The fashion designer Karl Lagerfeld has died aged 85, his Chanel label has said.

He is credited with reinventing Chanel, taking it from a small house to an industry leader. In 2017 the privately owned company released financial figures for the first time, revealing it had made £1.35bn the previous year.

US stock markets are expected to dip on the first day back from a long weekend to mark Presidents Day.

Futures for the benchmark S&P 500 index have fallen by 0.3% ahead of the open on Wall Street. Futures for the Dow Jones Industrial Average fell by slightly less than 0.3%.

US markets may be helped by Walmart, after the retailer beat profit expectations in the final three months of the year. Sales at stores rose by 4.2% at its US stores, after a 3.4% increase in the third quarter.

The strong numbers from the world’s largest retailer are especially encouraging after a very weak December retail sales report last week from the US Commerce Department led many to fear that consumers had gone into hiding.

Greg Clark, the business secretary, is facing questions in the House of Commons.

Clark said that the Japanese ambassador to the UK has written to the UK and the EU saying that companies cannot cope with a situation in which companies can “only [grasp] the whole picture at the last minute”.

“I think that is a piece of advice we should heed,” Clark said, calling for MPs to vote through a deal as soon as possible.

“Political uncertainty over a no-deal Brexit, or what kind of Brexit, casts a shadow over our future,” he added.

Perhaps unsurprisingly, Clark said the business leaders to whom he has spoken have a “virtually unanimous view that the deal is one that meets their needs”.

Something else for you to chew on this lunchtime: the vegan sausage roll has boosted sales at Greggs, the biggest baker in the UK.

Greggs has upgraded profit expectations for the third time in three months, crediting the publicity around its vegan sausage rolls for a surge in sales, writes Sarah Butler.

The UK’s biggest bakery chain said it had made “an exceptionally strong start to 2019” with sales at established stores up 9.6% in the seven weeks to 16 February.

Prime Minister Theresa May has spoken to the president of Honda to express her disappointment about its closure of its Swindon factory, according to her spokesman.

She told the cabinet that the government will do all it can to support Honda employees.

And she noted that Honda will retain its European headquarters in the UK, which will continue to manage its sales across Britain and the EU.

At lunchtime in London stock markets have eased further. The FTSE 100 is the second worst performer of the major European indices, down by 0.6%.

Germany’s Dax index has outperformed the rest of Europe, after the influential Zew economic sentiment index came in slightly higher than expected.

Greg Clark has acknowledged that getting a Brexit deal as soon as possible is a priority for business.

Leaving without a deal would threaten companies which export to more distant markets, he said. Some trade deals which the EU currently has with nations such as Japan and South Korea will not be applied to the UK before Brexit.

Clark has been one of the most prominent voices in Prime Minister Theresa May’s cabinet in favour of the withdrawal agreement the government reached with the EU.

However, the deal still faces significant opposition from a majority in Parliament, led by backbench Conservatives who want a no-deal Brexit to remain part of the government’s negotiating strategy.

The Office for National Statistics also published productivity numbers this morning, which showed that output per hour worked rose 0.2% quarter-on-quarter in the last three months of 2018.

Productivity had previously fallen by 0.4% in the third quarter.

Howard Archer, chief economic advisor at EY ITEM Club, said the lack of a bounceback from a “marked relapse in the third quarter” was “pretty disappointing news”.

Part of the UK’s recent poor labour productivity performance has undoubtedly been that low wage growth has increased the attractiveness of employment for companies.

It is also highly probable that several companies have preferred to take on labour rather than commit to costly investment, given a highly uncertain economic and political outlook, magnified by Brexit since mid-2016. The low cost of labour relative to capital has certainly supported employment over investment.

Alpesh Paleja, a principal economist at the Confederation of British Industry, said continued weak productivity growth poses a “risk to the sustainability of the recovery in pay going forward”.

Some reaction to the labour market numbers earlier this morning, which showed that unemployment remains low, and wage growth continued:

The figures may represent a peak for the British labour market, according to Andrew Wishart, a UK economist at Capital Economics – although he still believes the Bank of England will raise interest rates faster than markets currently expect. He said:

While reassuring, the large rise in employment in the fourth quarter probably marks a peak in employment growth given the deterioration in surveys of hiring in January. And pay growth plateaued.

Tom Hadley, director of policy at the Recruitment & Employment Confederation, said the figures show “the resilience of the UK jobs market, with record vacancies and numbers of people in work”.

However, he also noted the significant downturn in businesses confidence in the UK economy which is impacting on future hiring intentions in surveys.

There is a real fear, as we are seeing in the UK manufacturing industry, that we will see lower growth and fewer opportunities in the future.

The Labour party’s shadow business secretary, Rebecca Long Bailey, blamed the government’s austerity programme for Honda’s decision.

She said it was “devastating news, first and foremost for Honda employees and their families, but also for the jobs across the supply chain and the impact on the local economy in Swindon”

This government has failed to create an environment of business confidence. The Tories’ austerity programme has failed workers and businesses, and they continue to show a total lack of vision or plans for investment in our future.

With Honda saying Brexit was not a factor, this Tory government shoulders yet more responsibility for failing to create an environment of business confidence. Businesses have lost faith in the government’s austerity programme and total lack of vision or investment for our future.

The car industry’s lobby group reacts to the “devastating” Honda announcement.

While the Society of Motor Manufacturers and Traders has not commented directly on Honda’s reasoning, it’s clear that Brexit is still on the industry’s mind.

Mike Hawes, SMMT Chief Executive: “Today’s announcement is a huge blow to UK automotive manufacturing, and for the Honda plant’s highly skilled and productive workforce. Whilst production will continue in Swindon until 2021, giving government and industry time to help affected employees and the local supply chain, which supports a further 10,000 jobs, this is, nevertheless, devastating news.

The challenges facing Honda are not unique. The global automotive industry is facing fundamental changes: technological, commercial and environmental, as well as escalating trade tensions, and all manufacturers are facing difficult decisions.

The UK should be at the forefront of these changes, championing its competitiveness and innovation, rather than having to focus resources on the need to avoid a catastrophic ‘no-deal’ Brexit.

In mid-morning trading the FTSE 100 has slightly extended its losses, with HSBC and Standard Chartered still the biggest fallers.

It’s a sea of red across European stock markets this morning, so the 0.4% fall seen by London’s blue-chip equities is not out of line. Germany’s Dax has endured the smallest fall.

Unite also has a view on the political side. The union has been highly critical of the government’s approach to Brexit negotiations.

Des Quinn said: “While Brexit is not mentioned by the company as a reason for the announcement, we believe that the uncertainty that the Tory government has created by its inept and rigid handling of the Brexit negotiations lurks in the background.

If the government had delivered a strong and stable Brexit that protected the economy and jobs, we may well have been in a very different position today.

Honda staff have been sent home for the day after receiving the bad news this morning.

While the plans technically remain under consultation, it is all but certain that the 3,500 workers will be made redundant gradually as the factory shuts down in 2021.

Unite is not giving up on the plant, which has received millions of pounds of investment from the Japanese carmaker, most recently to make it the global production hub for its 10th generation Civic.

The union’s national officer for the automotive sector, Des Quinn, said: “We acknowledge the global challenges that Honda has outlined in its statement, but we don’t accept that this plant, with its highly skilled and dedicated workforce, does not have a viable future.

We are now entering a period of meaningful consultations with the management to examine in detail the business case put forward by the company. We will leave no stone unturned to keep this plant going and its workforce in employment.

The pressure on real wages has been one of the defining features of the British economy in the last decade, but the decline in inflation in recent months has given some relief to workers.

The government will hope that the pick-up in real wages is sustained.

Here’s a useful chart from the Office for National Statistics showing what the British worker has been through in the past two decades. Note the pick-up in the past year in real pay – after the devaluation of sterling following the EU referendum in 2016 boosted inflation and dented real wages.

Sterling remains unmoved in the immediate aftermath of the labour market data, down by less than 0.1% against the US dollar at $1.2918.

The headline figures are mostly in line with economists’ expectations, confirming the picture of a British economy with high employment and something of an acceleration in real wage growth.

The employment rate – the proportion of people aged from 16 to 64 in work – came in at 75.8%, higher than for a year earlier (75.2%) and the joint-highest since comparable estimates began in 1971.

Whatever Honda’s reasons for deciding to close Swindon, the UK car industry clearly feels threatened by a possible no-deal Brexit.

The sector made more than 1.5m cars last year, but the industry body, the Society of Motor Manufacturers and Traders, revealed that investment by manufacturers almost halved in 2018 to £588.6m.

Take a look here for what carmakers across the UK have done to prepare for Brexit, including Jaguar Land Rover, Nissan, Ford and BMW:

The mood in Swindon is grim, with the prospect of the loss of 3,500 high-quality manufacturing jobs – with knock-on effects across the town’s economy.

The Wiltshire town, with a population of around 220,000, has been relatively insulated from unemployment in recent years, writes the Guardian’s Amy Walker.

Alan Tomala, regional officer for the Unite union who worked at the plant between 1995 and 2007, said workers were “angry, dismayed and worried”.

Here’s the full Honda report from the Guardian’s Julia Kollewe, who notes that the Japanese carmaker’s decision is only the latest in a long line of bad news for the British car industry.

However, senior Brexit-backing MP Steve Baker has seized on Ian Howell’s comments that the move towards electrification was the only factor in the closure.

Baker, a former minister in the Department for Exiting the EU, is an influential member of the European Research Group. The backbench group has pressured prime minister Theresa May towards trading with the EU on World Trade Organization terms after 29 March, rather than having a withdrawal period.

Back on Honda, the political fallout from the closure of the Swindon plant is only just beginning.

Pro-EU politicians have disregarded Honda’s assertion that Brexit is not the main reason for its decision.

David Lammy, the Labour MP, said the decision was “gut-wrenching”.

Liberal Democrat leader Vince Cable said it was “ridiculous” to claim it was not Brexit-related.

On the FTSE 100, HSBC is the biggest faller, down by 3.3% in early trading after it delivered disappointing profit numbers this morning.

Higher costs and stock market falls chipped away at its trading businesses, while it also warned that an economic slowdown in China and the UK would throw up further hurdles this year.

Chief executive John Flint, rounding off his first year at the helm of the company, said the bank may have to scale back investment plans in order to avoid missing a key target to grow revenues faster than costs for a second straight year.

HSBC’s performance dragged down fellow emerging markets-focused bank Standard Chartered by 2.9%.

The FTSE 100 is down by 0.4%, while the mid-cap FTSE 250 has lost 0.2%.

Honda said it will focus its future manufacturing activity in regions where it expects high production volumes, in a statement published this morning.

Katsushi Inoue, Honda’s chief officer for European regional operations, said:

In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly.

As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future. This has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people.

Swindon, which was unveiled as the global production hub for the Civic only in 2017, makes 150,000 cars every year – one every 69 seconds.

Yet its “current role as a global manufacturing hub may no longer be viable”, Honda said.

Carmakers generally have a five- to seven-year investment cycle for production of each model, but Howells said the decision on what to do in Swindon had “collided with this change to electrification”.

Staff will now have a consultation over their future. The company will offer a “whole raft of support services” to employees who lose their jobs, Howells said. He added:

Clearly it’s a very sad day for us.

Honda insists the decision to close the Swindon plant is not related to Brexit, but rather the need to target its largest markets as the car industry rapidly moves towards electrification.

Ian Howells, the senior vice president at Honda Motor Europe, said the industry is facing “unprecedented change in the industry” on a “global scale”, in an interview on BBC radio.

This is not a Brexit-related issue for us. This decision has been made on the basis of the global issues.

“We’re having to look very closely at where we’re putting investment,” he said. Honda’s main markets are in the US, China and Japan.

Greg Clark, the government’s business secretary, said Honda’s decision was a “commercial decision based on unprecedented changes in the global market”.

It is “a devastating decision for Swindon and the UK”, he said.

This news is a particularly bitter blow to the thousands of skilled and dedicated staff who work at the factory, their families and all of those employed in the supply chain.

I will convene a taskforce in Swindon with local MPs, civic and business leaders as well as trade union representatives to ensure that the skills and expertise of the workforce is retained, and these highly valued employees move into new skilled employment.

The decision is also a blow coming after recent government investments in battery technology – although Honda has not been a direct recipient of state aid, unlike Nissan and other carmakers. Clark said:

The automotive industry is undergoing a rapid transition to new technology. The UK is one of the leaders in the development of these technologies and so it is deeply disappointing that this decision has been taken now.

Even amid the political turmoil, European stock markets are expected to open flat this morning.

The UK’s FTSE 100 edged down yesterday by 0.24%, after a week of gains.

Metro points out North Swindon Conservative MP Justin Tomlinson’s comments that Brexit is not to blame for the closure, after he spoke to Honda and essentially confirmed the plans yesterday.

Tomlinson made it clear he believed the decision was driven by “global trends and not Brexit” and a retrenchment of the carmaker in its Japanese home market. Tomlinson campaigned in favour of leaving the EU.

The news of Honda’s likely announcement dominated the business pages this morning – even if the defection of seven Labour MPs to a new independent group drove the day on the front pages.

The Financial Times used the Honda story to highlight just how close we are to the planned date of Brexit on 29 March, and how a fresh trade deal between the EU and Japan may have tipped the balance away from the UK.

The Guardian’s front page story on Honda highlights the effect on jobs, with 3,500 Honda employees who could lose their roles. Unions described it as a “shattering body blow”.