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UK firms expect higher pay rises, as Brexit hits investment plans – as it happened

All the day’s economic and financial news, including the latest trade figures from China and a Bank of England Agents report

Earlier:

And finally….. Sky News has an interesting tale about Brexit and the banking sector….

Here’s a flavour:

The boss of JPMorgan‎ warned Theresa May and Philip Hammond on Wednesday that the French government is intensifying efforts to lure British banking jobs across the Channel, even as he hailed greater clarity about the UK’s post-Brexit planning.

Sky News has learnt that Jamie Dimon, the Wall Street banking giant’s ‎chairman and chief executive, held private talks with the Prime Minister and Chancellor in Downing Street on Wednesday.

Exclusive: JPMorgan chief Jamie Dimon warned May, Hammond of French raid on City jobs during Downing St talks today. https://t.co/3c6JW5pYAd

Here’s our news story about the pressure building on UK wages as firms struggle to find staff:

Related: Shortage of factory workers starts to push up pay rates

In the media world, one of Rupert Murdoch’s key allies has sold his stake in the mogul’s 21st Century Fox.

The move could strengthen those shareholders who are unhappy about the Murdoch clan’s domination of the group, and agitating for change.

Prince Alwaleed bin Talal, who controls the investment firm Kingdom Holding and is one of the world’s richest men, at one stage owned more than 6% of Fox and has consistently backed the Murdochs in shareholder votes about the family’s control of the company.

He has been a shareholder in Murdoch companies – including Fox and News Corp, the owner of the Sun, Times and Wall Street Journal – for two decades and expressed public support for the family after the phone-hacking scandal at the News of the World in 2011.

Related: Saudi prince sells 21st Century Fox stake in blow to Murdochs

The UK’s blue-chip index, the FTSE 100, has closed 16 points higher at 7529

#FTSE100 closed today at 7529.7
+0.22%

Unions have warned they will not accept job cuts if the proposed merger between SSE and NPower goes through.

UNISON national energy officer Matt Lay says staff are feeling pretty nervous following the tie-up:

“This bolt from the blue will have left many of the companies’ employees feeling decidedly anxious.

“With the merger only just announced, there’s no detail yet as to the number of jobs that may go, the posts most affected, or the sites at risk.

Stock markets are taking a breather today, it seems.

Wall Street has opened calmly, with the Dow, S&P 500 and Nasdaq all dipping slightly.

Stocks open flat. Snap dives 10% as mounting losses overshadow investment by Tencent. Wendy's off 4% on sales miss. https://t.co/A9OlUXl3FI

The pound has been under pressure today as traders try to keep up with another day of political drama in the UK.

International development secretary Priti Patel is flying back to the UK as the row over her ‘working holiday’ in Israel escalates.

Related: Priti Patel visited Israeli military hospital in Golan Heights, reports say – Politics live

More than 22,000 users are currently tracking flight #KQ100 en route to London.
According to media #PritiPatel is on board this flight.https://t.co/3GXUkQw0e3 pic.twitter.com/8uzL9usnRc

“The pound slipped against the dollar and the euro today as the next round of Brexit negotiations approach, amid fresh political controversy at Westminster.

Progress in negotiations has so far remained incremental, but the markets are hopeful on the back of renewed discussion of a transition period from the government. Following last week’s allegations that resulted in the resignation of the defence secretary, fresh controversy over Secretary of State for International Development Priti Patel’s conduct overseas and Foreign Secretary Boris Johnson’s comments have put immense pressure on Downing Street.

Irish house prices inflation has hit a two-year high, driving prices back to their highest level since the financial crisis.

House prices across the Republic rose by 12.8% per annum in September, up from 11.8% in August.

Dublin house prices increased 12.4%. Apartments in Dublin increased 11.4% in the same period. The highest house price growth was in Dublin City, at 13.9%. In contrast, the lowest growth was in Dun Laoghaire-Rathdown, with house prices rising 9.9%.

If British firms do cut back on investment, it will make it even harder to hit the UK’s research and development goals.

The UK government’s goal is to get R&D spending up to to the OECD target of 2.4% within a decade, and to 3% in the long term.

Increasing overall R&D investment is the target.

To deliver this we need to create a vibrant environment that fosters research and innovation throughout UK public services, universities, charities and businesses and attracts global investment, incentivising companies to locate their R&D here.

UK recruitment firms say British employers are having to offer bigger pay rises, to cope with a shortage in workers from the EU.

Reuters has the details:

The Recruitment and Employment Confederation said its monthly survey showed starting salaries rose in October at the second-quickest rate since November 2015.

“We already know that EU workers are leaving because of the uncertainties they are facing right now,” REC chief executive Kevin Green said.

British workers really do need a pay rise.

As these chart shows, real wages have been shrinking since the spring as inflation has rattled up to 3% – mainly due to the slump in the pound after the EU referendum.

Real wages are falling, making it even more important that benefits keep up with prices. It's time to #endthefreeze https://t.co/HueEFDrsRN pic.twitter.com/VwZuvCdd70

UK inflation: @CEP_LSE evidence that Brexit has pushed up prices, esp of food, & led to return of falling real wages https://t.co/ITE3whPCzg pic.twitter.com/pGnJf3Tm8o

UK firms seem to be particularly reluctant to commit to new offices and factories.

The Bank of England’s agents found that firms expect to invest less in 2019 and 2020, as they await more clarity about Britain’s economic future and how Brexit will play out.

Firms in the survey expected investment growth to be little changed over the next twelve months, relative to the past twelve months.

However, investment growth was expected to be somewhat weaker over the following two years.

Bank also shows most firms saying they expect investment growth to be little changed in 2018, before weakening over following two years pic.twitter.com/7TS1QAPUL7

Breaking: UK companies are struggling to recruit new staff, and expect to hand over larger pay rises next year.

That’s according to the latest survey from the Bank of England’s regional agents, just released.

Recruitment difficulties had intensified and were above normal in a range of activities, alongside continued modest employment growth. As a result, pay growth had edged up and was expected to be somewhat higher in 2018 than this year.

Our robot overlords are clearly biding their time. Latest Agents survey reports firms facing increased recruitment difficulties. pic.twitter.com/zfi21FjQCz

Investment plans were being boosted by companies’ desire to increase their efficiency and to meet expected increases in demand, but expectations about the United Kingdom’s future trading relationships were dragging on spending.

Manufacturing output growth had risen again, with export supply chains supported by the past fall in sterling and some signs of increased domestic sourcing. But construction output growth had eased. Services turnover growth remained moderate.

Anne-Sylvaine Chassany, the FT’s Paris bureau chief, reports that Bank of America is pressing on with its plans to move 300 staff from London:

The superb Parisian building where 300 Bank of America traders will be relocated from London (bank planning up to 1,000) #Brexit pic.twitter.com/UNvXDliDmy

Britain’s Big Six could soon be the Big Five.

No, not in the football (before any long-suffering Arsenal fans cry foul), but in the energy market.

Especially after the government’s recent pledge to control price increases for the most vulnerable to fix what many regard as a broken market, where prices continue to rise despite a move towards renewables. Big six to big five doesn’t exactly scream “consumer benefit”.

Marks & Spencer also reports that its food sales — usually so buoyant – dropped by 0.1% in the last six months.

The food business has been keeping M&S afloat in recent years, but now progress seems to be flagging here, the clothing division needs to start pulling its own weight. The festive period also looks set to be challenging for the high street. Real wages are around 0.5% lower than they were last year, and the recent interest rate rise might well make consumers think twice about loading up on debt to fund the annual Christmas splurge.

For M&S it’s still early days in the turnaround plan, and it’s unfortunate that the retailer’s structural issues have been compounded by tough times in the industry as a whole. There won’t be any champagne accompanying the marmalade sandwiches at M&S HQ, it’s a quick brew, then back to work.’

Over in the City, shares in Marks & Spencer have dropped by more than 2% after it announced it is speeding up its turnaround plan.

Chief executive Steve Rowe warned that M&S still faces “many structural issues”. The firms now plans to open fewer new Simply Food outlets, and accelerate the closure of other stores.

M&S CFO Helen Weir to step down, accelerates plan to close 30 U.K. stores

Related: M&S speeds up shutdown of clothing and scales back Simply Food

Brexit continues to loom over the City of London, as the clock ticks towards 31 March 2019 when the UK is scheduled to leave the EU.

Those briefed on the talks, which were held over lunch at Wilton’s restaurant in London’s exclusive St James’s district, said the banks were particularly concerned by the failure of Britain to provide clarity over whether it will secure a transition deal to smooth the changing regulatory regime after the UK leaves the EU.

They warned they had even less clarity over what a final Brexit deal will look like.

Donald Trump warned of our chaos.
Just let that sink in. pic.twitter.com/Y5dAbCiJtw

China’s trade figures landed shortly before Donald Trump touched down in Beijing for a state visit.

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

New trade figures from China have missed expectations, which may be a sign that global growth isn’t as punchy as we hoped.

#China both #exports and #imports growth moderated in October pic.twitter.com/OUsILQOkHM

“The big picture is that both outbound and inbound shipments have softened recently, a trend that continued last month.

“We suspect that this reflects a slight easing of growth in other emerging markets along with weaker domestic demand as a result of slower infrastructure spending.”

China's Oct Iron ore imports fall to lowest in 2.5 yrs, Steel exports drop 3%
& I can practically fill in the most important points of China's trade data but then its not all very relevant..I still have characters left..Not sure what to write..More characters..& more…Ok done

China is making a concerted effort to move towards a more service focused economy. That being said, their demand for minerals is still a major driver of commodity prices and mining companies.

Continue reading…

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