Business news live: Lifetime ISA facing reform and financial advice rules get ‘once in a generation’ overhaul
Stock markets updates and business news from Monday
The UK’s economy has been confirmed as having grown by 0.7 per cent in the first quarter, January to March, with services and production the main contributors in what was a big boost in the early part of the year for Rachel Reeves and Labour’s plans for growth.
However, GDP is estimated to have fallen 0.3 per cent in April, largely through services output, and the UK - like much of the rest of the world - has faced huge uncertainty since then through factors such as Donald Trump’s tariffs, higher than expected inflation and continued escalations in the MIddle East.
Elsewhere, in stock markets the FTSE 100 grew slightly last week, but dropped again on Monday. The price of oil steadied across the weekend and into Monday, as investors began to look for risk-on assets once more.
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Business news live - Monday
US stocks are not exactly flying, but they are certainly rising - the S&P 500 is up 0.19 per cent and the Nasdaq slightly lower, as we depart this afternoon.
That’s it for us from today but we’ll be back from 7am tomorrow so do join us then. Bye for now!
Business news live on Monday
Good morning all and welcome to another week in the world of business and finance.
Lots to look at across the week and we’re starting with the UK economy after the latest figures emerged.
Hope you had a good weekend - let’s get back into it.
UK economy grew by 0.7 per cent in Q1
From January to March of this year, the UK economy grew 0.7 per cent - in large part supported by production and services.
It’s already expected that a slowdown is to be seen for April, and a lot has happened since then - tariffs, Middle East missiles, trade deals, inflation and more - but Thomas Pugh, chief economist at RSM UK, still expects overall annual growth to come in positive.
“There will be an inevitable slowdown in Q2 (April-June), but we think underlying growth is still positive and expect annual growth of a little over 1 per cent.
“Although headline growth remained at 0.7 per cent at the start of the year, there was a significant change in the drivers of growth. Consumer spending was revised up while total investment was revised down from 2.9 per cent to 2.0 per cent. This makes sense, as the huge jump in the saving rate had seemed at odds with strengthening consumer confidence and the improvement in consumer-facing services.
“Looking ahead, Q2 will look substantially worse than Q1 as there is some payback from activity brought forward to avoid taxes and tariffs. We are expecting growth of 0.2 per cent q/q, but underlying growth remains positive. The big question now is whether the recent string of weak data in retail sales and employment is a one-off, due to the initial shock of tax increases and tariffs, or whether it’s the start of a new trend. We suspect it’s more likely to be the former. Now that uncertainty has started to recede, consumer confidence is rebounding, and business surveys point to the worst of the labour market pain being behind us.
“That said, the economy is facing more headwinds in the second half of the year than it did in Q1, uncertainty remains elevated, inflation will be around 3.5 per cent and wage growth will probably slow further.
“That means growth is unlikely to get back to the heady heights of Q1’s 0.7 per cent anytime soon. Overall, we expect growth of around 1.2 per cent this year.”
Financial advice regulations overhauled to bridge 'advice gap'
The FCA has announced an overhaul of financial advice regulations, meaning millions may now have access to guidance they previously could not afford or were unsure about getting.
In principle, the idea should see “targeted support” bridge the gap between paid-for individual financial advice, and the usual free guidance which is broad-spectrum and not necessarily relevant to any individual.
Sarah Pritchard, deputy chief executive of the FCA, said: “We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.
“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.”
More on targeted support can be found here.
FTSE 100 opens up after positive end to last week
A new week has started in the stock markets and, following a strong finish to last week, the FTSE 100 is slightly up this morning at +0.14 per cent.
Defence firms Rolls Royce (+1.8pc) and Babcock (+2.29pc) are the leaders in early trading.
France’s CAC 40 is flat and Germany’s DAX is up around the same margin as the FTSE 100.
US tariff relief for UK carmakers and aerospace comes into force
Monday marks the day that tariff cuts for car and aerospace sectors coming into action.
The deal is part of the UK-US trade agreement, with vehicle manufacturers now seeing a 10 per cent tariff quota rather than 27.5 per cent, and the aerospace sector seeing no levy at all.
Sir Keir hailed the “historic trade deal” with the US, clinched after Donald Trump imposed the import taxes as part of his “liberation day” tariffs on countries across the world.
More details here:
US tariff relief for UK carmakers and aerospace comes into force
Lotus insist no plans to leave UK
More on vehicle manufacturers now after a statement from Lotus Cars revealed no plans to depart the UK, despite speculation to the contrary.
Business secretary Jonathan Reynolds was due to speak to the company across the weekend.
“Lotus Cars is continuing normal operations, and there are no plans to close the factory,” a statement said.
“We are actively exploring strategic options to enhance efficiency and ensure global competitiveness in the evolving market.
“We have invested significantly in R&D and operations in the UK, over the past six years. Lotus remains committed to the UK, and its customers, employees, dealers, suppliers, as well as its proud British heritage.”
Lotus is majority-owned by Chinese multinational Geely and employs more than 1,200 people in Norfolk.
Lloyds launch new cash bonus for switching current account
Lloyds Bank have announced their latest launch of a cash bonus switching offer to attract new customers - and in terms of an up-front fee, it’s a market leader.
The high street is offering £185 for eligible new customers who join using the CASS service for a Premier or Club Lloyds account.
Additional benefits across the two account types can include access to a higher rate savings account of 6.25 per cent and perks such as a year of Disney plus or cinema tickets.
Terms apply and the offer starts tomorrow.
WH Smith to get £12m less from store sales than expected
WH Smith decided earlier this year to sell off its high-street stores, you may remember, focusing instead on its travel area shops such as airports.
Modella bought the others and WH Smith forecast initially a £52m gross cash figure from the sale but a “more cautious” environment among stakeholders and “a period of softer trading, has resulted in a reduction in the ongoing cash flow of the business.”
That means they now expect only up to £40m gross from the disposal.
Oil, gold prices and pound-dollar rate check
Last week it was all about the commodities, so how are they faring today?
Brent Crude is down 0.14 per cent having dropped slightly over the weekend too, leaving it at $66.66. Bet environmental groups will love that.
Gold is slightly up, 0.55 per cent to $3,305 - that’s still way below the $3,431 close set in mid-June or any of the peaks earlier this year as the metal continually set new all time highs.
Finally, a quick look at the GBP:USD exchange rate, which is down 0.1 per cent.
Currently, £1 is $1.3700 - a reminder that in early January, it was below $1.22. Quite some change - this is the highest it has been since late 2021/early 2022.
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