Remain-voting City lobby group calls for 'dramatic Brexit U-turn'
Banks and law firms hail 'once-in-a-generation opportunity' in bid to bolster Britain's economic future outside the EU
Brexit vote has 'unshackled public spending'
Britain's vote for Brexit "appears to have unshackled public spending", says The Times.
According to Tussell, "an analytics consultancy which runs a database of UK public sector tenders and contracts", more than £100bn of public sector tenders were advertised between October and December 2016.
That's "in excess of 50 per cent more than was advertised in the final quarter of 2015", says the Times.
Separate figures for the six months after the June referendum also reveal construction tenders almost doubled to more than £40bn, while health and social care tenders rose 80 per cent to close to £20bn.
Gus Tugendhat, Tussell's founder, suggested the apparent increase in public spending could "explain why official statistics have shown the economy to be more benign than the feared" after the Leave victory, says the Times.
At the Autumn Statement in November, Chancellor Philip Hammond relaxed government targets to eliminate the deficit, setting a new goal to reduce borrowing to two per cent of economic output in this parliament.
However, this was more of a reflection of slower growth projections – and so forecasts of tax receipts – than the result of a planned splurge.
Against these new targets, the government is doing well, with a report last week suggesting borrowing may actually be lower than projected in November for the year to March as a whole.
Beneath the headline number, a squeeze in council budgets appeared to be confirmed by data showing local government tenders fell, while those for central government, the NHS and further and higher education all rose.
There was also a surprise drop of 17 per cent to less than £12bn in tenders in the north-west, despite government pledges to invest in a "northern powerhouse".
Brexit: Barclays prepares to move EU base to Dublin
Barclays is preparing to expand its operations in Dublin to create a new EU base that will ensure continuity of trading for big clients after Brexit.
The bank already employs around 120 people in the Irish capital, says the Daily Telegraph, and will move another 150 from London "if the UK's secession from the EU makes it difficult for banks to sell their services across the continent".
Theresa May's confirmation that the UK will leave the single market has led to fears that global banks could lose their "passports" to trade freely across the bloc.
HSBC, UBS and Goldman Sachs, among others, have confirmed they could move thousands of jobs out of the UK because of Brexit.
However, says efinancialcareers, Barclays' plan makes Brexit "look inconsequential".
It adds: "Given that Barclays' investment bank employs an estimated 10,000 people in the UK, the implication is that fewer than two per cent of the bank's British jobs would be affected. Teacups have seen bigger storms."
A source told the Irish Times the bank's "plan A is that a deal will eventually be hammered out and British financial companies will not have to relocate services such as euro-clearing to subsidiaries inside the EU".
The Irish proposal amounts to executives preparing "for the worst" - namely, that clearing euro-denominated transactions and serving EU clients will require a subsidiary with a banking licence to be based within the bloc.
"Staff moved to or hired in Dublin could include senior managers, derivatives specialists, currency traders, compliance and human resources staff", adds the Irish Times.
Barclays boss Jes Staley indicated last week he was more optimistic on London after Brexit, telling the World Economic Forum the UK capital had an "entire ecosystem" that would mean it retains global significance.
It had been reported that the bank could use Paris, where it also has a subsidiary, as its post-Brexit base.
However, bosses were said to have been put off by issues such as "the need for English-language schooling for the families of staff and France's restrictive labour laws", says the Telegraph.
Citigroup searches for post-Brexit hub away from London
Global banking giant Citigroup has revealed it is scouring the EU for a post-Brexit financial hub away from London, says The Guardian.
A final decision on a new European base will be made by June, said the bank, adding that "many other financial firms with London operations would be working to a similar timescale".
The news is the latest sign of the likely loss of jobs - and tax revenue - from the UK capital now Theresa May has confirmed the country will leave the European single market in a hard Brexit.
Citigroup said this will "presumably" result in international banks in London losing their "passporting" right to operate freely across the continent.
James Cowles, who runs the bank's operations in Europe, the Middle East and Africa, told the European Financial Forum in Dublin the "issue is with our broker dealer", which handles cross-border trading for major clients.
He added that Citigroup is in talks with Ireland, Italy, France, Spain, Germany and the Netherlands over where to base its new hub and that it has a 25-point criteria to help guide its decision. It has not confirmed how many jobs are likely to move from London.
Separately, Cowles told the Irish Times that jobs will go from the UK to Ireland post-Brexit. Citigroup already employs 2,500 staff in its Irish arm after a merger with its London operations last January.
He said: "When we look at different aspects of our business currently in London, there will be some things we'll move [to Dublin]."
Those jobs are related to its European retail and commercial banking unit and not the broker dealer that is subject to the location review.
HSBC, UBS and Goldman Sachs have confirmed that thousands of jobs will be moved out of London as a result of Brexit, with Goldman already suspending plans to move operations from New York.
Pound gains capped after Supreme Court ruling on Brexit
Sterling has failed to keep up the positive momentum after rising to a 2017 high last night and advancing further this morning following the Supreme Court ruling on Brexit.
The pound rose by around one per cent to close to $1.25 against the dollar yesterday," as investors anticipated a ruling from the Supreme Court on whether the government must hold a parliamentary vote to trigger the start of official negotiations to exit the EU", says the Financial Times.
It rose again and broke through $1.25 this morning in the immediate aftermath of Lord Neuberger's announcement that a formal Commons vote on invoking Article 50 was necessary.
However, the boost was short-lived and by around 10am in London, sterling was down 0.5 per cent to $1.2476.
Traders were expected to trade the pound up in the event that the government lost its legal challenge.
That's because it gives pro-Remain MPs scope to amend the legislation and avoid a hard Brexit, in which the UK will leave the European single market and EU customs union.
One of the reasons for the pound's gains being capped, the FT suggests, is that the Supreme Court also ruled that the government did not need to consult the devolved administrations of Scotland, Wales and Northern Ireland.
As two of the three countries voted to Remain - and the Scottish National Party has vowed to keep Scotland in the single market - this would have been another boon for a softer Brexit.
Another reason could be rumours that the government is going to put forward a very short bill to satisfy the requirements of the ruling with the least possible disruption to its plans.
This could mean legislation simply stating Article 50 will be triggered, which would be difficult for parliament to reject, given that a majority of MPs represent constituencies that voted for Leave in last June's referendum.
Brexit economic slump to 'last three years'
Confidence in the UK economy has fallen so sharply one of the country's top forecasters is predicting a Brexit-inspired slowdown could persist for three years.
According to EY Item Club, the rate of economic expansion will slow from two per cent last year to 1.3 per cent this year – and that will drop to one per cent in 2018 before recovering slightly to 1.4 per cent in 2019.
The figures for 2016-7 are broadly in line with wider estimates. An annual figure of one per cent for next year implies the potential for negative growth along the way.
Before the vote for Brexit, the economy was the fastest growing in the developed world, expanding at a "relative canter" of 3.1 per cent in 2014, says The Times.
Official government figures this week are expected to show the economy stayed strong in the immediate aftermath of the Brexit vote.
A Reuters poll of economists suggests the figures will show growth increased by 0.6 per cent in the three months following the June 2015 referendum and 0.5 per cent in the final quarter of the year.
This has been helped by strong consumer spending, although the slump in the pound since the vote could undermine this.
"With inflation already at a two-and-half-year high and expected to rise further, that support from spending will be harder to maintain", says The Guardian.
"The Bank of England expects the weak pound to continue to raise import costs and for some of that to be passed on to consumers, squeezing their spending power."
Signs that consumers are cutting back are already beginning to show. The Office for National Statistics says December saw the biggest fall in retail spending since April 2012, says Sky News.
However, retail spending growth remained strong in the last three months of the year and in 2016 as a whole.
Nevertheless, optimism on the economy within the financial services sector fell for the fourth consecutive quarter, according to a CBI study.
"Only 10 per cent of respondents were more optimistic about the economy than three months earlier, while 45 per cent were less optimistic," says The Times.
May's Brexit plan is a 'ruse' - to stop Brexit happening
A former EU trade commissioner and director-general of the World Trade Organisation (WTO) has claimed that Theresa May's hard Brexit plan could all be a "ruse", says The Guardian.
Speaking at a fringe gathering at the World Economic Forum in Davos, Switzerland, Pascal Lamy said the Prime Minister's real intention could be to prevent the UK from leaving the bloc.
He said: "It is like World War Two, where the allies intoxicated the Germans into thinking the [D-Day] landings were going to take place in Northern France when in fact they were going to take place in Western France.
"That's what's happening here. You have a fake foreign minister, then you have a message that 'Brexit means Brexit', then you choose the most costly option so that at some stage people realise that the costs are not worth it."
That "costly option" is the UK leaving the European single market, the largest trading bloc in the world, which May confirmed this week.
Lamy added that EU divorce proceedings and subsequent trade deal negotiations would be "long, obscure, bumpy and probably nasty".
Cecilia Malmstrom, the current EU trade commissioner, told Davos delegates it would take years to secure a deal.
She warned that the bloc was negotiating "15-16 trade deals at the moment" and that the UK would go to the back of that queue – and even then faces "difficult negotiations", says the Daily Telegraph.
The warnings were repeated by WTO head Roberto Azevedo, who said it "will not be as simple as people imagine" for the UK to fall back on his organisation's rules as the ability to "copy and paste" terms depended on the specifics of Brexit.
May addressed the Davos conference herself yesterday, saying the UK wanted to remain close to Europe while also becoming a "world leader" in free trade.
Commenting on her speech at a dinner yesterday evening, veteran investor George Soros said it was "unlikely" the PM would remain in office.
"She has a very divided Cabinet, a very small majority in parliament and I think she will not last," he said.
He also told guests that people in the UK were in denial about Brexit, but would react angrily when rising inflation started to eat away at their incomes this year, says The Times.
Big banks confirm their own Brexit form London
Global banks are firming up their plans to shift thousands of jobs and billions of pounds worth of revenue out of London.
Their stark news follow Theresa May's declaration this week that the UK will cease to be a member of the European single market when it leaves the EU.
This could compromise "passporting" rights that allow banks based in London to trade freely across the world's largest single market, a key reason the City is the main hub for clearing transactions denominated in euros.
Following through on a warning made in the wake of the EU referendum, Stuart Gulliver, chief executive of HSBC, confirmed his bank was planning to move 1,000 jobs to its Paris subsidiary.
He added they will take about 20 per cent of its trading revenue, an amount "in the billions" of pounds, says the BBC's Simon Jack.
Andrea Orcel, head of investment banking at UBS Group, which also previously warned it may transfer 1,500 jobs out of London, told Bloomberg the Swiss bank "will definitely have to move" a significant portion of activity from the City.
Adding to the exodus, JP Morgan's chief executive Jamie Dimon said yesterday "it looks like there will be more job movement than we hoped for" – last June, the Wall Street giant said it could be forced to shift 4,000 of its 16,000 jobs out of London.
Meanwhile, a source at Lloyds revealed it is planning to establish a formal base in Frankfurt and Goldman Sachs is also considering transferring thousands of jobs to the German hub.
The moves will have a big impact on UK tax revenues and the wider economy. Banks in London contribute up to £65bn a year in tax revenue, says Bloomberg, while their highly paid staff contribute hefty sums in income tax.
It is generally held that the process of job losses could be delayed if May agrees a transitional Brexit deal that would avoid a sudden loss of single market rights.
Beyond that, there is still hope that a bespoke deal ensuring regulatory equivalence with Europe in financial services could mitigate the loss of passporting rights.
Five reasons the pound rallied after May's 'clean Brexit' pledge
The pound enjoyed its best single-day jump in value for nine years yesterday, erasing its losses from the early part of this week.
Trading still remains around 17 per cent down against the dollar since the EU referendum, at a little above $1.23, but that it recovered so strongly after the Prime Minister confirmed a "clean" or "hard" Brexit is remarkable.
So what is going on?
1. Much needed clarity
Firstly, a lot of the slump in the pound of late has reflected uncertainty about what Brexit means for trade and the economy. Markets hate uncertainty. "It shows just how desperate the currency was for clarity that May's speech… could inspire such a reaction," Connor Campbell, financial analyst at spread-betting firm Spreadex, told The Independent .
2. Transitional deal hint
Theresa May promised to implement the Brexit changes in a "phased" manner, giving a very strong hint that she has heeded calls from businesses - and especially the financial services sector - for a transitional deal.
This is seen as important in avoiding a damaging "cliff-edge" withdrawal of key single market rights and could persuade firms to delay decisions to move jobs.
3. Vote on final deal
The Prime Minister also said she would give "both houses of parliament" a vote on the final deal, which "could limit some of the excesses of some of the Brexiteers", said Kathleen Brooks of City Index.
It is highly probable the final vote will only be whether to accept the deal or leave the EU without one, but it could still force a more conciliatory negotiation.
4. Customs union
While May confirmed the UK would leave the single market, she left open the possibility of remaining an "associate member" of the customs union which facilitates tariff-free trading across Europe.
It may prove impossible to reach an arrangement on which everyone agrees, but that the UK is seeking one at all is music to the ears of export businesses in particular.
5. The Trump effect
It's not all about Brexit, you know. The Guardian says "sterling's gains were also flattered by weakness in the dollar after Donald Trump said the US currency was overvalued".
Pound recovers after Brexit 'bloodbath'
Sterling rallied slightly this morning after a "bloodbath" yesterday saw it slip close to its lowest level against the dollar in 32 years.
Investors are nervous after reports over the weekend that Prime Minister Theresa May will today announce that the UK will leave the single market and end free movement of people – a so-called hard Brexit.
Traders fear the government does not have a clear plan for the way ahead and that a broken relationship with Europe could cause significant economic damage. Kathleen Brooks, an analyst at City Index, said the reports had been "like kryptonite" to investors, says Sky News.
Vicky Pryce, chief economics adviser to the Centre for Business and Economics Research, told Radio 4's Today programme it was "obvious" the markets believed a hard Brexit was "bad news for the economy".
Following the reports, the pound fell as low as $1.1988 - a "sterling bloodbath", said financial analyst Connor Campbell. It rallied a little this morning to trade at $1.2119, although Neil Wilson of ETX Capital said this was more related to activity in the US than the UK.
He told the BBC: "These gains are largely down to dollar weakness… as the greenback has suffered a bit of a sell-off overnight and gold has risen amid a bid for safer assets ahead of this speech and Donald Trump's inauguration on Friday."
Pound falls to three-month low ahead of May's Brexit speech
Sterling fell to its lowest level for three months in Asian trading overnight as fears grow that Theresa May will this week outline plans for a hard Brexit.
Its drop to below $1.20 to the US dollar puts the currency back in the "territory" of its nadir following a "flash crash in October", when it slumped below $1.19, says the BBC.
The Prime Minister is due to give a speech tomorrow in which she's expected to say the UK will leave the EU's single market and its tariff-free customs union for goods and services as the government prioritises taking full control of immigration.
While Downing Street dismissed the reports as "speculation", that hasn't stopped traders taking flight.
The reports are "like kryptonite" to brokers who back the pound, said Kathleen Brooks, an analyst at City Index.
Economists generally agree leaving the world's largest single market will be bad for the economy - and especially the financial services sector, which relies on free trading across Europe.
May has consistently insisted a bespoke deal with Europe will allow enough access to EU markets to protect the economy, despite the refusal to accept free movement.
She has also repeatedly asserted deals with countries elsewhere in the world will provide a boost to the economy - a claim seemingly backed up today by incoming US president Donald Trump, who told The Times Britain and the States would strike a trade deal with the UK "very quickly" after Brexit.
The pound recovered slightly in early London trading, to $1.2045.
However, Brooks warned there could be further pain this week. "There's a lot for the market to digest over the next five days, so I suspect the pound may well be a casualty of that," she said.
That's bad news for currency speculators, but good news for the FTSE 100, which relies heavily on foreign earnings.
It rose to another record high of 7,354 at the start of trading this morning and was set for a 15th straight day of gains, says the Financial Times.
Hard Brexit 'not the bogeyman' for UK business
A hard Brexit will not "be the bogeyman that causes everything to fall over" in the UK economy, Fitch Ratings says.
Officials at the US agency dismissed fears that leaving the single market will cause businesses to fail and send unemployment soaring, saying "businesses would cope even if Britain did not secure a transition deal with Brussels and fell back on World Trade Organisation (WTO) rules", reports the Daily Telegraph.
Alex Griffiths, group credit officer at Fitch, said: "We've not seen any sector where Brexit will be the bogeyman that causes everything to fall over."As soon as you look at trade, and global supply chains, for these companies there is going to be a big impact if we have a hard Brexit will tariffs going up. There will be a lot of shuffling around to do, but ultimately the companies will cope."Most economists argue that a soft Brexit, which would require free movement for EU workers in return for membership of the single market, would be the best option for UK businesses.
They also warn the "hardest" form of Brexit – leaving the EU with no deal and falling back on WTO rules – would probably mean tariffs of around ten per cent being placed on most goods, hurting UK exporters.
Leaving the single market is also expected to affect passporting rules for the financial services sector, with City grandees warning more than 200,000 jobs are at risk.
However, writing in the Financial Times, Martin Wolf argues that given Theresa May's determination to take full control of immigration, a hard Brexit is now inevitable.
He says: "The single market option is dead, even as a transitional arrangement."
He adds that some mitigation can be found for exporters by a deal that would see the UK stay in the EU customs union, or through a bespoke arrangement that achieved the same tariff-free treatment of goods for particular sectors.
But he says this would still be "costly" and that the economy would also be hit by a squeeze on purchasing power resulting from a slump in the pound.
"The direction of travel is sadly clear," Wolf concludes. "To many, that direction remains highly unwelcome. It is not welcome to me. But it is clearly the reality."
No 10 denies Brexit plan for £1,000 EU workers levy
Theresa May's office has distanced itself from reports the government is considering a £1,000-a-year levy on every skilled worker from the EU recruited in the UK after Brexit.
Immigration minister Robert Goodwill told peers yesterday the government was "seriously considering" the move in a bid to "help British workers who feel they are overlooked" and bring down migration numbers.
He added that companies were relying too much on migrants from outside Britain.
However, No 10 played down his comments, saying they may have been "misinterpreted". A Downing Street spokesman told Sky News the idea is "not on the agenda".
A Home Office spokeswoman said the department was considering "a whole range of options".
The move would be an extension of the immigration skills levy for non-EU citizens which comes into force in April. The £1,000 fee, which will be paid by employers, is designed to encourage companies to "train our own people" instead of relying on foreign labour, says the Daily Telegraph.
A similar levy for EU workers would put the government on "a collision course with business leaders, who have already warned that applying the policy to non-EU migrants could damage growth", says the Telegraph.
Guy Verhofstadt, chief Brexit negotiator at the European Parliament, tweeted the idea was "shocking".
Goodwill also gave a "strong indication" that a seasonal agricultural workers scheme, "under which tens of thousands of people could work… in low-skilled roles for less than six months", could be introduced after Brexit without counting towards the net migration target, says The Guardian.
There have already been warnings that the number of fruit and vegetable pickers coming to the UK from the continent has dropped markedly since the referendum, leaving tons of produce unpicked.
Farmers unions and others warn the problem will get worse without a dedicated scheme to allow employers to bring in thousands of workers.
City chiefs call for Brexit rules delay to 2022
City bosses have called for a three-year delay before a new regulatory regime is brought into force following Brexit.
Theresa May has said she will trigger Article 50 by the end of March, meaning the UK will leave the EU in early 2019.
Speaking before the Treasury select committee yesterday, Xavier Rolet, chief executive of the London Stock Exchange (LSE), told MPs he wanted a guarantee that the current trading rules would not change for five years after the start of negotiations, which would "give a three-year breathing space after Brexit", says The Times.
His call was echoed by HSBC chairman Douglas Flint, who called for standstill arrangements to be in place for "two to three years" to give time to adjust.
Without such reassurance, it appears jobs could be moved out of London pre-emptively - Flint restated that HSBC could transfer 1,000 jobs to Paris and eventually more to Ireland or the Netherlands.
US and Swiss banks would have to move even more swiftly, he added.
Rolet, meanwhile, said as many as 232,000 City jobs could ultimately be at risk.
It has been reported that global banks are performing due diligence on moving to the continent and could make decisions to do so in the next six months.
There are widespread fears that the government's drive to take control of immigration will mean the UK is forced to leave the single market, forfeiting the right of financial firms to operate freely across the continent. In particular, that would threaten the already-contentious status of the City as the main hub for euro-denominated transactions.
The government insists it can strike a bespoke deal with the EU to enable financial firms to continue trading across Europe as they do now, but it has given no detail on its negotiation plans.
Consequently, companies have called for an interim deal to guarantee current rules will continue for an extended period. This will also soften the "cliff-edge" nature of an abrupt change when Brexit finally happens.
Rolet and Flint, together with Elizabeth Corley of Allianz Global Investors, also called for clarity on a "transition arrangement" in the next eight to 12 weeks, says The Independent.
Liam Fox's Brexit investment claim 'includes old deals'
Liam Fox's claim that the UK has secured £16.3bn of inward investment since the Brexit vote has come under scrutiny after it emerged many projects had been announced long before the EU referendum.
"Fox said that his Department for International Trade had brought in billions of investment in the past five months across sectors including property development, infrastructure and renewable energy," says The Times.
The pro-Brexit Cabinet minister was countering criticism his department will spend the next two years on the sidelines while the UK negotiates its exit from the EU, during which time it cannot sign its own trade deals.
However, the Financial Times says its own analysis shows a number of the case studies presented to support the claims actually relate to "projects announced years ago".
It cites a commitment by Dong Energy of Denmark to invest £60m in a renewable energy scheme in Cheshire, saying: "Dong announced the project in 2015 and gained planning permission in February 2016."
The paper also highlights "a joint venture between Wheelabrator Technologies and SSE to regenerate the former Ferrybridge Power Station in West Yorkshire", which was "first announced in 2012".
Fox also announced a £650m investment by MGT Power in a renewable energy plant in Teesside next year, but the plans were "first revealed" as long ago as 2009 and recently received backing from Macquarie Bank, says the FT.
There were some projects that had not been previously announced, such as "a £100m investment by Peak Resources, an Australian company, in Tees Valley and 100 new jobs by a digital sports and media company called Perform Group in Leeds".
A £2.5bn co-investment involving China's CNBM in new modular homes was also a new announcement, effectively upping a previous pledge that the company would back a £1bn scheme.
A spokesperson for the Department for International Trade said the case studies were "just examples" of why inward investment is important and most did not count towards the £16bn figure, details of which remain confidential.
Labour MP Chris Leslie, a supporter of the Open Britain campaign, said: "The British people are not going to be fooled by Liam Fox's list of meaningless anecdotes."
Theresa May's hard Brexit stance sends pound to lowest since October
Sterling fell to its lowest level since October this morning after Theresa May gave "her strongest hint yet that the UK will leave the EU single market", says Sky News.
The pound, which had already slumped 1.1 per cent on Friday, dropped 0.8 per cent to below $1.22 against the dollar in early trading in London
However, this boosted the FTSE 100, which relies heavily on foreign earnings, to a new record high of 7,218, a 0.1 per cent rise.
The slide was sparked by the Prime Minister's televised interview with Sky News yesterday, in which she responded to criticism from former EU ambassador Sir Ivan Rogers.
May denied the diplomat's claims that the government had "muddled thinking" on Brexit, saying she will set out her negotiation objectives in the coming weeks.
She also reasserted that the UK will regain full control over immigration and refuted widespread claims this will result in a massive hit to trade because it will cost the UK its place in the EU single market.
European leaders have consistently said the UK will have to accept freedom of movement for EU workers in order to stay a member of the single market. When markets deem single market access is under threat, the pound is sold off.
May added: "We also, as part of that Brexit deal, will be working to get the best possible deal in the trading relationship with the European Union.
"Anybody who looks at this question of free movement and trade as a sort of zero-sum game is approaching it in the wrong way."
The government hopes any drop in trade from the EU will be cushioned by a boost in trade with other global countries.
However, Commerzbank said in a note: "Even though the US president-elect has already signaled an interest in closer ties with its former colonial masters which may well cushion the economic impact of the decision for the UK, what [economist] Larry Summers said… about the US also applies to the UK: 'If our strategy is to trade only with people that speak English that’s going to be a poor strategy.'
"The FX market shares this view and as a result, sterling has come under pressure again this morning."
Brexit was our 'Michael Fish moment', says BoE economist
The Bank of England's chief economist says financial forecasters had a "Michael Fish" moment ahead of the EU referendum, in comments seen by some as signalling a shift to a more positive outlook for the UK economy post-Brexit.
Andy Haldane was comparing his profession with the BBC weatherman who, on the eve of the great storms of 1987, assured viewers there was no hurricane on the way.
Economic forecasting was "to some degree in crisis", he said, after he and his peers predicted the Brexit vote would immediately hit the UK economy and also failed to foresee the 2008 financial crash.
Speaking at the Institute for Government in London last night, he said: "Remember that? Michael Fish getting up - 'There's no hurricane coming but it will be very windy in Spain.' Very similar to the sort of reports central banks - naming no names - issued pre-crisis: 'There is no hurricane coming but it might be very windy in the sub-prime sector.'"
He added that there was a "disconnect" between the warnings given about the effects of a Leave vote prior to June's referendum and the "remarkably placid" state of the financial markets since.
However, his words were nuanced. While he did say forecasts for a slowdown immediately after the vote had been too "sharp", it is debatable whether he was also saying the bank has been too negative in its predictions for the economy when the UK does leave the EU.
Sky News says his words are a conscious attempt by the bank to reposition itself away from its dire predictions, with Haldane taking "a step back from gloomy forecasts".
The BBC, however, stresses the economist was referring to the failure of economists to predict the global financial downturn of 2008, as well as any overly pessimistic Brexit forecast.
It adds that the bank has denied "claims it gave gloomy forecasts to support the Remain side".
The pro-Brexit Daily Telegraph says that when it was put to him that the bank's forecast of a "hurricane" after the Brexit vote had not materialised, Haldane replied: "It's true, and again, fair cop."
He continued: "We had foreseen a sharper slowdown in the economy than has happened, in common with almost every other mainstream macro-forecaster.
"Why has that been the case? We need look no further than the behaviour of the British consumer, the British housing market.
"If you look at how the consumer performed during the course of the last year, it's almost as though the referendum had not taken place. In terms of the real things like pay and jobs, not very much happened during the course of last year.
"It's pretty much business as usual. The spending power in people's pockets was not materially dented."
Brexit: Banks to announce if they will leave UK 'in coming weeks'
Britain's major banks will say in the next few weeks if they are pulling jobs out of the country in response to Brexit, experts claimed yesterday.
PriceWaterhouseCooper (PwC), which is advising several major City institutions on Brexit, has predicted 100,000 jobs could be lost in the City up to 2020, reports The Guardian. HSBC, Britain's biggest bank, last year warned it might have to move 1,000 jobs to Paris, while JP Morgan could take as many as 4,000 jobs out of the UK.
Andrew Bray, PwC's head of Brexit, said the lenders could start publishing their decisions on what action to take by late February.
He said: "A number of big banks are finalising plans for announcements they will make [this] year."
However, Brexit's effect on financial services will be felt across the UK and not just in London, with the City of London Corporation saying financial and professional services firms employ 2.2 million people nationally.
May urged to take action
Last last month, the corporation urged Theresa May to arrange a transitional deal with the EU for the country's financial institutions, claiming the lack of information about what Brexit will mean was damaging business.
Chair of policy Mark Boleat said: "Important strategic business decisions are being delayed and much needed investment postponed or withdrawn altogether.
"Firms' nervousness can only be allayed if they know how they can continue running their business. A transitional arrangement should be agreed as soon as possible."
Repeating the call last night, lobby group CityUK said banks were reluctant to leave the UK but needed to know where they stood.
Gary Campkin, CityUK's director of policy and strategy, said: "There's a real stickiness. People are here for a reason. It's a good place to do business."
An exodus from the City could also harm the rest of the EU, the Bank of England has warned, as major institutions may prefer to move their operations to New York and not other European capitals.
May says she will begin the formal process of leaving the EU by the end of March.
Brexit transitional deal needed 'as soon as possible'
Theresa May's government must secure a "transitional" arrangement with the European Union "as soon as possible", says the City of London Corporation.
The body that represents the capital's powerful financial district warned Brexit uncertainty means "important strategic business decisions are being delayed and much-needed investment postponed or withdrawn altogether", says The Guardian.
Its policy chair, Mark Boleat, added: "Firms’ nervousness can only be allayed if they know how they can continue running their business. A transitional arrangement should be agreed as soon as possible."
His call follows a series of Brexit reports from several House of Lords committees, which warned big banks in particular would need at least a year to make arrangements if they have to depart London.
Separate reports had suggested that several Japanese banks, which employ around 5,000 staff in London, could begin moving some activities in the next six months.
Firms are especially worried about the loss of passporting rights if the UK leaves the single market and fails to agree a deal based on regulatory equivalence.
Losing these rights would require the firms to open a regulated subsidiary within the EU – and they could be prevented from processing euro-denominated work in London altogether.
Given that the UK financial services sector, with the City as its main hub, contributes more than £70bn in tax each year, there is pressure on the government to offer more clarity.
A transitional deal being championed by, among others, the Chancellor Philip Hammond, would mean the current arrangements, including passporting rights, being guaranteed for several years in order to avoid a "cliff-edge" change in the rules.
Elsewhere, another City of London Corporation official played down fears over jobs losses related to Brexit this week.
Jeremy Browne, the corporation's special envoy for Europe, said an estimated ten per cent of City jobs – around 16,400 – are at risk. This is "lower than other estimates that lobby groups have put forward", says Reuters.
Browne added: "We shouldn't assume that all those will go en masse."
Although he warned that "once you start pulling bits out, the overall organism could be affected in unpredictable ways", he said the EU should be aware of the danger of "overstating [its] importance to the success of London".
Brexit 'is hurting thousands of small retailers'
"Small shops are beginning to experience the fallout of Brexit," says The Times, after a survey found the number of high street retailers struggling with "significant" financial distress has risen six per cent year-on-year.
The report by insolvency firm Begbies Traynor said 21,802 companies were now having financial problems, with the vast majority, around 21,150, being described as "small and medium sized".
"Significant distress" was diagnosed for any firm subject to a county court judgement – "a sign that they are struggling to pay their bills" – or if credit-scoring systems noted a marked deterioration in working capital or retained profits.
That the number of firms in this position has increased is surprising in one regard as retail sales are surging.
Figures from the Confederation of British Industry this week showed 35 per cent of retailers reported rising sales in late November and early December compared to last year, the best figures for more than a year, while last week, the official government statistics watchdog reported consumer spending rose six per cent in November.
But Begbies said the high street was seeing a bout of deep discounting, while the slump in the pound is increasing the price of imports and squeezing already-tight margins.
Independent retailers face the most significant challenges because they "lack the marketing budgets" of their larger rivals and are "less likely to have used currency hedging to soften the blow of weaker sterling", says the Times.
The weak pound is also expected to send inflation soaring, which could weigh on consumer spending next year. Retailers told the CBI they expect to reduce wholesale orders in January.
Some shops are said to be hoping for a last-minute rush of sales to provide revenues to meet quarterly rents next month, with the Daily Mail reporting price cuts of "50 per cent" or even "60 per cent plus" to attract customers.
"Research suggests one in four shoppers has held off making Christmas purchases until the last minute this week in the hope of getting a bargain," the paper adds.
May's 'Brexit revenge' sees Deloitte pull out of contracts
Theresa May has exacted "revenge" on consultancy Deloitte over a critical Brexit note that was leaked last month, says The Times.
The accountancy firm has reportedly agreed to pull out of tenders for government business - "including work for the Brexit department" - following talks with the UK's "most senior mandarins": John Manzoni, the civil service chief executive, and Sir Jeremy Heywood, the Cabinet secretary.
Deloitte itself said it "apologised for the unintended disruption" caused by the note and had submitted a "plan for working with central government to put this matter behind us".
However, the Times cites an "industry source" saying "civil servants were not at all keen" on the punishment and that it was simply a case of "government by rage".
Other consultants "who routinely work with government" are said to have reacted with anger, comparing the reaction to former Libyan dictator Muammar Gaddafi and saying the government was shutting down open debate on the consequences of Brexit.
One said: "You want an advisory market, a British market that is thinking about these things, that is not scared to be thinking about these things. Otherwise it is like a Stalinist state, isn't it?"
Another told the paper: "This is clearly becoming the kind of No 10 people will have to treat with long tongs.
"Business now wouldn't dream of going to them and engaging in any sort of sensitive conversation because they don't want to hear difficult messages."
The Times itself in an editorial said the Prime Minister's "skin seems to get thinner by the day".
Deloitte's two-page note, written by a consultant working on Whitehall contracts, was leaked to the Times in November and claimed the government was "struggling to cope with 500 Brexit related projects".
It also alleged that Cabinet splits on Brexit were preventing the government from forming a coherent negotiating strategy before triggering Article 50.
May accused Deloitte of "touting for business" and sternly rebuked the Times and the BBC, which highlighted the story prominently on its Today programme on Radio 4, says the Daily Telegraph.
Banks 'could sue Brussels' for transitional Brexit deal
London-based banks would have grounds to bring legal action against the European Commission if officials in Brussels fail to "cushion the blow of Brexit", says The Times.
In a report drawn up for banks lobbying for a "transitional" Brexit deal, law firms Linklaters, Clifford Chance, and Freshfields say there is international legal precedent for a case should rights to operate across the continent be withdrawn suddenly.
Specifically, they argue that under the Vienna Convention on the Law of Treaties, companies "have a right to 'legal certainty' of a stable regulatory environment", says The Independent.
Consequently, if negotiations between the UK and EU lead to a so-called hard Brexit with no interim arrangement, banks could bring a lawsuit against the commission to recoup lost earnings.
"There is no indication that banks are considering actually using the law to challenge the EU," says the Times.
It adds that "lawyers are divided over the chances of success", saying: "Some argue that anything agreed under Article 50 of the Treaty of Lisbon would override the Vienna Convention."
However, says the Independent, "the fact that banks and lawyers are exploring these options shows the work they are doing to find work arounds".
Banks will hope the spectre of legal action will be another persuasive argument to agree an interim arrangement that would maintain existing rules for several years after any formal Brexit.
There have already been calls for such a deal from several committees at the House of Lords and Chancellor Philip Hammond is known to be in favour. The Bank of England has also warned about the consequences of a cliff-edge EU exit.
Brexit Secretary David Davis and International Trade Secretary Liam Fox are far less amenable, but both have sounded more open to the idea in recent weeks.
The banks' particular concern is around the loss of the "passports" they have to operate across the whole of the EU without the need to be registered or regulated in any other country, an entitlement they receive because the UK is within the single market.
Several firms have indicated they could seek to move some operations to the continent unless certainty is offered in the coming months.
Fox hints at 'transitional' Brexit deal inside customs union
Liam Fox has suggested that Britain could remain within the European Union's customs union after leaving the bloc.
The International Trade Secretary also hinted that the government is warming to the idea of a "transitional" Brexit deal after it triggers Article 50.
In his first broadcast interview since returning to cabinet in July, Fox said the options were "a little more complex" than a binary choice between hard or soft Brexit - and he cited Turkey as an example of a country that was "in parts of the customs union but not other parts".
"I hear people talking about hard Brexit and soft Brexit as though it's a boiled egg we're talking about," he told the BBC's Andrew Marr Show yesterday.
The customs union includes all 28 EU member states, alongside Monaco. Countries including Turkey, San Marino and Andorra are in the customs union for certain sectors, but not others.
In Turkey's case, it is part of the union for goods but not services.
The customs union is a key part of the EU common market: it allows tariff-free trading between members, but imposes common tariffs on goods originating from outside.
So, if Britain were to remain part of the customs union for some sectors, it could not sign its own trade agreements with countries outside the EU.
A key benefit in the eyes of Brexit ministers – and evidenced by the case of Turkey – is that the UK would not be forced to accept free movement of people. It would be giving up some of its free trade autonomy but gaining control over immigration.
"I'll argue my case inside Cabinet, rather than on the programme. I remain… instinctively a free trader," Fox said, according to the Daily Telegraph.
Fox also indicated the government could pursue a transitional arrangement with EU officials to preserve single market access for a time, before striking a fresh trade deal with the bloc.
This arrangement has been strongly advocated by several Lords committees and is being championed by Chancellor Philip Hammond, as it removes the "cliff-edge" risk of Brexit to financial services firms in particular.
As such, it is argued, it could persuade firms in this important industry not to shift activities and cut jobs amid Brexit uncertainty, before a final deal is even struck.
Brexit: Japanese banks set six-month deadline for move to continent
Several Japanese banks have warned they will begin moving from London to the continent within the next six months if the uncertainty over Brexit continues.
At a meeting earlier this month, financial firms including Nomura and Daiwa told City minister Simon Kirby and international trade minister Mark Garnier they would move "certain functions" unless they received "clarity on the UK’s future relationship with the EU", The Financial Times reports.
At issue is "passporting", an EU deal that allows UK-based banks to operate across the single market without being registered or regulated in any other country.
If the UK remains a member of the single market, it will retain these rights. It could also do so with a bespoke deal that ensures regulatory "equivalence" with the EU.
However, it is unlikely there will be any clarification on this by June.
"One of [the executives] said the companies knew there was only a slim chance of the UK being able to guarantee passporting, and the banks’ objective was to explain their likely actions to the government," says the FT.
One option to give some certainty, at least for a period, is the agreement of a "transitional" deal to keep single market access for several years after Brexit, preventing banks and others firms having to make short-term decisions that would hurt the UK economy.
It is the option several Lords' committees have called for and is also being championed by Chancellor Philip Hammond.
However, some Tory ministers see it as a way to delay or even prevent leaving the EU and Brexit Secretary David Davis is known to be lukewarm on the proposal.
The Japanese banks are not the only companies looking over the water. Lloyds of London, the 328-year old insurance market, yesterday said it is working on plans to set up a subsidiary on the continent in case the UK does not secure a "no change" deal with Brussels, says the FT.
The subsidiary would be based in any one of five European financial centres and would provide a base for the 11 per cent of Lloyds' business that comes from EU-based clients.
Brexit trade deal will 'take ten years to agree', says UK ambassador
A bespoke Brexit free-trade deal between the UK and the European Union could take ten years to finalise and even then could fail, the UK's ambassador to the bloc has privately warned.
The BBC says it understands Sir Ivan Rogers, who "conducted David Cameron's negotiation over the UK's relationship with the EU prior to the referendum in June", warned ministers in October of a "European consensus… that a deal might not be done until the early to mid-2020s".
It adds that "he also cautioned that an agreement could be rejected ultimately by other EU members", with ratification at his point required by all national and even some regional parliaments.
Under EU rules, an agreement struck during the two-year timeframe outlined by Article 50 only needs to be approved by a qualified majority - 20 out of the 27 remaining member states.
However, if the UK fails to conduct a deal before the deadline expires but leaves the bloc anyway, it will have to agree any deal as an outsider, as Canada has done over the past six years.
Similarly with the Canadian accord, full and unanimous support will be needed for such a complex and far-reaching agreement with a non-member, meaning that regional governments such as Wallonia in Belgium will also have an effective veto.
Rogers is said to have suggested "that the expectation among European leaders was that a free trade deal, rather than continued membership of the single market, was the likely option for the UK after Brexit". That's been the consistent line from prominent pro-Brexit politicians too.
As such, based on the ambassador's warning, the UK may spend years without a formal arrangement in place, suggesting tariffs on trade with the EU and no access to the single market for financial services firms.
This could harm the UK economy and persuade ministers to consider a "transitional" deal to maintain EU market access until a formal trade deal can be reached.
A House of Lords report this week called for such an interim agreement. It is also being publically supported by Chancellor Philip Hammond.
Brexit Secretary David Davis has long been seen as less favourable to such a deal. However, he told a parliamentary committee yesterday he would be prepared to consider it "if it is necessary", says the Daily Telegraph.
Brexit: Banks will start leaving London next year, peers say
International banks will start leaving London as early as next year unless there is certainty on EU single market access in the medium term in the form of a transitional Brexit deal, a House of Lords report will warn tomorrow.
According to The Guardian, the peers "have been struck by the urgent need for financial institutions to make decisions on their location".
Banks "cannot wait until the end of Brexit negotiations in 2019 to find out if they can trade in the single market", they say, and need at least a year to instigate any move "because the relevant financial arrangements take a year to unwind".
London has become the world's financial centre, say experts, because it shares a language and cultural ties with the US and also offers "passporting" access to the largest single market in the world.
However, that access is under threat following the vote for Brexit in June and several banks have intimated they may shift jobs to the continent in response.
This could range from just a few positions to cover clearing activities for euro-denominated transactions to relocating their headquarters on the continent.
The peers also heard a claim from Ernst & Young, commissioned by the London Stock Exchange, that as many as 200,000 jobs are "at stake" across banking and related support sectors.
The report by the peers' Brexit sub-committee report is the fourth on the mechanics of exiting the EU to warn on the dangers of leaving the single market.
An earlier study this week from two sub-committees also called for a transitional deal to guarantee single market access beyond the formal EU exit and avoid a "cliff-edge".
That report featured expert testimony that there is "no foreseeable scenario where Britain was in a stronger position outside the single market", in terms of the balance between sovereignty and ability to secure lucrative trade deals.
Xavier Rolet, the chief executive of the London Stock Exchange, said "the article 50 negotiating process would make it hard to secure the smooth transition that he wanted".
He added: "Article 50 was designed with exactly the opposite set of objectives in mind; that is, to impose and enforce such a reduced timeline to raise the cost of exiting the EU and make it punitive, or to create a level of uncertainty.
"This is our number one concern."
Brexit: 'No scenario where UK is stronger out of single market'
There will be no "free lunch" in Brexit negotiations with the EU, a cross-party group of peers has warned.
In a scathing report on the government's plans for leaving the bloc, two House of Lords sub-committees say the government is "underestimating the consequences of its limited negotiating position", reports The Guardian.
The peers also reflect unanimous evidence from experts that there is "no foreseeable scenario where Britain was in a stronger position outside the single market".
Despite this, they say the establishment of the Department for International Trade shows the government has already committed to leaving the single market, but call for a transitional Brexit deal to "ease the pain".
Peers considered four models for life outside the EU, starting with the "softest" option of a Norway-style membership of the European Free Trade Association which would allow access to the single market.
At the other end of the spectrum they reviewed an ultra-hard Brexit falling back on World Trade Organization (WTO) rules.
Also under consideration were having Turkey-style access to the EU customs union and a free trade deal similar to that struck with Canada.
Overall, the experts all agreed that "far from escaping the protectionism of 'Fortress Europe'… walking away entirely and relying on the WTO tariff regime could both push up food prices and introduce huge uncertainty for UK farmers".
In particular they pointed to the need to "fight to inherit quotas agreed under opaque WTO 'schedules'".
The peers' report says: "While the UK could unilaterally decide to lower its tariffs on agricultural goods, this could complicate the process of agreement to its schedules and reduce its leverage in future… negotiations”.
In short, said Dr Ulf Sverdrup, the director of the Norwegian Institute of International Affairs, "there is no free lunch".
Retaining membership of the single market would require significant compromises, such as accepting free movement of people for work and contributing to the EU budget. Even having access to the customs union would require the UK to retain equivalence with EU laws.
Both options are being fiercely resisted by some Conservative MPs.
Overall, the committees warn that the UK is unprepared for the complex negotiations and says that the government should agree a transition deal that will prove "vital for protecting UK trade, and jobs that rely on trade".
Brexit Britain needs low-skilled migrant workers, says CBI
Debates about immigration post-Brexit need to move on from discussing highly-skilled professionals, says the director-general of the Confederation of British Industry.
Speaking to a select committee of MPs, Carolyn Fairbairn said there was a continuing call for migrants because the UK's young unemployed were generally unwilling to move to areas where they were needed,The Daily Telegraph reports. She also argued that there were too many unskilled jobs to be filled in any case.
"There are parts of the country where unemployment is really, really low [such as Exeter]. Many of the young unemployed people are on the other side of the country and they are not going to come down to Exeter, and they don't," said Fairbairn.
Sectors such as construction and elderly care were particularly vulnerable to a crackdown on low-skilled labour, she said. "We have an aging population and a real demand for people who are happy to come and care for our aging population… It is time to move off the theory and on to understanding where we really do have these stresses and strains in the economy."
Earlier this month, a leaked account of discussions among Cabinet members revealed some senior ministers are pushing to allow high numbers of low-skilled workers to continue entering the UK.
Concern was focused on seasonal short-term work, such as fruit and vegetable picking. The National Farmers Union has warned a slowdown in migration from the EU since the referendum means some produce may go unpicked this year.
In general, there are around 1.6 million unemployed people in the UK, but 5.5 million foreign workers, including 3.5 million from Europe.
Uncertainty over the changed landscape for hiring in the wake of Brexit is giving businesses the jitters and hindering investment.
Declining business investment is the main factor behind weaker growth estimates for next year, with the Business Chambers of Commerce (BCC) today saying economic expansion will fall from 2.1 per cent this year to 1.1 per cent in 2017.
Adam Marshall, the director general of the BCC, told The Guardian: "While some firms see significant opportunities over the coming months, many others now see increasing uncertainty, which is weighing on their investment expectations and forward confidence."
David Davis 'deluded' over Brexit transition deal
David Davis has come under attack from officials in Brussels after saying he would only offer the EU a transitional deal following Brexit to "be kind" to the remaining members, reports the Financial Times.
The comments were reportedly made at a private meeting with the City of London Corporation last month, in which the politician is said to have opposed a deal in principle as it "would not benefit the UK and could delay the Brexit process", adds the paper.
It continues: "Davis accepted, however, that Britain's 'sudden' departure could compromise the EU's financial stability and said he would be 'more in favour' if the EU asked Britain for a transition. 'I will be kind' he said."
But EU officials have bristled at the suggestion it is Brussels that will push for an interim arrangement to offset the damage of a sudden Brexit.
One senior official called the suggestion "deluded", saying: "There is a denial of reality in London." Another said: "I'm fed up with British politicians… They have no clue."
"Financial companies have pressed the government to agree a transition period after Britain leaves the bloc and before new trade terms are finalised, during which current arrangements remain in place," says the FT.
The financial services sector in London is critical to the UK economy: last year, it accounted for a record £74.1bn in tax revenues, or 11.5 per cent of the UK total, according to figures compiled by PwC.
Bank of England governor Mark Carney has pointed out that "over half of the equity and debt raised by eurozone companies was issued in the UK" and so stability in financial relationships after Brexit is also critical for the EU, says the FT.
More recently, adds the paper, Davis has sounded more open to a transition deal and "is working more closely with Philip Hammond, the Chancellor and strong advocate of a smooth, gradual exit".
At a meeting with the Chancellor and senior bankers last week, Davis was said to be "not dismissive" of an interim arrangement. Both men also said the City would get no special deal for Brexit.
Brexit: City banks 'in advanced talks over move to Paris'
Several major banks are in "advanced" talks about moving a number of their operations from London to Paris ahead of Brexit, says The Independent.
Benoit de Juvigny, France's main financial regulator, told BBC Newsnight last night that a number of large international financiers were already conducting formal due diligence in preparation for a move.
He said: "In some cases, I would say we are still at the level of inquiries or informal inquires by consultants, by lawyers and so on.
"But in other cases, especially regarding large international banks, it's a normal informal enquiry but they have been undertaking due diligence and we are receiving lots of practical questions regarding the way they are going to be managed from our perspective."
Rumours have long circulated that City banks might move some centres to the continent after the UK leaves the EU, but "the extent to which these plans have been progressed has been hard to ascertain - until now", the BBC says.
The disclosure is an "important milestone", it adds. "Due diligence is the process of close scrutiny that major businesses go through prior to a major deal. It is detailed and expensive, and even wealthy banks don't undertake it lightly."
A hard Brexit, in which the UK leaves the single market, would probably come at the cost of the "passport" banks have allowing them to operate freely across the EU. Chancellor Philip Hammond and Brexit Secretary David Davis also admitted this week there would be no special deal for the City of London's financial hub.
For Wall Street giants in particular, this undermines a key part of London's allure.
A move would probably involve a portion of the banks' activities, euro-denominated trading in particular, rather than a wholesale exodus.
However, it's not certain Paris will get the nod. The BBC says "Paris, Frankfurt, Dublin, Luxembourg, Amsterdam, Madrid, Bratislava, and the Maltese capital, Valletta" are all "actively vying for this business".
Fixed costs in Paris and Frankfurt are ten to 15 per cent higher than in London, eFinancialCareers says, and the City, along with Nordic countries and Spain, has the most efficient return on capital in Europe.
Banks are "likely to feel sorry that they can't just keep all their operations based in London", adds the site, and "moving to Madrid makes more sense than Frankfurt or Paris" if they want to cut costs.
ONS blunder boosts UK post-Brexit trade gap by £6bn
A statistical error means the size of Britain's trade deficit with the rest of the world in the lead-up to the Brexit vote was significantly narrower than previously thought – but is also £6bn worse in the months since.
The Office for National Statistics (ONS) "has discovered a mistake in the way it accounted for imports and exports of 'erratic' goods such as gold, silver, precious stones, aircraft and ships," says Sky News.
That means the trade deficit – the gap between money, goods and services flowing into and out of the country – was "not as bad as was thought".
Full revisions published today cover the whole of 2015 and the first half of this year and amount to an aggregated reduction of £10bn in the trade gap, £3.3bn of which related to the first six months of this year.
The deficit of seven per cent of GDP for the final three months of 2015, which would have been the worst ever, now comes in at six per cent, says The Guardian.
For the second quarter of this year, immediately prior to the referendum, it was 5.4 per cent, down from a previously estimated 5.9 per cent.
Given the warnings, including those of Bank of England governor Mark Carney, about Britain's reliance on the "kindness of strangers", the figures will be seized on by Brexiters as another sign of the Remain camp's 'Project Fear' unravelling.
But the trade deficit for last year was still "the largest on record" – and the revisions show things have deteriorated more sharply than thought since June.
"The gap between imports and exports… has widened in the three months to the end of September and reached a record £17bn, which is £5.9bn worse than initially thought," says Sky.
It's not the only statistic published today that points to economic deterioration since Brexit. The ONS revealed output by manufacturers dropped by 0.9 per cent in October, says the BBC.
This surprised economists "who had predicted a rise" – and comes after a 0.4 per cent rise in September.
City of London 'will not get special Brexit deal'
The UK's powerhouse financial hub in the City of London "will not get any special treatment in the upcoming Brexit negotiations", says the Daily Telegraph.
Chancellor Philip Hammond and David Davis, the Brexit Secretary, are reported to have made the announcement as they met some of the country's top bankers for the first time to discuss the UK's departure from the EU.
The industry leaders included bosses from Lloyd’s of London, Barclays, Santander, BlackRock and Goldman Sachs, says the Financial Times.
"There was quite a blunt warning that politically, the government does not want to be seen to do a deal to favour rich bankers, if it doesn't comply with Brexit voters' wishes," said one of the financiers.
Another said: "The message was, 'You’re not the only sector. You’re a very important sector but you're not the only sector and so what we have to do is to understand how we factor in your needs along with the needs of the other sectors.'"
This likely means the UK will not "precisely keep EU finance rules", which could lead to companies losing their "passports" to operate freely across the single market, says the Telegraph.
It adds that "as a result, the government and the Square Mile expect a modest amount of business and jobs to move from the UK to other European financial centres".
That would deal a blow to the UK's wider finances: a report from consultants PwC yesterday estimated the financial services sector contributed record-high tax revenues of £71.4bn last year, making up 11.5 per cent of the UK total, says the FT.
However, there were some positive signs of a "soft landing" for the City.
One banker at the meeting said Davis was "not dismissive" of a transitional Brexit deal to "allow current trading rules to continue for a limited period", despite long-standing opposition to such an arrangement.
The two ministers also discussed options for the City, including one based on regulatory "equivalence" between Britain and the rest of the EU.
Under European directives, this could grant third-party passports to UK financial service companies allowing them to operate across the bloc.
Ministers 'want low-skilled labour to come to UK after Brexit'
Ministers are pressing for any post-Brexit immigration deal to continue to allow large numbers of low-skilled migrants to come to the UK for work, says Sky News.
The revelation, from sources briefing on "Brexit Cabinet" discussions at the top of government, highlights concern at the effect of a major clampdown on immigration on sectors such as "agriculture, hospitality, construction and social care".
One minister said there is now an admission that "we can't just talk about high-skilled people; it has to be low skilled as well".
A lack of public admission of such discussion reflects concern at the public perception of low-skilled migration and fears of a drag on wages, which Bank of England studies have frequently claimed are unfounded.
Particular concern has been raised by farming unions, who say a drop in migration following the vote for Brexit means there are currently only enough fruit-pickers to harvest around two-thirds of Britain's "late-season crops such as potatoes and brassicas", says the Financial Times.
Figures last week showed record migration to the UK from Europe in the year to June. However, one agriculture employment agency said many Europeans have stayed away since the referendum.
John Hardman, the director of Hops Labour Solutions, said migrants can "go to Germany, Holland and Belgium, with better conditions and earn better wages since the devaluation of the pound has reduced their net income by 15-20 per cent".
Sajid Javid, the Communities Secretary, earlier this year raised concern that a clampdown on immigration in the construction sector could affect plans to build millions of new homes. Restaurants, bars and care homes also heavily rely on foreign workers.
Overall, there are around 1.6 million unemployed people in the UK. Around 5.5 million foreigners, 3.5 million from the EU, work in the country.
This implies that a sharp fall in immigration could leave some sectors very short of labour and skills. Economists also argue it would be damaging to productivity.
A source familiar with talks between No 10 and the Home Office said: "The public now view immigration as a numbers game… some people in government need to recognise where the public are on this," reports Sky.
A Home Office spokesperson said: "Government has been clear that, as we conduct our negotiations, it must be a priority to regain more control of the numbers of people who come here from Europe."
Pound surges after Davis drops soft Brexit hint
Sterling jumped to its highest level in nearly three months yesterday, after Brexit Secretary David Davis said the government would consider making contributions to the EU budget in exchange for access to the single market.
That would signal a prioritising of single market access, or soft Brexit, that many economists and others feel would avert substantial damage to the UK economy.
Responding to a question from Labour MP Wayne David on whether he would "consider making any contribution in any shape or form for access to the single market", Davis said the government would look at all available options during the Article 50 process over the next two years.
Downing Street was quick to downplay the suggestion, saying Davis's view was "consistent with what we have said to date".
However, markets and commentators seized on the statement, causing the pound to surge 0.63 per cent to €1.18 and rise one per cent against the dollar to more than $1.26.
German Christian Democrat MEP Reimer Boge, the former vice-chair of the European Parliament's budgets committee, suggested the UK could pay between €4 and €5bn a year for the highest levels of access to the single market.
That would represent the fee to be a member of the European Economic Area, equivalent to the status of Norway and not far off the amount the country currently pays for full membership.
"If you want something you are obliged to pay for it. This is part of the deal," said Boge.
Theresa May has repeatedly stressed she will seek a bespoke deal for the UK rather than pluck an existing model off the shelf.
"EU diplomats are also sceptical the UK would opt for maximum access to the single market, which would require accepting EU rules on free movement of people and the writ of the European court of justice", says The Guardian.
Brexit: Farmers demand 'tariff-free single market access'
Farming unions and dozens of major UK food producers and retailers have collectively issued a demand to retain "tariff-free single market access" as part of any Brexit deal.
In an open letter to The Times, all four main farmers' unions and "71 leading food businesses", including the bosses of Sainsbury's, Morrisons and Marks & Spencer, acknowledge Brexit could "be beneficial not just for our sector but for the wider economy too", but say is "vital" they are able to retain tariff-free trading with the world's largest single market.
They add that more than 75 per cent of UK food exports go to the bloc, "so all our farming and food businesses wish to achieve this outcome".
The letter continues that it is "essential" that farmers in particular continue to have "access to EU and non-EU seasonal and permanent labour, alongside assurances that EU workers already working permanently in the UK are allowed to remain".
The Financial Times says "British horticulture depends on the EU for more than 98 per cent of its seasonal workforce".
A survey published by the National Farmers Union (NFU) this week found half of all companies providing agricultural labour said they were unable to fill demand for workers between July and September.
It put this down to a combined Brexit effect of the weak pound effectively reducing the earnings of those only in the country for a short time and the UK being seen as a less attractive destination for European labour since the referendum.
"Romanians and Bulgarians have had the view that Britain is a xenophobic, anti-European place and that they can go to Germany, Holland and Belgium, with better conditions and earn better wages," said John Hardman, the director of agricultural recruitment agency HOPs Labour Solutions.
The NFU has called for an "urgent" trial of a visa system that would ensure a continued flow of EU workers – and warned of "very real risk that British fruit and vegetables will be left to rot… in 2017".
Continued single market access could be facilitated in a number of ways, including through full membership, bilateral deals in the manner of Switzerland, or even sector-by-sector arrangements.
Brexit: Legal challenge over single market plans
A legal wrangle is looming over whether the UK stays inside the single market after it has left the European Union, reports the BBC.
Lawyers argue leaving the European Economic Area (EEA) would not be automatic upon Brexit, while the government says membership will end.
British Influence, a pro-single market think-tank, has announced it is writing to David Davis, the Brexit Secretary, to inform him it will seek a judicial review of the government's position.
"There is a strong chance that the UK will be acting unlawfully by taking us out of the EEA with Brexit," said the group's Jonathan Lis.
He added that British Influence will be petitioning the courts for "urgent clarification" through a judicial review.
"If the courts back the legal challenge and give Parliament the final say over EEA membership, then MPs could vote to ensure that Britain stays in the single market until a long-term trading relationship with the EU has been agreed," the BBC says.
Professor George Yarrow, at the University of Oxford, said: "There is no provision in the EEA agreement for UK membership to lapse if the UK withdraws from the EU."
The only specified exit mechanism to leave the single market is Article 127 of the EEA agreement, he added.
It is a view endorsed by Jolyon Maugham QC, who said: "Given Article 127 provides an express mechanism for withdrawal, it implicitly excludes other implied mechanisms for withdrawal such as ceasing to be a member of the EU."
However, a number of Conservatives have attacked what they call a "legal wheeze" to "frustrate the will" of the British people. Pro-Brexit MP Dominic Raab said the lawyers should be working to make Brexit a success.
He said: "The public have spoken. We should respect the result and get on with it, not try to find new hurdles that undermine the democratic process."
A government spokesman told the BBC: "As the UK is party to the EEA Agreement only in its capacity as an EU member state, once we leave the European Union we will automatically cease to be a member of the EEA. The referendum result will be respected and we intend to invoke Article 50 no later than the end of March next year."
How much is the 'Brexit black hole'?
Britain's finances are suffering from a big Brexit-related "black hole", according to official forecasts. The only discrepancy is how big it really is.
Chancellor Philip Hammond yesterday said the national debt will rise to £1.945trn by the end of this parliament. "That is an increase in the cash level of debt of an eye-watering £220bn", says ITV News's Robert Peston.
He adds that these forecasts came alongside an Autumn Statement outlining a massive shock to the economy after the EU referendum, so it is "reasonable to characterise that £220bn increase in the national debt as the financial cost of Brexit".
However, it is not the direct cost of leaving the European Union. Even on George Osborne's watch, the UK was expected to run a budget deficit until 2019/2020 so much of that additional debt was already expected.
According to iNews, the specific deterioration in these first forecasts post-Brexit vote was actually £122bn, which comes from higher borrowing in each year of this parliament, including a swing from a surplus of £11bn to a deficit of £21bn in the final year.
That figure, though, includes £27bn of "headroom", says the Financial Times, as well as "structural weakness in tax receipts… [and] some changes in definitions mostly affecting the timing when the government can book corporation tax revenues".
Borrowing caused by lower growth - and therefore reduced tax receipts - as a direct consequence of Brexit comes in at close to £59bn, says the paper.
You could add to that the £26bn worth of additional spending yesterday, which is mostly to offset some of the effects of the hit to the economy over the coming five years.
However, whether the deficit is £59bn, £85bn, £122bn or £220bn, it is clear "Brexit has cost Britain on every measure worth looking at", says Philip Aldrick in The Times.
He adds that the Office for Budget Responsibility Real (OBR) now predicts wages will shrink next year and that over the next five years, unemployment will rise by 100,000, the economy will be 2.4 per cent smaller than it would have been and productivity will slow.
Brexiters say the figures are wrong and merely a continuation of "Project Fear" and designed to boost support for wriggling out of Article 50, says The Guardian.
Eurosceptic Iain Duncan Smith, the former work and pensions secretary, told Sky News: "The key thing is that the OBR has been wrong in every single forecast they've made so far. On the deficit, on growth, on jobs, they've pretty much been wrong on everything."
Hewden hire company collapses in wake of Brexit warning
Heavy machinery hire company Hewden has collapsed into administration, weeks after warning of a Brexit-related hit to trading.
Administrators at EY were called in last week and more than 250 of around 750 staff have been made redundant.
In a statement last month, the firm warned it had been "impacted by market uncertainty following the vote to leave the EU", says Sky News.
The company added: "The vote has adversely affected a number of large construction and capital investment projects."
Sam Woodward of EY confirmed Hewden has "collapsed into administration" says the Daily Telegraph.
The Guardian says 133 staff will move to rival Ashtead, which has bought parts of the operation in a £29m deal, but the fate of the remaining workers remains in the balance.
It will be argued that the news emphasises the hit to the economy to come from Brexit, which is thought to be slowing business investment, especially in areas such as construction, as bosses wait to see how the UK's relationship with the EU will shape up.
This was cited as a potential factor in the announcement from builders' merchant Travis Perkins that it is closing 30 branches and cutting 600 jobs.
However, Hewden has been struggling for some time. The Telegraph says its most recent accounts, covering the year to December 2014, revealed losses of £16.6m on sales of £105m.
"Prior to its collapse Hewden was struggling to refinance its £190m debt pile, as the terms on the debt came close to expiring," the paper adds.
The Manchester-based company has been owned by turnaround private equity firm Sun European since 2010.
Unite union's national officer Bernard McAulay said: "This is a sickening blow for workers in the run up to Christmas and is the result of a succession of venture capitalists hawking Hewden around the market over a number of years to make a quick buck."
Has Brexit wiped £1.2trn off UK wealth?
Headlines this morning have put a price on the cost of Brexit on UK households - $1.5trn, or £1.2trn when converted back into sterling.
The claims are based on Credit Suisse's annual Global Wealth Report, which converts each country's aggregate asset worth into dollars in order to rank the richest and analyse the distribution of wealth between and within nations.
In the UK's case to the end of June, in the immediate aftermath of the Brexit vote, total UK wealth was shown to have fallen by around 10 per cent, or $1.5trn.
This wiped $33,000, or about £26,700, off the average wealth per adult, which now stands at $289,000, or £232,000, says The Times. Dragging this lower is a fall in the number of very rich people, with the UK 406,000 fewer dollar millionaires.
However, this does not mean we are actually poorer since the referendum.
The fall is wholly the result of the drop in value of the pound against the dollar, which Credit Suisse put at 15 per cent up to the end of June.
When measured purely in sterling, the value of UK wealth grew six per cent compared to last year, says Sky News.
Added to that, the FTSE 100, the benchmark UK stock index, languished below 6,000 in the week after the referendum but has since rebounded to more than 6,800 today – and has been above 7,000.
One real effect tracked by Credit Suisse that has been borne out by wider studies is a fall in top-end property prices, although broader house prices have continued to edge higher despite Brexit uncertainty.
The net result of all this is that UK wealth is higher than last year and its distribution is mostly unchanged, with the top one per cent owning around 24 per cent of the total.
Oxfam, the anti-poverty charity, said the figures showed continuing inequality in the UK, but Credit Suisse said it "was no greater than in any other western country", says the Times.
It added: "The pattern of wealth distribution in the United Kingdom is fairly typical for a developed economy."
Pound breaks thorugh $1.25 after retail sales surge
Sterling enjoyed a mostly strong day yesterday after positive UK retail figures boosted optimism about economic growth and strengthened the case against further interest rate cuts.
At one point the pound broke above $1.25 against the dollar, while against the euro it jumped to €1.11622 this morning.
It has kept on rising against the single currency since then, hitting €1.1693. Against the dollar the rally ran out of steam,however, and the pound fell back below $1.25 before sliding further in New York trading. This morning it was at $1.2416, essentially unchanged.
Retail sales data published by the Office for National Statistics (ONS) yesterday shows that shoppers upped their spending by 1.9 per cent in October compared to September.
That's the fastest rise since April 2002, says Sky News. Online transactions also increased at their fastest pace in five years.
ONS says the October jump, which came after a disappointing September, was driven by colder weather increasing the demand for warmer autumnal clothing. It was also triggered by a strong Halloween period for supermarkets amid continuing food price deflation.
The falling pound could also be having a positive effect on sales, says the International Business Times, as it boosts the spending power of tourists.
As the economy is so heavily dependent on the services sector, of which retailers are a large component, the stronger economic reports in the past month or so suggest growth will be steady in the fourth quarter – and so for 2016 as a whole.
The pound eventually gave up gains against the dollar after the greenback was bolstered by the Federal Reserve's hints of an interest rates rise next month.
Traders are already convinced the central bank will increase borrowing costs again at its next meeting, but comments from its chair Janet Yellen last night have only made them more so.
"Such an increase could well become appropriate relatively soon," said Yellen, according to the Wall Street Journal. She also cited higher forecasts for inflation since the election of Donald Trump.
Brexit fears 'cooling' employment market
Uncertainty following the shock Brexit vote in June could finally be feeding through into the employment market, the Office for National Statistics warns.
For the three months to the end of September, unemployment across the UK fell by 37,000, taking the headline jobless rate (the proportion of people looking for work but unemployed) from 4.9 to 4.8 per cent.
That's the lowest unemployment figure since the three months to September 2005, says the BBC. At the same time the number of people in work has risen by 49,000 to a record 31.8 million.
But while these figures continue to point to a steady employment market post-EU referendum, ONS statisticians did point to some signs that it "might be cooling".
The latest data shows a decline in the employment growth rate, with 106,000 jobs having been added in August and a consensus estimate for 91,000 this time around.
Employment figures are extrapolated from a survey of 40,000 households. The fall in unemployment was well within the margin for error for the data.
Wage growth remained steady at 2.4 per cent excluding bonuses.
The British Chambers of Commerce (BCC) said Brexit was "dampening firms' recruitment intentions" and that this would put "increased pressure on UK employment levels".
BCC head of economics Suren Thiru added: "These subdued labour market and economic conditions are also expected to keep a lid on wage growth over the next year, despite higher than expected levels of inflation."
The Times says the data also reveals a huge increase in the proportion of foreign-born workers who have joined the labour force over the past year.
"The number of people in work increased by 454,000 between July and September last year and the same period this year, workers born overseas made up nearly 95 per cent of the increase – just over 430,000."
But analysts say that with unemployment at very low levels and economic growth ahead of other countries, "it was inevitable that most jobs growth would come from overseas migrants".
In fact, Jonathan Portes, a fellow at the National Institute of Economic and Social Research, says "substantial reductions in immigration, resulting from Brexit or from the government’s efforts to cut immigration more generally, will hit growth and tax receipts.”
Brexit fears prompt businesses to ditch £65bn of investment
15 NovemberA third of British businesses abandoned more than £65.5bn worth of investments in the wake of the vote for Brexit, says Sky News.A survey of 1,000 "senior business executives", commissioned by Hitachi Capital and conducted by YouGov and the Centre for Economic and Buyout Research, found that more than four in ten large or medium-sized firms have abandoned or postponed planned investments.Smaller businesses were more resolute, but overall a third of companies said they had chosen to cancel or delay spending plans in the wake of the shock EU referendum result.One of the main reasons given, cited by more than a fifth of the companies, is the fall in the value of the pound, which is down by around 18 per cent against the dollar since June and means buying in supplies from overseas is more expensive.Two other key concerns, also cited by around a fifth of affected firms, are uncertainty over access to the European single market and worries over a general hit to the economy."It is thought the lost or postponed investments were worth somewhere in the region of £65.5bn," says Sky News.More positively, 70 per cent of firms said they would resume investment if there was clarity on Britain's future relationship with the single market, prompting Robert Gordon, chief executive of Hitachi Capital, to call on the government to "take steps to ease concerns".He added: "Exports from the EU to the UK totalled £290bn in 2015… With this in mind, businesses must not forget we are in a strong position when it comes to ensuring that the UK negotiates the best possible trade deals."As well as hitting business investment, the fall in the pound is likely to lead to a surge in inflation next year that could have an impact on consumer spending and the economy.The Office for National Statistics reported a surprise fall in consumer price inflation from one to 0.9 per cent last month, says the BBC, but it says that factory prices have risen at their fastest rate since April 2012 and that this could feed into shop prices.
City-based banks could face 'nightmarish choices' after Brexit
London-based banks could face "nightmarish choices" if Brexit removes their power to process euro transactions, the Japanese ambassador said yesterday.
Speaking to a House of Lords committee on the UK's departure from the EU, Koji Tsuruoka said banks "have come a long way to establish the most efficient clearing house here in London" and to go elsewhere "would be a huge challenge", reports The Guardian.
He added: "It would be nightmarish if you think about the business decision they would be forced to make."
Koji Tsuruoka also warned that the complexity of this could mean a Brexit deal will take longer than the two-year window envisioned by Article 50, making it necessary to negotiate a transitional arrangement.
Having access to the European single market has helped make the City of London the world's preeminent financial centre. Banks based in the capital can not only trade freely across the continent, they can also use the city as a base to process all of their euro-denominated business.
Euro clearing rights outside the single currency zone have long been opposed by the likes of France, which the Guardian says has insisted it is not "prepared to see the main [euro] clearing house outside of the EU".
The situation adds to fears Brexit could hurt the UK's most valuable sector if banks decide to relocate abroad. This in turn would hit tax revenues and shrink the economy.
Jamie Dimon, the chairman and chief executive of JPMorgan, which has its European HQ in London, also said the UK may need a "transitional deal" to allow banks time to adapt to the country leaving the EU, says Sky News.
Prior to the referendum, Dimon said JPMorgan could move 4,000 jobs outside the UK if Brexit hit the bank's ability to do business in Europe.
More positively for the City, China yesterday issued a statement pointing to "closer ties" with the UK financial sector despite Brexit, says Reuters.
It added that Agricultural Bank of China (UK) and Shanghai Pudong Development Bank, among others, would open branches in the UK, while the China Banking Association and the Shanghai Clearing House will also open a London office.
UK trade deficit widens in spite of pound slump
Britain's trade deficit widened unexpectedly in September, despite the boost to exports following the sharp fall in the value of the pound.
The gap between imported and exported goods and services increased by £1.6bn to reach £12.7bn, says the Office of National Statistics.
In particular, imports of ships, materials, vehicles and oil rose by £1.3bn to £38.8bn, while exports fell by £200m to £26.1bn.
The disappointing performance suggests "the 16 per cent fall in the value of the pound since the EU referendum in June failed to lift exports, despite making British goods cheaper abroad", says The Guardian.
Reports from the likes of Markit suggest export order books post-referendum have been boosted by sterling's slump
However, Alan Clarke, an economist at Scotiabank, said: "Export growth tends to be driven more by the strength of overseas demand, rather than the exchange rate."
The Bank of England's latest monthly snapshot reports the weak pound is pushing up costs at UK firms, with profit margins lower than usual, and that businesses are planning to rein in spending over the next 12 months.
The rise in input costs for UK manufacturers has also led to widespread suggestions of a huge spike in inflation next year that would squeeze living standards.
Several companies, including Unilever, Heinz, Walkers and Birds Eye, have already increased the wholesale prices of their products.
UK jobs market 'thriving' - but Brexit 'threats' loom
The UK jobs market is "thriving" after a brief dip in the wake of the Brexit vote in June, according to a survey published by the Recruitment and Employment Confederation (REC).
Figures for October show "the number of people finding permanent roles climbed at the fastest pace in eight months in October, marking the third consecutive month of increases", says the Daily Telegraph.
In addition, starting salaries rose to their fastest pace in five months, while the number of vacancies has risen "in a sign of increasing employer confidence".
These statistics broadly correlate with official jobless figures published by the Office for National Statistics showing employment hitting record highs in rolling three-month periods to August and September.
Overall the unemployment rate remains near an assumed full employment rate of 4.9 per cent. Wage growth remains subdued by higher than cost of living increases, at 2.3 per cent.
However, chief executive Kevin Green, while saying the UK is still "a great place to be", told the Telegraph the rhetoric of a post-Brexit clampdown on immigration meant "there are real threats coming over the hill".
His concerns relate to a perceived "chronic skills shortage" that, under a hard Brexit, could threaten the "ability of businesses to meet demand and the government to deliver public services".
"The government urgently needs to outline a strategy to address employability skills within UK education and promote apprenticeships and other routes into work. We also need immigration policies that reflect immediate labour market needs," he said.
"We can't afford to see businesses relocate overseas, taking jobs with them and leaving us poorer as a nation."
Pound holds gains after triple-whammy of good news
Sterling continued to enjoy positive momentum this morning after a triple-whammy of good news yesterday saw it surge by more than one per cent, says the BBC.
The pound was up 0.2 per cent against the dollar to close to $1.25, the highest it has been compared to the global reserve currency since 6 October. It was also up 0.25 per cent to €1.12 against the euro.
Exchange rates are still down markedly since the EU referendum – by 17 per cent against the dollar – but are well up from the $1.20 that has prevailed in recent weeks and the "flash crash" low of $1.15 in Asian trading on 7 October.
That indicates markets are more confident of the UK having a soft Brexit that would retain the benefits of the EU single market.
Such optimism was boosted yesterday by a High Court ruling that the government has to hold a parliamentary vote before it can trigger Article 50 to start the EU exit process.
While the decision will be subject to an appeal to the Supreme Court, with a hearing set for December, it adds to the case for parliamentary scrutiny and the chance a pro-EU majority in the House of Commons could exert more influence.
Sterling's resurgence is also a response to this week's decision by the Bank of England not to cut interest rates further, despite September's strong hints that it might do so.
In addition, the bank markedly upgraded growth forecasts for 2016 and 2017, helping economic sentiment, although it dropped its forecast for 2018 and warned of a surge in inflation next year.
Finally, also adding to the sense that the economy is performing better than expected, new data showed the dominant services sector last month grew at its fastest pace since January.
Coupled with strong figures for the construction and manufacturing sectors earlier this week, this puts the UK on track to post expansion of 0.5 per cent in the fourth quarter, says The Guardian.
Pound leaps above $1.24 after High Court's Brexit ruling
Sterling spiked more than one per cent this morning following the High Court's ruling that parliament must have a vote before the government invokes Article 50 to start Brexit.
In the minutes following the decision, the pound rose to $1.245, the highest it has been since 6 October. It also hit a one-week high of €0.891 against the euro.
Yields on government debt bonds – gilts - fell slightly. As they move inverse to prices, this indicates rising demand from sellers and increased confidence in the UK economy.
The government has pledged to make immigration a central issue of its negotiations to leave the European Union, raising fears of a hard Brexit that would damage the economy.
A vote in parliament, however, could see MPs in favour of membership of the single market exerting far more influence on the stance the government adopts.
Neil Wilson, of ETX Capital, told the Daily Telegraph the ruling on Article 50 is "a body blow" for Theresa May and could delay the start of the Brexit process, which is expected to take place in the first quarter of next year.
It could also put a "floor under the pound around $1.25", he added.
The High Court has given the government permission to appeal the ruling and the Supreme Court has already set aside time to consider what would be a final verdict in early December.
That put a lid on some of the gains this morning. The pound was last up 0.7 per cent against the dollar at $1.2385, while gilt yields were down just 0.15 per cent.
Sterling has been receiving support in recent days from more strong economic data - a report pointing to a return to manufacturing sector growth was followed yesterday by another showing construction activity picked up in October.
Then today, a third publication showed the fastest rate of expansion in the powerful UK service sector since January, says The Guardian.
That means three of the main sectors are currently expanding. Taken together, they point to growth of 0.4 to 0.5 per cent in the fourth quarter.
Brexit could send inflation soaring to 4%, says NIESR
A Brexit-related slump in the pound could send inflation soaring to four per cent next year, think tank the National Institute of Economic and Social Research (NIESR) has predicted.
NIESR has identified signs of "substantial impending inflationary pressure", thanks to the crash in the value of the pound since the EU referendum, says The Independent.
Sterling is down close to 20 per cent against the dollar and 15 per cent against the euro. This has been blamed for a sharp rise in petrol prices and slowing food price deflation, two factors that pushed consumer price inflation to a two-year high of one per cent in September.
But economists reckon bigger rises are still to come – and big brands are already signalling sharp prices increases.
Unilever blamed import cost increases for a 10 per cent hike in the price of Marmite, along with other popular brands like Hellman's Mayonnaise. Microsoft has upped its business software costs by more than 20 per cent.
The Treasury says the average prediction of independent economists for inflation next year is 2.5 per cent. Many reckon it will go to three per cent – and NIESR has now forecast an even higher rate.
While this will be "a temporary phenomenon, it will nonetheless weigh on the purchasing power of consumers over the next couple of years," says NIESR. That means it could hit economic growth.
The flip side of the lower pound is reduced export costs, which are making British manufacturers more competitive overseas.
According to the latest purchasing managers' index compiled by Markit, a boost to export order books has meant UK manufacturing activity slowed only slightly to a still-impressive 54.3 in October, where anything above 50 indicates expansion.
Markit reckons manufacturing sector growth will rebound strongly in the fourth quarter after dipping during the three months to September, says The Guardian.
It also noted the impact of the pound on prices at home, however, saying manufacturers raised the wholesale price of their goods in the UK at the fastest rate in more than five years, reflecting surging input costs.
UK tax havens demand say in Brexit negotiations
British-controlled offshore "tax havens" should be given a prominent role in Brexit negotiations, the premier of the British Virgin Islands says.
"We require high-level engagement, just like the devolved administrations of Scotland, Wales and Northern Ireland," Daniel Orlando Smith told The Independent. "We want a deal which works for the whole UK family."
Smith is also the president of the United Kingdom Overseas Territories Association, which represents 12 governments of UK-controlled territories, including Bermuda, Gibraltar and the Cayman Islands.
Demanding the same role as the devolved administrations would mean getting a "direct line" to Brexit Secretary David Davis, The Guardian says.
Under a deal set out by Prime Minister Theresa May last month, Davis will chair an "official forum" that includes representatives from the Scottish, Welsh and Northern Irish governments.
But the government is not committing to agree to any demands, nor will give the administrations a formal vote on Brexit.
Experts warn the UK could face a "constitutional crisis" if it does not do enough to address the concerns of its constituent countries. Scottish First Leader Nicola Sturgeon has already floated the idea of a second independence referendum.
Britain's tax havens are not popular on the continent: eight are currently facing EU sanctions as part of a push to make tax havens less attractive.
The British Virgin Islands in particular was heavily implicated in the Panama Papers scandal.
"The EU has been exercising pressure on member states to tackle tax evasion," EU law expert Panos Koutrakos wrote in the Guardian earlier this year.
However, the extent to which pressure from the EU could still influence the UK in the future "would depend on the post-Brexit arrangement that would govern the EU-UK relationship".
Ratings agency warns over pound's reserve status
Standard & Poor's has maintained a negative credit rating on the UK and says the country could lose its reserve currency status.
The ratings agency stripped the UK of its coveted triple-A award, the highest possible, in the days following the Brexit vote, taking the UK's creditworthiness down two notches to AA.
It was the last of the three big agencies to maintain the top-level score for the UK. Rival Fitch cut its rating in June, while Moody's changed its "outlook" for the near-term future to negative.
S&P also has a negative outlook in place on its already-reduced rating, which it maintained on Friday, says Sky News.
In an updated report, S&P "listed a number of factors, including the possible threat of the pound losing its reserve currency status, that could lead it to a further downgrade" for the UK.
Credit ratings are a way for markets to assess the risk of borrowing from a government. A lower rating could make it more expensive to raise money to cover the UK's budget deficit.
So far, the UK has enjoyed ever-declining borrowing costs, despite the poor state of the public finances and economic uncertainty unleashed by the Brexit vote.
Almost all major nations lost their top credit ratings in the wake of the financial crisis, but if the UK continues to see its rating tumble, the market view could shift.
According to the Financial Times, the UK's currency is considered a global reserve currency - because it makes up around five per cent of global central bank reserves. If that drops below three per cent, S&P would remove that status.
The pound has already been sold off heavily by investors since June, causing it to fall by nearly a fifth against the dollar. However, there is no sign central banks are selling their holdings.
Other risks for the UK include the public finances worsening substantially (borrowing targets are already set to be missed) and a hard Brexit leading to the break-up of the UK if Scotland holds another independence referendum.
Brexit vote effect on prices 'now clearer', says think-tank
Official government statisticians have so far denied any discernible effect of the post-Brexit vote slump in the pound on consumer prices.
Since the Leave victory in June, sterling has fallen close to a fifth against the dollar to below $1.22 today. It's down 15 per cent against the euro and a similar margin against other currencies.
But while the headline rate of inflation hit a two-year high of one per cent last month, the Office for National Statistics said this was because of slowing food price deflation and rising petrol prices not directly related to the pound.
Specifically, the number-crunchers said there was "no explicit evidence" the lower pound was increasing prices of everyday goods.
However, the Centre of Economic and Buyout Research (CEBR) says the effect of sterling's recent dive on prices was "now clearer", says Sky News.
Publishing its latest monthly income tracker for Asda, the think-tank said the growth in household spending power had fallen into single-digits for the first time in two years, rising £9 to £201 in September, as a result of an increase in forecourt petrol prices and rises in inflation for "essential items".
Vehicle fuel rose 1.4 per cent, with the UK seeing the wider increase in global oil prices exacerbated by the fact they are priced in dollars.
Inflation on essential items such as clothing and footwear rose 0.4 per cent - a low rate historically but the fastest increase in two years.
CEBR economist Kay Neufeld said: "Household incomes continue to increase, but rising inflation is starting to take its toll on spending power. The weak pound means that price growth is going to accelerate further in the next months."
Several experts have taken issue with the official dismissal of the pound's impact on prices, saying the slump has had indirect effects on wholesale import prices that are not being picked up.
There are predictions that inflation could surge to three per cent next year, which would almost certainly translate to a fall in "real" wages as average earnings are currently growing at an annual rate of around 2.4 per cent.
First post-Brexit GDP figures better than expected
Britain's economy performed significantly better than expected in the three months following June's Brexit vote.
Official figures published this morning show the economy expanded at a rate of 0.5 per cent in the third quarter, well ahead of analyst expectations for 0.3 per cent.
Even that lower figure was widely regarded as evidence the UK managed to "avoid a major economic slowdown" after the referendum, says Sky News.
As recently as August, the Bank of England expected growth to slow to a modest 0.1 per cent, while The Guardian says the Treasury before the vote predicted negative growth of -0.1 per cent. That would have been the first dip in what was predicted to become a four-quarter slump, meaning the UK would be recession.
Since then, however, a range of indicators have shown the economy's resilience, with the lengthy period until the country leaves the EU and the potential for a soft Brexit preventing a sharp hit to investment.
Nevertheless, today's figures do show a sign of fragility.
Although growth is in line with its post-crisis average, it has also slowed from the stellar expansion of 0.7 per cent in the second quarter.
In addition, only the service sector grew in the third quarter, increasing 0.8 per cent. Construction, agriculture, industrial production and manufacturing all shrank between 0.4 and 1.4 per cent.
This is no surprise – the service sector has long made up about three-quarters of overall activity -but the figures show the economy remains very unbalanced and exposed to the risk of a delayed Brexit effect in the months ahead.
In the immediate wake of the report, the pound rose sharply, returning to its high for the week of $1.225 against the dollar.
Brexit blowing £84bn 'black hole' in public finances
An £84bn "black hole" directly related to the vote for Brexit "has opened up in Britain's public finances", says The Times.
Think-tank Resolution Foundation has used the "average change in economic forecasts since March" to project the effect of leaving the EU, in terms of falling tax receipts, on the UK government's borrowing.
It says a previously targeted £10bn budget surplus for 2019-2020 will be reversed into a £13bn deficit, with £84bn more being borrowed over the coming five years.
Chancellor Philip Hammond is already off-track with targets for this year, with a cut in borrowing to £55bn likely to be missed and the deficit likely instead to "come in at more than £70bn", it says.
The Guardian reports a leaked internal Treasury document says the deficit is £2.3bn lower for the year to date: "at a fall of 4.8 per cent, well behind the 27 per cent reduction forecast", says the paper.
It adds that estimates for economic growth next year have slipped from 2.2 to one per cent, while GDP figures on Thursday are expected to show a fall from 0.7 to 0.3 per cent in the third quarter.
All of this was anticipated, however, and Resolution Foundation said "public finances were showing signs of weakness before the EU referendum", says the Times.
Hammond has already indicated he will start a fiscal "reset" at next month's Autumn Statement that will increase spending on infrastructure and abandon the target of reaching a budget surplus by the end of this parliament.
The question is: how much extra spending will the fiscal hawk commit to?
If Hammond adopts "Labour's pre-election pledge of targeting a surplus in day-to-day spending, rather than overall spending that includes investment", says Resolution Foundation, he could boost spending and still achieve a surplus.
Specifically, he would have £17bn each year to invest in infrastructure projects or scale back benefits cuts – although this would mean the country borrowing £145bn more by 2020-2021.
ITV cuts 120 jobs over Brexit 'uncertainty'
ITV is to cut 120 jobs due to the "political and economic uncertainty" around Brexit, which has hit television advertising revenue.
In the immediate aftermath of the referendum, ITV's chief executive Adam Crozier said he wanted to make £25m in overhead savings next year.
ITV's ad revenues for the first nine months of 2016 are expected to be down by one per cent on 2015. Media buyers predict the UK TV ad market could be down by two per cent this year, its worst performance since the recession of 2009, says The Guardian.
Before the EU referendum on 23 June, the ad market had been expected to rise by more than seven per cent, after a 10 per cent increase in 2015.
The ITV job losses come after DMGT, the owner of the Daily Mail, revealed it has cut more than 400 jobs in the past year.
Elsewhere the BBC has said it will lay off more than 300 of its programme-makers as it spins off its £400m TV production operation, which makes shows including EastEnders and Strictly Come Dancing.
Brexit uncertainty has been growing in recent weeks as Theresa May's government have talked up the possibility of a "hard Brexit". Ministers look set to make immigration controls their top priority, which could compromise any hopes of a single market deal.
The breakdown of free trade talks with Canada yesterday is also seen as a negative signal, which could indicate that the UK will struggle to strike its own deal within the two-year negotiating window.
But the Daily Telegraph says Sweden is holding out an "olive branch to Brexit Britain", by indicating that it will push for Europe to agree an "amicable" deal with the UK.
"The softer the Brexit, the better," said Magdalena Andersson, Swedish finance minister. "We're an open country and we are in favour of free trade, and we want to see a solution that is as beneficial as possible for everybody.
"Data released this week show that Swedish exports to Britain are in free-fall, with a drop of 19 per cent over the period from January to July compared to the same period a year ago," says the Telegraph.
Big banks to leave UK 'early next year' over Brexit
Britain's biggest banks are getting ready to leave the UK early next year because of Brexit, the British Bankers Association has warned.
Writing in The Observer, BBA chief executive Anthony Browne says the "public and political debate at the moment is taking us in the wrong direction".
If the government pursues a so-called 'hard' Brexit and takes the UK out of the single market, he says, as many as 70,000 jobs in the financial sector could move overseas.
Browne suggests that some of the country's biggest banks have already "set up project teams to work out what operations they need to move by when, and how best to do it". Smaller banks will leave even sooner, he says, perhaps before Christmas.
"Their hands are quivering over the relocate button," Browne says.
Uncertainty about the future of 'passporting', which allows City-based firms to sell their services anywhere in the single market without having to establish a base in every country, is one of the central factors driving the looming exodus, notes Browne.
The Brexit Secretary David Davis and Chancellor Philip Hammond last week sought to offer reassurance they are determined to secure the status of the City of London.
But the suggestion from Theresa May and her trio of Brexit ministers that immigration is the key negotiating issue for the UK has worried markets.
Elsewhere there was more evidence of the inflationary impact of the fall in the value of the pound since the Brexit vote.
Microsoft has announced it is increasing the price of the software it sells to businesses by 13 per cent – rising to 22 per cent for its 'cloud' services – in order to "harmonise" its costs across Europe, says Reuters.
Prices will not apply to consumer products, the company said.
KitKat and Pernod could cost more after pound slump
After "Marmite-gate", other popular products could be hit by the UK's vote for Brexit.
Nestle warned yesterday it may be forced to "raise the price of some of its favourite brands, such as KitKat and Milkybar, to offset the weakness of the pound", says The Guardian.
French drinks company Pernod Ricard also said it will move to "protect margins" in the wake of sterling's slump, says The Times. That raises the prospect of price rises on brands including Pernod, Absolut vodka and Mumm champagne.
The news follows the spat between Tesco and Unilever caused when the grocer refused to pay a reported ten per cent price hike on the supplier's products, which it said was necessary due to the rise in import costs.
Tesco dug its heels in and a compromise was reached - although the price of Unilever products such as Marmite and Pot Noodle could still increase in the coming months.
The British Retail Consortium says all products imported from overseas or made from non-UK ingredients could cost more in the wake of the EU referendum. There is evidence to suggest brands such as Heinz have already increased prices, reports the Daily Telegraph.
This could all have negative implications for a Conservative government seemingly pushing for a hard Brexit - a recent ComRes poll found more than two-thirds of people would not be happy if the EU exit deal results in them being hit in the pocket.
Nestle's boss Paul Bulcke said the rises would be contained by the fact many of the products are produced in the UK - although several Unilever products are also manufactured here and that did not stop their attempt to increase prices.
This morning, the pound was languishing at $1.2223 against the dollar, down around 19 per cent since the June referendum, and at €1.223 against the euro, a drop of around 15 per cent.
Hammond eases market fears of a hard Brexit
As no formal Brexit negotiating position are being made public, investors are nervously scrutinising any comment from senior government figures for signs of what the EU exit deal might look like.
When talk turns to a hard Brexit - giving up single market membership and possibly tariff-free trade with the EU altogether - markets and especially the pound are hit hard. Any signal of a "softer" arrangement tends to prompt recoveries and rallies.
Yesterday was a soft Brexit day, thanks to the appearance of Philip Hammond at the Treasury select committee.
The Chancellor "sought to allay fears that the economy will be sacrificed in Brexit negotiations, with support for foreign high-skilled workers, the expectation of a favourable deal for the City and a staunch defence of the Bank of England’s independence", says The Guardian.
Hammond's tone was in stark contrast to some of the strident rhetoric of his Cabinet colleagues.
He even indirectly hit out at staunch Brexiters in government when asked about recent criticism, apparently emanating from within government, of his position.
"Those that are undermining the effort are those that are seeking to close down that negotiating space, seeking to arrive at hard decisions that we don’t need to make at this stage," he said.
"It would be far more helpful if we could conduct negotiations privately without leaks to newspapers," he added, reports the BBC.
Hammond also sought to allay fears on immigration, saying: "I cannot conceive of any circumstance in which we would be using [migration] controls to prevent banks, companies moving highly qualified, highly skilled people between different parts of their businesses."
The banking industry "knows that we regard it as extremely important", he told the committee, and that government understands "it has a particular set of challenges as we go into this period of negotiation with the European Union".
He added: "I hope the industry knows - it certainly should know - that helping to address these challenges and taking account of these challenges will be a very high priority."
Sterling, which had already been boosted by the publication of stronger-than-expected employment data yesterday, rose 0.3 per cent on the dollar to more than $1.23 and was holding close to this level at $1.2271 this morning.
Pound gains as jobs data continues to defy gloom
Sterling is building on gains made yesterday, its best trading session in three months, after latest official data showed the jobs market has remained steady since the Brexit vote.
The pound was trading at $1.2322 against the dollar at 9.50am in London, up from below $1.23 before the Office for National Statistics (ONS) published its employment report.
It jumped 1.4 per cent yesterday after suggestions that parliament would get a vote on any final Brexit deal eased fears of a hard exit from the European Union.
Last week, sterling was below $1.20 and during a "flash crash" earlier this month, it hit a 31-year low below $1.15.
Today's ONS figures showed 106,000 new jobs were added to the market during the three months to September, keeping the employment rate at a new 35-year high of 74.5 per cent, says Reuters.
The numbers were down from the 170,000 jobs added in the previous three surveys, but analysts had expected them to fall below 100,000 due to Brexit-related uncertainty prompting a slowdown in hiring.
Unemployment rose by 10,000, but the rate of those out of work and looking for employment remained at its record low of 4.9 per cent. Jobless claims in September, "considered a potential early warning sign", remained broadly stable and rose 700 to 776,400.
The number of permanent vacancies being advertised also remained mostly unchanged at 749,000, down from 750,000.
Regular pay also increased at a slightly faster rate than in the previous set of figures, up from an annual rate of 2.2 to 2.3 per cent for the three months to September, says The Guardian.
"These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy," ONS statistician Nick Palmer said.
However, analysts still warn against reading too much into short-term unemployment and say the real effects of the Brexit vote will take longer to filter through.
Elsewhere, experts pointed to figures showing there are more than double the number of foreign workers in Britain than there are unemployed Brits, to make the case against stiff curbs on immigration in the wake of the referendum.
UK inflation leaps to 1% - and will keep rising
Inflation is rising at its fastest pace for nearly two years, with the fall in the pound since the vote for Brexit said to be pushing up the price of imports.
A report from the Office for National Statistics shows year-on-year consumer price growth surged to one per cent in September, up from 0.6 per cent in August, says the BBC.
That's the fastest annual acceleration since November 2014 and quicker than analysts had predicted. It is mostly the result of falling food price deflation and increases in accommodation and petrol costs.
Experts warn price increases will accelerate further in the months ahead as the full effect of sterling's plunge is yet to filter into official figures.
Government statisticians said there was "no explicit evidence" that the lower pound was increasing prices of everyday goods. However, economist argue food price deflation is slowing because of import price increases while petrol prices have risen faster than oil prices, reaching their highest level in a year, because oil is priced in dollars.
In short, they say, consumers are facing a greater squeeze in the coming year. Whether or not the pound's slump is not yet fully apparent in inflation figures, this still means more pain is still to be felt.
The consensus seems to be for inflation to peak at around three per cent in either 2017 or 2018. Annual wage growth is currently stuck around 2.5 per cent and could even slow down.
Thomas Laskey, at Aberdeen Asset Management, told the Financial Times: "The worrying factor is that today's figure represents only a tiny part of sterling's steep drop and no effect from the second big tumble earlier this month."
Earlier this month, the pound hit a new 31-year low against the dollar of below $1.21, before dipping briefly to as low as $1.14 in an overnight "flash crash". It has recovered slightly to $1.2245 this morning.
Sterling also hit a six-and-a-half year low against the euro yesterday after dropping below €1.10 during Monday trading, reports Sky News. There has been a modest recovery to €1.1112 today.
Treasury rubbishes claims Hammond is 'undermining Brexit'
Claims that Philip Hammond's Cabinet colleagues have accused him of trying to undermine Brexit have been dismissed as "rubbish" by the Treasury.
He is pushing for a slow, "soft" Brexit, say the newspapers, while other colleagues are more hardline.
One unnamed Cabinet source told the Telegraph Hammond is "overly influenced by his Treasury officials who think it is a catastrophe that Britain voted to leave the EU".
According to The Sun, Hammond twice threatened to resign his position over clashes with Theresa May over Brexit. He was "upset" at being excluded from key strategy meetings, it says.
However, the Treasury dismissed the stories as "completely untrue" and "rubbish" last night while this morning, the Health Secretary, Jeremy Hunt, told the BBC the Cabinet was "absolutely united" on the essentials of Brexit.
"We must go through all the options. This isn't the first time in the history of government where you read reports in the newspapers that may not actually reflect what's happening," he said.
The dispute is said to be centred on plans for a new work-permit system designed to reduce immigration. According to the Telegraph, Home Secretary Amber Rudd presented the proposals to the Cabinet last Wednesday.
Under the proposal, EU workers will have to prove they have a skilled job in the UK before being allowed entry.
The plans were seen as confirmation the UK will leave the European single market in a "hard" Brexit, says the Telegraph, something Hammond is understood to have warned against in the past.
In his speech to the Conservative Party Conference, Hammond said the UK must control its borders "while protecting our economy, our jobs and our living standards".
'Hard Brexit or no Brexit', says Donald Tusk
EU Council President Donald Tusk says the UK can have either a "hard Brexit, or no Brexit at all".
His statement came just hours after Boris Johnson told MPs he was "confident Britain could strike a better trade deal with the EU after Brexit", The Guardian says. The Foreign Secretary said the country would negotiate a deal "of huge value and possibly of greater value" as it settled the term of its exit.
But Tusk dismissed the idea "that the UK might manage to keep trade benefits of EU membership while barring European immigrants and rejecting EU courts' authority", the BBC reports.
It was an "illusion that one can have the EU cake and eat it too", he said during a speech in Brussels, referencing a claim made by Johnson last month. "I propose a simple experiment: buy a cake, eat it and see if it is still there on the plate."
Both the UK and the rest of the European Union would end up worse off, he said. There would be "no cakes on the table for anyone. There will be only salt and vinegar".
Tusk suggested Britain think again about Brexit. "In the future," he said, "if we have a chance to reverse this negative process, we will find allies, I have no doubt."
Brexit: May pledges 'maximum possible' access to single market
Theresa May sought to calm unrest over the government's Brexit negotiating stance yesterday by promising parliament a debate and pledging "maximum possible" access to the single market.
"What we are going to do is be ambitious… to negotiate the best deal for the British people and that will include the maximum possible access to the European market for firms," she said, during a combative Brexit-dominated Prime Minister's Questions.
"I'm also clear that the vote of the British people said we should control the movement of people from the EU into the UK."
Her assurances failed to calm the waters for the pound, which resumed its slide and was trading below $1.22 this morning.
Traders are worried that comments from both the Prime Minister and Brexit Secretary David Davis show the government is prepared to sacrifice single-market membership to leave the EU. Demands from MPs for a full vote on triggering Article 50 have been refused.
Sky News says Davis has so far only disclosed the government's "overarching aims", which include "bringing back control over decisions of immigration" while securing the "freest possible access" to the single market.
Meanwhile, a spokesman for German Chancellor Angela Merkel repeated the EU's hardening stance that "full participation in the EU internal market means that the country that wants such participation must also fully subscribe to the free movement of people".
Joshua Mahony, of online broker IG, told the Daily Telegraph the government's comments should be seen as "mere gambits within a two-year poker game".
He added: "A hard Brexit is a possibility, as is a soft Brexit."
Mahony also warned that strong rhetoric pointing to a tougher departure from the EU would frighten UK firms and keep pressure on the pound.
"While Mrs May will want to use the threat of a hard Brexit as a ploy for a stronger negotiating hand, such rhetoric is also going to drive UK-based firms to plan for the worst, reducing UK hiring and investment," he said.
Brexit: Cabinet 'war' over Treasury leak
Simmering tensions within the government over the looming Brexit negotiations have erupted into an all-out Cabinet "war", says the Daily Telegraph.
Hostilities resumed after the leak of a Treasury document yesterday predicting UK tax revenues could be hit by as much as £66bn in 15 years' time if the country leaves the single market.
That would be equivalent to around ten per cent of current government income, or two-thirds of the budget of NHS England, and according to The Times, would "force ministers to slash public spending or raise taxes".
The figure was taken from pre-referendum research undertaken under the auspices of former chancellor George Osborne and branded "Project Fear" by Brexiters.
The Daily Mail says the leak has "reignited claims" the Treasury is "fighting a rearguard action" to prevent a "hard Brexit".
Chancellor Philip Hammond has indicated he is in favour of continued single market membership, while Brexit Secretary David Davis and International Trade Secretary Liam Fox favour immigration controls that could render that impossible.
"[Davis] thinks [the leak] is pulling the rug from beneath us," a friend of the Brexit Secretary told the Telegraph. "It fits in with a succession of Treasury briefings that are damaging negotiations."
Pro-Brexit Tory Jacob Rees-Mogg, a member of the parliamentary Treasury committee, told the Mail: "The Treasury is undermining the government’s own negotiating position – it's really serious… and there should be an inquiry into its abuse of its position."
A senior Conservative source added: "The leaking of this document was an incredibly unpatriotic thing to do."
Treasury figures hit back, with sources telling the Times the document was prepared by Davis's own department, indicating the leak came from within the Brexit ministry's own ranks.
Civil servants are also understood to "stand by" the calculations, with the £66bn figure presented as a "worst case" scenario.
After plunging to as low as $1.20 against the dollar after the leak yesterday, the pound has recovered this morning to a still-subdued $1.23. That followed Theresa May indicating she will grant parliament a debate – but not a vote – on the UK's Brexit negotiating stance.
Will 'hard Brexit' cost the UK £66bn in tax each year?
Losing access to the European single market could ultimately cost the Exchequer up to £66bn a year in tax revenues, according to leaked government papers.
The documents, seen by The Times, predict annual economic output could be as much as 9.5 per cent lower if the UK has to fall back on World Trade Organisation rules and fails to replace any of the global trade deals currently agreed through the EU.
In the worst case, tax revenues would be hit by almost ten per cent of the government's estimated income for this year, or the equivalent of "65 per cent of the annual budget of NHS England", says the paper.
The report has triggered a fresh wave of investor panic, pushing the pound below $1.23 against the dollar. It has also prompted fresh condemnation from the Labour Party and demands for parliamentary scrutiny of EU exit negotiations.
But by the Times's own admission, the leaked document, prepared for parliamentary committee discussions, is "controversial".
The calculations were copied from a paper produced by the Treasury in April as part of a campaign on the economic consequences of Brexit – a campaign later derided as "propaganda" and branded "Project Fear".
The £66bn is also a "worst-case figure", based on a scenario that includes no accord with Europe and no replacement deals with other global countries.
Even then, the tax hit refers to the impact 15 years down the line and is part of a range that starts at £38bn. Effects of inflation and the gradual increase in government spending would also make comparisons to today's spending levels appear more dramatic.
But while all of that may be true, the figures still highlight the severe potential impact of botching the UK's exit from the EU – and the Treasury, in defiance of senior Brexiters in the government, "stands by its calculations".
'Perfect storm' could take pound to $1.10
Sterling is currently "toxic" and facing a "perfect storm", with a record bet on further price falls being fuelled by ongoing fears over a "hard Brexit", according to one analyst.
Kathleen Brooks, the research director of spread-betting platform City Index, told The Guardian that the pound having started the week below $1.24 against the dollar, there is little hope for a recovery in the "coming weeks".
"At the start of this week, it does not look like we will regain the $1.25 handle… any time soon, instead we could drift down towards $1.20," she said.
Brooks's prediction is far from the most bearish. The Times says both HSBC and Naeem Aslam, the chief market analyst at Think Markets, predict the pound will fall as low as $1.10.
Charles-Henri Sabet, the chief executive of London Capital Group, says the dollar may eventually reach parity with the pound.
Hedge funds have made a massive bet against sterling, with the number of "short contracts" increasing by 10,000 in a single week and outnumbering bets on a short-term rise by 97,572.
Notably, these figures, from the US Securities and Exchange Commission, "predate" the Conservative Party conference, at which ministers set a date for EU exit negotiations and signalled a hard Brexit that will forfeit membership of the single market.
Those factors have ramped up market nerves and will only intensify pressure on the pound.
However, a falling pound still has positives for the economy. Manufacturers are already reporting increased export orders, as their prices are made much more competitive in the global market.
City Index's Brooks also says that if the pound pushes up import prices and therefore inflation, it would help to devalue the UK's large debt pile.
Nevertheless, for consumers, the weak currency is making overseas holidays more expensive, while inflation will hit them in the pocket – which, at a time of weak wage growth, could lead to a fall in spending that would hurt the economy.
Was 'fat finger' error to blame for pound dropping below $1.20?
Sterling was already under pressure this week, but it suddenly collapsed in Asian trading overnight – plummeting six per cent in just two minutes, reports the Financial Times.
The pound hit a new 31-year low of below $1.20, reaching $.11841 at one point. It quickly recovered to around $1.24, but was still down 1.5 per cent at the start of European trading.
Mystery surrounds the sheer scale of the drop "as traders scrambled to assess the cause of the heavy selling", says CNBC.
Rumours quickly circulated that a faulty automated-trading algorithm was to blame, as a surprisingly heavy – and probably erroneous – sell order triggered exit thresholds on other software-based trading systems.
"Officially the excuse is failing algos, which is the new, high-tech version of 'fat fingers'," Michael Every, the head of Asia-Pacific financial markets research at Rabobank, said.
Automated trading allow investors to set pre-determined high and low levels at which they will buy and sell to ensure they bank profits or cut losses in rising and falling markets.
However, they are often criticised for amplifying trends artificially, as market moves trigger a domino-effect.
"Financial markets have become increasingly driven by automated trading in recent years and glitches can occasionally cause sudden, hyper-fast crashes and rallies," says the FT.
Added to that, the initial drop occurred at a time of thin trading volume, with investors waiting for today's critical US jobs report that will indicate whether or not the Federal Reserve will increase interest rates soon.
Some, however, believe the fall was merely an extension of the fears over a "hard Brexit" that followed the Conservative Party conference and have weighed on the pound all week.
Sterling has bounced back from its overnight law, but is still nearly five per cent down.
Mitul Kotecha, the head of Asia currency and rates strategy at Barclays, said: "There were real trades done at some of these weak points so people were clearly prepared to believe in sterling's new weaker levels."
'Hard Brexit' fears send pound sliding to 31-year low
Sterling has continued to fall as the government sets out its tough stance on its Brexit negotiations.
The pound dropped to $1.2721 against the dollar yesterday, its lowest level since the summer of 1985.
It also touched new multiyear lows against the euro this morning at a shade above $1.13, a level not seen since September 2011, when the economy last flirted with recession.
The trigger for the latest currency crash was Theresa May's commitment at the Conservative Party conference on Sunday to invoke Article 50 and begin the process of Brexit by March next year.
Beyond just giving a firm date, the City has also been spooked by her comments, since elaborated in a number of interviews, that she will "place a priority on restricting immigration… even at the expense of leaving the single market", says The Guardian.
That's the "hard Brexit" many in the financial district fear will deal a massive blow to London, which is used as a hub by global banks seeking access to Europe.
It doesn't help, writes James Quinn in the Daily Telegraph, that when May yesterday "name checked… cabinet ministers who were central to the Brexit process" she omitted Philip Hammond, her 'soft Brexit'-supporting chancellor.
Most analysts believe the pound won't fall much below where it is now, says the Telegraph, and that it will recover to rise sustainably back above $1.30 in the second half of next year.
That view is by no means unanimous. Bank of America Merrill Lynch predicts the pound will keep sliding under the final Brexit deal takes shape, while HSBC said it could collapse to a low of $1.10.
Sterling's weakness has so far proved to be benign for the wider economy: in fact, the boost to export competitiveness is helping manufacturing sector and the FTSE 100 surged above 7,000 to close to its record high.
But it is bad news for holidaymakers looking to go abroad – and if it eventually feeds through to higher inflation, it will also hit shoppers in the pocket and could send real wages into reverse.
Pound falls after May's Brexit announcement
Sterling hit a three-year low against the euro and a three-month low against the dollar after Theresa May announced her Brexit strategy.
Yesterday's surprise announcement that Article 50 will be triggered within six months has left the pound 0.9 per cent weaker against Europe's single currency, with £0.8742 needed to buy €1, a level not witnessed since 2013.
It is down 0.8 per cent at $1.2880 against the US dollar, the lowest level since mid-August.
May also told the Conservative Party Conference she wants a clean break from the European Union, a stance being interpreted as a preference for a "hard" Brexit in which the UK leaves the single market. That would spark huge disruption for the City.
Marc Ostwald, of ADM Investor Services, told The Guardian the conference is now the "main item on the policy events agenda" for traders.
May's announcement "confirms that the 'phoney war' is now effectively over", he added.
Hussein Sayed, the chief market strategist at currency trading firm FXTM, said: "Now with the timeline being set, the negotiation of the terms will be a key driver for sterling going forward, but I expect it to be rough ride in the next few months."
However, there was a note of relative calm from Kit Juckes, of Societe Generale, who said: "Absolutely no one is going to change their view of the UK economy, sterling or the wider implications of Brexit until there are mountains of evidence about the economic impact."
Consumer confidence returns to pre-Brexit vote level
Another economic data point that crashed in the wake of the Brexit vote has recovered its pre-referendum level, emphasising the much-improved sentiment of late.
GFK's keenly observed survey of consumer confidence found UK shoppers more optimistic than they have been in months, with the reading of almost par for September also above the average for the past year, says the Financial Times.
The poll of 2,000 households also found "consumers still intended to carry out major purchases this month" and that people's view of their personal financial position has risen to above where it was this time last year.
GFK said that with the referendum now three months in the past and Brexit negotiations still some way down the road, there has been little in the way of real change. Consumers are getting back to their day to day lives and not delaying spending decisions.
Unemployment has so far continued to edge lower, with the number of people in work hitting a new all-time high. While wage growth is meagre, it remains above the rate of inflation so "real" incomes are still rising.
"The referendum date and its outcome continue to appear further away and with neither improvement nor deterioration on the political front, there was little to weigh on confidence," said Andrzej Szczepaniak, a retail analyst at Barclays.
"Our view is that households will only materially change habits once they are directly impacted."
GFK still believes a direct impact will come in time, however, as the economic picture could change dramatically once Brexit negotiations actually get under way.
There are also warnings that the slump in the pound, while good for exporters, could eventually hit shoppers in the pocket if shops pass on the inflationary effect on import prices.
A separate monthly survey, compiled by the Centre for Economic and Buyout Research (CEBR) for Asda, found that growth in disposable income has stagnated in the past five months as lower mortgage rates are offset by increases in transport and food costs, says The Guardian.
Sam Alderson, an economist at CEBR, said: "While the initial turbulence has been navigated, improvements in household finances have slowed, a process that could accelerate if rising production costs begin to feed into prices at the tills."
UK leapfrogs Japan in global 'competitiveness' rankings
The UK has continued its march up the World Economic Forum's (WEF) global competitiveness table, reports the Daily Telegraph.
Hitting its highest level in a decade, the country has leapfrogged Japan, Hong Kong and Finland to sit seventh out of the 138 countries ranked.
Explaining its findings, the WEF praised the country's "status as a digital pioneer and support for entrepreneurs".
The UK ranks third for "technological readiness" and is also regarded as having efficient goods and labour markets, sitting fifth and ninth respectively, adds The Guardian.
It lags on macroeconomic factors, however, with a big budget deficit, high debt ratio and weak savings levels leaving it languishing 84th. Nevertheless, this is the only one of the 12 measures assessed in which the UK underperforms the wider EU.
But while the country generally outperformed the bloc, its impending Brexit could yet derail its advances.
"Although the process and the conditions of Brexit are still unknown, it is likely to have a negative impact on the [UK's] competitiveness through goods and financial markets as well as market size and, potentially, innovation," the WEF said.
Specifically, leaving the EU could result in trade barriers with Europe that would raise costs for both business and consumers, it added.
Depending on the nature of the deal, however, the process could even be positive for the UK if it pursues a "free trade" path and retains access to the single market.
"[The WEF] said the decision to leave the EU meant the Government could set policies and regulations that were 'optimal' for the UK instead of having to 'compromise' with 27 other EU member states," says the Telegraph.
Weak pound post-Brexit boosts UK manufacturing
Yet another survey has been published showing the UK is shrugging off the uncertainty prompted by the Brexit vote.
In spite of the major questions looming over the country's future trading relations with Europe – with ministers still arguing over when the EU exit process will even begin – the economy has proved to be stronger than anticipated prior to the referendum.
The latest survey, commissioned by the Confederation of British Industry (CBI), reports the manufacturing growth reported in August has continued into September.
Output is also expected to rise further in the final months of this year.
A net majority of 11 per cent of the 481 companies questioned by the CBI say they have increased their output over the past three months, the same percentage as last month's survey.
But the balance of firms expecting orders to rise over the coming three months has doubled to 22 per cent, says The Guardian.
The CBI says the fall in the pound since the EU referendum – it's currently down around ten per cent against the dollar and more against other currencies – has "boosted international competitiveness". Export orders of food, drink and cars in particular have risen markedly.
Not all industrial sectors are doing so well, however, with chemical firms reporting a fall in export orders. Overall, however, the survey found order books across manufacturing were "comfortably above their long-run average".
But the CBI is not entirely upbeat. With an actual Brexit date still some way off and tricky trade negotiations still to come, there are "plenty of challenges ahead", it says.
Ruth Gregory, an analyst at Capital Economics, told The Times: "This latest survey adds to the evidence that the overall economy is set for a period of slower growth rather than a full-blown recession."
Why Brexit means you could get less biscuits for your buck
Be on the watch out for your packet of biscuits getting smaller or your loo roll shrinking because of Brexit, the Bank of England has warned.
The UK's decision to vote to leave the EU has seen the pound dive by around ten per cent against the dollar and more against the euro and other global currencies, something experts say could have led to higher import prices.
This in turn was expected to send consumer prices spiralling higher in the months ahead.
However, says the Bank of England, in its latest report on business conditions, UK shoppers are "highly price-sensitive" and supermarkets may be unwilling to pass on direct increases.
So rather than dropping prices, the bank warns stores may seek to "re-engineer" products - reduce their size or use cheaper ingredients.
Will Hayllar, the head of consumer goods at consultants OC&C, told The Times that as well as reducing package and jar sizes, supermarkets would look at downgrading ingredients, moving from sunflower oil to palm oil, for example, or from cod to pollock in ready meals.
The industry calls this "value engineering" – but Which? calls it "sneaky".
A report from the consumer group in April exposed the way supermarkets were already shrinking products without passing on the savings to customers.
It found standard packets of McVitie's dark chocolate digestives had shrunk from 332g to 300g, more than ten per cent, while the price had increased 10p to £1.69 at Tesco, says The Independent.
Andrex toilet roll had similarly reduced the number of sheets per roll from 240 to 221 without the price falling.
Sainsbury’s, Tesco, Morrisons and Waitrose all denied they had any plans to change packet sizes or reformulate their products with cheaper ingredients. Asda declined to comment.
Bank of England helped UK avoid Brexit disaster, says OECD
Immediate strong intervention from the Bank of England in the wake of the Brexit vote helped prevent a major blow to the UK economy, says the Organisation for Economic Co-operation and Development (OECD).
The Paris-based organisation, described by The Guardian as "the west's leading economic think-tank", now believes growth will come in at 1.8 per cent this year, slightly above previous forecasts.
This performance will be driven by "stronger-than expected performance in the first half of 2016", backed up by a significant monetary policy response from the Bank of England, which has spurred activity and boosted confidence.
The bank's Monetary Policy Committee cut interest rates to a new record low of 0.25 per cent in August and unveiled a £170bn stimulus programme. It has since hinted it could cut rates again before the end of the year.
In April, OECD secretary general Angel Gurria warned: "From the moment of a Brexit vote until the arrangements for 'divorce' are definitively settled – years later – there would be heightened economic uncertainty, with damaging consequences.
"Brexit would lead to a sell-off of assets and a sharp rise in risk premia. Consumer confidence would fall, as would business confidence and investment, thus holding back growth."
Explaining the latest revised predictions that she admitted amounts to the think-tank "changing its tune", Catherine Mann, the OECD's chief economist, said: "When we made our forecasts we did not presume to speak about what the Bank of England might do.
"The bank entered the market forcibly on interest rates and to calm the markets."
The organisation is still expecting a big hit to growth next year of a whole percentage point, to just one per cent, which would be "well below the pace in recent years and forecasts prior to the referendum".
Meanwhile, the Office for National Statistics has published a study that claims "the referendum result had not had a major effect on the UK economy so far", says Sky News.
Chief economist Joe Grice said soon-to-be published data on the services sector and the first estimate of third-quarter growth at the end of October would both "add to the evidence".
Pound rises as unemployment figures defy Brexit gloom again
Official jobless data out today has provided further evidence that the UK economy is proving resilient in the face of the shock victory for Brexit.
According to the Office for National Statistics, the unemployment rate held firm at 4.9 per cent for the three months up to andincluding July, says Reuters. The number of people looking for a job but out of work fell by around 39,000 to 1.63 million.
At the same time the number of people in work surged by what The Guardian describes as an "impressive" 174,000. This means that the employment rate is at an all-time high of 74.5 per cent.
In the wake of the official figures, the pound jumped from a low reached after inflation data was published yesterday. This defied expectations and showed that price rises held firm in August. The steady figure gives policy makers more scope to keep interest rates lower for longer.
Sterling is back above $1.32 against the dollar and closed €1.18 against the euro. Its rise is being capped by some less encouraging numbers on the claimant count and wage growth, however.
Regarding the claimant count – for which up-to-date data for August has just been published – the number of Britons receiving out of work benefits rose by 2,400.
This was ahead of expectations for a 1,800 rise, notes the Financial Times. The surprise drop in July's data was also revised down from 8,400 to a more modest 3,600.
These figures continue to suggest that the UK will avoid a recession.
Last month Samuel Tombs of Pantheon Economics said the claimant count would need to increase by an average of 80,000 in the third quarter to indicate negative growth. Two months in the claimant count is still lower for the quarter on a net basis.
Average weekly wage growth rose 2.3 per cent for the three months to July, down from 2.5 for the previous month but ahead of expectations of a rise of only 2.1 per cent.
Jobs market has 'shaken off the Brexit blues'
Employment prospects in the UK do not appear to have diminished despite the shock vote for Brexit in June.
According to a survey published by the recruitment group Manpower, British employers remain positive overall. The number of employers intending to expand their staff over the next three months outnumbers those looking to make cuts.
A net five per cent of the 2,100 companies questioned across nine sectors are seeking to add to their workforce before the end of the year. Of the companies included in the survey, 87 per cent plan to make no changes to their workforce and just four per cent intend to reduce headcount, reports the BBC.
This is the latest sign of a return of confidence since the referendum. Standard and Poor's (S&P), the ratings agency, told the Daily Telegraph the UK had "shaken off the Brexit blues".
It's not all good news, however. Manpower tracked a fall in confidence in six out of the nine sectors covered, with sharp drops in financial services, manufacturing and the public sector, where confidence is lower than at any point over the past four years.
In contrast, optimism is on the rise in areas like retail and hospitality, which are benefitting from a boost in spending by overseas tourists as a result of the slump in the value of the pound.
S&P says that "celebration about the rebound in August and conclusion that life has returned to ‘business as usual’ may prove to be premature" and that "uncertainty surrounding the UK's future outside of the EU and the associated economic risks… is pronounced".
Manpower points to the confidence slide in some sectors and says that "cracks in the ice are appearing". It called on the government to maintain the freedom of movement for workers in its EU exit negotiations in order to "fill the skills gap" and protect the financial services industry.
Elsewhere, another key concern that inflation would show a rapid increase in the wake of the Brexit-related pound slump appears to have been misplaced.
The latest official figures out today reveal that prices rose 0.6 per cent on an annual basis in August, the same as in July. Food prices are still falling, while restaurant and hotel bills, and transport costs, are rising, says The Guardian.
Workers must not 'pay the price of a Brexit', says TUC boss
Britain's exit from the European Union must not compromise the "advantages" of the single market, the general secretary of the TUC will say today.
Frances O'Grady, who runs the umbrella group for the UK's trade unions, is to dedicate much of her speech on the first full day of the TUC's annual conference in Brighton to the fallout from the Brexit vote in June, says Sky News.
Focusing on the issue of workers' rights currently guaranteed under EU law, O'Grady will say: "The vote was close but clear and now our job is to get on with representing working people, whichever way they cast their vote, and make sure that they don't pay the price of a Brexit."
She added that single market access was imperative, demanding that the government "step in and work to keep the advantages we get from membership of the single market – for all of our industries, not just the City".
Her comments echo those of Len McCluskey, head of the UK's biggest union Unite, who The Guardian says told delegates that "out of the EU must not mean out of work".
The single market is one of the most contentious issues relating to the UK's exit from the EU.
It is an affiliation of 32 countries, comprising the 28 member states plus Norway, Lichtenstein, Iceland and Switzerland, all of which agree to abide by EU laws and to contribute to its budget in return for being able to trade without punitive tariffs.
Many experts say retaining this access might be critical to London maintaining its status as the world's leading financial hub – and that international businesses in a range of other industries might move out of the UK if it is no longer in the single market.
Others say that accepting the free movement of people and billions in EU budget contributions would be a betrayal of the 17 million Brexit voters and that EU red tape makes a cleaner exit more desirable.
Among these experts who support Brexit are many who believe a deal can be struck that would allow continued tariff-free trade without compromising on areas such as immigration.
After setting out the TUC's demands for the Brexit negotiation, O'Grady said that before triggering Article 50 the government must prove workers' rights will be safeguarded and that EU citizens already resident in the UK will be guaranteed the right to remain there.
She also called for the negotiations to be conducted by a cross-party group that includes representatives from all UK regions and devolved countries.
JD Wetherspoon boss has last laugh over Brexit
Tim Martin, the chairman and founder of the pub chain JD Wetherspoon, has used his annual profits statement to condemn the establishment for its support for Britain remaining in the EU.
Martin was staunchly pro-Brexit and now says that claims of serious economic consequences before the national referendum on Britain's membership of the EU were "lurid" and wrong.
"We were told it would be Armageddon from the OECD, from the IMF, David Cameron, the chancellor and President Obama who were predicting locusts in the fields and tidal waves in the North Sea," he told the BBC.
His annual profits statement also takes aim at Cameron, FTSE 100 bosses, Mark Carney, City economists and Goldman Sachs, says The Guardian.
It reads: "In the run-up to, and the aftermath of, the recent referendum, the overwhelming majority of FTSE 100 companies, the employers' organisation CBI, the IMF, the OECD, the Treasury, the leaders of all the main political parties and almost all representatives of British universities forecast trouble, often in lurid terms, for the economy, in the event of the Leave vote.
"City voices such as PwC and Goldman Sachs, and the great preponderance of banks and other institutions, also lent weight to this negative view."
The statement implies that Wetherspoon's "record sales, profit and earnings per share" disprove the warnings – and it says that the "gloomy economic forecasts for the immediate aftermath of the referendum have been proven to be false".
Wetherspoon says its annual profits are up 12.5 per cent, with exceptional items included. Looking ahead, the firm says it expects a "slightly improved trading outcome" for this financial year.
While data for July showed a 'Brexit effect' on the UK economy, as predicted, August figures have been positive, says the BBC. However, Brexit itself has yet to happen – and most analysts expect problems to come in the future.
In May, Martin printed 200,000 beer mats criticising the International Monetary Fund head Christine Lagarde, who had said that leaving the EU would be "pretty bad to very, very bad" for the UK.
Immediately after the referendum, JD Wetherspoon saw millions wiped off the value of its shares, as The Independent reported. The company's shares have since recovered.
Brexit: European Central Bank leaves interest rates unchanged
The European Central Bank (ECB) has left interest rates unchanged and decided not to enact fresh stimulus measures in the eurozone to fight the economic slowdown, which it claims is related to the UK's decision to leave the EU.
At a press conference after the decision was announced, ECB head Mario Draghi spoke of a "moderate, steady" recovery in the eurozone but warned it would be dampened by the "uncertainty" of Brexit.
In a statement this afternoon, the ECB said the headline rate of interest would stay at zero. Deposits left by banks with the ECB will still be charged at -0.4 per cent.
It added that "non-standard monetary policy measures", meaning stimulus packages, will continue at their current rate, with the bank buying €80bn of debt each month, until at least March 2017.
Hopes that new stimulus measures would be announced led to the euro hitting a two-week high against the US dollar, rising 0.6 per cent to leave a euro worth $1.1306. While investors may now be disappointed, many experts are not surprised.
Reuters said this morning that "nearly all" the analysts it had spoken to expected the rate to be held steady – though some had anticipated fresh stimulus.
Draghi had other options, Naeem Aslam of Think Markets told The Guardian before this afternoon's announcement. He could have cut the deposit rate, for example, or expanded the monthly quantitative purchase beyond €80bn.
The ECB president could also have added other classes of assets to the purchasing programme, announced a round of "helicopter money" – or even produced new tools altogether, says Aslam.
Some investors had hoped for more dynamic action from the ECB. According to the Guardian, money has been flowing out of the European stock markets this year, partly because of Brexit uncertainty and partly because of the rise of far-right parties and eurozone structural problems.
Jennifer McKeown of Capital Economics sees the lack of new action as reflecting the "reasonably positive tone of recent economic data" but believes fresh stimulus will be announced "before long".
Brexit: Britain and Australia explore free trade deal
The UK and Australia are already discussing a post-Brexit trade deal – but Australia says there can be no agreement until the UK has left the EU.
Australian trade minister Steven Ciobo was in London this morning after preliminary discussions on a new trade deal with his UK counterpart, Liam Fox. He told BBC Radio 4's Today programme he expected an agreement could be reached "quite quickly" – after Brexit occurs.
Asked about the timing, he said it "will in many respects be dictated by the UK", adding that the "discussions with the EU, the nature of those, the length of them is all yet to be determined".
Pressed, he admitted that a deal could therefore be at least two-and-a-half years away.
Fox and Ciobo agreed that officials will now meet twice a year to discuss an "ambitious and comprehensive deal", with Ciobo saying that the two nations share a "strong political commitment" to trade liberalisation.
Ciobo is travelling to Brussels to continue EU-Australia trade negotiations later this week.
Meeting Prime Minister Theresa May at the G20 summit in China on Monday, Australian PM Malcolm Turnbull said he expected to negotiate a "very strong" free trade agreement with the UK and hailed the "long-standing ties" between the two nations.
He said: "Britain's made a very momentous and historic choice to leave the European Union and we have already been engaged in discussions with you about what the free trade arrangements may look like after that.
"Australia is determined to provide Britain with all the support and assistance that we can. We are such great friends, such strong allies. [There] couldn't be two countries with closer bonds."
Turnbull's very public support is a "major boost" for May, says the Daily Telegraph. It comes after US President Barack Obama struck a frosty note, saying the UK would now be at the back of the queue for trade deals.
Brexit anxiety eases as weak pound boosts exports
New evidence has emerged that fears that the Brexit vote would send the UK economy plunging into a deep recession were misplaced.
The weak pound, which yesterday was still around eight cent down against the dollar and ten per cent against the euro compared to its pre-referendum peak, has boosted export orders to their highest level in two years.
A survey by the Confederation of British Industry, published yesterday, found that 21 per cent of exporting firms have reported that business is above normal levels, reports The Times.
Total order books were marginally weaker, according to The Guardian, but the CBI says the figures paint a picture of activity that is "comfortably above the long-run average".
And that is not all. The Recruitment and Employment Confederation has just published its latest survey showing that a quarter of employers are planning to increase their workforce over the next year. Just three per cent intend to cut staff.
Data published last week by the Office for National Statistics reveals that jobless claimant numbers have defied the gloomy predictions. The total fell in July, after the Brexit vote, by 8,600.
Elsewhere the housebuilder Persimmon has become the latest in the construction sector to report that sales are mostly unchanged since the referendum, while HMRC has published figures showing that transaction numbers are stable, too.
Purchasing manager index updates relating to the eurozone have found that business activity is at its highest level for seven months and shows no signs of being "derailed by Brexit uncertainty".
All in all the statistics in recent weeks appear to vindicate those who claimed the Brexit result would not affect the economy.
Some, however, say that such data is too new and recent to allow a fair assessment of the impact of the referendum and that the market is likely to change over the coming months, especially as the weak pound continues to feed into higher import costs.
Chris Williamson, chief business economist at the researcher IHS Markit, says that the economy is arguably only so resilient because of the "huge policy response" to initially weak indicators from the Bank of England and, speculatively, the Treasury.