We started this week with the tensely awaited emergency budget; a report has suggested that two thirds of Britons believe they will be worse off as a result of the measures announced this week. Around 67% said they thought the budget had hit them in the pocket, while 51% said they now felt less confident about their finances. However 42% said they felt more confident about the UK’s finances as a result of the budget. One in four people said they felt confident about the end of the recession following the budget, although 32% felt less confident. Unsurprisingly, given the scale of some of the cutbacks announced, 29% thought their job was now less secure. Around 83% planned to change their spending behaviour as a result of the budget, with 48% saying they would rethink big purchases once VAT is increased to 20%, while 50% will cut back on luxuries.

The Retail Distribution Review is to go ahead under the new regulatory structure revealed by the Government last week. With the Financial Services Authority set to be transformed into a new prudential authority under the wing of the Bank of England, and the new Consumer Protection and Market Authority set to regulate authorised firms, the future for RDR had been unclear. However, speaking at the FSA’s annual public meeting, Hector Sants, the regulator’s chief executive, confirmed all major policy initiatives will be taken forward within the new structure. ‘We will not be deflected from delivering much needed policy reforms such as the RDR’ he said. ‘Furthermore, firms should recognise that our intensive supervisory approach will continue into the new organisational framework’. Sants also told the meeting that a period of substantial change in the European regulatory environment is about to be entered into and warned of the vital importance that the UK fully engaged with the changes. ‘We must recognise that going forward, particularly in respect of supervision, the national entities will increasingly become an arm of European policy and thus, effective engagement with the European agencies is absolutely critical’ he added.

A member of the Bank of England’s Monetary Policy Committee (MPC) has called for a rise in interest rates for the first time in almost two years. Andrew Sentence voted to lift rates to 0.75% from the record low of 0.50%, due to stubborn inflation, minutes show. It was the first call for a UK rate rise by an MPC member since August 2008, and will surprise economists, who expected another unanimous decision. The other MPC members called for rates to be held at its June meeting. The Bank of England also decided not to inject any more money into the UK economy under its policy of quantitative easing. Inflation hit a 17 month high of 3.7% in April, though it fell back to 3.4% in May it remains well above the Bank’s 2% target. Mr Sentence argued that the persistence of inflation had cast doubt on the Bank’s prediction that spare capacity in the slow economy would be enough to bring inflation down, but other committee members said that this was not enough to justify a change in rates policy.

The FSA has confirmed plans to make all mortgage advisers, including branch-based staff, and those who arrange non-advised sales personally accountable. It says they will be required to demonstrate they are ‘fit and proper’ or face a penalty in a move the regulator hopes will help them clamp down on mortgage fraud and enable the FSA to monitor individuals in the mortgage market. The Council of Mortgage Lenders (CML) had argued branch-based advisers should not be held accountable by the FSA because they are already subject to sufficient compliance standards within lenders. However the Association of Mortgage Intermediaries (AMI) argued the approved persons register should apply to the whole market. The FSA’s decision to include bank staff is part of wider measures unveiled this morning designed to ensure there are proper protections in place for vulnerable customers in arrears on their mortgages or entering sale and rent back (SRB) agreements.

And finally, Lloyds insurer Watkins may have to pay as much as £1m for injuries to Rio Ferdinand who was hurt during England’s South Africa training in the first big World Cup claim. Ferdinand hurt his knee ligament in England’s first training session in South Africa on 4th June. The claim comes from the English Football Association who has to pay clubs to cover the wages of any player on duty for the national side. Lloyd’s Syndicate 457, the Watkins Syndicate, backed by the world’s biggest reinsurer Munich Re, is said to be the lead underwriter on the FA policy. Lloyd’s has £6.2bn of World Cup insurance which includes a £3bn contingency covering cancellation, competitions, prizes and broadcast rights, £200m liability and £3bn for stadiums and venues.

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