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May 28, 2019

Business Live | EU leaders meet in Brussels to discuss top jobs.

Jennifer Rankin

The pound hasn’t moved much in today’s trading session, still firmly below $1.27 and slightly down against the euro:
  • $1.2670, down -0.06%
  • €1.1316, down -0.07%

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Bert Colijn, senior eurozone economist at the Dutch bank ING, says the eurozone survey suggests weaker growth for the second quarter, despite the pick up in sentiment:The improvements were mainly led by improved optimism about the months ahead for both industry and services. This is not because of improved new orders though, which still declined in May. Industry data was poor in general as the recent production trend dropped significantly and so did employment expectations. This seems in line with a modestly weaker GDP growth rate in Q2 than Q1.

Eurozone sentiment picks up in May

Economic sentiment in the eurozone was better than expected in May, rebounding after 10 successive monthly falls.
The European commission’s indicator rose to 105.1 from 103.9 in April, beating expectations of no change.

The five top EU jobs up for grabs

Jennifer Rankin
Jennifer Rankin, the Guardian’s Brussels correspondent, brings this report:
Theresa May will return to Brussels for a special European Union dinner summit this evening, but Brexit is not on the menu.
Instead the prime minister will join 27 other European heads of state and government to discuss the process for divvying up the EU’s top jobs.
At the end of this year, five big posts fall vacant: the EU will need a replacement for Jean-Claude Juncker as president of the European commission, and Donald Tusk, president of the European council.
The EU also needs a new presidents at the European Central Bank, the European parliament, and a new foreign policy high representative, a post currently held by Italy’s Federica Mogherini.
EU appointments are always a highly complicated political rubix cube; the bloc wants a spread of leaders balancing western and eastern Europe, men and women, right, left and centrists.
Adding to the complexity, the European parliament is insisting it should have the biggest say over who leads the European commission. Each political group has its own candidate: the centre-right European People’s Party has chosen long-serving MEP Manfred Weber, the Socialist candidate is commission vice-president Frans Timmermans, and the liberals are promoting the EU competition commissioner Margrethe Vestager, best known for taking on Apple, Amazon and Google.
But the parliament, more fragmented than ever after last week’s elections, has so far been unable to agree on a candidate, handing the initiative back to EU leaders.
Other party leaders turned down an invite to dinner with Weber on Monday, because they did not want it to appear as if he was leading the process.
Divisions among MEPs could open the way for a compromise candidate, such as EU Brexit negotiator Michel Barnier, who has long wanted to lead the commission. Or it could be a dark horse that no one is talking about.
Either way, the next cohort of EU leaders will not change the Brexit withdrawal agreement, which is the result of decisions taken years ago. The EU is united on not reopening talks on the agreement, while remaining open to changes on the political declaration.
Theresa May is expected to arrive around teatime and will meet Tusk, before joining other leaders.

Five-a-side football pitch operator Goals Soccer Centres has appointed forensic accountants to investigate its accounting after it revealed a likely tax underpayment, the company announced this morning. My colleague Jasper Jolly reports:
Goals, which counts retail tycoon Mike Ashley’s Sports Direct among its top shareholders, announced in March that it had misdeclared its VAT bill over several years.
The forensic accountants will investigate Goals’ accounting, including how the company, which has 50 sites in the UK, recognised revenues.
Goals “remains in active dialogue with HMRC in establishing a timetable for resolving any misdeclaration and also to establish a final value” of its tax bill, it said on Tuesday.
Goals replaced KPMG with BDO as its auditor last year. The company previously said its liability could be £12m.
Goals will be unable to complete its 2018 audit in time for the 30 June deadline, and shares will remain suspended until the audit and the tax bill are completed, Goals said in a statement to the stock market on Tuesday.
Shares in the company, which are listed on the junior Alternative Investment Market, have been suspended since 27 March at 27.2p after the accounting issue was uncovered. Shares closed 2018 at 74p.
The accounting issues could prove to be a distraction for Mike Ashley, as he tries to complete the £350m sale of Newcastle United to Sheikh Khaled bin Zayed Al Nahyan of the United Arab Emirates. Ashley’s Sport Direct, which owns 19% of Goals, has lost around £6.7m since the start of the year on the investment.
Close up of a young boy with his foot on a football. Image shot 07/2015. Exact date unknown.EXC64P Close up of a young boy with his foot on a football. Image shot 07/2015. Exact date unknown.

UK mortgage approvals hit two-year high

The number of mortgages approved by British banks hit the highest level in more than two years in April according to the trade body, UK Finance.
Banks approved 42,989 mortgages last month, up from 40,564 in March and the highest since February 2017.
It suggests that consumers shrugged off Brexit uncertainty in the month after the UK was originally supposed to leave the EU.

The Swedish economy grew by 0.6% in the first quarter, double the rate forecast by economists and faster than the eurozone’s 0.4% growth.
David Oxley at Capital Economics, says:

Source: The GuardianThe breakdown shows that exports of goods and services rose again in quarterly terms in Q1, benefiting from the rebound in the eurozone economy at the start of the year.
However, a stronger showing from imports means that net trade was broadly neutral. There were positive signs for domestic demand too. Household consumption grew at its fastest pace since Q1 2018 and investment rebounded.
Oxley says that the Swedish franc is likely to strengthen as weak global growth sends investors in search of save haven investments.

Over in France, consumer confidence rose to a one-year high in May as households became more optimistic about their personal finances.
The index, published by the French statistics office Insee, rose three points to 99, boosted by some better than expected economic data in the eurozone’s second largest economy.
Trading Economics (@tEconomics) May 28, 2019

FTSE ticks higher in early trading

Traders have returned from the bank holiday weekend in a reasonable mood, with the FTSE 100 outperforming is European peers in early trading.
  • FTSE 100: +0.2% at 7,294
  • Germany’s DAX: -0.05% at 12,065
  • France’s CAC: -0.04% at 5,334
  • Italy’s FTSE MIB: -0.9% at 20,185
  • Spain’s IBEX: -0.2% at 9,202
  • Europe’s STOXX 600: +0.03% at 377

Weber and Vestager among contenders for top EU job

Contenders to succeed Jean-Claude Juncker as president of the European commission include the German MEP Manfred Weber and Margrethe Vestager, the EU’s competition commissioner.
Manfred Weber
Manfred Weber
Manfred Weber has the backing of the German Chancellor, Angela Merkel. He leads the the European People’s party of which her CDU party is a member, but faces tough resistance from from the French President, Emmanuel Macron. He remains the bookies favourite, but is likely to meet stiff competition from a number of candidates.
Margrethe Vestager
Margrethe Vestager
Among them are Margrethe Vestager, the Danish politician with a high profile in her role as competition commissioner, not least for taking on the US tech giants. She has declared her interest in the top post, calling for gender balance in the top ranks of the EU.
Other frontrunners include Michel Barnier, who has so adeptly maintained a united front among the EU countries in his role as the bloc’s chief Brexit negotiator.
Frans Timmermans, the Dutch politician and a centre-left candidate, is another contender to succeed Junker.

Introduction: EU leaders meet to kickstart the process of filling the top jobs

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With the dust barely settled after the results of the European elections, EU leaders will gather in Brussels today to kickstart the process of filling the top jobs.
The first round of nominations for the heads of the EU institutions - including the president of the European commission and president of the European Central Bank - is likely to mark the start of a long battle as leaders fight for their preferred candidates.
Jasper Lawler, head of research at London Capital Group, says the chosen successor to Mario Draghi at the ECB is currently “too close to call” and will be a highly politicized appointment.
He adds:It is most likely to be someone who knows the mechanics rather than an outsider being brought in. This makes the ECB unlikely to benefit from fresh blood. Germany, France and Italy will be trying to push for their own candidates such as Villeroy, Couere or Wiedemann.
Even if the larger EU countries fail, the smaller one’s stand ready with candidates such as Rehn or Liikanean from Finland. Each candidate has a very different profile. Euro traders will be watching the race carefully as the results will impact on the future direction of monetary policy.
Here in the UK, it is the first day of trading after the European election results on Sunday, when voters frustrated by the Brexit impasse dealt a heavy blow to both the Conservatives and Labour.
Also coming up:
  • 9.30am BST: UK Finance, the trade body for banks, will publish mortgage approvals data for April
  • 10am BST: The latest snapshot of business and consumer confidence in the eurozone

  • 2pm BST: Case-Shiller house price index in the US

Source: The Guardian

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