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European Edition
14th October 2021
Chancellor urged to scrap bank tax
TheCityUK has called on Chancellor Rishi Sunak to scrap the bank surcharge, saying doing so would reinforce the UK’s leading role as a global finance hub and make it more attractive amid competition from global rivals. The removal of the 8% levy on banks’ profits has been proposed as part of Britain’s post-Brexit overhaul of its financial services sector, with Mr Sunak earlier this year announcing a review of the surcharge to make sure that “rates of UK taxation are competitive with major competitors.” Miles Celic, chief executive at TheCityUK, said: “The future of the UK’s status as a world-leading international financial centre rests on a vision based on openness, competitiveness and connectivity.” The lobby group also called for an overhaul of the UK’s tax system to attract more businesses to Britain.
Cunliffe: Digital currencies could spark financial meltdown
Sir Jon Cunliffe, a deputy governor of the Bank of England, says cryptocurrencies need to be regulated as a “matter of urgency” due to the “plausible” risk of a collapse in the market. He warned: “As the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems”. He went on to suggests that a collapse is “certainly a plausible scenario”, pointing to “the lack of intrinsic value and consequent price volatility, the probability of contagion between cryptoassets, the cyber and operational vulnerabilities and, of course, the power of herd behaviour.” Charles Kerrigan, a fintech partner with the law firm CMS, said Sir Jon is “quite right that this is an urgent issue.” “The industry is not by and large against regulation. But this technological revolution won't wait for the regulators,” he warned.
Bank of England ends closed-door policymaker briefings with banks
The Bank of England will no longer hold off-the-record briefings between policymakers and individual private sector firms, with Monetary Policy Committee (MPC) members banned from having private discussions with bankers. The move is designed to improve the transparency of the Bank's market intelligence gathering operations. The Bank will still hold regular off-record briefings with a group of economists from private finance firms following its quarterly Monetary Policy Report, with these meetings attended by individuals from a wide range of institutions rather than individual banks. A Bank of England spokesman has confirmed that the Bank will no longer be holding MPC roundtables.
Carbon emission cuts will fall short under current pledges
The International Energy Agency (IEA) says current plans to cut global carbon emissions will fall 60% short of their 2050 net zero target, saying emissions will decrease by just 40% if countries stick to their climate pledges. The IEA, in its annual World Energy Outlook, said the difference between current plans and the change necessary to reach the net zero target was “stark”, requiring up to $4tn in investment over the next decade. The IEA’s executive director Fatih Birol has urged world leaders to “come together and give a political message to the world that we are determined to have a clean energy future.” He added that world leaders could make it a “mandatory task” for organisations such as the World Bank and International Monetary Fund to prioritise clean energy projects, acting as a catalyst for private capital.
42% of black employees have left a job due to lack of diversity
Analysis by Savanta has found that 42% of black employees have resigned from their job citing a lack of workplace diversity and inclusion, while 28% feel discriminated against by their employer. Among Asian employees, 32% feel discriminated against at work. When quizzed on the impact of the Black Lives Matter movement, 30% of all staff said their employer had made them aware that their organisation supported the cause, with 22% saying their employer released a statement addressing the matter. However, 28% said their employer took no measures at all to address the BLM movement. Meanwhile, Business in the Community’s Race at Work survey found that black candidates are less likely to believe that they are being treated fairly by recruitment agencies. Just three in 10 black, Asian, mixed race and ethnically diverse employees believe they are treated fairly when working with a recruitment agency, compared to five in 10 white workers.
Financial services in staff shortage warning
Over a fifth of financial services firms have warned that staff shortages are limiting investment in the sector, according to a report by the Confederation of British Industry and PwC. Almost three quarters of financial services companies are actively recruiting new staff to tackle the skills shortage gap, while 78% of firms say upskilling existing staff is a high priority for the sector. Claire Tunley, chief executive at the Financial Services Skills Commission, said: “As the adoption of technology and automation accelerates, firms will have to continue to grow and adapt the skills of their workforce to meet changing needs”. Reflecting on the report, Emma Reynolds, managing director of financial services industry body TheCityUK, said: “In such a competitive market, ensuring the UK’s process for attracting global talent is quick, efficient and workable is key – especially where there are domestic skills shortages.”
Hotel group sues Deutsche Bank for €500m
Deutsche Bank faces a €500m lawsuit from Spanish hotel group Palladium over alleged mis-selling of financial products. The hotel group says bankers sold products knowing that the hotel executives "did not have any (or any significant) experience in dealing with complex financial derivative transactions". Deutsche said the claim is “without foundation”, adding that Palladium “is a sophisticated investor with extensive experience of using derivatives."
Leahy loses big on THG
The Telegraph report that former Tesco boss Sir Terry Leahy who is spearheading the private equity takeover of Morrisons, has lost £20.5m on The Hut Group this week alone, after shares in the online e-commerce group fell further yesterday. The latest slump brings Sir Terry's total loss on THG to £30m since its stock market debut last year. This comes after THG shares fell by 35% on Tuesday following an investor meeting. 
Most NI checks to be scrapped under EU plan
The EU has detailed plans that would see post-Brexit checks on goods arriving into Northern Ireland from the rest of the UK reduced. EU officials say the plan, which seeks to resolve a dispute over the Northern Ireland Protocol, would remove about 80% of spot checks and see customs paperwork cut by 50%. While the UK says the current arrangement imposes too many barriers, the EU has acknowledged that it has caused difficulties for businesses in Northern Ireland. It has proposed "a different model" that offers "bespoke arrangements" covering food, customs and medicines. European Commission Vice-President Maros Šefčovič said the bloc has listened to people and firms in Northern Ireland, with the proposals “a direct, genuine response to their concerns”. A UK Government spokesman said the next step should be a "rapidly conducted" round of intensive talks, adding: “Significant changes which tackle the fundamental issues at the heart of the protocol, including governance, must be made if we are to agree a durable settlement which commands support in Northern Ireland”. BBC News’ John Campbell suggests that the measures put forward by the EU will fall short of UK demands to fundamentally change the protocol by removing the European Court of Justice from an oversight role.
US firms pick up adoption of LIBOR alternative
Major US companies are abandoning the London interbank offered rate (LIBOR) ahead of a year-end deadline for dropping the short-term interest-rate benchmark, which fell into disrepute after a manipulation scandal. Banks, borrowers and lenders have been drafting plans to change over prior to December 31st, when Libor expires for shorter-dated dollar rates. Companies have increased their adoption since the Alternative Reference Rates Committee endorsed benchmarks administered by the exchange operator CME Group Inc. that could fix rates over longer time spans, said Gregg Geffen, head of North America corporate interest rate derivative marketing at JPMorgan. Year-to-date volumes of  Secured Overnight Financing Rate (SOFR) derivatives traded with corporate clients are up 800% and the bank has traded with four times as many clients compared with last year, he said. “The fact that we are getting near the deadline forces peoples’ hands to be more focused,” said Mr. Geffen. “But the ARRC’s endorsement of CME Term SOFR has been the single largest contributor recently towards moving the agenda along.”

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