Key events
UK’s Eastern Airways suspends operations with all flights cancelled
The UK domestic airline Eastern Airways has suspended operations and all of its flights have been cancelled.
Customers of the airline, which operated regional services from airports across the UK, are urged not to go to the airport as flights will not be operating, the UK Civil Aviation Authority said.
The airline flew to destinations including Aberdeen, Humberside, Gatwick, Newquay, Teesside International and Wick John O’Groats, according to its website.
On Monday morning the company filed a notice of intention to appoint an administrator at the insolvency and companies court within the high court.
Selina Chadha, consumer and markets director at the UK Civil Aviation Authority, said:
We urge passengers planning to fly with this airline not to go to the airport as all Eastern Airways flights are cancelled.
Eastern Airways customers should visit the Civil Aviation Authority’s website for the latest information.
HSBC profits fall 14% amid hit from Hong Kong property downturn and Madoff provision
Kalyeena Makortoff
Here’s more on HSBC.
HSBC has reported a 14% drop in third quarter profits to $7.3bn (£5.5bn), as it took a dual hit from both a real estate downturn in Hong Kong, and a lawsuit over the Bernard Madoff ponzi scheme.
It came as the London-based bank reported a 24% jump in operating costs to $10.1bn, which included restructuring costs – severance for bankers let go as part of the process – linked to a major shake-up under chief executive Georges Elhedery announced last year.
But those operating costs also reflected a $1.1bn provision to cover a lawsuit by investors who lost money in the Madoff ponzi scheme. It comes after a Luxembourg court turned down HSBC’s appeal.
Madoff admitted in 2009 to defrauding thousands of investors, losing them $65bn (£48.8bn). He died in prison in 2021. HSBC has been battling a 2009 lawsuit against its Luxembourg arm, with investors trying to recoup losses from the fraud. HSBC said it plans to file a further appeal with the Luxembourg Court of Appeal and, if that fails, it will dispute the final amount in later proceedings.
HSBC also put aside another $1bn to deal with the ripple effects of China and Hong Kong’s real estate downturn, which has hit the banking sector, with a rise in bad debts linked to the crash in property prices.
Chief executive Georges Elhedery said:
We are becoming a simple, more agile, focused bank, built on our core strengths. The intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters.
He added:
We remain fully focused on helping our customers navigate new economic realities, putting their changing needs at the heart of everything we do.
Introduction: UK reportedly faces more than £20bn hit from steeper productivity downgrade, fuelling tax rise speculation
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The chancellor faces a bigger-than-expected hit to the public finances of around £20bn, because of poor productivity in the UK economy.
The Office for Budget Responsibility (OBR), the government’s official forecaster, is expected to cut its trend productivity growth prediction by 0.3 percentage points, the Financial Times reported. It is expected to deliver its forecasts to Rachel Reeves on Friday, and they will be published on budget day on 26 November.
The Institute for Fiscal Studies think-tank has said that each 0.1 percentage point downgrade to productivity would increase public sector net borrowing by £7bn in 2029-30, so a 0.3 point reduction could create a £21bn hit.
Analysts have been expecting a smaller downgrade to productivity that would result in a £7bn to £14bn fiscal hit under the IFS calculation.
This would result in a total fiscal hole of £20bn to £30bn according to analysts’ estimates. A larger-than-expected productivity downgrade would increase the size of that hole, but the final number could be offset by other factors.
A bigger hit from worse productivity would make Rachel Reeves’ job much harder. She hinted at the downgrade on Monday, saying productivity was “poor” and blamed the financial crisis and Brexit. Speaking to business leaders in Saudi Arabia, she said:
Our independent forecaster is likely to downgrade the forecast for productivity in the UK, based not on anything this government has done but on our past productivity numbers, which, to be honest, since the financial crisis and Brexit, have been very poor.
Poor productivity has long been a problem for the UK economy, to be fair.
The mooted downgrade will increase expectations that the chancellor will be forced to breach Labour’s election manifesto pledge on tax, with speculation around an income tax hike in the budget.
Meanwhile, HSBC has reported a 14% drop in third quarter profits, as it took a dual hit from a real estate downturn in Hong Kong, and a lawsuit over the Bernard Madoff ponzi scheme.
Pre-tax profits at the London-headquartered bank fell to $7.3bn in the three months to September 30, down from $8.5bn during the same period last year (more later).
The Agenda
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