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United Kingdom-2012 Article IV Consultation Concluding Statement of the Mission
May 22, 2012--The Central Scenario and Risks
1. Current policies are aimed at assisting economic rebalancing and financial sector stability. Strong fiscal consolidation is underway and reducing the high structural deficit over the medium term remains essential. The UK has made substantial progress toward achieving a more sustainable budgetary position and reducing fiscal risks.
Bold monetary stimulus has helped support the economy, as has the free operation of automatic fiscal stabilizers. This macroeconomic policy mix assists in rebalancing the economy toward investment and external demand. Further, financial sector stability in the UK is of global importance as highlighted in spillover analysis. In this context, policies have encouraged the buildup of capital and liquidity buffers, the domestic oversight framework is being strengthened, and work is underway to enhance the capacity to deal with systemically important financial institutions
2. But the economy has been flat. The hand-off from public to private demand-led growth has not fully materialized. Much of this underperformance relative to earlier expectations is due to transitory commodity price shocks and heightened uncertainty following the intensification of stress in the euro area. However, the weak recovery also indicates that the process of unwinding pre-crisis imbalances is likely to be more protracted than previously anticipated, in part due to persistent tight credit conditions. Reflecting these forces, output remains more than 4 percent below its pre-crisis peak. Encouragingly, labor market performance has been better, with falling unemployment in recent months and fewer employment losses than in the aftermath of previous major UK recessions. This disparity between output and labor market indicators complicates the assessment of the current state of the economy. But unemployment at 8.2 percent, with a large number of youth without a job, is still much too high.
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Source: IMF
Financial transaction tax: getting the financial sector to contribute towards the cost of the crisis
May 22, 2012--How can the financial sector be made to contribute to the cost of the crisis it helped to create? Greek socialist Anni Podimata argues in her report that introducing a financial transaction tax would go a long way towards stamping out banks' risky behaviour while at the same time replenishing government coffers with much needed funds.
The Parliament will debate and vote on Ms Podimata's report in plenary on Wednesday 23 May.
Governments have not hesitated to use taxpayers' money to bail out the financial system, yet many are hesitant about taxing financial transactions to get some of that money back.
The facts are undisputable. The financial sector caused the current crisis, which will cost governments €4.5 trillion in bail-outs, while it remains largely under-taxed compared to the real economy. The European Parliament launched the idea of a financial transaction tax back in the public debate with its 2010 report on innovative means of financing, creating a fresh momentum in favour of the financial transaction tax. The arguments of the financial sector against the financial transaction tax collapsed when the European Commission, under pressure from the European Parliament, undertook an impact assessment, which pointed out that introducing the financial transaction tax at EU level is not only feasible, but will also generate significant revenue without harming the European economy's competitiveness.
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Source: European Parliament
DB X-trackers rolls out 2x leveraged long & short government bond ETFs
May 21, 2012--DB X-trackers, the ETF platform of Deutsche Bank, has launched four new ETFs aimed at professional investors who want daily double-leveraged long or short exposure to US and UK sovereign debt.
The four ETFs, which have been listed on the London Stock Exchange (LSE), enable investors to implement daily double-long or double-short positions in UK Gilts and US Treasuries for the purposes of short-term tactical trading or hedging.
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Source: ETF Strategy
Linhares seeks faster rate of growth in Europe
May 21, 2012--The exchange-traded fund market in Europe may be in good health after doubling in assets to $325bn since stock markets dive-bombed in 2008
, but Joe Linhares, European chief executive at the world’s largest ETF provider, iShares, wants more.
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Source: Financial News
SPDR ETFs on UK gilts and corporate bonds launched on Xetra
May 18, 2012--Four new exchange-listed bond index funds issued by SPDR (State Street Global Advisors) have been tradable on Xetra since Friday.
ETF name: SPDR Barclays Capital 1-5 Year Gilt ETF
Asset class: bond index ETF
ISIN: IE00B6YX5K17
Total expense ratio: 0.15 percent
Distribution policy: distributing
Benchmark: The Barclays Capital UK Gilt 1-5 Year Index
ETF name: SPDR Barclays Capital 15+ Year Gilt ETF
Asset class: bond index ETF
ISIN: IE00B6YX5L24
Total expense ratio: 0.15 percent
Distribution policy: distributing
Benchmark: The Barclays Capital UK Gilt 15+ Year Index
ETF name: SPDR Barclays Capital UK Gilt ETF
Asset class: bond index ETF
ISIN: IE00B3W74078
Total expense ratio: 0.15 percent
Distribution policy: distributing
Benchmark: The Barclays Capital UK Gilt Index
ETF name: SPDR Barclays Capital Sterling Corporate Bond ETF
Asset class: bond index ETF
ISIN: IE00B4694Z11
Total expense ratio: 0.15 percent
Distribution policy: distributing
Benchmark: The Barclays Capital Sterling Corporate Bond Index
The three SPDR ETFs on Barclays Capital UK Gilt indices provide investors with first-time access to the UK gilt market with the option of reacting to interest rate expectations within the different maturity ranges.
The SPDR Barclays Capital Sterling Corporate Bond ETF enables investors for the first time to participate in the performance of Sterling-denominated corporate bonds with investment grade ratings.
The product offering in Deutsche Börse’s XTF segment currently comprises a total of 974 exchange-listed index funds, making it the largest offering of all European stock exchanges.
Source: Xetra
European markets tumble after Moody's downgrades 16 Spanish banks
May 18, 2012--European stock markets faced their biggest weekly decline today since November, after 16 Spanish banks were downgraded by Moody's overnight and Fitch cut its debt rating for Greece.
Spain's main share index fell more than 2% before recovering, while shares in London fell by as much as 1%.
The downgrading included Banco Santander, the eurozone’s largest bank, owing to a weak economy and the government’s inability to bail-out the troubled lenders
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Source: The Finance page
Spain falls into recession amid fears of eurozone bank run
May 17, 2012--Spain tumbled into recession and European stock markets and the euro fell Thursday as Greece installed a crisis government to tackle its crippling debt, EU leaders prepared for talks and analysts raised the spectre of a run on eurozone banks.
"Markets are worried about eurozone bank deposit runs and an escalating banking crisis," London-based VTB Capital economist Neil MacKinnon told AFP.
Heavy withdrawals of deposits have been reported in Greece and Spain, and top European Union leaders were to hold a videoconference later in the day.
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Source: EUbusiness
Italy's assets under management at 974bn Euro, Assogestioni reports
May 17, 2012--Italian assets under management have reached €974bn in the first quarter of 2012, with a particularly positive performance of bond funds, according to a report published on May 16 by Assogestioni, the association of Italian asset managers.
Despite an outflow of €3bn, the overall value of assets under management has increased from €937bn at the end of December.
Net inflow has been of €5.2bn for bond funds, with a positive performance for insurance and pension funds, which recorded inflows of €933m and €1.4bn respectively.
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Source: Investment Europe
PLUS Markets Group PLC Statement re Press Speculation
May 17, 2012--The Board of PLUS Markets Group plc ("PLUS" or the Group") notes the recent press speculation and makes the following update to shareholders.
The Group can confirm that it is in talks with ICAP plc that may lead to the disposal of its subsidiary company PLUS Stock Exchange plc ("PLUS-SX"), the cash equities recognised investment exchange for a nominal amount due to the loss making nature of PLUS-SX. As indicated in previous announcements, the board believe that this would be in the best interests of shareholders to preserve remaining shareholder value. There can, however, be no certainty that a transaction will complete.
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Source: Wall Street Journal
Moody's downgrades Spanish banks; ratings carry negative outlooks or remain on review for downgrade
Actions follow rating reviews announced on 15 February 2012 and other dates
May 17, 2012--Moody's Investors Service has today downgraded by one to three notches the long-term debt and deposit ratings for 16 Spanish banks and Santander UK PLC, a UK-domiciled subsidiary of Banco Santander (Spain) SA.
The rating downgrades primarily reflect the concurrent downgrades of most of these banks' standalone credit assessments, and in five cases also Moody's assessment that the Spanish government's ability to provide support to the banks has reduced.
The debt and deposit ratings declined by one notch for five banks, by two notches for three banks and by three notches for nine banks. The short-term ratings for 13 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes.
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Source: Moody's
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