UK home owners pay off mortgage debtBrent crude oil price down 49% in 2014ECB warns more measures may be neededUS opens door to oil exportsActivity in China’s factories falls in DecemberGoldman pays top London bankers £3m each 12.12pm GMT An ally of the German chancellor Angela Merkel has claimed the eurozone is no longer obliged to rescue Greece.Michael Fuchs, a senior member of Merkel’s Christian Democratic party, said Greece was no longer of systemic importance to the single currency bloc, leaving Greek politicians unable to “blackmail” their counterparts in the rest of the eurozone.“If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece.The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the euro. 11.25am GMT Oil is heading for its biggest annual price decline since 2008.Brent crude oil is down 49% over 2014 on the back of weaker demand and a supply glut. It is currently trading at close to $56 a barrel, after hitting a peak of $115 in the summer. 11.02am GMT President Obama has signalled an end to a 40-year ban on domestic crude oil exports.Reuters reports:The Obama administration on Tuesday bowed to months of growing pressure over a 40-year-old ban on exports of most domestic crude, taking two steps expected to unleash a wave of ultra-light shale oil onto global markets. The Bureau of Industry and Security, or BIS, which regulates export controls, said it had granted permission to “some” companies to sell lightly treated condensate abroad. Condensate is a form of ultra-light crude. 10.54am GMT The latest data from the Bank of England shows UK home owners took advantage of low interest rates in the third quarter, paying off mortgage debt. In past years, housing equity withdrawal has been used significantly to support consumer spending. So regardless of the causes of the switch to a net injection of housing equity since early-2008, the fact that housing equity withdrawal is no longer happening has been a limiting factor on consumers’ spending power. There is certainly a compelling case for many people to be looking to take advantage of very low mortgage interest rates to reduce their outstanding mortgage levels to improve their balance sheets – if they can afford to do so.The fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past. 10.00am GMT The European Central Bank’s chief economist has warned that measures taken so far might not be enough to stimulate the eurozone’s flagging economy. Peter Praet has stressed in an interview that the battle against deflation and weak growth in the single currency bloc is still very much on. We have always emphasised that there are two contingencies for further action: first, our measures taken so far have not been enough to have the intended effect – that is, are not sufficiently sizeable in terms of expanding our balance sheet to provide the stimulus that is necessary in current conditions; and second, the inflation outlook itself has deteriorated since we decided on the measures we took in the past. Now we have a little bit of both.There is the risk that we won’t have achieved the degree of monetary accommodation that we had intended. And the Eurosystem staff have also substantially revised downwards their inflation projections. This is why we have to be very vigilant and ask ourselves: have we done enough? The sense of urgency was expressed when we said that we would reassess the situation “early next year”.Praet: There is risk of real economic vicious cycle: less investment, which in turn reduces potential growth http://t.co/pHkGcFmRR5Praet in Börsen-Zeitung: If we come to the conclusion that our objective is at risk, we have an obligation to act http://t.co/pHkGcFmRR5 9.33am GMT The dollar is on course for its strongest year in almost a decade. The US currency is likely to end 2014 up more than 12% against a basket of major currencies. It would be the biggest gain since 2005, when the dollar rose almost 13%. Most currency experts at major banks expect the greenback to climb further in 2015.Recent solid data has reinforced the view that the US economy is improving enough for the Federal Reserve to consider raising interest rates in mid-2015.If the Fed hikes rates (even once), two-year yields will be a lot higher than this in a year’s time and the dollar will be stronger. 9.19am GMT Supermarket chain Asda is handing its customers a New Year’s gift by knocking another 2p a litre off its petrol and diesel prices. The cuts take effect from Thursday and mean Asda customers will pay no more than 107.7p a litre for petrol, with diesel at 114.7p a litre.Down down deeper and down! Asda cut another 2p from unleaded - now at 107.9ppl.. Diesel hits 114.7 9.01am GMT City Link, the collapsed courier firm, is expected to deliver redundancy notices to workers today. More than 3,000 jobs are at risk as administrators - appointed on Christmas Eve - struggle to find a buyer for the business. 8.48am GMT US investment bank Goldman Sachs paid its top 121 London bankers about £3m ($4.7m) each in 2013, making it the highest paying of 13 leading banks. 8.29am GMT In the final day of trading in 2014, European shares are up slightly. Some of the regions markets are closed today, including Germany’s DAX, while others are open for half a day. 8.16am GMT More on the those weak manufacturing figures from China. Domestic demand led the slowdown, with new orders shrinking for the first time since April. The report prompted speculation that Beijing will further ease monetary policy in 2015.Today’s data confirmed the further slowdown in the manufacturing sector towards year end. We believe that weaker economic activity and stronger disinflationary pressures warrant further monetary easing in the coming months. 8.00am GMT Good morning, and welcome to our final blog for 2014 on the world economy, the financial markets, the eurozone and the business world.China’s manufacturing sector shrank for the first time in seven months in December according to the HSBC/Markit manufacturing PMI report. In the latest sign of a slowdown in the world’s second largest economy, the headline index fell to 49.6 from 50 in November, where anything below 50 signals contraction. Continue reading...
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