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  • Today's business and finance round up 1st November 2022

Today's business and finance round up 1st November 2022

Higher rates cool consumer borrowing

November 01, 2022

1st November 2022

Bite-sized business news from the UK and beyond

Good morning

Today's stories

  • Higher rates cool consumer borrowing 

  • Electric car battery startup on the brink

ECONOMYHigher rates cool consumer borrowing 

What happened?Data from the Bank of England showed that mortgage approvals and other consumer borrowing dropped in September as higher interest rates hit household lending.How did we get here?In the past year the Bank of England has increased base rates seven times in a bid to combat rising inflation. This has made mortgages more expensive and in September the number approved fall to 66,800 from 74,440 in August. The knock-on effect of high government borrowing costs in aftermath of the failed mini budget on 23 September saw many mortgage products removed or re-priced. But the drop in mortgage approvals suggests the UK housing market was slowing even before the budget put the skids under it. The latest data showed average two-year fixed mortgage costs at a rate just under 6.5% compared to just over 4% at the beginning of September.Meanwhile households borrowed an extra £700m on credit cards and loans in September, down from £1.2bn in August and the lowest level in almost a year. At the same time, households saved an additional £8.9bn — double the pre-pandemic average — suggesting that many people are building up cash reserves in response to the weakening economic outlook.Borrowing costs look certain to keep rising On Thursday the Bank of England is widely expected to raise rates by another 0.75% to 3%, which would be the biggest hike since 1989 despite the looming threat of recession. This will make borrowing for consumers more expensive with property site Zoopla predicting this could see UK house prices fall 5% next year.

Other stories to keep you in the loop

  • Asos eyes cutting 100 jobs as part of turnaround plan for fashion retailer

  • Purplebricks founder's property portal Boomin turns to bust

  • Elon Musk says Twitter blue tick to be revamped

  • Eurozone inflation rises far more than expected to hit record 10.7%

  • US judge blocks $2.2bn Penguin Random House merger

STARTUPElectric car battery startup on the brink    

What happened?A British battery startup could collapse this week after the government refused its request for funding. Britishvolt has been developing a £3.8bn gigafactory – a facility that produce batteries for electric vehicles on a large scale – in Northumberland but has been delayed several times.How did we get here? Founded in 2019 Britishvolt was billed as a homegrown battery champion as the country transitions to electric vehicles ahead of the 2030 ban on the sale of new diesel and petrol-powered cars to tackle climate change. The battery plant in the Northeast was supposed to produce more than 300,000 EV battery packs each year and begin production in 2023 but was subsequently postponed to 2025 due to difficult economic circumstances.In March Aston Martin announced it would work with the startup on the development of “high performance battery cell technology,” as the carmaker gears up to launch a battery-electric vehicle in 2025. Britishvolt received backing from the government including a £100m pledge to help it build its battery plant, as well attract more private investment to the project. But it’s understood that yesterday the government denied a £30m advance in funding. In recent months Britishvolt has been in emergency talks to raise funds or sell itself as its cash runs out.Zooming out: There’s now huge uncertainty as to whether the gigafactory, which was expected to create 3,000 jobs, will complete and this could have political implications. Britishvolt was hailed by the Conservative government as an example of "levelling up", a party promise to reduce the economic inequalities between the North and South by increasing investment.

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