As we near the end of the year the pace of financial news, impacting data and change, shows no sign of decreasing.
Family expenditure and purchase choices have come under the spotlight, and not just due to the now-infamous Black Friday free-for-all. The BBC notes that the Family Spending Survey, undertaken each year by the Office of National Statistics, revealed that ‘Family spending rose to £517.30 a week last year (2013) but remains below pre-crisis levels when inflation is taken into account’. The 2006 survey declared a figure of £539.80, whereas the 2012 figure was £489 per week. Housing costs are still the largest proportion of expenditure .
The Labour Market Statistics released by the ONS revealed some positive news in that the unemployment rate for the last declared 2014 quarter was down to 6.0% and that employment was rising both on the quarter and year. Explicitly 73% of people aged 16-64 were in employment for the quarter ending September 2014. A constantly increasing trend is viewed positively as unemployment is seen as a ‘lagging indicator’, meaning that firms facing financial difficulties make people redundant as a last resort. Hence, unemployment rises typically occur after other signs of economic pressure.
The Competition and Markets Authority have declared that retail banking is to be investigated by a new Market Reference Group. Their focus will be on the personal current account and SME sectors. The market investigation reflects the CMA’s concerns about the real levels of competition within these sectors. They state that their main concerns are:• low levels of customers shopping around and switching;• limited transparency and difficulties for customers in making comparisons between banks, particularly for complex overdraft charges on personal current accounts;• continuing barriers to entry and expansion into the sector, limiting the ability of smaller and newer providers to develop their businesses;• very little movement over time in the market shares of the 4 largest banks, which provide over 75% of personal and business current accounts.
Attention will be spent on the behavioural and technical advancements since the 2002 Competition undertakings by financial providers which were agreed after the 2002 Competition Commission’s Report.
In mid-November Mark Carney commented that repeated fines and financial scandals mean that ‘it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.’ His comments add weight to the argument for institutional cultural change led by bonus and pay reform.