Andrew Walker
World Service economics correspondent

Image source, Getty Images

Being tough with China plays well with many of President Trump’s supporters, actual and potential, at a time when he is looking ahead to the Congressional elections in November.

It could also be that he thinks China will run out of US imports to retaliate against. After all the US sells a lot less to China than the other way around.

But there is also a potential political cost for the President. Many in the Republican Party, who are more instinctively in favour of free trade, don’t think see this is the right way to tackle problems with China.

And as he increases the range of goods subject to tariffs it becomes harder for American importers and consumers to avoid the cost by finding alternative suppliers.

In the separate dispute about steel and aluminium tariffs, he also has to contend with the politically targeted retaliation that other countries such as Mexico, Canada and the EU have in hand, intended to hit important states in the mid-terms.

The euro has lost ground while the President of the European Central Bank has been speaking (see previous tweet).

It was trading around $1.1635, but has fallen about three quarters of a cent to $1.1560.

The President of the European Central Bank, Mario Draghi is giving a speech at an ECB conference in the Portuguese town of Sintra.

Economist Frederik Ducrozet tweets:

Debenhams executives are asked that if Debenhams would benefit, if House of Fraser closes 31 stores.

Matt Smith, Debenhams finance chief says that there would be an overall benefit, but it would differ from store to store.

So, on Oxford Street or in Milton Keynes, where HoF and Debenhams are close together, the closure of the HoF store would be good for Debenhams.

But in smaller market places, it would be different, Mr Smith said.

Debenhams chief executive Sergio Bucher says that fewer shoppers (known as footfall in the business) has been the main problem for Debenhams. He points to industry data showing that footfall is down 4% so far this year.

Matt Smith, chief financial officer, says he expects profits to improve next year - that would be the financial year ending in August 2019.

Much depends on how Christmas 2018 pans out, of course.

House of Fraser is planning to close 31 stores. Is Debenhams in some of the same locations?

Matt Smith, Debenhams finance chief confirms that 18 of its stores are in the same towns or shopping centres as the House of Fraser stores earmarked for closure.

House of Fraser has not yet got agreement for its reorganisation plan.

"Let's wait and see," says Mr Smith.

Image source, Reuters

Debenhams chief executive Sergio Bucher is holding a conference call for investors and analysts.

"We want to reduce promotional pressure and promotional days," he said.

Products have been improving, he argues.

New executives have improved womenswear and gifts.

Gifts were not up to the right standard last year, he said.

Image source, Getty Images

The pound has slipped to its lowest level against the dollar for the year.

It's fallen to $1.32, its lowest level since late November, on concerns about an escalation in the global trade dispute.

Economists eyes are focused on the Bank of England's policy decision on Thursday, in which it is expected to unveil its monetary policy stance for the rest of the year after a run of mixed data.

There are some dramatic moves on the markets today.

Footasylum shares have collapsed - down a whopping 42%.

Hornby is down 14%

McCarthy & Stone shares are down 19% after its profit warning.

Flybe is down 3% after its trading update.

Debenhams shares have tumbled 14% following that profit warning.

The FTSE 100 opened down 0.88%, or 62.88 points at 7,568.56.

The FTSE 250 index slipped 0.61%, or 135.93 points to 20,862.63.

Image source, Getty Images

Model maker Hornby lost £10.1m last year, external, slightly higher than 2017's £9.5m loss.

It warned that sales for the 10 weeks to 8 June "are lower than we expected".

Why? "This is due to the ongoing impact of insufficient investment in tooling in the past, coupled with late placing of purchase orders with suppliers. There is also a backlog of stock at our retailers from previous decisions to bring sales forward by discounting, which will take time to work through."

But Lyndon Davies, new chief executive - he's been there seven months - said: "We have assessed our position and confronted the reality of the situation in which we find ourselves. Tough decisions have now been taken and we are currently laying down the foundations for our future success."

Image source, Footasylum

It's not all gloom on the High Street.

Footasylum reported a 33% increase, external in sales last year to £194m, boosted by the opening of ten new stores.

Pre-tax profit was up 4% at £8.4m.

But there was a note of caution from the company's chief executive Clare Nesbitt.

"While our core target market of the 16 to 24-year-old consumer has proved to be comparatively resilient in a downturn, our trading since the beginning of the new financial year has undoubtedly been impacted by the widely documented weak consumer sentiment on the High Street."

Image source, Bonmarche

Value fashion chain Bonmarche said profits climbed 38.1% to £8m, external for the year to 31 March.

It said a 34.5% leap in online sales offset tougher high street trading, with like-for-like store sales down 4.5%.

Helen Connolly, chief executive, said: "While we expect the market to remain difficult, trading since the beginning of the new financial year has been stronger than during the second half of full-year 2017-18 and is in line with the board's expectations."

Today Programme
BBC Radio 4

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Could performance at the polls be behind Donald Trump's escalating trade war with China?

The US president has threatened to impose tariffs on an additional $200bn (£151bn) of Chinese goods and Ritu Vohora, an investment director at M&G Investments, told the Today programme: "There is a lot more at stake here for Trump with the mid-term elections in November.

"China clearly is very much wanting to be this global tech leader so neither side really wants to back down and the real risk here is if Trump continues to push China on systematic changes to its economic model, then that’s quite a significant protracted tension we could see in the markets."

Image source, Getty Images

Struggling outsourcing firm Capita will raise £160m from the sale of part of its business.

It is selling Supplier Assessment Services, external to a group of investors.

In April Capita reported an annual loss of £513m and promised to simplify its business.

Capita operates the London congestion charge and runs an electronic tagging service for the Ministry of Justice.

Image source, Getty Images

Budget airline Flybe lost £20.5m, external last year on the back of poor weather conditions, higher maintenance costs, and IT investment.

That was slightly higher than estimates and more than three times the 2017 £6.7m loss.

The firm said revenues climbed 6.4% to £753m but warned: "The European aviation market continues to be challenging, with many airlines impacted by excess seat capacity in the short-haul market, a weaker pound, higher fuel prices and both business and consumer uncertainty."

Christine Ourmières-Widener, chief executive, said: "Our Sustainable Business Improvement Plan, launched last year, is enhancing the business in a number of key areas including, network decision-making, revenue management and commercial performance."

According to the Financial Times, the Prime Minister has given Chancellor Philip Hammond a "free hand" to discard the party's promises on taxes, so that he can find £20bn to boost spending on the NHS.

Promised tax cuts for businesses and individuals could be abandoned, the report says.

Also from the FT, Disney is ready to sweeten its bid for Fox with cash, in an effort to trump an offer made last week by Comcast. Disney's original offer was all in shares. Fox's board meets on Wednesday to consider the Comcast offer.

The Times reports that investors are lukewarm about the takeover of Virgin Money by CYBG. There is concern about whether the banks can find promised savings of £120m. Meanwhile there is "unease" about the licensing deal with Sir Richard Branson's Virgin Group.

Image source, Nationwide

Nationwide building society boss Joe Garner comes under fire for his high pay in today's Daily Mail.

The paper's City & Finance section leads with a report that he gets £595 in perks every day, on top of his £855k salary, £903k bonus and £342k pension.

It points out that the "benefit bonanza" - which includes a car allowance and private medical cover worth £217,000 - is more than eight times the average worker's salary.

Luke Hildyard of the High Pay Centre, tells the paper: "It's hypocritical for Nationwide to market themselves as a different kind of organisation to the big banks, and then lavish these kinds of sums of money on its executives."