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- Today's business and finance round up 5th November 2021
Today's business and finance round up 5th November 2021
šInterest rates stay putā¦for now
5th November 2021
Good morning Can you believe it, itās officially 50 days until Christmas. To mark the occasion a host of high street retailers unveiled their festive ads including John Lewis, M&S and Boots. Sports Direct reportedly has the most expensive campaign featuring several sports stars and costing Ā£6m.
Today's stories
Interest rates stay putā¦for now
Metro Bank attracts US takeover bid
ECONOMYInterest rates stay putā¦for now
Whatās going on?The Bank of England surprised the market yesterday when it announced it would not raise interest rates from the record low of 0.1%. But the UK central bank did drop hints that an increase is on the way within months.
Why is this important?
The Bank of Englandās main role is to use interest rates to keep inflation below 2%.Thursdayās statement from the Bankās policymaking committee was hotly anticipated by investors and economists. The market had expected that rate rise would be on the cards to cool the rapidly rising prices of goods and services.But the Bankās nine policymakers voted 7-2 to keep rates unchanged. Inflation is currently 3.1% but is predicted to reach 5% by next year ā the highest in a decade. The wait was justified by concern about economic growth following signs of weakening consumption due to higher energy prices and clogged up supply chains. But Bank officials said recent economic data reinforced the view that borrowing costs will have to rise in the ācoming monthsā to keep inflation on target.TakeawayThe decision to keep interest rates unchanged caught many by surprise and led to a fall in the value of the pound by two cents against the US dollar to less than $1.35. The Bank believes that the UK economy is still too fragile to deal with higher costs of borrowing despite the rising inflation.Policymakers meet every six weeks so thereās a chance a pre-Christmas rise could be in store. But the Bank made it clear that interest rates were not going to return to levels seen before the 2008 financial crisis, i.e. above 5%, anytime soon.
BANKSMetro Bank attracts US takeover bid
Shares in Metro Bank rose by nearly 30% yesterday after it confirmed it received a takeover offer from Carlyle, an American private equity firm.Metro was founded in 2010 and is the newest UK high street bank in over 150 years. Today it has 78 branches and more than two million customer. The bank tries to stand out from its more traditional rivals with branches that are dog friendly and open seven days a week.However Metro has struggled since launch, its smaller scale and intense competition has made the past decade of low interest rates a challenge for profitability.On top of that a major accounting error in 2019 led to an overhaul in its leadership. Since then the share price has tumbled but the approach from Carlyle led to its best ever one-day performance.This year has been one of the busiest ever for UK takeovers by private equity firms. The deep pockets of private equity firms combined with the relatively low valuations of British businesses versus America and European peers has fuelled the activity.The banking sector could see particular attention driven by hopes that rising interest rates might boost the profits of smaller banks like Metro which have struggled to compete against the high street giants.
Stat of the day
Since its introduction in 2008 the HPV vaccine has cut cervical cancer by nearly 90%
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Microsoft Teams adds 3D avatars as it lays out metaverse ambitions
Wizz Air to offer discount tickets this winter as budget airline pursues growth
Venture capital fund dives into Love Island starās swimwear brand
Interesting links from around the web
Do āgreedy jobsā cause the gender pay gap?
Why all your colleagues who quit are about to come back as āboomerang employeesā
Why we should stop telling kids theyāll die from climate change
