22nd June 2021
Boris Johnson, said that Covid-19 data is “looking good” for the final lifting of pandemic restrictions in England on July 19. That gives us just under four weeks to rearrange cancelled plans from yesterday and get suitably into the new series of Love Island which starts next Monday.
- Crypto boosts Revolut
- Young people hit by pension changes?
Yesterday's market moves
FTSE 100 +0.6% 7,062
FTSE 250 +0.6% 22,457
Markets started the week in fine form following the jolts last week after the US central bank’s unexpected change in attitude towards inflation.
Domestically all eyes were on the supermarket sector after Morrisons surged 35% following its decline of a takeover offer from Clayton Dubilier & Rice, a US private equity company. There are suggestions that it could turn into a bidding war with the likes of Amazon getting involved.
Crypto boosts Revolut
What’s going on?
Millennial fintech app favourite, Revolut, reported a 57% increase in revenues in the 12 months to December 2020 to £261m. This includes a £39m benefit from the increased value in cryptocurrencies especially Bitcoin which rose 300% last year.
Why is this important?
Although revenue performance was strong in 2020, Revolut’s losses nearly doubled to £168m. This was driven by increased admin costs as the company expanded its engineering team and upped share payments to staff.
Since launching in London in 2015 as an app-based foreign exchange card, Revolut has experienced rapid growth and now offers a range of services including share trading, bank accounts and energy switching to its 15 million customers in 35 countries.
Most of its revenue comes from transaction fees that are taken from a business every time a customer uses their card to pay for their good or service. Revolut tried to reduce its reliance on this revenue stream as the coronavirus pandemic led to a steep drop off in transaction volumes.
Instead the company focused on more profitable channels like crypto, share trading and business accounts.
It now holds £537m in cryptocurrency on behalf of customers at the end of 2020, five times more than the year before.
Revolut has had a strong start to 2021 with revenue for the first three months up 130%. It’s last funding round valued it at over $5bn and it would come as no surprise if the next step was a public listing within the next year.
Young people hit by pension changes?
There are reports in several papers that the government is targeting pensions to pay for the pandemic spending which could hit young people the hardest.
The so-called triple lock on pensions guarantees that the state pension increases in line with inflation, wages or by 2.5%, whichever is higher. It’s been in place since 2010 and written in law.
Already in the three months to April 2021 earnings grew almost 6% following the slump during lockdown last year.
This led to suggestions that Chancellor Rishi Sunak could reconsider the promise as it becomes less affordable. However the government denied that was on the table. This would mean that next year pensioners would be in line for a bumper increase in income, paid for by working age people through National Insurance contributions.
Another rumoured change could be to cut the tax relief on pension contributions for higher rate taxpayers. This would reduce the incentive to save as much as possible for retirement.
Keeping the triple lock and reducing the tax relief on pension contributions would be a double whammy for the younger generation.
Making changes to pension policies is always a political minefield. The government will have to tread carefully if it wants to avoid creating tensions between the younger and older generations.
Stat of the day
Since Satya Nadella became Microsoft's CEO in February 2014, the company's market cap has increased by $1.6 trillion
Other stories to keep you in the loop
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- Flexible rail season tickets in England criticised over savings claims
- Bitcoin falls 10% as China intensifies crypto crackdown
- 1 in 5 London office firms expect staff to work from home five days a week after pandemic
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- Dating app Bumble gives all staff one week break
- Hotel Chocolat pays £4 for beauty firm Rabot 1745