BANKING
Consumer borrowing rises in May
Bank of England (BoE) figures show that consumer borrowing rose in May, outpacing the amount repaid for the first time since August. Net borrowing rose by £280m during the month, up from a net repayment of £228m in April. The report shows that borrowing on credit cards fell but there was a £381m increase in other forms of consumer credit, such as personal loans. Households continued to strengthen their savings, with net flow into banks and building societies hitting £7bn in May, down from £8.9bn in April. The BoE also revealed that mortgage approvals for house purchases reached 87,500 in May, up from 86,900 in April. Ruth Gregory, senior UK economist at Capital Economics, said: “The signs that households started to borrow again provides us with confidence that May’s surprise fall in retail sales was a result of a shift in spending from retailers to other areas as the economy continued to reopen, rather than an indication that the economic recovery is already spluttering”.
Danske Bank launches UK's first carbon-neutral mortgage
Danske Bank has launched the UK's first carbon-neutral mortgage, to tackle emissions generated throughout the mortgage life cycle. The mortgages, certified as carbon neutral by the Carbon Trust, will ensure physical paperwork is limited and recycled in Danske's offices.
Barclays offers compensation after cashback error
Barclays customers could get a compensation payout of up to £100 after the bank's Blue Rewards loyalty scheme underpaid monthly perks, although average pay-outs are said to be under £20. A Barclays spokesperson told MoneySavingExpert: “We are writing to a small number of customers who are part of our Barclays Blue Rewards, or previously held an account, to let them know that we owe them some back dated rewards.”
PRIVATE EQUITY
Bridgepoint plots London listing
Private equity firm Bridgepoint has announced plans to list on the London Stock Exchange, raising at least £300m from new shares to help fund its growth plans and pay down debt. Bridgepoint, which manages €27.4bn across a range of private equity and debt funds, said it aims to have a free-float of at least 25% and expects an over-allotment option of a further 15% of the offer size.
INTERNATIONAL
Paris to have 3,000 more finance job by end of 2021
French Finance Minister Bruno Le Maire has said that Paris will have 3,000 more jobs in finance by the end of 2021 due to Brexit. He was speaking as Emmanuel Macron visited the inauguration of JPMorgan's new trading hub in the French capital alongside CEO Jamie Dimon. The hub is set to employ 800 people in Paris by 2022. Of those jobs, some 265 already worked in France before Britain's EU exit, including in advisory roles, and 440 trading and sales staff will join by year-end, with some staff relocating from London.
JPMorgan raises base pay for junior bankers
JPMorgan has upped base pay for junior bankers from $85,000 to $100,000. This comes after pay increases at rival Wall Street firms, with Bank of America and Wells Fargo having given their first-year analysts a $10,000 raise this year.
AUTOMOTIVE
Government urged to ramp up EV infrastructure
The Society of Motor Manufacturers and Traders (SMMT) has published a 12-point plan for the sector's Covid recovery. It includes calls for the Government to increase spending on electric vehicle charging infrastructure and provide more support for battery-making gigafactories. Currently there are just 22,790 public EV devices in the UK. The SMMT wants 2.3m public charging points within the decade.
AVIATION
Council to loan Luton Airport extra £119m
Luton Borough Council is to loan a further £119m to the airport it owns to help it recover from the coronavirus pandemic. The total loaned to Luton Airport now stands at £507m, including £124m "in response to the pandemic".
CONSTRUCTION
Galliford Try sets net zero carbon deadline
Galliford Try has pledged to achieve net zero carbon across its own operations by 2030. The construction firm said it recognises the "urgency of the climate change agenda". The company said it is confident about achieving net zero across its own work by 2030 through further reduction measures, and added that it wants that "across all activities" by 2045 at the latest.
FINANCIAL SERVICES
Lawyers: FCA move points to crypto exchange clampdown
Lawyers say the Financial Conduct Authority’s (FCA) decision to tell Binance to cease all regulated activity suggests cryptocurrency exchanges are set to come under greater scrutiny from regulators. David Henderson, a senior associate at Browne Jacobson, says it is “telling that the FCA has used its powers to unilaterally impose such a sweeping requirement on Binance”, noting that the City watchdog normally first seeks to address concerns by agreeing variations to the permissions of a regulated firm. He notes that “crypto markets are volatile, there are perceptions around the risk of potential scams and money laundering concerns, and the FCA has a responsibility to protect consumers”. Reflecting on the regulator’s actions in regard to Binance, Nigel Brahams, a partner at Collyer Bristow, says “This is nothing new in terms of interpretation. However, this demonstrates a more interventionist approach on the part of the FCA”.
Finance leaders: Recovery will take more than a year
A new poll shows that finance leaders believe it will take an average of 13 months for businesses to recover from the effects of the pandemic. While 43% believe it will take between twelve months and four years for a full recovery, only 30% believe business will hit pre-coronavirus levels in under six months. The survey of over 200 UK finance leaders commissioned by automated purchase-to-pay provider Yooz also saw half of those polled say they fear Brexit will impact their ability to process payments. Francois Lacas, deputy chief of operations at Yooz, said: “Although many businesses are starting to benefit from a more stable economy, the further delay in lifting restrictions means that financial leaders remain cautious”.
FCA: 60 firms in line for pension transfer reviews
The Financial Conduct Authority (FCA) has identified nearly 60 advice firms it says should carry out past business reviews on their pension transfer advice. In a submission to a Work and Pensions committee inquiry on accessing pension savings, the FCA added that it had interacted with 104 firms who had given defined benefit transfer advice. This resulted in 39 variations in permissions and 21 asset retentions whereby firms cannot sell business assets, for example client books, without approval from the regulator. It also confirmed it is currently undertaking about 30 enforcement investigations and that it had recently commenced High Court proceedings in one case. The FCA told the committee said it had seen “high levels of unsuitable advice” in the past and pointed out that when it reviewed files from the period 2015 to 2019, it found 17% of recommendations to transfer were unsuitable, and only 55% were clearly suitable.
Online broker eToro predicts more crypto regulation ahead
Yoni Assia, CEO of eToro, believes the growing crypto market should expect greater focus from regulators and has urged watchdogs to develop a greater understanding of digital currencies.
MEDIA & ENTERTAINMENT
Google advertisers must be verified
Google UK has announced that as of September 6, all advertisers selling a financial product on its platform must be verified by the Financial Conduct Authority (FCA), bowing to pressure from the city watchdog which has raised concerns over scam promotions. The FCA has described Google’s announcement a “positive move” but is calling for investment fraud caused by online advertising to be included in the Government’s Online Safety Bill.
PROFESSIONAL SERVICES
Teneo chief resigns over misconduct
Declan Kelly has resigned as chief executive and chairman of PR firm Teneo following allegations of drunken misconduct at a fundraising event which saw some clients cut their ties with the business.
REAL ESTATE
House prices jump 13.4% in June
Nationwide figures show that UK house prices rose 13.4% in the year to June, the fastest pace since November 2004. The average house price increased to a record high of £245,432 from £216,403 in June 2020. The data show that all parts of the UK saw a rise in house prices in Q2, with Northern Ireland and Wales seeing the largest year-on-year increases, with values up 14% and 13.1% respectively. Month-on-month, UK house prices were up 0.7%. Price rises have been driven by a number of factors, including the stamp duty holiday and a mortgage guarantee scheme to help people with a 5% deposit get on the property ladder. Nationwide’s chief economist Robert Gardner commented: “Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the strong incentive for people to bring forward their purchases to avoid the additional tax.”
Stamp duty holiday pushes 1.8m houses into higher tax bracket
A surge in housing market activity driven by the stamp duty holiday has pushed around 1.8m properties into a higher stamp duty bracket. Zoopla analysis shows that 940,000 additional properties will attract some level of stamp duty at 5% while an extra 130,000 will see some level of stamp duty at 10%. The firm calculates that the average stamp duty payable on homes entering the 10% band will be around £6,100 after the end of the tapered stamp duty holiday in September. The average home moving into the 5% band will see an additional cost of £725. While Zoopla says the average UK house price has increased by £10,246 in the last 12 months, Halifax calculates that prices have gone up £20,000 since last April.
Business rates holiday end nears
Businesses are preparing to face property tax bills again, with a business rates holiday rolled out to support firms during the pandemic coming to an end on July 1. From this date – and for the remaining nine months of the financial year - relief from the business rate holiday will reduce from 100% to 66%. This is capped at £2m per business for properties that had to close when the UK entered its most recent national lockdown in January. Real estate advisers Altus Group say properties will face £5bn in tax liabilities for the rest of the year. It also calculates that the reduced relief measure will cost the Treasury £3.3bn, taking the total cost of relief to £17.1bn. Analysis shows that 394,601 businesses have benefitted from the rates holiday, with the initiative saving them around £13.8bn.
RETAIL
Fashion firms fall short on support for women
A new report suggests that many retailers are failing to support women in their boardrooms and factories. The World Benchmarking Alliance (WBA)'s Gender Benchmark showed that nearly two-thirds of the top 35 apparel brands have not publicly backed gender equality and women's empowerment, while only 14 have implemented gender-specific policies. The index takes into account factors such as the gender pay gap, representation in leadership, and policies to stop violence and harassment. It gave companies an average score of 29 points out of a possible 100, with Adidas, Gap and VF Corp – owner of brands including The North Face, Timberland and Vans - the only fashion firms to score more than 50 points on the index.
ECONOMY
Debt risk soars due to post-pandemic inflation
The Bank for International Settlements’ (BIS) annual report suggests that the UK’s post-pandemic debt could rise by over £100bn due to inflation. The reports sets out several scenarios, with its primary scenario one of solid recovery at uneven rates. Another sees government stimulus and household spending leading to more growth but with high levels of inflation and a “substantial tightening in global financial conditions”. This could see interest rates hit 6%, taking the UK’s debt servicing costs, currently at £45bn, above £100bn. Another scenario would deliver new pandemic-related restrictions that could dampen growth. Agustín Carstens, the BIS general manager, said: “While the recovery is under way and the central scenario is relatively benign, we are not out of the woods. Considerable uncertainty remains.”
National debt hits 99% of GDP
Office for National Statistics (ONS) data shows that the UK's national debt has risen to £2.2trn, or 99.2% of GDP, in the wake of the pandemic. The ONS report shows that May's monthly spend hit £24.3bn. While this was the second-highest figure on record, it was less than previously predicted by the Office for Budget Responsibility and down on May 2020’s £43.8bn. May’s figure put the deficit for the first two months of the 2021/22 financial year at £53.4bn.
OTHER
MPs: Name firms receiving furlough funds
The Public Accounts Committee has called on the Treasury to publish the names of firms that have benefited from the Government’s furlough scheme, saying such a move would provide transparency and an opportunity for whistleblowers to report fraud. The committee said data issued so far had "insufficient detail to allow for public scrutiny". It noted that while HMRC will not have a statistically valid estimate of how much fraud and error there was in the furlough scheme until December, the Department for Business has said the Bounce Back Loan Scheme could cost the taxpayer £27bn in fraud or credit losses.
Execs can leave quarantine for economy boosting activities
The Government has announced that senior executives of large businesses can temporarily leave coronavirus quarantine to perform activities which are “likely to be of significant economic benefit to the UK”. Officials have released guidelines saying business leaders can leave quarantine if the work they are doing “has a greater than 50% chance of creating or preserving at least 500 UK-based jobs”. The Department for Business, Energy and Industrial Strategy said this only applies to activities which cannot take place remotely and cannot be done by other people.