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BoE’s remit is to maintain inflation close to 2%

Part of the Bank of England’s remit is to maintain inflation close to a 2% target level, according to Tom Denman, chief financial officer at Principality Building Society.

Denman said: “It is already more than double this amount, and is predicted to go higher still.”

On Thursday, February 03, 2022, the Bank of England increased the base rate from 0.25% to 0.50%. This was the second increase in the base rate since December. One in five mortgages across the UK are trackers, which means due to the base rate rise, repayments will increase in line with the Bank of England’s decision.

The Consumer Price Index, a measure of the costs of goods and services, hit 5.4% in January, which is above the Bank of England target of 2%.

Denman added: “The MPC has raised rates because they fear that the inflationary pressures being witnessed in the wider economy are becoming entrenched.

“If they do not act to control it, there is the risk that wage inflation will follow as employees demand higher wages to compensate for these price rises.”

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As a result, Denman said this would cause firms to have to increase prices further in order to pay for those increased wage demands.
In this way, he believes there is a risk that inflation could spiral, which is something central banks are historically afraid of.

The rate of inflation, already at its highest level for almost 30 years at 5.5%, is tipped by the bank to hit 7.25% in April when the energy price cap is lifted, with bills expected to rise by an average of almost £700 to account for unprecedented increases in wholesale gas costs.

The price cap is currently limiting the rates a supplier can charge for its default tariffs.

Denman outlined that the markets are pricing in a number of base rate increases throughout 2022, beginning with a 0.25% hike in base rate.
“This could take Bank Base Rate to around 1.0% by the end of the year, or even slightly above that level,” he added.

Ben Merritt, director of mortgages for Yorkshire Building Society, said that given the acceleration in inflation in the past year, combined with a hot jobs market, it is no surprise the Bank of England has moved to increase the Bank Rate, and indeed we have had two in quick succession.

“With the Bank of England predicting inflation will peak at over 7.00% in April and remain above the 2% target in 2022 and 2023, the Bank Rate is likely to increase further this year but most economists expect it will probably settle at 0.75% to 1.00%,” added Merritt.

Base rate increases normally result in mortgage rates rising and, while this may happen, Merritt believes intense competition in the mortgage market will mean the cost of borrowing may not rise in line with the bank rate and should still remain affordable.

Further to this, Andrew Bailey, governor of the Bank of England, has warned that large wage and price rises that reflect surging inflation risk embedding rising costs in the economy that will result in “slow activity and increased unemployment”.

He told the Treasury committee of MPs that the so-called second round effects of the energy-led rise in living costs were his “biggest concern” and, if realised, would hurt the least well-off the most and lead to even higher interest rates.

Looking to expectations, Denman said that given the MPC’s behaviour and rhetoric over recent years, he was expecting them to acknowledge the risk that raising rates too far or too fast could have a negative effect on economic growth.

He added: “We also expect them to be mindful of this as we exit the pandemic and go through 2022.”

Overall, Morgan Miles, head of product pricing at Principality Building Society, said: “It has been a tough few years for savers given the low rate environment, so we are happy to be able to increase the interest rates of our savings products.”

Miles went on to detail that Principality Building Society has tried to support savers as much as possible, maintaining an average interest rate on its accounts which has been consistently higher than the market average.

By Jake Carter

Source: Mortgage Introducer

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UK Economy growth will be slow in 2022

London based Journalist and expert Sameh Habeeb said that UK economy will face a number of challenges due to international inflation, high prices of shipping and slowing economies around the world. Despite the end of COVID-19, restrictions the UK economy faces a tough start to 2022.

Meanwhile, Brexit impact can still be seen in the city and already affected SMEs and business in general.

Sameh Habeeb added, “While COVID-19 infections are down sharply, the Bank of England expects quarterly output to be back to pre-pandemic levels by the end of March. The rise in inflation, meanwhile, is expected to be faster than it has been in more than a decade, hitting a record high of 5.5% in January. The rise is also expected to hit a new high of 5.2 percent in April, as domestic power tariffs will be soaring. The Bank of England warns that despite the end of COVID-19, the United Kingdom economy will continue to experience a materially weaker 2022.”

“The reduction in overall trade with the EU is a worrying sign for the UK. Despite the end of COVID-19, British exporters are struggling to keep up with the global demand for manufactured goods and are losing market share.

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Moreover, introducing fresh trade barriers is causing British businesses to struggle to remain competitive. Hence, the government is focusing on strengthening domestic production and reducing the reliance on imported goods.” Said Sameh Habeeb

Despite the end of COVID-19, the UK economy will still face a challenging start to 2022. The UK economy is already suffering from rising prices in December and January. In the final three months of 2018, the UK had the worst monthly GDP fall in the history of the European Union. Nevertheless, despite the end of COVID-19, the country will face a tough start to 2022.

Habeeb said, The annual rate of inflation will reach 7.2% in April. The Bank of England will then introduce a further hike to its main Bank Rate of 0.5% in October. Those changes will have a major impact on households’ finances in the first half of the year and beyond.

The EU’s COVID-19 rest period has made it easier to access vaccines. In Europe, the COVID-19 rest period was an exception. The end of the rest of COVID-19 in March 2020 will make the UK’s GDP growth rate slower than the EU average.

Sameh Habeeb said that the UK economy remain strong and one of the top 10 in the world and will achieve recovery sooner or later. He added that the Government must give me opportunities for SMEs and nee start ups. He also added that, the Government must ensure some good packages to push these companies which will help economy recover on local and national levels.

Source: Mid-Day

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Help to Buy borrowers increasingly accessing second-charge options

In just over a year from now, the Help to Buy Equity Loan Scheme, is scheduled to end, and with it the book will be closed on one of the defining elements of the government’s housing policy over the last decade.

It is a scheme which has come with its own share of controversy, and there are many who believe the government could have used taxpayers’ money more wisely when it came to the housing market, but whatever your thoughts, you cannot deny its influence.

At the end of March 2023, a decade of Help to Buy will come to an end – unless of course the government decides to extend but that seems unlikely – and first-time buyers will have until then to complete on a property purchase in order to be able to access the equity loan element.

As mentioned, Help to Buy has played a big role in our marketplace, resulting in – at the time of writing – close to 350,000 people in England alone having used it to get on the housing ladder.

It has had a number of iterations, from being available to existing owners on all types of property, to being a new-build scheme just for first-time buyers, and a significant proportion of UK owner-occupiers will say they could not have got on the ladder without it.

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The fact that it is a central aspect of our market means it needs taking note of, especially by advisers who are likely to be seeing existing Help to Buy borrowers well into the future and are likely to come with a number of aims and requirements which need looking at in the context of their first-charge mortgage and government loan commitment.

For us, as a second-charge lender, it has been interesting to see a steady rise in our loans to Help to Buy borrowers, who for any number of reasons are seeking additional funding but of course are slightly different to the norm.

In essence, we are one of the few second-charge lenders active in this part of the market, willing to take what is effectively a ‘third-charge’ on these properties because of original lender and Government loan, but also not requiring the consent of either to put that charge in place.

There of course is a risk involved in this type of lending, although we will lend up to £50,000 on Help to Buy properties, and we carry out considerable due diligence and checks to ensure the loan is affordable and sustainable.

What we are seeing in the Help to Buy space is similar to that which we’ve witnessed elsewhere, in that borrowers are looking to use their properties to help fund home improvements or pay off debts, and are also likely to have seen the value of those homes increase in recent times, dropping the loan-to-value (LTV) to a point where they can access the extra equity.

The same issues that other second-charge borrowers are facing in the first-charge space are pertinent here, but perhaps even more so, given the government loan element which can appear to complicate matters.

However, if the borrower is on a deal with their first-charge lender which comes with significant ERCs, or if that lender isn’t willing to look at a further advance, then we can certainly look at these cases in order to work out a potential second-charge solution.

In recent months, there has been an increase in demand in this space, and we’ve been working with master brokers and their introducing advisers, to show the lending solution that is available to them.

Ensuring this is a more widely-known option for advisers is likely to deliver even greater interest, especially as more and more Help to Buy borrowers move further away from the time they originally became part of the Scheme.

As mentioned, we are nearly a decade on from the scheme’s introduction and it has played a pivotal role in our market, resulting in many thousands of borrowers being part of it.

We need to ensure they continue to have options like second-charge products going forward, and that this continues for them and their advisers, even after the Scheme does eventually end.

By Kerri Pender

Source: Mortgage Introducer

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UK economy faces a difficult start to 2022 despite the end of COVID-19 restrictions

  • Despite the end of the COVID-19 restrictions from late January, the immediate outlook for the UK economy is uncertain
  • Intensifying price pressures and imminent tax hikes will erode real household incomes.
  • Persistent supply chain disruptions and acute labour shortages will continue to constrain output developments
  • The narrow EU-UK trade deal weighs down on UK exports to the reviving EU economy.

UK real GDP grew by 1.0% quarter on quarter (q/q) in the fourth quarter of 2021, compared with an identical rise in the previous quarter.

In annual terms, the economy rose by 6.5% year on year during the same quarter, which implied that the economy grew by 7.5% in 2021, the largest gain since the Second World War. However, this was after a 9.4% contraction in 2020, with the UK enduring a larger-than-average hit from COVID-19 and public health restrictions.

The UK outlook for 2022 is uniformly less upbeat, flagged by sliding growth projections.

Despite the end of most COVID-19 restrictions from late January 2022, we expect real GDP growth to slow in the first half of this year for the following reasons.

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Many UK households face escalating cost of living pressures

The consumer price index (CPI) in the twelve months to January increased to 5.5% in January, the highest rate since the series began in January 1997, and since March 1992 (7.1%) when using the historical-modelled data.

More inflation pain lies ahead. Elevated energy futures prices forced the UK energy regulator Ofgem, which sets the tariff caps twice a year in April and October, to announce significant hikes. The tariff cap in April this year will increase by 54%, the largest increase since the government introduced the cap in 2019. This will imply notably higher household utility prices for 22 million households from 1 April.

The eye-watering rise in utility prices will ratchet up the anticipated peak in the 12-month rate in the CPI to over 7% in April 2022. Worryingly, Ofgem is expected to announce a further sharp increase in October, pointing to a higher-than-previously-anticipated inflation rate at the end of 2022. Meanwhile, households face more challenging fiscal and monetary policy conditions.

Employees face rising social security contributions from 1 April 2022 to finance the overhaul of the social care system and to allocate more resources to deal with the backlog of non-COVID-19 illnesses. The plan entails a 1.25-percentage-point rise in the National Insurance from April 2022. Meanwhile, the continued and broad-based climb in inflation prompted the Bank of England (BoE) to announce its first back-to-back interest rate hike in seventeen years in its February 2022 meeting. Furthermore, we expect further increases at both the March and May meetings, taking the Bank Rate to 1.0%. In addition, we acknowledge the increasing probability of an additional hike to 1.25% in November 2022.

Overall, we expect an intensifying squeeze on household confidence and real incomes. Early indicators are not encouraging, with real wages in retreat from late-2021. Furthermore, we now expect household disposable income adjusted for inflation to shrink in 2022, which would be the third time that it has fallen since 1990.

In addition, a greater share of savings accumulated during the lockdowns could be required to finance spending on essential goods as opposed to consumer durables and leisure and hospitality services.

Intensifying pressure on household budgets will weigh down on consumer spending developments and act as a handbrake on the pace of GDP growth in the next few quarters.

Supply constraints spill into 2022

The IHS Markit/CIPS UK Composite PMI survey reveals a continued shortfall of workers in January, preventing many companies from achieving full capacity.

Supply chain disruptions continue to elevate input cost inflation in January, with manufacturers and service providers having to lift aggressively their prices charged.

Firms cite rising salary payments alongside higher energy and logistics costs as significant obstacles.

Brexit strikes again

With the UK leaving the EU single market and Customs Union, UK exporters face additional checks for safety and security documentation, and customs papers, implying that the new EU-UK trading relationship does not deliver frictionless trade.

This is flagged by UK exporters failing to exploit the revival of domestic demand across the EU. According to Eurostat data, UK merchandise exports to the EU in nominal terms shrunk by 13.0% during 2021, compared with US and Chinese exports to the EU rising by 14.3% y/y and 22.6% y/y, respectively, over the same period.

The much-delayed full UK custom controls on EU imports are now enforced from 1 January 2022, adding to the supply chain disruptions because of tougher logistical cs industry warned that even if UK firms get their paperwork in order, they are dependent on hundreds of thousands of small- and medium-sized (SME) exporting businesses from across the EU.

Activity is likely to regain momentum temporarily from mid-2022.

Global supply chain constraints should ease alongside receding consumer price inflation and corporate cost pressures. In addition, uncertainties linked to COVID-19 developments should diminish.

Business investment plans are lifted by temporary tax breaks, which will end in April 2023.

By Raj Badiani

Source: IHS Markit

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UK Economy Recovery Accelerates in February show PMIs, Locking in a March Rate Hike

The UK’s economic rebound accelerated faster than expected in February according to a leading survey, which noted “a swift rebound in UK economic conditions”.

The IHS Markit PMI survey for the UK showed both the manufacturing and services sectors expanded in February, with the Services PMI printing at 60.8, beating expectations for a reading of 55.5 and up on January’s 54.1.

The Manufacturing PMI read at 57.3, unchanged on January but up a touch on the consensus estimate of 57.2.

The Composite PMI – which rebalances the readings to give a more accurate snapshot of the broader economy – read at 60.2, ahead of consensus at 55.0 and January’s 54.2.

“The UK economy is rebounding from Omicron at a fair clip,” says Gabriella Dickens, Senior UK Economist at Pantheon Macroeconomics. “The forward-looking components of Markit’s survey suggest growth will remain brisk over the coming months.”

The rebound in UK economic activity was the fastest recorded in eight months and follows a slowdown caused by Omicron disruptions at the turn of the year.

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A recovery in consumer spending on travel, leisure and entertainment were major contributors to the bounce back.

IHS Markit reports hiring was strong as staff recruitment accelerated again in February in response to increased workloads and favourable growth projections.

The rate of private sector employment growth was the fastest since October 2021, which was largely driven by stronger job creation in the service economy.

The findings come ahead of the March 17 Monetary Policy Committee meeting at the Bank of England, where it is expected another interest rate rise will be confirmed.

Indications that the economic rebound is solid will bolster the MPC’s decision to raise rates and signal further hikes are likely, which analysts say is a supportive dynamic for Pound Sterling’s outlook.

“The combination of reviving economic activity and widespread price increases suggests that the MPC almost certainly will raise Bank Rate to 0.75% at next month’s meeting,” says Dickens.

“The PMIs suggest the economy shrugged off the hit from Omicron. And the tentative signs of easing supply disruptions and price pressures are encouraging too. But with CPI inflation far above the Bank of England’s 2% target and rising, we still expect Bank Rate to reach 1.25% by the end of this year and 2.00% by the end of next year,” says Adam Hoyes, Assistant Economist, at Capital Economics.

But there remain some concerns for the outlook as inflationary pressures are acute and exports continue to struggle, with IHS Markit saying Brexit-related trade issues remain a factor.

IHS Markit’s Chief Business Economist Chris Williamson says UK goods exports slumped in February, contrasting with accelerating export growth in the eurozone.

“UK exporters are consequently underperforming their peers in the eurozone to one of the greatest extents seen over the past 15 years as Brexit adds to UK trading headwinds,” says Williamson.

Nevertheless, IHS Markit reports production volumes in the manufacturing sector were helped by fewer raw material shortages and easing global supply chain pressures, according to survey respondents.

Easing of supply chain constraints are expected to ultimately translate into easing cost-push inflationary pressures later in 2022.

The findings come on the day the Government is expected to detail how the country intends to ‘live with Covid’ and announce a complete removal of all Covid-related legislation.

Stronger client demand was widely linked to improving confidence about the UK economic outlook and roll back of pandemic restrictions said IHS Markit.

Year-ahead business expectations meanwhile picked up for the third month, with businesses the most optimistic since May 2021.

IHS Markit says positive sentiment towards the business outlook was linked to a strong recovery in client demand after the Omicron wave, as well as long-term expansion plans and hopes that the worst phase of supply disruption has passed.

“The latest UK purchasing manager indices will tick a lot of boxes for Bank of England policymakers,” says James Smith, Developed Markets Economist at ING Bank. “It’s yet another hint that Omicron has done very little lasting damage to the UK economy, and the data is consistent with what we’ve seen with just about every other high-frequency indicator.”

Written by Gary Howes

Source: PSL

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GBP/EUR looks to break 1.2000 handle as the pound strengthens

Yesterday, GBP/EUR continued it’s push towards the 1.2000 handle as the UK gets back on track after Omicron, benefiting from an economic growth rebound and further expectations the Bank of England will hike interest rates throughout the year. GBP/USD has followed a similar path with cable pushing past the 1.3600 mark, ending the day on 1.3630. EUR/USD has been dictated by headlines surrounding the Russia-Ukraine conflict, settling in over the last few days at 1.1370.

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Statistics in the UK are showing commuter travel within cities recovering to pre-Omicron levels, boosting expectation that February will show a strong growth rebound which is strengthening the GBP against both the euro and US dollar. The tensions between Russia and the Ukraine have kept EUR/USD trading between 1.1300 and 1.1400 with mixed reports of a de-escalation and a Russian withdrawal, however satellite imagery shows that the Russian Military are still very much active on the border. The pair will likely be driven by the headlines over the coming days and weeks, dependent on whether Russia stick to their withdrawal claims.

This morning, UK Retail sales data was released, with sales month on month beating market expectation by 0.5%. CPI was also released in France; the European Central Bank will keep a close eye on these stats after changing it’s tune earlier on in the year with regards to a potential interest rate hike.


Source: World First

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Inflation hits 30-year high, fuelling expectations of rises in cost of borrowing

UK inflation has climbed to a fresh 30-year high, as the cost-of-living crisis intensifies for households.

Official figures show annual UK consumer prices index inflation rose from 5.4% in December to 5.5% in January.

Annual inflation on the old all-items retail prices index measure surged from 7.5% in December to 7.8% last month, the figures from the Office for National Statistics show.

The rapidly worsening inflation outlook has heightened expectations of further swift rises in UK interest rates from the Bank of England.

Colin Dyer, client director at abrdn Financial Planning, said: “After finishing 2021 on a 30-year high, UK inflation continued to climb in January.

“Households should brace themselves for further acceleration in the cost of living until at least the second half of 2022, particularly when the energy price hike is implemented in April. The Bank of England could also be justified in raising interest rates more than once over the next few months to defend these soaring prices – meaning even more challenges may lie ahead for households.”

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Suren Thiru, head of economics at British Chambers of Commerce, said: “Rising inflation highlights both the cost-of-living crisis facing households and the uphill struggle for businesses to keep a lid on price rises amid surging cost pressures.

“While the headline annual figure remains at a 30-year high, the decline in monthly inflation in January offers some hope that we may be nearing the peak in the current spike in inflation. “

He added: ““Inflation should peak at over 7% in April as reversal of the hospitality VAT cut and the energy price cap rise enters the calculation. However, the current Russia-Ukraine tension could keep inflation higher for longer by triggering a further surge in wholesale energy costs.

“Rising inflation could well be a significant drag anchor on UK economic output this year by weakening consumer spending power and damaging firms’ finances and ability to invest.”

The Bank of England has predicted annual UK CPI inflation will peak at 7.25 per cent in April.

A poll published this week revealed a further quarter-point rise in UK base rates next month, to 0.75%, is now forecast by nearly two-thirds of economists.

Twenty-five out of 40 economists polled by Reuters between February 7 and 11 predict the Bank of England’s Monetary Policy Committee will vote for such a rise next month. The next rates decision is due to be announced on March 17.

Meanwhile, 21 out of 41 economists forecast a further rise in benchmark UK interest rates to 1% in the second quarter.

By Ian McConnell

Source: Herald Scotland

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UK inflation has economy in ‘chokehold’ with peak yet to come

As UK inflation hit a 30-year high of 5.5% in January, analysts have warned that it has the economy in a “chokehold”, with the peak yet to come.

According to the latest data from the Office for National Statistics, the 12-month UK Consumer Price Index was at its highest level since records began in January 1997. The last time it was higher than current levels was in March 1992 when it stood at 7.1%, based on historic modelling.

Laith Khalaf, head of investment analysis at AJ Bell, said: “Inflation is building and is now expected to reach a crescendo of over 7% in April, heaping pressure on consumers, businesses and savers.”

Although the Bank of England, which is expected to continue increasing interest rates on the back of better-than-expected UK job data, believes inflation will sink back down to 2% by 2024, Khalaf noted that inflation is, indeed, “unpredictable”.

“It is prudent to acknowledge that it might possibly tail off, though the bank’s forecasting capabilities haven’t exactly won any awards in recent times. The Ukraine crisis further muddies an already blurred picture.”

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Rupert Thompson, chief investment officer at Kingswood, said: “Inflation will head higher still over coming months, likely peaking at around 7.5% in April when the increase in the energy price cap feeds through. Today’s data leave a further 0.25% rate hike in March looking all but a done deal.”

Meanwhile, prices continue to rise while wages remain suppressed.

Chris Beauchamp, chief market analyst at IG Group, stated that markets “will be relieved that the pace of inflation increases appears to have moderated, but today’s further price rises mean consumer spending will keep getting squeezed, heightening the risk of tipping the economy into reverse”.

Rachel Winter, associate investment director at Killik & Co, said: “Inflation has the economy in a chokehold, with prices skyrocketing and consumers feeling significant pressure on their household budgets.

“High energy prices and increased shipping costs are key contributors to this inflationary pressure, but there are other causes for concern in the near term.

“Consumers are braced for next month’s rise in rail fares, growing mortgage payments and higher national insurance, and the Office for National Statistics confirmed yesterday that wages are falling in real terms because they are not keeping pace with inflation. All eyes are on Russia and Ukraine, where conflict would be likely to push oil and gas costs even higher.”

Sarah Giarrusso, investment strategist at Tilney Smith & Williamson, noted that the UK economy remains strong, growing by 7.5% in 2021, representing the strongest growth in the post-war period.

But the Omicron variant of Covid-19 has caused disruptions. “The employment data released yesterday (15 February) showed employment fell 38,000 in January. However, the labour market remains tight with vacancies at their highest level since records began in 2001 and an unemployment rate of 4.1%,” said Giarusso.

“Given this strength and high inflation some economists are expecting the Bank of England will have to be more aggressive than currently signalled by MPC members.”

Willem Sels, global CIO of HSBC Private Banking and Wealth, added that global factors such as supply chain bottlenecks leading to price pressures is likely to see UK inflation continue drifting higher.

“This affects everything from food and clothes prices to cars. There are more local UK factors too, in particular the 54% increase to the Ofgem energy price cap, which will feed through into CPI,” he explained.

“Job figures remain positive but are not enough to offset the squeeze on real household incomes. With inflation exceeding wage growth, real household income will probably fall by 2.5% this year.

“The silver lining? We think the Bank of England will hike interest rates less than the market fears, as it knows that the factors behind inflation are also the drivers behind lower real income, which threaten to limit economic growth. We expect the Bank rate to rise to 1.25%, lower than the markets’ expectation of around 1.75%.”

IG’s Beauchamp added: “Another Bank of England rate rise remains all but certain, but at least this slower pace of CPI increase means the more outlandish expectations will be dialled back. ‘Slow and steady’ are the watchwords for tightening on both sides of the Atlantic, it seems.”

Recent economic data has strengthened the case for more fiscal tightening in the coming months, with consensus expecting a third interest rate hike following the Bank of England’s meeting in March.

At Federated Hermes, the base case is for a further 0.25% increase, although a larger 0.5% rise “cannot be ruled out”, according to Silvia Dall’Angelo, senior economist at the international business of the firm.

“In the short term, the Bank might need to provide a stronger signal and bring some tightening forward to prevent second-round effects from elevated realised inflation against the backdrop of a tight labour market,” she said.

“As the year progresses, the trade-offs the bank faces might change, as high cost-push inflation, fiscal and monetary tightening weigh on the consumption outlook.”

By Alex Rolandi

Source: Professional Adviser

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UK economy sees surge in annual growth

On the back of a milder than anticipated hit during December, the UK economy can celebrate expanding at its fastest rate since the Second World War during 2021.

Recording a 7.5% annual rate of expansion, the figure is the largest since 1941 – also making Britain the fastest growing advanced economy during the year as a whole. However, the cloud to accompany the silver lining was that the UK economy still remained smaller than in the fourth quarter of 2019 – immediately before the pandemic hit.

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The UK suffered a deeper pandemic-hit recession than most of its peers, contracting by 9.4% during 2020. However, its recovery has been bolstered by billions in government aid and now the economy is forecast to outperform all other Group of Seven nations again this year.

The news is likely to impact the Bank of England’s focus in recent months – it is expected to step up efforts to curb inflation, with more interest rate rises likely.

Still, GDP dropped 0.2% in December with the Omicron variant keeping many consumers at home – however, this was below the 0.5% that had been forecasted. January is likely to be weak with Omicron restrictions extending into the New Year.

Speaking to Bloomberg, Yael Selfin, chief economist at KPMG UK, noted the squeeze on household incomes from rising prices and tax rises would also impact economic activity in the coming months.

By Paul Lucas

Source: Mortgage Introducer

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Second charge mortgage market continues steady recovery

The Finance & Leasing Association (FLA) has reported 2,174 new second charge mortgage lending agreements in December 2021, bringing the total number of new second charge mortgages for 2021 to 25,877 – a 44% increase from the previous year.

The new agreements for December 2021 were valued at £99 million, representing a 53% increase from December of the previous year, while the overall value of new second charge mortgages for 2021 rose to £1,110 million, 47% more than in 2020.

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“The second-charge mortgage market has reported a sustained recovery in new business volumes since April 2021,” said Fiona Hoyle, director of consumer & mortgage finance and inclusion at the FLA.

She also noted, however, that “[there] is still room for growth as new business remains 16% lower by value and 14% lower by volume than in 2019.”

By Mary Or

Source: Mortgage Introducer

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