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The banking industry has seen a rise in consumer confidence for two years in a row, according to a new survey of 32,000 banking customers in 43 countries. The study around the world showed confidence increasing most in India, followed by Saudi Arabia, with confidence falling the most in Ireland and Spain.The survey showed 60% of respondents aren’t planning to close or move their accounts, which, according to Ernst & Young highlights that this isn’t necessarily because they are confident that they are with the right provider, with some respondents stating they a change would be too difficult or time consuming.

“Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors“.

According to another global study the Arts, Entertainment and Hobbies market sector was 60% more competitive January 2014 compared to January 2013 and Financial Services 60% more so, whilst Sports & Recreation was 121% less competitive in January 2014 compared to 2013 in relation to digital advertising

The three months to February saw a highest level since 1998, in the Confederation of British Industry (CBI) quarterly Service Sector Survey.   Optimism indices for consumer services (including hotels, bars, restaurants and leisure) rose to their highest level amongst 139 companies and at the quickest pace since 2005.

The ONS has confirmed the UK economy grew by 0.7% in the Quarter with business investment rising by 2.4% from the previous three-month period and rose 8.5% from a year earlier.

The BBA  (British Bankers Association) has said that mortgage lending was 38% higher in January than a year ago and ‘continues to rise compared to a year earlier’. It is widely expected that the Bank of England  will raise interest rates by the end of next year, with an inevitable knock-on effect on mortgage rates.

Finally, not certain if this is a record or not but Royal Bank of Scotland has lost all the money  invested in it by the taxpayer six years ago with total losses since its bailout now drawn level with the £46bn put in with 81% stake, in 2008 and The Co-op Group’s losses  for 2013 are expected to be greater than £2bn, by far the worst in its history.

Image and Article credits: Copyright SUF 2014 ©

 

 

The latest Bank of England Inflation Report  has altered Bank of England Governor Mark Carney’s Interest Rate Policy since the first Report (August 2013).

Now, reflecting the falling unemployment and economic recovery, policy will be determined by a wider range of indicators other than the previous indicator of unemployment falling to 7% or below. The report says the ‘Bank Rate may need to remain at low levels for some time to come’ and considers ‘economic slack’ being ‘substantially reduced’, in taking a gradual approach to rate increases.  ‘When Bank Rate does begin to rise, the appropriate path so as to eliminate slack over the next two to three years and keep inflation close to the target is expected to be gradual’.  Sterling rose to an almost 3 year high  following the central banks forward guidance.

Although, with the ONS (Office of National Statistics) using some B of E Data, it will be interesting to see how they interpret the effects of the recent floods in their measurements: moving from Cornwall into the Thames Valley, M4 and M3 corridor. Mark Carney has said  although the floods would influence the short-term outlook, there was unlikely to be any effect on overall growth – currently forecast at 3.4 per cent this year.

Will the UK still be seen as being in a bad but improving place?

Image and Article credit: SUF Copyright 2014 ©

With inflation falling to the Bank of England’s 2% target for the first time in four years and numbers from Bank of England Credit Conditions Survey (2013 Q4)  continuing an upward trend, the notion of  ‘positive’ outlook has (for some) been reinforced.

Could it be that Default Rates on lending to small businesses  being reported as ‘fallen significantly in Q4’,  with  medium-sized companies unchanged and large PNFC’s falling over the quarter,  was due to re-structuring of existing facilities being part of the reclassification for 2012?  Alongside a statement which shows spreads on corporate lending falling in Q4, with  ‘significant reductions’ for medium-sized companies and large PNFCs, and a slight reduction for small businesses’ it’s worthy to  question an attribution to re-structures into the figures behind the numbers.

Depending on the questions asked and the answers given some results are ‘not directly comparable’ therefore perhaps some statements are too narrow?  Maybe an insightful survey is one that focuses on the survey participants’ business attitude, their plans and strategy in achieving that objective. Would that offer a stronger perspective and wider field of vision into the UK economy or would it  tell us what’s happening in business rather than what’s happened?

Image credit: Pilot Theatre  Article credit: Copyright SUF 2014 ©

The month of predictions is here… so while we get down to business…. here’s a roundup of what’s being said…

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The Banking Reform Act, ring fencing retail and investment banking, and implementing recommendations of the Parliamentary Commission on Banking standard (including criminal offences for senior bankers misconduct), has become law.

As is said, this is just the beginning.

Although, ring-fenced banks will not be able to hold or own the capital of other non ring-fenced banks etc., it won’t be fully in force for another four years during which a new authorisation process for staff will be introduced and effectiveness reviewed.

And, a banking union plan has been agreed for managing Eurozone banks (UK plus 10 other countries are not part of the plan). The ECB (European Central Bank) has been put in charge of European Union regulation rules for banks in the Eurozone

Image credit: WetWebWork  Article credit: Copyright SUF © 2013

Currently ‘forward guidance’  has been given that, providing unemployment remains above 7%, interest rates will not go above the four year static 0.5%, which theoretically could mean interest rates staying at 0.5% for yet another couple of years, which has been a ‘norm’ for the past few years. Although low rates haven’t proven to assist stagnation in many areas of the economy, would the alternative of raising interest rates encourage growth any quicker…?

Image credit: West Virginia Blue  Article credit: Copyright SUF 2013 ©

The Governor of The Bank of England recently said, of the banking industry, “The cultural issue is fundamentally important. There has to be a change in the culture of these institutions“.

Generally little-understood, retail banking institutions, with business-principled kernels, have sometimes amused the public with their comforting marketing campaign strategies that carry messages of a having a culture that works in their customers’ best interests -  rarely is it heard of many actually doing things the way their customers like.

With vertical management structures, theirs are bureaucratic systems, therefore having a slow-moving culture. Add to that, regulations that make some quicker elements relegated to additional slow processing, the quickest changes seen might be trust becoming increasingly eroded, prudent attitudes being viewed suspiciously and, when reasonable negotiation is unworkable, antagonism compounding the complexity of necessary changes.

Yes Mr Governor - culture is fundamentally important to an institution, comes from the top and, unfortunately, is usually slow to change.

Image credit: Barnaby Kerr Photography  Article credit: Copyright SUF 2013 ©

Mark Carney, the new Governor of the Bank of England, has announced there will be no rise in the Bank of England’s base rate until unemployment is below 7 %;  part of an intermediate target in his ‘forward guidance’ and translated as, we’re unlikely to see a rate rise for about 36 months… or more….

The ONS recently announced that the UK economy has grown by 0.6% (Q2), with surveys and reports simultaneously offering up positive numbers  for some areas of business and house buying but…..  there’s usually a but…..  Yes, any rise following a fall is good to hear (I get knocked down but I get up again) …..but these numbers are pitched against previous falls. Of course it’s welcome news ….but (here we go again) the underlying issue is how far is it to get us standing again?  How far did we fall?  Do the numbers compare to 3 months ago, 6 months ago, or 3 years ago?  Are there any regional differentiations?

When life gets you down, you know whatcha gotta do?  Just keep swimming, just keep swimming, just keep swimming swimming swimming  - Dory

As an Independent and sole trader, Step-Up Finance listens and talks with other business owners and I’ve noticed that a primary common characteristic recurring amongst us is that we adapt our businesses to changes, by taking ‘forward guidance’ as an opportunity, we’re able  to keep moving forwards.

MC’s announcement might sound as though its from the Dory school of philosophy in ‘forward guidance’ but I’m wondering if the ‘guidance’ bit has been tied-off and left to drag behind instead of a contribution to resilience.

Image credit: Melody Campbell    Article credit: Copyright SUF 2013 ©

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