Britain at ‘significant risk’ of gas shortages this winter, says regulator

(qlmbusinessnews.com via uk.reuters.com — Tue, 4th Oct, 2022) London, UK —

 UK faces a “significant risk” of gas shortages this winter and a possible emergency due to the conflict in Ukraine and limited supplies in Europe, the energy regulator has said.

Although Russia only meets about 4% of Britain's gas needs, a disruption in supply to Europe has contributed to driving up British prices and makes it harder for Britain to secure gas from others.

In a letter to power company SSE (SSE.L), regulator Ofgem said Britain faced the possibility of a “gas supply emergency” in which gas supplies to some gas-fired power plants are curtailed, which can stop them from generating electricity.


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Responding to the publication of the letter, Ofgem said in an email: “This winter is likely to be more challenging than previous ones due to the Russian disruption of gas supplies to Europe.”

In the event of gas supply issues the regulator and Britain's National Grid could be forced to curb supply of gas to gas-fired power stations to make sure enough supply remains available to households.

“We need to be prepared for all scenarios this winter,” Ofgem said in the email.

“As a result, Ofgem is putting in place sensible contingency measures with National Grid ESO (Electricity System Operator) and GSO (Gas System Operator) as well as the government to ensure that the UK energy system is fully prepared for this winter,” Ofgem said.

SSE had contacted Ofgem for clarity over imbalance charges which could see power generators forced to pay for failing to produce promised electricity, if emergency measures meant they did not get the gas they needed.


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Gas-fired power plants were responsible for more than 40% of Britain's electricity production last year while the fossil fuel is also used to heat around 80% of British homes.

Britain's National Grid (NG.L) said in July there could be periods where electricity supply is tight this winter, given uncertainty over supplies of Russian gas to Europe, but that it expects to be able to meet demand.

National Grid is expected to announce its winter outlook on Thursday.

Reporting by Susanna Twidale and Sachin Ravikuma

 

Chancellor Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

(qlmbusinessnews.com via bbc.co.uk – – Mon, 3rd Oct 2022) London, Uk – –

The government has U-turned on plans to scrap the 45p rate of income tax for higher earners.

Chancellor Kwasi Kwarteng told the BBC the proposals, announced just 10 days ago, had become “a massive distraction on what was a strong package”.


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“We just talked to people, we listened to people, I get it,” he added.

The decision, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs criticised the plan.

On Sunday, Ms Truss had said she was committed to the policy.

The plan to scrap the 45p rate, paid by people earning more than £150,000 a year, was announced as part of a package of tax cuts.

Mr Kwarteng told BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.

Asked whether he owed people an apology, he said: “We've listened to people. And yeah, there is humility and contrition in that. And I'm happy to own it.”

On how the decision was made, he said: “The prime minister decided not to proceed with the abolition of the rate.”

However, pressed on whether it was her U-turn, Mr Kwarteng added: “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn't proceed with the abolition of the rate.”

Asked if he had considered resigning, he said: “Not at all.”

On Sunday, the prime minister had told the BBC the move to cut the top rate of income tax was “a decision that the chancellor made”.

But she also said she was absolutely committed to it as part of a package to make the tax system “simpler” and boost growth.

Asked whether his previous comment that there was “more to come” on tax cuts still stood, Mr Kwarteng said there would be no tax cuts ahead of the next Budget in the spring.

Pressed on whether his economic plans would mean spending cuts for public services, the chancellor said there would be more details in the government's fiscal plan on 23 November.

However, he said the government was sticking to its 2021 comprehensive spending review, meaning it will not raise spending in line with inflation.

BBC political editor Chris Mason said the U-turn had left the chancellor and prime minister “humiliated, wounded and weakened”.

“But Liz Truss will hope it creates space to move forward, hauling herself out of the political quagmire of a budgetary statement that imploded on contact with political reality,” he said.

Labour called for the government to “reverse their whole economic, discredited trickle down strategy”.

Shadow chancellor Rachel Reeves said the U-turn came “too late for the families who will pay higher mortgages and higher prices for years to come”.

Lib Dem leader Sir Ed Davey called on the chancellor to resign, saying he no longer had “any credibility” and the whole mini-budget needed an overhaul.

Plans to scrap the top rate of tax had seen remarkable opposition from the markets, other parties and a growing number of Tory MPs.

Conservative Party chairman Jake Berry had previously warned Tory MPs who voted against the prime minister's tax measures that they would be kicked out of the parliamentary party – known as losing the whip.

But increasingly, it seemed Ms Truss did not have the numbers to get it through Parliament.

On Sunday, senior Tory Michael Gove hinted he would not vote for the plan when it came to Parliament, saying “I don't believe it's right”.

The former cabinet minister said the PM's decision was “a display of the wrong values”.

Former cabinet minister Grant Shapps had warned the prime minister would lose a Commons vote on the proposal.

He welcomed the U-turn, telling the BBC: “It's better to act, it's better to reverse ferret on something that's causing a problem like this, and it sends a very important signal to the public and also to the markets that we are serious about sound money.”

The decision was also welcomed by the Confederation of British Industry.

Director-general Tony Danker said the pledge had become a “distraction” from other economic reforms, which he said would “make a real difference to growth”.

The U-turn, suggestions of which were first reported by the Sun, comes on the second day of the Conservative conference in Birmingham, with Mr Kwarteng due to speak later on Monday.

The pound jumped on the news, rising by more than a cent against the dollar to $1.1263, before falling back.

The currency touched a record low last week after Mr Kwarteng's mini-budget created turmoil on the markets.


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A 45% tax rate applies to income above £150,000 in England, Wales and Northern Ireland.

Scrapping the top rate made up around £2bn of the £45bn worth of tax cuts announced by the chancellor in his mini-budget.

Other measures announced included a cut to the basic rate of income tax to 19%, a reversal of the recent rise in National Insurance and scrapping the cap on bankers' bonuses.

By Nick Eardley

 

Vodafone and Three UK accelerate ‘merger’ talks

(qlmbusinessnews.com via news.sky.com– Mon, Oct 3rd c 2022) London, Uk – –

A combined Vodafone and Three UK would become the largest mobile telecoms supplier in Britain, with a deal potentially being struck by the end of the year, Sky News learns.

Vodafone and the owner of Three UK have accelerated talks about a deal to combine their British operations, paving the way for the creation of the industry’s mobile phone industry’s biggest player by customer numbers.

Sky News has learnt that Vodafone and CK Hutchison are hopeful of striking an agreement by the end of the year to establish a joint venture or other form of business combination.


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People close to the talks said the discussions had intensified in recent weeks following a period in which they were thought to have stalled.

CK Hutchison, the Hong Kong-based conglomerate, has been exploring a sale of Three UK for some time, having concluded that the operation – which has 9m customers – was sub-scale in a sector which carries huge capital investment requirements for developing network infrastructure.

It is said to have decided that a deal with Vodafone represents its best opportunity to help it play a role in market consolidation, with the latter's chief executive, Nick Read, under pressure form shareholders to revive its flagging share price.

Insiders said on Monday that discussions between the two companies were now at a “relatively advanced” stage, although several significant hurdles remained outstanding and there was no certainty that a deal would ultimately be reached.

The most imposing of these is likely to be the regulatory scrutiny that a deal would face both from Ofcom, the telecoms industry regulator, and the Competition and Markets Authority.

Industry sources said it was “almost certain” that the CMA would want to launch a full-blown, or Phase-II, merger inquiry, with the majority of such investigations leading to deals either being blocked or requiring remedies such as asset sales.
One Vodafone investor queried whether such remedies, depending upon their scale, could undermine the logic of a tie-up.
Concerns are also likely to be raised by rivals about the volume of spectrum owned by the combined group, with one analyst saying it would control 46% of all UK mobile spectrum.

Ofcom, meanwhile, has hinted at a softer approach to consolidation among the UK's leading mobile networks.

A deal would create a market-leading business, with roughly 27 million customer connections.

That would be larger than Virgin Media O2, which boasted 24 million retail connections in July, and EE, which is owned by BT Group and has approximately 20 million customers.

Industry chiefs have ben calling for regulators to allow the consolidation of the UK industry from four major networks – EE, O2, Three UK and Vodafone – to just three, a move that would stoke concerns among consumer groups of price hikes during a huge squeeze on Britons' cost-of-living.

Market sources say CK Hutchison has indicated during deal-related talks that it was seeking a valuation for Three UK of roughly £6bn, although that pre-dated the sale of some mobile towers assets, so it was unclear if that figure remained current.

One industry analyst speculated on Monday that the value of the combined Vodafone-Three UK business could be in the region of £12bn-£15bn.

In recent months, doubts have intensified about Mr Read's long-term position after a number of prominent investors acquired stakes in Vodafone.

The most recent of these was Xazier Niel, the French billionaire, who disclosed that he had built a 2.5% stake in the company.

Mr Niel said in an accompanying statement that he believed there were “opportunities to accelerate…the streamlining of Vodafone's footprint”.


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Cevian Capital, a major European activist investor, emerged as a Vodafone shareholder last year, while state-controlled Emirates Telecommunications Group, acquired almost 10% of the FTSE-100 company in May.

On Monday morning, shares in Vodafone were trading at just over 100p, giving the company a market capitalisation of about £30bn.

Its stock has fallen by 10% during the past year.

Vodafone and Three UK both declined to comment.

 

£1bn Serco pension scheme seek financial support from outsourcer amid markets turmoil

(qlmbusinessnews.com via news.sky.com– Fri, 30th Sept 2022) London, Uk – –

Serco's pension trustees asked the company to provide a standby credit facility as it faced growing demands for collateral amid a surge in gilt yields, Sky News learns.

Sky News has learnt that the outsourcing giant's pension trustees contacted the company in recent days about establishing a new credit facility in the event of a continued deluge of collateral calls.

The request is thought to be highly unusual and highlights the turmoil caused even in well-funded and well-run corporate pension schemes by the sudden surge in gilt yields that followed last Friday's fiscal statement by Chancellor Kwasi Kwarteng.

The Bank of England intervened in financial markets on Wednesday by promising to buy tens of billions of pounds in government bonds during the next fortnight in an attempt to stabilise the market.

That followed a slump in sterling's value against the dollar to its lowest-ever level and deep anxiety about investors' appetite to buy UK government bonds.

Ministers have sought to blame the turmoil on global market forces, but Mr Kwarteng's £45bn of unfunded tax cuts, announced in last week's mini-budget, have been held responsible by many analysts for sparking the most dangerous financial markets rout since the 2008 banking crisis.

A person close to Serco pointed out that its retirement schemes boasted a surplus, before tax, of £105.3m at its latest half-year results.

The source added that the standby loan request from its pension trustees was simply to provide liquidity to help it meet demands for additional collateral.

Corporate pension fund trustees were faced with no choice but to sell billions of pounds of equities and bonds this week to meet margin calls – forcing them to put up extra collateral – as gilt yields surged and upset delicately balanced hedging strategies.

The turmoil has drawn closer attention to so-called Liability-Driven Investing, in which many pension schemes use financial instruments such as derivatives to help them match their long-term assets and liabilities.

The precise number of Serco's pension scheme members was unclear on Friday.

Members' retirement funds are not at risk as a consequence of the move to seek financial support from the schemes' sponsor.

According to its most recent results, Serco makes annual deficit recovery payments of £6.6m, a figure that is fixed until 2030.


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Serco is one of Britain's biggest outsourcing groups, handling contracts for a multitude of government departments.

This month, the company announced that Rupert Soames, its long-serving chief executive and grandson of Sir Winston Churchill, would retire.

He is regarded as one of Britain's most capable chief executives, having transformed Serco's fortunes since taking over in 2014.

Serco and its pension trustees both declined to comment.

By

EU agrees windfall tax on energy firms

(qlmbusinessnews.com via bbc.co.uk – – Fri, 30th Sept 2022) London, Uk – –

The European Union has agreed to impose emergency measures to charge energy firms on their record profits.

Ministers have agreed windfall taxes on certain energy companies as well as mandatory cuts in electricity use.


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The plan includes a levy on fossil fuel firms' surplus profits and a levy on excess revenues made from surging electricity costs.

The cash raised is expected to go to families and businesses.

But the bloc is divided on whether and how to cap the wholesale price of gas.

It comes as Europe braces itself for a difficult winter due to the cost of living crisis and squeeze on global energy supplies.

The bloc is largely trying to wean itself off Russia energy but it has left it scrambling for other alternative, expensive, sources.

A windfall tax is imposed by a government on a company to target firms that were lucky enough to benefit from something they were not responsible for – in other words, a windfall profit.

Energy firms are getting much more money for their oil and gas than they were last year, partly because demand has increased as the world emerges from the pandemic and more recently because of supply concerns due to Russia's invasion of Ukraine.

Earlier this week, 15 member states, including France and Italy, asked the EU to impose a price cap on gas bills to slow the soaring costs.


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A decision has not yet been announced on a price cap.

In the UK, former Chancellor Rishi Sunak introduced a similar tax to Friday's EU agreement in May, which he called the Energy Profits Levy.

It was applied to profits made by companies from extracting UK oil and gas, but not those that generate electricity from sources such as nuclear or wind power.

 

Porsche shares rise on first trading day in €75bn stock market float

(qlmbusinessnews.com via theguardian.com – – Thur, 29th Sept 2022) London, Uk – –

UK’s Next warns sterling plunge may cause second cost of living crisis

(qlmbusinessnews.com via uk.reuters.com — Thur, 29th Sept 2022) London, UK —

The plunge in the value of the pound looks set to create a second cost of living crisis for Britons, clothing retailer Next (NXT.L) warned on Thursday, cutting its sales and profit forecasts.

Shares the company tumbled more than 7% after it said August trading had been below expectations and pressure on household budgets was set to intensify in the coming months.

“It looks like we may be set to have two cost of living crises: this year, a supply side-led squeeze, next year a currency led price hike as devaluation takes effect,” said CEO Simon Wolfson.


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Next, which trades from about 500 stores and online and is often considered a gauge of how British consumers are faring, said it now expected full price sales in the second half of its financial year to fall 1.5%, and a full year pretax profit of 840 million pounds ($905 million), up 2.1% versus 2021-22.

It previously forecast second-half full price sales growth of 1% and a full year pretax profit of 860 million pounds.

The company said cutting its guidance was a difficult call, given sales in September had improved and the company may see benefits from recent government measures, such as an energy price cap. Sales to date in August and September are down 0.3%.

The group reported a pretax profit of 401 million pounds for the six months to July, up 16%, with full price sales up 12.4%.

TURMOIL

Confidence levels among Britain's consumers sank to a record low this month as they struggle with the accelerating cost of living, even before the government's mini-budget on Friday sowed turmoil in the mortgage market, leading to warnings of a sharp drop in house prices.

Wages are failing to keep pace with inflation that was 9.9% in August and Next's rivals Primark(ABF.L), ASOS (ASOS.L) and Boohoo (BOOH.L) have all warned on profit this month.

The government has announced a raft of tax cuts and help on energy costs for consumers and businesses, but the pound/U.S. dollar exchange rate has fallen to almost parity, raising the price of imports.

Wolfson said that while it seemed inevitable that clothing and homeware sales would slow, healthy employment and savings levels provided some comfort.


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He said it was too early to tell what impact government help would have, though it was likely the scale of the measures would support spending.

Looking to the 2023-24 year, he said if the weakness of the pound continued, it would likely inflate selling prices, particularly in the second half.

Separately on Thursday, H&M, the world's No.2 fashion retailer, launched a cost savings drive after reporting weaker-than-expected profits.

Reporting by James Davey

 

Amazon Involvement in Digital Euro Project Attacked by EU Lawmakers

(qlmbusinessnews.com via coindesk.com — Thur, 29th Sept 2022) London, Uk – –

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Cross-party lawmakers cited worries over data privacy and taxation as they demanded a U-turn on the controversial European Central Bank decision to let Amazon build a prototype app for a digital euro.

A cross-party coalition of members of the European Parliament on Tuesday turned their fire on the European Central Bank for picking U.S. retail giant Amazon to help develop the digital euro.


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Fabio Panetta turned up to a morning meeting of the Economic and Monetary Affairs committee with a pre-prepared speech on the currency’s design features – perhaps expecting the usual placid exchange of views over plans for the central bank digital currency.

Instead he was met with demands from furious lawmakers to backtrack on his decision to pick the U.S. company – the subject of numerous controversies – to develop a prototype for e-commerce applications of the putative new CBDC.

“We know that the reputation of Amazon in terms of social and tax policy is questionable, I have to say,” said center-left lawmaker Eero Heinäluoma, citing a record-breaking fine of 746 million euros ($720 million) the company received from data protection regulators last year for allegedly breaching privacy rules, which the company has since appealed. “What does Amazon have that could not be found in the European Union?”

Other lawmakers questioned whether the choice would undermine the stated goals Panetta has for the digital euro – to keep EU payments competitive and free from foreign meddling.

“How do you explain this choice really?” asked Stéphanie Yon-Courtin, a lawmaker from French President Emmanuel Macron’s centrist Renew Europe coalition. “In July 2022, you were saying about the digital euro that it would protect the strategic autonomy of European payments and monetary sovereignty… You were also saying that a digital euro would help to avoid market dominance. Three months later, we've been announced that Amazon has been selected over 54 companies.”

Lawmakers from the Green Party went further, calling for the ECB to reverse the decision to avoid undermining the entire project.

“I would like to know whether you would consider revising the decision,” said the Greens’ Ernest Urtasun. He drew parallels with the now-abandoned Libra initiative, in which the involvement of the “big American company” Facebook (now Meta) in a cryptocurrency project drew “strong opposition.”

If there was no change of heart, Urtasun asked if Panetta wasn't worried that “this project – which is essential and that the parliament supported – will not start with a very strong lack of credibility.”

Panetta defended his decision, arguing that Amazon had been chosen based on pre-issued criteria which he was powerless to now change, and that the prototypes Amazon develops would not be re-used later on.

“We wanted to have one merchant, and only one merchant applied” to the call for tender, Panetta said. “We want to learn [from] the best technology not from the worst one… there are not many companies in Europe that could show their experience in dealing with hundreds of millions of users.”

“There is no impact of this prototyping exercise on the future development on the actual participation to the terms of the digital euro,” Panetta said. “You are concerned what could be the consequences of this exercise? Zero.”

Panetta also stressed that, for its participation, the company received neither financial rewards, nor privileged data about the project or its users – but if anything, those assurances seemed to increase lawmakers’ disquiet.


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“Honestly, I am now more worried than before,” said the socialist party’s Jonás Fernández, since the lack of a financial reward implied the company was profiting in some other way.

Amazon declined to comment on the hearing itself but reiterated a previous statement that it was “excited to work with the European Central Bank on their digital euro prototyping exercise.”

By Jack Schickler

IMF criticised UK government’s mini-budget, warns ‘likely to increase inequality’

(qlmbusinessnews.com via news.sky.com– Wed, 28th Sept 2022) London, Uk – –

The IMF also recommended against fiscal policies not targeted towards specific groups, saying that the plans as they are will benefit the rich rather than those who really need help.

The International Monetary Fund (IMF) has criticised the UK government's mini-budget, saying the plans for tax cuts and spending will increase inequality and counteract the Bank of England's monetary policy.


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The conflicting government and currency policies, of seeking to ramp up growth via tax cuts and rein in inflation through interest rate rises, attracted sharp comment from the global financial institution on Tuesday.

“It is important that fiscal policy does not work at cross purposes to monetary policy,” a spokesperson said.

UK policy condemned as ‘utterly irresponsible' – pound latest

The IMF – which saw its concerns echoed by a former Bank of England deputy governor – also recommended against fiscal policies not targeted towards specific groups.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” the spokesperson added.

The organisation was unequivocal: “The nature of the UK measures will likely increase inequality.”

‘Tories believe in redistribution – from poor to rich!'

‘Consider more targeted support'

It is the latest in mounting criticism of the government's decision to fund the biggest tax cuts in 50 years by borrowing money.

The announcement sent the pound to an all-time low, making importing goods more expensive, and saw government borrowing costs increase as gilt yields rose.

The IMF called on the government to consider more targeted support to families and business.

Chancellor Kwasi Kwarteng's 23 November fiscal plan, to be announced along with Office of Budget Responsibility forecasts, would be an appropriate occasion to do so, the IMF said.

It would provide an “early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high-income earners”.

Why does the weak pound matter?

The situation is being watched, the IMF warned, adding: “We are closely monitoring recent economic developments in the UK and are engaged with the authorities.”


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The IMF has had to intervene in UK affairs in the past.

In 1976, Britain had to apply for an IMF loan of nearly $4bn during a financial crisis. At the time, IMF negotiators insisted on deep cuts in public expenditure.

By Sarah Taaffe-Maguire, business reporter

 

Nottingham Building Society to close a third of branches

(qlmbusinessnews.com via bbc.co.uk – – Wed, 28th Sept 2022) London, Uk – –

The Nottingham building society says it will close a third of its branches “due to changing consumer behaviour”.

The society said 17 branches including Leicester, Matlock and Skegness would close before the end of the year.


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Kathryn Kitson, from the society, said the branches were “unsustainable” as some customers had not returned since Covid lockdowns.

She said staff would be offered roles elsewhere in the business and branch customers would also be supported.

Other locations affected by the closures are: Ashbourne, Bourne, Crystal Peaks, Fakenham, March, Melton Mowbray, Rothley, Scunthorpe, Spalding, Stamford, Stapleford, Thetford, Wigston and Wollaton.

‘Disappointing news'

Ms Kitson, head of branch network at The Nottingham, said the firm had carried out a “thorough review” of how members were using branches and found “very low levels of transactions and usage” at some locations.

“Therefore, we've made the hugely difficult decision to close 17 branches in locations where the level of activity in the branch has reached a point where it is no longer sustainable,” she said.

“We appreciate this is disappointing news for both the members who use one of the affected branches, and our colleagues who work there.

“However, we have been thorough and considered when making decisions on which branches to close, trying to ensure there are options in place for more vulnerable members and also taking into account the impact on the communities our branches serve.”


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Ms Kitson said The Nottingham would “be focused on doing the right thing by colleagues over the coming weeks” by running a redeployment programme and offering “enhanced redundancy pay” to those leaving the business.

The closures will reduce the society's branches from 48 to 31.

By Heather Burman

UK mortgages rates to rise further: ‘next 10 days crucial’ as to how high

(qlmbusinessnews.com via theguardian.com – – Tue, 27th Sept 2022) London, Uk – –

Building society chief responds as stock market falls and pound slides after Kwarteng’s mini-budget.

Mortgage rates in the UK will rise further in coming days, and the next 10 days in financial markets will be crucial in determining how high they will go, according to the head of Principality building society.


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Experts are predicting that a typical two-year fix, which has cost borrowers £850 a month, could go up to almost £1,500 a month, after Kwasi Kwarteng’s mini-budget on Friday shocked markets and sent the pound plunging, as well as triggering a government bond sell-off. Sterling hit a record low of about $1.035 on Monday morning and has recovered slightly to $1.08, but is still down 7% this month.

Julie-Ann Haines, the chief executive of the building society, which has 500,000 members, said: “This £6,000-a-year difference [in mortgage costs] is really dependent on whether the markets over the next two weeks continue to think that the Bank of England base rate will get to 6%.”

The pound’s slide, which makes crude oil, priced in dollars, and imported goods more expensive, threatens to push UK inflation, already at 9.9%, even higher and is expected to force the Bank of England to raise interest rates to 5% or 6% by next summer. It lifted its base rate by a half a percentage point to 2.25% the day before the mini-budget.

Haines told BBC Radio 4’s Today programme: “What we do know is over 2022 we’ve seen very significant increases. Even so far, what we’ve seen passed on in mortgage rates is resulting in about an extra £3,000 to £4,000 a year for an average £250,000 mortgage. What the markets do in the next 10 days is really quite important in determining how big the impact is.”

UK government bonds, known as gilts, are on track for their worst month on record, going back to the 1950s. The sell-off has pushed the cost of borrowing for 10 years up to 4.1%, from 3.1% before the mini-budget. The slump in gilt prices has forced several mortgage providers, including Virgin Money and Skipton building society, to pull deals.


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Haines said Principality had a “a slightly smaller range than normal” and, as a small lender, was affected by others pulling mortgage deals, but that the mutual was working hard to help customers. She stressed that building societies and other lenders needed to be able to make a margin to survive as businesses.

“We no doubt see [mortgage] rates increase over the next 10 days,” she said. “If we can start to get a grip on what’s happening in the markets through building confidence from the Bank of England and the government then you are hoping that mortgage lenders will come back into the market.”

By Julia Kollewe

 

HSBC hires Goldman Sach’s Ma to lead North Asia global banking

(qlmbusinessnews.com via uk.reuters.com — Tue, 27th Sept, 2022) London, UK —

HSBC has appointed Goldman Sachs partner Christina Ma as its head of global banking for North Asia, according to a memo seen by Reuters.

Ma will join the bank after 21 years with Goldman Sachs , most recently as its head of Greater China equities.


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She will replace Dai Kitamura, who was serving in the role on an interim basis before taking extended leave earlier this year. He will leave HSBC on Nov. 1 after 27 years with the bank.

The contents of the memo were confirmed by a HSBC spokesperson.

Ma will remain based in Hong Kong, and starts her new role in the first quarter of 2023, the memo said.

Reporting by Scott Murdoch

 

Pound sinks to a record low against the dollar

(qlmbusinessnews.com via news.sky.com– Mon, 26th Sept 2022) London, Uk – –

Labour demands a “credible plan” as sterling's decline continues, fuelling fears the currency could plunge to parity with the US dollar.

How Amazon Changed Whole Foods, With New High-Tech Shopping

Source: CNBC

Five years ago, Amazon bought Whole Foods for $13.7 billion. Since then, there’s been a lot of changes, including a new CEO starting Sept. 1. It added a palm-scanning payment option, hundreds of cameras and sensors to enable checkout-free shopping, and a “dark store” devoted entirely to online orders. Take a look at how the new high-tech shopping, prices and product selection have changed since Amazon took over the specialty grocer in 2017.

 

Chancellor Kwasi Kwarteng’s Mini Budget key Announcements

(qlmbusinessnews.com via news.sky.com– Fri, 23rd Sept 2022) London, Uk – –

Stamp duty, energy bills and alcohol duty: The key announcements in Chancellor Kwasi Kwarteng's mini-budget.

Here are the key points from Chancellor Kwasi Kwarteng's mini-budget statement to MPs:

TAXES

• The basic rate of income tax will be cut to 19p in the pound from April 2023. Will mean 31 million people will be better off by an average of £170 per year.

• The 45% higher rate of income tax is to be abolished.


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• It was already announced that April's National Insurance hike is to be reversed from 6 November – saving money for businesses and 28 million workers. The 1.25 percentage points increase was introduced under former chancellor Rishi Sunak.

• Planned duty rises on beer, cider, wine and spirits cancelled

HOUSING

• Stamp duty to be cut from “today”. Nothing will be paid for first £250,000 of property's value – double the current amount allowed. The threshold for first-time buyers is to be increased from £300,000 to £425,000. The value of the property on which first-time buyers can claim relief is to also go up from £500,000 to £625,000.

• Household bills to be cut by an expected £1,400 this year with aid from energy price guarantee and £400 grant. Millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.

INFLATION

• Total cost of energy package, including business support, over next six months estimated at £60bn. It is “entirely appropriate for the government to use our borrowing powers to fund temporary measures to support families and businesses”.

• Treasury estimates see tax cut measures costing nearly £45bn a year in         2026.

• Independent forecasters expect the government's energy plan “will reduce peak inflation by around five percentage points”.

• Bank of England independence is “sacrosanct”.

• Government to set out its fiscal approach more fully in future and the Office for Budget Responsibility will publish an economic and fiscal forecast before the end of the year.

BANKERS BONUSES

• The cap on bankers' bonuses is to be lifted as part of efforts to “reaffirm” the UK's status as a financial services hub.

BUSINESS SUPPORT

• Planned rise in corporation tax to 25% next year is cancelled. “We will have the lowest rate of corporation tax in the G20. This will plough almost £19 billion a year back into the economy”, Mr Kwarteng said.

• Will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.

• To cut taxes for businesses in designated sites for 10 years to support investment, jobs and growth. In talks with 38 local and mayoral combined authority areas in England about “investment zones”. Aims to roll out more widely across UK.

• New legislation will cut barriers and restrictions to building new roads, rail and energy infrastructure.

• Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced. Aim is to reduce vacancies in economy.

• Introducing VAT-free shopping for overseas visitors.


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• Changing regulations to increase investment by pension funds into UK assets, benefiting savers and boosting economic growth, and incentivising investment into Britain's science and tech companies.

• Annual Investment Allowance – tax relief for businesses on plant and technology investment – to remain at £1m permanently, rather than letting it return to £200,000 in March 2023.

 

737 Max: Boeing to pay investors $200m over charges it misled on safety issues

(qlmbusinessnews.com via bbc.co.uk – – Fri, 23rd Sept 2022) London, Uk – –

Boeing is to pay out $200m (£177.5m) over charges that it misled investors about two fatal 737 Max crashes.

The US stock market regulator said the aviation giant and its former chief executive Dennis Muilenburg made false statements about safety issues.

Boeing “put profits over people” in an effort to rehabilitate its image, according to the Securities and Exchange Commission (SEC).

The 737 Max was grounded for 20 months after two crashes killed 346 people.


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As part of the settlement Mr Muilenburg will also pay a penalty of $1m.

“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets,” SEC chairman Gary Gensler said in a statement.

Boeing and Mr Muilenburg “failed in this most basic obligation,” he added.

The SEC's statement also said that both Boeing and Mr Muilenburg did not admit or deny the regulator's findings.

“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company in response to those accidents,” Boeing said in response to the SEC's announcement.

“Fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency,” the company added.

The SEC said a fund will be established for investors who suffered losses due to the misleading information between 2018 and 2019.

Analysis: Theo Leggett

This settlement is largely symbolic. The 737 Max scandal has already cost Boeing tens of billions – another $200m will barely register.

But it does give the SEC the chance to call out Boeing and its ex-chief executive Dennis Muilenburg for making assurances about the plane's safety, when they already knew it had a serious problem – thereby misleading investors.

It's unlikely this will cause Boeing any meaningful harm. Its corporate reputation had already been severely damaged by the affair. The company is now working hard to restore it, and regain public and investor confidence.

For Mr Muilenberg himself, the financial consequences of the settlement won't be that painful either. He received some $60m in compensation and benefits when he left the company. But the fact that the SEC chose to charge him personally sends out a powerful signal.

There have been criticisms in some quarters that the ex-boss has not been properly held to account for his role in the affair. On this occasion, though, the finger has been pointed squarely in his direction.

On 29 October 2018, Lion Air Flight 610 crashed into the Java Sea 13 minutes after taking off from Jakarta's Soekarno-Hatta International Airport, killing all 189 passengers and crew.

Less than five months later, Ethiopian Airlines Flight 302, another Boeing 737 Max on its way to Kenya, crashed six minutes after leaving Ethiopia's capital Addis Ababa. All 157 people on board were killed.

The crashes were linked to a flight control system called the “Maneuvering Characteristics Augmentation System” (MCAS) in the Boeing 737 Max.

The SEC said that “after the first crash, Boeing and Mr Muilenburg knew that MCAS posed an ongoing airplane safety issue, but assured the public that the 737 Max was safe to fly.


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The crashes have cost Boeing more than $20bn, including payments to families of those killed in the crashes.

In the wake of the incidents, the US Congress passed new legislation reforming how the country's aviation regulator, the Federal Aviation Administration (FAA), certifies new planes.

A small number of trials are expected to start next year to resolve outstanding claims.

By Monica Miller

BoE set for second hefty rate rise in a row

(qlmbusinessnews.com via uk.reuters.com — Thur, 22nd Sept, 2022) London, UK —

The Bank of England looks set to raise interest rates by at least half a percentage point on Thursday in a bid to tame inflation that is just off a 40-year high, against a backdrop of a tumbling currency and a free-spending government.

Economists polled by Reuters last week expect the BoE to announce at 1200 GMT that rates will rise to 2.25% from 1.75%, while financial markets have priced in a bigger move to 2.5%.

The BoE is also expected to confirm that it will soon sell some of the 838 billion pounds ($944 billion) of government bonds which it bought during more than a decade of quantitative easing – the first major central bank to do so.


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The BoE's half-point increase in rates last month was its biggest since 1995. If it raises rates by three-quarters of a point on Thursday it would be the largest hike since 1989, barring a failed, temporary attempt to shore up sterling in 1992.

The U.S. Federal Reserve increased its main interest rate by three-quarters of a percentage point on Wednesday and signalled more large increases to come.

Sterling sank to its lowest since 1985 against the U.S. dollar after the Fed decision and is at its lowest against a basket of currencies since 2020, pushing up the price of imports.

Central banks globally have been hiking rates to tackle inflation caused by the surge in energy prices following Russia's invasion of Ukraine, as well as supply-chain pressures and labour shortages since the COVID-19 pandemic.

The BoE was the first major central bank to raise rates in the current cycle, beginning in December last year.

Britain's annual rate of consumer price inflation edged down to 9.9% in August from a 40-year high of 10.1% in July, its first drop in nearly a year though still far above the BoE's 2% target and the highest in the Group of Seven.

MIXED INFLATION OUTLOOK

The short-term outlook for inflation is now somewhat better than at the time of the BoE's last meeting in early August.

New Prime Minister Liz Truss's caps on household and business energy tariffs mean inflation is unlikely to rise as high as the 13.3% peak the BoE had pencilled in for October, or rates of more than 15% which economists expected for early 2023.

However, the caps – combined with likely cuts to taxes on employment, business profits and potentially house purchases – amount to more than 150 billion pounds of economic stimulus that was not factored into the BoE's forecasts last month.

This, in turn, could prompt the BoE to raise rates more than previously thought over the coming year, despite what will still be a big squeeze on living standards from high inflation.

“Although the immediate risk of recession over the coming winter is diminished, substantial fiscal stimulus adds to the risk of high inflation being maintained for longer – and hence the chances of, ultimately, substantially more policy tightening by the Bank of England being required,” Investec economist Sandra Horsfield said.

Interest rate futures late on Wednesday showed BoE rates reaching 3.75% in December and plateauing at 4.75% from March.

New finance minister Kwasi Kwarteng will set out more details of the budget plans on Friday, including an update to debt issuance.

Last month, the BoE forecast the economy would enter recession in the final quarter of 2022 and shrink throughout 2023.


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A recession of this length now looks unlikely, economists say, but there is a risk – following contraction in the second quarter and weak retail sales and business survey data since – that the economy is already in a technical recession.

A public holiday to mark Queen Elizabeth's funeral, following more than a week of national mourning that led to the cancellation of some public events, will also reduce third-quarter output. The BoE also decided to delay by a week its policy announcement, which had been due out on Sept. 15.

Reporting by David Milliken

MPs warns: Energy bailout will benefit corporate giants who don’t need it

(qlmbusinessnews.com via theguardian.com – – Thur, 22nd Sept 2022) London, Uk – –