UK Finance chair: We need to create reasons for banks to be in London
Bob Wigley, chairman of UK Finance since its creation in 2017, has warned that UK banks risk being deemed “internationally uncompetitive” due to a punitive corporation tax regime. As well as a 19% corporation tax rate, banks in the UK face an eight percentage point surcharge introduced after the banking crisis. Mr Wigley fears that the lack of a post-Brexit deal on financial services regulation between London and Brussels, alongside the heavy tax burden, means banks may look elsewhere to set up job-creating projects. He has urged the Chancellor to deliver a “medium term roadmap for corporation tax,” with this a sentiment shared by the Confederation of British Industry, Britain’s biggest business group. Mr Wigley says utilising efficiency gains on offer from Brexit does not mean a mass rolling back of legacy EU regulation, but instead “incremental change, which, in aggregate, should make quite a significant factor in competitiveness, both domestically and internationally.” He said he would like to see officials create “reasons for banks to be in London.”
Halifax launches 5% mortgage for new builds
Halifax has halved the deposit needed to buy new-build homes from 10% to 5%. It said that based on the average house price of £289,099, the minimum deposit needed could now be £4,000. This assumes someone pays a 5% deposit when buying a 25% stake in a shared ownership home. Andrew Asaam, mortgage director at Halifax, said: “We recognise that getting a deposit together is still the biggest hurdle faced by most first-time buyers." Halifax's changes will bring new-builds in line with existing properties.
German bankers flag economic concerns
Leading German bankers have voiced concern over the nation’s economy, which has seen inflation hit 8% and is bracing for a gas crisis amid concern over supplies from Russia. Christian Sewing, chief executive of Deutsche Bank, said that inflation has an "enormous disruptive potential" and increases risks of a global recession next year. Bettina Orlopp, chief financial officer of Commerzbank, said the risks to the economy are as great as those seen during the European debt crisis a decade ago.
EasyJet executive quits
EasyJet has announced that chief operating officer Peter Bellew had resigned “to pursue other business opportunities” after two and a half years in the role. David Morgan, who was interim COO before Mr Bellew’s appointment, will step up to the role again. Mr Bellew’s departure comes amid a challenging time for the airline, with it having to cancel a number of flights - some at very short notice - on the back of sector-wide issues. The aviation industry has been hit by labour shortages, with stringent security clearances hindering recruitment in a tight labour market. Firms that let staff go amid the pandemic-driven downturn have been struggling to meet passenger demand now travel restrictions have been lifted.
City Airport details expansion plans
London City Airport has published details of its proposed expansion plans - including allowing more weekend and early morning flights. A consultation process outlines how the airport wants to increase the cap on passenger numbers from the current 6.5m to 9m by 2031. Additional capacity would not need extra infrastructure, following upgrades to the terminal building and taxiways.
FCA strike paused pending talks
Unite, the union representing employees at the Financial Conduct Authority, has put a scheduled two-day strike “on pause,” saying it has “secured a route to union recognition.” It said this makes strike action - which it described as a “last resort” - unnecessary. Earlier in the year, 75% of FCA staff with Unite memberships voted in favour of the action against the regulator over disputes around changes to pay and conditions, with 90% voting to support industrial action short of strike action. The FCA insists it offers “competitive pay” for its staff. A spokesman noted: “While we’re of course pleased that industrial action has been suspended, we respect the strength of feeling expressed by colleagues involved.”
Vauld suspends trading
Crypto lending platform Vauld has suspended all trading, withdrawals, and deposits on its platform as it explores potential restructuring. It attributed this to financial challenges” resulting from “a combination of circumstances such as volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate.” The Singapore-based crypto lending and trading platform’s customers have withdrawn almost $198m since June 12, when the crypto market started to decline as crypto lender Celsius halted withdrawals, crypto hedge fund Three Arrows Capital defaulted, and stablecoin UST collapsed.
UK motor insurers headed for underwriting losses as inflation bites
Analysis shows that UK motor insurers are set to see an underwriting loss this year and next, with soaring inflation delivering declines after recording profit in 2020 and 2021.
Wirecard finance chief admits forging documents
Stephan von Erffa, Wirecard’s ex-head of accounting, has reportedly admitted forging documents requested during a special audit of the collapsed payments firm. Sources say the former chief financial officer told prosecutors in Germany he falsified documents, having come under pressure from the auditor to provide evidence of a €50m payment.
Lost income warning over multiple pensions
New research from Hargreaves Lansdown shows that a quarter of Britons have three or more pension plans - raising concerns that many people could be missing out on thousands of pounds due to losing track of their various pots. The survey found that while 44% of people have one pension pot, 28% of adults have three or more scattered between different providers. Those who lose track of their pensions may not have a complete picture of how much income they will have in retirement.
LEISURE & HOSPITALITY
Venues urge Chancellor to reduce tax burden
Bosses across the night-time economy have urged Chancellor Rishi Sunak to reduce VAT to 12.5% in a bid to help businesses rebound to their pre-pandemic levels. Hospitality and leisure firms saw VAT reduced to 5% during the pandemic before being raised to 12.5% and eventually returning to the pre-pandemic rate of 20% in April. Michael Kill, chief executive of the Night Time Industries Association trade body, said the hospitality, night-time economy and events industries are “facing a bleak summer.” British Beer & Pub Association chief executive Emma McClarkin said a VAT cut would “relieve the immense pressures our industry is facing on rising costs.” UKHospitality CEO Kate Nicholls suggested a tax cut would “allow hospitality businesses to remain globally competitive, enable hospitality businesses to recover and protect jobs.”
Average length of time to sell a home increases
The average time between a home being listed and a sale being agreed was 22 days in May, up from an average of 20 days in March. The report from Zoopla also reveals that the UK has experienced the lowest rate of monthly price growth since December 2019 as average property prices increased by 0.1% in June. Annually, property prices are up 8.4% while quarterly growth was at 1.4%, with this the slowest rate since March 2021.
Tesco launches £150m share buyback
Tesco has announced that it will launch a £150m share buyback programme, as bosses look to reduce the supermarket giant's share capital. The company has appointed HSBC to repurchase shares on its behalf as part of a wider scheme to buy back a total of £750m worth of shares by April 2023.
CVC set to net WTA stake
CVC Capital Partners’ $150m deal for a 20% stake in the Women’s Tennis Association (WTA) is expected to be confirmed at a WTA board meeting at the US Open in September.
Households hit by income stagnation
Research published by the Resolution Foundation shows a slump in typical household disposable income growth in the 15 years leading up to the pandemic. Between 1961 and 2004/05, typical household incomes for working age families grew by 2.3% per year, or 25% per decade. Between 2004/05 and 2019/20 however, typical income growth slowed to just 0.7% per year. The foundation’s latest annual Living Standards Audit shows that typical incomes of the poorest fifth of the population were no higher in the period before the pandemic than they were in 2004/05, despite GDP per person growing by 12% in the period. The report shows that Britain has experienced a combination of low growth and persistently high income inequality. The hit to living standards has been driven by wages, with it found that they are no higher now than they were before the financial crisis, representing a wage loss of £9,200 per year. Resolution Foundation economist Adam Corlett commented: “Britain’s poor recent record on living standards – notably the complete collapse of income growth for poor households over the past 20 years – must be turned around in the decade ahead.”
1 in 3 would struggle with double-digit inflation
A poll for the Evening Standard shows that 32% of people would find it “very difficult” to cope if inflation were to hit 11% - with the rate jumping to 49% in London. It was shown that 52% would have to make some cutbacks but could cope, while 15% would not have to make any changes. Half of those polled said they have already had to make some reductions in what they would normally spend, with 20% saying they are finding it “very difficult” to cope. Inflation hit 9.1% in May and the Bank of England expects it to climb higher still later in the year.
A third of firms see automation investment as a priority
A survey by HSBC shows that 33% of businesses plan to invest in automation as a priority amid labour shortages. The poll of 670 UK firms also saw 40% of companies say they feel negatively about their staffing levels and availability. It was also shown that 45% of firms polled expect to increase capital expenditure by 9% in 2022. James Cundy, HSBC UK’s managing director and head of mid-market corporate banking and structured finance, said: “The research shows that infamous entrepreneurial spirit of UK businesses continues to lead them to invest, innovate and re-define their growth ambitions.” Elsewhere, a study by Arden University suggests that almost a third of jobs in the UK could become redundant due to automation and changing workforces by 2030.