Rolling business and financial news, as Andy Haldade warns that the UK is writhing in both agony and ecstasy 8.23am BST Rolls-Royce has warned it wont return to profit growth next year, blaming worsening economic conditions and tighter Russian trade sanctions. The shares tumbled more than 7%, or 71.5p, to 868p, making them the worst performer on the FTSE 100 in early trading. The British engineering firm said a number of customers had delayed or cancelled orders. While the company cut its revenue forecast for this year, it maintained its forecast of flat 2014 profits but no longer expects to return to growth in 2015. Its current best estimate is that underlying profit will be flat to 3% lower next year. Rolls-Royce is the worlds second-largest aircraft engine maker behind General Electric. 8.18am BST A calm start to Europes stock markets, as traders digest Andy Haldanes speech (new readers start here).The German DAX has jumped by 0.6%, and the French CAC is up 0.4% 8.12am BST Bottom line: Andy Haldane has joined the "lower for longer" camp at the @bankofengland. http://t.co/FeB3jev0IF pic.twitter.com/2Af8uvmQQV 8.11am BST The ecstasy long-view from Andy Haldane pic.twitter.com/kFsoM3hGrN 8.10am BST Haldane has also created an ecstasy index, based on unemployment, inflation and GDP growth in the UK.And in contrast to his agony index, this one looks quite good:In only 42 of the past 144 years has the index been above current levels. So far, then, so good. The UK economy appears to be healthier than on average in the past, if perhaps not quite yet ecstatic. Certainly, it appears to be firmly on the front foot. 7.59am BST Andy Haldane has also produced an agony index for the UK, a simple index of real wages, real interest rates and productivity growth. And it shows that Britains economy is suffering serious pain:The agony index is currently at painfully low levels. It has been around 5 percentage points below its 1970-2014 average since 2008. Such an extended period of agony is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the World Wars and the early 1970s. 7.52am BST Andy Haldane speech is online here:"The UK economy appears to be writhing in both agony and ecstasy." Very interesting speech by Andy Haldane. http://t.co/syxElzA08V 7.47am BST Andy Haldane, the chief economist of the Bank of England, has warned that economic conditions have worsened.In an important interventionat the Kenilworth Chamber of Trade right now, Haldane is explaining that he is gloomier about economic prospects. Rather peculiarly, the UK economy appears to be writhing in both agony and ecstasy. It is twin-peaked. Growth in real wages has been negative for all bar three of the last 74 months. The level of productivity is no higher than it was six years ago. And real interest rates are around zero. This combination of poor economic outcomes is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the world wars and the early 1970s. On balance, my judgement on the macro-economy has shifted the same way. I have tended to view the economy through a bi-modal lens. And recent evidence, in the UK and globally, has shifted my probability distribution towards the lower tail. Put in rather plainer English, I am gloomier. 7.45am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.Modest update to European opening - FTSE -6, DAX +26, CSC -2The bond market looks like it has pushed Greece out (once again) of the funding markets. Continue reading...
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