BUSINESS LIVE: Shop price inflation flat; Aldi UK and Lidl GB festive sales soar

One of Britain’s biggest lenders has kicked off 2024 with a wave of mortgage rate cuts.

Halifax has slashed its remortgage rates across its two-year, five-year and 10 year fixed rate deals by up to 0.83 percentage points.

The countdown is on for millions of Britons who need to file their tax returns ahead of the 31 January deadline.

More people could be caught out this year, as frozen tax thresholds and new rules on selling online mean they might not even realise they have to file a self-assessment return.

Bitcoin broke above $45,000 (around £35,500) for the first time since April 2022 on Tuesday, amid undeterred optimism over potential US regulatory changes.

The world’s biggest cryptocurrency reached a 21-month peak of $45,532, having gained 156 per cent in 2023 in its strongest year since 2020, as investors continue to hope for the approval of exchange-traded spot bitcoin funds in the US.

The full list of nearly 200 bank branches which are set to close this year was revealed today as lenders continue withdrawing from the High Street.

Lenders have already announced at least 189 branches will shut in 2024 – and the latest exodus follows the 645 that closed last year, consumer group Which? said.

Aldi UK joined rival discounter Lidl in revealing a record Christmas trading period on Tuesday, with the German-owned firm seeing its busiest ever day on 22 December.

The supermarket chain saw sales rise by 8 per cent in the four weeks to 24 December to top £1.5billion for the first time.

Chase UK could start becoming profitable as soon as next year, as the bank is striving to be a “major player” in Britain as people hunt for better returns on their savings.

The digital bank, owned by US giant JP Morgan, has amassed more than two million customers since launching in Britain in 2021 and manages around £15billion in deposits.

Managing director Shaun Port told the PA news agency that the UK spin-off is growing quickly and could begin to be profitable from 2025.

It comes after JP Morgan’s president Daniel Pinto revealed in November that he expects the UK consumer bank to break even in the next 12 to 18 months, at least two years earlier than previously expected.

JP Morgan had warned that losses from the UK digital bank would be about $450million (£352million) in 2022, and estimated a similar amount for the following years until it begins to generate an income.

Mr Port told PA: “We’ve been building the bank rapidly, so we believe that we can bring the UK business to profitability in 2025.

“We want to be a major player in the UK banking scene, and to do that, we obviously need to make banking with Chase compelling.”

(PA) – The UK’s manufacturing downturn deepened further at the end of the year and business confidence sank to a 12 month-low, according to a new survey.

The S&P Global/CIPS UK manufacturing PMI survey fell from 47.2 in November to 46.2 in December.

The score remains below the 50.0 threshold, which indicates that the sector is contracting.

It marks the 17th month in a row that activity has declined as factories grapple with a prolonged dip in demand at home and abroad.

Manufacturing firms, which includes carmakers, engineers and chemicals firms, said they produced less last month as a result of fewer orders from clients.

Less demand from overseas companies and firms reducing their stockpiles also resulted in less work during December, the survey found.

Poor weather conditions were also blamed for a decline in activity.

Rob Dobson, director at S&P Global Market Intelligence, said: “UK manufacturing output contracted at an increased rate at the end of 2023.

“The demand backdrop also remains frosty, with new orders sinking further as conditions remain tough in both the domestic market and in key export markets, notably the EU (European Union).”

Brits have been warned that selling their pre-loved items online could soon come with a huge tax bill if they don’t declare their income to HMRC.

It comes as HM Revenue & Customs has brought in fresh rules this New Year, in a bid to crack down on tax evasion through side-hustles.

Food inflation increased at the slowest pace for 18 months in December as retailers dropped their prices in the lead-up to Christmas.

The latest British Retail Consortium-NielsenIQ shop price index report showed UK food prices jumped by 6.7 per cent on an annualised basis last month, down from 7.8 per cent in November and marking the lowest reading since June 2022.

(PA) – Next-generation banks will use generative artificial intelligence (AI) to influence people’s financial decisions, spot potentially vulnerable customers, train call centre staff and even run social media accounts.

The complex technology could “touch almost everything that goes on at a bank”, according to Tom Merry, the head of banking strategy at Accenture.

The UK banking industry has been using AI for years, such as through predictive models which detect fraud and analyse risks.

But more banks are starting to test the use of generative AI, where complex models can create something completely new based on a vast set of data.

It has been cutting through into the mainstream with chatbots like ChatGPT and Google’s Bard.

The tech is “exciting but scary” for bank bosses who are “wary” of its risks, said Mr Merry, who works with lenders on their transformation strategies.

But he said he has had more requests from banking firms who are keen to experiment with the tech.

This could mean using people’s personal spending and banking data to design a bespoke product for a customer, or “nudging” through online banking toward making small decisions to improve their financial strength.

A Government target for electric car chargers near motorways has been missed, new analysis shows.

The Department for Transport (DfT) set an ambition for there to be at least six rapid or ultra-rapid chargers at every motorway service area in England by the end of 2023.

Marks and Spencer has teamed up with a science-based nutrition company to sell a milk drink that helps people improve their diet.

M&S Food and Zoe are hoping to cash in on increasing demand for products that support digestion and rising awareness over the gut’s role in remaining healthy.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, comments on the markets at the start of a new year:

’The FTSE 100 has begun the first session of the new year with small spring in its step, thanks to encouraging data on China’s economy and gains in oil prices amid fresh geo-political concerns.

Worries about the conflict in the Middle East becoming more complex have bubbled up again, amid heightened tensions in the Red Sea. The US-led maritime force destroyed boats whose crews appeared to be attempting to board a container ship.

This is increasing concerns about potential supply problems in the region rearing up again, putting upwards pressure on Brent Crude, which is hovering above $78.

The gains have put energy giants, Shell and BP on the front foot, heading higher in early trade. However, uncertainties about demand for oil going forward, is keeping a lid on much higher prices for now.

The FTSE 100 has kicked off 2024 in the green, with energy shares and retailers leading gains, while investors look ahead to economic data this week and its potential impact on the Bank of England’s interest rate trajectory.

Energy shares are up 0.1 per cent after oil prices jumped 1 per cent on potential Middle East supply disruptions and expectations of an economic stimulus from world’s top crude importer China.

Marks And Spencer has added 1.7 per cent after Exane BNP Paribas raised the retailer’s stock rating to outperform from neutral.

HSBC shares are off 0.4 per cent after its subsidiary HSBC Continental Europe completed the sale of its retail banking business in France to Credit Commercial de France.

Manufacturing and services activity and housing prices data will be on investors’ radar through the week to assess the strength of the British economy, which might be in a recession.

Richard Hunter, head of markets at Interactive Investor:

‘In the UK, the tepid performance which dogged returns for much of the year also saw some improvement as the possibility of interest rate cuts in 2024 eased some of the pressure which had been forced on investors.

‘The more domestically focused FTSE250 enjoyed a strong finish, ending 2023 ahead by 4.4% despite having been below the waterline for most of the year.

‘The more recent revelation that the UK could already be in recession following a contraction in growth for the third quarter, coupled with a sharp drop in inflation in November add to the possibility that rate cuts will need to be in sharp focus at the Bank of England as the year progresses.

‘The premier index also saw the benefit of December momentum following through, opening the year slightly higher and adding to the gain of 3.8% achieved throughout 2023. The FTSE100 remains some way off the record highs of over 8000 posted in February, although the upcoming reporting season could provide some further relief.

‘Over the next couple of weeks attention will turn towards retailers and supermarkets as they provide updates on trading over the festive period, and indeed these stocks have helped propel the index in early trade with prices marked up in anticipation of a successful Christmas season.’

More bank branches are set to close this year as lenders continue withdrawing from the High Street.

Lenders have already announced at least 189 branches will shut in 2024, figures show.

Investors face another turbulent year ahead.

Politics will dominate 2024 to a remarkable degree, especially while the tragic conflicts in Ukraine and Gaza remain unresolved.

The boss of Microsoft has performed a dramatic U-turn after previously claiming the UK was ‘bad for business’.

Brad Smith launched a scathing attack in April last year after the tech giant was blocked from buying Call of Duty maker Activision for £60billion by British regulators.

At the time, the Competition and Markets Authority (CMA) warned the deal would lead to Microsoft having a ‘stranglehold’ over the fast-growing cloud gaming industry.

The British arm of Aldi reported an 8 per cent rise in sales in the four weeks to 24 December to top £1.5billion of revenue for the period for the first time.

Meanwhile its smaller rival Lidl GB posted an even better 12 per cent increase in the same period.

Both chains said they recorded their busiest ever day of trading on Friday 22 December, with more than 2.5 million customers coming through the doors of Aldi on the day.

Annual UK shop price inflation was flat month-on-month at 4.3 per cent in December, but shoppers were able to cheer an easing of the rate of food price increases.

While non-food product inflation jumped from 2.5 to 3.1 per cent in December, marking the end of Black Friday discounts, food price inflation fell from 7.7 to 6.7 per cent for the month.

Chief Executive of the British Retail Consortium, which compiles the data, Helen Dickinson said:

‘Overall shop price inflation remained steady in December. Households did have reason to celebrate as food inflation fell for the eighth consecutive month thanks to retailers’ efforts to bring down prices in the run-up to Christmas.

‘There was cause for merriment as prices of wine, port and sherry fell on the month. Non-food products had a more challenging December, with price inflation rising again following retailers’ investment in November Black Friday discounting and ahead of the January sales.

‘Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead. New border checks for EU imports, hundreds of millions more on business rates bills from April. Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.’

Interest rates look set to tumble this year in a boost for millions of borrowers worried about mortgage payments.

According to bets on financial markets, the Bank of England will cut rates six times in 2024, taking them from a 15-year high of 5.25 per cent today to 3.75 per cent by Christmas.

That would be a major boost for borrowers needing to remortgage and first-time buyers getting onto the housing ladder.