Top stories

  1. Government continues ‘to make good progress’ on financial services deal
  2. BoE holds interest rates
  3. UK manufacturing slows

Stat of the day

72 per cent – The amount London house prices have increased in the last ten years, according to estate agent Savills.

Government continues ‘to make good progress’ on financial services deal

Downing Street has poured cold water on reports that a deal for financial services between the UK and EU has been reached, but emphasises that progress is continuing to be made in negotiations, reports the Guardian (online only). The Times(£, p42) welcomes the progress made in reaching an agreement for financial services but cites worries from senior City figures that Britain may give up too much. The Financial Times (£, p3) reports that a solution to the Irish border issue may also be within reach, with EU negotiators exploring a compromise that would offer Britain a “bare bones” all-UK customs union in the final exit agreement.

Meanwhile, Bank of England governor Mark Carney has emphasised the severe impact a ‘no deal’ Brexit could have on the UK, with a disruptive exit ‘probably’ causing a slump in the pound, delays at borders and higher production costs, reports the Daily Mail (p2).

In other Brexit news, Leave.EU backer Arron Banks leads this morning’s front pages, after the National Crime Agency (NCA) launched an investigation into the businessman over concerns that foreign money could have been used to influence the Brexit referendum, the Daily Mail (p10 – 11) reports. The i (p5) adds that Banks was referred to the NCA by the Electoral Commission, which believe that numerous criminal acts may have been committed.

BoE holds interest rates

Sky News reports that interest rates will remain at 0.75 per cent, following a unanimous decision by the Bank of England’s Monetary Policy Committee, published in the Bank’s inflation report yesterday. TheFinancial Times (£, p3) reports that interest rates will need to rise over the next several years to keep inflation under control. The Committee indicated that the raises would remain “gradual”, increasing by 1.5 per cent over the next three years. However, these forecasts assume a smooth Brexit transition. The Times (£, p14) adds that rates may rise anyway if the economy collapses in the event of a ‘no deal’.

UK manufacturing slows

The Financial Times (£, p2) reports that UK manufacturing has suffered its sharpest slowdown in two years, according to a key gauge of sentiment. A global slowdown in the sector, problems with new car emission tests and fears of a ‘no deal’ Brexit are cited as key variables in affecting activity. Employment in the sector also fell, with job losses linked to the decline in new work, redundancies and cost-cutting efforts, according to City AM (online only).

Latest from UK Finance

In light of yesterday’s Bank of England inflation report, Stephen Pegge, Managing Director of Commercial Finance at UK Finance, looks at what this means for the market in today’s blog.

News in Brief

The government has created a new forum for business leaders to meet with the prime minister and senior cabinet figures twice a year, in efforts to improve relations with business and the private sector (City AM, p7).

Sports minister Tracey Crouch resigned from the front bench yesterday, after accusing the government of delaying a proposed reform of gambling regulations (Reuters).

House prices rose just 1.6 per cent in October, down from 2 per cent in September, the slowest rise in more than five years, according to the Nationwide House Price (Sky News).

Bridgnorth public toilets in Shropshire will no longer accept coins for the 20p entry fee, after making the switch to contactless payment (BBC Online).

A leaked report has concluded that Home Office officials provided former Secretary of State Amber Rudd with inaccurate information during the Windrush scandal, which led to her eventual resignation (The Times, p1 , £).

The result of the EU’s stress testing of Europe’s top banks will be announced today, with Italian banks in particular expected to face close scrutiny (Reuters).

What the commentators say

Financial Times (£, p13) columnist Martin Wolf writes that if neither the EU nor UK can compromise on their apparently incompatible redlines regarding the Irish border, a second referendum in some form would be preferable for both sides rather than the UK exiting without a deal. He recognises that holding another vote would face political backlash and logistical obstacles but argues that it may be the only option to avert a no-deal, an outcome he expects would be disastrous.

Financial Editor Nils Pratley comments in the Guardian (p41) on reports that the UK may have reached a tentative agreement with the EU on future trade in financial services. He remarks that the key issue will be the degree to which the UK will become a rule-taker. Pratley also suggests any initial agreement on financial services is likely to only cover broad principles, with the details left to be thrashed out in the coming years.

Calendar

  • EU bank stress test results published
  • Mark Carney launches new £50 note character selection process

For a full list of upcoming UK Finance statistics releases, please click here.

News in brief – 2 November 2018