All the latest business and economics news, as eurozone business activity slows and the Treasury says it will redeem first war bonds as part of the autumn statement 11.39am GMT More from Reuters on the Ukrainian power plant situation:Ukraine’s Energy Minister Volodymyr Demchyshyn said on Wednesday an accident at the Zaporizhzhya nuclear power plant in southeast Ukraine posed no danger and that the plant would return to running as normal on December 5.“There is no threat ... there are no problems with the reactors,” Demchyshyn said at briefing, saying the accident affected the power output system and “in no way” was linked to power production itself. 11.38am GMT Over in Greece, and the troika of international lenders want more information on proposed pension reforms, newspaper Kathimerini is reporting:Greece’s international lenders have asked for more information on pension reform to plug a potential budget gap next year, a government official said on Wednesday, as the two sides continue to haggle in a bailout review.Athens has offered to raise value-added tax on hotels and implement pension reform to satisfy European Union/International Monetary Fund lenders’ concerns of a potential budget shortfall next year.A labor ministry official said the lenders had sought more information on pension reform proposed by the government.The lenders did not specify any date for returning to Athens to complete the review, Adonis Georgiadis, an official from Prime Minister Antonis Samaras’s conservative party told Greek television. 11.07am GMT Here’s Reuters first take on the Ukraine situation:Ukrainian Prime Minister Arseny Yatseniuk said on Wednesday an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference.“I know that an accident has occurred at the Zaporizhye NPP,” Yatseniuk said, asking new energy minister Volodymyr Demchyshyn to make clear when the problem would be resolved and what steps would be taken to restore normal power supply across Ukraine. 11.03am GMT The Ukraine energy minister seems to be playing down the problems at one of its nuclear plants:UKRAINE ENERGY MINISTER: NUCLEAR PLANT WORKING BELOW CAPACITY; INSIGNIFICANT DAMAGE IN ACCIDENTUkrainian Energy Minister: Says There Is No Threat To Reactor Following ‘Accident,’ Damage Was Insignificant 10.56am GMT Reports are coming in of a possible accident at a nuclear power plant in Ukraine, as revealed by the country’s prime minister Arseny Yatseniuk:#Ukraine's Yatseniuk discloses accident at nuclear power plant in SE of country. Instructs new energy min to call news conference.UKRAINE BONDS DECLINE AS PREMIER REPORTS NUCLEAR PLANT ACCIDENTYATSENYUK SAYS ACCIDENT HAPPENED AT ZAPOROZHYE NUCLEAR PLANT IN UKRAINE pic.twitter.com/NrFpUowZNgnot clear that this Ukraine nuclear plant incident is really an accident - shutdown yes but maybe more technical issues 10.45am GMT Elsewhere, Russia’s central bank is intervening in the currency market again to defend the rouble, according to Reuters. It reports:“Without doubt, the central bank is selling (foreign currency). The whole question is what volumes it is limiting itself too,” said a trader at a large Western bank in Moscow.Earlier on Wednesday the central bank said it had made $700m in market interventions on Monday, its first interventions since November 10, the day before it floated the rouble. 10.39am GMT Back to the news that the Treasury will pay off the first world war bond.Toby Nangle at Threadneedle, which is one of the two biggest holders of the debt, has been lobbying the Debt Management Office to pay it off. Reacting to the news, he said:We are really pleased to hear Chancellor Osborne announcing today that the War Loan is being refinanced. We estimate that refinancing this bond will deliver around £15m of interest savings per annum, comparable to a debt reduction of over £500m.We engaged with officials at the UK Debt Management Office outlining our assessment of the benefits of calling of the War Loan. We are delighted that on reflection they arrived at the same conclusion. 10.30am GMT More data from Europe, and eurozone retail sales returned to growth in October but fell short of expectations.After a weak third quarter, sales rose 0.4% month on month for a 1.4% year on year gain. This follows a fall of 1.2% month on month in September but was below forecasts of 0.6% growth.Euro zone retail sales also miss forecasts, printing +0.4% month-over-month versus +0.6% expected and -1.3% last #FX ^FR 10.19am GMT Speaking of the autumn statement, my colleagues Andrew Sparrow and Graeme Wearden are live blogging the chancellor’s speech and all the reaction here: 10.11am GMT More comment on the UK services figures.James Knightley at ING Bank said:The UK service sector purchasing managers’ index offers more encouragement on fourth quarter GDP growth. The headline index has risen to 58.6 from 56.2 and with the manufacturing index also having risen on Monday (while the construction index fell yesterday) it leaves the composite PMI at 57.6 versus 55.8 previously – the consensus forecast was for a reading of 56.2.In terms of the services survey, there were strong gains in new orders, which points to decent output growth in the first quarter of 2015, while the employment index rose further. Inflation pressures remain very subdued though, suggesting little imminent pressure for Bank of England policy action. [Reminder: both the Bank of England and ECB are meeting on Thursday].Services PMI data this morning solidly beat expectations with a reading of 58.6, when a reading of 56.6 was previously forecast. The pound has rallied slightly against the dollar and strongly against the euro this morning as eurozone PMI data earlier today was disappointing and triggered euro weakness across the board. This latest PMI reading bodes well for sterling, but the broader market reaction seems a bit more muted than it would usually be, as market participants are likely to be waiting for the autumn statement this afternoon before making their final decisions. 9.53am GMT I’m now handing over to my colleague Nick Fletcher. 9.52am GMT Here is some instant reaction to the UK services numbers. Alan Clark at Scotia Bank said:The CIPS Services survey was much higher than expected last month, rebounding to 58.6 from 56.2 - regaining pretty much all of the ground that it lost the prior month.Combined with the manufacturing index that gives a composite reading of 57.0 - consistent with ongoing above trend GDP. That is hardly a reading that suggests rate hikes would be a killer blow to the economy. 9.34am GMT Markit said:Supporting the latest increase in activity was another rise in new business volumes. Panellists commented that demand was high, and they had been able to secure contracts from both new and existing clients. Advertising and marketing drives provided further support to sales efforts, and overall new business growth strengthened since October with over 28% of panellists recording a rise in new work. 9.32am GMT UK’s services sector is stonking ahead: Growth was stronger than expected last month. The PMI headline index climbed to 58.6 from 56.2 in October, pointing “to a marked and accelerated rate of expansion that was well above the survey’s historical average,” survey compiler Markit said. The City had expected a slight improvement to 56.5. 9.14am GMT Italian services firms recorded a rise in business activity for the second month running in November, although a slight fall in new business and shrinking backlogs of work painted a gloomier picture of the short-term outlook, survey compiler Markit said. The headline business activity index rose to 51.8 from October’s 50.8. 9.07am GMT For the eurozone as a whole, Markit’s composite PMI, based on surveys of thousands of manufacturing and services companies across the currency bloc, slid to 51.1 in November from October’s 52.1, despite heavy price cutting by businesses. Chris Williamson, Markit’s chief economist, said:The region is on course to see a mere 0.1% GDP growth in the final quarter of the year, with a strong likelihood of the near-stagnation turning to renewed contraction in the new year unless demand shows signs of reviving. 9.03am GMT In France, business activity across manufacturing and services shrank at the fastest rate in nine months in November, dragged down by weak services. Markit’s composite PMI dropped to 47.9 from October’s 48.2, below the 50 mark that separates expansion from contraction. In the services sector alone, the reading was 47.9.Markit economist Jack Kennedy said:The latest PMI data show a deepening downturn in the French service sector during November. With manufacturing also continuing to struggle, the private sector looks set to act as a drag on GDP during the fourth quarter. 8.58am GMT Germany’s private sector grew at the slowest pace in 17 months in November, a survey showed. Markit’s final composite PMI, which covers the manufacturing and service sectors, dropped to 51.7 from 53.9 in October. The services index alone fell to 52.1, a 16-month low.Markit economist Oliver Kolodseike said:Composite PMI data suggest the German economy is likely to face another quarter of only marginal growth at best, with fears of a renewed downturn intensifying. 8.44am GMT In financial markets, the rouble opened flat but then resumed its slide despite data confirming that the Russian central bank stepped in to defend the currency on Monday. It is down 1.2% at 54.47 to the dollar, and nearly 1% lower at 67.25 against the euro.The FTSE 100 index in London is slightly down ahead of the chancellor’s autumn statement: it has slipped more than 7 points or 0.1% at 6734.49. Germany’s Dax is 17 points ahead at 9951.27, a 0.2% gain, while France’s CAC has edged down nearly 4 points, or 0.08%, to 4384.57. 8.39am GMT Ireland’s services PMI edged up to 61.6 last month from 61.5 in October, signalling strong expansion.Celtic tiger still roaring: #Ireland's PMI remained elevated in Nov running at level consistent with 7% y/y growth pic.twitter.com/CSJCbhyEYd 8.34am GMT The Markit PMI data for Spain suggests that growth in its service industries lost momentum as both activity and new business grew at much weaker rates than seen in October. The headline business activity index dropped to 52.7 in November from 55.9 in October, the lowest reading for a year. 8.31am GMT Enough of the past. The main event on the economic calendar today is the PMI services data for the eurozone (released between now and 9am GMT) and the UK (9.30am GMT).We’ve already had data for Japan, the world’s third-largest economy: its services sector returned to growth in November. Markit’s service sector purchasing managers index (PMI) rose to 50.6 from 48.7 in October. A reading above 50 indicates expansion. 8.22am GMT Returning to the war debt, the first bonds were sold to private investors in 1917 with the advertisement: “If you cannot fight, you can help your country by investing all you can in 5 per cent Exchequer Bonds ... Unlike the soldier, the investor runs no risk.” 8.10am GMT Last night, the Bank of England and the Treasury announced a one-year extension to the Funding for Lending scheme, to support bank lending to small and medium-sized businesses next year – “even in the event of stress in bank funding markets”.They said the scheme, which provides cheap funding to banks to support business lending, has contributed to a “substantial fall in bank funding costs” since its launch in mid-2012. 8.04am GMT Fidelity and Threadneedle Asset Management are the biggest holders of the 3.5% bond, called War Loan. No doubt they will be delighted with today’s announcement. Toby Nangle, a fund manager at Threadneedle, has been lobbying the Debt Management Office to pay off the first world war bond.You can read the Treasury’s announcement in full here. 7.57am GMT These gilts include some debt originally issued in the era of the South Sea bubble in the 18th century, as well as to fund he Bank of England’s nationalisation. The nation has paid some £5.5bn in interest on 5% War Loan 1929-47 and 3½% War Loan since 1917. 7.51am GMT The news comes just over a month after the government said it would pay off £218m from a 4% consolidated loan next February, as part of a redemption of bonds stretching as far back as the 18th century. They also relate to the South Sea Bubble crisis of 1720, the Napoleonic and Crimean wars and the Irish potato famine.This was the first planned repayment of an undated gilt of this kind for 67 years. The Treasury said today’s announcement kicks off a strategy to remove all six of the other remaining undated gilts in the government’s portfolio, “when we deem it value for money to do so”. 7.46am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.George Osborne has kicked off the autumn statement (which he will present in the House of Commons at 12.30pm) several hours early by announcing that the Treasury will repay the nation’s entire first world war debt.This is a moment for Britain to be proud of. We can, at last, pay off the debts Britain incurred to fight the First World War.It is a sign of our fiscal credibility and it’s a good deal for this generation of taxpayers. Continue reading...
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