Pound vs Euro: What does the future hold?
The euro has seen better days. Quantitative easing, turmoil in Greece and a slow recovery from recession are just a few factors that have brought uncertainty to the continent. What does the future hold for sterling? It is hard to say due to a high degree of volatility in the market.
“Investors always seek the dollar at times of uncertainty. But also the US economy is outperfoming other developed economies around the world.
“Europe is weak principally because of QE [quantitative easing] and the weakness of the European economy. Sterling is in the middle. A view on sterling in the near-term is going to be influenced by the outcome of the general election. I have to say that based on where the polls are now the political uncertainty after the election is not going to be good news for the currency. I expect it to be relatively weak.”
He said “This election does look as though it is a lose/lose for sterling, at least in the short term. Go out and get your holiday money now, unless you have decided that the place to be in 2015 for a relaxing break is Russia or Ukraine, of course.”
E.on fined £7.8m for overcharging customers
Energy regulator, Ofgem has fined E.On £7.75m for incorrectly charging some customers exit fees and overcharging on bills.
The energy giant has also been ordered to pay back £400,000 to affected customers, with refunds ranging from £8 to £12.
The hefty fine will be paid to Citizens Advice, a community charity that helps vulnerable customers, Ofgem said today in statement.
This isn’t the first time E.On has been caught out by the energy regulator. They were fined £12m as recently as May 2014 for miss-selling energy contracts, following an investigation by Ofgem spanning two years. It is estimated half a million households were affected.
Under rules laid out by Ofgem, energy suppliers have to give customers a full 30 days notice of price rises to allow customers to switch supplier if they choose to, before the new charges come into effect.
If a customer signals their intention to switch supplier within 30 days they should not be subject to any exit fees or higher tariff. Eon was found to have billed customers for price rises in January 2013 and January 2014.
“This error and the delay in providing the information is serious and E.On has failed to protect these consumers,” Ofgem said, adding that this had been taken this into account in determining the level of penalty.
“The level of penalty package today also reflects that E.On has made the same error previously as well as making senior level commitments that it rectified its processes,” the regulator added. “Also taken into account was that E.On notified Ofgem of the billing issues and has cooperated throughout the investigation.”
E.On has issued an open apology to customers. “This is not the first time that E.ON has made this error and the company sincerely apologises to those affected.” it said.
Eon is now in the process of trackign down customers to provide refunds by the end of April this year. Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: “It is vital that suppliers play by the rules so customers are encouraged to engage in the market.
“E.ON’s errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation. However it’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”
In a statement it said: “Following reports from E.ON, Ofgem opened an investigation into the errors in June 2014 and has agreed today’s penalty package in recognition of the company’s errors. These errors meant that some customers were overcharged, although in the majority of cases this was by less than £10.”
Liquidity storm could throw UK into chaos
The Bank of England has warned that global liquidity and the threat of Greek default could throw the UK economy into chaos.
The FPC (Financial Planning Committee), which is tasked with maintaining financial stability at thhe Bank Of England said that liquidity – the degree to which assets can easily be traded – may have become “more fragile” in some markets around the world.
Mark Carney, governor of the Bank Of England said they would be working with the Financial Conduct Authority to assess whether asset managers could cope with a fast paced change in market conditions.
“The Committee remains concerned that investment allocations and pricing of some securities may presume that asset sales can be performed in an environment of continuous market liquidity, although liquidity in some markets may have become more fragile,” the FPC said this week.
“Trading volumes in fixed income markets have fallen relative to market size and recent events in financial markets, including in US Treasury markets in October 2014, appear to suggest that sudden changes in market conditions can occur in response to modest news. This could lead to heightened volatility and undermine financial stability.”
Although the FPC has highlighted the risk that liquidity poses to the UK, members said the Bank Of England would work with market participants to ensure that they were aware of the risks and price liquidity appropriately in an attempt to mitigate negative effects.
Just last month Mr. Carney warned that diverging monetary policies across North America, the UK, Europe and and Asia may cause further turbulence and “test capital flows across the global economy, including emerging markets.”
The FPC was also quite clear that the situation in Greece posed a real threat to the UK, “There also remain significant risks in relation to Greece and its financing needs, including in the near term.”
“Any of these risks could trigger abrupt shifts in global risk appetite that in turn might lead to a sudden reappraisal of underlying vulnerabilities in highly indebted economies, or sharp adjustments in financial markets.”
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Greece too slow to address mounting debt, says president of EU commission
Jean-Claude Juncker, President of the European Commission has criticised the sluggish pace of progress in talks over Greece’s mounting debt.
In meeting with Greece’s Prime Minister Alexis Tsipras, Mr. Juncker said he was not satisfied. The Greek PM is in dire need of EU support for reforms in order to unlock vital funds for his country and avoid the possibility of bankruptcy and being ejected from the Eurozone.
Mr. Tsipras has pledged to end austerity measures in Greece, such plans have been opposed by Greece’s EU creditors. Greece managed to negotiate a four month extension on its bailout terms last month after heated talks with creditors.
Hoping to persuade EU leaders of its promise and worthiness of credit, Greece has announced a series of reforms, but it would still like the EU to agree new, more lenient terms for the repayment of its debts.
In the eventuality that no agreement is reached, Greece risks being unable to meet its agreed payments. In the next two weeks alone it will need to find €6bn to pay its creditors.
Mr Juncket also said that he was “not satisfied with the developments in recent weeks”.
“I don’t think that we have made sufficient progress, but we’ll try to push in the direction of a successful conclusion of the issues we have to deal with.”
“I am totally excluding a failure, I don’t want a failure. I would like Europeans to go together. This is not the time for division,” he said.
Speaking alongside Mr Juncker, Mr Tsipras said he remained optimistic. “If there is political will, everything is possible,” he said.