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Daily Mail
9 hours ago
- Daily Mail
Firms call for interest rate cuts as taxes bite
Business leaders last night urged the Bank of England to press ahead with interest rate cuts this week. The heads of the Confederation of British Industry (CBI), British Chambers of Commerce (BCC) and Federation of Small Businesses (FSB) told the Daily Mail that now was the time to lower borrowing costs to ease pressure on companies and households struggling despite four rate cuts since last August. They also warned firms have been clobbered by Rachel Reeves' £25billion National Insurance tax raid on employers. Fears are mounting of more tax hikes this autumn to plug a gaping hole in the Chancellor's Budget plans. A report by the Institute of Directors last week showed business confidence has collapsed to a record low under Labour, with morale lower than during Covid lockdowns. Interest rates are expected to be cut from 4.25 per cent to 4 per cent on Thursday – though with inflation well above the 2 per cent target and the highest in the G7 at 3.6 per cent, the CBI warned the Bank is 'walking a tightrope'. Alpesh Paleja, deputy chief economist at the CBI, said: 'We expect a rate cut and then two more after that, so that rates settle at 3.5 per cent early next year. 'However, interest rates rank fairly low in the spectrum of costs. Firms continue to grapple with the rise in employer NICs, high energy costs and more general uncertainty. 'The cumulative burden is something the Government needs to be mindful of, as we head closer to the next Budget.' David Bharier, head of research at the BCC, said small firms in particular 'are increasingly impatient for more cuts'. He added: 'Interest rate cuts are only part of the solution right now. For many SMEs, the cost of doing business is too high with new tax and administrative burdens. To restore business confidence and stimulate investment, a comprehensive growth plan is essential.' Martin McTague, chairman of the FSB, said: 'Small firms will be hoping for a cut to ease some of the financial pressure they are under and enable more of those who need finance to grow to access it. 'If no cut is forthcoming, the Bank should set out a clear path for the rest of the year, building in a gradual easing of the base rate to encourage investment and unlock growth.'
Daily Mail
17 hours ago
- Daily Mail
Australia's new best performing property market no one saw coming
Australia's most affordable capital city market is now Australia's best performing housing market - with prices peaking for the first time in more than a decade. The aftermath of Covid lockdowns saw house prices surge by double-digit figures in Brisbane, Perth and Adelaide, as young families priced out of Sydney moved interstate in search of a more affordable place to live. Until early 2025, Darwin home values were still below a 2014 peak, reached during an Inpex liquefied natural gas pipeline construction boom that was followed by a property market plunge. But after recovering gradually since Covid, prices are now soaring in the Northern Territory capital. Investors are now snapping up bargain-priced houses in a small city with Australia's tightest rental vacancy rate of just 0.5 per cent. Cotality research director Tim Lawless said landlord investors were chasing strong capital growth in Darwin, which is still a particularly affordable market. 'Investor numbers in Darwin have absolutely rocketed - they've pretty much doubled over the past year, more than doubled in value terms,' he told Daily Mail Australia. 'This upswing in housing values is being driven by investor demand. 'The affordability and the really high rental yields is probably the key thing that is attracting investors; again this is a supply thing - we haven't seen much investment activity in Darwin up until recently so there hasn't been a great deal of new rental supply. 'Whichever side of the book you're looking at, housing values or rental values, they're both rising quite rapidly now.' Prices are also reaching new peaks after plunging a decade ago. 'I wouldn't say they stagnated until recently - they've had a pretty decent upwards trajectory since 2020; it was really, since 2014, they went through quite a decent slump - they fell substantially and then did virtually nothing,' he said. 'The last five years has been catch-up for Darwin - it's a reflection of that affordability advantage that Darwin has built up.' Darwin's median house price has soared by 9.7 per cent during the past year to a still relatively affordable $641,997, new Cotality data for July showed. But in the nearby satellite city of Palmerston, Driver house values surged by 12.4 per cent to $512,921, which is still attainable for someone earning an average salary of $78,567. Unit values in Darwin, however, are still very affordable with a median value of just $390,863, following an oversupply during the Inpex LNG construction build that saw apartment values remain weak. Darwin is still the only capital city market where someone earning less than six figures can buy a mid-priced house instead of just a unit, with banks typically lending owner-occupiers five times their pre-tax salary. Like Brisbane, Perth and Adelaide during Covid, Darwin prices are roaring back to life and reaching new peaks after years of flatlining. The Top End is now seeing the kind of boom that other provincial capital cities experienced during Covid lockdowns in Sydney and Melbourne in 2021, when interest rates were still at a record-low of 0.1 per cent. This is despite the Northern Territory having a below-average population growth pace of 1.2 per cent as 2,234 people on a net basis left for another part of Australia. Adelaide was Australia's second best performing market with prices up 6.8 per cent over the year to $895,726 but in the more affordable northern suburb of Andrews Farm, prices climbed by 14.5 per cent over the year to a still cheap $506,610. Brisbane prices rose by 6.7 per cent to $1.02million but in nearby Bundamba, in Ipswich, they rose by 12.6 per cent to $646,332. Perth prices rose six per cent to $869,689 but in the more affordable eastern suburbs, Midland prices rose by 13.2 per cent to a still affordable $637,998. House price growth was more subdued in Sydney and Melbourne, which receive the biggest influx of overseas migration. Sydney values edged up by 2.2 per cent to $1.526million, making it by far Australia's most expensive market. The city's affordable south-west had bigger increases with Bonnyrigg prices rising by 13.6 per cent to $1.158million. Melbourne house prices rose by one per cent to $952,339 but in Frankston North, they rose by 9.3 per cent to $658,157. The Reserve Bank is widely expected to cut interest rates again on August 12, following an inflation drop, and the futures market is forecasting three more cuts by the end of 2025, which would take the cash rate from 3.85 per cent now to 3.1 per cent for the first time since February 2023. Mr Lawless said more rate cuts would see wealthier, inner-city suburbs get the steepest price growth instead of the more affordable, outer suburbs as banks were able to lend more. 'As interest rates come down, it's probably unlocking a bit more credit for more expensive suburbs,' he said. 'They're also the markets where we've generally seen weaker conditions over the past couple of years.'
Telegraph
a day ago
- Telegraph
Retirees pull billions from pension pots to escape Reeves's tax raid
Middle-class Britons risk a retirement 'disaster' after a record £5bn was pulled from pension pots in the wake of Rachel Reeves's inheritance tax raid. Official figures showed 672,000 retirees, representing roughly 5pc of all pensioners, pulled £5bn from their pots in the first three months of this year. HM Revenue and Customs (HMRC) said the amount taken from retirement funds was 25pc higher than the same quarter a year ago, with 13pc more people withdrawing money. It means withdrawals during the period were the highest since George Osborne introduced pension freedoms a decade ago. It comes after the Chancellor announced in her maiden Budget last October that pension pots would no longer be exempt from inheritance tax from April 2027, making them subject to a levy of up to 40pc. Baroness Altmann, a former Tory pensions minister, urged the Chancellor to reverse the policy, warning that many more people would choose to withdraw money from their retirement pot as soon as possible, creating a 'pensioner poverty time bomb'. Sweeping changes mean retirees can now withdraw unlimited amounts from their pot as soon as they hit 55. The figures also revealed a 50pc increase in the number of octogenarians taking money out of their pensions over the course of last year with the amount withdrawn by those aged 81 and over up by 80pc to £360m. 'It's a disaster' The Chancellor hopes to raise £1.5bn from her decision to bring pensions within the scope of inheritance tax. Pension withdrawals from defined contribution pots above the 25pc tax-free lump sum incur an income tax charge of 20pc for basic rate taxpayers and a 40pc levy at the higher rate. The changes mean heirs will be subject to both inheritance and income tax at the marginal rate from 2027. 'It's a disaster,' Lady Altmann said, adding that she expected withdrawals to accelerate as more people became aware of the looming inheritance tax charge. She added that the 'draconian' way the policy was introduced was storing up a crisis for the future, and said she was pushing for changes in the Lords that would see beneficiaries charged a maximum 20pc 'pension recovery tax' instead on inherited pots. Lady Altmann said: 'This policy could end up being as damaging to workplace pensions as Gordon Brown's tax rate was for DB [defined benefit] pensions. 'I honestly think this is an existential threat to the long-term survival of our DC [defined contribution] pensions, because there's a clear incentive to take the money out as soon as you possibly can.' She added that this would leave many middle-class families in danger of not leaving themselves enough to fund their retirement. Lady Altmann said: 'This IHT [inheritance tax] imposition will ensure that more and more people – especially those who don't have massive amounts of money – will just say, 'Why on earth would I want to lose two thirds of my pension to the taxman? I'll just take it out as soon as I can.' 'Those who build up, say, between £200,000 and £300,000 over their working life are now in danger of having a real financial incentive not to keep money in their pensions for their later life and then end up in poverty.' 'Taking a big hit' Guy Opperman, another former pensions minister, said: 'Pensions are taking a big hit from the Government's actions. 'The consequences of this policy are clear: people will save less for their pension and will withdraw more. This will also affect the ability to pass money on. There is time for the Government to think again and they should. It is very short-term.' Jamie Jenkins, director of policy at pensions giant Royal London, which manages more than £170bn of client cash, said there was already clear evidence that people were changing their retirement planning ahead of the changes. He said: 'There is increased interest from advisers and their clients in how they can mitigate the potential inheritance tax bill.' Claire Trott, at wealth managers St James's Place, added: 'Every individual's circumstances are different, but IHT changes to pensions have certainly triggered more conversations about gifting strategies and whether it makes sense to start drawing from pensions earlier.' An HM Treasury spokesman said: 'We continue to incentivise pensions savings for their intended purpose – of funding retirement instead of them being openly used as a vehicle to transfer wealth – and more than 90pc of estates each year will continue to pay no inheritance tax after these and other changes.'
