Economic Review – July 2024

UK growth stronger than expected 

Figures released last month by the Office for National Statistics (ONS) showed the UK economy grew faster in May than had been predicted, while survey evidence points to a more recent post-election pick-up in business activity. 

The latest gross domestic product (GDP) statistics revealed that economic output rose by 0.4% in May, twice the level that had been forecast in a Reuters poll of economists. May’s figure also represented a strong rebound from the zero-growth rate recorded in April, with a broad-based increase in output as the services, manufacturing and construction sectors all posted positive rates of growth. 

ONS also noted that growth was relatively strong in the three months to May, with GDP rising by 0.9% in comparison to the previous three-month period. This represents the UK economy’s fastest rate of growth for more than two years. 

Evidence from a closely watched economic survey also suggests private sector output picked up last month following a lull in the run-up to July’s General Election. The preliminary headline growth indicator from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) stood at 52.7 in July, slightly ahead of analysts’ expectations and up from a six-month low of 52.3 in June. Manufacturing output was particularly strong, with this sector expanding at its fastest rate in almost two and a half years. 

Commenting on the findings, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The flash PMI survey data for July signal an encouraging start to the second half of the year, with output, order books and employment all growing at faster rates amid rebounding business confidence. The first post-election business survey paints a welcoming picture for the new government, with companies operating across manufacturing and services having gained optimism about the future and reporting a renewed surge in demand.”  

Fresh signs of cooling jobs market 

Last month’s release of labour market statistics revealed further signs of a softening in the UK jobs market with pay growth easing and another drop in the overall number of vacancies. 

Recently released ONS figures showed that average weekly earnings excluding bonuses rose at an annual rate of 5.7% in the three months to May. Although this was in line with analysts’ expectations, it did represent a modest decline from the 6.0% recorded during the previous three-month period and was the slowest reported rate of pay growth since the summer of 2022. 

ONS said the latest release suggested pay growth is now showing ‘signs of slowing again’ although it also pointed out that, in real terms, wage growth still stands at a two-and-a-half-year high. Indeed, after adjusting for inflation using the Consumer Prices Index including owner occupiers’ housing costs, regular pay rose by 2.5% in the three months to May. 

The data also revealed a further fall in the number of job vacancies, with 30,000 fewer reported in the April–June period compared to the previous three months. While at 889,000, the total is still significantly higher than pre-pandemic levels, this latest fall was the 24th successive monthly decline in the overall level of vacancies. 

ONS highlighted other signs of ‘cooling’ in the labour market as well, with growth in the number of employees on the payroll said to be ‘weakening over the medium term.’ Additionally, while the latest release did show the unemployment rate unchanged at 4.4%, ONS noted that the rate has been ‘gradually increasing.’ 

The statistics agency also provided an update on its plans to improve reliability of the labour market data. A switch to a new version of its Labour Force Survey, which had been due to take place in September, has now been delayed until next year.  

Markets (Data compiled by TOMD) 

On the last day of July, US equities were supported as investors contemplated the latest move from the Federal Reserve to retain rates, with indicators from Fed Chair Jerome Powell that a September cut “could be on the table.” 

The tech-oriented NASDAQ responded positively after a challenging few days as initial earnings from some tech mega caps disappointed. The NASDAQ closed July down 0.75% on 17,599.40, while the Dow Jones closed the month up 4.41% on 40,842.79. 

The UK’s blue-chip FTSE 100 had a boost on 31 July, with a series of strong headline earnings supporting, while traders await the Bank of England’s next interest rate decision. The index closed the month on 8,367.98, a gain of 2.50% during July, while the FTSE 250 closed the month 6.48% higher on 21,600.71. The FTSE AIM closed on 787.02, a gain of 2.96% in the month. The Euro Stoxx 50 closed July on 4,872.94, down 0.43%. The Japanese Nikkei 225 closed the month on 39,101.82, a monthly loss of 1.22%.  

On the foreign exchanges, the euro closed the month at €1.18 against sterling. The US dollar closed at $1.28 against sterling and at $1.08 against the euro.  

Brent crude closed July trading at $80.91 a barrel, a loss over the month of 4.56%. With Middle East conflicts escalating, crude prices were impacted as markets closely watch geopolitical developments. Gold closed the month trading at $2,426.30 a troy ounce, a monthly gain of 4.09%.  

Headline inflation rate holds steady 

Consumer price statistics published last month by ONS showed that the UK headline rate of inflation was unchanged in June defying analysts’ expectations of a slight fall. 

According to the latest inflation figures, the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – remained at 2.0% in June. This was marginally above the 1.9% consensus forecast taken from a Reuters poll of economists. 

The largest downward pressure on June’s CPI rate came from the clothing and footwear sector, which ONS said was due to a higher level of discounting in this year’s summer sales compared to 2023. Hotel prices, however, rose by a significantly greater extent this June than last year, while a comparatively smaller fall in the costs of second-hand cars also put upward pressure on the headline rate. 

Just prior to release of June’s data, the International Monetary Fund (IMF) warned that the UK was among a number of countries witnessing some ‘persistence’ in inflation, particularly in relation to services inflation. The IMF added that this was ‘complicating monetary policy normalisation’ with the ‘upside risks to inflation’ raising the prospects of interest rates staying ‘higher for even longer.’ 

Cooler weather hits retail sector 

The latest batch of official retail sales statistics revealed a decline in sales volumes after unseasonably cool weather deterred shoppers, while more recent survey data suggests the retail environment remains challenging. 

Figures released last month by ONS showed that total retail sales volumes fell by 1.2% in June, following strong growth during May. ONS said June saw a decline across most sectors, particularly those sensitive to weather changes such as department stores and clothes shops, with retailers blaming poor weather and low footfall, as well as election uncertainty, for dampening sales. 

Evidence from the latest CBI Distributive Trades Survey shows trading conditions have remained difficult, with its headline measure of sales volumes in the year to July dropping to -43% from -24% the previous month. The CBI described July as a ‘disappointing’ month for retailers, blaming a combination of ‘unfavourable weather conditions’ and ‘ongoing market uncertainty.’ 

The survey also found that the retail sector expects the weak outlook to continue this month, although August’s fall in sales volumes is forecast to be at a slower rate (-32%). The CBI also noted some glimmers of optimism, with a number of retailers expressing hopes for ‘an improvement in market conditions post-general election.’  

All details are correct at the time of writing (1 August 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

“Last Week’s Kings Speech… has the potential to give businesses the confidence they need to grow, invest and drive economic growth” 

Although the latest Confederation of British Industry (CBI) Business Trends Survey showed manufacturer optimism tempered slightly in July, there is an expectation that output is set to increase over the next quarter, with overall sector growth predictions now at their strongest since March 2022. 

Looking ahead, investment intentions have strengthened and total new orders are expected to be stable, with stocks of work in progress set to rise at their fastest pace in over two years. CBI Lead Economist, Ben Jones, commented, “Sentiment among manufacturers has cooled a little over the past few months, as output growth consistently underperformed expectations, but the near-term outlook remains positive amid an ongoing recovery in the wider UK economy… Last week’s King’s Speech, with welcome measures to reform planning and speed up approvals for major infrastructure projects, has the potential to give businesses the confidence they need to grow, invest and drive economic growth.” 

Chancellor’s economic statement 

On Monday, Rachel Reeves made a statement to the House of Commons following a spending audit which identified a “forecast overspend” for this year of £21.9bn. The main announcements included: 

  • spending cuts worth £5.5bn this year, rising to £8.1bn next year 
  • scrapping Winter Fuel Payments for around 10 million pensioners who aren’t on means-tested benefits   
  • cancelling the adult social care charging reforms that were due to come into effect in October 2025 
  • most NHS workers, teachers and members of the armed forces will get above-inflation pay rises of 5.5% to 6%  
  • offering junior doctors in England a two-year pay deal worth 22% on average, in a bid to halt strike action 
  • VAT at 20% will be levied on private school fees from 1 January 2025 
  • non-domiciled tax status will be replaced with a new residence-based regime from April 2025 
  • the windfall tax on profits from energy and gas companies will rise by 3% from November. 

India trade talks 

Last week, Foreign Secretary David Lammy travelled to India to kick-start ministerial talks and meet with prominent business leaders, in an effort to secure a free trade agreement. Referring to India as an ‘indispensable partner,’ the government is keen to work hard to reset Britain’s relationship, just a matter of weeks into the new Labour administration. With India soon to be the world’s third largest economy, working toward securing a deal would be significant. 

Is cash king? 

New data from UK Finance has shown that last year 1.5 million adults favoured using money for transactions, the first rise since before the pandemic, likely due to people using cash to carefully manage their finances during the cost-of-living crisis. Last year, of the 48 billion payments made, six billion were made using cash, while paying with a debit card was the most common method, representing 51% of all transactions. 

Contactless payments leapfrogged direct debits as the third most popular payment method. The data also showed that most young people chose to make payments using their watches or smartphones, with 72% of 18 to 24-year-olds choosing this payment method. Older generations are yet to catch up, with only 27% of 45 to 54-year-olds using mobile contactless methods, reducing to 8% of those aged over 65. 

The future is electric 

The latest car manufacturing data from the Society of Motor Manufacturers and Traders (SMMT) has highlighted a dip in production of 7.6% in the first six months of the year, as the focus turns to electric models. A total of 416,074 cars were manufactured in H1 2024, 34,094 less than Jan-June last year. A decline of 26.6% was measured in June due to a series of model changes, an expected reduction as manufacturers ‘retool lines to make electrified models’ following £23.7bn of investment.  

SMMT Chief Executive, Mike Hawes, commented on the recent data and future for the industry, “The UK auto industry is moving at pace to build the next generation of electric vehicles – a transition that can be a growth engine for the entire British economy. The new government’s commitments to gigafactories, a decarbonised energy supply and a faster planning system will help boost our competitiveness and sustain employment in a sector that delivers well paid, skilled jobs nationwide.” 

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 (31 July 2024) 

The equity release market – “green shoots”

According to a lifetime mortgage lender, one in five of their new equity release plans in Q1 were taken out by homeowners with properties worth over £550,0001. 

When asked why they were releasing equity, 22% of customers said they planned to spend the unlocked cash on improving their home. Less than 20% of borrowers wanted to repay mortgages and debts, meanwhile 15% were putting the money towards holidays. 

Are consumers regaining confidence?  

The equity release market is showing some signs of improvement after a slow 2023. In the first three months of this year, there was a 4% quarterly increase in the number of new and returning customers using equity release products2. Existing customers seem to be more confident than those who are new to the market, as returners drove a 6% increase in drawdown activity in Q1. 

What’s in store? 

David Burrowes, Chair of the Equity Release Council, predicted, “As we look to the rest of 2024, we are confident that the green shoots that we are starting to see will germinate and the market will return to growth.” 

Talk to us 

If you’re considering releasing equity on your home, get in touch. Equity release isn’t the right solution for everyone and there could be other options which may be more suitable for you. Professional advice is essential. 

1Pure Retirement, 2024, 2ERC, 2024 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. Think carefully before securing other debts against your home. Equity released from your home will be secured against it. 

ISAs: a quarter century strong

Since being launched on 6 April 1999 as successor to PEPs and TESSAs, the Individual Savings Account (ISA) has become an integral part of the UK savings and investment landscape. 

Worth celebrating 

By any measure, the humble ISA has been a huge success. The latest HMRC figures show that more than 22 million UK adults have one, with the combined market value of these accounts standing at over £740bn. Their principal benefit is that holders do not have to pay tax on dividends, interest or capital growth; indeed, in total, ISAs will collectively save investors around £7bn in tax this year. 

Maxed out 

Estimates1 suggest that anyone who invested the maximum stocks and shares annual ISA allowance each year over the last quarter of a century could, depending on the performance of their chosen investments, have accumulated an investment pot worth around £900,000.  

The evidence also suggests that people who invested early in a tax year were likely to have amassed a larger amount than those who waited until the end – in other words, it’s time in the market that counts rather than timing the market. 

Make the most of your allowance 

For some people though, little and often is the preferred way to invest in ISAs and this approach can certainly amount to significant sums being saved as well. Indeed, whether investing a lump sum or saving on a regular basis, the real key is making sure you utilise as much as possible (having regard for other aspects of your current and future finances) of your ISA allowance each year. 

1Vanguard, 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. 

Limiting ‘home bias’

Does your investment portfolio suffer from too much ‘home bias’? It’s natural for investors to stay close to home when thinking about investing, contemplating well-known UK companies or UK-focused funds rather than looking further afield. But if your portfolio becomes too heavily concentrated in the UK, you risk missing out on valuable diversification benefits and better potential returns elsewhere.  

The drawbacks of home bias  

One of the biggest reasons to avoid home bias is that it limits your portfolio’s growth potential. Investing with a global perspective opens up your portfolio to a world of different countries, industries and companies to invest in, potentially leading to higher returns over time. Importantly, investing globally means you’re more likely to gain exposure to high-growth sectors or companies that are not always present in your domestic market, whereas sticking with the UK means narrowing your opportunities, even if you own some outstanding local companies.  

The benefits of diversification  

At the same time, home bias in a portfolio breaks one of the biggest investment rules: diversification. Spreading your portfolio across different asset classes, countries and companies is one of the simplest – yet most effective – ways to mitigate risk within your portfolio and helps you achieve more consistent returns over time. Studies and historical data show that including international investments in a portfolio can lead to better risk-adjusted returns due to diversification benefits, though geopolitical risks must be considered. Global markets offer a wider range of asset classes and reduce your vulnerability to economic downturns specific to your home country.  

However, over-diversification is a risk to be wary of too! It occurs when additional investments diminish returns without lowering risk significantly. Regular reviews and rebalancing help maintain a well-diversified portfolio and manage any potential concentration risk that may occur over time. Ready to invest? Recent research suggests that some Britons are starting to save more despite the cost-of-living crisis1. Now might be the right time to start thinking about investing if you have some money on the sidelines.  

1Aldermore, 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. 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

“I am determined to create wealth for people up and down the country” 

The government’s legislative agenda was set out in the King’s Speech last Wednesday. Delivered at the State Opening of Parliament, the government set out a package of bills it intends to introduce to Parliament in the coming sessions and months, in addition to outlining various policy priorities which don’t require legislation. 

As anticipated, the government continued its theme of growth, with Prime Minister Keir Starmer saying the focus of the Speech was on national renewal and growing the economy, reiterating his intention to “take the brakes off Britain,” before adding, “I am determined to create wealth for people up and down the country – it is the only way our country can progress, and my government is focused on supporting that aspiration.” 

In addition to widely expected bills including those on employment rights, planning and infrastructure, immigration and border security, devolution, renters’ rights, nationalising rail and bus services, climate change, reforming the House of Lords and the National Wealth Fund (NWF), a new Pension Schemes Bill was announced and confirmation of the manifesto pledge to add 20% VAT on private school fees to fund 6,500 new teachers.  

The Pension Schemes Bill is intended to improve outcomes for people in retirement, aiming to support over 15 million people save more in their private sector pension schemes, ensuring the average earner has over £11,000 more in their pension pot by the time they retire. Measures include addressing poorly performing default funds and consolidating multiple small pension pots. 

Former Pensions Minister, Steve Webb, commented on the bill, saying it “very much represents ‘business as usual’ when it comes to pensions policy. There appears to be nothing in the legislation that so far represents a distinctively ‘Labour Party approach’ to pensions, and a Conservative minister could happily have brought forward this legislation.” He continued, “It will take time before we see how the new government’s agenda differs from that of its predecessor, but this does mean that any distinctive policies will have to await legislation later in this Parliament and may take time to have effect.” 

Over the weekend, Chancellor Rachel Reeves announced a landmark pensions review which will include unlocking the investment potential of the £360bn Local Government Pensions Scheme and a review of the £2bn spent on associated fees. The Chancellor commented “The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. There is no time to waste.” 

New law – OBR power 

To avoid a repeat of the September 2022 mini-Budget, when previous Chancellor Kwasi Kwarteng announced £45bn of unfunded tax cuts, a new bill was announced to prevent any future government from sidelining the UK’s independent forecaster, the Office for Budget Responsibility (OBR), from assessing its economic plans. Powers will be given to the OBR to make judgements on any major taxation or spending announcements, with the intention of improving investor confidence and boosting economic growth.  

Inflation news 

New data from the Office for National Statistics (ONS) has shown that Consumer Prices Index (CPI) inflation held steady at 2.0% in June, replicating the 2.0% recorded in May. The latest figures show the largest downward contribution came from clothing and footwear.  

Director of Insight at the British Retail Consortium, Kris Hamer, commented, “While we should celebrate the end of high inflation, which has dogged the UK for two years, many of the factors that caused it lurk in the background. Energy prices have fallen from peak, but the UK’s reliance on imported energy remains a vulnerability. Similarly, the impact of climate change on harvests at home and abroad, as well as rising geopolitical tensions, could increase commodity prices and translate into higher inflation in the future.” 

Biden ends re-election campaign 

On Sunday Joe Biden announced that he will not run for re-election in November, saying, ‘It has been the greatest honor of my life to serve as your President. And while it has been my intention to seek  

re-election, I believe it is in the best interests of my party and the country for me to stand down and to focus solely on fulfilling my duties as president for the remainder of my term.’ Joe Biden has endorsed Kamala Harris for President.  

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 (24 July 2024) 

Commercial Property Market Review – July 2024

A report from Carter Jonas indicates some growth in commercial markets recently 

According to MSCI, annual retail rental growth was 0.9% in May – the highest annual growth rate since 2016. While rental values have grown modestly since 2022, values are still 17% lower than the peak seen in 2018.  

In the retail warehouse subsector, rental values increased by 1.3% in the year to May 2024. Meanwhile, shopping centre rental values continue to drop with an annual decrease of 1.5% reported in the year to May.  

With regards to the office sector, average rental growth was recorded at 2.5%, with the central London market moving ahead of the south east and regional markets. Despite their cost, high-quality office spaces are in high demand as they are perceived to help to improve employee wellbeing and attract new recruits.  

There is limited supply of new units in many key markets, including the industrial sector. However, occupiers are expected to sublease if they have surplus space, which should boost supply.   

How is the market faring in Scotland? 

Scottish investors seem to be treading carefully as the commercial property market has seen a dip in sales this year.  

According to Knight Frank data, almost £750m was invested in Scottish commercial property in H1 2024 – down 19% when compared with the same period last year. Retail property made up 51% of the total investment volume, followed by hotels (19%) and offices (16%).  

The most active buyers were real estate investment trusts (REITs) and listed property companies, who accounted for 32% of investment volumes, while international investors made up 30%. 

Despite the fall, there has been a spread of different investors this year, which is promising. Head of Scotland Commercial Property at Knight Frank, Alasdair Steele, commented, “Over the last decade international buyers have come to account for the majority of investment in Scotland, but in the year to date there has been a much more even share, with institutional investors buying as well as selling, alongside increased interest from private equity and property companies.” 

Large offices difficult to sell in the capital  

Large London office buildings have become very difficult to sell, as investors are deterred by high interest rates and the move to hybrid working, according to research. 

Data from JLL has found that central London office sales total £2.5bn so far this year – 28% lower than in 2023. The City of London used to see deals topping £1bn, but in H1, only a handful of office buildings over £100m have been sold, according to CoStar.  

An MSCI index indicates that 64% of investors would make a loss if they sold their London offices now. Office landlords struggling to sell include GPE and Derwent, who have reportedly not had high enough offers on their priciest buildings.  

New Bond Street drives West End investment market  

According to Savills, sales in the West End investment market were muted in May with only six transactions, worth a total of £166m. 

So far this year, there have been 51 deals totalling £1.83bn – 40% of these assets were worth less than £20m. There is £2.3bn of available supply, with only seven options above £100m.   

Four trades have taken place at New Bond Street in 2024, accounting for 22% of this year’s cumulative investment volumes. Savills notes, ‘The street’s defensive investment characteristics, including high letability prospects and robust rental growth forecasts, is a key driver for investors seeking long-term wealth preservation.’ 

In the most recent transaction, the virtual freehold interest in 126-127 New Bond Street was acquired by Weybourne, having previously been owned by a private investor in Hong Kong. It is understood to be priced at £71m.  

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. 

All details are correct at the time of writing (18 July 2024) 

Residential Property Review – July 2024

A new Labour government – what next for housing?  

Following the Labour Party’s landslide election win, what changes might be in store for the UK housing market?  

In the Prime Minister’s introduction to the King’s Speech on 17 July, Sir Keir Starmer stated “Too many people currently live with the threat of insecurity and injustice, and so we will make sure everyone can grow up in the secure housing they deserve. We will introduce tough new protections for renters, end no-fault evictions and raise standards to make sure homes are safe for people to live in.”  

Several key Bills relevant to the housing market were announced:  

  • Renters’ Rights Bill – rent caps and longer-term tenancy agreements to stabilise the rental market  
  • Planning and Infrastructure Bill – simplified planning procedures and infrastructure funding  
  • Draft Leasehold and Commonhold Reform Bill – abolishment of ground rent and simplification of leasehold extensions and freehold purchases. 

Housing market update 

Completions and house prices rose in June, but buyer activity fell as the nation awaits a cut in Bank Rate.  

The start of 2024 saw a boost in sales agreed, resulting in positive effects being seen in June, with the highest number of completed transactions since March 2023, according to HMRC.  

However, a slight decline in mortgage approvals and sales agreed indicate that buyer activity has waned halfway through 2024. Savills report that supply of homes has continued to increase, thus widening the gap between supply and demand. Buyer confidence should be restored once mortgage affordability improves and is dependent on Bank Rate reducing, which Oxford Economics predict will happen in August.  

UK annual rental growth fell to 5.8% in May according to Zoopla – down on the 6.6% recorded in April. Commuter belt regions continue to show the strongest growth, particularly in the north of England. 

BTL landlords intend to raise rents 

Many buy-to-let (BTL) landlords plan to raise their rents within the next year, according to a survey by Landbay.  

Nearly 85% of respondents intend to increase rents over the next 12 months, with 37% of this group planning to put rents up by between 6% and 10%. Meanwhile, 36% said they would raise rents by up to 5% and a further 8% of BTL landlords will put them up by between 11% and 19%. The reasons cited for the increases included higher interest rates and increased operating costs.  

According to the survey, half of the landlords raising rents self-manage their properties, 27% use an estate agent and a fifth rely on a professional management company. The survey also found that 42% of landlords have between four and ten properties, while 28% own at least 20 rental properties.  

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. 

All details are correct at the time of writing (18 July 2024) 

News in Review

“We need to go further and faster if we are to fix the foundations of our economy” 

Last week, Chancellor Rachel Reeves announced the launch of a National Wealth Fund (NWF), which has been created to increase investment in the UK. A key Labour manifesto promise, the Chancellor pledged £7.3bn of state funding to “unlock investment” in UK growth industries. 

The funding will be allocated through the UK Infrastructure Bank, alongside existing monies, while the British Business Bank will be reformed to help initiate institutional capital in the UK. British Business Bank Chief Executive, Louis Taylor, said, “We expect the fund to create a single coherent governmental offer for businesses and a compelling proposition for investors that will help mobilise billions.”  

A NWF task force has been assembled, the inaugural meeting of which was attended last week by Ms Reeves, Energy Secretary Ed Miliband and former Bank of England Governor Mark Carney. Further details on the fund will be outlined ahead of a global investment summit later in the year. The new government intends to legislate to make the fund a permanent institution. 

At the meeting, the Chancellor commented, “This new government is getting on with the job of delivering economic growth. I have been clear that there is no time to waste… We need to go further and faster if we are to fix the foundations of our economy to rebuild Britain and make every part of our country better off… Britain is open for business – and the work of change has begun.” 

GDP uptick 

Recently released growth figures have shown the UK economy grew by 0.4% in May, following a flat reading the previous month. The data from the Office for National Statistics (ONS) highlights a rebound in the service sector as a key contributor, growing by 1.1% in the three months to May, the strongest three-monthly growth rate since December 2021. Growth in the sector was widespread, with output increasing in 10 of the 14 sub-sectors. 

Exceeding expectations from a poll of economists of 0.2% growth for the month, sterling rose on the news last Thursday, to reach its highest level against the US dollar since early March. 

Housing activity 

The new UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS) has shown optimism in the housing market has reached ‘the highest level since January 2022,’ on the back of the General Election. Over the next quarter, the RICS survey highlighted 20% of respondents are expecting a recovery in residential sales, the highest figure since January 2022. The survey states, ‘The outlook does appear to be brightening somewhat, with near-term sales expectations improving noticeably.’ This can be partly attributed to confidence in the newly elected government, which has committed to deliver 1.5 million homes over the next five years. 

A net balance of +54 survey respondents anticipate house prices will continue their ascent over the next year. New buyer enquiries show a net balance reading of -7% in June, signaling a ‘modest weakening’ in demand, the third consecutive month in which enquiries have slowed. 

Senior Economist at RICS, Tarrant Parsons spoke of potential improvements in the sector, “There are some factors emerging now that could support a recovery in the months ahead. If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates. In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.” 

Euros boost the economy 

Although the result didn’t go in England’s favour on Sunday, there is some good news for the economy, with expectations of a £3.1bn economic boost over the last month as Euros excitement gripped the nation. Before the final, those preparing to watch the match spent an estimated £405m, with an estimated £280.1m spent in supermarkets alone, as viewers stocked up on last-minute food and drink. Over the weekend, Tesco predicted selling over one million pizzas, 180,000 packs of burgers and four million packs of beer. Pubs and bars estimate a £120m revenue boost with fans turning out to cheer on the Three Lions. 

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 (17 July 2024) 

Off on holiday? Leave your home fully insured

Are you looking forward to a long holiday this summer? Don’t spoil the fun and relaxation; make sure you leave your home fully insured. 

Inform your insurance provider 

You may think that it doesn’t make a difference whether you go on holiday for two weeks, a month, or more. However, most insurers require you to notify them if your primary home will be vacant for at least 30 days. In this instance, it is likely you will need to take out an extra layer of cover called unoccupied property insurance. Failing to do so may invalidate your policy, leaving you and your home unprotected. 

Proceed (and post) with caution 

We understand the desire to share snaps of your holiday on social media. Before you do so, be mindful that insurers expect you to take reasonable care to ensure the safety and security of your home. Since live holiday updates show people that your home is probably unoccupied, you could be putting your home and its insurance at risk. 

Safety tips 

With burglaries more common during the summer months, here are a few ideas for keeping your home secure: 

  • Lock all windows, doors and gates 
  • Save the holiday posts until you return home 
  • Ask a neighbour to put your bins away after they are collected 
  • Cancel any deliveries so they don’t pile up 
  • Leave keys with someone you trust; to make the house seem occupied, they could turn lights on/ off, close the curtains, remove post from the letterbox, or use your driveway. 

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