Welcome to Your Panthera Consultancy Weekly Newsletter!
This week, we delve into several key developments across various sectors, providing you with the latest insights and analyses. From potential interest rate cuts and robust investment growth in the UK economy to significant movements in the real estate market, and the evolving landscape of financial services, we’ve got you covered. Find out more about these stories and what they mean for your business in this week’s edition of the Panthera Consultancy Weekly Newsletter.
Remember, at Panthera Consultancy, we’re here to support your business growth and financial stability. Don’t hesitate to reach out for personalised solutions with business lending and foreign exchange that can drive you and your business to success.
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Now, to the updates:
ECONOMY
Broadbent: Summer Interest Rate Cut Possible
Deputy Governor of the Bank of England, Ben Broadbent, suggested that a summer rate cut might be on the horizon, given the positive economic signals. “The experience of the last two or three years has made people wary. Equally, the behaviour of the economy over the last six months… is reassuring,” he noted. Broadbent’s remarks come as inflation figures on Wednesday showed a significant decline. His vote in the upcoming MPC meeting in July will be his last, marking the end of his decade-long tenure at the Bank.
UK Investment Growth Ranks Second Among G7 Economies
Deutsche Bank reports that UK investment growth is second only to the US among G7 economies since the financial crisis. Despite post-Brexit stagnation, investment levels surged by 5.5% in 2023. Factors such as the attractiveness of capital investment in the face of rising labour costs, re-industrialisation, and government policies like the “super-deduction” on capital expenditure have contributed to this growth.
Inflation Inches Closer to 2% Target
Inflation reached closer to the Bank of England’s 2% target this week, potentially leading to a rate cut in June. The Office for National Statistics reported April’s inflation at 2.3%, down from 3.2% in March, driven by weaker food and energy price increases. This marked the first-time inflation meets the target of within a 0.5% range of 2% since July 2021.
HSBC Tells Clients to Buy UK-Listed Stocks
HSBC has advised clients to invest in UK-listed stocks, asserting that the sell-off of British equities has ended. With UK pension funds no longer offloading stocks, HSBC anticipates these funds will start buying British equities, upgrading its outlook from neutral to overweight.
IMF: UK Economy Heading for a “Soft Landing”
The IMF predicts that the UK economy is on track for a “soft landing” with faster-than-expected inflation drops, potentially allowing for three interest rate cuts this year. The IMF upgraded the UK’s growth forecast to 0.7%, up from 0.5%, while cautioning against pre-election national insurance cuts to avoid future fiscal challenges.
Government Borrowing Hits £20.5bn in April
Data from the ONS reveals that government borrowing reached £20.5bn in April, the highest in three years, surpassing the forecasts of economists and the OBR. The reduction in National Insurance contributions by £1.5bn has contributed to lower tax revenues. The total borrowing for the financial year is now estimated at £121.4bn, exceeding the OBR’s forecast of £114bn.
REAL ESTATE
House Asking Prices Rise by 0.8% in May
Rightmove reports that house asking prices increased by £2,807 in May, reaching a new record of £375,131. This marks the fifth consecutive month of price hikes, though prices are only 0.6% higher than last year. Despite high mortgage rates affecting affordability, the market sees an uptick in sales agreed, particularly for large family homes, which saw a 1.6% price increase. The South East experienced the largest price rise, while the North East saw a 5.8% annual increase.
INTERNATIONAL
Russian Court Seizes Foreign Bank Assets
A Russian court has ordered the seizure of assets belonging to Deutsche Bank and Commerzbank as part of a lawsuit related to a terminated contract for a gas processing plant in Russia. This follows the seizure of UniCredit’s assets in a parallel lawsuit. Austria’s Raiffeisen Bank International is also under pressure from eurozone banking supervisors to reduce its business in Russia.
BANKING
Brits Lost More Than £1bn to Fraud in 2023
UK Finance reports that Britons lost over £1bn to fraud in 2023, with criminals stealing £1.17bn through unauthorised and authorised fraud. While total losses were down 4% from the previous year, authorised push payment fraud cases rose by 12%. Banks prevented an additional £1.25bn of unauthorised fraud through security measures. The report also highlights a significant increase in card ID theft, with cases up 74% and losses increasing by 53% to £79.1m.
FINANCIAL SERVICES
Payments Watchdog Cracks Down on Card Fees
The Payment Systems Regulator (PSR) has proposed several measures to limit the power of Mastercard and Visa, which dominate 95% of UK card transactions. These proposals include requirements for more detailed financial disclosures and justifications for price increases, though a price cap is not yet proposed. This move aims to alleviate financial burdens on small retailers.
POLITICS
Tory MPs Question BoE Independence
A group of 44 Tory MPs have demanded a review of the Bank of England’s independence, accusing it of costing taxpayers thousands of pounds through its handling of inflation and quantitative tightening. They endorsed a report by Conservative Way Forward, claiming that making taxpayers liable for losses on bond sales would cost households £4,361 each between 2023 and 2025. The report also blames the Bank for the UK’s higher inflation compared to other countries, costing families £1,185 over 2022 and 2023. The MPs suggest that the Chancellor should have a greater say in bond sales. In a separate development, the BoE announced a major expansion of its operations in Leeds, with one in ten officials to be based in the city within three years.
AUTOMOTIVE
China Develops a Revolutionary New Car Battery
China has developed new car batteries capable of charging in just 10 minutes and powering a vehicle for 600 miles. While these advances are remarkable, the International Energy Agency warns that China is becoming increasingly dominant in the supply of materials needed for battery production.
New Law Means Self-Driving Cars Could Be on UK Roads in Two Years
The UK has passed a new law allowing fully autonomous “level four” vehicles to operate on its roads within two years. These vehicles do not require a safety driver, with responsibility for their performance lying with corporations like insurance providers and manufacturers. Transport Secretary Mark Harper hailed the legislation as a milestone for the self-driving industry.
AVIATION
Switch to Greener Fuels Will Bring Higher Travel Costs
Virgin Atlantic reports that the cost of a return trip to New York could rise by £40 due to incoming net zero regulations. Sustainable aviation fuel costs are expected to increase ticket prices by 6%. Virgin boss Shai Weiss calls for government support to reduce these costs, as the airline also faces an employment tribunal over claims of age discrimination in redundancies.
UK Business Flights Fall by Nearly a Third
The New Economics Foundation reports a 29% decline in UK business flights last year compared to 2019, with 3.9 million fewer trips made. This reduction is attributed to growing environmental scrutiny on corporate travel.
CLOSING THOUGHTS
As we conclude another informative edition of the Panthera Consultancy Weekly Newsletter, we value your feedback and insights. Our aim is to tailor our content to meet your specific needs and interests, ensuring each newsletter provides the most relevant and valuable industry insights.
We invite you to share your thoughts and suggestions with us. What topics or areas would you like us to cover more extensively? Your input helps us shape our stories to your greatest benefit and ensures that we continue to provide the most personalised and industry-specific news.
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Thank you for being a valued reader. Until next week, stay informed and stay ahead!
With my kindest of regards,
Benjamin Vis
Managing Director – Head of Business Lending
Landline: 0208 132 6872
Mobile: 07933 145 994