Britain’s financial status could be downgraded this week amid reports the Bank of England will cut interest rates on Thursday. The Guardian says that the Bank’s Monetary Policy Committee will examine the latest growth forecasts and inflation report, and then make a decision on whether to cut interest. If they do, it will be the first time the rate has changed since it was set at 0.5 per cent in March 2009. Mark Carney, the governor, warned that a vote for Brexit could tip the UK into recession and the figures seem to back up this pessimism, according to the paper. In May, growth was forecast at 2.3 per cent, but economists now believe that it could be as little as less than one per cent. It is expected that the bank will cut interest rates to 0.25 per cent.
RBS is still in trouble, says The Daily Mail. During the second quarter of the year the taxpayer-owned bank remained stuck in the red after a loss of £1bn in the first quarter. Since the financial crisis in 2008, the bank has had a full-year loss every year. What’s more, in the event of a new economic crisis, RBS would be the third-worst hit institution, according to a ‘stress test’ of banks carried out across Europe. The chief financial officer of RBS, Ewen Stevenson, promised to ‘transform RBS into a low risk, resilient bank.’
Sir Philip Green has hit back against the ‘kangaroo court’ investigating the failure of BHS. In a letter to Frank Field MP, chairman of the Work and Pensions Select Committee, Sir Philip insisted that he has not broken the law, and said Field had tried to create a ‘false narrative’. The Independent notes that Field said ‘why the hell doesn’t he [Sir Philip] just sign the cheque?’, in an interview with The Times on Saturday.
Roger Bootle, the executive chairman of Capital Economics, writing in The Telegraph, tells us that the fall of the pound is not necessarily a bad thing. It will eventually boost GDP as businesses and consumers will buy UK products, he says. ‘Nevertheless,’ he adds ‘there are losers as well as winners’ – with those going abroad on holiday clearly amongst the former.
Aldi, the German discount giant, may be faltering in its hitherto capacious growth, says The Times. Data from Kantar Worldpanel shows negative growth in same-store sales. In the 12 weeks to April 24th, sales growth was 12.5 per cent, but in the 12 weeks to July 17th this was down to 11 per cent. The slowdown should ease pressure on Britain’s ‘big four’ supermarket chains. W M Morrison will today announce price cuts of up to 56 per cent in everyday essentials in a bid to fend off the discounters. ‘This is about a bigger trend towards a slowdown among the discounters,’ said Thomas Warren, a retail analyst from Bernstein. ‘Their margins are being squeezed and they are looking at other places to deploy capital to generate growth.’