Financial matters

[SteveH]

The UK economy has barely grown since 2019 before the pandemic, with one economist describing it as "listless".

It shrank by 0.1% in May, partly due to the extra bank holiday for the King's Coronation, which meant there was one fewer working day than normal.

The rising cost of living and higher interest rates have been squeezing households and businesses.

When an economy shrinks, people might lose their jobs and find it harder to get pay rises that keep up with prices.

Inflation - the annual rate at which prices rise - is at 8.7%.

The Bank of England has been putting up interest rates to try to slow price rises but this is having a knock-on effect on consumer borrowing costs, driving up mortgage and loan repayments for millions.

cont https://www.bbc.co.uk/news/business-66179998

[SteveH]

The UK has signed a deal to join a trade pact with several countries in Asia and the Pacific, including Japan and Australia.

The name of this pact - CPTPP - is an unwieldy mouthful, but it's also a new club of 500 million people the UK will be able to access.

So what does it mean for the fortunes of businesses and households?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement between 11 nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Those founding members signed the Pacific trade pact in March 2018.

Between them, they generate 13% of the world's income.

The UK is the first non-founding country to join, and will be its second biggest economy after Japan. It takes the value of the new grouping to ?11 trillion.

https://www.bbc.co.uk/news/explainers-55858490

[SteveH]

The UK is "definitely over the worst" of food price inflation, the boss of online food retailer Ocado has said.

Chief executive Tim Steiner gave his forecast as separate figures revealed that grocery price growth slowed for a fourth month in June.

Market researcher Kantar said prices rose by 14.9% in the four weeks to 9 July compared with a year ago.

But Kantar said inflation remains "incredibly high" and Mr Steiner said customers were spending less.

Kantar said Britons had been turning to supermarket promotions to save money, which had helped to slow the pace of price rises from 16.5% in May.

Food prices are one of the biggest contributors to the UK's overall rate of inflation which remains stubbornly high.

New figures, due on Wednesday, are expected to show that the overall pace of price rises slowed to 8.2% in June, from 8.7% in May.

However, the Bank of England is expected to continue raising interest rates, which it has been using as a tool to curb rising prices and to bring inflation down back to its 2% target.

cont https://www.bbc.co.uk/news/business-66228386

[SteveH]

BBC live report

UK inflation falls to lowest in more than a year

report  https://www.bbc.co.uk/news/live/business-66231510ftp://


Second part
Interest rates: Big rise less likely after inflation surpise

cont https://www.bbc.co.uk/news/business-66237492

[SteveH]

UK inflation and interest rates high - how do other economies compare?

Inflation is still higher in the UK than in many other rich nations so interest rates may yet stay higher for longer.

So how is the UK fairing in other parts of our economic wellbeing? Include growth, jobs and taxes and it's a mixed picture.

Inflation
For all the talk of lower inflation, it still means prices are a painful 7.9% higher in the UK than a year ago. In the EU, that rate is 5.5%, it's even lower in the US.

Britain experienced the worst of both sources of price shocks impacting rich countries - last year's spike in energy and food costs prompted by the war in Ukraine, and a post-pandemic shortage of workers.

Cont https://www.bbc.co.uk/news/business-66269947

[SteveH]

British Gas: Anger as energy bill change leads to record profits

There has been an angry reaction to British Gas reporting record half-year profits as millions of households continue to struggle to pay for energy costs.

British Gas reported profits of 969million after price cap rises allowed it to make more money from household bills.

Regulator Ofgem said the bumper profits were a "one-off" due to the changes.

But poverty campaigners said the profits "are a further sign of Britain's broken energy system".

About half of the profit was due to the changes to the price cap made by the energy regulator.

Ofgem had raised the allowance suppliers can claim from household bills to make up for costs incurred during the pandemic.

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: "At a time when household energy debt is spiralling to record levels and energy bills remain double what they were just a few years ago, the profits posted will be greeted with disbelief by those struggling through the crisis.

"There will of course be questions about how these profits were made, but the reality is that energy firms are operating on a playing field set by the government."

cont https://www.bbc.co.uk/news/business-66315117

[Hugo]

Apart from British Gas the only people that will be happy are the British Gas shareholders.    I don't expect that they will be the only energy firm that shows record profits this year.
The firms do it simply because they are allowed to do it.

[SteveH]

New oil and gas licences will bolster the UK's energy independence and economy for generations, energy security secretary Grant Shapps has said.

He stressed energy security was "more important than ever" so Putin "can never again use energy as a weapon to blackmail us".

Writing in a statement, he said: "Safeguarding energy bills for British families and providing a homegrown fuel for our economy that, for domestic gas production, has around one-quarter the carbon footprint of imported liquified natural gas.

"Our next steps to develop carbon capture and storage, in Scotland and the Humber, will also help to build a thriving new industry for our North Sea that could support as many as 50,000 jobs, as we deliver on our priority of growing the economy."

cont https://www.bbc.co.uk/news/live/uk-politics-66357043

[SteveH]

Whose got the tissues?

Oil giant BP profits has reported a steep fall in profits between April and June after energy prices fell back from spikes caused by Russia's war with Ukraine.

The firm said its underlying profits dropped to $2.5bn (2bn).

That compares to a $8.4bn gain it reported in the same three months last year, a period covering the early stages of Russia's assault on Ukraine.

Wholesale oil and gas prices have fallen back sharply since last year.

However, energy giants such as BP and its rival Shell continue to make strong profits. Shell recently reported $5.1bn in income for the April to June quarter.

cont https://www.bbc.co.uk/news/business-66369811

[Ian]

Whose got the tissues?

:-)))

[SteveH]

The number of people missing payments on essential household bills like energy, phone and water is as high as it was over the winter, according to consumer group Which?.

Household budgets have been under strain for more than a year.

Even though prices have fallen back slightly, around 2.4 million households missed at least one bill payment in the month to mid-July, Which? estimates.

Which? said 770,000 failed to make mortgage or rent payments.

One in twenty renters and one in thirty mortgage holders defaulted on a payment, it estimated.

January is usually when the highest number of households miss a payment, after paying for seasonal festivities. Last winter the steep rise in energy prices added extra pressure.

cont https://www.bbc.co.uk/news/business-66375777

[SteveH]

Interest rates expected to rise to new 15-year high

What?s going on at the Bank of England?

What are interest rates and how do they affect me?

cont https://www.bbc.co.uk/news/live/business-66386519

[SteveH]

Inflation: Should we trust the Bank of England's forecasts?

The Bank of England's forecasting, which informs major decisions for the UK economy, is being reviewed and has been criticised.

After the Bank hiked interest rates for a 14th time in a row in an effort to slow price rises on Thursday, officials have predicted inflation to fall from the current rate of 7.9%, to "around 5%" by the end of the year.

So, in light of its estimating techniques being scrutinised, how much faith should we put in "5% by Christmas"?

Why does the Bank of England make forecasts?..........................

cont https://www.bbc.co.uk/news/66408346

[SteveH]

Shops offering discounts to tempt hard-hit customers
Retailers are ramping up promotions to try to persuade shoppers to spend more after July's wet weather hit business.

Sales of clothing and shoes declined last month, which is usually a busy month for fashion, as shoppers held back from updating their summer wardrobes.

But a report on retail sales said there was a "big rise" in offers designed to persuade shoppers back.

The higher cost of living and rising interest rates are squeezing spending.
cont https://www.bbc.co.uk/news/business-66429307


Higher food prices may be here to stay, says Bank economist
Higher food prices may be here to stay, the Bank of England's chief economist has said.

Huw Pill said that the rate at which food prices are rising was expected to slow to "about 10% by the end of the year".

But he warned a return to cheaper food was "something we may not be seeing for a while yet, if in the future at all".

The price of food and non-alcoholic drinks rose by 17.4% in the year to June.

Over the last few months, the food inflation rate has gradually been dropping after hitting a high of 19.2% in March, according to official figures.
cont https://www.bbc.co.uk/news/business-66433014

[SteveH]

The spending power of workers in many parts of UK will remain below the level it was before the pandemic until the end of 2024, a think tank warned.

The National Institute for Economic and Social Research said a triple blow of Brexit, Covid and Russia's invasion of Ukraine had badly affected the economy.

It projected the UK was set for five years of "lost economic growth", with the poorest hit hardest.

The think tank called for more investment in poorer parts of the UK.

Over the last few years inflation - the rate at which prices rise - has soared, forcing up the cost of living for millions.

Wages have also climbed, but not as fast as prices, leaving households across the UK feeling squeezed.

cont https://www.bbc.co.uk/news/business-66436792