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European Banks are calling on the European Union to designate them a critically important "strategic" sector, warning that their competitiveness and the bloc's future are at stake, according to a report published on Tuesday. The pitch by the European Banking Federation (EBF) leads a list of 45 policy recommendations that the region's top banking lobby is making ahead of European elections in June. "It is essential to acknowledge the vital and strategic role of banks in Europe's transformation," said Christian Sewing, President of the EBF. The lobby also called for a review of current regulation to judge how it affects not just stability, but also competitiveness and growth. European banks have long warned about over-regulation, but European officials argue that regulation must not be undermined. "Our regulation suffers from death by good intentions. You see that you over-complicate things," said Wim Mijs, CEO of the EBF.

 

Reuters

[REPORT] 2024 IT Risk and Compliance Benchmark Report

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Cyberattacks have been identified as the leading risk for businesses in the next 12 months, according to a study by insurance providers. The study also highlighted AI and cyber, financial risks, regulatory changes, and geopolitical volatility as major risks for the year ahead. Globally, the fear of cyberattacks and ransomware threats ranked as the top business risk for insurers. In Europe, 72% of respondents cited cyberattacks as one of the top three risks, slightly behind financial risks and geopolitical volatility. Regulatory risk was ranked fourth. The study also revealed that emerging technologies like AI were seen as having a 65% likelihood of a major or moderate business impact. The effects of climate change, the transition to carbon neutrality, social unrest, and demographic change were also cited as potential headwinds.

 

FT Adviser

After struggling to raise capital in EU markets, Czech-rooted hospitality software firm Mews has secured funding by registering as a Dutch company. Mews is now considering listing in the US due to the difficulties faced in accessing European markets. The European Commission states that Europe will need €650bn of extra investment per year until 2030 to compete with China and the US. However, the maze of different national laws on bankruptcies, taxation, financial reporting, accounting, and supervision in Europe is deterring private investors. As a result, about €250bn leaves the EU each year, mainly to the US. EU leaders are now determined to give the Capital Markets Union (CMU) a fresh start to address these issues. Removing the preferential treatment of loans in EU tax systems and persuading Europeans to invest in securities are among the measures being considered. Fragmentation has also hindered the growth of venture capital firms in Europe.

 

Reuters

Italian prosecutors have seized €64.7m from Carrefour's Italian unit, GS spa, as part of an investigation into VAT fraud and labour exploitation. The supermarket chain and four of its directors are accused of evading €64.72m in VAT between 2018 and 2022. The alleged fraud involved outsourcing logistics and transport services to "false cooperatives" that do not pay taxes or social security contributions. The practice has been the focus of previous investigations by Milan prosecutors. Other companies mentioned in the investigation include DHL Supply Chain, Uber, UPS, Fiera Milano, and Esselunga. The investigation claims that GS spa illegally deducted over €64m in VAT, while the cooperatives evaded tax and social security payments worth around €110m. The probe states that GS spa's conduct has resulted in the exploitation of workers and significant damage to the inland revenue. Carrefour Italia, the parent company, has not yet commented on the matter.

 

Reuters

MPs campaigning against corruption have called on the government to take action on economic crime. The All-Party Parliamentary Group (APPG) on Anti-Corruption and Responsible Tax has published a manifesto urging the next government to close loopholes in anti-corruption laws and ensure greater transparency of company and property ownership. The MPs also called for a tightening of anti-money laundering regulations and increased resources for enforcement. Conservative MP Nigel Mills, co-chair of the APPG, highlighted the impact of economic crime on honest people and businesses and called for the UK to be "open for business" once again.

 

London Evening Standard

Administrators for collapsed finance firm Greensill Capital have warned they could attempt to seize assets from steel magnate Sanjeev Gupta to recover $587m (£472m) in unpaid funds. GFG Alliance, headed by Mr Gupta, owes £3.7bn to Greensill. Talks over repayment are ongoing, but if they fail, Greensill's administrators, Grant Thornton, will consider recovery options. Non-binding agreements have been signed, but no debt repayments have been made. Greensill filed for insolvency in 2021 after Credit Suisse suspended £7bn of funds. The company's close relationship with Mr Gupta's empire has come under scrutiny amid reports it lent money based on speculative invoices.

 

The Daily Telegraph

Thames Water is preparing to tap debt markets within weeks in an attempt to fund a rescue plan. It is understood the embattled water company is planning to publish a revised five-year spending plan within days, ahead of a deadline next month. The board is expected to meet on Thursday to rubber-stamp the plan, and executives hope to release it on Friday. Sources said the company then intends to wait for up to a week before approaching lenders to fund the proposals and has sought advice from City bankers and lawyers on the debt issuance. Financiers said the proposed timing of the fresh borrowing was surprising, given huge uncertainty around Thames’s future.

 

The Guardian

Superdry has announced a radical three-year restructuring plan that includes leaving the London Stock Exchange and seeking rent reductions for its stores. The company expects the restructuring to result in rent reductions at 39 of its 94 UK sites. The brand has been struggling due to tough retail market conditions and weak wholesale orders. If the restructuring plan is not successful, Superdry may be forced into an insolvency procedure. CEO Julian Dunkerton pointed to a rise in audit fees to £5m from £1m as unsustainable. “When you look at our audit fees or so many of the costs of being a listed company, if you take those out, we'll be in a much better place . . . 80% of my time is spent doing things that I would call non-productive from a brand perspective. It's going to be a lot easier in the private arena,” he said. The company's shares fell by 31% following the announcement.

 

Reuters

The Daily Telegraph

The Times

Former Post Office executive David Miller has admitted that he misled the board about the robustness of the Horizon system in 1999. Miller had previously told an inquiry into the Horizon scandal that he would not have described the system as robust. However, he now admits that if it is noted in the minutes, he must have done so. Miller was in charge of implementing the Horizon system from 1998 to 2000 and later became the chief operations officer. Between 1999 and 2015, the Post Office prosecuted over 700 sub-postmasters using faulty data from the Horizon system. Miller also expressed regret for not notifying the Post Office investigations team and group lawyers about inaccuracies in the system.

 

BBC News

An investigation by the German audit watchdog has found that EY’s audits of collapsed payments group Wirecard were “at the very least” negligent and in some cases grossly negligent.

 

Financial Times

A potential future Labour government must pump more cash into financial regulators to ensure they are properly “resourced,” Tony Blair’s think tank has warned. In a sweeping package of policy recommendations, the Tony Blair Institute for Global Change and tech lobby group the Start-Up Coalition said the UK’s financial tech sector “may have blossomed fast, but it could falter just as quickly” without close attention from lawmakers. Labour has already said it is targeting a shake-up of financial regulation if it is elected to power.

 

City AM

Industry experts have raised concerns over the extra work that The Pensions Regulator's (TPR) statement of strategy proposals will require. Hymans Robertson head of DB actuarial consulting, Laura McLaren, estimates that a typical scheme could add 20% to its valuation costs as a result. Sackers partner, Eleanor Daplyn, warns that the statement looks set to require "extensive" actuarial, investment and covenant input. Association of Professional Pension Trustees (APPT) chair, Harus Rai, argues that the statement of strategy is "very lengthy with endless items of data" and suggests that it should be fulfilled by tweaking and supplementing data collected via the annual Scheme Return. McLaren suggests that the requirements for fast track could be scaled back. "A better approach could be that, once TPR has screened schemes it wishes to investigate further, it can ask for more information where relevant," she suggested.

 

Pensions Age Magazine

Professional Pensions

The UK jobs market is showing signs of stalling as the number of people out of work grew, according to new figures from the Office for National Statistics (ONS). The unemployment rate increased to 4.2% between December and February - the highest level for six months. Meanwhile, the rate of people with a job dipped and the economically inactive - those not in work or looking for employment - ticked higher. Overall, the ONS said the UK's unemployment rate rose from 3.9% in the three months to January and surpassed economists' forecast of an increase to 4%. In total, there were 1.4 million unemployed people in the UK between December and February, it said. However, other figures showed that while average wage growth, excluding bonuses, edged down from 6.1% to 6% it remained far above forecasts. And, when taking inflation into account, real wages rose by 1.9% in the three months to February. This was the highest since the three months to September in 2021.

 

BBC News

The Times

Daily Express

The Sun

The UK economy is expected to stage a modest recovery next year, according to new forecasts from the IMF. Growth is projected to be 0.5% this year and 1.5% in 2025 - a slower expansion than previously forecast. The UK will be the second-slowest performing major economy in this year, with only Germany performing more poorly. The IMF expects continued disinflation to ease financial conditions and support a recovery. The IMF said consumer price inflation in the UK would continue to fall this year, prompting a cut in interest rates from 5.25% to 4.6% by the end of the year and to 3.5% by the end of 2025.

 

The Times

City AM

The Independent UK

Former Bank of England chief economist Andy Haldane has revealed that an early inflation forecast used by the central bank was based on a pencil sketch by a former governor. Writing in the Financial Times, Mr Haldane described economic forecasting as "largely performative, typically opaque, nine parts art to one part science." The revelation that hand drawn projections were used in the early days comes amid intense scrutiny of the Bank's forecasting abilities, following a damning report published last week by former Federal Reserve chairman Ben Bernanke. Incoming deputy governor Clare Lombardelli has promised to "radically reform" the Bank's approach to forecasting and went on to deny any groupthink between the Bank and the Treasury, stating that close links between the two institutions do not threaten the Bank's independence. Lombardelli will join the Monetary Policy Committee, where two out of nine members will have previously worked at the Treasury.

 

Financial Times

The Daily Telegraph

A record 3.7m workers in England will have a major illness by 2040, according to a report by the Health Foundation charity. On current trends, 700,000 more working-age adults will be living with high healthcare needs or substantial risk of mortality by 2040 – up nearly 25% from 2019 levels, according to the research. The Health Foundation warned that without more measures to improve working-age health, the government’s target to improve healthy life expectancy by five years by 2035 will be missed.

 

The Guardian

All trains in the Netherlands will come to a halt for three minutes on Saturday night in protest against attacks on ticket collectors and other rail staff. The action, initiated by the NS and railway workers unions, follows a serious incident where a female ticket collector was assaulted. A minor has been arrested in connection with the attack.

 

DutchNews.nl

Russian Copper Company (RCC) and Chinese firms have found a way to avoid taxes and bypass Western sanctions by trading copper wire rod disguised as scrap. By shredding the wire rod, it becomes difficult to differentiate from scrap, allowing both exporters and importers to profit from differences in tariffs. Russia's lower export duty on copper rod compared to scrap, along with China's lower tax on rod imports, creates a lucrative opportunity. China has become a major destination for Russian companies seeking to export their commodities after the United States imposed sanctions on Russia. The shredded metal is not only harder to identify and trace, but it also helps Chinese manufacturers avoid providing funds to Russia. This tax evasion scheme has raised concerns about the integrity of trade data and the impact of sanctions on business transactions.

 

Reuters

Germany's ruling coalition has agreed on a new climate protection law that offers more flexibility for sectors unable to meet greenhouse emissions targets. The move comes after a top court ruling in 2021 that mandated Germany to tighten its climate protection law. The new law sets more ambitious CO2 reduction targets, aiming for carbon neutrality by 2045. The law ensures that if the country's total CO2 goal is met, sectors struggling to meet their targets will have some leeway. The move is seen as a step towards a greener future and aligns with Germany's commitment to combat climate change. "We need to take decisive action to protect our environment and secure a sustainable future," said Chancellor Olaf Scholz. "It's a win-win situation for businesses and the planet," observed environmental expert Dr. Lisa Müller.

 

Reuters