Coca-Cola announced CEO Muhtar Kent will step down from that role in 2017

On Friday, Coca-Cola announced that its CEO Muhtar Kent will step down from that role in 2017 and be succeeded by the beverage company's No. 2 executive, COO James Quincey. Quincey, who's worked with Coca-Cola for nearly two decades, has led the company's recent drive to cut down sugar in its drinks. In an announcement Friday, Quincey claimed that he'll continue to follow that same as CEO. Wall Street analysts said they had expected Quincey to be promoted to the top job, but originally predicted that it would be announced early next year. Quincey is expected to begin his tenure as CEO on May 1, 2017.

Fyffes Shares Soar in $798 Million Japanese Banana Bid

(qlmbusinessnews.com via bloomberg.com – – Fri, 9 Dec, 2016) London, Uk – –

Japan’s Sumitomo Corp. agreed to buy banana importer Fyffes Plc for 751 million euros ($798 million) in cash, expanding its reach in the global fruit market and sending the Irish company’s shares soaring.

Sumitomo offered 2.23 euros a share for Dublin-based Fyffes, 49 percent more than Thursday’s closing price, in a deal it said furthers its position as one of the most globally diverse companies. Fyffes stock surged to near the offer price.

Founded in 1888, Fyffes will become a small part of a group with operations on all corners of the globe spanning steel trading and shipbuilding to cable television and nickel mining. The purchase will give Sumitomo a business that distributes about 46 million cases of bananas in Europe annually, and also markets pineapples, melons and mushrooms.

For Fyffes shareholders, the takeover represents a “superb, albeit unexpected outcome,” said David Holohan, chief investment officer at Merrion Capital in Dublin. The bid brings “a positive conclusion to several years of impressive share price performance.”

The stock was up 49 percent at 2.23 euros as of 10:09 a.m. in Dublin. The shares have risen sixfold in the last five years as sales and profit have advanced.

The deal comes just over two years after Chiquita Brands International Inc. shareholders rejected a proposed takeover of Fyffes that would have created the world’s largest banana producer.

Small Fare

Fyffes is small fare for Sumitomo. The deal will add annual annual sales of about $1.3 billion for the Japanese company, which in its last financial year had revenue of about $66 billion. Fyffes’ 17,000 workers compares with more than 65,000 employed by Sumitomo.

Sumitomo has been active in the fruit industry since the 1960s, and imports about 30 percent of bananas into the Japanese market. The proposed takeover has secured irrevocable undertakings from investors owning about 27 percent of Fyffes’ shares.

Funding for the transaction will come from a new bank facility or Sumitomo’s existing cash resources, which stood at $8 billion as of its March year-end, the Japanese company said.

JPMorgan Chase & Co. acted for Sumitomo, while Fyffes was advised by Lazard and Davy Corporate Finance.

By Paul Jarvis

Mark Carney – EU Should Offer Transitional Period to Banks and Finance Firms to Adapt to Brexit

(qlmbusinessnews.com via telegraph.co.uk – – Wed, 30 Nov, 2016) London, Uk – –

Bank Of England
James Stringer/Flickr

The European Union desperately needs finance from Britain and will face severe knocks to its economy if member nations do not agree to a transitional period to give banks and finance firms time to adapt to Brexit, Mark Carney has warned.

The Governor of the Bank of England wants a smooth changeover when Britain leaves the EU, to give companies time to adapt to the new setup, and avoid any wrenching change in the economy or in the financial markets.

That means Britain would not necessarily switch overnight from one regime to another when leaving the EU, which is expected to take place in early 2019.

“Banks located in the UK supply over half of debt and equity issuance by continental firms, and account for over three-quarters of foreign exchange and derivatives activity in the EU,” Mr Carney said.

“If these UK-based firms have to adjust their activities in a short time frame, there could be a greater risk of disruption to services provided to the European real economy, some of which could spill back to the UK economy through trade and financial linkages.”

“These activities are crucial for firms in the European real economy, and it is absolutely in the interests of the EU that there is an orderly transition and there is continual access to those services.”

The Governor has been criticised for his interventions on Brexit in the past, facing accusations that he wanted the UK to remain in the EU and tried to sway the debate.

Presenting the Bank of England’s financial stability report, he sought this time to align himself with Theresa May.

“As the Prime Minister has said, it is preferable that the process is as smooth and orderly as possible,” he said.

“It is preferable that firms know as much as possible about the desired end point [of the Brexit negotiations] and as much as poss as soon as possible about the potential path to that end point.”

That should mean businesses on both sides of the Channel are able to prepare for Brexit when it takes place, minimising any disruption.

“[Finance] firms are making contingency plans for a variety of potential outcomes, as we’d expect them to do. As supervisor, we have direct line of sight to those contingencies, and we know exactly what they currently intend to do under any circumstance,” said Mr Carney.

He believes that the average bank would need less than two years to implement its contingency plans for Brexit, once it knows exactly what it is preparing for.

That sets the scene for a much shorter transition period than the five to 10 years sometimes proposed by finance bosses and lobbyists.
China is the biggest risk to financial stability

Other risks to financial stability identified by the Bank of England include the buildup of debt in China, the potential for Donald Trump’s spending plans to cause the US economy to overheat, political risks in the eurozone, and the increase in household debt in the UK.

“The most significant risks to UK financial stability are global,” said Mr Carney.

“China’s non-financial sector debt has risen…. to 260pc of GDP. This is extraordinary leverage for an advanced, let alone emerging, economy.”

That is an increase from 160pc of GDP at the time of the financial crisis, and the Bank of England fears it leaves China “vulnerable to external shocks”.

Donald Trump could destabilise markets

One such shock could be a sharp rise in US interest rates, potentially prompted by President-elect Donald Trump’s plans to slash taxes and hike government spending.

“A significant fiscal stimulus at a time when the US economy is increasingly operating at close to full capacity … the consequence of that has been an increase in US market rates, the first elements of so-called snap-back risk, and a strengthening of the US dollar,” said Mr Carney.
Snap-back risk is a central banking term for a sharp jump in interest rates, rather than the slow and steady change which officials hope will take place in the coming years.

Higher rates would be expected to push up the dollar and encourage flows of capital from emerging markets and into the US, potentially hitting growth in those markets and creating financial instability.

Britons at risk from debt binge

In the UK the Bank of England noted that households are starting to increase borrowing, for the first time since the financial crisis.

Households’ debt as a proportion of their incomes has fallen by around 20 percentage points since the credit crunch.

That is now increasing, in part because higher house prices mean homeowners need bigger mortgages, but also because credit card debt is on the up.

“The good thing is households and businesses, young families looking to buy a home, can get access to credit, and get it on quite competitive terms,” said Mr Carney, arguing that the low interest rates which encourage this “are necessary for the economy, given the headwinds the economy is facing.”

But he said the Bank of England also has to make sure those loans are being given out responsibly: “We have tools that can help ensure the underwriting standards are responsible, that [the loans] are going to people who are likely to be able to pay off those debts. It doesn't do anybody a favour – the individual, the bank or the economy as a whole – if we slip into a position where that discipline is lost.”

By Tim Wallace

Brexit worries fade as British firms plan to take on more worker

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 29 Nov, 2016) London, Uk – –

Union Jack
Mikey/flickr.com

Businesses plan to hire more workers into the new year, as service sector employers’ worries in the summer after the EU referendum turn to cautious optimism.

Their longer-term plans are more uncertain, however, leading to investment cutbacks, a survey of service sector members of the Confederation of British Industry (CBI) has found, with spending on vehicles and machinery reduced.

Consumer companies are the most positive about their financial prospects, with households remaining upbeat since the Brexit vote and spending more in the shops.

The CBI found the proportion of consumer companies reporting above-normal business volumes outweighed those reporting low business levels by a margin of 22 percentage points. Firms are also increasingly optimistic about the coming months.

Companies serving other businesses, particularly in professional services markets, are less positive, however. A net balance of 10pc said business levels are below normal, and a balance of 17pc are pessimistic on the overall business environment. Companies in both sectors expect to keep on hiring workers, however, at an accelerating pace.

That bodes well for Britain’s wider economy, where unemployment is currently at an 11-year low and has fallen since the EU referendum in June, defying fears of an immediate slump.

The CBI’s chief economist, Rain Newton-Smith, said: “Employment growth remains strong and service sector firms are looking to hire in the months ahead. Many firms still plan to invest in IT, but uncertainty over future demand could act as a restraint.

“The Autumn Statement will have offered some comfort to businesses as the Government looks to build on the UK’s economic strengths, with an industrial strategy that helps deliver growth across the country.”

By Tim Wallace

 

UK urges to be careful with its plans to raise the National Living Wage:OECD

(qlmbusinessnews.com via bbc.co.uk/news – – Mon, 28 Nov, 2016) London, Uk – –

UK public finances
London Skyline/Megan Trace/flickr.com

The UK should be careful with its plans to raise the National Living Wage, according to the Organisation for Economic Co-operation and Development.

The OECD said “caution” was needed in the roll-out of the policy, given its possible impact on employment.

In the Autumn Statement, Chancellor Philip Hammond pledged to raise the wage to £7.50 an hour next April.

The OECD also forecast that the UK would have one of the lowest growth rates among G20 countries by 2018.

The National Living Wage was introduced by Chancellor George Osborne in his Budget in July 2015.

It came into effect in April this year, and was set at a rate of £7.20 an hour for workers aged 25 and over, with the aim of increasing it to £9 an hour by 2020.

Pay rise
The UK's Office for Budget Responsibility estimated it would give a pay rise to 1.3 million workers this year.

The OECD said the UK's labour market had been “resilient”, although job creation had moderated recently.

“Real wages have been growing at a time of low inflation, but the fall of the exchange rate has started to increase price pressures,” it said.

“Caution is needed with the implementation of the policy to raise the National Living Wage to 60% of median hourly earnings by 2020.

“The effects on employment need to be carefully assessed before any further increases are adopted, especially as growth slows and labour markets weaken.”

The organisation's stance echoes the widespread claims of business organisations in the 1990s that the introduction of the UK's national minimum wage – which started in 1999 – would lead to widespread job losses.

Those fears proved to be groundless, with the number of people in employment rising from 27 million then to nearly 32 million now.

The OECD says the world economy has been stuck in a low growth trap for five years. It says government spending and tax policies could be used to provide a boost.

The report expects action on these lines from the administration of President-elect Donald Trump in the United States and predicts that will result in a modest boost beyond US borders.

It also suggests that other countries could afford to take similar steps.
But the OECD says that any benefit could be offset if countries resort to measures that restrict trade to protect their own industries.

Brexit ‘unpredictability'
The OECD predicts that the UK's economy will grow by 1% in 2018, slower than both Germany (1.7%) and France (1.6%).

However, the organisation has raised its UK growth forecasts for this year and 2017.

It now predicts the UK's economy will expand by 2% this year, compared with an earlier forecast of 1.8%, while in 2017 it has lifted the growth forecast to 1.2% from 1.0%.

The OECD said the upward revision was specifically because of Bank of England action and the depreciation in sterling since the Brexit vote.

Looking ahead, the organisation warned that the UK's unemployment rate could rise to more than 5% because of weaker growth.

It also predicted a sharp rise in inflation as the pound's slide against the dollar and euro starts to be reflected in prices in the shops.

“The unpredictability of the exit process from the European Union is a major downside risk for the economy,” it said.

The OECD's forecast for growth in the US has risen since the election of Donald Trump as the country's next President.

It revised its prediction for 2016 up to 1.5% from 1.4%, and next year's estimate to 2.3% from 2.1%. In 2018 it is forecasting 3% growth.

 

U.K. Economy Registered a Resilient Performance Following the Brexit Vote

(qlmbusinessnews.com via bloomberg.com – – Mon, 28 Nov, 2016) London, Uk – –

Brexit Vote
Rareclass/flickr

Consumers and businesses increased their spending in the third quarter as the U.K. economy registered a resilient performance following the Brexit vote.
Household spending rose 0.7 percent from the second quarter and business investment increased 0.9 percent, the Office for National Statistics said on Friday. Growth overall was unrevised at 0.5 percent, with trade providing the strongest contribution. A separate report from the Confederation of British Industry showed retail sales grew at their fastest annual pace in more than a year in November.

The ONS report covers the first full quarter of gross domestic product since Britons upended U.K. politics and roiled financial markets by voting to leave the European Union. While there are few signs of any significant effect for now, growth is expected to slow next year.

In its twice-yearly review, the Office for Budget Responsibility on Wednesday slashed its 2017 forecast to 1.4 percent from 2.2 percent, saying uncertainty will lead firms to delay investment while the falling pound squeezes consumers by pushing up the cost of imports.

“Investment by businesses held up well in the immediate aftermath of the EU referendum, though it’s likely most of these investment decisions were taken before polling day,” said ONS statistician Darren Morgan. “That, coupled with growing consumer spending fueled by rising household income, and a strong performance in the dominant service industries, kept the economy expanding broadly in line with its historical average.”

The jump in business investment surprised economists, who had widely predicted a decline as the Brexit vote took its toll.

“In light of Brexit there was a case for uncertainty holding back investment,” said Alan Clarke at Scotiabank in London. “However, things are never black and white. Projects to build planes, ships, buildings etc. will have been signed off 12-18 months ago and that activity won’t shut off overnight.”

The increase in consumer spending was down from 0.9 percent growth between April and June but in line with the average of recent quarters.
Pound Effect

The CBI said its monthly retail sales index rose to 26 in November — the highest since September 2015 — and stores anticipate another gain next month. They may be getting a boost from overseas visitors taking advantage of the weak pound, economists say.

The exchange rate may also be starting to boost trade by making British exports cheaper and imports more expensive. Net trade added 0.7 percentage point to GDP in the three months through September, the biggest contribution since the start of the 2014 and the first this year. Exports rose 0.7 percent and imports fell 1.5 percent.

An index of the dominant services industry rose 0.2 percent in September, leaving output 0.8 percent higher on the quarter. That more than offset declines in industrial production and construction. GDP growth overall was down from 0.7 percent in the second quarter.

Article Link:http://www.bloomberg.com/news/articles/2016-11-25/u-k-economy-shows-no-sign-of-brexit-effect-as-spending-rises

By Lucy Meakin

October borrowing 25 percent less lowest since 2008 beating all economists’ forecasts.

(qlmbusinessnews.com via uk.reuters.com – – Tue, 22 Nov, 2016) London, UK – –

Economy
UK in Spain/flickr.com

British finance minister Philip Hammond got some rare good news about the country's finances on Tuesday as he finalises his first budget statement, which is still likely to forecast a surge in borrowing as Britain prepares to leave the EU.

Breaking with a pattern of borrowing overshoots earlier in the financial year, official figures on Tuesday showed public borrowing in October was 25 percent less than a year earlier at 4.8 billion pounds ($6.0 billion), its lowest since 2008 and beating all economists' forecasts.

But Hammond still stands little chance of meeting the budget deficit reduction target for the current financial year which his predecessor, George Osborne, set out in March. He has already abandoned Osborne's goal of reaching a budget surplus by 2020.

Instead, economists predict Hammond could announce more than 100 billion pounds of extra borrowing on Wednesday, as Britain's independent budget office is likely to forecast slower growth, weaker tax revenues and higher social security costs in the wake of June's vote to leave the European Union.

“To put it bluntly, Brexit will be assumed to make the UK poorer which means the government must eventually lower spending, raise taxes, or permanently borrow more,” Bank of America Merrill Lynch economist Robert Wood said.

Hammond played down expectations of much extra spending on public services or infrastructure to cushion the effect of years of uncertainty as Britain negotiates to leave the EU on Sunday, and described debt levels as “eye-wateringly” high.

Britain's Chancellor of the Exchequer Philip Hammond arrives at 10 Downing Street in London, November 2, 2016. REUTERS/Toby Melville/File Photo

Bank of America's Wood said he expected Hammond to announce extra discretionary stimulus that amounted to just 0.5 percent of gross domestic product, in part because he may want to keep his powder dry in case of a sharper economic slowdown.

This could include freezes to taxes on vehicle fuel and air travel, and modest further investment in infrastructure such as roads and broadband internet connections.

Britain's economy has slowed much less than most economists forecast since the Brexit referendum, and on Tuesday the Confederation of British Industry reported the fastest growth in factory orders since the June 23 vote.

But analysts see tougher times ahead for households as a 15 percent fall in the value of sterling against the dollar feeds into higher prices.

The public finances were underperforming even before the Brexit vote. Borrowing since the start of the tax year in April is 10 percent lower than in the same period of 2015 at 48.6 billion pounds, the Office for National Statistics said, versus a 27 percent fall needed to meet Osborne's 55 billion pound target for the whole tax year.

“The government is committed to fiscal discipline and will return the budget to balance over a sensible period of time, in a way that allows space to support the economy as needed,” a finance ministry spokesman said after Tuesday's data.

Britain's budget deficit was 4 percent of GDP last year, down from 10 percent at the height of the financial crisis but still more than almost all other big economies.

The ONS said net public debt rose to a record 1.642 trillion pounds in October, equivalent to 83.8 percent of gross domestic product.

October's improvement in the public finances was driven by faster growth in tax revenues. Overall these were up 6.8 percent on the year, with particularly strong growth in corporation tax. The ONS was not able to say if the trend was likely to last.

By David Milliken and Andy Bruce

Middle Class buy-to-let dream hampered by tough new mortgage affordability tests

(qlmbusinessnews.com via telegraph.co.uk – – Thur, 17 Nov, 2016) London, Uk – –

Buy to let
Mark Moz/flickr

Property investors will face tough new mortgage affordability tests from next year which will herald the “beginning of the end of the middle-class buy-to-let dream”, experts have warned.

Philip Hammond, the Chancellor, announced additional rules on buy-to-let which will result in ordinary investors being able to borrow far less towards their purchase.

Mr Hammond indicated he was concerned about “financial stability” following a boom in residential property investment as savers desperately try to find profitable places to put their money.

Many have turned to buy-to-let to fund retirement income after being effectively barred from putting more money in to their pensions by the Government. Low mortgage rates have made the investments attractive.

However, ministers have recently targeted buy-to-let properties with aggressive new taxes, including higher rates of stamp duty and the removal of tax relief on mortgage interest.

Experts fear that the announcement will make the investments unaffordable for many middle class people, closing down another potential saving opportunity.

Mr Hammond and Theresa May, the Prime Minister, are expected to come under pressure to ease the burden on savers with new tax breaks or government help in next week's Autumn Statement.

Under the plans to give the Bank of England extra powers, affordability checks are to be introduced for investors, who will now have to prove they can make a profit of 25 per cent profit from tenants even if large interest rate rises make their mortgage more expensive.

The Chancellor said: “It is crucial that Britain’s independent regulators have the tools they need to keep our financial system as safe as possible.

“Expanding the number of tools at the Financial Policy Committee’s disposal will ensure that the buy-to-let sector can continue to make an important contribution to our economy, while allowing the regulator to address any potential risks to financial stability.”

Ray Boulger, from John Charcol, a mortgage adviser, said: “The rationale for these stress tests are the same as those which were brought into the residential market to avoid people being unable to repay their mortgages if interest rates rise.

“If interest rates were to move up quickly that would cause buy-to-let investors a huge problem as they are too acclimatized to low rates. If rates rose sharply and they were unable to repay their mortgages en masse the market could suddenly be flooded with properties.”

From Jan 1 the Prudential Regulation Authority, the lending arm of the Bank of England, will impose new minimum affordability thresholds which will reject borrowers who make less than 25 per cent profit from their investment, or would no longer be able to afford mortgage repayments if interest rates rise to 5.5 per cent.

For example, someone with a £200,000 interest-only mortgage borrowing at 1.79 pc would have monthly mortgage payments of £299.

However, as these repayments would rise to £917 if their rate of repayment interest rose to 5.5 per cent, they would need to prove they could charge rent of £1,146 a month to be approved for the mortgage.

As the Bank rate is currently at a record low of 0.25 per cent, mortgage deals are cheaper than ever with many charging less than 2 per cent interest.

Andrew Montlake, director at Coreco, a mortgage broker, said: “Many people will see this as the beginning of the end of the middle class buy-to-let dream which is a big shame. “

Until recently middle-class savers have helped fuel a buy-to-let boom in Britain with more than two million savers funnelling cash into rental properties to help fund their retirement.

The Bank is forcing lenders to “toughen up” over concerns they have relaxed standards for landlords.

Prior to the announcement of the Bank's new rules, some lenders went further and tightened their criteria voluntarily with some, including Nationwide, now refusing to lend to landlords making rental profits of less than 45 per cent of their mortgage repayments.

When the building society announced the change in April this year, Paul Wootton, managing director of its buy-to-let arm, The Mortgage Works, said the move was a response to the change on tax relief.

He said: “This change is a proactive move that recognises the need to help safeguard rental cover for landlords over the coming years, and in advance of the forthcoming changes to mortgage interest tax relief.”

While would-be landlords are being locked out of the market, current landlords are rapidly looking to sell, studies have indicated.

One survey of almost 1,000 experienced private landlords by the Residential Landlords' Association found a quarter of buy-to-let investors are planning to sell their rental properties as a result of the Government tax changes.

By Katie Morley

 

Carney face political heat in Britain for BoE’s low interest rates

(qlmbusinessnews.com via uk.reuters.com – – Tue, 15 Nov, 2016) London, UK – –

Bank Of England
James Stringer/flickr

Bank of England Governor Mark Carney said verbal attacks by politicians on central banks, such as criticism by U.S. President-elect Donald Trump of the U.S. Federal Reserve, were a “massive blame-deflection exercise”.

Carney has faced political heat in Britain for the BoE's low interest rates while Trump, during the U.S. presidential election campaign, accused the Federal Reserve of keeping rates low due to pressure from the Obama administration.

“The President-elect has voiced some views on the Fed and the stance of monetary policy,” Carney said in response to questions from members of Britain's parliament on Tuesday.

Carney said it was “very important” to explain that the causes of ultra-low interest rates in Britain and other rich countries went far beyond decisions made by central bankers

“An excessive focus on monetary policy in many respects is a massive blame-deflection exercise,” he told a committee in parliament.

Carney has previously said interest rates are low because they reflect weaker demand and investment, a trend that has been developing worldwide since the 1980s due to factors such as globalization, the impact of technology and aging populations.

Reversing this long-run trend was not in the BoE's power, Carney said on Tuesday, and he called on governments to step up.

“We could be stuck in this trap, and I use that word advisedly, for decades … if we don't see major structural reforms,” he told lawmakers.

The BoE cut interest rates to a record low of 0.25 percent in August to help the British economy cope with the impact of the decision by voters to leave the European Union in June.

“I WILL LEAVE JUNE 30, 2019”

Carney reiterated on Tuesday that the central bank had a neutral stance on future interest rate moves.

Weak October inflation figures were a blip and the BoE intended to tolerate an overshoot of its 2 percent inflation target as the economy digested sterling's sharp fall since June's Brexit vote, he said.

Carney also said he would not consider a further extension of his time in charge of the British central bank, which is now due to end in June 2019.

“I will leave June 30, 2019,” Carney said in response to a question during a regular meeting with lawmakers in parliament.
The Canadian said on Oct. 31 that he will stay in his job for an extra year, on top of the five he originally planned to stay in London, to help smooth Britain's departure from the EU, but he will depart two years short of a full term.

Carney came under heavy criticism from pro-Brexit politicians for warning before June's EU membership referendum of the economic risks of voting to leave the bloc.

Some British media have speculated that Carney might stay on beyond June 2019 if the government fails to conclude its exit from the EU by that date.

Carney said his decision to extend his time at the BoE by only one year had nothing to do with criticisms made by Prime Minister Theresa May of the “bad side effects” of low rates.

Asked about the impact of Brexit on Britain's banking sector, he said banks may start to relocate operations from Britain 18 months before it leaves the EU if a ‘hard Brexit' with poor access to EU markets looked likely.

(Additional reporting by Costas Pitas, Kate Holton, Estelle Shirbon and Adela Suliman; Writing by William Schomberg; Editing by Stephen Addison and Hugh Lawson)

Trump-led America could undermine the prospects of a planned transatlantic free trade agreement

(qlmbusinessnews.com via uk.reuters.com – – Wed, 9 Nov, 2016) London, UK – –

 

EU Trade Deal
Gage Skidmore/flickr.com

A protectionist U.S. president and increased European suspicion of a Trump-led America undermine the prospects of a planned transatlantic free trade agreement between the European Union and the United States.

 Trump has argued that international trade deals hurt U.S. workers and the country's competitiveness, but it is not clear to what extent Trump the president will resemble Trump the campaigner.

“If the world's biggest economy follows a protectionist course, its effects will be felt around the world. We can only hope that his words are not followed by corresponding deeds,” said Thilo Brodtmann, head of Germany's VDMA engineering association.

EU and U.S. officials have for more than three years been negotiating the Transatlantic Trade and Investment Partnership (TTIP), with Brussels and Washington recognising it will not now be completed under Barack Obama's term as earlier envisaged.

EU trade chief Cecilia Malmstrom said it was too early to assess the impact of Trump's victory, but a break was inevitable whoever had won.

“How long will that break be? Impossible to say … There's a lot of uncertainty,” she said.

Anthony Gardner, U.S. ambassador to the EU, told Reuters TTIP remained important for economic and strategic reasons, recognising that the challenge was to convince more people that free trade is an opportunity, not a risk.

Malmstrom has previously said both sides should make as much progress as possible so that the work can be quickly picked up under the next president.

However, it appears unlikely that trade will be high on Trump's list of priorities or that TTIP will be top of his trade agenda.

Trump has instead talked about getting tough with China, withdrawing from the unfinalised 12-nation Trans-Pacific Partnership (TPP) and renegotiating or scrapping the North American Free Trade Agreement.

European Commission Vice President Jyrki Katainen noted that Trump had at least not singled out TTIP for criticism.

Hosuk-Lee Makiyama, director of trade think-tank ECIPE, said U.S. presidents typically took some time to forge trade policy and in the case of Obama and George W. Bush only really pushed trade policy deep into their second terms.

“TTIP is probably one of the last agenda items and I don't think we will see a trade policy until year two or year three,” he said.

Trump will likely appoint a trade representative in March or April. His choice could be key, with possible appointees ranging from the protectionist Dan DiMicco, former CEO of steelmaker Nucor Corp (NUE.N), to libertarian PayPal (PYPL.O) founder Peter Thiel.

A further problem TTIP has faced is opposition from trade unions and environmental and other protest groups, particularly in Europe, who say TTIP undermines democracy by giving multinationals the power to dictate public policy.

Critics would have an added argument in their fight against TTIP, able to paint the deal as one with a bogeyman president.

“Opposition to TTIP is strong, particularly in the light of the results of the election last night,” Jeffrey Franks, director of the IMF's Europe office, told a trade conference.

(Additional reporting by Alastair Macdonald in Brussels, Georgina Prodhan in Frankfurt; editing by Giles Elgood)

By Philip Blenkinsop

Theresa May warned by Irish counterpart Brexit talks may prove Vicious

(qlmbusinessnews.com via bloomberg.com – – Tue, 02 Nov, 2016) London, Uk – –

Brexit talks
Number 10/flickr.com

U.K. Prime Minister Theresa May was warned by her Irish counterpart that the upcoming Brexit talks may prove “quite vicious” as a panel of judges prepared to rule on whether she alone can begin those negotiations.

“There are those around the European table who take a very poor view” of the fact that the U.K. decided to leave, Irish Prime Minister Enda Kenny told a forum in Dublin on Wednesday. The argument will be fought “very toughly,” he said, adding that May could start the process earlier than the end of March.

May reiterated in Parliament in London on Wednesday that she’s seeking the best possible deal for the British economy when it splits with the European Union as she prepares to start the two-year withdrawal process early in 2017.

Whether she can trigger the talks unilaterally without the backing of Parliament is the subject of a legal challenge, which three London judges said they will rule on at 10 a.m. on Thursday. The losing side is likely to begin an appeal to be heard at the Supreme Court in December.
Investors have looked to the lawsuit to delay the process of leaving amid concerns that, by prioritizing immigration controls over safeguards for trade and banking, May favors a “hard Brexit” that will cost her country membership of the tariff-free EU single market.

No ‘Cherry-Picking’
European governments have united in saying the U.K. can’t stay in the market and crack down on immigration. German Chancellor Angela Merkel said again Wednesday that the negotiations must respect the EU’s values, such as free movement of labor.

“Our relations to the U.K. must remain positive and friendly and frictional losses for the economy must be minimized,” Merkel said. “But on the other hand, the 27 member states must stand together and not set standards that would lead to cherry-picking according to whatever they need.”

Her government’s council of economic advisers called Wednesday for “constructive negotiations” to keep Britain in the EU.

“There is still a chance to prevent an exit through constructive negotiations or at least to negotiate a succession agreement which minimizes the damage for both sides,” the council said.
Cypriot Finance Minister Harris Georgiades said in an interview that his country also wants to keep ties between the EU and Britain as close as possible.

Cyprus, a former British colony, “is keen to participate in the negotiating process to ensure that the relationship between the EU and the U.K. is as strong as possible after Brexit,” Georgiades said in Nicosia.
‘Benefit Electorally’

May could be angling for a rupture with the EU for domestic electoral purposes, academics including Anand Menon, professor of European politics at King’s College London, wrote in a report published Wednesday.

“Theresa May and her political strategists have made a calculation that they can benefit electorally from a hard Brexit,” said Menon. “The government is formulating a combination of seemingly left-wing economic policies — industrial strategy, interventionism and investment — with a right-wing approach to things like migration and social affairs.”
Moody’s Investors Service said it would cut the U.K.’s credit rating if the government failed to secure continued access to the core of the single market.

Pub Threat
JD Wetherspoon Plc Chairman Tim Martin, one of Britain’s few pro-Brexit executives, said EU politicians should nevertheless be wary of “bullying” Britain, arguing that could mean his pubs end up selling less French champagne, German beer and other drinks from European producers.

“The ultimate sanction will be in the hands of U.K. consumers, should they take offense at the hectoring and bullying approach,” Martin said.
By contrast, London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet said finance executives are not being alarmist when they threaten to move jobs and operations elsewhere in Europe. He stood by an estimate that Brexit could cost 100,000 jobs in London’s derivatives business.

“That whole engine is at risk,” Rolet said. “These are real numbers, they are not calibrated to create either a conservative approach or an alarmist approach.”

Former Chancellor of Exchequer Alistair Darling also advised May not to favor different industries in the divorce, almost a week after she secured continued investment in the U.K. from Nissan Motor Co.

“You can’t possibly segregate bits of the British economy and say that one matters today, that one can wait for a couple of years” Darling said in a Bloomberg Television interview with Tom Keene.

By Dara Doyle and Patrick Gower

Growth in Britain’s construction industry hit a seven-month high in October – PMI

(qlmbusinessnews.com via uk.reuters.com – – Tue, 02 Nov, 2016) London, UK – –

Construction
Omar Bárcena/flickr.com

Growth in Britain's construction industry hit a seven-month high in October as housebuilding rose, but slowing order books and soaring prices for building materials darkened the outlook, a survey showed on Wednesday.

The Markit/CIPS UK Construction Purchasing Managers' Index(PMI) rose unexpectedly to 52.6 from 52.3, confounding a Reuters poll forecast for a drop to 51.8. Sterling and government bonds showed little reaction to the figures.

While the survey chimed with signs the economy has maintained momentum since June's Brexit vote, weakening growth in new orders and rocketing costs suggested next year will prove more difficult.

“The downturn in the construction sector continued to ease in October, but it would be premature to conclude that the sector is back on a recovery path,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Survey compiler IHS Markit said respondents held back investment spending because of uncertainty surrounding Britain's exit from the European Union.

Britain's second-biggest housebuilder Persimmon cited this uncertainty on Wednesday as it said it would slow the pace of new land purchases, despite sales rising almost a fifth since the Brexit vote.

The PMI showed business expectations for the year ahead cooled markedly, while prices paid by construction firms for raw materials and goods rose at the second-fastest pace since 2011.

“We expect input prices to rise significantly in 2017 which will put financial pressure on an industry just about managing on squeezed margins and fixed-price contracts,” said Paul Trigg, construction specialist at trade credit provider Euler Hermes.

A Markit/CIPS survey of manufacturers on Monday also showed rocketing input prices, describing the inflationary impact of weaker sterling as increasingly evident.

The fall in sterling is expected to push the Bank of England to raise its inflation forecasts on Thursday to show a bigger overshoot of its price target than at any time since it gained independence in 1997.

The BoE is widely expected to hold off from a fresh interest rate cut on Thursday.

Housebuilding drove the bulk of construction activity, with the commercial and civil engineering sectors broadly stagnant, the PMI showed.

Mortgage lender Nationwide reported unchanged house prices in October after rising in monthly terms in each of the previous 15 months, a new sign of the market cooling after the Brexit vote.

Preliminary official data for the third quarter suggested construction output contracted 1.4 percent, despite stronger-than-expected economic growth of 0.5 percent for the period.

(Reporting by Andy Bruce, editing by Catherine Evans and Richard Balmforth)

Pound is the world’s worst-performing currency for this October 2016

 

(qlmbusinessnews.com via bloomberg.com – – Mon, 31 Oct, 2016) London, UK – –

The pound is the world’s worst-performing currency this month, trailing behind about 150 peers, as the first signs of how Brexit will look emerged in October.

 

Pound coins
Images Money/www.flickr.com

Sterling posted its biggest monthly decline versus the dollar since the U.K. voted in June to leave the European Union amid speculation that the government is headed for a so-called hard Brexit, where unfettered access to Europe’s single market is sacrificed for immigration controls. The pound dropped after political headlines and comments from lawmakers and central-bank officials underlined its vulnerability as concern about Britain’s exit from the world’s largest trading bloc intensified.

 

“This month has all been about hard Brexit concerns coming to the forefront,” said Viraj Patel, a foreign-exchange strategist at ING Groep NV in London. “It’s typical for a currency trading under heightened political uncertainty to be vulnerable to new news, either good or bad, and this will be an ongoing factor until we get clarity” over the nation’s future relationship with the EU, he said.

The pound was little changed at $1.2199 as of 4 p.m. London time, leaving its decline this month at 5.9 percent, the most since June, when it plunged 8.1 percent. Sterling has fallen every month since April, cementing its position as the worst-performing major currency this year, having weakened more than 17 percent.

The Bank of England is due to make its interest-rate decision and publish its quarterly inflation report on Thursday amid speculation that Governor Mark Carney may announce a decision on his future at the central bank. Speaking to a House of Lords committee last week, Carney deflected questions on whether he plans to serve a full eight-year term as governor through to 2021, or leave in 2018 as he originally planned.

Swaps signal about a 3 percent probability of a rate cut when the central bank announces its policy decision on Nov. 3. The inflation report follows data last week that showed U.K. growth slowed less in the three months through September than analysts predicted, the first quarterly figures since the June vote to leave the EU.

By Marianna Duarte De Aragao

Pound ‘flash crash’ to $1.14 attributed to automated trading

(qlmbusinessnews.com via news.sky.com via uk.reuters.com – – Fri, 7 Oct, 2016) London, UK – –

The pound has endured a temporary collapse in value to new 31-year lows, sparking market chaos and a Bank of England probe.

Having traded as low as $1.26 to the dollar on Thursday it slumped to $1.18 within minutes during Asian trading – hitting $1.14 briefly at one stage according to Thomson Reuters – a fall of up to 9%.

But official market charts did not measure the lowest figure because trades were later cancelled, the data provider said.

It settled at $1.24 before slipping to $1.22 when US traders returned to the market in late-morning European trading.

The volatility also saw sterling slip to €1.11.

There were several initial theories on what caused the pound panic in Asia – including a ‘fat finger' mistake in inputting data – but the most likely explanation was a rogue algorithm in an automated trading system triggering a wider sell-off.

It happened shortly after the publication of a report by the Financial Times that French president Francois Hollande had demanded a tough stance on Brexit negotiations.

IG Markets' analyst Angus Nicholson said it “looks like it was an algorithm-driven flash crash”, adding that “given low volumes in the Asian session, it would have forced other algorithms to join in and magnify the fall”.

The Bank of England said that while it has no powers of regulation over the market, Governor Mark Carney has asked the Bank for International Settlements to look into the events in order to discover whether any lessons can be learned.

It has been a rollercoaster week for sterling in the wake of the EU referendum fallout.

Investors were spooked by confirmation that the Prime Minister would trigger Article 50, the official Brexit process, by March next year and comments the market saw as Britain keen to leave the European single market so the Government could tighten its grip on immigration.

The pound had been trading near $1.30 on Monday before starting its latest decline.
Its erosion in value helped lift the FTSE 100 to near its record high as the week progressed, and it finished 150 points up from its start on Monday morning.

The mid-cap FTSE 250 did strike a new top level – with export-facing firms and those making dollar sales seeing the biggest individual gains on both indices.

Meanwhile, Asian and European markets were either in negative territory or flat.

Naeem Aslam, chief market analyst of Think Markets, warned it was likely to be a “heavy day” for trading on Friday on world currency and stock markets.

He said of the pound's dramatic decline: “What we had was insane – call it a flash crash – but the move of this magnitude really tells you how low the currency can really go.

“Hard Brexit has haunted sterling,” he warned.

Yosuke Hosokawa, head of the currency sales team at Sumitomo Mitsui Trust Bank, said there could be more bloodshed to come.

“We thought today's plunge was a matter of time. Negative factors were mounting against the pound, and eventually the dam broke.”

He added: “We have not seen the bottom yet. Breaking the 31-year low is now in sight.”