IPPR proposes creation of ‘shared market’ for UK and EU

A think tank is proposing a post-Brexit trading deal based on the UK and the EU sharing each other’s markets. It would see the UK and EU continuing the regulatory alignment that exists today, and the formation of a new customs union similar to the existing one, the centre-left IPPR said. It would allow tariff-free trade, and the UK to benefit from EU trade deals. IPPR director Tom Kibasi said it “honours the referendum result” while securing Britain’s economic interests. The group said that the EU would also benefit from the scale of the UK’s economy in future trade negotiations. The group believes that a new shared market model would aim to keep the benefits of single market while allowing divergence from EU rules over time. The proposal would mean no interruption to the UK’s trade with the EU and avoid a hard border between Northern Ireland and the Republic of Ireland, the report says.

Japan expands unilateral sanctions against North Korea

Japan has imposed fresh sanctions against North Korea as it seeks to ramp up pressure on Pyongyang over its nuclear and missile programmes. Chief cabinet secretary Yoshihide Suga said the assets of another 19 entities and individuals would be frozen. More than 210 organisations and people from countries including China and Russia will now be targeted. Businesses on the blacklist include banks, coal and minerals traders, and transport firms. The widening of sanctions comes ahead of a meeting of the UN Security Council to be held on Friday.

Forward Diary: 18th – 22nd December 2017

Company and economic announcements planned for the week commencing 18th December 2017

Brexit transition deal is urgent, say select committee MPs

An influential group of MPs has urged Britain and the European Union to agree a “status quo” transition period following Britain’s departure from the EU. The Treasury Select Committee said that the temporary arrangement should be agreed as quickly as possible to ease business concerns over a “no deal” Brexit. The committee’s report said it “strongly supported” the prime minister’s push for a comprehensive free trade deal which would keep borders as “frictionless” as possible. But it said in order to reach that point, an implementation period would be necessary where the European Court of Justice (ECJ) was likely to retain supremacy over UK laws. “An agreement between the UK and EU27 on ‘standstill’ transitional arrangements is now urgent,” said Nicky Morgan, the Conservative chairwoman of the committee who campaigned for Remain before the referendum. “The consequences of failing to reach an agreement are dramatic and damaging.”

Disney set to seal $60bn 21st Century Fox takeover

Walt Disney is close to confirming a deal to buy 21st Century Fox’s entertainment assets for about $60bn, reports say. The sale would include the 20th Century Fox film studio and the Sky and Star satellite broadcasters in the UK, Europe and Asia. Disney was left as the front runner after Comcast, the NBC owner, dropped out of the race on Monday. The Financial Times said talks about the price were continuing on Tuesday. CNBC reported that Fox and Disney were on a “glide path” for an announcement on Thursday, according to people familiar with the negotiations. The Murdoch family was said to favour a deal with Disney because it would rather be paid in the entertainment giant’s shares than Comcast stock. A deal with Disney could also face fewer US regulatory hurdles, although it is extremely unlikely to be waved through.

Fears grow across the Atlantic over Brexit fallout

Nearly all the possible trading relationships between Britain and the European Union following Brexit would be less favourable than staying in the European Union, according to an influential US think tank. The Rand Corporation study said the worst option would be a “no deal”. That would leave the UK economy 4.9% poorer by 2029. “No deal” would also have a negative effect on the EU economy, but it would be “relatively minor”. The report said that even a “soft Brexit” involving staying in the free market would not be as positive economically as staying in the EU. Rand plays a significant role in America, with half of its funding coming from the US government. In Europe it has advised the UK government on policy issues such as mental health, as well as the European Parliament and the European Commission.

Bitcoin futures trading begins on CBOE exchange in Chicago

Bitcoin has begun trading on a major exchange for the first time. It launched on the CBOE Futures Exchange in Chicago at 23:00 GMT Sunday, allowing investors to bet on whether Bitcoin prices will rise or fall. In the lead-up to its futures debut, the value of the digital currency has surged. Bitcoin’s introduction to the CBOE has been seen by some as a step towards legitimising the currency. The move is expected to be followed next week by a rival listing on the Chicago Mercantile Exchange. Anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. Bitcoin was trading at about $15,230 on Monday, according to Coindesk.com.

CBI: Business needs more Brexit clarity

More clarity on the Brexit transition is needed to stop companies proceeding with contingency plans despite the progress announced on Friday, the CBI has warned. Paul Drechsler, president of the business lobby group, said companies had begun triggering plans months ago. However, more detail could help suspend further action by firms, he said. Sterling was trading higher at just under $1.35 and €1.15 after the announcement in Brussels on Friday. The CBI chief also called for “unconditionality” about the status of EU citizens living in the UK. “It’s an important political milestone, but clarity on transition is the most important thing from a business point of view at this stage,” Mr Drechsler told BBC Radio 4’s Today programme. The Institute of Directors echoed the CBI call for certainty on the rights of EU citizens. Stephen Martin, IoD director-general, said companies urgently needed certainty about the future of EU staff in the UK. “We have grounds to hope now that our members will be able to send their employees off for the Christmas break feeling more comfortable about their status here,” he said. “We look forward to further clarity about what the UK’s objectives are for that new relationship, as well as a firm commitment on transition in the very near future.”

Forward Diary: 11th – 15th December 2017

Company and economic announcements planned for the week commencing 11th December 2017

Bitcoin surges above $14,000 to new high

Bitcoin crossed $14,000 (£10,460; €11,870) on Thursday, surging $2,000 in less than 24 hours. The cryptocurrency began the year below $1,000 but continues its sharp rise despite warnings of a dangerous bubble. Bitcoin hit the latest milestone during early trading in Asia, according to the website Coindesk.com. The new record high comes just days before the launch of bitcoin futures on two exchanges, including the world’s largest futures exchange, CME. Spread betting firm CMC Markets said the rise had all the symptoms of a bubble market, warning “there is no way to know when the bubble will burst”.

First tax havens blacklist published by EU

The European Union has published its first blacklist of tax havens, naming 17 territories including Saint Lucia, Barbados and South Korea. A “watchlist” of 47 countries promising to change their tax rules to meet EU standards has also been issued. The “grey list” includes several with UK links, including Hong Kong, Jersey, Bermuda and the Cayman Islands, as well as Switzerland and Turkey. Both lists have been criticised as omitting the most notorious tax havens. The lists follow the leaking of the Panama Papers and the Paradise Papers, revealing how companies and individuals hid their wealth from tax authorities around the world in offshore accounts. EU tax commissioner Pierre Moscovici said the blacklist represented “substantial progress”, adding: “Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide.”

Rail fares to rise by average of 3.4%

Train fares in Britain will go up by an average of 3.4% from 2 January, the rail industry has announced. The increase covers both regulated fares, which includes season tickets, and unregulated fares, such as off-peak leisure tickets. The rise in regulated fares had already been capped at July’s Retail Prices Index inflation rate of 3.6%. The Rail Delivery Group said that more than 97% of money from fares goes back into improving and running the railway. It added that in the next 18 months alone, this plan will see services around the country improved with more trains and better services and stations. Routes to benefit include Crossrail, Thameslink, Edinburgh to Glasgow, Great Western and Waterloo and the South West while there will also be upgrades in the Midlands and the North. Paul Plummer, Rail Delivery Group chief executive, said: “Government controls increases to almost half of fares, including season tickets, with the rest heavily influenced by the payments train companies make to government. “Alongside investment from the public and private sectors, money from fares is underpinning the partnership railway’s long-term plan to change and improve.”

Facebook creates 800 jobs as it opens new London office

Facebook is opening a new London office that will allow it to create 800 new UK jobs in 2018. By the end of next year about 2,300 people will work for the social media company in the UK. The office will be Facebook’s biggest engineering hub outside the US, and opens during its tenth year in the UK. Nicola Mendelsohn, Facebook’s Europe, Middle East and Asia vice-president, said the company was “more committed than ever to the UK”. She said Britain’s “entrepreneurial ecosystem and engineering excellence” made it an ideal location for technology firms. The seven-floor building at Rathbone Place, near Oxford Circus in central London, was designed by Frank Gehry, the architect best known for the Guggenheim Museum in Bilbao.

RBS to close 259 branches and shed jobs

RBS says it will close 259 branches and cut 680 jobs as it reduces costs and encourages customers to use online and mobile services. The closures involve 62 Royal Bank of Scotland and 197 NatWest branches. RBS said it would try to ensure compulsory redundancies were “kept to an absolute minimum”. “We realise this is difficult news for our colleagues and we are doing everything we can to support those affected,” the bank said. An RBS spokesperson said: “More and more of our customers are choosing to do their everyday banking online or on mobile. “Since 2014 the number of customers using our branches across the UK has fallen by 40% and mobile transactions have increased by 73% over the same period. Over 5 million customers now use our mobile banking app and one in five only bank with us digitally.” The Unite union, which represents staff across RBS, said serious questions needed to be asked about whether the closures marked the end of branch network banking. Rob MacGregor, Unite national officer said: “This announcement will forever change the face of banking in this country resulting in over a thousand staff losing their jobs and hundreds of High Streets without any banking facilities.”

Forward Diary: 4th – 8th December 2017

Company and economic announcements planned for the week commencing 4th December 2017

Google faces mass legal action in UK over data snooping

Google is being taken to court, accused of collecting the personal data of millions of users, in the first mass legal action of its kind in the UK. It focuses on allegations that Google unlawfully harvested information from 5.4 million UK users by bypassing privacy settings on their iPhones. The group taking action – Google You Owe Us – is led by ex-Which director Richard Lloyd. He estimates affected users could be paid “a couple of hundred pounds each”. The case centres on how Google used cookies – small pieces of computer text that are used to collect information from devices in order to deliver targeted ads. The complaint is that for several months in 2011 and 2012 Google placed ad-tracking cookies on the devices of Safari users which is set by default to block such cookies.

Some lost rail routes may be ‘restored’

Railway lines closed in the 1960s could be reopened if they boost the economy, the government has said. Some 4,000 miles of rail routes were closed and became known as the Beeching cuts – after Dr Richard Beeching who was then chairman of British Rail. It is part of the Transport Secretary Chris Grayling’s rail strategy which will be unveiled on Wednesday. Labour, which wants to renationalise the railways, said the ideas were “flimsy re-announcements”. Mr Grayling said new rail lines could unlock jobs, encourage house building and ease overcrowding. “These could include rail services lost under the Beeching and British Rail cuts of the 1960s and 1970s where – if restored – these could kick-start crucial housing developments or help create new economic opportunities,” the Department for Transport said in a statement. “We’re already accelerating plans to reopen the railway line from Oxford to Cambridge. Now I want to see how we can expand other parts of the network to help make Britain fit for the future,” Mr Grayling added.

Banks pass Brexit stress tests

For the first time since the financial crisis, all of the UK’s biggest lenders have passed the Bank of England’s stress tests. The tests imagine a series of adverse economic scenarios to see whether the banks could continue to lend money to support the UK economy. The worst case scenario the Bank imagines includes a 33% fall in house prices and a rise in interest rates from 0.5% to 4% within two years. It also has unemployment up to 9.5%. Last year, both Barclays and RBS were told to strengthen their finances. This year, they both got a clean bill of health. The Bank also looked more closely at the impact of Brexit and concluded that even a disorderly Brexit would be no worse than the economic stresses the banks were asked to pass anyway.

Citizens Advice warns about subscription contracts

Many consumers still struggle to get out of unwanted subscriptions such as gym memberships and online streaming services, according to Citizens Advice. Analysis of almost 600 problems reported to the service found that in just three months consumers paid an average of £160 on unwanted services. Sometimes, consumers misunderstood terms and conditions, while some companies made cancellation difficult. The head of the consumer group, Gillian Guy, said firms must “act responsibly”. “Subscriptions are very easy to sign up to but can be difficult for consumers to get out of. We know people are wasting time and energy trying to cancel subscriptions while paying out of pocket,” she said. Companies refused cancellations by asking for more notice – stretching to six months in some cases – or told people they needed to cancel through a specific route, such as phone or email. CA said one person who contacted the service said they tried to cancel a subscription after they were made redundant, and were asked for proof from their employer – including a P45. Most payments are thought to be through a Continuous Payment Authority, where companies can change the date or amount of a payment without giving advanced notice. Frequently, consumers said they felt it was unclear they were being signed up to a recurring payment or that the contract may continue on an auto renewal basis. Under the Consumer Rights Act 2015, businesses can’t enforce terms on consumers that are unfair. CA’s report marks the start of National Consumer Week.

Budget 2017: Tax move will penalise savers, says insurer

Millions of small savers may be hit by a little noticed tax change in the Budget that affects long term policies sold by insurance companies and sometimes collected door to door. When the chancellor announced he was abolishing the Corporate Indexation Allowance on Wednesday, the Treasury said it wouldn’t affect individuals. But Royal London Insurance said savers are likely to lose out. It said the total cost could amount to hundreds of millions of pounds. “From the early numbers that we’ve looked at we think that millions of people have these policies and they’ll be losing relatively modest amounts of money, perhaps £25 or £50, some of them a lot more,” said Steve Webb, director of policy at Royal London. “But this all adds up to huge amounts, hundreds of millions of pounds for the Chancellor,” he said. Royal London says the tax change announced in the Budget will affect a group of investment policies or endowments, sometimes lasting decades and designed to provide a lump sum or something to pass on to family. They are often bought from door-to-door sales reps, collecting a few pounds a week, or from adverts in magazines and papers or direct from the companies.

Forward Diary: 27th November – 1st December 2017

Company and economic announcements planned for the week commencing 27th November 2017

Broadband firms must ditch ‘misleading’ speed ads

Broadband firms will no longer be able to advertise their fast net services based on the speeds just a few customers get, from May next year. Currently ISPs are allowed to use headline speeds that only 10% of customers will actually receive. In future, adverts must be based on what is available to at least half of customers at peak times. It follows research that suggested broadband advertising can be misleading for consumers. The Advertising Standards Authority (ASA) looked into consumers’ understanding of broadband speed claims and found that many were confused by headline speeds that they would never actually get in their own homes. The concerns were passed on to the Committees of Advertising Practice (Cap) which consulted with ISPs, consumer groups and Ofcom to find a better way to advertise fast net services. Most argued that the fairest and clearest way would be to use the average speeds achieved at peak time by 50% of customers. As well as insisting ISPs use “average” instead of “up to” speeds, Cap also urged ISPs to promote speed-checking facilities in their adverts so that users could test out the speeds they were likely to get from any given service.

Budget 2017: Hammond must be cautious, say nervous investors

The chancellor has been urged to deliver a “cautious” Budget or risk alienating investors. Rupert Harrison, former chief of staff to George Osborne, said that Philip Hammond should not radically change strategy by increasing borrowing significantly. Mr Hammond is under pressure to be “big and bold” in the Budget which he will deliver at 12.30pm. He will say that he is “optimistic” about the future of the UK economy. But with a major downgrade expected to productivity – the ability of the economy to create wealth – his room for spending giveaways will be limited. Mr Harrison told the BBC that with Brexit uncertainty and nervousness about the direction the UK economy is heading, the markets would be keener on a “steady as she goes” message. “You don’t want to surprise the world by saying we’re embarking on a new strategy, we’re going to borrow lots of money, raise taxes,” he said. “I think in a moment when the world has got some question marks about the UK anyway, it’s time for a bit of consistency and a bit of patience.”

EasyJet profits fall after ‘difficult year’ for aviation

EasyJet’s profits have fallen during what the airline called a “difficult year for the aviation industry”. Pre-tax profits in the year to 30 September fell 17.3% to £408m, in line with guidance given last month. Passenger numbers rose 9.7%. These are the last results overseen by chief executive Carolyn McCall, who is moving to become head of ITV. “EasyJet’s model is resilient and sustainable and we now have a huge amount of positive momentum,” she said. The headline profit figure would have been higher, but the airline was hit by “an adverse headline currency impact” of £101m. “We are hedged on currency, but the devaluation was quite significant on 24 June, 2016,” Ms McCall told the BBC’s Today programme, referring to the fallout from the Brexit referendum vote. “We started the year knowing exactly that, there was no surprise there for the market.” She said that the airline was in a healthy state, despite the industry having had “a couple of years where it was a very tough market”. In October, EasyJet announced an agreement to acquire part of Air Berlin’s operations at Berlin Tegel airport for €40m (£35m). The deal is expected be completed in December, and will result in the airline entering into leases for up to 25 A320 aircraft, and offering employment to up to 1,000 former Air Berlin crews.

British Gas scraps standard tariff for new customers

Energy giant British Gas will scrap its standard variable tariff (SVT) price category by April for new customers. It comes after draft legislation designed to lower the cost of energy bills was published by the government. The Draft Domestic Gas and Electricity (Tariffs Cap) Bill would give energy regulator Ofgem the power to cap SVTs. Rival energy firm E.On has already said SVTs will no longer be the default option for customers coming to the end of their existing tariffs. SVTs are usually among the most expensively priced tariffs. Announcing the change, Ian Conn, chief executive of British Gas parent firm Centrica, said: “We have long advocated that the end of the Standard Variable Tariff is the best way to encourage customers to shop around for the best energy deal.” Although the development only applies to new customers, Mr Conn said the company was keen to move all its customers off the SVT. “We will contact all of our customers at least twice a year to encourage them to move away from the SVT,” he said. British Gas contacted all its SVT customers in the first half of 2017, and it says that 10% switched away from the tariff.

Credit card limits ‘need control’

More than a million credit card users who are struggling financially have had their credit limits increased without asking, a charity has said. Such borrowing could make their financial problems worse, so Citizens Advice is calling for a ban on unsolicited increases in credit card limits. It wants Chancellor Philip Hammond to include such a move in the Budget. But providers say protection is being improved. Citizens Advice said its research, based on a sample of 1,300 people with credit cards, suggested as six million cardholders may have had their credit limits put up without their consent in the last year. Some 1.4 million of those would be struggling financially.

Forward Diary: 20th – 24th November 2017

Company and economic announcements planned for the week commencing 20th November 2017

Labour’s John McDonnell demands ’emergency Budget’

Shadow chancellor John McDonnell is to demand “an emergency Budget for our public services”. He is to lay out five proposals for next week’s Budget, including funding to lift public sector pay.He will also claim that the government is failing to stop tax avoidance, and that it wants to cut corporation taxes in a “race to the bottom”. In reply, the government said Labour’s plans would lead to more debt, higher taxes, and fewer jobs.Chancellor Philip Hammond is due to give his Budget speech next Wednesday afternoon. Mr McDonnell, who is due to lay out his proposals in a speech at Church House in Westminster on Thursday, is expected to say that there must be “a genuine and decisive change of course” by the government.

Supreme Court decides on Scottish minimum alcohol pricing

The UK’s highest court will decide later whether Scotland can finally implement its policy of minimum pricing for alcohol. Legislation was approved by the Scottish Parliament five years ago but it has been tied up in court challenges amid claims it breaches European law. Ministers said a 50p-per-unit minimum would help tackle Scotland’s “unhealthy relationship with drink”. The Supreme Court appeal was brought by the Scotch Whisky Association (SWA). It said the policy was a “restriction on trade” and there were more effective ways of tackling alcohol misuse. Last year, The Court of Session in Edinburgh ruled against the Scotch whisky industry but allowed it to appeal to the Supreme Court. That appeal was heard in July and judges retired to consider their verdict. If the SWA appeal is dismissed, Scotland could become the first country in the world to establish a minimum price for alcohol – with ministers saying it would become law “as quickly as is practicable”, possibly early next year.

Tesco takeover of Booker gets go-ahead

Tesco’s £3.7bn takeover of food wholesaler Booker has been provisionally cleared by the UK’s competition regulator. The Competition and Markets Authority (CMA) said the deal could even increase competition in the wholesale market and reduce prices for shoppers. It added that Tesco and Booker did not compete head-to-head in most of their activities. In particular, it said Tesco does not supply goods to the catering sector. The CMA concluded that the wholesale market would “remain competitive in the longer term” , because Booker’s share of the UK grocery wholesaling market, at less than 20%, “was not sufficient to justify the longer-term concerns”. Simon Polito, chair of the CMA’s inquiry group, said: “Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.” Tesco said it welcomed the CMA’s provisional decision and added that it would continue to work with the competition regulator, which is due to publish its final report by the end of the year. “We anticipate completion of the merger in early 2018,” it added. Booker is the UK’s largest food wholesaler, and also owns the Premier, Budgens and Londis store brands. Despite rising competition from the likes of Aldi and Lidl, Tesco remains Britain’s biggest supermarket.