Mr Cable told Sky News: “We should certainly think about how it
should come into effect, indeed whether it should come into effect in the
light of changing market conditions. We don’t want a new housing bubble.”
While Mr Cable has previously raised concerns about the scheme, his
intervention represents the first time he has suggested it should not come
into force at all.
The scheme currently helps buyers with a 5pc desposit to buy a new-build
property worth up to £600,000. From January the scheme will be spun-out to
include all properties up to £600,000.
12.14 And in more good news for the housing market, houseuilder Barratt
Developments has said the market is picking up across the country as
the price of a new home rose 8pc to £194,800.
“We are seeing the housing market recovery starting to spread beyond
London and the south east,” Mark Clare, the company’s chief executive
said as he unveiled a 74pc rise in annual profit before tax to £192.3m.
The company said average selling prices in the year had been £194,800, against
£180,500 in the previous year, while the average price of a private house
sale had risen 6pc to £213,900.
Barratt put the housing market’s recovery down to improved consumer confidence
and particularly the greater availability of mortgage finance, driven by the
Government schemes such as Help to Buy which helps get buyers with smaller
deposits onto the housing ladder.
Confidence in the UK housing market has started to grow, particularly
during our final quarter, against the backdrop of a more stable economic
outlook.
12.06 Back to jobs – a hiring
boom among estate agents on the back of rising house prices helped drive a
resurgent jobs market in the three months to July, writes our
economics editor Philip Aldrick.
Unemployment dropped to 7.7pc, from 7.8pc in the three months to April, as
80,000 jobs were created over the period. Economists had expected employment
to rise by about 55,000, but a 10pc surge in the “real estate” workforce
in the second quarter helped deliver the better-than-expected result.
Some 50,000 new real estate jobs were created in the three months to June,
taking the industry’s workforce to 562,000.
11.57 Over to France where the football
clubs may be exempt from paying the Socialist government’s hugely
controversial 75pc supertax on millionaires, according to comments
from the country’s finance minister.
Our France correspondent Henry Samuel reports that Pierre Moscovici said:
“We are looking at different views on this issue, but it’s true that we
have football clubs which are in a fragile financial state.”
He spoke after warnings from the head of France’s professional football
league, Frédéric Thiriez that the “crazy tax”
would see France “lose its best players” and cost first division
teams €182 million (£154 million).
The French football federation initially claimed it had received reassurances
that clubs would not have to pay the tax as they were not considered “large
businesses”. But that was shot down by the government, which said: “The
new system will apply to all businesses that pay salaries of more than one
million euros (£850,000),” including football clubs.
Football chiefs tentatively welcomed the comments. According to Le Figaro,
an exemption could save clubs €82 million, with the richest, Paris Saint
Germain saving €32 million alone, Marseille €14.2 million and Lyon €12.5
million.
Edinson Cavani and Zlatan Ibrahimovic of Paris Saint-Germain
11.42 A confident performance from British American Tobacco at
an investor day has helped shares in the cigarette maker edge up 0.3pc
today. Analysts at a number of broking houses were impressed, and Adam
Spielman at Citigroup said:
BAT’s message from its biannual investor seminar was very confident, with
much less reference to the difficulties the industry is facing than we had
expected. We aren’t altering our estimates or price target, but we came away
reassured that the company will continue to post steady EBIT and EPS growth,
both in organic and sterling terms, riding out the severe headwinds (macro,
industry volume, F/X) that it faces.
11.39 Back to today’s unemployment figures, my colleague Szu Ping
Chan has put together the key charts to explain the data.
Here is wage growth and inflation:
Public sector wage growth outpaced growth in the private sector for much of
2012, although the trend has reversed since the start of the current
financial year.
However, pay rises in the public and private sector are still being outpaced
by inflation.
11.27 Barroso’s full State of the Union speech is now up online if you
would like a bit of lunchtime reading.
You can view
it here.
11.19 I think you could put Callanan’s response to Barroso in to
the “pipe down” box.
11.14 UKIP leader Nigel Farage tweets just to make sure everyone
is clear on what Barroso is saying.
11.02 Heading back over to Strasbourg and the European Parliament
meeting where Barroso has been giving the State of the Union speech.
Once he finished other members of the Parliament took their turns to speak. Martin
Callanan, Conservative MEP for North East England, is up talking about
the European elections next year.
He says there is a new approach needed based on freedom, opening markets and
embracing enterrise and tackling vested interests.
Barroso’s response is fairly scathing and he does not seem to be a fan of the
Tories.
10.51 After initially spiking the pound has now retreated and
gilt-yields have fallen back below the day’s starting point.
Our economics editor Philip Aldrick says maybe markets have stopped
second guessing the Canadian banker.
10.40 Kathleen Brooks, head of research at Forex.com, doesn’t think
Mark Carney will be losing too much sleep about the good jobs numbers as the
markets continue to ignore his forward guidance.
She says there are still some pockets of weakness that support an
accommodative monetary policy for the UK – while job growth is strong,
wage growth is weak.
Wage growth is likely to remain stunted due to the proliferation of zero
hour’s contracts and lower-paying jobs that have become a feature of this
economic recovery.
Muted wage growth suggests that Mark Carney’s forward guidance policy
cannot be shelved quite yet, which may be why the market has had a mixed
reaction to the news.
She notes that the pound against the dollar shot to a high of 1.5830 in the
immediate aftermath of the data, a 7-month high, but retreated back below
1.58 soon after.
Likewise, a surge in Gilt yields did not last long, the 2-year yield surged to
0.56pc before falling back to 0.52pc -the bottom of the Wednesday’s range so
far.
The market still expects a rate hike in Q1 2015, 18 months before the BOE
expects rates to rise. Although the market remains ahead of the BOE, this
data has not dramatically shifted expectations for UK monetary policy,
potentially because of the mixed news on wage growth.
10.28 Back in markers, three weeks after African Barrick Gold
boss Greg Hawkins quit, the precious metals miner has now announced the resignation
of its chief operating officer Marco Zolezzi, news that has sent shares
in the FTSE 250 group tumbling 6.7pc. The company’s new CEO Brad
Gordon is taking on the COO role while a replacement is found and analysts
at Liberum Capital said:
It’s difficult to gauge the impact ahead of knowing who the replacement is
but it comes at a difficult time for as management tries to implement
cost-cutting measures and mine plan changes.
10.13 A lot of the reaction coming through unsurprisingly says that the
fall in the unemployment rate adds to the speculation that the Bank of
England will raise rates before its forward guidance suggestion of mid-2016.
Bank of England Governor Mark Carney last month announced that interest rates
would not be raised from their record low of 0.5pc until the unemployment
rate fell below 7pc.
Mr Carney said it meant that more than 750,000 extra jobs would have to be
created before the end of 2016 for rates to start rising again.
Matt Basi, head of sales trading at CMC Markets, said today’s numbers “once
again drawn into question Mark Carney’s pledge” to keep rates on
hold as far out as 2016.
Economic data apparently showing enough improvement to suggest rates will
head north much sooner.
Jeremy Cook, chief economist at World First, says short sterling
contracts are now pricing in two 0.25pc rate rises by the end of 2014 with
SONIA contracts putting an 80pc probability of a hike by September 2014.
The market will not let the Bank of England anchor expectations of lower
rates for longer without a fight.
Howevr, Mr Cook adds that he believes markets are being “overly
presumptive2 and he does not expect a rate hike until 2015.
10.06 Here is a summary of the numbers (courtesy of Howard Archer at
IHS Global Insight).
Employment rose by 80,000 in the three months to July to stand at
29.836 million, which is the highest level since records began in 1971.
Claimant count unemployment fell by 32,600 in August to a four-and-a
half year low of 1.4018 million. This followed drops of 36,300 in July and
29,400 in June. The claimant count unemployment rate fell to 4.2pc, the
lowest level since February 2009.
The number of unemployed on the International Labour Organization measure
fell by 24,000 in the three months to July to stand at 2.487 million –
this is the lowest level since the three months to May 2011. The
unemployment rate on the ILO measure dipped to 7.7% in the three months to
July.
Underlying average weekly earnings growth (regular pay – excluding bonus
payments) edged back up to 1pc in July after slowing to 0.9pc in June from
1.1pc in May and 1.4pc in April.
09.53 But youth unemployment has actually fallen.
When the ONS report the unemployment figures it compares the three months to
July with the three months to April.
On that basis there were 9,000 extra 16 to 24 year olds unemployed.
But to look at more recent data, the number of youth unemployed in the three
months to June stodd at 973,000.
In the three months to July it stands at 960,000 – a fall of 13,000.
09.48 But while the figure may be good for Osborne the reality is
households are still being squeezed.
Average incomes (excluding bonuses) rose by just 1pc in the three months to
the end of July – inflation is running at 2.8pc.
09.44 Our economics editor Philip Aldrick says the labour market
is making progress
09.39 As well as the unemployment rate there are a few other figures to
pay attention to.
The number of jobless claims fell by 32,600, ahead of the forecasts for
a 21,000 drop. That marks the tenth straight month of decline.
It is also worth noting that July’s jobless count has been revised. Initially
reported that claims had fallen by 29,200 but revised figure today says fell
by 36,300.
09.35 The pound has also spiked following the data.
It is now up 0.34pc against the dollar to $1.5787.
09.32 10-year gilt yields have been rising this morning in anticipation
of the jobs numbers and spiked as soon as the fall in the rate was
confirmed.
Now up 0.6pc to 3.036pc.
10-year gilt yields. Source: Bloomberg
09.30 BREAKING: UK unemployment rate falls to 7.7pc
09.25 Next up will be the UK unemployment figures. As mentioned
earlier analyst predictions are mixed between a hold and a slight fall from
7.8pc to 7.7pc.
Either way we will find out in five minutes.
07.21 Mixed bag in European markets following Barroso’s speech.
Germany’s Dax is up 0.26pc, France Cac is down 0.25pc, Spain’s Ibex
is flat and Italy’s FTSE Mib is up 0.78pc.
09.10 Back in the UK stock market, BQ-owner Kingfisher, off
2.2pc, is among the heaviest fallers in the FTSE 100 after posting a
1.6pc dip in adjusted pre-tax profits to £365m.
Whitbread, which on Tuesday disappointed with slowing second
quarter sales growth at its Costa Coffee chain, slid a further 1.7pc after
losing 2.4pc a day earlier.
09.03 Barroso sums up.
He wants to get an agreement on the next EU budgest and wants to implement a
banking union in the eurozone.
He finishes by saying that he hopes that Europe will walk out of the crisis “more
united, stronger and open”.
And he’s done, and he gets the biggest clap of his speech – although it is
still fairly muted.
08.59 He says that those that blame Europe for the financial crisis are
wrong. It is mismanagement in financial markets that is to blame.
He goes on to say that all of Europe’s citizens and businesses are
interconnected, with links between one country’s debt and another, between
one country’s business and its customers.
He says
When you are in the same boat, one cannot say: ‘your end of the boat is
sinking.’
And just to hit home the point he tweets it (well someone does on his behalf –
pretty sure I didn’t seem him on his phone).
08.55 He has now moved on to the European elections taking place next
year.
08.50 Barroso says if you don’t like Europe….improve it.
In the debate that is ongoing all across Europe, the bottom-line question
is: ‘Do we want to improve Europe, or give it up?’ My answer is clear:
engage! If you don’t like Europe as it is: improve it!
Not everything needs a solution at European level, he says. Europe must focus
on where it can add most value. Where this is not the case, it should not
meddle. The EU needs to be big on big things and smaller on smaller things –
something we may occasionaly have neglected in the past.
But he said that ‘very closer union” was needed
I believe a political union needs to be our horizon
08.42 Doesn’t seem like the speech is going down well with the crowd,
as the FT’s Peter Speigel notes – hardly anyone clapping.
08.41 He now speaks of the anniversary next year which will mark 100
years since the start of World War One.
He says Europe is a project of peace.
We should not be ashamed, we should be proud, but we should not be
arrogant.
Let me say to all those – including some in this House – who rejoice in
Europe’s difficulties and who want to roll back our integration and go back
to isolation: the pre-integrated Europe of the divisions, the war, the
trenches, is not what people desire and deserve. It is our duty to preserve
and deepen it.
08.36 This is not a cyclical crisis it is a structural crisis, Barroso
says.
We will not come back to the old normal. We have to shape a new normal.
He says that with this fragile recovery the bigegst downside risk he sees is
political – a lack of stability and a lack of determination and
perseverance.
Anything that casts doubt on that committmen to reform is instantly
punished.
Our Brussels’ correspondent Bruno Waterfield, who is in Strasbourg for
the speech, says Barroso has made an implicit warning to Germany and France
– Germany on sharing baking risks via creating a eurozone banking regulator
and France on economic reforms.
…
The government job is to provide stability and predictability. That is what
markets like.
08.24 Barroso says unemployment is is the most pressing problem.
The current level of unemployment is economically unsustainable,
politically untenable and socially unacceptable.
He says Europe owes it those to sort out the issues with the region for the
sake of those who recovery is not in touch, especially young, unemployed
people.
08.19 Barroso says, that for Europe, the “recovery is in sight”
as strong results are starting to emerge.
For Europe the recovery is in sight.
Let’s overestimate the results but lets not underestimate what has been
done.
Even one fine quarter does mean we are out of the heavy weather but it
means we are on the right track.
We have good reason to be confident.
08.16 A year on from his last speech, the EU is in a better place,
Barroso says.
One year on the facts tell us that our efforts have started to convince
[that we are in a recovery].
Spreads are coming down. The most vulnerable countries are paying less to
borrow, stock markets are perfoming well, business outlook is improving,
consumer confidence is shaprly rising.
Thos most vulnerable to risks are starting to note strong result.
08.12 In fact, Barroso has just started talking.
08.09 In markets, Microchip designer ARM Holdings, up 5.1pc, is
the biggest riser in the FTSE 100 this morning, boosted by the launch
of Apple’s new iPhone – the US giant is an important customer of the
Cambridge-based technology company.
However, London’s benchmark index, which surged on Tuesday as worries over a
US attack on Syria fade, has edged down six points in early deals today.
08.05 In Europe today, the European Commission president Jose Manuel
Barroso is giving the EU State of the Union speech.
You can watch
it live here.
Our Brussels’ correspondent Bruno Waterfield looks ahead to what he
might say:
Barroso’s speech is expected to be his last as European Commission
president, a job he’s held for nine years.
He still harbours ambition to return for a third term on October 2014 and,
if it is to be realised, he needs to thrill MEPs with his vision of “the
Union”.
But while he wants to put a marker down in the federalist European
Parliament, he must be careful not to upset the applecart for Angela Merkel,
the German Chancellor, with talk of Eurobonds or eurozone debt sharing.
He’ll begin by talking up eurozoone economic recovery and by warning that
political inaction is the biggest danger ahead. He own’t point the finger
though by naming Germany, and Berlin’s blocking of eurozone banking
regulation or French foot-dragging on refforms.
Predictably, the commission president will go on to argue that the EU needs
to be more united and integrated to succeed, while admitting that perhaps
Brussels should do a bit less in certain areas. He’ll then call on voters to
turn out in droves for European elections next year – something that is
close to the heart of MEPs concerned about declining trust in the EU.
08.00 Quite a bit of corporate news around this morning, as Louise
Armitstead reports in her City Briefing morning email.
Barratt Developments has reported a 73.7pc jump in annual pre-tax
profits to £192.3m and a 12.2pc rise in annual revenues to £2.6bn. The
average price of private house sale has risen 6pc to £213,900. Bob
Lawson, chairman, has credited the significant progress” in the
availability of funding for customers which has been “accelerated by a
series of Government initiatives” including First Buy, New Buy and Help
to Buy. Barratt is expecting more of the same after a “very strong
start to the new financial year.”
Kingfisher, the owner of BQ, has reported a 4.3pc jump in half
year sales to £5.7bn and a 10.2pc rise in pre-tax profits.But on an adjusted
basis, first half profits are down 1.6pc. The volatile weather has been
blamed: the sunny second quarter did not make up for the cold first quarter.
But the balance sheet has been given a £145m boost by the resolution of
French tax issues in the demerger of Kesa – a saga that has been running for
nine years. Ian Cheshire, chief executive, said he’s “delighted”
by the Kesa resolution but has warned that “consumer confidence remains
weak in all our major markets.”
Thorntons has reported £5.6m of full year pre-tax profits and revenues
of £221.1m, up 1.8pc from last year.
Redrow has agreed a new £250m revolving credit facility, £50m more than
the one it replaced.
Heathrow has reported a 7.7pc rise in passenger numbers in August to
7m.
And African Barrick Gold has announced the resignation of its COO,
Marco Zolezzi who is leaving to “pursue other interests.”
It’s a big day for Mike Ashley: Sports Direct, which was badly
received when it listed in 2007, is due to be elevated to the FTSE100 in the
quarterly reshuffle at the close of play today. In a trading statement this
morning, the sports retailer has said sales are up 18.2pc in the three
months to July and gross profits are up 23.2pc to £260.1m.
07.44 In Asia, markets haves swung between gains and losses after
President Barack Obama pulled the US from the brink of a military strike
against Syria.
China’s Shanghai Composite slipped 0.1pc. Australia’s SP/ASX
200 rose 0.6pc, to close at the highest level in five years, as the
nation’s consumer confidence index climbed to the strongest reading since
December 2010. New Zealand’s NZX 50 added 0.2pc and South
Korea’s Kospi gained 0.5pc.
Japan’s Topix slipped 0.1pc, erasing gains of as much as 0.8pc.
Taiwan’s Taiex was little changed and Singapore’s Straits
Times dropped 0.5pc.
07.31 Over in Europe the political soap opera surrounding Silvio
Berlusconi continues to rumble on as the Italian Senate commission
delayed a decision on expelling the former prime minister from parliament as
his political allies continue to ratchet up the pressure by threatening to
bring down the government.
In Spain, some have suggested that the Spanish economy could be
starting to show some green shoots of recovery, given the recent
recovery in PMI’s, which has prompted the treasury to consider the idea of a
50 year bond given the current calm in European bond markets.#
Michael Hewson, senior market analyst at CMC Markets, said this
optimism was “somewhat premature”.
For instance concerns remain surrounding the political denial surrounding
the health of the Spanish banking sector, as bad loans continue to increase.
Small businesses still find it difficult to raise finance and will continue
to do so until there is some evidence of a pickup in demand within the
Spanish economy, and not just its export markets.
We can talk about green shoots but Spanish borrowing costs have barely
moved in the past few weeks, we’ve simply seen Italy’s borrowing costs come
up and meet them. It would be more encouraging if the recent falls in
unemployment we’ve seen recently, survive the seasonal drops the end of the
tourist season normally brings.
07.15The big news today for the UK will be the unemployment figures
due out at 09.30.
There seems to be a mixture of expectations. Some analysts say it the
unemployment rate will slip from 7.8pc to 7.7pc, while others had forecast
no change.
Ishaq Siddiqi, market strategist at ETX Capital, said he expected the
UK jobs figures out today to be “pretty strong” and forecast that the
unemployment rate would tick down from 7.8pc to 7.7pc.
Michael Hewson, senior market analyst at CMC Markets, says it would not
be a surprise to see the rate drop to 7.6pc, and “at the very least”
will slip to 7.7pc.
In a note from Investec, it said it expected the unemployment rate to
edge lower to 7.7pc, which it said would fuel speculation that the Bank’s
Monetary Policy Committee would have to reassess its position on rates well
before its current guidance of 2016.
Mike van Dulken, head of research at Accendo Markets, said he expected
the unemployment rate to hold at 7.8pc but added that with yields rising,
“Carney is backed into a corner, because no matter what he says markets
aren’t taking what he says on board”.
Bank of England Governor Mark Carney has made a landmark commitment to
keep interest rates low until the unemployment rate falls below 7pc which is
not forecast to be until 2016, so there will be a lot of scrutiny of the
figures.
Markets have consistently dismissed Carney’s forward guidance since it was
announced and yesterday 10-year gilt yields rose above 3pc for the second
time in two years, which means markets are currently pricing in a rate hike
in late 2015.
07.05 Top story on our finance page this morning is news that European
efforts to impose a financial transaction tax (FTT) have been plunged into
further chaos after Brussels’ own lawyers concluded that the levy is
unlawful, writes Louise Armitstead.
A leaked opinion from the European Union’s legal service contains warnings
that the flagship policy is “not compatible” with existing laws and is also
“discriminatory”.
Elsewhere, Graham Ruddick reports that Tesco
is to sell its US chain Fresh Easy to Ron Burkle’s investment firm
Yucaipa in a deal that highlights the scale of the problems the
British supermarket group faced across the Atlantic.
Royal
Dutch Shell is likely to face questions over the future of its operations in
China after sources claimed an £8.3bn project in the country had
been quietly shelved, writes Malcolm Moore.
07.00 Good morning and welcome to our daily business and markets live
blog, your one stop shop for all the breaking business stories of the day.
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