UK Economics Correspondent, London
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Jul 17, 2014

Bank of England says some investment funds less liquid than they look

LONDON, July 17 (Reuters) – Investment funds focused on
emerging economies or high-yield debt may be unable to return
investors’ money promptly if turmoil hits markets, the Bank of
England’s financial stability chief warned on Thursday.

Many investment funds promise to redeem investors’ shares
within a day or two. But BoE Deputy Governor Jon Cunliffe said
this may not be realistic when trouble strikes less liquid
markets and droves of investors want to cut their losses.

Jul 15, 2014

Unexpected jump in inflation hammers UK government bonds

LONDON (Reuters) – British government bonds fell sharply on Tuesday after an unexpected jump in inflation, suffering their heaviest losses relative to German debt in more than six months as investors brought forward rate hike bets.

Official figures showed inflation rose to 1.9 percent in June from a four-and-a-half year low of 1.5 percent the month before, far outstripping economists’ forecasts of a modest rise to 1.6 percent.

Jul 15, 2014

Bank of England condemns UK banks’ mis-selling of rate swaps

LONDON, July 15 (Reuters) – The Bank of England said on
Tuesday that British banks had a “dreadful record” on
mis-selling complex interest rate hedging products to small
businesses and warned that it would keep a close eye on them.

Before the financial crisis, many businesses bought the
products to protect against interest rate rises, but ended up
facing crippling costs after the BoE cut rates to a record-low
0.5 percent in March 2009.

Jul 9, 2014

Bank of England likely to lower estimate of unused capacity – Shafik

LONDON, July 9 (Reuters) – The Bank of England is likely to
lower its estimate of the spare capacity in Britain’s economy
next month, incoming BoE Deputy Governor Minouche Shafik said on
Wednesday – a sign that an interest rate rise is approaching.

The Bank has said it is watching spare capacity closely as
it weighs up when to start raising rates from their record low
of 0.5 percent, and that it plans to raise rates before the
unused capacity reaches zero.

Jul 8, 2014

UK sees surprise slump in May factory output

LONDON, July 8 (Reuters) – British factory output suffered
an unexpected slump in May, echoing a similar decline in German
industrial production, according to official data on Tuesday
that raises questions about the pace of the country’s recovery.

Factory output dropped by 1.3 percent in May, its biggest
fall since January 2013 and in sharp contrast to economists’
forecasts for a solid 0.4 percent increase, the Office for
National Statistics (ONS) said.

Jul 3, 2014

BoE’s Cunliffe says rate hike last line of defence as stability tool

LONDON (Reuters) – Raising British interest rates would be an effective but “very blunt” way of tackling risks to financial stability from booming asset prices, deputy Bank of England governor Jon Cunliffe said on Thursday.

British house prices are rising at their fastest rate in nine years – led by a 26 percent increase in London – prompting some speculation that the central bank may need to raise rates to keep them in check.

Jul 2, 2014

Bank of England’s Haldane says rate rises last defence against bubbles

LONDON, July 2 (Reuters) – Raising interest rates is the
Bank of England’s last line of defence against asset price
bubbles, its chief economist, Andy Haldane, said on Wednesday as
British house prices posted their biggest rise in nine years.

Figures out earlier on Wednesday showed that house prices
have risen by nearly 12 percent in the past year and are more
than 25 percent higher in London – the sharpest increase there
since the eve of the 1987 financial crash.

Jul 2, 2014

UK housing market strengthens further, defies cooling measures

LONDON, July 2 (Reuters) – Britain’s house prices rose at
their fastest rate in nine years and London prices showed their
biggest jump in a generation, data showed on Wednesday, as
measures to curb mortgage lending have yet to have an impact.

Stricter checks on borrowers’ ability to pay back mortgages
were introduced in April and have weighed on the approval of
home loans. Some fear these could become unaffordable when
interest rates eventually rise from a record low.

Jul 1, 2014

Bank of England reveals 2011 euro zone break-up planning

LONDON, July 1 (Reuters) – The Bank of England revealed on
Tuesday how it made a secret recommendation to Britain’s finance
ministry in September 2011 to prepare for the risk of a euro
zone break-up.

The central bank’s Financial Policy Committee – which at the
time was chaired by former governor Mervyn King – said the
finance ministry should plan for how it would rescue Britain’s
banks if they were hit by a country leaving the euro zone.

Jul 1, 2014

Bank of England policymakers differed over mortgage lending cap

LONDON, July 1 (Reuters) – Bank of England policymakers
differed last month over how best to stop home-buyers from
borrowing too much, as they tried to reduce the risks from
rapidly rising house prices and high levels of debt.

A record of their June 17 meeting released on Tuesday also
revealed for the first time discussions between the BoE and
Britain’s finance ministry dating back to September 2011 over
how to protect against the risk of a euro zone break-up.

    • About David

      "David keeps a close watch on the UK economy, the Bank of England and the British government debt market. Previously he worked in Frankfurt, covering the European Central Bank and euro zone economy, and in Brussels where he reported on everything from EU summits to Belgian supermarkets."
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