Monday’s headlines 10.02.14

Economics
The eurozone’s new chief banking regulator says that weak banks should be allowed to fail. It has said that some of the region’s lenders have no future and should be allowed to die, heralding a far tougher approach to supervision across the currency bloc. (Cover of the FT)

The Bank of England is going to give guidance on Wednesday on how quickly interest rates will rise in Britain’s rapidly growing economy. After Mark Carney, bank governor, signalled that the BoE would move away from linking rate rises to unemployment, its Monetary Policy Committee has been considering how to provide clarity to markets without jeopardising growth. Many economists think the bank will use its scheduled quarterly Inflation Report to build on recent utterances indicating there is “no immediate need” to raise rates and that monetary policy will be tightened “gradually”. They also believe the bank will broaden its analysis to include other economic data beyond unemployment, probably including wages and underemployment. (p.2 of FT)

New research from the Business Trends survey, produced by accountancy firm BDO suggests that interest rates could rise in the “very near future”. The report states that business optimism reached record levels in January, signalling rapid economic growth over the next two quarters (p.B4 of The Daily Telegraph)

The Chairmen of Britain’s leading retailers have become significantly more optimistic about the prospects for the economy and have performed a dramatic U-turn on the performance of the government. According to the fourth annual survey of chairmen by headhunter Korn Ferry, 73% of chairmen are optimistic about the outlook for the economy, compared with just 15% last year. (p.B1 of The Daily Telegraph)

Personal Finance
Young people are bearing the burden of increasing levels of debt, according to a poll that shows how the older generation are escaping the squeeze in incomes. People in their 20s and 30s face a stark choice between “putting their lives on hold or racking up substantial debt”, according to the Demos thinktank that commissed the poll. The Populus poll of 1,775 adults found that more than half (55%) of those aged 18 to 24 – and 48% of those aged 25 to 34 – say their debts have increased over the past five years. This compares with a 13% rise for those aged over 65. (p.10 of The Guardian)

Property
Four in every 10 London homes sold for more than £1m last year were bou8ght by foreign buyers, according to new research. The number of homes being sold for more than £1m in Greater London rose to 6,145, up 20% on 2012. The research, from aviation firm Beechcraft Corporation, claims non-British buyers spent a combined £5.1bn on London properties (p.14 of The Independent)

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Economics

Labour’s economic plans would commit Britain to borrowing an extra £166billion over the next parliament, Treasury officials have calculated. This is the estimate of the impact of Labour’s recent promises. The Conservatives and Liberal Democrats have repeatedly accused Labour of fiscal irresponsibility, saying that excessive spending under the last government contributed to the financial crisis. Mr Balls made attempts last week to bolster Labour’s fiscal credibility, promising that a Labour government would act to balance the government’s books (p.4 of The Daily Telegraph)

Personal Finance

The government’s claim that living standards are finally improving has been challenged by independent experts, who have warned that they will not recover strongly for another few years. According to the Institute for Fiscal Studies, a think-tank trusted by both left and right, the average British household is 6% poorer than before the financial crash and is unlikely to recover lost ground before next year’s general election. Forecasts from the Office for Budget Responsibility also show real wages are not expected to regain 2009/10 levels until 2018/19. (p.3 of Financial Times, p.5 of The Independent, p.2 of The Guardian and p.4 of The Daily Telegraph)

Property

Lenders approved the highest number of mortgages last month in almost six years as Britain’s housing market revival continued. The Bank of England said mortgage approvals rose to 71,638 in December, the highest since January 2008 and roughly double the numbers seen in the recession. Net mortgage lending , which has lagged behind the recovery in approvals, increased at its fastest rate since January 2012. But corporate lending was subdued and net lending to small and medium-sized companies fell by £300m – the 22nd decline in the past 24 months (p. 4 of the FT)

A record number of homes were built last year in an effort to address the escalating housing supply crisis in Britain. The annual figures for home registrations rose by 28% to 133,670 last year, the highest number of new builds since the economic downturn, according to the National House-Building Council (NHBC). (p.B3 and cover of The Daily Telegraph)

Recruitment

Salaries being advertised on job vacancies have fallen by £2,136 over the past year despite the recovery taking grip. The 4.1% decline in annual pay to an average of £32,323 in December 2013 marks the third month running advertised salaries have fallen. They are now at a 16-month low, according to job search engine Adzuna. (p.B9 of The Daily Telegraph)

 

Paper Summary: Thursday 16th January 2014

Economics

The World Bank has raised its global growth forecasts for 2014. In a report released yesterday, the institution claimed the world economy had “reached a turning point”, and that developed economies would now be able to generate “self-sustaining growth”. The bank forecasts that global GDP will grow by 3.2% this year, up from 2.4% in 2013, with much of the pick-up coming from developed economies. (The Daily Express, BBC)

 

Personal Finance

Research from the housing charity shelter has shown that 19% of householders borrowed money on credit cards to meet the cost of rent or mortgages, while 2% had taken out payday loans to meet housing costs. Campbell Robb, chief executive of Shelter, said: “Sky-high housing costs, stagnating wages and the high cost of living have taken their toll.” However, Chris Hopkins, Housing Minister, questioned the claims – saying “Shelter’s figures are based on a small number of calls to their helpline, while LSL’s figures show that the numbers of people in severe rent arrears are significantly lower than this time last year, and are 1.6% of the 3.8 million households who rent in the private sector.” (ITV, BBC, Mail, Guardian, Sky)

 

Property

The Royal Institution of Chartered Surveyors (RICS) has said that house price gains “can’t go on”, after revealing that sales have hit the highest level in six years, but that new supply has not caught up. RICS says more homes need to come on to the market soon to meet rapacious demand, or price rises will start to spiral out of control. (Daily Mirror, Graham Hiscott) However, writing in today’s Times, the commentator Peter Franklin argues that more building won’t be enough to keep house prices under control – saying the government should act to control speculation by those who own many different homes.

 

Recruitment

Mark Carney has dealt a blow to Ed Miliband’s mooted plan to limit bank bonuses. The governor of the Bank of England was careful not to be overtly political, but criticised the Labour policy, arguing the idea of a “crude” bonus cap was to blunt an instrument to use in the regulation of financial markets.

Other news in the world of work this morning is that the most fulfilled worker is aged 40 and earns £31,000 a year – and is a woman. Research from recruiter Randstad also found that the most fulfilled industries were construction and teaching, while those in the public sector feel their careers are the least fulfilling.

Paper Summary: 18th December 2013

Property
A new record 400,000 property owners are now property millionaires, that’s translates as twice as many as five years ago according to Zoopla. The number of homes worth £1 million or more has increased by a third over the past twelve months, thanks to soaring house prices in London and South East. The lack of supply of new homes in the capital was to a great extent responsible for driving forward a further 57,120 over the £1 million mark which equates to 156 new property millionaires a day in the capital throughout 2013, as shown by Zoopla. Prices are still rising according to the latest ONS figures, by 5.5% in the past 12 months, and the rise is even higher in London, jumping by 12%. Marsh & Parsons highlighted that prices are at more than double the rate of other areas , while Prime London continues to be a honeypot for UK and overseas buyers, as demand remains intense. As a result, LSL highlights that first time buyers are still having to leap higher than ever before to join the property ladder.

Personal Finance
Over half of UK shoppers are heading to discount shops, visiting an Aldi or Lidl figures revealed, for the first time ever. More than 13 million used the budget stores in the past three month, up from 46.1% a year ago. As a result all of the big four grocers have lost market share, as the so-called budget shops now make up a combined seven per cent of the total market. Credit crunch bargains are proving attractive across the country, as value continues to be a great incentive. Although Lidl and Aldi may not be as prevalent in London, more common in regions where shoppers can drive to do a food shop, this is likely to change, as more shops are expected to open next year. The type of customers are also said to be changing – those known as ABC1s (the traditional middle classes) make up just 25% of shoppers in 2011. Last year that rose to 41%, proving that Aldi is no longer the store of the cash strapped student.

Economy
Britons believe that securing growth as their top economic priority is more significant than higher wages according to a survey for the Independent. The ComRes survey findings suggest that the Conservatives message on the economy may resonate more than Labour’s campaign on reducing the cost of living. Their competing messages will lead to a fierce battle in the run up to the 2015 election. It’s interesting to note that in a list of important priorities over the next five years from a range of options, at the top was ensuring the economy continues to grow, followed by ensuring wages increase faster than prices, thirdly keeping inflation down and finally reducing the deficit. Now that the economy is growing the Tories will take comfort in the fact that that the findings show people view growth as the top factor.

Recruitment
More than half of the UK is said to be ripe for fracking according to a new Government report by engineering giant Amec, that shows a shale gas boom could create up to 32,000 new jobs. These plans have been met with mixed responses with some arguing it will cast a dark shadow over many communities in Britain who could now face the threat of fracking in their backyard. A new licensing round to enable firms to search for shale gas will begin in the summer. There could be between 14 and 51 vehicle movements to a fracking site each day over a 32 to 145-week period which could have a serious impact on traffic congestion, noise or air quality, depending on existing roads, traffic and air quality.

UK Paper Summary: Saturday 30th November 2013

Economics

The Daily Mail leads with the story that Britain’s financial elite are now the highest paid in Europe. The number of UK bankers earning over €1m is now over 2,700 – 12 times more than that in any other EU country  (Times p.7, Telegraph p.37). With bankers earning up to four times their average salary in bonuses, the FT highlights that this also sets up a potential conflict with the controversial EU-wide bonus cap that comes in next year. This will restrict variable pay to 100%, causing banks to draw up plans to circumvent the restriction by paying affected staff with monthly allowances that do not count as bonuses (p.17)

Lenders have come under fire as it was revealed that lending to small and medium sized businesses shrank by £505 million as households borrowed an extra £1.7 billion, and economists have warned that this is hindering the long-term recovery (Times p.65). Duncan Kreeger, West One Loans, described business loans as “rarer than diamonds” and called for more action from Banks to reinforce business lending.

 

Personal Finance

Ahead of this week’s Autumn statement, it is expected that most energy companies will announce that household power bills will rise by less than expected this winter, in light of a deal with the Government to redistribute Green levies. The Chancellor’s review of how to roll back energy tariffs could knock £50 off the typical annual household bill (Telegraph p.1, FT p.3, Express p.2, Mail p.2). But the move has led to accusations that Downing Street had tried to secure an energy price freeze and “dance to Labour’s tune” before the next election (Times p.2)

As neither Labour, the Tories or the Lib Dems assure voters they’ll keep the ‘triple lock’ guarantee linking state pensions to earnings and inflation, experts warn of a looming pension crisis in 2015 (Express p.6)

 

Property

House prices in Prime Central London have stalled in November, with Knight Frank discovering annual growth is at its lowest figure in four years. According to Nationwide, prices in the capital are almost twice the national average – the biggest difference in 40 years. The FT speculates that the market may subsequently be heading for a 1990s-style correction, fearing that the city’s property boom may soon give way to rapid collapse in house prices (James Pickford, FT p.2). Changing sentiment of future gains, mansion tax, capital gains tax, a sterling crisis, the soaring cost the living in the capital and even the threat of withdrawal from the EU all threaten to “pull the rug out from under the whole market”.  

As the Bank of England call a halt to Funding for Lending, experts say mortgage rates are likely to rise in the medium term, while savers should benefit from higher deposit rates (FT Money p.3)

UK Paper Summary: Friday 29th November 2013

Economics
The Financial Times and The Guardian lead with the news that Mark Carney has signalled that the UK economy is ready to start moving away from loose monetary policy as he announced the withdrawal of Funding for Lending for mortgage lending. After endless questions about what the Bank of England will do to counter a housing bubble the answer finally came yesterday. As well as ending the incentives for cheap liquidity for banks to lend to households, the BofE is also ending a waiver on bank capital requirements for house-hold lending. Mr Carney said the steps put in place would reduce the need for “larger interventions” in the future. The MPC also warned it would require banks to test mortgage borrowers’ ability to withstand larger interest rate rises than they currently do. LEX argues that action was inevitable suggesting that “a Martian landing from outer space and looking for somewhere to live in the UK would immediately realise that government incentives are pumping up Britain’s housing sector and house prices”. Housebuilder’s shares slipped 3-6% on the news. FT, p.1,3,LEX; Guardian, p.1,2

Property
When it comes to buying homes, house hunters trust their nose more than their eyes. A survey from interior designers A Passion for Homes has shown that nasty smells come top of the list of house-buying turn-offs, ahead of damp patches, cracked walls and bad décor. The problem is not just the usual suspects of wet dogs, kitty litter and cigarette smoke. Buyers claim 10% of whiffs come from the people selling the property. Telegraph, p.19

Personal Finance
Co-op is suffering a customer exodus after the scandals over its chairman and revelations about its finances. In a surprise statement yesterday the bank admitted there had been increasing numbers of customers ditching current accounts. Experts pointed out it must have been a significant number of customers to warrant the stock market announcement. Daily Express, p.20

Employment
The main employment news focusses on the announcement of new family-friendly laws that will allow fathers to share up to 50 weeks of parental leave with their partners. New parents will also be able to divide their time off into as many extended breaks as they want as long as their employers agree. The reforms will extend parents’ right to request flexible working to all employees, in an attempt to reflect the growing role of grandparents and other carers in looking after children. Times, p.1,2 ; Telegraph, p.1.2

Wriglesworth Paper Summary 20/11/13

Economics

The Paris-based Organisation for Economic Co-operation and Development (or OECD) has revised down its expectations for global growth – to 2.7% this year, from 3.1% expected back in May. OECD economists cite the trouble in the USA over levels of government debt and the resulting shutdown, alongside the United States federal reserve and the effects of slowing down their digital money printing tactics. In the Financial Times, Martin Wolf discusses the limits on global growth and, perhaps controversially, puts the blame on an excess of savings across the world. (FT p.15)

However, for the UK, the OECD report was flowing with more optimism – for the time-being at least – as the British economy is set to grow by 1.4% in 2013, and by an expected 2.4% over the course of next year. (FT p.3)

Personal Finance

In today’s Independent, the front page blares the warning of “Britain’s next debt time-bomb”. As if the current struggles with government overspending weren’t enough, it seems that a new threat is developing from levels of personal debt. According to the Centre for Social Justice, 3.9 million British families lack savings to cover even one month’s mortgage or rent. In total, households owe the equivalent of 94% of the UK’s economic output, according to the CSJ. Meanwhile Andrew Grice, political editor at the Indie, says some ministers are concerned that excessively low interest rates are not encouraging people to pay down debt as fast as in some other countries.
(The Independent, p.1, p.14)

Property

Yorkshire Building Society is today announcing 36 new mortgage offers, adding to the spate of new 95% mortgages coming onto the market. According to the Daily Mail (page 10) , the number of 95% mortagges on the market has now reached over 100, up from 64 yesterday and 42 last month. But – there is still some way to go until lost ground is made up – the number of these 95% mortgages stood at 986 back in August 2007.

Recruitment

This morning’s City A.M. leads with the headline “Too many grads not enough jobs” –covering statistics released yesterday from the ONS on graduates in the labour market. Almost half of the UK’s recent graduates now in employment are not making full use of their skills, with 47% working in “non-graduate jobs”, where their work does not require a degree. Despite recent economic growth the graduate unemployment rate has also barely fallen since 2009, now standing at 8.82% compared to 8.99% four years ago in the brimstone of recession. In the Daily Telegraph, Andrew Hunter of jobs search engine Adzuna puts this in the context of wider improvements in the job market – with just 1.9 jobseekers now competing for each vacancy, compared to 2.3 at this point last year, though he adds, “But for those who are fresh out of university, the prospects of finding that first job remain gloomy”.

On a less gloomy note for graduates, a degree might still seem like a good idea compared to other routes – those with a degree still have much better chances than those without. On the other side of the fence, those with just GCSE qualifications have to wait until the age of 32 before their wages “level out at £19,000”. (The Guardian, p.7)