UK economy slows as global worries, Brexit weighs on factories

Britain’s economy has slowed after the June 2016 Brexit vote. (AFP)
Updated 11 January 2019

UK economy slows as global worries, Brexit weighs on factories

  • Gross domestic product was 0.3 percent higher than in the previous three-month period
  • Prime Minister Theresa May risks losing a parliamentary vote on Tuesday on the deal she has agreed with the EU

LONDON: Britain’s economy grew at its weakest pace in half a year in the three months to November as factories suffered from tough global trade conditions and the approach of Brexit, official data showed on Friday.
Gross domestic product was 0.3 percent higher than in the previous three-month period, down from growth of 0.4 percent in the three months to October and matching the consensus of a Reuters poll of economists.
Manufacturers suffered their longest period of monthly declines in output since the financial crisis, hurt by weaker overseas demand, the Office for National Statistics said.
Looking at November alone, industrial output dropped 1.5 percent on the year — the biggest fall since August 2013.
Worries about the global economy have been mounting due to concerns about a trade war between the United States and China.
Figures from Germany and France earlier this week also showed falling industrial output.
“There may well be a common theme which is hurting the factory sector throughout Europe, for example changes in the auto industry,” Investec chief economist Philip Shaw said, adding that Brexit worries were also weighing on investment.
Carmakers across Europe have suffered from a fall in demand for diesel vehicles due to pollution concerns.
Sterling and British government bonds were little changed by Friday’s figures.
The figures fit with business and consumer surveys that suggest the economy is slowing sharply after robust growth of 0.6 percent in the third quarter of the year, reflecting growing uncertainty ahead of Brexit, as well as global jitters.
Britain is due to leave the EU on March 29 and whether businesses will still be able to trade without disruption to cross-border supply chains remains unclear.
Prime Minister Theresa May risks losing a parliamentary vote on Tuesday on the deal she has agreed with the EU.
Defeat would leave open the prospect of Britain leaving the EU without any transitional arrangements to smooth the economic shock.
Compared with a year earlier, Britain’s economy was 1.4 percent larger. In November alone, it expanded 0.2 percent, compared with forecasts for a rise of 0.1 percent.
The Bank of England says the economy is likely to have grown around 0.2 percent over the fourth quarter of 2018.
Closely watched purchasing managers’ surveys have pointed to fourth-quarter growth of around 0.1 percent in Britain, according to data firm IHS Markit which compiles the surveys.
Britain’s economy slowed after the June 2016 Brexit vote, its growth rate slipping from top spot among the Group of Seven group of rich nations to mid-table or lower.
An unusually warm summer and the soccer World Cup spurred a pick-up in mid-2018 but retail sales data suggest consumers reined in spending late last year.
Britain’s services sector grew by 0.3 percent over the three months to November, while industrial output dropped by 0.8 percent, the biggest decline since May 2017.
Separate figures showed Britain’s goods trade deficit widened unexpectedly in November to £12 billion ($15.3 billion) from £11.9 billion, worsened by the highest oil imports since September 2014.


Cirque du Soleil walks a tightrope through pandemic

Updated 06 June 2020

Cirque du Soleil walks a tightrope through pandemic

  • Suitors wage backstage battle to rescue debt-stricken Canadian circus icon
  • Among the potential bidders is former fire eater Guy Laliberte, who fouded the acrobatic troupe in 1984

MONTREAL: Its shows canceled due to the COVID-19 pandemic, an already heavily indebted Cirque du Soleil’s fight for survival has invited an intense backstage battle to try to save the Canadian cultural icon.

High on a list of potential suitors is former fire eater Guy Laliberte, who founded the acrobatic troupe in 1984 but later sold it.

“Its revival will have to be done at the right price. And not at all costs,” said the 60-year-old, determined not to see his creation sold to private interests.

The billionaire clown said after “careful consideration,” he decided “with a great team” to pursue a bid, but offered no details.

Under his leadership, the Cirque had set up big tops in more than 300 cities around the world, delighting audiences with contemporary circus acts set to music but without the usual trappings of lions, elephants and bears.

Then the pandemic hit, forcing the company in March to cancel 44 shows worldwide, from Las Vegas to Tel Aviv, Moscow to Melbourne, and lay off 4,679 acrobats and technicians, or 95 percent of its workforce.

Hurtling toward bankruptcy, the global entertainment giant and pride of Canada commissioned a bank in early May to examine its options, including a possible sale.

Meanwhile, shareholders ponied up $50 million in bridge financing for its “short-term liquidity needs.”

Laliberte, the first clown to rocket to the International Space Station in 2009, ceded control of the Cirque for $1 billion in 2015.

It has since fallen into the hands of American investment firm TPG Capital (55 percent stake) and China’s Fosun (25 percent), which also owns Club Med and Thomas Cook travel. The Caisse de depot et placement du Quebec (CDPQ) retains the last 20 percent.

The institutional investor, which manages public pension plans and insurance programs in Quebec, bought Laliberte’s last remaining 10 percent stake in the business in February, just before the pandemic.

Since 2015, the Cirque has embarked on costly acquisitions and renovations of permanent performance halls, while its creative spirit waned, according to critics in the Quebec press.

Meanwhile, it piled on more than $1 billion in debt.

Fearing that the Cirque would be “sold to foreign interests,” the Quebec government recently offered it a conditional loan of $200 million to help relaunch its shows as restrictions on large gatherings start to be eased worldwide.

But the agreement in principle is conditional on the Cirque headquarters remaining in Montreal and the province being allowed to buy US and Chinese stakes in the company at an unspecified time in the future, “at market value” and with “probably a local partner,” said Quebec Minister of the Economy Pierre Fitzgibbon.

“The state does not want to operate the circus, but the circus is too important to Quebec (to leave it to foreigners),” he said.

In addition to Laliberte, other prospective buyers include Quebecor, the telecoms and media giant of tycoon Pierre Karl Peladeau, whose opening lowball bid was outright rejected.

“It is essentially the value and reputation of the brand” that has piqued interest in the company, says Michel Magnan, corporate governance chair at Concordia University in Montreal.

But “as long as there are restrictions on gatherings of people, the future is not very rosy” for the Cirque, he said.

Several challenges await, according to Magnan.

“There were a lot of people working in all of these shows. Where are they now? What are they doing? How are they doing? In what shape are they, what state of mind?” he said.

“The more time passes, the more this expertise risks evaporating.”

Small consolation: The Cirque resumed its performances on Wednesday in Hangzhou, China, five months after a coronavirus outbreak in the city.