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1. PM to ask EU for short Brexit delay
2. Wages up and employment at record high
The amount of money UK customers have saved in taxes through ISAs since they were first introduced 20 years ago, according to the Daily Mail (p38).
Prime minister Theresa May will ask the EU for a short Brexit delay up to the end of June 2019, reports BBC News (online only), rather than a longer extension. This follows pressure from cabinet ministers, some of whom reportedly warned they would quit if the prime minister opted for a longer delay to Brexit (Daily Telegraph, p1, £). The PM is expected to send a letter asking for a short extension to Article 50 later today, ahead of an EU summit tomorrow at which the request will need to be agreed by all 27 EU member states. European Commission president Juncker has warned in an interview with German radio that EU leaders are unlikely to sign off on any delay this week, and that an emergency summit could take place next week to approve the decision (Financial Times, online only, £). Meanwhile, German chancellor Angela Merkel said she would ?fight until the final hour of the deadline of March 29 that we have an orderly exit? (The Guardian, p8).
Financial services companies have committed to move about £1 trillion of assets out of the UK into Europe, according to the latest estimate from the consultancy EY (Financial Times, online only). The number of jobs likely to move to the continent has remained steady at about 7,000, but EY warned this could lead to a direct loss to the Exchequer from lower employment taxes of around £600 million. It comes as the European Securities and Markets Authority (ESMA) announced plans to require European banks and asset managers to trade some of the UK's largest stocks on exchanges in the EU if the UK leaves without a deal (Financial Times, online only). The move was criticised by the Financial Conduct Authority (FCA), which called for further dialogue on the issue ?in order to minimise risks of disruption in the interests of orderly markets? (Reuters, online only).
Meanwhile, Sir Charlie Bean from the Office of Budget Responsibility (OBR) has warned MPs on the Treasury Committee that the consequences of ?no-deal? could be similar to the start of the financial crisis (The Times, p38, £). Sir Charlie, a former deputy governor at the Bank of England said 'small business in particular? do not have the capacity to get ready for all eventualities. This follows a warning from Germany's central bank that many of the country's smaller companies are failing to prepare for the potential disruption of the UK's exit from the EU this month and could lose access to financial services as a result (Financial Times, online only, £). UK Finance recently launched its Let's Talk Business guide, supported by leading business groups, offering SMEs advice on how to prepare for the UK's departure from the EU.
The number of people in work rose by 220,000 to a new record high of 32.7 million in the three months to January 2019, figures published by the Office for National Statistics (ONS) yesterday revealed (CityAM, p2). The number of people who are unemployed also fell by 35,000 to 1.34 million, marking the first time since 1975 that the unemployment rate has fallen below four per cent (Sky News, online only). Growth in employment has been driven by an increase in older workers, with a record 10.4 million over 50s in work, up from eight million a decade ago (Daily Mail, p12, print only).
The latest ONS figures also revealed a record number of vacancies, with as many as 863,000 unfilled jobs (Guardian, p29). This 'tight labour market? is reported to be boosting wage growth, with average weekly earnings outstripping inflation by 1.4 per cent in the year to January. Economists said wage growth and employment alongside weak productivity and investment could lead the Bank of England to raise interest rates later this year (The Times, p4, £ and Evening Standard, p46).
Eric Leenders, MD of Personal Finance, UK Finance, blogs on the value of cash as more customers opt for the convenience and security of paying with contactless.
Banks are making progress in meeting globally agreed standards on capital and liquidity, according to the Basel Committee on Banking Supervision (Financial Times, online only, £).
The European Banking Federation has issued a statement backing greater international coordination to promote sustainable finance, ahead of a European Commission conference on the issue tomorrow in Brussels (Politico, online only, £).
More than 80,000 people released almost £4 billion of equity from their homes in 2018, with the market now doubling in size in just three years, reports the Daily Express (p32, print only)
Customers with small deposits make up just 15.4 per cent of first-time buyers in London, the lowest level in the country, according to research by valuation provider Esurv (CityAM, p9)
Barclays, Lloyds Banking Group and NatWest are rolling out shared branches across the UK for business customers, reports the Daily Mail(p48).
Almost half of UK adults risk paying way over the odds for loans because they have never checked their credit report, according to research from credit reference agency Experian (Daily Mirror, p36, print only)
Gillian Tett, US managing editor of the Financial Times , (p11, £), writes that Britain is caught in a regulatory tussle between the US and the EU regarding derivatives. European politicians have declared that if the London Clearing House (LCH) wants to clear euros following Brexit, it must either move to continental Europe, or be regulated by the European Securities and Markets Authority. As Tett notes, a similar arrangement was previously worked out with American regulators uneasy about having so much of the dollar market sitting outside their shores, but who accepted it because the UK authorities gave the Commodity Futures Trading Commission sufficient oversight of the LCH dollar business. Tett warns of an upcoming tug of war as both American and European regulators worry about the other encroaching on their currency on the supposed neutral ground of a post-Brexit Britain.
Writing in this morning's Telegraph (B2, £), columnist Jeremy Warner warns that a cashless society could pose an ?existential threat? to banks. Warner warns that there is a real danger of the payments market becoming the sole preserve of private payment providers, potentially bringing these companies into conflict with governments and central banks for whom safeguarding the money system is a core purpose. Werner discusses the adoption of ?e-cash?, or state bank-backed digital currencies, but warns that they could displace bank deposits, starving lenders of short-term funding. Werner closes by warning that the technological threat to traditional banking models and payments systems is about to get much worse.
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