The CBI has warned that the regulation brought in by the replacements to the FSA risk holding back growth. The FSA will be replaced by three new bodies – the Financial Policy Committee, the Prudential Regulatory Authority and the Financial Conduct Authority. Matthew Fell, the CBI’s director for competitive markets argued that regulation and compliance are likely to be significant drags on business throughout the year. However at the launch of the Prudential Regulatory Authority, George Osborne heralded the end of the system which failed to deal with the financial crisis.
Employment in financial services has risen by 2,000 roles over the past three months. This is due to an upturn in business volumes and more upbeat investment. The research by Price Waterhouse Coopers found higher employment in all parts of the industry except life insurance. The news comes after three consecutive quarters of decline.
George Osborne has defended the changes to the benefits system, insisting that 9 out of 10 households are better off by an average of £300. However Treasury figures show that stay at home Mums with four children are up to four times worse off than a similar family where both parents work. The freeze in fuel duty and the introduction of the top rate of tax at 45p also come in today.
Prudential’s property division is due to buy more than 500 homes from the Berkeley Group. It is hoped the properties across London and the South East will deliver rental income and capital gains for the insurer, which is paying more than £100m for the deal. It is seen as a sign of institutional investors looking to wider range of investments, away from a narrow focus on the commercial sector.
In SME news, loan rates for SMEs vary dramatically across Europe according to data from the European Central Bank. Italian and Spanish SMEs face the highest rates – up to 3-4% higher than their French and German counterparts. The problem is seen as even more concerning as SMEs account for around half of employment in Italy and Spain compared with 40% in Germany