Maxed-out consumers of concern to Bank of England

Governor Mark Carney likely to use financial stability report to highlight risks from rising borrowing

We have heard plenty from the Bank of England’s monetary policy committee of late, with its members divided over how to set interest rates in a post-referendum Britain. The debate centres on when to raise borrowing costs from their record low and whether the economy – and squeezed consumers – can take it.

This week it will be the turn of the Bank’s financial policy committee to hold forth. Its twice-yearly financial stability report will be presented by the governor, Mark Carney, on Tuesday and he is likely to use the health check to highlight the problem of consumer debt burdens in the UK. With real incomes squeezed, households have been dipping into savings and maxing out their credit cards.

The Bank has raised its concerns about what this means for the broader financial system before, and could well use this update to flag the risks to the system if individuals overstretch themselves. Investors will be watching for any hints from the Bank on what it plans to do about rising consumer borrowing.

Carney is also likely to use the report to give himself and committee colleagues a pat on the back for the steps already taken by the FPC to rein in the mortgage market, which in turn give monetary policymakers scope to raise interest rates without inflicting too much harm on borrowers.

Will Brexit dethrone Crown Estate?

The royal family’s commercial property arm has had full confidence in the resilience of the market in the West End of London despite the Brexit vote.

Even though investment in commercial property sank to its lowest levels in four years in the aftermath of the referendum, the Crown Estate said it was pushing ahead with a £100m development of Duke’s Court, a mixed retail and office block in St James’s, because it believed in “the fundamentals of London’s West End”.

Six months and an election later, and with the Brexit negotiations having just started, what will the view of the Crown Estate be now? On Monday, chief executive Alison Nimmo will reveal the annual results for the estate, which owns London’s Regent Street and the entire UK seabed, among many other holdings. Last year the property empire delivered a record £304.1m to Treasury coffers and saw the value of its portfolio rise 9.7% to £12bn.

The post-Brexit market is very different for commercial property, however, and a report from Deloitte found high levels of construction, but with less than half of the space being built let. Duke’s Court is due to be completed in the spring of 2019 – around the same time that article 50 negotiations are also due to complete.

Fracking meeting – you know the drill

Opponents of fracking are expected to gather this week in Lancashire for what has been called an “information evening” about the activities of energy company Cuadrilla in the area.

Work began in January on the company’s Preston New Road site, in Little Plumpton, Fylde West, which will be the location of the UK’s first horizontally fracked wells and a group of protesters has been a consistent presence since.

On Tuesday, anyone interested in fracking – including supporters – has been invited to a town-hall-style gathering at the 450-seat Lowther Pavilion theatre in Lytham St Annes, organised by engineer Mike Hill, one of the most vocal opponents of fracking in Lancashire. Billed as an event for all the community to learn about fracking, Hill says the meeting will focus on facts and not opinion, according to the Drill or Drop blog on fracking.

Last March, the chief executive of Cuadrilla, Francis Egan, complained about intimidation and harassment by what he called “irresponsible” activists at the Preston New Road site. He said he felt the balance between the right to protest and the right for companies to go about their business had tipped in the wrong direction amid reports of verbal abuse of his staff. Whether Egan turns up at the meeting as one of the supporters of fracking remains to be seen.


Shane Hickey

The GuardianTramp

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