Money latest: Inflation falling doesn't mean we should cut interest rates, Bank of England economist says (2024)

Recent falls in inflation may have spurred talk of interest rate cuts, but the Bank of England's deputy governor has said this is not necessarily enough reason to slash rates.

Speaking at the University of Chicago, Huw Pill said it would be better to cut rates too late rather than too early.

He said little had changed with the inflation and interest rate situation since late March, and that there were "greater risks" associated with going too early.

Despite optimism among some, Mr Pill said there is still a "reasonable way to go" before inflation has stabilised to the level needed for the UK to meet its 2% inflation target in a sustainable way.

"This assessment further supports my relatively cautious approach to starting to reduce Bank rate," he said.

Mr Pill had voted to keep the Bank rate unchanged at 5.25% in the most recent meetings of the Bank's Monetary Policy Committee in March.

Inflation currently stands at 3.2% - the lowest rate since September 2021.

This is still above the Bank's target of 2%.

The next Bank rate decision is next week - but markets don't expect a cut then. June is seen as more likely - though Mr Pill's comments cast some doubt on that.

Petrol prices are exceeding 150p per litre for the first time since last November, according to new data.

Figures from the website Fuel Prices Online shows typical pump prices reached 150.1p per litre on Monday.

The average price of a litre of diesel is also at the highest level since November 2023, at 158.3p.

Experts say rising fuel prices in recent weeks can be attributed to an increase in the cost of oil and a weakening of the pound versus the US dollar.

AA fuel price spokesman Luke Bosdet said while inflation was heading downwards, petrol's rebound to 150p a litre left a "big boulder in the road".

He said: "Five days of falling wholesale costs, with the value of oil coming off the boil, offers hope that pump prices may not get much worse in the short-term.

"However, road fuel priced above 150p a litre grabs the attention of drivers and will lead some to re-tighten their belts on other spending."

The annual 100 fastest growing UK businesses list has been published, with the country's largest electric vehicle fast charging network in top spot.

Environmentally conscious companies dominate the ORESA Growth Index 2024 - with three of the top 10 companies participating in the clean and renewable energy market.

There was also success for the retail sector, with 24 businesses in the list, while the construction and logistics sectors have also seen signs of recovery since the COVID-19 pandemic.

Topping this year's list is Basingstoke-based green energy business InstaVolt, which had an annual growth rate of 362.55%.

The company is the largest owner-operator of rapid public chargers in the UK, with 1,500 charging points.

In 2022-23, the company's third financial year, its revenues hit £18.6m.

Here's the top 10...

Regional success

While London and the South East dominate the list with 59 companies, Northern Ireland has four - up from zero in the past two years.

Companies from Yorkshire and Humber and the North East have increased from six to 10 and from zero to one respectively, while the East Midlands has gone down to six from nine in 2023.

Inheritance tax receipts surged to a record high last year due to the government freezing the threshold at which you start to pay.

Official figures show the government received £7.5bn in inheritance tax (IHT) receipts in the financial year to the end of March - an increase of £400m on the same period the previous year.

(More widely, total tax receipts were £827.7bn - £39.1bn higher than the same period last year - due in part to inflation and other tax threshold freezes.)

Inheritance tax is a tax on the estate of someone who has died - including all property, possessions and money - and is only charged above the tax-free threshold of £325,000.

This threshold has been frozen by the chancellor until 2028.

So, with inflation boosting the value of people's estates, more people are being dragged above the threshold.

The standard inheritance tax rate is 40%.

Jonathan Halberda, specialist financial adviser at Wesleyan Financial Services, says more families "can expect to be caught in its net".

So what can be done to ensure families can keep their wealth?

Use the inheritance tax spouse exemption

Mr Halberda says if you leave your entire estate to your spouse or civil partner, there will be no inheritance tax to pay - even if its value exceeds £325,000.

Make a will

Doing this can mean you can distribute assets to take advantage of tax-free allowances.

Use trusts

"Assets in trusts are no longer in your name and therefore not considered when valuing your estate for inheritance tax," Mr Halberda says.

Gift giving

Gifting money or assets to loved ones before you die can avoid inheritance tax, but there are limits on how much you can give away and who to.

Gifts to charity

Leaving gifts to registered UK charities in your will is exempt from inheritance tax.

By Daniel Binns, business reporter

The FTSE 100 has hit another all-time high this morning following its record performance yesterday.

The index, of the 100 most valuable companies on the London Stock Exchange, soared to 8,071 points shortly after the opening. It marks a new "intraday" (during the day) record.

Later in the morning, the FTSE 100 eased back to 8,060points,but was still up nearly 0.5% on yesterday. The score is based on a calculation of the total value of the shares on the index.

It comes after the index reported a record-high closing figure of 8,023 yesterday following a fall in the value of the pound. A lower pound makes it cheaper for foreign investors to invest in FTSE companies.

One of the reasons the pound is falling against the dollar is interest rates are expected to stay higher for longer in the US - meaning investors will get better returns on their US investments.

The strong performance this morning raises the prospect we could see another record close at the end of today's trading.

Danni Hewson, from investment platform AJ Bell, said the figures were "psychologically important for investors and for London markets as a whole" as the capital has been lagging behind its rivals, particularly the US, in recent years.

Among the firms doing very well this morning is JD Sports.The retailer's shares are up more than 7% in early trading following reports that it is set to buy US rival Hibbett for $1.08bn (£0.87bn).

On the currency markets, £1 will buy you $1.23 US or €1.15, similar to yesterday's five-month lows for the pound.

The price of a barrel of Brent crude oil is up almost 1% at nearly $88 (£71) this morning.

Aldi has recalled one of its products and a police investigation has been launched over fears it "may have been tampered with".

The supermarket has pulled its Village Bakery 8 Tortilla Wraps White, citing safety fears over the "possible presence of metal".

The recall affects items with best before dates up to and including 29 April 2024, and with a pack size of 8x62g.

Anyone who has bought the item is being urged to bring it back to their nearest Aldi.

Notices have been posted at the stores telling customers not to eat the wraps.

Aldi said its products go through "rigorous safety and quality checks" and the item was being recalled as a "precautionary measure".

"As there is an active police investigation we are not able to comment any further on this matter at this time," it said.

The Food Standards Agency (FSA) also said Signature Flatbreads UK, which makes the wraps, is "working with the relevant food and police agencies to investigate the cause of the contamination".

No other items from the company are affected, it said.

By Daniel Binns, business reporter

Doubts have been raised over the government's ability to unveil tax cuts ahead of the next general election after official figures revealed borrowing was higher than expected in the past year.

The Treasury borrowed £120.7bn in the financial year ending March 2024 - down £7.6bn from the year before, according to provisional estimates from the Office for National Statistics (ONS).

However, the figure is £6.6bn more than forecast by the Office for Budget Responsibility (OBR) only a month ago.

Overall, government debt was around 98.3% of the UK's annual gross domestic product (GDP) in March - up 2.6 percentage points from the previous year and at levels not seen since the early 1960s.

Ruth Gregory, deputy chief UK economist from Capital Economics, said: "If the chancellor was hoping March's figures would provide more scope for tax cuts at a fiscal event later this year, he will have been disappointed."

Read the full story here...

Basically, there might come a time when you can't make decisions for yourself - and in that event, having a lasting power of attorney (LPA) in place would allow someone who you trust to make decisions for you.

It's probably more important than a will in some cases because it affects decisions made about you while you're still living and breathing.

Here's what you need to know about LPAs...

What is a power of attorney?

It's a court-issued document that enables you to appoint someone (or a group of people) to make decisions on your behalf if you don't have the mental capacity to do so.

You're essentially giving them authority to manage your finances or make health and welfare decisions.

There are two types of LPA:

• Property and financial affairs
• Health and welfare

How do you apply for one?

There are two ways: do it yourself through the government website or have a solicitor draw one up.

To set one up you must:

• Be over 18;
• Have full mental capacity;
• Pay a fee to register it, unless you are exempt.

How many people can you appoint?

There is no limit but solicitors generally advise no more than four.

Your attorney needs to be 18 or over and they could be a partner, relative, friend or even aprofessional, for example a solicitor.

If you do decide to appoint more than one, you need to decide how you want them to act - either "jointly", which means all the attorneys have to agree, or "severally", where they act on their own.

Why are LPAs important and what happens if you don't have one?

If you don't have an LPA in place and you lose mental capacity, your loved ones must apply to the court of protection for a deputyship order - this can take anywhere between eight and 12 months.

"Power of attorneys are as important, if not more important, than wills because your choice of attorney can influence you while you are alive, whereas a will is dealing with things after you've died," Caroline Foulger, partner and head of private client at TWN Solicitors, told the Money blog.

"If you lose capacity for whatever reason you're at a crisis point and decisions have to start being made potentially about selling your house, how to fund care etc.

"If you don't have an LPA in place and you have to go down the route of being under a court protection there is a timeframe where nobody can help you and things don't get done."

Penny Wright, a partner in the wills, probate and estate planning team at Gardener Leader, said many assumed that a spouse or a next of kin automatically had such powers but that was not the case.

"That's a common misconception," she said.

"To access your funds, to pay your bills, to arrange your care and make medical decisions on your behalf - it's not automatic."

'Treat it like house insurance'

Joanna Grewer, partner at Roythornes Solicitors, said a power of attorney was "like an insurance against mental incapacity".

She said: "We insure our houses so why shouldn't we insure the ability for someone to make decisions for us when we are not able to make them for ourselves?"

What are the costs?

If you were to make your LPAs using the government website you pay an £82 registration fee per LPA.

The price will be more if you chose to instruct a solicitor.

Ms Wright said a typical charge for LPAs at her firm would be £650 + VAT for one type or £950 + VAT for both types (health and welfare as well as property and financial).

Read other entries in our Basically... series:

Turkey has become the latest country to allow Britons who can work remotely to apply for a "digital nomad visa".

People who earn $36,000 (just over £29,000) a year and are between the ages of 21 and 55 will be able to apply for the visa.

Italy opened applications for a similar scheme in the last few weeks.

Unlike the year-long visas being offered by Italy, it is unknown how long the"digital nomad visa" will last for in Turkey.

According to the Go Turkiye website, applicants are required to provide the following:

• Atravel document/passport valid for at least six months as from the date of arrival in Turkey;
• Diploma or certification of degree document showing that you are a university graduate;
  
• Document showing the applicant works in the Digital Nomad field - jobs that use technology and communication tools to complete work remotely;
  
• Biometric photo.