With the markets closed, City traders are now scarpering to their homes (or the shops!) to begin the Christmas break. So in that spirit, I’m going to wrap up now.

I hope you all have an excellent Christmas break. We’ll be back next week for the final push towards 2017.

Here’s a quick summary:

Britain’s economy has continued to defy the doubters, with growth revised up to 0.6% in the three months after the EU referendum.

And with growth earlier in the year revised down, there’s no sign of a Brexit slump.

However, the country’s current account deficit has worsened, with exports dropping during the quarter.

Economists fear that the economy is still too reliant on domestic demand, as consumer spending could tail off in 2017 when inflation takes a bigger bite out of wages.

Over in Italy, the prime minister has confirmed that the country’s weakest banks will be strengthened with state capital, starting with Monte dei Paschi – whose efforts to bolster its own reserves failed this week.

Paolo Gentiloni told reporters that:

“Today marks an important day for Monte dei Paschi, a day that sees it turn a corner and able to reassure its depositors.”

Two European banks, Deutsche Bank and Credit Suisse, are paying more than $12bn to settle charges that they mis-sold mortgage-backed securities in the run-up to the 2008 crisis.

But Barclays is fighting the US Department of Justice, denying that it is guilty of ‘irresponsible and dishonest’ conduct.

Merry Christmas!

Looking away from the UK economy, the European Central Bank has reported that wealth inequality across the eurozone has risen since the eurozone crisis began.

A new ECB survey has found that average net wealth across the euro area shrank by 10% between 2010 and 2014, to €223,300. This is primarily due to a sharp fall in house prices in many countries, as austerity gripped the euro area.

Importantly, the median household wealth (what a typical family owns), was just €104,100, less than half the mean average of €223k. That’s because so much wealth is held by the richest people.

Households needed to own almost €500,000 to squeeze into the top 10%.

Wealth slumped particularly sharply in Greece and Cyprus, which both entered bailout programme, while net wealth in Germany rose by 10%.

And the ECB flags up that wealth inequality appears to have increased slightly.

The Gini coefficient, a frequently used indicator of overall wealth inequality, edged up to 68.5 percent from 68.0, which is within the margin of measurement error. A value of 0 corresponds to complete equality, while 100 percent reflects maximum inequality - one household owning all wealth.

This could bolster criticism of the ECB’s ultra-loose monetary policy, which has pumped up the value of financial assets owned by richer Europeans. But the Bank argues that without its action, unemployment would be higher and growth lower.

The UK government has warned that Britain’s economy faces challenges, despite growing faster than thought in the last quarter.

A Treasury spokesperson doesn’t actually mention the Brexit negotiations, but I think we know what they’re hinting at. Here’s the official response:

“The fundamentals of the UK economy are strong, but there remain challenges ahead.

The Chancellor set out, in the Autumn Statement, his plan to support a resilient economy that works for everyone by driving productivity and supporting working people, while maintaining fiscal discipline.”

Worryingly, Britain’s current-account deficit has widened in the last quarter, as the country continues to import much more than it exports.

The difference between money flowing into the UK, and out, jumped to £25.5bn in July-September.

That’s the equivalent of 5.2% of the entire economic output this year, close to the record deficit recorded in 2013.

This deterioration is mainly due to weaker trade -- Britain’s trade deficit jumped from £11bn in Q2 to £16.7bn in Q3, according to the ONS.

Total UK exports decreased by 2.6% in the July-September quarter, while imports increased by 1.4%.

That’s despite the slump in the pound, which is meant to help exporters by making goods more competitively priced.

The ONS says:

Exports of goods decreased by 5.1% in Quarter 3 2016, due mainly to a decrease in exports of aircraft, chemicals and unspecified goods.

NEWSFLASH: The UK economy grew faster than we thought in the three months after the Brexit referendum.

The Office for National Statistics has just revised up its estimate for UK GDP in the third quarter of 2016.

It now reckons that the British economy expanded by 0.6%, not the 0.5% previously reported. That’s a pretty decent rate of growth, especially given the uncertainty created by the EU referendum.

It’s because the ONS has revised up service sector growth (the largest part of the UK economy) in the last three months to 1.0%, from 08%.

And the City can take the credit, with output from the “business services and finance industries” growing faster than expected.

Darren Morgan, Head of GDP, says:

“Robust consumer demand continued to help the UK economy grow steadily in the third quarter of 2016. Growth was slightly stronger than first thought, though, due to greater output in the financial sector.”

The ONS also says that industrial production only contracted by 0.4%, not 0.5%, while construction sector output has been revised from -1.1% to -0.8%.

More to follow!

City experts are relieved that Italy has finally taken the plunge and agreed to provide €20bn in emergency liquidity guarantees and capital injections for its banks.

There’s also some exasperation that Rome didn’t do this years ago (Britain, for example, pumped money into its financial sector back in 2008).

Jacopo Ceccatelli, head of Marzotto SIM SpA, a Milan-based broker-dealer, told Bloomberg

“Overall it’s good news; finally we are heading toward a solution,”

“Italy is doing now what other countries have done many years ago to sustain their banking system.”

Francesco Confuorti, chief executive officer of Milan’s Advantage Financial,

“A nationalization should have been done five years ago.

“The bank lost time, money and credibility seeking to keep the patient on life support when he was in an irreversible coma.”

More here:

Shares in Deutsche Bank have jumped by over 4% at the start of trading in Frankfurt, to €18.50.

That confirms that the $7bn settlement agreed with the DoJ for mis-selling toxic securities is much less than investors had feared.

Three months ago, Deutsche’s shares plunged below €10, the lowest in decades, after news broke that the DoJ was demanding $14bn.

Analyst Dan Davies reckons that leak may have rebounded on the US authorities, who were criticised for taking too tough a line over the scandal.

The bailout of Monte dei Paschi is an “important day” for the bank, says Italy’s new prime minister.

After approving the decree that will pave the way to prop up the banking sector, Paolo Gentiloni told reporters that

“Today marks an important day for Monte dei Paschi, a day that sees it turn a corner and able to reassure its depositors.”

Good morning.

Christmas has come early for bank watchers, with a packed stocking full of crucial developments on the final day before the festive break.

Overnight, the Italian government has given its approval for a state bailout of troubled Monte dei Paschi, after the bank failed to raise funds from private investors.

Paolo Gentiloni, Italy’s new prime minister, announced in the early hours of Friday that his cabinet had agreed to the rescue and would be dipping into a €20bn fund that had already been approved by the parliament earlier this week in the event that MPS needed to be saved.

Here’s the full story:

In another dramatic, and long-awaited development, Deutsche Bank has finally agreed a $7.2bn settlement with the US Department of Justice for misselling mortgage-backed securities in the run-up to the 2008 crisis.

The German lender will pay a $3.1bn civil penalty and also provide $4.1bn in compensation to consumers.

It’s much less than the $14bn which the DoJ had originally proposed, and which had raised fears over Deutsche’s financial strength.

Swiss bank Credit Suisse has also settled with the DoJ; it will pay a $2.48bn penalty plus handing back $2.8bn to consumers.

Late last night it emerged that the DoJ is also taking Barclays to court, after the UK lender denied similar charges of bundling up home loans and selling them on.

City editor Jill Treanor explains:

The US department of justice has accused Barclays of jeopardising the financial position of millions of American homeowners over a decade-old mortgage bond mis-selling scandal.

The DoJ is now taking the bank to court, in what was thought to be the first time an institution had failed to reached a settlement with the US authorities over the sale of residential mortgage-backed securities (RMBS) in the run-up to the banking crisis. Responding to the news on Thursday night, Barclays said it would fight the case.

Loretta Lynch, the US attorney general, said: “Financial institutions like Barclays occupy a position of vital public trust. Ordinary Americans depend on their assurances of transparency and legitimacy, and entrust these banks with their valuable savings....

As alleged in this complaint, Barclays jeopardised billions of dollars of wealth through practices that were plainly irresponsible and dishonest. With this filing, we are sending a clear message that the department of justice will not tolerate the defrauding of investors and the American people.”

I’ll be tracking all the development and reaction, as the City heads into its final trading session before Christmas (trading ends at lunchtime, hurrah!).

At 9.30am we get a new estimate of UK GDP in the third quarter, which will give more details of how the economy performed in the three months after the Brexit vote. It’ll probably confirm that the economy expanded by 0.5% in the quarter.