Top stories

  1. EU and UK regulators to work together to avoid Brexit disruption
  2. UK blames Russian GRU spy agency for cyber attacks
  3. IMF warns about threat of ‘reform fatigue’ to financial system

Stat of the day

20.5 per cent – The fall in car sales in September compared to the same period in 2017, according to the Society of Motor Manufacturers and Traders.

EU and UK regulators to work together to avoid Brexit disruption

The Financial Times (online only, £) reports that EU financial regulators are drafting a series of bilateral agreements with their UK counterparts to limit market instability, as fears grow that the UK could leave the EU without a political agreement in place. Steven Maijoor, chairman of Esma, gave a speech on Wednesday stating that EU banks should be allowed to continue using UK-based clearing houses for derivatives transactions even in the event of a ‘no deal’ Brexit (Bloomberg, online only). He added that talks had begun about creating a series of “memorandums of understanding” that could be signed with the UK’s Financial Conduct Authority to limit disruption (Reuters, online only). UK Finance has previously called on EU and UK regulators to work together to address critical cliff-edge issues such as contractual continuity and access to data.

It comes as Prime Minister Theresa May has committed to increasing public spending after securing a “good deal” for Britain” over Brexit, in her speech to the Conservative Party Conference yesterday (The Times, p1, £). She stated that: “A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off” (The Guardian, p1). Senior Irish officials are reported to have backed Theresa May’s plans to keep the whole of the UK temporarily in the customs union in order to avoid a hard border on the island of Ireland (Financial Times, p3, £). Meanwhile, France’s Europe Minister Natalie Loiseau has insisted that “no deal would be better than a bad deal”, warning that “time is running out” for the UK to secure a Withdrawal Agreement with the EU ahead of a key meeting of the European Council on October 18 (Daily Telegraph, p1, £).

UK blames Russian GRU spy agency for cyber attacks

The UK government has accused Russia’s military intelligence service, the GRU, of being behind a series of high-profile cyber attacks around the world over the past three years (Financial Times, p2, £). An official statement published last night by the Foreign Office stated that the National Cyber Security Centre (NCSC) had identified 12 ‘cyber actors’ that were fronts for the GRU and were responsible for carrying out six cyber attacks including the 2016 hacking of the US Democratic National Committee headquarters (The Guardian, p5). Foreign Secretary Jeremy Hunt said the GRU had waged a campaign of “indiscriminate and reckless” cyber strikes that served “no legitimate national security interest” (BBC News, online only). UK Finance published a report in April calling for greater collaboration between businesses, law enforcement and government to tackle the growing threat of cyber crime. Meanwhile the Daily Telegraph (p2, £) reports that Facebook could face a fine of £1.2 billion by the EU, after the Irish Data Protection Commission (IDPC) confirmed it was investigating a recent data breach thought to have affected 50 million users’ accounts.

IMF warns about threat of ‘reform fatigue’ to financial system

The International Monetary Fund (IMF) has warned that  “reform fatigue” amongst politicians and regulators could pose a risk to financial stability, after decade of reforms following the collapse of Lehman Brothers  (The Times, p40, £). In a report on the global financial system, the IMF cautioned against a “race to the bottom” on financial regulation and stated that regulators risk “fighting the last war” in the face of rapid technological change (CityAM, p9). The Washington-based body also argued that in many countries banks remain too exposed to government debt and singled out the rise in shadow banking in emerging markets as a particular cause for concern (Daily Telegraph, p3, £).

Latest from UK Finance

Ian Burgess, Principal, Technology and Digital Policy, blogs on the need for greater intelligence-sharing and collaboration between the finance sector and law enforcement to help prevent cyber-attacks

Daniel Cichocki, Principal, Commercial Finance, blogs about how access to finance is now far less of a concern to SME businesses than a variety of other factors

News in Brief

Growth in the UK services sector slowed slightly in September according to IHS Markit’s latest purchasing managers’ index, but there was a “solid increase” in new work across the sector (CityAM, p6).

The International Court of Justice (ICJ), the UN’s highest court, has ordered the US to lift sanctions it re-imposed on Iran after withdrawing from a nuclear deal with the country in May (The Times, p32).

The European Central Bank should consider playing a bigger role in promoting instant payments, according to one of its board members Yves Mersch (Reuters, online only).

People in their twenties are paying over 30 per cent of their typical salary to rent a one-bedroom home in over two-thirds of areas in the UK, according to research by BBC News (online only).

The debt charity StepChange has said it is seeing growing numbers of people falling behind with fuel bills and a resurgence in the proportion of clients with high-cost credit, such as payday loans (The Sun, online only).

What the commentators say

Hans Hoogervorst, chair of the International Accounting Standards Board, argues in the Financial Times (p13, £) that poor accounting standards should not be blamed for failing to prevent the 2008 financial crisis. Hoogervorst refutes criticisms that International Financial Reporting Standards had an ‘overly rosy outlook’ of banks’ balance sheets before the crash. He concludes that the policies that these critics advocate would actually weaken prudent accounting rather than strengthen it, as they could tempt banks to overstate losses in good times and mask future failings.

Writing in The Times (p41, £), columnist James Ashton urges more business leaders to stand for public office. Citing Michael Bloomberg as a prime example in the United States, Ashton bemoans the lack of similar aspirations from British figures. Ashton points to the threat of constant media intrusion and the exhaustive pace of British politics as possible reasons for such reluctance and calls for another way to make use of the dynamism of business figures, such as more advisory roles within government.

Calendar

  • EU chief Brexit negotiator Michel Barnier meets Irish Prime Minister Leo Varadkar in Brussels to discuss the Irish border issue.
  • Shadow Chancellor John McDonnell speaks at a protest outside the Royal Courts of Justice against a third Heathrow runway.
  • Opening of EU informal meeting of trade ministers
  • UK monthly car registrations figures from of Motor Manufacturers & Traders

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

News in brief – 4 October 2018