Key events
Back in Germany, business sentiment has picked up, despite the economy teetering near a technical recession.
German business morale improved for the third month in a row in November, though by slightly less than expected, the latest business climate index from the IFO institute shows.
The index rose to 87.3, up from 86.9, with measure of the current business situation and economic expectations both improving a little.
Sunak: Nissan investment will turn Sunderland into EV Silicon Valley
Prime Minister Rishi Sunak has declared that Nissan’s commitment to make electric versions of its Qashqai and Juke crossover SUVs in the UK, plus the new Leaf, will make Sunderland the UK’s electric vehicle “Silicon Valley”.
Sunak says:
“Nissan’s investment is a massive vote of confidence in the UK’s automotive industry, which already contributes a massive £71bn a year to our economy.
“This venture will no doubt secure Sunderland’s future as the UK’s Silicon Valley for electric vehicle innovation and manufacturing.
“Making the UK the best place to do business is at the heart of our economic plan.
“We will continue to back businesses like Nissan to expand and grow their roots in the UK every step of the way as we make the right long-term decisions for a brighter future.”
Full story: Nissan to build three new electric car models at Sunderland plant
Nissan will build three new electric car models at its plant in Sunderland as part of a £2bn investment by the Japanese manufacturer, my colleague Jasper Jolly reports.
The factory will produce three separate crossover models, yet to be named, and the decision will require a third “gigafactory” to supply batteries. That could mean the next-door battery supplier, AESC, will go ahead with previously announced plans to build a third “gigafactory”, subject to negotiations.
The carmaker said the total investment in the Sunderland area, including the battery factories, will reach £3bn, after £1bn was previously pledged. Nissan will invest £1.1bn in the latest phase, and the rest of the £2bn is expected to come from the battery supplier once it is confirmed.
Nissan did not reveal the size of the government subsidy for its investment, although it is understood to be significant in return for assurances that battery production will remain in the UK.
The cost-cutting axe is hovering over staff at Barclays.
Last night, Reuters reported at the bank is working on plans to save as much as £1bn, which could involve cutting as many as 2,000 jobs, mainly in the British bank’s back offic.
A group of Barclays managers, led by CEO C.S. Venkatakrishnan, are said to be reviewing proposals to bolster its profitability.
Reuters explains:
The potential cuts would primarily be at Barclays Execution Services, known internally as ‘BX’, and would form part of an overall target of reducing expenses by up to 1 billion pounds across the group over several years, the person added.
Barclays has made efforts to reduce expenses in recent years by slashing bonuses, as well as jobs in its retail and investment banking businesses, but moves to shrink BX and the potential savings have not been reported before.
The cost of living squeeze could push shoppers to second-hand stores, rather than to Black Friday bargains, says Victoria Scholar, head of investment at interactive investor.
Scholar explains:
This year, the timing of Black Friday doesn’t bode well for the retailers given that it falls ahead of payday when workers’ purse strings are typically much tighter. Given that retailers have been heavily discounting items already this year to try to bolster spending in response to sluggish demand, consumers are suffering from ‘discount fatigue’ by this point in the year, to the detriment of Black Friday and Cyber Monday.
According to Accenture, almost two thirds of UK adults are planning to spend less this Christmas, a trend that likely to weigh on Black Friday too. The survey also found that more than half of UK adults would not take part in Black Friday, Cyber Monday, or Boxing Day sales.
For the increasing number of price sensitive consumers, second-hand retailers are likely to benefit as shoppers go bargain hunting for deals in charity shops and online via platforms like eBay and Vinted. More and more retailers are opening their own second-hand clothing or rental departments to benefit from this shift.”
Here are more photos from the GMB union picket line outside Amazon’s site in Coventry early this morning:
Germany confirmed on brink of recession
We have confirmation that Europe’s largest economy is on the brink of recession.
Updated data shows that Germany’s GDP shrank by 0.1% in July-September, matching the initial reading.
Ruth Brand, president of the Federal Statistical Office, says:
“After the weak development in the first half of the year, the German economy started the second half of 2023 with a slight decline.”
This follows stagnation in January-March, and 0.1% gowth in April-June.
Today’s data will do very little to end the debate on whether or not the German economy is again the sick man of Europe, says Carsten Brzeski, global head of macro at ING.
Brzeski adds:
In any case, the German economy has become one of the growth laggards of the eurozone.
This weak growth performance has a long list of explanations: there is the cyclical headwind stemming from inflation, still elevated energy prices and energy uncertainty, higher interest rates and China’s changing role from being a flourishing export destination to being a rival that needs fewer German products. But there are also well-known structural challenges, ranging from demographics to energy transition and not enough investment.
German trade union Verdi has called on members to go on strike at five Amazon distribution centres across Germany on Black Friday.
Silke Zimmer, the member for retail on Verdi’s governing board, said:
“Amazon employees have decided to rename Black Friday ‘Make Amazon Pay Day’”.
Verdi said work will come to a standstill from Thursday’s night shift and throughout Friday, with centres in Koblenz, Leipzig, Rheinberg, Dortmund and Bad Hersfeld affected.
This is part of a dispute that began in 2013 over Amazon’s refusal to recognise industry-wide pay agreements.
A spokesperson for Amazon said participation in the strike was low and the vast majority of colleagues were working as normal, meaning customers will receive orders punctually.
Amazon workers stage Black Friday walkout at Coventry
Some Amazon workers in the UK are on strike today to coincide with Black Friday – which is typically one of the company’s busiest shopping days of the year.
More than 1,000 staff at the firm’s warehouse in Coventry are expected to take part in the walkout, the GMB union said, amid a long-running dispute over pay and conditions.
Some people have already gathered at a picket line outside the site.
A protest will also be held outside Amazon’s UK head office in London.
Strikes and demonstrations are also being held in other European countries and the US, which unions say will be the biggest day of action in Amazon’s history.
Amazon insists consumers won’t see any disruption, and that its pay rates were well above the National Living Wage and the voluntary Real Living Wage, while benefits included private medical insurance, life assurance, subsidised meals and an employee discount
An Amazon spokesperson says:
“We regularly review our pay to ensure we offer competitive wages and benefits.
By April 2024, our minimum starting pay will have increased to £12.30 and £13 per hour depending on location, that’s a 20% increase over two years and 50% since 2018.
But Amanda Gearing, GMB organiser, called the walkout an “unprecedented and historic moment”.
Gearing adds:
“Amazon has lost nearly thirty days to strike action in the UK this year alone.
“Despite that, Amazon bosses are desperate to claim it will be business as usual for Amazon and Amazon customers this Black Friday.
“The truth is that this Black Friday will see the largest day of industrial disruption in Amazon’s thirty-year history.
“Coventry is the beating heart of Amazon’s distribution network; strike action on Black Friday will ripple throughout the company’s UK logistics.
“With industrial action escalating and workers joining strike action in Europe and the USA, it’s clear that Coventry workers are inspiring Amazon workers worldwide to fight for their share of company profits.”
Staff in Coventry have held other strikes days already this autumn, In January, workers at the site – who have complained that they have been treated “like robots” – began a strike, the first time the corporation has faced industrial action in the UK.
Introduction: UK consumer confidence picks up as Black Friday begins
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK consumer morale has jumped this month as inflation eases, giving retailers hopes that people will come out to spend as they make their Black Friday pitches today.
Market research firm GfK’s index of consumer confidence, just released has bounced in November, hitting -24 from -30.
People grew more optimistic about their personal financial situation, and the wider economic outlook, GfK explains.
Although it remains in negative territory, this recovers most of last month’s drop.
Joe Staton, client strategy director at GfK, says:
“Consumer confidence strengthened in November with improvements across all measures. Recent ups and downs in confidence have underlined the nation’s topsy-turvy economic mood as encouraging news about falling inflation and wage growth is offset by high personal taxation, alongside costly fuel and energy bills.
Although the Overall Index Score is still tracking firmly in negative territory, it is good to see that consumers are more optimistic about their personal financial situation.
This pick-up in consumer confidence could give the UK economy a much-needed pick-up, after growth stagnated in the third quarter of the year.
But analysts have predicted that Black Friday will be quieter than in previous years, as the cost of living crisis continues to hit household budgets.
PwC predicted last week that UK spending for Black Friday – when retailers offer discounts to spur festive spending – could fall by almost a quarter, to £5.6bn from the £7.1bn forecast in 2022.
A PwC survey found that interest in Black Friday has waned. It says:
The research shows that the greatest interest is from under-45s and Black Friday shopping continues to be predominantly an online phenomenon. Even so, interest for the under-45s has dropped by between 15 and 20 percentage points.
This year interest levels have also equalised between men and women, with men having been more enthusiastic Black Friday shoppers in the past. Overall, the proportion who don’t intend to buy at all has increased from 39% in 2022 to 56% in 2023.
Also coming up today
Music store HMV is making a Black Friday return to its former store on London’s Oxford Street after a four-year absence. It will be selling vinyl, clothing and merchandise from the site at 363 Oxford Street again.
In Sunderland, Japanese carmaker Nissan is announing plans to build electric versions of three vehicles at its UK plant. Nissan is investing over £1.1bn in the transition, which will see electric versions of the Qashqai and Juke, and a new version of its electric Leaf vehicle.
The agenda
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7am GMT: German Q3 GDP report (final estimate)
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9am GMT: IFO survey of Germany’s business climate
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2.45pm GMT: ‘Flash’ PMI survey of US manufacturing and services
