Bank of England appoint Andrew Bailey as new governor

(qlmbusinessnews.com via bbc.co.uk – – Fri, 20th Dec 2019) London, Uk – –

Andrew Bailey has been appointed as the next governor of the Bank of England.

Mr Bailey, aged 60, is currently chief executive of the Financial Conduct Authority (FCA), the City watchdog.

He will become the 121st governor of the Bank of England on 16 March, taking over from Mark Carney, and will serve a full eight-year term.

The search for the new governor began in April and Mr Bailey, who spent more than 30 years at the Bank, was seen as an early favourite for the job.

However, the FCA has faced criticism in recent months over its regulatory scrutiny of the flagship fund of one of the UK's best known money managers, Neil Woodford. The fund was suspended in June and eventually closed, with investors expected to lose large sums of money.

In addition, the FCA's report into Royal Bank of Scotland's treatment of small business by its controversial restructuring division was called a “whitewash” after it recommended taking no further action against the bank.


Five things the Bank of England does

  • It sets the official interest rate, which determines the cost of borrowing money
  • It supervises the financial system, seeking to ensure it is stable and no banks are running out of cash
  • It acts as the government's bank and a lender of last resort in times of financial difficulty
  • It issues the UK's banknotes (coins are issued by the Royal Mint)
  • It stores the UK's gold reserves, as well as those of other central banks

Announcing the decision to appoint Mr Bailey, Chancellor Sajid Javid said he was “the stand-out candidate in a competitive field”.

“He is the right person to lead the Bank as we forge a new future outside the EU and level-up opportunity across the country,” he added.

Accepting the role, Mr Bailey said it was “a tremendous honour” to be chosen.

“The Bank has a very important job and, as governor, I will continue the work that Mark Carney has done to ensure that it has the public interest at the heart of everything it does.”

CBI chief economist Rain Newton-Smith congratulated Mr Bailey, saying: “His strong experience, both in Threadneedle Street and at the Financial Conduct Authority, means he is particularly well placed to steer the British economy through the new course it will take after Brexit and through challenging global economic times.”

But shadow chancellor John McDonnell was critical of the appointment, saying: “As an establishment figure with what some consider is a less than inspiring record at the FCA, Andrew Bailey will need to demonstrate early that he appreciates the need to address the deep structural problems of our economy and, like Mark Carney, understands the climate change threat.”

Mr Carney had been due to step down on 31 January, but has now agreed to stay on until 15 March in order to provide for a smooth transition.

Mr Carney described Mr Bailey as “an extraordinary public servant”.

“Andrew brings unparalleled experience, built over three decades of dedicated service across all policy areas of the Bank,” he said.

The decision means hopes that the Bank could have been led by a female governor for the first time in its history have been dashed.

Minouche Shafik, a former member of the Bank of England's interest rate-setting committee, had been hotly tipped for the role.

Mr Bailey has spent almost the entirety of his career at the Bank of England, which he joined in 1985.

He has held a number of roles including chief cashier, which meant that his signature appeared on all bank notes issued by the Bank of England.

Mr Bailey was chief cashier during the financial crisis when, he recalled in an interview: “The [RBS] treasurer, John Cummins, came in and I thought he was going to have a heart attack… and he looked at me and said: ‘I need £25bn today, can you do it?'. I said: ‘Yes, I can do that'.”

Mr Bailey was also a deputy governor and head of the Bank's prudential regulation division, before joining the FCA as its chief executive in 2016.

Analysis: Simon Jack


Andrew Bailey was the early frontrunner for one of the most powerful positions in the UK.

However, his time as head of the City watchdog, the Financial Conduct Authority, was peppered with a number of high-profile controversies – including its handling of complaints into RBS's treatment of small businesses in the aftermath of the financial crisis – which many thought might have harmed his chances for the top job.

He is highly thought of by colleagues and civil servants.

Former Permanent Treasury Secretary Lord McPherson described him as the most able and competent Bank of England official he had ever worked with, adding that while Bailey would not make waves for the government he had the backbone to stand up to it.


Mr Bailey, who will be paid £495,000 a year, is taking over at a fraught time for the Bank of England.

It emerged this week that an audio feed of sensitive market information from the Bank had been leaked to fund managers.

The Bank admitted one of its suppliers had “misused” the feed which gave traders early access to information that could potentially generate large sums of money.

The matter has been referred to the FCA, which Mr Bailey currently leads.

The City watchdog said it was “looking at the issue”.

PA reported that the prime minister's official spokesman, when asked whether Brexit was a factor in Mr Bailey's appointment, said: “The way it works is the chancellor recommends candidates to the PM, the PM then advises the Queen.”

When pressed on the issue, the spokesman added: “I just went through the process and the prime minister thinks he will do an excellent job.”

General election 2019: Conservatives win see pound and shares surge

(qlmbusinessnews.com via bbc.co.uk – – Fri, 13th Dec 2019) London, Uk – –

The pound and shares have surged after the Conservatives won a clear majority in the UK general election.

Sterling gained 1.9% to $1.34 – its highest level since May last year – on hopes that the big majority would remove uncertainty over Brexit.

The pound also jumped to a three-and-a-half-year high against the euro.

On the stock market, the FTSE 100 share index rose 1.5%, while the FTSE 250 – which includes more UK-focused shares – leapt 4%, hitting record highs.

Prime Minister Boris Johnson said the election result meant that the Conservative government “has been given a powerful new mandate, to get Brexit done”.

Mr Johnson has pledged to take the UK out of the European Union by 31 January.

Politically sensitive shares saw sharp rises in morning trading on UK markets.

Shares in water companies such as Severn Trent, which faced the possibility of nationalisation under a Labour government, shot up 6%, while UK housebuilders also saw big gains, with a huge 10% rise for Persimmon.

Shares in banks exposed to the UK economy rose sharply. Barclays, RBS and Lloyds were up 7%, 11% and 6% respectively.

Neil Wilson, chief market analyst at Markets.com, said housebuilders had been undervalued and rose “on hopes that construction will benefit from the Conservative victory”.

“We should also consider the potential risk that a Labour government could have posed to their profits being removed,” Mr Wilson said.

While many FTSE 100 shares saw big gains, this was offset slightly by the rise in the value of the pound, which affected companies with big international operations. A rise in sterling cuts the value of companies' overseas earnings when they are brought back to the UK and converted back into pounds.

In contrast, the FTSE 250 index – which generally contains firms with more exposure to the domestic economy – jumped more than 5% at one point, before slipping back slightly.

Analysis: By Simon Jack


The financial bookies had already installed Boris Johnson as the favourite but did not expect him to romp home by such a distance.

The pound moved sharply higher as soon as the exit poll was published and went on to post one of its biggest one-day gains against the dollar in years as Johnson's thumping victory removed one layer of political uncertainty.

Shares in politically-sensitive sectors such as house building and banking rocketed, as did water, rail and energy companies, as the threat of nationalisation under a Corbyn government evaporated.

Markets have given the prospect of a government with a functioning majority a round of applause but the euphoria may be short-lived.

Traders are already talking about the formidable challenge of completing a trade deal with the EU by this time next year, along with the prospect of a new Scottish independence referendum.

The election may be settled, but there are big political questions that are not.


Guy Foster, head of research at wealth manager Brewin Dolphin, said that “the potential for a smooth Brexit removes some of the downside risk for the UK economy”.

“This should be positive for both business and consumer confidence, at least in the short term, with a gradual acceleration in GDP growth and confidence.

“However, a lot can change over the coming months as the finer detail of the UK's future trade relationship with the EU is negotiated.

“This is still, after all, just the beginning of the exit process. Even with the passing of the withdrawal agreement, the UK could still leave the EU without a deal at the end of 2020 if trade negotiations don't proceed successfully.”

Andy Scott, associate director at financial risk adviser JCRA, said: “What will be interesting to see – assuming that Brexit will now follow a set course, at least [until] 31 January – is if economic data is given a significant boost from the perceived certainty, and [whether it] starts to influence sterling again.

“In recent months, the market has almost completely ignored the slowdown in the economy and the potential for monetary stimulus from the Bank of England, with election and Brexit expectations driving fluctuations in sterling's value.

“The performance of the economy is likely to be key to whether we see a further recovery in 2020.”

Sterling slips on Friday after three-day rally, set for best week since mid-October

(qlmbusinessnews.com via uk.reuters.com — Fri, 6th Dec 2019) London, UK —

LONDON (Reuters) – Sterling slipped on Friday, consolidating after three days of gains that took the pound to 2-1/2-year high versus the euro and a seven-month high against the dollar on expectations that the Conservative Party will win next week’s British election.

The pound is still headed for its best week since mid-October, having risen 1.5% against the dollar and almost 1% to the euro as various opinion polls indicate a comfortable majority for the ruling party.

But on Friday it slipped 0.2% to $1.3138, just off a $1.3166 high touched Thursday, while against the euro it traded at 84.58 pence, having traded as high as 84.31 pence this week.

“It’s a small move and no fundamental change (in terms of what opinion polls show),” Nordea analyst Morten Lund said.

“From a risk-reward perspective most people are too optimistic but if you look at option markets you can see some people positioning for sterling weakness.”

David Katimbo-Mugwanya, a fund manager at EdenTree Investment Management, said confidence has been growing that a decisive election result and the subsequent passing of a Brexit withdrawal deal in the UK parliament would boost the economy.

“I would expect some sort of bounce (in the UK economy). You have already seen some of that in the currency,” he said.

Should the Conservative Party win a majority in next week’s election, some analysts believe any further rise in the pound will be limited, however.

MUFG said in a research note sent to clients that the need for the UK and the EU in 2020 to begin negotiating their future relationship would introduce a “sustained period of uncertainty”.

Evidence of a weakening economy in Britain would also weigh on the pound, the analysts said, pointing to a new jobs market survey that showed the slowest rate of rising vacancies since October 2009.

Leaders of the two main parties will go head-to-head in a TV debate later on Friday.

Reporting by Sujata Rao and Tommy Wilkes

London Stock Exchange shareholders vote on $27 billion takeover deal of analytics and data company Refinitiv

(qlmbusinessnews.com via uk.reuters.com — Tue, 26th Nov 2019) London, UK —

LONDON (Reuters) – London Stock Exchange (LSE.L) shareholders met on Tuesday to vote on the exchange’s $27 billion takeover of analytics and data company Refinitiv, a deal designed to broaden LSE’s trading business and make it a major distributor of market data.

LSE Chairman Don Robert told the meeting in London that the exchange’s board was unanimous in recommending the Refinitiv deal because it was a “compelling opportunity” in the best interests of shareholders and the company.

One shareholder asked whether the LSE was simply bulking up to avoid becoming a future takeover target.

“We feel very strongly this is in the long-term strategic interest of the London Stock Exchange. It will give us an opportunity to have a truly global business,” LSE Chief Executive David Schwimmer said.

The industry has been littered with attempts at cross-border alliances between exchanges for more than a decade as profits from the traditional business of running stock markets and clearing houses have fallen. But many of the deals have run into regulatory and political opposition.

This has pushed exchanges to look for related businesses. LSE and New York Stock Exchange owner ICE (ICE.N), for example, are moving into more profitable and less politically sensitive areas such as data and analytics, where revenue is rising.

LSE executives also dismissed some shareholder doubts that the exchange has the ability to make a success of the takeover, with Schwimmer saying there was a high degree of confidence that integration of LSE and Refinitiv can be well managed.

The outcome of the vote is due to be announced later on Tuesday.

The deal was announced in August, just 10 months after a consortium led by U.S. asset manager Blackstone (BX.N) completed a leverage buyout of Refinitiv from Thomson Reuters (TRI.TO).

Thomson Reuters (TRI.N), the parent company of Reuters News & Media Limited, holds a 45% stake in Refinitiv.

Hong Kong Exchanges and Clearing (0388.HK) threatened to derail the deal in September by making an unsolicited $39 billion takeover offer for LSE. The Asian exchange walked away after failing to convince LSE management and investors to back the move.

Reporting by Huw Jones

November is the new Black Friday For UK shoppers

(qlmbusinessnews.com via uk.reuters.com — Fri , 22nd Nov 2019) London, UK —

LONDON (Reuters) – With harsh lessons learnt from past Black Fridays, British retailers are stretching promotions over several weeks, aiming to smooth out consumer demand and reduce the pressure on supply and distribution networks.

Brought over from the United States by Amazon (AMZN.O) in 2010, the annual event started as a single day of discounting before growing into a long weekend that took in ‘Cyber Monday’.

It then grew to a week or so either side and is now getting longer and longer, though after chaos and scuffles in stores in 2014 it is now predominantly an online affair.

“We’ve re-named Black Friday, November,” John Roberts, the chief executive of AO World (AO.L), the online electrical appliances retailer, told Reuters.

With recent consumer spending subdued, Brexit still unresolved and a looming national election creating new uncertainties, retailers are in need of a tonic.

AO went live with Black Friday deals, such as a KitchenAid Artisan Stand Mixer reduced from 449 pounds ($578) to 279 pounds, on Nov. 13 and some deals will run into December.

Dixons Carphone (DC.L), Britain’s biggest electricals and mobile phones retailer, launched a first wave of promotions on Nov. 13 on products such as laptops, TVs and vacuum cleaners, and deals will run for a few days after Black Friday itself on Nov. 29.

Amazon’s Black Friday Sale runs for eight days from Nov. 22, but it has been running early Black Friday deals this week.

Argos, owned by supermarket group Sainsbury’s (SBRY.L), and department store group John Lewis [JLPLC.UL] both launched their campaigns on Nov. 22.

LEARNING LESSONS

British retailers’ early experiences of Black Friday, when stores were overcrowded, websites crashed and delivery operations were overloaded, showed the folly of concentrating a huge amount of business on one day and then having a relatively flat period afterwards.

“While this may ease the demand on logistics operations over the period, it will mean that shoppers demand ever steeper discounts during Black Friday as they expect something more from retailers during this time,” said Zoe Mills, retail analyst at GlobalData, the data and analytics company.

It forecasts that UK shoppers’ spending in the Black Friday period would rise 2.2% year on year to 4.3 billion pounds.

Black Friday, the day after the U.S. Thanksgiving holiday, is so-called because it was historically the day when retailers would move into profit after months in the red. It traditionally marks the start of the U.S. holiday shopping season.

This year’s sales drive, which is often make-or-break for U.S. retailers, falls a week later than last year, leaving U.S. retailers with a shorter holiday shopping period.A customer stands next to a container advertising Black Friday offers in a branch of Mamas and Papas in Manchester, Britain November 20 2019. REUTERS/Phil Noble

‘BLACKVEMBER’

PwC, the advisory firm, reckons 52% of British consumers are either interested in buying or plan to buy something during Black Friday, with average spend forecast at 224 pounds. But it says consumers are increasingly cynical about the event.

“Some consumers doubt the quality of the deals on offer, with many seeing them as not especially good value or not worthy of interest, and this is likely to have been exacerbated as Black Friday deals have spread to the whole of ‘Blackvember’,” said Lisa Hooker, consumer markets leader at PwC.

Black Friday’s popularity has meant Britain’s Christmas trading season now has three distinct peaks – around Black Friday, the week up to Dec. 25 and the post-Christmas sales.

But nearly a decade after coming to Britain, the event’s worth to retailers still polarizes opinion.

Supporters say carefully planned, targeted promotions in close co-operation with global suppliers allow retailers to achieve a sales boost while still maintaining profit margins.

Naysayers argue the discounts suck forward Christmas sales at reduced profit margins, undermine consumers’ willingness to pay full price again before Christmas, and dampen business both in prior and subsequent weeks.

Marks & Spencer (MKS.L) has dabbled with Black Friday in the past but has opted out since 2015. CEO Steve Rowe says his focus is on improving M&S’ value all year round.

“That’s the way to deliver great value for customers, not one off promotions, so we won’t be taking part.”

Reporting by James Davey; Editing by Mark Potter

Inside the United Kingdom’s Tech Renaissance

Source: Bloomberg

Bloomberg’s Ashlee Vance heads to England to find out how the country is fighting to inject new life into its technology industry. The trip starts out in Bletchley Park. From there, it’s off to Cambridge, the heart of England’s technology scene. Vance hangs out with learned cows and artificial intelligence whizzes, bikes past Newton’s famed apple tree (at least a reasonable replica of it), and goes punting with the inventor of the Raspberry Pi computer. From Cambridge, it’s off to the Cotswolds and the headquarters of Dyson to see its latest creations. And then on to London to check out some startups and whine about Brexit while drinking the world’s most exotic cocktails at the Langham Hotel.

UK budget deficit likely to double to 100 billion pounds in No-deal Brexit – IFS

(qlmbusinessnews.com via uk.reuters.com — Tue, 8th Oct, 2019) London, UK —

LONDON (Reuters) – Britain’s budget deficit is likely to more than double to around 100 billion pounds if the country leaves the European Union without a deal, quickly requiring a return to austerity, a leading think-tank said on Tuesday.

Britain is due to leave the EU on Oct. 31 and Prime Minister Boris Johnson has said he is determined to do so despite parliament ordering him to seek a delay if he cannot negotiate an acceptable transition agreement before then.

The Institute for Fiscal Studies predicted borrowing would rise to 92 billion pounds – equivalent to 4% of national income – by 2021/22 under a “relatively benign” no-deal Brexit scenario, in which there are no major delays at borders.

Even then, the economy would still enter recession in 2020, the IFS said in an annual assessment of the public finances.

If the government undertook enough fiscal stimulus to stop the economy contracting – roughly 23 billion pounds of extra spending in 2020 and 2021 – annual borrowing would peak at 102 billion pounds

“A no-deal Brexit would likely require a fiscal short-term stimulus followed by a swift return to austerity,” IFS deputy director Carl Emmerson said.

In the 2018/19 financial year Britain’s budget deficit was 41 billion pounds or 1.9% of GDP, its lowest since 2001/02, following years of efforts to reduce the deficit from a peak of 10.2% during the depths of the financial crisis in 2009/10.

In the longer term, a no-deal Brexit would mean less money to spend on public services – or higher tax rates – than staying in the EU or leaving with a deal, the IFS said.

Even without Brexit, Britain was likely to have to raise tax rates to fund the cost of pensions and public healthcare for an ageing population, it said.

Finance minister Sajid Javid announced 13.4 billion pounds of extra spending on health, policing, schools and other areas last month – putting borrowing on course to overshoot a cap of 2% of GDP targeted by his predecessor, Philip Hammond.

“The outlook for borrowing has worsened dramatically since March,” Emmerson said.

Javid is due to set out fresh borrowing plans an annual budget before the end of 2019, possibly before an early election as Johnson seeks to regain a working majority in parliament.

The IFS said the government’s budget targets had lost credibility and it was now set to spend almost as much on day-to-day public services as planned by the opposition Labour Party before an election in 2017, promises which drew criticism from the ruling Conservative Party.

It also said the government should wait until the outlook for Brexit was clearer before setting long-term budget goals, and avoid income tax cuts of the type that Johnson suggested when he campaigned to become Conservative leader.

Reporting by David Milliken

Sports Direct ‘still finalising’ financial results expected for release early Friday morning

(qlmbusinessnews.com via bbc.co.uk – – Fri 26th July 2019) London, Uk – –

Mike Ashley's Sports Direct has said it is “still finalising” its financial results, which were due to be released early on Friday morning.

It is extremely unusual for a firm to delay results in this way, with one analyst calling events “an utter shambles” after a results presentation was postponed at the last minute.

The firm said it expected its results would still be published on Friday.

The retailer had previously delayed publishing annual results on 15 July.

At the time it cited uncertainty in trading at its House of Fraser chain and increased scrutiny of its auditor as the reasons for the delay. It had also indicated that it might not achieve its profits forecast.

In a statement released on Friday morning, Sports Direct said: “Unfortunately we are still finalising preliminary results.

“We anticipate that our annual results will still be released today, with a presentation to follow, and will update again at midday.

“Apologies for any inconvenience.”

Neil Wilson, chief market analyst for Markets.com, said the events were “a total and utter shambles” that “betrays a number of problems at the business after [Mr] Ashley embarked on his rather random acquisition spree.”

“Above all it betrays a total disregard for shareholders,” he said.

On Wednesday, the firm had said it would be publishing its results on Friday.

UK-listed companies normally publish their results at or close to 07:00, before the London markets open at 08:00.

Sports Direct shares fell about 3% in early trading on the London stock market.

The firm had been due to give a presentation to investors and media at 09:00, but this was cancelled at the last minute.

London house prices fall at its fastest rate since 2009

(qlmbusinessnews.com via news.sky.com– Wed, 17th July 2019) London, Uk – –

The second half of the year may be a buyers' market for much of the UK as average price increases continue to slow sharply.

House prices in London fell in May at their fastest rate for almost a decade, according to official figures.

The Office for National Statistics (ONS) reported a 4.4% decline, on an annual basis, in residential property costs in the capital.

It marked the biggest fall since the 7% reduction recorded in August 2009 as the effects of the financial crisis took a hold on the sector.

The wider ONS figures showed a continuation of the slowdown across the UK as a whole – with prices increasing by 1.2% in the year to May, down from 1.5% in April.

The gradual decline – over the past three years – was first driven by London followed by the wider South East region.

However, house price growth in Wales – while sharply down from a 5.3% rate in April – remains positive at 3%.

The figure was 2.8% for Scotland.

The English region with the strongest rate of growth was the North West at 3.4%.

London saw a surge house price growth after the financial crash that saw prices almost double before cracks began to appear in late 2016.

They were a consequence of concerns about affordability after the boom and shaky sentiment since the Brexit vote.

The ONS said that while London house prices fell over the year, it remained the most expensive place to purchase a property at an average of £457,000.

That sum is 6.7% down on the 2017 peak.

The North East continued to have the lowest average house price, at £128,000, and remains the only English region yet to surpass its pre-economic downturn peak, the ONS said.

There are signs of worse news for prices ahead.

The official figures lag other industry surveys which have already reported on activity during June.

A report by Rightmove earlier this week suggested that the current political uncertainty – as the clock ticks down to the extended Brexit deadline of 31st October – was continuing to weigh on sentiment.

It said average prices had fallen in the UK for the first time in 2019.

Rightmove's director and housing market analyst, Miles Shipside, said: “With record employment, low interest rates and good mortgage availability, buyers have a lot in their favour apart from the lack of political certainty.

“Those who have postponed their purchase should note that estate agency branches have more sellers on their books than at any time for the past four years, so there should be more choice of properties to buy.”

By James Sillars, business reporter

The ‘Big Four’ leading accounting UK firms all failed audit quality test – Watchdog

(qlmbusinessnews.com via uk.reuters.com — Wed, 10th July 2019) London, UK —

LONDON (Reuters) – All of Britain’s leading accounting firms have failed to hit quality targets set by their regulator for auditing company books for the second year in a row, with Grant Thornton and PwC singled out to join KPMG under tougher supervision.

The damning review from the Financial Reporting Council (FRC) will pile pressure on the government to implement a proposed sector shake-up prompted by corporate failures at builder Carillion, retailer BHS and an accounting scandal at cafe chain Patisserie Valerie.

The FRC said EY, KPMG, Deloitte and PwC, known as the Big Four, and BDO, Grant Thornton and Mazars from the next tier down, all failed to hit a target that 90% of audits reviewed by the regulator were good or required only limited improvements.

Only 75% of the sample of audits from among Britain’s 350 top listed companies for the year ending December 2017 met the 90% target overall as accountants failed to challenge information clients gave to them, the FRC said.

There was no overall improvement on last year’s findings when all audits reviewed failed to meet the 90% target.

“At a time when the future of the audit sector is under the microscope, the latest audit quality results are not acceptable,” said Stephen Haddrill, the FRC’s chief executive.

Radical reform of the sector was proposed last December to rebuild public trust in audit, including replacing the FRC, described by lawmakers as toothless, with a more powerful watchdog.

Haddrill and his chair Win Bischoff are being replaced.

The bulk of the top 350 listed firms would have two auditors in a bid to improve audit quality, but this depends on Grant Thornton, BDO and Mazars winning the confidence of blue chip companies.

The timing of reform is unclear given it needs legislation to implement and parliament is focused on Britain’s protracted departure from the European Union.

The ICAEW, a professional accounting body, said audit faces a “watershed moment” and the government should implement reform without delay.

The new watchdog should apply “fresh thinking” to improving audit quality and not be constrained by targets and methods bequeathed to it by the FRC, the ICAEW said.

British Business Minister Greg Clark told a parliamentary committee last month there would be a public consultation on a “proportionate package of reforms” to improve audit quality and maintain Britain’s global status as a center of audit expertise.

FAILING TO CHALLENGE

The FRC said it found cases in all seven firms where auditors failed to challenge management sufficiently, a “recurring finding” for several years.

The watchdog said it would raise its target to 100% from 90% for reviews of audits starting from June 2019 financial statement year-ends as having any below standard audits was unacceptable.

Only half of Grant Thornton’s sample audits were assessed as good, down from 75% in 2018, the FRC said. More than a quarter of its audits reviewed in the past five years needed significant improvement.

“The FRC has therefore increased its scrutiny of Grant Thornton,” the watchdog said. It will review a larger number of the firm’s audits in the coming year.

Both Grant Thornton, which audited Patisserie Valerie, and PwC, auditor of BHS, had already announced steps to bolster audit activities in anticipation of the FRC findings.

Grant Thornton said the FRC report showed that the entire profession must improve the quality of its work and that Grant Thornton is no exception.

The deterioration from 84% to 65% in PwC’s results was also “unsatisfactory” and the FRC will “scrutinize closely” how PwC implements its improvement plan.

“While results at KPMG have improved, the firm remains subject to increased FRC scrutiny,” the watchdog said. This will continue until KPMG, which audited Carillion, has demonstrated a sustained improvement in audit quality.Slideshow (2 Images)

The FRC said 84% of Deloitte’s audits met the required standard, up from 76% last year, with EY at 78%, up from 67% in 2018.

But 40% of Mazars’ reviewed audits failed to meet the target, worse than in 2018, while 12.5% of BDO’s sample audits were below the acceptable standard, unchanged from last year.

Reporting by Huw Jones

Heathrow reveal third runway expansion plans

(qlmbusinessnews.com via theguardian.com – – Tue, 18th June 2019 ) London, Uk – –

Plans unveiled to lower M25 and reroute rivers as campaigners warn of environmental impact

The scale of the disruption from Heathrow airport’s expansion project has been revealed with the publication of detailed plans to lower the M25 for the third runway to cross, reroute rivers, replace utilities and relocate enormous car parks.

A 12-week public consultation opened on Tuesday at 8am, with campaigners warning of the severe impact for years to come of more than 700 extra planes in the sky after 2026, when the runway is due to open.

Heathrow said expansion should “not come at any cost” and has outlined plans for low-emission zones and congestion charges to stem local air pollution. It plans to expand in phases up to 2050 with new terminal buildings added after the runway as passenger numbers grow to keep airport charges and fares down after airlines complained about the projected cost.

Plans to mitigate the effects of expansion include property compensation, noise insulation funding and a 6.5-hour ban on scheduled night flights.

Emma Gilthorpe, the executive director for Expansion, urged local people to participate in the consultation and make their views heard.

She said: “Expansion must not come at any cost. That is why we have been working with partners at the airport, in local communities and in government to ensure our plans show how we can grow sustainably and responsibly – with environmental considerations at the heart of expansion.”

However, campaigners said the proposals would lead to swathes of green belt land around the airport being used for buildings to support a third runway, including a huge new car park for the airport to the north of Sipson village.

Heathrow has committed not to have any more cars using the airport with expansion, and said it was consolidating existing space, including car parks where the new runway will go.

Robert Barnstone, of Stop Heathrow Expansion, said: “Not only does it want to disrupt people’s lives for up to 30 years while building this new runway but now proposes jumbo-size car parks while pledging to reduce the number of people using cars at the airport.

“The new prime minister, whoever that may be, will have to face up to the fact that Heathrow expansion cannot meet legal environmental requirements and will therefore not be able to proceed in the long term.”

John Stewart, the chair of Hacan, the campaign group that opposes a third runway, said: “What hits you is the scale of these proposals. The impact on local people could be severe for many years to come. Disruption from construction; the demolition of homes; the reality of more than 700 extra planes a day.”

The consultation is a statutory requirement of the planning process, after parliament gave Britain’s major airport the go-ahead for a third runway. Heathrow’s final plans, incorporating public responses, will be put to planning inquiry inspectors next year. Their recommendation will be put to the transport secretary to give the final approval in 2021.

By Gwyn Topham

EE 5G network lands in London and five other UK cities

(qlmbusinessnews.com via cityam.com – – Thur, 30th May 2019) London, Uk – –

EE’s 5G network went live in six cities today, bringing the new technology to the UK for the first time.

London, Birmingham, Manchester, Cardiff and Belfast are the first locations to benefit from the new mobile network, which will offer users data speeds that are considerably faster than 4G.

However, with EE the first network to launch 5G, prices are set to be considerably higher until rivals begin to compete with their own launches.

Vodafone will be the first of those operators to challenge EE when it launches its own 5G network on 3 July.

5G handsets – what's available?

Meanwhile, the selection of 5G handsets is expected to be limited for the moment, with Samsung, OnePlus, LG and HTC all producing 5G handsets.

Huawei’s Mate 20X (5G) smartphone has been blocked from both EE and Vodafone’s rollouts after Google banned the device from receiving upgrades.

The ban came amid claims from the US that Huawei is acting as a spy for China – something Huawei denies.

“The challenge we have at the moment is we don’t have enough clarity on whether our customers are going to be able to be supported over a timeframe of a two or three-year contract,” EE boss Marc Allera told City A.M. last week.

5G speeds and coverage

EE said its 5G network currently offers speeds 10 times faster than 4G, though it will not launch a fully fledged 5G network until 2022.

William Webb, a 5G expert and chief executive of Weightless SIG, warned that coverage will be thin for years after 5G launches, mirroring the ‘not-spots' of 4G and even 3G in some areas of the UK.

“Initially, coverage will be very patchy – some areas in city centres may have a good connection but little elsewhere. For many, there may be no 5G coverage where they live and work for many years,” he said.

He added that the data-hungry network will eat up allowances very quickly, leaving tariffs looking miserly in contrast to 4G contract deals on offer right now.

“The basic 5G package has 5GB of data. If the promise of 200Mb/s is delivered on – and 5G is aiming for much higher – then this entire monthly allowance will last a total of 200 seconds,” he said.

“The only real benefit here is that 5G networks will be virtually empty, allowing congestion-free communications. This is a big advantage when you consider in places such as Waterloo, Kings Cross or other mainline train stations.

“While lower congestion is a valuable benefit, there is no sign of the services or applications that will deliver the well-documented changes to the way that we live and work that some have promised.”

How can the UK improve 5G coverage?

Kate Bevan, editor of Which Computing magazine, said: “The rollout of 5G will offer great opportunities for consumers to get increased internet speeds, faster downloads and be better connected on the move, but the reality is that we are still lagging behind on 4G – with only two-thirds of the UK able to get access with a choice of all major operators.

“The government needs to clearly outline how it will achieve its 2022 target for 95 per cent of the country to have 4G coverage and the regulator must use its powers effectively to extend coverage.”

Kester Mann, principle analyst at CCS Insight, added: “EE’s launch highlighted that the shift from 4G to 5G is an evolutionary one, as it focused on offering a more reliable mobile experience. Its new 5G propositions contain little that is truly innovative, but address existing customer pain-points without over-inflating expectations.”

Currently an EE 5G contract will cost you £54 per month and £170 for a compatible device, though that will only get you 10GB of data per month.

By Joe Curtis

UK jobless rate falls to a 44 year low as employers hire ahead of Brexit

(qlmbusinessnews.com via uk.reuters.com — Tue, 14th May 2019) London, UK —

LONDON (Reuters) – Britain’s unemployment rate fell to its lowest since the mid-1970s in early 2019 as employers hired in the run-up to the original date for Britain’s EU departure, but there were signs that Brexit was beginning to weigh on the jobs boom.

The rate edged down to 3.8% in the first quarter, its lowest since the three months to January 1975, the Office for National Statistics said on Tuesday. Unemployment dropped by 65,000, the most in more than two years.

But employment growth slowed to 99,000, well below a median forecast of 135,000 in a Reuters poll of economists, and wage growth lost momentum too.

“It is possible to see the shadow of Brexit in some of these figures,” Mike Jakeman, an economist at accountancy firm PwC, said. “March was the month when Brexit anxiety was at its most acute and it might have been the case that firms were more reticent to offer higher wages and advertise new positions.”

The numbers could just as easily be a minor blip in the recent run of strong jobs and earnings growth, he also said.

Britain’s labour market has remained resilient as Brexit has neared, helping households whose spending has driven an otherwise fragile economy.

However, the jobs boom may well reflect how employers have opted to take on workers – who can be laid off quickly during a downturn – rather than commit to longer-term investments while they wait for uncertainty over the conditions of Britain’s departure from the European Union to lift.

Brexit was originally due on March 29. Last month it was delayed for a second time until Oct. 31 to give Prime Minister Theresa May more time to break an impasse over its implementation in parliament and in her own Conservative Party.

RISING INEQUALITY?

The strength of the labour market has pushed wages up more quickly than the Bank of England has forecast, leading some economists to think it might raise interest rates faster than investors expect once the Brexit uncertainty clears.

The ONS said that in January-March, total earnings including bonuses rose by an annual 3.2%, slowing from 3.5% in the three months to February and weaker than a Reuters poll forecast of 3.4%.

Excluding bonuses, pay growth also slowed, rising by 3.3%, in line with the Reuters poll.

The BoE this month said it expected wage growth of 3% at the end of this year.

Many people in Britain have however seen no increase in their living standards since before the financial crisis more than a decade ago, and a Nobel Prize-winning economist said on Tuesday that Britain risked tracking the rise in inequality seen in the United States.

The recent hiring surge, while good for workers in the short term, has weighed on Britain’s weak productivity growth – a major fault line in the economy – raising concerns about the long-term prospects for growth and prosperity.

The ONS said output per hour fell by an annual 0.2% in the first quarter of 2019, its third consecutive fall. In quarterly terms, output per hour dropped by 0.6%, its biggest fall since the end of 2015.

The ONS data also showed the number of EU workers in the United Kingdom rose by an annual 58,000 after three consecutive falls. The number of non-EU workers in the country grew more strongly, up by 124,000.

By William Schomberg

KPMG fined £5m over misconduct of Co-operative Bank audit

(qlmbusinessnews.com via bbc.co.uk – – Wed, 8th May 2019) London, Uk – –

KPMG has been fined £5m and “severely reprimanded” after admitting misconduct in its 2009 audit of Co-operative Bank.

The Financial Reporting Council (FRC) said KPMG's bad auditing came in the wake of Co-operative Bank's merger with building society Britannia.

It said the firm's deficiencies included “failures to exercise sufficient professional scepticism”.

KPMG said it regretted that some of its audit work “did not meet the appropriate standards”.

The accountancy giant had also failed to tell Co-op Bank that a number of loans it acquired through the Britannia merger were riskier than thought and failed “to obtain sufficient appropriate audit evidence”, the FRC said.

KPMG will pay £4m after agreeing to a settlement. Audit partner Andrew Walker was also fined, and will pay £100,000. The accountancy firm will also pay the regulator's costs of £500,000.

Co-op Bank problems

The FRC's fines relate to the aftermath of Co-op Bank's merger with Britannia. In 2013, the bank entered a bid for 632 branches being sold by Lloyds Bank.

The deal collapsed after the discovery of a £1.5bn black hole in the Co-op Bank's balance sheet.

The Co-op Bank was subsequently taken over by a group of US hedge funds in a rescue deal in 2013.

In 2017, the bank required another, £700m rescue package from investors to stop it from collapsing.

The bank – which no longer has any association with its former parent the Co-op Group – now has about 68 branches, down from 164 in 2015. In common with its larger competitors, setting aside money for customers wrongly sold PPI loan insurance has hit its performance.

‘Unacceptable deterioration'

The fine is the latest in a series for KPMG, which is one of the “big four”, the four largest auditors in the UK which as well as KPMG, include PwC, EY and Deloitte.

Last month, it was fined £6m, received another severe reprimand and told to undertake an internal review over the way it audited insurance company Syndicate 218 in 2008 and 2009.

The FRC is also investigating the accountancy giant's audit of the government contractor Carillion, which collapsed under £1bn of debt last year.

In June 2018, the FRC also found an “unacceptable deterioration” in KPMG's work and said it would be subject to closer supervision.

Break them up?

The big four accountancy firms are currently under review by the Competition and Markets Authority (CMA), which has proposed an internal split between their audit and non-audit businesses to prevent conflicts of interest in audits.

MPS have gone further urging a full structural break up of the firms.

Deloitte, EY, KPMG and PwC currently conduct 97% of big companies' audits.

London Metal Exchange launched an initiative to ban brands not responsibly sourced by 2022

(qlmbusinessnews.com via uk.reuters.com — Tue, 23rd April, 2019) London, UK —

LONDON (Reuters) – The London Metal Exchange (LME) on Tuesday launched an initiative that could see it ban or delist brands that are not responsibly sourced by 2022 as part of efforts to root out metal tainted by child labour and corruption.

The 142-year-old LME, seeking to avoid overly punishing small mining brands to the benefit of larger miners such as Glencore, said it would not single out cobalt and tin for accelerated auditing.

The proposal is the largest step yet by the LME, the world’s biggest market for industrial metals, to clean up the global supply chain of all its commodities.

Cobalt is a key ingredient in the batteries that power electric vehicles and one flagged by human-rights groups as particularly high risk.

“Global consumers rightly demand action on responsible sourcing – and our industry must listen,” LME chief executive Matt Chamberlain said in a statement.

The LME said its proposed rules would require all brands to undertake a “Red Flag assessment” based on guidelines set by the Organisation for Economic Co-operation and Development (OECD) by the end of 2020.

The exchange would audit higher-risk brands by 2022 with a view to banning them if they do not comply.

In a consultation paper in October, the LME said it wanted to ban cobalt brands that traded at a significant discount against prices gathered by trade publication Metal Bulletin after 30 days.

The discount was created by concerns that some providers of cobalt to the exchange may have used child labour at operations mainly in the Democratic Republic of Congo, where several organisations have cited human-rights abuses.

The proposal marks a shift from the LME’s traditional role of requiring brands and companies to meet metallurgical standards to including issues of ethical responsibility.

Brands would be forced to publish fully all of their supply-chain information by 2024, the LME said.

By Zandi Shabalala, additional reporting by Eric Onstad

Hotel chain attribute shortage of workers due to Brexit uncertainty for fall in profits

(qlmbusinessnews.com via bbc.co.uk – – Fri, 15th Feb 2019) London, Uk – –

Millennium & Copthorne Hotels has blamed a shortage of workers due to Brexit uncertainty for contributing to falling profits.

The hotel chain reported a 28% fall in pre-tax profits to £106m for the 12 months to 31 December 2018, compared with the same period in 2017.

It said Brexit concerns had affected its UK hotels, particularly in London.

The hotel chain also blamed the US-China trade war, minimum wage and competition from Airbnb for its woes.

For the fourth quarter of 2018, pre-tax profits dropped 76% to £7m.

In particular, revenue per available room in London dropped 7.4%, partly due to the closure of its Mayfair hotel for refurbishment.

“Concerns about Brexit have affected the Group's UK hotels especially in London, where the hotels started to face difficulties in recruiting EU workers which currently comprise more than half of the London workforce,” it said in a statement.

The hotel chain also said that it had been affected by the increase in the minimum wage, which came into force last year.

“The shortage of talent-from rank and file to senior management-is intensifying with many new hotels being built around the world, not to mention the growth of Airbnb and serviced apartments,” said chairman Kwek Leng Beng.

He stressed that all hospitality businesses would “need to evolve and embrace” changes in the industry in order to remain relevant and profitable.

How Black Sheep Coffee Created Their Unique Blend To “leave the herd behind”

(qlmbusinessnews.com via telegraph.co.uk – – Sat, 19th Jan 2019) London, Uk – –

Gabriel Shohet and Eirik Holth can empathise with the blue back-to-workers who returned to their desks last week; five years ago, they too were uninspired by their careers.

But the duo did something about it, quitting their jobs to start a coffee chain.

The co-founders used to be university flatmates before graduating and joining private equity firms. They lost touch, but caught up on the phone one day about wanting to strike out on their own. “We were used to managing companies from the board, so never got stuck in or started anything from scratch,” explains Shohet. “Getting our hands dirty was very appealing.”

Inspiration struck: why not go into business together? “Coffee was our passion; we were always micro-roasting and experimenting with new blends at the flat,” recalls the entrepreneur. “We agreed to pack in our jobs, set a date and did it.”

From the beginning, they wanted their brand to stand out from the crowd. It inspired the name, Black Sheep Coffee (and its tagline, “leave the herd behind”).

They launched with a different brew: a 100pc speciality-grade robusta coffee that, unlike its commonly used arabica counterpart, has more caffeine and protein, and is higher on the PH scale. It makes for a smoother, frothier drink that’s easier to digest on an empty stomach.

Another difference is its work with homeless people, says Shohet. “We care deeply about doing good, but we wanted to do it directlyand not just donate to a big charity like everyone else.”

The Black Sheep owners introduced an initiative that enables customers to donate a discounted brew or completed loyalty card by sticking it or a note to a board in store. Those who can't afford a coffee can simply come in and grab one. “So many warned us against it, predicting drunks and thieves who would turn new business away,” recalls the co-founder. “They were wrong, of course – people have been polite and often help us to open in the morning.

“It's a neat way to fight social exclusion and break down barriers.”

The duo spent most of a start-up loan on kit, inventory and flights to meet suppliers. They carried out product tests and customer research by popping up at London markets and stations. “We had no salary and very little money,” recalls Shohet. “The first two years were really difficult, but we slowly built up [a positive] cash flow and enough landlord credibility that one eventually bought into our idea.”

A proper shop was a big turning point, but Shohet doesn't regret the financial struggle. “We had discipline and became very creative in terms of making things happen,” he says, giving the example of a stall in Urban Outfitters on Oxford Street. “We only sought out that partnership because we needed someone who would fit out our kiosk and wouldn't charge rent.”

The heavy footfall and prominent window branding was priceless, he thinks. “Not having any cash forces you to come up with cool concepts and different ways of getting things done.”

A £23,000 Kickstarter campaign helped the founders to kit out their first café in Charlotte Street, but they've otherwise shunned investment. “We've tried to grow without calling on institutions that may be looking for a quick return,” he says. “Short-term targets force you to compromise and limit your scope – it can kill the soul of a business.”

Black Sheep has been anything but limited, having grown to £10m in annual turnover and 28 shops across London, Manchester and Manila. “We're scaling very fast, which means we have to hire a lot of new people,” says Shohet, who leads 216 employees.

The biggest challenge has been finding and retaining that talent, he adds. Paying above market rate helps with the former (“if you want the best people, you have to be comfortable with the fact that they will be expensive”), while “clear” and “visible” career progression helps with the latter. “We have a strong training programme through which people can work their way up to head of coffee and gain industry-recognised qualifications.”

A smart benefit also enables staff to pursue their passions; the company will pay any employee to teach a free class to colleagues. “We don't want them to have to choose between Black Sheep and yoga or acting, for example,” says Shohet. “It's all about making sure that people have a good time working for us.”

Having a worse time is the high street, with more casualties expected this year. But the entrepreneur isn't worried. “Coffee is still very much about the experience,” he says. “People want to see it being made and drink it straight away; they want to use the Wi-Fi and hang out or host a meeting.”

In terms of what next for the brand, he wants to continue to focus on its two main mission statements: source the best coffee in the world and hire the best baristas in town. “Get those right and we can't really go wrong,” says Shohet, whose beans are currently sourced from India, Peru, Ethiopia and Papua New Guinea.

It will also keep on in its fight against plastic. Front of house, the business stocks paper straws and 100pc compostable cups and lids, explains the co-founder, who isn't a fan of offering discounts to clients who provide their own reusable cups. “We want to tackle the issue head-on, instead of making people pick between convenience and the environment.

“It's not the their responsibility to bring a cup or recycle another; it's ours.”

While there's still work to be done on the supplier side, Black Sheep has otherwise been plastic-free for three and a half years. “It's not that difficult,” says Shohet. “If we can do it, so can the big chains.”

By  Matthew Caines 

Chancellor Philip Hammond hints at Article 50 extension

(qlmbusinessnews.com via bbc.co.uk – – Wed, 16th Jan 2019) London, Uk – –

Chancellor Philip Hammond has raised the possibility of an extension to Article 50, the process by which the UK is due to exit the EU.

In a call with business leaders on Tuesday evening, Mr Hammond sought to reassure the business community that a “no-deal” Brexit could be avoided.

According to the CBI, he outlined how the 29 March date might be postponed.

John Allan, president of the CBI, said the chancellor appeared more relaxed about the possibility of a delay.

The CBI, the UK's biggest business lobby group, has warned a “no-deal” Brexit is a threat to jobs and growth.

Mr Allan said it “wasn't absolutely crystal clear” that the government could avoid that scenario, but he understood, following the call, that there would be moves in Parliament next week which would allow the UK's exit date from the EU to be put back “if it became clear we were heading towards that”.

A delay to implementation of Article 50 would avoid the UK leaving the EU without a negotiated deal.

The CBI chief said he was encouraged by government moves to build a cross-party consensus for a new approach to Brexit.

Andrea Leadsom, leader of the House of Commons, told the BBC the government would not be delaying Brexit.

“We are clear we won't be delaying Article 50. We won't be revoking it,” she said.

Despite fears that the pound would plummet if the government suffered a heavy defeat in Parliament, sterling rallied slightly. Shares traded in London broadly flat on Wednesday morning. Some observers have suggested that there is now a stronger consensus amongst MPs wishing to avoid a “no-deal” Brexit, making that a less likely outcome.

Investment bank Goldman Sachs said Tuesday evening's Parliamentary defeat for the prime minister made it more likely that the UK would pursue a “softer” Brexit, retaining closer ties to the EU, or even that Brexit might be overturned.

“We think the prospect of a disorderly ‘no-deal' Brexit has faded further,” Goldman Sachs' European economist Adrian Paul wrote in a note.

Goldman Sachs still believes the most likely outcome is that “a close variant” of the deal Mrs May has negotiated with Brussels will eventually be passed by the House of Commons.

However, Stephen Martin, director general of the Institute of Directors, said the UK was still “staring down the barrel of no deal”.

“As things stand, UK law says we will leave on 29 March, with or without a withdrawal agreement, and yet MPs are behaving as though they have all the time in the world – how are businesses meant to prepare in this fog of confusion?” he said.