Sunday newspaper round-up: Interest rates, EU single market, IHG, Poundland

Savers face five more years of record-low returns, with investors betting that the Bank of England will not undo last week’s interest rate cut before the end of the decade. City traders expect Bank governor Mark Carney to slash borrowing costs again before the end of the year, the Sunday Times wrote, with interest rate markets not predicting a return to the previous 0.5% level until 2021.

The UK government has begun considering leaving the single market for the first time, as the Treasury and the newly created Brexit department hold detailed talks with finance leaders over the best way to pull out of the EU. A series of discussions have been held between the Chancellor Philip Hammond and top business lobby groups, the Sunday Telegraph reported, to determine the value of the single market and whether so-called passporting rights are worth “fighting for”, have revealed a willingness among some top figures to scrap passporting despite early calls to stay in the single market from some quarters.

One of China’s top insurers is weighing up an audacious £7bn swoop on the London-listed InterContinental Hotels Group (IHG). Anbang Insurance Group, a secretive conglomerate with a sprawling empire of top hotels and leisure assets, has held talks with City bankers about a potential takeover bid for the owner of the Holiday Inn and Crowne Plaza hotel chains, the Sunday Times revealed, which would rank the deal as one of the largest-ever by a Chinese company in the UK.

Prime Minister Theresa May’s policy chief has suggested that people with valuable homes who face high social care costs in old age should downsize or re-mortgage to cover their bills, the Observer revealed. Director of policy John Godfrey has suggested that over the next 10 years the solution to the social care crisis lies in people selling up or releasing some of the equity in their property.

The Treasury will save more than £1bn a year in interest on its debts after last week’s base rate cut by the Bank of England – but the sum will be dwarfed by a £30bn black hole in the Budget if the Bank’s forecasts for economic growth prove accurate. The dramatic shortfall will form the backdrop to Chancellor Philip Hammond’s Autumn Statement, and will mean he may have to abandon his predecessor George Osborne’s debt and deficit targets, the Mail on Sunday reported.

The Pensions Regulator is facing its biggest ever shake-up as MPs will tomorrow launch a sweeping probe into its powers and whether it is currently fit for purpose, with an inquiry by the Work and Pensions Committee considering whether it should be given new teeth to block takeovers, the Mail on Sunday revealed. Committee chairman Frank Field has indicated he favours such new powers but is also set to turn the spotlight on the regulator’s senior officers, calling them back for a fresh grilling in the wake of the BHS scandal.

American hedge fund Elliott has upped its stake in Poundland, fuelling speculation that South African retail giant Steinhoff will be forced to up its £600m bid for the discount chain. The Sunday Telegraph revealed that the activist fund has amassed a 17.5pc holding in Poundland through derivatives contracts, making it the retailer’s second-largest shareholder behind Steinhoff.

Rolls-Royce has made a fresh push to settle allegations that it paid bribes to win contracts in Indonesia, China, Nigeria and Brazil. The aerospace giant's chairman Ian Davis is understood to be try to reach a settlement with fraud investigators in Britain and America, the Sunday Times said, that could result in the payment of several hundred million pounds worth of fines to bring an end to the long-running probes.

Motorists could be driven out of new-car showrooms and into the second-hand vehicle market as a result of the plummeting pound. The fall in the value of sterling against the euro means that selling cars in the UK is no longer as profitable for manufacturers, who operate on tight margins and may shift deliveries of new cars away from the UK as they seek better returns abroad.

Britain's business rates system is heading for meltdown this autumn after it emerged that the Government agency responsible has failed to deal with 300,000 appeals, according to the Mail on Sunday. The Valuation Office Agency, an executive agency of Revenue & Customs, is understood to deal with around 10,000 appeals a month but figures suggest the size of the backlog has barely changed since the beginning of the year.

Although BT Group has only completed one season into its three-year, £897m deal for exclusive rights to all live European club football, Uefa is expected to put the Champions League and Europa League on the block again in the autumn, said the Sunday Telegraph. Some analysts say they do not expect Sky to regain the rights, while others believe Sky could pay as much as £500m per season to regain European supremacy, and stretch its ability to cash in on football rights.

Mehmet Dalman, the City tycoon and chairman of Cardiff City football club, is plotting a takeover of Panmure Gordon via his WMG fund, the Sunday Times reported. The 140-year-old stockbroker, where David Cameron’s late father Ian was a senior partner, is one of the most venerated names in the Square Mile but like many of its small and mid-sized broking peers has seen its shares plunge amid the sharp fall in initial public offers lower research fees.

Defence chiefs are studying four rival blueprints for a new warship, which could help to keep Britain’s surviving shipyards in operation, the Sunday Times reported, of which two have been submitted by BAE Systems and one from Babcock International. The Royal Navy is expected to buy five of the light frigates, which will cost £300m apiece, will be be used to help guard its two new aircraft carriers, and could be affordable to foreign navies.

The Serious Fraud Office (SFO) has narrowed the scope of its inquiry into the collapse of BHS, ratcheting up the pressure on Sir Philip Green as he faces fresh scrutiny over the pension schemes across his Arcadia empire. SFO investigators have begun focusing initial inquiries on whether there is sufficient evidence that Sir Philip or Dominic Chappell, who bought the chain from him, broke the law through “fraud by misrepresentation”, the Sunday Telegraph revealed.

Mark Carney has just made Sir Philip Green’s life even more difficult. The retail tycoon’s bid to bail out the BHS pension scheme, and hold on to his knighthood, could have soared to more than £700m after the Bank of England governor presided over a cut in interest rates last week, as the cut in borrowing costs to 0.25%, combined with a new round of quantitative easing, sent gilt yields crashing to a new low to add another 7% to pension scheme deficits, according to consultancy Hymans Robertson, the Observer reported.

The architect of Britain’s nuclear strategy under Margaret Thatcher has called for the Government to cut the controversial Hinkley Point nuclear plan in half to save cash – and placate France and China, the Mail on Sunday reported. Former Energy Secretary Lord Howell said the current scheme was ‘impossible’ and privately many in the industry favoured going ahead on a much smaller scale.

Canadian Mounties pension manager PSP Investments has lead a £4bn charge on SAB Miller’s central and eastern European beer brands that are being sold as part of the £79bn takeover by Belgian giant Anheuser-Busch InBev. PSP’s interest comes as AB InBev and SAB look to offload assets to steer their deal past European competition watchdogs, the Sunday Times said.

Oil may be a precious and dwindling resource but at the moment, at least, it looks like we just have too much of it, said the Observer. Crude-oil prices are now at their lowest since early April, hit by continued oversupply, concerns about global demand and negative price sentiment by oil-market participants. And that situation looks likely to continue in the near future.

Sports Direct’s acting finance chief, Matt Pearson, is employed on a contract with just eight weeks’ notice and is paid £80,000 a year, the Mail on Sunday reported. The FTSE 250 sportswear firm, run by billionaire Mike Ashley, has already faced criticism for having no permanent finance director and the terms of Pearson’s contract have added to fears that the group is not taking the role seriously enough. "In most big companies the chairman’s driver would be on a contract with more protection than two months’ notice. But then we are talking about Sports Direct, famous for zero-hour contracts, so nothing should really surprise us any more," said one City source.

Sports Direct boss Mike Ashley has arranged a personal overdraft of £50m with HSBC, which was secured three months ago and is being guaranteed by his Mash Holdings investment vehicle, which owns Newcastle United FC and more than half of the FTSE 250 sporting goods company. Ashley’s £50m facility, which was disclosed in Mash’s latest accounts, legally gives the billionaire access to tens of millions of pounds, the Sunday Times said, without him having to pay himself a dividend or salary from Mash, which would incur a big tax bill.

The number of foreigners forming companies in Britain has soared by 160 per cent since 2010, according to a study of Companies House data. Of the 664,000 firms set up last year, 170,000 were established by non-UK nationals – 14,000 by Poles, 12,500 by Irish, 11,500 by Chinese. The analysis by start-up specialist Made Simple found many chose to set up here as they were hindered by red tape in their own countries, the Mail on Sunday wrote.

The death of the plastic credit card could be a step closer as high street names including McDonald's and the Co-op prepare to test breakthrough finger-scanning payment technology FingoPay, developed by British start-up Sthaler. The technology, the Sunday Telegraph said, uses a biometric reader to scan the veins of a shopper’s finger, building up a “map” that is unique to each individual, which when connected with a credit card or bank account, lets shoppers pay simply by placing their finger in a pocket-sized scanner.