Inflation latest: June figures show unexpected rise to 3.6% as fuel and food costs continue to increase

Savers with cash in low-interest bank accounts will be contacted and encouraged to consider more lucrative investments, under Rachel Reeves’ plans to boost the economy and raise wealth.

One example offered by the Treasury on how people can benefit showed that a saver investing £2,000, such as in a stocks and shares ISA or general investing account, rather than letting it sit in a low-interest account, could expect that to grow to £12,000 after 20 years.

That was compared to £2,700 if left in a savings account – a difference of more than £9,000 for families or individuals, or around 4.5 times more.

Diageo, the London-listed drinks firm which owns the likes of Guinness, Smirnoff and Baileys, has announced the departure of chief executive Debra Crew with immediate effect.

Ms Crew took over from former boss Sir Ivan Menezes, who died two years ago, but faced struggles including lower alcohol sales in some parts of the world and plenty of cost pressures.

Tariff uncertainty also weighed on the share price, which is down 23 per cent in the last year.

Chief financial officer Nik Jhangiani will step into the role on an interim basis until a permanent boss is found.

Shares are up 1.2 per cent today, though did initially surge around 3 per cent on the news.

They have a lot in common: they’re both tax-efficient, they hold a similar range of investments – Lifetime ISAs are a little more restricted – and most compellingly, contributions to either are topped up by 25 per cent, albeit in different ways.

At first glance, it may seem that you could pay the same amount into one or the other and they would deliver an equal income in retirement. This isn’t the case, however.

Scanning around the world of business, a few big names are in the headlines for different reasons.

Barclays have been fined £42m by the FCA, related to a lack of oversight and “failing to adequately manage money laundering risks”, particularly relating to a company investigated by the police. Read more here.

Nissan are shutting a factory with nearly 4,000 workers in Japan, effective from 2027 and moving production further south. Read more here.

Nvidia say they will resume selling semiconductor chips to China after Washington removed licensing restrictions around their H20 AI chips.

James Moore delivers his column today on inflation and why all is not as it seems…

Imagine “Don’t Panic” in large friendly letters – the pink ones that fans of The Hitchhiker’s Guide to the Galaxy will know well – when you read that inflation did the dirty on us last month, coming in at 3.6 per cent.

Prices in the UK are running hot – far hotter than in Germany (2 per cent), or France (0.8 per cent). With inflation at 2 per cent for the Eurozone as a whole, the European Central Bank’s refinancing rate sits at just 2.15 per cent, making life much easier for the economies of those countries when compared to the welter burden of base rates at 4.25 per cent the British economy is struggling under.

Houston, do we have a problem? You could be forgiven for thinking as much, assuming the Office for National Statistics got its sums right.

A look now at the equities and commodity markets – the FTSE 100, oil and gold, specifically.

Today’s stock market rise in the UK sees the index up 0.14 per cent, with British Airways owner IAG one of the highest flyers on the day, up 1.54 per cent.

It’s a mixed picture in Europe, with France’s CAC 40 pretty much at zero for the day, Germany’s DAX up 0.2 per cent and the Euro Stoxx 50 down 0.2 per cent.

Gold futures are slightly on the rise, up 0.22 per cent, but Brent Crude Oil has dropped almost half a percent down to $68.39 today.

Futures markets show the Nasdaq set to drop 0.17 per cent lower when it opens this afternoon.

With inflation the key topic today, a lot of else has gone a little unnoticed.

Let’s look around the rest of the business, money and economics lines around lunch, starting with the UK house price index.

Gov.UK’s report today shows the average property price for May of this year was £269,000, resulting in an annual average price increase of 3.9 per cent.

That varies by region of course, with the highest being Northern Ireland 9.5 per cent, Scotland 6.4 per cent and the north east 6.3 per cent.

At the other end of the scale, the south west grew at 1.9 per cent, the south east 2.1 per cent and London at 2.2 per cent.

Jonathan Hopper, CEO of Garrington Property Finders, said:

“This is a reset rather than a resumption of business as usual.

“While April’s figures can be dismissed as an oddity – the weeks after the Stamp Duty deadline were ghostly quiet for many estate agents – May was supposed to see the market return to normality.

“Today’s figures suggest it has done so, but that in some areas the normality is sharper and harsher than before.”

It wasn’t all about investing and red tape.

Here’s a good run-down of the key points which might affect you, from ISA reform and mortgage changes to Ombudsman modernising and consumer protection rules.

Lots and lots of reaction on both sides of the divide over plans to start encouraging people to invest more money.

It’s easy to imagine wealth managers just want you to use their products, but the sense in this plan is visible with both investment and savings platforms alike speaking of their approval – and showing what actually needs to happen to change the narrative.

Here’s a selection of comments from those operating in the financial spheres…

Charlotte Kennedy, Rathbones:

“The emphasis on changing the narrative around investment risk is particularly welcome. Too often, risk is seen as something to be avoided entirely, when in reality, understanding and managing it is key to achieving better financial outcomes. Leaving money idle in savings accounts might feel safe, but it often fails to keep pace with inflation, let alone build wealth over the long term.

“Unlocking retail investment will be no easy feat. It means unpicking generations of overreliance on cash and the uniquely British tendency to favour bricks and mortar. Changing those deeply ingrained habits will take time – and, crucially, education.

“Greater financial education in schools is pivotal if we’re to lay the groundwork for long-term change. Children should leave school equipped not just with academic knowledge, but with the financial confidence to invest wisely in adulthood. If we’re serious about unlocking the nation’s capital and building a stronger economy, we need to start with the next generation.”

“Cash ISAs are not, and never have been, a blocker to investing—they’re a gateway. We’re pleased to see evidence of an increased focus on consumers, and finding the right balance between cash savings and investing for long term growth, rather than cutting allowances that motivate and reward positive saving behaviours and help people become financially resilient.

“We fully support the Government’s ambition to foster a stronger investment culture in the UK and while our research shows that there is an appetite to invest amongst most savers, people are held back by fear of financial loss, a lack of confidence and limited knowledge.

“Initiatives like the Advice Guidance Boundary Review, the Pensions Investment Review, easing overly cautious risk warning regulations along with consumer education campaigns will all be key to breaking down the barriers and building a nation of confident investors.”

“After much speculation over Cash ISA changes, savers will be pleased that the Chancellor is not moving forward with ISA reforms for the time being. It’s important, at the very least, not to make ISAs any more complex than they are now by adding new versions which could confuse people, potentially deterring them from using an ISA.

“Encouraging a culture of investment to achieve the Chancellor’s goals is the right priority rather than reducing the Cash ISA allowance to make it harder for people to save.

“Our Freedom of Information (FOI) request revealed that the average value of the top 25 stocks and shares ISAs stands at £8.8million versus an average of £650,000 for the largest 25 cash ISAs, which is 13 times more. However, it is important that this initiative is delivered in a way that puts consumer interests first and supports their understanding of investing and its risks.”

Yana Skrebenkova, Revolut:

“For too long, a lower appetite for investing in the UK may have hindered many Brits from building long-term wealth. But creating wealth through investing should be accessible to everyone, not just a privileged few. By equipping people with the confidence to invest, starting with clear guidance and readily available, low-cost investment tools, we can encourage more consumers to take the first step. Opening up conversations about starting to invest will dismantle the barriers that have historically prevented people from getting started, leading to a truly positive shift.”

Rachel Reeves has told City leaders to change the tune on investing to get more people putting long-term savings into equities.

Recent alterations to rules means people who don’t pay for financial advice can soon get targeted guidance, a bridge of the gap between specialist advice and just standard explanations.

Now more needs to be done to show why, and how, investing can be a long-term positive for people’s wealth.

“Our tangled system of financial advice and guidance has meant that people cannot get the right support to make decisions for themselves,” she said.

“For too long, we have presented investment in too negative a light, quick to warn people of the risks without giving proper weight to the benefits.”

Mark FitzPatrick, CEO of St. James’s Place, said: “We strongly support the planned UK Investment Campaign announced yesterday, joining colleagues across the industry to develop a campaign that encourages the nation to invest.

“Building a culture of investing is vital – not just for people’s long-term financial wellbeing, but for the wider economy. With better awareness we can help more people feel confident about investing and nurture a stronger investment culture.”