Britain’s economy is outpacing all its main competitors including America, according to combined data from Markit and JP Morgan. Britain’s economy is growing at an annualised rate of 2.4%, compared to 1.7% annual growth in the USA and an on-going recession in the Eurozone. Many economists are now upgrading their forecasts for this year and next. “This recovery is broad, and the broader it is, the more sustainable it is”, says Rob Dobson, senior economist at Markit. (Sunday Times p.2)
Personal Finance / Property
With official interest rates at record lows, and now set to remain so until an improving economy brings the unemployment below 7%, savers are bracing themselves for what could be a three more years of a 0.5% base rate. If interest rates did rise in 2016, in total that would mean a seven year wait for higher returns. Sunday Times Money has a full feature on what impact below-inflation returns could mean for savers, focusing on the move into property investments, and the rise of Buy-to-Let borrowing to leverage these deals. Buy-to-Let house purchases are expected to hit 85,000 this year and 100,000 in 2014, fuelled by strong rental yields, currently averaging 5.3% according to the LSL Buy-to-Let Index.
David Whittaker of Mortgages for Business said, “In the last couple of days we have seen a surge in calls for savers looking for advice on getting into the buy-to-let market. Clients want a better return ion savings than they would get by sticking their savings in the bank.” (Sunday Times Money p.1)
Unemployment could fall to a new low in this week’s jobless figures. According to IHS Global Insight the official figures on Wednesday will show a fall in unemployment of 38,000 to a 25 month low of 2.48 million. They also expect a rise in employment levels – predicting 52,000 more people in work to take the total number of people employed in the UK to 29.8 million. (Sunday Express Financial p.1) Tara Ricks, managing director of Randstad Financial and Professional, says “the jobs market is humming” and that this will help “stoke the fires of the economy”. In his column, the Express’s Geoff Ho is more cautiously optimistic saying we should still “keep the champagne on ice” for the time being, highlighting youth unemployment, which is still stubbornly high.