Bank governor Mark Carney warns on household debtMark CarneyThe governor of the Bank of England, Mark Carney, has given a warning about the high level of debt in UK households.

In particular he said that consumers were borrowing more on their credit cards and other unsecured debt.

Figures from the Bank this week showed that credit card lending is at a record level, up by £571m in the last month.

Overall unsecured debt – which includes overdrafts – is rising at its fastest pace for 11 years.

“We are going to remain vigilant around the issue, because we have seen this shift,” he told a press conference at the Bank.

The Bank’s Stability Report showed that the overall ratio of household debt to income was 133% in the second quarter of 2016.

The Bank said that was high by historical standards, although it was not as high as in the financial crisis.

“It’s the early phase of re-leveraging, following a long period of improvement of the position,” said Mr Carney.

‘Uncertain’ housing market

For that reason he said the rules on risky mortgage lending would remain as they have been for the last two years.

In June 2014 lenders were told they could not lend any more than 15% of their loan book to people borrowing more than 4.5 times their annual income – so-called riskier mortgages.

Lenders also have to apply an affordability test to anyone wanting to take out a mortgage.

As part of that, lenders have to assess whether a home-owner could still afford the mortgage if interest rates rose by 3% at any time in the first five years of their loan. 

Media captionOne man’s debt woes: Chris borrowed a £3,600 logbook loan but ended up having to pay back £12,100.

“This will help ensure that underwriting standards don’t slip from responsible to reckless as they have during past periods of consumption-led growth,” said Mr Carney.

In its report, the Bank also noted that house prices are now, on average, 4.5 times those of average incomes, a ratio which is high by historical standards.

The outlook for the housing market was “highly uncertain”, it said.

Buy to Let

In general the outlook for UK financial stability after the Brexit vote “remains challenging”, said the Bank’s report.

It said stability was dependent on an orderly exit from the European Union, while it would take time to clarify the UK’s new relationship with the EU.

Otherwise the greatest risks to UK financial stability are slowing growth in China and the eurozone, the report said.

UK banks are particularly exposed to events in Europe.

They provide more than half of debt and equity issuance by continental firms, and account for more than three quarters of foreign exchange and derivatives activity in the EU, it noted.

Canary wharf skylineImage copyrightBLOOMBERG

Image captionBritish banks are heavily exposed to firms in the European Union

“If these UK-based firms have to adjust their activities in a short time frame, there could be a greater risk of disruption to services provided to the European real economy, some of which could spill back to the UK economy through trade and financial linkages,” the Bank said.

However, Mr Carney concluded that overall the financial system had proved resilient.

“The UK financial system has stood up well, dampening rather than amplifying volatility in financial markets,” he said.

“Households and businesses have, as a result, been able to focus on what they should: whether a new home is right for their families or whether a new investment would help them better serve their clients.”

The Bank said it would also continue to monitor the buy-to-let market, an area it has previously been concerned about.

While buy-to-let transactions have slowed in recent months, it said there was no evidence of a widespread sell-off by investors.

Trump vows 35% tax for US firms that move jobs overseasPresident-elect Donald Trump gestures as he speaks during a "USA Thank You" tour event in Cincinnati.

US President-elect Donald Trump says he will impose punitive taxes on US firms that move manufacturing overseas.

Mr Trump promised a 35% tax on products sold in the US by any business that fired American workers, and built a factory elsewhere.

Firms should be “forewarned prior to making a very expensive mistake”, he said.

Mr Trump has promised to help blue-collar workers, as well as reduce taxes and regulations on businesses.

“The US is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the US without retribution or consequence, is WRONG!” [sic], the Republican tweeted.

“There will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, A.C. units etc., back across the border,” he went on.

“This tax will make leaving financially difficult, but these companies are able to move between all 50 states, with no tax or tariff being charged.

“Please be forewarned prior to making a very expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS.”

Donald Trump tours Staub Manufacturing Solutions in Dayton, Ohio in September.Image copyrightGETTY IMAGES
Image captionMr Trump won the votes of working-class Americans by vowing to keep jobs from moving overseas

 

Last week Mr Trump tweeted a warning to Rexnord Corp, an industrial supplier based in Milwaukee that plans to move a bearings plant and its 300 jobs from Indiana to Mexico.

“Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over the country. No more!” he fumed.

Experts have warned that the president-elect will face legal challenges if he tries to impose tariffs on specific companies without congressional approval.

Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, predicted that the US courts would block such a move.

Mr Trump, who defeated Hillary Clinton in the poll, is due to be sworn in on 20 January.

Samsung Electronics considers splitting firm in twoSamsung logo

Samsung Electronics has confirmed it is considering dividing the company into two separate firms.

The company has been under pressure from some investors to break itself into a holding unit and an operating company to boost shareholder value.

The South Korean technology giant also announced plans to increase dividends and said it would continue to buy back more shares.

Restructuring pressure had been mounting after the Note 7 fiasco.

In October, the company was forced to stop production of its flagship smartphone model after failing to resolve battery problems leading to overheating and the devices catching fire.

A ‘thorough review’

Samsung said it would bring in “external advisors to conduct a thorough review of the optimal corporate structure.”

The firm pointed out that “the review does not indicate the management or the Board’s intention one way or another.”

Samsung also said it would pay out half of its free cash flow to shareholders for 2016 and 2017 and raise the dividend for 2016 by 36% compared to the previous year.

In order to improve governance, the firm said it would nominate at least “one new, international, independent Board member” as well as create a separate governance committee.

The company’s statement comes after US activist hedge fund Elliott Management called for the firm to split into a holding unit for ownership purposes and a separate operating company.

Why two companies?

The fund argued that a split would simplify the company structure making it easier to get a clear valuation of the firm’s assets.

Currently, companies within the wider Samsung Group are linked through a complicated web of cross shareholding, linking Samsung Electronics to many other Samsung’s firms and affiliates ranging from shipping, to heavy industries to insurance business.

That makes it difficult for investors to get a clear idea of what each individual Samsung company is actually worth.

The benefit of splitting Samsung Electronics into two companies would be that the cross-shareholding would affect only the holding company while the operating unit could be assed separately – making it a lot easier to arrive at a clean company evaluation.

The proposal has won support from several of Samsung’s investors and it is also thought that it would give back more control to the founding Lee family behind the company.

Trump denies any conflict of interest over business empireDonald Trump waves to the crowd as he leaves the New York Times building following a meeting, 22 November

Billionaire US President-elect Donald Trump has said he is not obliged to cut ties to his business empire when he takes office on 20 January.

A Democratic senator is tabling a resolution calling on him to liquidate his assets to prove he does not intend to profit from the office of president.

There is no legal requirement to liquidate assets but past US presidents have set aside their business dealings.

Mr Trump also disowned far right activists who hailed his election win.

“Alt-right” activists could be seen making Nazi salutes at a conference in Washington DC over the weekend, where a speaker enjoined them to “Hail Trump”.

Mr Trump, who has flown to Florida for the Thanksgiving holiday on Thursday, is still assembling his White House team. One of America’s top generals, David Petraeus, has told the BBC he would be willing to serve under him.

What did Trump say exactly?

“In theory I could run my business perfectly and then run the country perfectly,” he told the New York Times in an interview.

“I’d assumed that you’d have to set up some type of trust or whatever and you don’t.”

US President-elect Donald Trump (R) steps off his plane upon arrival at Palm Beach International Airport in West Palm Beach, Florida, 22 NovemberImage copyrightMANDEL NGAN
Image captionMr Trump (right) has gone to Florida for the Thanksgiving holiday

However, he added that he would “like to do something” to separate his two areas of responsibility.

Democratic Senator Ben Cardin would like a more formal separation. He plans to introduce a resolution next week calling on the president-elect to adopt blind trusts or take equivalent measures to ensure that he complies with the constitution over potential conflicts of interest.

What kind of conflicts are we talking about?

The property tycoon is said to be currently worth $3.7bn (£3bn) by Forbes magazine, with more than 500 different enterprises in his business empire.

One example of a possible conflict of interest is the newly opened Trump International Hotel in Washington DC, the BBC’s David Willis reports.

This handout picture, released by Japan's Cabinet Secretariat on November 18, 2016 shows Japanese Prime Minister Shinzo Abe (2nd L) being welcomed by US President-elect Donald Trump (R) beside Ivanka Trump (C) and her husband Jared Kushner (L) in New YorkImage copyrightAFP
Image captionIvanka Trump and her husband Jared Kushner were present when Mr Trump welcomed Japanese Prime Minister Shinzo Abe in New York last week

Mr Trump already stands to profit from an influx of visitors in the weeks leading up to his inauguration.

Since the hotel sits on land leased from the federal government, when Mr Trump assumes office, he becomes, effectively, both landlord and tenant overnight, our correspondent notes.

Eyebrows were also raised when Ivanka Trump joined in a phone conversation her father had last week with the Argentine President, Mauricio Macri.

The Argentine government later denied reports that Donald Trump had asked Mr Macri to approve a building project by one of his companies in Buenos Aires.

What else did Trump tell the New York Times?

Apart from condemning the far right, he defended hiring Steve Bannon, the former CEO of radical conservative news site Breitbart, as his strategist.

“Breitbart is just a publication,” Mr Trump told the famously liberal newspaper. “They cover stories like you cover stories.”

“If I thought he was a racist or alt-right or any of the things, the terms we could use, I wouldn’t even think about hiring him”, the president-elect added.

He also argued that:

  • His son-in-law Jared Kushner – a real estate heir who has no experience of diplomacy – could help forge peace between Israel and Palestinians
  • The US should not be a “nation-builder” in the world
  • Republican leaders Paul Ryan and Mitch McConnell “love” him again

And he accepted there was some “connectivity” between human activity and climate change.

Trump: US to quit TPP trade deal on first day in office

Kris Kobach and Mr TrumpPresident-elect Donald Trump says the US will quit the Trans-Pacific Partnership trade deal on his first day in the White House.

He made the announcement in a video messageoutlining what he intends to do first when he takes office in January.

The TPP trade deal was signed by 12 countries which together cover 40% of the world’s economy.

The Republican also pledged to reduce “job-killing restrictions” on coal production and stop visa abuses.

But there was no mention of repealing Obamacare or building a wall on the southern border with Mexico, two actions he said during the campaign he would do as soon as he assumed power.

His surprise election win two weeks ago has sparked protests across the US.

The TPP was agreed in 2015 by countries including Japan, Malaysia, Australia, New Zealand, Canada and Mexico, but is not yet ratified.

Its aim was to deepen economic ties and boost growth but its opponents say it was negotiated in secret and it favours big corporations.

What is the TPP and why does it matter?

Asia-Pacific leaders meeting in Peru over the weekend said they will continue to pursue free trade deals despite Mr Trump’s opposition.

But on Monday, Japanese Prime Minister Shinzo Abe said the TPP trade deal would be meaningless without the involvement of the US. 

Media captionSingapore Prime Minister and Barack Obama defended the TPP

In the video message, Mr Trump said his governing agenda would be based on “putting America first”.

The six executive actions he would take on day one are:

  • issuing notice of withdrawing from TPP
  • cancelling restrictions on US energy production
  • cutting regulations on businesses
  • ordering a plan to combat cyber-attacks
  • investigating visa abuses that undercut American workers
  • imposing a five-year ban on people leaving government to become lobbyists

The president-elect has spent the last week starting to put together his new team.

The people around Donald Trump

He said in the video that “truly great and talented men and women, patriots are being brought in and many will soon be a part of our government”.

Kris Kobach and Mr TrumpImage copyrightGETTY IMAGES
Image captionKris Kobach met Trump on Sunday, but the photographers focused on what he was holding
Kris Kobach papersImage copyrightAP
Image captionHis documents outlined a registration system for certain immigrants

Some key appointments have been made, but not without controversy.

Alabama Senator Jeff Sessions, who was turned down as a federal judge in 1986 due to racism complaints, will head the Justice Department.

And the news that Steve Bannon, former editor-in-chief of the conservative Breitbart website, was the new White House strategist was welcomed by former Ku Klux Klan leader David Duke.

One of Trump’s immigration advisers, Kris Kobach, was unwittingly photographed meeting him while holding a document on view that contained some hardline proposals.

Among them was the re-introduction of registration for people arriving from mostly Muslim countries, which was brought in after the September 11 attacks but later dropped.

Asia leaders defend trade deals despite Trump stanceAnti-TPP protesters in Peru

Asia-Pacific leaders have said they will pursue free trade deals despite Donald Trump’s US election victory.

During the campaign, Mr Trump called for greater protection for US jobs and said he would tear up the Trans-Pacific Partnership – the biggest multinational trade deal in years.

But after a two-day summit in Peru, leaders defended the benefits of open markets.

China also claimed growing support for a wider 21-nation trade deal it backs.

In a communiqué at the end of the summit the Apec leaders said: “We reaffirm our commitment to keep our markets open and to fight against all forms of protectionism.”

It also referred to the “rising scepticism over trade”, after the uneven recovery since the financial crisis had caused more people to question whether globalisation worked for enough people.

But the leaders said that the “the benefits of trade and open markets need to be communicated to the wider public more effectively, emphasising how trade promotes innovation, employment and higher living standards”.

Is the TPP dead?

What is the Trans-Pacific Partnership?

The TPP pact involves 12 countries: the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.

The pact aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth.

Barack Obama leaves his Apec press conferenceImage copyrightREUTERS
Image captionPresident Obama says the US should not walk away from the TPP

But Donald Trump said the proposal was a “terrible deal” that would send American jobs to countries with cheaper labour.

The agreement must by ratified in the US Congress, which remains in the hands of Mr Trump’s Republican party – meaning it’s expected to fail.

Hillary Clinton, Mr Trump’s election rival, had also opposed it.

But after the Apec meeting, US President Barack Obama reiterated his support for the pact, saying not going ahead would undermine the US position across Asia Pacific.

He warned he was already hearing calls for a less ambitious trade agreement that would exclude US workers and businesses.

“When it comes to trade, I believe the answer is not to pull back,” he said. “The answer is to do trade right, making sure it has strong labour standards, strong environmental standards, that it addresses ways in which workers and ordinary people can benefit rather than be harmed by global trade.”

But while some leaders think the TPP could go ahead without the US, others say it would be impossible without a complete renegotiation.

Over the weekend, New Zealand Prime Minister John Key suggested there could be minor changes to the agreement that would give Mr Trump enough wiggle room to support it, without losing face.

Meanwhile Peru’s president Pedro Pablo said the TPP should not be written off, despite Mr Trump’s win.

What’s the alternative?

China – which is not part of the TPP – has set out an alternative vision for regional trade.

China’s proposal, the Regional Comprehensive Economic Partnership (RCEP), does not include the Americas.

After the Apec meeting, Beijing said several nations including Peru and Chile had expressed interest in joining the Regional Comprehensive Economic Partnership (RCEP).

Obama defends globalisation on Germany visitBarack Obama makes his way to his car after disembarking from Air Force One on November 16, 2016 at Berlin's Tegel airport

US President Barack Obama has made a strong defence of globalisation as he arrived in Germany on his final visit to Europe before leaving office.

In a joint article, Mr Obama and German Chancellor Angela Merkel said that with the global economy developing faster than ever, co-operation was vital.

Mr Obama arrived in Germany from Athens where he had warned of threats to modern democracy.

He is seeking to calm unease following the election of Donald Trump.

In the article in the business magazine, Wirtschaftswoche (in German), he and Mrs Merkel made a strong case for international trade in contrast to Mr Trump’s more protectionist stance.

 

“There will be no return to a world before globalisation,” they wrote.

“We owe it to our companies and our citizens, indeed to the entire world community, to broaden and deepen our co-operation.”

The two leaders voiced support for the proposed Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU.

By contrast, Mr Trump is a fierce critic of global free trade agreements and welcomed the UK’s decision in June to leave the EU.

US President Barack Obama walks in front of the Parthenon during a tour of the Acropolis on November 16, 2016 in Athens, GreeceImage copyrightAFP/GETTY IMAGES
Image captionMr Obama visited some of Athens’ most famous sites, including the Parthenon

In Athens, Mr Obama acknowledged that globalisation had created a “sense of injustice” and a “course correction” was needed to address growing inequality.

“When we see people, global elites, wealthy corporations seemingly living by a different set of rules, avoiding taxes, manipulating loopholes… this feeds a profound sense of injustice,” he told Greek leaders.

Mr Obama’s visit to Greece was marked by street protests by leftist groups which denounced US “imperialism”. Police used tear gas against about 2,500 demonstrators who had tried to reach the city centre on Tuesday.

The US president will stay in Germany until Friday and then head to Peru.