Matthias Müller says:
The positive news is that the massive slump some had feared has not occurred.
So VW is sticking to the adjusted profit forecasts it produced at the end of October (when it posted its first loss in 15 years).
But the picture for markets and brands is “very mixed”.
The situation is not dramatic, but it is tense ... We are fighting for every customer, and every car.
VW brand managers have launched strategies to stabilise the situation.
Müller says he is “cautiously optimistic” that it will work. But if it doesn’t, VW will have to adjust its production targets.
Updated
In conclusion, Müller says VW is making progress on the five-point plan he outlined earlier (here).
He reminds us that the European recall will start in a few weeks, while VW is progressing towards his new 10-year plan.
Updated
New era of "humility" for Volkswagen - will sell its private Airbus A319 and tone down presence at motor shows
— Graham Ruddick (@GrahamtRuddick) December 10, 2015
VW to sell Airbus in cost-cutting drive
With a hint of relish, Müller turns to the planned cutbacks at VW.
We don’t need our own Airbus, so we’re going to sell it.
We don’t need so many senior staff flying around the world or sitting on steering committees when they could be designing cars.
More humility at trade shows wouldn’t go amiss, either. Müller says he’s confident that VW’s cars “speak for themselves” (now that would be impressive).
Updated
Matthias Müller is now turning to the future, painting a vision of a bright sparkly new VW pioneering new products, not tainted by emissions scandals.
We want managers who will fight for their convictions. We need people who will back their beliefs, and not fear failure.
The future of VW belongs to the brave. We need some of the spirit of Silicon Valley....
Müller is explaining that VW is committed to changing itself, including a new push into digital.
Since the start of the year, there have been many changes at board and brand leadership level – we have the team for the future ...
Updated
European customers don’t need to do anything, VW will get in touch when it is time to fix their car.
But there is less good news for drivers in the US.
Muller admits that work on US vehicles is taking longer because of tougher emissions laws. VW is still committed to finding a solution, though.
Updated
VW: European recall will take all 2016
Müller says VW now has a “robust solution” for all the EA 189 diesel engines involved in the emissions scandal.
That means that:
We can make sure that all the models affected in Europe will have one and the same emissions strategy in the test bed and in real life.
Engineers have been “quite literally” working days and nights to reach a solution.
And this means that 2l-engine cars only need a software update to bring them into line.
1.6l-engines will need a “flow transformer” to be added.
The recall process will start next month with the 2l engines, followed by smaller-engined cars through 2016.
Most of Volkswagen diesel cars will be repaired in second and third quarter of next year
— Graham Ruddick (@GrahamtRuddick) December 10, 2015
Müller says the campaign could take all next year.
Completing the retrofits by the end of the year will be “a huge logistical challenge”.
Updated
Now CEO Matthias Müller is speaking, outlining his new five-point plan.
That includes helping customers affected, discovering what went wrong and making necessary changes, renewing VW’s structures, renewing mindsets, and evolving strategies to take the company forward.
And he declares:
We will not allow this crisis to paralyse us, instead we will use it as a chance to renew.
Updated
Finally, Pötsch says that nine staff have been suspended so far, and he won’t rule out more employees being suspended in future.
Looking ahead, Pötsch says that the car sector must clean up its gama and give customers a better ides of what their cars actually emit.
That will need courage, though.
The difference between testing and real life levels of emission is no longer acceptable.
Pötsch’s explanation shows that the VW scandal goes beyond a few ‘bad apples’....
VW crisis not due to "one-off" mistake but "whole chain" of errors says chairman
— Graham Ruddick (@GrahamtRuddick) December 10, 2015
This is the first time we have heard Volkswagen admit that there was systematic problem at company, rather than just rogue engineers
— Graham Ruddick (@GrahamtRuddick) December 10, 2015
Pötsch now turns to the key question - how did VW end up cheating nitrogen oxide emission tests?
He says it was down to individual staff who concluded that they could “not find a way by permissable means” to meet US emissions limits, under the timeframe and budget they were given.
So they created engine management software that allowed the cars to cut their emissions under testing.
We still do not know whether the people involved from 2005 to the present day were aware of the full consequences of what they were doing, and the damage it would cause, Pötsch concludes.
While VW’s internal investigation has moved quickly, the external investigation by Jones Day will take much longer to conclude.
That is because the firm is dealing with huge amounts of data – the equivalent of 50m books.
It is “ploughing through innumerable emails”, says Pötsch. About 1,500 storage mediums, such as smartphones and laptops, have been taken from about 400 staff for inspection.
VW investigation has conducted 87 interviews and seized 1,500 devices from 400 employees
— Graham Ruddick (@GrahamtRuddick) December 10, 2015
And 2,000 staff have been told not to lose any data.
I’m not saying they are all under investigation, Pötsch adds.
Updated
What went wrong at VW
Pötsch says VW’s internal audit has found that the emissions scandal was due to three factors:
-
Misconduct by some individual staff members
-
Flaws in some VW processes
-
An attitude in some parts of the company that tolerated rule-breaking.
The third factor is the biggest shock, he adds.
And VW is making changes in response to its internal investigation:
On individual misconduct, VW has found that its emissions testing machinery wasn’t robust enough to prevent cheat devices being used. It is being improved, he says.
On process flaws, Pötsch says VW will tighten up processes to catch any individual misconduct in future. Improved IT systems will make it possible to track individual events better.
Updated
Volkswagen’s internal investigation will conclude soon, but the external inquiry led by the legal firm Jones Day will run “well into 2016”.
This is because Jones Day must establish who is legally responsible and its investigation has to stand up in court.
Updated
Updated
We are “relentlessly searching” for those responsible for the emissions scandal, declares Pötsch.
And you can rest assured that we will bring those persons to account.
But everyone must be patient – diligence is more important than speed.
The investigators looking into the scandal are trying to answer these questions:
- Exactly what happened, and when?
- Were laws broken?
- Did internal processes encourage staff to break laws?
- Who is responsible, both for immediate responsibility and overall responsibility?
- How can we ensure it never happens again?
A total of 450 internal and external investigators are now involved, in two separate teams.
Updated
Pötsch reminds us that there are two parts to the emissions scandal – nitrogen oxode emissions and CO2 emissions.
On CO2, he confirms the initial fear that 800,000 cars had false emissions levels was incorrect. That is “good news for consumers and Volkswagen”.
Updated
The fallout from the scandal will be considerable, says the VW chairman, Hans Dieter Pötsch. We need to defend our strong market position, but must recognise the scale of the challenge:
We are in the midst of one of the biggest tests in the history of the group.
Updated
VW chairman: Scandal has hurt trust
Pötsch speaks first, welcoming reporters to the press conference.
I’m not giving away any secrets when I say the past two-and-a-half months are something that has never been experienced at Volkswagen, he says.
No one here could imagine that our company, where so many people give their best, which is a source of such pride for Wolfsburg, could end up in such a position.
We are all deeply shocked.
VW relies on the trust of its customers, Pötsch continues. They expect to travel safely and comfortably, but they also expect that their car doesn’t emit more emissions than it should do. And that hasn’t always been true.
We deeply regret this. We have lost the trust of customers, politicians and the public.
Our challenge now is to win back that trust and ensure that nothing like this ever happens again.
Updated
The Volkswagen chairman, Hans Dieter Pötsch, and chief executive, Matthias Müller, have just arrived for the press conference.
Updated
It’s nearly time for Volkswagen to face the media and discuss the emissions scandal – you can watch it live here from 10am. (I’ll try to embed it at the top of the blog too).
Updated
Ouch. More than £500m has been wiped off Sports Direct’s market value this morning.
Analysts are disappointed that underlying profits for the last six months only rose by 3.6%, missing expectations.
An investor is also concerned about corporate governance issues at the company:
Keith Bowman, an equity analyst at Hargreaves Lansdown, said:
Overseas operations leave the company battling currency movements, while the group’s relationship with its staff remains in the spotlight.
Updated
Britain's trade gap widens again
Another month, another piece of bad UK trade data.
The trade deficit widened in October to £4.1bn, up from £3.1bn the previous month, as Britain continued to import much more than it exports to the rest of the world.
The goods deficit – how much stuff Britain shipped in, minus what was shipped out – jumped from £8.8bn to £11.8bn, much worse than the £9.7bn expected.
Imports surged by 8.2%, the most in almost a year, while exports fell 2.7%.
Ouch! UK ONS: The UK’s deficit on trade in goods and services was estimated to have been £4.1 billion in October 2015, #GBP #GDP
— Shaun Richards (@notayesmansecon) December 10, 2015
A surge in imports of goods pushed up Britain's overall trade deficit to £4.1bn in October, from £3.1bn September: https://t.co/30g6hvhyud
— David Smith (@dsmitheconomics) December 10, 2015
Updated
Glencore is leading the London stock market, up 10% after announcing a new plan to tackle its debt mountain.
The commodity mining and trading firm has hiked the debt reduction target from $10.2bn to $13bn, and slashed its capital expenditure plans. Asset sales are also likely.
It is some relief to shareholders who have watched Glencore battered by the commodity crunch. But not a lot. Shares are trading below 92p today, a far cry from the 520p it floated at in 2011.
Those who helped Glencore out by buying new shares at 125p each in September may also have a bad case of buyer’s remorse.
#Glencore shares up 10% as commodities giant widens plan to cut debt, considers possible agricultural business IPO pic.twitter.com/WbmHR2mbFr
— Peter Hoskins (@PeterHoskinsTV) December 10, 2015
Updated
The VW press conference is the “biggest event” for European markets today, says Conner Campbell of Spreadex.
Yesterday it was revealed that only 36,000 cars (compared to the initially estimated 800,000) have been affected by CO2 emission problems, sending VW’s shares about 7% higher.
It will be interesting, then, if the company will have any more good news for investors, or if Wednesday’s little nugget of information was merely to soften the blow of whatever it reveals today.
Updated
Volkswagen shares are rallying, up 3% ahead of this morning’s crucial press conference (see opening post for details).
They plunged more than 40% when the scandal broke in September, but have recovered about half those losses since:
Updated
The chief executive of Sports Direct has declared that he will not step down following our report into work practices at the company’s outlets.
That is according to Simon Neville of the Independent and Evening Standard.
Sports Direct boss Dave Forsey tells me he has no plans on resigning after latest revelations.
— Simon Neville (@SimonNeville) December 10, 2015
Updated
Newsflash from Switzerland – the Swiss central bank has left interest rates unchanged at their current record lows.
That means Swiss rates remain negative at minus 0.75%. That is part of its attempt to keep the Swiss franc (CHF) weak and avoid capital flows out of the eurozone.
The Swiss national bank also pledged to keep intervening in the foreign exchange market if needed.
*SNB:CHF IS STILL SIGNIFICANTLY OVERVALUED - who cares SNB
— Michael Hewson (@mhewson_CMC) December 10, 2015
Updated
Whitbread sounded in good spirits this morning.
The firm, which runs Costa Coffee and Premier Inn hotels, posted sales growth of 11% for 2015. Whitbread also pledged to hit its growth targets, despite the challenge from Airbnb.
Not that this got much credit in the City – traders have sent its shares down 2.3% in early trading.
TUI are doing better, though. Shares in the holiday firm jumped 4% after it reported a good start to sales for 2016 breaks, despite geopolitical dangers.
Updated
Sports Direct shares fall by 7.5%
Sports Direct is leading the FTSE fallers this morning.
Shares dropped by 7.5% in early trading after slightly missing City expectations this morning (however, reported profits are still up by 25%).
Traders may also be reacting to yesterday’s Guardian investigation that revealed workers are effectively being paid below the minimum wage because they are searched at the end of each shift, in their own time.
Sports Direct touches on the issue of staff welfare in today’s statement, saying:
A number of issues were raised by shareholders at our AGM which we have addressed, for example the inconvenience experienced by some warehouse workers from the logistics of the security process when exiting the warehouse.
Following a review, the process has been streamlined, which has led to a reduction in waiting time.
Updated
Europe’s stock markets are dropping in early trading, extending recent losses.
The FTSE 100 has shed 20 points to 6106, its lowest level since 16 November.
Five questions for Volkswagen
VW has lots of issues to address today, including:
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How did Volkswagen come to install cheat software in millions of cars? And does VW still believe that 11m cars are affected worldwide?
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Who knew about the scandal and when? European commission officials were reportedly aware in 2013. Was it an open secret at the higher echelons of the company?
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How much damage has the VW brand taken? Figures last week showed that UK car sales plunged by 20% in October. Is that being replicated elsewhere?
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What’s the legal position? VW is likely to face huge fines in the US after fooling emissions testers. It could also be forced to repay governments in Europe who granted low vehicle tax rates to so-called greener cars.
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Should staff fear losing their jobs? In October, Müller pledged to scrap or delay all non-essential investment: can he clarify those plans and their impact on the workforce?
Updated
VW CEO faces the press
Today’s pollution scandal press conference will put the Volkswagen chief executive, Matthias Müller, in the spotlight.
He was appointed on 25 September after the former chief executive Martin Winterkorn resigned in the wake of the scandal.
The Agence France-Presse newswire has a good take:
Matthias Müller – the man brought in to steer the company out of a crisis that is expected to cost it countless billions of euros and has left the reputation of the former paragon of German industry in tatters – is scheduled to field questions from the world’s media during a news conference at VW’s headquarters in Wolfsburg, Germany.
Müller has been in the driving seat since the end of September, and was drafted in to replace Martin Winterkorn in the wake of shock revelations that VW systematically installed emissions-cheating software in 11m diesel engines worldwide.
Updated
The Agenda: Volkswagen faces the press, Bank of England rate decision
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, business and the eurozone.
It is nearly twelve weeks since US regulators stunned the world by revealing that Volkswagen had used a “defeat device” to cheat nitrogen oxide emissions tests.
And today, the German carmaker faces the media to answer questions on the scandal and explain how it is putting things right.
VW will hold a press conference at 10am GMT, which it bashfully describes as an update on ...
the current status of the clarification process concerning the diesel issue and on the realignment of the group.
Yesterday, VW announced that fewer cars than expected have faulty CO2 emissions.
But the NOx cheating is the bigger scandal, so the board’s chairman, Hans Dieter Pötsch, and the chief executive, Matthias Müller, should expect a serious grilling on a scandal that rocked the automotive industry and even raised questions about German engineering.
What else is afoot?
It is Bank of England day: policymakers will be meeting in London to (spoiler alert) leave interest rates unchanged. The minutes of the meeting will also be released, maybe giving a clue as to when the first rate rise will come.
The financial markets remain volatile, with investors anticipating a US interest rate rise next week amid the continuing commodity sell-off.
Europe’s main stock markets are being called down again, having hit their lowest levels in seven weeks yesterday:
Our European opening calls: $FTSE 6095 down 32 $DAX 10527 down 66 $CAC 4604 down 34 $IBEX 9770 down 65 $MIB 21370 down 131
— IGSquawk (@IGSquawk) December 10, 2015
And several major UK companies are reporting results this morning, including the holiday firm TUI, the hotels and coffee chain Whitbread and the retailer Sports Direct – whose business practices were exposed by the Guardian yesterday:
We’ll be tracking all the main events through the day ...
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