Good morning,
Ministers have
ditched plans to scrap copper coins and £50 notes and will instead replace the current £50 notes with a new plastic version.
The decision was made despite recommendations from the Bank of England - the Bank's research has shown that there was no evidence that eliminating 1p and 2p coins would lead to average prices being rounded up. The Treasury was also keen to eliminate the £50 note which is thought to be widely used for criminal activity.
The Bank of England have started the process of designing the new plastic £50 note and said it would be introduced after 2020.
Meanwhile, IoD’s Senior Economist Tej Parikh
writes in City A.M. this morning, looking at the issue of productivity in small businesses. The IoD published a report on the issue last week,
Lifting the Long Tail: The productivity challenge through the eyes of small businesses, which seeks to find policies that address the hurdles small companies face when adopting new technologies and management practices.
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Batlle of wills
Brexit Secretary Dominic Raab travelled to Brussels yesterday for surprise Brexit talks with EU negotiator Michel Barnier, ahead of the major European Council Summit on Wednesday. While the announcement of the meeting signalled hopes that both sides could be close to agreeing a deal, it ended with a stand-off.
A joint statement by Number 10 and the Department for Exiting the EU said that although “real progress” has been made “in a number of key areas”, “unresolved issues” still remained. Nevertheless, it added that the UK is “still committed to making progress” at Wednesday’s summit.
The so-called Irish backstop remains the biggest sticking point, as both sides seek to guarantee that there will be no return to the hard border on the island of Ireland.
Prime Minister Theresa May has proposed that the UK could remain temporarily part of the customs union until the system of carrying out border checks without a hard border is in place. However, many fear that without an agreed end date to the arrangement, the UK could stay as part of the customs union indefinitely, angering those who voted to leave the bloc.
Meanwhile, former Brexit Secretary David Davis yesterday
urged Mrs May's cabinet to rebel against the Prime Minister and "reset our negotiating strategy". He expressed concerns that a deal agreed by the EU and the Government would leave the UK "trapped in the customs union for the foreseeable future."
However, Health Secretary Matt Hancock defended Prime Minister's strategy yesterday, emphasising that any customs union extension would be "temporary and time limited".
Prime Minister is also facing the possibility of Ministers resigning over the issue, with Scottish Tory leader Ruth Davidson and Scottish Secretary David Mundell
warning they would not support a deal that introduces different arrangements for Northern Ireland.
Caught cooking books
The Patisserie Valerie drama
continued to unfold over the weekend, as it was revealed yesterday that two "secret" company overdrafts had been in existence.
Cafe chain's boss Luke Johnson told the Sunday Times that the company's board discovered the overdrafts last week, on which £9.7m have been spent. He added that neither he, the board nor the auditors had known about this.
Mr Johnson provided 20m in loans to save the company from collapsing on Friday, commenting that he felt a "moral obligation" to rescue the business. "There were 2,800 jobs at stake, there was 12 years of effort that I and colleagues had put into the business, and the board were determined not to allow the business to go into administration," said Mr Johnson.
Mr Johnson added that he had "no inkling this was going to happen" and described the past week as "the most harrowing week" of his life.
The finance director of Patisserie Valerie, Chris Marsh, was arrested last week after it was uncovered that fraudulent activity around the company's financial accounts had taken place and it owed over £1.14 million to HM Revenue& Customs. Mr Marsh has been released on bail, while the Serious Fraud Office has opened a criminal investigation.
Down you go
The UK’s economic growth could slow over the next three years, while a no-deal Brexit could dent growth event further, forecasting body EY Item Club has predicted.
The EY Item Club has suggested that GDP would grow by 1.3% this year and 1.5% next year, down from 1.4% and 1.6% respectively predicted by the body three months ago. The outlook is based on the assumption that a Brexit deal between the UK and EU is agreed.
EY chief economist Mark Gregory has urged companies to “consider a sharp downside to the economy in the event of a no-deal Brexit and make preparations for such a scenario.” He suggested that firms should test the robustness of their businesses, especially cash flow, against a short period of severe disruption, followed by a downturn for three of four quarters.
This comes despite growth figures last week showing positive
progress over the summer.
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