Business news live: FTSE 100 hits record milestone, Reeves to address mortgages and pensions in speech

The government have now published plans on the mortgage guarantee scheme and it’s a positive step, says Peter Stimson of MPowered Mortgages – but doesn’t answer every question and won’t tick the boxes for too many new would-be homeowners to take that next step.

“Kudos to the Chancellor for delivering on an election pledge. The rebranded Mortgage Guarantee Scheme is a good idea. The trouble is it’s a year too late, and is missing one vital detail – the cost,” Mr Stimson said.

“Every lender who wanted to offer a 95% loan is probably already doing so. The Chancellor’s announcement is unlikely to make dozens more suddenly follow suit – as the price of entry is unknown and will vary each year.

“The Freedom to Buy scheme shuffles some of the risk burden between lenders and the Government, but don’t expect it to make mortgages cheaper for borrowers.

“Much like the Mortgage Guarantee Scheme it replaces, the capital offered to mortgage lenders is likely to be at market rate rather than discounted.

“So while first-time buyers who aren’t able to call on the Bank of Mum and Dad may find it slightly easier to get a mortgage with a 5% deposit, they will still pay some of the highest interest rates.

“For all the Chancellor’s fanfare, big questions remain over the cost of Freedom to Buy and it will tweak, rather than transform, lending to first-time buyers.

“She would have done better to bring back an updated version of the Help to Buy scheme to boost both housebuilding and access to finance.”

Falling demand for UK gilts, also called bonds, might push borrowing costs higher, the OBR has warned.

They say with defined benefit pension schemes not buying as many, there might be a £20bn hit to borrowing costs over the long term.

“You’ve got to find people and induce them to hold bonds,” David Miles of the OBR said. “That means you’ve got to offer them a better deal.”

Falling demand means prices may lower; when bond prices go down, the yield on them therefore rises, and the yield is the effective cost of borrowing for the government.

One of the founders of BrewDog is targeting domestic dominance with a new business, planning to invest £20m into his new medical cannabis company.

A licence was granted by the Home Office last year to cultivate medical cannabis, with the firm describing their set-up as a tech-led vertical farm, with controlled environments and sustainable operations.

The first harvest, from a farm near Newburgh, Aberdeenshire, is expected to yield up to 9kg of medical cannabis. However, plans are to expand that to 200kg this year, with ambitions to continually scale up and grow the business over the coming years.

The FTSE 100 hasn’t fluctuated a huge amount today, but being up 0.08 per cent still leaves it in unchartered territory, above 9000 points for the first time.

Currently at 9005, in fact.

Looking at the futures market, however, shows that US stocks are going to open slightly higher than that this afternoon, with the S&P 500 up 0.25 per cent in pre-trading.

The Nasdaq is up 0.47 per cent too, ahead of market opening.

Losses at Thames Water dropped to more than £1.6bn last year as the company spent over £380m on restructuring, set aside more than £120m for anticipated fines and wrote off more than £1bn of unrecoverable loans.

The total senior debt rose 10 per cent to more £16.8bn by the end of March, underlining the work needing to be done as the business battles insolvency.

Senior creditors gave the company a £3bn lifeline on interest rates of around 10 per cent this year, say the Times.

If you’re looking at the news of late encouraging savers to start investing, and wondering if it’s for you… Independent Money has you sorted.

We’ve been building a bank of explainers, advice and ideas for people who are looking into, or even taking, their first steps as an investor.

So here are a few articles which might suit you for further education and learning:

These are all good primers to understanding why there’s more encouragement for investing now, and also to help understand what exactly makes up this whole term of “investing”.

If you have questions or want to know more about something specific, head to our Independent Money page, sign up to our Money newsletter (it’s under Lifestyle) here or get in touch using the comments in this blog.

While all eyes and ears are on Ms Reeves’ speech tonight, we should remind ourselves that tomorrow is inflation data day.

We expect it to be unchanged, maybe even a modest tick up to 3.5 per cent – but in terms of interest rates, as long as it’s not a major correction up, it feels like the Bank of England are paying more attention to the jobs market right now.

Kevin Mountford, co-founder of Raisin UK, explains what that might mean for savers.

“With the latest CPI figures due this week, all eyes will be on whether inflation continues to creep above expectations or starts to ease once again. A cooling inflation number would strengthen the case for a rate cut in August, particularly given Andrew Bailey’s recent comments about growing slack in the labour market.

“The Bank of England has been clear that it’s watching not just inflation, but the broader state of the economy. Slowing wage growth and signs that employers are reducing hours or headcount suggest the job market is softening, partly in response to higher business costs, such as the national insurance rise.

“If CPI surprises on the upside again, the Bank may hold its nerve a little longer. But if price growth appears to be coming under control, alongside a weaker labour market, that could tip the balance toward further easing. For savers, it means time may be running out to lock in competitive fixed rates, especially on longer-term accounts.”

Rachel Reeves has set out sweeping reforms to the UK’s finance industry in the hope of delivering much-needed economic growth.

The Chancellor hopes the drive to cut red tape and increase innovation, billed as the biggest changes in more than a decade, will turn around an economy which has shrunk in recent months.

The plans include measures to make it easier for first-time buyers to get on the housing ladder with increased levels of borrowing and efforts to support new financial technology – fintech – firms grow in the UK.

Full details here from PA:

As part of new plans to encourage people to invest more, those who have funds in low-interest bank accounts will be contacted over more potentially lucrative opportunities.

A large advertising campaign on the benefits of investing is to be started and banks will send customers details of opportunities which might benefit them.

In addition, a review of risk warnings will be undertaken, with current language around investments thought to be off-putting.

“We need to double down on our global strengths to put the UK ahead in the global race for financial businesses, creating good skilled jobs in every part of the country and helping savers’ money go further,” said Ms Reeves today.

UK Sustainable Investment and Finance Association CEO James Alexander says the nation must get a grip of pensions now, with two in five private sector employees facing a shortfall in retirement.

Speaking on BBC Radio 4, he said: “It’s really vital that we get a grip of pension savings in the UK, and a part of that, a big part of that, is looking at auto-enrolment contribution levels.

“Can we handle a future where a whole load of pension savers, people in retirement, don’t have sufficient income in order to live…in the UK?

“The pensions minister has said that auto-enrolment rates will not rise in this parliament. That’s the right decision. It means that these things can be long-term plans that investors and companies can work towards.

“This review has to balance the needs of ensuring people are saving the right amount for retirement and, of course, not putting too much burden on businesses.”