9th November 2015

BBA Brief – 9 November 2015

Further speculation over EU referendum date

Prime Minister David Cameron could hold the referendum on Britain’s membership of the EU in June 2016, if other leaders agree to his reform package at a summit next month, reports the Times (£, p1). Others still believe that September 2016 is the more likely date. In a speech to be delivered tomorrow, the Prime Minister will describe the choice to leave or remain in the Union as “the biggest we will make in our lifetimes”, and will present the decision on Britain’s membership as “not just a matter of jobs and trade but of the safety and security of our nation”.

The FT (£, p2) adds that Mr Cameron will argue that Britain can survive outside the EU because “it is a great country” and the decision will be a matter for voters, not politicians or lobby groups. The Prime Minister will today address the CBI’s annual conference. BBC News reports him saying that the issue is not whether the UK can survive outside the EU, but whether it would be more successful.

Chancellor to confirm further spending cuts

BBC News reports that four central government departments – including the Treasury – have agreed to cut their spending by an average of 30% over the next four years. The savings will be made by cutting day-to-day spending and closing low value programmes. The Chancellor will deliver his Comprehensive Spending Review on 25 November. BBC News says the Chancellor will confirm the news in a speech in London later today. He will also warn that if the Government does not control spending there is a risk of a loss of confidence in the economy.

Mixed picture for the number of jobs in financial services

The Times (£, p43) says that the Treasury faces losing “hundreds of millions of pounds” in revenue because several of the City’s largest employers have announced redundancies. CityAM (p5) quotes BBA figures, which revealed that over 2014 London lost 4,854 banking jobs, a 2.8% year-on-year fall. The paper also cites figures from recruitment consultancy Morgan McKinley, which found that the number of new vacancies in financial services in London rose by 7% to 9,480 in October, compared to the month before. The article acknowledges that the financial services industry is increasingly looking for staff beyond the capital, and cites figures from the BBA which show that 2,450 new positions in the banking sector were created outside of the capital in 2014. Our report, Banking on British Jobs, which highlights the growth in regional banking jobs against a decline overall in the sector, is available on our website.

Today’s diary

Financial Stability Board: Brief from Mark Carney

House of Lords: Bank of England Financial Services Bill Committee Stage 1

OECD: Economic Outlook

CBI: annual conference, growth indicator survey and economic forecast

Stat of the day

2.4% – The predicted percentage growth in the economy this year (Mail, p65).

Latest from the BBA

SMR Responsibility Mapping Workshop, 17 November. Under the new accountability regime, the regulator requires each bank to maintain and update a document that describes each bank’s management and governance arrangements. This workshop shows you how to understand, apportion and map your responsibilities. To register your place, click here.

Latest from our sponsor – Jaywing

Ben O’Brien, Risk Practice Director at Jaywing, writes about the annual cyclical stress test by the Bank of England.

In brief

Andrea Orcel, President Investment Bank at UBS, has warned that the investment banking industry is facing “somewhat of a perfect storm, from market, regulation and competitor headwinds” (FT, £, p20).

Pensions provider Liverpool Victoria has won approval for an online “robo advice” service that uses algorithms to help guide customers to financial products tailored to their savings goals and risk preferences (FT Weekend, £, p1).

The Greek Government is trying to secure the release of €2 billion in bail-out cash before eurozone finance ministers meet in Brussels today. The development comes as Pascal Saint-Amans, Director of Tax Policy at the Organisation for Economic Development, has warned that there are no “quick fixes” for Greece’s endemic tax avoidance problems (Telegraph, B1).

There has been a “flurry of activity from challenger banks” as they try to vie for customers’ business and offer a range of competitive savings products (Observer, p47).

London has been named the best city for digital entrepreneurs looking to start and scale up a digital business, according to Nesta’s European Digital City Index (CityAM, p19).

Shell investment company Silver Falcon is today floating on the London Stock Market as it aims to take advantage of the capital’s “booming” fintech start-up scene (CityAM, p11).

The CBI has predicted that the economy will grow by 2.4% this year, compared with an earlier prediction of 2.6%. For 2016, it believes the economy will grow by 2.6%, a slight downward revision from 2.8% (Mail, p65).

A survey carried out by the CIPD has revealed that employers only intend to raise basic pay by a median of 2% in the 12 months to September 2016 because most will be able to fill vacancies without increasing wages (CityAM, p16).

Wolfgang Schäuble, Germany’s Finance Minister, has said that the euro area needs higher growth rates and “this cannot be changed by Germany”. At a conference in Berlin on Friday, Mr Schäuble also said he was optimistic that Italy will solve its economic challenges but France must stick to its pledges to reduce its budget deficit (Bloomberg).

A report by EY published today has called on Britain to concentrate less on the emerging economies and more on high-growth markets such as America, China, India and Europe if it is to increase its share of global exports (CityAM, p15).

What the commentators say

In the Independent (p55), David Prosser says last year’s exports were £6 billion down on the previous year and the disappointing numbers are down to a number of “deep-rooted” problems, not least Britons’ poor language skills.

Ahead of Indian Prime Minister Narendra Modi’s state visit to the UK next week, Hugh Young, Managing Director Asia and Group Head of Equities at Aberdeen Asset Management, writes that India is keen to be a global centre for manufacturing but foreign investors remain sceptical (Mail, p65).

In its “Big Read”, the FT (£, p10) explores the power held by central bankers.

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