Top stories

  1. No-deal Brexit could see UK economy fall to 10 year low
  2. British Airways cyber-attack affected an additional 185,000 passengers
  3. Treasury Committee publishes report on SME Finance

Stat of the day

3.5 per cent – the increase in median full-time weekly earnings compared with 2017, equating to £569, according to the latest ONS statistics.

No-deal Brexit could see UK economy fall to ten year low

The National institute of Economic and Social Research has warned Britain’s economic growth will slow to its lowest rate in a decade if it leaves the European Union without a trading deal in place. The institute said that a no-deal Brexit would push growth down to 0.3 per cent in 2019, a fall not seen since the aftermath of the 2008 financial crisis, when the economy shrank by 4.2 per cent. (The Times, p44 £).

This forecast comes as Sam Woods, the Bank of England’s deputy governor for prudential regulation, advised banks yesterday to hold enough cash to withstand a disorderly Brexit impacting on financial markets next March, with firms needing to ensure they have ‘liquidity sufficient enough to accommodate a severe dislocation in financial markets’ (The Times p44, £).

Meanwhile Theresa May’s Cabinet is not able to agree a way forward for top level Brexit negotiations to resume, with no new plan to be put forward by the UK before next Monday’s budget, according to Bloomberg (online only).

British Airways cyber-attack affected an additional 185,000 passengers

British Airways (BA) yesterday announced a further 185,000 passengers may have had their personal data stolen by hackers following a cyber attack on the airline earlier this year. Customers potentailly affected were those making reward bookings between April 21 and July 28, 2018, who used a payment card (Telegraph, p6, £, (Guardian, p7).

A spokesperson for BA said: “While we do not have conclusive evidence that the data was removed from British Airways’ systems, we are taking a prudent approach in notifying potentially affected customers.

UK Finance has issued advice clarifying customers are protected against unauthorised fraud losses on a debit or credit card, and warning them to also be vigilant of criminals attempting to use the news of the data breach as an opportunity to trick people into revealing personal or financial information. Consumers are urged to follow the advice of the Take Five to Stop Fraudcampaign.

Treasury Committee publishes report on SME Finance

The Treasury Committee has today published a report on SME finance, calling for a Financial Services Tribunal to handle complex SME disputes with banks (CityAM, p5). The report also calls on the Treasury to bring commercial lending within the regulatory perimeter and develop a new strategy to overcome SMEs, unwillingness to apply for external finance.

Responding to the report in comments picked up by the Financial Times (online only, £), UK Finance’s Managing Director of Commercial Finance Stephen Pegge said:

“Small and medium-sized businesses play a vital role in our economy which the financial services sector is committed to supporting.

“The finance sector has undertaken a number of significant initiatives in recent years to improve standards and promote access to finance for SMEs.

“Banks provided £57 billion of lending to SMEs in 2017 and continue to approve eight in ten applications for finance. Firms who are turned down for a loan can access an independently-monitored appeals process and are offered the chance to be matched up with alternative finance providers.

“However, we recognise that more clearly can and should be done to enhance confidence and ensure SMEs can access the full range of support and guidance they need.

“UK Finance and its members will review this report, alongside other relevant evidence, and continue working constructively with all key stakeholders to deliver the best possible outcome for SMEs.

Latest from UK Finance

Following the PRA and FCA challenging financial institutions to consider how climate change may impact their business, Carla Sateriale explores green mortgages.

News in Brief

The former head of the US Federal Reserve, Janet Yellen has warned of a “huge deterioration” in corporate lending standards that is creating “systemic risks” to the economy (The Times, p49).

The European Central Bank (ECB) has signalled market turmoil and mounting risks to the European economy will not deter it from halting its quantitative easing programme by the end of the year (Financial Times, p4, £).

The Committee on Climate Change has warned rising sea levels will put 1.5 million properties at risk of coastal flooding while those properties threatened by coastal erosion will rise almost 15 times by 2085, compared with today (Financial Times, online only).

The gender pay gap has narrowed to a record low. The average female worker earned 17.9 per cent less than her male counterpart, down from 18.4 per cent last year according to the Office for National Statistics (The Times, p17, £).

Due to a series of insolvencies this year, stock markets expect the value of UK retail property to fall almost as much as during the financial crisis, according to analysis for The Financial Times(online only, £).

What the commentators say

Ed Conway, economics editor of Sky News, writes in The Times (p30, £) urging the chancellor Philip Hammond to be bold in the upcoming budget and address the problems in the UK’s tax system. He argues that too much money is raised from income and too little from wealth, and recommends a variety of solutions such as reforms to business rates and merging national insurance and income tax into one to address this. He concludes that in reality, the chancellor will opt for another budget that “barely shifts the needle” but emphasises that the UK desperately needs radical economic reform.

Writing in this morning’s City AM (online only) the head of corporate finance at ICAEW, David Petrie, warns that the government’s National Security and Investment consultation may risk “closing Britain for business”. While Petrie acknowledges that the consultation is a sensible response to a geopolitical scene in flux, he considers that it has over-reached in its scope and could deter legitimate investment.

Calendar

  • Irish presidential elections held
  • Michel Barnier meets Sadiq Khan in Brussels

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

News in brief – 26 October 2018