?ECONOMIC EMERGENCY HAS ONLY JUST BEGUN?

The UK's ?economic emergency has only just begun? the chancellor Rishi Sunak declared yesterday as he delivered his one-year spending review, with total government borrowing set to reach a record £394 billion this year (Daily Telegraph, p1, £; Financial Times; p1, £). The impact of coronavirus has cost the country three years of economic growth, according to the Office for Budget Responsibility (OBR), with the economy expected to be 11.3 per cent smaller this year than was predicted before the pandemic (The Times, p1, £). Unemployment is expected to reach 2.6 million by the middle of next year and the chancellor reaffirmed his immediate priority is to ?protect jobs and livelihoods?, announcing £2.9 billion of funding for a new ?Restart? programme to help retrain those without work and £1.4 billion to increase the capacity of Job Centre Plus (The Guardian, p1).

Mr Sunak also announced a £4 billion ?levelling up fund? and a new UK Infrastructure Bank which will launch in spring 2021 and will be headquartered in the north of England (The Times, p9, £). The chancellor also announced £100 billion in infrastructure investment, including a £7.1 billion ?national home building fund? to deliver up to 860,000 homes, alongside funding for roads, broadband, cycling and buses (Daily Telegraph, p9. £).

EU BANKS IN UK TO CONTINUE TO FACE EUROPEAN DERIVATIVES REGULATIONS

EU banks operating in the UK will continue to be subject to European regulations regarding derivatives trading after the end of the transition period following a decision by the European Securities and Markets Authority yesterday (Financial Times, p1, £). It had been hoped that such banks would be allowed to operate solely under UK rules from January, however the decision means that some trades may now need to be routed through another country such as the US, which Brussels recognises as having equivalent derivatives standards (Reuters). Meanwhile David Schwimmer, chief executive of London Stock Exchange Group, has said that 'this is the period of peak uncertainty? for Europe's financial sector (Financial Times, £, online).

The OBR warned yesterday that a no-deal Brexit would cut the UK's GDP by two per cent next year, with temporary trade disruption, such as border queues, leaving the economy 1.5 per cent smaller after five years (Daily Telegraph, p4, £). The EU's chief negotiator, Michel Barnier, has warned that unless there is a major shift in the negotiations by Downing Street in the next 48 hours he will pull out of the planned talks in London this weekend (The Guardian, p19).

NEWS IN BRIEF

The government will announce later today which tiers of coronavirus restrictions each area in England will face when the national lockdown ends next week, with most regions expected to be in the top two tiers (BBC News).

House prices are predicted to fall eight per cent next year and will not recover until 2022, the Office for Budget Responsibility said yesterday, with the average price expected to be 17 per cent lower by 2025 compared to the body's pre-Covid-19 predictions made in March (The Times, p7, £).

Bitcoin reached a record high of $19,510 yesterday, following a 400 per cent increase since March when it suffered a large drop in value (Financial Times, p13, £).

The government has confirmed plans to change the formula used to calculate the retail prices index, a move which will mean members of traditional pension schemes will see lower annual increases in their pay outs (The Times, p39, £).

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