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(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
(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.
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)
(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
(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
(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
(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.”
(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
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.
(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
Technology giant Amazon is buying Whole Foods for $13.7 billion. CNNMoney's Paul R. La Monica breaks down why Jeff Bezos is trying to dominate the brick and mortar grocery business.
In 1983, Jack Stack founded SRC Holdings, a highly entrepreneurial mini-conglomerate of manufacturing businesses. In 2016, SRC earned $532 million in revenue.
One of the most expensive listings in California's famed beach town would be right at home on the other coast – and it's priced to match. We took a tour with Caldwell Banker's #1 agent, Chris Cortazzo.
Boeing builds almost every one of its planes in Everett, Washington — just 30 minutes outside of Seattle. It's also where the new Air Force One will be built. And you can see it all happen in person.
Twenty-five-year-old Nicolas Bijan is reinventing his father's Rodeo Drive fashion house in his own image, betting that a new generation is ready to be dressed for success.
(qlmbusinessnews.com via uk.reuters.com — Fri, 16 June 2017) London, UK —
Tesco (TSCO.L), Britain's biggest retailer, has cemented its recovery, reporting its strongest quarterly sales performance in its home market in seven years despite rising prices.
Chief Executive Dave Lewis has been leading a fightback after Tesco's profits were hammered by changing shopping habits, the rise of German discounters Aldi and Lidl and an accounting scandal in 2014.
He stabilized the business and then got it growing again with a focus on lower prices, new and streamlined product ranges, better customer service and much improved supplier relationships. Tesco remains Britain's largest supermarket by a wide margin.
The group, which in January agreed to buy wholesaler Booker (BOK.L) for 3.7 billion pounds ($4.7 billion), said on Friday that UK like-for-like sales rose 2.3 percent in the 13 weeks to May 27, a sixth straight quarter of growth.
The outcome was ahead of analysts' forecasts, in a range of up 1.7-2.0 percent, and built on growth of 0.7 percent in the previous quarter.
“The key focus for this quarter has been working with our supplier partners to protect our customers from inflation. Today's numbers show the benefit of our approach,” Lewis told reporters.
The performance was driven by 1.3 percent growth in customer transactions, 10 million more year-on-year, and by volume growth in fresh food of 1.6 percent.
Tesco shares rose as much as 4.4 percent, but gave up those gains on wider concerns about a deteriorating consumer environment in Britain and lower international sales.
The stock is up 17 percent year-on-year but down 13 percent so far in 2017.
Britons have been hurt by a rise in inflation, caused in large part by the fall in the value of the pound since last year's vote to leave the European Union, and by a slowdown in wages growth.
FLEXING ITS MUSCLES
Tesco, which has a share of around 28 percent of the UK grocery market, says it is not passing on as many cost increases to shoppers as its competitors.
By purchasing a tighter range of goods and working more closely with its suppliers, Tesco is able to exploit its huge purchasing scale.
Lewis said Tesco's grocery inflation in the quarter was 1.5 percentage points below the most recent measure by industry researcher Kantar Worldpanel of 2.9 percent.
“At the moment inflation in Tesco is significantly below the market trend,” he said.
Bernstein analyst Bruno Monteyne said Tesco's inflation number “reflects working together with suppliers, not margin compression.”
Tesco's finance chief Alan Stewart said the group's margin and cost savings targets were unchanged after the update on the first quarter of its financial year.
Analysts regard Sainsbury's (SBRY.L), Britain's second largest supermarket group, as the most exposed to a weaker economy after buying general merchandise retailer Argos.
Other analysts say the discounters remain a major threat to Tesco and its traditional rivals, highlighting renewed momentum at Aldi and Lidl, with recent industry data recording their fastest sales growth since 2015.
The trading update, released ahead of Tesco's annual shareholders' meeting later on Friday, showed group like-for-like sales rose 1 percent.
However, Tesco's international like-for-like sales fell 3.0 percent, reflecting a decision to discontinue unprofitable bulk selling activity in Thailand.
Tesco also said it had resolved a tax issue relating to the sale of its South Korean business in 2015, releasing a 329 million pounds provision.
By James Davey
(qlmbusinessnews.com via theguardian.com – – Fri, 16 June, 2017) London, Uk – –
Tech giant could receive record penalty for favouring its comparison shopping service in its search result pages
Google is reportedly facing a record-breaking fine from Brussels of more than €1bn (£875m) over alleged abuse of its market dominance.
EU officials are expected to announce that the tech giant has been guilty of manipulating its search engine results to favour its new Google Shopping service, which offers price comparisons on products.
The unprecedented sanction, if tabled, follows a seven-year investigation by Brussels. In July last year, the commission had reiterated its belief that the search giant had “abused its dominant position by systematically favouring its comparison shopping service in its search result pages”.
A spokesman for the European commission declined to comment on the size of the fine or the potential timing of any formal announcement. A spokesman for Google was not immediately able to comment.
The Financial Times said the commission was looking at topping the penalty of €1bn handed out to chipmaker Intel in 2009, over its anticompetitive behaviour.
Senior politicians in Paris and Berlin, along with Google’s competitors, have been encouraging Margrethe Vestager, the European commission’s competition commissioner, to take a tough line.
It follows the commission’s decision to force Apple to pay Ireland €13bn in unpaid taxes as a consequence of the regulator finding that the tech giant’s tax regime in Ireland had been a form “illegal state aid”.
A financial sanction for abuse of a monopoly position is capped at a maximum of 10% of the total revenues of the company involved, which in the case of Google’s parent company, Alphabet, was $90bn last year. It is calculated as up to 30% of Google’s shopping revenues multiplied by the number of years of the anti-competitive behaviour.
The company will also have a set time to propose how it intends to operate in future in building its shopping business. If it fails to agree a deal with the commission in that period, the company could be fined up to 5% of average daily turnover for each day of delay.
Since 2000, European regulators have investigated Microsoft, Intel, Apple, Google, Facebook and Amazon, raising claims that Brussels is waging war against Silicon Valley. This is denied by the commission.
Vestager inherited the case from her predecessor, Joaquín Almunia, who reportedly rejected three settlement offers from Google between 2013 and 2014.
On being appointed to her job, Vestager issued a list of charges alleging that Google systematically favoured its own comparison shopping product in its search results. After hearing the company’s response, the commission narrowed the charge list a year later.
Google’s general counsel, Kent Walker, claimed in a blogpost last year that the EU’s case lacked evidence. The company is likely to appeal in the European courts, delaying a resolution to the case for years.
The decision from the regulator would, however, open the way for shopping comparison competitors or customers to file damages claims against Google.
A second investigation being undertaken into Google is considering if it unfairly banned competitors from websites that used its search bar and adverts. The regulator is also examining how Google pays and limits mobile phone providers who use its Android software and Play app store.
By Daniel Boffey
(qlmbusinessnews.com via theguardian.com – – Thur, 15 June, 2017) London, Uk – –
The Bank of England has edged closer to raising interest rates as a deeper split emerged among its committee of policymakers, with three out of eight voting for an immediate rise to keep inflation in check.
The 5-3 split to keep interest rates at their record low of 0.25% surprised financial markets and the pound rose against the dollar on the news. Most City economists had expected just one member, Kristin Forbes, would maintain her previous vote for rates to be raised to 0.5%. Instead she was joined by Ian McCafferty and Michael Saunders.
Their call for higher borrowing costs follows figures that show inflation has risen further above the Bank’s target of 2.0%. In May inflation hit 2.9%, as measured by the consumer prices index. The increase was driven in part by the pound’s weakness since the Brexit vote, which has made imports to the UK more expensive.
The other five members of the monetary policy committee (MPC), including the Bank’s governor, Mark Carney, decided interest rates should stay at their historically low level to help support growth at a time of rising prices and meagre wage growth. The drop in living standards has hit consumer spending and knocked overall economic growth. Figures on Wednesday showed workers were experiencing the biggest pay squeeze since 2014.
Minutes from the Bank’s rate-setting meeting released on Thursday cited a range of views on the MPC. They noted inflation was now expected to overshoot the Bank’s target by more than previously expected. Supporting those voting for a rate rise, there were also signs that growth in business investment and net trade was on track to make up for weaker consumption.
The minutes added that some policymakers felt it was time to start scaling back the massive package of support launched after last summer’s EU referendum, which included a rate cut and more electronic money printing.
“The withdrawal of part of the stimulus that the committee had injected in August last year would help to moderate the inflation overshoot while leaving monetary policy very supportive,” the minutes said.
“But there were also arguments in favour of leaving the policy rate unchanged. A slowdown in household consumption, and GDP as a whole, had recently begun, and it was too early to judge with confidence how large and persistent it would prove to be … Wage growth had remained subdued, despite low unemployment.
“Different members of the committee placed different weights on these arguments. On balance. For five members, the current policy stance was still appropriate to balance the demands of the committee’s remit. For three members, the outlook now justified an immediate increase in bank rate.”
All committee members agreed that any rate rises would be expected to be at a gradual pace and “to a limited extent”.
One seat on the committee was empty – the result of Charlotte Hogg’s resignation as deputy governor after it emerged she had breached the Bank’s code of conduct. Forbes leaves the MPC later this month and investors are awaiting an announcement on her replacement.
Policymakers, led by Carney, will provide a fuller update on their thinking when they release quarterly economic forecasts and vote again on interest rates in August. Before Thursday’s split vote most economists had said they expected the MPC to continue looking past above-target inflation and instead to favour supporting jobs and growth by keeping interest rates at their record low as Britain embarks on Brexit talks.
James Knightley, a senior economist at the bank ING, said he still expected a majority of policymakers to tolerate higher inflation in favour of shoring up the economy, as had been the case when inflation went well above target in the past.
“Given the BoE ‘looked through’ inflation at 5%+ rates in 2008 and 2011, we think the committee as a whole will look through this spike too,” he said.
“The economic and political uncertainty, we believe, is too great to get a consensus behind higher rates and with Kristin Forbes leaving the BoE this month, the hurdle to getting that consensus will soon be harder to achieve.”
But Ben Brettell, senior economist at financial firm Hargreaves Lansdown said the MPC minutes showed policymakers were more optimistic than many economists about the UK’s prospects.
“It seems the willingness of the MPC to ‘look through’ higher inflation and leave rates on hold is wearing thin, and if inflation continues to surprise we could see higher rates by the end of the summer,” he said.
By Katie Allen
Mobile phone roaming fees disappear on Thursday.
The move is part of the EU's drive to create a single digital market across the continent.
It should mean an end to those huge holiday phone bills
Those who travel regularly – or even commute to another EU country – should end up spending less on calls, texts and surfing.
(qlmbusinessnews.com via telegraph.co.uk – – Wed, 14 June, 2017) London, Uk – –
Volkswagen is facing its biggest legal challenge in Europe over the “dieselgate” scandal with a UK class action against the car maker teaming up with a similar claim in the Netherlands.
British law firm Harcus Sinclair has joined forces to unite its 41,000 claimants with as many as 180,000 affected VW drivers in Europe to create a international “super claim”.
By combining the claims the law firms hope to have greater heft against the German car maker as they attempt to to win compensation from VW.
Damon Parker, who heads the claim for Harcus Sinclair, said: “Our partnership underscores the co-operative approach that we are adopting with law firms and entities in different jurisdictions.
“Our clients’ goal is to do all that they can to support other law firms and organisations across Europe to ensure VW is held to account.”
In 2015, it emerged in the US that VW had installed “defeat devices” on some of its diesel cars which realised when a car was being tested for emissions.
They then turned on full pollution controls to meet the required standards but were not in use in normal driving conditions.
This meant that VW cars pumped out up to 40 times the permitted level of pollution in real world driving conditions – news which sent the company’s share price plunging.
VW has admitted that while about half a million cars in the US were affected, as many as 11m worldwide contained defeat devices.
The car maker has since agreed to pay tens of billions of dollars to motorists in the US to compensate them and account for the fall in value of their vehicles. It also agreed to pay billions in fines and penalties in the US. So far no similar deals have been agreed with drivers or authorities in other nations.
Mr Parker added: “It has been over 18 months since the scandal was exposed and UK consumers have waited in vain for Volkswagen to acknowledge and respond to their complaints fairly.”
He said the claim was not just about winning payouts but also “preventing corporations from thinking that they can deceive customers and harm people’s health and the environment with impunity”.
The combined claim also targets German engineering group Bosch, which supplied the software used by VW to control its engines, along with some local Dutch companies.
Harcus Sinclair is working with European law firms AKD Benelux Lawyers, Labaton Sucharow and Breiteneder Attorneys – collectively known as “the Foundation” – on the claim.
“Since its establishment in 2015, the Foundation has tried to reach a reasonable settlement with VW on behalf of aggrieved car owners, so far without any success,” said Guido van Woerkom, director of the Foundation. “We now see no other solution than to mobilise all affected car owners to force Volkswagen, Bosch and car traders to accept their responsibility and offer a reasonable compensation.”
MPs on the UK’s Transport Select Committee have tried to hold VW to account, repeatedly calling the company’s UK boss to give evidence at hearings.
The frequently stormy sessions saw VW accused of misleading MPs, with it seeming to promise to release the full findings of a huge investigation into who knew what and when about the scandal, something the car maker has since backtracked on.
In a statement, VW said: “We intend to defend these claims robustly. There is no evidence of any adverse impact on the residual value of the affected vehicles as a result of this issue nor with their performance following the implementation of the technical measures.
“It is our view that the instigation of legal proceedings in England is premature, not least because the implementation of the technical measures in the affected vehicles is still on-going.”
Bosch added: “Bosch takes the allegations of manipulation of the diesel software very seriously. These allegations remain the subject of investigations and civil litigation and Bosch is cooperating with the continuing investigations in various jurisdictions, and is defending its interests in the litigation.”
By Alan Tovey,