And finally, Britain’s stock market has just posted its worth month in almost a year.

The FTSE 100 has closed 22 points higher at 7207. That means the blue-chip index has lost 5% in August, following heavy losses earlier in the month.

That’s the worst monthly performance since October 2018, when the FTSE (by my maths) shed 5.08%. It’s very nearly the worst month in four years (going back to August 2015, when it lost 6.7%).

On that note, goodnight and have a great weekend. GW

We now know for sure that Britain was the weakest-performing major advanced economy in the second quarter of 2019.

Canada’s GDP report completes the set of growth figures from the members of the G7, leaving the UK as the worst performer.

• Canada: Grew by 0.9% in Q2 vs Q1
• US: Grew by 0.5%
• Japan: Grew by 0.4%
• France: Grew by 0.3%
• Italy: No growth during the quarter
• Germany: Contracted by 0.1%
• UK: Contracted by 0.2%

Both the UK and Germany are thus on the brink of recession -- and would suffer that indignity if their economies also shrink in the current quarter (July-September).

Britain’s economy suffered from a drop in manufacturing activity in the last quarter, as the boost from Brexit stockpiling earlier in the year unwound.

Germany, meanwhile, was hit by the US-China trade war which dented its exports and hurt factory orders.

Newsflash: Canada’s economy grew by 0.9% in the second quarter of the year, stronger than expected.

GDP figures just released show that growth accelerated strongly in April-June, following just 0.1% growth in both the previous two quarters.

Statistics Canada pointed to a rise in exports, including fuel, saying:

Exports of goods rose 3.7% in the second quarter, following declines in previous two quarters. The increase was led by energy products, which grew 5.9% after a 3.0% decline in the first quarter.

Exports of services rose 1.1%, maintaining the pace of the previous quarter. Import volumes declined 1.0%.

This is the fastest quarterly growth in two years:

President Donald Trump has started the day with a blast at General Motors for cutting its US workforce and moving operations to China.

I think he’s referring to a Bloomberg report that GM has fewer union-represented US workers than Ford or Fiat Chrysler for the first time since the unions started organising 80 years ago.

Over in the eurozone, inflation remained stuck at its lowest level since 2016 this month, intensifying pressure on the European Central Bank to launch new stimulus measures.

Consumer prices only rose by 1% in August, Eurostat reports, matching July’s three-year low.

Falling energy prices pulled the cost of living down, while food and alcohol prices rose faster.

With inflation so far from the ECB’s target, economists expect the central bank to cut the interest rates it pays commercial banks deeper into negative territory -- from -0.4% to -0.5%.

But will that actually work? After all, the ECB has created trillions of new euros to buy up government bonds - driving prices to record highs but having little lasting impact on inflation or growth.

Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management, argues that governments need to stop relying on monetary policy, and pull the fiscal levers instead.

Starting with Germany.

She says:

Even a sustained period of negative real interest rates has failed to drag inflation above 1%, the lowest level since 2016. With Germany on the brink of recession, the question on everyone’s mind is whether the country will drop its adherence to Swartz Null, a balanced budget, and use Government spending, fiscal policy to support growth and hence ultimately higher inflation.

As the UK’s political turmoil and the US/ China trade wars continue to loom over the global economy, Germany will have to embrace others tools of growth to support what Draghi is doing on the monetary side.”

The Bank of England also reported that lending to businesses fell by £4.2bn in July, the biggest decline since August 2017.

That’s partly because businesses made a net repayment £2bn to their banks during the month.

That could be another sign that firms are resisting investing in new equipment (which often needs a loan), and hunkering down until Brexit is resolved.

Newsflash: The number of mortgages approved in the UK has hit a two-year high.

Bank of England data just released show that UK lenders approved 67,306 mortgages in July, up from 66,506 in June.

That’s more than expected, and the highest level since mid-2017.

Does that contradict the Nationwide’s warning that the UK housing market is subdued, with prices up just 0.6% over the last year?

Not necessarily. It may be that sellers have been taking a realistic view on prices, perhaps accepting lower offers to ensure they’ve completed the sale before Brexit, just in case....

The BoE also reported that net mortgage lending rose by £4.611bn in July, the biggest increase since March 2016.

Consumer lending increased by £897m, a rise of 5.5% per year - down from over £1bn in June.

The conciliatory noises from Beijing and Washington in recent days has helped push European stock markets higher, in the final session of the week.

In London the FTSE 100 is up around 0.35%, or 27 points, at 7210 - its highest level in over a week.

Miners are leading the way, up 1.4%, followed by the technology and industrial sectors which have both gained around 1%.

Overnight, a closely watched consumer confidence survey has shown that Britons are becoming more anxious.

GfK’s consumer confidence index fell to -14 for August, down from -11 in July. That’s the weakest since January.

The survey showed a sharp drop in expectations for personal finances and the general economy over the next 12 months.

Joe Staton, client strategy director at GfK, warned:

“Until Brexit leaves the front pages – whenever that will be – consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

For most of us, a house is the biggest purchase we’ll ever make -- if we get the chance at all. And today we have fresh evidence that Brexit uncertainty is weighing the market down.

House prices were flat in August, the Nationwide building society reports this morning, extending a long run of weak growth.

On an annual basis, prices were just 0.6% higher than a year ago - lagging behind wages, and the broader inflation measure.

The average UK house now costs £216,096, Nationwide reports, down from £217,663 (this is not seasonally adjusted, though).

It’s rare good news for those trying to get onto the housing ladder, but also a sign that economic confidence remains subdued -- with Britain possibly crashing out of the EU without a deal in two months time.

Robert Gardner, Nationwide’s Chief Economist, explains that that market looks subdued - and affected by “developments in the broader economy”(<cough> Brexit).

“Annual house price growth remained below 1% for the ninth month in a row in August, at 0.6%. While house price growth has remained fairly stable, there have been mixed signals from the property market in recent months.

“Surveyors report that new buyer enquiries have increased a little, though key consumer confidence indicators remain subdued. Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable.

In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity.

This report comes as UK firms warn that confidence is being damaged by the ongoing Brexit crisis.

Yesterday technology firm Micro Focus and recruitment company Hays both warned that investment is being held back and new recruitment plans frozen, as firms fear a disorderly Brexit.

Also coming up today

August has been a volatile time for the stock market, as fears of a global downturn hit shares. But markets are making a late recovery today, on hopes (once again....) of progress in the US-China trade war.

President Donald Trump stoked optimism yesterday, revealing that talks were taking place “at a different level”, adding:

“Let’s see what the end product is; that’s what you have to judge it by.”

This lifted stocks in New York, where the Dow Jones industrial average jumped by 326 points, or 1.25%.

European stock markets are expected to nudge higher today.

New eurozone inflation data could move the euro later, as a weak reading would put more pressure on the European Central Bank to ease monetary policy.

The agenda

• 9.30am BST: Bank of England’s latest mortgage approvals and consumer credit figures
  
• 10am BST: Eurozone inflation data for August
• 1.30pm BST: Canadian GDP for Q2