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EQ Weekly Roundup

This week’s roundup includes news that NS&I is cutting the interest rate on its Direct ISA, the Prime Minister has promised extra investment in the UK’s aerospace industry and President Trump has labelled the EU a ‘foe’ on trade. 

National Savings to cut Direct ISA rate

National Savings and Investments (NS&I) is cutting the interest rate it pays on its Direct Individual Savings Account (ISA), affecting nearly 400,000 savers.

From 24 September, NS&I will reduce the rate on its Direct ISA from 1.00% to 0.75%. This accounts for 387,000 Direct ISAs and a total of £4.6bn.

NS&I said the decision to cut the rate was taken in order ‘to deliver positive value for taxpayers’.

Jill Waters, NS&I retail director, said: ‘As part of our operating framework, we must ensure that we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector.’

Government rules mean NS&I is not allowed to attract too much cash, in fairness to taxpayers and so as not to destabilise the savings market.

NS&I introduced the Direct ISA in April 2008 with an interest rate of 5.3%, but the rate has been slashed since then.

Returns on ISAs in general have declined sharply during the past decade of low interest rates, which have discouraged many people from putting money away.

PM boosts aerospace amid Brexit concerns

Prime Minister Theresa May has promised extra investment for the aerospace industry, just weeks after Airbus threatened to reduce its UK presence because of Brexit disruption.

It comes amid growing criticism of her plan from MPs, with another government member resigning in protest on Sunday. The proposal urges close links with the EU on trade in goods, but not services.

In a speech at the Farnborough Airshow on Monday, May offered more than £300m of government money for several projects, including research on more environmentally-friendly aircrafts.

There will be additional money for two new spaceports - one in Cornwall, one in Scotland - and a long-awaited commitment to build a new high-tech fighter aircraft that will eventually replace the Eurofighter Typhoon.

The UK aviation sector generates turnover of about £60bn and supports almost a million jobs.

However, industry trade association ADS has warned the sector could be paralysed if Britain leaves the EU customs union and single market, given its dependence on cross-border trade in components.

Trump: EU is a ‘foe’ on trade

US President Donald Trump has described the European Union as a ‘foe’ on trade, saying European countries were taking advantage of the US and not paying their NATO bills.

EU Council President Donald Tusk said anyone calling the EU foes was spreading ‘fake news’.

Trump said he had ‘low expectations’ for his meeting on Monday with Russia's Vladimir Putin, which comes after 12 Russians were indicted for alleged hacking during 2016 US elections.

Trump said he would raise this issue with Putin at the summit in the Finnish capital, Helsinki, and ‘maybe some good’ would come of it.

Russia denies the allegations.

There have been calls in the US for Trump to cancel his meeting with Putin over the indictments. Sunday also saw a protest march against the summit in Helsinki. Demonstrators chanted ‘media must be free’, and carried a banner calling for human rights.

Airbnb told to be clearer on costs

Airbnb has been warned that its terms and conditions fall foul of EU consumer rules, especially on pricing.

The European Commission has told Airbnb to show consumers up-front the total cost of renting a property, including service and cleaning charges. When this is not possible, it should at least warn them that there may be additional sums to pay later.

The European Commission has raised various other points with Airbnb on which it is not complying with EU law, including denying consumers the basic legal right to sue a host in case of personal harm or other damages.

Airbnb has until the end of August to present its proposals for change. If they are not considered satisfactory, Airbnb could face an enforcement action.

Last month, Airbnb had to cancel thousands of reservations in Japan after the country's government put in place a new law on home-sharing.