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Crossrail opening stalled until 2020, to spill budget by £3 billion

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Crossrail

The opening of Crossrail is to be delayed yet again. The Transport for London (TFL) admits the new £15-billion rail link will not start in autumn 2019 as per the plan, and cost up to £3 billion more than its budget.

The news follows a shock announcement made in August by TFL this year that the project would be delayed by 9 months, as more work requires to be done. The project will connect stations West Drayton and Hayes to Canary Wharf and beyond.

The Crossrail also known as the Elizabeth line, is a very controversial project due to its delays, safety and funding.

The Crossrail railway got parliamentary approval in July 2008, and services were originally due to begin in 2017. However, a decision was made in October 2010 that it will start in December 2018. Later, due to some reasons it was delayed again until autumn 2019.

In 2007, Crossrail budget was set at £15.9 billion, but Conservative and Liberal Democrat coalition government cut it down to £14.8 million in 2010. In July 2018, it was announced that more money, around £600 million, is required to complete the project. But the money was not sufficient to complete it and project is delayed again, which will cost the government around £3 billion.

A construction worker named Rene Tkacik, 44, working on the project, died after falling wet into concrete in March 2014. Two other men were also injured in separate incidents in January 2015. An investigation conducted by the Health and Safety Executive (HSE) accused three companies, Bam, Ferrovial and Kier (BFK), for not taking simple precautions.

On Monday, it was announced that the contractors working on the project were fined more than £1 million in July 2017 over the death of a worker and two other incidents.

The final cost of the rail is yet to be confirmed. A contract of up to £750 million has been agreed between TFL and the government in the form of a loan facility to reach the expected outcome at the earliest.

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Uncertainty Over Brexit hits UK with Investment and Hiring Prospects

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Uncertainty Over Brexit hits UK with Investment and Hiring Prospects

The financial uncertainties around Brexit are subject to deal or no deal of the agreement. Ever since the referendum in 2016, the UK firms have seen multiple falls. Therefore, as per the latest plan, they have planned to reduce investment and hiring, a survey of chief financial officers showed, Monday.

The survey conducted by Deloitte, a financial advisory firm, stated that as many as 83% of the CFOs believed that parting ways with the EU would hurt Britain’s going concern. Besides, only 4% believed that such a move was good, and taking risk could actually yield them rewards.

Britain’s economy opened on a high this year when companies were preparing to leave for the original deadline in March. However, the economy slumped after the deadline was delayed until October 31.

As per the surveys published last week, the British economy followed a downward trajectory in the second quarter. Further, England Governor Mark Carney also warned of the increasing risks from a no-deal Brexit and from the growing trade rifts worldwide.

As per the records, two thirds of the of the CFOs surveyed by Deloitte are likely to cut hiring in the next three years; as a result of Brexit, while some 47% firms are expected to reduce the capital spending.

Impact of Brexit on UK firms was also visible all throughout 2018, when House of Commons failed to register any progress on the deal. In fact, when British Prime Minister Theresa May suffered her greatest defeat in Commons, the investor’s confidence became really wobbly.

“Brexit uncertainty is crippling business investment. “We’re at risk of falling further behind our G7 competitors,” Rain Newton-Smith, the CBI’s chief economist, said.

Financial fallout looks on cards for Britain. While, May’s vow to deliver Brexit ended in disarray, not agreeing with her terms might now lead to an even worse situation. As it stands, Britain will soon know who their new leader will be, but what UK firms really need to know is, if Britain is falling out, or leaving the European Union with a deal at hand.

The survey conducted by Deloitte was formed on responses from 79 CFOs, including 489 from FTSE 3350 companies. It was conducted between June 12 to 28.

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Foreign Markets Experience Rise as Bank of England Holds off Interest Rate

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Bank of England

On Thursday, the Bank of England (BoE) cautioned and alerted on the economic stance and growth for the UK. The officials said that while the economic stance is negating continuously, the financial advancement might reduce to zero in the second quarter of this year.

These speculations come amidst the ever-increasing risks to the economy of the country as it nears the fate of a no-deal Brexit and global trade tensions. The nine-member committee of BoE decided to confine the interest rates at 0.75 percent. They also voted unanimously to retain the stock of the UK government bond purchases at £435 billion.

Following such an announcement from the Central Bank, European Banks witnessed a rise as investors reacted to the decision of curbing interest rates by the Bank of England and the Federal Reserve.

The bank continued to press hard on the fact that if in case, Britain is able to evade a damaging no-deal Brexit, then the interests rates will increase “at a gradual pace and to a limited extent”. The central bank also brought attention towards the discontent felt inside the organisation on the fact that Britain would have a “smooth” Brexit with minimum disarray.

As per the BoE, Britain’s economy will experience no growth in the second quarter, even though they predicted that the economy would see a growth of 0.2 percent every quarter as foretold last month.

The Monetary Policy Committee of the Bank of England has regularly said that the growth or depreciation in the interest rates depends upon the no-deal Brexit, and the movement relies on the demand, supply and exchange rate.

Earlier, it came into notice that the British currency saw a depreciation of three percent in May and the delay on Brexit was considered to be the prime factor for this fall in the value.

In its policy statement, the Central Bank said, “Globally, trade tensions have intensified. Domestically, the perceived likelihood of a no-deal Brexit has risen. Trade concerns have contributed to volatility in global equity prices and corporate bond spreads, as well as falls in industrial metals prices.”

Many economists also commented on the stance of the Bank of England and the all-day development in the stock market.

ING economist James Smith said, “All things considered, it’s slightly more dovish than one might have expected. The fact they are saying the perceived risk of a no-deal Brexit is rising suggests that they ultimately might take a more cautious approach than the rhetoric implied.”

Similarly, the Capital Economics economist Thomas Pugh stated, “If there is a no deal then the MPC will probably quickly change its tune and support the economy by cutting interest rates.”

Whilst the MPC committee looks forward to a steady growth of two percent if there is a “smooth Brexit”, the future stance and policies of the Bank of England, in wake of increasing global tensions, might soon witness a change.

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Ford’s Bridgend Closure to affect employment rate in the UK

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Bridgend

On Thursday, the American multinational automaker Ford announced to close its Bridgend plant in South Wales in 2020, due to the lowering demands for some of its automobile’s engines. The step taken by the company is a big challenge for its workers, as they risk losing their jobs with the closure.

Ford’s Bridgend engine plant, which is a manufacturing facility of Ford in Europe -selling automobiles and commercial vehicles, once provided innumerable jobs to the workers in the country. It also built around 2.7 million automotive engines in 2018. However, analysts have anticipated that its closing would make about 1,700 people jobless.  

As a turnaround of its European operations, Ford would promote closure of many other plants along with the discontinuation of loss-making vehicle lines. In the same context, due to lowering demands, Ford has decided to end its production of 1.5-litre petrol engine by February 2020.

The expected pre-tax amount to cover the closing of Bridgend plant is approximately 650 million US dollars. The move has attracted criticism from trade union that has largely rejected the idea of the closure. The members have blamed the company for involving such extreme measures that could adversely affect the lives of the workers. They united in an effort to stop the closure, whilst taking the matter to the Welsh Assembly.

In the past two years, there has been a continuous decline in the sales of Ford cars, which has further affected its output and investment throughout the Europe.

Observing the future disadvantages of Bridgend plant, considering the current situations, Ford’s Europe President Stuart Rowley said, “Changing customer demand and cost disadvantages, plus an absence of additional engine models for Bridgend going forward make the plant economically unsustainable in the years ahead.”

As a result, Ford is in process of making some profits in other countries to reverse the losses in deteriorating European markets.

People who have been working hard to produce hybrid technology and electric vehicle components alongside manufacturing of third party vehicles to identify new opportunities have not been successful.

Due to the declining demands, the Closure of Bridgend plant also brings in more confusion for other automobile companies. Jaguar Land Rover and Honda have claimed that approximately 9,000 jobs would be lost if they close their British Plant in 2021, depreciating car sales and employment rate in the country.

Closing of the Bridgend’s Ford plant is expected to bring further downfall to the sales of cars in the country. Amid the Brexit crisis, the automobile companies have feared that a no-deal Brexit would definitely bring tariffs and customs checks to the vehicles, engines, and components, which would further raise costs and investments amid the decreasing demands.

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Are Continuous Brexit Delays Behind Weakened Pound Sterling?

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Pound Sterling

Continuous Brexit delays have severely affected the pound sterling. Furthermore, the European Parliamentary elections in the country and the rising threats of a no-deal Brexit have raised concerns among few British officials.

A no-deal Brexit followed by the fall in the value of the pound would only add to the woes of the country. In addition, the battle to succeed Prime Minister May has made the existing situation even more complex as the economists believe that May’s resignation from her post on June 7 would rather ruin the British economy.

As per recent records, the British currency lost about three percent of its existing value earlier this month. The economists are of the opinion that the Prime Minister’s inability to find a proper solution over the Brexit deal with the opposition party is one of the main reasons behind the current downfall.

Pound slipped 0.13 percent to $1.2657, becoming as low as $1.2605 last week. In comparison to the US dollar and the euro, the British currency has fallen for three consecutive weeks.  

As a result, the prime-ministerial candidates have been under immense pressure to provide a more resolute solution for the Brexit deal. Though Foreign Secretary Jeremy Hunt has signalled that a no-deal Brexit would lead to worst consequences, many contenders have fully prepared themselves for the situations of no-negotiations that could occur over the withdrawal agreement.

In the recent European elections, Nigel Farage’s newly formed Brexit Party performed its best by winning around 31 percent of the votes and 29 UK seats in the Parliament. The overwhelming results in the elections indicated that the new Brexit Party was ready for all sorts of conflicts arising amid the no-deal risk.

The strategists in the country believe that the probability of a no-deal Brexit remains around 15 to 20 percent and the then-prime minister of the country would have to face a no-confidence vote for choosing that path. Since the UK is scheduled to leave the EU on October 31, the real deal is yet to start.

The ongoing political uncertainty in the country has disadvantaged the trading of pound, limiting the currency’s exchange rate and making it a much weaker currency in the present time. It appears that the rise in the British pound might highly be influenced by the next Prime Minister’s rule.  

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Bill to Mitigate Money Laundering Needs Amendments, Lawmakers Claim

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money laundering

As the joint parliamentary committee met on Monday, they raised their voice over the proposed anti money laundering bill that fails to prevent or restrict foreign buyers from using trusts to launder money in the UK.

The bill is supposed to be a major move by Prime Minister Theresa May to prohibit convicts and fraudulent foreign authorities from altering the sources of money in the UK.

The MPs from the committee of 12 members, comprising members from both the House of Commons and the House of Lords oversaw the bill. They claimed that the bill if enacted would fail to frame an appropriate structure to corroborate and administer the reliability of property-owners’ filings. They also pressed concerns on the fact that the anti money laundering bill does not pressurise the owners from foreign country to reveal their proper entities in the country.

According to the report of the joint committee on the draft Registration of Overseas Entities Bill, properties of worth £180 million were investigated between 2004 and 2015, under the pretences of criminal investigation.

While 160 properties with worth of more than £4 billion, purchased by highly corrupt individual came under the scrutiny, 86,000 properties in England and Wales were recognised as the properties of “tax havens”. The report also mentions that approximately £90 billion is transferred illegally from the UK every year.

Along with Edward Faulks, Conservative chairman of the joint committee, the lawmakers from the House of Commons and House of Lords have raised concerns regarding the bill to minimise money laundering.

Faulks, in relations with the bill and its limitations said, “We welcome this much-needed legislation as one of the vital tools required to create a hostile environment for money launderers who want to use the UK property market to hide unlawful funds.”

“The legislation is well drafted, but there are still some loopholes in the draft bill which, if unaddressed, could jeopardise the effectiveness of this important piece of legislation,” he added.

The lawmakers in regards with bill said, “The UK is valued for its democratic political environment, its independent legal system and its rigid protections. While these advantages have made property in this country popular among legitimate investors, they also appeal to those, such as money launderers, who may wish to use property to conceal illicit funds.”

To minimise money laundering some countries like New Zealand, India, Thailand and Switzerland have prohibited foreign individuals from owning property in the country. The report of the joint committee also asserts that the objective to develop a “hostile environment” for the corrupt individuals is at the prospect of jeopardy due to a lack of “teeth”.

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