For our roundup this week we report on a share price drop for HSBC following a significant profits fall, a new report highlighting the economy as the primary concern of the British public, a survey revealing an acceleration in business growth in the Eurozone and suggestions that some businesses may be allowed to reduce their pension generosity.
HSBC shares slide after 2016 profits slump
Shares in HSBC dropped in early trading on Tuesday after the bank reported a 62% fall in annual pre-tax profits. The bank posted a pre-tax profit of $7.1 billion (£5.7 billion) for 2016, which was markedly lower than the $18.9 billion recorded a year earlier.
Following the announcement, shares in the bank - which cited brakes on revenue growth and a number of one-off charges as reasons for the slump - were down by more than 6%.
Douglas Flint, Chairman of HSBC, also alluded to the impact of unexpected political events in 2016, including Britain's decision to leave the European Union (EU) and the election of Donald Trump as President of the United States. He said: "The uncertainties created by such changes temporarily influenced investment activity and contributed to volatile financial market conditions."
Economy 'is now number one concern for Britons'
The state of the economy has become the number one concern among Britons, a new survey has suggested. Carried out by data and information group Nielsen, the research found that people are more worried about the UK's economic situation following the result of the EU referendum than they are about terrorism and immigration.
The economy was named by 28% of respondents as one of their top two concerns at the end of 2016. This represented an increase of 12 percentage points on a year earlier and compared with 20% of people who named terrorism and immigration in their top two.
Steve Smith, Managing Director of Nielsen UK and Ireland, commented: "As the political and economic planning for Brexit gets underway, concerns about jobs leaving the UK have unsettled consumers."
Survey: Eurozone business growth accelerates
Strong demand and optimism about the future has helped to accelerate business growth in the Eurozone. This is according to the latest IHS Markit Eurozone flash composite Purchasing Managers' Index, which climbed to 56.0 in February, up from the 54.4 recorded in January.
This is the highest reading since April 2011, while job creation also reached its fastest level since August 2007. Markit explained that if this momentum continues, economic growth could reach 0.6% for the first quarter of 2017.
Chris Williamson, Chief Business Economist at IHS Market, said that an important contributing factor to the upturn has been the resurgence of France, which he said had previously been "a laggard in the region".
Firms to reduce pension generosity?
Some firms could be permitted to reduce the generosity of their pensions, the government has indicated. A discussion paper on the future of Defined Benefit pensions has suggested that companies in financial trouble may be allowed to go back on some of the promises they have previously made.
According to the green paper, around 5% of businesses could be classified as 'financially stressed'. It could be that some of these companies are allowed to use the Consumer Prices Index instead of the Retail Prices Index to adjust the way they up-rate pension payments in order to compensate for the effect of inflation.
The paper claimed, however, that permitting this could end up costing the average pensioner up to £20,000 throughout their retirement.
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