Lloyds Bank: Half (46%) of first-time buyers considering property purchase with friend or sibling
With affordability stretched for many aspiring homeowners, new research from Lloyds Bank shows that as many as half (51%) of young first-time buyers are willing to consider “non-traditional routes” to get onto the property ladder – like purchasing with a friend (24%) or sibling (22%).
While six in ten (62%) under-35s still say they would prefer to purchase their first property with a partner, many are now looking to alternative routes into home ownership.
The most common reason for first-time buyers to consider purchasing with a friend or sibling is to make it more affordable (60%) and because they trust the person (56%), with 14% thinking they would have no other way to buy. However there are some perceived barriers to buying with a friend or sibling.Psychologist and relationship expert Jo Hemmings comments, “Buying with a friend or a sibling is not the same as buying with a partner – there is so much to consider when it comes to the relationship dynamic. A lot can change when finances become involved with friendship, but provided you both know how to talk about your finances these changes can absolutely be positive”.Even traditional reliance on the “bank of mum and dad” to support a first property purchase may be at risk, as half (48%) of young first-time buyers would feel ashamed of borrowing money from family for a deposit compared to just one third (34%) who would feel confident. Young people are pioneering this new trend towards non-traditional ways of buying, with one third (32%) of 18 to 34-year-olds who have yet to buy a property reporting that they “don’t care how” they buy a home as long as [they] get onto the property ladder.With many people considering purchasing their first home with a friend or sibling, Lloyds Bank has worked with psychologist and relationship expert Jo Hemmings to offer her tips on broaching financial topics and help them avoid potential awkwardness:
Dogs or cats: When considering buying a property with a friend or family member, your relationship will inevitably change. Before you so much as open a property app for ‘just a look’, discuss your finances, future plans and the practical side of owning a property to help maintain communication and trust. Practical issues can include anything from being a cat or dog person, playing a musical instrument to how often you wash the dishes.
Split wise: Often there can be a disparity in the amount of money each of you is able to save for a deposit or the monthly mortgage each of you is able to pay. Drawing up a legal agreement regarding co-ownership is essential to cover each owner’s percentage of equity in the property. While this might feel like ‘overkill’ between friends or family, a formal document will give you more clarity and save you from any misunderstandings further down the line.
Preferred property: Not every property is right for everyone’s needs, so begin by discussing the type of property you want – a flat or a house, leasehold or freehold, where it might be located and how long you plan on living there. These should be joint decisions, but you must outline who is ultimately responsible for any aspects of this or whether everything will be decided together.
Understanding conflict: Even if you have jointly decided that you want a property with a garden or will invest in a new kitchen, disagreements over major or minor issues will inevitably happen. Raise any issues with your purchasing partner when they arise and don’t bottle them up.
Look to the future: When buying a property, it is important to consider that circumstances can change. This includes everything from finding a new partner to a job change or relocation, which can all impact on your original plan. To mitigate any issues down the line it is wise to draw up an exit strategy agreement should one of you want to sell or move out before the other.“It’s totally understandable that many people don’t feel particularly comfortable discussing finances. Whether it’s the classic British approach to money or perhaps negative experiences in the past, it’s easier to start those conversations if you feel you have a good starting point.”Four in ten (37%) who said they would not consider buying with a friend or sibling said they wouldn’t want to complicate their relationship, and one third (32%) reported that they were unsure how buying in this way would affect potential plans to move out and purchase with a partner in future.Amanda Bryden, Mortgage Director at Lloyds Bank says: “While many of us may picture our first property purchase as a home purchase with a partner, this new data shows that more people are open to buying with a friend or sibling than many would expect.“Buying with a friend or sibling can be appealing because you have probably known this person for a long time, but this new data also shows that people don’t always feel confident broaching financial subjects.“Just as you should when purchasing with any other person, we would always suggest that you speak with a qualified solicitor about the implications of a shared property purchase, to ease your future progression if you do choose to sell further down the road.“While a wider variety of options exist for people to purchase their first property, these are only suitable for people if they are able to discuss financial topics openly which is why we are trying to help first-time buyers discuss financial topics”.The first step onto the property ladder can feel overwhelming, and with the wide variety of options available the best thing an aspiring first-time buyer can do is understand their options and get advice from those they might wish to purchase with.
Lloyds Bank completes first digital trade transaction under new UK legislation
Lloyds Bank has completed what it believes to be the first transaction under the UK’s new Electronic Trade Documents Act (ETDA) which came into force today.
The ETDA gives electronic Bills of Exchange, Bills of Lading and other commercial documents the same legal footing as paper documents. The legislation is designed to give UK businesses and participants in the 60-80% of trade transactions worldwide that are subject to English law, more flexibility in how they trade. The Act will also significantly reduce the environmental impact that paper documentation has, while reducing the cost and time taken to conclude international trade transactions.
Lloyds Bank completed the transaction for Matalan Retail Ltd via Enigio’s trace:original solution. A digital promissory note was issued by Matalan to accept liability when settling a documentary collection for the purchase of garments from one of its suppliers. Through the technology, the key documents arrived two days earlier than they would have, if the promissory note had been concluded on paper.
Gwynne Master, Managing Director, Lending and Working Capital, Lloyds Bank, said: “This new legislation is a turning point for a cheaper, faster, and more sustainable global trading system. We’ve spent many years working with industry, government, suppliers, and clients to find ways to support the transition to digitisation, and we are pleased to be spearheading the practical implementation of the Act.”
Ed Collier, Head of Financial Reporting & Control at Matalan, said: “We are proud to have played our part in Lloyds’ first ever transaction under the ETDA. We welcome this move to digitisation as it will allow us to trade with our suppliers faster, more seamlessly and in a more sustainable way.”
Patrik Zekkar, CEO of Enigio, said: “This historical landmark transaction evidences a new era of trade and trade finance, where legislation and technology now truly work hand-in-hand and we are delighted that our trace:original solution has been at the heart of it. Unlike other digital trade solutions that require all parties to subscribe to digital platforms, trace:original only requires the party creating the document to be an Enigio user, directly or by proxy, therefore making it easier for businesses to make the switch to digital.“
Chris Southworth, Secretary General, International Chamber of Commerce, UK said: “Business surveys consistently say that a third of small companies see paper and red tape as a barrier to trade. There are now no legal requirements for paper in trade transactions which – as well as removing all the associated bureaucracy – presents a once-in-a-generation opportunity to bring the trading system into the 21st century and use technology more effectively.”
Enigio’s trace:original solution removes the need to physically transfer actual notes. It enables the creation of digital documents that can be ‘possessed’ by an individual, transferred between parties and originals can be distinguished from copies, just like paper-based counterparts. This means digital documents can be used in processes where an ‘original’ document is required. Unlike other digital trade solutions that require all parties to subscribe to digital platforms, trace:original only requires the party creating the document to be an Enigio user.
Lloyds Bank’s work with Enigio is part of its ongoing digital strategy and paperless trade initiative and follows its successful completion in August 2022 of the UK’s first transaction utilising a digital promissory note purchase.
Earlier this year (February 2023), Lloyds Bank also shared its learnings and experience in electronic payment undertakings (ePUs) under the Digital Negotiable Instrument Initiative (DNI), to help fintech group Mercore complete the UK’s first digital Bill of Exchange transaction, which was also executed through trace:original.
On the 18th September 2023, Lloyds Bank announced it has invested €3 million in Enigio to help expand and accelerate the use of digital documentation in trade.
Housing Growth Partnership to provide additional £300 million to UK housebuilders
Housing Growth Partnership (‘HGP’) funded by Lloyds Banking Group and Homes England commits £300 million equity funding to SME and regional housebuilders
New fund aims to support the development of 10,000 new homes by 2025
Regional Growth Initiative will provide additional assistance to the most ambitious regional housebuilders in the UK
Housing Growth Partnership II
The Housing Growth Partnership (‘HGP’) established by Lloyds Banking Group and Homes England has announced a new £300 million commitment to SME and regional housebuilders in the UK.
The partnership aims to bridge the homebuilder equity funding gap, allowing housebuilders to build more homes across the UK and grow their businesses.
The new fund will support a wider range of housing tenures to meet the UK’s diverse and evolving housing needs. Building on the success of the first HGP fund announced in 2016, the new £300 million commitment will help Housing Growth Partnership achieve its target of supporting the development of 10,000 new homes by 2025.
The new fund will be broader in scope to enable investment into larger housebuilding projects with a development value of up to £75 million. It will offer support for the delivery of a wider range of housing projects including Build to Rent, Regeneration and Retirement Living. The partnership will also look to prioritise projects with a greater sustainability focus, as well as those using modern methods of construction and other evolutionary construction methods.
Since its launch, the Housing Growth Partnership has invested alongside 46 housebuilders to support the delivery of over 4,500 new homes, with nearly half now completed and sold to families across the UK.
Housing Minister RT Hon Christopher Pincher MP said:
“It is a top priority of this Government to increase housing supply so hard-working people can be helped into home ownership.
“A thriving SME sector is crucial to our house building targets and ambitions. This significant amount of funding will help smaller and regional housebuilders by providing them with the financial support necessary to deliver much needed new homes.”
Vic Hepburn, CEO of Housing Growth Partnership, said: “We are pleased to be building on the success of the Housing Growth Partnership by extending the range of support we can provide to the UK housebuilding market. This includes our new multi-tenure approach which will provide more flexibility for housebuilders and more choice for homebuyers.
The introduction of the Regional Growth Initiative will also allow the Housing Growth Partnership to support the most ambitious housebuilders in a more substantial way with additional financial and strategic support.”
Harry Swales, Chief Investment Officer at Homes England, said: “The Housing Growth Partnership has already proved to be a huge public-private sector success and we’re now pleased to expand the fund to offer SMEs further support. By injecting this additional investment and harnessing Lloyds Banking Group’s commercial skills we’re able to diversify the market, support increasing numbers of builders and provide the homes the country needs.”
Regional Growth Initiative
The HGP fund will also partner with the most ambitious SME housebuilders in the UK to support their growth and development through its new Regional Growth Initiative. This scheme will see HGP committing a higher level of dedicated equity support to these housebuilders over a defined period to allow them to invest in their businesses and target larger and more strategic sites.
The first five regional partnerships are already in place across four different regions of the UK with Genesis Homes, Durkan, Stonewood Partnerships, Briar Homes and Cruden Homes.
The Regional Growth Initiative is being rolled out UK wide with the aim of trying to support the next generation of large regional housebuilders.
Support for the housing market
This announcement is part of Lloyds Banking Group’s commitment to helping Britain recover by working across the market to expand the availability of high quality and affordable homes. As well as being one of the biggest backers of housebuilders in the UK, the Group has also committed over £9 billion of funding to the social housing sector since 2018. The UK not only needs more homes, but also to make them greener, so Lloyds Banking Group is supporting the creation of national sustainability standards for house-building finance and has assessed the energy retrofit requirements of over 240,000 homes in the social housing sector.
The launch of Citra Living earlier this year marked the Group’s entry into the private rental market, building on its existing support for the buy to let sector. The Group remains committed to helping first time buyers realise the dream of homeownership, with £9 billion in lending already provided this year and a commitment to reach £10 billion by the end of the year.
Lloyds Bank Fined $125M for Inaccurate Communications over Home Insurance Renewals
The Financial Conduct Authority (FCA) has today published the findings of an investigation into the way Lloyds Banking Group communicated with home insurance customers about renewal of their policies between 2009 and 2017 and has imposed a penalty of £90,688,400.
The FCA’s investigation found competitive pricing language that the Group used in customer renewal communications was not substantiated. The FCA also found that the Group informed customers that they would receive a discount which was not applied and was never intended to apply.
The Group has contacted those customers who were due a payment after being incorrectly informed between 2009 and 2017 they would receive a discount, and made a payment to them.
The FCA recognised the Group’s cooperation during the investigation, that the breaches were committed inadvertently and that the Group has taken a number of positive steps to improve renewal communications and the associated systems and controls.
Statement attributable to a Lloyds Banking Group spokesperson:
“We’re sorry that we got this wrong. We’ve written and made payment to those customers affected by the discount issue and they don’t need to take any further action.
“We thank the FCA for bringing this matter to our attention and since then we’ve made significant improvements to our processes and how we communicate with customers.”
All UK sectors now in growth mode for the first time since August 2018
The latest Lloyds Bank UK Recovery Tracker shows:
All 14 sectors monitored by the UK Recovery Tracker reported output growth in April, up from 11 in March and for the first time since August 2018.
Technology equipment manufacturing was the best performing UK sector, while tourism and recreation output returned to growth for the first time since August 2020.
UK firms’ growth expectations for the next 12 months were ahead of their global counterparts.
The number of UK sectors reporting output growth rose to pre-pandemic levels for the first time during April, according to the latest Lloyds Bank UK Recovery Tracker, as the third national lockdown restrictions began to be lifted.
The output of all of the 14 UK sectors monitored by the Tracker increased in April, up from 11 in March, and for the first time since August 2018.
Manufacturing sectors lead UK recovery
Manufacturers of technology equipment (67.7) and metals and mining products (66.3) recorded the strongest output growth for the second month in a row during April. A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting.
Technology equipment manufacturers – which includes producers of specialist parts in smart devices, motor vehicles, computers and industrial machinery – continued to benefit from high international demand for components. Manufacturers of metals and mining products benefited from global raw materials shortages and surging commodity prices.
Industrial services (60.3) – which include providers of commercial and professional services – was the best-performing UK services sector during April. Firms in the sector, alongside software services (54.4) providers, cited a steep rebound in corporate spending on projects that had been delayed during lockdown and strong demand for business services in support of new investment initiatives.
Tourism and recreation bounces back
Meanwhile, during April, the output of UK tourism and recreation (51.9) businesses rose for the first time since August 2020 following the reopening of outdoor dining at pubs and restaurants. Hospitality businesses also cited a spike in forward bookings in anticipation of lockdown measures easing further.
Similarly, the real estate (53.6) sector also returned to growth during April as firms benefited from offices reopening and favourable conditions in the residential property market.
Automotive manufacturers (50.1) reported a rise in output in comparison to March (46.4), but the increase was marginal and took the sector only slightly above the 50 mark that signals growth. It was the worst performing sector monitored by the Tracker during April, as firms continued to struggle with semiconductor shortages and some overseas customers choosing to buy from EU suppliers post-Brexit. The export orders index for the UK automotive sector was 50.3 during April, which compared with the European benchmark of 62.9.
UK firms’ growth expectations ahead of global pack, despite rising inflation
Turning to the Tracker’s measure of expected output, for 13 of the 14 UK sectors monitored, readings for anticipated output growth over the next 12 months were higher than their global peers, as the UK’s progress out of lockdown and COVID-19 vaccination programme continued to outpace other countries.
Only real estate was behind the global index by this measure, largely due to offices in the US services sector reopening at a faster pace than the UK.
Firms’ positive outlook came as inflation caused UK businesses, during April, to experience the sharpest rise in input costs since February 2017. In response, firms in every sector monitored by the Tracker – apart from tourism and recreation – increased their prices. Chemicals producers recorded the highest increase in prices due to surging demand for raw materials from the global manufacturing industry.
Jeavon Lolay, Head of Economics and Market Insight, Lloyds Bank Commercial Banking, said: “The UK’s recovery seems to have moved into the fast lane. The latest lifting of lockdown restrictions will only fuel a further boost to the already rapid pace of expansion at the start of this quarter.
“It’s no surprise that business optimism for the year ahead is strongest in consumer services on hopes that the re-opening of the economy will lead to a sharp rebound in demand. However, it will also be very interesting to see how UK manufacturers address ongoing supply chain strains as concerns about inflation continue to build.”
Scott Barton, Managing Director, Corporate and Institutional Coverage, Lloyds Bank Commercial Banking, added: “The pace of the UK’s recovery from COVID-19 is clearly accelerating, with all sectors now showing growth. While British technology manufacturers continue to lead from the front, it is particularly promising to see the tourism and leisure sector returning to growth after such a significant period of time. Consumer-facing businesses like pubs and restaurants have borne the brunt of COVID-19 restrictions, and will also be hopeful that the reopening continues as planned.
“Still, there has been so much dislocation in the economy that brighter recovery prospects will need to be balanced with careful business planning and nimble strategies to adapt to the changing situation”.
New Lloyds Bank team to support clients’ sustainability ambitions
Lloyds Bank Commercial Banking has created a new team to support its corporate clients as they transition their businesses to become more sustainable.
The team will specialise in structuring environmental, social and governance (ESG) products and services, helping corporates become more sustainable and supporting the UK’s road to net-zero. The team will be led by Jonas Persson, currently head of the sustainable and natural resources team in the bank’s Corporate & Institutional Coverage (CIC) division, which supports larger businesses. In his new role Jonas will report to Scott Barton, Managing Director and head of CIC.
As well as bringing together internal sustainability experience into the planned 16-strong team, the bank will look to bring in material external sustainability expertise. Jonas will be joined by David Willock, a sustainability specialist who has led the rollout of the green buildings tool, which helps commercial property firms make their buildings greener, in his current role in the real estate and housing team within CIC.
The Sustainability team, which will support businesses across the UK, will also provide insights and learnings to clients to inform their green strategies. The creation of the new team comes ahead of the COP26 conference, which is being held in Glasgow in November. Lloyds Banking Group is a major employer in Scotland and supports consumers and businesses through its Bank of Scotland brand.
Jonas Persson, Managing Director and head of the new Sustainability team, said: “Sustainability has rightly been on the corporate agenda for a number of years, with the Paris Agreement and the UK’s net-zero legislation in 2019 focusing minds on the measures needed to tackle climate change. Finance has a key role to play in that, both in funding new, greener projects and incentivising corporates to continue making sustainable changes to their businesses.
“The new team will combine deep experience in structuring sustainable finance products across many sectors with expertise and insights to help clients make the right decisions for their firms and the environment. Our investment in this area reflects our belief in the role that business has to play in building a more sustainable society and our own commitment to being a leading sustainable bank.”
The formation of this new team is another step by Lloyds Banking Group to support increased sustainability in the UK. The Group announced last year its commitment to working with clients and government to reduce the carbon emissions of the businesses and projects it finances by more than 50% by 2030.
Last year Lloyds Banking Group provided £2.3 billion of green funding to businesses and in 2021 it is expanding the funding available under green finance initiatives from £3bn to £5bn to support green transition. The Group has also trained over 800 colleagues in climate change and sustainability-related risks and opportunities in collaboration with the Cambridge Institute for Sustainability Leadership.
Lloyds: Μειωμένα σχεδόν κατά το ήμισυ τα προ φόρων κέρδη στο δ΄ τρίμηνο
Μειωμένα σχεδόν κατά το ήμισυ ήταν τα προ φόρων κέρδη της Lloyds Banking Group για το δ΄ τρίμηνο του 2020, ενώ αρχίζει εκ νέου τη διανομή μερίσματος.
Η βρετανική τράπεζα ανακοίνωσε προ φόρων κέρδη 792 εκατ. στερλινών (1,12 δισ. δολάρια), σε σχέση με τα 1,45 δισ. στερλίνες το αντίστοιχο διάστημα του προηγουμένου έτους.
Οι εκτιμήσεις έκαναν λόγο για προ φόρων κέρδη 471 εκατ. στερλίνες.
Τα καθαρά κέρδη της τράπεζας μειώθηκαν στα 3,59 δισ. στερλίνες από τα 4,13 δισ. στερλίνες πριν από ένα χρόνο και με εκτιμήσεις για 3,43 δισ. στερλίνες.
Η Lloyds κατέγραψε απομειώσεις 128 εκατ. στερλινών για την περίοδο, όταν αναμενόταν να καταγράψει απομειώσεις 586 εκατ. στερλίνες.
Το Δ.Σ. ανακοίνωσε μέρισμα 0,57 πένες ανά μετοχή, χαμηλότερα από τις 3,37 πένες για το 2019 και με τις εκτιμήσεις να έκαναν λόγο για 0,53 πένες.
Ο δείκτης κεφαλαιακής επάρκειας σημείωσε άνοδο στο 16,2% από το 13,8% στις 31 Δεκεμβρίου 2019.
Lloyds Bank strengthens support for vulnerable and older customers with new Trusted Person Card
Lloyds Bank has taken a further step in its ongoing support for customers, by developing a new Trusted Person Card. Launching at the end of this month, the card will make it easier for friends, family and carers to help those who need additional help to make everyday purchases and access cash.
The new feature will give those who find it difficult to purchase groceries and essential goods – perhaps because of health concerns, shielding or lockdown – the ability to apply for a separate debit card for their account. This will enable a trusted person to make purchases in shops, or withdraw cash, for the account holder, without sharing the primary card or other confidential account details.
The card’s launch is a direct response to feedback from some customers, who have said that making everyday purchases can be difficult at times, even more so recently for those shielding. Customers are also aware of the fraud risks involved in sharing their own debit card details, and want a more sustainable solution for family, friends or a trusted person to be able to help out safely.
Simple and safe
The main account holder will retain full control of the account, will be able to cancel the additional card at any time, and keep track of how it is being used;
All transactions made using the card will be shown on the customer’s account statement
The card has a weekly spending limit of £100 and a weekly cash withdrawal limit of £100
The card will not be able to make purchases online, abroad, or over the phone
To help further protect the account holder, the trusted person will not be able to access the account or any details in any service channel
The account holder’s sort code and account number will not be printed on the card
The card will have a different card number and PIN to the customer’s existing debit card
Philip Robinson, Director of Personal Current Accounts, Lloyds Bank said: “We understand that for some, getting out and about isn’t always straightforward, and lockdown and shielding restrictions mean that many of our customers are relying on others to help them with groceries and picking up essentials. We’ve developed the Trusted Person Card to make sure that there is a straightforward and, crucially, secure way to ask family, friends and carers for help.”
The new card will be made available to the most vulnerable customers of Lloyds Bank, Halifax and Bank of Scotland and is a secondary card, attached to the customer’s main current account. The product will be launching at the end of the month when a specialised telephone service team will begin to proactively identify customers who have a need for the card.
Supporting customers through the pandemic
The Trusted Person Card is the latest supportive measure Lloyds Bank has introduced to help customers through the pandemic. The Bank also launched the ‘trusted person service’ in March, which provides a way for customers who find it more difficult to leave their home, or who don’t bank digitally, to manage their accounts. Customers can ask a trusted person to visit a Lloyds Bank branch and speak to colleagues (providing suitable ID to confirm who they are, such as a passport, or photo driving licence). The branch will then phone the customer – using the number held on the account record – to make sure they know this person and agree that they can act on their behalf. Earlier this year, the Bank also launched a dedicated helpline for customers aged over 70 and NHS workers, and has been proactively calling vulnerable and older customers, or those with additional needs, to check in and offer support. The Bank has now made over 600,000 of these wellbeing calls and received over 440,000 calls to the dedicated helplines.
In April, a new partnership was announced with We Are Digital, to provide vulnerable customers with access to free and practical support, on getting connected and staying safe online. This includes helping people with everyday digital tasks such as online shopping and speaking to family and friends. The partnership is also delivering 2000 tablets to over 70s, who do not currently have a suitable device to access the internet.
Lloyds Bank also offers widespread visual and auditory support for customers in branch, online, and through our mobile apps. This includes – but is not limited to – alternate format statements (Braille, large print, optional colours); magnification and voice over features in our mobile apps; touch-talk, and BSL or lip reading interpreters.
Lloyds Bank: UK private sector recovery ahead of global trend
At a country level, the UK in July compares favourably with other countries in Europe and the US
12 of the 14 UK sectors tracked by Lloyds Bank were ahead of global recovery trends in July
Tourism and Recreation and Technology Equipment were the only UK sectors to report a decline in output in July, with Metals and Mining and Chemicals the UK sectors experiencing the fastest increase in output
Proportion of UK firms reporting lower output and attributing this to Covid-19 has fallen every month since April, down to 26% of survey respondents in July compared to 69% in April
UK businesses outperformed their international counterparts on a series of metrics tracking recovery from Covid-19 during July, according to Lloyds Bank.
The Lloyds Bank UK Recovery Tracker, working with IHS Markit, provides unique insight into the shape and pace of the UK’s recovery following the unprecedented disruption caused by Covid-19.
From a Global perspective, PMI data shows a general shift upwards as lockdown measures were eased across most markets. The World PMI rose to 50.8 in July from 47.8 in June with increased output across manufacturing and service sectors,
The debut edition of the monthly Tracker showed that UK businesses’ output increased faster than the global benchmark in 12 of the 14 sectors monitored by the Tracker, indicating UK businesses recovered faster than similar firms in other parts of the world in July. A Tracker reading of above 50 signals output is rising, while a reading below 50 indicates output is falling. The July PMI builds on gradual gains from an exceptionally low point for most countries, the majority now above the key 50 level, with the UK Composite Index reaching 57, comparing favourably with the Euro Area 54.9 and the USA at 50.3.
Although output is now rising in the UK, the outlook is still very uncertain with the risk of future widespread Covid-19 outbreaks, and the figures should be viewed in the context of the historic lows recorded during the second quarter of 2020. All 14 sectors underperformed the global benchmark in April.
UK Metals and Mining (75), Software Services (59), Beverages and Food (63) and Chemicals (66) were furthest ahead of global recovery trends in July. A restart of domestic manufacturing supply chains and a tentative rebound in corporate spending were the main factors driving this outperformance.
The two domestic sectors to fall behind the global recovery curve were Tourism and Recreation (45) and Technology Equipment (39).
Tourism and Recreation Businesses were challenged by a drop in international travel and restrictions on in-person interaction. Businesses in the sector were also some of the last to reopen following the easing of lockdown measures in the UK. Meanwhile, Technology Equipment manufacturing is struggling globally, in part reflecting trade tensions between the US and China.
UK output rising steadily
The proportion of UK firms reporting lower output and attributing this to Covid-19 has fallen every month since the height of lockdown early in the second quarter.
80% of construction firms, 69% of services business and 67% of manufacturers cited lower output caused by the pandemic during April, but by July the number of survey respondents reporting a decline in output due to Covid-19 had fallen to 24%, 28% and 15% respectively.
In July, 12 of the 14 sectors monitored by the Tracker reported rising output compared to June. By comparison, at the height of lockdown in April, every UK industry reported that its output was falling. At that point, Healthcare fared best (39) while Tourism and Recreation output collapsed (2), reflecting the varied sector-by-sector impact of the pandemic.
The manufacturing industry underpinned the overall increase in UK output during July.
Of the manufacturing sub-sectors analysed by Lloyds Bank, those operating in metals and mining reported the greatest rise in output during the month – with a reading of 75 – due to increased demand for manufacturing materials and sales to reopened automotive plants.
Producers of Chemicals (66), Automobiles and Auto Parts (64) and Machinery & Equipment (57) all benefited from the same demand trends.
Technology Equipment (39) makers were the only manufacturing outlier. The sub-sector reported falling output in July, with firms citing ongoing supply chain challenges created by Covid-19, rising air freight costs and US-China trade tensions as contributing factors.
The picture for the UK services industry was more nuanced. Financial Services (63) and Software Services (59) output rose during July, with the latter benefiting from increased demand for digital services during the pandemic. However, the output of sectors that rely more heavily on in-person interaction, such as Tourism and Recreation (45), continued to fall, albeit with the rate of decline slowing for the third successive month.
Employment and jobs
The proportion of firms that mentioned ‘redundancies’ when reporting on their staffing trends is now level with those that mention ‘furloughing’ staff. In July, 23% mentioned them in each case.
Notably, the proportion of survey respondents that mention ‘recalling or rehiring staff’ has increased every month since April, with 14% mentioning this in July, up from 1% in April.
Jeavon Lolay, Head of Economics and Market insight, Lloyds Bank Commercial Banking, said: “Covid-19 has brought about a period of concentrated disruption unlike anything we’ve seen before. Now, as lockdown measures around the world begin to ease, we can better explore the potential shape and pace of the UK’s recovery from the historic lows recorded last quarter.
“The Lloyds Bank UK Recovery Tracker provides a monthly analysis of how UK firms are faring in a global context – and takes a deep dive into the key factors underpinning momentum behind the economic recovery.
“Our debut edition paints an encouraging early picture for a number of domestic industries, although the major caveat is that output is rising from an extremely low base, and the risk of further local lockdowns is very real. Future editions will give a clearer direction of travel for the UK economy, as Covid-19 restrictions evolve and demand profiles change.”
Ed Thurman, Managing Director, Global Transaction Banking, Lloyds Bank Commercial Banking, added: “The impact of coronavirus on business activity is hard to understate. The UK Recovery Tracker will be valuable in analysing the shape, pace and scale of the fightback as firms seek to overcome the challenges of this pandemic.
“The very early signs of recovery measured in July are, in my mind, the result of the resilience and innovation that the UK business community is renowned for – and the ambition that we have seen from our own customers time and time again.
“Clearly, the coming months will be critical in the journey to recovery. This data will help our understanding of the challenges and opportunities facing businesses right across the country. It will also inform our recently launched Big Conversation initiative, a grassroots programme designed to help businesses and communities build back better.”
Fall in essential spend as consumers spend nearly 60% less on fuel in April
Essential spend down 6% compared to a year earlier
Spending on groceries up 18% for the second month, money given to charity up 4%
Non-essential spend down 42%, driven by a 94% fall in holiday spend
Essential spend in April fell by 6% compared to last year, as the country spent its first full month in lockdown, data from Lloyds Bank has shown.
Travel suffers as the UK stayed at home
Heeding the Government’s ‘Stay at Home’ message, the overall dip in essential spend in April was driven by a drop in money spent on travel. The amount usually put towards fuel was down 58%, and day to day commuting costs 86%, together both accounting for over half of the total fall in essential spend.
Spend on health services, such as visits to dentists and opticians, also suffered this month when compared to a year earlier, down 55%.
However, supermarkets and food stores continued to buck the trend as people prepared for longer periods at home. Spending grew 18% year on year in April, the same increase as was seen in March.
Regionally, essential spend was down 9% in London compared to last year, the highest of any region, followed by the South East, where a fall of 8% were recorded. The North East, and Northern Ireland, saw the smallest contractions in essential spend growth, each at 3%.
Money spent by Londoners commuting in the capital fell by 86% compared to a year earlier – the biggest contributor to its total fall in essential spend (6% of 9%).
Non-essential spend
Spending on non-essential items took a dramatic fall in April. A month earlier, when the national lockdown took hold after the 23rd of March, discretionary spend was down 21% when compared to last year. However, in April, this had plunged even further to 42%.
With many establishments still closed to customers, severe dips in spending on holidays (94%) and in restaurants (75%), accounted for 11% and 9% of the total fall in April.
However, money put towards charitable causes is up 4% in April compared to last year, a huge show of support to the most vulnerable in society when everyone is faced with such uncertainty.
Regionally, London has seen the biggest reduction in non-essential spend in April, falling by nearly half (47%) compared to a year ago. Scotland (43%), East of England (42%), and the South East (42%) have also seen significant falls compared to a year earlier.
Gabby Collins, Head of Payments at Lloyds Bank, said: “The heavy falls in total spending seen in April – particularly in areas such as holidays and commuting – were expected following the guidance from the UK Government to ‘Stay at Home’. However, the eventual impact on people’s finances is going to be harder to predict, with many experiencing drastic changes to their financial situation due to the pandemic.
“It may sound simple, but taking some time out to review your current finances, can help you budget for the coming weeks and months.”