Bank of England: The negative impact of a no-deal Brexit not as severe as originally thought

( via – – Thur, 5th Sept 2019) London, Uk – –

The Bank of England updates analysis on the potential impact of a no-deal Brexit on the economy as Mark Carney goes before MPs.

The negative impact of a no-deal Brexit will not be as severe as originally thought because of improved planning by the government, businesses and the financial sector, the Bank of England has said.

Governor Mark Carney told the Treasury select committee that the Bank now believes GDP will fall by 5.5% in the worst-case scenario following a no-deal Brexit – less than the 8% contraction it predicted in last November.

The Bank's revised assessment of the possible scenarios also says unemployment could increase by 7% and inflation may peak at 5.25% if the UK leaves the European Union without a deal.

While he warned that there would still be an economic impact, with food bills likely to rise, Mr Carney said preparations for no-deal since the end of last year had informed the improved picture.

These include work undertaken at Dover and Calais to reduce disruption to cross-Channel trade, the government's proposed tariff regime, and work to reduce disruption in the financial markets.

In a letter to the committee, Mr Carney said: “Advancements In preparations for a No Deal No Transition scenario mean that the Bank's assessment of a worst case No Deal No Transition scenarios has become less severe.”

Giving evidence to the committee, he said that while risks of economic disruption remain, the work undertaken to reduce delays at Dover and Calais had been significant.

These include the automatic registration of UK companies to trade with the EU, simplified customs procedures and a temporary waiver on security checks at the border.

The government's own assessment of disruption, set out in the Operation Yellowhammer documents leaked last month, is that between 40% and 60% of freight trade will be disrupted, less than the 75% previously predicted.

Mr Carney said the Bank's forecast was based on less than half of freight being disrupted, with every 5% of freight traffic processed equating to about 0.25% of GDP.

The announcement of a no-deal tariff regime that would see 87% of imports by value eligible for a tariff-free increase, and work to reduce disruption to UK and European derivative markets, has also improved the worst-case scenario.

Mr Carney said: “There's real progress on the ground, there's real progress in the financial system and that has some positive knock on effect on confidence on financial markets as a whole. All of that adds up to 2.5% to 3% of GDP that we would not otherwise lose.”

“It is likely that food bills will rise in the event of a no-deal Brexit, that is almost exclusively because of the exchange rate impact. Movements are quickly translated onto the shop shelf, and domestic prices, imperfect substitutes, also increase. That impact has lessened because of the new tariff regime the government has put in place.”

By Paul Kelso

Barratt house builder shrugged off tough housing market to report record annual profits of £910m

( via – – Thur, 5th Sept 2018) London, Uk – –

Biggest UK housebuilder benefits from help to buy but warns of slow growth this year

Britain’s biggest housebuilder has shrugged off the tough housing market to report record annual profits of £910m, although it warned sales growth this year would be slower than expected.

Barratt reported an 8.9% rise in pre-tax profits to £909.8m for the year to 30 June, with sales surging to an 11-year high and margins improving. It announced a special dividend of 17.3p a share.

The company, the UK’s largest housebuilder by sales, sold 17,856 new homes last year, up from 17,579 the previous year. Sales in London were flat but rose outside the capital and in Scotland. The average selling price dropped to £274,400 from £288,900 as the company continued to shift away from central London to focus on the outer boroughs and areas such as Milton Keynes.Advertisement

Barratt has benefited from the government’s help-to-buy scheme, which accounted for 40% of sales. Its rival Persimmon, another major beneficiary of the taxpayer-funded programme, caused outrage in February when it made a profit of £1.09bn in 2018, the biggest ever made by a UK housebuilder, with nearly half of its sales coming from help to buy.

David Thomas, Barratt’s chief executive, said government schemes aimed at helping first-time buyers had been “enormously helpful to the market”. The first, Home Buy Direct, was launched by the Labour government in 2009, followed by FirstBuy in 2011 and help to buy in 2013, in which the government provides a guaranteed interest-free loan to homebuyers. Housebuilders have also benefited from affordable mortgages at a time of low interest rates.

Housebuilding collapsed during the financial crisis but has recovered, to 165,090 in England last year, although it is still far below the levels needed to solve Britain’s housing crisis.

The new-build housing market has been remarkably resilient, despite the increasing threat of a no-deal Brexit, and Thomas was sanguine about the outlook.

“If you look at the period over the last three years since the referendum, customer demand has been very strong, there is lots of eligibility, including help to buy,” he said. “So far we’ve not seen a reduction in consumer appetite.”

He welcomed the extension of the help-to-buy programme until 2023 and expressed confidence that lenders would fill the gap with affordable mortgages thereafter.

The housing market has been dragged down by Brexit uncertainty, which has deterred many from buying and selling and led to falling house prices in London and south-east England.

Barratt is forecasting that sales volumes will grow by 3% this year, the bottom end of its targeted 3% to 5% range. It has a forward order book of just below £3bn, down from £3.05bn this time last year. Shares in the company fell 5% initially, and later traded down 3.5% at 600p. City analysts are predicting pre-tax profits of about £880m this year, down from last year.

The company’s gross margin rose to 22.8% from 20.7% last year. The firm has reduced costs by cutting the number of house types it offers from more than 200 in 2016, to about 20 for Barratt, and 20 for its upmarket David Wilson brand. It has also changed the design, for example by reducing the pitch of its roofs to save money.

By Julia Kollewe

Chancellor Sajid Javid set to unveil government spending plans

( via – – Wed, 4th Sept 2019) London, Uk – –

Chancellor Sajid Javid is set to unveil the government's spending plans for the coming year on Wednesday.

The statement will set departmental budgets for just one year rather than the usual three years, due to uncertainty over the impact of Brexit.

Mr Javid will announce a further £2bn of Brexit funding for the government, as well as confirm additional funds for health, schools and the police.

The extra spending will be funded by borrowing rather than tax rises.

Independent think-tank the Institute for Government (IFG) says the government is likely to favour vote-winning measures ahead of a “potentially imminent” election.

But it argues the government should be prioritising other areas of spending, such as social care and prisons which it says are the services most in need of extra money.

Here we look at each of the public services, and which needs the most funding, according to the IFG's report.

It has graded services, according to need based on which are able to keep up with demand: amber for some concerns and red for significant concerns.


What has already been announced? Theresa May's government announced that annual funding would rise by £20 billion by 2023. Boris Johnson also announced a one-off injection of £1.8bn, but not all of that is agreed to be new money.

Spending on hospitals and GP services in England has risen since 2009-10, although more slowly than in the past.

IFG estimates suggest that the workload of GPs has risen faster than spending, meaning they have had to do more for less.

Despite practices increasing the number of telephone consultations and pooling resources, patients have been waiting longer for appointments.

This suggests that GPs, despite becoming more efficient, have not been able to keep up with demand.

However, the amount of work hospitals do has risen faster.

While hospitals have made efficiencies, hospitals have not been able to keep pace with the growing cost and demand for care, according to the IFG.

The result has been financial deficits and longer waiting times for treatment.

Analysis: By Nick Tiggle

The frontline of the NHS knows what its budget is until 2023-24: it was given a five-year settlement last summer.

The rises, an average of 3.4% a year, are generous compared to what the rest of the public sector can expect and reflect the fact the health service is constantly among the top priorities for voters and facing rising demand from the ageing population.

But there are still question marks around more than £13bn of funding that goes to things like staff training, buildings and healthy lifestyle initiatives, such as stop smoking.


What has already been announced? The government has announced that funding will rise by £2.6bn in 2020-21, £4.8bn in 2021-22 and £7.1bn in 2022-23.

Schools in England have not faced the same financial pressures as many other public services, according to the IFG.

However, after a rise in spending per pupil in most years since 2009-10, since 2014-15 the growth in pupil numbers has outpaced spending growth, meaning the per-pupil spending has fallen in both primary and secondary schools.

On top of this, schools have increasingly been paying for services that would have been previously provided by local authorities – such as educational psychology and extra support for special educational needs – following cuts to local authority budgets.

There are also signs that this increased workload is putting pressure on the workforce, with schools finding it harder to recruit and retain teachers, the IFG says.

But overall, schools have become more productive, it adds, with more pupils per teacher and pupil attainment increasing – particularly in primary schools.

Analysis: By Branwen Jeffreys

School funding in England had become a political headache and vote loser for the government, with both headteachers and parents campaigning. Rising costs such as national insurance and teachers pensions, as well as running costs such as utility bills, have contributed to an 8% real terms reduction in money spent in schools since 2010.

The extra money promised for 5-to-16 year-olds' education will almost reverse that squeeze by 2023. But that leaves financial pressures in England in other areas such as early years, and despite some extra cash for colleges educating 16-19 year-olds, an historic legacy under many governments of relative underfunding of further education.


What has already been announced? The government has promised 20,000 extra police officers over three years at a likely cost of £0.5 billion next year but has not yet confirmed how this will be funded.

Spending on the police in England and Wales has fallen sharply since 2009-10, says the IFG.

The number of police officers has also declined, with total police reserves now 9% lower in real terms than they were in 2009-10.

“Victim-reported crime has fallen over this period, but police-recorded crime has increased,” the IFG says.

“Overall police performance – as judged by inspection reports – has improved, although other indicators – such as public confidence in the police and the length of time taken to bring charges – have deteriorated.

“There is evidence that the police are struggling to maintain performance with current levels of spending.”

Analysis: By Dominic Casciani

The strength of policing reached a record high at the end of the Labour government that left office in 2010 – and then fell back by 21,000 as older officers left and cuts restricted recruitment.

The prime minister's pledge to re-recruit 20,000 officers in the coming three years is a huge task, because natural loss means forces may need to recruit more than double that number to hit the target.


What has already been announced? £0.1 billion pledged to boost security; promise of 10,000 extra prison places, but funding arrangements unclear

Prisons have experienced large spending cuts and a reduction in staff numbers since 2009-10.

This means prison safety has declined dramatically since 2012-13, according to the IFG.

Violence has risen and prisoners are less likely to have access to learning and development activities.

The 2016 Autumn Statement saw an injection of extra cash to tackle these safety issues and spending has risen again recently.

As a result, staff numbers are starting to rise again.

The IFG hailed a pilot programme to curb violence and drug use in 10 prisons, undertaken last year by the then Prisons Minister, Rory Stewart.

“This was largely successful, but replicating it across the whole prison system will require extra spending in every future year,” the IFG says.

Analysis: Dominic Casciani

The Ministry of Justice was one of the first big spending departments to settle with the Treasury in 2010, when the then Chancellor, George Osborne, demanded major cuts to public spending. Today, it has 25% fewer staff than back then.

The departure of experienced prison officers under the cuts coincided with a rise in smuggling of new psychoactive drugs into jails, leading to an increase in violence that the remaining prison officers struggled to control.

Adult social care

What has already been announced? In a Sunday Times interview, Boris Johnson said he would give councils £1bn for adult social care, but no formal announcement has yet been made.

Spending on adult social care in England fell between 2010-11 and 2014-15, but has since seen a rise.

The number of adults receiving publicly funded care packages has decreased, according to the IFG, even though an ageing population would suggest that demand is increasing.

Local authorities, responsible for providing adult social care, have driven down the price of care commissioned from private and voluntary sector providers following cuts to funding.

However, this has not enabled them to meet demand, the IFG says, and unpaid care – such as by family, friends or neighbours – has partially filled the gap.

In his first speech from Downing Street, Boris Johnson promised to “fix the crisis in social care once and for all”.

However, the IFG says there are no signs that plans to do so will be unveiled in the Spending Review.

Analysis: By Nick Tiggle

Not only has adult social care lost out in terms of funding, the long-awaited reform of the system has also been dodged.

Care services for the elderly and disabled simply do not have the profile of the NHS, although that is beginning to change a little as the problems worsen. But the challenge remains what to do about money.

Only the poorest and neediest get support from the state. But that means four-fifths of older people who need care go without, rely on family and friends or pay for it themselves.

Each of the areas covered by the IFG's report are devolved: the governments in Scotland, Wales and Northern Ireland run their own services.

So announcements on Wednesday will effect England (or England and Wales for policing and justice).

The devolved governments will receive extra money proportionate to the increases in spending, but they will decide how that money is spent.

Since 2010, the Westminster parliament has increased health spending faster and cut education and local government spending faster than the devolved governments.

Marks & Spencer demoted from the FTSE 100 for the first time

( via – – Wed, 4th Sept 2019) London, Uk – –

Exit of founding member of top City share index is latest sign of retailer’s declining fortunes

Marks & Spencer is to be demoted from the FTSE 100 for the first time in the latest sign of the declining fortunes of the retailer, which was a founding member of the leading City share index.

Relegation to the FTSE 250 comes as the company is closing 120 stores as part of an overhaul designed to shore up profits.

M&S’s demotion reflects a share price at nearly a 20-year low as a long-running sales slump at the retailer’s clothing arm is compounded by the high street crisisaffecting rivals including Debenhams and House of Fraser.

The FTSE 100, which was established in 1984, contains the UK’s biggest listed companies by market value, with membership considered a mark of business prestige. The index is reshuffled four times a year according to share price movements, allowing a handful of companies to move up and down.Q&A

Marks & Spencer timeline

Tony Shiret, an analyst at the stockbroker Whitman Howard, said: “It is significant [for M&S] in the sense that it is a fairly objective measure of the diminished scale of the company.”Advertisement

M&S shares closed down 1.5% at 187p, valuing the company at £3.6bn.

A decade ago, M&S was making a £1bn annual profit but the latest figure was below £100m on the back of more than £400m of restructuring costs relating to the revamp being led by the company’s chair, Archie Norman, who is highly regarded for turnarounds during his career including at Asda and ITV.

Losing its FTSE 100 status means M&S shares will no longer be held by the investment funds that only track the index of Britain’s highest-value companies, forcing them to dump the stock. Norman has previously been sanguine on the matter, saying: “When I went to ITV we dropped out of the FTSE 100, the sky didn’t fall in.”

Last year, he told shareholders M&S had bigger problems because it was facing an existential threat as retail shopping moved online. “This business is on a burning platform. We don’t have a God-given right to exist and unless we change and develop this company the way we want to, in decades to come there will be no M&S,” Norman warned.Q&A

What is the FTSE 100 and why does it matter?

Nick Bubb, a retail analyst, said M&S had been in the relegation zone for some time. “M&S has been declining remorselessly for many years, as a result of weak and arrogant management, and stronger, more focused competition [such as Primark]. The problems have mainly been on the clothing side, where M&S tries and fails to be all things to all people in the mid-market,” he said.

M&S – which was founded on a Leeds market stall in 1884 – was late to adapt to the rise in online shopping, hampered by its legacy of 300 clothing stores. Many of the chain’s shops predate the second world war and are no longer in the right place or are the wrong size for their local market.

Norman is putting the company through its biggest shake-up in a generation. He has paid £750m for a 50% share in Ocado’s retail arm and, from autumn next year, M&S products will replace Waitrose-branded goods in shoppers’ deliveries. But investors are split on the merits of the deal, with some arguing the company has taken an expensive route into the fast-growing online grocery market.

But Norman, who is working closely with the company’s chief executive, Steve Rowe, has had his work cut out reviving the M&S clothing business, which remains the country’s biggest in sales terms despite seven years of decline.

In July, M&S sacked its clothing head Jill McDonald after she failed to get a grip on the biggest job in high street fashion. At the time, Rowe – who is now running the business – revealed buying errors meant key products such as jeans had sold out, resulting in the poorest stock levels “I have ever seen in my life”.

With FTSE 100 membership purely a function of market cap size, Bubb said: “Other companies have grown bigger and M&S has got smaller. Life will go on after the exit from the FTSE 100 and in some ways, a lower profile might help M&S.”

By Zoe Wood 

Lloyds purchase Tesco Bank’s mortgage book in £3.8bn deal

( via– Tue, 3rd Sept 2019) London, Uk – –

Tesco Bank's 23,000 mortgage customers are set to transfer to Halifax once the deal is completed next year.

Lloyds Banking Group has completed the purchase of Tesco Bank's mortgage book in a deal worth £3.8bn.

Sky News reported in July how the high street giant had fought off rivals including RBS to enter exclusive talks for the business, three months after Tesco said it planned an exit because of challenging market conditions.

The deal will see more than 23,000 residential mortgage customers transfer to Lloyds-owned business Halifax – cementing the bank's position as Britain's biggest lender.

It is expected to be completed by the end of March next year.

Gerry Mallon, Tesco Bank chief executive, said: “Our focus is on how we best serve Tesco customers and align our resources effectively to their needs, while ensuring that our offer remains sustainable in the long term.

“As a result, we made the decision to move away from our mortgage offering.

“Our priority throughout has been to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.”

A sluggish housing market and low interest rates have helped spark a race to the bottom in mortgages amid strong competition for business between high-street lenders – a fight that has taken its toll on profitability over the past year.

Banks across the board have been reporting weaker margins from intense competition in the mortgage market – though smaller banks have endured the worst of the pain as a result of the weak rates.

Vim Maru, group director of retail at Lloyds Banking Group, said: “This is a good deal for the group, our shareholders and Tesco's mortgage customers.

“We believe our Halifax brand will make a good home for these customers and we look forward to welcoming them to the group.”

Tesco has previously said its mortgage customers needed to take no action as there would be no changes to their accounts.

UK manufacturing activity plunges to a seven-year low as Brexit doubts intensify

( via – – Tue, 3rd Sept 2019) London, Uk – –

UK manufacturing output crashed to a seven-year low in August as Brexit doubts intensify and a wider economic slowdown hurts firms, according to a closely followed measure of sector activity.

Manufacturing output plunged to its worst level since 2012 last month, according to IHS Markit’s Purchasing Managers’ Index (PMI).

Economists recorded a drop to 47.4 PMI, where anything below 50 represents a contraction.

“High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August,” Rob Dobson, IHS Markit director said.

“Business conditions deteriorated to the greatest extent in seven years, as companies scaled back production in response to the steepest drop in new order intakes since mid-2012.”

The output was consistent with a quarterly contraction of around two per cent, IHS Markit warned.

Sterling dropped even further against the dollar as the news came out, falling 0.55 per cent to 1.2089.

Market watchers warned it could sink below 1.20 “because there is no clarity whatsoever when it comes to Brexit”.

“The drop in the UK’s manufacturing sector was at the fastest pace since 2012 and this is going to only become worse if lawmakers don’t get their act together,” Think Markets chief analyst Naeem Aslam said.    

Optimism falls to series-low

Business optimism slumped to its lowest level since researchers began asking firms about their expectations for future output in 2012.

The gloomy outlook has stemmed from weakening market conditions, signs of a global economic slowdown, Brexit uncertainty and subsequent knocks to client confidence.

However, manufacturers still expect to see some output growth over the coming year, as highlighted by 40 per cent of companies forecasting expansion compared to only 13 per cent anticipating a decline.

British factories also shed staff last month amid fears of a no-deal Brexit. The report said manufacturing employment fell at one of the fastest rates over the last six-and-a-half years in August.

“Job cuts were driven by cost saving initiatives (including reorganisations and redundancies), slower economic growth and the continued impact of Brexit uncertainty.”

‘Significant disappointment’

Lloyds Bank Commercial Banking’s head of large corporates manufacturing Steve Harris said: “Further contraction in activity is a significant disappointment for the sector.

“The operating climate remains challenging. UK manufacturing’s exposure to the world economy has been one of its key strengths, but reduced global demand resulting from continued geopolitical uncertainty has created headwinds for export-led strategies.

“On the home front, meanwhile, the question mark over the UK leaving the EU means some manufacturers continue to plan for a number of eventualities, placing pressure on working capital.

Capital Economics analysts said that although the figures suggested the industrial sector was contracting, “we doubt that manufacturing will pull the overall economy into recession”.

“Given the ongoing struggles of global manufacturing and the strong possibility of a no deal Brexit in two months’ time, it is hardly surprising that both domestic and external demand are suffering,” analysts added.

Meanwhile Danske Bank said Brexit had acted as a supply shock.

Eurozone factory slump continues through August

Meanwhile on the continent, manufacturing activity contracted for the seventh month in August as optimism was suppressed by a continued fall in demand.

The Eurozone PMI score came in at 47 – better than July’s 46.5 but still well below the threshold for growth. The results makes it more likely that the European Central Bank goes ahead with monetary easing next week.

The ECB all but promised to ease policy further at their July meeting, as the bloc’s growth outlook gets worse. A further escalation in the US- China trade war yesterday has increased fears of a global economic slowdown, which would hit Europe’s already embattled manufacturers hard.

“Eurozone producers are suffering as the summer slump in factory production persisted into August. A marked deterioration in optimism about the year ahead suggests companies are expecting worse to come,” noted IHS Markit chief business economist Chris Williamson.

New orders fell for an eleventh month, and firms continued turning to completing backlogs of work to stay active.

By Alex Daniel and Joe Curtis

No-deal Brexit ‘could hit house prices’ – KPMG

( via – – Mon, 2nd Sept 2019) London, Uk – –

UK house prices could drop by 6.2% next year if the UK leaves the EU without a deal on 31 October, according to accountants KPMG.

However, if a deal is reached, KPMG predicts that house prices will rise by 1.3%.

London will probably see a fall in prices with or without an exit deal this year and next, it said, with sharper declines if no deal is reached.

However, the low supply of new housing stock could prop up prices over time.

“Overall, while a no-deal Brexit could dent property values in the short term, it may make less impact on one of the fundamental factors driving the market: the stock of regional housing,” said the report.

“Housebuilders are expected to reduce the supply of new housing in some regions in the short term as a response to a deteriorating economic outlook.

“So, while there will be fallout from the initial economic shock following a no-deal Brexit, the market is expected to recover most ground in the long run,” it said, assuming the economy recovers.

With the housing market hard to predict, KPMG said prices could drop in a no-deal scenario by as much as 10-20%.

“Transactions volumes will likely fall much more than prices – making government housing delivery targets impossible to achieve and slowing new building across the sector,” said Jan Crosby, UK head of housing at KPMG.

Assuming no agreement is reached, KPMG says Northern Ireland will be the hardest hit next year, with average price declines of 7.5%, followed by London at 7%. The least-hit will be Wales and the East Midlands, with 5.4% declines apiece.

This year, most regions will see changes of less than 2%, KPMG says, with the exception of London, down 4.8%, and Northern Ireland, down 2.2%.

If a deal is struck, prices in London and Northern Ireland are still predicted to fall this year, by 4.7% and 1.2%, while most other regions will be largely unchanged. Scotland and the North West will see gains of 1.4% and 1.6%.

And next year, all regions will gain aside from London's predicted 0.2% slide. The average increase will be 1.3%.

KPMG noted that the UK housing market is healthier than it was at the time of the last housing crash – when prices fell by 15% in 2008. House prices are lower as a percentage of earnings in most regions outside London and the South East.

In addition, compared with the aftermath of the 1991 recession – when housing prices dropped 20% over about four years – mortgages are much cheaper. Back then, the Bank of England's base rate was about 14%.

UK’s reliance on electricity imports climbs to a record high

( via – – Mon, 2nd Sept 2019) London, Uk – –

Reliance on European power would bring extra costs after no-deal Brexit, say experts

The UK’s reliance on electricity imports has climbed to a record high amid fears that homes and businesses could face higher energy bills if the UK crashes out of Europe.

The latest government figures, released just weeks before Britain’s exit from the EU, show that the UK’s net electricity imports reached their highest ever level in the first quarter of this year.

The four high-voltage power cables linking the UK to Europe’s energy markets imported a sixth more electricity than the year before, after a new interconnector opened in January.

In total, European electricity imports made up almost 7% of the UK’s total demand, and the government hopes to increase imports to about 20% by 2025.Advertisement

Although this is a small share of the UK’s electricity, experts have warned that higher import prices could lead to higher energy bills.

The government’s leaked no-deal planning report, Operation Yellowhammer,predicted a marked increase in energy prices for homes and businesses if the UK crashes out without a deal.

The market price for electricity could climb because of a fall in the value of the pound against the euro, but also because of potentially costly complications of severing ties with EU energy markets.

Gas and electricity bills rose by £2bn in the year after the 2016 referendum result because of the plummeting value of the pound, according to a report from University College London.

This translated into an average household’s bill increasing by £35 for electricity and £40 for gas, and researchers predicted bills would climb by a further £61 every year in the years following the referendum.

A report commissioned by National Grid before the referendum predicted that energy bills could climb by £500m every year by the 2020s if the UK left the EU’s internal energy market.

Kristian Ruby, the head of pan-European trade association Eurelectric, said a no-deal exit could mean the UK faces third-party costs to use the power lines connecting Britain to European power markets, which would raise the overall cost of the energy.

Ruby said the UK might also find it more difficult to trade if it were left out of the complex pan-European trading system, and this could place a “risk premium” on UK prices.

“When you throw all rules up in the air at the same time, this lack of clarity, predictability and rule of law is what is very concerning for us,” he added.

A spokesperson said the government had taken steps to make sure energy trading continued and that energy laws “work effectively and provide value for money”.

The Guardian understands that a pan-European network of energy system operators has agreed a plan for the UK to remain within the internal market on a voluntary basis which would offer the same commercial terms.

A spokesman for National Grid, which runs the UK’s power cables, said it was “not anticipating any additional charges for interconnectors in the event of a no-deal Brexit”.

However, the plan has not been agreed by the European commission and could be cast in doubt if the UK leaves without an agreement or without paying the £39bn exit fee.

Alexander Temerko, a major Conservative party donor, said he feared electricity market prices could jump by almost a third if the UK does not remain part of the EU’s internal energy market after a no-deal Brexit.

The Ukrainian-born billionaire, who is planning to build a new electricity cable between the UK and mainland Europe, said the price hike could mean higher bills and negative consequences for UK business.

Temerko publicly dropped his support for Boris Johnson during the Conservative leadership campaign earlier this year over fears he could steer Britain towards a no-deal Brexit.

“If we have a no-deal Brexit all existing regulations for the transmission of electricity will be terminated with immediate effect. I don’t know how quickly, or how high, the price of electricity would jump. My expert opinion is that prices could jump by 30%. But there are no scenarios for this. We are not ready,” he said.

By Jillian Ambrose

Grab Co-Founders of Southeast Asian ride-hailing discuss having their sights on becoming a super-app

Source: Bloomberg

Bloomberg Technology's Emily Chang speaks to Grab Co-Founders Anthony Tan and Hooi Ling Tan about the Southeast Asian ride-hailing business. In the exclusive conversation, they tell us how the company partnered with Uber, adding Dara Khosrowshahi to their board, and how they have their sights set on becoming a super-app.

Did Samsung prove Apple right by killing the headphone jack?

Source: CNBC

The headphone jack has a long legacy in the audio world. So when Apple decided to exclude it from the iPhone 7, consumers were up in arms. In the years since, Samsung has been a champion for those who still wanted the headphone jack Samsung even went so far as to run a headphone jack commercial mocking Apple. But with the release of the Galaxy Note 10, it too has forgotten the decades-old technology. Did Samsung prove Apple right by killing the headphone jack?

British Steel unit sold to Systra saving hundreds of jobs

( via–Fri, 30th Aug 2019) London, Uk – –

The French group's purchase of York-based TSP Projects will be announced by the Official Receiver on Friday, Sky News learns.

Hundreds of jobs at a British Steel subsidiary will be saved on Friday when a French engineering giant confirms the acquisition of TSP Projects, an infrastructure design consultancy.

Sky News has learnt that Systra, which has been engaged in talks to buy TSP for three months, has clinched a deal to buy the business, along with its £70m-plus pension liabilities.

The agreement is expected to be announced by Systra and the Official Receiver, which has been managing British Steel since it collapsed into compulsory liquidation in May.

A much larger transaction involving the sale of British Steel's wider business, including its vast steelworks in Scunthorpe, remains subject to several weeks of due diligence by Ataer Holding, a subsidiary of Turkey's military pension fund.

Confirmation of the deal between Systra and TSP will make it the first British Steel division to be sold to new owners since the group's collapse in the wake of a government decision not to provide further state funding.

Sky News revealed last week that the sale of TSP was being held up by the need for a secured lender to agree to the transaction.

The lender, PNC, agreed to do so earlier this week, according to insiders.

The sale safeguards the interests of roughly 500 pension scheme members and 400 TSP employees, many of whom are based at its York headquarters.

TSP has contracts to work on railway systems at Gatwick Airport‎ and broader infrastructure design in aviation, construction, energy and security.

Its biggest clients include Network Rail, Siemens and Costain.

Systra is owned by the French state railway SNCF, RATP and a consortium of French banks.

The company counts Andrew McNaughton, the former chief executive of Balfour Beatty, among its top management.

Its attempt to buy TSP Projects has drawn the attention of the UK's Pensions Regulator because of the roughly £70m deficit in its retirement scheme.

TSP Projects' pension scheme has only 14 active members, about 400 deferred members and 133 members who are receiving pensions from the company, according to information circulated to bidders.

British Steel's collapse into insolvency came just weeks after Greg Clark, the then business secretary, handed a £120m government loan to the company to help it meet its obligations under an EU scheme for industrial polluters.

A further support package was due to be given to British Steel but was withdrawn at the 11th hour amid concerns that it would breach state aid rules.

Sky News revealed earlier this month that ministers had signed off a support package worth around £300m to aid Ataer's efforts to buy British Steel.

Systra could not be reached for comment.

By Mark Kleinman, City editor

British households expectations for inflation rise to highest since 2013 – Citi/Yougov

( via — Fri, 30th Aug 2019) London, UK —

LONDON (Reuters) – British households’ expectations for inflation in the year ahead rose in August to their highest level since 2013, possibly reflecting the rising chance of a no-deal Brexit, a survey from U.S. bank Citi and pollsters YouGov showed on Friday.

The public expects inflation over the next 12 months to rise to 3.2%, up from 2.9% in July.

“Such high levels have previously usually been associated with high energy prices,” economists at Citi said in a research note.

“However, in the absence of those at the moment, the increase could be driven by rising chances of a rupture with the EU on Oct. 31, which could lead to higher consumer prices via tariffs, supply disruptions and weaker sterling.”

Reporting by Andy Bruce

UK car production down by almost 20% compared to the same time last year

( via– Thur, 29th Aug 2019) London, Uk – –

The decline in export orders is “primarily responsible”, with overseas shipments falling 20.2% since January, the SMMT says.

The number of cars made in Britain this year has fallen by almost 20% compared to the same time last year, new figures show.

So far this year, there have been 774,760 cars made in Britain, according to the Society of Motor Manufacturers and Traders (SMMT).

This is 180,864 fewer than at the same time last year – a fall of 18.9%.

The SMMT said the decline in export orders was “primarily responsible”, with overseas shipments falling 20.2% since January, while production for the UK this year to date is down by 13.5%.

Meanwhile, figures also show that July saw the 14th consecutive month of falling vehicle production.

There were 108,239 vehicles made in the UK last month, a fall of 10.6% compared to July last year.

This was despite domestic demand increasing by 10.2% – or just under 2,000 vehicles – when compared to a weak July 2018.

Production for export, however, fell by 14.6% over the same period, even though eight in every 10 cars made were shipped overseas.

The Society of Motor Manufacturers and Traders (SMMT) said the decline was due to an “ongoing weakness in major EU and Asian markets coupled with some key model changes”.

Mike Hawes, SMMT chief executive,said the decline was “a serious concern”.

He added: “The sector is overwhelmingly reliant on exports and the global headwinds are strong, with escalating trade tensions, softening demand and significant technological change.

“With the UK market also weak, the importance of maintaining the UK's global competitiveness has never been more important so we need a Brexit deal – and quickly – to unlock investment and safeguard the long term future of a sector which has recently been such an international success story.”

Some 168,000 people are directly employed in car manufacturing, with a further 823,000 in the wider automotive industry, the SMMT says.

It accounts for 14.4% of total UK export of goods.

By Sharon Marris, business reporter

UK consumers have just hours left to submit PPI compensation claims

( via – – Thur, 29th Aug 2019) London, Uk – –

FCA urges British consumers to submit their complaints by 11.59pm deadline on Thursday

UK consumers have just hours left to submit a complaint about payment protection insurance (PPI) before they lose their chance to claim compensation.

The deadline is 11.59pm on Thursday 29 August, and the Financial Conduct Authority is urging people to act now.

“This is the final chance for consumers to think about whether they had PPI and submit a complaint directly to any providers right away … There’s still time to act if you do it now,” said the regulator.

Many of the biggest claims management companies have already stopped accepting PPI claims because, they said, there was a risk they would not be able to register them with the lenders before the deadline.

PPI is Britain’s costliest ever consumer scandal, with £36bn paid out by UK banks to compensate people who bought often-worthless insurance cover, thinking it would help them repay debts in the event of sickness or unemployment. Of the total, £340m was paid out in June alone.

As many as 64m PPI policies were sold in the UK, but very often the cover was mis-sold. Banks and other financial institutions pushed the policies alongside loans, mortgages, credit cards and other deals.

The FCA has been running a campaign to raise awareness of the deadline, leading to a more than fivefold increase in its website users and a near eightfold increase in calls compared with the previous nine weeks. The latest figures show that more than 5.4 million people have accessed its PPI website and it has received more than 102,000 phone calls.

The FCA website includes a list of providers that sold PPI. It can be found at

By Rupert Jones

Pound falls more than 0.70% against the euro and US dollar as Queen asked to suspend Parliament

( via – – Wed, 28th Aug 2019) London, Uk – –

The value of the pound has fallen following news that Prime Minister Boris Johnson is planning to suspend Parliament on 9 September.

The move is expected to prevent opposition leaders from passing a law to stop a no-deal Brexit.

The pound is down more than 0.70% against the euro and US dollar. So £1 is now worth €1.10 and $1.22.

The FTSE 100, largely made up of stocks that could benefit from a devaluation of the pound, was up 0.34% at 7,113.47.

That is because many of those firms book much of their earnings in foreign currencies and benefit from a weak pound.

But the FTSE 250, a stock index that is seen as more representative of the UK economy, has fallen by 0.5%.

Pound falls below $1.22

Firms that are exposed to the domestic economy such as house builders and airlines were hit: Taylor Wimpey, Persimmon and Barratt Developments were down between 2% and 2.3%.

Meanwhile, British Airways owner IAG fell 1.7% and easyJet dropped 3.2%.

‘Sterling under pressure'

“As far as the markets are concerned, there's a fair bit of bad news already baked in to the pound,” according to David Cheetham, an analyst at currency trader XTB Online Trading.

“It is telling that after the knee-jerk move lower in recent trade, the selling we've seen is far from panic stations.”

Sterling drops below €1.10

Discussing the prime minister's decision to suspend parliament, Mr Cheetham said: “This seems like a pre-emptive strike from [Mr Johnson] against those seeking to block a no-deal Brexit and once more it seems that the opposition are in danger of fluffing a big opportunity to have an impact.

“If the government is successful in this, then a no-deal Brexit wouldn't be taken off the table until the 11th hour at the earliest and this keeps a significant downside risk to the pound in play.”

And Michael Hewson, chief markets analyst at CMC, said: “Sterling is under pressure as a consequence of the prospect of a no-deal Brexit increasing, while the FTSE 100 has jumped higher.

“Overall, though, this appears part and parcel of the ongoing battle between the various caucuses of MPs who want to block a no-deal Brexit at all costs, and those who want to retain the option as part of the ongoing attempts to renegotiate the withdrawal agreement.”

The government has asked the Queen to suspend Parliament just days after MPs return to work in September – and only a few weeks before the Brexit deadline.

Boris Johnson said a Queen's Speech would take place after the suspension, on 14 October, to outline his “very exciting agenda”.

But it means MPs are unlikely to have time to pass laws to stop a no-deal Brexit on 31 October.

UK bank mortgage approvals hit nearly 2-1/2-year high in July – UK Finance

( via – – Wed, 28th Aug 2019) London, Uk – –

British banks last month approved the most mortgages since February 2017, adding to signs that the housing market has picked up from its recent pre-Brexit slowdown, a survey showed on Tuesday.

Banks approved 43,342 mortgages in July, up from 42,775 in March and 10.6% higher than a year earlier, according to seasonally-adjusted figures from industry body UK Finance.

Net mortgage lending rose by 2.947 billion pounds last month, the biggest increase since March 2016 and up from an increase of 1.764 billion pounds in June.

Britain’s housing market slowed sharply in the run-up to the original March Brexit deadline but there have been signs that buyers and sellers are taking advantage of the delay to act ahead of the new Oct. 31 deadline.

Consumer spending has remained solid, sustaining the economy since the 2016 Brexit referendum while businesses have cut investment spending due to uncertainty.

UK Finance said consumer lending rose 4.3% year-on-year in July, the strongest increase since February 2018.

Lending figures from the Bank of England, which cover a broader section of Britain’s finance industry, are due on Friday.

Opioid crisis: Johnson & Johnson must pay $572m in landmark ruling

( via – – Tue, 27th Aug 2019) London, Uk – –

Drugmaker Johnson & Johnson must pay $572m (£468m) for its part in fuelling Oklahoma's opioid addiction crisis, a judge in the US state has ruled.

The company said immediately after the judgement that it would appeal.

The case was the first to go to trial out of thousands of lawsuits filed against opioid makers and distributors.

Opioids were involved in almost 400,000 overdose deaths in the US from 1999 to 2017, according to the US Centers for Disease Control and Prevention.

Since 2000, some 6,000 people in Oklahoma have died from opioid overdoses, according to the state's lawyers.

Earlier this year, Oklahoma settled with OxyContin maker Purdue Pharma for $270m and Teva Pharmaceutical for $85m, leaving Johnson & Johnson as the lone defendant.

What was the case against Johnson & Johnson?

During Oklahoma's seven-week non-jury trial, lawyers for the state argued that Johnson & Johnson carried out a years-long marketing campaign that minimised the addictive painkillers' risks and promoted their benefits.

The state's lawyers had called Johnson & Johnson an opioid “kingpin” and argued that its marketing efforts created a public nuisance as doctors over-prescribed the drugs, leading to a surge in overdose deaths in Oklahoma.

Johnson & Johnson vigorously denied wrongdoing, arguing that its marketing claims had scientific support and that its painkillers, Duragesic and Nucynta, made up a tiny fraction of opioids prescribed in Oklahoma.

Judge Thad Balkman, of Cleveland County District Court in Norman, Oklahoma, said prosecutors had demonstrated that Johnson & Johnson contributed to a “public nuisance” in its deceptive promotion of highly addictive prescription painkillers.

“Those actions compromised the health and safety of thousands of OklahomansThe opioid crisis is an imminent danger and menace to Oklahomans,” he said in his ruling.

The payment would be used for the care and treatment of opioid addicts, he said.

The outcome of the case is being closely watched by plaintiffs in about 2,000 opioid lawsuits due to go to trial in Ohio in October, unless the parties can reach a settlement.

How did Johnson & Johnson defend itself?

The state's case rested on a “radical” interpretation of the state's public nuisance law, Johnson & Johnson said.

The company said in a statement that since 2008, its painkillers had accounted for less than 1% of the US market, including generics.

“The decision in this case is flawed. The State failed to present evidence that the company's products or actions caused a public nuisance in Oklahoma,” it said.

“This judgement is a misapplication of public nuisance law that has already been rejected by judges in other states.”

Sabrina Strong, the lawyer representing Johnson & Johnson, said: “We have sympathy for all who suffer from substance abuse, but Johnson & Johnson did not cause the opioid abuse crisis here in Oklahoma, or anywhere in this country.

“We do not believe that the facts or the law supports the decision today. We have many strong grounds for appeal, and we intend to pursue those vigorously.”

The company added that it wants the fine to be put on hold during its appeal process, which could last until 2021.

What reaction has there been to the verdict?

The Oklahoma case was brought by the state's Attorney General, Mike Hunter.

“Johnson & Johnson will finally be held accountable for thousands of deaths and addictions caused by their actions,” he said after the ruling.

“There's no question in my mind that these companies knew what was going on at the highest level, they just couldn't quit making money from it and that's why they're responsible.”

One Oklahoma state attorney, Reggie Whitten, told US reporters: “This is very personal to all of us. My partner lost a niece to this opioid epidemic. I lost my firstborn son to the opioid epidemic.”

The company's share price rose following the ruling because investors had been expecting a much bigger fine, says BBC North America correspondent Peter Bowes.

Jared Holz, healthcare strategist for financial services company Jefferies, said: “The expectation was this was going to be a $1.5bn to $2bn fine, and $572m is a much lower number than had been feared.”

One of UK’s largest financial consultancy firms to bid for £200m KPMG pensions arm

( via– Tue, 27th Aug 2019) London, Uk – –

Lane Clark & Peacock, which is backed by the buyout firm Inflexion, is among the bidders for the KPMG unit, Sky News learns.

One of the UK's largest independent financial consultancy firms is plotting a £200m takeover of the pensions advisory arm of KPMG, the accountancy giant.

Sky News has learnt that Lane Clark & Peacock (LCP) is one of a handful of bidders through to the second round of an auction of the KPMG unit.

Sources said that LCP, which is backed by the private equity firm Inflexion, was competing against a number of trade and financial bidders for the pensions advisory business.

LCP provides actuarial and investment advice to hundreds of clients, including roughly one-third of the FTSE-100, according to its website.

That would make the KPMG division, which has about £50bn under advice, a logical fit with LCP's business, according to City insiders.

The big four auditor put its pensions advisory arm on the block in June following a number of unsolicited approaches.

Its plan to explore a sale was revealed at the time by Sky News.

The decision by KPMG bosses to do so came amid reforms aimed at curbing the scale of the big four accountancy firms' consulting work for audit clients.

Its pensions advisory operation employs about 20 partners and roughly 450 people overall.

City sources say that KPMG has put a price-tag of about £200m on the business.

The division advises both corporate clients and companies' pension trustees, and has become one of the largest such operations in Britain.

People close to the situation said in June that the decision to examine a sale was “not directly” a consequence of KPMG UK chairman Bill Michael's decision last year to ban the firm from taking on consulting work for companies whose books are audited by it.

Nevertheless, offloading the division would underline the complexities that the big four auditors – Deloitte, EY, KPMG and PwC – are seeking to navigate amid pressure from regulators to reform their profession.

If concluded, a sale of the KPMG pensions advisory arm would be among the largest corporate disposals undertaken by one of the UK's major audit firms.

Firms including KPMG and its principal rivals have been hit by a growing list of regulatory fines in recent years, with a slew of further probes by the profession's largely discredited regulator, the Financial Reporting Council, yet to be completed.

KPMG itself has been forced to pay millions of pounds in penalties for failings in audits of companies including the Co-operative Bank and Ted Baker.

The collapse of big employers including BHS and Carillion has also increased the intensity of the spotlight on the audit profession, prompting the business secretary, Greg Clark, to outline plans to scrap the FRC and replace it with a new body: the Audit, Regulatory and Governance Authority.

A KPMG UK spokesperson said in June: “Over the last few years, our UK pensions advisory business has grown significantly into a market-leading business in the sector, advising both corporate clients and pension trustees, and as such, we regularly receive unsolicited offers and expressions of interest for the practice.

“Like any other large firm, we routinely assess the strategic fit of each business in our portfolio and as a result of this can confirm that following recent expressions of interest from third parties, we are exploring options for this area of the business.

“However, we have made no firm decisions over any eventual outcomes at this stage, and will not comment further at this time.”

The structure of Britain's audit profession has been the subject of several inquiries in the past year, with competition watchdogs recommending greater separation between audit and consulting businesses within the big four firms.

Sir Donald Brydon, the former London Stock Exchange Group chairman, is leading a government-commissioned review of the future of auditing, while MPs on the business select committee have called for a full break-up of the big four.

KPMG has been the fastest mover among the profession's leading quartet, telling its 625 partners last November that it would phase out the vast majority of non-audit work for the 90 FTSE-350 companies where it serves as the auditor.

Mr Michael has spoken of the importance of substantial changes to restoring trust in the profession, and has announced the creation of a new executive committee for its audit business as one of the changes aimed at achieving that goal.

As the auditor to Carillion, KPMG has been facing intense scrutiny for its oversight of the construction giant, which went bust in January last year with debts of more than £5bn.

LCP could not be reached for comment on Monday.

By Mark Kleinman, City editor