Google fined a record €2.42bn EU for abusing internet search monopoly

 

EU competition chiefs have today fined internet giant Google a record 2.42 billion euros.

It is for allegedly abusing its dominant position to manipulate search engine results for its own benefit.

The European Commission claims the company used its search engine's dominance to favour results from its own Google Shopping service, above other price comparators.

Google said in a statement it disagrees with the EU and is considering an appeal.

Bank of England to make lenders hold £11 Billion amid tightening credit rules

 

James Stringer/Flickr

(qlmbusinessnews.com via uk.reuters.com — Tue, 27 June 2017) London, UK —

The Bank of England tightened its controls on lending on Tuesday and said it was likely to make British banks hold an extra 11.4 billion pounds of capital as it decided the risk of a big hit to the economy from the Brexit vote had passed.

After the referendum decision to leave the European Union a year ago, the BoE cut to zero a requirement that banks create a capital buffer as it sought to offset an expected drying up of lending.

But Britain's economy has performed more strongly than expected since the vote, despite some more recent signs of a slowdown. Some of the central banks' interest rate setters think it is already time to raise its main interest rate.

On Tuesday the BoE's separate Financial Policy Committee declared that overall risks to Britain's economy from its financial system were at a “standard” level.

The FPC raised its counter-cyclical capital buffer (CCyB) – which rises and falls along with the ups and downs of the economy – to 0.5 percent from zero with a one-year implementation phase. It said that it expected to raise it further to 1.0 percent in November.

One percent is the level that reflects an economy that is running normally.

Bank shares fell after the BoE announcement but recovered soon after to their levels earlier on Tuesday.

The BoE also said it was concerned that lenders were placing undue weight on recent low losses which could only be achieved in the current benign conditions.

“As is often the case in a standard environment, there are pockets of risks that warrant vigilance,” the BoE said.

The BoE said it was continuing to oversee banks' preparations for Brexit, including for the possibility of Britain leaving the EU in 2019 without securing any trade deal, cutting off banks from their European customers which could undermine financial stability.

“Such scenarios are where contingency planning and preparation will be most valuable,” the BoE said.

Each 0.5 percent increase adds 5.7 billion pounds to British banks' capital requirements, though many banks already hold capital in excess of the minimum so may not need to raise fresh funds.

TIGHTER NEW RULES FOR LENDING

The BoE also said British regulators would publish tighter rules on consumer lending next month, and that it would bring forward planned checks on whether banks could cope with consumer loans losses to September from November.

Existing restrictions on high loan-to-income mortgage lending were likely to stay for the long term, the BoE said, and it also tweaked the rate against which lenders must test borrowers' ability to repay their mortgages.

The BoE said some global risks it had previously identified had not crystallised. But it warned of dangers from China, where private-sector borrowing is now more than two and a half times annual economic output.

“High debt makes China vulnerable to shocks. This could affect the global economy and UK banks.”

It also warned that British corporate bonds and commercial real estate may be overvalued. Both had their valuations boosted by low interest rates, but did not appear to take into account that these low interest rates reflected a weak economic outlook.

“Current London West End office prices are well above the range of estimated sustainable valuation levels,” it said.

The FPC raised the minimum leverage ratio for British banks to 3.25 percent from 3.0 percent, to reflect last year's exclusion of central bank reserves from the calculation of capital. This exclusion was designed to ensure that monetary policy measures like quantitative easing did not crimp lending.

By David Milliken and Huw Jones

Holland & Barratt sold to Russian billionaire for nearly £2 billion

(qlmbusinessnews.com via bbc.co.uk – – Mon, 26 June, 2017) London, Uk – –

Holland & Barrett, the UK's biggest health food retailer, is being bought by a Russian billionaire for £1.8bn.

L1 Retail, a fund controlled by Mikhail Fridman, is buying the chain from US private equity firm Carlyle.

Carlyle acquired Nuneaton-based Holland & Barrett as part of its $3.8bn (£3bn) purchase in 2010 of US firm Nature's Bounty, now NBTY.

The chain, which has more than 1,300 stores worldwide, is expected to change hands in September.

Holland & Barrett was founded by William Holland and Alfred Barrett in Bishop's Stortford, Hertfordshire, in 1870.

They initially sold groceries and clothing, but later split the two into separate businesses. The grocery business was sold to Alfred Button & Sons in the 1920s, but the original name was retained.

The company eventually started focusing on health foods and changed hands several times. It now employs more than 4,000 people.

“Holland & Barrett is a clear market leader in the UK health and wellness retail market, with attractive growth positions in other European and international markets,” said L1 Retail managing partner Stephan DuCharme.

“We believe that the company is well positioned to benefit from structural growth in the growing £10bn health and wellness market and has multiple levers for long-term growth and value creation.”

The purchase is the first by L1 Retail, which was set up in late 2016.
It aims to invest $3bn in a small number of retail businesses that it believes can be market leaders by “moving with and leading long-term trends”.

The fund's advisory board includes John Walden, the former chief executive of Home Retail Group.

Other members are Karl-Heinz Holland, who was chief executive of Lidl Group, the German supermarket chain, and Clive Humby, one of the founders of dunnhumby, which came up with the idea for Tesco's Clubcard.

L1 also has funds focused on energy, technology and health.

Peter Aldis, Holland & Barrett chief executive, is to stay on. He said: “We are delighted to now be in partnership with the L1 Retail team and its advisory board of internationally-renowned retailers.”

Mr Fridman is best known for his role as chief executive of BP's Russian joint venture TNK between 2003 and 2012, when it was sold to Rosneft for $56bn.

He used the proceeds from the sale of his stake to set up L1, which also has investments in the telecoms, technology and energy sectors.

His oil and gas interests stretch from Algeria and Libya to Poland and Norway.

Mervyn Davies, the former Standard Chartered chief executive who is now Lord Davies of Abersoch, is chairman of L1 Holdings.

RBS restructuring to cut hundreds of UK jobs in move to India

morebyless/flickr.com
(qlmbusinessnews.com via theguardian.com – – Mon 26 June, 2017) London, Uk – –

Royal Bank of Scotland is to cut 443 jobs in Britain as the bank moves its team that arranges loans for small businesses to India.

The taxpayer-controlled bank said that the roles would transfer to Mumbai, to be included in the group’s growing team there, as part of a restructuring designed to cut costs, first reported in the Mail on Sunday.

An RBS spokesperson said: “As we become a simpler, smaller, bank, we are making some changes to the way we serve our customers. Unfortunately, these changes will result in the net reduction of 443 roles in the UK. We realise this will be difficult news for staff and we will do everything we can to support those affected, including redeployment into new roles where possible. All roles which require customer contact will remain in the UK.”

The latest wave of job cuts by RBS in the UK comes after at least 400 roles were moved to India last year, including 300 or so investment banking jobs.

In March this year the state-owned bank also said it was axing 158 branches, most of which were NatWest outlets, with the loss of up to 362 jobs.

Last year the bank shed more than 500 jobs as part of a plan to replace the staff giving investment tips with “robo-advisers”.

The bank has been trying to cut costs since a £45bn government bailout nearly 10 years ago at the height of the financial crisis.

Rob MacGregor, national officer for finance at Unite, said: “There has been a drip, drip, drip, cumulative effect so that we estimate that 12,500 people now work for RBS in India. That’s interesting for an organisation that owes its existence to the British taxpayer. We feel RBS has a moral responsibility to try wherever possible to keep work here in the UK. There is no customer business in India; it is just where they can get the jobs they want doing done cheaper.”

Moving jobs which relate to small business loans is likely to prove particularly controversial following a scandal at the bank’s global restructuring group, known as GRG.

MacGregor said: “It does pose the question, when it comes to regulation and risk, is this the right move for RBS?”

Small businesses were pushed to the brink of collapse to enable RBS to make a profit and, after years of pressure from campaigners, the bank set aside £400m to refund fees for customers of the now disbanded division.

RBS has also racked up a £1bn bill to end a legal battle sparked by the government bailout. The battle, involving 9,000 investors, has cost the bank an estimated £900m in settlements to shareholders and £100m in legal fees.

By Sarah Butler

Online gambling companies investigated by government watchdog, into unfair practices

 

(qlmbusinessnews.com via telegraph.co.uk – – Fri, 23 June, 2017) London, Uk – –

Online gambling companies will have to change their “unfair” sign-up deals or face a legal challenge after the Competition and Markets Authority (CMA) announced that it was launching enforcement action against operators that it believes to be breaking consumer law.

The CMA has been conducting an investigation with the Gambling Commission since last October into how the online gambling sector draws customers in with sign-up promotions and then does not allow them to withdraw money and quit while they are ahead.

It said that some customers “might have to play hundreds of times before they are allowed to withdraw any money”. It is also concerned that minimum withdrawal amounts are far larger than the original deposit, meaning customers have to bet more to take out their winnings.

Nisha Arora, the CMA's senior director for consumer enforcement, said that customers were finding that “the dice are loaded against them” and were encountering “a whole host of hurdles in their way” when trying to withdraw their winnings.

Sarah Harrison, the Gambling Commission’s chief executive, said that gambling companies “should be under no illusion” that it will “take decisive action” if it believes their sign-up practices do not comply with consumer law.

“Gambling operators must treat customers fairly but some have been relying on terms that are unclear with too many strings attached,” she added.

The online gambling sector is worth £4.5bn and attracts more than 6.5m regular users in the UK.

The CMA will first demand changes to current practices at online gambling operators it deems to be abusing consumer law. The companies will then have time to offer their solution to the problems raised and, if the changes are unsatisfactory, the CMA can take the company to court.

The CMA has also started a line of investigation over concerns that operators may be applying social responsibility and anti-money laundering requirements in a restrictive way, stopping legitimate customers withdrawing funds from accounts.

“Those checks cannot be used as an excuse to unduly restrict legitimate customers from withdrawing their funds,” said Ms Harrison.

Following today's announcement, shares in online-focused bookies 888 and GVC fell 0.85pc and 1.1pc respectively.

Neil Wilson, senior market analyst at ETX capital, said: “The move [by the CMA] highlights the willingness of the regulator to act and forms part of what appears to be a much broader clampdown on the industry after a period of liberalisation. The regulatory trend is working against the industry at present.”

The gambling industry is facing increased scrutiny of fixed odds betting terminals (FOBT), which have been labelled the “crack cocaine” of the industry.

Both Labour and the Liberal Democrats pledged in their general election manifestos to cut the maximum bet allowed on these gambling machines from £100 to just £2.

Analysts at Barclays estimated that Ladbrokes Coral could lose £439m in revenue next year if FOBT stakes are cut to that level. It also predicted falls in revenue of £288m and £58m for William Hill and Paddy Power Betfair respectively. Those figures fall to £329m, £216m and £43m respectively if some of the lost FOBT revenue is still spent at the bookmakers in other ways.

In April, John White, the chief executive of Bacta, the trade association for the UK's amusement and gaming machine industry, said that gambling operators with FOBTs “should learn to live without” the “dangerously high £100 stake limit”. Mr White called concerns from betting companies that setting the limit too low would be damaging on the industry as “scaremongering”.

By Tom Rees

Ireland AIB Sale raises 3 billion euros

(qlmbusinessnews.com via uk.finance.yahoo.com — Fri, 23 May 2017) London, Uk —

DUBLIN (Reuters) – Ireland raised 3 billion euros (2.7 billion pounds) by selling a quarter of Allied Irish Banks (AIB) on Friday in a remarkable turnaround for a company at the forefront of reckless lending during the “Celtic Tiger” boom.

The sale took the overall return for the state from AIB to nearly half the 21 billion euros spent to bail the bank out after a massive property crash in 2009, the biggest bill for any Irish lender still trading.

The state ended up with 99.9 percent of AIB and has been nursing it back to health, with the aim of eventually recouping all the taxpayer money it ploughed into the lender, one of three it managed to save in the euro zone's most costly state rescue.

The initial public offering (IPO) of 25 percent of AIB's shares at 4.40 euros each was the third largest European bank listing since the financial crisis and the biggest IPO of any kind in London by market capitalisation in almost six years.

“The successful completion today of AIB's IPO represents a significant milestone,” Finance Minister Paschal Donohoe said of the long-awaited share sale his predecessor Michael Noonan launched in May.

“This successful IPO has created a strong platform for the state to recover all the money it has invested in AIB and to further dispose of our banking investments for the benefit of the Irish people,” Donohoe said.

In the biggest test yet of investor appetite for the Irish banking sector since the crisis, the AIB shares on offer were four times oversubscribed and sold at the midpoint of an initial 3.90 euro to 4.90 euro range set last week.

The sale price valued the bank at 11.9 billion euros, meaning investors only received a 3 percent discount to the bank's book value of 12.3 billion euros at the end of 2016 – or 0.97 times tangible book value.

That put AIB shares at a premium to its main Irish rival Bank of Ireland, which trades at 0.87 times book value, and towards the level of European rivals such as Lloyds and ABN Amro.

“LANDMARK DAY”

Shares in the bank climbed 7 percent to 4.71 euros in unofficial trading ahead of next Tuesday's formal debut on the Dublin and London stock exchanges.

“Although the valuation only leaves around 7 percent upside versus our target price, we believe the potential for special dividends, excess capital and strong top down dynamics in Ireland are likely to be supportive of the stock price,” Keefe, Bruyette & Woods analyst Daragh Quinn wrote in a note.

Like Ireland's economy, which is growing faster than any other in Europe, AIB has staged a strong recovery, posting a profit for each of the last three years and becoming the first domestically owned lender to restart dividends since the crash.

The return for the state from the IPO, together with the amount AIB has repaid in capital, fees, dividends and coupons since its bailout, now comes to almost 10 billion euros.

“This is a landmark day for the bank,” AIB chief executive Bernard Byrne said in a statement. “The level of investor interest and support is a great vote of confidence in the strength of the turnaround in the bank and the wider economy.”

Ireland pumped 64 billion euros into its banks and expects to turn a profit on the half given to the three that survived. Noonan said last month it would probably take eight to 10 years to return AIB fully to private ownership.

The government will use Friday's proceeds to cut some 1.5 percent from a national debt that at 200 billion euros is still among the highest in the euro zone by most measures.

As the deal also includes a greenshoe, or over-allotment option, the size of the IPO could rise to 28.75 percent if demand proves higher than expected following AIB's debut – and add another 400 million euros to state coffers.

By Padraic Halpin

(Additional reporting by Dasha Afanasieva in London)

 

Train operators in bidding war for two of the UK’s most lucrative rail contracts

Joshua Brown/Flickr

(qlmbusinessnews.com via telegraph.co.uk – – Thur, 22 June, 2017) London, Uk – –

Railway operators around the globe are squaring off in the final stages of a bidding war for two of the UK’s most lucrative rail contracts.

The Department for Transport has announced the shortlist of travel giants in the running to operate the West Coast and Southeastern rail franchises.

The stakes are particularly high in the contest for the West Coast Partnership (WCP) contract as the winner will also be expected to work with HS2 to launch the first services on the multi-billion pound high-speed rail project, which will run from London to Birmingham from 2026.

The franchise is currently operated by Stagecoach and Virgin, who have enlisted the support of French company SNCF in a bid to retain the contract.

Also looking to land the franchise is Hong Kong-based MTR, which recently won the South West Trains contract alongside travel operator FirstGroup.

MTR is pairing up with China’s Guangshen Railway Company in its bid for the WCP contract.

FirstGroup is also shortlisted, in a bid with Italian company Trenitalia.

“The West Coast Partnership will support growth and better services on the West Coast Main Line while helping to ensure that HS2 becomes the backbone of Britain's railways,” said transport secretary Chris Grayling.

“This will create more seats for passengers, improve connections between our great cities, free up space on existing rail lines and generate jobs and economic growth throughout the country. I look forward to seeing the bidders' innovative ideas to put passengers at the heart of the railway.”

Stagecoach has also been shortlisted for the Southeastern franchise, which operates trains from Kent into London.

Also in the running are Trenitalia and South Eastern Holdings, a joint venture company owned by the East Japan Railway Company, Dutch firm Abellio and Japanese giant Mitsui.

Also in the running is London and South East Passenger Rail Services Limited, a wholly subsidiary of UK transport company Govia, which is the current operator of the franchise.

“Southeastern is one of the busiest franchises in the UK, running almost two thousand services every weekday,” Mr Grayling said.

“We want passengers to be at the heart of everything that the new operator does, enjoying modern, spacious trains on a more punctual and reliable service. We will listen to what passengers say in the current public consultation, and we will seek to make changes and improvements only with their support.”

By Sam Dean

Tesco Cardiff call centre to close with potential job loss of 1,100

(qlmbusinessnews.com via theguardian.com – – Thur, 22 June, 2017) London, Uk – –

Tesco is to close a call centre in Cardiff, putting 1,100 jobs at risk.

The supermarket chain said that in February it planned to close one of its two call centres which handle customer emails, social media inquiries and phone calls. About 250 jobs will be created in the group’s other call centre, in Dundee, which will handle all customer queries. Workers from Cardiff will be offered work there but few are expected to move.

Nick Ireland, the divisional officer of Usdaw, the shopworkers’ trade union, said workers in Cardiff were “understandably shocked” by the announcement.

“This is clearly devastating news for our members and will have a wider impact on south Wales, as so many jobs are potentially lost to our local economy.

“We will now enter into consultation talks with the company over the coming weeks to look at the business case for the proposed closure. Our priorities are to keep as many members as possible in employment, whether that is with Tesco or other local employers, and to get the best possible deal for our members.”

Andrew RT Davies, leader of the Conservatives in the Welsh Assembly, said: “This could be the biggest single loss of jobs in Wales since 2009, and will be a huge blow for the employees and their families and the South Wales economy.”

Matt Davies, the UK chief executive of Tesco, said: “The retail sector is facing unprecedented challenges and we must ensure we run our business in a sustainable and cost-effective way, while meeting the changing needs of our customers.

“To help us achieve this, we’ve taken the difficult decision to close our customer service operations in Cardiff.

“We realise this will have a significant effect on colleagues in the Cardiff area, and our priority now is to continue to do all we can to support them at this time.”

Retailers are having to rethink their businesses in the face of aggressive online competitors as well as higher costs after a hike in the national living wage from £7.20 to £7.50, recent business rate changes and the introduction of the apprenticeship levy.

Lewis said last year that retailers faced a “potentially lethal cocktail” as profits slump and costs rise.

Rising competition from the discounters Aldi and Lidl has also forced traditional supermarkets to hold down prices at a time of rising costs resulting from the fall in the value of the pound against the euro and the dollar.

The cuts at Tesco are the latest in a string of cutbacks implemented as part of a turnaround plan led by Dave Lewis, the group chief executive, who joined in autumn 2014.

 

In his first year in charge, Lewis axed nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division. More than 2,500 jobs were lost with the closure of 48 underperforming Tesco stores, while in April 3,000 jobs were put at risk when the chain cut night shifts for shelf stackers in some of its biggest supermarkets.

Tesco is not alone. Sainsbury’s, Morrisons and Waitrose have also closed stores while Asda has cut jobs as all the big grocers try to keep costs down.

But the latest changes are part of a cost-cutting drive designed to improve the efficiency of Tesco before its £3.7bn takeover of Booker, the cash and carry company behind the Londis and Budgens convenience store chains.

The announcement of the job cuts comes during a difficult week for the UK’s biggest supermarket. On Tuesday, call centres were inundated with customer complaints following an IT glitch that hit up to 10% of online grocery orders.

On Wednesday, Tesco Bank customers were unable to access online banking for several hours after another IT issue. Customer queries for the bank are handled by a separate operation from those in Cardiff and Dundee.

Tesco Bank apologised to those affected and said: “Service is now restored and customers can access their account as normal.”

By Sarah Butler

 

Centrica sells UK gas plants to EPH for 318 million pounds

 

Ton Zijp/Flickr

(qlmbusinessnews.com via uk.reuters.com — Wed, 21 June 2017) London, UK —

British Gas parent company Centrica has agreed to sell its two biggest gas-fired power plants to Czech peer EPH for 318 million pounds, pushing forward with its plan to become a nimbler energy supplier in a fiercely competitive market.

Centrica's Langage and South Humber power plants, which jointly employ around 130 people, have an installed capacity of 2.3 gigawatts (GW) and hold contracts to provide back-up power for the coming four years.

“The transaction is consistent with Centrica's strategy to shift investment towards its customer-facing businesses,” Centrica said in a statement.

The news comes a day after Centrica announced the permanent closure of its Rough gas storage site, Britain's largest.

Two weeks ago it sold its Canadian oil and gas assets, highlighting its move away from traditional energy.

Instead, Centrica said it wants to focus on flexible power generation assets. It has already invested in fast-response gas peaking plants and a power storage facility.

For EPH, the purchase builds on its existing power plant portfolio in Britain, which consists of the Eggborough and Lynemouth power stations.

The company has been snapping up coal, gas and nuclear power assets in recent years, betting they will remain needed and investments will pay off once electricity prices rise.

By Karolin Schaps

Travis Kalanick Uber boss resigns as CEO

(qlmbusinessnews.com via telegraph.co.uk – – Wed, 21 Nov, 2017) London, Uk – –

Uber CEO Travis Kalanick has resigned, capping a series of controversies that have rocked the world’s largest privately backed start-up.

The company confirmed Mr Kalanick’s departure from the top executive’s role Tuesday, after the New York Times reported major backers including Benchmark Capital demanded he resign. Mr Kalanick will remain on the board of directors, the newspaper said.

While Uber has become the world’s most valuable start-up, it has been dogged by drama including allegations of sexual harassment and the use of software to bypass regulators.

The resignation of the man who founded Uber in 2009 comes after a series of controversies shone a light on problems with the famously aggressive start-up’s culture and governance.

As Uber’s public face, Mr Kalanick has embodied its success. Earlier this month, he told staff of plans for a leave of absence, handing the running of the company over to a management committee. It followed the sudden death of his mother in a boating accident.

In a statement reported by the New York Times, Kalanick said: “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors' request to step aside so that Uber can go back to building rather than be distracted with another fight.”

Despite recent turmoil, Uber’s business is growing. Revenue increased to $3.4bn (£2.7bn) in the first quarter, while losses narrowed – though they remain substantial at $708m.

The company's board said: “Travis has always put Uber first. This is a bold decision and a sign of his devotion and love for Uber.

“By stepping away, he's taking the time to heal from his personal tragedy while giving the company room to fully embrace this new chapter in Uber's history. We look forward to continuing to serve with him on the board.”

 

 

Automakers call for interim Brexit deal

(qlmbusinessnews.com via theguardian.com – – Tue, 20 June, 2017) London, Uk – –

Sector warns of permanent damage unless UK can secure transitional deal maintaining access to single market and customs union

Carmakers have called on ministers to keep the UK in the EU single market and customs union for at least five years or risk permanent damage to the industry.

The Society of Motor Manufacturers and Traders told the government on Tuesday it was time to be pragmatic and honest about what could be achieved and secure an interim agreement in Brexit negotiations. Otherwise, Britain could face a “cliff-edge” in 20 months that would be the “worst foreseeable outcome for the sector” and possibly mean tariffs.

Mike Hawes, the chief executive of the SMMT, said: “We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO terms.

“This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.”

The UK and EU automotive sectors are highly integrated, and Hawes warned that a bespoke deal – which would need to cover rules on tariff and non-tariff barriers, and regulatory and labour issues – could not be completed within five years.

Almost 60% of the cars made in the UK are sold in Europe, and many components travel back and forth across the Channel to various plants during the manufacturing process. The SMMT estimates that tariffs would drive up the cost of a British car by £1,500.

Hawes said Brexit was the biggest challenge the car industry had faced in a generation, and warned that an untidy exit from the customs union would damage the industry permanently. “We must have the no-tariff, frictionless trade upon which the industry depends,” he said.

Although Hawes did not expect any immediate closure of key plants, he said the risk was “death by a thousand cuts” as uncertainty led to diminishing investment and the dwindling of the supply chain in the UK.

The SMMT announced a record turnover of £77.5bn for 2016, its seventh consecutive year of growth, underlining the importance of the sector.

The group’s intervention came as a study released by the Automotive Council suggested that cars manufactured in Britain were becoming more British, with an uplift in the proportion of parts from domestic suppliers. Nearly half (44%) of all components come from the UK, up from 41% in 2015.

While the council said the figures marked a significant move in the right direction, the proportion could still be problematic for some export agreements.

Hawes added: “The needle is shifting more towards British content, but we are a long way from the 50-60% shelf for most free trade agreements. We need to have arrangements where EU content counts as UK and vice versa – that should also allow us to take advantage of free trade arrangements with the 30-40 other countries that the EU has.”

By Gwyn Topham

Brexit talks begin in Brussels, as EU and UK seek new ‘partnership’

 

The big Brexit talks have kicked off in Brussels, with both sides sitting down for their first official discussions over the UK leaving the EU.

Britain's Conservative Party lost its overall majority in the recent election, but Brexit Secretary David Davis said that has not changed their negotiating position.

“Because the membership of the single market requires the four freedoms to be obeyed, we need to bring back to the UK control of our laws of our borders,” Davis told reporters.

Rising inflation puts a squeeze on UK households spending power

Ken Teegardin/Flickr

(qlmbusinessnews.com via uk.reuters.com — Mon, 19 June, 2017) London, UK —

Households in Britain have become more worried about the outlook for their finances in the 12 months ahead as rising inflation puts a squeeze on their spending power, a survey showed on Monday.

IHS Markit said its index measuring how households feel about their personal finances fell to 45.8 in June from 47.1 in May, the most pessimistic in three months and one of the lowest readings since the end of 2013.

The firm's overall Household Finance Index, measuring how people feel about their current situation, rose to 43.8 from 42.6 but remained below the 50.0 no-change level.

Britain's main measure of inflation hit 2.9 percent in May, its highest level in nearly four years after last year's Brexit vote hammered the value of the pound, and growth in wages is lagging behind, official data showed last week.

That is eating into the spending power of consumers who typically drive British economic growth.

“June’s survey reveals that UK household finances remain under intense pressure from rising living costs,” said Tim Moore, senior economist at IHS Markit.

“While the squeeze moderated slightly since last month, worries about the outlook have deepened.”

The survey also showed 58 percent of respondents expected higher interest rates in 12 months time, more than double the figure seen after the Bank of England cut interest rates last August following the Brexit vote.

The Bank kept rates at their record low of 0.25 percent last week but three members of its eight-strong Monetary Policy Committee voted for a rate hike, surprising investors and raising speculation that an increase in borrowing costs might come sooner than previously expected.

By William Schomberg