Closing summary
It was a busy day for the week before Christmas.
The International Monetary Fund welcomed progress on Brexit talks but warned the timeframe is ambitious because of the long list of tasks to address. It cut its forecast for the UK economy from the 1.7% it expected in October to 1.6%, and said it expected the economy to grow by 1.5% in 2018.
And managing director Christine Lagarde defended the overly gloomy warnings about the effect of Brexit on the economy which the fund made ahead of the referendum.
Meanwhile Michel Barnier, the EU’s chief Brexit negotiator, said that the European commission wants the Brexit transition period to end on 31 December 2020.
Still with Brexit, the Bank of England said it planned to spare European banks from costly extra capital requirements after Brexit. But it warned that could change if the current talks are unsuccessful.
Bank governor Mark Carney and other officials were up before MPs at the Treasury Select Committee, discussing bank stress tests and, inevitably, Brexit. Carney said the presumption was there would continue to be supervisory co-operation and information sharing with EU authorities after Brexit.
He said the UK financial system was effectively the banker for Europe, and there were economies of scale that benefited both sides.
Carney also talked about Bitcoin, and said he did not expect regulation of the crypto-currency to come under the Bank’s remit.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
European stock markets close lower
It is a cliche, but buy on the rumour and sell on the fact does seem to hold true sometimes for stock markets. So the bumper rises seen ahead of the US tax proposals has fizzled out now the plan is has more or less been passed. The final scores showed:
- The FTSE 100 fell 18.87 points or 0.25% to 7525.22
- Germany’s Dax dropped 1.11% to 13,069.17
- France’s Cac closed 0.56% lower at 5352.77
- Italy’s FTSE MIB fell 0.74% to 22,109.65
- Spain’s Ibex ended 0.26% lower at 10,207.7
- But in Greece, the Athens market added 0.73% to 789.74
On Wall Street, the Dow Jones Industrial Average is currently flat.
On ringfencing, Woods says the deadline in January 2019 but he would expect much of it to be done in four to six months.
We are in a good place to regulate both ringfenced bank and the rest.
And with that the meeting ends.
Is there a risk banks could reallocate not from UK to EU but to somewhere else?
Sharp says they have big European presences, and London has a tremendous competitive advantage. But there is no doubt that there will be profit opportunities in EU due to growth possibilities there.
Question on misconduct? Will it be helped by senior management regime, will we get to a point where midconduct doesn’t form part of stress tests?
Carney says previous misconduct is in the tests, what is not in there is what we don’t know yet about other possible types of misconduct. It could be they will pay less than the amount provided for in the stress tests.
It’s a sad commentary that this is systemic, but hope to see it reduce.
Question on foreign investment in the UK. Is that because of confidence in UK growth prospects, is it the kindness of strangers and if there is a reversal what are the implications for domestic credit conditions?
Some of that reversal is in the stress tests. One of the big elements of flows has been into real estate, especially London. These are signs of confidence. There are lots of reasons to continue to see the flow. But if there was a shrinking, this would be a concern but you would see this in the risk premia.
Question: A lot of this comes from China. What if see a sharp adjustment in China?
That is again in stress test. This has been a concern for a number of years, the growth of indebtedness in China. China has many strengths, authorities have taken steps and will take more, but we recognise it as a risk. It will have an impact on the UK because we have a very open economy but we have done our best to make sure our system is resilient to that type of risk.
Nicky Morgan leaves for a meeting with the prime minister and John Mann takes over, and asks about Bitcoin. Who will regulate it and if no one does will it be a problem?
Carney says at present we do not view Bitcoin as a financial stability issue. It is not connected closely to the mainstream financial system. It’s more like an equity type risk.
Carney expects international regulators will discuss crypto-currencies and potential future role of central bank digital currencies.
He does not expect Bitcoin regulation to come under the Bank’s remit. He says the core financial system needs currencies that don’t take days to settle [as Bitcoin does].
Question on the gender pay gap.
Carney says they are high relative to other industries. It requires multi pronged approach to change over a period of time. The Women in Finance initiative etc, these will make a difference if they are followed through and focus minds of senior management and their shareholders.
Question on cyber developments and whether the bank has sufficient skills.
Woods says it is challenging, mainly in operations resilience. Financial system is under attack, the Bank triggered its response systems for sufficiently large cyber attacks six times in last year. But now a significant development, we have brought a specialist GCHQ unit into our response team.
Updated
On the regulatory systems, Carney says:
We been through 10 years of fixing the faults of the financial crisis. With so many new rules in place, there is some duplication, and now the big job is to make adjustments to those rules on an international level.
Question: we are seeing some divergence in regulatory framework, eg in the US.
Carney says, the changes actual and contemplated in the US are moving it more to how regulations are imposed in UK eg, the way they conduct stress tests, is moving more towards the way the Bank of England conducts them.
I wouldn’t say we are seeing in the US an undercutting of UK standards of financial regulation.
We had a near death financial situation, we can’t run those risks again. The UK financial standards will continue to be at least as high as now after Brexit.
Question on jobs numbers, and comments that to judge by the numbers leaving immediately after Brexit rather than four or five years out would be a mistake.
Carney agrees. If in the short term there is an ability to retain interconections, the initial job losses are less. If those are pulled into the continent the job losses are much greater.
I would focus more on medium term numbers as being more relevant. There is likely to be a degree of expediency, decisions will have to be made in interests of system.
Question about co-operation with EU colleagues:
Woods says Brexit is throwing up a point of tension within the EU, which will probably build rather than subside. EU authorities tend to impose regulatory restrictions that the UK applies to retail banking to wholesale banking too.
Question about the potential loss to London of clearing business post Brexit?
Carney says the raw economics are compelling, so if the euro business were pulled out that is 13% of the overall pool. The loss of benefits would in our judgement cost at least 1 to 3 basis points to EU institutions, and that doesn’t sound much but 1 basis point equates to €21bn per annum.
Question: is there a clear enough understanding of the cost?
Exchanges like this help, and it is a cost which would be borne by European pension funds, and industries and ultimately European households.
Now questions to Carney about the London Stock Exchange succession planning (to recap Xavier Rolet decided to leave the LSE but an activist shareholder wanted him to stay on.)
Carney says they were aware of the issues, had multiple conversations with the board and management, it was clear that the then CEO was not going to continue with his role but they were in a legal position where they couldn’t say he would never return even though he had no intention of continuing under any circumstances. It was very Kafka-esq.
Carney says consumer credit was a key component of the stress tests.
The debt burden is less than it was in the 1990s. But there are without question parts of the working population that are vulnerable, who start from an overextended position. Those issues are important... we look at how we target an intervention to manage the scale of the risk.
Mann: are you underplaying the problem of the rise of consumer credit?
Woods says the fact it is growing at 10% a year is causing some concern to the committee. The impact is different on different firms. We publish how much we think individual banks would lose.
John Mann: Is risky consumer credit only a problem at some banks.
FPC member Richard Sharp says they don’t go into the micro level. We were concerned at the pace of the growth of consumer credit in the economy. We formed a consensus and we acted.
Updated
Is there enough being done to prevent banking misconduct?
Carney says, there is a lot being done to reduce banking misconduct. One of the things that is recognised is that fines alone of institutions well after the fact that affect current shareholders and not the individuals who perpetrated the act are a fairly ineffective way, shouldn’t be the tool to be the deterrent.
There has been a dramatic change in the UK so senior managers are responsible for the actions, and if there is a pattern of misconduct, then it is not just those individuals [who commit misconduct] who are held accountable but senior managers. One of consequences is ability to claw back bonuses.
Barclays and RBS failed 2017 test on the basis of the cut-off date for their capital reserves, but they’ve since built that up. Are you comfortable with that margin of error?
Woods says this is the first year we haven’t required any of the banks to do anything on the back of stress tests. On those two, if we ran the tests today they would both pass. Quite a significant moment.
Question on the 2017 stress tests, saying it was not designed to deal with a disorderly Brexit. How does the test scenario differ from a disorderly scenario. Are you confident all scenarios have been adequately tested.
Carney says the tests have a severe macroeconomic scenario, pound down by a quarter, house prices down by a third etc. On top there is a stressed hit for misconduct costs for the banks of £40bn.
We have £50bn of losses in the first two years, worse than financial crisis. Then looked at things that could go wrong in disorderly Brexit, derivatives, loss of trade, loss of confidence in UK assets etc.
We’ve looked at combination of all those, and the scale of losses would be significant but would be encompassed by stress test.
The banking system is adequately capitalised to take that hit.
But that’s it. If had disorderly Brexit and recession and misconduct at same time, likely system would need more capital. But we now have a banking system with 16% Tier 1 capital, and we have done it because there are these possibilities.
Updated
Lights out:
UK is effectively banker for Europe - Carney
Nicky Morgan turns to the Budget, and the forecasts from the OBR, which she says are predicated on smooth and orderly Brexit. But EU chief negotiator Michel Barnier has said financial services not being part of a free trade agreement, so do you have a comment on the OBR forecasts and Brexit affecting economy.
Carney says the OBR reduced its productivity forecast, we had reduced, they are now below ours.
[As for] the smooth and orderly aspect, at the MPC we have a similar assumption. At FPC we look at risk so we look at a disorderly scenario - one of tests for stress tests is are they tough enough.
On Barnier, Carney says the European council sets negotiating mandate not European Commission...The UK financial system, like it or not, is effectively the banker for Europe, in the most complicated bits of finance, the wholesale market, the equity underwriting, the derivatives, the fx trading. There are economies of scale that benefit both sides. We have improved regulations so we can operate the system reliably (lights dim in the room to laughter) and we have a commitment to openess in the system. From a trade perspective...you can have free trade in financial services..as you have common, high standards. I don’t accept the argument that because it hasn’t been done in the past it can’t be done in the future.
Updated
Question: of the four that are systemic, how much capital would they need to commit to UK?
Carney says its relatively modest, bigger capital requirment would be because of the wholesale bank footprint.
It’s around £10s of billions. It would be material for some institutions and for the system.
Carney is asked if there is enough time if changes need to be made.
He says, we know these firms now, we know the risk so we’re in a pretty good position to have a limited amount of time to adjust their business model.
Deputy governor Sam Woods adds we would have needed a good reason to depart from established way of doing this.
We will keep position under review as negotiations progress.
Nicky Morgan says this seems like a plan for the status quo. Alternative would have been for [EU banks] to create subsidiaries.
Carney says if we didn’t have co-operation with EU, we will tell banks to create subsidiaries. Should we say you subsidiarise now and then un-subsidiarise in the future if there is an agreement, that would cause a tremendous amount of disruption. We can at the moment manage the risk. Now is not the time to say, we’re never going to get a deal.
But it at the select committee in a year from now - which I’m already looking forward to - where it doesn’t look like we’d have {an agreement] then those directions to susidiarise would be there.
It is clearer now which firms might have to subsidiarise which businesses. I don’t think this is a good outcome for system, for Uk, for EU.
I’ve had discussions with all major EU counterparts and ECB to let them know this is our approach.
Carney says this is a proposal and is out for consultation.
The Treasury Select committee is beginning, chaired by Nicky Morgan.
Bank of England governor Mark Carney is going through the day’s earlier announcement.
He says, foreign banks have £4tn of goods and assets, worth two times UK GDP. We have to authorise those banks, and we have announced an update on that.
We will need to authorise those banks that currently use the passporting.
We look at two things. What does bank do and where is it from?
The question is how systemic are they. Do they deal with households and small businesses, do they have retail. They will be systemic, and it will have consequences. Four out of the 77 from Europe fall into this category. The other aspect is in wholesale activity, question is how big is balance sheet, how interconnected is institution to UK financial system.
If they are systemic, what’s our relationship with home supervisor. At present we have strong arrangements, but in Europe those will change.
We have to take a decision. Our presumption will be we will continue to have a form of supervisory co-operation and information sharing with EU authorities after Brexit. But we retain all our options, and if that is not forthcoming there will be consequences for those institutions.
Our responsibilty is to protect system and UK citizens. Could be creating subsidiaries, restrictions on business, ask for further capital requirements.
Updated
Bank of England confirms it will impose no material additional regulatory or capital costs on most EU banks operating in the EU (they can continue to operate as "branches" of their home country bank, in the jargon) https://t.co/BVv4cpgY11
— Robert Peston (@Peston) December 20, 2017
Bank of England to spare EU banks from costly capital rules if Brexit goes well
Just ahead of Bank of England governor Mark Carney’s appearance before the Treasury Select Committee, the Bank said it planned to spare European banks from costly extra capital requirements after Brexit. But it warned that could change if the current talks are unsuccessful. Reuters reports:
Setting out its position for a possible tussle with Brussels over London’s position as a top global financial hub, the BoE said it wanted to ensure it could effectively oversee foreign banks and financial services firms after Brexit.
“The foundation of the Bank of England’s approach is the presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU,” the BoE said in a statement.
That assumption might be “revisited as Brexit negotiations proceed,” BoE Deputy Governor Sam Woods said in a letter to the bosses of banks and insurers...
The BoE said the bigger and more complex the branches of European banks in the UK, the more supervisory cooperation there would have to be to avoid them being classed as subsidiaries, requiring them to park costly extra capital in Britain.
There 77 branches of banks from the European Economic Area, in Britain. There are also 80 branches of insurers from the EEA.
The BoE plans to start the process of reauthorising the branches of up to 200 EEA financial firms in Britain in early 2018. It hopes Britain will secure a Brexit transition deal to start after Brexit in March 2019 to give regulators more time.
Back with Michel Barnier, the EU’s chief Brexit negotiator, saying the European commission wants the transition period to end on 31 December 2020, and Dr Adam Marshall, Director General of the British Chambers of Commerce, does not appear entirely happy:
Businesses will welcome the fact that the European Commission has now joined the UK government in backing a single adjustment for business, at the end of an agreed transition period.
However, the end date proposed by the Commission seems better-suited to the EU’s bureaucratic framework than to real-world business conditions. The two sides’ main criterion should be to set a timeframe that allows businesses on both sides of the English Channel to adequately prepare for a new trading relationship between both parties.
Greece ratifies 2018 budget
Over in Athens, parliament has ratified the 2018 budget. It is the last one before debt-burdened Greece exits international supervision under its latest bailout programme. Helena Smith reports:
Passage of the budget marks the beginning of the end of a new era, according to Greece’s leftist-led government. Addressing MPs last night, prime minister Alexis Tsipras described the budget - which includes almost €2bn in new austerity measures - as the last one that would have to be applied under an economic adjustment programme.
Already, Greece was on the road to economic recovery, he said, with the country heading towards a “clean exit” when its third rescue programme officially expires next August.
He told parliament:
This year is the first with real growth after many years of recession. We took over a country with empty coffers, with unemployment close to 27%, with zero trust among its partners and international markets, and with the 10-year bond yield at almost 8%.
The claims were quickly debunked in an often rambunctious debate with the centre-right. The main opposition leader, Kyriakos Mitsotakis, described the government’s narrative of a “clean exit” as Tsipras’ “new big lie.”
Instead of spurring growth, the new fiscal measures would dampen it, he said, insisting that Greece’s promise to achieve high and “exhausting surpluses” in the years to come would mean yet more international supervision. The debate comes against a backdrop of disquiet among lenders over welfare handouts pledged by Tsipras, including a one-off €400 payment to the unemployed, announced in recent days.
IMF's UK forecasts: how they compare
The International Monetary Fund says its gloomy forecasts in the runup to the referendum are now playing out in the numbers.
Even so, the IMF’s forecasts for UK growth for this year and next compare favourably with those from both the Organisation for Economic Co-operation and Development (OECD), and the Office for Budget Responsibility (OBR), the government’s independent forecaster.
IMF
- 2017: 1.6%
- 2018: 1.5%
OECD
- 2017: 1.5%
- 2018: 1.2%
OBR
- 2017: 1.5%
- 2018: 1.4%
Here is our full story on the IMF’s annual health check of the UK economy.
The IMF’s managing director, Christine Lagarde, gave a strong defence of the Fund’s gloomy forecasts for the UK after Brexit, saying pre-referendum warnings of slower growth were coming true.
CBI: retail sales grow steadily in runup to Christmas
Retail sales rose in the runup to Christmas according to the latest survey from the CBI, but at a slower pace than retailers had expected.
Supermarkets were the main driver of growth in the year to December.
The business lobby group said evidence from the 109 firms surveyed suggested that online sales on Black Friday and Cyber Monday - considered two of the busiest shopping days of the year - were “unspectacular”.
Alpesh Paleja, principal economist at the CBI:
Retailers have seen decent growth heading into the vital Christmas trading period, although it was weaker than expected. It’s clear that people are stocking up on food for their Christmas lunch, with grocers’ sales driving most of the sales growth seen in December.
Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead.
Of those surveyed, 37% of retailers said that sales volumes were up in the year to December, while 17% said they were down. The resulting balance of +20% was slower than the +30% predicted by retailers, and weaker than November’s +26%.
Michel Barnier: Brexit transition should end 31 December 2020
Michel Barnier, the EU’s chief Brexit negotiator, has given a news conference, announcing that the European commission wants the transition period to end on 31 December 2020.
For all the details, follow our politics live blog here:
IMF's Lagarde says Fund was right to be gloomy about Brexit
Christine Lagarde has insisted she and the IMF were right to be gloomy about the implications of a leave vote in the runup to the EU referendum in June 2016.
She said the numbers on the UK economy today were proving the point, adding UK growth is “a bit of a disappointment” compared with other countries.
Here is a reminder of Lagarde’s predictions before the vote:
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Updated
The UK chancellor Philip Hammond says he agrees with the IMF on the urgent need for a Brexit transition deal.
One of biggest boosts we can provide to our economy is making early progress on delivering certainty and clarity about our future relationship.
IMF: Brexit vote is weighing on UK economy
The IMF is clear that the Brexit vote is already weighing on the UK economy.
Growth in the first three quarters of 2017 was slower than a year ago. Despite a strong recovery in global growth and supportive macroeconomic policies, the impact of the decision to exit the European Union has weighed on private domestic demand.
The employment rate has remained around record highs, but the sharp depreciation of sterling following the referendum pushed up consumer price inflation, squeezing household real income and consumption.
Business investment growth has been lower than would be expected in the context of strong global growth and high levels of capacity utilisation, owing to heightened uncertainty about economic prospects.
The Washington-based fund is predicting UK growth slowed in 2017 to 1.6% in 2017, from 1.8% in 2016. It is expected to slow further in 2018 to 1.5%.
IMF’s @Lagarde on Brexit vote and invoking of Article 50: “These two decisions are already having an impact on the economy.”
— Ed Conway (@EdConwaySky) December 20, 2017
Here is what the IMF had to say about the ambitious nature of the timeframe for Brexit talks.
Recent progress in negotiations between the UK and EU is welcome. Both parties have reached agreement in principle on citizens’ rights, on Northern Ireland, and on the financial settlement. While the ultimate outcome of the next phase of discussions is for the UK and EU to determine, an agreement that minimizes tariff and non-tariff barriers and ensures that firms have access to the labor they need would best support growth.
The list of tasks that remains to be accomplished is very long, and the timeframe to do so is ambitious. They include agreeing on a trade deal with the EU, negotiating new arrangements with around 60 countries to replace those to which the UK is currently party via its membership in the EU, bolstering human and IT resources in customs and other services, and translating many thousands of pages of EU law into UK domestic statute.
The government has set aside a budgetary allocation to support Brexit preparations. Early agreement on a transition period would avoid a cliff edge exit in March 2019 and reduce the uncertainty facing firms and households.
IMF publishes staff’s 2017 annual economic health check on UK economy https://t.co/T3i6r1mOwK
— IMF (@IMFNews) December 20, 2017
Breaking: IMF welcomes Brexit progress but cautions timeframe is ambitious
The International Monetary Fund has welcomed progress on Brexit talks but warned the timeframe is ambitious because of the long list of tasks to address.
The fund predicts the UK economy will grow by 1.5% in 2018.
Christine Lagarde is in London to present the IMF’s annual review of the UK economy at the Treasury.
As tradition dictates, Lagarde will be introduced by the chancellor, Philip Hammond, when the press conference kicks off shortly.
In the run-up to the referendum, Lagarde predicted a leave vote would result in a stock market and house price crash.
Updated
Uber must follow same rules as other cab firms, EU court rules
A setback for Uber this morning after the European court of justice (ECJ) ruled it is a transport services company, subject to the same rules as other cab firms.
Uber had argued that it is a computer services business, after a challenge brought by taxi drivers in Barcelona.
The decision in Luxembourg will apply across the whole of the EU, including the UK.
Here is our full story on the ruling:
MPs quiz Ryanair's O'Leary on treatment of workers
Michael O’Leary, the outspoken and often controversial boss of Ryanair, has been asked by MPs to answer allegations by workers that the airline sometimes pays less than the minimum wage.
The work and pensions committee and the business, energy and industrial strategy committee (BEIS), have written to O’Leary following allegations by crew, published in the Daily Mail, that bosses “don’t treat us like humans.”
Frank Field, chair of the work and pensions committee, said Ryanair workers “can rest assured” that MPs would be investigating further. He added:
Sadly, it will not surprise me if the sorry picture painted here is true: a company that turned in £1.15bn profit last year squeezing its workers. People who work long, hard hours and have an important role in passenger safety, and yet apparently cannot count on receiving the National Minimum Wage – or even close to it.
Rachel Reeves, chair of the BEIS committee:
These allegations of hours of unpaid work, of charges for uniforms, of fees being incurred to leave, suggest a company falling well short of its duty to the staff who help their planes get off the ground and who spend the flight attending to and serving its paying customers. This appears to be evidence of a company trying to wiggle out of its basic responsibility to pay its workers the National Minimum Wage.
Field and Reeves have asked O’Leary to answer a series of questions by Monday 8 January.
Updated
European markets fall in early trading
Investors across Europe are in a subdued mood this morning, with all the major indices following Wall Street lower.
Here are the scores so far:
- FTSE 100: -0.1% at 7,537
- Germany’s DAX: +0.1% at 13,231
- France’s CAC: -0.2% at 5,375
- Italy’s FTSE MIB: -0.4% at 22,191
- Spain’s IBEX: -0.1% at 10,224
- Europe’s STOXX 600: -0.1% at 391
Trump's tax reform fails to lift markets
President Trump’s long-trailed tax reform bill cleared a major hurdle last night and this morning, making it through Congress and then the Senate.
A procedural issue means the bill will have to go back to a revote in Congress, but this appears to be a technicality and is not expected to derail the bill.
The progress failed to lift Wall Street on Tuesday however, in what CMC Markets’ Michael Hewson describes as a classic case of “buy the rumour, sell the news”.
Having teased, tantalised and promised the markets for most of this year that we would see some significant measures to reform the tax code it seems that US President is on the cusp of delivering some measures that, depending on who you listen to, are either transformative or unfair.
Having seen the bill pass through Congress fairly easily last night, and pass through the Senate this morning it seems increasingly likely that the bill will be signed into law by President Trump in the coming days, though it will need to go back to a revote in Congress after a procedural snag made last night’s vote invalid. That obstacle aside it now looks increasingly likely that just over a year since being elected that Trump is likely to have something to show for his first year as President.
The big question now is whether having seen stocks rise in anticipation of legislation being passed, that the current momentum is maintained or we see a case of “buy the rumour, sell the news” as we head towards the Christmas break.
The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare)Repealed. Goes to the House tomorrow morning for final vote. If approved, there will be a News Conference at The White House at approximately 1:00 P.M.
— Donald J. Trump (@realDonaldTrump) December 20, 2017
Neil Wilson, senior market analyst at ETX Capital, says the Tesco/Booker deal could open the door to other deals.
Given how easily this deal was approved, it leaves the door open for further significant consolidation in the sector and the potential for a major change in the UK retail space over the coming years. The case for consolidation is strong given the intense competition, heightened margin pressure and the emergence of new threats online. Retailers should be looking to strike now to secure their economies of scale.
For Tesco/Booker it’s a win on several levels. Cost synergies of around £200m a year, mainly from buying and distribution, are expected, although this could a lot more and may exceed £300m.
But as previously noted the 24% premium that Tesco paid for Booker takes some of the shine off the deal. And the big risk is that Tesco takes its eyes off the turnaround strategy. We note that big Tesco shareholders Schroders and Artisan Partners said it was too expensive and too risky. But on the whole the benefits from synergies should more than compensate for any risks to the turnaround.
Tesco's £3.7bn takeover of Booker gets green light
Britain’s competition watchdog has given the go-ahead this morning to Tesco’s £3.7bn takeover of Booker, the cash-and-carry group that also owns brands including Londis and Budgens.
The Competition and Markets Authority had already given the provisional green light in November, so today’s announcement is a confirmation of that. The CMA concludes that the deal is not bad news for customers.
Simon Polito, chair of the CMA’s inquiry into the deal, says in a statement today:
We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors. Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident that this will continue after Tesco buys Booker.
This has been an important investigation for us. Millions of people use their local supermarket or convenience store to buy their groceries or essentials, so it is vital that they have enough choice to secure the best deal for them. Having examined the evidence in depth, we are satisfied this will remain the case following the merger.
The agenda: IMF gives verdict on UK economy, Carney grilled by MPs
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Christine Lagarde, head of the International Monetary Fund, is in London this morning to present the Fund’s annual health check of the UK economy.
She will give the presentation at the Treasury, following an introduction from the chancellor, Philip Hammond. The press conference kicks off at 10am.
This year’s review will be closely scrutinised for the IMF’s latest take on how much of an impact Brexit might have on the UK economy. In the runup to the referendum, Lagarde was an outspoken opponent of Brexit, and warned a vote to leave the EU would result in a stock market and house price crash.
How does the IMF now think the UK will fare? We’ll bring you its assessment as it comes in from.
Also coming up:
- 11am GMT: The CBI’s distributive trades survey for December will provide the latest snapshot of how the UK’s retail sector is performing in the runup to Christmas
- 1.15pm GMT: Mark Carney, governor of the Bank of England will appear with colleagues at the Treasury Select Committee on the subject of financial stability
