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Daily News Roundup: Wednesday, 6th January 2021

Posted: 6th January 2021

BANKING

Homeowners could save £2,000 a year by re-mortgaging

Homeowners could save an average of £169 per month by re-mortgaging to a fixed-rate product at the current rate, according to new research by TSB. This works out at an average saving of £2,028 per year. However, 89% of people have not considered this option, according to the survey of more than 2,000 homeowners with a mortgage in the UK. It found 84% of homeowners state their mortgage is their biggest monthly outgoing, yet 29% aren't aware of how much they pay in interest each month. Despite 70% saying they want to get a better handle on their money in 2021, just one in 10 (11%) have considered re-mortgaging as a way to improve finances. Some homeowners are put off re-mortgaging, the survey found, with more than half (51%) saying they are happy with their current rate.

Bailey to face questions on LC&F scandal

Andrew Bailey is due to appear before the Commons Treasury committee today to answer questions on the state of the economy. However, Mr Bailey, who was head of the Financial Conduct Authority before becoming governor of the Bank of England in March, could also face questions from MPs at a later date about the regulator's role in the London Capital & Finance scandal, the Times reports.

Investors sceptical over Bank of England’s QE programme

An FT survey reveals investors believe the Bank of England’s QE programme is an attempt to finance the Government’s deficit to keep its borrowing costs down.

PRIVATE EQUITY

Distressed debt specialist Howard Marks warns on corporate borrowing burden

Oaktree Capital founder Howard Marks has warned that even companies that can return to profit following the pandemic may struggle to service their debt following 2020’s borrowing binge.

INTERNATIONAL

Political pressure weighs on HSBC over Hong Kong activists

The FT looks at the compliance dilemmas for banks serving Hong Kong, especially HSBC, as they come under intense pressure from Beijing to freeze accounts of pro-democracy advocates.

Trump signs EO banning Alipay and other Chinese apps

President Trump signed an executive order banning transactions with the Alipay payment platform, owned by Jack Ma’s Ant Group, the WeChat Pay app owned by Chinese tech giant Tencent Holdings, along with six other apps. The order instructs Commerce Secretary Wilbur Ross to evaluate other apps that could pose a national security threat, and calls on the commerce secretary, the attorney general and the director of national intelligence to issue a report with recommendations to prevent the transfer of data from U.S. users to foreign adversaries.

NYSE delisting plans abandoned

Plans to delist China Mobile, China Telecom and China Unicom Hong Kong stocks have been abandoned by the New York Stock Exchange “in light of further consultation with relevant regulatory authorities.” This comes after China’s foreign ministry had described the delisting as “unwise.” CMC Markets’ David Madden predicted that the latest move would help to smooth US-China relations.

AUTOMOTIVE

UK carmakers warn of Brexit red tape costs

The Society of Motor Manufacturers and Traders (SMMT) has warned that additional bureaucracy due to Brexit and the need to approve vehicles separately in both the EU and Britain would add to costs for carmakers, despite the sector securing tariff-free trade with the EU. “It can be high single-figure percentage cost to an individual manufacturer. This is not a free deal,” said SMMT Chief Executive Mike Hawes, who added: “One of the big challenges for the UK now is to... see battery manufacturing established in the UK and grow in the UK to compete with Europe, and indeed, compete more globally.” Figures released by the SMMT on yesterday showed new car sales in the UK fell by close to 30% to 1.63m during 2020, the biggest annual fall since 1943.

Honda pauses car production

Honda has temporarily halted some operations at its plant in Swindon blaming international supply problems. The Japanese carmaker intends to resume production tomorrow.

AVIATION

Christmas fails to improve situation for budget carriers

New figures show that Ryanair and Wizz Air saw passenger numbers fall more than 80% for the second month in a row, with Ryanair flying some 1.9m people in December, representing an 83% decline from the year earlier period.

Travellers to UK must have negative Covid test

The UK is toughening border controls with a policy being formed that will require airlines to bar passengers from boarding if they do not have a negative Covid test within 72 hours of departure. It is expected that travellers coming from "red list" countries with high rates of Covid will still have to quarantine on arrival even if their 72-hour test is negative.

Bennett skips to state agency

Katherine Bennett is quitting as the head of Airbus UK to head a government agency, the High Value Manufacturing Catapult.

FINANCIAL SERVICES

Time for UK to plan for independent future

The Times’ Katherine Griffiths says that while London and Brussels have pledged to agree a memorandum of understanding by March on how to proceed on talks over equivalence, it is “not at all clear that the Treasury is going to be able to nail down the EU” on the issue. She adds: “Brussels has rebuffed efforts over several years to put financial services on the negotiating table, mainly because its leaders see Brexit as an opportunity to shift business inside the bloc. That position has been abetted by a British government unwilling to champion the City when issues such as fishing and state aid were more emotive for a public antipathetic to bankers.” Ms Griffiths concludes: “Rather than, at this late stage, trying the improbable of getting Brussels to give away what it deems are precious jewels… Britain should focus on the future. In November Rishi Sunak laid out his desire to make Britain a financial technology and green finance centre of excellence. There is also scope to create a modern regulatory system.”

AIM market helped by increase in IPOs in 2020

London’s AIM market rallied 21% last year, closing at 1,157.04 by the end of 2020. There were just three IPOs on the index in the first half, mirroring the pause in floats as a result of the pandemic. But as markets started to reopen AIM saw a rebound in the second half with 13 IPOs, an increase on the 10 listings recorded in the whole of 2019.

City broker shuts Polish satellite office

City-based broker ATFX UK’s Polish satellite office in Krakow is to shut, with a spokesperson commenting: “As a result of the current economic climate, the impact of the unprecedented events such as COVID-19 and Brexit, ATFX has made the strategic decision to focus on its services to professional and institutional clients under its FCA entity.”

EU urged to push UK harder on tackling tax avoidance and money laundering

The European Commission is being urged by Green MEPs to force the UK to take a harder line on money laundering and tax avoidance or lose access to the single market for financial services.

How UK finance can thrive after Brexit

An FT editorial posits that the City can once again flourish through innovation, “but only if policymakers and financiers together establish the architecture to align the City with the broader economy and the greater good.”

Mastercard executive hired to lead Network International

Mastercard’s strategy head for international markets Nandan Mer has been appointed chief executive of payments processor Network International.

MEDIA & ENTERTAINMENT

Twitter acquires podcasting app

Podcasting app Breaker is to be acquired by Twitter, with Erik Berlin, Breaker chief executive, remarking: “We’re impressed by the entrepreneurial spirit at Twitter and enthusiastic about the new experiences that the team is creating.” This comes after Amazon spent $300m (£217m) last week on podcast producers Wondery, while Spotify has also spent hundreds of millions of dollars on podcast content deals.

Ticketmaster fined by US DoJ

The US Department of Justice has fined Ticketmaster $10m (£7.4m) after the firm was charged with hacking into the computer systems of rival firm Songkick on multiple occasions.

RETAIL

UK supermarkets statistics revealed

December was the biggest month on record for British supermarkets, with £12bn spent on take-home groceries in the four weeks to 27 December. Total grocery sales were up 11.4% in the three months to 27 December, while Morrisons was the only one of the big four supermarket chains to gain market share. Sales at independent stores increased by 17.4% while Iceland saw sales rise by more than a fifth. Ocado’s sales were up 36.5%, over three times the pace recorded at Tesco, Sainsbury’s and Asda.

Paperchase declares notice of intention

Stationery chain Paperchase is believed to be close to entering administration. The latest accounts for the company show that its losses widened from £6.3m to £10.3m for the year to February 2019, with turnover down 5% to £125m.

ECONOMY

Sunak announces new £4.6bn support package for UK business

Grants of between £4,000 and £9,000 will be offered to small and medium business forced to close due to the lockdown. The aid, which is tied into the business rates typically paid by each business, is part of a £4.6bn Treasury scheme targeting retail, hospitality and leisure companies, some £594m of which will go to local authorities to offer discretionary support to affected companies which are not covered. Chancellor Rishi Sunak said the cash injection “will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”

Third lockdown could drive deficit to £450bn

Experts forecast that Britain’s third national lockdown will put borrowing on course to hit £450bn this year, smashing the £394bn predicted by the Office for Budget Responsibility only six weeks ago. JP Morgan UK economist Allan Monks predicts a 2.5% slide in growth for the first three months of the year. Separately, the World Bank has forecast that global GDP will expand 4% in 2021 but will remain well below pre-pandemic projections due to a surge in new cases.

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