BANKING
Inflation-beating savings accounts down 80% in a month
The number of savings accounts that beat inflation is down 80%, with Moneyfacts data showing that while 440 such accounts were available a month ago, today there are 91. This came as the Office for National Statistics revealed the Consumer Price Index had risen to 1% in July from 0.6% in June. Rachel Springall at Moneyfacts said: “Beating the eroding effects of inflation is possible in the short-term if savers chase down the best deals, but it is worth pointing out that there are still many easy access accounts paying less than 1%.” The Telegraph notes that just one easy-access savings account now beats inflation, with National Savings & Investment Bank paying interest of 1.16%. The average interest paid by an easy access account has fallen by almost two thirds since March, from 0.56% to 0.22%.
Monzo marketing chief steps down
Tristan Thomas is to stand down as head of marketing at Monzo at the end of the year. He joined the challenger bank in 2015 as its first community manager, climbing the ranks to become vice president of marketing. A spokesperson for the bank said: “Tristan has played a huge role in making Monzo what it is today … We can’t overstate the impact of his work.”
PRIVATE EQUITY
Oxy to build CO2 removal plant
Oxy Low Carbon Ventures, the venture capital arm of oil and gas producer Occidental Petroleum, is to develop the largest ever facility to pull carbon dioxide out of the atmosphere. It has formed a company with sustainability-focused private equity firm Rusheen Capital Management to license technology developed by Canada's Carbon Engineering.
INTERNATIONAL
Canadian bank profits to rebound
Canadian banks are set to post increased profits thanks to government stimulus, a recovery in financial markets and setting aside less money to cover bad loans. Refinitiv analysis suggests profits will be up by about 45% in the three months through July when compared to the previous quarter, although year-on-year earnings will be down. Mike Clare, portfolio manager at Brompton Group, expects provisions for loan losses to be down on Q2’s C$11bn, while National Bank analyst Gabriel Dechaine expects quarter-on-quarter credit-loss provisions to be down about 32%.
AVIATION
Austrian Airlines execs to hand back bonuses
The management board of Lufthansa unit Austrian Airlines have said they will hand back bonuses after Austria’s finance minister said the payments were “unacceptable” for a company that is being bailed out. The firm, which was granted €450m in grants and loans after the coronavirus pandemic prompted a collapse in air travel, handed 200 managers €2.9m in bonuses for their performance last year, with the four-man management board awarded €500,000 in total.
FINANCIAL SERVICES
Fewer financial services SMEs let staff go
Figures from Barclaycard reveal that financial services SMEs laid off fewer employees than the average small firm during the coronavirus crisis. On average 41% of SMEs have reduced their headcount but in the financial services sector the rate stands at 21%. Barclaycard’s quarterly barometer also shows that while just under a quarter of SMEs are optimistic for Q3, 34% of financial firms remain positive. It was also found that 32% of financial services SMEs expect to add to staff numbers in the next 12 months, compared to a 24% average across all sectors. On the impact the COVID-19 lockdown has had on working practices, 19% of financial services firms said they plan to move to a permanent work from home model and 65% will keep some form of flexible working in place.
EU watchdog warns on cross-border funds management
The European Securities and Markets Authority (ESMA), the EU’s securities watchdog, has called for laws to prevent asset managers in Britain running shell investment funds in the bloc to retain access to its markets. ESMA said there is merit in providing “clearer legal drafting” in EU laws on substance and delegation requirements, having already issued guidance on the matter in the wake of the Brexit referendum. Jake Green, a financial regulatory partner at law firm Ashurst, said: “Put simply, this is an attack on London,” adding that Luxembourg and Ireland are unlikely to be happy with a move that “could materially impact their fund offerings”.
HEALTHCARE
Johnson & Johnson to buy biotech Momenta in $6.5bn deal
Johnson & Johnson is to pay $6.5bn for biotech firm Momenta Pharmaceuticals.
LEISURE AND HOSPITALITY
Marriott International data breach results in legal action
Marriott International is facing legal action over a data breach which saw the personal details of around 393m guests compromised. Tech and media consultancy owner Martin Bryant has filed a High Court collective action on behalf of those affected. Hausfeld, the law firm representing Mr Bryant, said Marriott International “failed to take adequate technical or organisational measures” to protect guests’ personal data “over a period of several years”, adding that the hotel group “acted in clear breach of data protection laws.”
MANUFACTURING
British industries see growth outpace global average
Lloyds Bank analysis of IHS Markit's business surveys shows that many British industries are growing faster than competitors around the world, outpacing the global growth average. The report shows growth above the global benchmark in 12 of the 14 industries tracked.
REAL ESTATE
Prices slipped 0.2% in March and April
Office for National Statistics (ONS) figures show that house prices fell 0.2% month-on-month in April, taking the average property value to £234,612. The data also show that growth fell to 2.6% in the year to April, with year-on-year growth of 3.5% having been recorded in March. The index, which is released jointly with the Land Registry, has not been published since May, with the coronavirus lockdown having seen the property market all but shut down. The ONS says the April data does not reflect the impact of coronavirus on the market as the figures used are based on completed house sales, which can take up to two months to go through.
RETAIL
Lockdown boosts online grocery shopper numbers
A survey for Waitrose has found that 77% of households now buy at least some of their groceries online, up from 61% last year following a surge in online shopping during lockdown, while the proportion of households who buy their food online at least once a week has doubled to one in four since last year. The report also found that 60% of people said they shopped online for groceries more often since the coronavirus outbreak, with 40% saying they expect this change to continue..
ECONOMY
Inflation up, ONS figures reveal
Office for National Statistics figures show that inflation rose last month, with the consumer prices index (CPI) at 1% in July, up from 0.6% in June. The climb was driven by an absence of traditional summer sales and an increase in petrol prices as oil prices rebounded from lows seen earlier in the year. Jonathan Athow, deputy national statistician for economic statistics at the ONS, also noted an increase in prices for private dental treatment, physiotherapy and haircuts. Jai Malhi, strategist at JPMorgan Asset Management said of the data: “At this stage we doubt this will prevent the Bank of England (BoE) providing further support to the economy. But if these upside surprises continue it may add some hesitancy.” Ed Monk of Fidelity International said the figures showed that economic life was "getting back to normal" but pointed to BoE forecasts that prices could fall in August. The BoE has said the CPI is unlikely to recover to its 2% target until 2022. The Retail Prices Index for July, a measure of inflation that also dictates annual train fare increases, also rose last month, climbing to 1.6% from 1.1% in June.
HSBC: Economy to shrink 10.3% in 2020
HSBC has downgraded its forecast for the economy, predicting it to shrink by 10.3% this year and only grow 6% in 2021. It previously forecast a 7.8% dip in 2020 followed by growth of 6.2% next year. The bank expects the economy to be 4.5% smaller at the end of next year than it was at the end of last year. HSBC senior economist Elizabeth Martins said the 20.4% Q2 decline “was worse than we had expected” and “recent data outturns have made us more pessimistic about the lasting economic impact” of the coronavirus crisis.
OTHER
Scams jump 66% in H1
Figures from Barclays shows a surge in scams amid the coronavirus crisis and lockdown, with fraud up 66% in the first six months of the year and climbing a further 5% in July. Barclays found that scams relating to investments were up by 49% last month - the biggest increase the bank’s analysis has ever reported. Jim Winters, Barclays' head of fraud, said: “Fraudsters have undoubtedly taken advantage of the nation's uncertainty during the pandemic, in what is just another moment in the historical evolution of scams.”
SME growth up in July
A study from NatWest shows that over a third of SMEs reported growth in July, up from 10% in April, while the number of smaller firms shrinking fell from more than three-quarters in April to under 30% last month. Stephen Blackman, principal economist at NatWest, commented: “It's welcome news that, like the economy overall, small businesses sentiment and activity improved sharply in July”. He also said there should not be too much read into “slight relative underperformance” compared to recovery among bigger companies, as “the gap should narrow”.