An economic round-up … and a very mixed bag
Times like these and it’s hard to know where to be on the optimism / pessimism scale.
A(nother) week of economic and political upanddownery offers a dash of good, a dollop of bad and a serving of ugly to wrap our heads around … if we can bear it.
As wannabe-optimistic types, we’ll try to sandwich the bad and the ugly with breads of the good, wish us luck …
Rates didn’t rise
It was 50/50 whether or not we’d see another rate hike in September but indeed we did not. The Bank of England resisted slapping another few points on interest rates – which they’ve done over a dozen times since April 2022.
The reason the BoE held back is chiefly that inflation is deflating. From over 11% in October 2022, inflation has slid through most of this year and last week stood at 6.7%.
Cue a small feelgood factor in the air. For now it looks like the direction of travel is set, which is good news for many of us, especially worried mortgage customers.
That said …
Mortgage shocks
A shock warning was issued last week because a large tranche of fixed mortgages will come to end around Christmas. A large tranche? Yes, about half a million.
A quick recap: those whose mortgage deals were fixed when rates were lower, say two or more years ago, are now in the hugely uncomfortable position of shopping for deals which will all ultimately add much more weight to their current outgoing.
The average interest rate at the end of 2021 was 2.34%, but right now (though it varies product to product) customers will likely have to settle for a rate somewhere between 5 and 6%.
This will be a sore increase to what’s already a household’s biggest budget item … and at a time when cost-of-living and utilities prices are what they are.
We previously jotted down a guide on how to shop for mortgages but the caveat is that it won’t be pain-free regardless of how you go about it.
Climate backtracks
Anyone else feeling nervous about the climate situation?
In the backdrop of recent world events, it felt a very bad moment to see the UK water down its commitments to change.
After previously making a lot of noise about the UK’s climate ambitions, Rishi Sunak this month dialled back targets relating to new petrol and diesel cars; pushing their ban from 2030 to 2035.
He also announced a delay to the target of eliminating the sale of gas boilers to homes.
It’s all pretty ugly, really, at a time concerns are spiking around the impacts of climate change and the pressing need to do more quicker, not less slower.
Don’t lose hope
For one, there is some positive economic news in that a post-pandemic recovery has been quietly bubbling away in Britain.
Looking at newly published business data, the ONS suggests that the UK’s recovery compares better with other G7 nations than was previously thought.
Unrevised figures had put UK GDP at 0.2% lower in Q2 2023 than its pre-pandemic level in Q4 2019, but the latest snapshot — which hasn’t yet been fully reconciled or published — shows we may be some 1.6% higher in Q2 2023 than we were in Q4 2019.
Oh and for two, re the climate backtracks, it’s not speaking out of turn to say that political decisions can and do change.
And as powerless as we may feel (and may be) there are small actions to take to make a difference. They start at home and extend to our money too. Here’s more on that.
Breathe.
We find ourselves being bearers of somewhat gloomy news again but there are chinks of light in the darkness.
You’ve heard us before mention Albert Einstein’s marvellous quote re compound interest. For a man of maths and science, he was also a man of (more) profound words …
“Learn from yesterday, live for today, hope for tomorrow.”