Pound Rises on Hopes of Brexit Progress

Pound Rises on Hopes of Brexit Progress
The value of the pound continued to climb on Thursday as hopes rose of progress in the Brexit negotiations. Sterling hit a two-month dollar high on Wednesday on reports the UK had offered to pay up to €50bn to settle its EU “divorce bill”.

The Times also reported on Thursday that the UK was close to a deal concerning the border with Northern Ireland and the Republic of Ireland.

The pound was up more than half a cent against the dollar at $1.3467. Against the euro, sterling also rose 0.4% to €1.1363. On the stock market, the benchmark FTSE 100 share index was down 25.06 points at 7,368.50.

Shares in Aviva rose 2.6% after the insurer increased its targets for growth and dividend payouts.

Outside the FTSE 100, shares in the owner of the Daily Mail newspaper – Daily Mail and General Trust – plunged by a quarter after the publisher reported a full-year loss and gave a downbeat outlook for next year.

The company reported a loss of £112m after writing down the value of some of its businesses by more than £200m, and added that expected earnings in the short-term to be “adversely affected by recent disposals and challenging conditions in some of our sectors”.

Pub operator Marston’s saw its shares jump nearly 10% after it reported a rise in full-year profits and said it was “well positioned” for growth next year.

But results from rival Greene King fell flat by contrast. Its shares dropped 2.8% after the brewer and pub owner reported an 8% fall in half-year profits and said trading conditions were likely to “toughen” in the next few years.

UK Economy Grows by 0.4%

UK Economy Grows by 0.4%
The UK’s economy grew more than expected in the three months to September – increasing the chances of a rise in interest rates in November. Gross domestic product (GDP) for the quarter rose by 0.4%, compared with 0.3% in each of the first two quarters of the year, latest figures show.

The services industry was behind most of the rise but manufacturing, helped by car production, also helped.

Industrial production rose in July and August but construction output fell.

Debtors to be Given ‘Breathing Space’

Debtors to be Given ‘Breathing Space’
People with problem debt could be given a six-week breathing space, the government has confirmed. It follows pressure from rebels in the House of Lords, who had threatened to vote down the Financial Guidance and Claims Bill later on Tuesday. They wanted the bill amended to include the breathing space idea.

But the Treasury has now confirmed that help for those in debt will now be the subject of a consultation, and will become law by 2019. The concept had been promised in the Conservative party manifesto, and was mentioned in the Queen’s Speech.

The news was welcomed by the debt charity StepChange, although it said debtors needed protection beyond the six week grace period. However, the rebels – led by former pensions minister Ros Altmann – still want a ban on pensions cold-calling to be included in the bill.

The Department for Work and Pensions announced in August that a ban would happen, but as yet there is no date. It told the BBC that a bill would be brought forward “when time allows”.

Under the government plan, those people affected by debt would be exempted from further interest, charges and enforcement action in order to give them a chance to seek advice. That exemption period could last up to six weeks.

The Economic Secretary to the Treasury, Stephen Barclay, said: “For many people in the UK problem debt seems impossible to escape. Its effects can be far-reaching, impacting all aspects of a person’s life and leaving them feeling helpless. “That is why we are working to give people who are overwhelmed by debt, more time to seek advice, find a workable solution, and help get their lives back on track.”

The plans include better legal protection for debtors once a debt repayment plan is in place.

But the debt charity StepChange said there needed to be protection from creditors right the way through the process.

“We know from the experiences of our clients that continuous protection between the initial breathing space period and any statutory repayment plan is vital,” said Mike O’Connor, the chief executive of StepChange. “Any interruption would destabilise fragile family finances and risk putting people back to square one.”

The Conservative rebels will still push for an amendment to the Financial Guidance Bill to include a ban on pension companies cold-calling consumers. It is illegal to cold-call someone to try to sell a mortgage, but as yet not a pension. The cold calling ban to include texts and emails.

Many people have been scammed, after being persuaded to withdraw cash from their pension and move it to unregulated investments, such as storage schemes or car-parking spaces.

“The government has talked about banning cold-calling – it’s talked about protecting pensioners – but in fact it hasn’t done anything yet,” said Ros Altmann. “This bill is an ideal opportunity to actually put some legislation in place that would ban cold calls.”

Millions may Lose Promised Pension Payout

Millions may Lose Promised Pension Payout
Three million savers in final-salary pension schemes only have a 50/50 chance of receiving the payouts they were promised, a study has concluded.

Some employers were under pressure to meet their pension obligations, the Pensions and Lifetime Savings Association (PLSA) said. High-profile cases such as the BHS collapse have highlighted concerns over the future of workplace pensions. The PLSA said one solution could be the pooling of resources into “superfunds”. This would allow relatively small companies to pay a fee to transfer final-salary pensions to a larger fund – which would then have bigger investment opportunities.

A standard deal for pension scheme members could see some receive better final payouts as a result, but others could see their expected income deteriorate.

The in-depth study by the PLSA considered the outlook for final-salary pensions used by 11 million people in the UK. Employers have pumped in an extra £120bn in special payments to try to plug financial holes in these schemes, but the combined deficit of the UK’s 6,000 schemes remains at £400bn.

The majority of final-salary schemes had a sustainable model for meeting future payouts, the PLSA said. However, three million members of schemes faced a more uncertain financial future, it concluded.

Ashok Gupta, who chaired the PLSA review, said there was a “real possibility” of a collapse for more high-profile pension schemes, and so the report’s many proposals needed to be considered. “The industry and government need to grasp this opportunity and tackle serious flaws that threaten the security of people’s retirement,” he said.

Pension saving has become automatic for most workers, owing to the government’s automatic enrolment scheme, but there are still concerns about a lack of saving across all age groups.

Insurer Aviva estimated that two million older workers had dependent children or parents, and a third expected to delay retirement with others likely to reduce pension saving owing to the financial pressures involved. “Many over-50s are shouldering the responsibility of putting their families’ financial needs ahead of their own for a prolonged period of time,” said Lindsey Rix, of Aviva. Aviva’s survey did find that many older workers were staying on in employment owing to job satisfaction rather than financial need.

UK Jobless Rate Down to 4.4%

UK Jobless Rate Down to 4.4%
Unemployment in the UK fell by 57,000 in the three months to June, official figures show, bringing the jobless rate down from 4.5% to 4.4% – its lowest since 1975.

Average weekly earnings increased by 2.1% compared with a year earlier. But with the rate of inflation running at 2.6%, real earnings fell by 0.5%.

The number of people employed on zero hours contracts as their main job fell 20,000 compared to a year earlier.

G4S Slides as FTSE 100 Tumbles

G4S Slides as FTSE 100 Tumbles
Security group G4S was the biggest faller on the FTSE 100 in early Wednesday trading despite reporting a 7.6% rise in first-half profit. The firm saw its shares slide 3.7% after chief executive Ashley Almanza said it would sell off more underperforming assets this year.

Overall, the 100-share index was down 42.11 points or 0.56% at 7,500.62.

Meanwhile, the pound rose 0.13% against the dollar to $1.3010 and was up 0.14% against the euro to 1.1070 euros. Among the top gainers was payment processing firm Worldpay, which added 0.6% after agreeing to merge with US rival Vantiv.

Biggest winners were mining firms Randgold Resources and Fresnillo, which gained 1.7% and 1.4% respectively.

On Tuesday, the FTSE 100 narrowly failed to hit a record closing high after a late rally stalled just short of the magic mark.

Brexit: Johnson, Davis and Fox Push Agenda

Brexit: Johnson, Davis and Fox Push Agenda
Senior cabinet ministers will push the UK’s Brexit agenda on three different continents later. International Trade Secretary Liam Fox will travel from the US to meet Mexican counterparts to discuss trading relationships. Foreign Secretary Boris Johnson is on a two-day tour of Australia, saying post-Brexit trade is “top of the agenda”. And Brexit Secretary David Davis will hold private talks in Germany ahead of the next round of negotiations.

The globetrotting by the three ministers – dubbed the “three Brexiteers” for their role in backing a Leave vote – comes amid increased scrutiny of the opportunities and challenges facing Britain in terms of negotiating free trade agreements with other countries once it leaves the EU.

No deals can be done until withdrawal in March 2019 but the UK has established a series of inter-ministerial working groups in the US and Australia to discuss the way ahead while also signalling to other countries, such as New Zealand, that they will be “near the front of the queue”.

US President Donald Trump has said a deal with the UK could be “big and exciting” in terms of jobs, accusing the EU of a “very protectionist” stance towards America.

The EU has insisted Brexit talks will only be held by the European Commission, and the Department for Exiting the European Union confirmed Mr Davis’ talks with officials in Germany would be private.

Brussels has also made clear that trade talks between the UK and the EU must wait until other issues, including the status of expats and any “divorce bill” to be paid by the UK, have been settled.

The role of the European Court of Justice has emerged as a stumbling block to a deal on citizen’s rights, despite both sides insisting that they want to come an arrangement.

The UK is seeking a “comprehensive free trade deal” with the EU after Brexit to replace its membership of the common market and customs union.

UK & US to Start Talks on Post Brexit Trade Deal

UK & US to Start Talks on Post Brexit Trade Deal
The UK is to hold its first talks with the US to try to sketch out the details of a potential post-Brexit trade deal. International Trade Secretary Liam Fox will spend two days in Washington with US counterpart Robert Lighthizer. EU rules mean the UK cannot sign a trade deal until it has left the bloc.

Mr Fox said it was too early to say exactly what would be covered in a potential deal. Firms and trade unions have both warned of the risks of trying to secure an agreement too quickly. The Department for International Trade said discussions were expected to focus on “providing certainty, continuity and increasing confidence for UK and US businesses as the UK leaves the EU”. Mr Fox added: “The [UK-US trade and investment] working group is the means to ensure we get to know each other’s issues and identify areas where we can work together to strengthen trade and investment ties.”

The British Chambers of Commerce (BCC) director general Adam Marshall said the US’s experience at such negotiations would make it difficult for the UK to secure a good deal.

“We’re just getting back into the game of doing this sort of thing after 40 years of doing it via the EU,” he told the BBC’s Today programme. “So I think early on in the process, it would be concerning if the UK were to go up against the US on a complex and difficult negotiation.”

Mr Marshall said while the BCC’s business group’s members would welcome the US and the UK talking about how to increase trade between them, the focus should be on improving “small practical things” such as custom procedures rather than a comprehensive trade deal.

Trade unions the TUC and Unite have also expressed disquiet over a rushed US trade deal. “Ministers should be focused on getting the best possible deal with the EU, rather than leaping into bed with Donald Trump,” TUC boss Frances O’Grady told the Guardian.

UK Should End Cash in Hand Economy

Taylor Review: UK Should End Cash in Hand Economy
The author of a government review into work practices would like to see an end to the “cash-in-hand economy”. Matthew Taylor, whose report is out on Tuesday, said cash jobs such as window cleaning and decorating were worth up to £6bn a year, much of it untaxed.

The review recommends that firms which have a “controlling and supervisory” relationship with workers should pay a range of benefits. That includes millions of pounds in National Insurance contributions. The recommendations are part of a much wider review into modern working practices, including the gig economy. Mr Taylor’s report recommends a new category of worker called a “dependent contractor”, who should be given extra protections by firms such as Uber and Deliveroo. It also says low-paid workers should not be “stuck” at the minimum living wage or face insecurity.

At the launch of the report later on Tuesday, the prime minister will say that it confronts issues that “go right to the heart of this government’s agenda and right to the heart of our values as a people”. Mrs May will say: “I am clear that this government will act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected.”

In particular, Mr Taylor’s review found the UK had a “great record on creating jobs” but less so on the “quality” of those jobs. “In my view there is too much work particularly at the bottom end of the labour market that is not of a high enough quality,” Mr Taylor told the BBC. “There are too many people not having their rights fully respected. There are too many people at work who are treated like cogs in a machine rather than being human beings, and there are too many people who don’t see a route from their current job to progress and earn more and do better,” Mr Taylor said.

He said his aim was not to change the working landscape for those who wanted to work flexibly: “If people want to clock on and earn a few extra quid we don’t want to stop that. “We don’t want to ban zero hours [contracts] – many people who work zero hours want to do so.” But he said working platform providers such as Uber had to demonstrate that workers signing on for hours of work would “easily clear” the minimum wage.

Mr Taylor also said he did not want to ban cash payments outright, but hoped, over time, the increasing popularity of transaction platforms such as PayPal and Worldpay would see a shift from cash-in-hand work. “In a few years time as we move to a more cashless economy, self employed people would be paid cashlessly – like your window cleaner. At the same time they can pay taxes and save for their pension,” he said. “Most people who do pay for self-employed labour would like to know that that person is paying their taxes.”

However, Labour’s shadow business secretary Rebecca Long-Bailey said the review did not go far enough for the 4.5 million people in insecure work. She told the BBC’s Today programme: “If it looks like a job or it smells like a job then it is a job, and the worker should be employed, and I think in those those situations where a worker is carrying out work on behalf of an employer… they should not be exploited as a flexible workers.”

Trade unions also said Mr Taylor did not tackle many of the issues facing workers. TUC general secretary Frances O’Grady said: “From what we’ve seen, this review is not the game-changer needed to end insecurity and exploitation at work.” Tim Roache, GMB general secretary, called it a “disappointing missed opportunity”.

Mr Taylor, who worked on the review for nine months, is presenting seven recommendations to the government to provide “good quality work”.

The BBC understands he will also suggest ways to tackle tax avoidance from cash-in-hand work. He is set to call for cash jobs to be paid through platforms such as credit cards, contactless payments and PayPal.

Last year, tax dodging by people in the “hidden economy” cost the government £4.4bn, according to HMRC figures.

However, making changes to cash-in-hand work is a controversial area. In 2012 the then-Treasury minister David Gauke was criticised for saying it was “morally wrong” to pay tradesmen in cash.

Former shadow chancellor Ed Balls also came under fire for suggesting people should get a written receipt for all transactions, even small gardening jobs.

FTSE 100 Rebounds After Two Days of Losses

FTSE 100 Rebounds After Two Days of Losses
London’s main share index opened higher as the market recovered some of the ground lost in the past two days. Global markets have dropped sharply since Wednesday, with uncertainty surrounding the Trump presidency being blamed for the sell-off.

The row over the firing of FBI director James Comey has led to growing scepticism about Mr Trump’s ability to deliver tax and regulatory reform. But in early trade on Friday, the FTSE 100 rose 30.10 points to 7,466.52.

Airlines shares were in favour, with British Airways owner IAG up 1.6% and EasyJet rising 1.5%.

But shares in Hikma Pharmaceuticals dropped 4.8% after the company cut its full-year revenue forecast. Last week, Hikma had said that its launch of a generic asthma drug would be delayed after its approval was blocked by US regulators.

On the currency markets, the pound was back below the $1.30 mark. On Thursday, it had jumped above this level to the highest point since September after the release of stronger-than-expected retail sales figures. However, on Friday it was trading at $1.2981. Against the euro, the pound was down slightly at 1.1648 euros.