Last Week In Review: A Financial Roundup
Monday
Revolut set to take on Hargreaves Lansdown after winning trading licence
Revolut, Europe's most valuable fintech, has received authorization from the UK's Financial Conduct Authority (FCA) to allow customers to trade UK and EU-listed stocks and exchange-traded funds (ETFs) from 2025. This marks a shift from its current US-focused trading partnership model, which has been in place since 2019. The move positions Revolut as a competitor to established retail investment platforms like Hargreaves Lansdown and AJ Bell.
The company's trading expansion aims to enhance its investment offerings in its home market following its receipt of a UK banking license in July. With a valuation of $45 billion and a customer base of 650,000 in the UK and 10 million globally, Revolut is entering a competitive market crowded with fintech firms like Etoro, Freetrade, and Robinhood, the latter currently limited to US stock trading.
Revolut's announcement reflects its ambition to solidify its presence in the UK while increasing competition in the retail trading space.
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Tuesday
German economy to stagnate as labour market cools, tariffs loom
Germany's economy is expected to stagnate in the final quarter of the year, the Bundesbank reported, citing a weakening labor market and the risk of new trade tariffs. Although the economy grew by 0.2% in the third quarter, weak foreign demand and low investment suggest limited prospects for a short-term recovery.
The central bank expressed concern over potential tariff barriers, likely referencing U.S. President-Elect Donald Trump's protectionist policies, which could harm Germany's export-driven economy. This bleak outlook has shifted the Bundesbank's focus within the European Central Bank (ECB) from controlling inflation to stimulating growth through lower borrowing costs.
Wage growth, previously seen as a driver of inflation, appears to have peaked and is expected to decline in upcoming negotiations due to prolonged economic weakness and reduced inflation rates.
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Wednesday
Ford cuts 4,000 jobs in Europe, including 800 in UK, after slowdown in EV sales
Ford plans to cut 4,000 jobs in Europe by 2027, citing slowing electric vehicle (EV) sales and competition from Chinese automakers. This move affects 14% of Ford's European workforce, with 2,900 jobs lost in Germany and 800 in the UK, though the Dagenham and Halewood factories will remain unaffected. The cuts will target product development and administrative roles.
Ford has scaled back production plans for new EV models like the Explorer and Capri, citing weaker demand and economic challenges. Its Cologne factory, upgraded for $2 billion to produce EVs, will reduce production hours.
Amid falling overall car sales and strict UK/EU mandates to increase EV sales, Ford and other automakers are lobbying for regulatory flexibility, including more time to sell hybrid vehicles. The UK government has acknowledged these challenges but remains committed to the 2030 EV transition, with potential tweaks to regulations to balance economic growth.
Globally, Ford’s European job cuts represent 2.3% of its 174,000 employees. The company previously laid off 3,800 European workers in 2022 to accelerate the transition from internal combustion engines to EVs.
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Thursday
Public sector pay deals help drive up UK borrowing
In October, UK government borrowing reached £17.4bn, the second-highest October figure since records began in 1993. This was driven by record-high debt interest payments for the month (£9.1bn) and increased public sector spending, including pay rises for NHS staff and teachers. Borrowing has totaled £96.6bn so far this financial year, exceeding last year’s figure by £1.1bn.
The higher-than-expected borrowing reflects challenges in controlling public finances, exacerbated by rising inflation, stagnant economic growth, and calls from businesses to reverse recent tax hikes. Revenue increased despite earlier National Insurance cuts, but spending grew faster, driven by public services, benefits, and debt costs.
The government’s net debt has reached £2.8 trillion, or 97.5% of GDP—the highest level since the early 1960s. Chancellor Rachel Reeves’ recent Budget increased spending by £70bn annually, funded by higher taxes and borrowing. New fiscal rules now track public sector net financial liabilities (PSNFL), which stood at 83.7% of GDP in October, with a target to reduce this share by 2029-30.
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Friday
Weaker pound takes FTSE 100 to best week in six months
The FTSE 100 saw its best weekly gain in over six months, rising 2.5% for the week and ending Friday 1.4% higher, as a weaker pound boosted UK-listed international firms. Sterling dropped 0.6% to its lowest since May, driven by weak November business output and disappointing October retail sales. This currency decline benefited companies like AstraZeneca, Unilever, and Reckitt Benckiser, which earn significant revenue overseas. However, banks such as Barclays and HSBC fell due to poor economic data.
The Bank of England is expected to hold interest rates next month, with traders now anticipating more significant rate cuts in 2024. The FTSE 250 midcap index also rose, gaining 1.1% to reach a one-week high.
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