- Norway rules out Efta membership for the UK
- Stamp duty reforms cost £4billion
Stat of the day
0.2 per cent – the increase in gross domestic product for the eurozone from the end of June, according to data from Eurostat (The Times, £, p51).
Norway rules out Efta membership for the UK
A “Norway for now” plan to prevent a no-deal Brexit, which is favoured by some Conservative MPs over the Government’s proposed Chequers plan, was rejected yesterday by Norway at the Nordic Council where Prime Minister Theresa May spoke (The Times, £, p6). The proposed Norway plan would see the UK’s EU membership replaced by a temporary European Free Trade Association (Efta) membership until a solution is found for the Irish border problem.
Separately, the Financial Times (£, p1) reports that the chance of a no-deal Brexit has now increased, according to a report by S&P Global Ratings, and would spark a “moderate recession lasting four to five quarters”. It also warned that the result of a long recession would likely reduce Britain’s credit rating.
S&P remarked, however, that it did expect the EU and UK to come to an agreement before Britain’s EU exit (The Guardian, p1).
If a no-deal Brexit does occur, it has been confirmed that EU banks and companies will be able to access UK clearing houses for a limited time, as long as they adhere to the regulatory and supervisory standards (City A.M, p6).
The confirmation was welcomed by Stephen Jones, CEO of UK Finance, who commented: “The commitment to maintain temporary access to UK clearing houses is a welcome first step forward that recognises the importance of mitigating risks to financial stability in the event of a ‘no deal’ Brexit.
“It is positive that the joint working group of the Bank of England and European Central Bank is addressing this potential risk to our financial system.”
The Financial Times (£, p1) reports that other issues still to be tackled include the validity of derivatives contracts, emergency capital for banks, and a call for lenders to keep planning in case of a no-deal Brexit outcome.
Stamp duty reforms cost £4billion
Following the Budget on Monday, Philip Hammond faces calls to overhaul stamp duty, reports Daily Mail (p12). According to calculations by the Office for Budget Responsibility (OBR), the Chancellor’s proposed reforms will cost the public purse up to £4billion by 2023, as well as making it difficult for families to move up the property ladder.
In addition, the OBR also predicts that the decision to allow councils to borrow extra money to build more social housing will result in no more than 9,000 extra homes by 2024 (The Times, £, p8). This figure contradicts previous predictions that the government is on track to meet its target of 300,000 new homes a year.
Separately, Prime Minister Theresa May has confirmed that there will not be a snap General Election, the Financial Times reports (£, p1). Mrs May insisted that a General Election would not be the way for the Conservative Party to find its way through the Brexit deadlock.
Latest from UK Finance
The ICO recently consulted on some fundamental principles to inform its development of a ‘regulatory sandbox’. Walter McCahon explains more.
The FCA is changing how it regulates individuals at the firms it authorises. Nik Kiri and Julia Dixon (Linklaters LLP) explore this change.
News in Brief
The announcement of a digital services tax in the Budget has been criticised by Google who have said the UK should wait until a “meaningful” international solution can be found (The Times, £, p2).
The Financial Times (£, p1) shares that foreign secretary Jeremy Hunt is to unveil plans tonight to create a limited number of ambassadorial roles to applicants outside the civil service, including business leaders, stating: “we must never close our eyes to the approaches and skills of other industries”.
The Financial Reporting Council is shaking up the annual company report after warnings that the current format is at “breaking point” (Evening Standard, online only).
The latest GfK consumer confidence index fell to -10 over the past month, The Times reports (£, p42), which may be of concern to retailers with the approaching Black Friday and Christmas trading periods.
What the commentators say
Writing in The Times, Katherine Griffiths, Banking Editor, writes that The City is optimistic that a deal on financial services is on the horizon (£, p43). Comments by Valdis Dombrovskis, the vice-president of the European Commission responsible for financial regulation, that European banks and companies will be able to clear derivatives in London support this, though Griffiths cautions that this declaration will not be legally binding.
Pushing up stamp duty on the most expensive homes will not calm the surge in house prices or raise money for the public purse, claims Alex Brummer, City Editor (Daily Mail, p12). Figures from the Office for Budget Responsibility (OBR) support this claim, with £1bn of receipts set to go missing in 2019-20 alone.
- OBR Chairman Robert Chote appears before the Treasury Committee
- GfK’s UK Consumer Confidence Survey published
- Lloyds Bank’s Business Barometer published
- British Retail Consortium’s Shop Price Index published
- Hometrack’s UK Cities House Price Index published
For a full list of upcoming UK Finance statistics releases, please click here.