Commercial Property Review – April 2024

Commercial property market update 

Latest research from Cluttons indicates that vacancy rates hit 4.1% at the end of 2023 – up from 3.8% in September.  

This is partly due to e-commerce activity remaining strong and the demand for buildings to meet net zero standards. Vacancies are expected to keep increasing as supply continues to be released into the market.  

Meanwhile, rental growth is easing across the UK; at the end of last year, the annual growth of asking rents in London was 3.5% – significantly less than the peak of 10% in Q2 of 2022. Experts hope that this slowdown will cause the commercial property market in the capital to pick up. Industrial yields are more stable, rising to above 4% in London and 6.9% in Manchester. Industrial equivalent yields have risen to 6.5% across the UK, which is likely to bring in investors. 

Retrofitting older buildings 

With industry standards rising, investors and occupiers in the UK logistics market are facing pressure to retrofit older properties to keep up with the high quality of new builds. If older buildings are not improved now, they risk being unusable in the coming years.  

The reports states that the ‘flight to quality of demand has, inevitably, started to weigh on the letting prospects of older, poorer-quality second-hand stock.’ 

With the government intent on decarbonising the economy, the focus on Energy Performance Certificates (EPC) and Minimum Energy Efficiency Standards (MEES) have risen to prominence across all sectors of the commercial property market. 

By 2027, the minimum EPC rating for existing commercial properties will be C, a building rating below this will be considered unsaleable and unlettable. While a few years later, in 2033, standards are likely to tighten (currently under consultation), applying to any property with an EPC rating under B. The report summarises, ‘While landlords will be wary of the tightening standards, retrofitting provides an excellent opportunity to meet these standards and future-proof warehouse assets.’ 

Major London skyscraper now 95% let  

The flagship London office scheme of AXA IM Alts – 22 Bishopsgate – is now 95% let.  

The state-of-the-art building close to Liverpool Street is owned by AXA IM Alts on behalf of multiple investors. Global software company, UiPath, and a London-based service provider have both signed 10-year leases, totalling 35,495 sq. ft. 

Completed in 2020, 22 Bishopsgate has not appeared to suffer from the shift to flexible working, as AXA IM Alts say they are heading towards full occupancy. The investment managers reported that ‘leasing momentum at the building has remained robust’ – in the past year, around 112,000 sq. ft. of space has been leased and there is strong interest in the 70,000 sq. ft. that remains vacant.   

Hilton enters luxury lifestyle market  

Hilton have made their first move into the luxury lifestyle market with the acquisition of a majority controlling interest in Sydell Group, owner of NoMad hotels. 

Hilton reportedly aims to develop up to 100 NoMad hotels internationally, with 10 sites already in advanced discussion stages with Sydell. Hilton will lead on the development of NoMad hotels while Sydell will remain responsible for branding, design and management.  

As part of the deal, Hilton will take control of the NoMad’s flagship hotel in London, situated in London’s Bow Street Magistrates Court building. 

Chris Silcock, President, Global Brands and Commercial Services for Hilton commented, “By pairing an already proven brand concept that’s ready for expansion with the power of Hilton’s commercial engine, we are accelerating our ability to drive growth in the luxury lifestyle segment.” 

This acquisition is part of Hilton’s plans to expand globally; earlier this year, the firm partnered with Small Luxury Hotels of the World (SLH), an association that inspects and verifies a curated collection of boutique accommodation. Hilton said they expect to increase their portfolio of luxury properties to 600-700 over the next few years.  

All details are correct at the time of writing (17 April 2024) 

News in Review

“The economy is turning a corner”

Last week, positive news came in the form of the latest UK gross domestic product (GDP) data from the Office for National Statistics (ONS) which showed the economy grew by 0.1% in February. This extends the economic recovery after growth in January was revised up to 0.3% from 0.2%.

Economic growth in February was led by an uptick in the UK’s production industry, which rose by 1.1% in the month, compared to a fall of 0.3% in January. Growth in the service sector, including hospitality and leisure activities, was also evident, alongside public transport and haulage, which also registered growth in the month. It’s likely growth would also have been supported by reductions in National Insurance, providing households with increased confidence in their spending and finances.

Despite a challenging month for retail and construction, impacted by the fourth wettest February on record, ONS Director of Economics Statistics, Liz McKeown said the latest data showed, “widespread growth across manufacturing, particularly in the car sector,” while “services also grew a little, with public transport and haulage and telecommunications having strong months.”

When asked about the economic data, Jeremy Hunt said the new figures were a “welcome sign that the economy is turning a corner… we can build on this progress if we stick to our plan.”

A spring in the step of the property market

The latest residential housing survey from the Royal Institute of Chartered Surveyors (RICS) shows buyer demand continued to rise in March with a net balance of +8% of respondents experiencing an increase in new buyer enquiries during the month. This is the most positive result on this indicator since February 2022. Respondents noted an uptick in new listings, increasing for the fourth consecutive month (+13%), while +13% predict increased sales volumes during the next three months, up from +6% in February. On the back of improved market conditions, the survey indicates sentiment is gradually improving. Respondents note a stabilisation in house prices, following falls last year.

Senior Economist at RICS, Tarrant Parsons, commented, “Near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21.”

US inflation creeps higher

Rising costs of housing, clothing, fuel and dining out pushed the US rate of inflation higher in February, according to the latest data from the Labor Department. US consumer prices accelerated faster-than-expected in March, as the challenge to reduce inflation continues. Over the 12 months to March, prices rose 3.5%, up from 3.2% in February. This backward step is likely to impact the central bank’s next interest rate decision. If inflation remains higher than the Federal Reserve is comfortable with, a rate cut could be less likely.

Small business expectations

A recent small business survey of UK firms has highlighted an optimistic mood amongst business owners and freelancers this year, with 66% reporting that they expect to do better this year than last, whilst 32% plan to start a new business. The findings from Atom Content Marketing, reveals a significant number of owners expect their business to outperform the economy in 2024, with growth a key ambition for UK SMEs. Key concerns for the year ahead include funding, cashflow, political change and work-life balance.

Cash is King

Last week, Bank of England (BoE) Governor, Andrew Bailey, presented King Charles III with new banknotes featuring his image. The presentation at Buckingham Palace follows the tradition of the monarch receiving the first issues of new banknotes, issued with the serial number 00001.

The new banknotes will be issued on 5 June 2024 by the BoE. The portrait of the King will appear on existing designs of all four banknotes (£5, £10, £20 and £50). People will still be able to use all polymer banknotes featuring the portrait of Her late Majesty, Queen Elizabeth II as they will remain legal tender, co-circulating alongside King Charles III notes.

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 April 2024)

Crafting your retirement strategy

Have you developed a retirement strategy yet? Whether you’re nearing retirement, or you still have many years of your working life ahead, careful planning is essential to secure financial stability and peace of mind when you stop working. 

Active planning is important 

According to a recent report1, individuals on average begin actively planning for retirement around the age of 36. At this age, 63% of respondents expressed confidence in their financial decision-making abilities, a notable increase compared to younger demographics where only 56% share the same level of confidence. 

With more than a decade of work experience under their belt by age 36, the ‘age of responsibility’ arrives for many people, with increasing awareness of the importance of financial planning, including actively thinking about their retirement. 

Whatever your age, a well-thought-out retirement strategy is a must! 

Decades to go? 

Younger individuals can afford to adopt a more aggressive investment approach with their pension pot, embracing riskier assets for potentially higher returns over time, if they are comfortable doing so. Although this strategy does involve exposure to short-term market fluctuations, the longer investment horizon allows ample time for recovery from any downturns (during which monthly pension contributions may be invested at the cheaper asset prices). 

If you’re closer to retirement 

For those on the cusp of retirement in the next few years, a prudent approach involves creating a smooth, non-volatile investment profile which minimises risk for the first five to ten years of retirement, with the remainder invested in more volatile funds which have the potential to grow over the longer term. This approach should help to shield your pension pot from the unpredictable nature of market volatility, as witnessed during events like the pandemic or financial crashes. By maintaining a stable portfolio for the initial years of retirement, you minimise the risk, thus safeguarding your financial wellbeing. 

How about the ‘inbetweeners’?  

For those falling between these two extremes, a balanced and risk-managed approach is advisable. The strategy here is to aim for a balanced mix of stable and more volatile investments, aligned to your risk tolerance and personal financial goals. Diversifying your portfolio across various asset classes helps mitigate risk while providing the potential for growth. 

The importance of rebalancing  

Regular portfolio rebalancing is vital for a sound retirement strategy. Market fluctuations and varying asset performances can cause your portfolio to deviate from its original allocation over time. Without intervention, this drift could lead to unintended asset concentration and increased risk exposure. 

1Standard Life, 2024 

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

Adding value to your home this spring

If you’re looking to sell this year, you might be wondering how to add extra value to your home before listing. It’s not always obvious, though, what are the best ways to do this, so it is easy to become fearful of sinking money into a project that might not increase the sale price. 

Fortunately, research by an estate agent comparison website1 has revealed some of the best things it believes you can do to have a good chance of a price boost. Here are four ideas: 

Home / garden office 

The rise of hybrid working has made home offices increasingly desirable. The research suggests that converting a spare bedroom into a purpose-made office or creating office space in the garden can provide a boost of about £9,500. At around £12,000, this can be a costly improvement, but might add around 7.5% (roughly £21,500 for an average UK house) to your home’s market value. 

Deep clean 

A good old-fashioned clean is a very cheap way to add value! For less than £1,000, you can make your house sparkle, and with an estimated 2.8% added to the market value of your home, a deep clean can be a great investment. Of course, if you take on the cleaning yourself, you could save even more! 

Repaint and redecorate 

This isn’t guaranteed to make money since colour schemes and home décor are highly subjective. However, the research claims that a good redecoration, for a cost of about £3,000, can add 3.1%  to the property’s value, which means a profit of around £6,000 for an average priced home. Focus on the rooms most in need of a freshen up to minimise costs and maximise gains. 

EPC improvements 

Improving a lower-rated home’s Energy Performance Certificate (EPC) to at least a C rating will add about 3% to the market value. This won’t come cheap, though, with an estimated cost just over £6,000, leaving you with a possible profit of around £2,500. So, whether it is worthwhile will depend on your specific improvements and how far you can increase the rating. 

1GetAgent.co.uk, 2023 

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

In the news

UK M&A activity drops nearly a fifth in 2023 

UK M&A activity in 2023 fell below 2022 levels as economic headwinds continued to affect the number of deals completed in the year, according to PwC’s latest Global M&A Trends 2024 Outlook. In total, the UK saw 3,628 deals across 2023, compared to 4,362 the previous year, a 17% decline. The Technology, Media and Telecommunications (TMT) sector saw the most activity for 2023 (955 deals), accounting for just over a quarter of total output for the year. 

Gen X impacted by emotional trading 

A survey1 delving into the trading psychology of new traders has revealed that the demographic most likely to have their trading decisions consistently influenced by emotions were 41 to 60-year-olds (Gen X). Over a third (35.4%) of the Gen X group considered emotions to be a significant factor in their trading approach, which compares to 10.1% of the 18 to 24-year-olds surveyed. 

BRICS gets a boost 

BRICS, the alliance of major developing countries, gained five new members this year – Saudi Arabia, Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE). The population of the expanded group is around 3.5bn or 45% of the world’s inhabitants. The combined members’ economies are worth over $28.5tn, about 28% of the global economy. Originally coined as an asset class in 2001, the original members Brazil, Russia, India and China (BRIC), were later joined by South Africa in 2010 to become the BRICS acronym we know today. Following the Russian invasion of Ukraine, many BRICS indexes dropped Russia from their portfolios. 

1City Index, 2024 

News in Review

“Shop price inflation eased to the lowest level since December 2021”

New data from the British Retail Consortium (BRC) has revealed that shop price inflation has reduced to its lowest level in over three years. Recordings for the first week of March show an easing in annual price growth to 1.3%, a considerable reduction on the February reading of 2.5%, and well below the three-month average rate of 2.2%.

It’s lowest reading since January 2022, non-food inflation registered 0.2%, while food inflation tempered from 5% in February to 3.7% in March, it’s tenth consecutive monthly decline.

Chief Executive of the BRC, Helen Dickinson, commented on the latest data set, “Shop price inflation eased to the lowest level since December 2021 last month as retailers continued to compete fiercely to bring prices down for their customers. While Easter treats were more expensive than in previous years due to high global cocoa and sugar prices, retailers provided cracking deals on popular chocolates, which led to price falls compared to the previous month.”

Referencing a new raft of challenges for retailers, as the threat of inflation recedes, Mrs Dickinson continued, “While these figures are good news for consumers, from this month, retailers face significant increased cost pressures that could put progress on bringing down inflation at risk. These costs include a 6.7% business rates rise, ill-thought-out recycling proposals, and new border checks – all at the same time as the largest rise to the National Living Wage on record. The industry needs pro-growth government policy that supports investment and helps keep down prices for households up and down the country.”

Brexit import charges revealed

Following this news from the BRC, concerns were raised last week about how much companies will be paying to import foods from the EU. The Department for Environment, Food and Rural Affairs (DEFRA) has revealed that from the end of April small imports of products including cheese, yoghurt, fish and sausages, will be subject to fees of £29 on individual products and up to £145 for mixed consignments. This fee, which the government plans will pay for ‘world-class border facilities’ is referred to as the ‘common user charge,’ and is scheduled to be levied on plants and plant products and animal products, which will be entering the UK from the EU via the Eurotunnel at Folkestone and the Port of Dover. It is anticipated that the fee will finance new facilities in Kent to prevent the import of animal and plant disease into the country.

Chief Executive of the Cold Chain Federation, Phil Pluck, said the fee will impact food prices and have to be passed on to “either the EU importer, the smaller UK retailer, or the UK consumer.” He added, “Ultimately, this will increase business costs and food prices and potentially lower choices for the shopper.”

Criticising the timing of the new measures, Mr Pluck said that the government had “announced the charges at the last minute, leaving affected businesses little time to revise their commercial arrangements.”

Mortgage approvals on the up

The Bank of England’s latest Money and Credit report has highlighted some positive trends in the mortgage market in February. Net approvals for house purchases reached their highest levels since September 2022 (65,300). A prime indicator of future borrowing, net approvals elevated to 60,400 in February, an increase on the 56,100 recorded the previous month. In the month, remortgaging net approvals also saw an uptick, recording 37,700 approvals, compared with 30,900 in January.

And FTBs snapping up homes

According to Hamptons, first time buyers (FTBs) are very active in the market, with the share of homes being purchased by this group reaching a new record. The latest research shows a third (33%) of properties sold in the UK so far this year were bought by FTBs, up from 29% in 2023 and 17% ten years ago. It seems the increase has been driven by purchases by FTBs in southern England, with 51% of all first timers favouring one or two-bedroom properties, something not seen since 2011. With higher mortgage rates impacting buyers ability to borrow, Head of Research at Hamptons, Aneisha Beveridge commented, “The market continues to be dominated by those who can afford to buy, rather than those who want to.”

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 (10 April 2024)

The surging costs of retirement

According to the Pensions and Lifetime Savings Association (PLSA)1, a ‘moderate’ standard of living that includes £55 per week on groceries, a two-week all-inclusive holiday, £10 a week on takeaways and £100 a month to take others out for a meal, could cost a single person £31,300 a year, which is £8,000 more than last year. For couples, £43,100 a year is required to live at this standard. 

Minimum, moderate or comfortable  

The PLSA’s Retirement Living Standards report details what levels of income retirees will need to live either a ‘minimum,’ ‘moderate,’ or ‘comfortable’ life in retirement. However, the forecast does not factor in any rent or mortgage payments. 

As well as the cost of a ‘moderate’ life in retirement rising, so has the cost of having a ‘minimum’ living standard, which shot up by 12% from £12,800 a year, to £14,400 for a single person and £22,400 for a couple. 

A ‘comfortable’ standard of living, where there is more financial freedom and some luxuries, could now cost £43,100 per year for one person – a jump from £37,300 a year earlier. This rises to £59,000 for couples to live comfortably. 

Inflation and more 

The increase in inflation, particularly in energy bills and food prices, over the last few years has contributed to the rising costs of retirement lifestyles. Helping family during the cost-of-living crisis, coupled with people’s expectations of living standards, also played a part. 

It’s important not only to focus on your current needs, but to provide for the future and to understand how much you need to save for the standard of living you want in retirement. 

1PLSA, 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. 

Confidence returns

Increased investor confidence in equity funds over the last few months has been evidenced by a leading Index1, with UK investors at their most bullish in almost three years. 

Equity fund inflows reached £2.01bn in January, one of the top ten months on record and the highest since April 2021. In addition, the January Index reported: 

  • US equity funds had record inflows of £1.04bn 
  • European equity funds had their third best month on record with an inflow of £471m 
  • Weak news from China meant outflows from Asia Pacific funds for a ninth consecutive month 
  • ESG funds had record inflows of £1.63bn. It’s likely to be too soon to identify this as a trend after months of negativity 
  • Inflows to safe-haven money market funds slowed to a trickle (£56m) after months of strong buying. 

1Calastone, 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. 

Spring Budget overlooks first-time buyers

It was a disappointing Spring Budget for anyone looking to get onto the housing ladder. There were no announcements on Lifetime ISAs, no changes to Stamp Duty thresholds, no replacement for Help to Buy and the Chancellor had already scrapped plans for 99% loan-to-value (LTV) mortgages after resistance from the banking community. 

A deafening silence 

Coventry Building Society’s Jonathan Stinton said the silence around housebuilding was deafening, adding that the Budget, “could have been an opportunity to present new innovative schemes which help buyers with affordability as well as saving for a deposit – but not even the bare minimum was done. It’s not only incredibly disappointing, it feels like a big mis-step on the Chancellor’s part. First-time buyers are the foundation on which the rest of the housing market stands. Failing to give them proper help is failing to help the rest of the market.” 

Rightmove’s Tim Bannister said, “We had hoped the government would seize the opportunity to help first-time buyers and reform the outdated Stamp Duty system today. Instead, home-movers were left with extremely little and the temporary Stamp Duty thresholds weren’t even made permanent, meaning more will pay higher rates of Stamp Duty next year, unless the government makes them permanent in the autumn.” 

Other measures to be aware of 

There were some housing measures announced in the Budget, but these have bigger implications for private landlords and second homeowners rather than aspiring and current homeowners: 

  • The higher rate of Capital Gains Tax (CGT) will be reduced from 28% to 24% and the lower rate of CGT has been maintained at 18%. It’s worth noting that you only pay CGT on second homes 
  • The Furnished Holiday Lettings tax regime will be abolished – second homeowners can no longer deduct mortgage interest from their rental income or pay lower CGT when they sell 
  • In England and Northern Ireland, Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR) will be abolished from 1 June 2024. There is an equivalent MDR relief under Land and Buildings Transaction Tax (LBTT) in Scotland and it remains to be seen if the Scottish Government will consider how MDR applies in future. 

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. 

Economic Review – March 2024

Short-term growth forecasts upgraded

New economic predictions produced by the Office for Budget Responsibility (OBR) suggest the UK economy is set to grow by more than previously expected over the course of the next two years.

Chancellor Jeremy Hunt unveiled the independent fiscal watchdog’s latest forecasts during his Spring Budget delivered to the House of Commons on 6 March. The updated figures predict the economy will expand by 0.8% this year, marginally higher than the OBR’s autumn forecast, while next year’s growth rate was revised up to 1.9% compared to a previous figure of 1.4%. The OBR said this strengthening near-term outlook was partly due to inflation receding more quickly than had previously been anticipated.

The week following the Chancellor’s Budget statement, the latest monthly gross domestic product (GDP) statistics were published by the Office for National Statistics (ONS) revealing that the UK economy returned to growth at the start of the year. The ONS figures showed the economy expanded by 0.2% in January following December’s 0.1% fall, with the rebound driven by strong growth in both the retail and construction sectors.

Data from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) also suggests this recovery has continued across the rest of the first quarter, with March’s preliminary composite headline figure once again coming in comfortably above the 50 threshold that denotes an expansion in private sector output.

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “Further signs of the UK economy having pulled out of last year’s brief recession are provided by the provisional PMI data for March. The survey data are indicative of first quarter GDP rising 0.25% to thereby signal a reassuringly solid rebound from the technical recession seen in the second half of 2023. Business expectations for the year ahead also remain reassuringly lofty by recent standards.”

Lower interest rates “on the way”

Although last month did once again see the Bank of England (BoE) maintain interest rates at their current 16-year high, the Bank’s Governor noted that inflation is “moving in the right direction” for rate cuts.

At its latest meeting, which concluded on 20 March, the BoE’s Monetary Policy Committee (MPC) voted by an 8–1 majority to leave Bank Rate unchanged at 5.25%. The one dissenting voice preferred to see an immediate quarter-point reduction, which meant this was the first time since September 2021 none of the nine-member panel had voted for a rate hike.

The meeting ended the same day ONS released the latest inflation statistics. These revealed that February’s headline annual CPI rate dropped to 3.4% from 4.0% the previous month; this figure was slightly below analysts’ expectations and the lowest reported rate for almost two and a half years.

Speaking just after the interest rate decision, BoE Governor Andrew Bailey described the latest fall in inflation as “very encouraging.” While stressing the Bank needed to see inflation decline further, Mr Bailey did strike a relatively optimistic note on future rate reductions.

Asked whether investors were right to price in two or three cuts over the remainder of this year, Mr Bailey suggested it was “reasonable” for markets to take that view. The Governor added, “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction. I think you know we can say – we are on the way.”

Prior to the MPC’s announcement, a Reuters poll found a majority of economists expect the BoE to begin cutting rates in the third quarter of this year, although a sizeable minority did predict the first cut would be delivered during the second quarter. The next MPC announcement is scheduled for 9 May.

Markets (Data compiled by TOMD)

At the end of March, most major markets closed in positive territory as investors contemplated new data from the US showing the economy grew faster than expected in Q4 2023.

In the UK, the FTSE 100 index closed the month on 7,952.62, a gain of 4.23%, while the mid-cap focused FTSE 250 closed the month 4.36% higher on 19,884.73. The FTSE AIM closed on 743.26, a gain of 0.92% in the month.

On the continent, the Euro Stoxx 50 closed March on 5,083.42, 4.22% higher. In Japan, the Nikkei 225 continued its bull run, closing the month on 40,168.07 a gain of 2.56%. In the US, healthy economic data at month end helped support strength in the market. The Dow closed the month up 2.08% on 39,807.37, meanwhile the NASDAQ closed March up 1.79% on 16,379.46.

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

Brent crude ended the month trading at around $86 a barrel, a gain of 5.81%. The price has been supported by falling inventories and output cuts from OPEC+. Gold closed March trading around $2,207 a troy ounce, a monthly gain of 7.76%. Precious metal prices are trending higher despite US Treasury yields advancing.

Consumer sentiment holding steady

Data released last month revealed a stabilisation in retail sales volumes while survey evidence suggests consumer confidence is also holding firm as households become more positive about their finances.

The latest official statistics showed that total retail sales volumes were flat in February, with ONS noting that sales were partly dampened by a reduction in footfall due to the month’s heavy rainfall. February’s figure was, however, stronger than most economists had predicted with the consensus pointing to a 0.3% monthly decline.

Last month’s CBI Distributive Trades Survey also suggests the retail sector’s prospects could be set to improve, with its headline measure of sales volumes in the year to March posting its first positive reading for 10 months. CBI Principal Economist Martin Sartorius said, “The stabilisation of retail sales in March should give some hope that the sector’s downturn is bottoming out” and he added “easing inflation should support retail spending going forward.”

Data from the latest GfK consumer confidence index also suggests consumer sentiment is holding steady, with its headline figure remaining unchanged in March. In addition, the survey revealed that households turned positive about the outlook for their personal finances for the first time in over two years.

Economic inactivity figures rise again

The latest set of employment statistics have revealed another increase in the UK’s economic inactivity rate with over a fifth of all working-age adults now not in work or looking for a job.

Figures published last month by ONS showed that the economic inactivity rate for those aged 16 to 64 years was 21.8% in the November to January period; this represents a slight increase from the previous quarter and also puts the figure above the level recorded a year earlier. This means that, in total, there are currently around 9.2 million people of working-age that are neither in employment nor looking for work.

The growing problem of long-term illness has clearly been a key factor driving this rise, with a report recently published by the Resolution Foundation showing the country is going through its longest sustained increase in the number of working-age people too sick to work since the 1990s.

According to the Resolution Foundation’s analysis, economic inactivity due to long-term sickness has been on an upward trend since July 2019 or the past 54 months. The think tank’s report also revealed that the youngest and oldest age brackets had the highest proportion of those out-of-work due to ongoing illness.

All details are correct at the time of writing (28 March 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.