UK consumer confidence hits lowest level since financial crisis – business live

BBC economics editor Faisal Islam details the news that Richard Hughs will be taking over from Robert Chote as the head of the Office for Budget Responsibility.

Administrators of Neil Woodford’s failed flagship investment fund have announced the sale of “a significant portion” of the equity income fund’s remaining assets.

The sale will help it make another tranche of payments to investors who have been trapped in the fund for a year, having been suspended following a surge in redemptions last June.

Link Fund Solutions said in a letter this morning:

We are now able to confirm to investors in the Fund that we have reached agreement with Acacia Research Corporation (“Acacia”) for the sale of an agreed selection of up to 19 of the fund’s healthcare assets in return for up to £223.9m

Link said the sale could take up to six months to complete and was not able to confirm the exact dates and amount that would be paid out (it’s unlikely to the full amount of the sale, given that admin costs are shaved off).

Meanwhile, law firm Nelsons has confirmed it is now looking at a possible claim against Link for failing to deal with Woodford’s illiquidity issues sooner.

They’ve also claimed that to have received more than 300 enquiries from investors interested in suing Hargreaves Lansdown for promoting Woodford and its Equity Income Fund as ‘best buys’.

Worth noting that the Halifax house price data is far more optimistic than what we saw from Nationwide earlier this week.

( Nationwide’s data showed average prices tumbling 1.7% in May from the previous month, to £218,902. That was the biggest monthly fall since February 2009.)

The Halifax house price index shows a further 0.2% month-on-month decline in May, as continued lockdown measures took their toll on the housing market.

The average price of a house in the UK was £237,808.

The annual figures are far more optimistic, though, showing a 2.6% increase from the same month last year.

Russell Galley, Managing Director, Halifax, said:

This is the third successive monthly fall, though more modest than in April, and reflects a continued loss of momentum following what was a strong start to the year. Though it should still be noted that with a limited number of transactions available, calculating average house prices remains challenging and increased volatility is to be expected.

The easing of restrictions in mid-May on property viewings has eased some of the fears about a long-term decline and has given a short-term boost to buyers and homeowners trying to re-start transaction that had been put on hold.

Galley says:

Looking ahead, we expect market activity to increase progressively as restrictions are eased further
across the whole of the UK and we continue to have confidence in the underlying health of the housing
market over the long-term.

However, the extent of downward pressure on market confidence and prices over the coming months will depend on how quickly the economy is able to recover from the effects of the
pandemic and the available government policy support for jobs and households.

Back to that dismal GfK consumer confidence data.

Joe Staton, GfK’s client strategy director, said:

Against a backdrop of falling house prices, soaring jobless claims, and with no sign of a rapid V-shaped bounce-back on the cards, consumers remain pessimistic about the state of their finances and the wider economic picture for the year to come.

He notes that the only “bright spark” is in the figures for major purchases (as in, expensive items), which is pointing to pent up demand by shoppers across the UK despite most shops remaining shut.

But looking at the next chart, there does seem to be some stabilisation following the sharp drop in March and April, and there may be hope that – barring a second peak in Covid-19 infections – that consumer sentiment will start to bounce back

Staton said:

As the lockdown eases, it will be interesting to see just how the consumer appetite for spending returns in a world of socially-distanced shopping and the seismic shift to online retailing – alongside worries of a fresh spike in COVID-19 cases as relaxations increase.

The euro surged yesterday after the ECB ramped up its coronavirus response by agreeing to inject an additional €600bn (£539.5bn) of emergency financial support into the Eurozone economy.

It’s meant that the currency has dominated peers including the pound, which is at its lowest level in over two months against the euro.

The pound has performed better against the greenback, with dollar weakness helping push the sterling to near three-month highs.

After ending Thursday’s session in the red (which analysts have chalked up to profit taking) European shares are back in positive territory this morning:

• FTSE 100 is up 0.6%
• France’s CAC 40 is up 1%
• Germany’s XETRA DAX is up 1.1%
• Spain’s IBEX is up 1.4%

Good morning and welcome to our rolling coverage of the world economy, the financial markets and business.

Consumer confidence took a dive in May to the lowest level since the global financial crisis.

That’s according to the latest GfK consumer confidence index, which fell to -36 in second half of the month, amid worries over a surge in unemployment and tumbling house prices during the Covid-19 lockdown.

(We’ll get an update on house prices when Halifax releases their data at 8:30am)

That GfK reading was the lowest since the banking crash in January 2009, and is close to record lows of -39 recorded in July 2008.

However, the release is not expected to dampen overall sentiment on equity markets, with the FTSE 100 and its European peers all set to rise when markets open at 8am.

And all eyes will turn to US non-farm payrolls for May this afternoon. As jobless numbers continue to mount during the pandemic, we’re expecting to see the US unemployment rate edge closer to 20%.

Michael Hewson, chief market analyst at CMC Markets UK, says:

With certain sections of the US economy slowly reopening, there is a hope that we could start to see the unemployment rate start to plateau as more and more people return to work after being furloughed.

The agenda

• 8:30am BST: Halifax house price index for May
• 13:30pm BST: US non-farm payrolls and unemployment rate for May