Tag: UK

UK Households’ Financial Health Remains Weak Amid Covid-19 Pandemic

UK households’ financial health remained under severe pressure in May as coronavirus pandemic took its toll on employment and income, survey results from IHS Markit showed Monday.

The Household Finance Index, which measures households’ overall perceptions of financial wellbeing, came in at 37.8 in May, up only slightly from April’s eight-and-a-half year low of 34.9.

Although the headline rose from April, it remained among the worst seen since the survey began in 2009 and signaled a further sharp deterioration in the financial health of British households.

The future household finance index also indicated a strong degree of pessimism towards the outlook for financial health.

Households reported a further severe decline in workplace activity in May and incomes from employment fell drastically and at an accelerated pace.

Overall, the decline in incomes was the sharpest ever seen since data collection began in February 2009.

In April, job security perceptions plunged into deep pessimistic territory and the latest data revealed that perceptions remained at this level in May.

The concern for the household sector remains the labour market, which will be vital in determining the speed at which consumer spending can return once the economy emerges from the lockdown, Joe Hayes, an economist at IHS Markit, said.

More than 50 percent of all survey respondents indicated a drop in household spending since April, with falling expenditure most widespread in the highest income brackets.

Further, there was a slight improvement in the proportion that anticipates the next move by the Bank of England to be an interest rate cut. Overall, the majority of UK households expect the BoE to lift interest rate within the next two years.

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Bank Of England Maintains Stimulus; Signals More Easing

The Bank of England maintained its key interest rate at a record low and refrained from unveiling additional quantitative easing, on Thursday, as the economic outlook remains uncertain due to the impact of the coronavirus, or Covid-19, pandemic.

However, Governor Andrew Bailey kept the door open for further easing as the economy is set to contract the most in more than 300 years due to the lockdown announced to curb the spread of coronavirus, or Covid-19, that hurt on all forms of economic activity.

The nine-member monetary policy committee of BoE voted unanimously to maintain Bank Rate at 0.1 percent. The bank had altogether reduced the rate by 65 basis points at two unscheduled meetings in March to combat risks posed by coronavirus to the economy.

The committee voted by a majority of 7-2 to continue with quantitative easing of GBP 645 billion. Jonathan Haskel and Michael Saunders sought an increase in the target for the stock of asset purchases by an additional GBP 100 billion.

The policymakers judged that the existing stance of monetary policy is appropriate.

“However the economic outlook evolves, the Bank will act as necessary to deliver the monetary and financial stability that are essential for long-term prosperity and meet the needs of the people of this country,” Bailey said. “This is our total and unwavering commitment.”

Markets expect the BoE to ramp up stimulus in June before the current quantitative easing programme runs out.

Paul Dales at Capital Economics, said the notion that the MPC would expand QE by around GBP 100 billion at the meeting in June looks pretty good. If anything, over the coming months and years, the MPC will probably end up doing much more than that, the economist added.

In the Monetary Policy Report, the bank said the GDP is expected to be close to 30 percent lower in the second quarter of 2020 than it was at the end of 2019.

The BoE warned that GDP could fall by 14 percent in 2020 as a whole before picking up in 2021. Growth is forecast to advance to 15 percent in 2021 and expand around 3 percent in 2022.

As the outlook for the economy depends critically on the evolution of the pandemic and how government responds to it, the MPC has constructed a plausible illustrative economic scenario.

The bank said Covid-19 is dramatically reducing jobs and incomes in the economy. The fall in output has been large and consumer spending has declined sharply. But the disruption will be temporary, the bank noted.

As the social distancing measures are lifted, the economy will recover.

Bailey said the recovery will be much more rapid than the pull back from the global financial crisis.

According to BoE, inflation will fall further below the 2 percent target in the second half of this year, largely reflecting the weakness of demand.

As activity has fallen, the unemployment rate is expected to rise to 9 percent in the second quarter.

According to the desktop stress test, banks would make only GBP 80 billion credit loss in case of an unprecedented economic shock, resulting in financing difficulties for businesses and in rising unemployment.

This was materially lower than the GBP 120 billion of losses banks were able to withstand in the 2019 stress test.

Therefore, UK banks have the financial capacity to withstand the losses, according to interim Financial Stability Report, released Thursday.

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UK House Price Growth Accelerates Ahead Of Covid-19 Pandemic

UK house prices increased at the fastest pace since 2017 before the coronavirus pandemic struck the economy, data published by the Nationwide Building Society showed Friday.

House prices increased 3.7 percent on a yearly basis in April, faster than the 3 percent rise in March. The annual growth was forecast to ease to 2.5 percent. The latest increase was the strongest since February 2017.

The mortgage lender said the impact of the pandemic was not fully captured as the house price index was designed using mortgage approval data, and there is a lag between mortgage applications being submitted and approved.

Month-on-month, house prices grew unexpectedly by 0.7 percent after climbing 0.8 percent in the previous month. Prices were forecast to fall 0.3 percent.

Robert Gardner, Nationwide’s chief economist, said housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period.

Lack of transactions will make gauging house price trends difficult in the months ahead, he noted.

According to Gardner, the medium-term outlook for the housing market is also highly uncertain.

Although economic activity is set to contract significantly in the near term, policies adopted to support the economy should set the stage for a rebound once the shock passes, he observed.

These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude, Gardner added.

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UK Jobless Claims Rise In March Amid Covid-19 Triggered Lockdown

UK jobless claims increased in March, while the employment rate reached a record high in the three months to February ahead of social distancing measures taken to curb the spread of coronavirus, or COVID-19, data from the Office for National Statistics showed Tuesday.

In March, the claimant count rose marginally to 3.5 percent from 3.4 percent in February. The number of people claiming unemployment benefits increased 12,100 from the previous month.

During the three months to February, an estimated 1.36 million people were unemployed. This was 22,000 more than a year earlier.

The jobless rate rose 0.1 percentage point from the previous quarter to 4 percent, which was slightly above economists’ forecast of 3.9 percent.

At the same time, the employment rate rose 0.2 percentage points from previous three months to a record high of 76.6 percent.

According to the Office for Budget Responsibility, the economy could contract about 35 percent in the second quarter and unemployment will rise more than 2 million.

The small crack that appeared to be opening up in the labor market in March may soon turn into a chasm with the unemployment rate rising from 4 percent to almost 9 percent, Paul Dales, an economist at Capital Economics, said.

David Freeman, ONS head of labor market statistics, said final data wholly from before the coronavirus restrictions were in place showed the labor market was very robust in the three months to February.

Data showed that annual growth in average gross earnings excluding bonus, was 2.9 percent, and that including bonus, came in at 2.8 percent. Both indicators were forecast to climb 3 percent.

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Supermoons 2020 – UK dates, names, and how to spot the next one – The Sun

STARGAZERS can enjoy a larger – and brighter – Moon than usual in our night sky when a Supermoon occurs – a breathtaking wonder of light and natural beauty.

And March saw the first of a trilogy of Supermoons. Here's when to spot the next one just before Easter…

When can we see Supermoons during 2020?

February's Snow Moon  – possibly the biggest and brightest of the year – was, according to some, the first of four similar events in 2020.

The February moon was also the first to occur since March 2019 – but there were mixed opinions over whether it was a Supermoon or not.

Here's some that are DEFINITELY Supermoons – with the next one in April:

APRIL 2020: Super Pink Moon

This is another Supermoon in 2020, being 357,035km from Earth on April 8.

It's also a special Moon as it fixes the date of Easter, which falls on the first Sunday after the Pink Moon (April 12), and marks the start of the Jewish Passover.

It's also known as the Egg Moon or Fish Moon.

MAY 2020: Super Flower Moon

If you look to the skies on May 7 you will see the final Full Moon Supermoon of 2020.

It is the fourth consecutive Supermoon in 2020 and is also known as Corn Planting Moon and Milk Moon.

This moon is at a distance of 361,184km from Earth.

Was February's Full Moon a Supermoon

Some experts believe that the Snow Moon – the Full Moon in the month of February and named after when the snow is deepest – is a Supermoon.

Astrologers and space buffs found out by viewing between Friday, February 7 through to the evening of Monday, February 10.

However NASA's Preston Dyches told Space.com: "'Supermoon' isn't an official astronomical term, and there's no firm technical definition for it, so different sources sometimes disagree."

EarthSky also pointed out that experts don't agree on what constitutes a Supermoon, with some dismissing it as "hype".

They go into great detail over whether the February Full Moon is Super or not as it is 362,479km from Earth.

However, even if it's not "officially" a Supermoon, the best time to have seen it in the UK was on Sunday, February 9, at 7.33am.

What was the Supermoon in March?

The Full Moon in this month fell on Monday, March 9 and was called Super Worm Moon.

It was best viewed at 5.47pm in the UK.

This Moon was at a distance of 357,404km from Earth making it a Supermoon.

This particular spectacle is also known as the Sap Moon, Crow Moon or Lenten Moon.

How can I best view a Supermoon?

For the best view of the Supermoon, make sure that you're as far away from light pollution as possible.

US space agency Nasa often runs live-streams of the lunar event so keep an eye out for them too.

And keep your fingers crossed that the clouds will stay away.

What is a Supermoon?

A Supermoon is when a Full Moon appears a little bigger and brighter thanks to its slightly closer position to Earth, 361,885km or less.

Supermoon's can be up to 14 per cent larger and brighter than a regular Full Moon.

NASA explains that "Supermoon is actually just a nickname for what astronomers call a perigean full Moon – a Moon that is full and at its closest point in its orbit around Earth".

The term was created by astrologer Richard Nolle.

The astrologer explained that the phenomenon is “a new or full moon which occurs with the moon at or near (within 90 per cent of) its closest approach to Earth in a given orbit.”

Based on Nolle’s theory, the moon would have to be 226,000 miles away from the Earth to be considered "super".

Because of its relatively close proximity to the Earth, the celestial body’s surface appears a lot bigger when a Supermoon occurs.

Stargazers can also enjoy a "season" of three New Moon Supermoons on September 17, October 16 and November 15.

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