After telling congress yesterday it is too soon to end monetary easing, the US Federal reserve has now spoken about halting the programme in the near future. This – alongside a shock fall in a key Chinese manufacturing index – has put stock markets into free-fall. At time of writing the FTSE 100 is currently trading at 6,720, already down by 1.8% today.
On the UK economic front more specifically, the IMF has scaled back its criticism of the austerity scheme, but has stressed the importance of maintaining capital spending rather than other areas. The IMF says the UK government should look for more “bang for its buck”. (City A.M. p.2, FT p.1)
In The Mail (p.10), Becky Barrow describes the Bank of England’s recent warning report on the success of the government’s £80 billion Funding for Lending Scheme – in particular the lack impact on lending to small businesses.
In addition to its wider commentary on the UK economy, the IMF has warned of the difficulty in building new homes in the UK, agreeing with previous commentary that Help-to-Buy could do little to increase the availability of housing, rather stoking house prices instead. Rising house prices are already going hand in hand with higher transaction levels. (The Daily Telegraph, B4)
George Osborne is planning an announcement this summer on his plan to sell the government’s stakes in Lloyds Banking Group and RBS. The IMF has called for a clear strategy, prompting the statement. Shares prices of the two banks have risen recently towards the government’s break even point, but the IMF stresses the need for a quick disposal rather than a profit. For taxpayers however, any disposal could be a boon – Osborne has previously floated the idea of a free distribution of the shares to UK taxpayers.
Recruitment & Employment
In the FT’s Executive Appointments supplement, Maxine Boersma takes perhaps a controversial look at the drawbacks of flexible working schemes. While it does have a place, staff still need to work out the best way to maximise their overall productivity, thereby potentially saving more time to spend at home not working. The piece also stresses the importance of camaraderie and the often-overlooked responsibilities of employers for their workers’ health and safety while working at home.