We started this week with the news that the Bank of England has kept UK interest rates on hold at a record low of 0.5% for the 16th consecutive month. The decision had been expected but calls have been growing for an increase in rates to curb inflation. Separately, a leading think tank warned that the UK recovery faced ‘headwinds’ in the wake of last month’s budget. The National Institute of Economic and Social Research (Niesr) estimated that the economy grew by 0.7% in the three months to the end of June, marking a slowdown from the 0.9% expansion seen in the three months to May. Official gross domestic product (GDP) figures for the second quarter will be released on 23rd July. The British Chambers of Commerce said it ‘fully supported’ the Bank’s decision, while the manufacturer’s organisation, the EEF, said the decision was expected and ‘likely to be maintained in the short term’. ‘However, the planned VAT rise will place additional pressure on already elevated inflation expectations and next month’s inflation report will need to consider the risks of relying on spare capacity in the economy to bring down inflation and expectations’ said Lee Hopley, the EEF’s chief economist.

UK house prices have fallen slightly in the early summer compared with the start of the year according to the Halifax’s recent report. Property values dropped by 0.6% in June compared with May, following a fall the previous month. This means prices in the second three months of the year were 0.1% lower than the first quarter. More properties coming on to the market and less activity from house buyers caused the fall, the lender said. The average home in the UK is now valued at £166,203 according to Halifax figures. In contrast the Nationwide Building Society has reported month on month house price rises in May and June of 0.5% and 0.1% respectively. The Nationwide also records prices rising year on year, although it too suggests this has started to slow down.

City grandees have been working on plans to snap up state-owned banking assets such as Northern Rock to create a new player on the high street. Lord Levene, chairman of the Lloyd’s of London insurance market and Sir David Walker – who headed a review into bank boardroom practices – are backing the launch of a new venture that would look to bid for taxpayer- backed assets. The corporate heavyweights are planning to list an acquisition vehicle on the stock market and have already got investment banks and advisers on board, sources close to the venture confirmed. UK Financial Investments, which overseas Government-owned banking assets and the city regulator have already been briefed on the proposals, with details expected to be announced within days.

The number of British property millionaires has soared nearly five-fold during the past decade despite the house price crash, research has indicated. There are currently 131,996 homes worth more than £1 million in Great Britain, up from 26,776 in 2000, according to Santander. The housing market correction during 2008 and the early part of 2009 led to 43,000 homes losing their million pound status – a 29% reduction. The top end of the property market has recovered well, with house price rises pushing the value of 29,000 homes back over seven figures, leaving the number of property millionaires close to its 2008 peak of 147,000. Unsurprisingly, 78% of homes worth more than £1,000,000 are in Greater London, with 29% of the total in the SW postcode area. The SE postcode has seen the biggest jump in the number of homes worth seven figures, with properties with a million pound price tag soaring 23-fold during the past 10 years. The top four locations for million pound properties are all in London, with Kingston upon Thames, Guildford and Twickenham the top three towns outside of the capital.

And finally, recent research suggests that parents spend an average of £330 keeping their children entertained during the school holidays. 64% of families who took part in the research are worried about how much summer holiday activity will cost them, while 21% think they will struggle to find the extra cash. Around 12% of families are hoping to save money by not taking a holiday abroad this year, while 27% of parents said they would go without nights out with friends to cut costs. 53% of parents plan to take their children on a day out to a theme park, while 45% will visit their local swimming pool and 31% plan to go bowling. Eight out of ten parents said they would cut down on the cost of day trips using discount vouchers.

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