Pain remains for first-time buyers as mortgage costs rise
Boris Johnson’s promise to get a generation of young people on to the housing ladder has been dealt a blow after figures from the Bank of England show mortgage rates for first-time buyers have rocketed in the wake of the Covid crisis. Borrowers with a small deposit are being billed an extra £100 a month on average as banks hike their interest charges to guard against the risk of a market crash. The Bank’s figures showed the average cost of a two-year, fixed-rate deal for borrowers with a 5% deposit jumped to a two-year high of 3.95% in September, sharply up from 3.02% in February.
FCA advises businesses to prepare for Libor end
The Financial Conduct Authority’s director of markets, Edwin Schooling Latter, has warned that financial markets must make ready for regulatory updates about the Libor benchmark interest rate ending by 2022. He stated: “Market participants need to be ready for announcements later this year setting out what will happen at the end of 2021.” This comes as NatWest writes to 3,500 firms to explain that the volatility of borrowing costs could increase as a result of delays in switching rates, as well as issuing advice on how to choose the most suitable new benchmark post-Libor.
BAME business owners struggle to access state help
An inquiry by a committee of cross-party MPs and the Federation of Small Businesses has found that nearly two thirds of black, Asian and minority ethnic (BAME) business owners felt unable to access state-backed loans and grants in the early days of the pandemic due to a lack of clear guidance and the fact many do not use large mainstream banks.
Regulator fines Citigroup over risk failings
Citigroup has been fined $400m by the Office of the Comptroller of the Currency, part of the US treasury department, over its "longstanding failure" to rectify problems in its risk and data systems. The Federal Reserve separately also ordered the bank to explain how it would hold its bosses accountable for lapses in oversight and how it would overhaul its risk management and internal controls, adding that Citi had not taken effective actions over issues raised earlier by regulators.
Airports group to axe 900 jobs
Manchester Airports Group (MAG) - which owns hubs at Manchester, Stansted and the East Midlands, plans to cut 900 jobs due to the slump in demand for travel. MAG added the lack of progress on testing had discouraged people from travelling while the prospect of a two-week quarantine was impractical.
Bailey: Second wave won’t hurt as bad as the first
During an online roundtable discussion with Yorkshire business leaders, the Bank of England Governor Andrew Bailey suggested some parts of the economy may have to undergo "structural change" in the wake of an uneven economic recovery, but a second wave of the coronavirus would not be as economically damaging as the first. He also praised the financial services industry in Leeds and on the topic of Brexit said it was in the interests of both sides to strike a deal. He added: "I'm surprised that the EU want to restrict where their citizens can do business. We will certainly keep our markets open to the world." Mr Bailey went on to explain: "We can certainly have equivalent outcomes in our financial regulation. It's even more important that we all stick to international standards which we're all part of agreeing and negotiating. But we can't be a rule-taker; I don't think that is at all sustainable or correct."
New Bill will put pension pot pinchers in prison
Therese Coffey, the Work and Pensions Secretary, told the Commons yesterday that the Government will "strengthen protections for savers" as part of the Pension Schemes Bill. Introducing the second reading of the Bill, Ms Coffey told MPs: "This Bill […] creates a new style of pension scheme that has the potential to increase future returns for millions of working people while being more sustainable for employees and employers alike. The Bill has consumer interests at its heart. It strengthens protections for savers by extending the pension regulator's sanctions regime. Prison for pension pot pinchers will, I hope, deter reckless bosses from running schemes into the ground."
Solid listings help London keep float status
A revival in IPOs in the third quarter helped London maintain its status as one of the top markets for company flotations, according to a new report . Despite the transaction numbers remaining low, sizable floats by The Hut Group and others meant London has maintained its position behind the US and China for funds raised both in the quarter and in the year to date.
LEISURE & HOSPITALITY
Greene King confirms closure of 26 sites
Greene King has announced the closure of 26 branches, with hundreds of jobs believed to be at risk. This comes after UK Hospitality chief executive Kate Nicholls said last week that a previous forecast of 560,000 job losses in the hospitality sector would have to be revised up.
MEDIA & ENTERTAINMENT
Lawsuit launched against Chinese broadcaster over Premier League deal
Chinese broadcaster PPLive Sports International is facing a £170m lawsuit from the Premier League after being accused of defaulting on a TV rights agreement. This comes weeks after the league moved to negotiate a replacement agreement with rival Chinese internet firm Tencent, believed to be worth around £20m up front.
Government broadband target ‘requires reform’ to be reached
The Social Market Foundation (SMF) think tank has issued a report claiming that the Government’s pledge to provide full-fibre broadband to every home in the country in the next five years will require comprehensive telecoms reforms. BT’s Philip Jansen had previously cautioned that £9bn worth of tax and red tape cuts would be required for the Government’s target to be met.
House prices rise at fastest rate in four years
Property prices are rising at the fastest pace since the Brexit vote more than four years ago, the Halifax revealed yesterday, rising by 7.3% on the year taking the average to a record £249,870. House prices rose 1.6% last month, the third consecutive month of growth since May. The Halifax also said mortgage applications were at a 12-year high.
New VAT rules for overseas visitors risks harming tourism
The boss of the owner of Bicester Village, Value Retail, has criticised a new rule which will stop overseas visitors from reclaiming VAT on luxury purchases in the UK. New laws would mean visitors from overseas would have to recoup the VAT by posting the products home directly from shops, something James Lambert says has been done by precisely zero customers visitors to Bicester Village. Mr Lambert added: “We operate 11 villages around the globe and our experience is that typically none of our guests make use of the ship-to-home option.”
Tesco reports results as first-half profits rise
Tesco has reported underlying UK retail profits for the first half of the year of £1.19bn, representing a 6.4% increase. Food sales were up 9.2%, and clothes down 17%, while overall group international sales increased 6.6% to £26.7bn. Tesco has been criticised for handing out nearly £400m in dividends, a 20% increase in the half-year payout, despite taking £585m of taxpayer support.
Adidas appoints new HR head
Adidas has appointed BNP Paribas executive Amanda Rajkumar as its new head of human resources following the departure of Karen Parkin in June.
IoD survey shows UK businesses plan to cut jobs and investment
A survey by the Institute of Directors shows the employment expectations of firms for the year ahead fell in September while investment expectations were also down. “The overall business outlook appears to be stuck in the doldrums,” said Tej Parikh, chief economist at the IoD. The survey showed that the top concern after the pandemic is uncertainty over trade talks with the EU. A separate survey from the REC showed people were losing their jobs “rapidly” in September, causing a sharp increase in workers looking for new posts. However, demand for employees in the capital continues to fall as the rest of the country recovers. Finally, the Resolution Foundation says youth unemployment will not return to its pre-pandemic level for at least another four years and could hit a high of 17% before gradually falling back to 7% by 2024.
Recovery stymied by virus surge
Sir Charlie Bean, a senior member of the Office for Budget Responsibility, told MPs yesterday that the jump in coronavirus cases and the ensuing restrictions on trade will “put the recovery on hold” for a while. Sir Charlie added: “You certainly might expect that with heightened risk, consumers will be more wary about going to bars and shops.” Meanwhile, the OBR’s new chairman, Richard Hughes, warned that the prevailing low interest rate environment may not last forever and the Government should not base its policies on low borrowing costs in the long term.