This newsletter is supported by
Charles Stanley |  |
|
  |
High interest rates are straining UK house prices, household wealth and company finances, new data today shows. House prices are now falling in most parts of the UK, as high mortgage costs restrict how much buyers are willing, or able, to pay, says property portal Zoopla this morning.
High borrowing costs are also pushing some firms into issuing profit warnings, a report from EY-Parthenon today shows. The proportion of firms blaming profit warnings on tighter credit conditions has risen to the highest level since the financial crisis.
A third of the profit warnings issued by UK companies in the last quarter blamed tougher credit conditions as a factor, the latest data from EY-Parthenon shows. That’s the highest since 2008, and a clear sign that high interest rates are hitting the economy.
And the surge in interest rates to 5.25%, from 0.1% in late 2021, have triggered a sharp reversal in wealth levels across all parts of the UK, Resolution Foundation says today. The recent rises have been blamed for ending Britain’s wealth boom and causing total household wealth to plunge by a quarter since the Covid-19 pandemic.
The Resolution Foundation, a thinktank, and Abrdn, the asset manager, said the fall was due to a drop in house prices and pension pots, which account for about £4 out of every £5 of total wealth, and played a leading role in rising wealth across the country over the 40 years leading up to the pandemic.
However, both have fallen in value since the Bank of England started raising interest rates in December 2021. While total household wealth was worth 840% of gross domestic product (GDP) in 2021, it had tumbled to 630% of GDP this year.
Zoopla’s latest house price index show that prices have fallen over the last year in 4 in 5 local housing markets in the UK, with the largest declines in Southern England towns such as Colchester (-3.5%), Canterbury (-3.4%) and Luton (-3.3%). This is a sharp increase on six months ago, when 1 in 20 housing markets were showing annual falls.
Zoopla’s report shows average UK house prices are down 1.1% over the last year, which it says is the “most dramatic slowdown in price growth since 2009.” It’s a smaller fall than Nationwide and Halifax have reported, though, based on their mortgage approvals data.
Zoopla points out, though, that the rise of the cash buyer continues. This group will account for 1 in 3 sales in 2023 as high mortgage rates hit buyer demand.
Also coming up today
Germany’s economy will be in the spotlight when the latest growth and inflation data is released. Economists predict German GDP fell by 0.3% in the last quarter, while inflation is seen cooling to 4%.
The agenda
• 9am BST: German Q3 GDP report
• 9.30am BST: UK mortgage lending and mortgage approvals for September
• 1pm BST: German inflation report for October
• 2.30pm BST: Dallas Fed Manufacturing Index
We’ll be tracking all the main events throughout the day ... |
| | | A quick word to say thank you for subscribing to this newsletter | | Our open journalism is supported by people like you. Help power the Guardian’s reporting for the years to come. If you can, please support us from just £1. It takes less than a minute to set up. Thank you. | | |
|
|
| | |
|
| | | How to plan and protect your family wealth |  | | Preserving family wealth takes more than just a large asset base and some complicated estate planning. To last for several generations, the family must understand and believe in the story of that wealth. It may be time to change your mindset. Investment involves risk. | | |
|
| | | We have all been profoundly shaken by recent events in Israel and Gaza. This latest conflict marks the start of a chapter that is likely to affect millions of lives, both in the Middle East and further afield, for years to come. With reporters on the ground, and others producing live blogs, videos, podcasts and photo essays as the story unfolds, the Guardian is dedicated to bringing you independent, fact-checked journalism 24/7.
We appreciate that not everyone can afford to pay for the news right now. That’s why we choose to keep our journalism open for everyone to read. If this is you, please continue to read for free.
But if you can, can we count on your support at this perilous time? Here are three good reasons to make the choice to fund us today. | | 1 | Our quality, investigative journalism is a scrutinising force at a time when the rich and powerful are getting away with more and more. |
| | 2 | We are independent and have no billionaire owner pulling the strings, so your money directly powers our reporting. |
| | 3 | It doesn’t cost much, and takes less time than it took to read this message. |
| | Choose to power the Guardian’s journalism for years to come, whether with a small sum or a larger one. If you can, please support us on a monthly basis from just £2. It takes less than a minute to set up, and you can rest assured that you're making a big impact every single month in support of open, independent journalism. Thank you. | | |
|
|
| | |
|
| Manage your emails | Unsubscribe | Trouble viewing? | | You are receiving this email because you are a subscriber to Business Today. Guardian News & Media Limited - a member of Guardian Media Group PLC. Registered Office: Kings Place, 90 York Way, London, N1 9GU. Registered in England No. 908396 |
|
|
|
|
|
Levelling up Britain is difficult – here’s why 
AI firms pay high price for their software’s ‘creativity’ 
