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British Pound: ‘No Deal’ Brexit Odds to Rise from 15%, will Pressure Sterling Lower vs. Euro and Dollar

Pound Sterling will come under pressure if the odds of a no deal Brexit rise from 15%, which they surely will as the Conservatives forced into delivering Brexit on October 31 amidst fierce backlash from Brexit voters.

For now, the currency remains well supported against the Euro and U.S. Dollar assured that Brexit risks have faded and as global markets settle for the long Easter break amidst a sizeable drop in volatility.

Volatility has hit multi-month lows and should take the risk out of the markets as no major moves, either higher or lower are likely in such an environment.

The Pound-to-Euro exchange rate is currently quoted at 1.1556, as the Pound endures a slow-burning move lower against the Euro which appears to be benefiting from an uptick in global investor sentiment.

The Euro is certainly the driver of this pair for now.

The Pound-to-Dollar exchange rate is quoted at 1.3029 and while intra-day over are limited the pair is also making a slow grind lower towards the key 1.30 marker.

Complacency

Of course, the lack of volatility could also just as well be a precursor to sizeable ‘breakout’ moves, and we await potential triggers.

For Sterling, we note markets are becoming increasingly complacent with regards to the potential risks surrounding Brexit over coming months. And, for us a potential trigger that could ignite a substantial move in a complacent market would be a rapid repricing of ‘no deal’ Brexit risks.

The Pound tends to rise as ‘no deal’ Brexit becomes less likely, as has been the case during the first-quarter of 2019 in which the currency was the best-performing major currency. It tends to fall when ‘no deal’ Brexit risks rise.

The market is relaxed on the prospect of a ‘no deal’: there is now a greater chance the UK will not leave the EU at all than of the UK leaving the EU without a deal in October, according to a poll of institutional economists.

A Reuters poll out on Thursday shows the median probability of a ‘no deal’ Brexit is at 15%, the lowest since Reuters began asking in July 2017.

Only one of 51 respondents gave a value over 50%.

The findings show the favoured outcome amongst analysts is the two sides reaching a free-trade deal.

Joining the European Economic Area was held to be the second most likely outcome.

Revoking Article 50 and cancelling Brexit entirely was held to be the third most likely outcome ahead of leaving the EU under World Trade Organization rules.

The UK embarked on the road to a softer Brexit when the EU granted ab extension to the Article 50 process until October 31.

Prime Minister Theresa May made the request for a delay based on her desire to reach a deal with the opposition Labour Party that would allow for an exit deal to be ratified by a deeply divided parliament. Talks are ongoing.

“The key conclusion here is that the government (albeit not unified) has agreed to seek a Brexit compromise with Labour that will inevitably be a softer version of the
May deal. This will either lead to a compromise deal (Customs Union/Common Market 2.0) or we will have a third attempt at reaching a plan through votes in parliament. So these developments are positive for the Pound,” says Derek Halpenny, a foreign exchange strategist with MUFG in London.

So while developments are positive for the Pound, we fear the pricing of ‘no deal’ Brexit risks at 15% remain too low.

“Risks of a ‘no deal Brexit’ have subsided and Eurozone political tensions appear contained. We are however still cautious on the GBP as continued uncertainty weighs on the macro outlook and prevents a more meaningful Sterling recovery,” says Vassili Serebriakov, a strategist with UBS.

Often a one-side consensus view can result in a powerful counter-move when that consensus is shattered.

But Sterling Bulls Could Face a Rude Awakening if Odds of ‘No Deal’ Rise

A potential injection of volatility into Sterling markets will almost be political in nature.

A startling poll on Westminster voting intentions from Comres on Thursday shows support for the Conservatives has plummeted to 23%, well below Labour’s 33%.

A YouGov poll, also out Thursday, shows the Conservatives on 29%, Labour on 30% and the Brexit Party on 14%.

The Conservative’s appear to have haemorrhaged support to the newly-formed Brexit Party who opened their account on the Comres polling series with 14% of the vote.

A political shakeup following May’s European elections, and more importantly, local elections are now increasingly likely as the Conservative party is facing a potential wipeout.

“The main known unknown in the next two months is the EU elections in May. The UK government is ideally looking to get a Brexit deal in place to allow the UK to not participate. The coiling/contracting range of GBPUSD in particular shows potential for a break-out in that time-frame,” says Robin Wilkin, a Cross Asset Strategist with Lloyds Bank.

Other polling out this week shows the Brexit Party are on course to win the European Election as leader Nigel Farage looks to capitalise on the discontent brewing amongst the UK’s leave-voting electorate.

“In a development that must have European leaders eating their hats Nigel Farage’s Brexit party has surged in the polls as the clear leader to win in European elections. The party which was only formed in January has overtaken Labour, the Conservatives and UKIP as the likely winner. Whether related or not the pound, which has been the barometer of all things Brexit, is nudging lower,” says Fiona Cincotta, Senior Market analyst with City Index.

Heavy losses by the Conservatives could place immense pressure on Prime Minister Theresa May to abandon talks with the Labour Party, or stand down.

Whether May stays or not, the Conservative Party will almost certainly pivot towards delivering Brexit at all costs on October 31 in order to remain relevant with the electorate. In all likelihood the EU won’t renegotiate the deal they have offered, and with this deal lacking parliamentary backing a ‘no deal’ would become increasingly more likely.

All outcomes we believe would rapidly raise the odds of a ‘no deal’ Brexit in October from the current benign weighting of 15% held by economists.

The implications for Sterling could be notable as we know the currency tends to struggle when the odds of a ‘no deal’ increase.

“There will be huge political fallout from the further Brexit delay. The tight ranges in EUR/USD and GBP/USD and the further compression in volatility (which is probably not over yet) partly reflect the fact that FX investors do not know how to quantify these political risks, nor are they able to estimate the economic effects,” says Stephen Gallo at BMO Capital Markets.

Like a coiling spring, Sterling could in fact be a currency that is loaded and ready to be triggered in either direction, depending on the nature of that trigger.

We feel that at present the conditions are aligned to a rude surprise for a complacent market.

Written by Gary Howes

Source: Pound Sterling Live

UK wage growth
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UK wage growth at new decade high as employers hire in the face of Brexit

British workers’ pay grew at its joint fastest pace in over a decade as employers extended their hiring spree, adding to signs that uncertainty about Brexit is prompting firms to take on workers rather than commit to longer-term investments.

Contrasting with other sluggish readings of Britain’s economy, total earnings, including bonuses, rose by an annual 3.5 percent in the three months to February, official data showed, in line with a Reuters poll of economists.

That was the joint highest rate since mid-2008 although in the month of February on its own the pace of wage growth slowed.

Britain’s labor market has defied the approach of Brexit, helping households whose spending drives the economy. Last week, Britain’s exit from the EU was delayed until October.

Employment grew by 179,000 in the three months to February, in line with the Reuters poll forecast, helping to keep the unemployment rate at 3.9 percent, its lowest since early 1975, the Office for National Statistics said.

However, the jobs surge could reflect nervousness among employers about Brexit and risks aggravating Britain’s long-standing productivity problem, the Achilles heel of the world’s fifth-biggest economy.

Workers can be hired and then fired if the economy takes a hit, whereas investment in technology and new machinery — which helps the economy over the long term — fell throughout 2018.

PRODUCTIVITY PROBLEM

“The elongated period of uncertainty has kept businesses in a hiring cycle,” Tej Parikh, an economist at the Institute of Directors, an employers group, said.

“Without a pick-up in investment, low productivity will also keep wages from growing further, particularly when considering the higher regulatory costs businesses are facing this tax year.”

Data earlier this month showed output-per-hour rose by only 0.5 percent in 2018, well below the annual average of 2 percent before the global financial crisis.

Accountancy firm Deloitte said on Monday that large British-based businesses were increasingly focused on cashflow as they worried about the long-term economic hit from Brexit.

The ONS said the increase in jobs over the past year was all coming from full-time workers, both employees and self-employed.

Average weekly earnings, excluding bonuses, rose by an annual 3.4 percent, the ONS said, in line with the Reuters poll and down from 3.5 percent in the three months to January.

It was the first fall in that measure of pay growth since the middle of last year.

The strength of the labor market is pushing up wages more quickly than the Bank of England has forecast, leading some economists to think it might move quickly to raise interest rates once the Brexit uncertainty lifts.

The BoE forecast in February that wage growth would slow to 3.0 percent by the end of 2019 with the overall economy likely to grow at its slowest pace in a decade.

Writing by William Schomberg; Editing by Peter Graff

Source: UK Reuters

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London slump drags UK house price growth to more than six-year low

British house prices rose at the weakest rate in six-and-a-half years in February, dragged down by London’s biggest price slump in a decade as Brexit uncertainty sent chills through the property market.

Official data also showed Britain’s consumer price inflation unexpectedly held just below the Bank of England’s 2 percent target in March, offering relief to consumers whose spending has helped Britain’s economy through the Brexit crisis.

House prices were just 0.6 percent higher in February than a year ago, slowing sharply from a 1.7 percent annual rise in January, the Office for National Statistics (ONS) said.

In London, house prices were down by 3.8 percent — the biggest drop since mid-2009. The malaise in the capital spread to the south-east of England, where prices fell for the first time since 2011.

Other surveys have shown Brexit to be a major drag on the property market in the capital, which is sensitive to flows of migrant workers from the European Union. A surge in prices in London in previous years has also stretched affordability.

House prices in London are now 6 percent below their mid-2017 peak, albeit a smaller contraction than an 18 percent decline during the financial crisis.

“It is possible that the avoidance of a ‘no deal’ Brexit at the end of March could provide a modest boost to the housing market through easing some of the immediate uncertainty and concerns,” said economist Howard Archer from consultancy EY ITEM Club.

“However, we suspect it is more probable that with Brexit most likely being delayed until Oct. 31, prolonged uncertainty will weigh down on the housing market and hamper activity.”

INFLATION STILL SEEN RISING

Separately, the ONS said consumer prices rose at an annual rate of 1.9 percent in March, the same rate as in February. A Reuters poll of economists had pointed to a rate of 2.0 percent.

Sterling slipped against the U.S. dollar and the euro on the figures, while British government bond prices rose slightly.

Rising motor fuel prices were offset by falling food prices and computer game prices rising more slowly than they did a year ago, the ONS said.

Looking ahead, improving wage growth and poor productivity in Britain’s economy are likely to push inflation above the BoE’s 2 percent target by the end of 2019, said economist Andrew Wishart from consultancy Capital Economics.

“Nonetheless, with another Brexit crunch point looming in October and growth likely to be modest this year, we doubt the (Bank of England) will press ahead with another interest rate hike until next summer,” Wishart added.

BoE policymakers have said they want to see firm evidence of domestic inflation pressure – chiefly from rising wages – building before they vote to raise rates.

They will likely be reassured by Wednesday’s data that showed costs faced by factories for materials and energy – which eventually feed through to consumer prices – rose more slowly than expected in March.

Editing by Andrew Cawthorne

Source: UK Reuters

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Average Scottish house prices suffer first annual fall in 3 years

Property prices in Scotland dropped in February for the first time since March 2016, official figures have shown.

Registers of Scotland figures showed the average price of a property in Scotland in February 2019 was £145,762 – a decrease of 0.2 per cent on February in the previous year.

Aberdeen saw the greatest decrease, with prices falling seven per cent to an average of £149,435, while neighbouring Aberdeenshire also suffered a fall in values of 5.8 per cent.

Meanwhile, figures from the Office for National Statistics (ONS) showed that overall UK house prices are continuing to slow to the lowest annual increase in seven years, driven by dramatically falling prices in the previously buoyant market of London, where the value of a typical property slumped by 3.8 per cent.

Overall, prices rose just 1.7 per cent in January down to 0.6 per cent in February according to the latest official ONS figures – the lowest annual increase since September 2012. The average UK house price was £226,000 in February, £1,000 higher than a year ago.

North of the border, official figures showed that the biggest price increases were in Midlothian and Perth and Kinross where average prices increased by 9.9 per cent to £185,753 and 8.8 per cent to £192,631 respectively. Average price increases were recorded in the majority of local authorities – 22 out of 32 council areas – when comparing prices with the previous year.

Janet Egdell, accountable officer at Registers of Scotland, said: “The average price of a property in Scotland in February 2019 signalled the first annual decrease since March 2016, falling by 0.2 per cent in the year to February 2019.

“Prices increased in around two thirds of local authority areas and different property types showed a mixed picture, indicating that the market is highly variable across the country in this time of uncertainty.”

The volume of residential sales in Scotland in December 2018 was 7,392 – a decrease of 8.2 per cent on the original provisional estimate for December 2017. This compares with decreases of two per cent in England and 5.1 per cent in Wales, and an increase of 4.3 per cent in Northern Ireland.

The fall in London prices was the largest drop since mid-2009. However, the UK capital still has the highest average house price at £460,000.

Ben Brettell, senior economist at financial services firm Hargreaves Lansdown, said: “Annual UK house price growth slowed to 0.6 per cent in February, the lowest annual rate in seven years. London prices fell 3.8 per cent, their largest annual fall since August 2009 in the immediate aftermath of the financial crisis.

“This follows efforts by policymakers to cut down on riskier mortgage lending, though clearly uncertainty over Brexit will have played a large part in the capital’s faltering housing market.”

Mike Hardie, head of inflation at the ONS, said: “Annual house price growth has slowed to the lowest rate in close to seven years.”

By JANE BRADLEY

Source: Scotsman

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Stamp Duty hikes pushing more London landlords out of their home city

Increasing numbers of landlords who live in London are looking beyond the capital for buy-to-let returns.

Analysis by Hamptons International – based on activity at Countrywide branches – found that 59% of London-based landlords purchased their buy-to-let property outside the capital during the past 12 months.

In contrast, in 2010 just one in four London-based landlords purchased their buy-to-let outside the capital, with 75% investing in London.

However high house prices in London mean that the 3% Stamp Duty surcharge is particularly significant in the capital, and are pushing buy-to-let investors further out.

The proportion of London-based investors purchasing buy-to-lets in their home region has fallen 17% since 2015, the agent said.

The capital is still the most common area, favoured by 41% of London landlords, but 34% now invest in the north and the midlands, which is up 19% on 2015.

Meanwhile, the analysis found the average cost of a new let in Great Britain rose 1.9% annually to £969 per month in March.

This was driven by a 3.7% rise in Greater London to £1,737 per month, the highest level on record.

Scotland was the only region where rents fell, down 0.1% year-on-year.

Aneisha Beveridge, head of research at Hamptons International, said: “April marks the three-year anniversary of the Stamp Duty surcharge introduction for second-home owners.

“Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns. Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.”

Region

Where London-based landlords purchase buy to lets

Change since 2010

Change since 2015

London

41%

-34%

-17%

South East

11%

5%

-2%

East Midlands

10%

8%

6%

East

10%

-1%

-2%

North West

9%

9%

1%

Yorkshire and the Humber

6%

6%

6%

West Midlands

6%

5%

2%

South West

3%

-1%

1%

North East

2%

2%

1%

Scotland

1%

1%

1%

Wales

<1%

0%

0%

 

 

 

 

North and Midlands

34%

30%

19%

By MARC SHOFFMAN

Source: Property Industry Eye

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P2P lending offers an attractive entry point into property investment

For investors the current turbulent economic environment has made the trade-off between risk and return somewhat more challenging that it has been for a few years. Volatility in the equity markets at the end of last year saw stocks ricochet from record highs to post their biggest fall since 2008 – with the FTSE-100 ending down 12.5% at the end of December 2018. And while stocks bounced back in the first quarter, many are understandably wary.

In such a climate, it’s not surprising that investors are turning to asset classes that might be considered somewhat more stable such as property or bonds. Yet buying property remains expensive and buy-to-let investment is a far less attractive option than it once was.

This is where P2P lending platforms may offer a solution. Less costly than buy-to-let investment, I believe P2P property platforms provide the perfect entry into bricks and mortar investment while offering highly attractive returns.

Buy-to-let investors under pressure

Traditional routes into property investment are being squeezed as never before. The stamp duty surcharge on additional properties introduced in 2016 has made investing in a buy-to-let portfolio more expensive.

Meanwhile, some landlords now face an uphill battle getting mortgages at all, thanks to tighter lending restrictions ushered in by the Prudential Regulation Authority (PRA) at the start of 2017. And this month sees another tranche of mortgage interest tax relief disappear driving up costs once more for buy-to-let investors.

All of this has led to an 80% fall in new lending on buy-to-let properties in two years from £25bn to just £5bn. As a result, many investors spooked by the volatility in the equity markets and put off by the cost and increasing administration associated with buy-to-let investing have begun to look to alternatives such as P2P lending.

In their simplest form, P2P platforms connect those with money to invest with those looking to borrow, enabling investors to target solid returns without the rollercoaster volatility of the stock market, while benefiting from reduced transaction costs.

Additionally, P2P performance has proven to be robust with many of the largest P2P lenders delivering yields of around 4-5%. In 2015, P2P was approved to be included within the ISA wrapper, so interest earned through eligible P2P platforms can now be tax-free.

The rise of P2P, together with a decade of low interest rates has inspired many would-be savers to seek alternatives to traditional banks saving accounts to boost their income.

Lending is robust too. Last year, P2P lending volumes stood at £3bn, according to figures compiled the UK P2P Finance Association (P2PFA), while P2P lending to date now stands at £15bn and within this property-based P2P lending, in particular, is experiencing healthy demand.

Two main routes into P2P property investment

Property-backed P2P lending has become increasingly popular with investors because the loans are secured against bricks and mortar, reducing risk of capital loss, yet maintaining the healthy returns on offer.

There are two main ways to invest in property through a P2P lender.

The first, property crowdfunding is possibly the most familiar. It allows investors a fractional share of a property along with others over a lengthy period of time. Investors stand to make a profit as a property’s value rises over time, along with a share of potential profits from rent (which could be thought of as similar to a stock’s dividend). Of course, ownership also carries the risk of losses if property values drop, if there are void periods and owning a fraction of a property if things go wrong can create headaches in terms of determining the order in which multiple investors should be compensated.

Considered a simpler method, P2P property lenders advance money to property developers to either build small developments or refurbish old buildings into residential accommodation. The loans are for far shorter periods, so investors lose the potential for a windfall return on the longer-term investment in a buy-to-let property that is gaining in value each year. But the returns are generally more predictable and in some cases the investor, or some P2P platforms such as Blend Network, have the first charge on the loan should anything go wrong meaning the risk of significant losses is relatively small.

Investing outside of London offers greater rewards

We believe the biggest growth has recently been in this second area of lending to the broader residential space, which includes bridge funding, small family builders and developers of flats for sale to buy-to-let landlords.

Of course, all P2P property lending is not without risk. Investors should be aware that many platforms offer loans in higher risk assets and cities, which, as at least one recent high-profile case has shown, run a greater risk of default.

Property developers concentrating on prime, city-centre locations – sectors which generally have peaked in recent years, should in our opinion largely be avoided, while loans on high-value properties we believe should be assessed with caution. Moreover, in our experience, small builders who tend to operate in niche, higher-margin markets are less exposed to market volatility than London’s buy-to-let landlords.

We have developed a different model, which focuses on affordable housing, outside London, in less overbought regions where there is still the potential to secure robust returns. We have so far lent out some £6m, with an average return of close to 12% and had no defaults.

Essentially, P2P property investment can offer robust fixed yields, backed by physical property assets. With due diligence undertaken by the P2P platform and available to potential investors, loans are likely to be advanced to borrowers that have credible plans for their properties and pose little risk to investors while at the same time offering investors greater liquidity and more attractive returns than may be found in traditional property investments. That said, we always advise investors to do their own due diligence.

Source: Mortgage Introducer

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How has the UK property market reacted to Brexit?

Jamie Johnson, CEO and co-founder of FJP Investment, takes a look at what leaving the EU – when we eventually do – will mean for the UK property market.

If we are to reflect on the current state of the Brexit negotiations – which have made very little progress in the last few months – it would be easy to assume that the UK is in a state of disarray. But while this may be somewhat descriptive of the current political deadlock in Westminster, we must be careful not to paint all sectors of the economy with the same brush. After all, many of the UK’s leading industries are striding forward.

The property market, for instance, has shown itself to be a beacon of strength and resilience in the face of economic and political turmoil. Initial fears about the future of the market post-EU referendum were quickly dismissed; since the vote, house prices have been steadily rising, new construction projects are taking place up and down the country, and property continues to attract strong levels of domestic and international investment.

So, while it is easy to let Brexit cast a dominating shadow over the economy, it is important to step back and note the positive long-term developments we are seeing in the real estate market. At the same time, we must also consider the challenges currently facing the market notwithstanding the political standoff – obstacles which should be a priority in months and years to come.

What do recent house price trends tell us?

If we are to look back on the headlines that followed in the wake of the EU referendum, the UK was presented with a cascade of doom and gloom predictions. And while there have naturally been some knock-on effects stemming from the vote – most notably houses prices in the capital stagnating – there have also been noticeable advancements that have strengthened the market. For one, the Midlands and North of England have championed house price growth over the past few years, driving up the national average house price.

Since the 2016 vote, house prices have risen at double-digit rates in many areas; by 16% in Birmingham, followed closely by Manchester and Leicester (both up 15%). The growth in property values can in part be attributed to the influx of investment into regeneration projects, which are reviving housebuilding efforts and supporting the improvement of infrastructure and transport links.

Meanwhile, domestic and foreign levels of investment into UK property have also remained strong. With just weeks to go until the (then) 29 March Brexit deadline, the number of transactions recorded in January 2019 for residential properties was 1.3% more than 12 months prior.

These figures just go to show that, while there is some hesitancy, real estate as a traditional asset class continues to offer attractive investment options for prospective homebuyers. After all, it has demonstrated time and time again that it is able to withstand difficult times with confidence and offer strong returns on investment.

Key priorities for the UK property market

As house prices continue to climb and transactions pick up, the challenge becomes to provide enough suitable housing to meet the needs of the population.

Yet, while construction efforts have been bolstered across the country, the currently imbalance between supply and demand remains a top priority. The Conservative government has long touted addressing the national housing shortage as a key policy agenda; in the summer of 2018, Prime Minister Theresa May reaffirmed this mission by pledging to put 300,000 new homes on the market by the middle of the next decade.

There is no doubt that progress has been made in this sphere. Multi-billion pound funding has been committed to construction efforts, planning reforms have been put in place and councils have been given the freedom to borrow more in order to build homes. As a result, in 2017-18, 220,000 homes were constructed – a number that is higher than in all but one of the last 31 years.

That is not to say that the housing crisis deserves any less attention now, however. The reality is that there are still not enough homes to meet the growing demand for accommodation, while construction efforts are progressing slower than necessary to reach the ambitious 300,000 target.

A recent study by Lichfields found that in 2020, about 50% of local authorities are likely to fail the test for building enough homes – the report revealed that only 44.1% of local authorities had up-to-date plans setting out how they could meet the need for new homes. Meanwhile, SME developers are also struggling, particularly when it comes to sourcing funds; 57% cited access to finance as their biggest obstacle.

Irrespective of the eventual outcome of Brexit, speeding up housebuilding efforts across the country must remain a national priority. Creative reforms are certainly needed, and there are some positive steps that can be taken to ensure that housebuilders and developers have access to the funding they need to continue delivering homes. Debt investment products such as loan notes, for instance – which are issued by private investors to the firms constructing a property – are one such measure that could support construction efforts.

Considering recent property trends demonstrates the resilience of UK bricks and mortar. Looking beyond the initial fears posed by Brexit, real estate continues to offer strong returns for buy-to-let investors and has proven its value as an asset class. So, while we can expect some hesitancy from the market as the details of the final EU withdrawal deal are unveiled, there is little evidence to suggest that Brexit will ultimately dampen foreign and domestic investor sentiment towards property.

By Jamie Johnson 

Source: Accountancy Age

government
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Government provides £200m for small firms as Brexit threatens EU funding

The UK government has handed over £200m to help support smaller businesses in the 2019-20 financial year as the future of European Union funding remains uncertain.

The Treasury announced today that it has made the cash available to the British Business Bank, which provides loans to small companies looking to increase in size through investment and venture capital firms.

Chancellor Philip Hammond suggested in the 2018 Budget that £200m could be made available “to replace access to the European Investment Fund [EIF] if needed”.

The EIF is an EU agency that has been a significant source of funding for small UK businesses that struggle to get credit, but Brexit means British firms look likely to lose access to this money over the long term. The Federation of Small Businesses (FSB) today voiced concerns over the loss of EU funding.

The Treasury said the money will be available from today and will cover this financial year. Further funding arrangements have yet to be made and will depend on Britain’s future relationship with the EU.

Venture capital and investment firms will be able to approach the British Business Bank, a public-private partnership, to bid for the extra £200m to invest in small UK firms.

Business minister Kelly Tolhurst said: “This funding, supported by the government-backed British Business Bank, will play a key role in supporting innovative firms access the finance they need to grow and thrive.”

British Business Bank chief executive Keith Morgan said: “We welcome HM Treasury’s confirmation today that this allocation of £200 million is now available to increase provision of much-needed scale-up capital for innovative businesses across the UK.”

The national chairman of the FSB, Mike Cherry, said: “The British Business Bank provides vital support for thousands of smaller firms – particularly in parts of the country where funding is hard to come by – so it’s good to see it receive another £200 million following the launch of the £2.5 billion patient capital programme last year.”

“However, with Brexit on the horizon, serious questions regarding future funding for a UK small business support network that’s heavily reliant on the EU remain unanswered.”

He said: “A promised consultation on the post-Brexit Shared Prosperity Fund that would replace EU funding streams is yet to materialise. The £200 million is welcome, but we need to start thinking much bigger about future investment in the small firms that make-up 99 per cent of the UK business community.”

By Harry Robertson

Source: City AM

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UK house prices growing at slowest pace in almost seven years

Annual house price growth is at its lowest level in almost seven years, with London house prices suffering most.

UK house prices were up by just 0.6% in the year to February with an average of £226,000, a much more subdued picture than the 1.7% increase seen in the year to January.

It marked the lowest annual increase since September 2012 (0.4%) according to the Office for National Statistics, the Land Registry and other bodies who released the figures jointly.

The national slowdown is largely due to falling prices in London and the South East of England.

Prices in London were down by 3.8% in the year to February, faster than the 2.2% decrease seen in the year to January.

In the South East, prices fell by 1.8% during the year.

Mike Hardie, head of inflation at the ONS, said: “Annual house price growth has slowed to the lowest rate in close to seven years.

“Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the South East for the first time since 2011.”

Jamie Durham, economist at PwC, said “uncertainty around Brexit” was weighing on the capital’s housing market but prices there are still the highest in the UK at an average of £460,000.

He added: “Elsewhere in the UK, however, house prices continued to rise. The highest price growth was in the North West, with annual house price inflation of 4.0%. The Midlands also maintained strong annual house price growth, particularly in the West Midlands, with annual growth of 2.9%.”

Paul Smith, chief executive of Haart estate agents said: “While clarity over Brexit would be helpful – it is not absolutely vital. Although prolonging the inevitable is certainly frustrating, this level of uncertainty has become the new normal, and since the New Year, we have seen buyers sweep their fears under the rug and return to the market.

“Pent up demand has been building for months and Brits are ready to move. The extended negotiation period is not going to stop them.”

Ray Rafiq Omar, chief executive of Unmortgage, said: “There’s a real need to think outside the box to help those who are stuck renting and badly want to own their own home.

“The government needs to take greater steps in meeting housebuilding targets and creating some much needed movement within the market.”

Source: Yorkshire Coast Radio

inflation rate
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UK inflation rate holds steady at 1.9 per cent sending Britons’ real wages higher

The UK’s headline annual inflation rate remained unchanged in March, staying at 1.9 per cent, meaning Britons’ real wages are increasing as pay growth outstrips price rises.

Meanwhile the inflation rate including housing costs and council tax stayed at 1.8 per cent, where it has stood since January, monthly figures from the Office for National Statistics (ONS) have shown.

With wages rising at 3.4 per cent, Britons are seeing sustained real wage growth, although weekly pay is yet to return to its pre-financial crisis levels.

While the headline rate is below the Bank of England’s two per cent target, it remains unlikely to change interest rates while Brexit uncertainty clouds the economy.

Both the headline rate and the inflation rate including house prices were 0.1 percentage point below economists’ expectations.

The largest downward contributions to inflation came from falls in recreation and culture, and food and non-alcoholic beverages.

However, there were upward contributions from a variety of categories including transport, principally increases in both petrol and diesel prices, miscellaneous goods and services, and from clothing and footwear.

Mike Hardie, head of inflation at the ONS, said: “Inflation is stable, with motor fuel prices rising between February and March this year, offset by falls in food prices as well as the cost of computer games growing more slowly than it did at this time last year.”

Tom Stevenson, investment director for personal investing at Fidelity International, said: “The Bank of England will view today’s inflation data as the least problematic of the week’s three economic announcements.”

“Prices are rising pretty much in line with the Old Lady’s two per cent target, giving the central bank cover to continue sitting on its hands,” he said. “As such the CPI data sits between yesterday’s employment data – which pointed towards higher interest rates in due course – and tomorrow’s retail sales numbers – which probably won’t.”

Chief economic adviser to the EY Item Club, Howard Archer, said: “Any help to consumer purchasing power is particularly welcome as the economy is likely to be hampered by prolonged Brexit uncertainties following the flexible extension of the UK’s exit from the EU to 31 October.”

“Consumers have generally been the most resilient part of the economy and they have been helped by real earnings growth climbing to 1.6 per cent in the three months to February, which was the best level since mid-2016,” he said.

By Harry Robertson

Source: City AM