UK Business Secretary Defends Royal Mail Sale
Credit: Reuters/Ki Price LONDON | Mon Oct 7, 2013 12:06am BST LONDON (Reuters) – Britain’s banks and other financial firms are at their most optimistic for almost 17 years, according to an industry survey. Some 59 percent of UK financial services firms said they felt more optimistic about their business situation, compared to 6 percent who were less optimistic, according to the latest quarterly CBI/PwC financial services survey, released on Monday. The positive balance of 53 is the highest since December 1996. The survey, covering the three months to early September, also showed a net 24 percent of financial firms increased staff in the period, the biggest rise for six years. A net 14 percent of firms expect to increase staffing again in the current quarter. The CBI/PwC survey is based on the balance of firms reporting an increase and those reporting a decrease. The survey findings indicate about 10,000 jobs were added in the third quarter and another 2,000 will be created this quarter, taking UK financial services jobs to 1.14 million, CBI/PwC estimated. Business volumes fell in the latest quarter, however, mainly in banking. The CBI said 22 percent of financial firms reported a rise in business volumes, but 32 percent said they were down. A big majority of firms expect volumes to increase this quarter, it said. “Banks’ optimism is increasingly buoyant despite seeing a slight seasonal blip in commercial and industrial volumes. Activity and profitability are expected to grow as the economy recovers, and investment in new products and infrastructure is increasing,” said Kevin Burrowes, PwC’s UK financial services leader. Profitability rose for the fourth consecutive quarter, as companies managed to offset the fall in business volumes by increasing their margins, the survey showed. With costs expected to fall, profitability should increase further in the current quarter, firms said.
UK economy should beware ‘weapons of mass distraction’
government to encourage banks to get lending to businesses and the public in its efforts to revive the U.K. economy. The government initiatives include schemes such as “Funding for Lending” and the “Help to Buy” home-buyers’ program , of which an updated version was launched on Tuesday. Under the home buyers’ scheme, the government will guarantee part of a home-buyer’s mortgage on properties worth up to 600,000 ($918,000). Although concerns have grown that the schemes could create another housing and credit bubble, the government has said the initiatives have helped contribute to a nascent recovery in the U.K. economic confidence. British house prices rose at their fastest rate in 11 years in September and sales hit a four-year high, a survey by the Royal Institution of Chartered Surveyors showed on Tuesday, highlighting a sustained recovery in the property market and concerns of a bubble. With the rate of home building failing to catch up with the rate of price increases, however, Longworth warned that the “Help to Buy” scheme to assist home buyers could actually do more damage to the economy than good. Consumer confidence seemed to take a dip in September as retail sales slowed for a second consecutive month and showed a longer negative trend. Like-for-like sales were up 0.7 percent from September 2012, the British Retail Consortium’s report said, when they had increased 1.5 percent on the preceding year. While David McCorquodale, the head of retail at KPMG, which compiled the data with the BRC, called the figures “a reality check” that would make retailers nervous in the run up to Christmas, the BCC’s Longworth said that retail sales growth could be a false friend in terms of economic growth anyway. “Certainly what we don’t want is a consumer boom-led growth pattern, what we need is solid good growth and that sort of growth comes from exports, infrastructure investment and manufacturing and production and the building of businesses.” “This is a really dangerous time in the recovery.
Cable told a parliamentary committee Wednesday that more than 700,000 retail investors have sought shares in the initial public offering. Overall, investors have requested seven times more shares than the government offered for sale. The government would raise between 1.04 billion pounds and 1.72 billion pounds based on these figures. The opposition Labour Party says the sale should be put on hold amid concern the price is too low, costing taxpayers as much as 1 billion pounds. The sale is a big and controversial change for a national institution that dates to the time of King Henry VIII. Even former Prime Minister Margaret Thatcher, who championed the sale of state-owned companies such as British Telecom and British Gas in the 1980s, refrained from privatizing Royal Mail. Royal Mail workers protested near Parliament, carrying a banner saying: “The Great British Royal Mail Robbery.” Members of the Communication Workers Union are holding a strike ballot, with the results to be released next week. Any strike would be held in the weeks ahead of the busy Christmas period. The Labour Party has challenged whether Cable had obtained the best price for the taxpayer. The concern is that if the shares are undervalued they will rise steeply on the first day of trading, giving investors a windfall that, according to Labour, should have gone to the taxpayer. Join the Discussion You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.