According to the Financial Times, the Bank of England is set to have its first “detailed discussion” this week about an interest rise.
But the Financial Times reports it is not expected to increase rates this Thursday (8 May).
With unemployment now below the bank’s 7 per cent threshold, the BoE is no longer bound by its guidance last August to keep interest rates at a historic low of 0.5 per cent.
Monetary Policy Committee members predict greater dissent among their ranks.
Last week, data revealed the UK achieved GDP growth of 0.8 per cent in the first three months of 2014.
Economists said the positive data meant that the BoE may increase interest rates in the first half of next year but they ruled out a 2014 rate rise.
Profits halve at Barclays’ investment bank
Profit at Barclays’ investment bank almost halved in the first quarter after a slump in income at its rates and currency business, the Guardian reports.
Its trading update revealed that pre-tax profit at the investment bank dropped 49 per cent to £668m in the first three months of the year because of what the bank described as “difficult trading conditions and cuts to the business”.
The investment bank’s return on equity also slumped to 4.7 per cent from 10.7 per cent a year earlier.
Poor performance at the investment bank dragged Barclays’ adjusted pre-tax profit down 5 per cent to £1.69bnm whilst profit from retail banking rose 20 per cent to £360m.
Last week, the FT reported that Barclays will this week announce the creation of a bad bank in a bid to transform its struggling investment banking operations.
EC upgrades Britain’s growth forecasts
The European Commission said in its latest health check of the 28 members of the European Union that growth in the UK was ‘broadening’ and becoming ‘firmly established’, the Daily Mail reports.
The EC now expects Britain’s economy to grow by 2.7 per cent this year, compared with a forecast of 2.5 per cent in February and 2.2 per cent in November.
Unemployment is expected to continue to fall from 6.9 per cent to 6.3 per cent by 2015, “while an increase in confidence among firms will boost investment”, the EC said
MPs to investigate AstraZeneca takeover
According to the Guardian, the takeover of AstraZeneca by US drugs group Pfizer is to be investigated by MPs, who are being urged to take evidence from their chiefs amid fears the £63bn transaction could “threaten the future health of the UK’s science base”.
Andrew Miller, the Labour MP who chairs the science and technology select committee, said he had decided to launch an investigation after senior industry figures had contacted him over the Bank Holiday weekend to express their concerns about the deal and confirmed he would be calling expert witnesses from both companies to give evidence at next week’s hearing.
On Friday (2 May), AstraZeneca rejected a £50-a-share offer that included £15.98 in cash, which was slightly higher than Pfizer’s opening gambit.