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Business - Need to Know

Morning Edition

Good morning. The euro has fallen in overnight trading in Asia after Greeks overwhelmingly rejected a European rescue package - with 61 per cent of Greeks voting “no” in yesterday’s referendum.

“You made a very brave choice,” declared Alexis Tsipras, Greece prime minister, in a televised address last night. It is certainly brave.

David Cameron and George Osborne are due to meet Mark Carney, the Bank of England governor, today for talks on the impact on the economy, markets and tourists who are caught up in the drama.

The market reaction has been predictable. The euro has fallen as much as 1.5 per cent overnight against the dollar and yen; investors have switched into safe haven sovereign debt; and equity markets (apart from China - see below) have slipped. Gold, surprise, surprise is up. The FTSE 100 is predicted to open more than 90 points lower shortly (see markets below).

What happens now? As David Charterfield and Bruno Waterfield explain in this handy Q&A (sorry, you have to scroll to the bottom of the article) Germany and the European Central Bank are key. Mr Tsipras needs to persuade the ECB to continue propping up Greek banks and Angela Merkel to soften Germany’s hardline. No easy task. If he can’t a euro exit looks increasingly likely. Philip Aldrick, our economics editor, has more on Greece’s currency options in the event of an exit here.

The resignation this morning - via a blog post of course - of Yanis Varoufakis, as Greek finance minister will help Mr Tsipras as he seeks a deal. “I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings … I shall wear the creditors’ loathing with pride,” he writes this morning.

For the latest on Greece and the market reaction log on to our new look Business Now live blog. You can also follow Bruno Waterfield, our man in Brussels, on twitter - @BrunoBrussels.

Attempts by the Chinese authorities to shore up struggling equity markets - announcing a string of measures over the weekend in an attempt to halt a 30 per cent slide turning into a crash - appear to have faltered. The Shanghai Composite Index initially jumped 8 per cent, but quickly gave up the gains and briefly slipped into negative territory. At 7.00am (UK time) the index was trading up a fraction at 3,699.92.

On the corporate front there’s more bad news for embattled shareholders in Rolls Royce this morning. New chief executive Warren East, who joined just days ago, has warned that continued weakness in oil and gas markets means profits will be lower this year and next. We’ll have a full story shortly on www.thetimes.co.uk/business. We have also got interim results from Bovis Homes today - average sales prices are up 6 per cent and Bovis has sold a record 1,525 new homes in the first half.

Don’t forget for the latest - throughout the day - follow me on Twitter - @fletcherr.

Have a great day.

Richard Fletcher Business Editor
The Times
richard.fletcher@thetimes.co.uk

Dismayed by the millions of unsold homes in China's troubled real estate market, the Chinese government is taking matters into its own hands - by buying some properties and turning them into public housing. Like a white knight riding to the rescue of distressed developers, a handful of local governments are snapping up thousands of empty homes at hefty discounts and re-selling them to the country's poorest households, Reuters reported.

George Osborne is weighing up whether to announce a review of the £3.5 billion-a-year bank levy in Wednesday’s budget as one of a range of business-friendly measures. Amid fears that the annual tax could prompt HSBC to quit Britain, the City is optimistic that the chancellor will signal the possibility of reforming the levy.

“Our complete tax code, at 21,000 pages and ten million words, may now be the fattest in the world (Hong Kong gets by with 300 pages), and is ten times longer than the Bible,” George Osborne – like Gordon Brown – has increased the complexity of the tax system and that helps the wealthy, argues Matt Ridley.

“There’s a skills shortage and, in shortages, the price rises. In the City these days, that means that the price of risk managers is surging.” Unheard of 20 years ago, chief risk officers have become indispensable, says Ian King, routinely collecting seven-figure salaries.

Following the Greek referendum result the Nikkei 225 has started the week on a negative note closing down 2.08 per cent this morning at 20,112.12. The FTSE 100 is expected to open 116 points lower when trading begins shortly.

The FTSE 100 lost another 44.69 points, or 0.67 per cent, to close at 6,585.78 on Friday. For the week it was down more than 2 per cent, its biggest weekly fall in a month after a punishing week in which uncertainty swirling around Greece’s future in the eurozone has pushed it further away from the peak of 7,103.98, hit at the end of April. Mining groups and banks were among London’s biggest fallers.

Across the pond in the US, Wall Street was closed on Friday for Independence Day.

Sterling rose to $1.5649 after buoyant data from Britain’s dominant services sector, but was back at $1.5601 by mid-afternoon. Against the euro, it was 0.3 per cent weaker at 71.095 pence.

Brent crude for August settled down $1.75 at $60,32 a barrel on Friday as a rising US rig count fuelled fears of a global oversupply.

The Times
Investors were braced for volatile trading today after Greece overwhelmingly rejected rescue terms offered by its creditors and voted “no” in the country’s referendum. The euro fell in early Asian dealing and the result was predicted to trigger a further sell-off of the currency as well as peripheral European sovereign bonds and equities across Europe. Goldman Sachs warned on Friday that up to 10 per cent could be wiped off the value of stock markets.
read full update
Daily Telegraph
Greek voters have rejected the austerity demands of Europe's creditor powers by a stunning margin, sweeping aside warnings that this could lead to the collapse of the banking system and a return to the drachma. Early returns in the historic referendum showed the No side -Oxi in Greek - running at 61pc versus 39pc for the Yes side as the Greek people turned out en masse to vent their anger over six years of economic depression and national humiliation. A volcanic revolt appeared to have swept through Greek islands.
read full update
Financial Times
Even before the polls closed in Greece, Emmanuel Macron, the French economic minister, insisted that even with a No vote in Sunday night’s referendum, talks must resume between the leftwing government in Athens and its eurozone creditors. But despite predictions by Greek ministers that a new bailout deal could be just days away, other than Mr Macron and his French colleagues, there are few elsewhere in the eurozone who predicted a resounding No would lead to much more than continued stalemate.
read full update
Today

Sir Howard Davies is speaking at the Runways UK conference. He is to discuss his work chairing the Airports Commission, which published its final recommendations for additional airport capacity in the south-east of England last week. The commission short-listed three options — a second runway at Gatwick, a third runway at Heathrow, and an extension to the existing northern runway at Heathrow to operate as two separate runways — having rejected the idea of an inner Thames estuary hub airport backed by London mayor Boris Johnson. Last week it announced that a third runway at Heathrow “presents the strongest case and offers the greatest strategic and economic benefits”.

Interims: RM Finals: Trakm8 Holdings AGM/EGM: Marwyn Management Partners, Base Resources, Aberdeen Asset Management, Martin Currie Pacific Trust Trading Statement: Bovis Homes

Tomorrow

The Competition and Markets Authority publishes provisional findings and possible remedies for an investigation of the supply and acquisition of energy, ahead of a final report with a statutory deadline of December 25. Ofgem referred the retail energy market to the CMA in June 2014. The CMA is charged with investigating if there are any features that which prevent, restrict or distort competition and, if so, what action might be taken.

Finals: Bacit, Solid State, Sepura AGM/EGM: Marks & Spencer, 3i Infrastructure, Summit Germany Trading Statement: Marks & Spencer, Asos, Connect, McBride, Cineworld, Robert Walters Economics: UK: industrial production, manufacturing production, US: trade balance

Wednesday

George Osborne delivers his summer budget statement two months after the general election and four months since the last budget. It is the first budget from a Conservative government for almost 19 years and it is expected to include details of how the government plans to cut £12 billion from Britain’s welfare bill, with further details expected at the spending review this autumn. The Office for Budget Responsibility publishes its economic and fiscal outlook for the economy and public finances alongside the budget.

Finals: Micro Focus International AGM/EGM: J Sainsbury, Palace Capital, Active Energy, Great Portland Estates, Shires Income, Booker, UK Mail Trading Statement: Great Portland Estates, Taylor Wimpey, Booker, Galliford Try, Unite Economics: UK: Budget; US: Federal Markets Committee minutes of June meeting

Thursday

The Bank of England’s monetary policy committee announces its latest interest rate decision. The committee decided in June to maintain the Bank rate at the historic low of 0.5 per cent, a figure unchanged since March 2009, and the size of its quantitative easing asset purchase programme at £375 billion. The Bank of England’s chief economist warned subsequently that an increase could damage Britain’s fragile, and placed the prospect of a cut back on the table.

Finals: NCC, Mirada, SuperGroup AGM/EGM: Gulf Keystone Petroleum; Aveva, Boussard & Gavaudan, Zoltav Resources Trading Statement: Grafton, Dunelm, Ashmore, Hays, Barratt Developments. Premier Oil, Associated British Foods Economics: UK: RICS house price balance; Bank of England rate announcement

Friday

The deadline for Nuna Minerals to either announce a firm intention to make an offer for Worthington or say that it does not intend to make an offer, expires. The deadline was extended from June 12. Worthington announced in May that it was in discussions with Greenland Mining Management, the sole shareholder and director of which is Paul Michael Patrick Newman, which is proposing to invest in a rescue refinancing of NunaMinerals A/S, a company quoted on the Copenhagen stock exchange, with a view to that company subsequently making an offer for Worthington shares.

Interims: Mercia Technologies AGM/EGM: Tau Capital, Graphene NanoChem, Aurasian Minerals, Ig Seismic Services, Ilika, Value & Income Trust, JPMorgan Euro Small Co. Trust Economics: UK: trade balance, construction output

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