MGN-AFRICA»» pin:2A123D88 Bank of England chief economist gloomier about the economy - business live: Andy Haldane warns that the UK is writhing in both agony and ecstasy, with real wage growth falling for most of the last 74 months 9.46am BST Relief is rife in the European stock markets - the main indices are a sea of green: 9.43am BST If Haldane is right, the UK wont see an interest rate rise before next Mays election. Thats a relief for George Osborne and colleagues, suggests Paul Waugh of Politics Home: Senior Tories feared interest rate rises cd cause real trouble if done early 2015. So Andy Haldane remarks to @itvnews signif 9.34am BST On the markets, Jimmy Choo made its stock market debut this morning. While the luxury brand is famous for its perilously high heels, the shares got off to a rather flat start: up 0.5p to 140.5p. They were priced at the bottom end of the price range (140p), valuing the company, owned by JAB Luxury the investment arm of Germanys billionaire Reimann family at £545.6m rather than £700m as expected last month. 9.31am BST Its early days, but there are signs that the US stock market might rally today. Investors are taking comfort in Andy Haldanes dovish comments that UK interest rates will stay lower for longer. The Bullard and Haldane effect: S&P futures pointing to 15 point gain when Wall Street opens 9.26am BST News Release - Twin Peaks - speech by Andy Haldane t.co/Luu7oCpTWn pic.twitter/1OGROcKsP2 9.09am BST Bank of Englands chief economist Andy Haldane tells me its not a bad bet to expect rates to rise in the middle of next year 9.05am BST Haldane also warns that Britain is vulnerable to another explosion in the eurozone crisis, telling ITV News that: Its a concern. It [the euro area] is our biggest trading partner by far. We know weve see recently that any event on the continent laps back to the UK very quickly through our trade links but also through our financial links and indeed increasingly just because of confidence. If confidence is ebbing on the continent, it appears to leak across here pretty quickly. 9.04am BST Andrew Haldane has also given an interview to ITV News, in which he reiterates that he is more reluctant to consider raising interest rates than three months ago. The Bank of Englands chief economist says: In the global economy, certainly, weve seen some of the energy of the recovery reduced, weve seen global growth prospects revised down a bit and here in the UK weve seen inflationary pressures from wages but also from oil prices, from commodity prices also heading south and those two things in combination means that Im a bit less on the front foot than I was three months ago. Who knows precisely when the lift-off date [the first interest rate hike] will come. If you believe the financial markets, theyre now betting somewhere in the middle of next year. Perhaps thats not a bad bet. 8.38am BST The pound has fallen by half a cent against the US dollar, underlining that expectations of an early rate rise have been stumped. Its trading at $1.6044 this morning. 8.34am BST I wish there was a new Andy Haldane speech in my inbox every morning. 8.34am BST The key monetary policy message from Andy Haldane this morning is that UK interest rates will probably stay at their current record lows for longer. Put in rather plainer English, I am gloomier - BoE chief economist Andy Haldane In June, when evaluating the UKs monetary stance, I used the metaphor of a batsmen in cricket deciding whether to play off the front foot (raise rates) or the back foot (hold rates). And I compared the averages of two English batsmen, one who played from the front foot (Ian Bell), the other from the back (Joe Root), to illustrate the dilemma. At the time, Ian Bell averaged 45 to Joe Roots 43. In other words, while it was a close run thing, the data narrowly favoured the front foot. Cricketing statistics are not the sole basis for my views on the appropriate stance for UK monetary policy. Nonetheless, on balance, I felt the same front-foot judgement was appropriate for UK interest rates at the time. It seems unlikely that BoEs Andy Haldane is on the same wavelength as Martin wages are about to take off Weale: t.co/d6uerOnbq3 8.23am BST Rolls-Royce has warned it wont return to profit growth next year, blaming worsening economic conditions and tighter Russian trade sanctions. The shares tumbled more than 7%, or 71.5p, to 868p, making them the worst performer on the FTSE 100 in early trading. The British engineering firm said a number of customers had delayed or cancelled orders. While the company cut its revenue forecast for this year, it maintained its forecast of flat 2014 profits but no longer expects to return to growth in 2015. Its current best estimate is that underlying profit will be flat to 3% lower next year. Rolls-Royce is the worlds second-largest aircraft engine maker behind General Electric. 8.18am BST A calm start to Europes stock markets, as traders digest Andy Haldanes speech (new readers start here). The German DAX has jumped by 0.6%, and the French CAC is up 0.4% 8.12am BST Bottom line: Andy Haldane has joined the lower for longer camp at the @bankofengland. t.co/FeB3jev0IF pic.twitter/2Af8uvmQQV 8.11am BST The ecstasy long-view from Andy Haldane pic.twitter/kFsoM3hGrN 8.10am BST Haldane has also created an ecstasy index, based on unemployment, inflation and GDP growth in the UK. And in contrast to his agony index, this one looks quite good: In only 42 of the past 144 years has the index been above current levels. So far, then, so good. The UK economy appears to be healthier than on average in the past, if perhaps not quite yet ecstatic. Certainly, it appears to be firmly on the front foot. 7.59am BST Andy Haldane has also produced an agony index for the UK, a simple index of real wages, real interest rates and productivity growth. And it shows that Britains economy is suffering serious pain: The agony index is currently at painfully low levels. It has been around 5 percentage points below its 1970-2014 average since 2008. Such an extended period of agony is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the World Wars and the early 1970s. 7.52am BST Andy Haldane speech is online here: The UK economy appears to be writhing in both agony and ecstasy. Very interesting speech by Andy Haldane. t.co/syxElzA08V 7.47am BST Andy Haldane, the chief economist of the Bank of England, has warned that economic conditions have worsened. In an important interventionat the Kenilworth Chamber of Trade right now, Haldane is explaining that he is gloomier about economic prospects. Rather peculiarly, the UK economy appears to be writhing in both agony and ecstasy. It is twin-peaked. Growth in real wages has been negative for all bar three of the last 74 months. The level of productivity is no higher than it was six years ago. And real interest rates are around zero. This combination of poor economic outcomes is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the world wars and the early 1970s. On balance, my judgement on the macro-economy has shifted the same way. I have tended to view the economy through a bi-modal lens. And recent evidence, in the UK and globally, has shifted my probability distribution towards the lower tail. Put in rather plainer English, I am gloomier. 7.45am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance. Modest update to European opening - FTSE -6, DAX +26, CSC -2 The bond market looks like it has pushed Greece out (once again) of the funding markets. Continue reading... bit.ly/1kcSHfb pin:2A123D88
Posted on: Fri, 17 Oct 2014 09:02:12 +0000
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