Five things CAs need to know this week: 11 July 2016
A look ahead to some of the things happening in business, accountancy and politics this week.
1. UK interest rates could reach record lows
UK interest rates are expected to hit a new record low this week, as part of the Bank of England’s (BoE) economic stimulus measures following the EU referendum.
Interest rates have been 0.5% since March 2009 and economists are expecting the BoE’s monetary policy committee to announce a cut to 0.25% when it meets on Thursday (14 July).
City AM reports that it is “unusual” for the BoE to shift policy before the publication of August's quarterly inflation report, which it says signals how “drastic” Governor Mark Carney believes the UK’s financial situation to be.
2. EU leaders decide on Spain and Portugal sanctions
The EU’s 28 finance ministers will decide on Tuesday (12 July) whether Spain and Portugal should be sanctioned over breaching their budget deficit limits. The European Commission has recommended the sanctions in what is described as an “unprecedented step” to enforce rules to prevent further debt.
Last week, Dutch finance minister Jeroen Dijsselbloem said: “When I look at the numbers I really have to conclude that Spain and Portugal did too little.” If the sanctions go ahead, the two countries could be fined as much as 0.2% of their GDP.
Also in the EU region this week, French President Francois Hollande is expected to discuss the impact of Brexit on France and reveal if he will seek re-election when he addresses the nation on Thursday (14 July).
3. Top US banks kick off ‘earnings season’
We will get an insight into the health of the US financial sector this week, when five US banks release their results, kicking off the earnings season. JP Morgan Chase & Co, Citigroup Inc, Wells Fargo & Co, BlackRock Inc and U.S. Bancorp will announce their earnings.
It comes after US investment banks pledged their support for London’s position as a top financial centre and the UK government’s plans last week.
US figures on retail sales, consumer prices, consumer sentiment and industrial production are also due this week.
4. China releases GDP figures and hints at rate cut
China will release its second-quarter gross domestic product (GDP) data on Friday (15 July). Government researchers have said that China will not rule out an interest rate cut if the data disappoints.
Analysts believe China’s economic growth will be lower than the first quarter, with year-on-year figures slowing to 6.6%. The country’s target rate is between 6.5% and 7%.
5. Updates due from Begbies Traynor, ASOS, M&S, Experian, Burberry
- Monday: Trading update from RPC Group.
- Tuesday: Trading update from ASOS, M&S and Michael Page. Finals due from Begbies Traynor and Jaywing plc.
- Wednesday: Trading updates from Barratt Developments, Burberry, ICAP and Wetherspoon.
- Thursday: Trading updates from Ashmore Group, Experian, Hays, Halfords and Moneysupermrket.com. Finals due from SuperGroup plc.