LONDON’S BUSINESS NEWSPAPER
BUDGET SPECIAL THURSDAY 16 MARCH 2023
PENSION CHANGES, TAX HIKES AND TINKERING AROUND THE EDGES: ALL YOU NEED TO KNOW P2-P5
CITYAM.COM
ISSUE 3,951
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CREDIT SUISSE IN CRISIS AS SHARES FREEFALL BY A QUARTER SWISS NATIONAL BANK SAYS IT WILL PROVIDE LIQUIDITY IF NEEDED EUROPEAN BANK SHARES BATTERED IN WIDESPREAD SELL-OFF CENTRAL BANK TO DECIDE ON EUROPEAN RATE RISE TODAY WORST DAY FOR THE FTSE 100 IN MORE THAN A YEAR LARRY FINK ASKS ‘ARE THE DOMINOES STARTING TO FALL?’
CHRISTOPHER DORRELL, JACK BARNETT AND CHARLIE CONCHIE CREDIT SUISSE lost a quarter of its value yesterday, highlighting a day of crushing stock market losses across the world, with the Swiss National Bank forced to issue a statement promising it would provide liquidity to the Zurich lender ‘if necessary’. It came on the same day Blackrock chief Larry Fink asked if the collapse of Silicon Valley Bank last week was the first ‘domino’ starting to fall as the era of cheap money comes to an end. Credit Suisse’s tumble was triggered yesterday morning by comments from its
largest shareholder, Saudi National Bank, that it would not inject further cash into the business should it come to it. That built on fears across the world that the demise of Silicon Valley Bank last week, hit by the impact of a series of bad bets on interest rates staying low, could be a canary in the coalmine for other banks. Late last night the Swiss National Bank (SNB) and the country’s financial regulator was forced to issue a statement which confirmed that Credit Suisse met “the capital and liquidity requirements” it needed to. The FTSE 100 suffered a more than three per cent loss, its worst in a year. Across Europe, bank stocks were battered:
CONTAGION FEAR HITS BANK SHARES AGAIN
-25% -17%
Commerzbank tanked nearly nine per cent , BNP Paribas slipped 10 per cent and Socgen fell more than 12 per cent. In a sign of the fear gripping markets, economist Nouriel Roubini – nicknamed Dr Doom after predicting the late-noughties sub-prime crisis – said the “Credit Suisse crisis is a ‘Lehman moment’ for European and global markets” and that it was “too big to fail and too big to be saved”. The price of bets that Credit Suisse could default on its debts spiralled yesterday as other financial institutions looked to insure themselves against any further turbulence. In his annual letter to investors, Fink, the boss of the world’s biggest asset manager,
said “the dominoes are starting to fall” after an unprecedented hike in interest rates across the world. Fink said the jumps had “exposed cracks in the financial system” and “something else had to give”. “It does seem inevitable that some banks will now need to pull back on lending to shore up their balance sheets,” he said. The European Central Bank is meeting today to decide whether to hike rates. It had all but announced it would hike 50 basis points, but most traders now expect a smaller rate rise of 25 basis points due to the increasingly febrile environment. £ BANKS IN CRISIS: PAGE 6
The Parent Trap: Why hitting six figures could now cost you tens of thousands CITY A.M. REPORTERS AMBITIOUS City workers approaching the six-figure salary mark may need to reconsider their request for a pay rise if they’re planning to have children in the near future – with those earning more than £100,000 ineligible for four-years worth of free childcare. Jeremy Hunt announced in
yesterday’s budget that he would extend free access to thirty hours of childcare for three- and fouryear-olds to children aged one and two years old. But the £100,000 cliff-edge means anybody who earns even £1 over the limit stands to lose access to the benefit. Deliberately conservative City A.M. estimates suggest parents above the
threshold will have to cough up an additional £25,000 over the first four years of their child’s life, though in London the reality may be much higher. Analysts said that while the policy is designed to encourage young parents to return to work, at higher
income brackets it could have the opposite effect on higher earners – with earners above £100,000 also entering a marginal tax rate of 62 per cent for around £20,000 worth of earnings above the threshold as the personal allowance is withdrawn. “Even for relatively welloff parents, this could deliver a crippling blow to
the household finances,” Tom Clougherty, research director at the Centre for Policy Studies, told City A.M. yesterday. “The work incentives here are rotten. It is also unfair to completely withdraw benefits (rather than taper them) and to base withdrawal on an individual’s income, rather than the household total,” they continued.
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