U.S. budget deficit hits record high for March as aid payments swell outlays

WASHINGTON (Reuters) – The U.S. government posted a March budget deficit of $660 billion, a record high for the month, as direct payments to Americans under President Joe Biden’s stimulus package were distributed, the Treasury Department said on Monday.

The deficit for the first six months of the 2021 fiscal year ballooned to a record $1.706 trillion, compared to a $743 billion deficit for the comparable year-earlier period. The first six months of fiscal 2020 largely did not include emergency pandemic spending to counter the coronavirus-related lockdowns that started in March 2020.

The March deficit, which compared to a year-earlier deficit of $119 billion, included receipts of $268 billion and outlays of $927 billion – both record highs for that month.

A Treasury official said the March outlays were further increased by $339 billion in direct payments of $1,400 that were sent to many individuals under Biden’s American Rescue Plan Act that was enacted last month.

More funding from the $1.9 trillion stimulus package will roll out in coming months, the official said, likely keeping outlays elevated.

For the first six months of fiscal 2021, outlays were a record $3.410 trillion, while receipts were $1.704 trillion, the Treasury said. Total direct payments in the six-month period came to $487 billion, including those from a year-end stimulus package passed under former President Donald Trump, the Treasury official said.

Reporting by David Lawder; Editing by Paul Simao

Asia shares set to rise after S&P 500, Dow hit records on strong economic data

(Reuters) – Asian equities are poised to rise on Tuesday after the S&P 500 and Dow indexes set records as a streak of strong U.S. economic data fueled optimism even as a smaller-than-expected climb in 10-year Treasury notes eased inflation concerns.

Investor sentiment was buoyed by a survey from the Institute for Supply Management (ISM) on Monday showing activity in the U.S. services industry reached its highest level on record in March. The data came after a jobs report on Friday beat forecasts with 916,000 added to the U.S. economy last month.

“The jobs report set the stage for what we’re seeing today,” said Thomas Hayes, chairman of Great Hill Capital LLC in New York. “It’s not only that the report crushed expectations but it showed that wage inflation was subdued as people compete for labor.”

Australian S&P/ASX 200 futures rose 0.34% in early trading, while Hong Kong’s Hang Seng index futures rose 0.40%.

The S&P 500 and the Dow – the benchmark Wall Street indexes – have rallied in recent sessions as widespread vaccinations and an unprecedented government stimulus boosted investor confidence in an economic rebound and spurred demand for sectors, including energy, financials and materials, which are primed to benefit from economic reopening.

On Monday, gains were led by sectors that have underperformed recently, including communication services, consumer discretionary and technology, as the 10-year U.S. Treasury yield remained below a 14-month high hit last week.

“The rate of change with the 10-year yield has slowed and that has created a runway for some of the left behind sectors in recent weeks like tech and other yield sensitive areas like utilities,” Hayes said.

On Wall Street, Dow Jones Industrial Average rose 1.13% to a record high of 33,527.19, the S&P 500 gained 1.44% to a record 4,077.91 and the Nasdaq Composite added 1.67%, to 13,705.59.

U.S. Treasury yields edged lower on Monday, as investors paused recent selling of government bonds and took profit from short positions, though the uptrend in rates remained intact following Friday’s blockbuster jobs report.

Benchmark 10-year notes last rose 3/32 in price to yield 1.7127%, from 1.72% late on Friday. The yield curve steepened on Monday after flattening the previous session as the spread between U.S. 2-year and 10-year yields rose to 154 basis points.

Gold prices edged lower as the safe-harbour metal’s luster was dimmed by rising global equity prices.

Spot gold declined 0.1% to $1,727.98 an ounce. U.S. gold futures settled little changed at $1,728.80.

Oil prices fell as increasing OPEC+ supply and rising Iranian output, along with the threat of a new wave of COVID-19 infections, offset hopes for a demand rebound driven by economic revival.

U.S. crude settled at $58.65 per barrel, down 4.6% on the day, while Brent shed 4.18% to end at $62.15 per barrel.

U.S. service sector activity index hits record high in March

WASHINGTON (Reuters) – A measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders, in the latest indication of a roaring economy that is being boosted by increased vaccinations and massive fiscal stimulus.

The upbeat survey from the Institute for Supply Management (ISM) on Monday followed news on Friday that the economy added 916,000 jobs in March, the most in seven months. Economic growth this year is expected to be the strongest in nearly four decades.

“Vigorous services activity in March sets the stage for robust expansion in the second quarter,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. “All the right pieces for a faster services recovery – expanded vaccine eligibility, reopenings, and historic fiscal expansion – are falling into place.”

The ISM’s non-manufacturing activity index rebounded to a reading of 63.7 last month also due to warmer weather. That was the highest in the survey’s history and followed 55.3 in February.

A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast the index rising to 59.0 in March.

The ISM said comments from services industries indicated that “the lifting of COVID-19 pandemic-related restrictions has released pent-up demand for many.” It, however, noted that “production-capacity constraints, material shortages, weather and challenges in logistics and human resources continue to cause supply chain disruption.”

The survey added to a raft of reports from manufacturing to consumer confidence and employment in suggesting that the vastly improved public health situation and the White House’s $1.9 trillion COVID-19 pandemic rescue package were providing a powerful tailwind to the economy.

The ISM reported last week that its measure of national manufacturing activity soared to its highest level in more than 37 years in March. The services industry, hardest hit by the pandemic, could accelerate further as the economy re-opens. The U.S. Centers for Disease Control and Prevention said on Friday fully vaccinated people could safely travel at “low risk.”

U.S. stocks were trading higher, with the S&P 500 and the Dow hitting record highs. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.

COST PRESSURES RISING

The ISM survey’s measure of new orders for the services industry rebounded to an all-time high of 67.2 in March from a nine-month low of 51.9 in February.

Supply constraints are raising costs for businesses. The survey’s measure of prices paid by services industries jumped to 74 last month, the highest reading since July 2008, from 71.8 in February.

The surge in these price measures have added to concerns of higher inflation this year. But some economists say they are not reliable predictors of future inflation. Price pressures are seen driven by the generous fiscal stimulus and extremely accommodative monetary policy.

The ISM survey’s measure of services industry employment shot up to 57.2 last month, the highest reading since May 2019, from 52.7 in February. That confirmed the sharp acceleration in private services industry employment in March.

A separate report from the Commerce Department on Monday showed new orders for U.S.-made goods fell in February, likely weighed down by unseasonably cold weather. Factory orders dropped 0.8% after surging 2.7% in January.

Economists polled had forecast factory orders slipping 0.5% in February. Orders increased 1.0% on a year-on-year basis.

The weakness in factory orders is likely temporary and left intact expectations for robust gross domestic product growth in the first quarter. Growth estimates for the last quarter are as high as an annualized rate of 10.0%. Growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.

Jordan arrests: Official and royal arrested for ‘security reasons’

A former adviser to Jordan’s King Abdullah and a member of the royal family are among a number of people arrested on “security-related” grounds.

Bassem Awadallah, a former finance minister, and Sharif Hassan Bin Zaid, a royal, were detained.

The military denied reports the king’s half-brother, former Crown Prince Hamza bin Hussein, was among those arrested.

But it said he had been ordered to stop actions that could be used to target the country’s “security and stability”.

High level political arrests are rare in Jordan, a key US ally in the Middle East. 

The country has a powerful intelligence agency that has been granted new powers since the coronavirus pandemic, which has drawn criticism from rights groups.

Mr Awadallah, an economist who was educated in the US, has been a confidant of the king and an influential force in Jordan’s economic reforms. 

He has often found himself pitted against entrenched government bureaucracy resistant to his reforms.

Petra news agency earlier said the former Crown Prince Hamzah bin Hussein, the oldest son of the late King Hussein and Queen Noor, was not subject to any restrictions.

However, in a later statement the military said he had been asked to stop any actions targeting the country’s security and stability.

King Abdullah stripped Hamzah of the title of crown prince in 2004

It was seen as a blow to Queen Noor, who had hoped to see her eldest son become king.

Former Crown Prince Hamzah bin Hussein pictured in 2004
image captionPrince Hamzah is a graduate of the UK’s Royal Military Academy, Sandhurst,

Prince Hamzah, who was 24 at the time, had been a favourite of the late King Hussein, who often described him in public as the “delight of my eye”.

However, he was seen as too young and inexperienced to be named successor at the time of his death.

Jordan is a key US ally and has assisted US forces in security operations. It is also a partner in the US-led campaign against the so-called Islamic State.

The country has few natural resources and its economy has been hit hard by the pandemic. The kingdom has also absorbed waves of refugees from the civil war in neighbouring Syria.

Source: BBC

Global equities could receive April boost after a pause in rally

(Reuters) – While the pace of the global equity rally has waned in recent weeks, world shares have a better chance of climbing again if history repeats itself.

MSCI’s gauge of stocks across the globe has delivered an average gain of 2.6% in the month of April in the last 19 years, the highest compared with other months of the year.

It was followed by November’s 1.7% gain and July’s 1.1%, according to the data.

Graphic: MSCI World index’s April gains

Reuters Graphic

“April tends to be a strong month for risk assets, with monthly returns statistically significant across major markets, said Andrew Sheets, a strategist at Morgan Stanley, adding that higher dividend payments could be a reason behind this rise in shares in the month.

“The April month could be an important tactical window for investors to take on beta, before heading into a possibly quieter summer period,” he said.

The MSCI World index rose just 4.1% in the Jan-Mar quarter, the lowest in a year, as global shares were pressured by growing concerns about hiccups in vaccine rollouts and a fresh wave of coronavirus infections, particularly in Europe.

Some analysts said higher corporate profits could boost stock prices this month, with factories across Europe and Asia ramping up production in March.

Paul Sandhu, head of multi-asset quant solutions at BNP Paribas Asset Management, said investors should take this pause in the rally as an opportunity to rebalance their portfolios and buy on dips this month.

Refinitiv data showed global companies’ profits in the March quarter are expected to rise 70%, compared with a year ago, led by a recovery in energy, consumer and mining firms.

Graphic: Expected March quarter profit growth

Reuters Graphic

“April should see good data, strong 1Q earnings, still-modest realised inflation and a pause in the yield move,” said Morgan Stanley’s Sheets.

The MSCI World index was up 0.24% on Thursday, which was the first trading day of the month.

U.S. dollar share of global FX reserves hits lowest in 25 years in fourth quarter: IMF

NEW YORK (Reuters) – The U.S. dollar’s share of currency reserves in the fourth quarter of last year plunged to its lowest since 1995, IMF data showed on Wednesday.

The greenback’s share slid to 59% in the fourth quarter, from 60.5% in the third, declining for three straight quarters. Its share in 1995 was 58%.

Still, the dollar has the largest share of currency reserves held by global central banks. It posted a high of nearly 73% share in 2001, data showed.

“For the most part, Wall Street and the rest of the world are convinced that we’re bound to see a weaker dollar. If you take a look at the money growth, the initiatives from the Biden administration, it’s only going to get worse,” said Edward Moya, senior market analyst at online FX trading platform OANDA.

“The ballooning trade deficit is going to continue and you’re probably going to see that the longer-term outlook for the dollar is going to be much weaker.”

In the fourth quarter, the dollar posted losses of 4%, its worst showing since June 2017. It recovered somewhat in the first quarter of 2021, posting gains of roughly 3.5%, its best performance since June 2018.

Global reserves are assets of central banks held in different currencies and are used primarily to support their liabilities. Central banks sometimes use reserves to help support their respective currencies.

The euro’s share, meanwhile, rose to 21.2% in the fourth quarter, compared with 20.5% in the third. The single currency’s share in the fourth quarter was the highest since 2014.

In 2009, the euro hit its highest share of FX reserves at 28%.

IMF data also showed global reserves rose to a record $12.7 trillion in the fourth quarter, from a revised $12.246 trillion in the third.

Reserves held in U.S. dollars totaled $7 trillion, compared with $6.939 trillion.

The yen’s share of currency reserves grew as well to 6.03% of allocated reserves in the last three months of 2020, rising for three straight quarters.

The Chinese yuan’s share increased to 2.25% during the period, gaining for four consecutive quarters. The IMF started tracking the yuan’s share in 2017.

Bosses share their experience: Three months Post-Brexit

The UK’s new trading relationship with the European Union (EU) might only be a few months old.

But some businesses are struggling to adjust to the new trading landscape outside of the customs union and single market.

Firms across four different sectors share their stories of rising costs, extra paperwork and packages that never arrive.

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The fashion firm

Ben and Alice, co-founders of Country of Origin knitwear
image captionBen and Alice co-founded Country of Origin in 2013

Ben Taylor and Alice Liptrot have come a long way since they founded their knitwear brand Country of Origin straight out of university.

The couple now employ four other people and sell clothes wholesale to independent shops and to customers online.

About a third of sales, Ben says, came from customers in the EU. 

“But since the end of January, it’s tailed off completely.”

Ben says the firm has been caught up in an “onslaught of admin” and about 80% of orders to the EU after Brexit have seen customers having to pay extra charges.

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What are the new rules?

New rules have come into force for those in the UK either importing from, or exporting to, Europe.

Exactly what licenses are needed or what duties must be paid depends on what is being exported, its value, where the product originates from and to which country it is being sent, according to government guidance.

From 1 January, the UK government introduced a rule that VAT must be collected at the point of sale rather than the point of import.

This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).

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One customer in the Netherlands was asked to pay an additional €100 (£88) on their order, Ben says, for “government fees”, with no further explanation from customs agents.

Ben adds that the firm is not an “inexperienced” exporter, having shipped goods to Japan and the US. He says the lack of clarity on why certain charges are being raised is “frustrating”.

The next step? “To get some kind of operation going in Europe – moving stock to dispatch from there because this just isn’t sustainable,” he says.

“I just hope this doesn’t put off any other young person who wants to start a small business today.”

The flower grower

Diane Collison
image captionCollison’s Cut Flowers supplies supermarkets such as Sainsbury’s, M&S and Asda

Diane Collison has been responsible for helping her firm, Collison Cut Flowers, adapt to post-Brexit changes.

The Norfolk cut flower producer imports 35 million bulbs a year – mostly tulips from Holland, scented stock and lilies.

The government recently pushed backintroducing new checks on most imported plants until 2022. But some of the bulbs imported by Collison’s Cut Flowers count as “high-risk”, so they have already had to make some changes.

Diane has registered the business as a “place of destination”, where plants could be checked by local health teams, and for an EORI number so the firm can bring EU goods into the UK.

Day-to-day, she must email a freight forwarding business details of expected deliveries before they hit UK ports. That’s on top of registering invoices and plant health certificates with UK authorities.

“Each load is probably costing us about £200 extra now – and at about 150 per year that’s not an insignificant amount of money,” Diane says.

The firm may soon need to increase costs for customers.

“But I’m just pleased we’ve managed to get our imports in and what we’ve done is working,” Diane says, adding the firm has only seen deliveries delayed by a few hours so far.

The sausage exporter

Steve Howell of Foodlynx
image captionSteve Howell’s Foodlynx suffered a three-day delay to the one shipment it has made since Brexit

Steve Howell’s Foodlynx sells British sausages, bacon and bread to hotels and restaurants across the EU. 

Typically it sends one or two trucks out a week and up to six in the peak summer season. But the Dorset-based firm suffered a three-day delay to the one shipment it has made since Brexit.

Its truck was held up at the port of Le Havre in France as customs officials questioned whether certificates for some animal products had been filled in correctly.

It was moved to another cold storage unit nearby while the issue was sorted out. Steve was charged €3,914 for storage and admin costs.

Although recent statistics show that UK exports to the EU dropped significantly in January, Steve believes other factors are at play.

“Demand dropped off due to Covid last year anyway, plus we, like many others advised our customers to stock up before Christmas to avoid these types of delays.

“Now, the customers are running low on stock and we’re still trying to battle through paperwork, new labelling regulations and compliance.”

“The whole point [of Brexit] was to take back control of our country,” Steve says.

“We have succeeded in doing exactly the opposite because British exporters are completely and utterly blown out the water.”

The car parts dealer

Martyn Wilson
image captionMartyn Wilson sells classic car parts across Europe, but is considering focusing more on US customers

Martyn Wilson set up his classic car parts firm 12 years ago and about 60% of orders are shipped to the EU.

VAT is now applied at the point of sale for parts under £135 – on top of duty charged on car parts at 24%.

Citroen Classic Car Parts typically sends out 130 items per month – but difficulties arose quickly.

“For couriers, I have to supply customers’ contact details – and often have to write to them in French and German to get those, which is a bit of a drama we never had to deal with before.”

Deliveries into Italy, for example, have never arrived and others have been returned due to customers not paying the new charges.

“It has impacted us certainly from the mental point of view. It’s a lot of additional stress and you’re continually on deadlines, trying to get good reviews from customers and make sure things get delivered.”

Martyn points out that he is able to deliver car parts to the US in less than 24 hours – and no tariffs are applicable on those under $700.

“I will muddle on through in the best possible way I can and maybe it’ll push me to think outside the box a bit. 

“Perhaps in the long-run it might be good for us, but we’re going through the pain barrier.”

By Lora Jones
Business reporter, BBC News

Asian SPAC listings face stern test as regulators consider rule changes

HONG KONG/SINGAPORE (Reuters) – Asian bourses from Tokyo to Singapore are considering rule changes to allow listing of SPACs, but some industry players say the region may not attract the kind of frenzy, or the massive billions of dollars, seen in the U.S. for such blank cheque firms.

The trend to list through Special Purpose Acquisition Companies (SPACs) has seen such floats raise $96 billion in the United States this year after a bumper 2020.

In Asia, industry executives worry that low valuations in some markets and the need for SPAC regimes to include strong investor protection safeguards would keep such listings from rapidly taking off.

“We don’t get the sense that anyone is rushing to do this,” said one person with knowledge of Asian exchanges’ informal consultations with industry executives, referring to SPAC listing prospects in Asia.

“Hong Kong is more strongly leaning to the no side, while Singapore, because it has less equities activity, has more pressure,” said the person, declining to be named as he was not authorised to speak to the media.

With the hot new method of floating a company taking the U.S. tech world by storm, Asian exchanges are stepping up efforts for SPAC listings although the response has been tepid in Europe.

Earlier this year, Singapore Exchange’s regulatory unit said it was exploring a consultation on SPACs, while the Hong Kong government directed the city’s exchange and regulator to look into allowing such listings.

Indonesia’s bourse has also said it would consider allowing SPACs, and in Japan, a government panel said SPACs listings should be considered to boost growth.

SPACs or shell companies, raise funds via IPOs to merge with operating firms and then take them public by enticing them with shorter listing timeframes and strong valuations.

One problem for SPACs in Hong Kong are recent rule changes brought in to resolve long standing worries about illegal practices linked to the formation and trading of shell companies.

“A lot of the changes that were introduced from 2016-2019 would need to be changed to accommodate SPACs,” said Christina Lee, a capital markets partner at Baker McKenzie, adding that she had received inquiries from clients, many from mainland China, about listing SPACs in Hong Kong.

DESIGNING RULES

Singapore, which has attracted listings mainly of real estate investment trusts, could find it tougher.

“Singapore doesn’t have as deep liquidity and the velocity of the leading markets and that could be an issue particularly when it comes to the adoption of new investment models,” said Yang Eu Jin, co-head of corporate and capital markets practice at RHTLaw Asia.SGX consulted the market on SPAC listings in 2010 but this didn’t take off due to lack of market interest.

Stefanie Yuen Thio, joint managing partner at TSMP Law in Singapore, said a quick roll out of regulations this year and more interest for SPAC listings for Chinese tech targets, due to the unrest in Hong Kong and U.S.-China tensions, could help Singapore.

“The important thing will be to ensure that our rules are, as far as possible, aligned with U.S. listing rules for SPACs so that Singapore can be seen as the Asian alternative bourse,” she said.

“That may be more of a challenge but if Singapore wants to stay competitive and relevant as a stock exchange, we will need to resist the urge to create a Frankenstein’s monster of the SPAC listing rules.”

UK retail sales rise 2.1% in February

Retail sales rose 2.1% in February, recovering some ground from a steep fall in January.

The Office for National Statistics (ONS) said sales were still down by 3.7% on a year earlier, before the impact of the coronavirus pandemic.

Food and department stores benefitted from essential retailers remaining open, it said, though clothing shops continued to struggle.

Online sales continued to grow and hit a record 36.1% of all UK sales.

Jonathan Athow, ONS deputy national statistician for economic statistics said that despite national restrictions, “retail sales partially recovered from the hit they took in January” when they fell by 8.2%.

He said mixed stores, which were allowed to stay open as they sold some foodstuffs, had benefitted, with budget-end department stores increasing sales. 

Mr Athow said anecdotal evidence from retailers suggested people had been spending on home improvements and on outdoor furniture, as people prepared for lockdown easing, which will allow gatherings in gardens again.

Bank of England reveals new Alan Turing £50 note design

The design of the Bank of England’s new £50 note, featuring the computer pioneer and codebreaker Alan Turing, has been revealed.

The banknote will enter circulation on 23 June, which would have been the mathematician’s birthday.

It will be the last of the Bank’s collection to switch from paper to polymer. In keeping with Alan Turing’s work, the set is its most secure yet.

Old paper £50 notes will still be accepted in shops for some time.

Why is Alan Turing on the note?

The work of Alan Turing, who was educated in Sherborne, Dorset, helped accelerate Allied efforts to read German Naval messages enciphered with the Enigma machine. His work is said to have been key to shortening World War Two and saving lives.

Less celebrated is the pivotal role he played in the development of early computers, first at the National Physical Laboratory and later at the University of Manchester.

BBC copyright

BBC copyrightAlan Turing

1912 – 1954

  • 1912 Alan Mathison Turing was born in West London
  • 1936 Produced “On Computable Numbers”, aged 24
  • 1952 Convicted of gross indecency for his relationship with a man
  • 2013 Received royal pardon for the conviction

Source: BBC

In 2013, he was given a posthumous royal pardon for his 1952 conviction for gross indecency. He had been arrested after having an affair with a 19-year-old Manchester man, and was forced to take female hormones as an alternative to prison. He died at the age of 41. An inquest recorded his death as suicide.

Andrew Bailey, the governor of the Bank of England, said: “He was a leading mathematician, developmental biologist, and a pioneer in the field of computer science. 

“He was also gay, and was treated appallingly as a result. By placing him on our new polymer £50 banknote, we are celebrating his achievements, and the values he symbolises.”

The Bank is flying the rainbow flag above its Threadneedle Street building in London as a result.

However, campaigners are still questioning how much the Bank’s collection of banknotes represents society. Three feature men – Winston Churchill on the £5 note, JMW Turner on the £20 note, and soon Alan Turing on the £50 note. Only the £10 note, with the portrait of Jane Austen, depicts a women apart from the Queen, and all are white.

What features are on the note?

Steam engine pioneers James Watt and Matthew Boulton appear on the current £50 note, issued in 2011.

The new note will feature:

  • A photo of Turing taken in 1951 by Elliott and Fry, and part of the National Portrait Gallery’s collection
  • A table and mathematical formulae from Turing’s 1936 paper “On Computable Numbers, with an application to the Entscheidungsproblem” – foundational for computer science
  • The Automatic Computing Engine (ACE) Pilot Machine – the trial model of Turing’s design and one of the first electronic stored-program digital computers
  • Technical drawings for the British Bombe, the machine specified by Turing and one of the primary tools used to break Enigma-enciphered messages
  • A quote from Alan Turing, given in an interview to The Times newspaper on 11 June 1949: “This is only a foretaste of what is to come, and only the shadow of what is going to be”
  • His signature from the visitor’s book at Max Newman’s House in 1947 which is on display at Bletchley Park
  • Ticker tape depicting Alan Turing’s birth date (23 June 1912) in binary code. The concept of a machine fed by binary tape featured in Turing’s 1936 paper
Sarah John, the Bank of England's chief cashier, whose signature is on the note
image captionSarah John, the Bank of England’s chief cashier, whose signature is on the note

There are also a series of security features, similar to other notes, including holograms, see-through windows – based partly on images of Bletchley Park – and foil patches.

The Bank also says that plastic banknotes are more durable and harder to forge.

Sarah John, the Bank’s chief cashier whose signature features on the note, said: “This new £50 note completes our set of polymer banknotes. These are much harder to counterfeit, and with its security features the new £50 is part of our most secure series of banknotes yet.”

Do we need a £50 note?

The £50 note is the least likely to be in people’s wallets or purses.

There were 351 million £50 notes in circulation last year, out of a total of nearly four billion Bank of England notes.

The government has previously discussed whether it should be abolished.

The banknote was described by Peter Sands, former chief executive of Standard Chartered bank, as the “currency of corrupt elites, of crime of all sorts and of tax evasion”.

The debate continues, with the added element that cash use has declined, particularly during the Covid pandemic.

2px presentational grey line
Analysis box by Gordon Corera, security correspondent

The UK’s intelligence agency GCHQ has set what it describes as its toughest ever puzzle to mark the new note. 

Twelve puzzles – called the Turing Challenge – increase in complexity leading to one final answer. The agency’s in-house experts claim that ‘an experienced puzzler’ should be able to complete it in just seven hours. 

Few clues are provided other than that each is based on unique design elements of the banknote, including technical drawings for the device designed by Turing during World War Two to break the German Enigma code at Bletchley Park. 

Although Turing was, among other accomplishments, the co-creator of the first computer chess programme he claimed not to be that good at puzzles himself. 

The new note though marks another step in the recognition of a man whose wartime work was secret, and who took his own life soon after his conviction for homosexuality in 1952. 

“Turing was embraced for his brilliance and persecuted for being gay,” said current GCHQ Director Fleming. “His legacy is a reminder of the value of embracing all aspects of diversity, but also the work we still need to do to become truly inclusive.”

By Kevin Peachey
Personal finance correspondent, BBC