UK races ahead as confidence returns

According to the CBI, the economy is growing at its fastest pace in more than a decade amid rising consumer and business confidence. It said the retail, manufacturing and service sectors registered record growth in May in a sign that the recovery is broadening. Katja Hall, CBI deputy director general, said the strong performance of the UK economy was down to rising confidence, as well as "better credit conditions at home and 'abroad'". However, she said sluggish eurozone growth and rising tensions in Ukraine still posed risks. The CBI's survey of 726 businesses showed 35% of respondents believed activity had increased in the three months to May, up from 25% in April. This was the highest reading since records began in 2003. Meanwhile, the BCC has upgraded its UK growth forecast to 3.1% for 2014, from 2.8%. It now expects the BoE to start raising rates in the first quarter of next year, two quarters earlier than previously forecast.

Lord Sugar sues lawyers over property deal

Lord Alan Sugar is suing his solicitors, Kinglsey Napley, claiming that they botched a property deal. Amsprop has filed a claim for £1.3m at the High Court, alleging that Lord Sugar was forced to pay out nearly £1m to luxury jeweller Longmire after his lawyers mishandled efforts to take possession of the Bond Street property as part of a planned redevelopment project.

Money laundering funding Right to Buy applications

The Daily Star says that hundreds of benefits claimants are able to buy council houses at reduced prices as a result of using the government's Right to Buy Scheme, but officials fear many are raising cash by laundering money. Fraud officer Andrew Hyatt, who works for the Royal Borough of Kensington and Chelsea, says 33 of 39 Right to Buy applications in his borough collapsed after an official probe. "In terms of money laundering, it is imperative that we know where the finances are coming from to purchase the property to ensure it is not from illegal sources", he stated.

Lenders set to copy Lloyds

Experts have predicted that mortgage lenders will soon follow Lloyds Banking Group and introduce tighter borrowing requirements. On Tuesday, Lloyds decided to cap mortgages over £500,000 at four times income in order to cool the housing market in London. The bank said the policy would apply across the whole of the UK, but was targeted at the capital. Other lenders have said they are keeping vigilant as regulators fret over the booming housing market. A spokesman for Santander said: “We constantly review affordability and adjust our criteria based on a number of factors - one of which is the macro housing market.” A Barclays spokesman expressed a similar theme.

BoE on top of house prices

Anne Ashworth comments that Mark Carney’s announcement that he is not putting up interest rates shows that he is more observant about the market than some of his critics who have called for an interest rate rise. She says that the Mortgage Market Review is already in place to prevent borrowers over stretching themselves, and that the property price revival has not yet spread nationwide. She also comments on news from Savills that interest in prime London is cooling down. However, she notes that there is still a huge interest in the UK's real estate star attraction.

Unemployment falls to five-year low

The ONS has revealed that the number of people out of work in the UK fell by 133,000 to 2.2m, or 6.8% of the population, in the three months to March. Average earnings grew 1.7% year-on-year, meaning that with inflation at 1.6% in March as measured by CPI, wages outpaced inflation for the first time since 2010. The growth rate in wages - which includes bonuses - was unchanged from the previous month. The ONS said the number of self-employed people in the UK has risen by 375,000 since March 2013 to nearly 4.6m, outstripping the 351,000-strong increase in full- and part-time employees in the private and public sectors. Employment minister Esther McVey said: “As the recovery takes hold, more people are able to get a job or set up their own business and become the employers of tomorrow.” The Daily Telegraph, Business, Page: 1, 4 The Sun, Page: 12

Eurozone deflation a danger to UK

A group of economists has warned that a sustained period of deflation in the Eurozone could derail Britain's recovery. Almost half of the economists surveyed by the Centre for Macroeconomics, in a joint study between the BoE and the NIESR, said that there was a significant risk of a sustained period of deflation across the Eurozone in the next two years. Nearly two thirds of respondents to the survey think that it would pose a "significant threat" to the UK economy, which is expected to grow by about 3% this year.

More incentives needed to encourage brownfield developments

A new report from Civitas suggests that the UK has enough brownfield space to build 2.5m houses. Report author Peter Haslehurst, chairman of manufacturing group Luxfer Holdings, argues there are not enough incentives for developers to build on brownfield sites where costs are higher. He writes: "If the costs of clearing up brownfield sites were genuinely met by central government, then developers would be eager to make profits on them. Not only would the subsequent corporation tax flow to the Treasury, but many brownfield eyesores in towns and cities would disappear; the pressure for new roads, schools, public transport, shops, hospitals and other infrastructure to support new housing in greenfield areas would be eased; much of our countryside would be preserved; and, crucially, we would be investing in the future of our town and city centres and their communities." The Civitas report says that while there is tax relief available to meet the cost of clearing up brownfield land, the rules and regulations make it "almost impossible to obtain". The Daily Telegraph, Page: 8 Yorkshire Post, Page: 4

Government told its time to exit Help to Buy

Economists who had previously supported Help to Buy subsidies have now warned George Osborne that the scheme is undermining affordability by pushing up house prices, reports the FT. Kate Barker, a former MPC member who sits on the board of Taylor Wimpey says she has changed her views on the scheme having previously thought it was a helpful intervention, but now believes the Government should start looking at when it should exit the scheme. Michael Saunders, from Citi, said the scheme's job was done. "With the economy growing strongly and unemployment falling rapidly, we believe that such stimulus is no longer needed," he said. Meanwhile, Danny Gabay of Fathom Consulting, says the policy gave implicit government support to high and rising house prices and encouraging a "buy now before it's too late attitude" that has pushed prices nationwide far above sustainable levels. The FT goes on to consider what the Government's Help to Buy exit options are. Separately, the paper looks at how Australia and Canada have dealt with their mortgage guarantee schemes. Australia privatised the operation entirely, while Canada set up a specific government body to deal with it, while allowing some private operators in. Financial Times, Page: 4 Financial Times, Page: 4

Bank of England poised to step in?

HSBC believes that the Bank of England is poised to intervene in the housing market in order to prevent the collapse of a growing housing bubble. Finance director Iain Mackay, said: "What we are all waiting for or perhaps wondering about is, as London or the south-east continues to move ahead, will the financial policy committee or the Bank of England reflect on how they wish to put some controls on lending into that sector?” HSBC has increased its share of the UK mortgage market since the financial crisis, but the bank also stressed that its loans were low risk and that the average loan to value of its mortgages was 47.3%. Meanwhile, the Telegraph’s James Kirkup says that the current state of the housing market could actually be attributed to the BoE keeping rates so low for so long. “That generosity cannot continue. Sooner or later, rates are going up”, he comments.

Miliband would raise tax on “ghost homes”

Ed Miliband has said that owners of empty "ghost" homes, who buy them as an investment and help to drive up house prices, would be hit by bigger tax penalties under a Labour Government. In an interview with the Evening Standard, Mr Miliband said he would target London's 60,000 "ghost homes" by letting councils charge double their council tax on properties left empty for more than a year. Since April last year councils have had the power to impose a 50% surcharge on properties that have been unoccupied for two years, but Labour says that while half of all 15 of London's Labour-run boroughs have introduced the empty homes premium, Conservative and Lib Dem-run councils in London had failed to use the powers at all. Mr Miliband has also pledged to kickstart house building in the UK and says that Labour would construct 300,000 new homes in the next parliament. "When I think about the prospect of becoming prime minister next year, housing is one of the absolute top priorities because it is a crisis," he stated.

Land Registry could be privatised

Leaked minutes from a meeting of Land Registry board members suggest that the body could be heading towards privatisation. The Guardian says the documents in question indicate senior civil servants are deciding between a joint venture between the government and a private company, or letting a private company run it as a “GovCo.” It is thought the government could raise £1.225bn from a deal with a joint venture company, or £1.1bn from a GovCo agreement. Former Land Registry executives and unions have both criticised the proposal. John Manthorpe, the former chief land registrar, said: “It is clear that the management board, which has negligible experience and understanding of land registration and its important role, are solely fixed on the privatisation of this important state asset without any regard to the practical, financial or legal consequences for the citizen and business." Michael Fallon MP has said that options would be put out for public consultation before any decision is made, but Land Registry staff are expected to announce a two-day strike in response to the potential privatisation. The Guardian, Page: 2, 22