UK firms more pessimistic about Brexit, Bank of England says – business live

New survey by Bank of England regional agents finds more firms expect Brexit to hurt their salesLatest: More UK companies expect Brexit to hurt businessBank agents: Firms are struggling to find workersBank of England worried about household debtsChart: How debt could trigger financial crisis (again) 2.43pm BST Bank of England chief economist Andy Haldane caught many observers off guard last week when he voted for an interest rate rise for the first time.But in a speech in London on the UK’s productivity problem, he said the decision should not have been seen as “surprising or radical.” He said:Voting for a 25 basis point rate rise, a full decade after monetary policy was first placed on an emergency setting, is hardly either surprising or radical. A Bank Rate rise of 25 basis points would still leave monetary conditions in the UK extraordinarily accommodative by any historical metric. And the aim in doing so is to lower the risk of needing to tighten policy less gradually in future and cause a sharper adjustment in the economy.Truth be told, I would have voted to raise Bank Rate at the MPC’s May meeting had data on the economy held firm. What we saw ahead of that meeting was a string of weak data suggesting consumer spending might be faltering. I believed there was option value in waiting to see if these data signalled the start of a lasting retrenchment by households, or were instead a temporary snow or statistical blip. With only a modest policy tightening needed over a number of years to return inflation to target, there was “no rush”. And then, of course, there is the World Cup. Without wishing to tempt fate, England’s recent sporting success on the football field (and cricket pitch) has probably added to that feel-good factor among England-supporting consumers. The “smile count” on my recent visits to Wales and Scotland was also as high as I can remember, although I suspect that may have been the weather rather than the football. Haldane said there would always be some data that disappoints.“But waiting for something to turn up is not a prudent strategy in life. And waiting for everything to turn up is certainly not a prudent strategy for monetary policy,” he said. 2.13pm BST Stock markets continue to be volatile, with the worries about a potential trade war between the US and China continuing to dominate sentiment.The FTSE 100 is down 0.35%, Germany’s Dax is down 1.44% and France’s Cac has fallen 0.83%. The UK market is outperforming peers due to further weakness in the pound. Connor Campbell, financial analyst at Spreadex, said:The FTSE avoided the losses seen over in the Eurozone, largely because of sterling’s ongoing crisis.Concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May heading into Thursday’s EU summit, and disappointment at a dovish message from MPC member Jon Cunliffe left the pound in a sorry state. Against the dollar it was at a sub-$1.31, 7 month nadir after falling 0.3%, while against the euro it hit a 7 and a half week low of €1.1305 following a half a percent plunge. Continue reading…
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