Latest news with #AndrewBailey
Bloomberg
21 minutes ago
- Business
- Bloomberg
UK Squabbling Over Revolut Helps No One
Fresh off a losing battle with the left wing of her own party over spending cuts, UK Chancellor of the Exchequer Rachel Reeves has run into a pillar of the establishment, central bank chief Andrew Bailey. He's annoyed that she's trespassing on his turf in an effort to support fintech Revolut Ltd. Bailey intervened to cancel a meeting Reeves had called between the Bank of England regulators and Revolut to clear the way for it get a banking license, the Financial Times reported this week. The mercurial fintech is the UK's biggest unicorn with 11 million UK customers and 10,000 employees and is straining at the leash after a three-year wait to become a fully regulated bank.
Reuters
a day ago
- Business
- Reuters
Bank of England set to split again in face of inflation, job risks
LONDON, July 31 (Reuters) - The Bank of England is expected to cut interest rates next week but the likelihood of a fresh three-way split among policymakers underscores the conflicting risks posed by rising inflation and a weakening job market to Britain's economy. The BoE's Monetary Policy Committee still appears divided between those who want aggressive action to offset the slowing job market, others who worry about persistent inflation pressure and a majority in the middle who favour gradual rate cuts. The MPC's vote broke three ways in May when the BoE cut its benchmark rate by 25 basis points. Many analysts expect a similar outcome on August 7 with the majority backing another quarter-point cut in Bank Rate while others call for a bigger half-point move and some favour no cut at all. Governor Andrew Bailey and most of his colleagues have stuck to their "gradual and careful" messaging about how quickly they are likely to ease the burden of high interest rates on Britain's economy. But some analysts think the BoE might be approaching the end of its run of reducing borrowing costs. Robert Wood and Elliott Jordan-Doak, economists at Pantheon Macroeconomics, predict a "one-and-done" cut next week and expect inflation to hold above the BoE's target of 2% through 2026 and 2027 - in contrast to the BoE's view that CPI will return to 2% early in 2027. "We think the Monetary Policy Committee will have to press pause after one more cut," they said. "Six years of near-continuous inflation overshoots cannot be ignored." By contrast, most economists polled by Reuters earlier this month expected the BoE to cut rates in November as well as next week, followed by two more quarter-point cuts in 2026. That would take Bank Rate down to 3.25% from its peak of 5.25% following a surge in inflation above 11% in 2022. But it would still be a lot higher than its level of 0.5% that held for much of the decade after the 2007-08 global financial crisis. Finance minister Rachel Reeves has often pointed to the four rate cuts since last August as a sign of recovery in the British economy since her Labour Party took power just over a year ago. However, some economists see the BoE's gradualist approach to cutting rates turning even more cautious after a run of data that suggests Britain's high inflation rate is stickier than previously thought. Headline consumer price inflation unexpectedly rose to 3.6% in June and surveys of inflation expectations have shown the public is largely expecting stronger price growth. Elizabeth Martins and Chris Hare, economists at HSBC, said the BoE might increase its forecast for inflation's peak this year to as high as 4% - double its 2% target - from a previous estimate of 3.7%. Policymakers could also sound more concerned about a potential knock-on impact from higher inflation on the public's expectations for inflation and pay growth over the medium term. "The June minutes noted that rising food inflation increases the risk," Martins and Hare said. But they added that the signs of weakness in the labour market meant the BoE was likely to keep its forecast for inflation in two years' time just below target at 1.9%. The BoE will announce the MPC's latest decision and forecasts for the economy at 1100 GMT, half an hour before Bailey and other top officials hold a press conference. The central bank is also expected to assess the impact of its programme of running down its stockpile of government debt ahead of a decision in September on the pace of sales over the following 12 months, a key decision for bond investors.
Daily Mail
a day ago
- Business
- Daily Mail
Revolut eyes US expansion amid clash between Chancellor and the Bank of England over its UK licence
Revolut wants to expand in the US amid tensions between the Chancellor and the Bank of England over its plans in the UK. The British fintech firm is reportedly weighing up buying an American lender to allow it to operate in the US as the wait for full authorisation in the UK drags on. Revolut's application for a UK banking licence was approved in 2024 after a three-year delay, but it still faces restrictions on lending. It emerged this week that Bank of England governor Andrew Bailey blocked Rachel Reeves from brokering a meeting with regulators and Revolut to help the company secure a full licence. She had tried to set up talks between the fintech, the Treasury and the Prudential Regulation Authority, which is an arm of the Bank. Bailey had concerns that the Bank's regulatory activities should be independent from political interference, the Financial Times reported. Revolut and the Bank declined to comment. The Treasury has been contacted. The US market would provide access to a large pool of customers and potentially higher deposits.
Yahoo
2 days ago
- Business
- Yahoo
Rachel Reeves and Andrew Bailey clash over blocked Revolut meeting
The governor of the Bank of England has reportedly blocked a meeting planned by Chancellor Rachel Reeves to address the regulation of Revolut, in a sign of potential friction between the Government and the central bank. The Chancellor had sought to set up a three-way meeting for Treasury officials, the fintech business and the Bank of England's Prudential Regulation Authority, with regulates UK banks. It is understood the Chancellor is pushing for Revolut to be fully authorised as a bank as soon as possible, after receiving initial approval last year. However, the Financial Times reported the meeting was scrapped by Governor Andrew Bailey due to concerns of political interference in the central bank's oversight process. The incident, which took place in recent weeks according to the publication, contributes to speculation of a growing rift between the Treasury and regulators. Ms Reeves is currently pushing forward with reforms designed to loosen the rules on financial firms, in a move which will increase risk-taking in the sector. The 'Leeds reforms', unveiled in the West Yorkshire city earlier this month, are set to be the biggest set of changes to financial services for more than a decade, according to the Government. Labour is hoping that cutting red tape in the financial services sector and other industries can help accelerate growth in the economy. In her annual Mansion House speech to the financial services sector earlier this month, she urged regulators to resist 'excessive caution'. She added: 'In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.' Shortly after the meeting, Mr Bailey said 'I don't use those terms' when asked about Ms Reeves's remarks on regulation. He also said: 'We cannot compromise on basic financial stability, that would be my overall message.' Last year Revolut was approved for a UK banking licence after a lengthy process with regulators, however its banking division still has a limit on deposits it can receive until it receives full approval from regulators. The Bank of England declined to comment. The Treasury has been contacted for comment. Sign in to access your portfolio
The Guardian
2 days ago
- Business
- The Guardian
Bank of England governor blocks Rachel Reeves's Revolut meeting
The governor of the Bank of England blocked a meeting that Rachel Reeves tried to secure with watchdogs and Revolut, amid concerns the chancellor was meddling in an independent process over the fintech's UK banking licence. Andrew Bailey intervened after learning of the plan to bring together representatives from Revolut, the Treasury and the Bank's regulatory arm, the Prudential Regulation Authority, to discuss the fintech's ambitions to become a fully authorised UK bank. The three-way meeting, first reported by the Financial Times, had been due to take place in the past few weeks but was cancelled over concerns that the central bank's regulatory decisions should be independent from government interventions and influence. A Treasury spokesperson said: 'The chancellor and the governor have a strong and productive relationship, and the government fully supports the operational independence of the Bank of England.' The Bank declined to comment. The meeting would have been part of the government's charm offensive, with ministers desperate to convince Revolut – last estimated to be worth $45bn (£33.6bn) – to choose London for its much-awaited stock market debut primary listing. Ministers have been spooked by comments from Revolut's co-founder and chief executive, Nik Storonsky, who suggested last December that New York could be a better fit because of the regulatory environment and the size of the market. Losing Revolut, which is Europe's most valuable private fintech, would represent a major blow to the City and the London Stock Exchange, which has suffered from a growing number of defections, with companies snubbing the UK for listings abroad. The chancellor has also been urging UK watchdogs to support financial firms in the name of growth, having gone so far as to claim in her Mansion House speech this month that regulation was acting as a 'boot on the neck' of businesses. Revolut secured a limited UK banking licence last year, after a rare three-year wait, having had to convince regulators that the company had addressed a number of accounting issues and EU regulatory breaches, as well as reputational concerns, including an overaggressive corporate culture. The fintech company says it has since resolved those accounting and regulatory problems, and has made efforts to improve its working culture. However, the fintech was only granted a restricted licence and, 12 months on, has yet to have its application fully authorised. The restrictions mean it cannot currently offer its own loans in the UK, and while it can hold customer deposits, they are capped at £50,000. Banks are usually put under these restrictions until they can prove they have appropriate staff, IT systems and governance and accountability checks in place to satisfy officials. Revolut has been hoping to gain full approval from UK regulators this year. A fully fledged licence would open the door to new income streams, as being able to hold customer deposits would allow it to start funding own-branded loans and mortgages. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion It would also mean it face stricter regulations and make it part of the compensation scheme. A full licence was expected to be the first step in open the door to banking licences in other countries, including the US. Revolut has already secured an EU banking licence through Lithuania. However, in the absence of UK approvals, it has emerged that Revolut is considering buying an American bank in order to secure an American banking licence and accelerate its expansion stateside. The fintech company originally launched as a pre-paid card focused on free currency exchange for customers. It has since grown to more than 10,000 staff, serving customers in more than 36 countries, with more than 50 products and services. As well as money transfers, it offers home rentals, buy now, pay later credit, wage advances, e-sims for mobile data plans and crypto trading. Its annual report in April showed Revolut more than doubled its annual profits in 2024, jumping almost 150% to £1bn, thanks to a rise in subscriptions, and revenues from its wealth and crypto trading divisions.
