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Daily News Roundup: Thursday, 21st December 2017

Posted: 21st December 2017


Carney: Bespoke Brexit deal still possible for financial services

The Governor of the Bank of England, Mark Carney, has dismissed suggestions from Michel Barnier that a special trade deal to include financial services is impossible as Britain looks to ramp up its efforts to safeguard the City’s future. He told MPs on the Treasury Select Committee that a bespoke trade deal between the UK and EU could cover financial services. Mr Carney said: “The UK financial system, like it or not, is effectively the banker for Europe in the most complicated bits of finance - there are substantial economies of scale and scope that benefit both sides.” Mr Carney was speaking as the BoE laid out plans to allow EU banks and insurers in the City to continue as normal after Brexit. Regardless of the outcome of the forthcoming trade talks between Britain and the EU, the BoE’s gesture will potentially save them millions of pounds because they won’t be required to set up new UK regulated subsidiaries to conduct wholesale financial business. James Moore in the Independent suggests that the move could encourage firms to keep functions in the UK, along with their high earners’ tax takings.

Banks given more time to comply with Mifid II rules

The European Securities and Markets Authority (Esma) has extended the deadline for banks to comply with Mifid II rules requiring all parties to a trade to have a Legal Entity Identifier (LEI). The rule was due to come into force in January, but there will now be an extra six months after banks complained that many of their clients did not yet have an LEI. The UK’s Financial Conduct Authority (FCA) supported the announcement, saying it recognised the need “for a smooth introduction to the new regime”.

Tandem cleared for Harrods Bank takeover

Tandem has been given regulatory approval to acquire Harrods Bank by the Bank of England's Prudential Regulation Authority.


EU financial regulation chief warns of signs of bitcoin bubble

European Commission vice-president Valdis Dombrovskis has urged EU banking and markets watchdogs to do more to warn consumers of the risks of cryptocurrencies, in light of Bitcoin’s recent volatility.

Wall Street bond traders fear zero-bonus ‘doughnut’

The FT notes that a slump in fixed-income sales and trading revenues is likely to take its toll on year-end bonuses for Wall Street investment banks.


UK car manufacturing dips

New figures have shown that the number of cars built in the UK fell in November compared to a year ago amid a continuing reduction in production for the home market. Just under 161,500 cars left UK factories, down by 4.6% on the same month in 2016 after a 28% drop in domestic demand, the biggest decline of the year. The figures from the Society of Motor Manufacturers and Traders revealed that exports rose by 1.3%. Mike Hawes, SMMT Chief Executive, said: “Brexit uncertainty, coupled with confusion over diesel taxation and air quality plans, continues to impact domestic demand for new cars and, with it, production output.”


Wizz Air adds three new routes from London Luton

Wizz Air has announced three new routes from London Luton Airport to Athens, Bari, and the Icelandic town of Keflavik. The airline has been focusing on bolstering its operations at London Luton, since opening a base there in June, and plans to increase its fleet size from one to seven aircraft next year.

US finds against Bombardier in trade dispute

The US has ruled that Canada's Bombardier received government subsidies and sold C-Series jets below cost in the US, a step likely to lead to steep tariffs. Bombardier said it was “deeply disappointed” in the decision. The BBC notes that the conflict has the potential to lead to job losses in Northern Ireland, where Bombardier employs about 1,000 people linked to the C-Series.


UK ‘best country for business’ in 2018

The UK has risen from fifth place to first in Forbes’ best place to do business rankings, performing particularly well in technological readiness and workforce education. The UK's financial services sector and investment by top US technology firms were cited as major positives for the country. Suren Thiru, head of economics and business finance at the British Chambers of Commerce, commented: "The UK remains a great place to start and establish a business with low barriers to entry and a good reputation for business-friendly regulation and enforcement.”

UK City regulators turn on Brexit charm offensive

The FCA has announced that temporary waivers would be granted to the over 8,000 European entities operating in Britain after Brexit. The move would allow them to be run as if the UK was still in the EU should Brexit occur without a bilateral agreement on financial services. The move is also designed to avoid the FCA from being overwhelmed by thousands of applications for licence approvals by EU-based firms and funds ahead of March 2019

Dealmakers say 2018 prospects look strong

Corporate finance chiefs expect to be busier with deals in 2018 than this year, according to a survey carried out for Icas. The poll found 50% expected to be busier on deals next year,


William Hill names new chairman

William Hill has named Roger Devlin as its new chairman. Currently chairman at Marston’s and Sports Information Systems, Mr Devlin will join the board on February 1st, replacing Gareth Davies as chairman at the beginning of April.


Nationwide expects flat growth

Nationwide expects house price growth “to be broadly flat” in 2018, with a gain of around 1%, saying “subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth”. Robert Gardner, Nationwide's chief economist, added: “The UK housing market has been characterised by significant regional disparities in house prices in recent years and it is not clear how Brexit will impact these dynamics.”


Retail sales show growth

A CBI survey has revealed solid retail sales growth in the run-up to Christmas, although the business lobby said underlying trading conditions remained tough. In the survey of 56 retailers and 53 wholesalers, 37% of respondents said sales volumes were up in the weeks from November 23 to December 14 compared with the same period a year ago, while 17% said they were down. This gave a balance of 20%, down from 26% in November. Alpesh Paleja, CBI principal economist, commented: “We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead.”

Tesco-Booker merger wins final approval from CMA

The UK Competition and Markets Authority has given its approval to Tesco’s £3.7bn takeover of Booker, overriding arguments from the wholesale group’s rivals that it could force them out of business. Tesco and Booker both welcomed the news and said they expect shareholder meetings to approve the deal will take place in late February.


Recruiters fear Britain is running out of workers

The Recruitment and Employment Confederation has said that recruitment firms are reporting that they are facing growing difficulties with hiring, especially for the construction, engineering and health and social care sectors. These sectors have traditionally had "a high dependency on non-UK nationals in the workforce", the REC said. Meanwhile, the CBI has reported that 75% of its members view access to labour supply as a threat to international competitiveness over the next five years. A separate report from the Bank of England has revealed that recruiters are also struggling to fill less skilled roles. In a quarterly report on business conditions by the central bank's 12 regional agents, recruiters in horticulture and agriculture were said to be facing "intensifying" difficulties finding workers.

IMF downgrades UK growth forecast

The IMF now expects UK economic growth of 1.6% this year, down slightly from its previous forecast of 1.7%. IMF chief Christine Lagarde said the economy was being held back by rising inflation and stagnant wages, which are squeezing spending power, and suggested growth would slow further next year, to 1.5%. “Under these circumstances, greater reliance on revenue measures for consolidation than in recent years may be warranted,” the IMF said.


Coinbase is to probe insider trading of Bitcoin Cash

Cryptocurrency trading platform Coinbase is to probe whether staff traded in Bitcoin Cash on the back of insider knowledge. Minutes before Coinbase announced it would allow Bitcoin Cash to be traded on its platform the digital currency climbed, raising concerns about insider trading. Trading was halted after four minutes because of what Coinbase called significant volatility.

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