Having helped to prompt the end of Charlotte Hogg’s career at the Bank of England, Andrew Tyrie MP has now welcomed her resignation.
In a statement, Tyrie says:
“This is a regrettable business with no winners. Ms Hogg has acted in the best interest of the institution for which she has been working. This is welcome.
“It is also welcome that the Bank has responded immediately by announcing an internal review. The Bank’s governance is already in much better shape than it was a few years ago. It is something to which the Governor and Court has been committed for some time. But there is clearly more to do.
“The Treasury Committee will be examining the conclusions of this work in due course.”
As well as criticising Hogg’s competence, today’s report from the Treasury committee didn’t cover the rest of the BoE in any glory.
This exchange with BoE court chairman Anthony Habgood, during last week’s session, was particularly excruciating:
The financial markets have known for nine months that Britain was going to trigger the process of leaving the EU. But it seems that Brexit may not be ‘priced in’.
George Saravelos, currency strategist at Deutsche Bank, believes that sterling could fall much further, and close to parity with the US dollar:
“I think the market is slowly starting to realise that Brexit is anything but priced in.”
“How can you price in an event of incredible complexity that has never happened before? We remain very bearish on the pound — our forecast is for a move close to $1.05.”
Speaking of Brexit, one of the major groups in the European Parliament has backed a petition calling for UK citizens to be allowed to retain their EU citizenship rights after the break-up.
ALDE is the Alliance of Liberals and Democrats, led by former Belgian PM Guy Verhofstadt. He’s the European Parliament’s chief Brexit negotiator, and has warned that any Brexit deal could be voted down unless EU citizens in Britain get the right to remain.
Back in the markets, the pound is still bobbing around an eight-week low as traders worry about Brexit, and a possible second vote on Scottish independence.
Sterling is down almost one cent right now, at $1.2127. Against the euro, it’s lost over half a eurocent at €1.141.
Theresa May is due to update parliament about last week’s European Council summit later today; a chance for MPs to express their views and concerns about Brexit.
So far today, former UKIP leader Nigel Farage has voiced his disappointment that article 50 isn’t being triggered today, while the UK government has warned that an independent Scotland would have to join the EU.
Our Politics Live blog has all the details:
Nicola Sturgeon’s dramatic call for a new vote on Scottish independence is a serious complication to the Brexit story, says Mihir Kapadia, CEO of Sun Global Investments.
The complex issue of Brexit has been further affected by the additional twist of the call for a second Scottish Independence Referendum. The previous Scottish Referendum was supposed to have settled the issue for a generation but the SNP now claims that Brexit decision has changed this, as 62% of Scots voted to remain in the EU. This complicates the task facing the UK government as they have won parliamentary authority to trigger Article 50, to initiate the process for pulling out of the EU.
Further to last night’s developments, the pound has now slumped into a two month low, at $1.2125. The lower pound is proving to be good for UK exports but inflation which is already showing signs of a significant revival could be boosted further.”
Gin, bike helmets and soya milk added to inflation basket
On a lighter note, gin and bicycle helmets are being included in the basket of goods used to track UK inflation.
Both items were dropped over a decade ago, but have been brought back to reflect changing consumer habits.
The Office for National Statistics says that:
Gin consumption [is] on the rise, partly thanks to the significant growth in the number of small gin producers.
Bicycle helmets are also returning to the basket after a 12-year absence, following the significant increase in the popularity of cycling due to sporting successes by British cyclists in the Olympics and the Tour De France.
The ONS has also added “no dairy milk” items, such as soya, rice and oat milk; these “Free From” items have all risen in popularity in recent years.
Basic mobile phone handsets have been dropped from the basket.
In another tweak, the stats body has stopped tracking the price of child’s swings, and replaced them with child’s scooters. It’s another attempt to better measure what parents spend money on:
The number of price quotes collected for the swing has been falling reflecting its availability in shops particularly in the winter months and the change is an attempt to improve coverage of outdoor play equipment particularly in those winter months.
More details here: Consumer price inflation basket of goods and services: 2017
Charlotte Hogg’s resignation letter
Oh wow. Charlotte Hogg actually offered to resign last week, when she also admitted to MPs that she’s failed to report her brother’s role at Barclays.
The Bank has just published Hogg’s resignation letter, in which she insists she made an “honest mistake” by not fully complying with the BoE’s code of conduct (which she helped to draw up).
She also reiterates that she never shared any information with her brother , but recognises that saying sorry isn’t enough.
Here’s the letter, dated yesterday (suggesting she resigned last night, after MPs met to discuss the issue before drawing up this morning’s report).
Here’s some instant reaction to Charlotte Hogg’s resignation, from the BBC’s business editor Kamal Ahmed:
And here’s our political editor Heather Stewart:
Charlotte Hogg has resigned
NEWSFLASH: Charlotte Hogg has resigned from the Bank of England, following the scathing report from the Treasury committee.
In a statement, the BoE says it accepted her resignation with deep regret.
Anthony Habgood, Chair of Court, says:
“In her time at the Bank, Charlotte Hogg has made a huge contribution in areas such as professionalising and modernising the management and operations of the Bank, leading the implementation of the strategic plan, championing diversity and driving forward the Bank’s understanding of key issues such as Fintech and Operational Risk. No one who knows her doubts her track record or her integrity. While Charlotte’s decision by any measure exceeds the standard that would be expected in the private sector or would be required under statute, it is understandable in the circumstances and she has taken it with the best interests of the Bank at heart.”
Mark Carney, Governor of the Bank, says he also “deeply regrets” her decision:
“While I fully respect her decision taken in accordance with her view of what was the best for this institution, I deeply regret that Charlotte Hogg has chosen to resign from the Bank of England.”
“Since Charlotte joined the Bank almost four years ago, she has transformed its management and operations. Drawing on her extensive private sector experience and her unrelenting commitment to excellence, she has led a broad range of initiatives to build a more open and inclusive institution, to overhaul our IT systems, and to change fundamentally how the Bank develops, manages and rewards its dedicated public servants.
Along the way, she has inspired countless colleagues at the Bank and attracted a new cohort of professionals to it. The combination of Charlotte’s unique skills and drive were exceptionally well suited to lead similar transformations of our markets and banking responsibilities, particularly given the growing importance of FinTech, operational excellence and the management of cyber risk.”
Charlotte Hogg is under serious pressure now, following the Treasury Committee’s ruling that she lacks the competence to be deputy governor.
Wes Streeting, another member of the committee, says she should step down.
MPs: Charlotte Hogg lacks competence to be Bank of England deputy governor
Newsflash: The Treasury Committee has just declared that Charlotte Hogg, the new deputy governor of the Bank of England, has fallen short of the ‘highest standards’ required for the role.
In a new report, MPs have criticised Hogg for not reporting that her brother Quintin works for Barclays, when she joined the Bank in 2013 as chief operating officer.
Hogg only revealed this breach of the code of conduct last week, having initially told the committee that she had reported all possible conflicts of interest.
And the Treasury Committee has now concluded that this means Hogg is not up to the job of deputy governor – a very serious rebuke.
Here’s the key conclusion from its report:
In its Report on 2 March, the Committee concluded that Ms Hogg had the professional competence necessary to fulfil the role of Deputy Governor for Markets and Banking. Had it known then what has since been disclosed, it would have taken a different view.
Professional competence for this role includes an ability to follow the rules, particularly those that one has had a hand in writing and enforcing; an understanding of why those rules are important; and an awareness of the risks arising from actual and potential conflicts of interest, and the perceptions of conflict. Ms Hogg’s oral and written evidence has given the Committee grounds for concern on all three counts.
The Committee considers that her professional competence falls short of the very high standards required to fulfil the additional responsibilities of Deputy Governor for Markets and Banking.
John Mann MP, a member of the committee, says this is its strongest ever ruling.
The British Chambers of Commerce has added to the jitters in the City this morning.
Although the BCC has raised its growth forecast for 2017, it also cut its forecasts for 2018 and predicted that consumer spending will falter as inflation rises.
Foreign exchange traders are starting to get “spooked” by the prospect of two years of Brexit negotiations, warns Kathleen Brooks of City Index.
Parliament may have passed the Brexit Bill, but a source at the PM’s office said that Article 50 won’t be triggered today, instead we will have to wait until the end of March, when Dutch elections and the EU’s 60th birthday celebrations are out of the way.
The pound has taken a sharp drop in early Tuesday trading, in fairness liquidity has been thin, however, it suggests that the reality of the UK’s divorce from Europe and two years of horse-trading to agree trade deals is beginning to spook the FX market.
Naeem Aslam of Think Markets says “sterling has dropped like a rock” this morning, as traders wake up to the reality that the UK will trigger article 50 this month.
Theresa May is heading towards hard Brexit negotiations with an attitude that she has nothing to lose.
The biggest fear on the street is what will her EU partners will say and how they are going to treat this matter given that Brexit is about to become a reality.
FTSE 250 hits another record high
Britain’s FTSE 250 index, which contains many medium-sized UK companies, hit a fresh all-time high in early trading.
A cheaper pound boosts the value of UK companies’ overseas earnings, and also makes them more vulnerable to takeover bids from foreign rivals.
Scottish independence vote also weighs on the pound
Financial experts believe that Scotland’s push for a new referendum on independence is also hitting the pound today.
Theresa May tried to slap down the idea yesterday, claiming the Scottish Government was playing politics by requesting a second vote.
But the City is concerned that the United Kingdom’s future is also in doubt, as the PM starts the devilishly complicated task of exiting the EU.
Investors must consider whether the vote will happen, whether it will be before or after Brexit, and what the result might be.
Carsten Nickel of Teneo Intelligence says:
The many questions surrounding the latest Scottish push for independence will further add to the already elevated levels of uncertainty. The coming days will likely see both pro- and anti-independence activists starting to work with strong assumptions about the consequences of a potential Scottish break-away, painting their positive or negative views as “inevitable”.
Here’s Adam Cole of Royal Bank of Canada:
The government’s stance on calls for a second Scottish referendum is still evolving, but reports in the media overnight (The Times) suggest PM May is “preparing to reject” the call.
Mike van Dulken of Accendo Markets agrees that the prospect of a second Scottish independence vote is pushing sterling down this morning.
Pound hits eight-week low as Brexit looms
The prospect of Britain triggering its exit from the European Union this month has hit sterling this morning.
The pound has shed almost a cent against the US dollar in early trading, hitting $1.2125.
That’s sterling’s lowest point since mid-January, when Theresa May declared that Britain would leave the single market. It’s around 19% weaker than before last June’s Brexit vote.
The pound is also down around 0.6% against the euro, at €1.140.
Traders appear to be responding to last night’s developments in Westminster, where MPs gave their approval to Theresa May’s Brexit bill.
That gives the prime minister the power to formally trigger article 50 of the Lisbon Treaty, and ends the tussle between the House of Commons and the House of Lords.
The Lords had pushed, in vain, for the government to grant residency rights to EU nationals and guarantee MPs a vote on the final Brexit deal.
Labour’s leader in the Lords, Lady Smith, told the Guardian that the Upper House realised there was no hope of changing MPs minds over this issue.
“If I thought there was a foot in the door or a glimmer of hope that we could change this bill, I would fight it tooth and nail, but it doesn’t seem to be the case.
Brexit won’t be formally triggered today, but the government is adamant it will happen by the end of the month.
The agenda: Fed starts meeting, UK inflation basket updated
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
America’s central bank begins its two-day policy meeting today, where policymakers are widely expected to raise borrowing costs for the first time this year.
The Federal Reserve meeting is taking place in a chilly New York, as a blizzard strikes the North East of America.
That may prevent some Wall Street traders getting to work, but it shouldn’t prevent the Fed taking its decisions or holding a press conference tomorrow night. Investors will be keen to see how hawkish Fed chair Janet Yellen sounds, for clues on how many interest rates may come this year.
In the UK, we’re about to find out which products have been added to the basket of goods used to calculate inflation, and which have been turfed out. The ONS will reveal all at 9.30am GMT.
In Europe, the Dutch election race is reaching a climax. Voters head to the polls tomorrow, after watching prime minister Mark Rutte and far-right populist Geert Wilders clash in a TV debate last night.
The escalating row between the Netherlands and Turkey, following a ban on Turkish ministers campaigning in the country, has added an extra level of tension and drama and put migration firmly in the spotlight (just where Wilders wants it).
And in the City, online supermarket chain Ocado and copper producer Antofagasta are reporting results.
We’ll be tracking all the main events through the day….