More Labour MPs and some Tories could join new group - Chuka Umunna

Political reporter(wp/bbc):::

More Labour MPs could quit the party unless it listens to their concerns, Jeremy Corbyn has been warned.

Seven MPs have walked out in protest at the Labour leader's handling of anti-Semitism and Brexit.

One of the seven, Chuka Umunna, said "a lot of Labour MPs" could follow suit, together with Tories "demoralised by the UKIPisation of their party".

Deputy Labour leader Tom Watson has warned his party could see more defections if it did not change.

He said Labour had to do more to tackle anti-Semitism and he also urged Mr Corbyn to reshuffle his shadow cabinet to reflect a wider range of MPs.

Mr Corbyn has said in a statement he was "disappointed" by the defections, which represent the biggest split in the Labour Party since the Social Democratic Party was set up 40 years ago.

Shadow Chancellor John McDonnell said the seven should now stand down as MPs and seek re-election against Labour Party candidates.

The seven MPs - Mr Umunna, Luciana Berger, Chris Leslie, Angela Smith, Mike Gapes, Gavin Shuker and Ann Coffey - quit Labour in protest at what they said was a culture of "bullying and bigotry" in the party and frustration over the leadership's reluctance to back another EU referendum.

Mr Umunna said another "big issue for us" was the belief that Mr Corbyn could not be trusted with national security, if he became prime minister.

"Many Labour MPs agree with us on that," he told BBC Radio 4's Today programme.

Mr Umunna said the new Independent Group was not yet a new political party, but he believed it could become one in time.

He urged members of all parties to join them in building an "alternative" to the current two party system, which he said was "fundamentally broken".

The BBC has been told two Conservative MPs are thinking of joining the new Independent Group in Parliament.

Mr Umunna refused to speculate on who they could be but he added: "There are a lot of Labour MPs wrestling with their conscience on this issue but also Conservatives who have become demoralised by the UKIPisation, if you like, of the Conservative Party."

A number of Conservative MPs are at the centre of rumours about joining the new group.

Sarah Wollaston, a supporter of the People's Vote campaign for another EU referendum, along with the seven Labour defectors, has warned about former UKIP members joining local Tory parties and the pro-Brexit European Research Group (ERG) pushing the party to the right.

On Monday evening, she tweeted: "#BLUKIP has been busy taking over the Tory Party alongside the ERG. Soon there will be nothing left at all to appeal to moderate centre ground voters."

Other Conservative MPs unhappy with the party's direction include Anna Soubry, another People's Vote supporter, who has called in the past for a new centre party.

This splintering might, just might - in time - turn into a much bigger redrawing of the landscape.

For now though that is way off. And this is first and foremost about the Labour Party - the seeds of the splinter sown more than three years ago, bearing bitter fruit just when Parliament's biggest decisions over Brexit are about to be made.

Several Labour MPs have said they are considering their future in the party - but more have said they are sticking with it.

Former shadow environment secretary Mary Creagh told Today: "I have [been approached] and I've said no. I think what is important is we now take a long hard look at ourselves as a political party.

"It is clear that Brexit is pushing both parties to the brink, it is clear that anti-Semitism has taken root in our party."

Edinburgh South MP Ian Murray told the BBC he was sticking with Labour but "may change his mind" unless the party responded to concerns about its culture and direction.

Labour MP Jess Phillips, writing in the Daily Telegraph, called on Mr Corbyn to listen to why the MPs had quit and "act on it", warning that reacting with bitterness could cause the party to "burst apart".

However, shadow foreign secretary Emily Thornberry told the Daily Mirror that the resignations were a "distracting and divisive exercise".

Shadow business secretary Rebecca Long-Bailey told BBC Radio 4's Today programme Labour MPs had to "listen to each other".

But she added: "Equally, I think we also have a duty to unify and make sure that we provide a force for change within Britain."

HSBC warns on China, UK slowdowns as 2018 profit disappoints

Banking&Finance reporter(wp/reuters):::
HSBC warned it may have to delay some investments this year as Europe’s biggest bank missed 2018 profit forecasts due to slowing growth in its two home markets of China and Britain.

Its shares fell 3 percent and analysts cut their forecasts as HSBC reported a drop in fourth-quarter revenue amid tumbling stock markets that sapped customer’s confidence in investing.

The results spoke to a wider problem for European banks, which are struggling to return to growth after a decade of post-crisis restructuring due to a worsening global economic outlook.

At the end of his first year in charge, Chief Executive John Flint said HSBC may have to delay investment plans in order to avoid missing a key target known as ‘positive jaws’ - which tracks whether the bank is growing revenues faster than costs - for a second straight year.

“We will be proactive in managing costs and investment to meet the risks to revenue growth where necessary, but we will not take short-term decisions that harm the long-term interests of the business,” Flint said on Tuesday, after HSBC reported a lower-than-expected 16 percent rise in 2018 profit before tax.

In June, Flint had said HSBC would invest $15-$17 billion over three years in areas including technology and China, while keeping profitability and dividend targets little changed.

“The key thing is just to moderate the pace of investments ... not to cancel it or change the shape of the investments,” Flint told Reuters.

The bank said it failed to achieve positive jaws in 2018 due to the weakness of markets in the fourth quarter.

A combination of U.S.-China trade tensions, central banks turning off the money taps and cooling growth in former hot spots wiped 10 percent off MSCI’s 47-country world stocks index last year, its first double-digit loss in any year since the 2008 global financial crisis.

GROWING BUT SLOWLY

Flint’s comments come as an economic slowdown in China challenges HSBC’s strategy of pouring more resources into Asia where it already makes nearly 90 percent of its profits.

China’s economic growth slowed to 6.6 percent in 2018, the weakest in 28 years, weighed down by rising borrowing costs and a clampdown on riskier lending that starved smaller, private companies of capital and stifled investment.

Pressure on the world’s second-largest economy could increase if Beijing and Washington do not reach a deal soon to end their year-long trade dispute, which is taking a growing toll on export-reliant economies from Asia to Europe.

HSBC’s profits in Asia grew by 16 percent to $17.8 billion last year, accounting for 89 percent of group profit.

“Clearly our customers are really more cautious and are more thoughtful around this trade war with the U.S.,” Flint said.

“It’s possible that we’ll see a slightly lower growth rate this year but we are still going to see a growth rate.”

Since taking over from Stuart Gulliver last February, Flint has largely stuck to the same China-focused strategy as his predecessor while attempting to revive HSBC’s ailing U.S. franchise and putting less emphasis on its investment bank.

BREXIT HIT

HSBC set aside $165 million against possible future bad loans in Britain, which it said reflected the increased risks of a potential economic hit from Britain’s departure from the European Union, scheduled for next month.

HSBC joined UK peer Royal Bank of Scotland in warning that uncertainties related to Brexit could also drive businesses under.

“The longer we have the uncertainty the worse it’s going to be for the customers. Customers are absolutely postponing investment decisions ... and that’s been the part of this slowdown that we have seen in the UK,” Flint said.

HSBC reported a profit before tax of $19.9 billion for 2018, versus $17.2 billion the year before, but below an average estimate of $22 billion, according to Refinitiv data based on forecasts from 17 analysts.

The bank said it would pay a full-year dividend of $0.51 per share, roughly in line with analysts’ expectations. HSBC was confident of maintaining the dividend at this level, it said.

The bank’s core capital ratio, a key measure of financial strength, fell to 14 percent at the end of December from 14.5 percent at the end of 2017, mainly due to adverse foreign exchange movements.

Honda to close UK car plant as Brexit looms

Business correspondent(wp/reuters):::
Honda will close its only British car plant in 2021 with the loss of up to 3,500 jobs, a major departure of Japanese investment announced just over a month before the United Kingdom is due to leave the European Union.

The Japanese firm, which builds a tenth of Britain’s 1.5 million cars at its Swindon plant, said the move was not related to Brexit and that it needed to focus its activity in regions where it expects to sell most cars, after struggling in Europe.

But the timing of the announcement, just 38 days before Brexit, comes amid deepening Japanese corporate worries about investing in Britain after it leaves the EU.

“This decision was not informed by Brexit,” said Honda Chief Executive Takahiro Hachigo.

“We had to consider the rise of electrified vehicles, and the different speeds at which electric vehicles will be taken up in North America and Europe.”

Honda, which builds its Civic car in Britain and Turkey, said it would stop making the model in both countries. The announcement comes just over two weeks after fellow Japanese carmaker Nissan reversed its decision to build a new SUV in Britain.

Honda, Britain’s fourth biggest automaker, will cease production at its Swindon plant which made 160,000 cars in southern England in 2018.

It follows decisions by Japanese electronics companies Sony and Panasonic to move their headquarters from Britain into the EU, while Hitachi put a $28 billion (£22 billion) nuclear power project in Britain on hold in January.

‘DEVASTATING DECISION’

Some 1,000 Japanese firms are based in Britain, employing around 140,000 people, and have invested about £60 billion, according to the Japanese embassy in London.

Nissan, Toyota and Honda were encouraged to come to Britain in the 1980s as a pro-business gateway to the EU and have helped turn around a domestic car industry that had been decimated.

The trio currently build half of Britain’s cars and hundreds of thousands of engines at production sites across the country.

“This is a devastating decision for Swindon and the UK,” said business minister Greg Clark.

For Honda, declining demand for diesel vehicles and tougher emissions regulations have also clouded its manufacturing prospects. The company said in October 2017 it would stop making vehicles at its Sayama plant in Japan by 2022 as it grapples with a shrinking domestic market.

Like many of its global rivals, Honda is trying to streamline its operations as it invests heavily to develop electric vehicles and self-driving cars.

The recently agreed EU-Japan trade agreement means tariffs on cars from Japan to the bloc will be eliminated, while Britain is struggling to make progress on talks over post-Brexit trade relations with Tokyo.

Honda said that was not part of the decision-making process but the firm’s boss said it would benefit from the EU-Japan deal.

Britain’s largest trade union Unite said it would continue to consult with the company and fight to keep the site open.

“We will leave no stone unturned to keep this plant going and its workforce in employment,” said national officer for the automotive sector Des Quinn.

“We believe that the uncertainty that the ... government has created by its inept and rigid handling of the Brexit negotiations lurks in the background.”

UK jobs market defies economy's Brexit slowdown

Business correspondent(wp/reuters):::
British workers’ pay growth maintained its fastest pace in a decade in late 2018 and job creation stayed strong, data showed, suggesting the labour market was buoyant ahead of Brexit as the broader economy slowed.

Total earnings, including bonuses, rose by an annual 3.4 percent in the three months to December, matching their fastest pace of growth since mid-2008.

The increase was a touch below a forecast for a pick-up to 3.5 percent in a Reuters poll of economists.

Average weekly earnings excluding bonuses also rose by 3.4 percent on the year, the Office for National Statistics said on Tuesday, in line with the poll forecast.

Britain’s strong labour market has defied a slowdown in the economy since the 2016 referendum vote to leave the European Union.

Tuesday’s figures showed the number of people in work rose by 167,000 in the three months to December, the biggest increase since the first quarter of 2018 and stronger than the poll’s forecast of 140,000.

With Britain due to leave the EU in just over a month’s time, and no clarity yet on whether it will get a deal to smooth the shock, many companies have cut investment in equipment, potentially making them more likely to hire workers.

BREXIT EFFECT AHEAD?

However, Honda’s announcement that it will close a plant with the loss of 3,500 jobs and Nissan’s decision not to build a new model of car in Britain have raised concerns about the outlook for big manufacturers against the backdrop of Brexit and a slowing world economy.

Signs of nervousness among businesses might be yet to appear in the jobs figures, Andrew Wishart, an economist with consultancy Capital Economics, said.

“The (business) surveys deteriorated more markedly in January, so a Brexit effect might start to weaken employment growth in the next batch of official data.”

With unemployment at its lowest rate since 1975 - 4.0 percent in the three months to December - employers have begun raising pay for staff more quickly.

The Chartered Institute of Personnel and Development, a human resources professional body, said on Monday that private-sector employers planned to increase basic pay rates this year by the most since the survey started in 2012.

The Bank of England has said it will need to raise interest rates gradually to offset inflation pressures from rising pay.

This month, it forecast wage growth would slow to 3.0 percent by the end of 2019 before picking up again.

When adjusted for inflation, total earnings in the last three months of 2018 rose by 1.3 percent, the fastest increase since late 2016, the ONS said.

However, the pace of nominal wage rises remains slower than the 4 percent increases of before the financial crisis.

PRODUCTIVITY PROBLEM

Tuesday’s ONS data showed a downside of the continued strong job creation in the form of a latest fall in productivity, the Achilles’ heel of Britain’s economy.

Output per hour fell 0.2 percent in annual terms in the last three months of December. The last time it declined by more was in late 2015, the ONS said.

Weak productivity puts long-term pay growth in jeopardy and risks pushing up inflation.

The ONS data showed a fall in the number of EU workers in the United Kingdom, largely driven by a decline in eastern European workers. But the number of non-EU workers rose, resulting in a total annual increase of 83,000 foreign workers in the country in the last three months of the year.