This only affects companies with more than 50 employees. If affected any Personal Service Company should review their current engagements.
Weak PMIs
The purchasing managers index (PMI) for the UK construction sector dropped down to 43.1 from 48.6. Unfortunately manufacturing PMI also dropped to 48 from 49.4 and also the service sector dropped to 50.2 from 51. It looks like the effect of a delayed Brexit is showing in the numbers.
Change of ECB president
European bond markets can breathe a sigh of relief this morning as Christine Lagarde is poised to be the new president of the European Central Bank, succeeding Mario Draghi in October.
The relief is perhaps more about who is not going to be the new president, rather than who will be at the helm; German Bundesbank chief Jens Weidman was considered to be one of the frontrunners for the post. While Draghi will be remembered for pledging to do ‘whatever it takes’ to preserve the euro, Weidman will be known for trying all he could to prevent some of Draghi’s policies being enacted.
The US economy
This is now the longest uninterrupted expansion since 1854. As the central banks have injected liquidity using Quantitative Easing to keep the economy going.
The UK current account deficit has increased
The deficit has risen to £30 billion from £23.7 billion in the final quarter of 2018. This is equivalent to 5.6% of GBP. This might have been down to Brexit stockpiling.
US Inflation drops to 1.8%
Inflation in the US was 1.8% YoY in May, coming in below the consensus forecasts. Consumer price inflation slowed from the 2% pace recorded in April, which coincided with the Federal Reserve’s 2% inflation target. In addition, in core CPI inflation (a gauge that excludes volatile prices, such as fuel, etc.) also slowed to 2% YoY. Benign inflation combined with slowing growth and escalating trade tensions could increase pressure on the Federal Reserve to bow to the market and cut interest rates this year. The market now takes it for granted that the Jerome Powell-led FOMC will slash the Fed funds futures by 25 bp by the end of July and initiate an easing cycle.
Tesco has pulled out of the mortgage market
Tesco has pulled out of the mortgage market amid a price war among lenders that has pushed down rates for borrowers and piled pressure on smaller providers. The 23,000 mortgage customers of the supermarket’s banking business will not see any immediate change to existing arrangements.
Interest-only Mortgages
Yorkshire Building Society has become the latest big name to launch an interest-only mortgage. If you have a reasonable deposit saved up please give us a call.
Interest-only mortgages were once common but virtually disappeared after the financial crisis, amid fears that many borrowers were not setting aside enough money to repay their debt. Borrowers do not repay any capital during the course of the loan, so when their mortgage term ends they need to pay back their equity.
Under new lending criteria, borrowers have to show lenders that they have a repayment strategy in place.
There were twice as many interest-only products on the market earlier this month as there were six years ago, according to Moneyfacts.
UK savings level lowest of all OECD countries
Mr Micawber would not be pleased. British households, companies and government together are spending approximately 5% more than we are earning. We are now worse than any other OECD country; even below the US who spend 1%.
UK employment
The number of people in work rose by 179,000 to 32.71 million in the three months to the end of February, the highest since 1971. The Office for National Statistics said that jobless numbers fell by 27,000 to 1.34 million, putting the unemployment rate at 3.9 per cent, the lowest since 1975.