VCL Vintners



Financial markets update: Q1 2022

Financial markets update: Q1 2022

UK house market breaks £8 trillion barrier

UK housing value hit a record high of ¬£8.41 trillion in 2021 ‚Äď up 10.6% on 2020. The value rose by ¬£804 billion, the biggest annual increase in value ever recorded. The South East saw the greatest increase in housing value, up ¬£155 billion.

London and the South still hold 62% of the total value of UK housing stock ‚Äď despite being home to just 44% of all housing stock.

Increased institutional investment in the private rented sector saw the tenure grow by ¬£86 billion in 2021 ‚Äď more the double the increase seen the year before.

UK agrees historic trade deal with Australia

The UK has secured a trade deal with Australia eliminating tariffs on all UK goods and boosting jobs and businesses across the country, in the first major trade deal negotiated from scratch by the Government since we left the EU. The new Free Trade Agreement means iconic British products like cars, Scotch whisky, biscuits and ceramics will be cheaper to sell into Australia, boosting UK industries that employ 3.5 million people across the country.

The Consumer Prices Index rose by 4.9% in the 12 months to January 2022

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.9% in the 12 months to January 2022, up from 4.8% in the 12 months to December 2021. The largest upward contributions to the January 2022 CPIH 12-month inflation rate came from housing and household services (1.37 percentage points) and transport (1.24 percentage points, principally from motor fuels and second-hand cars).

UK economy bounces back after Covid as service sector grows at fastest rate in months

Growth in Britain’s all-important services sector rose at its fastest pace for eight months in February despite more record price rises. The closely watched IHS Markit/CIPS services PMI survey scored 60.5 in February, up from 54.1 in January and the highest score since last June as the sector rebounded thanks to the Omicron wave easing and all restrictions being lifted. Any score above 50 shows growth in the sector.

Saver piled £100bn into easy-access accounts in 2021 but fixed rate/ISA cash balances fell

Savers are squirrelling cash into easy-access deals rather than opting for fixed-rate or Isa accounts, new research has found. Excluding cash held in current accounts and NS&I products, personal savings at the end of last year totaled £1.414trillion, according to analysis by Aldermore Bank of Bank of England data, representing a 6.5 per cent (£86billion) rise on December 2020.

Derek Sprawling, savings director at Paragon Bank said: ‚ÄėThe dominant trend that we are noting in the easy access space is that seven out of ten savers continue to receive a really low return on their money. Laura McLean, chartered financial planner from The Private Office said: ‚ÄėTimes like this really illustrate the risk that holding all your money in cash can bring. When inflation is higher than the interest you can earn, your wealth is being eroded.

Russia invades Ukraine

On 24 February 2022, Russia launched a large-scale military invasion of Ukraine, one of its neighbouring countries to the southwest, marking a steep escalation to a conflict that began in 2014. Several officials and analysts called the invasion the largest conventional military attack in Europe since World War II.

The invasion received widespread international condemnation, including new sanctions imposed on Russia, triggering a financial crisis. According to the UN High Commissioner for Refugees, a refugee crisis across Europe ammounted with more than one million Ukrainians fleeing the country during the first week of the invasion. Global protests took place, while protests in Russia were met with mass arrests.Various states, including previous Russian allies, provided foreign humanitarian and military aid to Ukraine. During the crisis, Russian president Vladimir Putin described the post-1997 enlargement of NATO as a threat to his country’s security, a claim which NATO rejected, and he demanded Ukraine permanently barred from joining NATO.

Bank of England raises interest rates again to curb inflation

The Bank of England has responded to the likelihood that the war in Ukraine will push inflation to around 10% this year by raising interest rates back to the pre-pandemic level of 0.75%. The Bank said Russia‚Äôs invasion had¬†forced it to rethink its forecast for the peak¬†of inflation this year and it was now expected¬†to be ‚Äúseveral percentage points‚ÄĚ higher than¬†the 7.25% it had previously forecast. The Bank¬†said growth in January had been stronger than¬†expected but consumer confidence was being¬†hit by falling living standards. ‚ÄúThat impact¬†on real aggregate income is now likely to be¬†materially larger than implied in the February¬†report, consistent with a weaker outlook for¬†growth and employment, all else equal‚ÄĚ. The¬†Bank thinks the annual inflation rate will rise¬†to around 8% in the second quarter of 2022,¬†and perhaps even higher later this year.

$1 trillion bid to collapse Russia’s economy

The West has responded to Russia‚Äôs invasion¬†of Ukraine with round after round of punishing¬†sanctions. The latest salvo is designed to spark¬†a banking crisis, overwhelm Moscow‚Äôs financial¬†defenses and tip the Russian economy¬†into a deep recession. Western officials have¬†described their campaign as an economic war¬†meant to punish President Vladimir Putin and¬†turn the country he leads into an international¬†pariah ‚ÄĒ even if it takes years for sanctions to¬†destroy the defenses of Russia‚Äôs ‚Äúfortress economy.‚Ä̬†

US Stocks extend winning streak following Fed rate


U.S. stocks rallied for a third consecutive day as investors warmed up to the Federal Reserve’s long-anticipated move to hike short-term interest rates for the first time in three years. Oil prices jumped back up, with investors turning their attention back to the war in Ukraine and its potential impacts on the global economy. The U.S. central bank revealed on 16th March that it will lift its benchmark Federal Funds Rate by 0.25%, to a target range of 0.25% to 0.50%. The move was in line with what market participants had anticipated.

Get Your Whisky Investment Guide

Get Your Whisky Investment Guide

We've sent the PDF guide to your email address