Weekend economic news headlines


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Weekend economic news headlines

Take your pick of the best share Isas
Investors’ appetite for Isas remains undiminished, according to figures released this week, with net sales in July totalling £125 million, compared with an outflow of £25 million this time last year.
The Times, p. 59

The arrogance of youth? Not any more
Elaine Moore looks at how young employees in Britain are more enthusiastic about joining a company pension schemes under the government’s new automatic-enrolment plan than their older colleagues.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 7

The nanny state just got dearer – as families face big pension bill by 2015
Thousands of families in the UK will have to start paying money into a pension scheme for their nannies within the next two years, according to Nannytax, a payroll service for families.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 1

Income warning on annuity delays
Savers who put off buying an annuity for two years in the hope that rates will rise further may have to wait up to 41 years to recoup the lost pension income, according to new figures by MGM Advantage, a pension provider.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

Mortgage lending hits pre-financial crisis levels
The Bank of England published figures yesterday showing that the number of mortgage approvals jumped to 60,624 last month from 58,238, the highest level since March 2008. The Bank itself had not expected mortgage approvals to reach this level until the end of the year and the figures added to fears that Government policies may be creating a fresh property bubble. Separately, Nationwide house prices had risen for the 11th consecutive month, up 0.6% in August. Prices have climbed 3.5% this year and 1.4% in the past three months – the fastest rate of growth for three years. Nationwide said the average price of a home is £170,514, more than £8,000 higher than January.
The Daily Telegraph, p. 29
Also appeared in : Financial Times, p.4, Independent i, p.46, Financial Times Money, p.2, The Independent, p.48, The Times, p.44

Trading up to a second home affordable only to over-40s
The average age of a homebuyer trading up to a second property has risen to 40 as younger people are trapped in flats they purchased as first-time buyers before prices crashed. The report showed that the average age of a home-mover had risen from 37 in 2002 to 40 today, with the increase being most marked since 2007. The report used data from the Halifax, the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.
The Daily Telegraph, p. 10
Also appeared in : Independent i, p.8, The Independent, p.17, The Times, p.45

Boost for homebuyers as lenders rush to Join in Help to Buy scheme
It has been revealed that the number of lenders taking part in the Government’s Help to Buy equity loan scheme is growing steadily, providing a greater range of mortgage options for borrowers.
The Times, p. 58-59

90% offer boost to first-timers
Rupert Jones reports reports that HSBC is launching a range of “market-leading” 90% mortgages aimed at newcomers to the property market, including a two-year fixed-rate deal at 3.59% and a five-year fix at 4.39%. Perhaps more notably, it is promising that its first-time buyer rates will be “the lowest on the high street”.
The Guardian Money, p. 2

Lloyds customers face blackout while TSB website is launched
Lloyds Banking Group is to temporarily switch off its telephone and online banking next weekend ahead of the launch of the new TSB bank.
The Daily Telegraph Your Money, p. 4

No light on the horizon for investors in Co-op bonds
Thousands of pensioners and investors with Co-operative Bank bonds remain in the dark over how much they stand to lose if they accept an exchange offer from the beleaguered bank.
The Times, p. 55

Consortium offers RBS a stake in its branches
A consortium of UK fund managers bidding for 315 branches being sold by Royal Bank of Scotland has offered to improve its bid by allowing the bank to retain an interest in the business.
The Times, p. 45

Bank branch cull likely to gather pace next year
Banks and building societies look set to step up UK branch closures next year, according to Jones Lang LaSalle, the property advisory company.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 5

Osborne and Carney press EU over US bank rules deal
Minutes released by the Bank of England show that George Osborne and Mark Carney have agreed Britain should put more pressure on the European Union to reach a deal with the US over the regulation of major banks. Among the measures on which Mr Osborne and Mr Carney said that the UK should press European and US regulators is the implementation of a common “leverage ratio” of banks’ total assets to core equity. The disclosure of the meeting came in the first minutes released by the Treasury and the Bank of the talks held by the Chancellor and the Governor.
The Daily Telegraph, p. 29

SMEs repay more than borrow despite Bank’s ‘forward guidance’
The Bank of England published figures yesterday showing that Britain’s small businesses paid back more bank loans than they borrowed during July, suggesting that they will need more convincing over Mark Carney’s flagship policy of “forward guidance”. The Bank’s figures show that bank lending to SMEs rose to £3.8bn last month, up from £3.6bn in June and more than the average of £3.4bn over the past six months. However, small companies repaid a total of £4.1bn, which reduced net lending to -£0.3bn overall. The repayment level was far higher in July than the £3.5bn average over the past six months.
The Daily Telegraph, p. 29
Also appeared in : The Daily Telegraph, p.30

Swiss banks face fines for US tax dodgers
Around a hundred Swiss banks could face significant penalties under a tax accord between the US and Swiss governments that will give lenders in Switzerland an opportunity to resolve an international dispute over tax evasion by rich Americans.
The Independent, p. 49
Also appeared in : International Herald Tribune, p.8, Independent i, p.46, International Herald Tribune, p.1

ECB divided on rate cut as inflation slows in eurozone
Official figures published yesterday shows that consumer prices in the euro area rose 1.3% in the year to August, slower than July’s 1.6% and below expectations of a fall to 1.4%, largely driven by lower energy costs. The drop gives the ECB scope to cut its interest rate again and next week’s policy meeting, but board members have sent out mixed signals regarding a cut. Executive board member Peter Praet, speaking earlier this month, said the bank “had not reached the lower bound on our key interest rates” and had not “run out of ammunition” and Cyprus’s Panicos Demetriades has said another cut was still “on the cards”. However, more recent remarks by Ewald Nowotny indicated that the nascent recovery in the eurozone will prevent the ECB from lowering rates. “I would not see many arguments now for a rate cut”, he said.
The Daily Telegraph, p. 30

Consumer credit booming at fastest rate since 2008
Campaigners warned yesterday that debt is becoming a “way of life” for some cashstrapped families, after official figures showed that consumer credit is expanding at its fastest rate since December 2008. Data from the Bank of England, released yesterday, showed a 3.5% annual increase in consumer credit – which includes borrowing on overdrafts, credit cards and unsecured loans, including from payday lenders such as Wonga – the most rapid increase in four and a half years.
The Guardian, p. 31

Watchdog warns of mobile dangers
The Financial Conduct Authority has warned that people using mobile-banking services to transfer cash are risking making mistakes.
The Independent, p. 55
Also appeared in : The Guardian Money, p.2

Don’t let short-term perks decide your bank account
With a little over two weeks until the new faster-switching rules come into play for people looking to transfer their bank account, it’s no surprise that the banks are pulling out all the stops to maintain their slice of the current accounts market. The latest move in the war to win over customers from rival banks comes from Halifax. On Tuesday it announced a new Cashback Extras programme, where account holders can earn up to 15 per cent cashback via personalised offers from high street retailers including Morrisons, Argos and Homebase.
The Independent, p. 61

GE considers a return to basics with finance sale
It has been announced that General Electric is set to exit the credit card business by selling its consumer finance unit.
The Times, p. 47

Zurich opens inquiry into executive stress after finance chief’s suicide
Josef Ackermann, the chairman of Zurich Financial, Switzerland’s biggest insurer was named in a suicide note left by the company’s finance chief, as the insurer pledged an investigation into whether senior executives were under “undue pressure”.
The Times, p. 45
Also appeared in : International Herald Tribune, p.1-10, The Daily Telegraph, p.31, The Independent, p.51, The Times, p.44

TV advert exaggerated payout claims
A misleading television commercial that claimed mortgage borrowers could get compensation worth tens of thousands of pounds for mis-sold home loans has been banned.
The Independent, p. 60

Savers may lose out over Nationwide bond buyback
Thousands of savers holding bonds issued by Nationwide should think carefully before selling them back to the mutual, advisers have warned. Last week Britain’s biggest building society said it would buy back up to £715m of its permanent interest bearing shares (Pibs), an IOU mutuals issue to raise money from investors. The move by Nationwide follows demands by regulators for it to improve its capital position. However, advisers warn that there are few alternative assets for savers paying such attractive rates. Justin Modray, of candidmoney.com, the finance website, said: “You’ll struggle to fully replace the income without taking a fair amount of risk.” The best-buy fixed-rate deposit account is from Skipton at 3.5%, but locks away cash for seven years.
The Sunday Times Money, p. 3

Parents pay deposits as young scramble for cheap mortgages
First-time buyers are borrowing huge sums from parents and grandparents to pile on to the property ladder, according to mortgage brokers. According to the Council of Mortgage Lenders, 11,200 loans were advanced in the capital over the three months to June – the largest number since 2007. The story was similar across Britain.
The Sunday Telegraph Money, p. 2

First-timers targeted by rate promise
High street banks are battling to attract first-time buyers with ultra-low rates, but brokers are warning that some of the best overall deals are still to be found at smaller mutuals. On Monday, HSBC will launch a series of best-buy deals for first-timers and a promise to match or beat any other mortgage rate on the market for those with 10% deposits.
The Sunday Times Money, p. 1

Spend on your debit card, get 15pc cashback
Two of Britain’s biggest banks are offering “cashback” to current account holders who spend on their debit cards on the high street and online, writes Dan Hyde. Halifax, part of Lloyds Banking Group, is paying customers up to 15pc in a variety of 16 stores including Morrisons, Argos and Homebase.
The Sunday Telegraph Money, p. 2

Co-op banker to defend record
The former chief executive of the Co-operative Bank, Neville Richardson, is expected to attempt to distance himself this week from the near-collapse of the lender. Richardson, who received a £1.4m payoff when he left in 2011, is to be hauled before the Commons Treasury committee on Wednesday. It will be his first opportunity to talk openly about the bank’s £1.5bn capital hole, which has been blamed on its 2009 merger with Britannia building society.
The Sunday Times Business, p. 2

Co-op Bank investors express anger over rescue deal
Senior fund managers have warned the Co-op that it risks a full-scale investor rebellion if it does not begin engaging with its bond-holders ahead of the launch of a controversial £1.5bn emergency recapitalisation of its banking arm.
The Sunday Telegraph Business, p. 1

Halifax pays cashback
Halifax has started offering cashback to current account customers. Shoppers will receive 5%-15% cashback from selected retailers including Ocado, Homebase, Argos and Urban Outfitters, saving more than £100 a year on average, according to the bank.
The Sunday Times Money, p. 2

Bank sits tight as UK recovers
More evidence of growing economic momentum is set to stay the Bank of England’s hand on help for the recovery this week. The Bank’s Monetary Policy Committee (MPC) rate-setters meet on Wednesday after another month of buoyant data.
The Independent on Sunday, p. 75

Merkel ‘is EU’s big weakness’
The head of one of Europe’s fastest-growing banks has launched a damning attack on Angela Merkel ahead of the German elections later this month. Lars Seier Christensen, the chief executive of Saxo Bank, which provides Barclays with white-label products in the UK, described Germany’s chancellor as “Europe’s Achilles’ heel”.
The Independent on Sunday, p. 74

Banks to be given ‘cyber stress tests’
Focus on how banks resilience to cyber attacks are being rated by government officials for the first time amid concerns about the increasing risks to the financial system from electronic criminals and terrorists.
The Sunday Telegraph Business, p. 3

Bank warned low rate plan risks disaster
The Institute of Economic Affairs think tank today launches a savage attack on Mark Carney’s forward guidance policy, warning that it is based on a “flawed model” and risks “accelerating inflation or worsening boom-bust cycles”.
The Sunday Times Business, p. 1

Revealed: how RBS ignored warnings
Royal Bank of Scotland ignored a whistle-blower who revealed that multi-billion-pound losses were being covered up by the bank’s American traders. Vincent Hong, a senior risk manager who had been parachuted in from JP Morgan to clean up the investment banking operation, exposed concerns a year before RBS had to be rescued by taxpayers.
The Sunday Times Business, p. 3

The above articles appeared on 31/08/13 & 01/09/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

Charterbridge Private Financial Planning, Independent Financial Advice, Thornbury, Bristol.