Capital Markets Corporate

September 4, 2020

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

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UK consultancy firms secure more than £100m to advise on pandemic response 
UK consultancy firms have been awarded £109m and a total of 106 contracts for assisting the Government in responding to the coronavirus pandemic. The figures were revealed through analysis of delayed disclosure documents published by Whitehall. The high number of contracts show how civil servants urgently scrambled to secure support from firms including PwC, Deloitte and McKinsey to help set up track-and-trace systems and acquire ventilators. Several of the contracts have come under intense scrutiny due to a string of administrative errors, such as Deloitte’s role in procuring PPE equipment for hospitals early in the pandemic. (From City AM 31 August 2020)

Real yields on corporate debt plunge into negative territory 
Large waves of central bank support for corporate bond markets have driven up prices and sent real yields tumbling into negative territory, causing some investors to accept a loss for buying them after accounting for inflation. This is the first time short-term investment-grade corporate bonds with a maturity of between one and three years have fallen below zero since March 2017. Government debt has, however, sat in negative territory for most of this year due to in part to record low interest rates and subdued expectations over economic growth. (From Financial Times 31 August 2020)

Stamp Duty holiday and pent demand causes sharp rise in mortgage approvals 
Mortgage demand increased sharply over the last month, according to latest figures from the Bank of England. The number of mortgage approvals jumped to 66,300 in July, up from 39,900 in June. The rise has been partly driven by the release of pent-up demand following the reopening of the UK’s housing market in May and buyers and buy-to-let investors taking advantage of the financial incentives offered by the higher Stamp Duty threshold. Consumer borrowing also rose for the first time in five months as the UK emerged from lockdown. (From The Guardian  1 September 2020)

City firms predict workers will stay at home 
Major City firms are not expecting a rush to the Square Mile despite schools reopening and a plea by ministers for people to get back to their desks. Concern over contracting coronavirus either through commuting or moving around city centres is mounting among workers, possibly prompting them to stay away from workplaces. Employees have also maintained high productivity levels while working from home, suggesting they do not need to be in the office to complete work. However, fears over a rise in insolvencies among city centre located leisure and hospitality businesses are mounting as a result of sharp drops in revenues caused by workers continuing to stay at home. (From Daily Telegraph 1 September 2020)

Dormant pension pots could rise more than threefold in next decade 
The number of dormant pensions could more than triple by 2035 unless the government takes action, according to a study by the Pension Policy Institute. The rise may be in part the result of workers not transferring their existing pensions when moving to a different company. Savers often fail to merge their pots each time they move jobs, causing them to accumulate multiple pots held in different company pension schemes. This makes it hard to keep track of savings and increases the likelihood of pensions being lost, reducing the money savers have in retirement. (From The Times 30 August 2020)

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