Last week the Home Secretary, Priti Patel announced a new points-based immigration system as part of the post-Brexit reform. This will bring an end to the free movement of labour and will come into play from the 1st January 2021. The new system builds on the Australian immigration model where the objective is to create a high wage, high skill and more productive economy. The new system would require visa applicants to have a job offer from an approved employer at an appropriate skill level and the ability to speak English. Further points are then awarded based on salary and qualifications, ensuring that the UK continues to attract the brightest and the best. The policy is moving away from the reliance upon lower-skilled workers, but this could lead to a shortage of staff in the social care sector where currently foreign workers make up a sixth. The average salary in this sector is £20,536 meaning these workers would not qualify for points under the new system. The policy is the biggest immigration reform in decades as the UK continues to regain control of its borders.
The UK inflation rate rose to a six-month high of 1.8% but is not expected to change the outlook for interest rates when the Monetary Policy Committee next meet on the 26th March. This week also saw the circulation of the new polymer £20 note with almost 2 billion having now been printed. The introduction of the new note will hopefully reduce the number of fraud instances reported with 88% of the forgeries discovered belonging to the £20 note. The new £50 polymer note is expected to be released next year and will feature the face of Alan Turing. The rise of digital finance and the convenience of online payments has reduced the need for cash. In 2018, cash payments formed 28% of total payments in the UK and is set to decrease to 9% by 2028 with the increasing reliance upon debit/credit cards and the rapid uptake of contactless technology. Sweden is the market leader in this space and is expected to become entirely cashless by 2023, the first country to ever do so. The emergence of Swish, an electronic payments service has enabled this fast transition, with only 1% of transactions now being completed by cash.
Elsewhere, the Coronavirus is continuing to cause a slump in global economic activity. The US Purchasing Managers’ Index (PMI) data showed that business activity fell from 53.4 to 49.4 in January, the first time PMI has fallen since 2016. Furthermore, the S&P dropped -0.81% and investors have switched to government bonds. There are now fears that the Coronavirus could become a pandemic and is expected to continue to disrupt the markets in the short term.