Rising Employment sees incomes hit new peak
Average UK income moved above its 2009-10 peak in 2014-15, official figures show, due to an rise in the number of people in work. The average net income of all households was up 3% after inflation, meaning average income, before housing costs, reached £473 a week or around £24,600 a year, said the Department for Work and Pensions. This reversed falls during the financial crisis, but the impact of Brexit on future earnings is an unknown.
BHS collapse goes under the spotlight
The accountancy regulator has opened an investigation into professional services firm PwC’s audit of collapsed retailer BHS. The Financial Reporting Council (FRC) said its probe was into the year ending 30th August 2014, when BHS was still owned by Sir Philip Green. He sold the chain for a pound and it collapsed just 13 months later.
If the FRC finds evidence of misconduct the watchdog will refer the case to an independent tribunal. If that tribunal agrees with the FRC’s conclusion it can levy fines and exclude individuals from the accountancy profession.
Discount supermarkets continue to flourish
Almost 60% of British shoppers have been to Aldi or Lidl over the past 12 weeks, claims a study showing how discounters continue to hit the big supermarkets. The pair continue to make inroads in the supermarket wars with a record 10.5% joint share of the grocery market in the three months to mid-June. Lidl’s sales have risen by 13.8% and Aldi’s by 11.5% on a year ago.
The performance of the ‘big four’ supermarkets over the same period was disappointing. Sales at Britain’s biggest supermarket, Tesco, dropped 1.3%, Morrisons’ fell 2.4%, Sainsbury’s 1.4% and at Asda they were down 5.9%.
Pension funds take a hit as gilts suffer
Pension deficits could balloon after a collapse in the interest rate paid on government bonds (gilts). Investors poured cash into the bonds after Brexit as they sought safe havens from market turmoil. When government bond prices rise the yield – the fixed price payable on the bond – falls. Gilt yields are used by actuaries to calculate how much money a pension scheme needs to meet future liabilities and a fall in the rate means a company needs more now than it had previously calculated.
“Final salary scheme employ-ers and trustees should brace themselves for unwelcome news on scheme valuations,” said Hargreaves Lansdown pensions expert Tom McPhail.
Big buying decisions put on ice after referendum shock
People spooked by the shock vote to leave the EU are ditching plans to buy homes, putting big purchases on ice, and looking for work abroad. The short-term panic triggered in financial markets following Britain’s decision to quit the EU has started to ripple down to everyday decision-making, as consumers brace themselves for sustained uncertainty. One estate agent said there was an 11% rise in people pulling out of property deals compared with the final weekend of June 2015.
Searches for jobs in other countries spiked in the immediate aftermath of the decision, with Ireland a popular alternative to the UK.
New Zealand offers trade negotiators to ease UK’s EU pullout
New Zealand has offered its top trade negotiators to the UK, as it prepares to seek new deals with countries across the globe. The Commonwealth country offered to loan staff to the British civil service, which has few trade negotiators. Wellington’s support came alongside an offer to discuss a trade agreement with the UK, which would help Britain get out of the starting blocks and begin replacing the trade access lost as a result of the Brexit vote.
Lord Price, minister for trade and investment, said the Government has around 40 trade negotiators, compared with 550 employed by the EU. Whitehall has outsourced trade powers to Brussels for 43 years, meaning negotiators employed by the Government have dwindled.
Savers’ nest eggs still protected after Brexit
Post Brexit, savers will continue to benefit from the same protection if their bank or building society goes bust, but after the UK exits the EU they could face changes to how much compensation they receive and have more hassle claiming their money back. At present, under EU law, savers are entitled to up to 100,000. This gives UK savers £75,000 protection (£150,000 on joint accounts) under the Financial Services Compensation Scheme.
EU rules also give up to £1m cover if you have a ‘temporary high balance’ in an account, for example from selling property. This extra cover lasts for six months after the money lands in the account. The EU forces banks and building societies to pay out within seven working days. This is one of thousands of examples of consumer-friendly EU legislation the Government will have to decide if it wants to continue. Other examples are the scrapping of roaming charges for mobile phones and compensation for delayed flights within the EU.