EQ Weekly Roundup 27-03-18

This week’s roundup includes news that credit card debt is growing at a 12-year high, the Royal Mail has now raised the price of first and second-class stamps and the government has waded in on an £8.1bn bid to take over one of the UK’s largest industrial firms.

This week’s roundup includes news that credit card debt is growing at a 12-year high, the Royal Mail has now raised the price of first and second-class stamps and the government has waded in on an £8.1bn bid to take over one of the UK’s largest industrial firms.

Credit card debt growth at 12-year high

Debt on UK credit cards is growing at the fastest rate since before the financial crisis, new figures from UK Finance have shown.

The more regular use of these cards for smaller, contactless purchases explains in part the greater debt being built up over short periods.

However, new research shows that the annual growth rate in outstanding credit card debt of 8.3% in February was the highest for 12 years. The annual growth rate of outstanding debt across the credit card market of 8.3% in February was faster than the 6.3% growth seen among cards issued by High Street banks.

Credit card debt is growing at a much faster rate than other forms of debt, such as loans and overdrafts. UK Finance has pointed to the more regular use of credit cards in day-to-day purchases as one of the reasons behind this.

Stamp price rise comes into effect

The 2p price rise in the cost of first and second-class stamps has now taken effect.

A first-class stamp now costs 67p and a second-class stamp now costs 58p, under the price rises that came into force on Monday. Stamps bought before the price rise can still be used without any need to top-up the cost.

Royal Mail said the squeeze on consumer finances was considered when setting the new price.

But it added that the price rise was needed to maintain the universal postal service, which means that the price of a stamp is the same irrespective of where in the UK the letter is sent from and to.

If the price of a first-class stamp had risen in line with inflation since 1989, it would now cost 41p.

Government wades in on GKN takeover

Business Secretary Greg Clark has written to takeover specialist Melrose demanding ‘binding’ commitments over its £8.1bn bid for GKN.

GKN, one of the UK’s largest industrial firms and employer of 6,000 people in the UK, makes parts for Airbus and Boeing, as well as parts for Volkswagen and Ford cars.

Mr. Clark has sought ‘extensive and clear’ measures over GKN’s workforce, research and development, and pension schemes, also raising concerns over national security given GKN’s role in supplying the UK armed forces.

In response, Melrose has set out several pledges, including not selling GKN’s Aerospace Division for five years. It also said that for five years it would maintain the company’s UK listing, maintain its UK headquarters, and ensure research and development (R&D) spending remained at least 2.2% of sales.

Ex-BHS boss faces ban

The Insolvency Service has said it will take steps to have Dominic Chappell, the former owner of BHS, and three other ex-BHS directors banned from holding directorships for up to 15 years.

However, the Service added it would not seek to have Sir Philip Green disqualified.

The Insolvency Service is an executive agency of the Department for Business Energy and Industrial Strategy.

The development comes after Chappell was fined £87,000 in February after being found guilty in January of neglecting or refusing to provide information and documents in relation to the collapsed chain’s pension schemes.

BHS went bust in April 2016, leaving a £571m pensions deficit, and bringing it to the attention of The Pension Regulator.