EQ weekly roundup 2-5-18

This week’s roundup includes news that Asda and Sainsbury’s are pursuing a merger, TSB’s computer glitch has entered its second week and poor UK manufacturing data has thrown a rate rise by the Bank of England into doubt.

This week’s roundup includes news that Asda and Sainsbury’s are pursuing a merger, TSB’s computer glitch has entered its second week and poor UK manufacturing data has thrown a rate rise by the Bank of England into doubt.

Asda and Sainsbury’s to merge

Two of the UK’s largest supermarkets, Asda and Sainsbury’s, have announced they are planning to merge.

The deal – likely to face scrutiny by competition authorities – will create a grocery powerhouse with combined revenues of £51bn.

The companies say there are no plans to close Sainsbury’s or Asda stores though executives are targeting savings of £500m, including ‘operational efficiencies’ and by opening Argos concessions in Asda stores.

Sainsbury’s chief executive Mike Coupe said, however, that he could not dismiss the possibility that regulators could order the disposal of some sites.

Analysts at Global Data said at least 75 would have to go. Unions have voiced fears that the merger would threaten tens of thousands of jobs.

It comes at a time when the major players are battling to remain competitive, with households facing an income squeeze and German-owned discounters Aldi and Lidl posing a growing threat.

TSB computer fiasco enters second week

Frustrated TSB customers are still locked out of their accounts as the bank’s IT fiasco enters a second week.

Some have suggested the system is ‘going from bad to worse’ as they are denied access to online banking and the bank’s mobile app.

It has been announced that TSB chief executive Paul Pester will face questions from MPs on the influential Treasury Committee on Wednesday.

The bank said it was ‘working around the clock’ to fix the problems.

The debacle began when TSB shut down services for two days from the evening of Friday, 20 April to move customer data from former owner Lloyds to a new IT system managed by its Spanish owner Sabadell.

As soon as the new system was switched on, customers reported seeing other people’s account details alongside a range of other difficulties.

UK manufacturing growth slumps

UK manufacturing growth slowed to a 17-month low in April leaving the chances of a Bank of England rate hike further in doubt, a report has shown.

The Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 53.9, lower than the 54.9 for March.

IHS Markit Director Rob Dobson said: ‘While adverse weather was partly to blame in February and March, there are no excuses for April’s disappointing performance, making the chances of a near-term hike in interest rates by the Bank of England look increasingly remote.

‘On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signalled by the opening quarter’s GDP numbers.’

Britain’s economy expanded 0.1% in the first three months of the year. It was the weakest growth since late 2012 and much worse than many economists had expected.

Labour pledges cap on overdraft fees and interest payments

Labour says it would cap the total amount anyone could pay in bank overdraft fees or interest repayments.

Shadow Chancellor John McDonnell said he wanted to end the ‘national scandal’ of low paid families trapped in debt.

The Treasury said it had already tightened the rules to protect debtors and cracked down on payday loans.

According to Labour, people stuck with permanent overdrafts use them more than 85% of the time while incurring higher charges.

The party also said overdraft charges could be up to four times higher than the equivalent borrowing from payday lending.

Under the policy, regulators would impose a limit of £24 per month per £100 borrowed on any interest, fees and charges related to an overdraft. That would be equivalent to the current cap on payday loan interest charges.