Chancellor Jeremy Hunt cites the pandemic and the energy crisis as reasons for high borrowing
The Government now owes a record £90,000 for every household in the UK after borrowing soared again in March to lift total public debt to more than £2.5 trillion.
Latest official data shows that Chancellor Jeremy Hunt was forced to borrow another £21.5 billion in the month — the second highest total on record for March — just to keep the wheels of Government turning.
Government spending rose by almost a fifth in the month as ministers handed out billions in support for families suffering with sky-high energy bills following the Russian invasion of Ukraine.
The figures came as separate data from market analysts Kantar showed food inflation easing slightly from a record 17.5 per cent to 17.3 per cent in the four weeks to April 16, the 10th month in a row it has been in double digits.
Alison Ring, director of public sector and taxation at the accounting industry body ICAEW, said: “Today’s data for the financial year to March 2023 emphasises just how weak a state the public finances are in, with debt now approaching an eye-watering £90,000 per household. The UK is still running big fiscal deficits, with a provisional shortfall between receipts and spending of £139 billion in 2022/23, while public debt over the past three financial years has grown by £715 billion or almost 40 per cent to £2.53 trillion.
“The UK Government’s financial position remains precarious, with high debt and limited headroom against its fiscal rules that reduce our resilience to future economic shocks. An ageing population, underperforming public services and a worsening global security situation are all putting pressure on Government spending, even as taxes rise.
“What is most concerning is weak public investment after the Government constrained spending to meet its short-term fiscal objectives, for example in scaling back HS2.
“Unfortunately, this will restrict economic growth in the medium and long term, and will also delay much-needed investment in the quality and cost-efficiency of public services.”
Mr Hunt said: “These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and Putin’s energy crisis.
“We were right to do so because we have managed to keep unemployment at a near-record low and provided the average family more than £3,000 in cost of living support this year and last.
“We stepped up to support the British economy in the face of two global shocks, but we cannot borrow forever. We now have a clear plan to get debt falling.”
The figures from the Office for National Statistics also reveal how the Chancellor raked in £40 billion more in income tax and national insurance as stealth taxes hit millions of workers.
Financial firm Hargreaves Lansdown said receipts from PAYE Income Tax and NIC1 (National Insurance) for April 2022 to March 2023 hit £378.2 billion, £40.2 billion higher than in the same period a year earlier.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “There’s no getting away from the fact our tax burden is growing as a series of threshold freezes and cuts kick in.” – yahoo.com
Outgoing British High Commissioner to Kenya Jane Marriott (left) and Neil Wigan.
The UK government has announced the exit of Jane Marriott as British High Commissioner to Kenya and appointed Neil Wigan to succeed her effective July 2023.
While welcoming the changes, Ms Marriott said that she will miss Kenya after serving here for four years, and hinted at assuming another role in July.
Before coming to Kenya, she served as Director of International Counter Terrorism and Ambassador to Yemen.
Ms Marriott has been involved in several initiatives in the country since she took over, including fighting FGM and taking part in a programme to mitigate drought in some parts of Kenya.
Coming from Israel
Mr Wigan has been serving as the UK Ambassador in Tel Aviv, Israel, a position that he has been holding since 2019. Before that, he was the Foreign Commonwealth & Development Office (FDO) Director in Africa from 2015 to 2018.
He also served as the Ambassador to Mogadishu from 2013 to 2015.
He said he was happy to be returning to Kenya. – nation.co.ke
The state had already banned the app on government devices but this extends the prohibition to personal phones.
The state House voted 54-43 to pass the bill – which goes further than prohibitions in place in nearly half the states and the US federal government that prohibit the video-sharing app on government devices.
The measure now goes to Republican Governor Greg Gianforte for his consideration.
The bill, known as SB-419, cites a number of concerns about the app, including alleged surveillance from the Chinese government and encouragement of “dangerous activities” among young users, such as “throwing objects at moving automobiles” or “lighting a mirror on fire and then attempting to extinguish it using only one’s body parts”.
The legislation makes it illegal for app stores to offer TikTok, however it does not prevent those who already have the app from using it.
Violations of the bill could carry a penalty of up to $10,000 (£8,000), which would be enforced by Montana’s Department of Justice.
Montana already bans the app on state-owned devices.
TikTok spokesperson Brooke Oberwetter said in a statement: “We will continue to fight for TikTok users and creators in Montana whose livelihoods and First Amendment rights are threatened by this egregious government overreach.”
The bill’s supporters “have admitted that they have no feasible plan for operationalising this attempt to censor American voices and that the bill’s constitutionality will be decided by the courts”, Ms Oberwetter said.
TikTok, which is owned by the Chinese tech company ByteDance, has been under intense scrutiny over concerns it could hand over user data to the Chinese government or push pro-Beijing propaganda and misinformation on the platform.
Leaders at the FBI, CIA and numerous lawmakers of both parties have raised those concerns but have not presented any evidence that it has happened.
Supporters of a ban point to two Chinese laws that compel companies in the country to cooperate with the government on state intelligence work.
TikTok has said its servers containing information on US users are in Texas. – skynews.com
From left: Mwai Kibaki, Charles Njonjo, Naushad Merali and Chris Kirubi
Business mogul Naushad Merali decreed anyone disputing his Will would get $1 (Sh145) from his vast estate.
Tycoon Chris Kirubi first wrote his Will aged 55 years so his decisions won’t be contested on age. He died at 80.
Retired President Mwai Kibaki and former Attorney-General Charles Njonjo declared children-in-law were not beneficiaries. This is designed to restrict the number of beneficiaries to the close-knit family, and potentially limit conflict.
These are the measures the wealthy and prominent Kenyans have resorted to in a bid to avert fighting over their billion-shilling empires in death.
Worry about succession — and the threat to family businesses — is among concerns for Kenyan billionaires, according to the latest Knight Frank Wealth Report 2022.
The transfer of wealth to the next generation is a key moment of vulnerability for these tycoons as poorly managed successions can lead to rapid wealth depletion, observes the report, citing the frequent disputes in Kenya.
Read: Chris Kirubi: The mover and shaker who had Midas touch
This explains the keen attention to succession by these tycoons who are among the few prominent individuals whose families did not implode in a scramble for property following their departures.
Heirs of wealthy and eminent persons such as politicians, businessmen and top civil servants are known for court battles following the death of the patriarchs, and matriarchs, in some instances, but these are among the few families that avoided property feuds.
A review of successful cases in court involving prominent persons show apart from the disputes over division of the wealth, the feuds are also being fuelled by “outsiders” and children born out of wedlock claiming a stake in the estates.
Multibillion-shilling estate
For instance, the beneficiaries and dependants of the late President Kibaki are yet to receive their share of the multibillion-shilling estate not because of wrangles within the family but a dispute lodged by two people claiming to have been sired by him. They want recognition and a share of the wealth. He died on April 22, last year, aged 90.
Major fallouts in wealth succession involve identification of the dependants of the departed person and their entitlements, beneficiaries of the estate and validity of the Will, if any.
“At the succession court, it is all about dividing the properties of the departed to his/her dependants and beneficiaries. The first duty of the court is to identify the beneficiaries and net estate available for distribution. Dispute starts on identification of the beneficiaries,” explains lawyer Adrian Kamotho Njenga.
It is at the point of identifying beneficiaries that claims such as one or some children were not biologically sired by the property owner emerge. For widows, questions on legality of their marriage to the dead man crop up. Former wives also emerge claiming a share of the estate.
Among the big shots whose estates were not marked by disputes is Mr Merali, who died in July 2021, Mr Kirubi in June 2021 and Mr Njonjo, who died in January, last year.
Others are former first lady Lucy Kibaki (died in April 2016), 2004 Nobel Peace Laureate Wangari Maathai (died September 2011), former vice president George Saitoti (died June 2012), former Interior Cabinet Secretary Joseph Nkaissery (died July 2017) and former Chief Justice Evans Gicheru (died December 2020).
A peak into their Wills offers strategies being used to forestall conflict.
Apart from using Wills to avert fallouts, the tycoons exclude spouses of their children as beneficiaries of their estates, hence preventing them from inheriting them directly or claiming direct stake.
Former President Kibaki and Mr Njonjo are among those who declared in their respective Wills that their children-in-laws were not their dependants.
Mr Njonjo bequeathed his wealth — Sh318 million is disclosed in court papers but he is estimated to be worth much more — to his wife and three children.
His estate comprised property in Nairobi, Naivasha, Kiambu, Murang’a and shares at Safaricom, Oceanic Hotel Limited, Mua Insurance and Tarabete Farmers Association. He also had motor vehicles.
Like former President Kibaki, Mr Njonjo declared that the children-in-law were not his dependants.
For Kibaki, he did not disclose his net worth but said he had bequeathed his wealth to his children Judith Wanjiku Kibaki, James Mark Kibaki, David Kagai Kibaki and Anthony Andrew Githinji Kibaki.
He wished that the cash in bank accounts under his sole name be distributed equally and absolutely between the children.
Many fights
But two other persons, Jacob Ocholla and a woman codenamed JNL, emerged claiming to be his children and demanding a stake of the wealth. Their case is yet to be determined.
“Succession can be very controversial because it is open to so many fights by many people and it recognises many people within the family arrangement including parents,” says Mr Njenga.
For instance, interpretation of dependants as per the law of succession is broad. It says dependant can mean a wife or wives in polygamous arrangement, former wife/wives, children of the deceased and it does not matter whether they were maintained by the deceased at the time of his death or not.
Another tactic being used by tycoons to avoid feuds is writing their wishes when they are healthy, with stable memory and can make sound decisions without influence or being under duress.
For instance, Mr Kirubi wrote his first Will on April 19, 1996 in which he bequeathed his children 80 per cent of the estate and siblings 20 per cent.
The billionaire died in June 2021, aged 80, leaving an expansive estate estimated to be worth Sh20 billion. Her daughter, Mary-Anne Musangi, is among those running his empire that includes business investments in transport, banking, insurance, farm and pharmaceutical chemicals, and media.
Persons challenging validity of the Wills usually contend that the owner (testator) made it when he/she was suffering from dementia or did not have stable mental capacity. Others claim that the Will was procured as a result of undue pressure from some dependants.
According to Mr Njenga, other common grounds for contesting a Will include claims that it was procured by undue influence, fraud, mistake or manipulation. The testator putting a signature that is different from his/her other known signatures can be a ground of disputing validity of the Will.
Having a well-structured Will that meets all requirements of the Law of Succession Act such as signature of the testator and two competent witnesses is another reason that has saved some families from court battles.
To avert fallouts in distribution of their wealth, most of the country’s big shots whose wealth has not been subject to court tussles left behind Wills with specific details and particulars on how the assets were to be distributed.
However, according to the lawyer, having a Will is not guarantee that the surviving members of the family will divide the assets based on the final wishes of the owner.
There are instances the Wills get contested and voided by court however valid they may appear, he says.
For instance, if the Will failed to adequately provide for the children of the property owner (testator) that are under the age of 18 years.
Mr Njenga adds that the court also considers whether there are dependants who previously relied on the testator during his/her life and are not reasonably provided for under the Will.
Process of succession
“Once the property owner dies the contest begins on proving the Will in the court’s probate process. One may be having a good Will but it is contested for various reasons such as the properties listed. Some people list properties sold or gifted earlier. Having a Will does not mean the process of succession is insulated from disputes,” says Mr Njenga.
To discourage fights over his vast property, Mr Merali, whose wealth was estimated at Sh35 billion, stated in his Will that anyone who challenged his wishes would get one United States Dollar (US$1.00) from the disclosed Sh500 million estate. The estate comprises assets within and outside the country.
According to Mr Njenga, when a Will is contested, the estate cannot be distributed until court determines the issues raised by the objector.
This delays division of the assets and there are instances where estates have remained locked for over 10 years due to the family wrangles.
A case in point is the estate of former Starehe MP Gerishon Kirima, who died in 2010 and his estate is yet to be distributed owing to a long running family feud which stemmed from a contest on validity of his Will.
The lawyer says placing a condition (like Mr Merali) in the Will to shield family from succession disputes may also be unhelpful if the said condition is not clear.
“Putting a provision that whoever disputes the wishes of the testator be given a particular share or be denied or any other condition, sometimes can make the Will uncertain. The intention of the condition must be clear and any condition must be interpreted contextually,” says Mr Njenga. “Any doubt or uncertainty would lead to a conclusion that the person died without a Will (intestate),” he adds.
Former first lady Lucy Kibaki’s Sh200 million estate devolved to her spouse, former President Kibaki, and his three children smoothly.
It comprised shares in companies such as Barclays Bank Kenya Limited, properties in Nyali, Mombasa, and money in banks. The letters of estate administration were issued to Mr Kibaki and his children Judith Wanjiru, David Kagai and Anthony Githinji.
For the 2004 Nobel Peace Laureate Wangari Maathai, her wealth devolved to her three children Waweru Maathai, Muta Maathai and Wanjira Maathai as per the Will dated May 18, 2006.
She had wealth worth $102,402. She had shares in various companies such as American-based lender, Merrill Lynch, Standard Chartered Bank and East African Cables.
She also had motor vehicles, money in banks and over 10 pieces of land scattered in various parts of the country, including Nairobi.
Social relationship
In some cases, the fight is between logic and the law.
If you are identified as a child of the departed property owner, it does not matter when you met him/her last or the social relationship.
There are siblings who attempt to lock out others on various grounds such as social relationship with the father or mother and failure to take care of him/her.
“Upon death, entitlement goes to the dependant or beneficiary by operation of the law that you are his/her child. It does not matter whether he/she was maintaining you or not and that brings you in to the arm of a possible beneficiary. Estranged wives also emerge and are legally entitled. Some families try to lock out the former wives on a belief that they are not entitled to any share of the estate,” says Mr Njenga.
Among the departed tycoons whose Wills have been contested in court is businessmen Nginyo Kariuki, Njenga Karume, Tarlochan Singh Rai, former powerful Internal Security minister John Michuki, former Starehe MP Gerishon Kirima and celebrated entertainer and marketing guru Kevin John Ombajo alias Big Kev.
For former President Moi, who died in 2019 leaving wealth estimated to be worth Sh300 billion, distribution of his estate is marred by a dispute although he had a Will. – nation.co.ke
About 500 adult male migrants will be housed in a barge on the Dorset coast “in the coming months”, the government has confirmed.
The plans have been criticised by local groups, refugee charities and Conservative MP Richard Drax, who said “every action’s being looked at”, including a legal case.
The vessel, which is currently in Italy, will be “significantly cheaper than hotels”, says the Home Office.
The three-storey barge called Bibby Stockholm will be located at Portland Port off the coastal town of Weymouth, and used to house single men while they wait for their asylum claims to be processed. It will operate for at least 18 months.
As well as providing basic and functional accommodation, healthcare and catering, the berthed vessel will have security on board to minimise disruption to local communities, says the Home Office.
The boat, with 222 rooms, has been refurbished since it was criticised as an “oppressive environment” when the Dutch government used it for asylum seekers.
Bibby Marine, which owns the barge and will lease it to the government, said there was a laundry and a canteen on board – and all the rooms have a window, bed, desk, storage and en-suite.
It said the boat “has comfortably housed workers from various industries including construction, marine and the armed forces over the years”.
Housing migrants in hotels costs more than £6m a day, says the Home Office, with more than 51,000 people in nearly 400 hotels across the UK.
Refugee groups have called the plan “completely inadequate”, while councillors from the local area – which is popular with tourists – have opposed the proposals.
Prime Minister Rishi Sunak said they would save taxpayer money and reduce pressure on hotels, adding: “It’s part of our broader plan to stop the boats.”
“It can’t be right” that the country is spending so much on housing migrants in hotels, the PM told reporters in Peterborough.
Just under 4,000 people have arrived on the south coast so far this year after crossing the Channel in small boats.
On Wednesday evening 41 migrants in two boats were taken back to France after getting into difficulty in the Channel. Several other boats made it half way across and those on board were taken to Dover by the Border Force.
The use of the Bibby Stockholm will mark the first time that migrants are housed in a berthed vessel in the UK.
The Home Office said it was in discussion with other ports and further vessels would be announced “in due course”.
Charities and local councillors have opposed the plans, with the Refugee Council saying the barge will be “completely inadequate” to house “vulnerable people”.
“A floating barge does not provide what they need nor the respect, dignity and support they deserve,” said chief executive Enver Solomon.
Amnesty International called for the plans to be abandoned, and said use of the barge to house migrants was a “ministerial cruelty”.
Dorset Council said it had “serious reservations” about the suitability of Portland Port as a location, adding: “We remain opposed to the proposals.”
The British Red Cross said that docked barges did not “offer the supportive environment that people coping with the trauma of having to flee their homes need”.
Christina Marriott, the charity’s executive director of strategy and communications, called for a “more effective and compassionate asylum system” that would help people integrate into a community.
Mr Drax, whose constituency includes Portland, told BBC News on Tuesday he was “very concerned” about the impact on the area which “relies on small businesses”.
This comes weeks after the government announced plans to tackle small boat crossings through the Illegal Immigration Bill.
The legislation would mean anyone found to have entered the country illegally would not only be removed from the UK within 28 days, but also be blocked from returning or claiming British citizenship in future.
Will this migrant bill become a reality?
Bill Reeves, chief executive of Portland Port, said he encouraged “everyone in the community to approach this with an open mind”, adding that during the vessel’s preparation there would be close ties with the local community and voluntary groups.
Portland, where Bibby Stockholm will be docked, was also once home to a prison ship. It closed in 2006 after criticism from the Chief Inspector for Prisoners who said inmates had no exercise and no access to fresh air.
Meanwhile, Labour criticised the plans, with shadow home secretary Yvette Cooper calling the announcement a sign of the government’s “failure to clear the asylum backlog”.
She said: “This barge is in addition to hotels, not instead of them, and is still more than twice as expensive as normal asylum accommodation.”
Liberal Democrats home affairs spokesperson MP Alistair Carmichael said the barge was a symbol of “the government’s failed asylum policy”. – bbc.co.uk
One of the world’s biggest criminal marketplaces used by online fraudsters to buy passwords has been closed down in a global law enforcement crackdown.
Genesis Market sold login details, IP addresses and other data that made up victims’ “digital fingerprints”.
Often costing less than $1, the personal information let fraudsters log into bank and shopping accounts.
Law enforcement agencies around the world were part of the co-ordinated raids, including the UK.
During a series of raids, the UK’s National Crime Agency (NCA) arrested 24 people who are suspected users of the site. They include two men aged 34 and 36 in Grimsby, Lincolnshire, who are being held on suspicion of fraud and computer misuse.
Law enforcement agencies from 17 countries were involved in the raids, which began at dawn on Tuesday. The operation was led by the FBI in the US and the Dutch National Police, working alongside the NCA in the UK, the Australian Federal Police, and countries across Europe.
On Wednesday, anyone logging onto the Genesis website saw a message which read: “Operation Cookie Monster. This website has been seized.”
Genesis Market had 80 million sets of credentials and digital fingerprints up for sale, with the NCA calling it “an enormous enabler of fraud”.
“For too long criminals have stolen credentials from innocent members of the public,” Robert Jones, director general of the National Economic Crime Centre at the NCA, said.
“We now want criminals to be afraid that we have their credentials, and they should be,” he added.
Dutch police have launched a portal on their website, where the public can check whether their data has been compromised.
It was a one-stop shop for login data that enabled online fraud. Users could buy login information, including passwords, and other pieces of a victim’s “digital fingerprint”, such as their browser history, cookies, autofill form data, IP address and location.
This allowed fraudsters to log in to bank, email and shopping accounts, re-direct deliveries and even change passwords without raising suspicion.
Login information on sale included passwords for Facebook, PayPal, Netflix, Amazon, eBay, Uber and Airbnb accounts. Criminals buying the information were even notified by Genesis if the passwords changed.
Genesis provided its customers with a purpose-built browser which would use the stolen data to mimic the victim’s computer so it looked as if they were accessing their account using their usual device in their usual location. So the access did not trigger any security alerts.
“It was a very sophisticated website, very easy to use, with a wiki [website that can be modified or contributed to by users] telling you how to use it, and accessible on the open web and the dark web,” Mr Jones said.
“So you didn’t need to be a sophisticated cyber actor to get into this. You just needed to be able to use a search engine, and then you could start committing crime.”
Depending on how much data was available, a victim’s information would sell for less than $1, or for hundreds of dollars.
While Genesis users were mostly accessing it for fraud, the data on sale could also be used for ransomware attacks – where hackers block access to data and demand payment to release it.
The individual’s data that led to the 2021 hack of gaming giant Electronic Arts (EA) sold for just $10.
Businesses also had their information sold on the website, which facilitated fraud, mobile phone number hacking and ransomware attacks.
Will Lyne, head of cyber intelligence at the NCA, said Genesis was “an enormous enabler of fraud” and one of the most significant marketplaces for buying login information.
The NCA believes there were about two million victims worldwide with tens of thousands of them in the UK.
Many victims would first know something was wrong when they saw fraudulent transactions on their account, or if they were lucky, they got a message saying someone had logged in as them.
Tens of thousands of criminals are thought to have been using Genesis, with several hundred users in the UK.
They could search for potential victims by country, and see what data was available before they made their purchase.
Internet users who want to avoid fraud are advised to keep their computer and phone operating systems up-to-date, to use two-factor authentication (2FA) and strong passwords such as ones involving three random words.
They are also being urged to consider using a password manager. – bbc.co.uk
A Kenya Airways plane at the Jomo Kenyatta International Airport
The national carrier Kenya Airways (KQ) has reported a Sh38.26 billion net loss for the full year to December, the worst-ever in its decade-long loss-making streak.
KQ reported a 141.77 percent drop in losses from Sh15.8 billion posted in 2021, surpassing the Sh36.2 billion loss the airline booked in 2020 when global aviation operations were grounded during the peak of the Covid-19 pandemic.
The airline’s management has blamed increased fuel costs, foreign exchange losses caused by the weakening of the Kenyan currency and a Sh18 billion one-off loss incurred when the government took over a dollar-denominated facility.
“Net financing costs increased by Sh23 billion because of a one-off transaction that was taken during the year pertaining to the takeover of a USD-denominated loan by the Kenyan government, which basically converts the loan from US dollars to Kenyan shillings,” said KQ’s chief finance officer Hellen Mathuka.
The airline also stated that it incurred a loss of Sh5.7 billion due to foreign exchange vulnerabilities as the Kenyan shilling depreciated against the US dollar.
KQ Managing Director, Allan Kilavuka, however, remains bullish that operations of the airline have already taken an upward trend in the first quarter of 2023, promising that the airline could report a profit next year.
“Without the significant impact of fuel price increase, we are a profitable business,” Mr Kilavuka said.
While the airline’s revenues increased by 66 percent (Sh46.5 billion) to Sh116.7 billion in 2022, total operating costs also went up by 58.9 percent, to Sh122.4 billion.
The airline carried 3.7 million passengers last year, growing from the 2.2 million travellers in 2021, while its cargo operations also grew from hauling 63,726 tonnes in 2021 to 65,955 tonnes.
The airline in January issued a profit warning, signifying that its net earnings would fall by at least 25 percent, blaming the expected negative performance on forex losses from hedging on its US dollar-denominated debt that was last year taken over by the government.
In February, Treasury Principal Secretary Chris Kiptoo told Parliament that the Exim Bank of the US issued a default notice to Kenya over delayed servicing of a Sh57.8 billion loan, revealing the airline’s continued financial turmoil, which has caused it to rely on State bailouts.
But the government, with a 48.9 percent stake, has expressed its discontent with continued support, slashing planned capital injection from Sh30 billion to Sh20 billion in the current financial year through the supplementary budget I of 2022/23.
This is now the 10th year that KQ has consecutively made losses. It last reported a profit in 2012 of Sh1.6 billion. – nation.co.ke
Andrew Bailey, Governor of the Bank of England, attends the Bank of England Monetary Policy Report Press Conference, at the Bank of England, London, Britain, February 2, 2023.The Bank of England (BoE) has raised the UK interest rates by 0.25 basis points to 4.25% to combat double-digit inflation.
This is the 11th time in a row, in less than 18 months, that the central bank has increased rates, making borrowing costs higher despite the cost of living crisis that has hit UK households.
It lifts UK interest rates to their highest since October 2008, early in the financial crisis, when Bank Rate was 4.5%.
It also comes after inflation took a surprise leap to 10.4% in February. Inflation hit a 41-year high at 11.1% in October.
The monetary policy committee voted 7-2 in favour of a 25bps increase, with two members preferring to maintain at 4%.
Seven members (governor Andrew Bailey, plus Ben Broadbent, Jon Cunliffe, Jonathan Haskel, Catherine Mann, Huw Pill and Dave Ramsden) voted in favour of raising Bank Rate by a quarter-point, to 4.25%.
But two members, Swati Dhingra and Silvana Tenreyro, voted against the proposition, preferring to maintain Bank Rate at 4%.
Nathaniel Casey, investment strategist at wealth manager Evelyn Partners, said: “The split in voting is indicative of the tricky state of affairs confronting the MPC and other central banks, with committee members having to weigh the fragility of the global banking sector against the need to bring inflation back to target.
“The recent turmoil in the banking sector, which began with collapse of Silicon Valley Bank (SVB) nearly a fortnight ago, has reminded central banks that things can break when monetary policy is rapidly tightened. Although contagion risks from the tech bank crisis and Credit Suisse look to have receded for the time being, the BoE will need to tread carefully if it decides to further tighten monetary policy from here. The Bank recently acknowledged that ‘more sharp moves in asset prices could expose weakness in parts of Britain’s financial system’ in a letter to lawmakers.”
This increase will have an immediate impact on some borrowers and savers. High-street banks use the Bank’s base rate to work out the interest rates it offers to customers.
“Those on a tracker mortgage will see an immediate impact on monthly repayments, and those on a variable rate could also see their costs rise. Mortgage owners on a fixed-term deal will not be affected for the duration of their deal, however they will likely be stung with much higher rates when the time comes to renew.
“Homeowners struggling with payments should speak to their lenders, which are required to offer support, such as temporarily reducing payments or extending the mortgage term. Discussing your options with your lender will not affect your credit rating.
“Higher rates will also have an impact on renters, as buy-to-let landlords will likely pass on increased costs to their tenants. If you are unsure about how you will be able to make monthly repayments, contact your landlord or letting agent to see if a different payment plan is available.”
The Bank of England says up to 4 million households face a higher monthly mortgage bill this year. An estimated 356,000 mortgage borrowers could face difficulties with repayments by July next year, according to the Financial Conduct Authority.
When interest rates rise, more than 1.4 million people on tracker and variable rate deals usually see an immediate increase in their monthly payments.
For the average UK property costing £270,708 on a variable rate and with a 75% LTV, monthly mortgage repayments would increase by £26 a month, according to data from TotallyMoney and Moneycomms.
Three-quarters of mortgage customers hold a fixed-rate mortgage so their payments should not be affected for now but prospective house buyers or those seeking a remortgage will pay more.
Alice Haine, personal finance analyst at Bestinvest, said: “For first-time buyers shopping around for a fixed rate deal, another interest rate rise will leave them feeling very nervous. Mortgage rates rose rapidly last year – hitting a peak of 6.5% in October in the wake of the mini budget chaos when unfunded tax cuts spooked the markets. Despite interest rates continuing to rise since then, the average two- and five-year fixed rates are currently at a six-month low as most of the recent Bank Rate rises were already priced in by lenders.”
Richard Donnell, executive director of research at Zoopla, commented: “We don’t expect the increase in the base rate to make much difference to the outlook for the housing market. Demand for homes is down on last year but sales are still being agreed albeit at a slower rate (20% lower). People still want to move and households are resetting their plans in an environment of higher borrowing costs. Talk of a big price correction in home values has been overplayed and if you price your home sensibly, it’s likely to attract interest subject to some negotiation on the final price.”
The Bank of England said in its latest monetary policy report that global growth “is expected to be stronger than projected” in its last meeting and that the UK banking system “remains resilient”.
Markets predict this to be the final rate hike in the Bank of England’s run.
“Assuming the broader inflation data continues to point to an easing in pipeline pressures, then we suspect the committee will be comfortable with pausing by the time of the next meeting in May,” ING economist James Smith said.
The BoE has raised its outlook for the economy in the near term, now expecting the economy to grow in second quarter.
Chancellor Jeremy Hunt said: “With rising prices strangling growth and eroding family budgets, the sooner we grip inflation the better for everyone.
“That’s why we support the Bank of England’s actions today and why we will continue to play our part in this fight by being responsible with the public finances, alongside providing cost of living support worth an average of £3300 per household over this year and next.”
The Bank of England follows other central banks in rising interest rates amid sticky inflation and an international banking crisis.
The US Federal Reserve raised its main rate by a quarter of a percentage point on Wednesday but indicated it would stop further increases.
The European Central Bank also raised its three main interest rates by 50 basis points last week.
This Thursday, the Swiss National Bank’s policy rate has been lifted to 1.5%, from 1%, to counter “the renewed increase in inflationary pressure”.
The Norges Bank’s Monetary Policy and Financial Stability Committee also announced today it had decided to raise the Norwegian policy rate from 2.75% to 3%, as it battles inflation. – yahoo.com
