German automaker is setting aside €6.5bn to cover costs of investigation into how software was used to cheat emissions tests * VW: 11m cars effected worldwide * Volkwagen issues profits warning * Shares slump again * Campaign group: Regulators need to get tough * Full story: US chief says carmaker ‘totally screwed up’ * Q&A: Volkswagen scandal explained 12.13pm BST VOLKSWAGEN HAS REVEALED FOR THE FIRST TIME TODAY THAT 11 MILLION VEHICLES WERE FITTED WITH SOFTWARE THAT TRICKED REGULATORS INTO UNDER-RECORDING NOXIOUS EMISSIONS. Before today, VW has admitted to fitting half a million diesel cars with the code -- something the FT called a ‘monumental blunder’. Further internal investigations conducted to date have established that the relevant engine management software is also installed in other Volkswagen Group vehicles with diesel engines. For the majority of these engines the software does not have any effect. Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide. A noticeable deviation between bench test results and actual road use was established solely for this type of engine. Volkswagen is working intensely to eliminate these deviations through technical measures. 12.02pm BST THE ECONOMIST ARGUES THAT VOLKSWAGEN WAS ALREADY STRUGGLING, BEFORE BEING SHUNTED BY THE REVELATIONS SURROUNDING EMISSION TESTS. Investors have also been spooked by its other problems, which the latest scandal have made worse, it says: VW has been aiming to build more than 10m cars a year, in order to take advantage of the big economies of scale that exist in the industry. But its efforts to grow appear to have faltered. Its market share in America—which at 2.2% last year is less than Subaru’s—is now shrinking, along with its turnover in China. Even the sales it is making are not particularly profitable. Why Volkswagen's share price has fallen by another 23% this morning http://t.co/LikeAtUZBm pic.twitter.com/RxnOSSmaEb 11.58am BST A string of commentators are suggesting that the emissions scandal could be the auto equivalent of the interest rate-fixing perpetrated by the banking sector. .@OlafStorbeck "This has the potential to be the Automotive industry's #Libor" #Volkswagen VW emissions test crisis could end up as the car industry's LIBOR scandal. Expect this one to run and run. Tesla must be pleased? 11.47am BST The cost of insuring Volkswagen’s corporate debt against default has jumped this today. That indicates concerns that the scandal could cause extremely serious damage: Left left hard left formation, VW CDS. http://t.co/bMPa55PXq3 pic.twitter.com/3HzlcKJZZ9 11.45am BST THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS (SMMT) HAS INSISTED THERE WAS NO EVIDENCE THAT MANUFACTURERS IN THE UK ATTEMPT TO MISLEAD EMISSION TESTERS. The trade association’s chief executive, Mike Hawes, said (via PA). The EU operates a fundamentally different system to the US - with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency. “There is no evidence that manufacturers cheat the cycle. Vehicles are removed from the production line randomly and must be standard production models, certified by the relevant authority - the UK body being the Vehicle Certification Agency, which is responsible to the Department for Transport. 11.40am BST 11.35am BST BY MY RECKONING, AROUND €28BN HAS BEEN WIPED OFF THE VALUE OF VOLKSWAGEN THIS WEEK. Shares were trading at €162 each on Friday afternoon, valuing the company at €78.5bn. 11.31am BST CAMPAIGN GROUP TRANSPORT & ENVIRONMENT (T&E) HAS WARNED THAT MILLIONS OF DIESEL CARS COULD BE RECALLED, IF THE PRACTICE OF FIDDLING EMISSION TESTS IS WIDESPREAD. T&E’s diesel expert Jos Dings has called for EU regulators to “take their job seriously”, and examine if cars on the road are pumping out more harmful emissions than is tolerable. All the evidence points to exactly the same thing going on in Europe and potentially even worse. “Diesel cars in Europe operate with worse technology on average than the US. 11.23am BST THE ESCALATING CRISIS AT VOLKSWAGEN IS SENDING SHIVERS THROUGH THE FRANKFURT STOCK MARKET, WHERE THE DAX INDEX HAS LOST 2.7%. The scandal risks denting the reputation of Germany’s manufacturing sector, warns political writer Andrew Lilico. This VW thing cld damage the whole German manufacturing brand. It's potentially a kind of DasLIBOR. 11.17am BST LIBERAL DEMOCRAT MEP CATHERINE BEARDER has warned that European regulators are failing to enforce emission standards. BEARDER says: “Manufacturers in the US have been caught out, but we know that pollution limits are also being breached in Europe. “We need to tighten EU emission standards and make sure they are properly enforced. Unless we take action, thousands of lives will continue to be tragically cut short by air pollution.” 11.12am BST VOLKSWAGEN HAS ALSO REVEALED THAT AROUND 11 MILLION DIESEL VEHICLES WORLDWIDE WERE FITTED WITH THE SOFTWARE AT THE CENTRE OF THE US EMISSIONS SCANDAL. It also pledged to work “intensely to eliminate these deviations through technical measures.” 11.02am BST Wow. VW shares have crashed by another 20% today, as traders digest this profits warning. An iconic German brand: -20.1% pic.twitter.com/SJKAvN6njD 10.55am BST BREAKING NEWS: VOLKSWAGEN HAS JUST ANNOUNCED THAT IT WILL SET ASIDE €6.5BN TO COVER THE COSTS OF THE INVESTIGATION INTO HOW ITS DIESEL CARS CHEATED EMISSION TESTS, SENDING ITS SHARES SLUMPING. The move will make a significant hit in its earnings this quarter, as the German carmaker wrestles with the impact of the scandal. BREAKING: #Volkswagen sets aside €6.5 billion ($7.3 billion) to pay for emissions crisis http://t.co/PlNPWciAZV #Volkswagen shares down by almost 10% as company to set aside €6.5bn provision in 3Q for Diesel remedies. pic.twitter.com/XcS2UFbHFN 10.35am BST Over in Greece, state run TV has just announced that prime minister Alexis Tsipras’ new cabinet will be sworn in Wednesday morning, _our correspondent Helena Smith reports_. 10.33am BST Being Greece’s finance minister is one of the roughest jobs in European politics, so we can’t blame Euclid Tsakalotos if he turns it down.... No wonder Tsakalotos is reluctant. He probaly lost 10 yrs of his life trying to close deal for #Greece http://t.co/5wsHkc2iAg via @ReutersUK 10.30am BST GREEK MEDIA ARE REPORTING THAT EUCLID TSAKALOTOS, IS RELUCTANT TO BECOME FINANCE MINISTER AGAIN. If Tsakalotos was not appointed finance minister he could still lead negotiations with the eurozone, which has agreed an €86bn ($96 billion) bailout with Greece in exchange for deep economic reforms. Tsipras’s alternative would be Giorgos Houliarakis, who has been finance minister in the caretaker government put in place during Greece’s election campaign. 10.28am BST Britain’s slow progress reducing its budget deficit means the UK is vulnerable to economic shocks, warns ROSS CAMPBELL, ICAEW Director for Public Sector Policy. Here’s his take on today’s figures: Sorting our public finances depends on robust tax receipts, so it is disappointing to see corporation and income tax revenues decrease. The weakening global economy could also have a significant impact on tax receipts in the coming months, which would only make the situation worse. 10.12am BST 10.11am BST BACK IN THE EUROZONE, ITALY’S PRIME MINISTER FINANCE MINISTER HAS WADED INTO UK POLITICA WITH AN ATTACK ON LABOUR’S LEADER, JEREMY CORBYN. Matteo Renzi has been dubbed Italy’s Tony Blair. And he probably spoke for the former PM when he told lawmakers that the MP for Islington North wasn’t a winner. “After what happened with Corbyn, I think [David] Cameron is the happiest of all about Corbyn’s win.... “It’s not a question of being Blairite or anti-Blairite, it’s a matter of ‘Do you want to go to elections like you go to the Olympics, to win or to participate’?” Related: Corbyn election shows Labour's delight in losing, says Italian PM So, @yanisvaroufakis is baaaack. And he has a message for @matteorenzi http://t.co/jYWMx6dVdk pic.twitter.com/XjmD2TBGA0 10.03am BST Today’s public finance figures also show that Britain is heading towards a deficit of around £70bn this year. Borrowing illustrated pic.twitter.com/fQDy89Z8WV 9.53am BST BRITAIN HAD TO BORROW £12BN TO BALANCE THE BOOKS IN AUGUST, AROUND £3BN MORE THAN EXPECTED. BUT IT’S NOT A REASON TO PANIC. This is the largest monthly deficit since August 2012, due to unusually weak income tax receipts. According to the ONS, more people paid income tax bills in July, so last month suffered a shortfall. So whilst the year so far has been better for UK borrowing and PSBR the figures for August are disappointing #GBP #Austerity 9.37am BST FRANCE’S FINANCE MINISTER HAS CALLED FOR A “EUROPE-WIDE” PROBE TO ADDRESS THE REVELATIONS THAT VOLKSWAGEN EVADED US POLLUTION TESTS. Michel Sapin told French radio that in order to “reassure” the public, it seemed “necessary” to carry out checks on cars manufactured by other European carmakers. “We are in a European market, with European rules that need to be respected,” Sapin told _Europe 1_ radio. 9.34am BST The FTSE 100 index of blue-chip shares has now shed 111 points, as the selloff picks up. #FTSE below 6000 for the first time in three weeks. TM pic.twitter.com/XMO5xCyZbH Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h 9.28am BST OVER IN FRANKFURT, VW’S SHARE PRICE HAS NOW LOST ALMOST 5%. Other car makers are also leading the DAX fallers, as the revelations that emissions data have been falsified continue to rock the sector. News that South Korea, as well as the US, would be investigating the company’s diesel cars took the stock over 4% lower (and counting) immediately after the bell, pushing VW to a further 3 year low (and continuing to have a nasty knock on effect for majority shareholder Porsche and the rest of the auto-sector). 9.15am BST A SELLOFF IN THE MINING SECTOR IS HELPING TO PULL EUROPE’S STOCK MARKETS DOWN THIS MORNING. The FTSE 100 is leading the selloff, down 1%. *COAL DROPS BELOW $50 FOR FIRST TIME IN EUROPE AS GLUT PERSISTS pic.twitter.com/0dcaWIbdsj 8.57am BST Our Q&A explains why the Volkswagen emissions scandal is so serious, and what might happen next: Related: VW scandal: what the emissions revelations mean 8.37am BST VOLKSWAGEN SHARES ARE SLIDING AGAIN, DOWN 3.4% IN EARLY TRADING AFTER SLUMPING BY A FIFTH ON MONDAY. The selloff comes after the German automaker’s US chief executive admitted the company has “totally screwed up” over the emissions scandal that has rocked the automotive industry. Related: Volkswagen scandal: US chief says carmaker 'totally screwed up' 8.21am BST GEORGE OSBORNE IS NOW FIELDING QUESTIONS ABOUT HIS TRIP TO CHINA, ON RADIO 4’S TODAY PROGRAMME. He’s defending his decision to build closer ties with Beijing. Osborne defends govt engaging with China despite worries over human rights 8.13am BST GEORGE OSBORNE’S calming words went down well with Chinese traders. The Shanghai index just closed, up almost 1%. After @George_Osborne started talking here, the Shanghai stock exchange hit a new intraday high. Just saying pic.twitter.com/rJj04RGTzZ 8.09am BST UK CHANCELLOR GEORGE OSBORNE HAS CALLED FOR BRITAIN AND CHINA TO BUILD A GOLDEN DECADE TOGETHER. And he used a trip to China’s main stock market to do it. “I very deliberately chose to come here, to the Shanghai Stock Exchange, to the epicentre of the volatility in financial markets this summer, to say this: “Whatever the headlines, regardless of the challenges, we shouldn’t be running away from China.” “Let’s stick together and make Britain China’s best partner in the West. Let’s stick together and create a golden decade for both of our countries.” .@George_Osborne speaking to a huge audience here in Shanghai pic.twitter.com/V2xMmpN9bL 8.01am BST ALEXIS TSIPRAS WILL KEEP SOME FAMILIAR FACES IN THE TOP JOBS IN HIS CABINET, PREDICTS THE GREEK NEWSPAPER KATHIMERINI. But he may also create some new roles, to help implement the measures he signed up to this summer. It is expected that EUCLID TSAKALOTOS will continue as finance minister and that GIORGOS STATHAKIS will also keep his role at the Economy Ministry. However, Tsipras is said to want to create a position at the level of deputy minister that will carry the responsibility for coordinating the government’s actions in relation to the demands of the third bailout. It is expected that caretaker finance minister GIORGOS HOULIARAKIS, who also led Greece’s negotiating team in Brussels over recent months, will take on this role. 7.52am BST GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. Having been sworn in as prime minister last night, Alexis Tsipras will be getting to work this morning creating a new cabinet. His eurozone allies are watching closely, to see if the left-winger can now deliver the challenging programme of tax rises and reforms demanded by lenders. Tsipras must now implement a fiscal consolidation and reform programme that was designed to fail. Illiquid small businesses, with no access to capital markets, have to now pre-pay next year’s tax on their projected 2016 profits. Households will need to fork out outrageous property taxes on non-performing apartments and shops, which they can’t even sell. VAT rate hikes will boost VAT evasion. Related: The lenders are the real winners in Greece – Alexis Tsipras has been set up to fail | Yanis Varoufakis .@George_Osborne backs China's ambition to be an IMF reserve currency Euro markets have just opened: $FTSE 6121 up 12 $DAX 9990 up 41 $CAC 4595 up 9 $IBEX 9879 up 23 $MIB 21784 up 28 Continue reading...
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