- Government issues latest ‘no deal’ Brexit guidance
- UK crime agency targets Russian assets
- BoE votes to hold interest rates
Stat of the day
0.5 per cent – The Bank of England’s forecast for economic growth in the third quarter of 2018, up from a previous estimate of 0.4 per cent.
Government issues latest ‘no deal’ Brexit guidance
A number of papers including the Daily Telegraph (p3, £) and The Times (p12, £) report on the government’s latest ‘no deal’ Brexit guidance for businesses, issued yesterday, which includes warnings that transfers of personal data between the EU and UK could be restricted.
UK Finance Chief Executive Stephen Jones responded with the following statement: “It is vital that negotiations progress swiftly to ensure continued cross-border data flows and prevent additional costs and bureaucracy for firms and their customers on both sides of the Channel.” UK Finance and TechUK published a joint paper last year setting out proposals to allow the free flow of personal data between the EU and UK to continue.
Meanwhile Mark Carney, Governor of the Bank of England, yesterday warned cabinet ministers that leaving the European Union without a deal could be as big a disaster as the 2008 financial crash, The Daily Mail (p5). It is reported that Mr Carney stated that in a worst-case scenario, house prices would fall by 35 per cent, as sterling would plunge, driving up inflation and interest rates, leading to higher risk premiums passed on to customers The Times (p1, £). Unemployment could also reach double figures, according to The Guardian (p1).
The Guardian (p14) also reports on increasing pressure from across the channel, as EU leaders will not impose new instructions on Michel Barnier to get a Brexit deal, adhering to the EU’s tough lines on the single market and customs union published last year.
UK crime agency targets Russian assets
Donald Toon, director of the National Crime Agency’s economic crime unit, declares that the agency is ramping up its focus on targeting Russians with suspicious wealth, as part of the UK’s response to clear the £90bn tide of “dirty money” flooding into London (Financial Times, p1, £). Toon revealed the NCA is preparing to expand its use of unexplained wealth orders (UWOs) to freeze Russian assets in the UK. This move is part of the British government’s attempt to end London’s reputation as ‘a magnet for dirty money from Moscow’.
UK Finance’s Head of Sanctions Policy Justine Walker has previously blogged about the implications of the changing geopolitical landscape and sanctions against Russia on the financial sector.
BoE votes to hold interest rates
The Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to hold interest rates at 0.75 per cent, while upgrading its outlook for economic growth (Bloomberg, online only). In its policy statement, the MPC said the Bank’s latest economic projections “appear to be broadly on track”, with growth slightly faster than the economy can withstand, raising the prospect of modest inflationary pressures in the second half of next year (Financial Times, p2, £). The Bank also published it quarterly survey of business conditions, finding that consumer spending had seen a modest boost partly due the warmer weather, but that investment was being held back due to uncertainty around Brexit (The Times, p2, £).
Latest from UK Finance
Carla Sateriale and Stephen Robin share their takeaways from last week’s Buy-to-Let Conference.
Maria Harris, Director of Intermediary Lending at Atom Bank, discusses embracing technology to empower customers, ahead of next week’s Digital Innovation Summit.
In the final post of our summer intern blog series, Matthew Panton asks: is cash still king?
News in Brief
All 60 economists surveyed by Bloomberg expect the Bank of England’s Monetary Policy Committee to maintain the benchmark interest rate at 75 basis points in today’s interest rate decision (Bloomberg, online only).
At a panel event marking ten years since the collapse of Lehman Brothers, Lord Macpherson, former Permanent Secretary at Her Majesty’s Treasury, warned it would be a mistake for a Labour government to use bank nationalisation as a means to increase lending to SMEs (The Guardian, p41).
Reuters (online only) reports that the EU Commission is pressing for the European Banking Authority (EBA) to receive greater resources to tackle money-laundering, but has stopped short of calling for a new agency to be set up for that purpose.
The Times (£, p12), reports that the Prime Minister will use her speech at Conservative Party Conference to outline plans for a “strict” post-Brexit immigration regime, likely to end preferential access for EU citizens.
The European Research Group of Eurosceptic Conservative MPs unveiled their proposals yesterday for minimising post-Brexit disruption at the border between the Republic of Ireland and Northern Ireland, citing technology as key (BBC News, online only).
What the commentators say
A decade after the financial crisis, Mark Carney, Governor of the Bank of England, comments in The Daily Mail (p78) on how finance is an immense force for good and financial institutions such as banks, should continually serve us not the other way round. Mr Carney discusses the ‘lies of finance’ which were exposed during the collapse of Lehman Brothers, including the notion that financial markets are right and moral. Post-crisis, Carney argues the Bank’s priority was to shore up confidence and encourage households to spend, which meant the Bank had to reduce interest rates and embark on Quantitative Easing which proved unpopular with savers but helped the economy recover.
To align the values of society with those of conduct, tough new codes have been introduced, where financial firms and individuals are accountable for their actions. He concludes, although readers have disagreed with some of the Bank’s decisions, his job is to ‘prepare for the worst not hope for the best’ and by identifying the risks and coming forward with solutions, the Bank is now working hard every day to get the UK’s financial system in shape for Brexit whatever form it takes.
Writing in City A.M. (p13), Jasper Jolly tracks the rise and fall of Lehman brothers as we approach the tenth anniversary of its demise. Jolly describes the dramatic effect the collapse had on the global financial system and the resultant measures put in place to prevent a repeat, such as bank ringfencing and tighter cooperation with regulators. Jolly ends by noting some of the unexpected outcomes of the crisis, including the boom in FinTech helping to break up the inertia of the last decade.
In the Financial Times (p11, £), US Managing Editor Gillian Tett writes how emerging market turmoil makes the case for a stronger IMF. She remarks that Managing Director of the IMF Christine Lagarde is launching a discreet lobbying campaign to persuade the fund’s major creditors to expand its permanent resources, which has been given a growing impetus by the need to respond to ongoing crises in Argentina and Turkey. Tett argues that despite US President Trump’s overt hostility to multilateral institutions, behind the scenes the US administration has quietly backed plans to increase financial support from the IMF and its rescue packages.
- G20 Trade Ministers Meeting
- Parliament rises for Party Conference recess, returning on the 9th of October
- Bank of England Quarterly Bulletin, Q3
- Mark Carney delivers the Central Bank of Ireland’s Whitaker Lecture
For a full list of upcoming UK Finance statistics releases, please click here.