Mortgage approvals dipped in April
Mortgage approvals fell by £1.4bn in April, marking the lowest level since records began, excluding during the pandemic. Bank of England data shows that the number of mortgages approved for house purchases fell by more than 5% to 48,700, from 51,500 in March. Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With mortgage approvals slipping in April, it looks as though buyers are concerned as to what's going on in the wider economy and what they can afford.” Laura Suter, head of personal finance at AJ Bell, said that for many homeowners, “it’s just not an option to borrow more money and move … with interest rates where they are,” while others “are too nervous about the direction of rates and the housing market” to move. Andrew Wishart of Capital Economics said mortgage approvals are forecast to fall from 752,000 in 2022 to 540,000 this year. The last time mortgage approvals were so low was in 2008, when the number of loans slumped to 523,316 during the financial crisis.
Record £9bn pumped into ISAs
Figures from the Bank of England show that savers are looking to capitalise on higher interest rates, with £9bn pumped into ISAs in April, marking the biggest ever inflow into such accounts. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “ISAs are having their moment in the sun,” adding: “Higher savings rates and frozen tax thresholds mean protecting our savings from tax is a top priority.” Including deposits into the Government-backed National Savings and Investments scheme, savers set aside an additional £5.2bn into bank accounts in April. This follows a record outflow of £4.8bn from banks and building societies in March, with customers spooked by the banking crisis that saw the collapse of Credit Suisse and Silicon Valley Bank.
Lloyds to close 53 more branches
Lloyds has announced the closure of 53 more branches, with 21 Lloyds Bank, 15 Halifax and 17 Bank of Scotland sites set to go between this September and May 2024. Lloyds said the branches set for closure had seen their usage fall by an average 55% in the last five years. The announcement takes the number of bank branches that have been shut or earmarked for closure so far this year to more than 500. Figures compiled by consumer group Which? show that 662 branches were closed last year across the industry. While 204 have gone so far this year, 255 more are scheduled to close, as well as the latest batch from Lloyds.
HSBC launches £15bn SME fund
HSBC has launched a £15bn fund dedicated to financing the survival and expansion of SMEs. HSBC said £2bn will be allocated for SMEs trading internationally. An additional £500m each has been earmarked for the tech sector and franchise businesses.
JPMorgan to close 21 First Republic branches
JPMorgan will shut 21 branches of First Republic Bank by the end of the year as it integrates the failed lender into its operations, with the closures accounting for a quarter of First Republic's 84 branches. About 100 employees who are affected by the branch closures will be offered six-month transition assignments. After that, they will be eligible to apply for other roles at JPMorgan.
FCA urges Woodford investors to ‘seriously consider’ redress deal
The Financial Conduct Authority has urged Neil Woodford’s investors to “seriously consider” a redress deal that has been offered, with the regulator having struck a redress deal with the fund’s administrator earlier this year. The FCA announced in April that former fund manager Link Fund Solutions had agreed to repay £235m to investors with money trapped in the fund when it collapsed in 2019. Therese Chambers, joint executive director of enforcement and market oversight at the City watchdog, said: “Creditors for Woodford Equity Income Fund should seriously consider the offer on the table – this is the quickest and best chance to obtain redress,” adding that although the redress scheme does not cover all losses, “we consider it is in the interests of investors to seriously consider it.” She said the proposed scheme, which represents 77p in the pound of the lost funds, “offers investors the best chance to obtain a better outcome than might be achieved by any other means.”
M&A deals fall to 7-year low
Activity in mergers and acquisitions in Britain is at its lowest level in seven years, according to the deals intelligence team at the London Stock Exchange Group (LSEG). The total value of mergers and acquisitions involving UK companies has more than halved to $89bn in the first five months of the year, while the number of deals announced has dropped by 29%. The value of private equity-backed deals jumped from $1.8bn to $8.8bn in April but fell to $480m last month. Goldman Sachs, Rothschild and Bank of America have been the most prolific investment banks for M&A in 2023. Goldman Sachs has worked on 18 deals, with a value of $12.9bn, while Rothschild has worked on 37 deals, with a value of $11.8bn, and Bank of America has been involved in nine deals, with these worth $10.8bn. The LSEG report shows that the total value of deals announced globally declined by 42% year-on-year to $1.1trn in the first five months of the year.
Private wealth advisers call for tax loopholes to be closed
The Progressive Advisors’ Movement, a group of 100 private wealth advisers, has called on the industry to tackle an “anti-tax” culture and help HMRC identify ways tax laws are being exploited.
‘Nowhere to hide’ for wrongdoers, says watchdog
Therese Chambers, joint executive director of enforcement and market oversight at the Financial Conduct Authority (FCA), says there is "nowhere to hide" for firms who breach rules, warning that they will face "meaningful consequences." Speaking at the City & Financial FCA Investigations and Enforcement Summit, she warned against "aggressive diversionary tactics" and advised firms to “get their ducks in a row now," as there “really is nowhere to hide.”
Rising tide of greenwashing across finance flagged by EU supervisors
The European Banking Authority has warned of a “clear increase” in greenwashing across the financial system, with officials concerned that banks, asset managers and insurers are overstating their climate credentials.
Investors turn to AI-guided dealmaking to gain edge over rivals
The FT looks at how venture capital funds, private equity groups and accountancy firms are using AI tools to advise clients and help guide their dealmaking, utilising the technology to gain an advantage over rivals.
Manufacturing hit by drop in exports
Manufacturing production in the UK fell in May, with the sector hindered by a continued dip in exports. The S&P/CIPS UK manufacturing PMI gave a reading of 47.1 in May, compared to 47.8 in April on an index where a number below 50 indicates contraction. May’s report marks the tenth successive month that the manufacturing sector has been in negative territory. New export orders fell for the 16th consecutive month, with the drop in overseas sales attributed to stronger international competition and lower demand from mainland Europe and the US. Domestically, manufacturers felt the impact of poor market sentiment and staffing contractions. Firms did, however, benefit from the first reduction in average input costs for three-and-a-half years. Dave Atkinson, SME & mid corporates head of manufacturing at Lloyds Bank, said: “Uncertainty remains over how sustainable growth is in the sector, after nearly a year of contraction with mixed forecasts of what's to come for the economy.” He added that manufacturers “want to see renewed focus behind a UK industrial strategy, which will provide the stability and confidence for long-term investment.”
House prices fell 3.4% in May - Nationwide
Data from Nationwide shows that UK house prices have fallen at their fastest annual pace since July 2009. The building society said prices declined by 3.4% in the year to May. Month-on-month, house prices fell by 0.1% in May to an average of £260,736. Robert Gardner, Nationwide's chief economist, said: “Recent Bank of England data had shown some signs of recovery in housing market activity, although the number of mortgages approved for house purchase in March was still around 20% below pre-pandemic levels.” He added: “Headwinds to the housing market look set to strengthen in the near term.”
Amazon in top-15 UK taxpayers
Amazon now ranks in the top 15 largest UK taxpayers for overall total tax contribution. The online giant paid £781m in direct taxes last year, up from £648m in 2021. Direct taxes the firm must pay includes business rates, corporation tax and employer National Insurance. Including indirect taxes like VAT, Amazon said it paid more than £3.6bn in total contributions last year, far exceeding the £2.7bn it paid the year before.
US economist: Brexit a ‘historic economic error’
Former US Treasury chief Larry Summers says Brexit was a “historic economic error” which has helped fuel high inflation in the UK. He told BBC Radio 4’s Today programme that UK economic policy “has been substantially flawed for some years,” arguing that “Brexit will be remembered as a historic economic error that reduced the competitiveness of the UK economy, put downward pressure on the pound and upward pressure on prices, limited import goods and limited in some ways the supply of labour.” “All of which contributed to higher inflation,” he added. Going on to question Bank of England activity in regard to interest rates, Mr Summers said higher levels of inflation were “reinforced by very ill-judged monetary policies that were substantially too expansionary for too long.”
Finance chiefs expect inflation to ease
British businesses expect lower inflation over the coming year, according to a Bank of England survey of chief financial officers at more than 2,300 companies. The poll for May shows that businesses expect to raise prices by 5.1% over the coming year, down from 5.9% in April’s survey. The survey found that companies expect consumer price inflation to be higher over the next year, averaging 5.9%, compared with the 5.6% recorded in April. Three-year inflation expectations also rose, climbing to 3.5% from 3.4%. Prior to the pandemic, businesses surveyed by the Bank typically reported plans to raise prices and wages by about 2%-3% a year.