Last week’s Headlines (week of October 24): Interest rates could rise in the US in December but likely will remain stable in the UK thanks to stronger than expected post-Brexit growth, the CETA will be signed, Bitcoin receives a boost, Uber drivers are employees, and CIBC is the latest bank to be fined for ripping off customers.
The CETA (Comprehensive Economic and Trade Agreement) saga is finally coming to an end. The trade deal which was seven years in the making, nearly fell at the last hurdle when Wallonia, a French speaking region of Belgium, refused to agree to CETA unless provisions to protect farmers and labour interests were added, thus preventing Belgium’s parliament signing off on the EU deal. After tough negotiating Wallonia relented, and on Friday all 28 EU countries officially approved the trade agreement. CETA will remove 99% of the tariffs between Canada and the EU, and supporters say this will generate $12 billion more trade per year. Prime Minister Trudeau is now en route to Brussels to sign the deal. Reaching a deal could bolster the EU’s ability to sign future deals, and CETA could provide a framework for a post-Brexit UK deal with the EU.
Bit by Bit
Although the hype surrounding bitcoin has died down lately, the digital currency has received a major boost as Switzerland’s national rail service will sell the currency at its stations in November. Although customers will not be able to buy their tickets with BitCoin, they will be able to trade Swiss francs for Bitcoins at ticket machines. The two year pilot project is in response to consumer demand. There will be limitations however: buyers will have to provide a phone number and can only buy 500 Swiss Francs worth of Bitcoin at a time.
US Economic Growth
The US economy grew at an annualised rate of 2.9% in the third quarter of 2016 – the fastest growth the country has experienced in two years. The figures exceeded the expected growth rate of 2.5%. The US expresses growth at an annualised rate, while many other countries express the figure in quarter on quarter terms. Quarter on quarter growth was 0.7%. Strong economic performance could encourage the Fed to raise interest rates in December, which would strengthen the USD.
A tribunal in Britain has ruled that Uber’s drivers qualify as employees – not independent contractors. The ruling means that the 40,000 UK based Uber drivers are entitled to vacation days, sick days, and other rights granted to regular employees. Many British Uber drivers earn less than minimum wage while Uber has gone on to become one of the world’s most valuable tech companies. Supporters of Uber claim the drivers are independent drivers who take on the risk knowingly and that labelling driver employees could make the service more expensive.
CIBC has been forced by Ontario’s securities regulator to compensate clients who were overcharged. The bank will pay out $73 million in compensation. CIBC will have to reach out to those that were overcharged in order to pay them compensation. CIBC will also pay $3 million to the Ontario Securities Commission, and a further $50,000 to cover the cost of the investigation. Over the summer Scotiabank faced similar charges and was forced to shell out about $20 million in compensation. CI Investments, an investment management company, paid out over $150 million last February.
The British economy exceeded the predicted 0.3% growth rate by posting growth of 0.5% from July to September, indicating that the Brexit vote had little to no immediate impact on the economy. The strong numbers reduce the likelihood that the Bank of England will cut interest rates next week. Cutting interest rates would further dampen the pound which is already low. If interest rates remain stable it will be good news for anyone holding pounds, but won’t do any favours for Canadians looking to visit the UK.
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