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Summary

  1. Aviva suspends dealings in property fund
  2. Bank of England frees up to £150bn for bank lending in Brexit plan
  3. FTSE 100 turns positive after Bank of England action
  4. Sterling falls more than 1%
  5. Shares in housebuilders suffer further falls

Live Reporting

By Tom Espiner

All times stated are UK

Get involved

Good night

That's all from the Business Live page for tonight. See you again tomorrow from 06:00 for more business news.

'Unambiguous' that City jobs will be lost

British banker: it is unambiguous that jobs will be lost from the City
Jobs will be lost from the City as a result of Brexit, says Peter Sands, British banker and former Group CEO of Standard Chartered.

Mr Sands explains this is partly because 'passporting', the ability to do business across Europe, will be restricted. 

(Photo: Canary Wharf at night. Credit: Getty Images.)

Wall Street closes down

Wall Street stocks closed down after investors faced continued uncertainty in Europe and tumbling oil prices weighed on energy shares.

The Bank of England said the outlook for Britain's financial stability after the 23 June vote to leave the European Union was "challenging" and said it would lower the amount of capital that banks were required to hold in reserve to allow them to keep lending.

The Dow Jones industrial average closed down 109.92 points, or 0.61%, to 17,839.45, the S&P 500 lost 14.47 points, or 0.69%, to 2,088.48 and the Nasdaq Composite dropped 39.67 points, or 0.82%, to 4,822.90. 

Bonds in UK, US and Germany hit new lows

US government bonds, like those in the UK and Germany, have now hit fresh lows as investors rush to buy perceived safe haven assets. 

The 30-year US Treasury yield hit a new low earlier, as did the 10-year German bond. 

Brexit 'is Lehman moment' for European banks

European banks are going through a real-life stress test following the UK's Brexit vote, according to Mark Gilbert of Bloomberg Views.

"Deutsche Bank, which once hadundefinedpretensions to be Europe's contender on the global investment banking stage, is now worth just €17bn."

"When the biggest bank in Europe's biggest economy, with annual revenue of about €37bn, is worth about the same as Snapchat - a messaging app that generated just $59m of revenue last year - you know something's wrong."

Is the cost of borrowing at record lows?

Reality Check

Stephen Crabb saying: The price of borrowing is at record lows … it’s one of the significant policy levers a developed economy has to improve productivity.
BBC

The claim: The cost of borrowing for the UK government is at record low levels. The government should take advantage of this to improve the UK's economic performance. 

Reality Check verdict: The yield on UK government bonds has been falling to record lows, making borrowing cheaper, despite the recent cut in the UK's credit ratings. Borrowing to invest has the potential to reduce the need for future borrowing, but that's not guaranteed and it could further damage the UK's credit. 

Read the full Reality Check here.

Chart showing UK bond yields
BBC

Goldman forecasts second leg of weakness for pound

After taking a hit from the Brexit vote, the pound is in for a second leg of weakness against the dollar and the euro due to the Bank of England's policy response, Goldman Sachs analysts have predicted.

Goldman Sachs UK economist Andrew Benito expects the Bank of England to cut interest rates by 0.25% at its August policy meeting.

Pledge to Scots business after EU vote

David Mundell and Nicola Sturgeon
BBC

Holyrood and Westminster politicians give reassurances to Scotland's business community during a series of meetings following the Brexit vote.

David Mundell and Nicola Sturgeon

Pledge to Scots business after EU vote

Holyrood and Westminster politicians give reassurances to Scotland's business community during a series of meetings following the Brexit vote.

Read more

EU's Moscovici doubts UK will go through with corporate tax cut

Pierre Moscovici, European commissioner for Economic and Financial Affairs, Taxation and Customs
Getty Images

Britain's plan to cut corporation tax to less than 15% is a bad idea, EU Economic Affairs Commissioner Pierre Moscovici has said.

He also doubts it will take place.

Chancellor George Osborne announced the cut on Monday in an attempt to cushion the shock of Britain's vote to leave the European Union.

"Dropping to 15% doesn't look to me like a good initiative to be getting involved in... and that would be a considerable loss of receipts for the British Treasury at a time when there is already a deficit that is much too high," Mr Moscovici told Radio Classique in France.

Business confidence 'falls off a cliff' after Brexit vote

Bloomberg Business tweets...

'Unambiguous' that City jobs will be lost

The World at One

BBC Radio 4

Jobs will be lost from the City as a result of Brexit, says Peter Sands, British banker and former Standard Chartered group chief executive.

Mr Sands says this is partly because "passporting", the ability to do business across Europe, will be restricted.

Blackberry to stop making Classic smartphone

BlackBerry will stop making its Classic smartphone, less than two years after launching it.

Ralph Pini, the company's chief operating officer and general manager for devices, said the Classic had surpassed the average lifespan for a smartphone in today's market.

'A grim day to be a challenger bank'

Shares in UK challenger banks dropped quite precipitously after the Brexit vote, and they dropped again today after property fund suspensions by Aviva and M&G.

"Shawbrook's shares closed down 14.2%, while Virgin Money was down 14%, OneSavings was down 11.6% and Aldermore down 9.5%," City AM reported.  

McDonald's wins 'Mc' case

McDonald's logo
Getty Images

McDonald's has won a case which could prevent other food or drinks companies using the prefixes "Mc" or "Mac" for one of their products.

The US fast-food giant had been trying to stop Singapore's Future Enterprises from registering MACCOFFEE as a European Union trade mark. 

The General Court of the European Union ruled in its favour, saying: "The repute of McDonald's trade marks makes it possible to prevent the registration, for foods or beverages, of trademarks combining the prefix "Mac" or "Mc" with the name of a foodstuff of beverage." 

The judgment comes eight years after Future Enterprises of Singapore won permission to register the MACCOFFEE trademark in the EU. 

Will Brexit help the young onto the housing ladder?

BBC home editor tweets...

Wall Street falls as global growth concerns resurface

Traders work on the floor of the New York Stock Exchange
Getty Images

Wall Street is lower as oil prices slide more than 4% and tepid US data adds to investor concerns over global growth.

New orders for US factory goods fell in May after weak demand for transportation and defence goods.

The Commerce Department said new orders for manufactured goods declined 1% after two months of increases.

"People are going to be cautious. They are still keeping an eye on the UK and probably don't want to over commit here," said John Callany, chief economic strategist at LPL Financial in Boston.

The Dow Jones industrial average was down 113.92 points, or 0.63%, at 17,835.45, the S&P 500 was down 16.03 points, or 0.76%, at 2,086.95 and the Nasdaq Composite was down 48.16 points, or 0.99%, at 4,814.46.

Sainsbury's 'plans to create 1,000 jobs through Argos buy'

Financial Times tweets...

Finance first?

Theresa May
Getty Images

London's financial industry must be protected and it must retain its competitive edge in any negotiations to leave the EU, according to Home Secretary, Theresa May.  

Ms May - a frontrunner to replace Prime Minister David Cameron - told the London Evening Standard newspaper: "We need to maintain the City of London and the advantages that the City has."

"Ensuring that we can continue to get the right deal for the UK in terms of financial services is part of the negotiation," she added. 

FBI recommends no charges against Hillary Clinton over emails

Hillary Clinton
Getty Images

The FBI has announced it will not recommend criminal charges against Hillary Clinton over her use of private email while she was secretary of state.

FBI Director James Comey said "no reasonable prosecutor" would pursue a case, but said the likely Democratic presidential nominee was "extremely careless" with classified information.

Mrs Clinton had said no classified emails were sent from her account.

However, FBI found more than 100 classified emails on the servers.

Read more here.

M&G suspends £4.4bn property fund

M&G has followed Aviva and Standard Life to become the third institutional investor to suspend dealing in its commercial property fund following outflows after the Brexit vote.

M&G Investments announces a temporary suspension of trading in the shares of the M&G Property Portfolio and its feeder fund. Investor redemptions in the Fund have risen markedly because of the high levels of uncertainty in the UK commercial property market since the outcome of the European Union referendum. Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading."

Pro-Brexit boss: 'Panic after vote has reversed'

The World at One

BBC Radio 4

The Bank of England has warned there is evidence that risks it identified over Brexit are emerging.The bank has eased special capital requirements for banks to help lubricate the financial system.

But John Mills, founder and chairman of consumer goods company JML, who campaigned for a Leave vote, told Martha Kearney that Brexit had not been damaging.

Lady Green 'was paid £28m offshore for BHS acquisition by Taveta'

Tina Green
Getty Images

Following the submission of written evidence by Tina Green to MPs scrutinising the collapse of BHS, Work and Pensions select committee chair Frank Field has said:

I am not much closer to understanding the complex web of offshore Green companies but I am intrigued to learn that, while the attraction of Monaco is its fine schools, the British Virgin Islands and Jersey are favoured for their robust regulatory regimes. What is clear, however, is that Lady Green was paid £28m offshore, in the latest accounting year, for the acquisition of BHS by Taveta."

Frank FieldWork and Pensions select committee chair

Twinkies maker Hostess to go public under new owner

Ding dongs
Getty Images

Hostess, the maker of US snack cake brands Twinkies and Ding Dongs, has said an affiliate of private equity firm Gores Group will buy the company in a $725m deal and take it public.

Mark Carney hits the reassurance button

BBC economics editor Kamal Ahmed writes...

Mark Carney
AFP

At the last Inflation Report, published in May, you could hunt high and low with little success for the word "positive" when it came to the Bank of England's analysis of the possible fallout from any vote to leave the European Union.

Today, a different tone - nuanced, maybe, but still significant.

Although Mr Carney made it clear that the economic risks were still very visible - and indeed some, such as sterling's slump, were beginning to "materialise" - preparation ahead of the referendum was now paying off.

Read more here.

Back to the future after Brexit?

Business reporter Simon Falush writes...

The pound’s heavy slump resumed on Tuesday and it fell to below $1.31 for the first time since 1985.

But why was the pound so weak at that time, as the economy had recovered from its weakness earlier in the decade?

The pound plummeted from around $2.45 in November 1980 to $1.05 in March 1985. 

In fact it was the exchange rate’s extreme pricing was more about the dollar’s strength than the pound’s weakness. The dollar had been lifted by high interest rates. 

To head off a round of protectionism and make it more competitive on the world stage,  the US authorities were determined to weaken the dollar.

The response was the Plaza Accord. Under the agreement, implemented in September 1985, central banks agreed to revalue the exchange rate system over a two-year period by each nation's central bank intervening in the currency markets.

Under deal, the dollar saw a 50% decline while West Germany, France, the UK and Japan saw 50% appreciations.    

Aslef union criticises DfT over Network Rail performance

Train drivers' union Aslef has criticised the Department for Transport after Network Rail said on Monday that its net debt had hit £41.6bn in 2014-15, up from £37.8bn the year before.

Mick Whelan, general secretary of Aslef, said:

"We are concerned that Network Rail’s debt has increased by 10% in the last 12 months and we are concerned about infrastructure projects being pushed back... The government needs to get a grip on the rail industry. Its hands off approach means we have failing franchises and failing infrastructure as well as failing politicians."

On track?

Southern Rail train
Getty Images

Let's go back to the delays and cancellations that many passengers on Southern Rail services have endured recently. 

Charles Horton, chief Executive of owner, Govia Thameslink Railway, has apologised to customers for train delays but said his company was not wholly responsible.

We are fit to be running this railway. We are in the middle of an extremely difficult moment in the franchise. It is a difficult and challenging franchise anyway but the problems over the last few weeks following the industrial action taken by the RMT conductors have added to some challenging circumstances which are inherent in this franchise."

Charles HortonGovia Thames link Railway, chief executive

Sterling skids to new 31-year low after Brexit worries

Pound v dollar
BBC

Sterling has hit a fresh 31-year low against the dollar due to investor concerns about the economic and financial fallout of Britain's vote to leave the European Union.

The pound has borne the brunt of market concerns about the economic impact of the vote. It slid 1.6% to hit $1.3075, its lowest since 1985.

That has left it more than 12% below its levels before the 23 June referendum. 

Bank bosses positive

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Chancellor George Osborne took to Twitter today to flag up a post-Brexit meeting he was holding with the bosses of the big banks and building societies.

Apparently what they had to tell him was encouraging.

"They report back that capital is strong, liquidity is strong, and we've got to make sure that lending is available to businesses - and they've assured me that it will be," he told ITN.

FTSE 100 still positive

The FTSE 100 is up 5 points at 6,526 points, helped by the measures announced earlier by the Bank of England. The blue-chip index initially fell about 0.6% but then rose as much as 0.5% before falling back once more. 

"The FTSE has been bolstered by the Bank of England's latest set of measures, which should help to counter the negative effects of Brexit," said Securequity sales trader Jawaid Afsar. 

More funds to follow suit

Aviva logo
Getty Images

Laith Khalaf at Hargreaves Lansdown says more commercial property funds are likely to follow suit after Standard Life and now Aviva has suspended trading following outflows precipitated by the Brexit vote. 

"The problem these funds face is that it takes time to sell commercial property to meet withdrawals, and the cash buffers built up by the managers have been eroded by investors heading for the door, both in the run up to the EU referendum, and in the aftermath," he says.

"These managers will now be adding to the supply of commercial properties on the market, which is likely to put downward pressure on prices. Foreign investors might be tempted in by the fall in sterling, but equally they may decide to steer well clear of an economy in limbo.

"Investors in property funds need to focus on the reasons they bought commercial property in the first place and consider whether they are still intact, because there may be challenging times ahead."

BreakingAviva suspends property fund

A spokesperson for Aviva Investors said:

“The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect. Suspension of dealing will give Aviva Investors greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings.”

Business backs the Bank

The Governor of the Bank of England, once again, is offering clear leadership and boosting business confidence at a time of political and economic uncertainty. Mark Carney’s decision to temporarily ease bank capital rules will help to improve liquidity and sustain vital credit flows to businesses and consumers. The Bank of England must continue to keep a watchful eye on credit conditions, particularly for young and high-growth businesses, who tend to be the very first frozen out of the financial system when conditions deteriorate. The Bank of England is acting in a clear and resolute fashion. Government must do the same, so that businesses can continue to trade, invest and take risks – as many have done both before and after last month’s vote.

Adam MarshallBritish Chambers of Commerce acting director-general

Oil back under $50

Oil pump
Getty Images

Oil is back below $50 a barrel as fears about the global economy and the impact of Brexit mount.

Brent crude was down 99 cents at $49.11 a barrel - but that is still 80% higher than the 12-year low of $27 reached in January. US. crude was down $1.15 at $47.87 a barrel.

Barclays analysts said: "The deterioration in the global economic outlook, financial market uncertainty and ripple effects on key areas of oil demand growth are likely to exacerbate already-lacklustre industrial demand growth trends." 

World view

BBC World Service

The Bank of England announcements today are the second story on the BBC World Service news bulletins - and it's a nice summation of this morning's Financial Policy Committee report. 

"Britain's central bank, the Bank of England, has identified the economic challenges it says have 'crystallised' as a result of the vote to leave the European Union.

"It said it would take time for Britain to establish new trade links with the EU and the rest of the world, and maintaining foreign investment would become harder. 

"It said consumers face more difficulty paying debts and house prices could fall. But the Bank of England said commercial banks were well capitalised and it won't now make them put more money aside -- leaving them more room to lend to businesses and the public." 

Carney's comments

Bank of England press conference
EPA

Still haven't had enough Mark Carney? You can read his opening remarks from today's press conference here.

And for a complete wrap of all today's moves by the Bank of England, click here for our news story.

You can lead a horse to water ...

More reaction to the Bank of England's drive to keep banks lending from Ben Brettell, senior economist at Hargreaves Lansdown.

Today’s steps to shore up the economy will be seen as a major test of Bank’s new ‘macroprudential’ powers it acquired after the financial crisis in order to safeguard financial stability. Banks were required to build up an extra tier of capital designed to be unleashed in a downturn. From today this ‘counter-cyclical capital buffer’ will be reduced to zero, which should free up an extra £150bn to be lent to businesses and households. However, it should be remembered that lending volumes depend on demand as well as supply – if already indebted households become more risk averse following the referendum, the demand for credit simply won’t be there, however much the banks are willing to lend.

Global effects are 'notable'

Mark Carney
PA

Mark Carney is asked about the spillover effects of the Brexit vote on the global economy.

The are "notable" he says. "But the system globally has worked well and I have every confidence it will continue to do so," he adds.

But Mr Carney does think that global economic growth had firmed in the run-up to the referendum, so he reckons it was a more "constructive" environment than it would have been had the decision been taken earlier in the year.   

Credit is available

If we were in any doubt at this stage about the key message the Governor of the Bank of England wants to get across, Mark Carney spells it out.

One thing to take away from the table here is the "availability of credit", he says.

Bond auction success

Sky News economics editor tweets:

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