AI & scams

Although there is much excitement surrounding the advent and development of artificial intelligence (AI), there are some serious risks involved – namely, the prevalence of scams that are becoming increasingly sophisticated.  

Types of scams  

There are a few main scams to be aware of: 

  • Deepfakes are essentially fake media content that is very believable. For example, a video clip of financial expert and broadcaster Martin Lewis was recently fabricated, aiming to convince viewers to part with their money. This AI software can also clone voices and use them to make fraudulent phone calls. In a recent survey1, 77% of those respondents who had been victims said they had lost money because of this kind of scam. 
  • Images and videos can be created of people to pass through security and verification checks, thus gaining access to bank accounts  
  • ChatGPT enables phishing scams to seem more convincing by making the tone more human and filtering out any spelling or grammatical errors.  

Who is at threat? 

Everyone risks falling victim to these scams, regardless of age. In fact, research2 has found that 48% of adults between the ages of 25 and 34 have experienced financial fraud, while only 28% of over 55s said the same. 

What can we do? 

Andrew Bailey, Governor of the Bank of England, commented, “The time to act to safeguard our society from AI-enabled fraud is now, and all organisations need to think carefully about how AI may create fraud risks for their business and their customers. This will require ongoing vigilance, including monitoring and the sharing of insight and best practice between firms and across sectors.” 

We understand that the threat of scams can feel overwhelming, especially when the capability of AI is constantly changing and developing. That’s why it’s important to question everything, equip yourself with knowledge so you’re not vulnerable and, if in doubt, get in touch for guidance. 

1McAfee, 2024 

2GFT UK 

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. 

Focusing on self-actualisation in retirement

To enjoy a financially secure retirement, it’s important to spend time doing some in-depth thinking well in advance to determine your goals and requirements in order to achieve the lifestyle you dream of. You need a robust financial plan. 

When thinking about the income you’ll need in retirement, many people find it helpful to think in terms of Maslow’s renowned Hierarchy of Needs. His pyramid has various levels of need that human motivations move through, starting with the physical requirements for human survival, and ending with mankind’s highest aspirations, reaching ‘self-actualisation’ at the apex of the pyramid. Adapting this approach to personal finance was pioneered in the US. Using this hierarchical approach in a personal finance context can be a useful tool in deciding how to plan your income in retirement. 

Survival income – This is the base of the pyramid and consists of the income you need to pay all your basic household expenses, your regular bills and running costs. 

Safety income – The next layer up, this is the amount you might need to meet life’s unexpected events, such as health and later-life care costs, loss of income and any emergency financial help you might want to give your family. 

Freedom income – This layer is all about assessing the likely cost of doing all those things that you never had time to do before you retired, including travel expenses, major purchases or indulging yourself in other ways. 

Self-actualisation 

Many people add a gift layer representing money they want to pass on to children and grandchildren during their lifetime, and some add a dream layer, their ultimate ‘bucket list,’ to the very top. The apex of ‘self-actualisation’ represents the ultimate in reaching your full potential, being self-fulfilled and enjoying peak experiences. Maslow described this level as the desire to accomplish everything that one can, and “to become everything one is capable of becoming.” 

By viewing your retirement finances in this way, you can gain a clear picture of how much money you’ll need to help you enjoy the retirement you’ve always wanted. We can build a clear and comprehensive strategy. 

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. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

News in Review

“The market appears to be showing signs of resilience” 

The UK experienced a modest rebound in house price growth in May, according to the latest Nationwide House Price Index, released on Friday. Prices rose by 0.4% month-on-month to reach an average house price of £264,249. The annual growth rate picked up to 1.3%, from 0.6% in April. 

The figures point to resilience in the housing market, with May’s gain reversing a 0.4% drop in the previous month. Wage growth and lower inflation contributed to renewed buyer confidence, analysts suggested. 

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said, “UK house prices increased by 0.4% in May, after taking account of seasonal effects. This resulted in a slight pickup in the annual rate of house price growth to 1.3% in April, from 0.6% the previous month.” He added, “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”   

There has also been positive news on homeownership rates for young adults, according to new research from the Institute for Fiscal Studies (IFS). After falling continuously from 2000 through to 2015, homeownership for those aged 25 to 34 has recovered to the level of 14 years ago, despite rising prices and interest rates. The figure for this age group rose by 6 percentage points to 39% in 2022/23, which is back to the level in 2010. However, the IFS warned the figure remains 20 percentage points lower than in 2000, adding, ‘The recovery has been concentrated among those on middle incomes.’ 

UK car production falls 

Figures released last Thursday by the Society of Motor Manufacturers and Traders (SMMT) showed that car production in the UK has fallen for a second consecutive month. 

Some 61,820 cars rolled off the production line in April, the SMMT revealed, down by 7% on the same month last year. Of these, around 14,000 were built for the UK, an increase of almost 20%. In contrast, cars built for export declined, with shipments to the European Union, China and Australia experiencing double-digit drops. 

Analysts attributed falling production to the winding down of existing models, as well as some plants transitioning to electric vehicle (EV) production. 

Mike Hawes, SMMT Chief Executive, commented, “With a General Election in a matter of weeks, the next government must ensure the conditions are right not just for the competitiveness of UK manufacturing, but for the investment required to transition the sector to a net-zero future.”  

US economy growth slower than expected  

The US economy grew slower than expected at the start of 2024, after an initial estimate of a 1.6% annualised growth rate was revised down to 1.3%. According to the US Bureau of Economic Analysis, the world’s largest economy, which has outperformed its peers over the past year, suffered from a widening trade deficit and a drop in consumption in the first three months of the year. The 1.3% growth rate compares to 3.4% annualised expansion recorded at the end of 2023 and was lower than the 2.4% that had been forecast by economists. Household consumption was reduced from an initial estimate of 2.5% to 2% in the revised figures and accounted for about half of the overall growth downgrade. 

Calls for financial engagement 

UK Finance has called on the next government to produce polices that will promote financial engagement, including financial education delivered via the school curriculum and a cross-government task force to tackle financial abuse. According to UK Finance, 80% of voters support better financial education at school. The lobby group is also calling for improved policies around frauds and scams. 

King Charles banknotes enter circulation 

The Bank of England will issue banknotes bearing the likeness of King Charles for the first time today. To minimise the environmental and financial impact of the change, new notes will only be printed to replace worn ones featuring her late Majesty, Queen Elizabeth. So, the public will begin to see the new King Charles notes very gradually. 

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 (5 June 2024) 

Making sure you have got your mortgage covered?

Taking out life insurance may not be a legal requirement if you have a mortgage, but it certainly is sensible to have. 

The benefits 

When applying for a mortgage, proof of cover could make you a stronger candidate in the eyes of a lender because they know that, in the event of your death, other members of your household would be protected. Therefore, not only does life insurance provide financial security in a hypothetical future, but it may also offer you some peace of mind knowing that your loved ones would be able to stay living in their home without debts to pay off. 

Who needs it? 

Regardless of your circumstances, life insurance is advisable for all mortgage holders – whether you’re a first-time buyer or moving up the property ladder and taking on a larger mortgage. Even those who are currently single with no dependants should consider it, as circumstances could change in future (e.g. by getting married or becoming a carer for a family member). 

Types of life insurance 

There are two main options to consider – decreasing term or level term life insurance. Decreasing term is often used by those with a repayment mortgage, as the potential payouts decrease over time to reflect the amount left to pay on the mortgage. With level term insurance, you decide how much cover you want, and your loved ones will get the full payout if your death occurs within the term. Unlike decreasing term, level term life insurance can cover the costs of more than just a mortgage. 

We can advise on the most suitable protection for your unique requirements. 

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

Wealth transfer gains momentum

Recently published research suggests the long-heralded ‘great wealth transfer’ is now firmly underway, which inevitably heightens the need for carefully considered intergenerational financial planning as assets continue to flow down the generations. 

The great transfer 

Dubbed by analysts the ‘great wealth transfer,’ the next two decades are set to witness the largest ever intergenerational transfer of wealth as baby boomers and Gen X pass on assets to their heirs. 

Gaining momentum 

A recent survey1 shows this transfer starting to gather momentum, with 2023 the first ever year in which billionaires amassed more wealth through inheritance than entrepreneurship. This trend is expected to continue in the coming years, with predictions millennials’ wealth will increase five-fold across the current decade, with significant levels of wealth passing to Gen Z too, according to research2. 

Continuing family legacies 

As the great wealth transfer progresses, each generation will clearly have their own views on legacy. The research did, however, find strong support for continuing current family legacies, with 60% of heirs planning for future generations to benefit from their wealth. 

Careful planning 

In addition, heirs were found to be conscious of the need to reshape and reposition their wealth in order to continue the family legacy, while they also appear to be taking a more holistic approach to the role accumulation of wealth plays in their lives. All of this suggests careful planning will be required if families are to successfully transfer wealth in a way that makes fair provision for all generations. 

1UBS Billionaire Ambitions Report, 2023 

2Coldwell Banker, 2019 

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. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

Economic Review – May 2024

UK growth rate at two-year high 

Last month’s release of first-quarter gross domestic product (GDP) statistics confirmed the UK economy has now exited the shallow recession entered during the latter half of last year, while survey evidence suggests private sector output has continued to expand across the past two months. 

The latest GDP data published by the Office for National Statistics (ONS) showed the UK economy grew by 0.6% during the January to March period. This figure was above all forecasts submitted to a Reuters poll of economists with the consensus prediction pointing to a 0.4% first quarter expansion and represents the fastest quarterly rate of growth since the final three months of 2021. 

ONS said that growth was driven by broad-based strength across the services sector with retail, public transport and haulage, and health all performing well; car manufacturers also enjoyed a particularly good quarter, although construction activity remained weak. In addition, the statistics agency noted that the first-quarter data was likely to have been boosted by Easter falling in March this year compared to April last year. 

Data from the closely-watched S&P Global/CIPS UK Purchasing Managers’ Index (PMI) suggests the recovery has continued in the second quarter as well. While May’s monthly release did reveal that the preliminary composite headline Index fell to 52.8 from 54.1 in April, this latest reading was still above the 50 threshold that denotes growth in private sector activity. 

Commenting on the findings, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The flash PMI survey data for May signalled a further expansion of UK business activity, suggesting the economy continues to recover from the mild recession seen late last year. The survey data are consistent with GDP rising by around 0.3% in the second quarter, with an encouraging revival of manufacturing accompanied by sustained, but slower, service sector growth.”  

Inflation data dampens early rate cut hopes 

Chances of the Bank of England (BoE) sanctioning a June interest rate cut have declined significantly following last month’s smaller-than-expected drop in the rate of inflation. 

Following its latest meeting, which concluded on 8 May, the BoE’s Monetary Policy Committee (MPC) voted by a seven to two majority to leave Bank Rate unchanged at 5.25%. The two dissenting voices, however, both preferred a quarter-point reduction and comments made by policymakers after the meeting did appear to suggest a first rate cut since 2020 was edging ever closer. 

Speaking just after announcing the MPC’s decision, BoE Governor Andrew Bailey made it clear that the Bank does need to see “more evidence” of slowing price rises before cutting rates. But he once again struck a relatively upbeat note on future reductions adding he was “optimistic” things were moving in the right direction. 

Comments subsequently made by BoE Deputy Governor Ben Broadbent also seemed to be potentially paving the way for rates to be cut soon. Speaking at a central banking conference, Mr Broadbent suggested that, if things continued to evolve in line with the Bank’s forecasts, then it was “possible” rates could be cut “some time over the summer.” 

Last month’s release of inflation data though appears to have dashed hopes of an imminent cut. Although the headline annual CPI rate did fall sharply – down from 3.2% in March to 2.3% in April, primarily due to a large drop in household energy tariffs – the decline was less than had been expected, with both the BoE and economists polled by Reuters predicting a drop to 2.1%. 

The next two MPC announcements are scheduled for 20 June and 1 August. While an August rate cut does still appear to be a distinct possibility, most analysts now agree that a June reduction looks increasingly unlikely.  

Markets (Data compiled by TOMD) 

At the end of May, equities were in mixed territory as new inflation data from the eurozone and the US was digested by investors. Inflation stateside came in as expected, while eurozone data was higher than anticipated, fuelling speculation over the pace of rate cuts in both regions. 

In the UK, the FTSE 100 index closed May on 8,275.38, a gain of 1.61% during the month, while the FTSE 250 closed the month 3.83% higher on 20,730.12. The FTSE AIM closed on 805.79, a gain of 5.92% in the month. The Euro Stoxx 50 closed the month on 4,983.67, up 1.27%. In Japan, the Nikkei 225 closed May on 38,487.90, a small monthly gain of 0.21%. At month end, the index traded higher as reports circulated of plans for major investments by government-backed pension funds and other large institutional investors. 

Across the pond, at the end of May, newly released government data showed that during Q1 the US economy grew at a slower pace than initially estimated and higher than expected jobless claims also weighed on sentiment. The Dow closed May up 2.30% on 38,686.32, meanwhile the NASDAQ closed the month up 6.88% on 16,735.02.  

On the foreign exchanges, the euro closed the month at €1.17 against sterling. The US dollar closed at $1.27 against sterling and at $1.08 against the euro.  

Brent crude closed May trading at $81.38 a barrel, a loss during the month of 5.69%. The price dipped in May primarily due to concerns over future demand. Gold closed the month trading around $2,348 a troy ounce, a monthly gain of 1.79%.  

Consumer sentiment continues to rise 

Although official retail sales statistics for April did reveal a larger than expected decline in sales volumes, more recent survey data does point to an improving consumer outlook as households become more optimistic about their finances. 

According to ONS data published last month, total retail sales volumes fell by 2.3% in April following a 0.2% decline in March. ONS said sales fell across most sectors as poor weather reduced footfall but added that it was confident its seasonally adjusted figures had accounted for the timing of the Easter holidays. 

Recently released survey data, though, does point to growing optimism for future retail prospects. May’s CBI Distributive Trades Survey, for instance, reported a balance of +8 in its year-on-year sales volumes measure following April’s slump to -44. The CBI said May’s rise added to “the swathe of data pointing to an improvement in activity over the near-term” and suggested that falling inflation and continuing real wage growth will contribute to a “healthier consumer outlook.”  

Data from the latest GfK consumer confidence index also revealed another rise in consumer sentiment. Indeed, May’s headline figure reached its highest level for nearly two-and-a-half years, as households took an increasingly positive view of their personal finances. 

Wage growth remains resilient 

Earnings statistics published last month showed that wage growth remains strong despite the recent slowing jobs market, although analysts do expect pay growth to moderate over the coming months. 

The latest ONS figures show that average weekly earnings excluding bonuses rose at an annual rate of 6.0% in the first three months of 2024. This figure was the same as recorded in the previous three-month period, defying analysts’ expectations of a slight dip to 5.9%. After adjusting for CPI inflation, regular pay increased by 2.4% on the year, the largest rise in real earnings for over two years. 

A survey released last month by the Recruitment and Employment Confederation suggests earnings growth remained high in April, with pay rates for temporary staff rising at their fastest rate in nearly a year. One factor driving this increase was April’s 9.8% minimum wage rise.  

Research recently published by the Chartered Institute of Personnel and Development (CIPD) also found that employer expectations for private sector wage rises remain at the same level as reported three months ago. The CIPD did though say they expect employers to adjust their pay plans in the coming months as inflation falls and the labour market continues to slow. 

All details are correct at the time of writing (3 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

“I will fight for every vote” 

Last Wednesday, hot on the heels of fresh inflation data, Prime Minister Rishi Sunak took to a rain-soaked Downing Street podium to announce the date of the General Election – which is due to be held on 4 July. The countdown is on. The statement signals the start of intense campaigning for 650 Parliamentary seats across the country.  

Mr. Sunak vowed, “Over the next few weeks I will fight for every vote,“ as he endeavors to win a fifth term in office for the Conservative party. Sir Keir Starmer responded by saying that it was “time for change,” while Ed Davey, Leader of the Liberal Democrats said the election is a chance to “deliver the change the public is crying out for.” 

Parliament was suspended on Friday, before formally shutting down on Thursday (30 May) in advance of an official five-week election campaign. This left the government limited time to push through any outstanding legislation before the end of the parliamentary session on 24 May. 

The Finance Bill, which includes taxation plans as outlined in the Spring Budget, was passed, while the Renters Reform Bill was dropped. This Bill would have brought changes to the private rental sector, including rent rise regulation.  

Party leaders and MPs hit the campaign trail with vengeance ahead of the bank holiday weekend. In the coming weeks, each party will release their manifestos, outlining key pledges and their intentions if they form a government – essentially their key priorities. Focus areas are likely to be the economy, immigration, security and defence, crime, the NHS, climate, housing, tax, pensions and education. 

The Royal Family has postponed engagements ‘which may appear to divert attention or distract from the election campaign,’ according to the Palace. 

Inflation closer to target 

With an improving economic picture a likely election trail theme for the Conservatives, it came as no coincidence that the election announcement was made on the day that new inflation data from the Office for National Statistics (ONS) showed the annual Consumer Prices Index (CPI) rose by 2.3% in the year to April 2024, down from 3.2% in the year to March 2024, in touching distance of the Bank of England’s (BoE’s) 2% target. The lowest inflation level in almost three years, ONS noted that falling electricity and gas prices resulted in the largest downward contributions to the monthly change in CPI annual rates. From a monthly perspective, CPI rose by 0.3% in April 2024, compared with a rise of 1.2% in April last year. 

The Prime Minister said in a statement, ‘Today marks a major moment for the economy, with inflation back to normal. This is proof that the plan is working and that the difficult decisions we have taken are paying off. Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for everyone.’ 

Markets and retail sales  

The surprise election announcement was made after UK markets closed last Wednesday, but on Thursday the FTSE 100 slipped as weaker banking and utility stocks weighed. Last Wednesday, sterling reached a two-month high but tempered as the week progressed. 

On Friday, poor UK retail sales weighed on the market, with data for April showing a worse than expected monthly fall of 2.3%, as bad weather and early Easter holidays impacted. Economists had widely expected a modest 0.4% decline in the month. 

After reviewing the retail data from the ONS, Director of Insight at the British Retail Consortium, Kris Hamer, spoke about the prospects for the retail sector in the coming months, “With summer around the corner, and inflation fast approaching the Bank of England’s 2% target, retailers are hopeful that consumer confidence will improve, and spending will pick up once again. Retail is crucial to healthy local economies, and if the next government wants to boost growth and jobs in left behind regions, it must help unlock retail investment right across the country. With a General Election fast approaching, political parties must ensure their manifestos detail how they will support retail, the three million people it employs, and the 60 million people it serves.”  

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 (29 May 2024) 

Residential Property Review – May 2024

Housing market latest  

The property market continues to find its feet after a difficult 2023, with buyers remaining cautious due to the higher cost of borrowing.    

Mortgage rates may not be as high as they were last summer, but they are still elevated. While most experts agree that Bank Rate will be cut this year, there is uncertainty surrounding when this will happen. The Bank of England reported an increase in agreed sales resulting in mortgage approvals reaching their highest level in 18 months in March.  

Price sensitivity remains among buyers, causing a slight dip in house prices in April, according to Nationwide. However, property experts Savills still envisage growth of 2.5% in 2024, and buyer confidence is expected to pick up once interest rates fall. This should close the widening gap between supply and demand, as sellers are currently returning to the market at a faster rate than buyers.  

Annual rental growth across the UK was 6.9% according to Zoopla, with Scotland and the North East regions showing growth rates of 9.6% and 9.3% respectively.  

Dip in prime London residential market 

The prime market has been feeling the effects of higher mortgage rates, with the capital experiencing a significant slump.  

According to data from Knight Frank, annual price growth in prime central London fell to -2.6% in April – the lowest figure in three years. Prime outer London did not fare as badly, with a smaller annual decrease of -1.2%. Knight Frank speculated that the weak growth may have been exacerbated by recently announced rule changes for individuals with non-domicile tax status.   

On a positive note, supply in London has risen, with instructions rising by 10% between January and April of this year.  

   

Affordability challenges in southern England  

The divide in market activity between the south of England and the rest of the UK is becoming more evident.  

The disparity can be traced back to the 2008 global crisis; the London property market bounced back afterwards and took southern England with it. By 2014, house prices in the capital were increasing at an annual rate of 20% according to Zoopla – an exponential growth rate unmatched by the rest of the country.  

As a result, there is now significant disparity in housing affordability across the UK – data from USwitch shows that, in 2023, the average first-time buyer in Greater London had a deposit of £108,848. This is over three times more than those buying in the North East, who put down an average deposit of £29,740.  

Zoopla’s Executive Director of Research, Richard Donnell commented, “With mortgage rates unlikely to get much lower in the short term, income growth is going to have to do the hard work in resetting affordability across southern England.” 

All details are correct at the time of writing (22 May 2024) 

Commercial Property Review – May 2024

Central London office market – a Q1 update 

Data from Jones Lang LaSalle (JLL) shows that the central London office market had a slightly weaker start to the year. 

January to March saw the lowest quarterly leasing activity since Q1 2021, with 1.5m sq. ft transacted. This is nearly a third (31%) lower than the Q1 10-year average of 2.2m sq. ft. 

The banking and finance sector led most of the leasing activity, accounting for over a quarter (28%) of the occupier take-up. Transactions from Investec and Wise Payments contributed to the sector’s domination, as they secured leases at 30 Gresham Street and Worship Square.   

Although occupier demand in Central London was 33% higher than the long-term average in Q1, supply decreased for the second consecutive quarter.  

Investment volumes in the capital were also much lower than usual at a total of £1.2bn – 46% less than Q1 2023. Rental rates are stable, with prime rents in the City remaining at £79.50 per sq ft. 

UK commercial market exceeds expectations 

The UK commercial market exceeded expectations in Q1, largely driven by a strong March.  

Investment volumes saw a monthly increase of 56% in March, hitting £4.7bn according to Savills – the highest point since March last year. This brings total volumes for Q1 to £10.7bn, exceeding previous expectations, and is the second quarter in a row with rising volumes. Savills expect the second half of 2024 will see a further rise in activity, prompted by expected inward movements.  

Savills has identified London as Europe’s most resilient city in their latest Resilient Cities Index. England’s capital is ranked third in the world, placed behind New York and Tokyo, performing particularly well on its tech ecosystem and knowledge economy – two of the four core metrics that Savills used to examine 490 cities.   

  

Amazon’s new robot-powered fulfilment centre 

Amazon is set to build a £500m next-generation warehouse in Northampton. 

The new building is expected to be around 2m sq. ft, with three floors of robotics that will pick customer orders. Located on the SEGRO Logistics Park at junction 15 of the M1, Amazon said the new development will create 1,400 new jobs when it is ready for use in 2026. This figure will increase to over 2,000 over the first three years of opening.  

Amazon’s regional director, Neil Travis, commented, “The East Midlands is an important region for Amazon, with more than 6,000 small and medium-sized enterprise selling partners”. Since 2010, the conglomerate has invested over £4bn in the East Midlands and more than £56bn in the UK. Louise Wall, CEO of Northamptonshire Chamber of Commerce, welcomed the plans, saying, “This is a significant endorsement of the strategic location of the SEGRO Logistics Park Northampton and the importance of our region’s role in the UK logistics industry.” 

 

All details are correct at the time of writing (22 May 2024) 

News in Review

“The sheer scale of this near three-year inflation shock has reshaped the economy” 

New research from the Resolution Foundation has shone a light on the impact of inflation on the UK economy. The prolonged spike in inflation has ‘left British households spending less and saving more’ as elevated prices have affected spending behaviour, living standards and public finances. 

Interestingly, contrary to expectations that households would look to borrow or dip into their savings to deal with rising prices, the research highlights that people have focused on saving rather than spending, cutting their consumption by more than their incomes have reduced. 

The economic think tank attributes this ‘surprise savings boost’ is due to households reducing the amount they spend on energy, food and luxury items, in particular.  

When compared to the final quarter of 2019, real household disposable incomes have fallen by 1.1%, or £280 per year, with real spending falling much further, reducing by 4.7% or £1,200 annually. The Resolution Foundation says the difference between the two has been ploughed into savings, adding that during Q4 last year, families saved 6% of their disposable incomes, representing the highest rate (excluding the pandemic) in over 30 years.  

The report did note that as prices have gradually eased over the last year from their peak (in October 2022), ‘almost all of the financial windfall from falling energy prices’ has been allocated to funds for going on holiday or going out, ‘while spending on goods has not recovered.’ People are therefore choosing to prioritise spending on experiences and travel over buying goods or items.  

James Smith, Research Director at the Resolution Foundation, commented on the findings, “The sheer scale of this near three-year inflation shock has reshaped the economy and public finances, and changed what people do with their money… The crisis has made us poorer, with the sharp rise in the cost of essentials hitting lower-income families hardest. It has also turned us from a nation of spenders to a nation of savers, with credit card spending falling by 13% and families saving around £54bn a year more than we might have expected. While this high inflation phase maybe largely behind us, its legacy will be felt well into the future.” 

The next set of inflation data from the Office for National Statistics (ONS) is due to be released on 22 May. It will be interesting to see how close it is to the Bank of England’s 2% target. 

Pace of price increases slows in the US 

Last week the US Bureau of Labor Statistics reported that inflation, as measured by the change in the Consumer Price Index (CPI), was 3.4% on a yearly basis in April, down from 3.5% in March. In line with market expectations, the mild fall in CPI is unlikely to resolve debate about the Federal Reserve’s next steps regarding interest rates. The majority of the increase can be attributed to petrol costs and higher rents.  

Eurozone registers growth in Q1 

During Q1 2024, the eurozone experienced economic growth of just 0.3%, according to new data from Eurostat. Following two quarters of contraction, placing the euro area in a technical recession, this latest data shows the recession has been exited. Despite gross domestic product expanding in Q1, it was half the pace of the UK’s 0.6% expansion in the same period. From a regional perspective, Germany and France both grew by 0.2% in Q1, with Italy experiencing growth of 0.3% and Spain 0.7%. 

More data from Eurostat last week showed annual inflation in the eurozone reached 2.4% in April, matching the level recorded in March, in line with expectations.  

The European Commission believes that the European Central Bank’s (ECB’s) 2% target will be met in the latter half of next year. Paolo Gentiloni, the EU’s Economy Commissioner concurs, “We believe we have turned a corner… We expect an uptick in growth this year and further acceleration in 2025. Meanwhile inflation is set to fall further and reach the ECB target next year.” 

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 (22 May 2024)