Latest news with #MattSwannell
The Herald Scotland
23-05-2025
- Business
- The Herald Scotland
Retail sales figures major surprise as food stores in focus
The month-on-month rise in retail sales volumes in April was six times the 0.2% increase forecast by economists polled by Reuters. However, the ONS revised the month-on-month rise in retail sales volumes in March down from 0.4% to 0.1%. Food store sales volumes grew strongly in April, increasing by 3.9% month on month, with the ONS noting retailers had attributed this to 'the good weather' but also observing the rise saw this category 'mostly recovering from falls in February and March'. The ONS said of the April picture: 'Supermarkets, specialist food stores such as butchers and bakers, and alcohol and tobacco stores all grew during the month, with some retailers attributing this to the good weather.' Non-food store sales volumes fell by 0.7% month on month in April. The ONS said: 'This was because of falls in clothing stores and other non-food stores, such as sports and games retailers, and second-hand goods stores.' It noted these falls in sales volumes 'mainly followed strong growth in March'. The EY ITEM Club think tank said: 'April delivered a fourth successive rise in UK retail sales following a significant uptick in food sales. However, it's unclear as to whether underlying conditions are as strong as this data suggests, with sales likely to fall back in the coming months.' Read more Holiday companies and airlines revelations are eye-catching Major North Sea player issues warning on jobs Flights win 'game changer' for Scottish airport Ian McConnell: Privatisation surely not the answer for Scotland's ferries Ian McConnell: Why this big CalMac news is such a huge relief It added: 'The outlook for retail sales further ahead is dependent on the mood of consumers. Weaker real income growth, tighter fiscal policy, and the lagged effects of past interest-rate rises represent powerful headwinds to spending. But if consumer confidence remains resilient, there is scope for spending growth to align more closely with household income growth.' Matt Swannell, chief economic advisor to the EY ITEM Club, said: 'The retail sales data has been exceptionally strong in recent months, but it's unclear as to whether underlying conditions are quite as robust as the data suggests. "Furthermore, there was a puzzling inconsistency in official data for Q1, with both retail sales and output of non-retail consumer-facing sectors growing strongly despite a very soft outturn for consumer spending. The ONS's difficulty in adjusting for changes in seasonal spending patterns since the pandemic is probably part of the story.' He added: 'Looking ahead, we expect to see some payback for the string of recent upside surprises, with sales set to fall back in the coming months. Beyond that, the consumer outlook is mixed.' Nicholas Found, at consultancy Retail Economics, noted a 'glimmer of momentum' in the retail sales figures but flagged a 'more challenging reality'. He said: 'Retailers welcomed some much-needed sunshine, as shoppers returned to DIY and gardening, while lighter evenings and social gatherings lifted food and drink spending, which had seen sluggish growth in recent months. "Yet beneath the glimmer of momentum lies a more challenging reality. Value remains the overriding priority for consumers, with demand concentrated around carefully timed promotions and events, as high living costs and elevated interest rates continue to shape behaviour.' Mr Found added: 'At the same time, Budget and tariff-related costs are coming in, putting pressure on profitability. Retailers are navigating an increasingly complex environment, where protecting margins, sustaining investment and staying competitive is becoming harder. With economic uncertainty persisting and consumers still cautious, the resilience gap between those who can and cannot adapt will only widen.'
The Herald Scotland
21-05-2025
- Business
- The Herald Scotland
Interest rates in focus after surprise UK inflation surge
The rise in annual CPI inflation, from 2.6% in March, was fuelled partly by the hike in regulator Ofgem's price cap for household gas and electricity, which fed through to higher bills. There was also a surge in air fares, with the Office for National Statistics flagging the impact of the timing of Easter as it published the inflation data. And annual inflation in the food and non-alcoholic beverages category accelerated to 3.4% in April, from 3% in March, heaping further misery on hard-pressed households. Economists polled by Reuters had forecast annual CPI inflation for April would come in at 3.3%. The outturn of 3.5% is significantly above the target of 2% set for the Bank of England by the Treasury. The Bank of England's Monetary Policy Committee cut benchmark UK interest rates by a quarter-point earlier this month, to 4.25%. This was the fourth quarter-point cut since the MPC started reducing base rates last summer. The EY ITEM Club think-tank said: 'Consumer price index inflation surprised on the upside in April, largely due to the scale of rises for regulated and indexed prices and a temporary increase in air fares.' Mulling the outlook, it added: 'Headline inflation will likely edge up further over the coming months, before easing from the autumn as the contribution from the energy category fades.' Read more Weighing the prospects for interest rates, in light of the inflation data, the EY ITEM Club declared: 'Though the Monetary Policy Committee will likely be concerned that April's once-a-year rises in indexed and regulated prices were higher than anticipated, its measure of underlying inflation continued to cool. We don't expect today's data to deter the committee from maintaining its established 'cut-hold' tempo.' Matt Swannell, chief economic advisor to the EY ITEM Club, observed that 'as expected, the energy category added almost 0.7ppts (percentage points) to the headline rate' of inflation 'after Ofgem's price cap rose by 6.4% on April 1'. He added: 'However, the…once-a-year price rises for other indexed contracts and regulated prices were larger than expected. There was also an unusually high reading in the air fares category as April's price collection dates coincided with the Easter holidays, unlike in 2024.' Air fares rose by 27.5% month on month in April, the ONS data showed. And higher prices for overseas holidays over the Easter period played a part in the recreation and culture category exerting upward pressure on the annual CPI rate in April. Meanwhile, increases in vehicle excise duty (VED) also pushed annual inflation higher. Mr Swannell said: 'Today's data offers mixed messages for the MPC. On the one hand, April's readings for headline and services inflation overshot the committee's latest staff forecasts, and the larger rises for services prices that only change on an annual basis mean higher inflation is now baked into these categories for another year. 'But, on the other hand, the MPC's preferred measure of underlying services inflation continued to cool in April. On balance, we expect the MPC to continue cutting interest rates at every other meeting in the near term.' Bruna Skarica, chief UK economist at US investment bank Morgan Stanley, said: 'Inflation beat consensus as VED and package holidays pushed services inflation above even our higher-than-consensus forecast. 'Goods were weaker than we had expected and, all netted out, headline and core inflation came in line with our forecasts, and just 10bp (basis points) above the BoE's (Bank of England's) estimates. In addition, its measure of underlying services inflation went down, by 20bp. This really was a much better print than it looks at first.' She said of interest rates: 'We look for the next cut in August.' Ms Skarica added that Morgan Stanley then sees "sequential cuts to 3.25% by year-end".
The Herald Scotland
23-04-2025
- Business
- The Herald Scotland
UK Government borrowing exceeds forecast as tariffs to weigh on public purse
The latest figures from the Office for National Statistics (ONS) show public sector net borrowing rose to £151.9 billion in the year to the end of March. This was £14.6 billion higher than the £137.3 billion forecast by the the Government's official forecasters, the Office for Budget Responsibility (OBR). (PA Graphics) The yearly figure was also £20.7 billion more than the same period a year earlier. Borrowing makes up the difference between what the Government spends on the public sector and what it receives in income from tax and other receipts. The ONS said it was the third-highest level of borrowing in any financial year since records began in 1947 – behind only the 2021 financial year, during the peak of the Covid pandemic, and the 2010 financial year, following the global crisis. A boost in income for the Treasury was offset by a larger increase in expenditure, largely due to higher wages and benefit increases, the ONS said. The latest figures reflect the period shortly before Mr Trump unveiled a range of tariffs on US imports which heightened global trade tensions and are expected to limit economic growth around the world. (PA Graphics) On Tuesday, the International Monetary Fund (IMF) lowered its growth outlook for the UK by 0.5 percentage points this year, and cut the US's growth projections by 0.9 percentage points. The UK's downgrade partly reflected tariffs, but also weaker consumption amid higher inflation which has been driven by bills and energy price hikes. Matt Swannell, chief economic adviser to the EY Item Club, said: 'Having ended the year on a poor footing, recent US tariffs are only going to make the UK fiscal arithmetic more challenging.' He said that Chancellor Rachel Reeves' recent spring statement 'only left a slim margin for error against the fiscal rules', which limit the Government's ability to borrow to fund day-to-day spending. 'Most of this will likely be used up as the combination of reduced access to a major export market, a weaker global economy, and lingering uncertainty is set to hold back growth,' Mr Swannell said. Elliott Jordan-Doak, senior economist for Pantheon Macroeconomics, agreed that 'fracturing global trade and geopolitical uncertainties are going to make the Chancellor's life even more difficult'. Mr Trump's sweeping tariffs on US imports are expected to impact UK economic growth, 'which will further weigh on the public finances', he warned. 'The public finances were already in a difficult position heading into the trade war, and we think both taxes and borrowing will need to be raised in the October budget,' he added. Chief Secretary to the Treasury Darren Jones stressed that the Government 'will never play fast and loose with the public finances'. 'We are laser-focused on making sure taxpayer money is delivering our plan for change missions to put more money in people's pockets, rebuild the NHS and strengthen our borders,' he said. Initial estimate of 2024-25 borrowing above forecast– our monthly commentary on the public finances will be published later this morning 📊 — Office for Budget Responsibility (@OBR_UK) April 23, 2025 Shadow chancellor and Conservative MP Mel Stride said the latest ONS figures 'lay bare the price the British people are paying for Rachel Reeves' choices'. 'These eye-watering sums are being paid for by hardworking people through higher taxes, higher prices and higher mortgage rates' he said. The OBR forecasts UK Government borrowing will fall to £117.7 billion for the year to March 2026, according to projections published last month. Philip Shaw, an economist for Investec Economics, said measures including hiking employer national insurance contributions are likely to 'boost tax inflows' in the year ahead. 'It remains to be seen whether this forecast will be achieved, especially given the size of the overshoot in 2024-25 and that uncertainty over tariffs poses a major downside risk to the global economy this year,' he said.
Leader Live
23-04-2025
- Business
- Leader Live
UK Government borrowing exceeds forecast as tariffs to weigh on public purse
Economists said the Government ended the year on a 'poor footing' while hurtling towards further challenges. The latest figures from the Office for National Statistics (ONS) show public sector net borrowing rose to £151.9 billion in the year to the end of March. This was £14.6 billion higher than the £137.3 billion forecast by the the Government's official forecasters, the Office for Budget Responsibility (OBR). The yearly figure was also £20.7 billion more than the same period a year earlier. Borrowing makes up the difference between what the Government spends on the public sector and what it receives in income from tax and other receipts. The ONS said it was the third-highest level of borrowing in any financial year since records began in 1947 – behind only the 2021 financial year, during the peak of the Covid pandemic, and the 2010 financial year, following the global crisis. A boost in income for the Treasury was offset by a larger increase in expenditure, largely due to higher wages and benefit increases, the ONS said. The latest figures reflect the period shortly before Mr Trump unveiled a range of tariffs on US imports which heightened global trade tensions and are expected to limit economic growth around the world. On Tuesday, the International Monetary Fund (IMF) lowered its growth outlook for the UK by 0.5 percentage points this year, and cut the US's growth projections by 0.9 percentage points. The UK's downgrade partly reflected tariffs, but also weaker consumption amid higher inflation which has been driven by bills and energy price hikes. Matt Swannell, chief economic adviser to the EY Item Club, said: 'Having ended the year on a poor footing, recent US tariffs are only going to make the UK fiscal arithmetic more challenging.' He said that Chancellor Rachel Reeves' recent spring statement 'only left a slim margin for error against the fiscal rules', which limit the Government's ability to borrow to fund day-to-day spending. 'Most of this will likely be used up as the combination of reduced access to a major export market, a weaker global economy, and lingering uncertainty is set to hold back growth,' Mr Swannell said. Elliott Jordan-Doak, senior economist for Pantheon Macroeconomics, agreed that 'fracturing global trade and geopolitical uncertainties are going to make the Chancellor's life even more difficult'. Mr Trump's sweeping tariffs on US imports are expected to impact UK economic growth, 'which will further weigh on the public finances', he warned. 'The public finances were already in a difficult position heading into the trade war, and we think both taxes and borrowing will need to be raised in the October budget,' he added. Chief Secretary to the Treasury Darren Jones stressed that the Government 'will never play fast and loose with the public finances'. 'We are laser-focused on making sure taxpayer money is delivering our plan for change missions to put more money in people's pockets, rebuild the NHS and strengthen our borders,' he said. Initial estimate of 2024-25 borrowing above forecast– our monthly commentary on the public finances will be published later this morning 📊 — Office for Budget Responsibility (@OBR_UK) April 23, 2025 Shadow chancellor and Conservative MP Mel Stride said the latest ONS figures 'lay bare the price the British people are paying for Rachel Reeves' choices'. 'These eye-watering sums are being paid for by hardworking people through higher taxes, higher prices and higher mortgage rates' he said. The OBR forecasts UK Government borrowing will fall to £117.7 billion for the year to March 2026, according to projections published last month. Philip Shaw, an economist for Investec Economics, said measures including hiking employer national insurance contributions are likely to 'boost tax inflows' in the year ahead. 'It remains to be seen whether this forecast will be achieved, especially given the size of the overshoot in 2024-25 and that uncertainty over tariffs poses a major downside risk to the global economy this year,' he said.
Gulf Today
02-04-2025
- Business
- Gulf Today
British mortgage approvals fall to six-month low in February
British mortgage approvals cooled to a six-month low in February ahead of a rise in transaction taxes on many house purchases while consumer lending grew at the joint-slowest pace in nearly three years, Bank of England data showed. Lenders approved 65,481 mortgages in February, down from 66,041 in January. This was the lowest number since August and just below the median in a Reuters poll of economists which had pointed to approvals of 66,000. Net unsecured lending to consumers increased by slightly more than expected, up 1.358 billion pounds ($1.76 billion) in February after a 1.701 billion pound increase in January. On an annual basis, consumer lending growth matched January's 6.4 per cent rate, which was the lowest since May 2022. Matt Swannell, chief economic adviser to the consultancy EY ITEM Club, said slowing mortgage approvals reflected an unwinding of a boost late last year, when homebuyers sought to purchase homes ahead of an increase in property transaction taxes in April. 'In the near term, (this) will continue to drag on mortgage activity,' he said. In the three months to the end of February, net mortgage lending - which reflects completed transactions - grew at the fastest pace since the three months to the end of November 2022, when former prime minister Liz Truss' aborted budget plans led to mortgage lending drying up. While net consumer lending increased at a slower pace in February, analysts said the better-than-expected monthly increase chimed with strong retail sales data. 'Overall, the data is in line with a picture of a slow, gradual improvement in consumer spending, which should help push (economic) growth up to 0.3 per cent quarter-on-quarter in the first quarter,' said Thomas Pugh, economist at accountancy firm RSM. Meanwhile British house prices rose at their fastest pace in two years in the 12 months to January, according to official data published. Average house prices rose by an annual 4.9 per cent to 269,000 pounds ($346,956.20) in January 2025, the fastest increase since January 2023 and up from a 4.6 per cent increase in the 12 months to November, the ONS said. Private-sector rents across Britain in February were 8.1 per cent higher than in the same month last year at 1,326 pounds a month, slowing from January's 8.7 per cent rise. Britain's government will stick to its fiscal rules despite global upheaval, finance minister Rachel Reeves said on Sunday, raising the prospect of belt-tightening measures to meet her targets for the public finances in a budget update this week. In her first full budget last October, Reeves sought to win the trust of investors by pledging to bring day-to-day spending into balance with tax revenue by the end of the decade. But she is believed to have been knocked off course by slow economic growth and higher borrowing costs. A potential global trade war triggered by US President Donald Trump's import tariffs has led to downgrades to the international outlook. 'The world has changed. We can all see that before our eyes and governments are not inactive in that,' Reeves told Sky News. 'We'll respond to the change and continue to meet our fiscal rules.' British debt costs jumped after higher-than-expected borrowing figures, showing nervousness among investors about the ability of Prime Minister Keir Starmer's government to fix the public finances with the economy stuck in a slow gear. Last week, the government announced cuts to welfare spending to save around 5 billion pounds ($6.5 billion) a year, angering some lawmakers in Starmer's centre-left Labour Party. Reeves is expected to announce further measures in her Spring Statement on Wednesday to restore her 10 billion pounds of room for manoeuvre to meet her fiscal targets. Reeves said public spending was still expected to outpace inflation in each year of the current parliament. 'But as a government, we have to decide where that money is spent, and we want to spend it on our priorities,' she said. The government has increased spending on defence in response to Trump's calls on Europe to do more to protect its own security. Further increases are planned for the coming years. Reeves said 10,000 public sector jobs could be cut under a new plan to lower civil service costs by 15% by the end of the decade and save over 2 billion pounds ($2.58 billion) a year, adding it was not right to keep COVID-era staffing increases. More than 500,000 people work in the civil service. With the economic growth outlook likely to be slashed on Wednesday, Britain hopes to avoid the brunt of import tariffs that the Trump administration is considering. 'President Trump is rightly concerned about countries that run large and persistent trade surpluses with the US The UK is not one of those countries,' Reeves told the BBC.
