Housing hurts
First fall
The latest data from lender Nationwide on the UK housing market suggests it has suffered its first price reversal in 17 months with the building society’s monthly survey showing a 0.2 per cent fall in UK house prices in September, bringing the annual growth figure back to 9.4 per cent. The engine room, London, has seen a slowdown in price appreciation between the second and third quarters, from 25.8 per cent to 21 per cent although average prices in the capital are now almost one third higher than their 2007 peak. Various reasons are given for the slowdown from a lack of housing stock to tighter mortgage lending criteria and tougher comparatives with this time last year.
No king coal
Solar to win
The International Energy Agency has called time on ‘King’ coal’s dominance of global electricity production. True, it may take another 30-plus years for coal’s position to be usurped but the IEA this week predicted that solar power will become the pre-eminent source of electricity production by the middle of the century. Coal currently provides 36 per cent of the world’s electricity, and a much higher share in developing economies, but solar is growing fast – the IEA reckons more solar capacity has been added since 2010 than in the previous 40 years. By 2050 solar photovoltaic systems could account for 16 per cent of the world’s electricity with solar thermal adding a further 11 per cent.
Apple skewered
Brussels speaks up
The European Commission has published details of arrangements between Apple and the Irish authorities which ran from 1991 for 15 years which constituted potentially illegal arrangements which could amount to state support for the company which may have to be repaid. The Commission detailed discussions between Apple and Irish authorities in 1990 which showed negotiations over tax margins which were effectively ‘reverse engineered’ and linked to job creation, a factor which should hold no relevance in terms of levels of taxation. The Commission could compel Ireland to recoup any taxes it believes should have been paid although the Irish government has reiterated that it feels there was no undue favour given to Apple.
UK ok?
Data better
The UK economy appears to be in decent health, and a major revision of economic data from recent years has suggested that the recession was not as deep as originally thought and the recovery since has been more impressive than previous statistics suggested. Economic growth in the second quarter of this year has been revised to 0.9 per cent and the economy is now 2.7 per cent ahead of where it was at its previous peak. The drop in output during the recession in 2008 has been revised from a 7.2 per cent fall to a 6 per cent reversal with the economy having grown 9.3 per cent since its nadir. But on a pessimistic note, figures this week suggested UK manufacturing activity slowed to a 17 month low in September.
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Spend, spend, spend
IMF call
The International Monetary Fund has called on the world’s developed nations to up their spending on infrastructure as concerns grow over slowing global growth. Citing a decline in infrastructure spending over the past 30 years, the IMF urged governments to consider projects which could add to national output saying that, done properly, ‘public infrastructure investment could pay for itself’. The current low cost of borrowing offers an opportunity for governments to use ‘one of the few remaning policy levers available to support growth’ according to the IMF.
Glum grocers
Sainsbury struggles
After the debacle of Tesco’s overstated profits, for which it will now be formally investigated by the Financial Conduct Authority, this week rival Sainsbury issued disappointing trading figures. The UK’s number three grocer, thought to be the steadiest of the quoted supermarkets, bemoaned a change in shopping habits which it says has seen a significant shift in favour of smaller basket sizes bought through its convenience stores. Chief executive Mike Coupe said sales are likely to continue falling for the rest of the year in what are the ‘most challenging’ market conditions in his 30 years in the business with minimal food price inflation and the rise of discounters key challenges.
