Archive forDecember, 2017

Cost of global disasters ‘jumps to $306bn in 2017’

Disasters in 2017 caused losses of $306bn (£229bn), according to estimates from insurance giant Swiss Re. The figure represents a 63% jump from last year, and is well above the average of the past decade. The Americas was hardest hit, with hurricanes in the Caribbean and southern US, earthquakes in Mexico and wildfires in California. Despite the rise in the financial cost of disasters, there was no significant increase in the loss of lives. Swiss Re said more than 11,000 people died or went missing in disaster events in 2017, which is similar to 2016’s figure.

Forward Diary: 25th December 2017 – 5th January 2018

Company and economic announcements planned for the fortnight commencing 25th December 2017

Brexit: UK plans to soften impact on European banks

The Bank of England is to unveil plans allowing European banks to operate in the UK as normal post-Brexit. The BBC has learned that banks offering wholesale finance – money and services provided to businesses and each other – would operate under existing rules. It would apply even in a “no deal” scenario, the Bank is due to announce later on Wednesday. It means EU banks operating through branches can continue without creating subsidiaries – an expensive process. The difference between branches and subsidiaries is something all of us might have hoped not to care about ever but it is significant – so please bear with me. Branches offer an easy way for banks to move money around their international operations, but present the risk that in the event of a financial crisis, funds are quickly repatriated to the foreign bank’s headquarters – leaving customers of the UK branch out of pocket. Subsidiaries are forced to hold their own shock-absorbing capital which can’t cut and run – they essentially become UK companies. Changing from a branch to a subsidiary could cost billions for a bank like Deutsche Bank, for example, which employs 9,000 people in the UK. Currently, banks based anywhere in the EU can sell services to anywhere else in the EU thanks to an instrument known a financial services passport.

Steinhoff’s former chair Christo Wiese in the spotlight

Investors are meeting in London on Tuesday to decide the fate of household goods giant Steinhoff. The firm owns 6,500 retail outlets in 30 countries, including the UK’s Poundland and furniture chains Bensons and Harveys. After revelations of accounting irregularities, Steinhoff’s shares collapsed and executives resigned. Now, shareholders must decide whether to keep Steinhoff afloat or sell off assets to recoup some money. One person in the spotlight is Christo Wiese – Steinhoff’s former chair and its largest shareholder. He’s one of South Africa’s richest businessmen – and one of its most respected, with a reputation for having something of a Midas touch. Mr Wiese holds a stake in investment firm Brait SE, which is a majority shareholder in several other UK businesses including Virgin Active and fashion retailer New Look. But since the scandal emerged earlier this month, the fall in the value of his investments has wiped out a large chunk of his net worth.

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.”