Optimistic days ahead

This year, summer brings hope of a better financial future as inflationary pressures recede and the economy continues to grow. It could therefore be an ideal opportunity to prioritise a range of pension-related issues in order to ensure brighter days do lie ahead. 

Pension withdrawals up 

Many people have faced significant financial challenges over the last few years. Recently released Financial Conduct Authority data covering 2022/23 highlights these difficulties, with the number of pension plans accessed for the first time up by 5%. However, as recent challenges begin to ease, it is hoped that, rather than dipping into pension savings, people’s focus will increasingly return to boosting their retirement pots and sorting out other pension-related concerns. 

Expression of wishes 

One pertinent issue relates to inheritance, with research1 showing that almost half of all UK pension savers have not considered who will inherit or otherwise benefit from their retirement savings. Since April’s Lifetime Allowance changes, decisions around pension beneficiaries have become more vital due to the way such pensions are taxed on receipt. It is therefore extremely worrying that the research also found over half of respondents had not completed an expression of wishes form, with a further one in ten unaware if their forms were up to date. 

Taxing issues 

Most people appreciate the tax advantages associated with pension contributions, but what is often less well-known is their potential to pass on wealth tax-efficiently. This means pensions can play an important role in supporting loved ones after you pass away. Pensions can also be advantageously used to navigate the Child Benefit trap, as pension contributions reduce taxable income and can thereby enable some people to avoid paying the Child Benefit Charge. 

Pension conversations 

We all appreciate the importance of devoting time to our pension arrangements now to ensure we reap the benefits later. If you need help with any retirement-related issues, we can talk through your options and make sure you are maximising your pension benefits. 

1Canada Life, 2024 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

Economic Review – June 2024

Prospect of rate cut moves closer 

While last month once again saw the Bank of England (BoE) leave interest rates unchanged at a 16-year high, the minutes to the Bank’s Monetary Policy Committee (MPC) meeting signalled a notable change in tone and economists now view a rate cut as the most likely outcome when the MPC next convenes. 

At its latest meeting, which concluded on 19 June, the MPC voted by a 7–2 majority to maintain Bank Rate at 5.25%. For the second month running, the two dissenting voices both called for an immediate quarter-point reduction while, for the first time, some other members described their thinking as being “finely balanced.” 

The minutes to the meeting also highlighted this potentially significant shift in stance, noting that the MPC will now be looking at whether ‘the risks from inflation persistence are receding.’ The minutes concluded, ‘On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level.’ 

Last month’s inflation statistics published by the Office for National Statistics (ONS) prior to the MPC announcement, revealed that the headline rate has now returned to its 2% target level for the first time in almost three years. In a statement released alongside the MPC decision, BoE Governor Andrew Bailey described that as “good news.” He also said that policymakers need to be sure inflation will remain low and added, “that’s why we’ve decided to hold rates for now.” 

July’s release of economic data, particularly in relation to wage growth and services inflation, is likely to prove pivotal to the next MPC decision which is due to be announced on 1 August. A recent Reuters survey, however, found that a large majority of economists now expect an imminent cut, with all but two of the 65 polled predicting an August rate reduction.  

Survey data signals slowing pace of growth 

Official data published last month revealed that the UK economy failed to grow in April, while survey evidence points to a more recent slowdown in private sector output due to rising uncertainty during the run up to the General Election. 

The latest monthly economic growth statistics released by ONS showed the UK economy flatlined in April, as most economists had predicted. Some sectors did report growth; services output, for instance, was up by 0.2%, a fourth consecutive monthly rise, with both the information and technology, and the professional and scientific industries reporting rapid expansion across the month. 

Other sectors, however, suffered a contraction, with ONS saying some were hit by April’s particularly wet weather. A number of retail businesses, for example, told the statistics agency that above average levels of rainfall had dented their trade during the month. Activity across the construction industries was believed to have been impacted by the wetter weather as well. 

More recent survey data also suggests private sector output is now growing at its slowest rate since the economy was in recession last year – preliminary data from the S&P Global/CIPS UK Purchasing Managers’ Index (PMI) revealed that its headline economic growth indicator fell to 51.7 in June from 53.0 in May, a larger decline than analysts had been expecting. While the latest figure does remain above the 50-threshold denoting growth in private sector output, it was the indicator’s lowest reading since November 2023. 

Commenting on the data, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “Flash PMI survey data for June signalled a slowing in the pace of economic growth. The slowdown in part reflects uncertainty around the business environment in the lead up to the General Election, with many firms seeing a hiatus in decision making pending clarity on various policies.”   

Markets (Data compiled by TOMD) 

As June drew to a close, global indices were mixed as a raft of economic data was released. Stronger-than-expected GDP data in the UK at month end fuelled speculation over the timing of interest rate cuts, while in the US, the latest inflation reading boosted market sentiment, and unemployment data came in below estimates. 

Although the FTSE 100 registered its first monthly decline in four months, the upward revision to Q1 GDP on 28 June supported sentiment around UK-focused equities at month end. The main UK index closed June on 8,164.12, a loss of 1.34% during the month, while the FTSE 250 closed the month 2.14% lower on 20,286.03. The FTSE AIM closed on 764.38, a loss of 5.14% in the month. The Euro Stoxx 50 closed June on 4,894.02, down 1.80%. In Japan, the Nikkei 225 closed the month on 39,583.08, a monthly gain of 2.85%. Meanwhile, in the US the Dow closed the month up 1.12% on 39,118.86, and the NASDAQ closed June up 5.96% on 17,732.60.  

On the foreign exchanges, the euro closed the month at €1.17 against sterling. The US dollar closed at $1.26 against sterling and at $1.07 against the euro.  

Gold closed June trading around $2,330.90 a troy ounce, a monthly loss of 0.74%. Brent crude closed the month trading at $84.78 a barrel, a gain during the month of 4.18%. The price rose during the month as indicators suggest an expanded military conflict in the Middle East, could lead to further disruption to the production of OPEC+ member Iran. 

Retail sales rebound strongly in May 

The latest official retail sales statistics revealed strong growth in sales volumes during May after heavy rain dampened activity in the previous month, although more recent survey data does suggest the retail environment remains challenging. 

ONS data published last month showed that total retail sales volumes rose by 2.9% in May, a strong bounce back from April’s 1.8% decline. ONS said sales volumes increased across most sectors, with clothing retailers and furniture stores enjoying a particularly strong rebound from the previous month’s weather-impacted figures. 

Evidence from the latest CBI Distributive Trades Survey, however, suggests May’s recovery has proved to be short-lived, with its headline measure of sales volumes in the year to June falling to -24% from +8% the previous month. While the CBI did note that unseasonably cold weather may have had an impact on June’s figures, the data certainly suggests that retailers still face a tough trading environment. 

CBI Interim Deputy Chief Economist Alpesh Paleja said, “Consumer fundamentals are improving, with inflation now at the Bank of England’s 2% target and real incomes rising. But it’s clear that households are still struggling with the legacies of the cost-of-living crisis, with the level of prices still historically high in some areas.” 

Financial challenges await new government 

Data released by ONS last month showed UK public sector debt now stands at its highest level for over 60 years, while the Institute for Fiscal Studies (IFS) has warned that the next government will face a fiscal ‘trilemma.’ 

The latest public sector finance statistics revealed that government borrowing totalled £15bn in May, the third highest amount ever recorded for that month. Although the figure was £800m higher than May last year, it did come in below analysts’ expectations and was £600m less than the Office for Budget Responsibility had predicted in its latest forecast. 

Despite this, the data also showed that public sector net debt as a percentage of economic output has now risen to 99.8%. This was up 3.7 percentage points from last May’s figure, leaving this measure of debt at its highest level since 1961. 

Analysis by the IFS has also highlighted the scale of the financial challenge awaiting whichever party wins the forthcoming General Election. The IFS said that, unless economic growth is stronger than expected, the incoming government will face a ‘trilemma,’ either having to raise taxes more than their manifestos imply, implement cuts to some areas of public spending or allow national debt to continue rising. 

All details are correct at the time of writing (1 July 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

News in Review 

“Taking the action wasn’t always easy, but we’ve got there and inflation is back to target” 

Data released by the Office for National Statistics (ONS) showed that for the first time in almost three years, the Consumer Prices Index (CPI) rate of inflation had returned to the 2% target in the 12 months to May, down from 2.3% in the 12 months to April. 

ONS cited food as the largest downward contributor, with motor fuels the largest upward contributor. Food prices eased for the fourteenth consecutive month, increasing by 1.7% in the year to May, down from 2.9% in the year to April, from a high in March last year of 19.2%, the highest annual rate for over 45 years. 

With the economy a key element of the election for voters, the Prime Minister hailed inflation falling back to target as “very good news… the last few years have been tough on everybody. I know that… taking the action wasn’t always easy, but we’ve got there and inflation is back to target.” 

Meanwhile, although Shadow Chancellor Rachel Reeves welcomed the fall in inflation, she added that the cost-of-living crisis is not over, “While inflation is down, of course, those higher prices still remain… Whether that’s the cost of the weekly food shop, the cost of the energy bills, or indeed people who are looking to re-mortgage this year or have seen their rents increase.” 

MPC vote to retain Bank Rate 

Last week, the Bank of England’s (BoE’s) Monetary Policy Committee (MPC) voted to retain Bank Rate at 5.25% for the seventh consecutive time, as widely expected. The MPC voted by a majority of 7-2 to maintain Bank Rate, with two committee members favouring reducing the rate by 0.25 percentage points to 5%.  

Economists had largely speculated that an interest rate reduction in the middle of an election campaign would be unlikely, although, the BoE said that had no bearing on their decision, ‘The committee noted that the timing of the General Election on 4 July was not relevant to its decision at this meeting, which would as usual be made on the basis of what was judged necessary to achieve the 2% inflation target sustainably in the medium term.’  

The MPC minutes reiterated that monetary policy will need to remain restrictive for ‘sufficiently long’ to return inflation to target sustainably in the medium term, ‘until the risk of inflation becoming embedded above the 2% target dissipates.’  BoE Governor Andrew Bailey commented, “It’s good news that inflation has returned to our 2% target. We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.” 

In its latest forecast, the Bank was positive on the prospects for the UK economy, estimating economic growth of 0.5% for Q1 2024, with a similar pace expected in Q2. Looking ahead, the next MPC meeting will conclude on 1 August. 

Election news 

Last week, Reform UK published its manifesto entitled ‘Our Contract with You.’ At the launch, Nigel Farage declared this “the immigration election,” with Reform UK’s policy document outlining a number of key pledges, including a freeze on “non-essential” immigration, leaving the European Convention on Human Rights within 100 days, raising employers’ National Insurance (NI) rates for foreign workers to 20% and scrapping net zero targets. Tax related pledges included reducing the main Corporation Tax rate to 15% in three years and abolishing business rates for small and medium-sized businesses (SMEs), to be paid for by encouraging benefit claimants back to work.  

Scottish National Party (SNP) leader John Swinney launched his party’s manifesto in Edinburgh last week, saying if the SNP won a majority of seats in the Scottish Government, they would commence “immediate negotiations” on Scottish independence talks. The NHS was a prime focus for the party, who outlined a Bill to keep the NHS in public hands, boost NHS England funding by £16bn, and to provide an extra £1.6bn each year to Scotland’s NHS. 

Ipsos published its first MRP (multi-level regression and post stratification) model of the 2024 General Election, predicting Labour could win 453 seats and the Conservatives 115, giving Labour a majority of 256. However, it believes 117 seats are still ‘too close to call.’  

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (26 June 2024) 

The real value of a survey

Nobody wants to pay too much for their home. During the home buying process, there are many causes of stress. Making sure you don’t overpay doesn’t need to be one. That’s because getting the right survey can give you peace of mind that you are paying a fair price. 

What is a survey? 

A survey is a detailed report which helps make potential buyers aware of any present issues or problems which may occur in the future. 

This can help with budgeting for any works required and help you renegotiate if there are any major concerns. Remember: a survey is not a valuation; it is a tool to help homebuyers make informed decisions. 

Surveys crucial in turbulent times 

House prices have been unpredictable in the last year. In times of economic uncertainty, surveys become even more important. When house prices have fallen, a survey can help clarify what represents real value. 

Value means something different to different people. For example, over two fifths would pay more for a property with a high EPC rating, research reveals1. This shows that getting the price right is 

personal. A survey is designed to help you do just that. 

More than simply one more cost  

Buying a home can feel like an accumulation of costs – a survey can feel like one more among many. That’s why it is important to factor in the survey as early in the buying process as possible. 

1Uswitch, 2023 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments

Residential Property Review – June 2024 

Housing market update 

The UK housing market continues to show modest signs of recovery, according to the latest data from Savills.  

Despite some house price growth, a significant upturn is considered unlikely until mortgage affordability improves.  

Buyer activity continues to improve, as the number of sales agreed in May was 10% higher than the 2017-2019 average, according to TwentyCI.  

The rental market remains relatively consistent. Data from Zoopla shows that, in April, annual UK rental growth was 6.6% – slightly lower than the 6.7% recorded in the previous month. The region with the strongest annual growth was the North East (9.5%), followed by Scotland (9.3%). Rental growth is accelerating in locations close to large cities, such as North Tyneside and Midlothian – more evidence that the pandemic’s ‘race for space’ appears to be in reverse.   

New homes in the capital – demand outstrips supply 

Demand for new builds in the capital is increasing, but supply is limited, attributable to high development costs.  

Knight Frank data indicates that confidence is picking up amongst London buyers, as the number of offers placed on new homes in April increased by 9% year-on-year, while viewings rose by 17%. Similarly, the number of prospective buyers who registered interest in purchasing a new build was 15 to 20% higher than the previous year for mid-to-upper markets.  

Despite this growing demand, the cost of building in the capital has put off some developers. As a result, new starts fell by 20% over a 12-month period and there are currently about 35,000 new homes being delivered per year – over 30% lower than the Mayor of London’s target of 52,500.  

How will the General Election affect the housing market?  

Ahead of the 2024 General Election, new homes are the unanimous focus of the manifestos when it comes to housing.  

If the Conservatives remain in government, Rishi Sunak aims to build 1.6 million new homes over the next five years – slightly more than the Labour Party’s target of 1.5 million and less than the Liberal Democrat’s promise of 380,000 new builds per year. Ed Davey stated that 150,000 of these will be social housing; Keir Starmer would also prioritise building new social rented homes. 

The Labour, Liberal Democrat and the Conservative manifestos all pledge to fully abolish Section 21 ‘no fault’ evictions. Davey also pledged to create a national register of licensed landlords and make three-year tenancies the default.  

If the Labour Party comes to power, they propose to increase the rate of Stamp Duty for non-UK residents. Meanwhile, the Conservatives would abolish Stamp Duty for first-time buyers (FTBs) on homes up to £425,000. To further support FTBs, Sunak promised a new and improved Help-to-Buy scheme. Similarly, the Labour manifesto pledged a permanent mortgage guarantee scheme. 

All details are correct at the time of writing (19 June 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

Commercial Property Review – June 2024 

Commercial trends of 2024 

Flexibility, sustainability and diversification are key trends in the commercial property market so far this year, according to PropertyWire. 

Flexible workspaces are increasingly in demand, reflecting the shift to hybrid working since the pandemic. Co-working spaces, quality buildings and adaptable offices are more popular, as are those in prime locations.  

Sustainability continues to be a priority, prompting landlords and developers to adopt eco-friendly practices. Eden, a new sustainable office space in Salford, is one of the developments leading the way; the 12-storey, 115,000 sq. ft building was designed to meet net zero targets. Features include air source heat pumps, a rainwater harvesting system and energy efficient lifts.  

Logistics and distribution centres are in demand due to the upturn in e-commerce. As the online retail market grows, high street units are having to diversify their offering to become more than just shops; some are now incorporating experiences, entertainment and restaurants.  

London lacking big deals  

April was another quiet month for the City investment market, according to Savills.  

At the end of April, the year-to-date turnover was £474.3m across 25 deals – 77% down on the previous year and 79% lower than the five-year average. Interestingly, the number of deals was only 18% less than the five-year average, indicating that fewer larger deals are bringing down the turnover volumes. In fact, the City has not had a deal above £100m so far this year.  

With a muted market, Savills believes investors could use this opportunity to take advantage of reduced competition, commenting, ‘It seems the time is ripe for investors to act on big ticket deals in London. By making the most of the market dynamics, unlocking undervalued assets, and harnessing historical insights, investors can position themselves to take advantage of this ever-evolving market landscape.’ 

Industrial and retail outperforming the office sector 

CBRE’s Monthly Index for April highlights that there is a positive outlook for the retail and industrial sector, while the office market experiences some challenges. 

The report found that, in April, retail capital values increased by 0.1%; standard shops were a key driver of this, recording 0.2% capital growth. Also, retail warehouse capital values rose by 0.1% and, for the first time since April 2023, shopping centre values did not decrease. 

As for the industrial sector, capital values were up 0.3% in April, with the South East region performing particularly well compared to the rest of the UK. 

The office sector did not fare so well, with total returns at -0.1%. Capital values of Outer London/M25 offices fell by 1.2%, causing a monthly decrease of 0.6% overall. However, office rental values did increase by 0.1%.  

Jennet Siebrits, Head of UK Research at CBRE, reflected, “Industrial and retail performance is a source of optimism for UK real estate investors. Both sectors exhibit steady rental growth, particularly industrial and have reported positive total returns in every month so far in 2024.” 

All details are correct at the time of writing (19 June 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

News in Review

“While there was no growth in April, it’s important to focus on the broader trend” 

The UK economy did not grow in April, official data released last Wednesday by the Office for National Statistics (ONS) revealed. The headline figure followed a month of wet weather, with ONS suggesting that the rain might have affected consumer spending.  

More positively, the services sector belied the trend and grew by 0.2%, a fourth consecutive monthly increase. Furthermore, real gross domestic product (GDP) rose by 0.7% in the three months to April, compared with the previous quarter. 

Growth in the first three months of 2024 had helped the UK economy exit recession. David Bharier, Head of Research at the British Chambers of Commerce (BCC), commented, “While there was no growth in April, it’s important to focus on the broader trend, rather than volatile monthly movements. Growth of 0.7% in the three months to April is positive news. 

He continued, “While the broader trend is ticking up, downside risks remain. Many businesses we speak to are still held back by skills shortages, high borrowing costs and trade barriers with the EU. Sectoral performance remains very imbalanced, with retail and hospitality sectors consistently reporting weaker growth.” 

  

Mortgage arrears rise for UK borrowers 

The UK’s total value of outstanding mortgage balances with arrears rose again in Q1 to reach its highest level since 2014, according to Bank of England (BoE) data released last week. 

The value of outstanding mortgage balances with arrears rose by 4.2% in Q1 2024. On an annual basis, this put total arrears 44.5% higher than a year earlier. 

The BoE’s Mortgage Lenders and Administrators Statistics revealed that the total value of outstanding mortgage balances with arrears is now £21.3bn. Many analysts maintain a positive tone, pointing to expected upcoming cuts to Bank Rate, which could ease the pressure on borrowers. 

More UK adults are ‘economically inactive’ 

ONS data showed the number of working-age adults considered economically inactive reached a nine-year high of 2.8 million, with 22% of adults aged 16 to 64 not actively looking for work. Since surging during the pandemic, the UK’s inactivity rate among adults has remained persistently high in the past two years. 

Meanwhile, the official unemployment rate confounded analysts by unexpectedly rising to 4.4% in the three months to April, its highest level for two and a half years. Conversely, as unemployment rose, the number of job vacancies fell by 9,000 to 904,000. 

And on the campaign trail… 

The major parties published their manifestos last week, outlining their intentions for the UK should they be elected on 4 July.  

Sir Ed Davey launched the Liberal Democrat manifesto entitled, ‘For a Fair Deal,’ with the NHS a key focal point. Pledges included giving unpaid carers the right to paid carers’ leave from work and providing 8,000 more GPs in England. Economic pledges from the party included reforming Capital Gains Tax (CGT), reversing banking sector tax cuts and raising the tax-free Personal Allowance. 

Rishi Sunak set out his ‘Clear plan, bold action, secure future’ manifesto pledging £17bn worth of tax cuts, to be funded by clamping down on tax avoidance and tempering welfare spending. Headline announcements included abolishing National Insurance (NI) contributions for the self-employed, along with a further two percentage point cut in employee NI contributions by 2027, plans to abolish Stamp Duty for first-time buyers on homes up to the value of £425,000 and the construction of 1.6 million new homes. The manifesto also confirmed proposals already announced during the campaign, including National Service, the State Pension triple lock and plans to halve immigration. 

The Labour Party’s manifesto placed wealth creation as their “number one priority,” according to Sir Keir Starmer, who announced intentions to recruit 6,500 new teachers, launch a new ‘Border Security Command’ to tackle immigration and plans to build 1.5 million new homes. Their manifesto promised no changes to personal tax rates, explaining its plans would be funded by charging VAT on private school fees, abolishing the non-dom tax status, increasing Stamp Duty for foreign buyers and clamping down on those who are underpaying tax by closing ‘loopholes’ in the windfall tax on oil and gas firms.  

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (19 June 2024) 

Investing – adopting an Olympic mindset

The countdown is well and truly underway to this summer’s Olympic and Paralympic Games in Paris when we are all sure to be watching in awe as the world’s leading elite athletes showcase their talents. And investors could boost their chances of success by emulating an Olympian’s mindset and thereby improving their financial wellbeing. 

Attributes of an Olympian 

Many of the attributes associated with successful Olympic or Paralympic athletes are the same as those required to be a successful investor. A growth mindset, for instance, is important, as is managing nerves, being confident and resilient, having a well-thought-out strategy, blocking out ‘noise’ or distractions, setting clear objectives and realistic attainable goals, displaying discipline, and making small alterations or rebalancing. 

The coach’s role 

There are also similarities in terms of the relationship between an athlete and their coach, and a financial adviser’s role with clients. Both relationships, for example, are based on trust and honesty, and rely on a coach or adviser imparting knowledge and experience. Indeed, the provision of quality financial advice, just like a good coaching relationship, should be empowering. 

Taking advice 

Just like elite athletes, clients who receive professional advice are typically better prepared, more focused, more likely to maintain a positive mindset and avoid behavioural mistakes that can derail any investor’s plans. So, make Olympic year the time you fully utilise the ongoing guidance and mentoring we can provide in order to ensure your investment plans stay firmly on track and give you the best chance of attaining your life goals. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

No plans to downsize for the majority of over 55s

Only one in seven non-retired homeowners over 55 plan to downsize after they stop working, a new study1 suggests. 

In a poll of 2,000 adults over the age of 55, half said they plan on staying in their current home after they retire. For those aged 71 to 75, the figure is 68%. 

No hassle, please 

The main barriers to downsizing include not wanting the hassle (37%), wariness about potential costs, including Stamp Duty (35%) and a perceived lack of suitable housing (26%). Meanwhile, three in ten said there were no barriers in place, suggesting they simply do not want to move. 

Of course, it’s your choice where you live. But downsizing can bring many benefits, such as freeing up some cash and saving you money on your bills in the long term. It may also be beneficial living in a property better suited to your lifestyle. 

Knock-on effects 

Low levels of downsizing can have an impact on supply levels across the property market. Analysts suggest it may prevent some growing families from finding suitably sized homes to move into. Some have also warned of a ‘ripple effect’ that could impact buyers further down the property ladder. 

Here to help 

If the ‘hassle’ of a house move is stopping you from downsizing, we can help with your mortgage and support you in the process. 

1Pegasus, 2024 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments 

News in Review

“As consumers gear up to spend more… there’s a brighter outlook for the coming months” 

Last Tuesday, figures from the latest Barclays Consumer Spend Report revealed that consumer card spending fell to a three-year low in May. As households continue to feel the squeeze, overall spending grew by just 1.0% for the month, its lowest rise since February 2021. 

Analysts lay the blame for lower discretionary purchases not only on cost-of-living concerns but also unseasonable levels of rainfall, which may have kept some shoppers off the high street. Sectors that performed especially poorly include takeaways and fast food, which experienced its first fall in the past four years. Meanwhile, supermarket spending growth also sank to its lowest point in two years. 

On a brighter note, the report revealed that, as consumers feel more optimistic about the latest inflation figures, three in 10 now plan to spend more once the weather improves. Karen Johnson, Head of Retail at Barclays, struck a cheerful tone when commenting on the figures. She said, “As consumers gear up to spend more with better weather, and with the Euros, Wimbledon, and Taylor Swift’s ‘Eras Tour’ on the horizon, there’s a brighter outlook for the coming months.” 

BCC says there is ‘life in the UK economy’ 

The UK economy is now forecast to grow faster than expected this year and next, according to upgraded figures from the British Chambers of Commerce (BCC) released last week. The BCC expects the economy to expand by 0.8% in 2024, above the 0.5% previously forecast. In 2025, the BCC estimates growth of 1.0%, raised from an earlier projection of 0.7%. 

Despite the small upwards revisions for 2024 and 2025, longer-term prospects are not much improved, the BCC noted. Indeed, the forecast for 2026 remains unchanged at 1.0%, with the BCC pointing to ‘global headwinds remaining, interest rates falling slowly and only a gradual expansion in consumer spending’ as the main reasons. 

Following a turbulent few years, acceleration in growth forecasts – however minor – is welcome. The revised figures follow better than expected economic performance at the start of 2024; having briefly fallen into a technical recession at the end of 2023, the UK economy is now on course for a slight recovery, analysts suggest. 

Another strong month for UK services sector 

More positive news came from the S&P Global UK Services PMI, which revealed last Wednesday that the UK services sector continued to perform solidly in May. Although some momentum had faded from the previous month, the index only slipped slightly from April’s 11-month high to settle at 52.9. This also represented the seventh consecutive month above the 50.0 neutral mark.  

The release revealed service companies feeling ‘strongly optimistic’ about the outlook for 2024. Notably, input cost inflation fell to its lowest level since February 2021, prompting some analysts to wonder whether the Bank of England (BoE) might cut interest rates in the near term.  

Commenting on the figures, Joe Hayes, Principal Economist at S&P Global Market Intelligence, said, “That’s now three months on the trot that selling price inflation in the services sector has eased. This will be very encouraging to the BoE’s Monetary Policy Committee and suggests the trajectory of services prices is moving in the right direction.” 

Eurozone rate cut 

Last week the European Central Bank (ECB) cut its main interest rate from 4% to 3.75%, following progress in successfully tackling inflation. Following Canada’s decision to reduce its official lending rate last week, ECB President Christine Lagarde said the inflation outlook had improved “markedly,” but cautioned inflation was likely to stay around the target level of 2% into 2025. She said, “We are not pre-committing to a particular rate path” but will keep interest rate policy “sufficiently restrictive” as required to bring inflation down. 

UK election 

On Friday night, a seven-party leaders’ debate took place, with Leader of the House of Commons, Conservative candidate Penny Mordaunt and Labour Deputy Leader Angela Rayner taking part on behalf of the Prime Minister and Sir Keir Starmer, respectively. Key issues debated included defence, immigration and tax. Earlier in the day the Prime Minister apologised for leaving D-Day 80th anniversary events early. The Liberal Democrats and Conservatives have released their manifestos, with Labour’s due on Thursday.  

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (12 June 2024)