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UK retail sales rose by more than expected in June, rebounding from May’s decline, according to the Office for National Statistics (ONS). The quantity of goods bought rose by 0.6% in June from May, which was stronger growth than economists had been expecting.
The rise was driven by strong sales of household goods, clothing and shoes. That compensated for falling sales at supermarkets and other sellers of food and drinks. “A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales this month,” ONS statistician Kate Davies said.

Retail sales rose by 1.5% in the three months to the end of June, which wipes out the 1.4% slide in sales over the first three months of the year. Economists prefer to look at figures over three months, which smooth out volatile moves from month to month. “We shouldn’t get too carried away by these figures. After all, the retail sales figures are very volatile on a month-by-month basis. And the heatwave in June provided a boost to clothing sales that may not be sustained,” said Paul Hollingsworth, UK economist at Capital Economics.

Other economists argue the figures should have been even stronger. “Last month was the fifth warmest June since 1910, and food and clothing sales usually surge when the temperature is unusually high in the summer,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. “The increase in retail sales in June was relatively modest, given the temporary support to demand from the unusually warm weather.” Economists are keeping a close eye on spending by UK shoppers as it has been supporting the overall economy. But with inflation now running ahead of wage growth, there have been concerns of a slowdown in spending. “The outlook of falling real wages and tightening credit conditions suggest that retail sales will struggle to retain Q2′s vigour in the second half of this year,” Mr Tombs said.

Next week, figures will be released on second quarter growth in the UK. Growth could “perk-up” from the first quarter figure of 0.2% according to Chris Williamson from IHS Markit. However, Mr Tombs from Capital Economics doubts there will be much improvement, given other weak economic data.

Profits at US bank Morgan Stanley increased 11% year-on-year in the second quarter, with gains across its business. The firm also weathered a decline in bond trading better than rivals, reporting a 4% revenue fall in that business. Profits were $1.8bn in the quarter, on revenues of more than $9.5bn. Revenues increased 7% year-on-year. Shares climbed 2.7% in morning trade.

Chief executive James Gorman said the earnings showed “the resilience of our franchise in a subdued trading environment”. The firm’s investment management unit, the smallest segment of the business, showed the strongest gains, with a 14% year-on-year rise in revenue. While Morgan Stanley has grown on an annual basis, its revenues dipped 2% from the previous quarter. Morgan Stanley said client optimism had dimmed since the start of the year, but it expected US policy changes, including interest rate increases and financial deregulation, to help boost future growth.

Bond trading revenues at Goldman Sachs slid 40% in the second quarter, echoing similar declines at other US banks. Revenue from trading fixed income, commodities and currencies was $1.16bn as the US increased interest rates and cut back on bond buying. Total net revenues for the first half rose 12% to $15.91bn. Separately, profits at rival Bank of America were boosted by tighter US interest rate policy.

Goldman posted profits of $1.83bn for the quarter, down from the $2.2bn reported in the first three months of 2017 and only slightly higher than the $1.82bn it reported for the same quarter last year. Chief executive Lloyd Blankfein said the “mixed operating environment” continued into the second quarter. “Against that backdrop, we produced revenue growth and improved profitability for the first half of 2017, reflecting both the diversity and strength of our global businesses.” Goldman said it ranked first in worldwide mergers and acquisitions for the year-to-date and was also number one for issuing company shares. It got a critical boost from private equity investments. But Goldman’s commodities business had its worst quarter, continuing a slide that has previously alarmed investors. “This is something that all of us are evaluating and making changes and working on,” said Martin Chavez, the chief financial officer. “We know we need to do better.”

Shares in Goldman fell 2.3% in New York to $223.84. Goldman, one of Wall Street’s most most famous financial institutions, escaped from the financial crisis relatively unscathed. But its growth has been more limited in recent quarters, due partly to difficulties in its fixed income, currency and commodities unit. Mr Chavez said demand from active investors had traditionally driven that business, but those companies have pulled back amid relatively low market fluctuation.

Active management firms are also under pressure as investors switch funds away from expensive stock-pickers to passive funds that track indexes such as the S&P 500. Mr Chavez also said Goldman’s own performance in commodities – a business many of its rivals have shifted away from in recent years – has been weak. “We didn’t navigate the market as well as we aspire to or as well as we have in the past,” he said.

At Bank of America, net profit for the second quarter was $4.9bn, 11% higher than for the same period a year ago. Much of the increase in profit was due to a rise in net interest income following a rise in US interest rates. The firm said growth in mobile banking – which has lower costs – has also helped its bottom line. Bank of America chief executive Brian Moynihan said: “Against modest economic growth of 2%, we had one of the strongest quarters in our history.”

Brentford Football Club has entered a partnership with Curtis Sport to be the Official Programme Supplier for the next three seasons. The experienced print and sports specialist will have responsibility for the sales and distribution of Brentford FC’s matchday programme, which will be redesigned for the new season. There will also be a new Programme Editor this season with Sam Marshall, newly appointed to the Club’s Communications team, taking on the role.

Curtis Sport produces matchday programmes for sporting organisations across the country. They work with football clubs including West Bromwich Albion, Aberdeen and Millwall and well as Rugby League, Rugby Union and speedway teams. The West Midlands based firm will be designing and printing the programme as well as taking responsibility for matchday and online sales. The Club will maintain control of the editorial content.

The UK’s inflation rate dropped unexpectedly to 2.6% in June, down from 2.9% in May, official figures have shown. It is the first fall in the rate since October 2016 and was largely down to lower petrol and diesel prices. Fuel prices fell for the fourth month in a row in June, according to the Office for National Statistics. Economists say the fall in inflation could ease pressure on the Bank of England to raise interest rates. The UK inflation rate has risen sharply since the referendum on membership of the European Union last June, partly due to an increase in the cost of imported goods following the fall in the value of the pound.

“These numbers are a real surprise, showing the first drop in inflation since autumn 2016,” said Lucy O’Carroll, chief economist at Aberdeen Asset Management. “This is going to kill the chances of a rate rise in the short term. We’ll learn more about the Bank of England’s thinking in a couple of weeks, but we can expect the calls for a rate rise to reduce to a whimper.”

But June’s fall in inflation is a blip, according to some economists. “We have not necessarily passed the peak of inflation,” said Andrew Sentance, senior economic adviser at PwC. “Oil prices are volatile and could bounce back later this year. Meanwhile, the big fall in the value of the pound since last summer is still working its way through the pipeline and has not yet fully fed through into shop prices.” Another measure of inflation, the Retail Prices Index (RPI), edged lower from an annual rate of 3.7% in May to 3.5% in June. RPI is used to calculate the interest rate for student loans, for example. The ONS also reports a version of consumer price inflation that includes housing costs known as CPIH. That rate fell to 2.6% in June from 2.7% in May. Also contributing to June’s fall in inflation was a decline in prices for recreational and cultural goods, which includes items such as toys, computer games and sports events.

Despite June’s fall, inflation is still running ahead of average wage growth, which stands at 2% excluding bonuses. That is eroding the value of people’s pay, something the Bank of England has been keeping a close eye on. Last month, the Bank’s governor, Mark Carney, said that “anaemic” wage growth one of the reasons why he was not supporting a rise in interest rates. While Mr Carney is not keen to raise interest rates, other members of the Monetary Policy Committee think the time has come to make a move. In last month’s meeting three members out of eight voted in favour of a rate rise from the current level of 0.25%.

The new plastic £10 note has been unveiled by Bank of England governor Mark Carney at Winchester Cathedral. The note, which follows the polymer £5, will be issued on 14 September and has a portrait of Jane Austen on the 200th anniversary of the author’s death. It is also the first Bank of England note to include a tactile feature to help visually impaired people. Meanwhile, a limited supply of a new £2 coin honouring Jane Austen has been put into circulation by the Royal Mint. The coin will initially only be available in tills at key locations in the Winchester and Basingstoke areas that have connections with Austen, including Winchester Cathedral and the Jane Austen House Museum. It will be circulated more widely across the UK later this year.

The £10 note will be made of the same material as the £5 note, which means it also contains some traces of animal fat – an issue which caused concern for vegans and some religious groups when it was launched last September. A petition to ban the note attracted more than 100,000 signatures but the new £10 will again contain some tallow, which is derived from meat products.

The Jane Austen quote on the note from Pride and Prejudice has also attracted some unfavourable comment. The quotation: “I declare after all there is no enjoyment like reading!” is uttered by a character called Caroline Bingley who in fact has no interest in books and is merely trying to impress Mr Darcy, a potential suitor. But Mr Carney defended the choice. “It captures much of her [Jane Austen's] spirit, at least in my mind,” he said. “It draws out some of the essence of some of her social satire and her insight into people’s character. So it works on multiple levels.” A new polymer £20 featuring artist JMW Turner is due to be issued by 2020, but there are no plans to replace the current £50 note, which was released in 2011.

The Bank of England says the new £10 notes contain sophisticated security features and are expected to last five years, which is two-and-a-half times longer than the current note.
Security features of new £10 note: A see-through window featuring the Queen’s portrait.
Winchester Cathedral shown in gold foil on the front of the note and silver on the back.
A quill at the side of the window which changes from purple to orange. A hologram which contains the word “Ten” and changes to “Pounds” when the note is tilted. A hologram of the coronation crown which appears 3D and multi-coloured when the note is tilted.
A book-shaped copper foil patch which contains the letters JA. Micro-lettering beneath the Queen’s portrait with tiny letters and numbers that are visible under a microscope. The words “Bank of England” printed in intaglio (raised ink) along the top of the note.

The tactile feature was developed in conjunction with the Royal National Institute of Blind People (RNIB) and is a series of raised dots in the top left-hand corner of each note. Bank notes are already in tiered sizes, and have bold numerals, raised print and differing colours to help blind and partially sighted people. Launching the note in Winchester Cathedral, Austen’s final resting place, Mr Carney paid tribute to the author, saying: “The new £10 note celebrates Jane Austen’s work. Austen’s novels have a universal appeal and speak as powerfully today as they did when they were first published.”

Victoria Cleland, the Bank’s chief cashier, said: “The new £10 note marks the next exciting step in our introduction of cleaner, safer, stronger polymer banknotes, and I am grateful to the cash industry for their work towards a smooth transition.” The design of the note includes the quote “I declare after all there is no enjoyment like reading!” from Austen’s novel Pride and Prejudice and a portrait of the novelist based on an original sketch drawn by her sister Cassandra.

Meanwhile, the Austen £2 coin, designed by Royal Mint graphic designer Dominique Evans, features Austen’s silhouette, set in a period frame against a backdrop of Regency wallpaper. Ms Evans said: “I imagined Jane Austen’s framed silhouette as if it were in one of the houses featured in her books, on the wall of a corridor as guests passed by to attend a dance, perhaps in Pride and Prejudice, or on the wall in the home of Emma.” Austen had her first novel Sense and Sensibility published anonymously in 1811 at the age of 35.

The Bank of Scotland unveiled the design of its new plastic £10 note at the end of May. Featuring Scottish novelist and poet Sir Walter Scott alongside The Mound in Edinburgh on the front and the Glenfinnan Viaduct on the back, it also has a picture of a steam locomotive hauling a heritage tourist train. The note is due to come into circulation in the autumn.

 

Visa has said it is considering offering incentives to UK businesses to go cashless, after introducing a similar scheme in the US. The payments company is selecting 50 small companies in the US to receive $10,000 if they only use cards.

The companies have to bid for the money by explaining how going cashless would affect them, their staff and customers. However, the idea has been criticised by consumer groups, who say cash is still vital for many people. “It is easy to categorise it as a bribe, but ultimately they are incentivising companies to do away with cash, and that’s not the job of people like Visa,” said James Daley of consumer group Fairer Finance. In any case, the offer could be of limited appeal to many retailers, who have to pay fees every time a customer uses a debit or credit card. Even though interchange fees, as they are called, have been capped by the EU, retailers still pay an average of 16p on each credit card transaction, and 5.5p on each debit card. In total UK retailers still paid £800m in such fees last year, charges that have been criticised by the British Retail Consortium (BRC).

Cards have already overtaken cash for retail payments, according to figures for last year from the BRC. But banks and card companies should not be driving that move, Mr Daley said. “In 50 years it seems unlikely that most of us will be using cash. But banks need to let evolution follow its natural course, rather than accelerating it,” he told the BBC. “As a responsible society we need to look after vulnerable customers who rely on cash.” Last month Victoria Cleland, the Bank of England’s chief cashier, said that 2.7 million people in the UK rely almost entirely on cash – that’s 5% of adults. Nevertheless at least one cafe in London – Browns of Brockley -has already gone cashless.

In a statement, Visa said that following the launch of the scheme in the US, “we hope to bring similar cashless initiatives to other countries, including the UK”. “At this time, we do not have a firm plan on when such an initiative would be available in the UK.” In June this year, Visa chief executive Al Kelly told investors that the company was “focused on putting cash out of business”. “The number one growth lever [for the company] is the conversion of cheque and cash to digital and electronic payments.”

Train passengers will soon be able to judge the punctuality of their journeys with much greater accuracy. From Tuesday, the industry trade body, the Rail Delivery Group, is publishing average national punctuality statistics to the minute, not just to within five or 10 minutes of planned arrival times. From next spring train operators will do the same for each of their own routes. That will let passengers scrutinise the punctuality of individual journeys.

The new data will also be published for the punctuality of trains stopping at intermediate stations, not just their final destinations, using GPS technology. Paul Plummer, the chief executive of the Rail Delivery Group (RDG), said: “By adopting the most transparent measure in Europe, we want passengers to know that rail companies are putting an even greater focus on ensuring that trains are meeting the timetable, arriving to the minute and at stations along a journey.” On its own, the new measure will not necessarily lead to trains arriving with greater punctuality. But Mr Plummer said he hoped it would encourage operators to put greater emphasis on arriving to the minute. “We are pushing ourselves to drive better punctuality because it will help to deliver a more reliable railway for the whole of Britain,” he said.

Currently trains are judged to be on time officially if they arrive within five or even 10 minutes of their scheduled arrival time. Looking at the figures for 28 May to 24 June this year, this suggested that 92% or even 97% of trains were on time time. But measuring arrivals to the minute, this figure fell sharply to just 65%, though 35% were in fact early. The number of cancellations will also be measured and made available on the website My Train Journey.

The changes were welcomed by the rail watchdog Transport Focus. Its chief executive, Anthony Smith, said: “Passengers want a reliable, on-time train service. How that performance is measured and reported should, our research shows, closely mirror passengers real life experience otherwise trust will not be built up.” “So, it is good to see the rail industry reporting on time performance at many more stations.”

The gap between the richest and poorest households in the UK has narrowed since the recession of 2007-08, according to the Institute for Fiscal Studies (IFS). In its latest report on living standards, the IFS said rising employment and sharp falls in income in the middle and top earning households was behind the decline in inequality. There had been a “dramatic” fall in inequality in London, the IFS said. However, the capital is still the most unequal region in the UK. “While London remains the most unequal part of the country, inequality in the capital has seen a dramatic decline over the last decade,” said Agnes Norris Keiller, a research economist at the IFS. The report found that there was a particular narrowing in inequality in 2007-08 and 2011-12, but since then, the situation had not changed much.

Analysis: Theo Leggett, business correspondent, Inequality is falling, but that doesn’t mean living standards are rising a great deal. Here’s why. Incomes have declined among the highest earners, many of whom work in the finance and insurance industries. That’s because these sectors were hit hardest by the financial crisis. That brings down the gap between rich and poor. But if someone who once earned £5m per year is now earning £2.5m, they are still pretty rich. And it doesn’t change anything for people on the lowest incomes, who still struggle to make ends meet.

There have been some improvements for people on the lowest incomes – an increased minimum wage and higher benefits, for example. And more people are in employment.
But overall, incomes have barely increased and the level of absolute poverty – defined as people below a fixed level of income, seen as the minimum required to meet their basic needs – has only fallen slightly over the past decade. So inequality may be declining, but there seems to be little cause for celebration. Between 2007 and 2010, increases in benefits helped low-income households, the report showed. A sharp fall in incomes adjusted for inflation between 2009-10 and 2011-12 hit middle and top earners. The report notes that since 2011-12 many benefits for those of working age have risen less than inflation and there has been a slow recovery in incomes. But despite that, inequality has been “largely unchanged” due to employment growth being much stronger than expected. This has boosted the least well-off households the most.

Helen Barnard, head of analysis at the Joseph Rowntree Foundation which commissioned the research, said: “If you look back over the last decade, we’ve [seen] average income stagnating, they aren’t very much higher than they were before the recession. “The progress on reducing poverty has really stalled and what’s now very worrying is we’re now seeing poverty starting to tick up again so those groups for children and pensioners where poverty fell quite a lot for that, we’re starting to see progress starting to be undone.” Other findings in the Living Standards report include: Average median income is only 3.7% higher than in 2007-08, Absolute poverty has changed little over the last decade, the West Midlands is the UK’s lowest income region, the fastest income growth has been in the South East and Scotland.

Tara O’Connor
01:07PM, Thursday 13 July 2017

The Transport Secretary has said the government’s commitment to building a third runway at Heathrow Airport is as ‘strong as ever’. Speaking at an Aviation Club Lunch yesterday, Chris Grayling addressed speculation why it was not included in the Queen’s Speech. He said this is because building a third runway does not need any new primary legislation and added ‘our commitment to the third runway is as strong as ever’. He said: “Right now, we are reviewing the many responses to the consultation on the draft Airports National Policy Statement. “Of course it needs to be done right. We’re not interested in expansion at any cost, but the right scheme at the right price.” Following the speech, Parmjit Dhanda, director of Back Heathrow, called the ‘reaffirmation’ great news. He added: “A new runway at the UK’s biggest port is crucial as we look to navigate Brexit and create a bright, prosperous future outside of the European Union.”