What Gothenburg Got Out of Congestion Pricing
Ever since New York City implemented its high-profile congestion pricing program in January, there has been a fresh surge of interest in the efficacy of such policies. London's tolls were intensely controversial when launched in 2003, but they succeeded in declogging streets; in Milan, congestion pricing has been hailed for reducing air pollution and raising funds to improve public transit. Early evidence from Manhattan, where most drivers must fork over $9 to enter south of 60th Street, indicates that the policy has sped up bus service and dampened urban noise, and it's on track to produce about $500 million for transit investments this year, after expenses.
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Bloomberg
26 minutes ago
- Bloomberg
Will retail ETF adoption in Europe continue amid global uncertainty?
Overview What's behind the surge in ETF interest from Europe's new generation of investors? How are platforms and asset managers responding to the demand for transparent, low-cost products? This episode of Market Dialogues features Ferat Ozturk, Head of Xtrackers Digital Distribution EMEA at DWS, Julius Weller, Vice President Broker at Scalable Capital, and Selina Kirby, Head of Digital & Execution Only, UK Client Group at Vanguard, join Henry Jim, ETF Analyst, at Bloomberg Intelligence, to discuss how issuers and platforms are working to close the education gap and evolve product offerings for a growing audience of self-directed investors. Source: ETFs in Depth, June 18, 2025, London About the series In focus Featured insights from this episode of Market Dialogues: On changing sources of investor education Selina Kirkby: What we are finding is [that] about 80% of new investors are under 45. So they are wanting to educate themselves and learn about investing and where to invest…We're seeing a huge growth in trust in social media. Whether or not we like it, social media, AI – everyone has got advice in their pocket now… [so] when we think about education, it is really important for the industry to be able to educate the end investor.* Ferat Ozurk: Once you try to engage with retail investors through [social media] platforms, it's a different language which you have to use… market volatility, duration, sharp ratios. Most of the retail investors, are not there yet… It would be the overall goal of the whole ETF ecosystem, whether that would be broker, [or] providers… to make sure that people get more comfortable with the benefits of investing. Julius Weller: Not only we work with marketing partners influencers, but we [also] create a lot of content ourselves that is video content in long or short format for YouTube or the social media channels that is a podcast, but also the very traditional newsletters and blogs… I think [there is a] growing number of people that are interested in those topics, want to understand them, and watch hour-long videos on YouTube about ETFs, the mechanics…and they will also be the buyers of more complicated, sophisticated products. On demand for financial product innovation in Europe Ferat Ozurk: Retail clients just started with a one-size-fits-all product, almost broad-based equity, and now we already see the trend toward new themes. Thematic investing is a great [example]… We do have quite a large AI ETF – it is now among the top three saving-plan choices across platforms. Two years ago that was not the case, so innovation is clearly being driven by big demand for it from retail clients. What's important to understand that at the moment, if you look into the assets, it looks different compared to institutional investors because it's not so much multi-asset, not so much fixed income. It's a lot and heavily focused on Selina Kirkby: Having multi-asset exposures [among issuers offerings] will be really important. And what we're seeing is I think a growth in these neo brokers and recognizing there's a lot of money in mutual funds still and actually looking to offer those alongside ETFs. So whilst there's a growth in ETFs, we're also seeing people being offered mutual funds alongside because they recognize that clients want to have their assets in one place and there's a vast amount of money in the mutual funds.
Yahoo
26 minutes ago
- Yahoo
Will the Bank of England cut interest rates?
The Bank of England (BoE) is widely expected to lower interest rates at its meeting this week, marking the fifth cut since last August. However, while a 0.25% cut is all but certain, the Monetary Policy Committee (MPC) is not expected to accelerate the pace of easing, leaving the future trajectory of monetary policy in the balance. Shop Top Mortgage Rates Your Path to Homeownership A quicker path to financial freedom Personalized rates in minutes City traders are pricing in an 80% probability that the nine-member committee will reduce the Bank Rate from 4.25% to 4% on Thursday, returning borrowing costs to levels last seen in March 2023. 'A rate cut is never nailed on, but it's looking very likely we'll see one when the Bank of England meet next Thursday,' said Sarah Coles, personal finance columnist at Yahoo Finance UK and head of personal finance at Hargreaves Lansdown. Financial markets have anticipated the move for some time, and they have also factored in at least one more cut this year, likely in November. Yet with inflation still running well above the Bank's 2% target and signs of labour market weakness emerging, the debate inside the MPC is likely to be contentious. A tidy cutting cycle? 'To cut, or not to cut, is not the question facing the Bank of England interest rate committee. At least, that's what the markets are saying,' said Laith Khalaf, head of investment analysis at AJ Bell. 'They have already almost fully priced in an interest rate cut this week, so focus will lie not so much on the decision itself as on the precise split of the votes from the interest rate committee, and on the forecasts for inflation and growth in the accompanying economic report,' he added. 'Of course, if the Bank of England chooses not to cut rates, there will be a sizeable backlash in the bond markets. But that seems unlikely on this occasion.' Khalaf highlighted that at the MPC's last meeting in June, three members already backed a cut to 4%. With economic data weakening since, including a softening labour market and rising unemployment, momentum appears to have tilted further toward easing. Read more: UK taxpayers 'subsidising' S&P 500, says LSEG boss 'The unemployment rate has risen to its highest level since the pandemic, and wage growth continues to cool. No doubt one of the factors behind a weaker labour market is the national insurance hike announced by the chancellor in last year's budget, which came into force in April,' he said. Khalaf also pointed to the Bank's measured approach to cutting, calling the current cycle 'metronomic' in nature. 'The Bank of England has been metronomic in its activity during this rate-cutting cycle, with base rate getting chopped back every three months since last August. This fits in with the 'gradual and careful' narrative expounded by the Bank. One year on from that first rate cut, the steady drum beat of the rate-cutting cycle demands another thump.' Looking ahead, markets expect the rate to fall to 3.5% by spring 2026, with further cuts potentially in November and February. 'If it plays out this way, it would surely go down as the tidiest rate-cutting cycle on record, especially in light of what's going on in the world outside of Threadneedle Street,' Khalaf said. 'However, there are plenty of things which could throw the schedule off course… The effects of tariffs on the global economy, the unpredictable prospects for energy prices, and a tricky autumn budget in the UK are just three factors which will weigh on the direction of interest rates from here.' Inflation still a concern With CPI inflation having risen to 3.6% in June, up a full percentage point from March, questions remain over the timing of any easing. 'It might seem odd for the Bank of England to be cutting interest rates at the same time that inflation is pulling away from the 2% target,' Khalaf said. 'However, the Bank's actions are based not on the current inflation rate, which tells us about price rises over the last 12 months, but rather on future inflation, forecast over the next three years.' 'Importantly, the Bank of England's previous forecasts show inflation rising over the course of this year before falling back, so prices are currently evolving broadly in line with what the Bank has been expecting.' Divided Committee, divided outlook While a cut appears to be the consensus, the vote is likely to be split. The MPC is expected to reiterate its 'gradual and careful' stance, keeping the door open for future moves, but resisting pressure to commit to a faster pace of easing. More dovish members, such as external appointees Alan Taylor and Swati Dhingra, could support a deeper reduction amid concerns over rising joblessness. The unemployment rate rose to 4.7% in the three months to May — the highest since June 2021 — and vacancies have slipped below pre-pandemic levels. Others are expected to remain cautious. 'Signs of lingering price pressures will mean the committee remains cautious, with two of the hawkish MPC members expected to favour no change,' said Matt Swannell, chief economic adviser to the EY Item Club. Read more: IMF wants Bank of England to ease interest rates 'gradually' Attention will also focus on Catherine Mann, one of the MPC's most outspoken members. In February, she pushed for a 50 basis point cut, while voting against the consensus again in May to keep rates on hold. The expected split 'reflects the MPC's 'finely balanced decision' on cutting rates to 4%,' said Deutsche Bank's Sanjay Raja. He warned that hawkish voices within the committee could ultimately slow the pace of cuts. Raja expects three cuts over the coming 12 months, broadly in line with market expectations for rates to settle around 3.5%. Michael Saunders, senior economic advisor at Oxford Economics and former MPC member, struck a more cautious note. 'The economy is likely to face persistent headwinds,' he wrote. 'Monetary policy remains quite tight. Fiscal policy is tightening, and the budget may include further tax hikes later this year. Trade policy uncertainty remains high, deterring investment and hiring. The resultant disinflationary effects for the UK may be reinforced by trade diversion from China.' 'As a result,' Saunders added, 'the MPC are likely to cut rates again later this year and early next year, with Bank Rate falling to 3.25% by mid-2026, somewhat below market pricing. Rates could fall faster and/or further if the economy weakens sharply.' Stagflation fears mount The BoE's updated economic forecasts, due alongside Thursday's decision, are expected to be bleak. The economy contracted in April and May, while CPI inflation remains high. Some economists warn that a period of stagflation — characterised by high inflation, stagnating economic growth, and high unemployment — may be setting in. Robert Wood and Elliott Jordan-Doak from Pantheon Macroeconomics suggest that the anticipated rate cut this week could be the last for the foreseeable future. They point out that solid economic growth, along with ongoing wage and price inflation, limits the case for additional cuts. Furthermore, they argue that persistent inflation expectations warrant keeping the neutral rate elevated. As a result, they believe the MPC is likely to pause after this cut, particularly given the prolonged period of inflation overshooting. Enrique Diaz-Alvarez, chief economist at financial services firm Ebury, said: 'While we think that a 25 basis points rate cut remains highly likely in August, fears over the latter could ensure no more than a gradual pace of rate reductions beyond then.' Impact on savers and mortgages Should the MPC proceed with a cut, savers are likely to see falling returns, particularly on easy-access accounts. Read more: Best cash-savings accounts paying up to 7.5% 'A cut next week is likely to mean savings rates fall, particularly easy access rates given they can be more sensitive to base rate cuts,' said Mark Hicks, head of active savings at Hargreaves Lansdown. 'At the moment, unusually, the most competitive fixed terms currently have lower headline rates than the most competitive easy-access deals… We think easy-access rates could fall towards 4%. Fixed-rate deals, however, could remain relatively stable, eventually offering higher rates than easy-access products.' 'It means anyone who has money they don't need for a fixed period of a few months or longer could consider tying it up for a better rate in the longer term.' On mortgages, Khalaf said that fixed-rate mortgage borrowers are unlikely to see major changes from this week's decision. 'A rate cut also won't result in a huge change in fixed rate mortgages, seeing as it is already baked into market prices… A shock decision to leave rates on hold would push mortgage rates up though, as the market reacts to a more hawkish position from the central bank."
Yahoo
26 minutes ago
- Yahoo
UK taxpayers ‘subsidising' S&P 500, says LSEG boss
Tax breaks should be used to encourage domestic investment in public markets, the London Stock Exchange Group's (LSEG.L) chief executive has said. Westminster is seeking to reform pension rules to encourage large pools of capital to invest in domestic equities. Chancellor Rachel Reeves has sought to force pension funds to invest in UK companies, as a means to stimulate economic growth, in a contentious move toward mandation. 'We're not advocating for a mandate," David Schwimmer, CEO of the London Stock Exchange Group (LSEG.L), said in an interview with Yahoo Finance UK's Market Sunrise show. He explained that UK pension funds have historically decreased their allocations to UK-listed assets "dramatically", from over 40% to just 4% over the past 25 years. Schwimmer argued that pension funds should allocate a minimum percentage of their investments back into UK markets, particularly given the tax benefits they receive. "The issue is that the pension funds get £49bn a year in tax benefits from the government, from UK taxpayers," Schwimmer said. "If they are getting those tax benefits and then they're investing in US equities, you basically have the UK taxpayer subsidising the cost of capital in, I'll say, the S&P 500 (^GSPC), which doesn't make a ton of sense from a policy perspective." While Schwimmer did not advocate for a mandate, he suggested that "it's reasonable to have those tax benefits that the pension funds are currently getting be conditional on some kind of minimal threshold investment in the domestic background. I'll throw out 10% but I'll let the policy experts figure out what the right number is." Read more: What is the Pension Investment Review? Earlier this year, Reeves had suggested the introduction of a 'backstop' power that would compel pension funds to invest in British assets if necessary. Her proposals gained some traction, with 17 pension funds agreeing under the Mansion House Accord to allocate at least 5% of their assets to the UK by 2030. This commitment includes giving the government the power to enforce domestic investment in the event that voluntary contributions fall short. The reforms will form part of the Pension Schemes Bill, which is about to go before parliament. The new approach would mean over £50bn of additional investment in UK infrastructure, new homes and businesses, the Treasury said. London's IPO struggles amid New York allure The UK's declining IPO activity has been a persistent issue, with the number of listings at the London Stock Exchange falling to a 30-year low. But Schwimmer acknowledged that the broader global trend has seen a dip in listings, especially with the rise of private capital. "The number of listings on a global basis has declined. In New York, for example, the number of listings is down by 40% over the last 10 years or so," he added. The UK has been working to reform its listings regime to make the market more attractive. "If you go back a few years, there were some rules that were probably overly conservative and hadn't really moved along with how markets were operating around the world," Schwimmer said, referring to changes like the acceptance of dual-class share structures and the loosening of free float requirements for new listings. "All these different aspects have been viewed as very attractive and helpful, so we are now actually seeing a growing pipeline and an increasing number of companies looking to list here," he added. Read more: London IPO fundraising slumps in blow to UK Despite these efforts, Schwimmer admitted that the UK market still faces intense competition from other exchanges, particularly New York, which has seen a resurgence in listings in 2025. Schwimmer was quick to point out, however, that not all companies are suited for the US market. 'There are many companies where it does not make sense to list or go to New York," he said. "In the past 10 years, 20 companies or so have gone from the UK and listed in New York and raised over $100m. Of that 20, three of them have their stock trading up. Of the rest, I think eight of them have delisted, and the remainder are trading down like 70% or so." He also pointed out that many companies, particularly smaller ones, benefit from the personalised attention they receive in London in contrast to the more crowded US market. "They don't get the right attention from investors, from research analysts." For these companies, Schwimmer argued, "it makes much more sense to be listed and trading in the UK." Despite the challenges facing the UK market, Schwimmer remains confident in London's long-term position as a global financial hub. While the number of listings may be down, the capital's strength lies in its international appeal. "London is by far the leading stock exchange in Europe, and it is also the most international financial centre, attracting capital from the UK, US, EU, the Middle East and Asia," Schwimmer said. He acknowledged that New York's appeal cannot be dismissed but argued that for many companies, London is "absolutely" is better. 24-hour trading under discussion When asked about the potential for 24-hour trading at the London Stock Exchange, Schwimmer said that while nothing has been decided yet, LSEG is actively exploring the idea. "We are looking at whether we should be changing our hours. We haven't made any decisions, and anything that we would do would happen in consultation with the market, our users, and of course, we would work closely with the regulators," he said. "Nothing has been decided at this point, but it's something we are certainly thinking about." This would require navigating some challenges, including technological upgrades, regulatory considerations, and potential impacts on liquidity and dual-listed companies. While cryptocurrencies such as bitcoin (BTC-USD) already trade 24/7 and more investors are turning to platforms such as Robinhood (HOOD) to trade shares after hours, stocks listed on the London Stock Exchange remain confined to traditional UK trading hours, running from 8am to 4:30pm. Globally, other exchanges are also eyeing extended hours. In late 2023, the New York Stock Exchange proposed a shift, requesting US regulators to expand its trading window from the current 9:30am–4pm schedule to a new span of 1:30am–11:30pm. Read more: The 'cheapest' stocks on FTSE 100 as UK blue-chip index trades at record high However, such changes come with concerns. Critics, including some brokers, warn that extended hours could complicate the clearing process and require significant operational shifts. Additionally, open-ended fund managers, who calculate daily values at market close, could face challenges with pricing and liquidity in a round-the-clock trading environment. AI and the future of finance The London Stock Exchange Group has diversified over the years, with its data and analytics business now comprising the bulk of its revenues. The company's strategic pivot into financial data services, which involves providing access to market information for a wide range of clients, including banks, brokers, and asset managers, has positioned it as a key player in the financial data sector. This transformation was bolstered following LSEG's $27bn acquisition of Refinitiv, the financial data provider, in 2019. Schwimmer also discussed the growing role of AI at LSEG, highlighting that AI is already a major part of the company's operations. "AI is already playing a significant role in our business, both internally and externally," he said, adding that internally, AI is being used to increase efficiency, streamline operations, and improve data ingestion. The CEO highlighted a partnership with Microsoft (MSFT), which took a stake in LSEG a few years ago. "We've been collaborating with Microsoft to make our products interoperable with the Microsoft productivity suite, including tools like Excel and PowerPoint. This allows bankers and other financial users to use basically modelling, which, if you're in that space, is incredibly helpful and useful," Schwimmer explained. Revenues at LSEG rose 7.8% to £4.49bn in the first six months of the year, exceeding analysts' expectations. The company made just £205m from its equities division over the same period, or 4.6% of its overall revenues. LSEG also announced a £1bn share buyback. Read more: Did the Genius Act just kill the UK's crypto dreams? Defence companies post strong results as UK investors back the sector over AI Should you invest in gold?
