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Today's markets: BoE green lights banking sector payouts, retail sales surge, reopening confirmed

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Today's markets: BoE green lights banking sector payouts, retail sales surge, reopening confirmed

 

  • FTSE100 boosted by lifting of payout restrictions on UK banks
  • Shoppers flock back
  • 'Freedom day' downplayed amid Covid surge

BoE lifts restrictions on bank dividends 

The Bank of England has lifted restrictions on bank dividends and share buybacks, after banning them last April to cushion the impact of the pandemic and shore up lending capacity. 

“Extraordinary guardrails on shareholder distributions are no longer necessary,” the central bank wrote in its financial stability report this morning. “The UK banking system has the capacity to continue to provide...support. The [Financial Policy Committee] continues to judge that the banking sector remains resilient to outcomes for the economy.” 

Meanwhile, Bloomberg reported that the European Central Bank (ECB) may cap banks that propose excessive shareholder rewards. Supervisory board member Margarita Delgado said in an interview that the ECB would push banks to return to a “more average distribution policy”, and that “other tools” were at its disposal if the industry does not accept the recommendation. That could include higher capital requirements or “qualitative measures”, according to Bloomberg.

Retail revival

A triple whammy of warm weather (?!), the Euro2020 football tournament and easing coronavirus restrictions led to an upsurge in retail spending in the second quarter of the year. The British Retail Consortium’s survey of second quarter activity also pointed to staycations as a factor in retail sales rising 13.1 per cent in June compared with two years previously while the second quarter as whole saw sales rise by 10.4 per cent - the fastest quarterly growth since records began.

'Freedom day' confirmed, but downplayed

Prime minister Boris Johnson yesterday confirmed that virtually all coronavirus restrictions will be lifted in England from next Monday, the long awaited 'freedom day'. But the announcement was laced with caution compared to previous steps in the unlocking process as Covid cases continue to surge, particularly among the predominantly unvaccinated younger ages groups. It appears there is serious divergence among the scientific community around just how severe the 'exit wave' could become over the summer and the government is imploring a public who appear to be straining at the leash to get back to normal life to proceed cautiously. 

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