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☆ UK banks’ Big Bang thankfully looks like big flop
▼ + stars: | 2022-11-30 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

Yet, the mooted changes would probably only benefit middling lenders like Santander UK, Virgin Money (VMUK.L) and Banco Sabadell’s (SABE.MC) TSB Bank, according to the FT. And on Wednesday, the BoE’s supervisory body said it planned largely to stick to international bank-capital rules, dubbed Basel 3.1. But the big flop might not be such a bad thing for the country’s financial sector. Separately, the government’s City minister Andrew Griffith said on Nov. 29 that he wanted to relax the so-called ringfencing regime that forces large British lenders to separate their retail and investment banking arms. According to the Financial Times, the ringfencing regime would still apply to the biggest UK banks but there could be exemptions for lenders with limited trading operations including Santander UK, Virgin Money and TSB Bank.

LONDON, Nov 24 (Reuters) - Bank of England Deputy Governor Dave Ramsden backed more interest rate hikes on Thursday, but said he would consider cutting rates if the economy and inflation pressures panned out differently to his expectation. But Ramsden also said he would "continue to vote to respond forcefully" if inflation pressures proved to be more persistent than expected. The BoE has raised interest rates eight times since December 2021. Ramsden said the government's budget statement published earlier this month - comprising tax rises and spending restraint - was likely to push down on economic growth and inflation. "However, the vast majority of these measures do not come into effect until April 2025 so will have very little effect over the MPC's three-year forecast horizon, relative to what was assumed in the November MPC," Ramsden said.

☆ Bank of England confirms start of new gilt sale programme
▼ + stars: | 2022-11-23 | by ( David Milliken | Gibran Naiyyar Peshimam | ) www.reuters.com time to read: +2 min

The BoE intends to offer gilts for sale on Tuesdays, Wednesdays and Fridays, giving minimum prices that it will accept before each sale. "There will be instances when the Bank could sell a larger volume of gilts if demand is particularly strong, but also times when the Bank will sell few or no gilts if there is insufficient demand," the BoE said. On days when the DMO had held a long-dated gilt auction, the BoE would only sell index-linked gilts and vice versa. The BoE said it would publish details of the gilt sales as soon as possible after each sales window closed. ($1 = 0.8312 pounds)Reporting by David Milliken, Editing by Kylie MacLellanOur Standards: The Thomson Reuters Trust Principles.

☆ IMF backs UK plan for $65 billion of budget tightening
▼ + stars: | 2022-11-18 | by ( David Milliken | ) www.reuters.com time to read: +1 min

LONDON, Nov 18 (Reuters) - The International Monetary Fund's managing director, Kristalina Georgieva, said she had spoken with British finance minister Jeremy Hunt on Friday to welcome his latest plan for 55 billion pounds ($65 billion) of budget tightening. "It strikes the right balance between fiscal responsibility and protecting growth and vulnerable households," Georgieva said in a brief statement on social media. loadingThe IMF had criticised Hunt's predecessor, Kwasi Kwarteng, for previous budget plans in September which included 45 billion pounds of unfunded tax cuts. Hunt's plan represents tax rises and spending cuts equivalent to 2% of gross domestic product by the 2027-28 financial year. ($1 = 0.8412 pounds)Reporting by David Milliken; Editing by Alistair Smout and James DaveyOur Standards: The Thomson Reuters Trust Principles.

He froze until 2028 a threshold at which employers start to pay social security contributions, which will cost companies more. Public spending would grow more slowly than the economy but rise in overall terms, he said. It now expects gross domestic product to contract by 1.4% next year compared with its projection in March for growth of 1.8%. The OBR forecasts GDP growth of 1.3% in 2024 and 2.6% in 2025, compared with previous forecasts of 2.1% and 1.8% respectively. Thursday's forecasts by the OBR showed that target would be met in the 2027/28 financial year.

LONDON, Nov 17 (Reuters) - The pound rose for a third day against the dollar on Thursday ahead of finance minister Jeremy Hunt's new budget full of "tough but necessary" measures to control inflation. Against the euro , sterling has only risen by around 6% since late September and by 9% against the yen. Benchmark 10-year gilts are around 3.3%, their lowest since mid-September, just before Truss and Kwarteng released their budget. Typically, this would have dragged on the pound, given the lower yield advantage it affords investments in sterling. Adding an extra element of risk on Thursday, are the economic forecasts of the independent Office for Budget Responsibility, which did not release any kind of breakdown of the impact of Truss' budget in September.

☆ The UK has laid out a $65 billion package of tax rises and spending cuts to restore faith after political upheaval and a market storm
▼ + stars: | 2022-11-17 | by ( George Glover | ) www.businessinsider.com time to read: +3 min

The UK's finance minister Jeremy Hunt has laid out a £55 billion package of tax rises and spending cuts. The government wants to restore credibility after a prior tax plan drove the pound to an all-time low. The fiscal plan will be divided roughly equally between tax rises and spending cuts, Hunt said. That goes contrary to the tax plan laid out by former finance minister Kwasi Kwarteng, which called for huge tax cuts. Read more: UK inflation tops 11% to hit its highest level since 1981 as food and energy prices soar

☆ Premarket stocks: Get ready for a spending slowdown this holiday season
▼ + stars: | 2022-11-17 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

Retail sales surged by 1.3% in October. What’s happening: Wednesday’s headline retail sales numbers, reported by the US Census Bureau, came in strong, but the momentum is unlikely to continue. These cracks in retail are starting to show just as the sector enters its most critical sales period: The holiday shopping season. The bottom line: This holiday season will likely be a mixed bag with some winners and losers in the retail sector, said Saunders. “We do have to do some tax rises, do some spending cuts, if we’re going to show we’re a country that pays our way,” he told Sky News on Sunday.

However, Biden said the weapon was probably not fired by Russia, although the investigation was ongoing. NATO ambassadors will hold an emergency meeting on Wednesday with a news conference due around 11.30 GMT. The European common currency was then knocked off that high, falling as low as $1.028 after news of the explosion in Poland sent traders to the safety of the dollar, which also caused falls in equities. "Geopolitical risks continue to hang over currency markets and are likely to remain a key driver of volatility," she said. The greenback was also down 0.15% on the Swiss franc at 0.9418, near Tuesday's seven-month low, and the dollar index, which tracks the greenback against six main peers, was 0.24% lower at 106.26.

☆ UK bond dealers see jump in gilt issuance for 2023/24 - Reuters poll
▼ + stars: | 2022-11-16 | by ( David Milliken | ) www.reuters.com time to read: +4 min

However in the 2023/24 financial year, gilt issuance is expected to jump to 238 billion pounds, according to the median poll forecast, the second highest ever after the 486 billion pounds of issuance in 2020/21 to fund COVID-19 support measures. “It feels like there shouldn’t be too many surprises, but the gilt market remains febrile, and even small news could create oversized reactions,” he said. Gilt issuance is distinct from public sector net borrowing (PSNB), the main borrowing measure forecast by Britain’s Office for Budget Responsibility. Here GEMMs expect PSNB, excluding public-sector banks, to rise to a median 187 billion pounds, almost double the 99 billion pounds forecast by the OBR in March. Next year it is forecast to fall to 142 billion pounds, versus an OBR forecast of 50.2 billion pounds.

☆ UK to turn page on 'Trussonomics' with budget plan
▼ + stars: | 2022-11-16 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

He and Sunak say they must now go further. Critics say a return to austerity is unnecessary, will hurt millions of households and will deepen the expected recession. How soon spending cuts and tax rises come will be key for the short-term economic outlook. Hunt risks reviving tensions within the ruling Conservative Party, many of whose members were already upset at the scale of tax increases he announced when finance minister. The budget statement will be accompanied by forecasts from the Office for Budget Responsibility which are likely to echo the BoE's message that Britain is heading for a long recession.

☆ British government to usher in new era of austerity in effort to restore market confidence
▼ + stars: | 2022-11-15 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

We're going to see spending cuts," Hunt told the BBC on Sunday, while also promising the government would deliver a new and more focused plan to help with household energy bills beyond April. First, an increase in council tax with local authorities allowed to raise the level of council tax above 3% without a referendum," Raja said. "And second, an increase in both the duration and scale of the windfall tax on oil and gas 'excess profits'." Spending cuts, again executed via "stealth," could take the form of "nominal cash freezes to departmental budgets," Raja said, with spending budgets topped up minimally going forward. "If he wants to reassure the markets, he will have to announce early action in the form of a big fiscal tightening.

☆ UK needs to make politically unpopular reforms to boost growth, business group says
▼ + stars: | 2022-11-14 | by ( ) www.reuters.com time to read: +2 min

LONDON, Nov 14 (Reuters) - The British government must be willing to make politically unpopular choices in areas such as immigration and regulation to boost business investment and economic growth, the Confederation of British Industry (CBI) said on Monday. It also called on the government to streamline "the slow and inconsistent planning system", and speed-up decision-making for major developments. "All of us need to accept now that with fiscal and monetary policy tightening, we need many more pro-growth policies for our economy, if we’re to avoid a decade of no growth," CBI Director-General Tony Danker said in a statement. Danker said that if Hunt's plan for growth was only "warm words and aspirations" it wouldn't stop businesses pulling back from investment. "We need to make the UK an attractive place to invest."

☆ UK must raise taxes and cut spending, Hunt says ahead of budget
▼ + stars: | 2022-11-13 | by ( ) www.cnbc.com time to read: +2 min

Jeremy Hunt arrives at his home in London after he was appointed Chancellor of the Exchequer following the resignation of Kwasi Kwarteng. But he said poorer households should be spared much of the pain and cuts to public services would be balanced. "You don't want to do things that make any recession that you may be in worse," Hunt told Sky News on Sunday. Asked about spending cuts, Hunt said a strong economy needed good public services and cuts would be made in "balanced way". "I'm arguing for two things: both fairer choices on taxes, but also crucially, a plan for growth," she told Sky News.

☆ Take Five: A UK budget and trouble in crypto land
▼ + stars: | 2022-11-11 | by ( ) www.reuters.com time to read: +5 min

LONDON, Nov 11 (Reuters) - The long-awaited UK fiscal plan is (almost) here and after the ructions unleashed by September's mini-budget, markets are paying close attention. UK markets have recouped most of the maxi-losses from the mini-budget, but the outlook is grim. Reuters Graphics2/ CRYPTO CHAOSThe crypto world has been thrown into fresh chaos by a meltdown at FTX. Big banks too are starting to pare back staffing levels. September data showed a measure of underlying retail sales rising thanks to strong wage gains and savings, even as the broader number came in flat.

☆ Britain's businesses are 'running out of fight' as country faces longest-ever recession
▼ + stars: | 2022-11-11 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +5 min

U.K. businesses are bracing for a difficult winter amid soaring inflation and higher energy bills. Andrew Matthews - Pa Images | Pa Images | Getty ImagesLONDON — The doors to The 25, a Torquay-based boutique bed and breakfast on the U.K.'s southwest coast, are now closed for the winter period. With rising energy bills and higher costs piling pressure on U.K. businesses, owner Andy Banner-Price has deferred reopening by a month until well into the spring. The Bank of England has warned that the U.K. is facing its longest recession since records began a century ago. Huw Fairclough | Getty Images News | Getty ImagesUntil now, Holliday said his business has been "taking the hit" and absorbing increased production and energy costs to buffer customers.

LONDON, Nov 7 (Reuters) - British finance minister Jeremy Hunt will seek to fill a 50 billion pound ($57 billion) hole in the country's public finances with around 30 billion pounds of spending cuts and 20 billion in tax rises, two government sources said on Monday. Hunt is due to present a fiscal statement to parliament on Nov. 17. Britain's Guardian newspaper reported on Sunday that early drafts of Hunt's statement included up to 35 billion pounds of spending cuts and 25 billion pounds of tax rises, while on Monday the Financial Times gave figures of 33 billion pounds and 21 billion pounds respectively. Last week a finance ministry source said broad-based tax rises were likely to fill a "fiscal black hole". Most of the 45 billion pounds of unfunded tax cuts which Kwarteng announced were rapidly reversed, apart from a 16 billion pound cut in payroll taxes which took effect on Nov. 6.

"There's a growing perceived chance that the Fed will be the last major central bank to throw in the towel and arrest its tightening cycle," said Francesco Pesole, FX strategist at ING. U.S. payrolls data released later on Friday will provide the latest indication of the health of the U.S. economy. In contrast, Friday data showed euro zone business activity contracted last month at the fastest pace since late 2020. CHINA HOPESFriday's 'risk on' move in currencies, as well as commodity and share markets, followed reports China could relax its anti-COVID restrictions, which have been hobbling economic activity. "CNH (the yuan traded offshore) will tell you if investors are running hot or cold in China markets.

Fueled by a post-lockdown buying frenzy, the average UK house price hit a record £275,000 ($315,474) in December, a £27,000 increase on the previous year’s high. UK mortgage rates have been ticking upwards since spring, in line with rising interest rates. UK house prices fell 0.9% between September and October, the first decline in 15 months, according to data from Nationwide. A drop in buying power makes a significant drop in house prices inevitable, according to Andrew Wishart, a senior economist at Capital Economics. When house prices fall, homeowners feel less confident about their personal finances, causing them to cut back on spending and hold off on making additional investments.

☆ UK house prices fall after 'mini-budget' turmoil - Nationwide
▼ + stars: | 2022-11-01 | by ( David Milliken | ) www.reuters.com time to read: +2 min

[1/3] An estate agent's board is displayed outside a house on a terraced street in Blackburn, Britain, January 17, 2022. REUTERS/Phil NobleLONDON, Nov 1 (Reuters) - British house prices recorded their first monthly fall since July 2021 last month, mortgage lender Nationwide said on Tuesday, after the market was hit by turmoil during Prime Minister Liz Truss's short-lived premiership. Nationwide Building Society said house prices dropped 0.9% in October after being unchanged in September, while they are 7.2% higher than a year earlier, slowing from September's annual increase of 9.5%. "The market has undoubtedly been impacted by the turmoil following the mini-Budget, which led to a sharp rise in market interest rates," Nationwide chief economist Robert Gardner said. The monthly fall in house prices was the largest since June 2020, when the market was crimped by initial COVID-19 pandemic restrictions, while the annual rise was the weakest since April 2021.

☆ UK still faces 40 billion pound budget hole - Resolution Foundation
▼ + stars: | 2022-11-01 | by ( David Milliken | ) www.reuters.com time to read: +3 min

LONDON, Nov 1 (Reuters) - Britain still faces a 40 billion pound ($46 billion) budget hole that will need to be filled by tax rises as well as spending cuts, despite recent U-turns on measures proposed during Liz Truss's short-lived premiership, a think tank said on Tuesday. Previous finance ministers had also left a minimum of 12 billion pounds of leeway to achieve their budget goals, the think tank added. The government is reviewing a previous promise to raise pensions and welfare benefits in line with inflation, which will cost around 9 billion pounds. Around 17 billion pounds of Truss's tax cuts remain in place, largely the reversal of a 15 billion pound rise in payroll taxes introduced by Sunak when he was finance minister. "This reality means that the Autumn Statement is likely to involve tax rises, not just spending cuts."

☆ Britain's new PM is a fan of crypto. There are hopes he'll give the industry a boost
▼ + stars: | 2022-11-01 | by ( Ryan Browne | ) www.cnbc.com time to read: +6 min

Dan Kitwood | Getty ImagesU.K. cryptocurrency firms and investors have high hopes that new prime minister Rishi Sunak could turn around Britain's fading crypto aspirations. Crypto isn't exactly high up on his priority list, but industry insiders say there's reason to be optimistic. Before Sunak's appointment as PM, confidence in the U.K.'s position in the global crypto market had been waning. In a survey of 300 British fintech founders, only 9% believe it's leading the way on crypto. Yet the U.K. is home to a fairly active crypto market.

☆ UK will not take action over Czech mogul's plan to raise Royal Mail stake
▼ + stars: | 2022-10-31 | by ( ) www.reuters.com time to read: +2 min

Oct 31 (Reuters) - Britain is no longer intervening in Czech billionaire Daniel Kretinsky's plan to increase his stake in Royal Mail parent International Distributions Services (IDSI.L), sending the company's shares up more than 7% on Monday. In August, Royal Mail said it had been notified by then business minister Kwasi Kwarteng that he was exercising powers to look into proposals by Kretinsky's vehicle, Vesa Equity Investment, under the National Security and Investment Act. The Royal Mail review came days after the government decided not to take action over billionaire Patrick Drahi's stake in telecoms firm BT (BT.L). Vesa, Royal Mail's biggest shareholder which is ultimately controlled by Kretinsky and his business partner Patrik Tkac, in August said it had voluntarily contacted the government to inform them of its intention to increase its stake in Royal Mail, which is currently just over 22%. "Vesa Equity Investment welcomes the decision ... and reiterate our commitment to continuing long term investment presence in the U.K., including our partnership with Royal Mail," a spokesperson said.

☆ Truss phone was hacked by suspected Putin agents when she was foreign minister, the Daily Mail reports
▼ + stars: | 2022-10-29 | by ( ) www.reuters.com time to read: +1 min

LONDON, Oct 29 (Reuters) - Former British Prime Minister Liz Truss's personal phone was hacked by suspected agents working for Russian President Vladimir Putin when she was foreign minister, the Daily Mail reported on Saturday. That includes regular security briefings for Ministers, and advice on protecting their personal data and mitigating cyber threats," the spokesperson added. The hack was discovered during the Conservative Party leadership campaign that led to Truss becoming prime minister, the Mail reported. Truss left office last week as prime minister and was succeeded by Rishi Sunak. The Mail said the messages that fell into foreign hands included criticisms of Johnson made by Truss and Kwarteng, "leading to a potential risk of blackmail".

LONDON, Oct 27 (Reuters) - Having hiked mortgage rates after political turmoil drove up the cost of borrowing, British banks are now cutting home loan prices, albeit slowly, as markets calm since Liz Truss's government collapsed and Rishi Sunak took power. But as markets have stabilised and borrowing costs have fallen, the trickle of mortgage rate cuts has lagged behind. By contrast, average rates on two-year and five-year fixed-rate mortgages have fallen just 0.16 percentage points, Moneyfacts data shows. Reuters GraphicsFIXED RATESMortgage brokers say fixed-rate mortgage rates typically lag changes in swap rates, a trend which could be exacerbated this time as lenders focus on reintroducing products. Five-year mortgage rates have followed a similar pattern, Moneyfacts data shows.

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