FINANCIAL TIMES
Pension income hit by new round of QE
By Josephine Cumbo
Savers approaching retirement now face difficult decisions over how – and when – to take their pension income, as annuity rates are set to be driven lower by the latest economic stimulus measures from the Bank of England.
This warning came from pension advisers after the Bank of England extended its asset purchase programme, known as quantitative easing (QE), by a further £50bn on Thursday. An unwelcome side-effect of QE has been to drive up the price of gilts, pushing their yields down to record lows – and, with them, the income paid by pension annuities.
Savers in personal or workplace defined-contribution pensions typically use their accumulated funds to buy annuities, which provide an annual income in retirement. However, as annuity income is partly determined by gilt yields, the income offered to those approaching retirement has fallen by 20 per cent in the past three years.
Hundreds of thousands of individuals who have bought lifetime annuities since QE began have locked into lower rates for the rest of their lives.
DAILY EXPRESS
Pensions wrecked by new 27% cut
By Sarah O’Grady
Britain’s pension system is in meltdown, with retirement payouts slashed 27 per cent in just four years.
Experts say the Bank of England’s policy of printing money to ease the country through the recession has destroyed the pensions industry and “impoverished more than a million pensioners”.
And yesterday, in a fresh blow, the Bank’s policy makers agreed to more quantitative easing (QE), pumping an extra £50billion into the economy and boosting the money supply to £375billion.
William Hunter, director of Hunter Wealth Management, said: “The economy may need more QE, but pensioners need it like a hole in the head.
THE GUARDIAN
Europe and China cut interest rates while Bank of England extends QE
By Phillip Inman
Central banks around the world signalled their determination to stimulate the flagging global economy on Thursday yesterday, with the injection of £50bn of electronic money into the UK and interest rate cuts in the eurozone and China.
The Bank of England warned that recovery was at risk without a boost to its programme of quantitative easing after a flurry of economic surveys showed the double-dip recession could stretch into the autumn.
Not since the financial crash of 2008 has the world economy appeared to be going into reverse, but a downturn in the US and key Asian economies following the euro crisis has sapped the life out of global trade.
The Bank of England's monetary policy committee, which sets interest rate policy, said that the total amount of QE would rise to £375bn, while the base interest rate would remain at 0.5%.
It said the eurozone crisis was continuing to batter business confidence, despite a deal struck last weekend that calmed market fears of a euro collapse.
THE SUN
Rate-fix banks face £4.5bn bill
Massive cost of Barclays scandal
By Steve Hawkes
Barclays faces a possible £4.5bn bill from the Libor-fixing scandal that has ripped the bank apart, a top City guru has warned. The influential analyst last night said the cost of civil lawsuits against Barclays and other top banks caught up in the rate fiddling could be “material”. Nomura’s Chintan Joshi said on average each bank faced a £4.5billion bill.
But it could be far higher given the huge size of the loans based on Libor rates that banks are accused of manipulating.
Mr Joshi said: “The losses could be considerable. Our main thought at this stage is that if this issue is the size of PPI, that would be a positive outcome for the industry.”
The blast came amid fresh warnings that up to 15 top banks around the world will be dragged into the scandal that has rocked Barclays. Sources claimed RBS will be the next UK bank to be fined, followed by Halifax Bank of Scotland, now part of Lloyds.
But the Financial Services Authority is not understood to be investigating HSBC, in a possible lifeline for chief exec Stuart Gulliver.
bbc.co.uk
Airlines include debit card charges in headline price
Twelve airlines, including Easyjet and Ryanair, have agreed to include debit card charges in headline prices, rather than adding an additional surcharge at the end of the online booking process.
The move follows enforcement action by the Office of Fair Trading (OFT).
The airlines have also agreed to make any charges for credit cards clear in the early stages of booking.
The government is looking at legislation to ensure companies across all sectors follow suit. Ryanair's £6 per flight administrative fee will be included in advertised prices by 1 August and will be included in the firm's website headline prices by 1 December. Easyjet is further ahead in the process and was already including its £9 per booking charge in advertised prices, according to the OFT.
DAILY MAIL
House prices bounce £1,500 in June, but Halifax warns stagnant market lies ahead despite 'marked improvement'
House prices bounced by more than £1,500 in June, Halifax has reported, but homeowners have been warned that stagnation still lies ahead.
The average property rose 1 per cent in June, as volatile monthly figures continued to deliver surprise reports from the Halifax index.
However, while Britain’s biggest mortgage lender said there had been ‘a marked improvement’ in house prices over the past 12 months, it cautioned that property values were unlikely to rise this year and sales would not pick up from their low level.
Halifax’s chief economist Martin Ellis said: ‘Continuing low levels of mortgage payments relative to income and recent increases in employment may have helped support house prices so far this year.
We expect little change in prices and sales over the remainder of the year provided that the UK's economic outlook does not deteriorate significantly.’
The average property is now worth £162,417, up 0.5 per cent on a year ago.
THE TELEGRAPH
Libor scandal: Barclays prepares for showdown with Bob Diamond over £25m pay-off
By Louise Armitstead and Philip Aldrick
The bank's board called a late meeting to review the terms of his contract and decide the bank's legal position in regard to Mr Diamond's £18m of unvested share options and £4m-plus of benefits.
He is also due more than £2m in lieu of a year's salary and pension after being ejected from the bank on the direction of the Bank of England Governor over the Libor scandal.
A source close to the board said: "Barclays needs to establish where it stands legally with regards to Bob's contract and entitlements. The bank is fully aware of the high emotions around this and the need for there not to be any false moves."
The board is expected to discuss the terms of the internal third party review into the bank's culture, to be led by deputy chairman Sir Mike Rake, as well as possible claw-backs for others involved in interest rate rigging, which resulted in a £290m fine for Barclays.
THE TIMES
Regulator warned Barclays of failings
By Patrick Hosking, Roland Watson
The directors of Barclays were warned in person five months ago by a senior regulator to address shortcomings in the bank’s aggressive culture.
Andrew Bailey, the highest-ranking bank supervisor in the City, attended a Barclays board meeting in February to say that the company’s sometimes buccaneering culture was unacceptable.
Bob Diamond, the ousted Barclays chief executive, said this week that there was no systemic problem at the bank and that recent scandals were isolated cases.
Details of Mr Bailey’s comments came on the day that Labour and the Conservatives papered over deep divisions to agree a six-month parliamentary inquiry into the rate-rigging scandal.
After an ill-tempered Commons debate yesterday, Ed Balls, the Shadow Chancellor, offered qualified support and vowed to continue pressing for a separate judge-led investigation into the wider culture of banking.
But the agreement was sufficient for Andrew Tyrie, the Tory chairman of the Treasury Select Committee, to take on the role of chairing the new panel of MPs and peers.
www.cityam.com
Takeover Panel eyes pensions
By Katie Hope
The Takeover Panel yesterday proposed a series of rule changes aimed at protecting pension funds in bid situations.
The proposals, which are open for consultation until the end of September, would force a potential bidder for a company to publicly state what it would do with the pension scheme if it wins control.
The new rules would also extend the same rights to pensioners as employees of the firm to be notified of a bidder’s plans. The changes also aim to make it easier for scheme trustees to complain if they feel a takeover could hurt their members.
THE INDEPENDENT
CBI attacks Government green business 'mistakes'
By Tom Bawden
The CBI launched a forceful attack on the Government's green business record yesterday, accusing it of driving desperately needed investors away and urging it to underwrite costly but essential low-carbon developments.
In his most strongly critical comments of the Government to date, the CBI director-general, John Cridland, said it had "made quite a collection of mistakes" in green business policy, which have caused "my frustrations to bubble over" and potential investors to baulk at committing capital.
The UK's green business sector was worth £122bn in the year to 31 March, 2011, representing 8 per cent of GDP, according to new figures from the CBI.
The CBI predicts the green business sector has the potential to jump to £146bn a year by 2014 with the right policies, but is concerned it will only crawl up to £126bn because the Government has put off investors by changing key tax and subsidy levels.
