The GBP/EUR exchange rate was lower on Tuesday as retail sales were disappointed by consumer confidence. The Chancellor hinted that tax cuts could ease the burden. In France, Emmanuel Macron threw cold water on Ukraine’s hopes of joining the EU soon.
GBP against EUR is trading at 1.1670 and will support lower levels.
UK homeowners warned to prepare for 3.5% interest rates
Felicity J Lord’s partner James Baring has warned that interest rates will “continue to rise” and could reach 3.5% before the end of the year. He suggested that sellers could benefit from the rise as buyers will feel the need to “secure a decent fixed rate”, he claimed, but warned that there will be a point where rates “will bite into people’s disposable income”.
Mr Baring said: “I believe, and this is supported by the research I have done, that interest rates will continue to rise throughout the year. Maybe 2% or even 3.5%.
“I mean that’s what was prophesied by economists,” he added.
On Northern Ireland, the DUP said the Northern Ireland protocol must be scrapped before an executive can be formed.
DUP leader Sir Jeffrey Donaldson said the protocol’s “long shadow” is making politics worse in the region. Speaking at a press conference with his new assembly team at Stormont, Sir Jeffrey said: ‘We want to see this place up and running as soon as possible. We need decisive action from the government to resolve the difficulties created by the protocol,” he said.
“Whether it’s driving up the cost of living, whether it’s the harm it’s doing to businesses and our economy, or even undermining political stability in Northern Ireland. But the cast shadow of protocol casts its mark on this place,” he added.
For the month of April, UK retail sales were down 0.3% year on year, compared to a 51.1% increase in April 2021 when ‘non-essential’ retail reopened.
Macron refutes the prospect of Ukraine joining the EU soon
French President Emmanuel Macron used a much-anticipated speech to the European Parliament on Monday to talk about his vision for the future of the European Union, calling for a “stronger and more sovereign” Europe.
However, it dashed Ukraine’s hopes of soon joining the bloc of 27 EU countries. As he delivered the speech, his Russian counterpart marked the country’s victory over Nazi Germany, but Macron said Europe would “do everything” to ensure that “Russia can never win”.
The European and German economies will see the release of ZEW Economic Sentiment figures this week ahead of the Queen’s Speech, which will be delivered by Prince Charles. During the speech, 38 bills will be announced that are expected to become law within the next year. These include the Online Safety Bill, a bill protecting free speech in universities and legislation to boost the economy through post-Brexit powers.