Panthera Consultancy Weekly Newsletter
Welcome to Your Panthera Consultancy Weekly Newsletter!
In this week’s edition, we bring you key updates: the Bank of England cuts interest rates for the first time in four years, house prices continue to rise, and optimism in British businesses reaches a seven-year high. We also cover developments in the banking sector, international markets, and retail, among others. Stay informed and stay ahead of your business needs with Panthera Consultancy.
By staying on top of these stories, you’re staying on top of your business. Whether it’s changes in interest rates, shifts in the property market, or trends in international economics, these factors can impact your business. If you know others who could benefit from this newsletter, share it with them and tell them to email ‘join’ to info@pantheraconsultancy.com.
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ECONOMY
Interest rates cut for the first time in four years
The Bank of England has voted to cut interest rates for the first time since March 2020, reducing the base rate to 5%. This decision comes as inflation has held steady at the Bank’s target rate of 2% in May and June, down from a peak of 11% in 2022. Despite this positive trend, Bank governor Andrew Bailey emphasized the need for caution, warning that inflation control is “not mission accomplished yet.” The Bank’s latest economic forecast suggests inflation could rise slightly to 2.7% by the end of 2024 before gradually falling back to 2% by 2026 and even lower to 1.5% by 2027.
Wage growth expectations ease
A recent Bank of England survey indicates a modest cooling in wage growth expectations, with the figure easing to 4.1% in the three months to July, down from 4.2% in the previous quarter. Despite this, some month-to-month fluctuations suggest wage pressures could persist longer than anticipated. However, easing inflation and fewer recruitment challenges may help slow wage growth more decisively in the latter half of the year.
Business optimism hits 7-year high
Optimism among British businesses has soared to its highest level in over seven years, according to Lloyds Bank’s Business Barometer. Trading prospects for the next 12 months jumped to 56% in July, up from 44% in June. Confidence has surged across various sectors, including services, manufacturing, and construction. While some companies are planning price increases, these remain below the levels seen earlier in the year, reflecting a more stable outlook for the economy.
REAL ESTATE
Rate cut set to boost housing market
The Bank of England’s rate cut is expected to have a positive impact on the housing market. Homeowners with tracker mortgages will benefit from an average reduction of over £340 in annual payments, while those on standard variable rate mortgages will see their monthly payments reduced by approximately £14.50. This relief is likely to boost market activity and provide some respite to homeowners and buyers alike.
House prices up 2.1% year-on-year
House prices are on the rise, with Nationwide reporting a 2.1% year-on-year increase, pushing the average price to £266,334. This is the largest annual increase since December 2022. Despite higher interest rates, the housing market remains resilient, with mortgage approvals holding steady at around 60,000 per month—a figure that, while slightly below pre-pandemic levels, indicates a stable market environment.
Home sales up 8% in June
The latest data from HMRC shows that property transactions rose by 8% in June compared to the same month last year, with an estimated 91,370 sales recorded. Although there was a slight month-on-month decline, industry experts remain optimistic about the market’s recovery. The resilience of buyers and sellers in the face of economic uncertainty highlights the underlying strength of the property market.
INTERNATIONAL
Eurozone inflation rises unexpectedly
Eurozone inflation saw an unexpected rise in July, increasing to 2.6%, exceeding economists’ predictions. Core inflation, excluding volatile items like food and energy, remained steady at 2.9%. This has created uncertainty around the European Central Bank’s (ECB) next move, with analysts split on whether the ECB will opt for a rate cut in September. The recent data has complicated the picture, leaving the door open for potential policy adjustments.
US interest rates held again
The US Federal Reserve has maintained interest rates within the 5.25%-5.50% range for the eighth consecutive meeting. While the Fed did not specify a timeline for reducing rates, it noted progress toward its 2% inflation target. Chairman Jerome Powell expressed growing confidence in the Fed’s strategy, indicating that future rate decisions will depend on continued positive economic data.
BANKING
Fraud reimbursement depends on who victims bank with
The Payment Systems Regulator (PSR) has highlighted significant disparities in fraud reimbursement across banks. While institutions like Nationwide and TSB reimbursed over 95% of scam victims, others, such as AIB and Monzo, had much lower reimbursement rates. The PSR is set to introduce mandatory reimbursement measures in October, aiming to enhance consumer protection and ensure more consistent treatment of fraud victims.
Nationwide brings back sub-4% mortgage rates
Amid increasing competition in the mortgage market, Nationwide has reintroduced sub-4% mortgage rates, offering reduced rates on two-, three-, and five-year fixed-rate mortgages. These new rates are available to both new home movers and first-time buyers, signalling a potential easing of financial pressures for many borrowers.
New lender offers six times income mortgages
April Mortgages has launched a new product allowing borrowers to access up to six times their annual salary, with options to fix their mortgage rate for up to 15 years. This innovative approach offers greater flexibility and affordability, particularly for first-time buyers and those looking to remortgage. It also positions April Mortgages alongside other lenders like Perenna, which offers similar high-income multiple products.
RETAIL
CBI: Retail sales fell in July
UK retail sales experienced a decline in July, according to the Confederation of British Industry (CBI). The retail sales balance dropped to -43, down from -24 in June, with weak trading conditions and poor weather contributing to the downturn. Despite this, there is some optimism for a rebound in August, particularly following the general election.
CONSTRUCTION
Taylor Wimpey expects to build 10,000 homes this year
Taylor Wimpey has upgraded its forecast and now expects to build up to 10,000 homes this year. Despite a 22.6% drop in operating profit in the first half, the company anticipates a stronger second half, buoyed by the recent interest rate cut. Taylor Wimpey is also optimistic about the potential benefits of Labour’s planning reforms, which could further support the housing sector.
MANUFACTURING
Britain drops out of manufacturing top 10
For the first time since the Industrial Revolution, Britain has fallen out of the top 10 global manufacturing nations, now ranked 12th with an output of $259bn per year. This decline, highlighted by trade body Make UK, underscores the need for a robust industrial strategy to regain the UK’s competitive edge. Industry leaders and politicians alike are calling for stability and a clear long-term plan to support the manufacturing sector.
Manufacturing sector sees production growth
Despite challenges, the UK manufacturing sector has seen its fastest production growth since February 2022. S&P’s purchasing managers’ index (PMI) registered a reading of 52.1 in July, up from 50.9 in June, indicating expansion. Increased demand, new product launches, and efforts to clear backlogs have all contributed to this growth. However, rising input costs and inflationary pressures remain concerns for the sector.
CLOSING THOUGHTS
As always, we thank you for being an avid reader of the Panthera Consultancy Weekly Newsletter and for trusting us to provide you with these essential financial updates. Beyond updates, we are here to support your business in obtaining finance and helping both businesses and individuals navigate complex financial landscapes.
If you’re looking to elevate your business or need advice on securing the best financial deals, get in touch today. Let us help you achieve your financial goals and ensure your business remains resilient in the ever-changing economic environment.
Until next week, Stay Informed & Stay Ahead.
With my kindest regards,
Benjamin Vis
Managing Director
Head of Business Lending
Panthera Consultancy
Unmatched in the Financial Kingdom