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Equilibrium’s finance and investment news roundup

This week’s roundup includes news of government plans to extend pensions auto-enrolment to 18 year olds, a rise in UK retail sales following Black Friday, a lack of confidence about household finances amid Brexit confusion and a fall in the RICS house price balance.

Pensions auto-enrolment ‘will be rolled out to 18 year olds’

Every worker over the age of 18 is set to automatically begin saving into a workplace pension unless they opt out, government plans have confirmed.

As part of the scheme to extend automatic enrolment, ministers have announced they hope to reduce the minimum age to 18 in the mid 2020s, as part of a move that will affect around 900,000 young people.

Speaking on the Andrew Marr Show, Work and Pensions Secretary David Gauke admitted that increases in contributions from next year may “put people off” but added “the evidence is that opt-out rates have been lower than people predicted”.

Currently, the scheme means employers must enrol staff aged 22 and over who are earning more than £10,000 into a pension. The system has been widely praised for ensuring more people prepare for older age, but it does lead to extra costs for employers.

The total minimum contribution is currently set at 2% of earnings (0.8% from the worker, 1% from the employer and 0.2% as tax relief from the government). From April 2018, it will increase to 5% of earnings (2.4% from the worker, 2% from the employer and 0.6% as tax relief).

Black Friday lifts UK retail sales in November

Black Friday discount deals helped to push retail sales up 1.6% in November compared to the same month in 2016, official figures have revealed.

The Office for National Statistics (ONS) said retailers had reported a marked uplift in sales of electrical household appliances.

Discussing the figures, ONS statistician Rhian Murphy said underlying growth had remained “reasonably strong”. However, some analysts have noted that Black Friday had distorted sales, and retailers were still facing tough conditions.

The ONS revealed that the quantity of food purchased in November 2017 dropped by 0.1% compared to November 2016, however, the amount of money spent jumped by 3.6% thanks to rising food prices that have contributed to the increase in inflation.

In November, clothing and footwear sales rebounded from a drop in October, rising 2.3% in November from a year earlier. This is despite department stores experiencing a fall in sales of 0.9%.

UK households ‘downbeat about finances’

More households across the UK are expecting a financial struggle in the coming months due to uncertainty surrounding the Brexit vote, a survey published by the Bank of England (BoE) has revealed.

The drop in confidence, which saw more people predicting financial difficulties than improvements, reflected how households felt about their personal finances over the past 12 months. Analysts found that households had suffered a loss of confidence for their outlook for the economy since the EU referendum.

According to the BoE, “households’ expectations of income and spending have both increased since last year, which likely reflects the rise in cost of living following the depreciation of sterling”.

Britain’s inflation rate has increased to 3.1%, pushed up by the fall in the value of the pound since the Brexit vote, while wage growth has also been weak. The BoE raised rates for the first time in more than a decade last month, pushing the Base Rate to 0.5% from 0.25%.

RICS ’house price balance ‘lowest since March 2013’

British house prices were flat for the first time in more than four years during the past three months, as falling prices in London and nearby areas dragged down the national average.

The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance fell to zero in November from +1 the month before.

The figures show that RICS members were evenly split between those reporting price rises compared with three months ago, and those reporting falls. It was the lowest level for RICS’ price balance since March 2013.

RICS Chief Economist Simon Rubinsohn said: “The mood music in London and the South East is very much flatter than elsewhere and, interestingly, the forward-looking indicators suggest this is likely to persist into the new year.”

The RICS data pointed to a fall in prices in the East and North East of England, but reported solid increases in Wales, Northern Ireland and North West England. 

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