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1. Predictions for slow growth due to Brexit
2. Plan to ditch the penny scrapped
3. Ministers consider tighter legislation regarding ?red money?
- predicted GDP growth for 2020 according to EY ITEM Club's Spring Economic Forecast.
Brexit will lead to a slowdown in the economy in the second half of 2019, a new report from EY ITEM Club claims (Guardian, p28). The report credited the economy's robust start this year to unprecedented stockpiling by UK firms ahead of the intended Brexit deadline but warned that GDP growth could drop to just 0.1 per cent in the event of a ?no-deal?. However, if a deal is reached, it expects economic activity will gradually pick up as businesses commit to delayed investment (City AM, p12).
Ongoing Brexit uncertainty may also affect sterling's status as a global reserve currency (Financial Times, p6, £). A recent poll by the trade journal Central Banking Publications showed that three quarters of reserve managers predict that central banks will alter, and in all likelihood cut, their sterling holdings in response to possible future currency instability.
The chancellor Philip Hammond is expected to announce this week that 1p and 2p coins will not be scrapped, despite describing them as obsolete in last year's Spring Statement (Daily Telegraph, online only, £). The chancellor had also questioned the future of the £50 note amid claims that it is predominantly used in transactions associated with criminal activity (City AM, p6).
Ministers are considering a new law to crack down on foreign spies working for banks and businesses in order to curb the influence of "red money" in the UK. The legislation is part of a raft of measures designed to get a grip on money flowing into the UK from Russia and China (The Times, p18, £).
This comes as foreign secretary Jeremy Hunt warns that the UK should be cautious about allowing Huawei to help build Britain's 5G network because the company is legally obliged to cooperate with China's intelligence services (Independent, £). This follows last week's report that Huawei will be permitted to build non-core parts of the 5G network, prompting intelligence experts and MPs on both sides of the House to raise concerns about the security risks. In a piece in this morning's Daily Telegraph (p2, £), Conservative MP and cabinet minister Tobias Ellwood also urged caution with regard to Huawei, citing China's reputation on the world stage and its poor record with respect to international labour laws and carbon emissions.
Becky Clements, our Director of Payments, blogs today on Open banking innovation and the benefits of standardised information sources.
The director of the Serious Fraud Office, Lisa Osofsky, says the agency needs to improve the way it handles evidence in fraud and corruption cases in order to speed up its investigations and prosecute the right people (Financial Times, p3, £).
The UK India Tech Hub opened today in London with the aim of promoting business between the UK and India (City AM, p3).
Scottish first minister Nicola Sturgeon has announced plans for her government to provide loans of up to £25,000 to those who have managed to save five per cent of the value of their first home (Scottish Sun).
The number of dawn raids conducted by the Financial Conduct Authority (FCA) has almost doubled over the past year from 13 in 2017 to 25 in 2018, the highest level since the financial crisis (City AM, p3).
Catherine McGuinness, policy chair at the City of London Corporation, writes in City AM (p20) on the opportunities of a UK-US free trade deal for the financial services sector. She argues that Britain should deepen its bilateral trading relationship with the US in services, while maintaining the best possible access for US firms to European markets after Brexit. McGuinness calls for a bilateral ?regulatory highway? between the UK and the US, which could be used to jointly influence the global rules that govern trade in financial services.
James Daley, managing director of consumer group Fairer Finance, discusses in the Daily Telegraph (online only, £) the impact ?fintech? and ?challenger banks? are having on financial services. Daley feels that although new fintech banks have begun to change the culture of the financial sector, they are still failing to shake up the current banking business model. He concludes that fintech has the ability to bring proper change to banking, but will only succeed if it does not resemble the status quo.
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