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The Bank of England has warned that the UK faces growing risks from weaknesses in the global financial system. The Financial Policy Committee (FPC) said some global risks to financial stability have increased since its December meeting, including a rise in political tensions. The FPC said that while prices of assets such as shares and bonds have risen, leading to higher valuations, economic conditions remain challenging. Noting the risk of a “sharp correction,” the committee warned that investors may be “putting less weight on risks to growth or the path of interest rates necessary to bring inflation back to target sustainably.” Private equity could be particularly vulnerable to a fall in asset prices, BoE officials warned, saying; “The extent of transparency around asset valuations, overall levels of leverage, and the complexity and interconnectedness of the sector make assessing financial stability risks difficult.”

 

Financial Times

The Daily Telegraph

The Bank of England is set to conduct a cyber stress test of the UK's financial system to assess its resilience against malicious hacks and potential ripple effects. The stress test will also evaluate the vulnerabilities of banks' increasing use of cloud computing and the potential threat to UK financial stability if disrupted. Experts have warned that the impact of a cyber attack has become even more of a concern due to rapidly advancing AI technology and the shift toward digital banking. The cyber stress test comes after a Bank of England survey found that 80% of firms consider a cyber attack to be the second biggest threat to the UK financial system, with only geopolitical risk flagged higher. Analysis by Lloyds of London suggests that a major attack on a European financial services payments system could lead to losses of £762bn. 

 

The Sun

 

BBC News

The Times

More than a quarter of UK technology businesses are considering selling their company to overseas investors or selling shares abroad due to concerns about domestic infrastructure and skills shortages, according to a survey by Barclays. The study found that 16% of respondents prefer to sell their company to a foreign buyer, while 10% would opt to sell shares abroad. The data highlights the need for Prime Minister Rishi Sunak to convince UK companies to stay and scale up. Despite the survey results, Minister for Tech and the Digital Economy Saqib Bhatti said he remains optimistic about the situation, stating that more companies will choose to stay in the UK. The government has introduced measures to improve the domestic environment for growing companies, including investment tax breaks and new visas. However, the UK has lost ground in terms of capital investment in technology companies compared to other European countries. Funding availability, infrastructure concerns, and talent shortages are seen as being among the factors holding back the growth of UK tech firms.

 

Bloomberg

British businesses have reduced their staffing and wage plans in response to the upcoming increase in the minimum wage, according to a survey conducted by Lloyds Bank which revealed that the measure of staffing plans fell to 27% from the previous month's high of 36%. Additionally, the share of firms expecting to increase wages by 3% or more over the next year also decreased slightly. The impending minimum wage rise is causing concern for businesses, particularly smaller firms, according to the survey. The survey also showed that overall business confidence remained at a net 42%. The introduction of the minimum wage 25 years ago has been hailed as a successful economic policy, with low earners now earning £6,000 more than they would have without the minimum wage. The share of workers on low pay has also decreased significantly, and Britain's minimum wage is now one of the highest among advanced economies.

 

Reuters

European Union countries' budget cuts have reduced staff in public administration and delayed the adoption of new technologies, hindering the transition to a green and digital economy, according to Elisa Ferreira, European commissioner for cohesion and reforms. Ferreira emphasised the need for public administration to adapt and utilise green budgeting and artificial intelligence, but acknowledged that it often lacks the means to do so. The European Union has allocated a fund to help member countries prepare for future challenges and carry out reforms. The European Commission has selected 170 projects for 2024, with a focus on the green transition and digital shift. The EU aims to support public authorities in green budgeting and strengthen them, although this may not necessarily involve hiring more staff.

 

Reuters

Britain's software industry is urging the government to provide more support, including tax incentives and talent visas. Over 120 industry leaders are calling for government intervention to improve conditions for European software companies. A new policy document highlights Europe's struggle to scale up tech companies compared to the US. Phill Robinson, founder of industry body Boardwave, shared the report with Britain's technology minister, warning that mid-sized software companies have received little government attention. The recommendations include expanding talent visa schemes and introducing bigger tax allowances for research and development spending. The report also suggests the creation of a continent-wide stock exchange. The campaign has support from CEOs and venture partners in the industry. Boardwave is pursuing talks with the French and German governments for further support.

 

Reuters

Experts warn that up to 8m British workers could lose their jobs to artificial intelligence (AI) within the next five years. A study by the Institute for Public Policy Research (IPPR) found that nearly 60% of current human tasks could be automated. Jobs most at risk include human resources staff, secretaries, call centre agents, salespeople, and authors. Barristers, electricians, plumbers, carpenters, bricklayers, teachers, dentists, and doctors are among the least at risk. The IPPR suggests that the government should tax AI computers and encourage people to pursue jobs less likely to be replaced by AI, such as nursing. The worst-case scenario would result in 7.9m job losses and no economic benefit. Carsten Jung of the IPPR urged employers, unions and ministers to manage AI well to avoid a “jobs apocalypse,” adding: “If they don't act soon, it may be too late.”

 

Sky News

Mirror.co.uk

Compliance software provider Avetta has attracted interest from private equity firms, including EQT AB and Warburg Pincus, as well as Bain Capital. Avetta, which operates a cloud-based supply chain risk management and commercial marketplace platform, could be valued at over $3bn in a potential sale. The company's projected 2024 earnings before interest, tax, depreciation, and amortization is around $125m. Deliberations are ongoing and there is no certainty of a transaction. Avetta's owner, Welsh Carson Anderson & Stowe, is working with a financial adviser to gauge interest in the company. Avetta recently launched an OpenAI-powered "risk assistant" to enhance contractor compliance and safety.

 

Bloomberg

Major UK fast fashion retailers, including Asos, Boohoo, and Asda's George, have agreed to change their environmental claims after being accused of greenwashing by the UK Competition and Markets Authority (CMA). The retailers have signed agreements with the CMA to use only accurate and clear green claims, avoiding vague terms and misleading imagery. Sarah Cardell, chief executive of the CMA, stated that these commitments set a benchmark for the fashion industry and expects other retailers to review their practices. "The millions of people who shop with these well-known businesses can now have confidence in the green claims they see," she added.

 

BBC News

Bloomberg

Reuters

Sébastien de Montessus, the sacked CEO of Endeavour Mining, has been implicated in $15m of disguised payments made to an unknown entity in the UAE. The firm accused the ousted chief executive of "concealing his actions with repeated false representations to management, the Board and auditors.” An investigation by EY and law firm Linklaters found that Mr de Montessus transferred the money in 2020 and 2021, but the recipient remains unidentified as the “entity was liquidated immediately after the funds were transferred.” Endeavour Mining fired Mr de Montessus in January after alleging he made an irregular payment of $5.9m to an unknown third party. Endeavour, which has clawed back remuneration totalling almost $30m from Mr De Montessus, plans to recover bonuses and shares awarded to its former CEO.

 

Financial Times

The Daily Telegraph

The Times

The first City trader to be jailed for rigging Libor interest rates has lost his appeal against his conviction. Former Citigroup and UBS trader Tom Hayes was handed a 14-year jail sentence - cut to 11 years on appeal – in 2015. His case was referred to the Court of Appeal by the Criminal Cases Review Commission and lawyers argued that judges should follow the approach of a US appeals court which overturned the convictions of two former Deutsche Bank traders' convictions for Libor rigging. The Serious Fraud Office opposed the appeals made by Mr Hayes and Carlo Palombo, who was jailed for four years in 2019 over rigging the Euribor interest rates. The court upheld the safety of their convictions, saying the ruling in the US was not relevant to English law. The traders say they will now apply to take their cases to the Supreme Court. 

 

Sky News

BBC News

The Times

Businesses are experiencing court delays of nearly 20 months as backlogs increase following the pandemic. Civil case delays have risen 40% from an average of 61 weeks in 2019 to 85.7 weeks in 2023. Criminal case backlogs have also grown significantly. The delays could have serious consequences for businesses, including hefty costs and financial planning uncertainty, while the reputation of businesses subjected to false civil claims may also be affected. Calls have been made for greater use of virtual technology and AI to speed up the process. The use of virtual courts has the potential to tackle delays, according to the majority of respondents in a Thomson Reuters survey. Some 82% of respondents said virtual courts could help tackle delays, up from 76% two years ago.

 

The Daily Telegraph

The British Chamber of Commerce (BCC) says improving trading terms with the EU could encourage trade and boost the economy. Data shows that goods exports have under-performed the G7 average by 15% since 2020. Although services exports have held up better, the BCC said restrictions on trade with the EU mean there are “stronger headwinds” to service exporters than a decade ago. Office for Budget Responsibility data shows that while overall trade intensity has fallen by 1.7% compared with 2019, the G7 average has increased by 1.9%. Martha Lane Fox, president of the BCC and chair of the Business Council, said that the issue is “about much more than Brexit,” but noted that the UK's exit from the EU "casts a long shadow.” She argued that politicians “must be bolder in their decision making . . . They must set out a strategy on how we mange EU regulation and, where it makes sense, to diverge so that British business can benefit.” The BCC has recommended that primary regulations on traded goods should mirror the EU’s in order to keep business costs low, arguing that there should be “strong arrangements” for co-operation between the EU and UK to minimise compliance frictions.

 

City AM

The Financial Conduct Authority (FCA) has issued a warning to insurance firms after finding that some are undervaluing written-off or stolen vehicles when settling claims. The FCA found evidence that customers were being offered settlements below the vehicle's fair market value, with offers only improved if the customer challenged them. This is not the first time the watchdog has warned the sector over claim values and says it is ready to take action, including public censure and financial penalties. Sheldon Mills, the FCA's executive director for consumers and competition, said: “We expect all motor insurers to take note of our findings and we are engaging directly with those that have issues that need to be addressed."

 

Sky News

City AM

 

The Daily Telegraph

The FT reports that a government decision to hold the National Living Wage steady as a share of average earnings will come as a relief to businesses after a period of rapid increases.

 

Financial Times