UK and eurozone construction declines slow; European markets fall ahead of Fed rate decision – business live

Britain’s financial watchdog plans to simplify mortgage rules, and has launched a consultation.

The Financial Conduct Authority said:

We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage. Doing so will help consumers better navigate their financial lives and support growth, both priorities in our new strategy.

This includes making it

• quicker and easier for consumers to discuss options with a firm, while still having access to advice if they want or need it

• easier for consumers to reduce their mortgage term, lowering the total cost of borrowing and reducing the risk of repaying into later life

• easier for consumers to access cheaper products when remortgaging

The FCA has introduced Consumer Duty – a set of rules to improve consumer protection which it says sets clearer, up-to-date standards in financial services.

The watchdog also said it had reminded firms of flexibility in its rules to help people access a mortgage. In June, it will follow this work with a further public discussion on the future of the mortgage market, including risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life and consumer information needs.

Emad Aladhal, director of retail banking said:

Our strategy aims to deepen trust and rebalance risk to support growth and improve lives.

That’s why, with the Consumer Duty now in place to maintain high standards, we want to make it easier, faster and cheaper for borrowers to access and make changes to their mortgage.

Novo Nordisk’s finance chief is sceptical that Donald Trump’s executive order to reduce the time it takes to approve pharmaceutical factories in the country will significantly change timelines for the pharma industry.

Trump signed an executive order on Monday that aims to reduce the time it takes to approve pharma plants in the United States, as part of new regulations to encourage international drugmakers to shift their operations to the country.

Wegovy and Ozempic maker Novo Nordisk’s chief financial officer Karsten Munk Knudsen told Reuters that it takes years for a pharmaceutical company to build a factory in compliance with the quality protocols set and enforced by the US Food and Drug Administration (FDA).

We would welcome if there are more pragmatic ways through it, but I’m sceptical that it will markedly change timelines in our industry.

The trade group PhRMA estimates it takes five to 10 years to build a new pharmaceutical plant in the US.

Amazon said it has made a “fundamental leap forward in robotics” after developing a robot with a sense of touch that will be capable of grabbing about three-quarters of the items in its vast warehouses.

Vulcan – which launches at the US firm’s “Delivering the Future” event in Dortmund, Germany, on Wednesday and is to be deployed around the world in the next few years – is designed to help humans sort items for storage and then prepare them for delivery as the latest in a suite of robots which have an ever-growing role in the online retailer’s extensive operation.

Aaron Parness, Amazon’s director of robotics, described Vulcan as a

fundamental leap forward in robotics. It’s not just seeing the world, it’s feeling it, enabling capabilities that were impossible for Amazon robots until now.

The robots will be able to identify objects by touch using AI to work out what they can and can’t handle and figuring out how best to pick them up. They will work alongside humans who now stash and retrieve items from shelving units which are manoeuvred to them at picking stations by wheeled robots – of which Amazon now has more than 750,000 in operation.

Vulcan will be able to stow items on the upper and lower levels of the shelving units – known as pods – so that humans no longer need to use ladders or bend so often during their work. Robots now operating in Amazon’s warehouse are able to shift items around or pick items using suction cups and computer vision.

Turning to corporate news again… One of the UK’s largest planned offshore windfarms has been cancelled by its developer, the Danish wind power company Ørsted, as a result of higher costs and greater risk.

The fourth phase of the huge Hornsea windfarm development, located off the Yorkshire coast, was expected to include 180 giant turbines, capable of generating the equivalent of enough green electricity to power 1m homes.

However, Ørsted’s chief executive, Rasmus Errboe, said in a statement to investors it was discontinuing the development: “The combination of increased supply chain costs, higher interest rates, and increased execution risk have deteriorated the expected value creation of the project.”

As a result, the company expects to incur breakaway costs of between 3.5bn and 4.5bn Danish kroner (£399m-£513m).

Joshua Mahony, analyst at Scope Markets, has looked at the moves in financial markets.

European markets have kicked off the day in rather uncertain fashion… This comes as traders weigh up the potential for progress between the US and China, with talks due to get underway in Switzerland [at the weekend]. The response to that news has been surprisingly muted, with the Shanghai composite (up 0.8%) providing the one bright spot as domestic Chinese optimism builds. Nonetheless, coming off the back of a one-month period that has seen sharp gains for the DAX (+17%), IBEX (14%), Eurostoxx (13%), FTSE 100 (11%), and CAC (10%), it comes as no surprise that much of the upside of a resumption in US-China trade talks have been baked in.

The DAX remains within touching distance of the all-time high of 23,479. In spite of those US-centric concerns, the German economy remains in a more positive position as the new chancellor Friedrich Merz looks to bring forth a new phase of increased spending and a potential resurgence for German business activity.

This morning saw German factory orders jump 3.6% for the month of March, representing the strongest monthly increase since December. This growth in demand came particularly from other euro area nations (8%), while domestic (2%) and rest of the world (2.8%) demand also remained healthy. With Mertz now confirmed as chancellor after a second attempt, the economy looks to be in a more stable position as the government seeks to push forward with a plan to ramp up borrowing and spending in a bid to raise growth.

Turning to tonight’s Federal Reserve meeting, where interest rates are expected to stay unchanged, he said:

Looking ahead, today’s FOMC [federal open market committee] meeting undoubtedly provides the main event of note, with traders watching out for commentary from [Fed chair Jerome] Powell over the direction of travel for rates in the face of economic uncertainty. The sheer number of unknowns mean that we are highly unlikely to see the Fed cut rates this time around. However, the events of the past week have also seen markets lose confidence over the potential for a June cut, with a pause going from a 33% outside chance to the 70% base case.

Nonetheless, traders still expect to see the bank cut rates another 3-4 times this year, and thus the outlook provided by Powell today will likely help inform markets over the direction of travel for rates. The recent better-than-expected jobs and ISM PMI data does ease the pressure on the Fed to act swiftly, and thus there is a hope that Donald Trump can mend the relationship with China before the economy rolls over.

Retail sales in the eurozone dipped in March, according to official figures.

The volume of sales dipped by 0.1% in both the eurozone and the European Union, according to Eurostat, the statistics office.

It also released figures for trade with Ukraine that showed the EU had a €18.3bn trade surplus with the war-torn country last year.

Matthew Pointon, senior commercial real estate economist at Capital Economics, said:

The commercial balance was at its lowest since the height of the Covid lockdowns in May 2020. Early signs of a recovery in construction activity in late 2024 have therefore been snuffed out. Elevated interest rates will be partly responsible, but uncertainty caused by the US tariff announcements may also be weighing on activity.

Admittedly, UK property is relatively well insulated from the impact, and some sectors may even benefit. Construction costs may also ease if materials that had been destined for the US are rerouted to the UK. But the rise in overall economic uncertainty may cause some developers to delay plans until the outlook becomes clearer. Indeed, the new orders balance saw a small fall to 44.0, from 44.2 in March.

Looking ahead, a gradual fall in interest rates should help construction activity later this year. But until the economic outlook becomes more certain, developers are likely to remain cautious.

Britain’s construction industry remains in a downturn, but the pace of decline slowed last month as housebuilding improved somewhat.

Construction activity fell for a fourth month, as rising business uncertainty led to delayed decision-making on new projects. There was a steep reduction in total new work and the pace of decline was the second-fastest since May 2020.

The headline construction purchasing managers’ index from S&P Global edged up to 46.6 in April from 46.4 in March, signalling the slowest decline in output in three months. Any reading below 50 points to contraction.

The latest survey indicated further declines in total order books and cutbacks to staffing numbers.

Residential work fell at the slowest pace so far this year, with the index at 47.1. Civil engineering remained the weakest area of construction activity in April (43.1), amid a lack of new work to replace completed projects. Commercial work (45.5) decreased for the fourth month running and the pace of decline accelerated to its fastest since May 2020.

Construction companies noted that heightened business uncertainty and worries about the broader UK economic outlook had weighed on client demand.

Tim Moore, economics director at S&P Global Market Intelligence, said:

UK construction companies have endured a bumpy ride since the start of the year as domestic economic headwinds and hesitancy among clients led to a lack of new work to replace completed contracts.

Output levels continued to slide in April, but the rate of decline eased to its slowest for three months. This was helped by slower reductions in residential building work and civil engineering activity.

Despite a sharp and accelerated fall in input buying, strong cost pressures persisted in April. Overall input price inflation eased only slightly from March’s 26-month peak. Survey respondents commented on rising prices paid for a range of raw materials, as well as efforts by suppliers to pass on greater payroll costs.

An encouraging development in April was a slight improvement in business activity expectations for the year ahead. Output growth projections improved to the highest level so far this year, with a number of survey respondents citing the prospect of a turnaround in workloads across the residential building segment.

Denmark’s Novo Nordisk has cut its revenue and profit forecasts for this year following disappointing sales of its weight loss drug Wegovy, as US prescriptions tailed off amid fierce competition.

Booming sales of Wegovy and the diabetes medication Ozempic – taken by celebrities such as Oprah Winfrey and Kim Kardashian – helped to turn the pharmaceutical firm into Europe’s most valuable listed company, worth $615bn at its peak.

However, prescriptions in the United States, its biggest market, have not grown since February, even though Novo Nordisk ramped up production of Wegovy to meet demand. Its market value has halved to about $310bn.

This is likely to deepen investor concerns that Denmark’s biggest company is losing market share to its US rival Eli Lilly, which makes the diabetes and obesity drugs Mounjaro and Zepbound.

Hargreaves Lansdown analyst Susannah Streeter said:

Obesity drug maker Novo Nordisk looked like a lean profit machine but its sales are turning flabbier as main rival Eli Lily gains more muscle in the space.

Wegovy was the first of a new wave of anti-obesity drugs, known as GLP-1s after the gut hormone they mimic, to hit the market in 2023. Sales of the injectable drug totalled 17.36bn Danish kroner between January and March, down by 13% from the previous quarter. This was below the 18.7bn crowns forecast by analysts.

Overall revenues rose by 18% and operating profits advanced by 20% at constant exchange rates in the first quarter, but Novo Nordisk said it was being hit by compounding — medications made by pharmacies using the active ingredients of patented drugs.

As a result, Novo Nordisk cut its annual forecasts, ending a four-year run of upgrades. The Danish company now expects 13%-21% sales growth this year, down from the 16%-24% range given at the start of the year. Operating profits are expected to rise by 16%-24%, compared to the previous estimate of 19%-27% growth.

Analysts are forecasting that sales and operating profit this year will grow by 17.8% and 21.5%.

Chief executive Lars Fruergaard Jørgensen said:

In the first quarter of 2025, we delivered 18% sales growth and continued to expand the reach of our innovative GLP-1 treatments.

However, we have reduced our full-year outlook due to lower than-planned branded GLP-1 penetration, which is impacted by the rapid expansion of compounding in the US.

Novo reported first-quarter profits before interest and taxation of 38.79bn crowns, up 22% from a year earlier.

Derren Nathan, head of equity research at Hargreaves Lansdown, explained:

Novo Nordisk has lashed out at the controversial US compounding industry in its quarterly update, citing a focus on preventing unlawful formulations of semaglutide, the active ingredient in its weight-loss wonder jab Wegovy. In some cases US compounding pharmacies are allowed to formulate active medical ingredients into non-approved drugs to meet individual requirements or combat shortfalls in supply.

Wegovy sales growth in the US was hardly pedestrian,at 39%, but it was international sales that drove most of the 83% uplift, as new markets open up. None of this was enough to prevent a downgrade to full-year guidance.

News earlier in the year that the US drugs reglator FDA has declared the shortage of GLP-1 medicines as over is something of a double-edged sword, he said.

There’s a clampdown on compounders, but question marks remain over its enforcement. The end of the shortage also raises questions about the health of US demand. That’s also reflected in Novo’s deal last week with a US healthcare provider to provide Wegovy to patients at a discounted rate of $499.

There’s intense competition too from Eli Lilly, both in injectables and in the race to bring an oral alternative to the market. These challenges have been reflected in a 40% decline in the share price over the last six months. Novo remains a key player in the biggest shift in healthcare treatment of our generation. This could mark an attractive entry point for opportunistic investors, but there’s a real job to do to restore market confidence.

Competition is set to heat up further, with other drugmakers developing GLP-1 medications, and cheaper generic versions coming onto the market.

Sheena Berry, healthcare analyst at Quilter Cheviot, said:

Currently, the obesity market is still dominated by Eli Lilly and Novo Nordisk, but there are numerous clinical trials ongoing with competitors looking to enter the space.

Global debt surges to new record high of $324tn

Phillip Inman

Global debt has hit a new record high of more than $324tn, fuelled by extra borrowing by Beijing as the Chinese authorities sought to offset the impact of Donald Trump’s tariffs with extra public spending.

Debt rose by $7.5tn in the first three months of the year, according to figures from the Institute of International Finance (IIF).

A modest increase in economic growth across much of Europe, the US and Asia meant that as a share of economic output, or gross domestic product (GDP), global debt edged down to almost 325%, maintaining a modest annual drop since a borrowing peak in 2021.

The IIF, which represents 400 of the largest financial companies from more than 60 countries, said that while major industrialised countries either mainted or reduced debt-to-GDP ratios, emerging markets reached an all-time high of 245% in the first quarter of 2025.

China’s government debt-to-GDP ratio has surged past 90%, up from 60% in 2019.

The IIF said one of the greatest sources of rising debt could be found in Washington, where plans by the White House to reduce taxes without cutting spending could send the US debt-to-GDP ratio above 200%.

In a hard-hitting judgement on the US president’s first 100 days, the usually restrained IIF said:

US government debt levels are projected to soar over the next several years and could trigger increased market volatility unless new revenues can be sourced to offset planned tax cuts and extensions.”

Tax breaks that are still in place from Trump’s first period in office could take the debt to GDP ratio to 180%. Further tax cuts could increase that to beyond 200%.

The institute said Trump’s pledge to lift overtime income and income from tips out of the income tax regime would cost about $1.4tn over the 10-year budget projection to 2034 – “implying that the U.S. government would need to borrow an additional $7.2tn over 10 years”.

The department of government efficiency (Doge) is currently on track to achieve annual government savings of about $160bn, well below the original $2tn annual target.

The eurozone construction sector remained in decline in April, while the pace of contraction slowed.

New orders fell at a slightly slower rate and many firms cut both jobs and purchasing. Price pressures picked up to a 15-month high, although they remained well below the long-run average. Suppliers’ delivery times shortened for the second consecutive month. Companies were also pessimistic about the year ahead, with sentiment worsening.

The eurozone construction PMI from Hamburg Commercial Bank showed a rise in the headline index to 46 in April from 44.8 in March. Any reading below 50 indicates contraction.

Activity has now fallen for three years, though the latest decline was the least pronounced since February 2023. The slower decline largely reflected a softer reduction in Germany, while the contraction in France worsened slightly. Meanwhile, activity in Italy broadly stalled over the month.

Norman Liebke, economist at Hamburg Commercial Bank, said:

HCOB Economics expects further interest rate cuts by the ECB in the coming months of this year, which would benefit the construction industry.

Residential construction may catch up. Although all three sectors contracted in April, residential construction was able to close the gap with the other two sectors – civil engineering and commercial construction. Since the beginning of 2023, residential construction has performed significantly worse.

The outlook remains bleak. Orders are falling rapidly and are well below the historical average. Business expectations have declined further, with no signs of improvement in the near future, particularly given the increased geopolitical uncertainties. In view of this difficult situation, construction companies continued to cut jobs in April.

European stock markets dipped at the open, ahead of the Federal Reserve’s meeting later today.

The FTSE 100 index in London has lost 18 points, or 0.2%, to 8,578, after its recent record run. The Footsie rose for 16 trading sessions in a row.

Germany’s Dax and Italy’s FTSE MiB are flat to slightly lower while France’s CAC has dropped by 0.5%.

Traders are waiting nervously for the Fed’s rate decision and Fed chair Jerome Powell’s press conference.

Naeem Aslam, chief investment officer at Zaye Capital Markets, said

The anticipation surrounding the Federal Reserve’s policy decision is causing investors to tread carefully. While no rate change is expected, market participants are keenly awaiting Chair Jerome Powell’s remarks for insights into future monetary policy directions, especially in light of recent strong labor data and persistent inflation concerns.

In Germany, factory orders jumped more than expected in March, in the run-up to Donald Trump’s trade tariff announcements.

Orders rose by 3.6% between February and March, according to the federal statistics office, beating analysts’ expectations of a 1.3% increase. Stripping out major orders, demand was up by 3.2%.

Orders rose across electrical and transport equipment, machinery, automotives and pharmaceuticals.

Business surveys from S&P Global also suggest that Germany’s factories emerged from a downturn in April, helped by export orders.

However, Trump’s tariffs against the EU – announced on 2 April, but then paused – have clouded the outlook for Europe’s biggest economy. Economists are wondering whether the improvement in performance was due to companies trying to get ahead of the levies.

Goldman Sachs analysts said last week that such frontloading may have added 15% to eurozone exports to the US between January and April.

Michael Herzum, head of macro and strategy at Union Investment, said, according to Bloomberg News:

Don’t read too much into this month’s increase. Unfortunately the recovery so far is nothing more than a flash in the pan. Unpredictable US economic policy will continue to be a burden for the time being and stands in the way of dynamic growth in 2025.

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

China has cut interest rates, and news of trade talks between Beijing and Washington lifted Asian stocks.

The People’s Bank of China is making a half-point cut to the banks’ reserve requirement ratio, its benchmark interest rate, and trimming other interest rates, releasing 1tn yuan into the banking system.

Pan Gongsheng, governor of the People’s Bank of China, said the move was due to “uncertainties of global economy, economic fragmentation and trade tensions, which disrupted global industrial supply chains”.

Beijing announced the measures amid a damaging trade war with the US.

After weeks of rumours over de-escalation between the two countries, markets gave a lukewarm welcome to news that top trade officials are due to meet in Geneva this weekend – the first meeting since Donald Trump launched punitive tariffs against China.

China’s vice-premier He Lifeng will meet US treasury secretary Scott Bessent on the sidelines of meetings in Switzerland between 9 and 12 May. US trade representative Jamieson Greer will also attend.

Japan’s Nikkei edged 0.1% lower, while Hong Kong’s Hang Seng rose by almost 0.5% and markets in Taiwan, Australia and South Korea were up between 0.1% and 0.55%. In mainland China, the Shanghai Composite rose by nearly 0.5% while the Shenzhen Composite gained 0.16%.

Stephen Innes, managing partner at SPI Asset Management, said:

That tepid market response speaks volumes. Because let’s be honest—this isn’t a rates problem, it’s a demand problem. China’s real economy isn’t thirsty for credit, it’s paralyzed by weak confidence, property rot, and collapsing export flows. You can lead the horse to water, but you can’t make it drink—especially when the water’s tainted with deflationary fear and policy fatigue.

European stock markets are set for a mixed open, with the UK’s FTSE 100 index seen opening slightly lower after its recent strong run while the German and French indices are expected to rise.

Traders are cautious ahead of the US Federal Reserve’s meeting tonight, where interest rates are expected to be left unchanged.

Oil prices are rising again, after yesterday’s 4% jump amid signs of higher demand in Europe and China, lower production in the US, tensions in the Middle East, a day after prices fell to a four-year low.

Brent crude is 1.1% ahead at $62.86 a barrel while US crude has risen by 1.3% to $59.86 a barrel.

The Agenda

• 8.30am BST: Eurozone HCOB Construction PMI for April

• 9.30am BST: UK S&P Global Construction PMI for April

• 10am BST: Eurozone retail sales for March

• 7pm BST: US Federal Reserve interest rate decision