• 17 Dec 2017

    Spanish banking giant BBVA has successfully piloted a blockchain solution for paperless trade transactions between Europe and Latin America.

    The blockchain pilot, built on the Wave platform, was carried out to automate the electronic submission of documents for an actual sale transaction between Mexico and Spain in a move to speed up the time required for sending, checking and authorizing cross-border trades.

    The trial saw the time taken for document verification reduced from 7–10 days to 2.5 hours.

    According to Patxi Fernández de Trocóniz, head of global trade at BBVA, the blockchain pilot marks a "leap forward" for effective international trade transactions. 

    He stated:

    "The time it takes to manage the documentation was reduced to a process that lasted just a few hours, in which all parties – the banks, the importer and the exporter – were constantly aware of the status of the documents."

    The payment of the transaction was carried out using a letter of credit for the transport of 25 tons of frozen tuna, bought from Mexico by a company in Barcelona.

    Utilizing blockchain for foreign trade allows the creation of a "safe and digital environment ... as the foundation for a global foreign trade marketplace," says BBVA Bancomer Corporate Banking and Governance head of strategy, Jorge Zebadúa.

    The blockchain pilot forms part of BBVA's effort to digitize aspects of finance with the use of nascent technologies like blockchain, the release added.

    The bank has been investigating blockchain tech for some time, and made its entrance into the Hyperledger blockchain consortium this March, joining 100-plus startups and businesses already involved in the enterprise-focused project.

  • 15 Dec 2017

    The symbiotic relationship between technology and international trade is fast becoming the cornerstone for exporting.

    Not only does technology underpin innovations that make trade more efficient and safer for individual businesses but it is also used to tackle wider issues such as fraud and money laundering that can present a risk to would be exporters.

    With international exports worth £29bn to the Scottish economy, growing beyond our borders is a key priority.

    As one of the world’s largest international banking and financial services organisations, with a presence in more than 67 countries, it is our responsibility to enable small and medium-sized enterprises (SMEs) to export and grow globally. In doing so we’re also supporting the economies in which we are present. With this also comes a responsibility to tackle financial crime, reduce risks and make global trade less challenging.

    Safeguarding businesses

    In today’s sophisticated world, any business or individual is susceptible to financial crime.

    As an international bank, it is incumbent on ourselves, with our international knowledge and financial expertise, to ensure there are safe passages to market for our export-fit domestic businesses. That includes tackling the global issue of financial crime while also developing innovative, world-leading technologies to make international business efficient, safer and easier.

    The rise of online banking means companies are using a variety of digital platforms to do business, bringing international trade closer to home. However, the more digitally present a company is, the larger the risk for exposure.

    Other risks can simply come in the form of understanding the country and landscape in which you are trading. Due diligence is critical to ensure your business is cooperating with possible sanctions and embargoes. This thorough knowledge of the trading landscape will increase vigilance of potential fraud; minimising the risk of inadvertent involvement in illegal activity optimises returns by avoiding unexpected costs and business disruption.

    This is why, at our global centre of excellence for risk and compliance in Edinburgh, we’re investing in our best teams and expertise in developing the technology and skills to fight financial crime.

    In fact, we delivered more than 3.1 million hours of targeted training on financial crime last year to our staff.
    Edinburgh was an ideal location due to its: global reputation in banking and finance; unique pipeline of high-level data science, financial and technical expertise; and the city’s readily available connections to European, American and Far Eastern markets.

    At the centre, a variety of activities are undertaken across financial crime compliance, regulatory compliance, wholesale credit and market risk, operational risk and risk analytics. The building is a hive of technological and human intelligence. Half of our employees here are directly involved in money laundering prevention.

    We have a passion to tackle these issues, which is why earlier this year we held an event with Police Scotland and the Scottish Government, bringing together our senior leadership to better understand how we can work together. Specifically, we see three component parts to our role: the expertise of front line staff; the impact of technology on our capability to detect crime; and the influence of partnership working in delivering results.

    However, we must remember the opportunity to export outweighs any perceived threats.

    Streamlining the export process

    Today, almost everything we do in banking and finance circles back to technology. Since 2015 HSBC has invested US$1bn to ensure we’re driving forward innovation in our sector and delivering better access to international markets for our domestic SMEs.

    Scottish brewer WooHa, known for its award-winning and KeyKeg conditioned beer, is a prime example of how SMEs, no matter their size, can reap enormous reward from overseas trade. The brewer began trading in April 2015, and received HSBC finance to upgrade its facilities through the purchase of a new 6.2 acre farm in Moray and hire an additional four employees.

    Today, the business is able to increase production five-fold and ramp up an ambitious export strategy. The business is forecasting that 80% of its revenue next year will be via exports, with its focus to be on dramatically increasing supply to the US market.

    This year, Scotland’s food and drink exports grew by £421m in 2016, to a record £5.5bn. Exports to the EU countries alone were worth £2.3bn – up £133m on last year. The market for export is buoyant and we must ensure we navigate a clear journey to international opportunities for Scottish SMEs.

    One way is to make some of the complex processes involved in exporting easier. Particularly pertinent for WooHa is the digitising of paper-based processes through innovative technologies. When businesses have an import or export focus, the level of paperwork involved can be enormous and complex – often becoming a drain on company resources.

    HSBC’s global trade and receivables finance team facilitates more than US$500bn of documentary trade for customers every year, and in doing so must manually review and process up to 100 million pages of documents, ranging from invoices to packing lists and insurance certificates.

    To make this easier, HSBC has developed a cognitive intelligence solution devised with IBM, which uses optical character recognition, advanced robotics, advanced analytics technology including intelligent segmentation and text analytics to identify, digitise and extract key data from all of this documentation.

    By digitising this process we will make transactions quicker and safer for both buyers and suppliers, leading our industry forwards, and we will reduce compliance risks through an enhanced ability to manage this volume of data.


    Another fast-emerging technology, increasingly synonymous with financial technology, is blockchain. Blockchain records transactions in blocks and then forms chains of permanent data. It is the technology behind cryptocurrency bitcoin and is set to revolutionise the financial industry.

    The immutable nature of blockchain helps ensure banking is more secure and transparent and can be applied to a range of financial services.

    When applied to the digitisation of paper-based processes, blockchain could not be a more important asset. Currently, more than US$2tn of global trade depends on the physical exchange of documents, such as letters of credit. These are issued by banks to be used by importers and exporters to reduce the risk of trading with each other and give suppliers certainty over payment.

    Considering the rapid growth in Scotland’s food and drink sector alone, it is critical to our economy to get these processes right.

    We understand that innovation is the lens through which we will truly understand what our customers want and need. And in this world, behind every innovation are the technologies and expertise to give businesses the global launch pad they need for international trade.

  • 01 Dec 2017

    The Internet of Things and Smart Infrastructure

    The Internet of Things enables connected objects and devices containing sensors to share data, information and insights - from industrial machines, infrastructure, buildings and vehicles, to consumer electronics and clothing. The benefits for industry, the public sector and citizens could be huge. For example: wearable monitors can improve personal health care; smart water pipes can warn of falls in pressure; street-level data can improve traffic flows and planning.

    We want the UK to remain an international leader in R&D and adoption of IoT. We are funding research and innovation through the three year, £30 million IoT UK Programme, including:

    • the large-scale Cityverve smart cities demonstrator in Manchester to show how IoT technologies and services can improve the quality and efficiency of services in transport, energy, health and culture
    • NHS test beds, using IoT and health and care innovations to help people with dementia in Surrey and people with diabetes in the West of England
    • the IoT Research Hub led by University College London and partners, to develop UK interdisciplinary research excellence, focusing on privacy, ethics, trust, reliability, acceptability and security (PETRAS)
    • help for IoT entrepreneurs and innovators from the Digital Catapult and Future Cities Catapult; and specialist accelerator schemes for IoT hardware businesses, R/GA and Startupbootcamp.

    Increasingly, new infrastructure is also smart: connected, and operated with data to achieve maximum efficiency and effectiveness. To provide leadership in the roll out of smart infrastructure, the EPSRC has announced £138 million of funding for the UK Collaboratorium for Research in Infrastructure and Cities (UKCRIC) to create a coordinated and coherent national infrastructure research community, spanning at least 14 universities. UKCRIC stated aims are to:

    • build on existing capabilities to establish a network of state-of-the-art large-scale experimental facilities supporting world-leading research in cities and infrastructure
    • establish a unique, national network of local ‘urban laboratories’ to sense, capture, monitor and evaluate new and existing infrastructure in UK towns and cities
    • establish world-leading computation and big data infrastructure for the modelling, simulation, and visualisation of cities and infrastructure
    • we have also asked the National Infrastructure Commission to undertake a new study on how emerging technologies can improve infrastructure productivity

    Sector deals offer another important channel to support specific industries. They offer an opportunity for important players to join together and address shared challenges and opportunities they face. We are therefore pleased to support reviews into the following important and rapidly growing sectors, which could inform potential sector deals.

    Professor Dame Wendy Hall, Regius Professor of Computer Science at the University of Southampton, and Jerome Pesenti, Chief Executive of BenevolentTech, will conduct a review of how industry and government can create the conditions for the artificial intelligence industry to continue to thrive and grow in the UK. The review will consider the core challenges such as skills and access to talent, access to data, and access to finance and investment. This review will build on the work on machine learning by the Royal Society, and it will complement, but remain separate from, the ongoing work by the British Academy and Royal Society on data ethics and governance, which will also cover ethical issues around AI.

    As outlined in the Industrial Strategy green paper, Sir Peter Bazalgette will conduct an independent review into how the UK’s creative industries, such as our world-leading music and video games industry, can help underpin our future prosperity by utilising and developing new technology, capitalising on intellectual property rights, and growing talent pipelines.

    In addition to these reviews, government will consider how it can further support the virtual reality (VR) and augmented reality (AR) sectors in the UK, considering how these industries could seize opportunities for growth. The UK is home to a number of innovative firms working in this sector, including Blippar, Improbable.IO, Ultrahaptics, and a host of world-leading production houses specialising in VR or AR content. As an international hub for the cultural and creative industries, and with our strengths in research and computer science, the UK is well placed to take advantage of global growth in these sectors.

    The Digital Catapult is already helping advance next generation virtual and augmented reality businesses. Earlier this month, it launched Augmentor, an equity free 10-week programme to provide technical and business mentorship to start-ups in this space. Successful applicants will have access to the Digital Catapult Centre in London as a space to work and collaborate, as well as the state-of-the-art Immersive Lab at the centre.

  • 11 Dec 2017

    It will be regulation-led, but make no mistake: 13th January 2018 will see the start of a deep-rooted and long-term transformation of the European payments market. This is when PSD2, the new European Directive on Payment Services in the Internal Market, comes into force, and both financial institutions and fintech firms need to ensure now that they will be PSD2-ready, says Shahrokh Moinian, global head of cash products, cash management, Deutsche Bank

    Payments in Europe have come a long way since PSD2’s predecessor Directive established a modern and comprehensive set of rules for all payment services in the European Union (EU) and the European Economic Area (EEA), laying the legal framework for the Single Euro Payments Area (SEPA). That first payments revolution brought faster, more convenient and safer payments to millions of payment service users (PSUs). Today, however, we are on the cusp of a second, potentially even more significant, revolution that will ultimately affect not just payments, but banking services in general. 

    PSD2 aims to better align payment regulation with the current state of the market and technology, strengthen payment security and enhance consumer protection. Yet it goes further still: its purpose is also to shake up the European payments market by encouraging greater competition, transparency and innovation in payment services. 
    What will bring about this change is PSD2’s requirement to open up the payments market to third party providers (TPPs), obliging traditional account servicing payment service providers (ASPSPs) including banks to give them guaranteed access to the customer account information they need to provide their services.

    While this prospect initially caused concern to some in traditional financial institutions, most are now embracing it as a timely and necessary stimulus to the industry to future-proof itself against a new age in payments and banking services. Given the clear benefits to customers, banks should therefore not delay getting PSD2-ready and instead participate in the consultations and act on the early drafts of the European Banking Authority’s Guidelines immediately in order to ensure smooth implementation projects. 

    Timelines and the 'implementation gap'
    So, what must organisations do now to comply with PSD2? There are several points worth noting concerning the Directive’s implementation timeline. 

    Firstly, although the regulation comes into force on 13th January 2018 across all member states, not all are likely to meet this deadline. To date only Denmark, France, Germany and the United Kingdom have transposed PSD2 into national law, with a number of other member states having draft legislation in place.

    Secondly, due to the way the various European bodies elaborate and scrutinise legislation, there is going to be a significant ‒ even a problematic ‒ gap in implementation of different parts of PSD2. 

    As said, the regulation as a whole comes into force on 13th January 2018, but the provisions introducing the third party interface have been delayed by discussions between the European Banking Authority (EBA) and the European Commission over its content. However, the final version of the EBA’s Regulatory Technical Standards (RTS) on Strong Customer Authentication (SCA) and Common Standards of Communication (CSC) was provided by the European Commission on 27th November, providing a solution that should address the interests of all market participants. Once adopted, the RTS have an eighteen-month implementation period, so the relevant provisions of PSD2 are likely to become applicable around September 2019.

    So can ASPSPs put off building their third party interface, and implementing 2-Factor authentication until later next year? The answer is a resounding no. No organisation should use the “implementation gap” as an excuse to delay any of their PSD2 preparations. One minor exception is that it would be premature to publish amended terms and conditions for customers in member states that have not yet transposed PSD2 into their national law (though these can of course be ready in draft).

    There are a number of reasons why preparations for all parts of PSD2 should advance at full speed. The first is that a number of important provisions in PSD2 that are closely bound up with interface requirements will be mandatory from 13th January 2018, irrespective of whether an organisation has a live interface or not. 

    One example concerns errors in payments involving a TPP. From 13th January 2018, the legal position concerning payments involving a TPP, and consequently their risk profile for ASPSPs, will change entirely. A PSU complaining of an erroneous payment initiated by a TPP will no longer be able to claim reimbursement from the TPP, but only from the ASPSP, who must recover from the TPP. However, an ASPSP without 2-Factor authentication in place dynamically linking a transaction to the amount and the payee specified by the payer initiating the transaction may not have sufficient means of demonstrating who was responsible for the error.

    A second example is cancellation of payments. From 13th January, PSUs will no longer be allowed to cancel payments involving a TPP. An ASPSP without a dedicated interface for TPPs will not be able to tell whether a transaction was initiated by a TPP or not. It will of course incorporate into its terms and conditions of acting for its PSUs that they are not entitled to cancel transactions involving TPPs. The really effective and practical solution, however, will be to have the interface in place.

    Quite apart from these considerations, getting the interface and strong customer authentication up and running will benefit customers immediately, and ensure readiness and functionality when it is required. Additionally, those dragging their feet will miss out on prime mover opportunities in the new environment of Open Application Programming Interfaces (APIs). Widely seen as front runners among ways of implementing the third party interface that PSD2 requires, the wide introduction of Open APIs is also predicted to stimulate the ASPSPs and TPPs they connect into generating new and convenient products and services tailored to changing user needs. This will benefit both PSUs and all payment service providers involved, helping them retain existing and win new customers and build new revenue streams.

    Preparation, preparation…
    Clearly, building (or buying in) a third party interface and implementing 2-Factor authentication require substantial investment in time and resources. But these are not the only areas needing attention. Many organisations may be surprised to learn how much work is involved in complying with the Guidelines on security measures for operational and security risks, and the Guidelines on major incident reporting, under PSD2. Both are more detailed and more comprehensive than the previous Guidelines on the Security of Internet Payments. 

    TPPs arguably have even more to comply with, as they have to comply with Guidelines on authorisation, registration and professional indemnity insurance, as well as all those applicable to ASPSPs. PSUs, on the other hand, need make no major adjustments, but will reap benefits from Day 1, for example through changes concerning value dating, and enhanced consumer protection.

    More than just regulatory compliance 
    PSD2 is set to revolutionise the European payments market, opening it up to new players and technologies. The widespread use of standardised Open APIs will eventually result in a multitude of new value-added services for customers. Payments, across an array of devices and platforms, will become faster, safer, more reliable and convenient. Payment customers will have routine convenient access to information from their accounts with different institutions. 

    And soon, similar developments will extend to other banking services, with customers for example accessing stock portfolios, monitoring online securities transactions and managing borrowings all in one place.

    In this new innovative ecosystem, the winners will be those who can exploit the full potential of Open APIs, leveraging their existing assets and collaborating with new partners. To get onto this springboard, however, they must be PSD2-ready.

  • 11 Dec 2017

    Connected and Autonomous Vehicles

    Connected and autonomous vehicle technologies are set to transform our roads and could offer huge benefits including improved road safety, traffic flow, efficiency and mobility, together with significant opportunities for UK industry. We want to ensure the UK is at the forefront of these developments and we will work with industry and road network managers to understand the changes necessary to make this a reality, including improved connectivity on the road network.

    Our regulatory framework already supports real-world testing of automated vehicle technologies, and our world-leading ‘test anywhere’ approach, which encourages co-operation between a variety of organisations, is helping to attract international companies to test their vehicles on our roads. We are keen to ensure that we are acting at speed to put in place the necessary regulatory framework to enable the safe sale and use of this technology, and will be taking forward a rolling programme of reform, engaging with industry and international partners to identify where to focus our efforts.

    We have also provided over £100 million of funding to support research, development and real-world demonstrations of connected and autonomous vehicles, matched by industry. Our driverless car trials have commenced public demonstrations in Milton Keynes, and projects in Bristol, Greenwich and Coventry will go live soon. In February 2016 we awarded £20 million to 21 new collaborative research and development projects, and in August 2016 we launched a further £35 million research competition, one part of which involves a grand challenge demonstration of a highly autonomous vehicle operating in a variety of conditions on public roads.

    We are consolidating this effort to assert a world leadership position in the demonstration and deployment of connected and autonomous vehicle technologies. In his 2016 Autumn Statement, the Chancellor announced £100 million for new connected and autonomous vehicle testing infrastructure. The funding will be used to develop a high impact programme (to be matched by industry up to £200 million) over four years to provide a globally competitive testing ecosystem for these technologies by strengthening and integrating our existing centres of excellence.

  • 02 Dec 2017

    With Christmas on the way, the government has embarked on a B2C marketing campaign with American online marketplace Newegg, which will promote British tech products to US consumers.

    The campaign from the Department for International Trade is a first of its kind, with the B2C initiative to help UK tech companies with exporting plans.

    Launched 16 years ago, Newegg is a tech-centric US ecommerce site that boasts 32m registered users worldwide. As of Friday 1 December, the Department for International Trade will run a pilot programme with Newegg to reach US customers in a bid to make them aware of products from UK tech firms.

    The move is part of the Department for International Trade E-Exporting Programme, which is designed to help UK businesses access overseas markets via the web through online campaigns.

    The programme offers support with an overseas selling tool, something that enables connectivity and sale of items through the likes of Newegg, Amazon, eBay and Tmall. It also comes with built-in discount options and marketing packages to make things easier for companies involve.

    “Online marketplaces are making it much easier for small businesses to sell their goods and services to customers overseas,” said minister for Trade and Export Promotion, Baroness Rona Fairhead.

    “At the Department for International Trade, we are committed to supporting businesses by opening doors for exciting British tech innovators to sell their products on new platforms. This partnership with Newegg and other e-retailers forms an important part of our E-Exporting programme. I’d encourage small businesses to take a look.”


    Blue Maestro is among the 20 plus companies that have tied up with the Department for International Trade and Newegg collaboration. The 2013-launched business offers digital health support with Bluetooth sensors for items such as baby monitors, and hopes it will be able to break into the US through the scheme, having tackled other overseas markets.

    Kristin Hancock, co-founder, Blue Maestro, said: “Newegg is a platform which has been really easy to be involved with and we’re excited at the prospect of expanding into the US market.

    “The support from DIT has made the process easy and we’re already seeing more traction as a result of the advertising.”

    Elsewhere, London drone business Extreme Fliers is also hoping to crack the US. The business’ latest Micro Drone 3.0 product raised $3.5m on Indiegogo, so it will be banking on achieving a high level of interest with American consumers.

    Vernon Kerswell, CEO, Extreme Fliers, added: “Out of our small design studio in South London, we have built one of the UK’s leading drone technology companies. By combining the best high tech engineering with global supply chains, we are able to develop products and scale very fast.

    “With DIT’s E-Exporting programme our products can quickly reach exciting new markets and customers around the world.”

  • 26 Nov 2017

    The UK is the global capital for financial technology, or ‘FinTech’, which generated £6.6 billion in revenue and raised over £500 million of investment in 2015 alone. It is disrupting established processes and changing the ways that consumers interact with financial services.

    In doing so, it is radically reducing the cost of accessing financial services and broadening the range of services available. This is allowing those who may previously have struggled to access financial services to do so, and providing consumers with the tools they need to manage their finances well.

    The government and regulators are taking a significant number of actions to support the UK FinTech industry:

    • supporting the banks to deliver Open Banking through a fully open application programming interface (API), providing ongoing access to authorised third parties by Q1 2018. Third-parties will then be able to access consumers data in real-time, thereby allowing them to offer budgeting tools to support individuals in managing their finances
    • supporting industry to design and deliver a pensions dashboard by 2019 – a digital interface where an individual can view all their pensions in one place, enabling consumers to make more well-informed decisions about their pensions
    • working with Tech City UK on a FinTech delivery panel to set out a long-term strategy for UK FinTech, identify key industry initiatives to deliver this, and drive forward progress. This panel comprises key representatives from the FinTech sector, existing financial services sector, and the Financial Inclusion Commission, given the significant potential of FinTech in supporting financial inclusion
    • appointing regional FinTech envoys to ensure the continued growth of FinTech across the UK. To date, regional FinTech envoys have been appointed for the Northern Powerhouse and Scotland
    • launching a professional services information hub
    • showcasing the best of British FinTech to investors at the annual International FinTech Conference, to take place on 12 April 2017

    The Bank of England is also supporting the FinTech sector by:

    • establishing the New Bank Start-up Unit in January 2016 (in partnership with the Financial Conduct Authority). Nine new UK banks have been authorised in this parliament
    • expanding access to central bank money to non-bank payments service providers, allowing them to compete on a level playing field with banks
    • being open to providing access to central bank money for new forms of wholesale securities settlement, such as those based on Distributed Ledger Technology
    • proactively seeking contributions from a wide range of perspectives and disciplines to feed into its long-term research into the impact of a digital currency on monetary and financial stability and whether new technology has the potential to be used to provide wider access to central bank money, via a Central Bank Digital Currency
    • partnering with FinTech companies through a Bank of England FinTech Accelerator to help harness FinTech innovations for central banking

  • 23 Nov 2017

    The United Kingdom has a bright future. The fundamental strengths of the UK economy will support growth in the long term as the UK forges a new relationship with the European Union (EU). The Budget prepares for that: supporting families and business in the near term; setting a path to a prosperous, more open Britain; and building an economy that is fit for the future. It demonstrates the government’s commitment to a balanced approach to managing the public finances and supporting key public services. By investing in the future, the Budget will ensure that every generation can look forward to a better standard of living than the one before and ensures young people have the skills they need to get on in life. It backs the innovators who deliver growth, helps businesses to create better, higher paid jobs and builds the homes the country needs.

    The Budget sets out actions the government will take to:

    • support more housebuilding, raising housing supply by the end of this Parliament to its highest level since 1970, to make homes more affordable in the long term and help those who aspire to homeownership

    • prepare for exiting the EU and ensure a smooth transition by setting aside an additional £3 billion for government

    • establish the UK as a world leader in new technologies such as artificial intelligence (AI), immersive technology, driverless cars, life sciences and FinTech

    • give everyone the skills to succeed in the modern economy and get better paid jobs

    • expand the National Productivity Investment Fund (NPIF) to support innovation, upgrade the UK’s infrastructure and underpin the government’s modern Industrial Strategy

    • invest over £6.3 billion of new funding for the NHS to improve A&E services, reducing waiting times and improving performance for treatment after referral, and to transform and integrate patient care

    • provide more support in the short term for households, reducing costs of living, and boosting wages for the low paid through the National Living Wage (NLW)

      Economic context

      The UK economy has shown its resilience, with solid growth over the past year and further increases in the number of people with a job. Gross domestic product (GDP) grew 1.5% in the year to the third quarter of 2017, employment remains near the record high set earlier this year and unemployment is at its lowest rate since 1975.

      The Office for Budget Responsibility (OBR) now expects to see slower GDP growth over the forecast period, mainly reflecting a change in its forecast for productivity growth. It has revised down its forecast for GDP growth by 0.5 percentage points to 1.5% in 2017, then growth slows in 2018 and 2019, before rising to 1.6% in 2022.

      Household spending continues to grow, having slowed since 2016 due to higher inflation caused by the depreciation of sterling. Business investment has grown moderately over the past year and net trade has started to make a positive contribution to GDP growth. Surveys of export orders in 2017 have been strong, with some reaching their highest level since 2011.

    • Outlook for the public finances

    • The government has made significant progress since 2010 in restoring the public finances to health. The deficit has been reduced by three quarters from a post-war high of 9.9% of GDP in 2009-10 to 2.3% in 2016-17, its lowest level since before the financial crisis.

      The government’s fiscal rules take a balanced approach to government spending, getting debt falling but also investing in our key public services like the NHS, and keeping taxes low.

      Compared to the Spring Budget 2017 forecast, borrowing is significantly lower in the near term. However, over the medium term the impact of a weaker economic outlook and the measures taken at the Budget see borrowing higher than previously forecast. The OBR expects the government will meet its 2% structural deficit rule for 2020-21 two years before target, in 2018‑19, and with £14.8 billion of headroom in the target year. Debt is forecast to peak at 86.5% of GDP in 2017-18, and is forecast to fall in every year thereafter to 79.1% of GDP in 2022-23.

    • Building an economy fit for the future

    • The Budget sets out a long term vision for an economy that is fit for the future – one that gives the next generation more opportunities. It is an economy driven by innovation that will see the UK becoming a world leader in new and emerging technologies, creating better paid and highly skilled jobs.

      To achieve this vision, the government has already set in train a plan to boost UK productivity over the long term. A key part of this is the NPIF, launched last year to provide additional investment in housing, infrastructure, and research and development (R&D). The Budget goes further, increasing the size of the NPIF from £23 billion to £31 billion. This investment will underpin the government’s modern Industrial Strategy and help raise wages and living standards. It means public investment as a proportion of GDP will reach its highest level in 30 years by 2020-21, excluding the exceptional years following the financial crisis. Further details of the government’s plan will be set out in the Industrial Strategy.

      Government action at this Budget to boost productivity includes:

    • Transport: A £1.7 billion new transforming cities fund through the NPIF to improve connectivity and support jobs across England’s great city regions

    • Research and Development: The largest boost to R&D support for 40 years with a further £2.3 billion investment from the NPIF in 2021-22

    • Long Term Investment: Unlocking over £20 billion of patient capital, over the next 10 years so that innovative high-growth firms can achieve their full potential

    • Emerging Tech: Leading the world in developing standards and ethics for the use of data and AI, and creating the most advanced regulatory framework for driverless cars in the world

    • Skills: Creating a new partnership with industry and trade unions to deliver a National Retraining Scheme, giving people the skills they need throughout life to get a well-paid job, and equipping young people with the science, technology, engineering, and maths (STEM) skills to become innovators of the future

    • A fair and sustainable tax system

    • The government remains committed to a low tax economy, cutting taxes for both working people and businesses to help respond to short term pressures. It has secured £160 billion in additional tax revenue, and these actions have also helped the UK achieve one of the lowest tax gaps in the world at 6.0% in 2015-16. The Budget takes action so that everyone pays their fair share, including those seeking to evade or avoid tax using offshore structures. The Budget will:

    • crack down on online value-added tax (VAT) evasion by strengthening and extending existing powers that make online marketplaces responsible for the unpaid VAT of their sellers

    • provide Her Majesty’s Revenue and Customs (HMRC) with additional resources including for new technology to further tackle avoidance and evasion risks

    • As the UK economy evolves, the tax system needs to evolve with it, to ensure that vital public services can be funded sustainably. The Budget sets out the government’s approach to ensuring that digital businesses will pay tax that is fair, given the value they generate.

    • increase the time limits for HMRC assessments of offshore tax non-compliance, and support new global rules to force the disclosure of certain offshore structures to tax authorities

    Global economy

    Global growth has strengthened in the first half of 2017. The OECD estimates that GDP growth for the G20 rose to 3.6% in the year to Q2 2017, up from 3.0% in Q2 2016. Growth has also become broader-based, as activity has strengthened in the euro area and Japan, and Brazil and Russia have emerged from recession. Growth has remained strong in China and firmed in the US. Higher global growth will benefit the UK economy. The OBR forecasts that global growth will be 3.6% in 2017 and 3.7% in 2018; these forecasts are both 0.2 percentage points higher than at Spring Budget 2017.

  • 18 Nov 2017

    New Trade Bill enters Parliament, with Customs Bill to follow, to set the groundwork for the UK to become an independent global trading nation

    The government is making crucial progress on the domestic legislation needed for Brexit, taking forward the next two Brexit Bills to Parliament.

    The Trade Bill and the Customs Bill will allow the UK to set the groundwork to becoming an independent global trading nation, providing necessary certainty for businesses and international trading partners to make the most of this opportunity.

    Key measures in the Trade Bill include provisions for the UK to implement existing EU trade agreements, helping ensure that UK companies can continue to access £1.3 trillion worth of major government contracts in other countries and creating a new trade remedies body to defend UK businesses against injurious trade practices.

    Further tax-related elements of the UK’s trade policy will be legislated in the Treasury’s Customs Bill – Taxation (Cross-border Trade) Bill – as part of the creation of a new UK tariff regime. This includes the trade remedies and unilateral trade preferences which provide preferential trade access to UK markets for developing countries.

    International Trade Secretary Dr Liam Fox said:

    For the first time in over 40 years the UK will be able to shape our own trade and investment agenda – and we are determined that businesses and consumers can take advantage of this opportunity.

    We are getting on with delivering a successful Brexit, by seeking a deep and special partnership with the EU, and by boosting our existing trading relationships with old partners while opening up access to new and exciting markets across the world.

    The Bills follow engagement with stakeholders including the Scottish and Welsh Governments and Northern Ireland leaders after the Trade and Customs White Papers were published in October.

    Trade Bill

    The Trade Bill laid in Parliament today will:

    • create powers to assist in the transition of over 40 existing trade agreements between the EU and other countries
    • enable the UK to become an independent member of the Agreement on Government Procurement (GPA) ensuring UK companies have continued access to £1.3 trillion worth of government contracts and procurement opportunities in 47 countries
    • establish a new independent UK body, the Trade Remedies Authority, to defend UK businesses against unfair trade practices
    • ensure the UK Government has the legal abilities for gathering and sharing trade information

    Customs Bill

    The government also laid resolutions for the Customs Bill, which will enter Parliament shortly. The Bill will allow the government to create a standalone customs regime and amend the VAT and excise regimes. It will:

    • charge and vary customs duty on goods
    • specify which duties are payable on which goods
    • set preferential or additional duties in certain circumstances – for example, to support developing countries
    • maintain a functioning movement of goods from the day we leave the EU by continuing the VAT and excise regimes in line with the final deal reached in negotiations

  • 17 Nov 2017


    • Payments made by American Express' business customers on its FXIP platform will now be routed through Ripple's enterprise blockchain network
    • The blockchain project will initially allow customers in the U.S. to make instant, traceable cross-border payments with U.K. Santander bank accounts
    • Ripple said that its cryptocurrency, XRP, will "come into play" as a means of speeding up payments later on down the line

    American Express and Santander have partnered with financial technology firm Ripple to speed up cross-border payments between the U.S. and the U.K. by using blockchain technology.

    Payments made by American Express' business customers on its FX International Payments (FXIP) platform will now be routed through Ripple's enterprise blockchain network, RippleNet.

    Blockchain — otherwise known as distributed ledger technology — allows vast amounts of data to be stored on a dispersed network of computers around the world, rather than on one centralized server.

    It was originally used to record all bitcoin transactions but increasingly businesses are finding alternative uses for the technology, such as payments, trade finance and identity verification.

    A number of other financial institutions have been experimenting with distributed ledger projects, including JPMorganUBSCredit SuisseBarclays and HSBC.

    "This collaboration with Ripple and Santander represents the next step forward on our blockchain journey, evolving the way we move money around the world," Marc Gordon, executive vice president and chief information officer at American Express, said in a statement Thursday.

    American Express' blockchain project will initially allow customers in the U.S. to connect instant, traceable cross-border non-card payments to U.K. Santander bank accounts.

    "This blockchain solution opens up a new channel between the U.S. and the U.K. and presents significant opportunity for payments globally", Jose Luis Calderon, global head of global transaction banking at Santander, said in a statement Thursday.

    The distributed ledger platform will enable all parties involved to keep track of a transaction's status and cost.

    Ripple CEO Brad Garlinghouse said that its blockchain network would allow the business customers of financial services firms to move money in "real-time."

    "We're taking a huge step forward with American Express and Santander in solving the problems corporate customers experience with global payments. Transfers that used to take days will be completed in real-time, allowing money to move as fast as business today," Garlinghouse said in a statement Thursday.

    Both American Express and Santander suggested the blockchain project could eventually be extended worldwide.

    Cryptocurrency 'will come into play later'

    Ripple said that it is has tested a means of speeding up payments with its cryptocurrency, XRP, and that this would become a feature in its partnerships with banks and other financial companies further down the line.

    "The XRP currency will come into play later on in the evolutionary dynamics and the other players," Marcus Treacher, global head of strategic accounts at Ripple, told CNBC in an interview.

    "The technology we have developed, it separated a connection from the cryptocurrency or the token. So what that means is that a bank or non-bank like AMEX can use Ripple to connect and just exchange value from one fiat currency to another directly, without the need for any intermediate blockchain currency."

    Some banking executives have raised concern about cryptocurrencies in recent weeks.

    Last month, UBS CEO Sergio Ermotti told CNBC he was "not necessarily" a believer in cryptocurrencies but that he saw a future for blockchain. Credit Suisse CEO Tidjane Thiam went as far as to describe the world's largest cryptocurrency bitcoin as "the very definition of a bubble."

    And, most notably, JPMorgan's Jamie Dimon has been particularly critical of bitcoin, and last month said that anyone "stupid enough to buy bitcoin" would "pay the price for it one day."

  • 12 Nov 2017

    Since the Brexit vote last year, Britain’s future trade relations have dominated policy discussions across the globe as it seeks to boost trade ties.

    The United Kingdom is looking for investment and trade opportunities in Uganda to augment the already existing ties between the two countries.

    The UK Secretary of State for International Trade and UK Business Associates, Liam Fox, led a high-level delegation comprising of cabinet ministers to Uganda and held a meeting with top managers of private and public companies to discuss investment opportunities in the country. In a meeting hosted by Financial Sector Deepening Uganda (FSD-U) at Serena Hotel last Thursday, Fox said the UK has a £50b (sh210.75 trillion) fund to facilitate investments but the UK can only utilize 20% internally, thus the move to explore investment projects in African countries including Uganda to invest the excess funds.

    He said that UK is interested in exploring ways through which its financial institutions can partner with Ugandan institutions to boost capital investments, trade finance and innovations to boost financial inclusion. The FSD-U managing director, Jacqueline Musiitwa, said during the closed door meeting, the delegation expressed interest to invest in energy, agriculture and manufacturing sector. Additionally, UK Financial Technology companies (FinTechs) expressed interest in partnering with Ugandan financial service institutions to develop innovative financial products, as well as innovative ways of financing to boost financial inclusion.

    In innovative financing ways, the UK FinTechs seek to enhance agriculture insurance by enhancing local companies’ capacity in credit risk management to boost uptake. The FSD-U Board chairperson, Gertrude Wamala Karugaba, said partnerships are critical if Uganda is to boost financial inclusion and reduce poverty levels. She noted that while global absolute poverty has sharply reduced over the last 30 years from about 40% to under 20%, over 40% of people in Sub Saharan Africa still live in absolute poverty, thus the need to partner to facilitate inclusive growth. Karugaba added that there is need for more collective efforts, partnerships, innovation and close collaboration between the government and the private sector now more than ever.

    The UK’s renewed effort to seek investment opportunities in Uganda comes at a time when China is aggressively pursuing trade and investment opportunities in Africa and Uganda. China is currently funding a number of major infrastructure projects in Uganda for roads and energy projects, including the Entebbe-Kampala Expressway and the Isimba and Karuma hydropower plants.

    Statistics from Bank of Uganda indicate that Uganda imported goods worth $727.02m  (sh263.9 trillion) from China in 2016/17 financial year while exports to the Asian country were estimated at $27.97m (sh101.5b). On the other hand, Uganda’s imports from the UK were estimated at $55.32m (sh200b), while exports were valued at $16.15m (sh58.62bn). It should also be noted that since the Brexit vote last year, Britain’s future trade relations have dominated policy discussions across the globe as it seeks to boost trade ties.

  • 10 Nov 2017

    International trade has seen little innovation since the arrival of the shipping container in the 1950s. Goods are still transported over sea or land in much the same way as they were then. But one area most in need of a technological revolution is the paperwork and bureaucracy generated by cross-border trade.

    From letters of credit to product quality documentation, trade generates stacks of documents. Behind this administrative thicket is the laudable desire to eradicate ills such as human trafficking, counterfeit goods and illegal smuggling. Yet a growing number of companies believe blockchain technology could speed up trade, all the while improving, rather than compromising, security.

    “International trade demands a faster, more secure and more efficient way to handle the document approval workflows needed to move goods across international borders,” says Ramesh Gopinath, vice-president of blockchain solutions at IBM, which is working on trade-related digital ledger technologies with partners including Maersk and Walmart.

    “Traditionally, supply chains have relied on the physical movement of large volumes of paper documents, leaving the window open for fraud, human error and inadvertent delays.” He says the administrative costs of processing, moving, verifying and securing this documentation can almost double the cost of simply moving a shipment.

    Blockchain, a distributed ledger — the underlying technology for virtual currencies such as bitcoin — is a useful ‘middleware’ for slashing such bureaucracy. It records transactions in sequential blocks, creating encrypted data that can be shared between several parties through the supply chain, updating them instantly without risk of fraud.

    “With roots in financial services, digital ledger technology is making inroads into goods transport through financial instruments, such as letters of credit, and through the digitisation of traditional trade and shipping documents,” says Wolfgang Lehmacher, head of supply chain and transport industries at the World Economic Forum.

    To quantify the documentation involved in ‘business as usual’, Danish shipping giant Maersk tracked a shipment of flowers from the Kenyan port of Mombasa to Rotterdam. The process generated dozens of documents and nearly 200 communications involving farmers, freight forwarders, land-based transporters, customs brokers, governments, ports and carriers.

    Maersk’s blockchain-based approach, developed with IBM, puts all documents into a single, template-based workflow, kicked off when the farmer submits the packing list. As each step is completed, documents are captured and shared so participants can see what has been submitted, when, and by whom. “No one party can modify, delete or even append any record without the consensus from others on the network,” says Mr Gopinath. The ransomware hack that hit AP Moller-Maersk in June, sufficiently severe as to cause the company to cut its profit guidance, has no doubt increased the imperative to develop tamper-proof tools.

    Maersk and IBM are not alone in deploying blockchain to quicken trade processing times. In August 2016, a consortium of banks, with the Singaporean government, used blockchain to prototype a letter of credit, through which banks guarantee buyers’ payments.

    A month later, Barclays used blockchain to complete a trade finance deal, and in 2017 a South Korean consortium used blockchain to track reefer containers from Busan to Qingdao, monitoring everything from shipment booking to cargo delivery.

    Start-ups and small firms are also experimenting. London-based Everledger uses blockchain to ‘track and protect’ valuable assets like diamonds across the life cycle, creating a digital thumbprint used by participants along the supply chain to verify authenticity, while BlockVerify is tackling counterfeiting in industries including pharmaceuticals and electronics. While offering a rare promise — to simultaneously accelerate processing and improve security — blockchain, and digital ledger technologies, pose challenges. The technology might be tamper-proof and collaboration-friendly, but the same is not always true of its users, or of the technologies that move data from blockchain into the real world.

    “While blockchain technology itself is highly resilient, blockchain applications might be vulnerable,” explains Mr Lehmacher, referring to the hacking of multiple exchanges used for the Ethereum and bitcoin cryptocurrencies. Another challenge, he adds, is that the “technical capabilities to handle very large transaction volumes remains unproven, and the costs of maintaining the protocol are high”. Ordinary companies and individuals need to be trained to use blockchain tools correctly.

    Such ‘permissioned’ blockchain systems are heavily dependent on collaboration and work only when all the parties want to use the technology, and have the technical wherewithal to do so. It will also be difficult to take blockchain from pilot projects to widespread use, given the risks that come with overhauling decades-old financial processing infrastructures.

    But in cross-border trade, at least, participants would benefit from the simpler, automated workflows and smart contracts that blockchain can generate. The bribe-taking border officials and illicit traders would lose out. 

  • 04 Nov 2017

    This introduction explains the most important thing about crypto currencies. 

    Today crypto currencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.

    In 2016, you would have had a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research crypto currencies, publish a paper about it or start a so-called blockchain-project.

    But beyond the noise and the press releases the overwhelming majority of people – even bankers, consultants, scientists, and developers – have a very limited knowledge about crypto currencies. They often fail to even understand the basic concepts.


    What is crypto currency and how crypto currencies emerged as a side product of digital cash

    Few people know, but crypto currencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important crypto currency, never intended to invent a currency.

    In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“  

    His goal was to invent something; many people failed to create before digital cash.The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.

    After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.

    This decision became the birth of crypto currency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you‘ll know more about crypto currencies than most people do. So, let‘s try to make it as easy as possible:

    To realize digital cash you need a payment network with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a central server who keeps record about the balances.

    In a decentralized network, you don‘t have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.

    But how can these entities keep a consensus about this records? 

    If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?

    Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.

    Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution – the part that made the solution thrilling, fascinating and helped it to roll over the world.

    What are cryptocurrnecies really?

    If you take away all the noise around crypto currencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions. This may seem ordinary, but, believe it or not: this is exactly how you can define a currency.

    Take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition than you physically own the coins and notes? Money is all about a verified entry in some kind of database of accounts, balances, and transactions.

    How miners create coins and confirm transactions

    Let‘s have a look at the mechanism ruling the databases of crypto currencies. A crypto currency like Bitcoin consists of a network of peers. Every peer has a record of the complete history of all transactions and thus of the balance of every account.

    A transaction is a file that says, “Bob gives X Bitcoin to Alice“ and is signed by Bob‘s private key. It‘s basic public key cryptography, nothing special at all. After signed, a transaction is broadcasted in the network, sent from one peer to every other peer. This is basic p2p-technology. Nothing special at all, again.

    The transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed.

    Confirmation is a critical concept in crypto currencies. You could say that crypto currencies are all about confirmation.

    As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.

    Only miners can confirm transactions. This is their job in a crypto currency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.

    For this job, the miners get rewarded with a token of the crypto currency, for example with Bitcoins. Since the miner‘s activity is the single most important part of crypto currency-system we should stay for a moment and take a deeper look on it.

    Revolutionary properties

    If you really think about it, Bitcoin, as a decentralized network of peers which keep a consensus about accounts and balances, is more a currency than the numbers you see in your bank account. What are these numbers more than entries in a database – a database which can be changed by people you don‘t see and by rules you don‘t know? 

    Basically, crypto currencies are entries about token in decentralized consensus-databases. They are called CRYPTO currencies because the consensus-keeping process is secured by strong cryptography. Cryptocurrencies are built on cryptography. They are not secured by people or by trust, but by math. It is more probable that an asteroid falls on your house than that a bitcoin address is compromised.

    Describing the properties of crypto currencies we need to separate between transactional and monetary properties. While most crypto currencies share a common set of properties, they are not carved in stone.


    Transactional properties:

    1.) Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. Not you, not your bank, not the president of the United States, not Satoshi, not your miner. Nobody. If you send money, you send it. Period. No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer. There is no safety net.

    2.) Pseudonymous: Neither transactions nor accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of users with those addresses.

    3.) Fast and global: Transaction are propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely indifferent of your physical location. It doesn‘t matter if I send Bitcoin to my neighbour or to someone on the other side of the world.

    4.) Secure: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send crypto currency. Strong cryptography and the magic of big numbers makes it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.

    5.) Permissionless: You don‘t have to ask anybody to use crypto currency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other crypto currencies. No one can prevent you. There is no gatekeeper.

  • 02 Nov 2017

    The Bank of England raised interest rates today for the first time in over a decade. The rise may be marginal, from 0.25% to 0.5%, but the move has prompted a mixed reaction from the nation's business community.

    The Federation of Small Businesses (FSB), the trade body that represents the views of more than 160,000 private firms, warned that the rise – though small – could not have come at a worse time

    'Today’s rate rise will mean yet more cost pressures for small firms as they battle spiralling prices and flagging consumer demand,' said Mike Cherry, national chairman of the organisation.


    Small firms are already failing to take advantage of external finance, which is hampering their growth potential, Mr Cherry argued.

    'We have a chronic issue with permanent non-borrowers in the small business community,' he said. 'Today’s rate increase could heighten the sense that borrowing is too expensive if you’re a small firm. 

    'That would threaten investment, growth and job creation. Just one out of 10 UK firms applies for funding at present, according to official statistics.

    The response from lobbying organisation CBI, which represents the interests of larger businesses, was more sanguine. 'While it’s the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5% it remains near rock bottom,' said chief economist Rain Newton-Smith. However, she added that business leaders will be watching consumer reaction closely in case this spooks the man on the street. 

    Last month brought us a slump in consumer confidence and a dip in retail sales, and the rates rise could make consumers more reluctant to open their wallets. This would be bad news so close to Christmas, with many retailers banking on bumper festive revenues.


    Following the announcement, Sterling took a tumble, falling by more than a cent against both the euro and the dollar. (Usually, a rate rise would push sterling up as it encourages people to hold pounds in British banks, but this time it was expected and therefore already priced in.) This has the potential to hurt British exporters, who have been experiencing healthier order books as a result of the cheaper pound. 

    'The main impact of a hike is a likely reduction in confidence for consumers and firms already rattled by ongoing Brexit uncertainties and an erosion of growth that is already tepid,' commented Phil McHugh, a senior analyst at forex firm Currencies Direct. 'Some have argued the economy is still too fragile to cope with increased borrowing costs.'

    Newer start-ups are also likely to be caught on the hop by the rates rise, having never experienced one before. Graham Toy, chief executive of the National Association of Commercial Finance Brokers (NACFB), explained: 'Some of the more insightful SMEs may well have factored an interest rate hike into their financial plans but with interest rates having been so low for so long, many SMEs will have just assumed the benign cost of borrowing will continue.'

    Mortgage payments may rise for many homeowners following today’s announcement and the FSB warns that this could have a knock-on effect on Britain’s businesses too. 

    'You need to consider the fact that, for a typical micro business owner, personal and business finance are closely interlinked,' says Mr Cherry. 'If mortgage and car leasing payments start to rise that’s less money to play with when it comes to expanding the business and taking on new people.'

    The impact of this rise may be limited in the short-term. But if Mark Carney pushes through further rises over the coming months, it could be a long, gruelling winter for Britain's small firms. 


  • 29 Oct 2017

    Artificial intelligence (AI) can transform the productivity and GDP potential of the UK landscape. But, we need to invest in the different types of AI technology to make that happen.

    Research shows that the main contributor to the UK's economic gains between 2017 and 2030 will come from consumer product enhancements stimulating consumer demand (8.4%). This is because AI will drive a greater choice of products, with increased personalisation and make those products more affordable over time.

    Labour productivity improvements will also drive GDP gains as firms seek to "augment" the productivity of their labour force with AI technologies and to automate some tasks and roles. 

    There will be significant gains across all UK regions, with England, Northern Ireland, Scotland and Wales seeing an impact from AI in 2030 at least as large as 5% of GDP.

    The value of AI is in enhancing and adding to what businesses can do now is large, if not larger than the impact of automation. It shows how big a game changer AI is likely to be – transforming businesses, people’s lives and society as a whole.

    But, for the UK to benefit fully, the following is required::

    • Create the right environment for existing and new businesses to innovate and make the most of the product, productivity and wage benefits that this technology can bring.

    • Look at how to obtain the right talent, technology and access to data to make the most of this opportunity. To meet this challenge, there needs to be even more innovative ways in developing technology skills in the UK.

    • Make sure that AI systems are adopted responsibly and that every part of society can reap the benefits. One AI Responsibility Report warns that effective controls need to be built into the design and implementation phase, so AI’s positive potential is secured. This will also address stakeholder concerns about it operating beyond the boundaries of reasonable control.

    There will be significant gains as a result of AI across all UK regions. 

    The larger total impact on GDP in some UK regions reflects the different trade patterns in each of the countries. England, and to some extent Scotland and Wales, have stronger trade links with Europe and the rest of the world. The gains through trade related to artificial intelligence are likely to put even higher upwards pressure on GDP in these countries by 2030.

    The Department for International Trade remains optimistic about the future of AI in the UK. Earlier this year, the UK Government announced a large-scale review into AI as part of the government’s five year Digital Strategy in order to identify the critical elements required  for the technology to thrive and grow on the UK.

    Led by Professor Dame Wendy Hall of the University of Southampton, as well as Jérôme Pesenti, the CEO of BenevolentTech, it aims to consider the ways in which the state and industry could collaborate to back the technology and eventually inform a sector deal.

    The Government has also announced an additional £17.3m funding boost from one of the UK’s Research Councils—the Engineering and Physical Sciences Research Council—for UK Universities to support the development of new AI technologies.

    The Secretary of State for Business, Energy, and Industrial Strategy, Greg Clark, recently argued that “Investment in robotics and artificial intelligence will help make our economy more competitive, build on our world-leading reputation in these cutting-edge sectors and help us create new products, develop more innovative services and establish better ways of doing business.”

    AI represents a significant business opportunity for the UK. “The UK Government is taking a leading role in getting the balance right, and our approach to this challenge will influence how the UK AI industry develops and the speed of disruption,” Mark Beresford argues. He believes that the workforce will quickly adapt: “Fortunately, the UK has an extremely flexible labour force, which is comfortable with the adoption of new technologies, having already transitioned to a more flexible and dynamic [post-industrial] model.”

    “British companies and experts will help solve some of the world’s most difficult challenges in the fields of healthcare, medicine, the environment, transportation, infrastructure, and security, to name but a few.”

    “The UK’s recognised strengths in attracting and cultivating world class talent to work on these problems in our Universities, combined with our unique innovation ecosystem which brings together ‘unusual suspects’ to create and develop new business models across technology and industry sectors, will help us to realise this opportunity on a global stage.”

    The UK AI market is forecast to grow significantly in the next ten years—roughly £650 billion by 2025, according to a report by Accenture. Mark argues that this will attract international companies and capital to invest in innovative new start-ups and to expand their business operations from the UK, in part thanks to national incubators and accelerators such as Entrepreneur First, which have produced a stream of new AI companies that are attracting global investment capital. Furthermore, “global technology giants like Google (Deep Mind), Microsoft (SwiftKey), Twitter (Magic Pony), and Softbank (Improbable) have already made significant investments in UK AI companies to scale their own platforms.”

    Alongside the market opportunities available in the UK, he sees the presence of some of the world’s strongest AI university research groups as equally important. This includes Cambridge, Oxford, Edinburgh, and UCL. “This strong university research base supports the growth of the next generation of scientists and engineers, and this is complemented by an increasing amount of AI related vocational skills development and apprenticeship opportunities.” New UK AI companies that began life in universities include Diffblue (University of Oxford), which uses AI to check for errors in source code, and Cytora (University of Cambridge), which specialises in AI driven data analytics for the insurance industry. 

    The British tech sector has always been well connected globally. “The scale of business opportunity is global,” he argues. “We know that international clients and policymakers across Asia, the Middle East, Europe, and the US are already hungry to learn from UK AI experts.” He believes that AI ‘certainly’ represents a new opportunity to help UK companies develop even stronger international partnerships. “UK AI companies operate in a wide variety of industry verticals, and have developed solutions in different functional areas such as sales and marketing, operations and supply chain, human resources and finance.”

    “the Asian markets, in particular Japan and South Korea, with their ageing populations and imperative to enhance productivity to stay competitive, will be attractive to UK companies.” This is reflected in the Department’s support for B2B matchmaking ‘Mega-Missions’ to Japan, South Korea, and Malaysia. “The interest from local partners has been exceptionally high, and new business wins have already been bagged by some of the UK participants.”

    The Department are currently evaluating options for a similar high-profile AI initiative in the US in 2018, where UK firms are already making ground. “The US market will always be challenging for UK companies, but with dedicated support from the Department for International Trade’s US team, we are already seeing traction across the US in industries like financial services, healthcare, retail, cyber security, oil and gas, and manufacturing, where the UK has recognised strengths.”

  • 26 Oct 2017

    The Treasury has flatly rejected calls for a second EU referendum after the west’s leading economic thinktank, the Organisation for Economic Cooperation and Development, said reversing the decision to leave would significantly benefit the economy.

    “We are leaving the EU and there will not be a second referendum,” the Treasury said in a terse statement that reflected the government’s unhappiness with the OECD’s intervention.

    The Paris-based group, which has 35 of the world’s richest countries as members, said it would revise the gloomy forecasts it made in its annual health check were Britain to stay in the EU.

    “In case Brexit gets reversed by political decision (change of majority, new referendum, etc), the positive impact on growth would be significant,” the report said.

    No 10 joined the chancellor, Philip Hammond, in rejecting the OECD’s analysis, though a spokeswoman for the prime minister would not be drawn on whether the statement was irresponsible or on whether the UK’s £10m-a-year membership contribution to the thinktank was well spent.

    “The OECD are a respected international body but what we should bear in mind is that it’s based on a no-deal situation, which is not what we are looking for. We are confident we are going to strike a good deal,” she said.

    Leave campaigners were more critical of the OECD, which receives most of its funds from other EU member states. 

    The Change Britain chair and former Labour MP Gisela Stuart said: “It is laughable that the EU-funded OECD, at a time that is the most helpful possible for Brussels, has the gall to intervene in our negotiations and call for Brexit to be reversed. 

    “These EU elites refuse to accept that 17.4 million people voted to take back control, and meant it. The British public didn’t believe the OECD’s scaremongering before, and nor should they start now.”

    Angel Gurría, the OECD’s secretary general, insisted that the thinktank respected the decision of the referendum and sources at the organisation sought to play down the “second referendum” call, saying it was merely sketching out alternative scenarios.

    However, the OECD said Britain must secure “the closest possible economic relationship” with the EU after Brexit to prevent the economy suffering a long-term decline.

    Gurría said Brexit would be as harmful as the second world war blitz and the British would need to act on the propaganda maxim to keep calm and carry on.

    The deputy leader of the Liberal Democrats said it was clear from the OECD report that a second vote was needed to prevent the harm caused by Brexit.

    Jo Swinson said: “Brexit has already caused the UK to slip from top to bottom of the international growth league for major economies. 

    “This will only get worse if the government succeeds in dragging us out of the single market and customs union, or we end up crashing out of Europe without a deal.”

    The thinktank, which has predicted the UK’s growth rate will fall to 1% next year, said a “disorderly” exit from the EU single market and customs union in 2019 would hurt trading relationships and reduce long-term growth.

    Entering the debate over Brexit at a crucial stage in negotiations, the OECD added that steep falls in the UK’s productivity performance relative to other major economies, allied with the failure of its export industries to grab a slice of expanding world trade, have left the country in a weak position to operate outside the EU.

    The warning follows a week of shuttle diplomacy between London and Brussels. The UK government says it has gained a commitment from EU leaders to speed up talks, although there has been no progress in crucial areas, including the divorce bill.

    Officials at the OECD have adopted one of the gloomiest outlooks for the British economy with an assumption that a trade deal with the EU would take four years to negotiate after Brexit, leading to further uncertainty and lower growth.

    To offset some of the damage, the OECD urged Hammond to spend spare funds on identifying ways to improve productivity, which measures the output per hour of an individual worker, by enhancing the skills of low-income workers.

    On the possibility that the UK might change course altogether, it said: “In case Brexit gets reversed by political decision (change of majority, new referendum, etc), the positive impact on growth would be significant.”

    The report also called on the chancellor to revive his plans to raise funds through an increase income tax on the self-employed, and end the triple lock on state pension rises, arguing that the state pension should rise in line with average earnings.

    Both proposals were immediately slapped down by Hammond, who said there was no intention to revisit the self-employment pension increases, which would continue to be in line with the highest of inflation, earnings or 2.5%.

    But the OECD reserved a warning for the Bank of England, which it said must guard against raising interest rates during a period of low growth, declining rates of productivity and while the economy remained vulnerable to Brexit. 

    It said Threadneedle Street should “look through” the current spike in inflation and maintain a loose monetary policy.

    The Treasury said: “Increasing productivity is a key priority for this government, so that we can build on our record employment levels and improve people’s quality of life. 

    “Today, the OECD has recognised the importance of our £23bn national productivity investment fund, which will improve our country’s infrastructure, increase research and development and build more houses. 

    “In addition, our reforms to technical education and our ambitious industrial strategy will also help to deliver an economy that works for everyone.”

  • 22 Oct 2017

    AI is a rich and diverse field. The greater value will come from understanding the multitude of related technologies, and then integrating those technologies into full solutions.


    Artificial Intelligence—which we define as information systems and applications that can sense, comprehend and act—has captured the attention of C-suite executives, not just technologists and research scientists.

    The media regularly draws attention to innovative business solutions based on Artificial Intelligence. Venture capitalists are funding AI start-ups at a rapid pace.

    Technology companies are moving swiftly to create and capture value in this emerging area. High-profile acquisitions by Google1, Apple2 and Facebook3 are piquing interest in Artificial Intelligence technologies such as robotics, expert systems, computer vision, and speech, gesture and facial recognition. Companies are creating new research labs devoted to innovating with these technologies, and the number of Artificial Intelligence vendors has increased dramatically.

    Artificial Intelligence technologies and solutions also face several obstacles. As with any new technology promising to change the world, business leaders wonder how to separate hype from real potential. From there it’s a short step to wondering if their organization will be one of those that figures out how to capture new value —or will be one of those playing catch-up. Add to this skepticism and lack of understanding as well as the widely discussed apprehension about the social and economic implications of these technologies, and it’s clear that Artificial Intelligence faces serious headwinds.

    But executives shouldn't let these concerns obscure the considerable likely benefits of Artificial Intelligence. These include lower costs for services, better quality and consistency of services, improved education and medical treatment, and better, faster, more informed business decisions.

    Decision makers should also recognize that Artificial Intelligence isn’t a matter of any single technology or application—whether driverless cars or smartphone virtual assistants or trend detection solutions or a myriad of other examples. Artificial Intelligence is a rich and diverse eld. The greater value will come from understanding the multitude of related technologies and then integrating those technologies into full solutions. 

    Artificial Intelligence consists of multiple technologies that enable information systems and applications to sense, comprehend and act. That is, computers are enabled (1) to perceive the world and collect data; (2) to analyze and understand the information collected; and (3) to make informed decisions and provide guidance based on this analysis in an independent way. Artificial Intelligence can also learn from experience and alter their processing and behavior based on those learnings..


    Consider how a border-control kiosk uses computer vision technologies such as facial recognition to sense characteristics of travelers. Integrated with other 

    technologies such as multi spectral image analysis (scanning passports using infrared and ultraviolet light), extensive information databases and matching algorithms, an integrated solution here can improve security by identifying people on unauthorized entry lists or others posing a risk. Video analytics is another sensing technology that can automate observation and incident detection by video surveillance cameras. Other similar applications can help companies improve physical security at their premises, or they can help retailers count visitors or recognize customers as they enter a store so sales people can provide personalized services.. 


    Artificial Intelligence systems also comprehend through technologies such as natural language processing, inference engines and expert systems. These technologies have a wide range of applications across multiple industries. For example, a medical diagnostic system can help doctors identify diseases and suggest treatments. 

    The system asks follow-up questions and stores facts in working memory, then takes the facts of the case and the knowledge it has of medicine and cases (stored in a knowledge base) and infers a solution or treatment. Finally, the system presents a conclusion or suggestion to the doctor, who uses it as expert input into a nal diagnosis and treatment plan.


    An Artificial Intelligence system acts independently. It can take action within a process, through technologies such as inference engines and expert systems, or it can direct action in the physical world. Consider a widely publicized example of the driverless car which senses the environment, understands the myriad inputs and then steers the car without assistance from a human driver. Other examples include factory robots that assemble products on the production line, virtual assistants that act by responding to customer or consumer inquiries, and assisted-braking capabilities in cars that sense skids and automatically take action to steer the car safely.


    A distinctive feature of all types of true Artificial Intelligence solutions is their ability, through a technology known as “machine learning,” to adapt their capabilities based on experience, rather than needing to have all the rules hard-coded. For decades, computers have been able to process complex questions and give answers, but applications were rigid and any change required programmatic modi cations. Today, Artificial Intelligence systems can be self- learning; they are more like bright students who are given educational materials and then can learn by themselves. 

    For example, self-learning Artificial Intelligence solutions are already in use by banks to detect credit fraud. The banks use machine learning models that understand previous spending patterns of a customer and predict the transactions a person will make, agging unusual activity. These systems are also given real examples of fraudulent and legitimate transactions so that the models can learn to recognize new patterns and evolve as fraudsters alter their tactics.

    At the consumer level, an example of a self-learning application is Google Now, a personal assistant. It learns from its user’s activities and interactions to nd, collect and present relevant, personalized information on a smartphone. Google Now is also designed to constantly improve based on user feedback and its own learning methods.

    Technology advancements are continuously improving the sophistication of computers’ learning capabilities. A form of machine learning called “deep learning” is being used today to develop systems that can perform more complex activities using neural networks to mimic the human brain structure. Such systems are increasingly able to do things like recognize patterns and objects, and generate descriptions of images in natural language. 

  • 20 Oct 2017

    New online tools could help a greater proportion of UK businesses offer their services overseas, director at recently created department claims. 

    A top official at the Department for International Trade has said “pioneering” work in digital will help boost the low number of British exporters, but he also conceded that access to data in this area was “not ideal”.

    Paul McComb, transition programme director at the Department for International Trade, told MPs that new online tools will help increase the number of British businesses trading overseas, which has remained stubbornly at around 11% for more than a decade.

    But, when questioned by the International Trade Committee on the department’s support for exports and investment, he admitted that DIT’s work in this area is hampered by the patchy nature of data on British exporters, which cannot easily be broken down by sector.

    DIT was created last year following Britain’s vote to leave the European Union, and tasked with drawing up new international trade agreements and a trade and investment policy for Britain. It brought together the functions of the former UK Trade & Investment, UK Export Finance and Whitehall’s since-bolstered trade policy function, in a “machinery of government change” that McComb confirmed had cost £1.4m. 

    McComb, who joined UKTI as managing director of strategy in 2016 before it was absorbed by DIT, said the department’s investment in digital was “really quite pioneering” and that good progress had been made.

    “Digital has transformed other bits of government, it’s transformed other industries,” he said, adding that DIT was looking at how it can use technology to connect British companies with overseas export opportunities.

    He told MPs that DIT had invested £6.3m in 2016-17 and will be spending a further £4.5m in 2017-18.

    Government used to have 19 separate websites all claiming to provide export advice and not all of them were up-to-date. But in November 2016 DIT launched, which has brought all that advice together in one place.

    Another part of the department’s digital offering will be about improving segmentation, so that products and services can be better targeted at the right businesses. 

    Companies will be asked to register their interest online in becoming overseas exporters, and can then use the “export readiness assessment” – an online tool. 

    Responding to a question about whether this shift to online services will meet business needs, McComb said: “It’s genuinely too early to declare any kind of victory in this space.

    “What we haven’t done is thrown the kitchen sink at this and said, ‘It’s digital and we’re laying off everyone who did face-to-face’. We’ve kept both going.”

    He also said that the number of British businesses that export overseas – which “has been stubborn” at around the 11% mark for the past 10 to 15 years – cannot easily be broken down by sector.

    “The data isn’t automatically served up like that,” he said. “This is certainly one of the things that as a department we want to make serious inroads in – there’s a lot of analysis, there’s a lot of sample data, but there’s not a great deal of caseload data where you can go and reach in and say, ‘Show me companies who are exporting around the world on this sector’.

    “It’s certainly not ideal today and I would acknowledge that.”

    There are proposals for DIT to take on powers to use some HMRC customs data, and McComb said he hopes the department’s new digital services will also be a rich source of data.

    “All Whitehall departments are just data junkies, they do want this information to underpin and drive and shape strategy,” he said, adding, however, that the additional burden placed on businesses was also a factor. 

    Asked about the department’s use of private sector contractors, McComb said DIT was “quite a leveraged organisation” and had contracts worth £195m with organisations such as British Chambers of Commerce and EY.

    The department is able to access external expertise at short notice, and recently it has particularly invested in commercial experts to help it negotiate better value contracts, he added.

  • 15 Oct 2017

    Artificial intelligence is technology that appears to emulate human performance typically by learning, coming to its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, enhancing human cognitive performance (also known as cognitive computing) or replacing people on execution of non-routine tasks. Applications include autonomous vehicles, automatic speech recognition and generation and detecting novel concepts and abstractions (useful for detecting potential new risks and aiding humans quickly understand very large bodies of ever changing information). In short it is a machine to sense, comprehend, act and learn. In short, it is a collection of advanced technologies that allows machines to sense, comprehend, act and learn.

    It is set to transform business in ways we’ve not seen since the Industrial Revolution; fundamentally reinventing how businesses run, compete and thrive. When implemented holistically, these technologies help improve productivity and lower costs, unlocking more creative jobs and creating new growth opportunities.

    Compelling data reveal a discouraging truth about growth today. There has been a marked decline in the ability of traditional levers of production—capital investment and labour—to propel economic growth.

    Yet, the numbers tell only part of the story. Artificial intelligence (AI) is a new factor of production and has the potential to introduce new sources of growth, changing how work is done and reinforcing the role of people to drive growth in business. Today, we are witnessing the take-off of another transformative set of technologies, commonly referred to as artificial intelligence. Many see AI as similar to past technological inventions. If we believe this, then we can expect some growth, but nothing transformational.

    But what if AI has the potential to be not just another driver of TFP, but an entirely new factor of production? How can this be?

    The key is to see AI as a capital-labour hybrid. AI can replicate labour activities at much greater scale and speed, and to even perform some tasks beyond the capabilities of humans. Not to mention that in some areas it has the ability to learn faster than humans, if not yet as deeply. For example, by using virtual assistants, 1,000 legal documents can be reviewed in a matter of days instead of taking three people six months to complete.

    Similarly, AI can take the form of physical capital such as robots and intelligent machines. And unlike conventional capital, such as machines and buildings, it can actually improve over time, thanks to its self-learning capabilities.

    Based on various analyses and modelling, it can be seen that AI is seen as a new factor of production rather than just a productivity enhancer. This ability of AI to complement and enhance traditional factors of production is where its true potential lies.


  • 12 Oct 2017

    Maryland economic development officials plan to open an international office in London to help the state attract investments from international cyber-security companies.

    The office will be run through a partnership between the state Department of Commerce and iCyberCenter@bwtech, an international business incubator in bwtech@UMBC Research and Technology Park on UMBC’s campus. The office will be paid for by the state commerce department through a grant to iCyberCenter@bwtech.

    “Maryland truly is leading the cyber generation, and this unprecedented cyber sector growth is helping to drive an exciting economic resurgence in our state,” Gov. Larry Hogan said in an announcement Thursday.

    During Hogan’s trade mission to London in June, state officials signed a memorandum of understanding between Maryland and Midlands Engine, the U.K.’s center of cybersecurity and technology. The London office will be headed by Andy Williams, who heads cCyberCenter@bwtech and will continue as the incubator’s international director.


    “Maryland represents a huge opportunity for overseas defense and cyber-security companies seeking to establish a presence in the U.S. market,” Williams said.

  • See more blogs...