Weekend economic news round up


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Weekend economic news round up

National Grid risks strike to cut pension deficit
It has emerged that furious union leaders have accused National Grid of “North Korean-style sabre rattling”, as the operator of Britain’s biggest electricity and gas transmission networks risks industrial action to tackle its debilitating pension deficit. National Grid started informal briefings with shop stewards from the GMB union last week arguing that more than 5,600 workers might see the terms of their lucrative final salary pension schemes changed in order to fund a deficit that was last calculated at over £1bn.
The Independent on Sunday, p. 71

Tesco aims to boost income for pension savers
MPs have called for annuity providers to supply customers with a “comprehensive breakdown of all the annuity rates available to them” just as tesco announces it is entering the market..
The Sunday Telegraph Money and Jobs, p. 2

About 200,000 victims of the Equitable Life pensions scandal may never be compensated and thousands more have died without receiving redress, according to a damning report from the National Audit Office (NAO) last week.
The Sunday Times Money, p. 7

Britons forced out of their castles and into landlords’ arms
According to the Office for National Statistics, home ownership has changed almost beyond recognition in the past few years. For the first time in a century, the UK saw a rise in the number of households in rented accommodation. Back in 1918, the vast majority (77 per cent) of households in England and Wales rented, but from 1953 ownership started to increase at a colossal rate and by 1971 the percentage of households owning and renting was split down the middle. Ownership reached a peak of 69 per cent in 2001, however, in the past decade it has fallen to 64 per cent – the first fall recorded in a century.
The Independent on Sunday, p. 82-83

Safe as houses – the homebuyers turning to five-year fixed rates
Tomorrow HSBC is launching the lowest ever five-year fixed rate at 2.49% for those with a 40% deposit or the equivalent equity (be warned; the fee is a whopping £2,000). This is the first time a five-year fix has dropped below 2.5% – but it’s not just HSBC getting in on the act. In the last year, the number of five-year fixed-rate deals has increased by 73%, says data provider Moneyfacts. By comparison, the traditionally popular two-year fixes have only increased by 33%.
The Observer, p. 44-45

Lenders shut door on listed homes
Lenders are growing increasingly unwilling to agree mortgages on buildings with exotic conversions, timber-framed properties, thatched cottages and Grade I listed buildings.
The Sunday Telegraph Money and Jobs, p. 3

French Private Finance the mortgage broker says mortgage rates on offer to British buyers of French property have dropped to their lowest level “since the end of the Second World War”.
The Sunday Telegraph Money and Jobs, p. 2

EU mulls loan test
Borrowers will be refused a mortgage if they fail a standard affordability assessment, proposed under new EU rules. However, the Council of Mortgage Lenders, the trade body, said UK lenders already have strict affordability criteria.
The Sunday Times Money, p. 2

It’s one long round of fees on short-term mortgages
Borrowers could be thousands of pounds better off by locking into the latest 10-year mortgage fix instead of repeatedly paying high arrangement fees on shorter-term deals. Last week Yorkshire building society offered borrowers with a deposit of at least 25% the chance to lock into a fixed rate until 2023 of 3.99%.
The Sunday Times Money, p. 6

Interview with Lloyds Banking Group chief executive James Quinn, who discusses his plans for the bank in the wake of the collapse of the deal to sell 632 branches to the Co-op.
The Sunday Telegraph Business, p. 6-7

Lloyds plots path back to dividend
Lloyds Banking Group chief executive Antonio Horta-Osorio has opened the door to a return to the dividend list as he prepares to reveal the bank’s net lending to UK businesses has increased for the first time since the global credit crisis. In an interview with The Sunday Telegraph ahead of the bank’s first-quarter results on Tuesday, Mr Horta-Osorio gave the strongest suggestion to date that the bank could be about to begin to return capital to investors.
The Sunday Telegraph Business, p. 1

Welcome to a new bank with an old name
Lloyds is rebranding around 600 of its existing branches as TSB after the deal to sell selected branches to the Co-op fell through.
The Sunday Telegraph Money and Jobs, p. 4

£750m black hole at Co-op
Focus on the mounting concern that the Co-op needs to plug an estimated £750m black hole in its bank business that could force the supermarkets-to-funerals group into a series of fire sales. Industry sources estimate the group has to raise between £600m and £800m to meet Prudential Regulation Authority requirements.
The Sunday Times Business, p. 3

City funds offer RBS £1bn for quick sale
Andy Higginson, the former finance director of Tesco, and front man for a consortium that includes Schroders, Invesco, Threadneedle, Lansdowne Partners and GLG – has offered Royal Bank of Scotland more than £1bn for a network of branches – on condition of a quick sale. The taxpayer-backed bank is under pressure to select a buyer for the 316 branches that are being sold on the orders of the European Commission.
The Sunday Times Business, p. 3

Euro rate cut on the cards
Next week the European Central Bank could cut its interest rates for the first time in nine months to stimulate the recession-racked eurozone economy, according to City analysts. “The last few weeks must have increased worries about the fragile eurozone economy,” said Christian Schulz at Berenberg Bank. “We now see a 60 per cent probability for a 25 basis points rate cut.”
The Independent on Sunday, p. 72

Deals tax ‘may add to eurozone’s debt woes’
The International Banking Federation has warned the European Union that plans to impose a Financial Transactions Tax (FTT) could worsen the continent’s sovereign debt crisis by reducing tax receipts and making it harder for Europe’s ailing economies to prop up their public finances with borrowing from financial markets. Although Britain has opted out of the FTT, George Osborne recently launched legal action against the plan. The Chancellor believes the levy will discourage trades with the City of London.
The Sunday Telegraph Business, p. 2

Ailing Spanish house price’need to fall a future 10 pc’
Goldman Sachs has warned that Spanish house prices need to fall by another 10% despite already falling by 30% from their high point, as the investment bank called for a fundamental restructuring of the country’s lenders.
The Sunday Telegraph Business, p. 3

We want to make heroes of entrepreneurs, say banking leaders
Goldman Sachs and Santander are to offer more help to SMEs looking to expand their businesses.
The Sunday Telegraph Business, p. 6-7

Banks cleared to begin £2bn swaps payouts
The Financial Conduct Authority (FCA) has given British banks permission to start paying compensation owed to small firms that were mis-sold derivatives products. The permission comes after a review by the FCA and its predecessor the Financial Services Authority into the level of mis-selling and the way in which small businesses should be compensated.
The Sunday Telegraph Business, p. 1

Aberdeen payout up
Aberdeen Asset Management is poised to unveil a 20% increase in its dividend this week, on the back of strong full-year results.
The Sunday Times Business, p. 2

Fed’s cheap cash lifts economy out of spring swoon
The US economy grew at an annual rate of 2.5% in the first quarter, well ahead of the paltry 0.4% in the final quarter of 2012.
The Sunday Times Business, p. 4

Will Carney spell pain for savers?
Mark Carney, who takes over from Sir Mervyn King in July, has recently sought to downplay expectations that he could take radical action on the economy. If, as expected, Carney targets growth while keeping rates low, equities should do well. Hollands suggests funds such as Threadneedle UK Equity Income, which is yielding 3.8%, and Fidelity Moneybuilder Dividend, yielding 4%. He said: “The income alone will beat what you will get in a building society or with bonds, and, hopefully, over time will produce capital growth.”
The Sunday Times Money, p. 3

The above articles appeared on 28/04/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

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