Closing post
Time to recap.
Average UK mortgage rates have risen as major lenders hike their rates, despite the Bank of England’s cut to borrowing costs last week.
The European Commission has fined Meta almost €800m for breaching EU competition law with its classified ads service, Facebook Marketplace.
Luxury goods maker Burberry has posted its biggest share price jump in the last 20 years, after announcing a cost-cutting scheme and a turnaround plan.
The pound has recovered earlier losses, which saw it hit its lowest level against the US dollar since July.
Gas prices in the UK and Europe hit their highest level in a year, due to fears of supply disruption from Russia and the colder weather.
Shares in Disney have hit a six-month high, after it beat Wall Street expectations thanks to its Inside Out 2 and Deadpool & Wolverine films.
Rachel Reeves will announce plans to merge local government retirement schemes into “megafunds” as she tries to revive long-running efforts to overhaul the public pension system.
Burberry's best day in at least 20 years
Burberry has posted its best day on the London stock market in at least the last 20 years.
Shares in the luxury goods maker have closed for the night up 18.6%, which is its biggest daily rise since at least November 2004 (my data doesn’t go any further back!).
The City are welcoming Burberry’s new £40m cost-cutting programme and turnaround plan to revive the fortunes of the ailing British luxury fashion brand.
Businesses accelerate reshoring amid geopolitical uncertainties and rising costs
Geopolitical uncertainties and rising costs are encouraging companies to ‘reshore’ their operations closer to home, a new survey from Bain & Company shows.
Bain’s biennial operations survey of CEOs and chief operating officers has found a rise in companies planning, or already investing in and executing, reshoring and near-shoring.
According to Bain, 81% of CEOs and COOs say their companies have plans to bring supply chains closer to home or to their main market, up from 63% in 2022.
There’s also increased interest in ‘split-shoring’, where businesses balance a mix of offshore production with other key manufacturing activity close to home.
One factor is that companies are trying to cut their dependence on China.
A second is Joe Biden’s 2022 Inflation Reduction Act, which provides US companies with subsidies and tax credits to incentivize reshoring and near-shoring.
Hernan Saenz, partner at Bain & Company and global head of its Performance Improvement practice, says:
“We believe the current acceleration of reshoring across key markets worldwide is a crucial trend that demands CEOs’ attention.
The multiple disruptions companies have grappled with since the pandemic mean the question for company leaders is no longer whether to reinvent supply chains but how to do that so their operations are made more cost-competitive, resilient, sustainable, and agile in responding to evolving markets and customer needs.”
Although the euro has also recovered from its earlier lows, the growing economic gap between the US and Europe threatens to weigh on the currency in future, economist Mohamed El-Erian has warned.
El-Erian, the chief economic adviser to Allianz, told Bloomberg TV today:
“If you look at the good, the bad and the ugly of the global economy, unfortunately Europe is the ugly.
The market has understood that divergence is a major story going forward.”
Back in the financial markets, the pound has recovered its earlier losses against the US dollar to trade just over $1.27.
Meta has pledged to appeal against the EU’s fine.
It says:
“Today, the European Commission announced a decision claiming that Facebook Marketplace has hindered competition for online marketplaces in Europe.
“This decision ignores the realities of the thriving European market for online classified listing services and shields large incumbent companies from a new entrant, Facebook Marketplace, that meets consumer demand in innovative and convenient new ways.
“We will appeal this decision to ensure that consumers are well served in the EU.”
Meta fined €800m foro EU competition law breach
The European Commission has fined Meta almost €800m for breaching EU competition law with its classified ads service, Facebook Marketplace.
The Commission fined Meta €797.72m for tying Marketplace to its Facebook social media platform, which meant consumers on Facebook were regularly exposed to Marketplace whether or not they wanted to be.
This gave Meta a “substantial distribution advantage” over rival classified ad platforms.
The ruling also said Meta had unilaterally imposed unfair trading conditions on other classified ads services providers who advertise on Meta’s platforms, including allowing Meta to use ad-related data generated by other advertisers for the benefit of Facebook Marketplace.
It orders Meta to bring the conduct to an end and refrain from repeating the infringement, in addition to the fine.
The Commission said that while market dominance was in itself not illegal under EU antitrust rules, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition.
Margrethe Vestager, executive vice-president of the Commission in charge of competition policy, says:
“Today we fine Meta 797.72 million euros for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms.
“Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers.
“It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules.
“Meta must now stop this behaviour.”
Updated
The average cost of household building work is up by almost a fifth (19%) on the last quarter, according to new data reported by PA Media today.
The average cost of a building job is now £12,634 due to the higher cost of labour and materials, up from £10,626 in July to September this year, Checkatrade’s inaugural UK Home Improvement Index found.
However the increase has not dampened consumer demand, with the number of building jobs up by 1% between quarters one and three, the data, based on more than 10.5 million jobs carried out by tradespeople in the UK, shows.
The average cost of a kitchen fitting has gone up by 12% on the previous quarter – now £7,376 compared with £6,574, while insulation installation costs are up 20% to an average £4,634.
The average cost of a plastering job in the third quarter was up 16% to £2,343 and gardening jobs increased by 10% to £679.
The average “handyman” job – typically of a smaller scale than building work – increased by 25% from to £563.
Disney shares hit six-month high
Shares in Disney have jumped almost 10% at the start of trading in New York, as traders welcome its forecast-beating results.
They’re up 9.8% at $112.77, their highest level since May.
£100m economic regeneration boost for Grangemouth and Falkirk
The UK and Scottish governments are to pump £100m into new energy and economic regeneration projects around the closure-hit Grangemouth oil refinery and the neighbouring town of Falkirk.
The deal, which is being signed in Falkirk by Scottish and UK ministers today, includes a new “carbon utilisation” centre to reuse waste CO2, and a bioeconomy accelerator pilot project for the whisky and food sectors at Grangemouth, where Petro-Ineos plans to close down Scotland’s last oil refinery in June 2025.
Its closure, which will lead to more than 400 direct job losses and hit several thousand people in the wider economy, is the most serious immediate challenge to the UK government’s green jobs and energy transition agenda in Scotland, where the oil industry is a powerful force.
Highly skilled workers may emigrate, as most face significant uncertainty. There are proposals for carbon capture pilots, and sustainable aviation fuel and hydrogen production projects there but widespread scepticism about their likely success.
The Scottish and UK governments are co-investing £80m in the overall growth deal and £20m on new energy projects at Grangemouth; Falkirk council and Scottish Canals are spending a further £49m.
Forth Valley college will receive funding for a skills transition centre, while money will also be ploughed into regenerating brownfield sites in Grangemouth, new transport hubs and upgrading of the Forth and Clyde canal and its workshops, and an arts park alongside it.
Kate Forbes, Scotland’s deputy first minister, said:
“The growth deal will support the region to grasp the opportunities of the transition to net zero and remain at the forefront of innovation and manufacturing in Scotland, complemented by a community-led programme of projects in Grangemouth.”
Today’s results from Disney show that CEO Bob Iger’s “quality-over-quantity approach” is paying off, says Adam Vettese, analyst at investment platform eToro:
A particular bright spot was the company’s entertainment segment, which enjoyed double-digit growth in revenue and a big bounce in operating income, in part thanks to strong box office results over the summer from such global hits as ‘Inside Out 2’ and ‘Deadpool & Wolverine’.
“Disney’s streaming business as a whole turned a profit for the first time ever in the previous quarter and the company has seen profits continue to climb in this area, which is quite the turnaround – just a year ago, the streaming business was bleeding hundreds of millions of dollars per quarter, but now it is making hundreds of millions instead. At this stage, Disney is deep into its shift in focus from linear media networks towards streaming, so a reported 6% decline in revenue from traditional networks is no great cause for consternation, though an accompanying plunge in operating income, including a more than 50% drop for its international linear networks, may still give investors pause.
“There was a small rise in profit at its experiences segment, which includes Disney’s famous theme parks, with healthy growth in domestic income offset by sharp falls in profitability at its various international parks. Forward guidance for the overall company was encouraging, predicting ‘high-single digit adjusted EPS growth compared to fiscal 2024’ and a $3 billion buyback plan. As a whole, it’s an upbeat earnings report and shares in Disney rose more than 9% in pre-market trading.”
Over in the US, the number of Americans filing new claims for unemployment support has fallen.
In a sign that Joe Biden is handing a solid labor market onto Donald Trump, there were 217,000 fresh ‘initial claims’ for jobless support last week. That’s down from 221,000 the previous week.
BoE's Mann: Economic uncertainty is reason to leave rates on hold
Bank of England policymaker Catherine Mann is warning that the UK economy is likely to face elevated “macroeconomic volatility” in the next few years.
In a speech to the Annual Conference of the Society of Professional Economists in London this lunchtime, Mann is examining the last forty years of the ‘Great Moderation’, which brought low inflation and macroeconomic stability.
Mann points out that experts disagree on whether good policy or good luck was the prime cause of the Great Moderation (while central bankers tend to believe policy was responsible)
One risk that could help unwind the Great Moderation is climate change, she points out, saying:
The introduction of various uncoordinated climate mitigation policies may introduce volatility. Price-based instruments such as carbon taxes create volatility in output, and quantity-based instruments such as an ETS create price volatility. In addition, there is added uncertainty about future changes to policy stringency that may further accentuate macroeconomic volatility.
A second risk is global trade fragmentation, as shocks can be transmitted to the UK via the exchange rate, imports and exports, as well as financial markets.
Mann points out that uncertainty about trade policy in itself may have damaging economic effects and increase volatility, adding:
The latest political developments across the Atlantic have not made a disorderly trade scenario less likely, which would have consequences for output and inflation in the UK.
Financial Market volatility and policy-induced volatility and spillovers are also potential threats, she adds.
Mann – who opposed last week’s cut to UK interest rates - concludes that these risks, and uncertainty about the economic outlook, are a reason to leave borrowing costs on hold:
In the face of uncertainties about the outlook for inflation and output, waiting buys time to learn more about developments, to make a better assessment of whether the inflation risk has subsided sufficiently to justify changing the policy stance. In the current context, an activist stance holds the policy rate firmly until sufficient evidence on diminished inflation persistence is revealed; and then to move forcefully.
Disney’s Experiences division, which includes its theme parks, resorts and cruise ships, has achieved record revenue and operating income for the last year.
In today’s results, the company says:
In Q4, Experiences revenue increased $0.1bn, or 1%, and operating income of $1.7bn was a decline of $0.1bn, or 6% compared to the prior-year quarter.
Domestic Parks & Experiences operating income increased in Q4, on comparable attendance to the prior-year quarter, driven by higher guest spending, partially offset by higher expenses and costs related to new guest offerings driven by Disney Cruise Line. International Parks & Experiences operating income declined in Q4.
Updated
Inside Out 2 and Deadpool & Wolverine drive earnings at Disney
The sucess of this summer’s films Inside Out 2 and Deadpool & Wolverine have helped Walt Disney to forecast-beating results today.
Disney has grown its adjusted per-share earnings to $1.14 for the July-September quarter, up from $0.82 a year earlier, and ahead of forecasts of $1.10 per share.
Revenues increased by 6% in the quarter, although pre-tax income dipped by 6%.
Disney’s Content Sales/Licensing and Other revenues rose by 39% in the quarter.
Disney says:
Pixar’s Inside Out 2 and Marvel’s Deadpool & Wolverine broke numerous box office records and helped drive $316m in operating income at Content Sales/Licensing and Other in Q4.
It also increased its Disney+ Core paid subscriber base by 4.4 million during the quarter, to more than 120 million.
Disney has also forecast it will achieve “high single-digit” growth in adjusted earnings per share (EPS) in the next financial year, rising to “double digit adjusted EPS growth” in the 2026 and 2027 fiscal years.
CEO Bob Iger says:
This was a pivotal and successful year for The Walt Disney Company, and thanks to the significant progress we’ve made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future.
Updated
The dollar is trading at its highest level against a basket of currencies in over a year.
The dollar index is up 0.4% today, to its highest since the start of November 2023, extending the rally which began after the US election.
Shares in gold producer Resolute Mining have been suspended at the company’s request, amid a tax row that has seen the company’s CEO detained in Mali.
Resolute told shareholders that a temporary halt on trading its shares on the Australian Stock Exchange has begun, and that the company will provide further updates “as and when appropriate”.
Its chief executive, Terry Holohan, and two other Resolute employees were detained in Bamako, Mali’s capital, last Friday, after attending a meeting to discuss a demand to repay back taxes and a renegotiation of terms over its Syama gold mine.
Bloomberg reports that Mali are demandng Resolute pay about $160m to resolve the tax dispute.
Gold is on track for its fifth daily fall in a row.
The spot gold price is down 1% today, to $2,547 per ounce. At the end of last month, it hit a record of $2,790 per ounce, but has been dipping through November.
George Saravelos, of Deutsche Bank Research, says this fall has “confounded expectations”, and cites three messages we can take from it:
This market is NOT worried about US credit risk. If the market was becoming concerned about excessive fiscal deficits, fiscal dominance and a loss of central bank independence in the US gold would be the first thing that would be going up. This is of course also reflected in the very muted moves in US term premia and inflation break-evens so far. We see gold price action as confirming the argument we have been making throughout the year that the US is not at risk of a twin deficit currency crisis any time soon.
Demand for gold reserves from central banks is going down. The reasoning here is simple: Trump policy is likely to put weakening pressure on many emerging market currencies most notably CNY. By extension, many central banks now need to spend dollar reserves to defend their FX from capital outflows and prevent excessive weakening. We have been showing that Asian central banks have been diversifying their holdings in to gold. They now have to spend more of these dollars defending their currencies instead.
The USD remains the pre-eminent safe-haven currency of choice. Some have been arguing that the dollar’s appeal is in structural decline, with the weaponization of sanctions and trade a key driver. In contrast, our view has been the opposite: while public sector demand for dollar assets might be dropping, private sector demand has been rising and matters much more: the greater the risk a government gets sanctioned by the US, the bigger the net demand for dollars. Price action since the US election victory is therefore not only consistent with a rising risky asset demand for US assets (US over global equities) but safe-haven demand too (dollar up against all global FX and gold).
Ukrainian government bonds are rallying again this morning, on anticipation that Donald Trump’s return to the White House could end its war with Russia.
Reuters has the details:
Longer-dated maturities saw the biggest gains, with 2035 paper rising 2.6 cents to be bid at 56.73 cents, its highest. since the bonds were launched in early September as part of the country’s debt restructuring, Tradeweb data showed.
Trump has pledged a quick end to the Russia-Ukraine war once he takes office in January, but he has yet to share details on how he would achieve it.
UK mortgage rates rise
Bad news for those looking to buy a house in the UK: mortgage rates are moving up again.
Moneyfacts has reported that the average fixed-term mortgage rates have risen this morning, even though the Bank of England cut interest rates last week.
They report:
The average 2-year fixed residential mortgage rate today is 5.48%. This is up from 5.44% the previous working day.
The average 5-year fixed residential mortgage rate today is 5.21%. This is up from 5.17% the previous working day.
Several banks have raised their mortgage rates in recent days, such as Santander, TSB, HSBC, Virgin Money and Nationwide Building Society.
This follows a pick-up in the yields (rate of return) on UK short-term government bonds since the budget. They are used to price mortgage rates, and have risen as traders have anticipated higher borrowing.
Statistics body Eurostat has reported that the eurozone economy grew by 0.4% iin the third quarter of this year, matching its initial ‘flash’ estimate.
That means growth accelerated in July-September, up from 0.2% in April-June.
Ireland’s GDP grew by 2%, while Spain and the Netherlands both expanded by 0.8%. France’s GDP rose by 0.4%, while Germany lagged behind with 0.2% growth.
Eurostat also reports that employment in the eurozone rose by 0.2% in the last quarter.
Trump trade drives pound down to four-month low against the dollar
Donald Trump’s election victory last week is continuing to shift the markets.
The pound has dropped to its lowest level against the US dollar since early July this morning, down half a cent to $1.2653.
On election day, sterling was worth $1.30, but it has been sliding since as traders have anticipated that Trump’s tax cuts and tariffs will be inflationary, meaning US interest rates stay higher.
The euro has dropped to a one-year low, at €1.0524 against the US dollar.
These latest losses came as the Republicans secured a majority in the US House of Representatives, which could give Donald Trump sweeping power to enact his legislative agenda.
Kathleen Brooks, research director at XTB, fears the pound could head lower….
President Trump’s clean sweep at last week’s election has been confirmed with the Republicans winning the House. This was expected; however, it gave the dollar a boost overnight, and GBP/USD sunk below $1.27.
If we don’t see a stabilization in the pound, then it opens the door to a further decline to $1.25. There were some concerns that winning the trifecta of elections could give President elect Trump concentrated power, however, his choice of John Thune for Senate majority leader is interesting – he has clashed with Trump before and was not Elon Musk’s choice for the role.
This suggests two things: firstly, that the Trump administration could surprise us. Secondly, that although Republicans now control the main organs of power in the US, the President elect may not get his way on all matters. The question is whether this appointment will halt the Trump trade, stocks are pointing to a lower open in the US, although the dollar remains upbeat.
Stephen Innes, managing partner at SPI Asset Management, predicts a “full-blown dollar tsunami’ once Trump is back in the White House:
Investors are caught in a whirlwind of global uncertainty and trade anxieties. With Trump’s anticipated tariffs looming like storm clouds, those markets in the line of tariff fire are bracing for impact.
I hope you’re not underestimating what’s brewing because Trump’s trade and domestic agenda is setting up a US dollar moonshot like we’ve never seen. This week’s price action? Just a tremor before the full-blown dollar tsunami that’s bound to hit with Trump’s second term.
IEA: Oil market to be in surplus in 2025
In other energy news, the International Energy Agency has predicted that the oil market will run a surplus next year.
In its latest monthly report, the IEA says that concerns about the health of the global economy have hit the oil price in recent weeks, with Chinese demand contracting for a sixth straight month in September.
It predicts that the oil market will be “well-supplied” in 2025; the IEA estimates that oil consumption will rise by 990,000 barrels per day next year, while non-OPEC+ supply is expected to grow by 1.5m barrels per day in 2025.
As a result, even if the Opec+ group continues to postpone its planned production increase, the IEA reckons supply will outpace demand.
It says:
Our current balances suggest that even if the OPEC+ cuts remain in place, global supply exceeds demand by more than 1 mb/d next year.
With supply risks omnipresent, a looser balance would provide some much-needed stability to a market upended by the Covid pandemic, Russia’s full-scale invasion of Ukraine and, most recently, heightened unrest in the Middle East.
Updated
UK and European gas prices at one-year high
UK and European gas prices have risen to their highest levels in a year.
The European gas benchmark has risen by 4.5% this morning to €45.65 per megawatt hour, the highest since November 2023.
The price of next-day gas in the UK is also trading at its highest since last November, up 4% to 115p per therm.
The increase comes as colder weather in Europe drive up demand for heating. Low wind speeds have also caused a “dunkelflaute” in the region, meaning less power could be generated by wind farms.
A drop in supplies from Russia is also a factor.
Bloomberg is reporting that Russia’s Arctic LNG 2 project has slashed output at its gas fields to nearly zero so far this month, due to western sanctions.
And….Germany has warned its state-operated gas import terminals to reject any Russian cargoes of liquefied natural gas, after it was notified of a planned shipment, the Financial Times reports this morning.
According to the FT, the German economy ministry has instructed Deutsche Energy Terminal “not to accept any deliveries of Russian LNG”.
A third possible factor is that Austrian oil and gas group OMV has been awarded €230m by the International Chamber of Commerce (ICC) over irregular German gas supplies from Russia’s Gazprom.
OMV plans to offset the claim against its bills to Gazprom Export to obtain its compensation, but there are concerns that Gazprom could potentially stop supplies to Austria in response.
Austrian energy minister Leonore Gewessler wrote in a post on X yesterday:
The current developments surrounding the OMV supply contract for Russian gas are to be taken seriously, but do not pose an immediate threat to our security of supply. We have always known that gas supplies from Russia are unsafe.
“We have been preparing for a possible supply disruption for a long time. In any case, our country’s gas supply is secure. Our gas storage facilities are full.”
Updated
Tracy Blackwell, chief executive of Pension Insurance Corporation, has backed Rachel Reeves’s pension reforms as “a step in the right direction”.
Blackwell told BBC Radio 4’s Today programme that new pension “megafunds” will benefit the taxpayer.
We think it’s a really important step in the right direction. It really mirrors what has already happened in the defined benefit private sector world.
We can use our economies of scale and expertise to invest in complex projects in the UK.
It doesn’t solve all the issues but it is very much a step in the right direction.
Updated
Shares in Burberry have jumped 6% at the start of trading in London, as traders react to its turnaround plan.
Pub chain Young & Co has reported that last month’s budget will drive up its costs by £11m a year.
Simon Dodd, chief executive of Young’s, told shareholders that measures such as the increase in employers’ national insurance contributions will be costly:
The new government’s budget will result in significant increased costs for our industry in the near term through rises in National Minimum Wage and Employer’s NI payments.
We expect the cost impact to be approximately £11m on an annualised basis from next April. We will work to see how we can mitigate these headwinds without passing on all the cost to our loyal customers.
Updated
Burberry launches turnaround plan as sales fall
Luxury fashion group Burberry has announced a turnaround plan that aims to revitalise its sales and cut costs.
Burberry’s new CEO, Joshua Schulman, told the City this morning that his ‘Burberry Forward’ plan will “reignite brand desire”, improve performance and drive long-term value creation.
Schulman says he is aiming to attract a broad base of luxury customers, and criticises his predecessors for moving “too far from our core with disappointing results,” by trying to be modern rather than focusing on the firm’s traditional strengths.
Schulman explains:
We recognise there is much to be done in the short term, and we are acting with urgency. We are confident we can get back to generating £3 billion in annual revenue over time, while rebuilding margins and driving strong cash generation.
Burberry is also launching a cost savings programme to save £40m per year, and also suspending its dividend.
Burberry has also reported that revenues fell 22% year-on-year in the six months to the end of September, meaning it made a loss of. £53m, down from a profit of £223m the previous year.
Rachel Reeves has told the Financial Times that her plans will create eight pension “megafunds”.
She has told the Financial Times that these eight pools, worth an average £50bn by 2030, would end the role of local councils in administering the money and boost “fast-growing British businesses and infrastructure”.
Reeves told the FT:
Everything will go through the pools rather than through local authorities.
This will deliver the megafunds that have eluded the UK for too long.
Updated
Amanda Blanc DBE, chief executive officer at Aviva, reckon’s Reeves’s shake-up will benefit savers, saying:
“As the UK’s largest pension provider, we warmly welcome today’s announcement. These proposals will help get more savers into larger schemes that can offer better value and more opportunities for productive investment”.
Pension reforms will help lift UK from bottom of G7 investment league, says IPPR
The IPPR thinktank is hopeful that combining the UK’s 86 separate local government pension schemes into a single pot will help drive investment.
Dr George Dibb, associate director for economic policy at IPPR, says:
With the lowest levels of investment in the G7 — and among the lowest in the developed world — the UK has languished at the bottom of the league for 24 of the past 30 years. These pension fund reforms should help to end that.
Consolidating pension pots into ‘megafunds’ will unlock substantial capital for UK investment, enabling more high-impact, high-return ventures. Paired with a comprehensive industrial strategy and the highest levels of public investment since the 1970s, these reforms will help shift the UK economy toward sustained investment and growth.
Updated
Former Bank of England economist Neil Record is concerned that Rachel Reeves’s plan to create pension megafunds could leave taxpayers were “on the hook if investments went wrong”, the Daily Telegraph reports.
Record says:
This is not the case in the private pension market, where the number and size of failed pension funds now in the Pension Protection Fund illustrates how hard it is to get investments sufficiently right to pay the pensions promised.
Updated
Fears over UK plan to create pension 'megafunds' to invest in infrastructure.
Chancellor Rachel Reeves is to lay out plans today to create pension “megafunds” in a drive to to increase infrastructure investment.
Reeves will tell the City tonight that she will introduce a new pensions bill next year, to pool assets from the 86 separate local government pension schemes (LGPS) into larger vehicles.
Those 86 defined-benefit schemes cover 6.5 million members and £360bn in assets. Putting them into larger pots would create a set-up similar to those in Australia and Canada, where single large pension funds managed by professional investors invest more in infrastructure
The chancellor will tell an audience of City leaders and chief executives at the Mansion House tonight that the plan could unlock £80bn of investment.
Reeves says:
Last month’s Budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth.
That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off.
But… there are concerns that the plan could put people’s retirement savings in danger.
Tom Selby, director of public policy at AJ Bell, fears that the interests of savers may be left behind as ambitious measures could put savers’ money at risk and undermine their retirement goals.
Selby says:
The government’s hope will be that by moving from having 86 local government schemes down to a single one, or a few, will benefit from economies of scale.
My overarching concern is that the needs of the saver, whose money is ultimately going to be risked, will be forgotten about. There’s a reason that an occupational scheme has a trustee to look after the interests of members. Part of that is investing their money to maximise returns and get the best retirement outcomes possible.
Selby adds:
Conflating a government goal of driving investment in the UK and people’s retirement outcomes brings a danger because the risks are all taken with members’ money. If it goes well, everyone can celebrate. But it’s clearly possible that it will go the other way, so there needs to be some caution in this push to use other people’s money to drive economic growth.
It needs to be made very clear to members what is happening with their money. One of the strengths of the system we have today is that investment decisions for members of defined contribution (DC) default funds and defined benefit (DB) schemes have independence baked in, usually via the appointment of trustees. Those trustees are required to make those decisions first-and-foremost with the aim of delivering the highest possible income in retirement for members.
Updated
Introduction: Renters are squeezed by lower supply and rising prices
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK tenants are facing a “chasm” when trying to find a property to rent, surveyors are warning today, as demand rises and the supply of rental properties falls.
The Royal Institution of Chartered Surveyors (RICS) has reported that renters are being squeezed by lower supply and rising prices in the lettings market. A net balance of +19% of surveyors polled reported that tenant demand in their area increased over the last three months.
At the same time, landlord instructions, which measures how many landlords are making their property available for rent, fell over the quarter.
RICS’s UK Residential Market Survey found that a net balance of +33% of respondents expects rental prices to be driven higher over the coming three months, due to this mismatch between supply and demand.
RICS says that “woes for renters persist” as rental properties continue to disappear from the market and demand remains resilient in most regions.
RICS president, Tina Paillet, said:
Our data continues to indicate that renters are feeling the pressure from a limited supply of rental properties and rising rents.
While the Autumn Budget announcement of immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, it will make it more challenging to address the critical shortage of rental homes.
RICS’s latest monthly survey also found that UK house prices continued to rise in October, although they did drop in Yorkshire and the Humber, and the South West of England.
More surveyors expect prices to rise over the next year than to fall.
RICS says:
Virtually all parts of the UK are expected to see a rise in house prices in the year to come, led by firm growth across Northern Ireland and Scotland.
The agenda
9am GMT: IEA’s monthly oil market report
9.30am GMT: UK mortgage and landlord possession statistics: July to September 2024
10am GMT: Eurozone GDP for Q3 2024
10am GMT: Eurozone employment report for Q3 2024
1pm GMT: Bank of England policymaker Catherine Mann gives a speech on “Revitalising the global economy”
1.30pm GMT: US PPI index of producer price inflation for October
1.30pm GMT: US weekly jobless claims
Tonight: Mansion House speeches from Rachel Reeves and BoE governor Andrew Bailey
Updated
