‘Magic’ scam warning 

The Financial Conduct Authority (FCA) has warned pension holders to beware of scammers’ ‘magic tricks’ as research shows the economic squeeze is encouraging more people to withdraw pension savings. 

ScamSmart 

Britain’s financial watchdog recently launched its latest ScamSmart campaign aiming to give consumers the knowledge and tools to avoid scams. Over 700,000 pension plans were accessed for the first time in 2021-22 and FCA research suggests that number could increase this year, with a quarter of all pension holders considering an early raid due to cost-of-living pressures. This puts a significant number of people at risk of potential scams. 

Pension scam tactics 

Scammers typically prey on consumers’ misunderstanding of how pensions work and pension pots grow. To help people avoid falling victim, the FCA has compiled a list of common scam techniques which include: high-pressure sales tactics using ‘time-limited offers’; guaranteed higher returns; unusual unregulated investments; arrangements involving several parties; any offer to release pension funds for under-55s. 

Distraction techniques 

FCA research also highlights consumer vulnerability to some classic ‘distraction’ tactics scammers employ. Around 44% of pension holders, for instance, said they would take up the offer of a free pension review, while 46% could be swayed by a scammer providing details of a third party (falsely) vouching for their offer. 

Devastating consequences 

Mark Steward, FCA Executive Director of Enforcement, is urging consumers to check out the watchdog’s ScamSmart website in order to “avoid being tricked by scammers.” He added, “Pension scammers are tricking victims with false promises of a better lifestyle in retirement. Like the magician’s trick, thousands can disappear in seconds, but this time the consequences can be devastating.” 

Trust your instinct 

If you ever have any doubts when contacted in relation to your pension, trust your instinct and get in touch with us. 

The value of investments and income from them may go down. You may not get back the original amount invested. 

Estate planning – take control

Inheritance Tax (IHT) is once again in the spotlight following the Chancellor’s decision to freeze IHT thresholds for a further two years until April 2028. Extending the frozen thresholds, together with rising house prices and soaring inflation mean that more estates are likely to be affected. 

IHT receipts on an upwards trend  

The latest IHT figures released in October make interesting reading. Total HM Revenue and Customs (HMRC) receipts for April 2022 to September 2022 were £3.5bn, £0.4bn higher than in the same period last year. 

Not just a tax on the very wealthy  

IHT is a tax payable on all your assets when you die and potentially on some gifts you make during your lifetime. If the estate is liable for IHT, it is usually payable at 40%. These days, you don’t have to be hugely wealthy to be affected by IHT – the hated tax can cost your estate thousands of pounds when you die. 

A reminder of the thresholds 

An individual’s current threshold, or nil-rate band, is £325,000. A couple (married or civil partners) has £650,000. Any unused nil-rate band can be passed to the surviving spouse or civil partner on death. 

In 2017 the government introduced an additional nil-rate band when a residence is passed on death to a direct descendant. The main residence nil-rate band is £175,000 and when added to the existing threshold of £325,000 could potentially give an overall allowance for individuals of £500,000. 

To reduce the amount of IHT payable, many families consider giving assets away during their lifetime. Some gifts will be automatically free from IHT; for example, £3,000 each financial year, certain wedding gifts and gifts to charities. 

Getting the right balance between gifting money during your lifetime and ensuring you have enough for your future years requires careful planning. Expert planning can legitimately mitigate IHT, meaning you can pass on assets to your family as you’d intended. 

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority. 

News in Review

 “Confidence is returning”

UK gross domestic product (GDP) grew by 0.3% in January, according to the latest official figures released by the Office for National Statistics (ONS) on Friday.

Higher school attendance and the return of Premier League football helped growth return after a 0.5% contraction in December, though quarterly figures show that the economy stagnated between November and January compared with the previous three months.

The 0.3% growth exceeded City forecasts of 0.1%, which led KPMG to upgrade its outlook for the year ahead. The figures boosted hopes that the UK might avoid the shallow recession the Bank of England is forecasting.

Darren Morgan, Director of Economic Statistics at ONS, said the main factors behind the growth were “the return of children to classrooms, following unusually high absences in the run-up to Christmas, … Premier League clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month”.

Ahead of the Budget, the boost provides good news for Prime Minister Rishi Sunak. Commenting on the GDP data, he said, “If you look at some of the things that have been coming out in the last month, they’re all showing encouraging signs that things are better than people had feared, that sentiment is improving, confidence is returning. The underlying fundamentals of the economy are strong.”

Labour market latest

The latest labour market overview, released on Tuesday by ONS, revealed that job vacancies have fallen for the eighth time in a row, though there are still 328,000 more vacancies compared with Q1 2020.

The rate of economic inactivity likewise dipped in the three months from November 2022 to January 2023 to 21.3%, while the unemployment rate remained largely unchanged at 3.7%. The data also point to stalling pay growth, with the average weekly salary, excluding bonuses, £589 in January, up by £1 month-on-month.

Darren Morgan commented, “The number of people neither working nor looking for a job fell overall, driven by a drop in young people. However, a record number of people were completely outside the labour market due to long-term sickness. Although the inflation rate has come down a little, it’s still outstripping earnings growth, meaning real pay continues to fall.”

Budget build-up

On 15 March, Chancellor Jeremy Hunt will deliver his first Budget, outlining the government’s plans for tax and spending for the coming year.

In response to newly released jobs data, Mr Hunt reiterated the importance of tackling inflation. He said, “Tomorrow at the Budget, I will set out how we will go further to bear down on inflation, reduce debt and grow the economy, including by helping more people back into work.”

Several policies that will come into effect from April have already been announced, including the new £900 cost-of-living payment for the poorest households and the uprating of benefits and pensions in line with inflation. The Treasury has also confirmed that energy costs for those with prepayment meters will be brought in line with customers who pay by direct debit.

As a plan to keep people in work for longer, or encourage them to return to work, the Chancellor is expected to increase the pension Lifetime Allowance. The £40,000 Annual Allowance could also be increased.

Alongside the Chancellor’s speech, the Office for Budget Responsibility (OBR), will release a forecast.

SVB collapse shakes markets

Bank shares in Asia and Europe slumped on Monday after the collapse of the US-based Silicon Valley Bank (SVB), the largest failure of a US bank since 2008. Despite reassurances from Joe Biden that America’s financial system is safe, investors were concerned that other lenders could still be hit by the fallout.

After the UK arm of SVB was put into insolvency on Sunday evening, UK tech firms warned they could go bust without help. On Monday, HSBC bought the UK subsidiary following talks led by the government and Bank of England.

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 March 2023)

Economic Review – February 2023

Interest rate peak may be approaching

Last month the Bank of England (BoE) announced another hike in its benchmark interest rate but hinted that rates may now be nearing a peak, as the tide in its battle with inflation begins to turn.

Following its latest meeting held at the beginning of February, the BoE’s nine-member Monetary Policy Committee (MPC) voted by a 7–2 majority to raise Bank Rate by 0.5 percentage points to 4.0%. This was the tenth consecutive increase sanctioned by the MPC and took rates to their highest level in over 14 years.

The minutes to the meeting noted that ‘considerable uncertainties’ around the outlook remain and that risks to inflation are ‘skewed significantly to the upside.’ However, they also stated that updated MPC projections show ‘inflation falling back sharply’ from current elevated levels, with the headline rate expected to dip to around 4% towards the end of the year.

Commenting after announcing the MPC decision, BoE Governor Andrew Bailey cautiously acknowledged that price rises have begun to edge back. Mr Bailey said, “We’ve seen the first signs that inflation has turned the corner. But it’s too soon to declare victory just yet –inflationary pressures are still there.”

The latest official inflation statistics also suggest the headline rate is now on a downward path. The Consumer Prices Index (CPI) annual rate – which compares prices in the current month with the same period a year earlier – fell to 10.1% in January. This represents the third successive monthly decline since CPI inflation hit a 41-year high of 11.1% in October.

Although analysts do still typically expect the MPC to sanction at least one more hike, there does seem to be a growing consensus that the high point in the current interest rate cycle is approaching. The next MPC meeting is due to conclude on 23 March.

BoE predicts shallower recession

Updated economic forecasts published last month by the BoE suggest the UK will enter recession this year but that the downturn will be less severe than previously feared.

According to the latest economic growth figures released by the Office for National Statistics (ONS), the UK narrowly avoided entering recession at the end of 2022. Despite monthly data showing the economy shrank by 0.5% in December, growth in the previous two months resulted in an overall growth rate of zero across the final quarter of last year.

While this figure is only a first estimate and may therefore be revised, either up or down, it does currently show the UK avoided a second successive quarterly contraction which would have met the technical definition of a recession. Analysts, however, still expect further economic weakness this year – CBI Lead Economist Ben Jones, for instance, commented, “We may have avoided a technical recession late last year, but we probably won’t avoid one this year.”

The BoE’s latest economic assessment also suggests the UK will enter recession during the coming months, although their revised projections imply any downturn will be ‘much shallower’ than previously envisaged. The Bank now expects the economy to shrink by 0.5% during 2023, significantly lower than the 1.5% contraction forecast in November, with the recession expected to last five quarters rather than eight as previously predicted.

Survey data released towards the end of last month has even raised hopes that the UK might actually avoid recession altogether during the first half of this year. The preliminary headline figure from the S&P Global/CIPS UK Purchasing Managers’ Index jumped to 53.0 in February, up from 48.5 the previous month. This is the first time since July that the reading has been above 50, the threshold which indicates growth in private sector output.

Markets (Data compiled by TOMD)

On 27 February, Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen announced a new agreement had been reached on post-Brexit trading arrangements for Northern Ireland. At month end, investors were digesting the trade deal between the UK and the European Union. 

In the UK, the FTSE 100 hit the 8,000 milestone for the first time in mid-February, as concerns of a global recession began to ease. Shares were supported by the release of better-than-expected inflation data. The blue-chip index moderated to close the month on 7,876.28, a gain of 1.35% in February. The FTSE 250 ended the month up 0.25% on 19,903.28, while the FTSE AIM closed out the month on 859.37, a small monthly loss of 0.97%.

In the US, the NASDAQ closed February on 11,455.54, a loss of 1.11%. The Dow Jones index closed the month down 4.19% on 32,656.70. In Japan, the Nikkei 225 closed February up 0.43%, on 27,445.56. Japan equities were supported at month end by gains in the Machinery, Precision Instruments and Electrical / Machinery sectors. On the continent, the Euro Stoxx 50 closed the month on 4,238.38, registering a gain of 1.80%.

On the foreign exchanges, the euro closed the month at €1.14 against sterling. The US dollar closed at $1.20 against sterling and at $1.06 against the euro.

Brent crude closed the month trading at around $83 a barrel, a loss of 1.77% over the month. Gold closed the month trading at around $1,824 a troy ounce, a monthly loss of 5.16%. The gold price has been negatively impacted in the month following the release of strong economic data, fuelling expectations of more interest rate increases.

Retail sales rebound unexpectedly

Official data has revealed a surprise increase in sales volumes during January, although more recent survey evidence does suggest the retail outlook remains challenging.

According to the latest ONS data, total sales volumes in January rose by 0.5%, as shoppers sought to take advantage of New Year sales promotions. ONS said discounting helped lift sales at online retailers as well as jewellers, cosmetic stores and carpet and furnishing shops, although growth was also partly driven by an increase in fuel sales as prices at the pumps continued to decline.

Data revisions, however, saw December’s figure fall more sharply than previously reported, with updated data showing a drop of 1.2% from November rather than the originally estimated 1.0% decline. Darren Morgan, Director of Economic Statistics at ONS, commented, “After December’s steep fall, retail sales picked up slightly in January, although the general trend remains one of decline.”

This challenging environment was also highlighted in the CBI’s latest Distributive Trades Survey, with retailers reporting broadly unchanged sales volumes in February while expecting sales to fall this month. CBI Principal Economist Martin Sartorius said, “Whilst retail sales volumes were largely unchanged in the year to February, firms remain pessimistic about their business outlook.”

Chancellor receives pre-Budget boost

The latest public sector finance statistics revealed an unexpected budget surplus giving Chancellor Jeremy Hunt a little more leeway as he prepares to deliver his Spring Budget.

Figures released by ONS showed that UK public sector net borrowing (the gap between the country’s overall income and expenditure) returned to a surplus of £5.4bn in January. This figure, which was boosted by the highest self-assessed Income Tax receipts since records began in 1999, was significantly better than economists had been expecting.

As a result, total government borrowing across the first ten months of the current fiscal year now stands at £117bn. While this does still represent a large shortfall by historic standards, the figure is just over £30bn lower than the Office for Budget Responsibility had predicted when it produced forecasts for the Chancellor’s Autumn Statement in November.

This data does therefore appear to provide the Chancellor with a little more wiggle room as he sets out the tax and spending plans he will deliver in the Spring Budget on 15 March. Mr Hunt, however, has played down any suggestions of significant tax cuts recently saying, “It is vital we stick to our plan to reduce debt over the medium term.”

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

All details are correct at the time of writing (01 Mar 2023).

Residential Property Review – February 2023

Housing market continues slowdown

According to the latest UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS) new buyer demand, sales, fresh listings and prices are all on a downward trend.

January saw the ninth successive negative monthly reading for new buyer enquiries, with contributors to the survey in all parts of the UK reporting either a fall in demand or stagnation in enquiries. Alongside this, respondents continued to see a drop in the volume of fresh listings coming onto the sales market.

RICS report that twelve-month price expectations remain firmly negative, with a headline net balance of -40%. However, this is less downbeat than readings of -61% and -57% posted in November and December respectively.

Separate figures from the Bank of England show net borrowing of mortgage debt by individuals decreased from £4.3bn in November to £3.2bn in December and mortgage approvals dropped from 46,200 to 35,600 in the same period, the lowest since May 2020.

Energy-efficient homes hold value

Home buyers are increasingly factoring in energy costs when making homebuying decisions, resulting in energy-efficient homes outperforming other properties during the current market slowdown.

Six out of 10 estate agents said homes with high energy-efficiency ratings were holding their value, according to Zoopla. Four out of 10 said they were seeing more interest in energy-efficient homes from potential buyers.

The government’s Energy Price Guarantee has kept bills lower over the winter months but the guarantee will change in April when the average annual bill for gas and electricity is expected to jump to around £3,000.

If you’re selling or renting a property, it’s a legal requirement to have an up-to-date EPC rating. A is the most efficient EPC rating and G is the least efficient. While 80% of new-build homes have an EPC rating of A or B, only 3% of older properties have a rating this high.

Cost of renting soared in 2022

Research by Zoopla has found that rent increases in 2022 were at their highest level for the last decade. In December, the UK average rent was £1,118 per month which is 11.5% or £120 higher than a year previously. 

The average monthly rent in London was £1,976 and the capital also saw the highest rent increase in the UK with annual growth of 16.1%. Rents also soared in other major cities such as Manchester (£977 per month and 14.8%), Glasgow (£844 per month and 13.1%) and Edinburgh (£1,130 per month and 12.7%).

The soaring cost of renting has caused many tenants to move to cheaper regions. In particular, London tenants have been leaving the capital in record numbers. Hamptons Lettings Index found that 40% of renters moving home in London last year chose to leave the capital, up from just 28% a decade ago.  This equated to 90,370 households, with the numbers doubling since 2012.  Hamptons expect the number of renters leaving the capital to continue rising for the foreseeable future. 

All details are correct at the time of writing (16 February 2023)

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

Commercial Property Market Review – February 2023

Commercial market downbeat but withstanding

Conditions in the commercial property market continued to decline in Q4 2022, according to the latest UK Commercial Property Market survey from the Royal Institution of Chartered Surveyors (RICS).

At the national level, 83% of respondents consider the market to be in downturn, a slight increase from 81% in the previous quarter. All-sector net balance for tenant demand fell to -20% (from -10% in Q3), the weakest such reading since the end of 2020. Noteworthy drops included occupier demand across offices (-29%) and retail premises (-45%).

This downbeat picture was reflected in Scotland, where overall demand dropped for both occupiers (-14%) and investors (-27%). The Scottish retail sector fared badly, with net balances of -44% for occupiers and -68% for investors. Demand for Scottish industrial space proved a rare exception, with occupiers (+41%) and investors (+12%) both recording positive net balances.

Turning point for logistics and prime office shortages

Yields in January 2023 presented ‘a very mixed story’, according to Savills’ most recent Market in Minutes: UK Commercial report.

The latest figures show downward pressure on parts of retail, stability in logistics and softening in prime office yields. In total, the average prime yield rose marginally to 5.68%, the report states, its highest level since 2008.

According to analysts, the stabilisation in prime logistics yields was regarded as the first sign of a pricing plateau. Near record low vacancy rates are expected to become a reality again through 2024 and beyond, experts say, therefore pushing rents higher and creating increased competition for the best space.

A separate report from Colliers notes that new Grade A office properties continued to dominate occupier activity in 2022. In Birmingham, Leeds, Manchester and other key regional cities, average prime rents grew last year, pushed by record levels of demand. Falling Grade A vacancy is set to increase in the years ahead, the report concludes.

Amazon set to shed UK warehouses

Amazon is aiming to rid itself of empty warehouses across the UK, it has been revealed, after the recording its worst annual loss on record.

During the pandemic, the tech giant is estimated to have opened hundreds of warehouses globally, to prepare itself for an expected boom in online spending. Now that demand for online orders has started to dry up, however, Amazon has lost around 30% of its value.

In response, the company is aiming to sublet warehouses acquired during the pandemic surge that it has not yet moved into, experts say. As part of a wider review of its operations, Amazon has already announced it will be closing three warehouses and seven delivery stations in the UK.

All details are correct at the time of writing (16 February 2023)

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

 “High streets continue to show the biggest improvement”

Footfall in UK retail stores bounced back in February 2023 from the levels recorded a year earlier, according to the latest data released on Friday by the British Retail Consortium (BRC). In total, footfall increased by 10.4% on an annual basis, but fell by 2.1% month-on-month.

Specifically, High Street (+17.8%) and Shopping Centre footfall (+11.7%) both rose year-on-year, while Retail Parks saw footfall decrease by 3.3% compared to February 2022.

Despite the annual rise, however, the number of shoppers remains below pre-pandemic levels, with total footfall 8.8% lower than in 2019. Similarly, High Streets (-7.7%), Shopping Centres (-23.3%) and Retail Parks (-2.7%) are all below pre-pandemic figures.

Helen Dickinson, Chief Executive of the BRC, commented, “Growth in footfall slowed this month after the rush of Christmas shopping and January sales. Some people are making fewer visits as the cost of living continues to bear down ahead of the April energy price rise. Despite this, high streets continue to show the biggest improvement compared to last year, when concerns around COVID kept people away from town and city centres.”

Energy price, guaranteed?

In the Chancellor’s Budget, due to be delivered on 15 March, the future of the Energy Price Guarantee seems likely to be a significant announcement. On Friday, it was revealed that the government is preparing to extend the Guarantee at its current levels for a further three months.

A Whitehall source said ministers are expected to keep the Guarantee at £2,500, protecting households from the scheduled rise to £3,000 per year (for a typical household) that was due to come into force from April.

Although the level of help is now expected to be maintained, energy firms have been asked to prepare for both scenarios. In contrast, the £400 winter payment, which resulted in a £66 per month reduction in monthly bills, is expected to end next month.

Inflation still a key concern

Inflation continues to be a major news story around the world. On Friday, a report from the Federal Reserve stressed that the central bank is ‘acutely aware’ of the challenges that high inflation poses to the economy; the report also reiterated that the Federal Reserve is ‘strongly committed’ to its 2% inflation target. On Tuesday, Federal Reserve Chair Jerome Powell warned of a return to big rate rises. In prepared remarks for a hearing before the Senate Banking Committee, Powell said, “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. It will take time for the full effects of monetary restraint to be realised, especially on inflation.”

In Europe, latest data released last week showed that core price inflation jumped to a record 5.6% across the Eurozone in February, up from 5.3% in January. The consumer price index for the 20 countries that use the euro, eased slightly to 8.5% in February, a drop from 8.6% a month earlier.

In Japan, Prime Minister Fumio Kishida ordered the ruling coalition to draft additional measures in response to inflation. The country’s economic recovery remains fragile, as prices continue to rise. “We are aware that price hikes in food and other items are still carrying on due to existing raw material inflation and a weak yen,” Chief Cabinet Secretary Hirokazu Matsuno said on Friday.

Cost of stamps rises

Stamp prices are due to rise in the UK, with a first class stamp set to cost £1.10 from April, Royal Mail announced on Friday. The 15p leap will occur the day before the first stamps with the image of King Charles go on general sale.

Second class stamps will also rise by 7p to 75p. With letter volumes down 25% since the pandemic, Royal Mail said the increases were needed to ensure the ‘one-price-goes-anywhere Universal Service remains sustainable’.

Markets

Stock markets slumped on Tuesday after the testimony from Jerome Powell to Congress, with the FTSE 100 closing down 0.13% to end on 7,919.48, and the FTSE 250 dropping 0.54% to close on 19,956.61.  

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 (8 March 2023)

News in Review

“Consumers have suddenly shown more optimism about the state of their personal finances and the general economic situation”

On Friday, the latest release of GfK’s Consumer Confidence Index revealed a month-on-month improvement in consumer sentiment. In February 2023, total confidence was -38, seven points higher on a monthly basis. All five measures that make up the overall gauge increased in comparison to January’s readings.

The index for the general economic situation of the country over the coming year performed especially well, rising by 11 points to -43, which puts it on a par with the score recorded in February 2022.

Joe Staton, Client Strategy Director at GfK commented, “Despite widely reported headwinds of inflation continuing to outstrip wage rises, and the ongoing household challenge from the cost-of-living crisis, consumers have suddenly shown more optimism about the state of their personal finances and the general economic situation, especially for the coming year.”

A “decisive breakthrough” in Brexit talks

On Monday, Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen confirmed a breakthrough deal on post-Brexit trading arrangements for Northern Ireland, which could draw a line under months of negotiation and speculation.

The deal, referred to as the ‘Windsor Framework,’ was described by Mr Sunak as a “decisive breakthrough,” while Mrs Von der Leyen spoke of a “stronger EU-UK relationship.” Crucially, the Democratic Unionist Party (DUP) acknowledged that ‘significant progress’ had been made, though it is not yet clear whether the party will support the deal in Parliament. On Tuesday, Mr Sunak visited Belfast to outline the deal to politicians and businesses, highlighting how he believes it will ease the flow of trade between Britain, Northern Ireland and Ireland.

Fruit and vegetable shortages

In the last week, UK shoppers have faced limits on fruit and vegetable sales from major supermarkets. On Friday, The Lea Valley Growers Association (LVGA), which represents producers across Britain, said that some fruit and vegetable shortages could last until May, as growers continue to delay planting due to high energy costs.

Lee Stiles, Secretary of the LVGA, said that supply issues are arising not only from Spain and Morocco, but also from the fact that the prices set by supermarkets for UK produce make it hard for growers to plant when energy costs are high. “It’s a simple fact of economics between the growers and the supermarkets,” he commented.

Tax record leads to surplus

Record self-assessed Income Tax receipts helped provide the government with a surplus of £5.4bn in January, official figures revealed last week. Government spending has played a part, with public borrowing in the financial year to date £30.6bn below the levels predicted by the Office for Budget Responsibility. In addition, the falling cost of wholesale energy has reduced the government’s spending on support for household bills.

However, economists have warned that public finances remain weaker than they were at the same time last year. Even so, the data does appear to provide the Chancellor with a little more wiggle room as he sets out the tax and spending plans due to be delivered in the Spring Budget on 15 March.

Car sales steady…

UK car production was stable in the first month of 2023, according to figures released on Friday by the Society of Motor Manufacturers and Traders (SMMT). Output dipped by -0.3%, equivalent to just 215 fewer cars, mostly as a result of structural changes at one major plant.

…but sneaker sales nosedive

In contrast, the growth of global sneaker sales fell in 2022, according to a recent Business of Fashion report. The industry experienced massive growth during the pandemic, with sales of trainers in 2021 up £16.6bn year-on-year. In 2022, however, growth declined rapidly to £9.2bn.

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 (1 March 2023)

Equity release dominates 

New equity release lending hit £1.5bn in Q3 20221, with 29% more plans taken out by the end of September than a year previously. The average amount borrowed now comes to more than £114,000, while pressing needs and cost-of-living concerns remain more prevalent than discretionary spending. 

Why release equity? 

Equity release products provide access to equity that is locked up in the value of your home. There are many reasons why you might decide to access this equity: 

  • Repaying debts (31%) and mortgages (24%) were key reasons people chose to release equity in the third quarter 
  • Supporting family members (20%) was also common, with people gifting an average amount of £53,503 to younger members to help them onto the property ladder or as an early inheritance 
  • There was a 3% year-on-year increase in people using equity release to fund home or garden improvements and a 7% increase for holidays. 

Advice is key 

Equity release is not suitable for everyone. It is vital to take financial advice to make sure equity release is the most suitable option for your individual needs. We’re happy to help – get in touch. 

1Key Later Life Finance, 2022 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. Equity release may require a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. 

Saving for their future 

With the current generation of graduates typically leaving university with a mountain of debt, it is perhaps unsurprising that so many parents are now looking to ease the burden by investing on their children’s behalf. 

University challenge 

Government statistics show the average debt accumulated by a university student is currently around £45,000. Thankfully, graduates only start repayments when their earnings hit a certain threshold and, at the moment, loans are written off after 30 years however much debt remains. As a result, some students will never pay back their loans in full. 

Increasing debt burden 

Many students, though, do repay all of their debt, and recent reforms to the loans system means many more will do so in the future – government forecasts suggest that, from next year, over half of students will repay their loans in full. This inevitably places an even greater burden on future graduates’ shoulders, both as they enter the world of work and, potentially, throughout their entire careers. 

Giving your children a helping hand  

Most parents are keen to help their children fund university and many do so by investing on their behalf through a stocks and shares Junior ISA (JISA). While there are risks with stock market investments, historically they have performed better than cash-based savings and consistently delivered above-inflation returns. The annual JISA allowance is currently £9,000 per child which, for anyone who starts saving early, can grow to a sizeable tax-free lump sum. Smaller amounts can mount up too, particularly when combined with contributions from other family members. 

Peace of mind 

Investing on a child’s behalf can make a huge difference to their future, whether they decide to go to university or put the money towards something else. It also provides parents with the comfort of knowing they are giving their children the best possible start to adult life. 

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.