Our Blog
petrol pump

This week's roundup includes news that inflation has fallen to 2.7%, the UK's growth forecast has been hiked by the British Chambers of Commerce and Facebook has come under fire amid allegations it breached users' privacy.

Inflation falls to 2.7%

Falling petrol prices and a slower rise in the cost of food contributed to a drop in UK consumer price inflation during February.

The rate fell from 3% to 2.7%, the lowest figure since July 2017, easing pressure on the Bank of England to raise rates.

The figures suggest the squeeze on households, caused by rising inflation and stagnant wages, may be ending. The price of petrol and food played a key part in this month's figures.

Petrol prices fell by 0.2p per litre on the month, while diesel dropped by 0.1p. Food prices rose by 0.1% between January and February, compared with a 0.8% rise the year before.

UK growth forecast hiked by business group

The British Chambers of Commerce (BCC) has raised its UK growth forecast but warns it will be among the worst performing G7 economies until 2020.

The BCC has raised its GDP forecast for 2018 from 1.1% to 1.4% and in 2019 from 1.3% to 1.5%. Its first forecast for 2020 is for 1.6% growth.

The hike is driven by slightly stronger than expected consumer spending. The Confederation of British Industry says the UK's export performance is expected to remain robust on the back of strong global growth.

But it says with imports also likely to continue to grow, the contribution of net trade to the UK's GDP growth over the near term is to be limited, ‘particularly with little evidence of a sterling boost to the UK's overall net trade position’.

And despite the upgrades, UK GDP growth is set to remain well below the historical average throughout the forecast period.

Facebook hit by privacy breach accusations

Facebook is under fire after reports detailing how Cambridge Analytica, which is credited with helping Donald Trump win the US election, acquired and used Facebook's customer information.

Downing Street called the allegations "very concerning". Facebook's shares were down by more than 6% in mid-morning trade as of 19th March.

Facebook is accused of failing to properly inform users that their profile information may have been obtained and kept by Cambridge Analytica.

On Friday, Facebook suspended Cambridge Analytica, saying it had acquired data from a researcher in a violation of the firm's policies.

Brexit boost for consumers to be short lived

Consumers could see prices fall by up to 1.2% if Britain were to abolish all tariffs once it has left the European Union, according to a report by the Institute for Fiscal Studies (IFS).

But the study warned that any gains would be small and were based on ‘optimistic’ assumptions.

It also said that consumers had already seen prices rise by 2% since the referendum due to the weaker pound. In addition, costs linked to new EU trade barriers could also hit consumers.

Those increased costs would ‘offset’ any ‘rather limited’ gains from becoming tariff free in the future, the report from the think tank says.

‘We estimate that complete abolition of all tariffs would reduce prices faced by households by about 0.7-1.2%,’ the report said.

‘This could have additional positive economic benefits in the long run but could also be very damaging for some UK industries in the short run.’

5X more homeowners choosing renovation route

The number of homeowners choosing to stay put and invest in their existing property instead of moving has soared in the past five years, according to insurers Hiscox.

In 2013 just 3% of homeowners took the decision to improve instead of move, but fast-forward five years and this figure has increased to 15%, further rising to one in four (26%) amongst millennial homeowners (those aged 18 – 34).

The Hiscox Renovations and Extensions Report draws on insight from homeowners, UK-wide estate agents and over 400 local council planning permission records to highlight the growing number of homeowners choosing to invest in home improvements and the profits and pitfalls they’re facing as a result.

The subdued and costly property market has been a clear catalyst for this trend. When questioned, homeowners cited prohibitively high property prices (25%), stamp duty (13%), a sluggish property market (15%), potential interest rate rises (8%) and even the uncertainty caused by Brexit (8%), as reasons for investing in their current home instead of looking elsewhere.