Bets on pound volatility climb after Johnson’s no-deal gambit
Investors are braced for an unnerving ride in foreign exchange markets in the run-up to the Halloween deadline for the UK’s exit from the EU, writes Philip Georgiadis.
Shifts in the options market, where bets are made on exchange rates, show expectations for sterling volatility have hit their highest level since the start of the year. Bets shot up on Wednesday after Boris Johnson’s government took the unusual step of signalling its intention to suspend parliament in a bid to stop MPs blocking a no-deal Brexit.
The prime minister is set to suspend parliament for at least a month, shortening the time available to MPs who hoped to introduce a bill to force the government’s hand on Brexit.
UK economic sentiment at lowest level for seven years
Economic sentiment in the UK dropped to its lowest level in seven years in August on the back of weak services and a slump in confidence in the retail sector., writs Chris Giles
Monthly figures from the European Commission showed that while the eurozone had arrested the decline in its economic sentiment, it continued to fall fast in the UK.
The figures highlight the fragility of the UK economy as the Brexit deadline approaches, and were particularly weak among retailers, who recorded the lowest level of confidence for just over a decade.
Amigo shares plunge as it overhauls lending model
Specialist lender Amigo has warned it will change its business model to head off a regulatory crackdown, sending its shares plunging more than 50 per cent on Thursday., writes Nicholas Megaw
The UK company, which lends to people with poor credit ratings as long as they have someone to step in should they fail to repay, has drawn the scrutiny of the Financial Conduct Authority over concerns that its customers risk becoming trapped as repeat borrowers on interest rates of close to 50 per cent.
As a result, Amigo said it would almost halve the share of business from repeat borrowers to about 20 per cent, from 38 per cent, a move that will slow lending growth and drive up advertising costs as it spends more to lure new customers. It will also tighten its credit checking policies and increase investment in areas such as compliance and complaints-handling.
Universities’ pension funding hole doubles
Hundreds of thousands of members of the £72bn Universities Superannuation Scheme face the threat of a further rise in their pension contributions after the plan’s managers revealed a funding hole had nearly doubled to £6.6bn.
About 198,000 active members of the USS, the UK’s largest private sector pension plan, are making monthly payments of 8.8 per cent of their salary towards their pensions, which promise an inflation-proofed retirement income for life.
These payments are due to rise to 9.6 per cent of salary from October, under a controversial schedule put forward by the USS, and backed by university employers, to address a £3.6bn deficit in the scheme’s finances based on a valuation in March last year.
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