UK economy expected to see slower growth - live

Discussion in 'Market News' started by Lily, Dec 23, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Analysts believe growth figures mean no interest rate rise until well into 2016.

    8.11am GMT

    European stock markets, as forecast, have made some strong opening gains.

    The FTSE 100 is up 68 points or 1.1% in early trading, while Germany’s Dax has added 1.2%, France’s Cac and Spain’s Ibex have both climbed 1%, and Italy’s FTSE MIB is 0.8% higher.

    8.06am GMT

    Company tax affairs are in the spotlight at the moment.

    Amazon and eBay are facing action over VAT, as Simon Bowers reports:

    Top tax officials are exploring whether Amazon and eBay can be forced to foot the bill for ballooning VAT fraud associated with an army of small overseas sellers who are rapidly coming to dominate sales of many popular items on Britain’s leading shopping websites.

    Related: Amazon and eBay face crackdown over VAT fraud by overseas sellers

    Related: Anger at City banks paying little or no corporation tax

    8.03am GMT

    The French economy grew by 0.3% in the third quarter, confirming earlier readings after showing no growth in the previous three months.

    Meanwhile French consumer spending fell unexpectedly by 1.1% in November, compared to expectations of a 0.1% increase.

    French consumer spending on goods disappointingly fell back 1.1% m/m in Nov in blow for Q4 growth hopes. We currently expect 0.2% q/q growth

    7.52am GMT

    And an early Christmas profit warning. Computer games retailer Game Digital said it had seen challenging trading conditions and disappointing sales since the start of the festive school holidays.

    So it expected half year profits to come in at £30m. Analysts at Liberum said:

    UK sales have fallen off sharply in the past few weeks at the most critical time of year for Game. General weakness has been exacerbated by very rapidly slowing sales in old format content, down 57% in the UK, and while sales of new generation content remained strong these were not enough to offset the decline. The Spanish market remains strong with sales up 8%.

    While a decline in old format sales was expected the scale has surprised the company while the importance of Christmas trading has hugely magnified the issue. We cut our full year earnings per share forecasts by 60%, 2017 estimates by 42% and 2018 by 30%. There is no updated guidance on the dividend, but we note that current year cover is just 0.5 times.

    7.47am GMT

    Meanwhile oil prices have edged higher, with Brent crude up 1% to $36.48 a barrel.

    But on Tuesday, for the first time in 10 years, Brent had traded below the level of US West Texas Intermediate.

    Brent and WTI move back to parity. $CL_F $BRENT

    7.44am GMT

    European markets are expected to open higher after a fairly mixed day on Tuesday:

    Our European opening calls: $FTSE 6130 up 47 $DAX 10574 up 85 $CAC 4605 up 37 $IBEX 9486 up 71 $MIB 21190 up 129

    7.41am GMT

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

    The UK economy is expected to have grown more slowly in the third quarter, as we get the final snapshot of the latest GDP figures, and then to improve again in the final three months. But the data will not be strong enough to prompt the Bank of England to consider an interest rate rise until well until 2016.

    We expect GDP growth in the third quarter to be confirmed at 0.5% quarter-on-quarter and 2.3% year-on-year. We expect GDP growth to improve to 0.6% quarter-on-quarter in the fourth quarter, resulting in overall GDP growth of 2.4% in 2015. The 1.7%month-on-month jump in retail sales volumes in November suggests that consumer spending will be strong in the fourth quarter, which increases the possibility that growth could surprise on the upside and come in at 0.7% quarter-on-quarter.

    [UK GDP growth] to some extent has been slightly disappointing in the readings seen thus far in that it has only shown growth of 0.5%. There is an outside expectation that we could see an upward revision to 0.6% as a result of a strong September due to the Rugby World Cup and a buoyant services sector, which in turn should offer some optimism that the fourth quarter will be similarly positive.

    As far as rate rise expectations are concerned, it probably won’t move the dial that much in that a UK rate rise still seems some way off into 2016, after further policymaker comments in the last few days regarding the benign inflation outlook, and which has served to push the pound to eight month lows against the US dollar, a rather strange state of affairs for one of the best performing economies in the G7 this year.

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