The Bank of England has warned that the task of regulating the City after Brexit will put a strain on its ability to police the financial sector. Deputy governor Sam Woods also said the Bank’s regulatory arm, the Prudential Regulation Authority, faced “a material risk to its objectives” – which include promoting financial stability – as it deals with the UK’s exit from the EU. Woods warned of a “material extra burden” on the PRA if it had to regulate more financial firms as they made plans to cope with Brexit. “It is incumbent on us to manage this burden but we may have to make some difficult prioritisation decisions in order to accommodate it,” said Woods, chief executive of the PRA. In a letter to Nicky Morgan, the Conservative MP and new head of the Treasury select committee, Woods also described handling the fallout from Brexit as a top priority for the PRA. Backing calls from the chancellor, Philip Hammond, for a transitional exit deal, Woods added: “Some form of implementation period is desirable in order to give UK and EU firms more time to make the necessary changes to adjust to the UK’s new relationship with the EU in an orderly way.” He also outlined the risks contained in the Bank’s half-yearly assessment of financial stability, in which it warned that business conducted in the City could fragment across other financial centres, pushing up the costs to the EU and the UK. It also warned of the risk to the UK economy from potential disruption to trade and the need for banks to be braced for higher bad debt charges if loans turned sour owing to Brexit-related economic turbulence.
China’s consumer price index rose 1.4 percent in July from a year ago, missing estimates, the National Bureau of Statistics said Wednesday. Meanwhile, China’s producer price index rose 5.5 percent in July from a year ago. Analysts polled by Reuters expected consumer inflation to stay steady from June at 1.5 percent on-year while producer prices were also forecast to remain flat from the 5.5 percent on-year rise in June. Capital Economics China Economist Julian Evans-Pritchard said the inflation data point to cooling price pressures. Producer price inflation held steady for the third straight month and was positive on a month-on-month basis for the first time since March, but “this appears to be almost entirely due to the recent rally in domestic steel prices, which is unlikely to be sustained in our view,” he added. ANZ’s markets economist David Qu, however, said PPI is likely to remain strong in the coming months as the Chinese government continues to reduce over-capacity, a move that will support commodity prices. The Chinese government has been tightening monetary policy to reign in debt. “The upshot is that with policy tightening now weighing on economic activity, underlying inflation has already begun to decline. With growth likely to slow further in the coming quarters, we think the pick-up in price pressures witnessed during the past year will continue to unwind,” said Evans-Pritchard.
Former RBI Deputy Governor Rakesh Mohan on Wednesday said the GST rollout was a colossal task achieved after over a decade but the multiplicity of rates still remained a challenge. “GST has been achieved after a decade. Multiple rates is an issue,” Mohan said here at the ‘Economics and Governance’ event organised by Penguin publishers. The Goods and Services Tax has tax-slabs of 5, 12, 18 and 28 per cent. Gold is at a special rate of 3 per cent. In addition to the tax rates, there is also a cess rate on luxury and sin goods like high-end cars, aerated drinks and tobacco and tobacco products which results in further variations in effective rates of taxation under the new indirect tax regime. The former RBI officer said India needed to focus on health and education to achieve a higher growth rate. “Health and education is a challenge. We have the worst health and education indices. India can’t grow at 10 per cent without major improvements in these sectors,” he said.
Direct tax collection registered a steady growth of 19.1 per cent in the first four months of the current fiscal to Rs 1.90 lakh crore. The collection for the April-July period is 19.5 per cent of the Rs 9.80 lakh crore target from this segment for the entire 2017-18.”Direct tax collection during the said period, net of refunds, stands at Rs 1.90 lakh crore which is 19.1 per cent higher than the net collections for the corresponding period of last year,” a finance ministry statement said. The collection of direct tax, which consist of personal income tax and corporate tax, continue to register “steady growth”, it said. In April-July of last fiscal, 2016-17, the direct tax collection had grown 24.01 per cent to Rs 1.59 lakh crore. In gross terms, the growth rate for corporate income tax is 7.2 per cent, while that for personal income tax (including securities transaction tax) is 17.5 per cent for April-July period of the current fiscal. However, after adjusting for refunds, the net growth in corporate tax collections is 23.2 per cent while that in personal income tax collections is 15.7 per cent. Refunds amounting to Rs 61,920 crore have been issued during April-July, 2017 which are 5.1 per cent lower than the refunds issued during the corresponding period of 2016-17. Earlier this week, the government had released the numbers of income tax returns filed, showing demonetisation of old Rs 500 and Rs 1,000 notes had given the substantial growth. Number of tax returns filed soared to 2.83 crore as against 2.27 crore in the previous year. The growth of 24.7 per cent this year compared with 9.9 per cent in the year-ago period. Individual tax returns filed were up 25.3 per cent at 2.79 crore.