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) 

Buy-to-let landlords expanding portfolios?

New research1 indicates that more than half (52%) of buy-to-let (BTL) landlords have been actively expanding their property portfolios over the past year, with 25% acquiring one property and an additional 27% acquiring multiple properties. 

Looking at the next twelve months, 26% intend to acquire a single property, while another 26% plan to expand their portfolios further by acquiring multiple properties. This optimistic outlook may be fuelled by confidence in the residential property market, with 74% expressing positivity for the next 12 months. 

The research also delved into the motivations driving portfolio expansion. The leading factor was increased tenant demand, cited by 31% of respondents, followed by having available capital (25%). Diversification across property types and regions was also a priority for many landlords, with 21% aiming to achieve this. Additionally, 20% sought properties with better Energy Performance Certificate (EPC) ratings. 

While growth is prevalent, a notable portion of landlords have been selling properties. In the past year, 31% have sold one or more properties, with 33% planning to do so in the coming year. Concerns regarding remortgaging due to rising interest rates topped the list of reasons for selling (35%), followed by worries about declining house prices (28%). Additionally, 23% sold properties to reinvest in better opportunities. 

1The Mortgage Lender, 2024 

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

Record levels of IHT receipts 

Figures released by HM Revenue & Customs (HMRC) show that IHT receipts have hit record levels while new data shows the taxman is hunting down thousands of families that have not paid the correct liability on inherited estates. 

Record sums 

In the first ten months of the 2023/24 financial year, HMRC collected £6.3bn in death duty receipts, £0.4bn more than during the same period of the previous fiscal year. This represents a 7% rise and suggests this year’s annual figure will comfortably surpass last year’s record-breaking total of £7.1bn. 

Frozen thresholds 

The increase continues an upward trajectory that has been evident in recent years, largely as a result of the nil-rate threshold being frozen at £325,000 for over a decade. This, combined with growth in property prices, has effectively dragged more households into the IHT net. 

Investigations rising 

Recent years have also seen record amounts of underpaid tax clawed back by HMRC through a specialist team targeting the estates of wealthy deceased individuals. Data obtained via a Freedom of 

Information request shows a total of 2,029 IHT investigations were opened between April and November 2023, with £172m recovered over that period as a result of targeted investigations. 

IHT concerns 

New research1 also suggests IHT is the number one financial concern among wealthy individuals. In total, the survey found that more than a third of wealthy Brits are worried about IHT, with notable increases in levels of concern reported across both the 25 to 34 and 55 to 65-year-old categories over the past year.  

Complex rules 

The rules surrounding IHT are notoriously complex and people therefore often require professional advice in order to find the most efficient solution for their personal circumstances. If you have any concerns or need advice in this area do get in touch; we’re always here to help. 

1RBC, 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. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

News in Review

‘A change in Bank Rate in June is neither ruled out nor a fait accompli” 

Last week, during their third meeting of the year, the Bank of England’s (BoE’s) Monetary Policy Committee (MPC) voted to retain Bank Rate at 5.25% by a majority of seven to two. Two members of the committee preferred to reduce the rate by 0.25 percentage points, to 5%.  

The decision to retain Bank Rate was widely expected. Marking its sixth pause in a row, Bank Rate has been held at its current level since August 2023. 

In its latest forecast, the Bank was positive on the prospects for the UK economy, predicting inflation will fall to its target level of 2% in the coming months and then to 1.9% in 2026, with economic growth expectations of 0.4% for Q1 2024 and 0.2% for Q2. 

The MPC minutes reiterate that monetary policy will need to remain restrictive for ‘sufficiently long’ to return inflation to target sustainably in the medium term in line with their remit. 

Looking ahead, with the next MPC meeting concluding on 20 June, BoE Governor Andrew Bailey commented, “Before our next meeting in June, we will have two full sets of data – for inflation, activity and the labour market – that will help us in making that judgement afresh. But, let me be clear, a change in Bank Rate in June is neither ruled out nor a fait accompli.” 

Economists are now divided on how far rates will fall in the second half of this year, and when the first rate cut may take place. 

Head of Economics at the Institute of Chartered Accountants in England and Wales (ICAEW), Suren Thiru, commented that the vote to keep Bank Rate unchanged was a missed opportunity to provide relief for “people struggling with their mortgage bills and businesses facing numerous cost pressures… Given the Bank is now forecasting inflation to fall more quickly, an interest rate cut by the end of the summer remains very much on the table.” 

Stronger growth than expected 

Official data released on Friday confirmed the UK rebounded out of recession with faster-than-expected growth in Q1. According to the Office for National Statistics (ONS), UK gross domestic product (GDP) is estimated to have risen by 0.6% in Q1, following two consecutive quarters of decline, and is the strongest growth rate for two years, since the fourth quarter of 2021, when it rose by 1.5%, as the country emerged from the pandemic. 

The data shows that growth in Q1 was driven by service industries, such as arts, hospitality and entertainment, as well as strength in other sectors including retail, public transport, haulage, health, and car manufacturing. An earlier Easter is likely to have supported growth in the quarter. 

Looking at the monthly data, Friday’s figures showed that GDP in March was 0.7% higher than a year earlier, far exceeding expectations of a 0.3% rise. Services output grew by 0.5% in March 2024, and was the largest contributor to the growth in GDP on both the month and the quarter. 

Construction output weighed on growth over both the quarter and the month, falling by 0.4% in March, and by 0.9% in the first quarter of the year. A decrease in new work contributed toward the decline. 

Unemployment rate rises 

The latest labour statistics from ONS show that the UK’s unemployment rate has risen to its highest level for almost a year, increasing to 4.3% between January and March, the highest since May to July last year. 

Jobs on offer in the UK dropped by 26,000 to 898,000 vacancies between February and April, meaning that more people are competing for the same jobs. Liz McKeown, ONS Director of Economic statistics said, “We continue to see tentative signs that the jobs market is cooling.” 

ONS data also shows that wage growth remained at 6%, whereas it had been expected to slow to 5.9% in the first three months of this year. This figure will be closely watched by the BoE when deciding if and when Bank Rate can be cut. 

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 (15 May 2024) 

In the news

Equity release trends 

According to the Equity Release Council1, total annual lending reached £2.6bn in 2023, compared to a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn). The total number of plans agreed last year was 26,119, a drop of 47% from 49,285 in 2022. The majority preference (53%) opted for drawdown lifetime mortgages, reversing the trend in 2022 when lump sum lifetime mortgages made up 52% of new product sales. 

Average property gain of over £100k 

An overwhelming majority of households (93%) sold their homes for more than their initial purchase price, according to recent research2. People who bought properties within the last two decades saw an average increase of £102,650 when selling up in 2023, marking the second-highest recorded figure. 

In total, sellers in 2023 collectively gained £103bn in value compared to their purchase prices. However, the average gross profit dropped by £10,300 or 9% compared to 2022, partly due to marginal house price decreases. 

According to estate agents Hamptons, the decrease in average gains is partly due to small house-price falls last year, alongside households opting to move sooner. Aneisha Beveridge, Head of Research at Hamptons, said, “Households rarely move when they’re faced with the prospect of selling their home for less than they paid. Generally, the chances of selling at a loss peak within the first few years of ownership. But for some Londoners, that stretches back to when parts of the market peaked in 2016.” 

1ERC, 2024 

2Hamptons, 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.