The UK economy, high inflation, rising interest rates, and the increasing cost of living

[shaz619]

You can sell back to Royal Mint. Its not only an hard asset which will increase in value but for me its an asset as a safety net which may be needed to purchase simple produce such as bread/milk IF in 5-10 years paper money, digital money collapses or becomes worthless.

Nice, I have read silver especially is a good play 5-10 years from now. But you are right, it may be an unfortunate security we need in the future. In terms of your portfolio balance, what is the % split between cash in banks, isa or other stock investments, digital currency if you have any stake, property (residential/let) and precious metal coins

 

[MenInG]

The UK economy will shrink and perform worse than other advanced economies as the cost of living continues to hit households, the International Monetary Fund (IMF) has said.

The IMF said the economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted.

However, the IMF also said that after the Autumn Statement it thinks the UK economy is now "on the right track".

Chancellor Jeremy Hunt said the UK outperformed many forecasts last year.

In its World Economic Outlook update, the IMF, which works to stabilise economic growth, said the UK's Gross Domestic Product (GDP) would shrink rather than grow by 0.3% this year.

It predicted the UK would be the only country - across the world's advanced and emerging economies - to suffer a year of declining GDP.

The IMF said its new forecast reflected the UK's high energy prices and financial conditions, such as high inflation.

IMF Chief Economist Pierre-Olivier Gourinchas told the BBC that for 2022, the UK had had "fairly robust" growth at 4.1%, which he said was "one of the strongest growth numbers in Europe".

BBC

 

[shortbread]

Expecting a 0.5% interest rate hike this month, expect property prices to shrink ball park 15-20% this year.

 

[shortbread]

House prices fall for fifth month in a row

House prices in the UK fell for the fifth month in a row in January, according to Nationwide Building Society.

The price of the average property last month was £258,297, down by 0.6% on December.

Annual house price growth slowed to 1.1%, down from 2.8% in December.

The country's biggest building society said it would be "hard for the market to regain much momentum in the near term."

On Tuesday, the Bank of England reported lenders had approved fewer mortgages than expected in December, about 35,000 compared with more than 46,000 in November.

That is the lowest number since January 2009, excluding the pandemic lockdowns.

Nationwide said the decline in approvals followed a big slowdown in mortgage applications following the government's mini-budget in September.

https://www.bbc.co.uk/news/business-64471258

 

[MenInG]

The Bank of England raises its base rate from 3.5% to 4% - the highest in 14 years

A higher interest rate will be welcomed by savers, but have a knock-on effect for those with mortgages, credit card debt and bank loans

The 4% rise means people with a typical tracker mortgage will pay about £49 more a month - while those on a variable mortgage will pay another £31 a month

However, Governor Andrew Bailey says there are signs the UK has "turned the corner" on inflation

The Bank says the UK is still set to enter recession this year, but this will be shorter than previously thought

The slump is now expected to last just over a year rather than almost two as energy bills fall and price rises slow

As a result unemployment may not rise as much as previously thought with firms expected to make fewer redundancies

 

[JaDed]

Energy prices should help atleast NG prices are super low.

 

[daytrader]

BP profits rise to £23bn, adding fuel to calls for toughened windfall tax
Figure comes on back of sharp increase in gas prices linked to Russia-Ukraine war

BP’s annual profits more than doubled to $28bn (£23bn) in 2022 as a sharp increase in gas prices linked to the Ukraine war boosted its earnings, adding fuel to calls for a toughened windfall tax.

The huge profit is likely to anger consumer and green groups, as oil companies reap rewards from higher gas prices while many households struggle to cope with a sharp rise in energy bills.

The Labour party last week asked for Britain’s energy profits levy to be revamped to capture more of the exceptional earnings made by oil and gas firms, after Shell’s profits more than doubled to $40bn, the biggest profits in its 115-year history.

The introduction of a windfall tax on North Sea oil and gas firms last year followed comments by the BP chief executive, Bernard Looney, in which he likened the company to a “cash machine” and admitted the levy would not prevent it making any planned investments.

BP said it had incurred total taxes of $15bn worldwide – its highest annual total. In the North Sea, which it said accounts for less than 10% of global profits, it will pay $2.2bn in tax for 2022, including $700m because of UK windfall taxes, known as the energy profits levy. In November, it said it expected to pay $800m in windfall tax on its North Sea operations.

The oil and gas company reported underling profits of $4.8bn for the final three months of the year, bringing its annual earnings to $27.7bn, well ahead of the underlying profits of $12.8bn posted in 2021.

...
https://www.theguardian.com/business/2023/feb/07/bp-profits-windfall-tax-gas-prices-ukraine-war

 

[MenInG]

The UK is set to be one of the worst performing major economies in the world this year, according to the International Monetary Fund (IMF).

It says the UK economy's performance in 2023 will be the worst among the 20 biggest economies, known as the G20, which includes sanctions-hit Russia.

The IMF predicts the UK economy will shrink this year, although this is a small upgrade from its last forecast.

It also warned of a "rocky road" for the global financial system.

It follows the collapse of two US banks last month, closely followed by a rushed takeover of Swiss banking giant Credit Suisse by its rival UBS, which sparked fears of another financial crisis.

The IMF had already forecast that the UK would experience a downturn this year and be bottom of the pile of the G7 - a group of the world's seven largest so-called "advanced" economies, which dominate global trade and the international financial system. The UK topped the group in 2022 during the pandemic rebound.

It now expects the UK economy to shrink by 0.3% in 2023 and then grow by 1% next year.

Although the UK is forecast to have the worst economic performance this year, the IMF's latest prediction is slightly better than its previous expectation of a 0.6% contraction, made in January.

IMF researchers have previously pointed to Britain's exposure to high gas prices, rising interest rates and a sluggish trade performance as reasons for its weak economic performance.

Forecasts are made to give a guide to what is most likely to happen in the future, but they are not always right. For example, previous IMF forecasts picked up fewer than 10% of recessions a year ahead of time, according to an analysis it conducted of recessions around the world between 1992 and 2014.

Responding to the latest IMF's predictions, Chancellor Jeremy Hunt said: "Our IMF growth forecasts have been upgraded by more than any other G7 country.

"The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone."

But Rachel Reeves, Labour's shadow chancellor, said the estimates showed "just how far we continue to lag behind on the global stage".

"This matters not just because 13 years of low growth under the Tories are weakening our economy, but because it's why families are worse off, facing a Tory mortgage penalty and seeing living standards falling at their fastest rate since records began," she added.

Liberal Democrat Treasury spokesperson Sarah Olney said the forecast was "another damning indictment of this Conservative government's record on the economy".

A number of forecasters think the chances of a recession in the UK this year are declining. An economy is usually said to be in recession if it shrinks for two consecutive three-month periods.

The independent Office for Budget Responsibility now expects the economy to contract by 0.2% this year but avoid a recession.

Bank of England governor Andrew Bailey also said recently that he was "much more hopeful" for the economy, and it was no longer heading into an immediate recession.

BBC

 

[daytrader]

UK chip giant Arm files for blockbuster US share listing

British microchip designing giant Arm has filed to sell its shares in the US, setting the stage for what could be the biggest stock market listing this year.

The Cambridge-based firm is reportedly aiming to raise up to $10bn (£8bn).

In a blow to the UK, the company said in March that it did not plan to list its shares in London.

Arm was bought in 2016 by Japanese conglomerate Softbank in a deal worth £23.4bn. At the time Arm was listed in London and New York.

Softbank said it had "confidentially submitted a draft registration statement" for the listing to the US Securities and Exchange Commission (SEC).

The announcement did not reveal how much it planned to raise or when the share sale might take place.

The firm was seeking to raise between $8bn and $10bn through the listing this year on the technology-heavy Nasdaq platform, according to reports.

Sometimes referred to as the "crown jewel" of the UK's technology sector, Arm was founded in Cambridge, England, in 1990.

The firm designs the tech behind processors - commonly known as chips - that power devices from smartphones to game consoles.

Its designs are used by chip manufacturers like the Taiwan Semiconductor Manufacturing Company and companies like Apple and Samsung to build their own processors.

Listing a firm on a stock exchange takes it from being a private to a public company, with investors able to buy and sell shares of a company's stock on specific exchanges.

Earlier this year, Arm said it did not plan to pursue a London Stock Exchange listing.

Reports in January said that UK Prime Minister Rishi Sunak had restarted talks with Softbank about a possible London listing.

Arm's decision raised concerns that the UK market is not doing enough to attract tech company stock offerings, with US exchanges seen to offer higher profiles and valuations.

The registration shows that Softbank is pushing ahead with the multi-billion dollar sale despite difficult conditions in the global financial markets.

The number of stock market listings has fallen sharply since Russia's invasion of Ukraine. At the same time, shares in major technology companies have fallen in the wake of the pandemic.

Softbank said the listing was "subject to market and other conditions and the completion of the SEC's review process."

...
https://www.bbc.com/news/business-65445428

 

[MenInG]

Interest rates hiked to 5%

UK interest rates have been raised to 5% by the Bank of England, as it battles to control soaring prices.

The Bank has increased rates to 5% from 4.5% - the 13th increase in a row.

 

[shortbread]

Beware people, the UK economy ponzi scheme is coming to a grinding halt and the govt. is broke...... so how does one keep the gravy train running?

Ans: PENSIONS...... aye the filthy fingers are going to dig into our pensions next!

 

[shaz619]

Beware people, the UK economy ponzi scheme is coming to a grinding halt and the govt. is broke...... so how does one keep the gravy train running?

Ans: PENSIONS...... aye the filthy fingers are going to dig into our pensions next!

The new forecast is suggesting rates could hit 6.25% in 2024 and stay there for most of the year. The knock on effect on mortgage rates would simply not be manageable by the UK. I am deciding whether to agree a fix or go on a tracker next year.

 

[Saj]

I feel sorry for those people trying to get on the property ladder.

The price of things in the shops is getting ridiculous. Every week you go to a supermarket and you will find that the price of essential items has gone up.

 

[shortbread]

The new forecast is suggesting rates could hit 6.25% in 2024 and stay there for most of the year. The knock on effect on mortgage rates would simply not be manageable by the UK. I am deciding whether to agree a fix or go on a tracker next year.

I think its foolhardy to believe rates will go down to the artificial lows of the last two decades. Rates are likely to stay higher for longer. Western economies were irresponsible with their loose fiscal policies and the UK was the worst of them.

 

[shaz619]

I think its foolhardy to believe rates will go down to the artificial lows of the last two decades. Rates are likely to stay higher for longer. Western economies were irresponsible with their loose fiscal policies and the UK was the worst of them.

We wont ever get to that level for some time, but I can’t fathom how the UK wild handle rates around the 6-7% range. Forecasts are not reliable but it seems the earliest BOE may lower is in 2025, assuming they achieve their target of 2% which is not going to happen with their method alone

 

[James]

I know people who are already paying £400 per month extra on their mortgages. The banks will be absolutely loving these interest rates, and the sparse availability of new borrowing products won’t be bothering them at all. It’s far more reliable in a cashflow sense to raise the rates on long term lending deals when the banks know that their existing mortgage holders, however skint, are generally reliable, place a high level of importance on their repayments, and therefore will always find the money from somewhere.

 

[shaz619]

I know people who are already paying £400 per month extra on their mortgages. The banks will be absolutely loving these interest rates, and the sparse availability of new borrowing products won’t be bothering them at all. It’s far more reliable in a cashflow sense to raise the rates on long term lending deals when the banks know that their existing mortgage holders, however skint, are generally reliable, place a high level of importance on their repayments, and therefore will always find the money from somewhere.

Good point, the opposite is true with the better rates coming on the back of longer term deals. Maybe the returns they get off the longer terms deals combined with the high volume of people they shaft on the shorter term products is a much bigger bag for them overall?

 

[Cpt. Rishwat]

I feel sorry for those people trying to get on the property ladder.

The price of things in the shops is getting ridiculous. Every week you go to a supermarket and you will find that the price of essential items has gone up.

I guess the UK public could always switch to non-essential items like energy drinks or tobacco.

 

[DeadlyVenom]

We are gonna see a financial bloodbath soon.

Tories on the way out will protect their chums. Labour on the way in will protect the bums.

The average joes in the middle will get shafted.

 

[shortbread]

We are gonna see a financial bloodbath soon.

Tories on the way out will protect their chums. Labour on the way in will protect the bums.

The average joes in the middle will get shafted.

There's very little money left for chums or bums. All there's left to do is to hike taxes and cut public spending. Oh yes, as a consolation prize banks can raid our pensions and help the chums to invest in whatever Ponzi scheme they come up with next.

 

[James]

We are gonna see a financial bloodbath soon.

Tories on the way out will protect their chums. Labour on the way in will protect the bums.

The average joes in the middle will get shafted.

Middle class gets screwed, nothing new really.

 

[The Bald Eagle]

Cost of living crisis hits activity in deprived English areas hardest, report claims​

The cost of living crisis has had a negative effect on the ability of more than a third of adults in England to be active, according to a new report from Sport England, with deprived areas being hit hardest. The report, which surveyed nearly 3,000 people, found that 36% reported they could not afford to be active while 29% said they had less time to exercise, often as a result of having to work more.

“People from the most deprived areas and from lower socioeconomic backgrounds are more likely to say their levels of physical activity have been negatively affected by cost of living increases,” the report states.
Almost three-quarters of respondents, 71%, said they had changed the type of sport and physical activity since the cost of living crisis began, with many substituting paid activities, such as gym and sports memberships, for free activities such as walking or cycling.

The report, which was produced in conjunction with Sheffield Hallam University, paints a similarly stark picture when it comes to children. “Parents and carers of children and young people said they were making changes to their children’s sport and physical activities because of cost of living increases,” it says. “The types of changes were similar to those reported by adults, ie increasing the number of free activities, walking or cycling to get to places and cancelling membership to specific sports activities.”

The report states these changes are unlikely to be reversed until household finances improve and also warns that rising energy costs are hitting sports clubs, gyms and swimming pools hard, with prices rising and membership levels falling.

However, Sport England’s chief strategy officer, Nick Pontefract, said there were still reasons for optimism given that overall activity levels had not fallen and club activities were now nearing pre-Covid levels. “Today’s report shows that in common with much of the economy, the cost of living is impacting on affordability of physical activity and sport, particularly for the most disadvantaged,” he said.

“While these headwinds inevitably impact all areas of life including work to increase physical activity and participation, the sector has been remarkably resilient and creative in sustaining opportunities for people to keep active.

Source: The Guardian

 

[FearlessRoar]

UK interest rates cut to 4.75% by Bank of England​

UK interest rates have been cut for a second time this year to 4.75% from 5%.

The Bank of England's decision means interest rates are at their lowest level for more than a year.

The cut means borrowing money is cheaper, but it is likely to reduce returns for savers.

The Bank had been widely expected to cut rates after inflation fell sharply in September.

UK interest rates cut to 4.75% by Bank of England

The move had been widely expected after inflation fell sharply in September.

www.bbc.com

 

[FearlessRoar]

UK economy failed to grow between July and September​

The UK economy failed to grow between July and September, revised official figures show.

The ONS said the economy was weaker than it had initially estimated due to weaker contributions from bars and resturants, legal firms and advertisting.

The ONS puts out initial estimates on the UK's economic performance and revises them once it receives more data.

Initial figures had suggested the economy had grown by just 0.1% between July and September - and shrank during September itself.

Uncertainty about the Budget had been blamed for such slow growth.

In September, the Bank of England's chief economist had warned the new government's gloomy language had generated fear and uncertainty among consumers, businesses and investors. But Prime Minister Sir Keir Starmer had denied ministers had talked the country down.

The UK economy is measured by gross domestic product - a measure of all the economic activity of companies, governments and people in the country.

UK economy failed to grow between July and September

The economy fared worse than previously estimated in the quarter before the Budget, official figures suggest.

www.bbc.com