Aurelia Butler

The customers that walk through the doors of Ramsdens pawnbrokers use the lending service in starkly different ways.“We’ve got a very good customer [with] a platinum Rolex, which is probably worth about £50,000 [or] £60,000,” said Peter Kenyon, the company’s chief executive. “He’s a builder and when his cash flow is short he gives us the Rolex, borrows between £10,000 and £20,000 . . . pays interest at 2 per cent a month, then pays us back when his cash flow improves.”But Kenyon noted the chain also assists customers who need small sums because they’ve “got to feed the kids, or buy the school uniform”.The UK’s pawnbroking sector is reporting strong post-coronavirus lockdown growth, as rapidly increasing living costs boost demand from borrowers seeking small loans, while a crackdown on high-interest lenders has left customers with limited options. Listed companies that offer “pledge lending” — typically small loans secured on assets such as jewellery and watches — have reported strong growth in sales and profits, boosting their share prices in recent months.Shares in H&T Group, the UK’s largest pawnbroker, have risen 37.6 per cent this year, while those in rival Ramsdens are up 8.6 per cent over the same period as of the close of trade on Monday.Kenyon said weekly customer numbers within Ramsdens’ shops were 20 per cent higher than pre-pandemic levels: “A lot of that is driven by what the consumer [is] facing and the cost of living increase, but we lend for a raft of reasons — we do lending to businesses . . . we’ve lent for school fees.”H&T this month said its pledge book — loans linked to a customer’s asset — was worth £84mn in June, up sharply from £48mn in the same month last year. “The cost of living, yes, absolutely that’s driving the need to borrow, but I think the larger of the two issues is that people have got less options open to them,” said H&T chief executive Chris Gillespie. “The need of people to borrow has returned . . . but that need has returned into a market where the supply of small sum credit is massively reduced.”He added that the clear difference between pawnbroking and most other forms of lending was that “our only recourse is to the asset . . . we don’t and can’t ever go back to the borrower if there’s a shortfall [in repayment]”.However, like other forms of lending there are risks associated with using pawnbrokers.“Using a pawnbroker can be a relatively expensive way to borrow and you can usually only borrow a percentage of the value of the item you want to pawn,” said Caroline Siarkiewicz, chief executive of the Money and Pensions Service, which is sponsored by the UK’s Department for Work and Pensions.Consumers can expect to pay a pawnbroker a higher rate of interest than they would for a high street loan — but less than a payday lender, according to the Money and Pensions Service.If a borrower fails to repay the loan, ownership of the asset passes to the pawnbroker, who could sell it. They have to try to secure the best value for the item, and any surplus generated after the debt is paid must be returned to the customer.Ramsdens said pawnbrokers typically charged 8-10 per cent a month. Customers have six months to repay their loan and more than 95 per cent pay the full loan back in one instalment.Siarkiewicz noted that this method of borrowing can be tempting “because it is a quick way to get access to cash”. But she stressed it was important customers “shop around to find the most competitive rates and make sure they’re FCA regulated”. Around 130 members of the National Pawnbrokers Association run 870 outlets around the UK, accounting for 97 per cent of the industry. The largest brands are H&T, Cash Converters and Ramsdens, but most members run just a single store. Many of those companies have benefited from the demise of subprime lenders or non-standard finance providers, which prospered after the 2008 financial crisis, as mainstream banks became reluctant to lend to consumers with blemished credit files.Ramsdens said it ended its own payday lending offering when market conditions shifted.“It was scary where the pricing had got to, so people would borrow £100 and have to pay back £140,” said Kenyon.The Financial Conduct Authority clamped down on the sector in response to fears about rising levels of consumer debt. The number of active high-cost, short-term lenders in the UK fell by almost a third between 2016 and the third quarter of 2020, according to FCA figures. “The FCA have regulated the market almost to death,” added Kenyon. Wonga, once the UK’s largest payday loan provider, filed for administration in 2018 after a surge of customer complaints. Provident Financial, one of the largest participants in Britain’s subprime market, shut a unit providing “high cost lending” last year. Amigo Loans, which offers “guarantor loans” backed up by a borrower’s friends or family, has also been out of the market. The group is awaiting FCA approval to recommence lending for the first time since November 2020 following a backlog of complaints and uncertainty caused by the pandemic.There are now concerns that people struggling to access credit may turn to buy now, pay later services, a type of short-term lending that allows consumers to pay for purchases in instalments.

These services boomed during the pandemic as online shopping surged. However, according to polling data from debt charity StepChange, half of those with buy now, pay later loans in the UK said they found it hard to keep up with household bills and credit repayments.Debt charities have also raised concerns about the increased use of pawnbrokers.“With everyday costs soaring it’s no surprise to hear more people are using pawnbrokers,” said Theodora Hadjimichael, chief executive of Responsible Finance. “But you shouldn’t need to put your wedding ring or a family heirloom at risk to pay an unexpected expense.” More

(Reuters) – Central banks and markets may have dropped the narrative that inflation is “transitory,” but there is a strong chance that current spikes in prices are temporary and will soon begin to trend downward, economists and former central bank policymakers told the Reuters Global Markets Forum (GMF).”I’ll confess I’m still in team transitory,” said Stephen Poloz, former governor of the Bank of Canada, referring to the rises in consumer prices.Central banks around the world have revised earlier views that inflationary pressures were temporary and have embarked on a series of rapid interest-rate hikes. Poloz, however, said that while price rises have lasted longer than markets anticipated due to external shocks, they have likely peaked.”The exogenous increase in commodity prices took over a year to peak, which means ‘transitory’ gets defined as at least 24 months,” he said.Several economists saw the combination of central banks tightening rates, the increasing likelihood of an economic recession, and commodity prices giving up gains made in the wake of Russia’s invasion of Ukraine, as contributing factors to declining price pressures.”The current sharp increase of interest rates by many central banks may eventually undermine the economy and cause that weaker demand,” said Takahide Kiuchi, former Bank of Japan policy board member.Recession fears are looming globally including in the United States, the eurozone and the United Kingdom, leaving policymakers faced with the dilemma of tightening policy even as risks grow.The steep growth in money supply in the wake of the COVID-19 economic fallout drove U.S. inflation higher, but “the money growth has come to a complete halt,” said Timothy Congdon, founder of the Institute of International Monetary Research.”I think that we can restore the stability of the prices at the expense of deterioration of the economy,” said Kiuchi.Other factors such as growing technology advances are also likely to structurally keep inflation in check, Poloz said.(Join GMF, a chat room hosted on Refinitiv Messenger: https://refini.tv/33uoFoQ) More

LONDON/NEW YORK (Reuters) – Argentina’s international bonds rose on Friday but remain near historic lows after President Alberto Fernandez’s launched a “superministry” designed to coordinate economic policy, though analysts warned of uncertainties.Fernandez appointed veteran politician Sergio Massa, who heads the lower house of Congress for the ruling Peronist coalition, to the new role overseeing economic, manufacturing and agricultural policy. A new economic roadmap will be key to Massa’s success as the country’s third Economy Minister in a month, analysts said.”Massa’s selection is a last-gasp throw of the dice for an administration in freefall,” said Mariano Machado, Principal Latin America Analyst at risk intelligence company Verisk (NASDAQ:VRSK) Maplecroft. “His entry into the cabinet is likely to kick-start a series of policy shocks to regain the trust of the markets and other key political stakeholders.”Latin America’s third-biggest economy is contending with inflation above 60%, snowballing short-term local debt and the sharp widening between the official and a parallel dollar rate. Argentina’s dollar-denominated bonds gained between 2-4 cents Friday, though still traded in deeply distressed territory between 21 and 25 cents on the dollar, data from Refinitiv showed.”A key thing to watch in the next few days will be who advises Massa because he’s a politician and a lawyer, so he will need to gather a good team to navigate the country’s complicated situation,” said Carlos de Sousa at asset manager Vontobel, which holds some of Argentina’s bonds.”The market will probably want to see his concrete plans before bond prices go back to the pre-Guzman resignation levels.”Economy Ministry Martin Guzman resigned abruptly in early July, and his successor Silvina Batakis was replaced after only 24 days in the job, underscoring the power of Cristina Fernandez de Kirchner, Argentina’s vice president and former leader. Her veto power on the economy and dealing with the IMF will be the next big test for Massa’s policy making, analysts said. “Massa was always on the cards to some extent and has been always regarded as market-friendly in Argentina,” said Joe Delvaux, emerging markets distressed debt portfolio manager at Amundi, Europe’s largest fund manager.”The coalition is not an easy environment but he is a well-versed politician. Now we have to see the direction of his policy.”Capital controls are still in place after a $65-billion overseas debt restructuring in 2020 and a recent $44-billion bailout program with the IMF.Separately, the country’s central bank raised its benchmark rate on Thursday by 8 percentage points to 60%, marking its seventh hike this year, in a renewed push to tame surging inflation.”Massa has higher political capital and stature than the previous two finance ministers,” Alberto Ramos, chief Latin America economist at Goldman Sachs (NYSE:GS), told Reuters. A mix of conventional policies and less pressure from the ruling coalition is much needed, said Ramos.”Argentina needs to adjust the currency, reduce the high level of financial repression and controls, a tighter monetary policy, and a credible fiscal consolidation plan,” he said. More

Even as inflation soared, 60% of those who quit between April 2021 and March 2022 realized real wage gains, according to a new report by the Pew Research Center. Less than half of workers who remained loyal to their employers can say the same. The so-called Great Resignation has brought massive upheaval in the labor market, with quit rates at highs possibly not seen since the 1970s. An average of 4 million workers quit each month from January to March this year, for an annual turnover rate of nearly 50 million workers — about 30% of the workforce — according to Pew’s analysis, which assumes workers don’t change jobs more than once a year.The report analyzed data from the US Census Bureau, Bureau of Labor Statistics and a survey of about 6,000 American adults conducted in June and July of this year.As employers have struggled to cope with chronic staffing shortages brought on by rapid turnover, most workers who quit did not immediately jump into a new job. For those who quit this year from January to March, two-thirds were not with a new employer the following month. Instead, almost half left the labor force, while another 18% remained unemployed.Women who quit were more likely than men to take a break from the labor force, according to the research. Men with children were the least likely to do the same.The window of opportunity for potential job-switchers may be closing. With fears of recession mounting, many considering a change may stay put for fear that a new, higher-paying gig may be more difficult to get. According to the report, about 20% of workers say they’re likely to look for a new job in the next six months, though nearly 40% say they think landing one will be difficult.Those with the least sense of stability are more inclined to move, according to Pew, with 45% of those with little job security likely to look for work elsewhere, relative to just 14% of workers who feel most secure. Almost 30% of workers who are financially insecure are likely to consider a change, nearly twice as many who are financially stable.©2022 Bloomberg L.P. More