Eurozone manufacturing recession deepens; Stellantis shares fall after CEO’s resignation – business live

Over in Moscow, the Kremlin has suggested Donald Trump’s push to force Brics countries to keep using the US dollar would backfire.

Asked about Trump’s threat to impose 100% tariffs on Brics members if they challenged the dollar, Kremlin spokesman Dmitry Peskov said the dollar was beginning to lose its appeal as a reserve currency for many countries.

Peskov told reporters:

“More and more countries are switching to the use of national currencies in their trade and foreign economic activities.”

If Washington resorted to “economic force” to compel countries to use the dollar it would backfire, Peskov predicted, adding:

“If the U.S. uses force, as they say economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (for international trade).”

Climate protesters gathered outside the Department of Energy Security and Net Zero in London this morning, to call for the end to government subsidies for the Drax Power Plant in North Yorkshire.

Protestors from Axe Drax, Biofuelwatch, Climate Resistance, Fossil Free London, Friends of the Earth, Greenpeace and other members of the Stop Burning Trees Coalition donned Christmas jumpers and brought four giant Ents and a Christmas choir to the department.

They presented the department with a Greenpeace petition calling for an end to the subsidies, signed by over 120,000 people.

Drax’s power station in North Yorkshire uses wood pellets to generate electricity; the protestors are unhappy that Drax is logging and sourcing wood from forests in British Columbia, and the Southern US, as well as burning waste wood.

Paul Morozzo, a climate campaigner for Greenpeace UK, says:

“Burning trees to stop climate change is just as ridiculous as it sounds, subsidising Drax is a joke that’s bad enough to go in a cracker, and all of the company’s accounting tricks aren’t making it any funnier.

If we’re going to hold back the climate disaster that’s starting to have impacts all around the world then the government needs to stop subsidising high-cost, high-carbon energy like Drax, and concentrate on cleaner, cheaper, genuinely renewable sources. And just as importantly, we need governments and companies to stop accepting IOUs in place of real carbon cuts, because the climate crisis is here now.”

Thames Water appoints chief restructuring officer as it fights nationalisation

Jasper Jolly

Thames Water has appointed a restructuring expert to its board to advise it as the British water company tries to raise more than £6bn to avoid temporary nationalisation.

The company said that Julian Gething has been appointed as chief restructuring officer and will sit on the boards of several companies within its complex corporate structure.

Thames, which supplies water and sewage services to 16 million customers in London and the Thames Valley, said that Gething would not be involved in anything operational, and his appointment would not herald any job cuts within the company.

The British water industry has been under severe pressure for several years as many companies were caught out by rising interest rates, after years of underinvestment in crucial infrastructure. Thames has been the worst affected.

Thames has won approval from its creditors to borrow £3bn, before it tries to raise another £3bn in equity investment to try to turn it around. The talks over the debts are likely to wipe out existing shareholders’ stakes.

Gething has worked for 35 years in restructuring, specialising in situations in which debtors must negotiate over losses. He is a partner at AlixPartners, a consultancy. Thames said that the appointment was supported by its lenders.

Britain’s manufacturing downturn has also worsened!

The latest poll of purchasing managers at UK factories shows that output fell for the first time in seven months, driven by a fall in new orders.

S&P Global’s PMI report also shows that firms cut back their staffing levels, purchasing activity and inventory holdings last month.

Manufacturers found it harder to export; new orders from overseas contracted for the thirty-first month in a row, due to weaker demand from US, China, the EU and the Middle East.

Some firms specifically mentioned weak demad from Germany, especially from its auto industry.

Other companies suggested clients were rethinking their spending decisions following the UK budget at the end of October, which lifted taxes on businesses.

There are also signs that supply chain pressures have risen, due to the Red Sea crisis, border regulatory issues (including Brexit related constraints) and the recent strike at US ports.

This all pulled the UK manufacturing PMI down to 48.0 in November, from 49.9 in October, showing a contraction for the second month running.

Rob Dobson, director at S&P Global Market Intelligence says:

“Conditions in the UK manufacturing sector deteriorated again in November. The headline PMI fell to a nine-month low as concerns surrounding the economic outlook, high costs and weak demand led to lower output, falling orders and cutbacks to purchasing, jobs and inventory holdings.

The export climate also remained bleak, as weaker demand from the US, China and EU led to a further drop in new export business. While companies of all sizes are experiencing a downturn, small companies are the hardest hit, reporting especially marked drops in output, new orders and new export business.

Meanwhile, supply chain worries have intensified as the combination of the Red Sea crisis, port disruptions and border regulation issues led to longer supplier delivery times, input shortages and rising costs. Input price inflation accelerated as a result. With recent budget announcements on labour costs and employer national insurance likely to raise costs further in 2025, and geopolitical tensions heating up notably around the threat of increased global protectionism, manufacturers are left facing an environment of high costs, low demand and raised uncertainty for the foreseeable future.

News that the eurozone manufacturing recession has deepened came as Volkswagen workers across Germany began a walkout.

The “warning strikes”, which usually last a few hours, are a protest against VW’s plans to lay off thousands of people, cut pay and close plants for the first time in its home country.

Thorsten Gröger, the union IG Metall’s lead negotiator with VW, said:

“If need be, it will be the toughest collective bargaining battle Volkswagen has ever seen.”

The union leader accused VW managers of making the situation worse, adding:

“Volkswagen has set fire to our collective agreements.”

The eurozone’s manufacturing recession has deepened, driven by a sharp slowdown in the region’s largest economies.

Data provider S&P Global has reported that the euro area’s manufacturing sector deteriorated at a faster pace during November.

This wasa driven by quicker declines in new factory orders, production, purchasing activity and inventories.

It pulled the HCOB eurozone manufacturing PMI down to a two-month low of 45.2, down from October’s 46.0. Any reading below 50 shows a contraction.

Among eurozone members, Germany recorded the fastest drop in output, Italy’s factory sector shrank at the fastest rate in a year, while France recorded the steepest contraction in 10 months.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says:

“These numbers look terrible. It’s like the eurozone’s manufacturing recession is never going to end. As new orders fell fast and at an accelerated pace, there’s no sign of a recovery anytime soon. According to our nowcast, the manufacturing sector’s output is going to decrease by 0.7% in the fourth quarter compared to the previous quarter. This slump is likely going to drag into next year.

“The downturn is widespread, hitting all of the top three eurozone countries. Germany and France are faring the worst, and Italy is not doing much better. By main industrial grouping, it’s the capital goods sector which is taking the biggest hit. In an interesting development, Spain’s companies in the capital goods sector were able to show accelerated growth. This might be linked to the heavy floods in Spain, where an estimated 100,000 cars were destroyed and need to be replaced. But this boom most probably won’t last.

The report also found that companies continue to trim staffing levels, while firms continued to run down their inventories of materials and finished goods as they continued to destock.

Shares in car giant Stellantis have dropped at the start of trading, following the surprise resignation of CEO Carlos Tavares last night.

Stellantis’s shares are down 5.5% in Paris, as traders digest the shake-up at the company behind brands including Vauxhall, Fiat, Jeep and Peugeot.

Last night, Stellantis announced that Tavaras would leave “with immedaite effect”, and that the process to appointing the new permanent Chief Executive Officer was “well under way”.

Henri de Castries, Stellantis’s senior independent director, hinted at boardroom tensions last night, saying:

“Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board and the CEO.

However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision.”

Tavaras departure follows a decline in Stellantis’s financial performance. At the end of October, the world’s fourth-largest carmaker reported a steep fall in sales, which it blamed production delays and flagging demand in Europe.

One person familiar with the situation told the Financial Times:

“[Tavares] was focusing on the short term rather than the group’s longer term and managed to anger everybody in the process.”

Here’s some reaction to this morning’s Nationwide house price report:

Guy Gittins, CEO of Foxtons:

“After the rate of house price growth slowed in the lead up to the Autumn Budget, the latest figures suggest the market is once again starting to accelerate.

This consistent positivity demonstrates the current strength of the market despite the complications posed by wider economic headwinds. Over the last 12 months we’ve seen a huge increase in new buyer volumes, viewings and offers made and there is a very healthy level of stock currently on the market. So, whilst house prices are climbing, there is certainly a good level of stock for buyers to choose from and the market isn’t overheating due to the usual supply and demand imbalance.

The market traditionally pauses for breath during the festive period, however, we’re seeing a flurry of activity driven by buyers looking to secure stamp duty relief before next April’s deadline. We anticipate the start of next year to be much the same, although those buyers who are looking to take advantage of current stamp duty relief thresholds need to be acting now to stand a chance of completing in time.

Matt Thompson, head of sales at Chesterton:

“November’s property market saw an increasing number of first-time buyers who were and still are motivated to purchase a property before the stamp duty changes in April 2025. This, in addition to high demand from house hunters in general, led to more sales being finalised than in November of last year.

With the current level of buyer activity expected to continue well into the new year, we predict London properties to hold their value or see a gradual value increase of up to 3% over the course of next year.”

Tomer Aboody, director of specialist lender MT Finance:

“Another month of house price growth further indicates the level of confidence in the market which has been evident since the reduction and stability in both mortgage rates and inflation.

“Both sellers and buyers are pushing to transact, as affordability is improving.

“While the Budget is now behind us, its full impact has yet to be felt. However, we are hopeful that this confidence in the market continues, with further rate cuts expected in the new year.”

Jeremy Leaf, north London estate agent:

“In our offices we are seeing prices hardening and stock levels rising, partly because the Budget, though not particularly helpful, was not as bad as many feared either.

“As a result, some pent-up demand was released and buyers are digging a little deeper. That extra choice, as well as broad acceptance that inflation and mortgage rates will not reduce as far and as fast as many expected, has meant caution still prevails. Transaction lengths are extending too, particularly bearing in mind the seasonal distractions so sellers still need to be extra competitive to attract serious attention at this time of year.”

The US dollar is rallying, after Donald Trump warned countries in the Brics bloc that he would impose 100% tariffs if they challenged America’s currency.

Over the weekend, Trump posted that he would impose 100% tariffs on Brics members if they create a new currency to rival the US dollar.

The president-elect declared:

We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.

With fears of a trade war rising, the dollar has gained 0.5% against a basket of major currencies – even though there’s no agreement among Brics members to go it along with their own currency.

This has pushed the pound down by half a cent to $1.2695.

The euro, which is also weighed down by political instability in France, is also half a cent lower at $1.052.

Trump’s comments may be a sign that his administration will favour a stronger dollar.

Jim Reid of Deutsche Bank told clients this morning

As ever with Mr Trump it seems to be a shot across the bows but likely wouldn’t ultimately be great for the US economy if implemented….

it seems to further point to Dollar strength being a theme of the new administration as against Trump 1.0 where initially they tried to talk the Dollar down.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK house prices growth has “surprisingly” picked up to a two-year high, a new survey this morning shows, despite the recent rise in mortgage rates.

The average prices of a house sold in November rose by 1.2% compared with October, lender Nationwide reports, to £268,144. That’s the largest monthly gain since March 20.

That lifts the annual increase in house prices to 3.7% – the fastest since November 2022, shortly after Liz Truss’s mini-budget – up from 2.4% in October.

House prices are just 1% below the all-time high recorded in the summer of 2022.

Robert Gardner, Nationwide’s chief economist, says the pace of the increase is unexpected:

“The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.

Housing market activity has remained “relatively resilient in recent months”, Gardner adds, with mortgage approvals approaching the levels seen before the Covid-19 pandemic.

Gardner adds:

“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year. Household balance sheets are also in good shape with debt levels at their lowest levels relative to household income since the mid-2000s.

Nationwide also predicts there will be a jump in transactions in the first three months of 2025. as buyers try to seal deals before changes to stamp duty kick in next April.

These surveys from lenders can’t give a perfect measure of the market though; they only track buyers taking out a mortgage, rather than cash buyers. And changes in the ‘mix’ of houses being sold can also distort the data.

The agenda

• 9am GMT: Eurozone manufacturing PMI report for November

• 9.30am GMT: UK manufacturing PMI report for November

• 10am Christine Lagarde speaks at the EIB Group Climate and Environment Advisory Council in Luxembourg

• 2.45pm GMT: US manufacturing PMI report for November