Accountants to be edged out by robots, says DB CEO

Deutsche Bank chief executive John Cryan says work now done by qualified accountants could soon be carried out by robots.

Cryan told a Frankfurt gathering: “In our bank we have people doing work like robots. Tomorrow we will have robots behaving like people. It doesn’t matter if we as a bank will participate in these changes or not, it is going to happen.”

Deutsche Bank is currently undergoing a restructuring programme led by Cryan, who joined the bank in 2015. Deutsche Bank employs 100,000 people around the world.

Cryan joins other senior banking figures to predict the impact of automation on the profession. Andy Haldane, chief economist at the Bank of England, has said up to 15m jobs are at risk in Britain from the rise of the robot. The former chief executive of Barclays Antony Jenkins has described technology as “an unstoppable force” giving banking an “Uber moment” of disruption.

Automation could lead to better productivity, as accountants are freed from number-crunching to focus on more analytical roles that contribute to strategic direction. However, critics say that automation undermines the market by increasing unemployment, so there are fewer consumers able to buy the products made by robots.

Cryan also said that Frankfurt is set to receive a banking boost from Brexit. The banker said the German city has the regulatory capacity, law firms, consultants and airport capacity to take business from the City of London. Around 4,000 of Deutsche Bank’s 9,000 London-based staff are said to be preparing to move to the city after Brexit.

Bad weather hits UK retail sales

Retail sales across the UK fell between February and March this year because of bad weather, the Office for National Statistics (ONS) reported today.

The quantity bought in the retail sector decreased by 0.7% in March compared to the prior month, while the amount spent remained unchanged.

In comparison to the same period last year the quantity bought was down by 0.5%, broadly in line with economists’ expectations. This follows strong year-on-year growth of 2.5% in February 2013 and a year-on-year decrease in January of 0.6%. The amount spent increased by 0.1% between March 2012 and March 2013.

Over the whole of the first quarter, retail sales increased by 0.4% compared with the preceding three-month period.

With severe winter weather in much of the country, consumers embraced online shopping last month. The ONS reported that “non-store” retailing registered its biggest rise since March 2009.

In total, UK consumers spent an average of GBP601.4m online each week in March 2013. This represents an increase of 20.5% compared with March 2012.

Excluding automotive fuel, the amount spent online accounted for 10.4% of all retail spending.

Commenting on today’s figures, the British Retail Consortium’s director general, Helen Dickinson, said that the coldest March for 50 years had resulted in mixed fortunes for different retailers. While food sales were strong due to Easter celebrations and the cold weather, sales were sluggish for seasonal items like spring and summer fashion ranges.

David Kern, chief economist at the British Chambers of Commerce, pointed to the “encouraging” growth in sales between the fourth quarter of 2012 and the first quarter of 2013 which he said reinforces the organisation’s hope for a small rise in GDP, with the services sector offsetting weaker areas of the economy such as manufacturing and construction.

UK chancellor confirms lower expectations for economic growth

The UK economy is now expected to contract by 0.1% in 2012 and then grow by 1.2% in 2013, the Office for Budget Responsibility announced today.

This is a significant downgrade from predictions made by the OBR in March, when it expected the economy to grow by 0.8% this year and 2% next year.

In a report published to coincide with Chancellor George Osborne’s Autumn Statement in the House of Commons, the OBR also revised upward its forecasts for public sector borrowing over the next five years.

According to the OBR, tax revenues will be lower because of the weaker outlook for the economy. As a result, the government is no longer likely to achieve its target of reducing public sector net debt by 2015-16.

The chancellor has now pushed back the target by a year, saying that debt will begin to fall as a proportion of national income by 2016-17. Osborne is also extending austerity measures by another year to 2018 in order to close the budget deficit, although he claimed that such measures would be implemented “fairly” with savings made from bureaucracy and a greater contribution from the richest households and those on benefits.

He pointed out that people on out-of-work benefits had seen their incomes rise at twice the rate of working people, and said that over the next three years benefits such as jobseekers allowance and child benefit will increase by just 1% per year. There will also be a further cut in tax relief on pension contributions, with the the amount that can be paid into a pension each year with tax relief reduced by GBP10,000 to GBP40,000 and the lifetime allowance cut to GBP1.25m from GBP1.5m from 2014-15.

Among other measures announced in the Autumn Statement, the chancellor said that he would increase efforts to collect tax from multinational companies operating in the UK, cut corporation tax to 21% from April 2014, cancel the planned fuel duty rise and lift the personal allowance – the amount that people can earn before paying income tax – by more than planned to reach GBP9,440 from April next year.

OECD lowers forecast for UK economy in 2012

The Organisation for Economic Co-operation and Development (OECD) has said that it expects the UK economy to contract by 0.7% in 2012.

This is a significant decrease from the OECD’s forecast in May that the economy would grow by 0.5% this year.

In its latest Interim Economic Assessment, the organisation confirmed that the global economy has weakened since the spring, driven by developments in the euro area where key European countries are entering a recession that is having an impact worldwide. The persistent crisis in the euro area is weakening confidence, trade and employment and slowing economic growth for OECD and non-OECD countries alike.

Downgrading its growth forecasts for developed economies across the world, the OECD revealed that it expects Britain to be one of the worst hit. The economies of Germany, France and Italy are predicted to shrink by just 0.2% on an annual basis. Outside of Europe the prospects are somewhat brighter, with growth expected in the US, Canadian and Japanese economies.

The OECD called for further policy action to be taken in order to instill more confidence, for example by cutting rates and expanding stimulus programmes. It also said that the European Central Bank should lower the rates at which banks borrow from it and consider further action to help normalise monetary policy transmission in vulnerable countries.

Pier Carlo Padoan, chief economist at the OECD, stressed that resolving the euro area’s banking, fiscal and competitiveness problems is the key to recovery.

UK business groups expect economy to shrink this year

Leading business groups in the UK have downgraded their economic forecasts and called for action from the government.

The British Chambers of Commerce (BCC) announced today that it expects the UK’s gross domestic product (GDP) to shrink by 0.4% in 2012, down from its earlier forecast for growth of 0.1%.

It claimed that the prospects for recovery are complicated by headwinds from the slowing global economy and the continuing crisis in the eurozone, as well as the austerity drive in the UK. In addition there are new risks from recent rises in food and oil prices, the BCC said.

Next year the organisation expects the UK economy to show growth of 1.2%, a decrease from its earlier prediction of a 1.9% rise in GDP.

The BCC has urged the government to adopt a hybrid strategy that delivers both deficit reduction and growth. It said that swift action is needed to support business investment, incentivise job creation and stimulate construction, particularly in the housing sector, and that this can be achieved by changing spending priorities or with limited extra borrowing.

“Politicians need to get some political backbone and show leadership,” said BCC director general John Longworth.

Yesterday another business organisation, the Confederation of British Industry (CBI), cut its GDP forecast for 2012, saying that it now expects the economy to shrink by 0.3% in 2012. This is a significant fall from the previous forecast in May of 0.6% growth, reflecting a more negative first half and a more modest rate of growth in the second half than was expected in May.

The CBI expects growth to return to the UK economy towards the end of the year and it forecasts GDP growth of 1.2% in 2013, revised down from its previous estimate of 2%. This matches the BCC forecast. The CBI noted, however, that the ongoing global uncertainty means there is a risk that growth could be lower.

Despite the coalition government’s austerity measures, both the CBI and the BCC have predicted that the government will end up borrowing more in 2012 and in the coming years. The BCC believes that public sector borrowing will overshoot the target by GBP14bn to GBP17bn in each year until 2015 and it said that the task of eliminating the government’s structural budget deficit will probably take two to three years longer than envisaged.

 

Wet weather keeps shoppers away from Britain’s high streets

There was a decrease in the number of shoppers visiting high streets, shopping centres and out of town retail parks across the UK in the three months to July, according to a report released today by the British Retail Consortium (BRC).

Unusually wet weather, combined with people being short of money, resulted in footfall for May, June and July declining by 2.3% compared with the same period last year. This is down from a 2.0% fall in the previous quarter.

Footfall was down in all types of locations, but the most dramatic drop was seen on the high street, with a 5.5% decrease compared with out-of-town down 1.2% and shopping centres down 0.4%, the BRC/Springboard Footfall and Vacancies Monitor for May to July 2012 revealed.

Diane Wehrle, research director at Springboard, noted that the gap between the high street and other shopping venues has widened since the same quarter in 2011, partly due to the wet weather. In addition out of town retail locations have shown more resilience because they are more convenient to access by car and provide cheaper car parking.

Apart from the boost from Christmas in December, high street footfall has now been down for 18 months, driven by jobs fears and falling disposable incomes, according to BRC director general Stephen Robertson.

There was little sign of a general Jubilee bounce and retailers will be hoping that the Olympic Games had a more positive impact, Robertson added.

The report also showed a marginal increase in the national town centre vacancy rate in the UK. This figure, which includes high streets and shopping centres, stood at 11.4% in July 2012, up from 11.2% in July 2011. The highest vacancy rates were recorded in Northern Ireland (18.5%), Wales (15.3%) and the North & Yorkshire (13.0%).

Increase in UK government borrowing for June

Borrowing by the UK government increased by more than expected in June 2012 as the economy remained weak, official figures revealed today.

Estimates from the Office for National Statistics (ONS) show that public sector net borrowing, excluding financial sector interventions such as bank bailouts, rose to GBP14.4bn last month from GBP13.9bn in June 2011.

Tax revenues increased in the month by 3.6% to GBP40.9bn but total government spending only dipped by less than 1% to GBP52.4bn.

This second consecutive monthly increase in borrowing makes it harder for Chancellor George Osborne to hit his deficit reduction targets, as the government needs to be borrowing less than last year. In the last financial year government borrowing totalled GBP125.7bn, revised down from the earlier estimate of GBP127.6?bn, and the Chancellor is hoping to reduce borrowing in 2012/2013 to GBP120bn.

A Treasury spokesperson said today that it was too early to conclude what total borrowing for the current financial year would be, as the data is volatile and prone to revision.

On Thursday the IMF said that the UK government should ease its austerity measures if the recovery continues to stall, suggesting that a ‘Plan B’ should be introduced in early 2013 if the economy fails to bounce back. Specifically, it recommended targeted tax cuts and increased spending on infrastructure to support growth, as well as reform of the welfare system.

However, the IMF also welcomed recent initiatives such as the GBP50bn UK Guarantees scheme to attract investment in infrastructure projects and support exports.