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UK economy probably shrank for first time in seven years – Bloomberg Survey

The latest Bloomberg survey of economists showed that the UK economy probably shrank for the first time since 2012 in the second quarter of this year.

Key Findings:
“Official data this week is forecast by economists to show growth rebounded to 0.3% in May, after a contraction of 0.4% in April.

Still, such a reading would mean an expansion of 0.8% was needed in June just to return a flat result for the quarter as a whole, according to Bloomberg calculations.

The latest poll follows a dismal week of reports in the U.K., with Purchasing Managers’ Indexes showing the dominant services industry barely growing in June, and both construction and manufacturing sectors suffering outright contractions.

The worsening outlook, both at home and overseas, has also left investors and economists rewriting their calls for U.K. interest rates.”

By Dhwani Mehta

Source: FX Street

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Eight in ten finance bosses expect Brexit to damage UK business sector

City finance bosses have said they expect the UK’s business sector to be harmed in the long-term by Brexit, in a stark warning for the Government.

More than eight in ten chief finance officers (CFOs) said they expect the UK business environment to deteriorate because of Brexit, in Deloitte’s latest CFO survey.

The survey of finance bosses for the second quarter of 2019 revealed their greatest level of concern regarding the impact of Brexit since the referendum in June 2016.

Only 4% of CFOs said they think that now is a good time to take a greater risk on to their balance sheet, representing the highest level of caution since the financial collapse in 2008.

The low appetite for risk among large corporates stands in stark contrast to the buoyant mood of equity investors, who have record levels of cash at their disposal.

The survey, which involved 79 CFOs at large UK corporates, also saw 62% of respondents say they expect to reduce hiring over the next three years due to Brexit.

Almost half, 47%, also said they expect to reduce capital spending in the near future.

Ian Stewart, chief economist at Deloitte, said: “Events in the last three years, and recent news suggesting the economy shrank in the second quarter, have added to worries about the impact of Brexit.

“This is not solely a question of the long-term outlook. Brexit has not happened, but it is acting as a drag on corporate sentiment and spending.”

The findings come after the Labour Party and senior economists voiced concern over the UK’s productivity crisis after fresh figures on Friday showed a third straight quarter of decline.

Output per hour fell by 0.2% in the three months to March, compared with the previous year, the Office for National Statistics (ONS) said.

The drop in productivity has added to concerns of a “productivity puzzle” in the UK, which has seen output per hour grow slowly since the 2008 economic downturn.

By Henry Saker-Clark

Source: Yahoo Finance UK

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UK economy shows slowdown signs as recruiters, shoppers turn wary

British employers and shoppers are turning increasingly cautious, indicators showed on Friday, suggesting two of the drivers of the economy during the Brexit crisis are losing momentum.

In a week when business surveys pointed to a contraction in overall output in the second quarter, the latest signals from Britain’s boardrooms and high streets underscored the extent of the slowdown following a strong start to 2019.

That was when many companies were rushing to prepare for the original Brexit deadline in March.

The latest figures showed that the subsequent slowdown in the economy was not just payback for the stockpiling surge.

The number of people hired for permanent jobs via recruitment firms in Britain fell for a fourth month in a row in June, recruitment industry group REC said on Friday.

The figures represented a stark contrast to the robust hiring activity in 2018.

“Brexit stagnation continues to seize up the jobs market as the slowdown in recruitment activity continues,” said James Stewart, vice chair at KPMG which produces the report with REC.

For temporary staff, hiring rose marginally in June, marking the weakest patch of growth since May 2013, when Britain’s economy began to emerge from the after-effects of the global financial crisis.

Britain’s labour market has been one of the strengths of the economy since the 2016 Brexit referendum.

Unemployment fell to its lowest rate since 1975 at 3.8% in the first quarter of 2019, according to official data.

Many economists have linked the jobs boom to uncertainty about Brexit which has made employers favour hiring workers — who can be laid off quickly — over the longer-term commitment of investing in equipment.

But the jobs surge has put more money into people’s pockets which had driven consumer spending, offsetting a fall in investment by many companies.

Data on Friday showed Britain’s high street retailers had a “washout” June, however, as shoppers did not respond to early summer sales discounts.

“We saw retailers discount early on in June, adding further pressure to tight margins, yet they still weren’t able to salvage the month,” said Sophie Michael, head of retail at BDO, an accountancy and business advisory firm.

The survey chimed with another weak reading of retail sales published last week.

The Bank of England has said Britain’s economy probably had zero growth in the April-June period, contrasting with growth of 0.5% in the first three months of 2019.

BoE Governor Mark Carney warned on Tuesday that the prospect of a no-deal Brexit and the rise in protectionist trade policies around the world, led by U.S. President Donald Trump, posed growing risks to the British economy.

Surveys published this week of Britain’s manufacturing, construction and services sectors suggested the economy contracted by 0.1% in the second quarter.

That would be the first fall in gross domestic product since the end of 2012.

A survey published by an employers group showed British businesses turned gloomier, bucking an improvement in sentiment earlier this year.

By William Schomberg and Catherine Evans

Source: Zawya

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Investors swoop on British build-to-rent sector

Property firms are turning to Britain’s budding build-to-rent sector, which caters to students and city dwellers seeking affordable accommodation, as traditional home building and selling falters on weak consumer confidence.

U.S. real estate firm CBRE Group Inc (CBRE.N) said it had agreed to buy British property developer Telford Homes (TELF.L) for about 267 million pounds, in a deal representing a premium of about 11% to Telford’s closing price.

In a separate deal announced on Wednesday, student housing provider Unite (UTG.L) said it would buy rival Liberty Living Group for 1.4 billion pounds.

Established in 2000, Telford has focussed on London, building housing blocks in up-and-coming outer areas of the capital such as Stratford, Bow or Finsbury Park.

“The UK is in the early stages of a secular shift towards institutionally-owned urban rental housing, similar to what we have seen in the US over the last two decades,” CBRE Chief Executive Bob Sulentie said in a statement.

Traditional UK house builders and developers have been struggling due to a slowdown in European growth and home buyers holding out for further falls in house prices as the country faces uncertainty over plans to leave the European Union.

At the same time, demand for rental property is rising, according to Britain’s Royal Institution of Chartered Surveyors (Rics), as the amount of rental stock falls, with tax and legislation changes deterring would-be landlords and prompting small-scale landlords to sell up.

This has left room in the market for large players looking to capitalise on rising rents.

Schroders, which has a 2.88% stake in Telford according to Refinitiv data, said in a report last month that investors were being pushed to consider investment opportunities in alternative, non-mainstream sectors.

But the asset management firm’s head of real estate capital, Robin Hubbard, cautioned that segments like student accommodation and build-to-rent residential had already seen significant interest from institutional investors and yields had compressed as they had become mainstream.

REDUCING RISK
Telford in May reported a nearly 13% drop in annual profit for its fiscal 2019 as it sought to navigate a Brexit-dampened London housing market with an increased focus on low-risk build-to-rent properties.

“The difficult properties to sell have been the very expensive ones. I think a bit of the bottom is falling out of that market. A lot of their buyers were from overseas and with Brexit that’s creating a little bit of uncertainty,” said Paul Mumford, fund manager at Cavendish Investment Management and the 9th biggest shareholder in Telford Homes.

“Telford have decided they would prefer to do a less risky business than the business of building blocks to sell, and they’ve gone into partnerships in order to build to rent.”

CBRE has said its offer price is final, but that it reserves the right to raise it if another offer is made for Telford. Telford’s directors have recommended the offer.

Cavendish’s Mumford said: “At the moment we’re undecided what to do but it looks as though possibly one should be waiting to see whether there is a higher offer.”

Analyst Aynsley Lammin, an analyst at Canaccord Genuity,

said: “I don’t think any of the other UK house builders will be coming in to make a bid.”

“It’s quite a specific area of the market and so would require somebody who is already involved in the build-to-rent market and has the equity and skill base to manage these properties as well as develop them.”

Telford shares rose 12.4% to 354.25 pence by 1330 GMT – slightly above the offer price of 350 pence per share – indicating some hope among investors of a higher bid.

LUCRATIVE STUDENTS
Founded in 2000, Liberty Living has a portfolio of 24,021 beds which was independently valued at 2.2 billion pounds as of May 31.

“By combining two highly complementary portfolios, the enlarged group will be well positioned to meet the growing need for affordable, high quality student accommodation in university towns and cities where demand is strong,” Unite’s CEO Richard Smith said.

In 2015-16 there were 2.3 million students at British higher education institutions, roughly the same figure as a decade before, according to the universities’ representative body Universities UK, although the proportion of international students had risen from 14% to 19% over the same period.

Liberty Living posted turnover of 155.7 million pounds in 2018, an increase of 15%. Unite posted a 7% rise in profit before tax in 2018 to 246 million pounds.

Writing by Alexandra Hudson; Editing by Arun Koyyur, Deepa Babington, Georgina Prodhan

Source: UK Reuters

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Pound Sterling Dented by Carney Warnings

The British Pound is under pressure in mid-week trade with foreign exchange markets digesting a speech by Bank of England Governor Mark Carney that prompted markets to rapidly raise expectations for an interest rate cut over coming months.

Carney told an audience in Bournemouth late on Tuesday that the “stance of monetary policy is tighter than intended” owing to a disconnect between market expectations of interest rates and the Bank of England’s guidance on where they believe interest rate expectations should actually lie.

Carney’s added that downside risks to the economy have increased recently owing to global trade tensions and markets interpreted the comments as reason to increase expectations for an interest rate cut in coming months.

Currencies tend to fall when their central bank communicates the prospect of future interest rate cuts.

Carney said the global trade tensions have caused a “sea change” in investors’ outlook for the world economy that “suggests a shock to U.S. and Chinese business confidence and investment analogous to what has happened in the UK”.

“The latest actions raise the possibility that trade tensions could be far more pervasive, persistent and damaging than previously expected. The rationales for action are broadening,” he said in the speech.

The key phrase here being “the rationales for action are broadening”: markets quickly ramped up expectations for an interest rate cut at the bank on this comment. Money markets now assign a 57% probability of a 0.25% interest rate cut by the Bank in December, up from 41% ahead of Carney’s speech.

This repricing in expectations sent Sterling lower.

The intervention by the Governor means what had already been a poor day for Sterling just got worse leaving the currency trading near multi-week lows against the Dollar and Euro at the mid-week period.

“Things have gone from bad to worse for the Pound. After being knocked by a poor construction PMI earlier in the day, sterling slumped to hit a new session low moments ago in reaction to a speech by Bank of England Governor Mark Carney,” says Fawad Razaqzada, a Market Analyst with Forex.com. “Carney said the BoE expects economic growth in the second half of the year to be considerably weaker and that it will re-assess Brexit and trade tension in August.”

The speech appears to be a clear move by the Bank of England Governor to massage market expectations towards expecting a more sombre assessment at their next major policy update in August with the view to potentially laying the path to another interest rate cut.

However, we are told by one analyst this particular sell-off in Sterling might not be warranted as some interpreted the Governor’s speech as being more balanced than the market have judged.

“Carney did hint 2-way risks to Bank policy rate (explicitly says need for rate hikes if smooth Brexit). Sure nobody can see smooth Brexit / easing global trade tensions right now but no need to chase UK rates even lower (50% odds of 2019 cut priced). GBP sell-off overreaction,” says Viraj Patel, an analyst with Arkera.

Carney said the Bank of England was working on the assumption that both candidates in the leadership race to replace Prime Minister Theresa May would achieve their stated aim of reaching a deal with the EU.

If that happened, the outlook for Britain’s economy could improve quickly, which is why the Bank has not changed its main message about the outlook for rates: that gradual interest rate rises would be needed in the future.

“In the UK, the combination of the relatively strong initial conditions – including a tight labour market and inflation at target – and the prospect of greater clarity emerging in the near term regarding the UK and EU’s future relationship argues for a focus on the medium-term inflation dynamics,” Carney said.

The British Pound had already been under pressure against the Euro, U.S. Dollar and other major currencies earlier on Tuesday, July 02 as foreign exchange markets continue to express caution over the prospects of a disruptive Brexit and heightened prospects for a General Election before 2019 is out.

Adding downward pressure was a rude surprise in the form of Construction PMI for June that showed the sector has entered its deepest slowdown in ten years: the reading of 43.1 is sharply down on the previous month’s reading of 48.6, and well below analyst expectations for a reading of 49.3 to be delivered.

The data only adds to market concerns that the UK economy is stalling at a critical period for the country’s politic future. The economy has long been a bright spot for the Pound, underpinning it amidst chronic political uncertainties. We wonder what might happen to the currency now that the economy is looking less reliable.

We continue to maintain a view that currency markets are primarily focussed on the Brexit strategies of the two candidates to replace Prime Minister Theresa May in late July, and we hear today that front-runner Boris Johnson will make an offer to the European Union over post-Brexit free trade, but if it rejects that gambit then Britain will leave the bloc without a deal on October 31.

“With Boris, what he’s actually said clearly is: ‘We’re not going to go back and renegotiate’,” Iain Duncan Smith, Johnson’s campaign chairman, told Sky News.

“What we’re going to do is we will put a different offer down and say to them: ‘Look – we want to get to free trade. Now we can either start talking about that now if you are serious and you want to have a process that means we don’t end up … with tariffs etcetera after the 31st – if that’s what you want, the EU, then we are prepared to talk,” Duncan Smith said.

“But if all you are interested in doing is saying: ‘All you can have is this deal’, then the answer is: we will be prepared to leave on the 31st,” says Duncan Smith.

The developments will only further embed growing expectations for a ‘no deal’ into the value of Sterling we believe.

“A hard Brexit or the prospect of a new election is likely to weaken the GBP further, while a controlled withdrawal or a second referendum is likely to reduce the risk premium on the GBP and strengthen it,” says Dr Richard Falkenhäll, Senior Currency Strategist with SEB.

Merkel Will Talk: Hunt
Jeremy Hunt, who is fighting Johnson for the top job, has meanwhile said German Chancellor Angela Merkel will be willing to look at proposals for a revised Brexit deal.

“When you talk to those people … they also say that if a new prime minister comes forward with new proposals that are sensible of course they will look at the package,” Hunt told Sky News. “I have had a conversation with Angela Merkel. (She said) of course we will look at any proposals made by the new UK prime minister, because she wants to solve this problem.”

Hunt’s view on a potential willingness by the EU to look at the proposals of the next Prime Minister does offer some hope that a deal, of sorts can be done.

Of course EU leaders and officials have lined up over recent weeks to say there is only one deal on the table, and that is the current Withdrawal Agreement, and that it cannot be reopened for fresh negotiations.

We do however wonder if apparent EU intransigence on the matter will be permanent when faced with a Prime Minister who decidedly commits to a ‘no deal’ Brexit.

Hunt, who has long been seen as the ‘softer’ of the two candidates on Brexit is meanwhile appearing to harden his stance, saying that unless the EU budge by the end of September he will commit fully to a ‘no deal’ Brexit.

Johnson has long been of the opinion that a ‘no deal’ should be pursued if no improved deal with the EU can be found and has this week sought to downplay the negative impact of a potential ‘no deal’ Brexit.

We remain of the view that foreign exchange markets will continue to place great emphasis on Johnson’s intentions concerning Brexit and the strategy he intends to pursue.

“His “do or die” pledge to leave the EU on the 31st October has heightened ‘No Deal’ Brexit fears. We continue to believe a General Election or second referendum will be required to break the deadlock if parliament votes to prevent a ‘No Deal’ Brexit. We believe there is scope for further Pound weakness heading into the autumn,” says Derek Halpenny, Head of FX Research at MUFG in London.

Johnson said on Monday the impact of leaving the European Union without a deal would be “very, very small”, and added that he had a very carefully costed programme of spending plans.

“There is as you know about 26 billion quids worth of headroom. The money is there,” Johnson told reporters when asked about his spending proposals.

“We also think there is room to make some sensible tax cuts as well and we will be doing that too.”

Analyst sees Further Declines for Sterling against the Euro Ahead
Foreign exchange analyst Trevor Charsley with AFEX – a currency brokerage based in London – says he believes the Pound will continue to “staircase” lower against the Euro for the foreseeable future.

“For now at least the market here can continue to “stair-case” directly lower first/next instead and despite initial buying interest at 1.1100 a window of opportunity thus remains open to examine the psychological 1.1000 in coming sessions, Charsley says in a weekly briefing note to clients.

The Pound-to-Euro exchange rate has been under pressure since early June, when it was quoted as high as 1.17, and is now looking to be stuck in a range below 1.12 with a negative bias being in place.

Pound Shifting Negative Against the Dollar
The Pound has been tracking sideways against the U.S. Dollar since late May: bordered to the top by the 1.2750 area and to the bottom by 1.25-1.2550.

It appears that we are witnessing another impulse lower in the range.

“A closing break below 1.2650 has put a negative bias back into the recent phase of consolidation again,” says Richard Perry, a market analyst with Hantec Markets. “Momentum indicators are drifting lower, with the RSI into the low 40s, Stochastics lower and MACD lines plateauing, but these are more of a negative bias rather than precipitous bearishness.”

“Losing 1.2650 effectively opens the recent low at 1.2505,” adds Perry.

Written by Gary Howes

Source: Pound Sterling Live

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UK economy feels the strain of global slowdown as well as Brexit

UK economy has lost momentum and might have shrunk in the second quarter of 2019, according to data that showed the double impact of Brexit and the slowdown in the global economy.

Manufacturers had their worst month in more than six years and consumers increased their borrowing at the slowest pace since 2014.

The value of sterling fell against the dollar and the euro after the data was published.

Howard Archer, an economist with EY Item Club, a forecasting group, estimated that Britain’s economy contracted by 0.2% in the April-June period.

The Bank of England last month cut its forecast for economic growth in the second quarter to zero.

That largely reflected an unwinding of the rush by many factories to get ready for the original Brexit deadline which has now been delayed until Oct. 31.

But economists said Monday’s manufacturing purchasing managers’ index showed how hard Britain’s factories were also being hit by the slowdown in the world economy caused by the trade skirmishes between the United States and China.

The overall PMI slumped to 48.0 in June from May’s 49.4, well below the average forecast in a Reuters poll of economists and its lowest reading since February 2013.

Export demand fell for a third month as manufacturers around the world lost confidence.

Allan Monks, an economist at JP Morgan, said the weak PMI survey challenged his view that manufacturing growth would rebound at the start of the third quarter.

Separate data from the Bank of England published on Monday showed lending to British consumers – whose spending has helped the economy cope with the Brexit crisis – rose by its weakest annual pace in more than five years in May.

The BoE data also showed the weakest increase since April 2017 in net mortgage lending.

Archer at EY Item Club said May’s mortgage data chimed with other figures which suggested the relief from the delay of Brexit had been limited.

“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market, but this has recently shown some signs of levelling off,” he said.

Economists said they were waiting for Wednesday’s PMI of Britain’s dominant services industry to gauge the extent of the slowdown in the overall economy.

Chris Hare, an economist with HSBC, said he expected only a slight pick-up which would point to anaemic underlying growth.

“So, considerations about Brexit deadlines notwithstanding, we do not think that now is the time for the Bank of England to be raising rates,” he said.

The BoE has stuck to its message that it expects to raise borrowing costs, assuming Britain can avoid a no-deal Brexit.

Writing by William Schomberg and David Milliken; additional reporting by Alistair Smout

Source: UK Reuters

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UK housing market stuck in slow gear as Brexit weighs – Nationwide

British house price growth remained weak in June as uncertainty about Brexit hung over the market, mortgage lender Nationwide said on Tuesday.

House prices increased by 0.5% compared with a year ago, slowing slightly after a 0.6% rise in May but in line with the median forecast in a Reuters poll of economists.

At the time of the Brexit referendum in 2016, house prices were growing by about 5 percent a year, according to Nationwide’s measure.

In monthly terms, house prices in June edged up by 0.1%, a slightly smaller increase than the median forecast in the Reuters poll for a rise of 0.2%.

Nationwide’s data chimed with other housing indicators which have suggested that a weakening of the market seen in 2018 might have bottomed out as investors wait for Britain to resolve its Brexit crisis.

“While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity,” Robert Gardner, Nationwide’s chief economist, said.

Price growth and transaction levels were likely to be little changed over the coming months, he said.

Britain is waiting for the ruling Conservative Party to choose its new leader who, as next prime minister, will attempt to strike a new Brexit deal with the European Union before an Oct. 31 deadline for the country’s departure from the bloc.

Nationwide’s data showed that prices in London fell for an eighth quarter in a row in the April-June period although the pace of decline moderated to 0.7% in annual terms from 3.8% in the previous quarter.

Prices in the capital were around 5% below the all-time highs seen in early 2017 and were about 50% above their levels in 2007, before the global financial crisis, Nationwide said.

Prices in Britain as a whole were only around 17% higher over the same period.

House prices in the second quarter rose most strongly in Northern Ireland and Wales, up by an annual 5.2 and 4.2% respectively.

Source: Yahoo News

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Mortgage approvals down slightly in May

Mortgage approvals for house purchases, an indicator of future lending, fell back slightly from April to 65,400 in May, the Bank of England’s Money and Credit statistics has found.

Approvals remained broadly in line with the narrow range seen in previous years.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The number of mortgage approvals for house purchase, which indicate at what level future lending will be, fell back slightly in May but remain broadly in line with the narrow range seen in previous years.

“It shows that the mortgage market is trundling along quite steadily with no great shocks either way. This is reassuring as there is plenty of political and economic uncertainty, which is preying on people’s minds and creating a delay when it comes to making big decisions

“Lenders remain keen to lend and several have cut rates in recent weeks, so mortgage rates are likely to remain low for a while yet, further supporting the market.”

Net mortgage borrowing by households fell to £3.1bn in May, the smallest increase since April 2017. However, the annual growth rate for mortgage lending remained stable at 3.2%, and has now been around 3% since late 2016.

John Phillips, operations director at Just Mortgages and Spicerhaart, added: “There is not a huge change here; net mortgage borrowing fell slightly, but the annual growth rate for mortgages has remained stable at 3.2%, which means it has now been steady at around 3% for almost three years.

“Approvals, however, were down for both house purchase and remortgaging, which could suggest that lending will fall over the next few months and growth may slow too.

“There is no doubt that it has been a funny old few years for the mortgage market. Brexit has obviously had – and is still having – an impact, but I don’t think it is the only factor at play.

“For many years now, borrowing costs have been very low, but wages have not been keeping pace with house prices, so while mortgages are affordable, deposits and stamp duty are not.

“Those who may have upsized in the past are now either remortgaging to borrow more and then extending, or just saving the money they would’ve used on stamp duty and investing it into their existing homes.”

Phillips said that if the government wants to get things moving again, it needs to do something about the cost of moving, in particular stamp duty.

He said: “People are simply not prepared to throw thousands of pounds that could be used to invest in a bigger home on stamp duty.

“Back in April, the House of Lords Committee on Intergenerational Fairness and Provision recommended changes to stamp duty because, they said it is ‘seriously distorting the market’ and I think they’re right. Until something is done about the crippling cost of stamp duty, the market will continue to struggle.”

The number of approvals for remortgaging fell in May, to 46,700.

Nick Chadbourne, chief executive of conveyancing solutions provider LMS, added: “Remortgage activity figures from the Bank of England show the market is resilient, buoyed by near record low interest rates and high product expiry rates in Q2 this year.”

“In fact, LMS’ latest remortgage snapshot shows that there was a spike in remortgage activity to 53,624 and almost half of those who remortgaged opted for a 5-year fixed rate deal.

“LMS’ data also shows 65% of borrowers expect an interest rate rise within the next year, so we expect the trend towards long-term fixed rate deals to continue throughout 2019.”

Kevin Roberts, director, Legal & General Mortgage Club, said: “The government’s Help to Buy scheme has improved affordability for first-time buyers, and with mortgage lenders increasingly offering 95% loan-to-value products, they have unparalleled access to the finance they need.

“The low interest rate environment has also encouraged existing homeowners to remortgage onto longer fixed-term products – giving them certainty over their future repayment costs.”

By Michael Lloyd

Source: Mortgage Introducer

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North’s housing market the best performing in the UK, new survey shows

HOUSE prices in the north have increased at the sharpest rate in the UK, according to a new survey.

The latest Nationwide figures show that the Northern Ireland market remains the best performing, with annual growth the strongest of all UK regions.

The average house price in the north between April and June was £143,343, 5.2 per cent more than the same period a year ago and greater than the 3.3 per cent increase recorded in the previous quarter.

Wales was next in the figures, reporting a 4.2 per cent jump to an average of £160,407, followed by Yorkshire and Humberside (3 per cent growth).

The UK as a whole reported muted growth of 0.6 per cent to an average of £215,910. This was heavily influenced by the English market, with prices roughly flat in the last quarter compared to a year ago.

London saw annual prices fall for the eighth quarter in a row between April and June – down 0.7 per cent, although that was an improvement on the 3.8 per cent drop seen in the previous three months.

Over the month between May and June UK house prices edged up 0.1 per cent between May and June, but there are concerns Brexit uncertainty is set to weigh on growth over the coming months

Property prices edged higher month on month in June to an average of £216,515 after adjustment for seasonal factors.

This marks an improvement on the 0.2 per cent monthly fall recorded in May.

But, the building society warned that, while low mortgage rates and a healthy jobs market will help support the property market, wider uncertainty in the economy will take its toll.

Nationwide chief economist Robert Gardner said: “Survey data suggests that new buyer inquiries and consumer confidence have remained subdued in recent months.

“Housing market trends are likely to continue to mirror developments in the broader economy.

“While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”

Howard Archer, chief economic adviser at the EY Item Club, said: “We believe, with Brexit being delayed until October 31 – and it currently very unclear what will happen then – and the domestic UK political situation unsettled, prolonged uncertainty will weigh down on the economy and hamper the housing market.

“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”

Source: Irish News

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Brexit and global slowdown hit UK factories in second quarter – BCC

The proportion of British manufacturers reporting a rise in their domestic orders has fallen to its lowest in seven years as Brexit uncertainty and the global slowdown take their toll, a leading employers group said on Monday.

Factories also showed the weakest picture for export orders in four years in the April-June period while a slight pick-up for services firms was not strong enough to make up for a weak start to the year, the British Chambers of Commerce said.

“These results indicate that underlying economic conditions in the UK remain decidedly downbeat,” BCC economist Suren Thiru said.

Britain’s economy began 2019 strongly, but the growth came largely from a surge in stockpiling by manufacturers seeking to protect themselves against the risk of border delays after the original March 29 Brexit deadline.

That deadline has been postponed until Oct. 31, and progress to resolve a stand-off in parliament over how to leave the European Union is on hold while the Conservative Party chooses a new leader who will take over as prime minister.

The BCC’s Quarterly Economic Survey showed price pressures for services firms and manufacturers fell to their lowest level since 2016.

Thiru said the prospect of muted inflation would help consumers and allow the Bank of England to keep interest rates on hold as it waits for the outcome of Britain’s Brexit impasse.

On Sunday another employers group, the Confederation of British Industry, reported that Britain’s private sector had its worst three months in nearly seven years..

Later on Monday, the IHS Markit/CIPS purchasing managers index for the manufacturing sector, which is due to be published at 0830 GMT, is expected to show the factory sector shrank slightly in June.

The BCC survey was based on responses from 6,846 companies – making it the largest of its kind in Britain – and was conducted between May 20 and June 10.

Reporting by William Schomberg, editing by David Milliken

Source: UK Reuters