The Bank of England’s recession-busting policy of quantitative easing could end up costing the Treasury up to £80bn – more than outweighing any profits it will make from the scheme, according to new research by the International Monetary Fund, reports the Guardian.
Policymakers have become increasingly concerned about their “exit strategy” from the unprecedented measures they have used to cushion their economies from the impact of the financial crisis over the past five years.
In a study of the impact of “unconventional” policies, including the Bank’s £375bn bond-buying programme, economists at the IMF found the Bank could sustain losses of anything up to 5.5 per cent of GDP, or almost £80bn, when it sells the bonds back into the market.
Eurozone imports reflect weakness
The trade surplus for the eurozone in March hit its highest level since the bloc was formed in 1999, driven by a continued decline in imports that reflects very weak demand at home as well as steadily rising exports, reports the Wall Street Journal.
The figures released yesterday indicate that the region’s trade surplus increased in the first quarter as a whole, suggesting that weak demand was also responsible for the decline in output during the period.
CBI chief John Cridland issues warning over European Union exit
The head of Britain’s most powerful employers’ organisation today issues a blunt warning about the risks of quitting the European Union after the Conservative party signalled the beginning of a drawn-out parliamentary battle over plans for an in-out referendum by 2017, reports the Guardian.
Budget black hole at heart of George Osborne’s finances
George Osborne’s attempt to slash £11.5bn off public spending in election year has run into cabinet trouble, after ministers identified only £2.5bn in cuts to their budgets, reports the Financial Times.
Some ministers failed to provide Mr Osborne with the list of 10 per cent in proposed departmental cuts he ordered before last month’s deadline. One said the chancellor was “asking too much”.
Gold hits 4-week low on ETF selling
Gold fell to a four-week low on Thursday, with an increasing number of investors becoming bearish about the precious metal as it has fallen through technical support levels, reports the Financial Times.
Lloyds’ shares close in on ‘break even’ level
Shares in Lloyds Banking Group rose to within a whisker of the price at which support for the taxpayer-backed bank is booked by the government, increasing the prospect of a share sale as soon as this year.
While not being an automatic trigger for a sale, 61p is the average price at which the government’s equity support for the bank is booked in its accounts. The stock closed at 60.9p per share last night, up 22.5 per cent so far this year.
RBS axes 1,400 in UK retail restructuring
Royal Bank of Scotland is to axe 1,400 jobs over the next two years as part of a restructuring of its UK retail banking head office, reports the Daily Telegraph. This will take the total number of staff cut since the bank was bailed out by taxpayers in 2008 to 38,900.
Tony Hayward becomes Glencore Xstrata interim chairman
Tony Hayward, the former BP chief executive who was once described as the US’s most hated man following the Deepwater Horizon oil spill in April 2010, has sealed a remarkable comeback by becoming interim chairman of commodities group Glencore Xstrata.
