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- China’s economy grew by just 7.4% in 2014, the slowest pace since 1990, new figures showed. New government policies have been aimed at reducing the country’s dependence on consumer credit, but the news still came as a shock to the financial markets. The Shanghai Composite dropped by almost 9% on 19th January as the announcement appeared, although that still left it handsomely ahead on the last six months.
- King Abdullah of Saudi Arabia died,and was succeeded by his younger brother Salman (79). The new ruler, regarded as a social conservative, faces a tough period of challenge as oil prices languish below $50 a barrel.
- Projected world economic growth was downgraded by the International Monetary Fund, which said it now expects growth of only 3.5% this year, compared with last October’s estimate of 3.8%. The forecast for 2016 was also cut to 3.7%. The IMF said that any benefits from cheaper oil would be offset by weaker investment, as companies suffered demand shortfalls. Earlier, the World Bank had also reduced its forecasts.
- British energy companies competed to slice an average of 4.75% off their consumer prices for natural gas, reflecting what they said was a fall in market prices. Consumer groups, however, pointed out that wholesale gas prices had actually halved by 50% in the last nine months.
- Global stock markets perked up in the last weeks of January, as perceptions grew that the introduction of quantitative easing, coinciding with a healthy US economy, would usher in a period of greater calm and reduced volatility. The euro weakened by 6% against the pound during the three weeks to 22nd January, and by 10% against the dollar.
- The first issue of pensioner bonds got off to a flying start on 16th January, with the NS&I phone lines and website both swamped by enquiries. The NS&I 65+ Guaranteed Growth Bonds, which are available only to the over-65s, pay 2.8% for one year or 4% for three years.
- Pension advisers face a 73% increase in the amount they pay to the Financial Services Compensation Scheme (FSCS) – with the life and pensions intermediation class seeing its contribution toward the levy rise from last year’s £33 million to £57 million for 2015-2016. The service is gearing up for a “significant” growth of compensation claims relating to SIPP advice.
- The Financial Conduct Authority declared that it was planning to step up pre-emptive action against firms that it believed were guilty of bad practice. The announcement (http://tinyurl.com/ksv8tyh) came in the context of a response to allegations that the regulator was using retrospective logic in applying rules.. The FCA said it had used its early intervention powers 31 times in 2014, up from 14 in 2013.
- UK house price sentiment cooled again in January, according to a Markit Economics survey which found that although consumers perceived a small rise in that month, their expectations for future price growth had fallen back and were well below last May’s record high. All regions had seen a sharp moderation of sentiment since then, Markit said, with London and the South West experiencing the greatest slowdown.
- Fast-growing platform provider Transact tightened the competition a notch by announcing that its reduced 0.325% fees for those with portfolios of £300,000 – £600,000 would be extended from April to portfolios of at least £180,000. Investors with less will continue to pay a 0.5% annual charge on the first £60,000 of their investments. The firm also announced that funds under direction had now exceeded £17bn.
- ‘Doctor Copper’ suffered an unpleasant relapse as the price of copper, which is commonly regarded as a bellwether for economic health, slumped by 12%. Poor markets in China were blamed.
- Britain’s consumer inflation level dropped to just 0.5% in December, a very long way below the Bank of England’s 2% target. Governor Mark Carney was obliged to explain to the Treasury for the shortfall, which is thought to be at least partly due to low fuel prices. Everyone was feeling twitchy about deflation, which had already been indicated in the eurozone.
- O2, the mobile communications provider formerly owned by BT, came under offer from Hutcheson Whampoa’s Li Ka-Shing, who bid $15.4 billion for Telefonica’s control of the company. Meanwhile, BT was in talks to buy EE. But the O2 bid was expected to come under close scrutiny from the European competition commissioners.
- UK households are an average of £489 a year worse off because of government changes to taxes and benefits, according to the Institute for Fiscal Studies. Changes such as VAT rate increases, rises in National Insurance Contributions and significant cuts to benefits had meant that the poorest households had lost around 4% of their incomes, compared with around 3.5% for the next poorest decile and 2.5% for the richest sectors, it said. But the middle-income sector had lost much less, and pensioners had been “relatively unaffected” because of indexation.
