New research reveals a UK technology market which has attracted the eye of US businesses and seen a huge increase in transactions, with acquisitions of UK technology companies up 386% in 2017 than there were in 2009).

Of the 247 UK companies to have exited into the US in 2017, almost a third (32.3%) of those were technology companies, followed by manufacturing, which has also seen an increasing interest from the US over the same period.

While technology has been one of the principle drivers of the UK M&A market in the mid-market, the results highlight there has also been a wider trend of increasing activity from US acquirers. Overall, the UK has seen the acquisition of companies below £1billion increase by 86% over the last decade (2009 to 2017), with sectors such as Business Services and Manufacturing having increased in the number of sales to US acquirers.

Commenting on the findings, Andy Hodgetts, Senior Corporate Finance Manager at Buzzacott said: “The UK’s technology landscape is changing dramatically and is far more active than it was just under a decade ago. Silicon Valley is no longer the sole proprietor for developing new innovations, the UK is a hotbed for talent, and in the US’ acquisitions of UK companies, they are gaining access to that talent pool.

Hodgetts continued: “There has been a lot of uncertainty around Brexit and what it means for the UK, which has left many businesses unsure as to when might be a good time for them to sell. What we are seeing however is that there are a number of opportunities and buyers out there, especially in the US. For UK companies that are planning on exiting, but have waited due to the uncertainty the UK faces, it is important to not just think about companies within the UK that might want to acquire the business, but explore internationally too as there are plenty of buyers available, whatever the sector.”

(Source: Buzzacott)

China has been beating its currently forecast growth rate. According to official data, China's economy grew at an annual pace of 6.8% in the first quarter of this year compared to the same period in 2017.

Over the past year China has seen national economic growth that is unparalleled and unprecedented worldwide. This week Finance Monthly set out to hear Your Thoughts on the following: Is China's economic growth rate on the rise? How resilient can Chinese business maintain current growth? Will consumer demand continue to fuel its growth spurt?

Olivier Desbarres, Managing Director, 4xGlobal Research:

With mounting concerns about the impact of potential protectionist measures on global trade and growth there has been much focus on GDP data releases for the first quarter of the year. China accounted for nearly 30% of world growth last year so Q1 numbers had top billing even if doubts remain as to the reliability of Chinese GDP data.

Chinese GDP growth remained stable in Q1 2018 at 6.8% year-on-year, in line with growth in the previous 10-quarters but marginally higher than analysts’ consensus forecasts and quite a bit faster than the government’s 6.5% target for the full-year of 2018.

The stability of Chinese growth has done little to alleviate concerns that this pace of growth may not be sustainable, given the changes in the underlying driver of growth, or even advisable going forward.

In recent years, aggressive bank lending to households, companies and local government has funded rapid investment growth, including in large infrastructural projects and the property market, and driven overall Chinese growth. Property development investment growth continues to rise at above 10% yoy.

This has led to a sharp rise in public and private sector debt as well as environmental pollution. The government has responded with a raft of measures, including a crackdown on the shadow banking sector, a tightening of real estate companies’ access to credit, a tightening of the approval of local infrastructure projects and pollution controls. These measures may in the medium-term help reduce or at least stabilise debt levels, channel funds to a manufacturing sector which has seen a rapid growth slowdown (to around 6% yoy) and reduce environmental damage. Property sales growth, a leading indicator of property investment, has indeed slowed to around 3.5% yoy.

However, near-term there are concerns that these deleveraging and environmental measures could put pressure on Chinese growth at a time when net trade’s contribution to overall Chinese growth is potentially under threat. For starters, the structural shift in China has seen buoyant consumer demand and imports curb the trade surplus. Moreover, if the war of words between the US and China over import tariffs escalates into a full-blown war China’s trade surplus could erode further and household consumption run into headwinds.

The transition from one economic model to another is challenging for any government and China’s leadership has so far avoided a potentially destabilising rapid fall in GDP growth. The increasing focus on high valued-added exports, consumption and broader quality of life indicators is unlikely to go in reverse. However, this transition may not always been smooth as policy-makers deal with the overhang from years of excessive lending and investment. This could well result in slower yet more balanced and sustainable economic growth in coming years.

David Shepherd, Visiting professor in Global Macroeconomics, Imperial College Business School:

Recent figures for Chinese GDP growth suggest the economy is expanding roughly in line with Government targets, with growth at 6.85% compared to the stated 6.5% target. Moving forward, the question is whether this kind of rate can be sustained or whether we can expect to see lower or perhaps even higher growth over the coming months and years?

The outstanding growth performance of the Chinese economy over the last 20 years stems from a successful programme of industrialisation based on market reforms, capital investment and a drive for higher exports. But that was in the past, and it is unlikely that these factors alone can be relied upon to sustain future growth, partly because of a change in the political environment in the United States, which has become increasingly antagonistic towards the Chinese trade surplus, but mainly because of purely economic factors related to high market penetration and the rise of competing low-cost producers in Asia and elsewhere. While exports and capital investment will always be important for China, if further high growth is to be sustained it will have to come either from higher domestic consumption or increased government spending.

The share of government spending in the Chinese economy is currently only 14% of GDP and the Chinese economy would undoubtedly benefit greatly from increased expenditure on health, education and other public services. While this could in principle be a significant engine for growth, in practice there are significant constraints on the ability and willingness of the government to finance increased spending, not least because of an already high fiscal deficit. The implication is that if high growth is to be sustained in the future it will almost certainly require a move towards higher consumption.

In contrast to the United States and the United Kingdom, where consumption has increased significantly over the last 20 years and now accounts for almost 70% of GDP, in China consumption spending has if anything been falling and currently accounts for only 40% of GDP. For the US and the UK, consumption is arguably too high and both economies would benefit from lower consumption and increased capital investment and exports.

In China, the opposite re-balancing is required, and the relevant consideration is how a sustainable increase in domestic consumption can be achieved. Consumption typically rises when real wages rise and when households choose to save less, but in China, saving rates are high and the share of labour income in national income has been falling. The challenge for policy makers is to find the best way to change these conditions, to reduce saving and boost wages at the expense of profits and other business incomes, all in a context of considerable uncertainty about the economic environment. It is now almost nine years since the current economic expansion began and, if history is any guide, the next recession is not too far down the road. But how that would affect China’s growth performance is another story!

Alastair Johnson, CEO and Founder, Nuggets:

Napoleon once referred to China as the ‘sleeping giant’. It’s looking, certainly in terms of its economy, like the giant is finally rearing its head. China’s unprecedented and unparallelled growth in the e-commerce sector trumps that of other nations, boasting a 35% rise in the past year (with a market twice the size of that of the rest of the world).

There is a great deal of focus, not only in online retail commerce in and of itself, but in the bridges built to link it to peripheral services. China dominates the O2O (online-to-offline) model, strengthening the connection between strictly digital commerce and brick-and-mortar merchants. Instead of displacing traditional commerce, the nation’s retail industry is instead evolving by combining physical stores with increasingly innovative online solutions.

Development of applications such as WeChat and Alipay have lead to a seamless user experience, whereby individuals can simply access stores and make purchases from within the app. It integrates with some of the biggest players in ecommerce, including the behemoths that are Alibaba, JD.com and ULE.

Worth considering on the telecommunications front is China’s plan to bootstrap a new network for 5G (versus simply building atop existing ones). Given that 80% of online purchases are done on mobile (versus under half in the rest of the world), this development will only serve to further strengthen the connection between mobile devices and e-commerce.

It’s hard to see the trend dying down anytime soon. Businesses appear to have grasped the importance of user experience, and identified the lifeblood of the industry: consumer demand. New wealth in the nation is fuelling purchasing power. To maintain this hugely successful uptrend, companies in the sector should continue to foster an ecosystem of interconnectivity, both with retailers and tech companies. Smartphone manufacturers anticipate that their growth in 2018 will be slow in China, due to saturation and slow upgrade cycles. Brands will need to look to Western markets for continued development.

Jehan Chu, Chief Strategy Officer, Caspian:

China's rise is not only measured by its achievements, but also by its insatiable appetite to develop new industries. Despite the ban on ICO's and cryptocurrency exchange trading in China, there has been a surge in interest and development in Blockchain technology - the underlying rails of crypto.

From new startups like Nervos (blockchain protocol) and veterans like Neo (US$5bil coin market cap tech) to institutions like Tencent (Blockchain as a Service) and Ping An (internal infrastructure projects), China is leading the world in developing efficient solutions using Blockchain technology. In addition, increased restrictions inside of China have spurred ambitious Chinese developers and entrepreneurs to decamp to crypto-friendly cities like Singapore and San Francisco, creating expert and cultural diaspora networks that span the globe but lead back to China.

Looking forward, it is clear that the sheer volume of engineering talent combined with its seamless adoption and endless ambition to build the new Internet on top of blockchain will keep China at the forefront of technology for decades to come.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Investors on the Assetz Capital platform are expecting to feel a negative impact from the UK’s economic situation in the next three months, despite the government lauding growth of 0.8% in Q4 2017.

The peer-to-peer lending platform canvassed the views of its investors in the Q1 Assetz Capital Investor Barometer. Asked how the economic situation would impact their lives in the next three months, only 13% said it would have a positive impact. 51% expected no impact, but 36% thought it would have a negative impact.

When asked how the economy had affected them in the three months prior, investors were again gloomy, with only 15% saying they have felt a positive impact. 60% said it had no impact, while 25% reported a negative impact.

Stuart Law, CEO at Assetz Capital said: “In contrast to the positive outlook which is expected to be announced in the Spring Statement, there doesn’t appear to be a great deal of optimism about the economy at the moment, with a growing number of our investors anticipating a negative impact in the next quarter. As Brexit creeps closer and the reality of a no-deal outcome seems more likely, uncertainty about the future of the economy seems to have taken its toll.

“Interest rates remain low while inflation remains relatively high, so many people are effectively losing money each day. It is no surprise, therefore, that alternative financial investments are continuing to gain traction, as people become willing to take on a little more risk – as with any investment – in order to see potentially fairer returns.”

(Source: Assetz Capital Investor Barometer)

Average UK current account holder charged £152 last year in overdraft, FX, transaction and other fees, according to analysis from Plum.

Analysis of over 11,000 UK personal current accounts (PCA) has revealed that the average holder was charged £152 in bank fees last year which, if incurred by every one of the 65 million active current accounts in the UK, suggests banks made £9.9 billion from charges in 2017.

The data, collated by Plum, the automated money management chatbot, coincides with launch of its Fee Fighters function, a free tool that enables users to check in exactly what fees they are being charged by their banks. This functionality is made possible due to the implementation of Open Banking, which aims to encourage fair competition and comparison. The European-wide regulation orders banks and credit card companies to share a customer’s data with other regulated companies if requested to do so by a customer, removing the banks monopoly on customer data.

The average £152 paid per year by current account holders includes overdrafts, foreign exchange, and transactions fees, as well other unspecified fees, such as monthly account charges. This £152 average rises significantly when considering personal current accounts with an overdraft function. In this case, total bank charges were closer to £221 per current account holder with those that have at least 1 overdraft transaction per year.

In terms of what charges were applied by the banks, 56% were due to overdrafts, both from planned and unplanned usage. Foreign exchange fees accounted for 11% of the total charges, while late transaction fees made up 6%. Over a quarter, however, (27%) of the total charges were classed as “other” which included monthly account fee, unspecified bank fees, or bank subscriptions. Some of these charges can be fairly high, with an average of £5-£10 charged per bounced back transaction it is not uncommon for users to accumulate these charges without realising it, getting charges up to £75 in “Unpaid Transaction Fees”.

To help consumers be alerted to and understand the culprits of the charges, Plum has developed a free Fee Fighter tool, first of its kind that alerts users to fees. With the implementation of Open Banking, in the coming months Plum hopes to go beyond raising awareness about hidden fees and provide solutions, helping users to identify smarter deals and more cost effective products with alternative providers bespoke to their financial requirements. The tool uses TrueLayer, a secure FCA authorised service, to gain read-only access to a user’s bank account, Plums AI then processes the description of each bank transaction understanding what type of a fee it is and allocates it to a specified category. When banks hide fees in the description of the transaction rather than listing it as a separate line in the bank statement, Plum extracts the fee from the description itself.

Victor Trokoudes, CEO and co-founder of Plum, said: “For too long, banks have been guarding customer data, and have been purposely vague about the true cost of overdrafts, borrowing, and FX. But with Open Banking now a reality, people can see in real time what charges they are being asked to pay by the banks and therefore take control of their money to avoid paying them.

“Enabling people to take control is why we launched Plum and that’s why we’ve created Fee Fighter which, in less than five minutes, helps people find a better deal and avoid fees when it comes to banking. We want to help people stand-up to their banks and demand a competitive deal. The more people that switch, the more that banks will be forced to compete for their business and fight to retain loyal customers. This is just one of the ways that we’re helping people be better off.”

(Source: Plum)

The UK’s Banking and Financial sector has ended the year on a positive note, with the growth of new companies up 18.56% to 5,775 and failures down by 37.89% to 59 compared to Q3, according to figures released in the quarterly Creditsafe Watchdog Report. The report tracks economic developments across the Banking and Financial sector and 11 other sectors (Farming & Agriculture, Construction, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Transport, Utilities and Wholesale).

In addition, sales were up marginally by 1.24% from Q3, and the number of active companies rose by 6.86% over the same period. Total employment fell by 4.39 in Q4.

The research shows a significant improvement in the financial health of the sector, with the volume of bad debt owed to the sector decreasing by 89.31% in Q4, and down by 81.35% since the same period a year ago. The average amount of debt owed to companies in the sector in Q4 came in at £28,686, which was an 88.35% drop on the previous quarter. There was a mixed picture for supplier bad debt, the volume owed by the sector, which saw a big decrease of 60.71% against Q3, but was up by 51.16% compared to Q4 2016.

Rachel Mainwaring, Operations Director at Creditsafe, commented: “Creditsafe's Watchdog Report shows a much-improved outlook for the UK’s Banking and Financial sector moving into 2018. Last quarter’s levels of bad debt were a serious cause for concern, so it’s extremely positive to see a huge drop in these figures in the final quarter of the year.

“It’s also exciting to see such an increase in the growth of new companies, pointing to an encouraging year ahead for the sector. It will be interesting to see how these new companies fare, and whether these positive figures continue throughout the next few quarters.”

(Source: Creditsafe)

December mortgage sales in the UK plummeted by 38% (£5.8 billion) on November, according to Equifax Touchstone analysis of the intermediary marketplace. Year-on-year sales dropped by 12.8% (£.1.4 billion).

Residential figures dropped dramatically by 39.6% (£4.9 billion) on the previous month. Buy-to-let sales also tumbled, falling by 32.1% (£853.7 million) on November.

All regions across the UK suffered from a significant mortgage sales contraction in December. The South Coast witnessed the largest slump of 42.1%, followed by the Midlands (40.6%) and Wales (40.3%). Mortgage sales in the North West fell 34.4%, the smallest drop across all the regions.

John Driscoll, Director at Equifax Touchstone, said: “After three months of consecutive growth, mortgage sales in the UK have decreased sharply across both residential and buy-to-let sectors. Traditionally, December is a slow month for sales due to the festive period and other seasonal effects. However, the level of decrease is somewhat concerning for the industry, especially when considering that mortgage sales are down £1.4 billion year-on-year.

“While we expect to see the usual New Year pick-up in the market following a festive dip, there are a number of factors at play which could alter the direction of mortgage sales in coming months. An uncertain economic and political outlook, the onset of Open Banking and whether this will facilitate faster mortgage applications, the end of the Term Funding Scheme and implications for higher mortgage rates, and the subdued forecast for house prices, to name a few, have set the scene for a volatile and uncertain market in 2018.”

The data from Equifax Touchstone, which covers the majority of the intermediated lending market, shows that the average value of a residential mortgage in December was £191,522 (2016: £196,682) and £150,914 for buy-to-let (2016: £158,967).

(Source: Equifax)

The Dow just soared through yet another milestone, crossing 25,000 for the first time. CNN's Christine Romans explains what's driving gains.

Anomali recently released a new report that identifies major security trends threatening the FTSE 100. The volume of credential exposures has dramatically increased to 16,583 from April to July 2017, compared to 5,275 last year’s analysis. 77% of the FTSE 100 were exposed, with an average of 218 usernames and password stolen, published or sold per company. In most cases the loss of credentials occurred on third party, non-work websites where employees reuse corporate credentials.

In May 2017, more than 560 million login credentials were found on an anonymous online database, including roughly 243.6 million unique email addresses and passwords. The report shows that a significant number of credentials linked to FTSE 100 organisations were still left compromised over the three months following the discovery. This failure to remediate and secure employee accounts, means that critical business content and personal consumer information held by the UK’s biggest businesses has been left open to cyber-attacks.

The report, The FTSE 100: Targeted Brand Attacks and Mass Credential Exposures, executed by Anomali Labs also reveals that:

• Five of the FTSE 100 companies had more than 1,000 credential exposures, access to these enable cyber criminals to harvest and misuse additional credentials and company data
• The banking sector accounted for a quarter (23%) of the total exposed credentials

“Our research has uncovered a staggering increase in compromised credentials linked to the FTSE 100 companies. Security issues are exacerbated by employees using their work credentials for less secure non-work purposes. Employees should be reminded of the dangers of logging into non-corporate websites with work email addresses and passwords. While companies should invest in cyber security tools that monitor and collect IDs and passwords on the Dark Web, so that staff and customers can be notified immediately and instructed to reset accounts,” said Colby DeRodeff, Chief Strategy Officer and Co-Founder at Anomali.

The Anomali research team also analysed suspicious domain registrations, finding 82% of the FTSE 100 to have at least one catalogued against them, and 13% more than ten. In a change to last year the majority were registered in the United States (38%), followed by China (23%). With the majority of cyber attackers using gmail.com and qq.com (a free Chinese email service) to register these domains to mask themselves. With a deceptive domain malicious actors have the potential to orchestrate phishing schemes, install malware, redirect traffic to malicious sites, or display inappropriate messaging.

For the second year, the vertical hit hardest by malicious domain registrations was banking with 83, which accounted for 23%. This is double that of any other industry. To avoid a breach, organisations have to be more accountable and adopt a stronger cyber security posture, for themselves and to protect the partners and customers they directly impact.

“Monitoring domain registrations is a critical practice for businesses to understand how they might be targeted and by whom. A threat intelligence platform can aid companies with identifying what other domains the registrant might have created and all the IPs associated with each domain. This information can then be routed to network security gateways to keep inbound and outbound communication to these domains from occurring. No one is 100% secure against actors even with the intent and right level of capabilities. It is essential to invest in the right tools to help secure every asset, as well as collaborate with and support peers in order to reduce their risks to a similar attack,” continued Mr. DeRodeff.

(Source: Anomali)

The annual cost of fraud in the UK is £190 billion, equal to around £10,000 per family, according to a new research study.

The Annual Fraud Indicator 2017 reveals the staggering prevalence of fraud, which is now the UK’s most common criminal offence.

Put into context, the scale of the problem is such that the cost of fraud to the UK is greater than the Gross Domestic product of 148 out of 191 countries.

The study, compiled by Crowe Clark Whitehill, Experian and the Centre for Counter Fraud Studies at the University of Portsmouth shows that private sector fraud costs the UK economy £140 billion, while fraud in the public sector is estimated to cost the country £40.4 billion in 2017.

Fraudulent activity aimed at individuals amounts to £6.8 billion, while charities suffer to the tune of £2.3 billion.

These numbers are far from insignificant. With the latest National Audit Office and National Crime Agency statistics confirming that fraud has surged to the top of the list of commonly committed crimes, now is the time to identify and measure its cost so that businesses, government bodies, charities and individuals can understand the value of their investment in countering fraud.

The private sector is the worst hit, largely due to the volume of expenditure conducted by private enterprises. While public sector fraud is the easiest to measure and detect due to the reliability of tax and benefits data.

A significant proportion of the costs of fraud in the report are attributed to procurement fraud. Procurement accounts for a large portion of organisational expenditure and fraud can creep in at various stages of the procurement process. The rise in the incidence of fraud in registered charities is largely attributable to an increased expenditure on procurement, for example.

New trends have emerged that impact demography and type of fraud victim. Technology continues to open up new avenues for fraudulent activity. Online Banking fraud has grown by 226% and Telephone Banking Fraud by 178% in the past year, with many millennials increasingly being drawn into the fraudsters’ net.

Technology and legislative controls are also impacting behavioural patterns amongst fraudsters. Reformative measures such as the Payment Services Directive 2 (PSD2) will bring tighter regulatory controls and deter attacks, while new counter fraud tools are causing fraudsters to innovate and target platforms not governed by strong customer authentication.

Jim Gee, Head of Forensics and Counter Fraud at Crowe Clark Whitehill, comments: “The cost of fraud is clear – not just the proportion which is detected, nor a guestimate but accurate information about the total cost to UK plc, just like any other business cost. And that cost is £190 billion.

“Private companies are made less stable and financially healthy; as citizens we don’t get the quality of public services that we pay our taxes to receive; and even charities don’t get to spend the full value of the donations which people make. What other problem of this size doesn’t have a proper national response?”

Nick Mothershaw, Director of Fraud and Identity Solutions at Experian: “Awareness of the dangers fraud poses is growing, but the total of £190 billion is startlingly high. Plastic card and online banking fraud continues to increase, so new regulations which make it harder for fraudsters to use someone’s cards online are a necessary step. Fraudsters are shamelessly opportunistic and are now turning their attention to the pensions release, lured by the promise of high value returns when their scams are successful.”

Professor Mark Button, Director of the University of Portsmouth’s Centre for Counter Fraud Studies, adds: “The 2017 Annual Fraud Indicator highlights again the colossal cost of fraud to the UK economy. At £190 billion it would represent more than the UK government spends on health and defence combined, or on all welfare payments, bar pensions.”

(Source: Crowe Clark Whitehill)

The year 2017 has been eventful in terms of the various socio-political and economic developments across the world.  Here is Mihir Kapadia’s quick summary of the year as it was.

The Year of Elections

After 2016 gave us Brexit and Trump, political and economic analysts across the developed world were wary about the possibility of protectionism spreading across the European continent, especially as 2017 was due series of elections in the region. With The Netherlands, France and Germany, the three big powerhouses of the European Union, going to the polls, there was a real threat of right-wing populist parties gaining prominence and altering the mainstream and liberal values of the western developed economies. The fear was legitimate, as EU sceptics appeared to be inspired by Brexit and Trump and were engaging on similar campaign promises based on nationalism and the closing of borders.

The year delivered relief across the continent, as liberal political parties emerged victorious over right-wing populists; however, the political dynamics and discourse in the region were considerably altered. Eurosceptics including Geert Wilders in The Netherlands, Marine Le Pen in France, and the Alternative for Germany (AfD) party gained mainstream prominence and considerable representation in their respective countries.

Germany is currently in a difficult spot, as none of the parties secured a working majority, Angela Merkel’s CDU has been attempting to negotiate a ‘grand coalition’, in an attempt to break the current political deadlock after coalition talks with the pro-business Free Democrats (FDP) and Greens collapsed. While brokering a grand coalition across parties in the parliament can deliver governance, it is too early to comment how strong the Chancellor’s leadership and authority would be.

Trumping the Stock Markets

 While protectionism and populist policy proposals have been part of the 'Make America Great Again' campaign slogans, the larger driver behind the 'Trumponomics' rally has been the hope that President Trump can push through policies to stimulate growth and increase corporate profits. Anticipation of infrastructure expenditures, healthcare reforms and tax cutting legislation helped rally the stock markets to a series of all-time highs. While the stock market has consistently risen strongly since November 2016, despite the fact that many of Trump’s key promises such as infrastructure spending and healthcare reforms are yet to materialise, there are increasing fears that the US stocks are being overvalued. However, these concerns have been there since 2003 when the current long equity rally began.

Meanwhile, the dollar has had a rough year, having lost about 9-10% in 2017, but Trump has probably been happy to see it fall, as it will help boost US exports.

Financial analysts observing the uptrend in the US stock market over the year have cautioned that the markets may already be overpriced. The last time the US economy had a meltdown, it was 2008 and it affected the whole world. The 2008 financial crash occurred because of fragility in the banking system due to poor mortgage lending. The US is currently trending positively on earnings, employment, wage growth, housing and GDP. These indicate no signs of an impending recession; and the Federal Reserve is likely to raise interest rates through 2017 and into 2018. Trump has been indirectly very good for the economy.

Dull year for Gold

 The significant threat globally throughout 2017 has been North Korea's aggressive stance against the US and its regional allies - South Korea and Japan. The year-long nuclear ballistic tests and provocative missile launches rattled Asian markets, but net impact was negligible and equities have risen in Asia and elsewhere. Therefore, safe-haven assets, such as Gold, received little support due to these threats.

Globally, the bullish stock market, rising interest rates and a sense of market security proved to be bad news for Gold, US-denominated assets such as Gold are influenced by the movements of the dollar, and its fortunes are also tied to the dollar among other factors. The US dollar has fallen nearly 10% year-to-date (or YTD) in 2017.

Under a bullish Federal Reserve, the commodity had already priced in the factor of interest rate hikes. Only if the actual rate of increase is lesser than expected, gold prices may benefit and see some relief going into 2018. Investors therefore will keenly observe the Fed’s tone when they discuss the interest rates for next year to understand how they would progress into 2018.

Brexit uncertainty remains

 Brexit continues to dominate the UK’s political and economic spheres and the year began with the invoking of Article 50 by Prime Minister Theresa May on 29th March 2017. Political discussion around Brexit also led the country into a snap general election in June, resulting in the Conservative Party losing their majority, and further splitting the British parliament.

Since the Brexit referendum of 2016, the pound lost 10% against the Euro and 17% against the Dollar. The fall in the value of the pound in fact worked in favour for the stock markets, with the FTSE100 (which largely comprises of exporting organisations) having reached record highs through the year. While the fall in the value of the currency may have helped British exports, the benefit stops there. Rising inflation and weak wage growth in the UK have directly affected the average British household as the period of uncertainty continues.

While Brexit is inevitable, the financial sector, which considers London to be its capital, is keen on retaining its ‘passporting rights’ - the right for a firm registered in the European Economic Area (EEA) to do business in any other EEA state without needing further authorization in each country. In fact, London has been the major focal point for this very reason – an English language capital city, ideally located between the Americas and Asia and acting as the gateway into Europe. Therefore, any indication of a ‘Hard Brexit’ – one which threatens to pull the UK out of the EU without any deal, is of a major concern for the City of London. The pound and the economy therefore are directly affected over this concern as businesses continue to operate over the period of uncertainty.  The UK also faces an upward of £40 Billion Brexit ‘divorce bill’ payable to the EU, which adds another financial liability to the process.

Eurozone recovery at its finest   

 The European Central Bank’s (ECB) president Mario Draghi has expressed the bank’s confidence over the region’s recovery, noting that the momentum has been robust, as GDP has risen for 18 straight quarters. The central bank attributed the overall success this year to improved employment figures in the single bloc, while noting that inflation cannot be self-sustained at this juncture. Mr Draghi used these comments to express interest and possibility for extending the timeline of the slowdown of its bond-buying program, which is slated to start from January 2018.

While the recovery has been robust, the ECB also recognises that it is vital for member states to continue a stable political and economic structure within, and reinforce each of their fiscal structures in order by focusing on both, keeping a buffer rainy-day fund while also working towards reducing debt. While these are words of wisdom for the future, Mr Draghi would also be thankful for the past year as Eurozone mitigated the rise of far right into leadership, especially in France, Netherlands and Germany – the three key powerhouses in the EU. The economy therefore was well protected this year.

10 Years of the Financial Crash

 2017 also marked the 10 years of the great financial crisis of 2008 in October, which had sent the risk assets across global stock markets and economies tumbling. The ten years since the financial crisis of 2007-08 has passed quickly and on a better note than anyone could have expected at that point of time. From the collapse of Lehman brothers in 2008 to the arrests of Irish bankers in 2016, the 2008 depression had brought in a wider understanding of the fragile western economic ecosystems. The crash was a serious wake-up call for governments across the world, thus paving way for bringing in regulatory responses to the banking practices - such as the expansion of government regulation, scrutinised lending practices, and tougher stress tests to make sure they can withstand severe downturns.

The financial crash of 2008 provided a learning opportunity to set things right, and our economic mechanisms today have certainly implemented checks and balances to be more cautious in their functionality. If the crash has taught us anything, it is that complacency can be catastrophic.

It has certainly been an interesting year, and 2018 holds more opportunities for us than ever before to learn and grow.

We've seen some huge deals in 2017, from Qualcomm/Broadcom earlier in the year, to Gemalto/Atos in the last few weeks. We also had the 10-year anniversary of the financial crisis and the seating of Donald Trump into power.

As part of this week’s Your Thoughts, Finance Monthly reached out to experts far and wide to ask about their favourite moments in this financial year, from the most significant changes in regulation and announcements of further regulatory developments, to highlights of the most impacting acquisitions and mergers in the UK and beyond.

Andrew Boyle, CEO at LGB & Co.:

A key 2017 highlight for me surrounded Brexit and came in November at an event organised by the Edinburgh law firm Turcan Connell, which featured an SNP MP and a Conservative MEP. I expected a lively but entrenched debate carried out in a partisan fashion. To my complete surprise, the mood at the event was calm, points were made politely and there was an obvious willingness to compromise. It seems this more constructive spirit foreshadowed that of subsequent UK/EU negotiations given the breakthrough in talks with the EU and the clear indication that all parties, including the EU Commission, wanted to move forward. At the moment, the prospect of a transition period will keep the financial markets and company directors guessing what the final outcome will be. However, it is becoming increasingly clear that a failure to reach a deal will be in the interest of neither of the parties, whose economic viability is so deeply intertwined. I hope the new more constructive mood continues into the New Year.

Another highlight was the Budget. Fears of a radical change to EIS and VCT investing rules were unfounded. The Chancellor did refer to limiting EIS investment that shelters low-risk assets, but he offset this by promising increased EIS limits for investing in knowledge-intensive companies.

Continued support for early-stage businesses is key to what the Chancellor described as Britain’s position at the forefront of a technological revolution. UK SMEs will increase their total economic contribution to £217bn by the end of the decade –up significantly from 2015. In spite of the economic uncertainty around Brexit, British SMEs remain hungry for growth and are generally optimistic about the future. What often holds them back is a lack of funding, particularly through conventional avenues. SMEs often need to raise money quickly to adapt to changing markets or new opportunities, but obtaining bank financing can be a slow and cumbersome process – and that’s where EIS and VCT investors and indeed alternative lenders can help fund the gap. Specific measures announced in the Chancellor’s budget were positive for companies and investors. For now, government policy remains to support innovative companies notwithstanding the pressure to reduce tax breaks and apply funds elsewhere.

Richard Anton, General Partner, Oxx:

The biggest financial story of 2017, in the world of venture capital and technology start-ups and scale-ups, was the European Investment Fund suspending investment in UK VC firms. As an immediate result of the Brexit vote, FinTech lending was the first to suffer, before full suspension of investment into UK VCs. The EIF had been by far the single largest funder of UK venture capital firms and with the options for supply reduced so significantly, not only does this make competition for funding even more intense, the lack of on-the-ground European experience presents yet another challenge to businesses trying to grow to the next stage.

Thankfully, the British Business Bank has moved quickly to help mitigate the EIF’s withdrawal. The £1.5 billion Enterprise Capital Fund programme has got to work to support UK-based start-ups, recognising that the entire market needs to see small firms confident to apply for finance in order to grow. Perhaps the most encouraging indication that British funding is filling the void is the success of Episode 1 Ventures in recently raising £60m for its fund targeted at British early stage start-ups - £36m of this coming from the British Business Bank.

The withdrawal of the EIF shook up the market more than perhaps was covered at the time. Of course for any business to survive and grow, it needs to adapt to a range of situations, yet the sudden absence of European funding was particularly challenging. It is also one that will have long-term ramifications and when the dust settles the European funding market will look very different.

Peter Veash, CEO, Bio:

Amazon’s purchase of Whole Foods in August is my most significant financial moment of 2017. The deal was lauded by many industry pundits as a match made in heaven, with Whole Foods’ glowing reputation for offering high-quality goods marrying with Amazon’s unsurpassed track record for fast, efficient logistics – a new retail power couple was born.

The upshot? Aside from a slashing of prices across the board at Whole Foods (many by up to as much as 40%), the deal also meant that Amazon tech like the Echo, Dot, Fire and Kindle products are now available to purchase instore, while Whole Foods products are now available to buy online via Amazon. ‘Try before you buy’ Amazon Pop-Up stores have opened in locations all over the country, and Amazon Lockers have also been introduced instore, allowing customers to pick up packages and drop off returns. The deal has also given rise to rumours around the potential roll out of Amazon concept stores, including cashier-free checkouts, which would allow Amazon to push commerce tech to a new level.

The $13.7 billion megadeal knocked some competitor share prices sideways and boosted Amazon's – it rose so much on the news that some were saying they’d essentially bought it for nothing. Most importantly, it gave Amazon the physical outlets to develop the future of truly omnichannel retail, particularly within the coveted fresh grocery market (which the ecommerce giant had been preparing to attack for some time).

Marina Cheal, Chief Marketing & Customer Officer, Reevoo:

2017 marked 10 years since the financial crisis, and it’s been a story of reputations - new players trying to forge a new one, and old ones clinging desperately on to theirs.

The world’s big banks took a spectacular fall from grace, the likes of which hadn’t been seen since The Great Depression: after being perceived as trustworthy, powerful corporate behemoths for decades, consumer trust in these institutions was at an all-time low, with many feeling shaken and disillusioned by the lack of ethics displayed by those responsible for the crash.

Meanwhile, a new breed of disruptive, digital-first fintech brand was evolving to challenge the status quo. In 2017 this group of app-based banks have broken the mainstream. Monzo, Starling, Atom and others are now household names, appealing in particular to Millennials who came of age during the crisis years and had the least trust in the financial sector.

Where big institutions once represented trust, newer and nimbler banks have taken their place. Legacy is a dwindling commodity, replaced by convenience and transparency.

What we’re seeing is the next stage on the road to rebuilding consumer trust, but what people want most of all now is a sense that they are in control of their own money, coupled with an ease of use and friendly, authentic communications from their bank – and right now, the challengers are beating the legacy brands to the punch.

Howard Leigh, Co-Founder, Cavendish Corporate Finance:

This year’s November Budget was my highlight for 2017 as it provided some welcome news for the UK’s thriving Financial Services industry and saw the Chancellor confirm his commitment to maintain the UK‘s leading position in technology and innovation post-Brexit. Although it was anticipated by some that EIS and SEIS investments, were going to be in the Chancellor’s firing line, he instead doubled the EIS investment limits for “knowledge-intensive” companies, demonstrating the Government’s commitment to help UK start-ups. The Chancellor also chose to continue supporting Entrepreneurs’ Relief, which, along with other business-friendly policies, is predicted to support the inflow of billions of pounds worth of investment into growth businesses.

With Britain soon to lose access to the European Investment Fund, it was encouraging to see the Chancellor outline his plans to establish a new dedicated subsidiary of the British Business Bank to become a leading UK-based investor in patient capital across the UK. The new subsidiary will be capitalized with £2.5 billion. and will provide a cushion if negotiations with the EIB and EIF do not encourage then to continue investing in the UK. I hope, as some of it is our money and London is clearly Europe’s centre of social impact investing the EIF will now recommence its activities in the UK.

Finally, another key measure in the Budget was the introduction of a policy that will compel online ecommerce companies, such as eBay and Amazon, to police their own websites, thus helping to stem the £1.2 billion yearly tax loss due to fraudulent sales. I first raised this issue in an Oral question in the Lords some 2 years ago and am delighted to see that the campaign run largely with VatFraud.org and Richard Allen has been successful.

The Autumn Budget was a pivotal moment for the UK’s Financial Services sector and the policies laid out by the Government firmly position it as a friend to business. Not only will these policies help to boost UK businesses in the tech and digital sectors, but it will help enhance the City’s position as a leading global centre for finance and innovation.

Tsuyoshi Notani, Managing Director, JCB International (Europe) Ltd:

PSD2 can revolutionise retail banking, generate further investment into fintech, and drive innovation. We’re focused on increasing partnerships with PSPs and fintech firms, enabling them to secure global reach as a gateway to Asia, so February 2nd, when the UK government confirmed its PSD2 timetable, was a really promising step in the sectors’ quest to level the playing field."

We would also love to hear more of Your Thoughts on your favourite moments of 2017’s finance world, so feel free to comment below and tell us what you think!

Using the website Numbeo to compare the prices of items from all over the world, giffgaff money has found the global destinations (and no-go zones) for anyone looking to save money.

Residents of London, New York, Paris and Amsterdam, look away now. Research into the world’s cheapest and most expensive countries has found that rent in Egypt is incredibly cheap, averaging at ­just £114 a month for a one-bed apartment in the city. Although you might feel a little better to know that a city centre apartment in Hong Kong would set you back £1,562 a month.

Categories used included every day and essential purchases including cars, rent and groceries which giffgaff have used to create maps and graphs to illustrate the vast cost gap in each category.

• Iceland, which consistently has one of the highest costs of living in the world, topped three categories: food and drink, groceries, and clothing and shoes.
• Switzerland also made several top-five appearances, proving most expensive for sports and leisure.
• Tunisia, on the other hand, was consistently one of the world’s cheapest countries and was found to have the cheapest food and drink in the world.

Rent

Living in a city apartment in Hong Kong is simply not possible for most of us, with a monthly rent average of an incredible £1,562 a month. Families hoping to live in the city centre will also face mind-blowing monthly costs, with a three-bed home stretching to £3,715 a month in rent.

Residents of London, New York, Paris and Amsterdam, look away now – rent in Egypt is incredibly cheap, averaging at ­just £114 a month for a one-bed apartment in the city. Families will also save, with a three-bed suburban home costing around £170 a month to rent.

Cars

Driving the picturesque landscape of Eastern European Georgia is a cheap affair, with a Volkswagen Golf priced around £12,072 (compared to £23,638 in the UK) and a Toyota Corolla coming in at just £13,621 (compared to £ 23,724 in the UK).

Singapore, on the other hand, is a pricey place for drivers, with a nippy Volkswagen Golf setting you back an eye-watering £88,474 – a massive £76,406 more than buying the same vehicle in Georgia.

For full results from the research, click here.

(Source: giffgaff)