Welcome to Your Panthera Consultancy Weekly Newsletter!
This week, we hear about optimism from UK businesses expecting to increase output and hire more staff with the Lloyds Bank latest business barometer index. We highlight the opportunity to beat inflation with you saving as there are currently 818 savings accounts paying 4.6% or more. And we raise concern around the fact that big banks will further reduce funding for small businesses.
As always don’t forget, Panthera Consultancy is here to assist you and your business to not only identify opportunities, but also navigate the changing business landscape. When your unsure about what financial solutions could be available to you, whether with foreign exchange or business lending, get in touch with one of our experts who will guide you through the complexities of international trade and lending products.
Email: info@pantheraconsultancy.com
Phone: 0208 132 6872
Now, to the updates:
ECONOMY
Business Confidence at Highest Level Since November 2015
Business confidence has reached its highest level in nearly a decade, according to Lloyds Bank’s latest business barometer index. The index shows that confidence climbed to 50% in May, the highest since November 2015. Companies are growing increasingly optimistic about their trading prospects and plan to hire more workers. Over 60% of businesses surveyed expect to raise output in May, while only 8% predict slower output. The same degree of firms are optimistic about the economy, generating the highest net reading since September 2021. More than half of businesses plan to expand their workforce. Lloyds Bank also notes that a greater share of businesses intend to raise prices in the coming months.
UK Mortgage Holders Hardest Hit by Rising Prices, Data Shows
The Office for National Statistics said on Thursday that household costs rose 4.4% in the year to March, down from an annual rate of 5.3% in January and 12.3% a year earlier. The ONS Household Costs Index revealed that households with home loans had the highest annual inflation rate of 5.5% while outright owner occupiers had the lowest, at 3.3% in the period. The ONS explained: “Those groups who spent a higher proportion of their basket on mortgage interest payments saw higher annual household cost inflation rates than those who spent a greater proportion on household energy bills.”
REAL ESTATE
Homes on the Market Hit Eight-Year High
The number of homes on the market has reached an eight-year high, according to data from Zoopla. The property search website calculates that there are 20% more homes on the market than there were at this time last year. The average estate agency branch currently has 31 flats and houses on its books. This is up from 26 last year and 16 in 2022 – and marks the highest average since 2016. Richard Donnell, executive director of research at Zoopla, says the high supply of homes for sale shows renewed confidence among sellers. Zoopla estimates that house prices are 0.1% lower than they were at this time last year.
New Rules Could Disrupt House Purchases, Experts Warn
House purchases could be severely disrupted by new rules designed to protect against fraud, experts have warned. Banks will be able to stop suspicious payments for up to four days under incoming rule changes, causing potential chaos for home movers. Delays in payments flagged as suspicious could cause problems on completion day for those buying homes. Lawyers have warned that the added red tape could result in severe penalties for buyers under legally binding contracts, especially in complex property transactions. Experts argue that there are already sufficient measures in place for banks to identify unusual or suspicious activity.
BANKING
Savers Can Beat Inflation
Analysis from Moneyfacts shows that there are currently 818 savings accounts paying 4.6% or more, representing 47% of qualifying saving accounts. This means that savers can earn at least double the rate of inflation on their savings. Laura Suter of investment platform AJ Bell advises savers to take advantage of the current market conditions. Sarah Coles of broker Hargreaves Lansdown adds that as the Bank of England expects inflation to be 2.6% in a year’s time, and 1.9% in two years’ time, “it means you could still effectively lock in a rate that could end up being double inflation for the next two years.”
Small Firms Expect Big Banks to Reduce Funding
A survey by online credit provider iwoca shows that SMEs believe big banks will further reduce funding for small businesses. The poll shows that 77% of SME finance brokers believe high street banks will decrease their appetite to fund small businesses. The survey also found that 86% of brokers expect increased demand for SME finance in the next six months, but 68% believe high street banks will further reduce access to working capital for SMEs over the next twelve months. The decline in lending to SMEs by high street banks has led to a rise in the popularity of specialist lenders, with 59% of SME lending now coming from outside big banks. Analysis of Bank of England data by iwoca shows that 77% of gross lending went to larger firms last year, up from 72% in 2014. The total value of lending to SMEs from high street banks has fallen by more than £1bn over the last year – from £15.5bn in the first quarter of 2023 to £14.2bn in Q1 2024.
FINANCIAL SERVICES
FCA Approves Fewer Than 1 in 7 Crypto Firms
Analysis shows that the Financial Conduct Authority (FCA) has approved fewer than one in seven cryptocurrency firms that tried to register with the regulator. Of 344 applications received by the FCA between January 2020 and April 2024, just 47 companies were successfully registered, while 233 were withdrawn and 48 rejected – with 16 still pending when the figures were compiled. A Treasury report said the FCA carried out “robust” assessments when firms first registered, which “identified significant weaknesses” in money laundering controls. This, it added, resulted in “a large number of companies withdrawing their applications or being rejected or refused by the FCA.”
MPs Call for Rethink on Cryptocurrency Rules
A group of Conservative MPs have voiced concern that the UK’s rules around cryptocurrency are “relegating Britain to the sidelines” of the digital currency industry. In a letter to the Prime Minister, they urge the Financial Conduct Authority to end a ban on retail investors accessing cryptocurrency-related investment products such as derivatives and exchange-traded funds (ETFs). The 11 signatories argue that the ban is pushing investors towards “Wild West crypto exchanges” instead of reputable firms. They also highlight that the US allows crypto ETFs, while many “European and Anglosphere markets all provide their citizens with access to crypto exchange-traded products and funds.” In 2022, Rishi Sunak said he wanted to make the “UK a global hub for cryptoasset technology” and the MPs argue that ending the ban would “help to unlock that potential.”
POLITICS
No Budget Until September if Labour Wins
A Labour government will not deliver a Budget until September, shadow Chancellor Rachel Reeves has revealed, saying she would wait to receive a forecast from the Office for Budget Responsibility (OBR) before any fiscal statement. Ms Reeves noted that the OBR requires 10 weeks’ notice to provide an independent forecast ahead of a Budget.
PM: A Vote for the Tories is a Vote for Rate Cuts
Rishi Sunak says a vote for the Conservatives is a vote for lower interest rates, telling the Times that he shares the Bank of England’s optimism that the economy is “heading in the right direction” and that rate cuts were on the way. The Prime Minister said the Tories are “the party who has committed to bringing down inflation, which is a necessary condition for bringing down interest rates.”
Labour Can Rebuild Ties with City Regulators, Says Former FCA Chair
The former chair of the Financial Conduct Authority (FCA), Charles Randell, has claimed that if the Labour party is elected to government, it can rebuild ties with City regulators. Randell, who stepped down as chair of the FCA in 2021, stated that the Square Mile desires stability and predictability after a period of political point-scoring. Randell’s endorsement of Labour is likely to be beneficial for the party, which has been actively seeking support from the City. Randell added that he did not “expect Labour to agree with everything that independent regulators suggest, but there’s a chance to improve the quality of the dialogue and change the tone”. Labour’s plans for the City include shaking up financial regulators and streamlining the rulebook used by the FCA.
RETAIL
Shop Price Inflation Back to ‘Normal’ Levels
Shop price inflation has fallen to the lowest level since November 2021, according to analysis by the British Retail Consortium (BRC) and NielsenIQ. Price increases fell to 0.6% year-on-year in May, down from 0.8% in April. This is well below the peak of 9% recorded in May 2023. Over the past month, shop prices have risen by 0.2%, compared with a 0.3% contraction in April. Mike Watkins, head of retailer and business insight at NielsenIQ, said: “After a number of months of falling input prices, we are now seeing food inflation stabilise and retailers continue to pass on price cuts to shoppers.” BRC chief executive Helen Dickinson added: “Shop price inflation has returned to normal levels.”
Retail Sales Climb in May
Confederation of British Industry (CBI) data shows that retail sales have expanded at their quickest pace since December 2022. The CBI’s weighted balance of retail sales climbed to 8% in the year to May, up from minus 44% in April. Alpesh Paleja, lead economist at the CBI, said: “May’s increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near-term.” He added: “Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further.” The CBI said retailers expect sales to contract marginally over the next month. The report shows that employment in the retail sector fell in May and is expected to continue to do so in June.
AUTOMOTIVE
Car Production Declines
UK car production has fallen for a second consecutive month, with a 7% decline in April compared to the same month last year. The Society of Motor Manufacturers and Traders reported that 61,820 cars were built in April, with a 20% rise in production for the UK market but a 12.7% decline in production for overseas markets. This decline is attributed to manufacturers preparing for new models.
CLOSING THOUGHTS
As we conclude this week’s Panthera Consultancy Weekly Newsletter, we highlight the optimism coming from the Lloyds Bank’s latest business barometer index showing over 60% of businesses are expecting to raise output. Despite this we can also see from Iwoca’s survey that 59% of SME’s are now seeking lending from specialist lenders. This tells us the banks are only going further with their lack of support for the SME Market. This goes to show, working with a specialist business finance broker has only become more attractive as they will have access to a wealth of alternative lenders who are willing to support when the banks won’t.
If you’re interested in finding out how your business could obtain finance to join the 60% of businesses who are expecting to raise output, get in touch with us today and see what finance options could be available to you!
Email: info@pantheraconsultancy.com
Phone: 0208 132 6872
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
Email: Benjamin@pantheraconsultancy.com