CLES / Newstart

New data from the Office of National Statistics (ONS) shows that inflation rates remained steady in January, however, charities have warned the news will result in some low-income families choosing between food and heating. 

The figures from the ONS found that inflation rates remained at 4% last month despite an increase in energy bills as the cost-of-living crisis continued to squeeze people’s budgets. Experts highlighted that food prices began to fall last month, making this the first time it’s happened within the last two years.

As a result of the cost of food coming down it offset the rise in gas and electricity costs.

The news has been positively received by financial experts as the Bank of England predicted a small rise in inflation last month after an increase in the Ofgem energy price cap for households across Great Britain, while economists polled by Reuters expected a rise to 4.2%.

However, various charities across England have explained why this news will not be accepted well by many.

Peter Matejic, chief analyst at the Joseph Rowntree Foundation, said: ‘Families on the lowest incomes won’t be debating what it means for inflation to remain at 4%. They’ll be debating whether to turn the heating on, or to replace their shoes that have holes in or to skip another meal because they can’t afford it.

‘The government’s cost-of-living payments gave families a short-term reprieve. Without them, they face an income safety net that offers no safety and the ever-rising cost of essentials like food and energy.

‘Politicians can start making a difference at the budget. Universal credit needs to reflect the actual cost of essentials. Beyond that, we need an economy that works for people, not one that leaves people exposed to unjustifiable hardship.’

In addition, chancellor Jeremy Hunt said: ‘Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11%, and the Bank of England forecast that it will fall to around 2% in a matter of months.’

Since the cost-of-living began to climb in 2021 the Bank of England have hiked interest rates 14 times and have recently left them at 5.25%. Although this move is helping to bring inflation down, it is having serious affects on mortgage rates. At the beginning of this year, research found that around 2.3 million households are expected to face higher rates in 2024, with an average monthly repayment increase of £240.

Although, Daniel Austin, CEO and co-founder at ASK Partners, claimed that really high inflation figures could help boost the property market.

‘Stubbornly high inflation figures will be followed closely by those with vested interested in real estate debt, and those hoping to see a positive boost in the market,’ Austin said. ‘Generally, property has long been considered a good hedge against inflation, with property values and income keeping pace with inflation over the longer term. Those looking to invest in property will, as such, be keeping a close eye on upcoming inflation and interest rate decisions as the economy continues to weather this uncertain period.’

Image: Frantisek_Krejci

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David Hall, associate director at Boyer (part of the Leaders Roman group), explains that a need for adequate housing delivery through collaboration has frequently been recognised but never achieved. Throughout this piece, David analyses where things have gone wrong. 

I have worked in planning from 1968. Since then, and indeed as far back as the immediate post war period, housing has been an issue with which various governments have struggled. This article looks at the changes within the planning system, but also the consistencies which have contributed to the problem.

The labour administration of Harold Wilson, in a draft white paper, Housing Programmes 1965-70, announced that ‘the government intends to give greater priority to housing than it had for many years. The rate of building will be pushed up as fast as resources and improving techniques allow. In 1964, 383,000 houses were completed (United Kingdom). The first objective is to reach half a million houses by 1970.’

According to research, the 1964 figure was briefly exceed four years later, at 425,840, but by 1970 it had fallen to 362,220 and from 1971 onwards it has declined fairly steadily; half a million homes per annum has never been achieved.

Planning for housebuilding in the 1980s was set out in three circulars: Circulars 9/80: Land for Private Housebuilding, and Circular 22/80: Development Control Policy and Practice, issued as the first acts of the new Tory administration. These were followed by Circular 15/84 Land for Housing.

The suggestion was that these circulars would ‘free up’ the planning system. The thatcher government sought to relax planning controls and introduce the imperative that there must be a continuous and adequate supply of land to enable housebuilding, suggesting that planning policies should reflect demand from the market. Housebuilding climbed gradually, to a peak in 1988.

The two circulars of 1980 introduced the requirement for a five year land supply and for housing land and availability studies undertaken jointly by local authorities and the housebuilding industry. Circular 22/80 stated that in the absence of a five-year supply, there should be ‘a presumption in favour of granting planning applications for housing, except where there are clear planning objections’.

So the matter of a five year supply and land availability has been a political hot potato since the 1980s. At this point there appears to have been some cooperation between housebuilders and local planning authorities, through Joint Housing Land Availability Studies. However, as time progressed the system lost any credibility as it became one in which decisions were best described as ‘planning by appeal’. Local authorities unable to demonstrate an effective five year land supply found that secretaries of state regularly ruled in favour of appeals brought by housebuilders.

From 1988, housing supply dropped, mainly as local authority housing was reduced substantially, and has remained at a lower level.

By 2001, however, the total number of new dwellings completed in England had fallen to a then record post-war low of 174,100, compared to almost 202,510 in 1990. Developers blamed the planning system for the slow-down.

Planning Policy Statement 3 was introduced to put things right: local authorities were required to identify not merely an immediate supply of deliverable housing sites for the first five years of a local development framework, but a further supply of potential development sites for the next five years, together with more sites or general locations for growth for the following five years.

PPS3 defined deliverable sites as those already available, which offered a suitable development location contributing to the creation of sustainable mixed communities and which had reasonable prospects of development within five years.

In 2007, the government sought to achieve 240,000 new homes per annum in England (following just 208,970 in 2006) But in 2007, new homes across the UK as a whole amounted to just 223,590 and even this figure has not been met in the years following.

From the coalition of 2010-2015 to the conservative government of today which followed it, we have had a relatively non-interventionist approach to planning. This is most recently exemplified in the promotion of greater freedom of permitted development rights. Paradoxically, this has tended to meet with the (traditionally more interventionalist) labour party’s approval.

So, what are the common factors over the last 55 years? The objective of building more homes has not changed, and yet despite the numbers varying across the years, need has prevailed year on year. Another constant, and possibly the reason for unmet need, is that the politics of housebuilding has been consistently negative. As the comparison between the 1970s and 80s shows, deregulation is demonstrably not the answer, and the regional approach has proven the most effective way of delivering the requisite number of homes (the duty to cooperate is no substitute).

Successive governments have tinkered with the problem but have been repeatedly diverted from bold decision-making by political expediency. This has been evident very recently in Michael Gove’s pandering to the government’s backbench NIMBY brigade.

It seems to me that there are two fundamental issues. Firstly, location and need for development, and secondly, the administration of the system to enable that need to be delivered.

In the case of the former, location and need are predicated by demand in as much that each area should at least ‘consume its own smoke’. Once need has been established, administrative requirements to deliver housing must be put in place. It is no coincidence that when administration was simpler, delivery was more effective. When I started in planning, the Encyclopaedia of Planning Law and Practice comprised three volumes. It is now running at nine.

The sad reality is that successive governments have been long on rhetoric (as well as administration) and short on action. In the blame game that ensues, the politicians blame the housebuilder, and the housebuilders blame the system administered by the politicians: the proverbial vicious circle. 

It is obvious, therefore, that to expedite delivery, the approach must be collaborative, however unpalatable that might be. The draft white paper, Housing Programmes 1965-70, stated: ‘Now for the first time, the government, the building societies and the builders have discussed together and agreed on the need for forward planning of housebuilding, and for continuous collaboration to ensure a steadily rising programme. For the first time the pre-requisites of forward planning, including adequate incentives and flexible controls, are being formulated. It should now be possible, with the new arrangements for regular consultation and review among all the interests concerned, to ensure a steadily rising house-building programme. From this start a comprehensive plan covering all facets of housing policy can be evolved.’

Is this not the approach we should have been following for the last five decades?

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Ministers have announced that every council in England must prioritise brownfield developments and demonstrate more flexibility in applying policies that halt progress.

On Tuesday 13th February, Prime Minister Rishi Sunak, and housing secretary Michael Gove, announced the beginning of a consultation into a package of measures aimed at making it easier for developers to get permission to build on derelict sites in England’s 20 biggest towns and cities.

In a statement, Rishi Sunak said: ‘We pledged to build the right homes in the right places – protecting our precious countryside and building more in urban areas where demand is highest. [This new package] is us delivering on that.’

Michael Gove added: ‘Our new brownfield presumption will tackle under delivery in our key towns and cities – where new homes are most needed to support jobs and drive growth.’

As part of the new plans, all local authorities across the country will be required to approve new developments on brownfield land – a site which was previously developed but has fallen into disuse – unless they can come up with a good reason why they cannot.

In addition, the new plans include limits being removed on the kinds of former commercial buildings that can be turned into flats, removing restrictions on how big the building can be before a developer has to apply for planning permission.

Previously, planning rules stated that when turning a commercial building into a block of flats, the floor space of the existing building must not exceed 150 sq metres.

Against this backdrop, ministers will also consult on making it easier for homeowners to extend their houses without seeking planning permission – an idea that has been trialled before by former prime minister David Cameron. He attempted to axe red tape for single-storey extensions of up to eight metres long in 2012, however, the idea made a U-turn following severe backlash from his MPs.

Following the announcement, some industry experts have welcomed the news whilst others believe it to be the wrong decision.

Ritchie Clapson, co-founder of propertyCEO, said: ‘[The] announcement underlines the importance of converting unused brownfield sites which could unlock up to 1.2 million new homes right across the country, according to countryside charity CPRE. But simply removing restrictions will do little to solve the housing crisis unless other key issues are addressed.

‘The vast majority of brownfield conversion projects are too small to be attractive to large housebuilders. But they’re perfect for SME builders – a group who previously accounted for over 30% of all development in the UK but who now represent just 12%. The government needs to be doing a lot more to encourage landlords and other solo entrepreneurs to take on these smaller development projects, otherwise they simply won’t happen.’

‘Removing the ‘vacant for 3 months’ requirement means developers can buy with the certainty they can develop, which in turn means they can get funding. Scrapping the 1,500m2 rule should also create opportunities for larger developers. Both are good news – but permitted development rights still require approval from local councils,’ Clapson said. ‘And that’s where there’s a major problem. Local planning authorities are massively under-resourced and regularly view permitted development as an unwelcome affront to their authority. The government needs to invest in these planning teams and get them onside – otherwise these housing projects run a significant risk of being vetoed out of hand.’

The consultation on the new proposed plans is set to run until 26th March 2024.

David Thomas, chief executive of Barratt Developments, said: ‘We welcome any efforts to make it easier to get planning permission, particularly for brownfield regeneration, which is already naturally a more complicated and capital-intensive process.’

Although, Clive Holland, broadcaster on Fix Radio – the only national radio station for builders – echoed similar views to Clapson, as he claimed that other areas of the development industry need to be addressed before new homes can be built. Particularly hiring new staff members.

‘To keep up with current construction demand alone, it is estimated that Britain needs an extra 225,000 tradespeople by 2027. This is before we account for new homebuilding pledges,’ Holland said. On top of this, our industry is losing record numbers of colleagues, with nowhere near enough new recruits entering the trade.’

Holland added: ‘Data from the Department for Education has revealed that the number of completed construction apprenticeships in England fell from 12,420 in 2018 to 7,700 in 2022. Another alarming stat: 17,500 people apply for electrician apprenticeships every year, yet only 2,500 pass their course, while an estimated 8,000 electricians leave the industry each year.’

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The RSPCA have received over 10,000 reports of animals being harmed as a result of discarded litter over the last three years – almost 10 per day.

On Monday, 12th February 2023, National Highways, a government-owned organisation that looks after roads, launched their new campaign ‘Lend a paw – bin your litter’ as a result of shocking figures that have been revealed by leading animal charity the RSPCA.

The charity, who have joined forces with National Highways to launch the campaign, has highlighted that within the last three years, they have received over 10,000 reports of animals being found injured, trapped, or dead due to litter.

These shocking findings prompted National Highways to launch a survey in January 2024 which found that almost half of the people involved were unaware that fruit peel and apple cores counted as litter. However, these disregarded leftovers can lead animals into fatal situations.

In addition, almost a third of survey participants – 2,000 people were questioned overall – thought dropping organic waste like apple cores or leftover food on the road was beneficial to wildlife, while around a third weren’t sure or didn’t know.

The survey also outlined that while more than 90% of people said they had never discarded litter onto the roadside, over 60% said they had seen someone else doing it.

As well as launching the campaign, National Highways have also run a trial using AI-enabled cameras in conjunction with a local authority that is carrying out enforcement. This is part of a long-term plan to rid roads and motorway service areas of rubbish.

The government-led organisation have likewise trialled message signs to reduce littering and used geofencing to send texts to motorists entering laybys where littering is an issue to prompt them to take their waste home.

National Highways chief executive Nick Harris said: ‘Littering is a dreadful social problem. It’s not just unsightly, it can have a deadly impact on wildlife, turning verges into lethal roadside restaurants.

‘We’re working hard to tackle it on our roads, with our people litter-picking every day. To keep them safe we have to close motorway lanes, which delays drivers and costs millions of pounds.

‘But if people don’t drop litter in the first place it wouldn’t need to be picked up – so we urge road users to take their litter home.’

National Highways will be taking part in the upcoming Great British Spring Clean for the ninth year running.

‘We welcome National Highways’ campaign to raise awareness about the dangers wildlife faces from litter discarded by the roadside,’ Geoff Edmond, RSPCA lead wildlife officer said. ‘Our rescuers deal with thousands of incidents every year where animals have been impacted by litter. Old drinks cans and bottles, plastic items and even disposable vapes are just some of the items that pose a danger to our wildlife including hedgehogs, squirrels, deer, and foxes.’

Edmond added: ‘Animals can ingest the litter, become trapped in it, or be attracted to old food on the roadside which puts them in danger of moving vehicles.

‘Sadly, for every animal we’re able to help there are probably many others that go unseen, unreported and may even lose their lives.’

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The National Housing Federation-backed alliance of housing associations and councils has mapped out plans to increase the use of modern methods of construction (MMC) in social housing.  

At the beginning of this week, Procurement for Housing, a service provider dedicated to the social housing sector based in Scotland, teamed up with Building Better, an alliance of housing associations and councils, to develop a £800m framework that will help bolster the use of modern construction in social housing.

In order to work the framework, which is set to run for four years, is looking to appoint traditional contractors that are based in 10 different regions in England and Wales, who will ultimately lead on the project.

Known as the ‘Integrated Traditional Build & MMC Framework’, the project has been created in response to calls from social housing providers for a compliant way of involving trusted, local construction firms on MMC projects, where elements of traditional construction are still required.  

News of this new framework has come amidst government debates on whether Awaab’s Law should be extended to the private housing sector as the quality of homes in the UK has declined. According to a report that was released in 2023, one in six young adults in the UK are forced to live in poor-quality housing.

Whilst building on their new scheme, Procurement for Housing and Building Better have spoken to SME building firms across England, gathering feedback on how an agreement could work to the best of its ability. Both organisations are looking for ways to make the procurement process more straightforward and to develop the most effective contracting environment.

Tony Woods, technical manager for construction & sustainability at Procurement for Housing said: ‘We’ve been talking to traditional contractors to find out how they’d want to work on MMC schemes and, interestingly, many of their requests are the same as those from offsite manufacturers.

‘Both want to be engaged early in the process, before set designs are in place. Both want a more transparent way of working with wider use of ‘pain and gain’ agreements and a simpler, more collaborative contracting environment. This feedback is now being used to design our integrated framework.’

The framework will cover the construction of housing, apartments, and extra care homes and there will be a regional lot structure. A contract notice will be issued in March 2024, with successful bidders appointed in the summer.

‘Increasingly, our members want a blend of different construction methods on their MMC projects,’ Trina Chakravarti, director of Building Better said. ‘Traditional SME construction firms have a huge amount of expertise, and we’re keen to harness this through the framework.’

Chakravarti added: ‘Using a collaborative approach means that manufacturers can concentrate on delivering their product, traditional firms can take control of the building process and we can offer housing associations and councils a wide range of construction solutions.’

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Richmond Council has been granted approval to apply to become a registered provider of social housing, enabling it to access additional funding to deliver temporary accommodation and address homelessness.

The decision comes in the wake of the council’s recent appeal to the government to end the freeze on the housing benefit subsidy cap, which has remained stagnant since 2011.

Jim Millard, deputy leader of Richmond Council, said: ‘Our dedicated officers are doing incredible work supporting residents presenting as homeless in the borough, but the pool of appropriate properties available within the private rented sector has evaporated.

‘As a result, too often Richmond families faced with homelessness are having to be placed in temporary accommodation outside the borough, far from support networks and often with journeys of over ten miles to school every day. In the face of a temporary accommodation crisis which has been exacerbated by the soaring cost of living, we need to take swift action to alleviate the impact on Richmond residents in need.

‘With over 500 families currently in temporary accommodation, becoming a registered provider enables us to directly deliver accommodation within the borough for those in need and this decision not only streamlines the process but shows how we are innovating to tackle this challenge at a local level.’

Seeking registered provider status gives Richmond, as a non-stock holding authority, the opportunity to bid for funding from the Greater London Authority to allow it to pursue other approaches to increasing the stock of temporary accommodation within the borough, including expanding the council’s programme to acquire properties on the open market and address the immediate need for temporary accommodation.

At the end of June 2023, Richmond had 521 households in temporary accommodation, 273 of which included children. Of the 521 households, only 18 were accommodated in social housing, and 399 were housed outside the borough.

The figures marked a 53% rise in the space of a year – at the end of June 2022, Richmond had 340 households in temporary accommodation, 173 of which included children, and 220 of which were housed outside the borough.

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The number of private rented households repossessed by bailiffs in England following section 21 ‘no-fault’ evictions reached 2,671 in the last quarter – a rise of 39% in a year and the highest quarterly figure since 2018.

Meanwhile the Renters (Reform) Bill, which will eventually outlaw no-fault evictions, continues to be delayed with serious concerns it won’t become law before the general election. The Bill was introduced in May last year and is currently awaiting the report stage in the House of Commons.

Commons Leader Penny Mordaunt announced last week that the government is prioritising the Leasehold and Freehold Reform Bill, which has now overtaken the Renters (Reform) Bill despite only being introduced on 27th November.

Shadow Commons Leader Lucy Powell commented in response that the Renters (Reform) Bill was ‘missing’ and ‘Report Stage was promised by early February but is nowhere to be seen’.

The number of section 21 claims taken to court by landlords reached 7,527 last quarter, a 23% rise year-on-year, according to data published by the Ministry of Justice.

The total number of section 21 claims taken to court since 2019 – when the government first promised to deliver a ‘better deal for renters’ and ban the practice – now stands at 88,965.

As the majority of section 21 evictions are not contested and therefore do not end up in court, the real number of no-fault evictions issued to tenants will have been many times higher. Polling by Shelter estimates that 172 families a day are served a Section 21.

Tom Darling, campaign manager of the Renters’ Reform Coalition, said: ‘It’s barely believable that against an escalating evictions and homelessness crisis we have a government slow-walking one of the only policy levers they say will address the issue – not to mention that they first promised to abolish no-fault evictions five years ago. We are now very concerned this vital legislation won’t get passed before the election – if it doesn’t, it would be an outrageous betrayal of England’s 11 million private renters.’

Ben Twomey, chief executive of campaign group Generation Rent, said: ‘Today sees the continuation of an awful trend that has been blighting the lives of renters across our country. As long as landlords can evict tenants through no fault of their own with just two months’ notice, homelessness in England will continue to soar.

‘Renters have been waiting five years since the government promised to end these evictions, and yet today we find out the government is delaying their plans again. Since that promise, almost 90,000 households have been forced out because of no-fault evictions – and this number is rising every day. In fact, since the law to change this was last debated in parliament, we estimate that 5,891 more households have faced Section 21 eviction in the courts.

‘How can the government stand by while thousands of us are turfed from our homes? The Renters (Reform) Bill must be brought back to the Commons as soon as possible to end these appalling evictions. England’s 12 million private renters cannot be made to wait any longer.’

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An incriminating new report highlights that the policy not only leaves refugees without a safe place to live but warns it could ruin the UK’s reputation.

This morning, a new report from MPs was published which details the detrimental effects the Rwanda bill could have should it be passed. The aim of the bill, which is progressing quickly through the houses of parliament, is to counter the judgement of the Supreme Court which found that Rwanda is not a safe place for UK asylum seekers to be removed to last November.

The bill, which was introduced as part of Prime Minister Rishi Sunak’s plans to ‘stop the boats’, claims that Rwanda is a safe country and that anyone who is sent there by the government will not be forcibly removed to an unsafe country.

Against this backdrop, the report finds it is unclear whether this can be guaranteed in practice.

In November 2023 two out of three judges from the Supreme Court cited five reasons as to why the bill is unlawful. These include:

• Asylum interviews are conducted in a brief and perfunctory manner, which could prevent a person from being able to fully explain their circumstance
• Rwanda’s committee to determine refugee status does not allow lawyers to make arguments on behalf of a person, to help explain why they should be granted asylum
• Local non-governmental organisations do not have the capacity to provide asylum seekers with legal assistance throughout the process
• Rwandan officials deciding applications do not have sufficient skills and experiences to make reliable decisions, partly due to a lack of training
• Judges in Rwanda may be susceptible to political influence and reluctant to overturn decisions not to grant asylum

To conduct the report, a committee of MPs gathered evidence from legal experts, academics, and non-governmental organisations (NGO). They discovered that the bill is incompatible with the UK’s human rights obligations, erodes the protections laid out in the Human Rights Act, contravenes part of the European convention on human rights and falls short of the UK’s commitment to comply with international treaties.

The report said: ‘The bill’s near total exclusion of judicial scrutiny seeks to undermine the constitutional role of the domestic courts in holding the executive to account.’

In addition, the committee’s chair, Joanna Cherry MP, has stated that the bill creates ‘hostility’ to human rights and that no number of improvements would be able to save it.

‘This bill is designed to remove vital safeguards against persecution and human rights abuses, including the fundamental right to access a court. Hostility to human rights is at its heart and no amendments can salvage it,’ Joanna said. ‘This isn’t just about the rights and wrongs of the Rwanda policy itself. By taking this approach, the bill risks untold damage to the UK’s reputation as a proponent of human rights internationally.’

In response to the report, a home office spokesperson said: ‘We are committed to tackling this major global challenge with bold and innovative solutions, and the Rwanda scheme is doing just that. The bill we have introduced, and the treaty alongside it, are the best way of getting flights off to Rwanda as soon as possible.

‘Rwanda is clearly a safe country that cares deeply about supporting refugees. It hosts more than 135,000 asylum seekers and stands ready to relocate people and help them rebuild their lives.’

The Rwanda bill is set to reach its committee stage in the House of Lords this afternoon where it is thought it will be heavily scrutinised. 

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Hailed as one of the world’s most ‘ambitious’ decisions to support the environment, new developments in England must now consider natural habitats.

Today, a new law has been implemented in England which will ensure that all new housing and road projects benefit nature rather than destroy it. Under the new law, which has become a requirement under the Town and Country Planning Act, all new road and housing developments must achieve a 10% net gain in biodiversity or habitat.

This means that if a new development has plans to damage a particular green space, another needs to be recreated either on site or elsewhere.

The government have set a target to build 300,000 new homes a year by the mid 2020s which, will not only inevitably contribute to carbon emissions, but also result in thousands of acres of land being torn up. At least with the new rules coming into play, net zero goals won’t be so obstructed.

Commenting on the news, Natalie Duffus, a biology and geographer researcher from the University of Oxford, said: ‘It’s one of the most ambitious schemes we’ve seen. Other places are watching us and seeing how it unfolds. If done well, I think it could inspire a lot of other markets to develop in different countries.’

Experts in Sweden, Singapore, Wales, and Scotland have already expressed an interest in copying the idea. This news makes a change in how the UK are often viewed in response to their climate goals, as in summer 2023 government advisors revealed the UK was missing climate targets on almost every front.

A report from the Climate Change Committee, which was published last year, revealed that various built environment targets had been missed such as the number of homes receiving energy efficiency improvements under the government’s Energy Company Obligation scheme more than halved, from 383,700 in 2021 to 159,600 in 2022.

However, industry experts have claimed that the new law, which came into force today for larger sites and will be implemented on 2nd April for smaller schemes, is a start in the right direction to ensuring England provides much needed housing but not at the cost of green space.

‘The biodiversity net gain requirements coming into force from today will establish the UK as a world leader on natural capital regulation,’ Peter Bachmann, managing director of sustainable infrastructure at Gresham House, said. ‘The legislation, designed to protect and enhance nature, will not only lead to positive outcomes for our natural world but will also create protected environments for local communities and more consistent and transparent requirements for developers.’

Bachmann added: ‘Through formally recognising the value of nature, the government is playing a key role in establishing a novel market worth hundreds of millions annually and giving investors the confidence needed to fund the realisation of its potential. This is truly a game changer and represents a policy shift that serves people and the planet – supporting development to solve the UK’s housing crisis while also driving positive environmental impact.

‘We must support and scale the companies that offer fully funded solutions, providing long-term legal and financial certainty essential to properly avoid biodiversity loss while also offering a robust product for developers to manage this new planning requirement. For investors, this new market for companies delivering biodiversity net gain units now represents a unique opportunity to drive strong financial returns through positive impact.’

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Southwalk council have began ripping out communal spaces and playgrounds to make room for new homes, however the spots have been left boarded up due to insignificant funds.

Last August the local authority began digging up parts of Bells Gardens and Lindley estates ready to build new homes in January, although all that remains of the spaces is a small pitch surrounded by hoardings.  

Experts have warned that the boarded-up area, which locals have described to The Guardian as an ‘abomination’, mirrors the dire state of social housing across the entire capital city and that better laws need to be in place to protect children’s play areas.

Because the majority of playparks have been dug up in this specific area, families in South London have claimed that their young ones have stopped playing outside on weekends and once they have finished school.

Commenting on the news, Helen Dennis, a cabinet member and councillor for new homes and development, said that the local authority had been hit by mounting costs and was ‘extremely disappointed’ when they had to stop the works to build more social homes.

Cllr Dennis said: ‘Increased inflation, significantly higher building costs and interest rates following the government’s mini-budget a year ago have meant that councils across the country have had to change plans.

‘The residents of Bells Gardens worked so passionately with us to plan what was to happen on the estate. It’s incredibly disappointing. We will provide a playground and we are working as quickly as possible to get things moving again.’

When the plans to construct 600 new homes were submitted, various locals protested against them. In London, the mayor has said that there should be around 10 sq metres per child but pressure for denser builds means developers do not always stick to this standard.

Currently the problem of protecting children’s play areas is at the forefront of an inquiry by the committee that scrutinises the Department for Levelling Up, Housing and Communities, and is gathering evidence from play experts, planners, and psychologists.

The new properties were set to be built as part of a process known as ‘infill building’ – the insertion of additional housing units into an already-approved subdivision or neighbourhood.

Recent statistics have shown that in London one in 23 children are homeless and Southwalk alone has 15,000 people on its housing waiting list. Some people who are currently waiting for an affordable home are stuck in bed and breakfasts’.

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For the first time, a plot of London real estate belonging to the Russian Federation has been seized by the former shareholders of a defunct Russian oil giant. 

Amid a $60bn (£47bn) legal battle, a prime plot of London real estate belonging to the Kremlin – the Russian government – has been grasped by former shareholders of defunct oil giant Yukos. 

Located at 245 Warwick Road in Kensington, the plot of land was bought by the Russian Federation in 2006 for £8m. According to calculations from The Telegraph, properties on the site are said to cost around £200m.

However, Transparency International, a global movement to end the injustice of corruption, has estimated that £1.1bn worth of London property owned by Russians has been accused of corruption or with links to the Kremlin.

In 2003, Yukos was illegally seized by the Kremlin on grounds of tax evasion after the organisation’s former boss, Mikhail Khodorkovsky, fell out with Vladimir Putin.

Following this, the major Russian oil firm filed various claims in international courts seeking compensation for their expropriation, and in 2014 a Dutch court ordered Russia to pay them more than $50bn (£40bn) – a decision Russia is still fighting.

Commenting on the news, Tim Osborne, chief executive of GML, which through its subsidiaries was the majority shareholder of Yukos, said: ‘This historic first charge over Russian property in England is a testament to our commitment to hold Russia accountable for its actions by pursuing Russian state assets worldwide until justice is done.

‘Russia makes it a point to ignore court judgments, making it very difficult if not impossible for its victims to get justice.’

Against this backdrop, Russia has argued that their motives were protected by sovereign immunity, but this claim was rejected, and the London High Court ordered Russia to reimburse Yukos for its legal costs.

Yet, Russia ultimately failed to pay these costs, and shareholders were able to obtain a charging order over the real estate.

The Russian Federation has the right to challenge the interim order at a hearing on 12th April, however, should they fail, the former Yukos shareholders will acquire ownership of the land.

Image: aukett swanke 

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The decision to implement a new North East mayor and ratify a multi-billion pound devolution deal is set for approval by parliament.

For years, councils across the North East have discussed the benefits of signing a devolution deal and introducing a mayor with ministers in the Houses of Parliament. Finally, the decision has reached the final hurdle. Yesterday, an order was laid in parliament which will pave the way for a new authority to be formed.

Once formally approved, the North of Tyne and North East Combined Authorities will be abolished to make way for a new North East Combined Authority, with the election of a mayor set for May this year.

The new authority is being set up under the leadership of the seven council leaders in County Durham, Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside, and Sunderland.

In a joint statement, the seven council leaders, and North of Tyne Mayor, welcomed the next steps in the process.

‘It’s exciting that the devolution deal we secured is now moving through parliament. It’s an important final step before the formation of our new combined authority,’ officials said. ‘As a group of leaders we are working together already to put plans into place to deliver for our residents, businesses, and communities.’

The leaders added: ‘That collaboration means we will hit the ground running and deliver results for the people of this region.

‘The new powers and funding we negotiated will mean important decisions about our region will be made here, in the North East. This is set to be a transformative year for the North East.’

Despite the decision bringing substantial new changes, it will not impact the services that local councils are responsible for. However, the functions of the North East Local Enterprise Partnership, Transport North East and Invest North East England will be delivered by the new combined authority.

These new features were introduced as part of the devolution deal, which received positive feedback during a public consultation last year and was agreed with government in December 2022.

The investment package, which is worth £4.2bn, includes:

• An investment fund of £1.4bn, or £48m a year, to support inclusive economic growth and support regeneration
• An indicative budget of around £1.8bn, or £60m a year, for adult education and skills – to meet local skills priorities and improve opportunities for residents
• A £900m package of investment to transform the transport system, with £563m from the City Regional Sustainable Transport Fund, on top of funding already announced for buses and the metro system
• £69m of investment in housing and regeneration, unlocking sites to bring forward new housing and commercial development

Jacob Young, minister for levelling up, said: ‘[Yesterday was] an important milestone for communities across the North East as their landmark devolution deal moves one step closer to becoming a reality.

‘The reason we’re so excited for this to get over the line is because a major part of levelling up is giving local people, who know their areas best, the levers and money they need to improve their areas.

‘That’s exactly what this deal does – from Sedgefield to the Scottish Border – providing new decision-making powers, billions in funding and a new mayor who can champion their area on behalf of the two million who live there.’

Image: Ryan Booth

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Central government is poised to axe plans to introduce ‘boiler tax’ if targets to fit sustainable heat pumps in homes are missed.

Back in 2020 Boris Johnson, former Prime Minister of the UK, introduced plans to install 600,000 heat pumps per annum by 2028 as part of the government’s plans to phase out gas boilers for their clean heat strategy.

As part of this plan the government were set to introduce a ‘boiler tax’ which, from April, would have included manufactures of fossil fuel boilers face a quota for heat pump installations relative to their gas or oil installations. Companies are required to match or face a fine of £3,000 for every insulation they fall short by.

However, at the beginning of this week ministers announced potential plans to boycott the idea. A government source informed the Sunday Times: ‘Boiler manufactures have saddled with families with indefensible price hikes – this is not right. We’re looking again at the policy and expect manufacturers to do the right thing and remove their price hikes immediately.’

Currently, a formal decision on the matter is yet to be announced. However, energy secretary Claire Coutinho has said that ditching the policy could be the only way to get manufactures to drop their prices again and that the government can still achieve its goal of 600,000 heat pumps through other schemes and incentives.

‘We remain committed to our ambition of installing 600,000 new heat pumps a year by 2028,’ Coutinho said. ‘We want to do this in a way that does not burden consumers, and we’ve increased our heat pump grants by 50% to £7,500 – making it one of the most generous schemes in Europe.’

Despite optimism shown by the government, environmentalists have expressed their disappointment about the decision. The news has come just several months after current Prime Minister Rishi Sunak announced a watering-down of the UK’s net zero policies, which included pushing back the deadline for banning new petrol and diesel cars.

In addition, the news has also been announced as the Labour Party are due to ditch their policy of spending £28bn a year on its green investment plan which details intentions to secure more green jobs and reach climate targets.

Images: Jamie Street and Heidi Fin

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Adam Neumann, founder of WeWork, is trying to buy back the company despite being pushed out as CEO five years ago.

It’s often these points in a movie when people being rooting for the underdog, however, when Adam Neumann expressed interest in buying back WeWork after the organisation declared themselves as bankrupt in November 2023, it wasn’t met with the cheer he’d been looking for.

On Monday, 5th February 2024, lawyers representing Neumann’s new venture, Flow Global, sent a letter to WeWork advisors explaining that he has been trying to meet with the company for months to negotiate a fair deal to buy back the organisation.  

In addition, the letter detailed that if Neumann wasn’t able to buy back the co-working space company, then he would alternatively offer debt financing.  

However, it has been reported that WeWork advisors have been hesitant to revisit the negotiating table with Neumann, WeWork’s former CEO, as they claimed the establishment has had a ‘lack of engagement’ with him and had not provided the information needed to make an offer to purchase the company or finance its debt.

According to the New York Times, who were the first outlet to report on this matter, WeWork has more than $4bn in debt.

In the letter to WeWork, Neumann’s lawyers painted an overview of what the former CEO has in mind should he get the company back.

The letter said: ‘In a hybrid work world where demand for WeWork’s product should be greater than ever, my clients believe that the synergies and management expertise offered by an acquisition could significantly exceed the value of the debtors on a stand-alone basis. WeWork should at least educate itself about that potential and not preclude itself from maximizing value.’

In 2019, Neumann was pushed out of the company after WeWork failed to get on to the US stock market. The organisation was founded in 2010, and with Neumann as the major company stakeholder he was able to discuss an exit package worth almost half a billion – $245m was given in company stock and $200m in cash to leave the company.

Against this backdrop, since WeWork filed for Chapter 11 bankruptcy in November, as a result of rising interest rates amidst a lack of demand for office space, they have faced frustration from their landlords who have taken the company to court over doubts about its stability. This suggests the organisation may not have a choice but to strike a deal with Neumann. Only time will tell. 

Image: Sargent Seal

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Bridges have joined forces with City Development Limited to deliver Yardhouse, an innovative mixed tenure scheme in Wood Lane, London.

The new development, which was conjured up between Bridge, alongside development partner HUB, and Singapore-based real estate developer City Developments Limited (CDL), is set to deliver 209 co-living homes and high-quality amenity spaces.

In addition, two roof terraces, which will provide picturesque views across London will also be included.

However, although the development will provide beautiful scenery, it is also set to deliver 60 new, high-quality, affordable homes for single women – an act that is full of kindness. This decision has only been made possible through a partnership with Women’s Pioneer Housing (WPH), who will likewise be receiving a new HQ through the development.

Speaking of organisations that have helped bring this plan to life, the close collaboration with Hammersmith and Fulham Council played a huge part. Local residents and business owners have campaigned to bring forward a co-living and affordable housing scheme supported at all levels in the borough.

It will replace 36 existing WPH homes and 300 sqm of office space, creating a vibrant and dynamic living environment that aligns with modern lifestyle preferences and better serves the needs of local people.

Commenting on the news, Simon Ringer, Bridges’ head of property said: ‘This landmark deal reflects the strong demand in London for lower-cost, high-quality co-living space.

‘We have worked extensively with the local community to make sure that Yardhouse caters to local needs – in line with our ongoing commitment to support best-in-class developments in needs-driven sectors. We can’t wait to see this pioneering scheme come to life.’

One of the reasons this new deal has been struck is to address the growing demand for sustainable housing solutions, particularly in urban areas.

‘This forward funding deal will be instrumental to our delivery of this next gen co-living scheme,’ Damien Sharkey, managing director at HUB said. ‘We’re thrilled to partner with CDL on its first co-living development in the UK and move forward with the first project in our growing co-living pipeline.’

Damien added: ‘Not only does this further strengthen our commitment to innovative and inclusive housing solutions that meet the evolving needs of communities, but it reinforces our confidence in the resilience of the real estate market and the appeal of this emerging asset class.’

Situated within easy reach of Westfield, White City Place, Television Centre, and Imperial College London’s campus, and with excellent transport links, no better site could be thought of for co-living.

Image: Bridges 

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Instead of being locked away Birchgrove have recently had plans approved to convert a former police station into a 50-unit retirement living community.

Originally opened in 1972, the police station at 209-211 Chiswick High Road closed in 2021 and was sold by the Metropolitan Police to Birchgrove, an organisation dedicated to creating new retirement living spaces, in April 2022.

Following this, redevelopment plans were submitted later in the same year, and, after two public consultations, planning permission has now been granted.

Commenting on the news, Honor Barratt, chief executive at Birchgrove said: ‘After almost two years of consultation we are thrilled to have secured planning permission, and I would like to thank everyone – including the council and local residents – for both their support and suggestions to ensure the development is the best it can be and does Chiswick justice.

‘All too often older people are shoved to the end of a cul-de-sac somewhere, but not here. With our development bang in the middle of Chiswick High Street, our residents will be able to flourish at the heart of the community.’

Plans include one and two-bed self-contained rented apartments, which will be available for people aged 65 and over, with facilities including a 24-hour concierge service, restaurant, license bar, courtyard garden and wellness suite.

One of the reasons the plans were put forward to create this establishment were because Birchgrove believed people in the area could benefit from a dedicated space solely available for those who have retired.

As well as including features such as a restaurant and a garden, plans also include a ground-floor space that will be available for local community groups to hire so they can arrange meetings with members.

In addition, the police will also be provided with a separate dedicated facilities space which will enable officers to charge their body-worn cameras, iPads, and radios, and means a police base will be re-established on the High Road following the station’s closure.

The scheme will also provide a £400,000 contribution towards affordable housing in Hounslow, and has been assessed as highly sustainable – achieving a minimum 77% reduction in carbon emissions over the regulatory baseline.

Image: Birchgrove 

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New research found that the average price of a house increased by £3,785 last month, making it the fourth month of consecutive rises.

This morning, the Halifax House Price Index, the UK’s longest running monthly house price series, published their latest findings which display that typical property values increased by 1.3% in January from December. Experts also found that house prices increased by 2.5% annually – the highest annual growth since January 2023.

Kim Kinnaird, director at Halifax Mortgages said: ‘This is the fourth consecutive month that house prices have risen and, as a result, the pace of annual growth is now 2.5%, the highest rate since January last year.’

‘The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market, has contributed to increased confidence among buyers and sellers,’ Kim said. ‘This has resulted in a positive start to 2024’s housing market.’

Kim added: ‘However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply.

‘For those looking to buy a first home, the average deposit raised is now £53,414 – around 19% of the purchase price. It’s not surprising that almost two-thirds of new buyers getting a foot on the ladder are now buying in joint names.’

Due to the annual change in the cost of house prices, here are the average costs of buying a house in different areas of the UK:

• East Midlands – £236,862
• Eastern England – £327,270
• London – £529,528
• North East – £169,505
• North West – £229,707
• Northern Ireland – £195,760
• Scotland – £206,087
• South East – £379,220
• South West – £295,399
• Wales – £219,609
• West Midlands – £251,185
• Yorkshire and the Humber – £207,602

Commenting on the news, Daniel Austin, CEO, and co-founder at ASK Partners, said: ‘Today’s data shows that the property sector is beginning to show signs of recovery. With a decline in inflation year on year and the peaking of interest rates, the overall outlook has considerably improved.

‘Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.

‘Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.’

‘A survey conducted by the Royal Institute of Chartered Surveyors (RICS) uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns,’ Daniel said. ‘Although the lead-up to the general election may pose some uncertainty, a subsequent boost in productivity and a decrease in interest rates are expected. The hope is that any new government can address local planning issues to stimulate construction and guide the economy out of the downturn.’

Images: RosZie and Pavel Danilyuk

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We’ve heard of caravans and motor homes, however a Canada-based company have taken it one step further with an idea we could all benefit from.

Acorn Tiny Homes, a Toronto-based builder of tiny homes that was established in 2021, have released new images of their latest creation: the Paddock Paradise home – a small house that operates on wheels.

The new homes measure at 38 feet long and 10.6 feet wide, yet although they are small, they are able to fit various home comforts inside of them, including a sofa, kitchen, and a bed. The models are designed for year-long living with a wood-framed construction and spray-foamed insulation.  

Offering no less than 436 sq ft of space, the homes are designed to sleep two people but can fit up to four. The full layout includes a living room, kitchen, a pass-through bathroom, a ground-floor bedroom, and a storage attic.

The idea to create such a unique portal home came as research found more people in Canada were looking to simplify and downsize to a smaller property that helped them reduce living costs. In addition, because the models are equipped with wheels, it provides individuals with the chance to travel more.  

Against this backdrop, research from Savills UK, a national estate agent and letting company, found the number of the people looking to downsize has risen markedly since September 2022, suggesting this type of creation would work well in this country.

A survey, which included all of Savills 130 offices that are situated across the UK, found the number of ‘older’ homeowners looking to move from a larger family home into something significantly smaller had increased by more than half over the last six months.

In addition, Acorn Tiny Homes, which was founded by D’Arcy after he experienced a nightmare of a renovation job and believed he could job better, uses 100% sustainable materials when building – a concept various UK organisations are currently working towards.

The Paradise Paddock cost around $230,000 to construct, however once they come liveable, they reduce living costs substantially.

Image: Acorn Tiny Homes 

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David Bridges is set to return to Kier, where he previously worked as chief executive until its sale to private equity group Terra Firma in 2021.

In 2020 David Bridges worked as the chief executive of Kier, a leading provider of infrastructure services, construction, and property developments, until it was sold for £110m to Terra Firma. This decision ultimately resulted in Bridges moving to Homes England, where he has worked as the interim chief investment officer since August 2023.

However, in a shocking turn of events, Bridges recently announced he will be returning to Kier in March as a managing director.

News of the announcement has come just a week after a House of Lords committee criticised Homes England’s ‘undirected and nonstrategic’ investment in housebuilders specialising in modern methods of construction (MMC).

One of the reasons Homes England, the governments leading housing and regeneration agency, has been labelled as ‘undirected’ is because it is set to lose around £68m from its investment in Ilke Homes, which collapsed in summer 2023; lost £3m of £27m invested into House by Urban Splash, which collapsed in 2022; and is also owed over £9m by a subsidiary of Stewart Milne Group that fell apart this month.

Commenting on the news, Leigh Thomas, Kier Property groups managing director said: ‘I am delighted to welcome David back during this exciting time in Kier Property’s growth.

‘David brings a wealth of experience in residential and commercial property and will play an integral role in leading our talented residential regeneration team and help drive our growth strategies through our existing joint ventures in the public and private sectors.

‘In David’s new role, he will sit on our property board and take overall responsibility for the delivery of all our residential projects. I am looking forward to seeing the impact David will once again have at Kier.’

Before working for Kier and Homes England, Bridges has previously held roles at other leading property organisations including Taylor Wimpey, Keepmoat, McCarthy Stone, Linden Homes and Sergo.

In response to getting his new role, David Bridges said: ‘It’s fantastic to be rejoining Kier. I know first-hand what a great company this is, with a people and culture which drives to make a difference. Coupled with my passion to help regenerate towns and cities, I knew this would be a brilliant opportunity.

‘Given the strategic focus of the business, I am confident that learnings from my time at Homes England will really help to deliver on the ambitious growth plans of Kier Property in the residential and regeneration sectors. I look forward to getting started in March.’

Images: Mike Hindle and Ernie Journeys

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Employment rates in the UK are even worse than we thought. Kathleen Brooks, research director XTB, examines new figures from the Office of National Statistics (ONS) and analyses where it all went wrong.

The ONS released its updated Labour Force Data for the three months to November at the start of last week, which incorporates new estimates of the UK population increased response rates. The updated report now suggests that the unemployment rate fell to 3.9% from 4.2% in the three months to November, suggesting that the labour market was even tighter than expected at the end of 2023.

While the unemployment rate was revised down, the economic inactivity rate was higher than previous estimates and average hours worked were also revised down to 31.6 hours per week, from 31.7 hours. This highlights the dichotomy in the post pandemic labour market: there are less people working, those who are working are working fewer hours, and yet there is a huge demand for labour. The revised survey suggests that wage pressure could remain elevated for some time, which supports the Bank of England’s caution when it comes to cutting rates and instead focussing on inflation risks.

There were some other interesting details in the revised report. There was an increase in the relative number of women who were economically inactive and female employment levels dropped. There have been concerns about low response rates to labour force surveys, to combat this and in an effort to get higher levels of accuracy, the ONS will conduct face to face interviews from now on, which should improve the quality of UK labour market data.

There was good earnings news for the UK at the start of the week. Vodafone beat analyst estimates for organic revenue last quarter, rising by 4.7% vs. 4.27% expected. It also reiterated its full year 2024 guidance, and it sees adjusted earnings for this year at EUR 13.3bn, vs EUR 13.2bn expected. This is a solid set of earnings in an earnings season where share prices are rewarded if companies don’t post nasty surprises. The FTSE 100 is expected to open down a touch later this morning.

Fed chair, Jay Powell, was speaking to 60 minutes, a US TV news show, on Sunday night, which could set the tone for markets at the start of the week. He said that the Fed would move carefully on rate cuts. He also said that he does not think that FOMC members will have dramatically altered their forecast for interest rate cuts when they next update the ‘dot plot’ in March. The dot plot forecast three rate cuts for 2024. The market is currently expecting just under 5 rate cuts for 2024, according to the Fed Fund Futures market, and expectations are for US interest rates to end the year at 4.12%, whereas the Fed’s dot plot sees rates falling to 4.6% by year end.  

There has been a rapid re-pricing in expectations for US interest rates in the past few days, after last week’s FOMC meeting essentially ruled out a March rate cut. After Powell’s comments on 60 minutes, there could be a further to go. There is now only a 17% chance of a March rate cut expected by the market, with the first cut expected in May. As usual, there are a large number of Fed speakers this week. If Powell has set the tone for Fed speak, then we could see more FOMC members converge around three rate cuts for this year.

Emini S&P 500 futures have turned lower, and Treasury yields have risen at the start of the week, although they have backed off their highs as we move towards the European session open.  The S&P 500 reached another record high last week and has registered its 13th gain in 14 weeks. US stocks outperformed European indices after a strong rally at the end of the week, triggered by superb earnings from Meta and Amazon. This is the US blue chip index’s longest winning streak since 1986! However, February can be a choppy time for markets, and it is the third worst performing month for the S&P 500 going back to the 90s.

Meta deserves a mention, after reaching a fresh record high last week, and rallying more than 20% on Friday. An interesting Meta fact, during its earnings call last week, the number of mentions of AI and machine learning was at its lowest level for a year. We cannot confirm if there is a link between the all-time high in the stock price, and the fact that AI was mentioned less frequently on this earnings call, or if investors are cooling to the AI theme. However, Meta is a keen reminder that the market likes good results across multiple business lines, and it seems to only love AI if it comes clothed in revenue growth.

We are mid-point through earnings season for last quarter, and although there are more companies who have missed earnings estimates compared to the 5-year average, the level who have surpassed estimates is rising.  The earnings growth rate of the 46% of companies who have reported results for the previous quarter currently stands at 1.6%, however, this level may be improved upon after the earnings reports coming up this week. On a sector basis, those reporting YoY earnings growth include tech, communication services, consumer discretionary and utilities. Those reporting earnings declines YoY include energy, healthcare and financials.

There are also some key earnings releases this week, including analytics AI retail favourite Palantir. There could also be a test of the market’s appetite for stocks beyond tech, with earnings releases for McDonalds, and Caterpillar on Monday. Although the US economy is growing strongly, growth has not been even, and there are signs of weakness, particularly in industrial sectors. Caterpillar is seen as an economic bell weather for demand for industrial equipment. The company announced in October that its order backlog had slumped, and analysts expect slowing sales and orders for Q4. In the past, Caterpillar earnings have tended to signal trends in US growth. The US economy is less tied to industrial trends than it once was, however, a second consecutive slowdown for Caterpillar’s results may not be a good omen for the US economy.

Eli Lily, the largest healthcare firm in the US by market cap, Walt Disney, PayPal and Pepsi also report later this week. They could tell us interesting information about the strength of the US consumer, and also how companies outside of tech are performing. In the UK, BP, the oil major, will report results on Tuesday, followed by Barratt Developments on Wednesday, Unilever and Astra Zeneca on Thursday and BATS on Friday. In Europe, we get Total on Tuesday, Siemens on Thursday along with another dose of earnings from the luxury sector, including Kerring on Thursday and Hermes on Friday. German and French shares reached record highs last week. All eyes will be on whether these earnings reports can help them to sustain further gains, and whether European indices, which have less tech exposure than their US counterparts, can also keep making record highs as we move into February.

Chinese stocks have slumped at the start of the week, even though Chinese officials pledged more support to stabilise the market, without specifying details. This pledge of support has not soothed market fears. The larger index of Chinese shares, including the CSI 300 and the Hang Seng managed to eke out small gains on Monday, however, the index of small and medium sized shares, including the Shenzhen composite and the CSI 1000 are coming under intense selling pressure, the Shenzhen Composite is down some 5.5% and the CSI 1000 has slumped by 7.2%. Volatility in the shares of China’s small and medium sized companies has led to fears about margin calls, and derivates called snowballs that could hit their knock-in levels could exasperate the selling pressure.

The downturn in Chinese shares in recent weeks has been broad based as the economy fails to return to pre-pandemic highs. The Hang Seng is lower by nearly 8.5% YTD while the CSI 300 is down by 7.29%. The contrast with the US could not be starker. The S&P 500 reached a record high at the end of last week, and is up by nearly 4% YTD, while the Nasdaq is higher by 4.1%. The selling pressure is particularly noticeable in the small and medium-sized stock indices. This largely impacts domestic investors and could increase the risk of social unrest. There are reports of investors venting their frustrations with the Chinese market on social media, and so-far signs of official intervention in the market has not had lasting effects. If Chinese officials cannot find a way to stabilise financial markets soon, this could lead to political problems for Beijing, and this is why it is worth watching the Chinese stock markets at this delicate time. 

Images: geralt and Aaron Burden

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