Our Weekly Newsletter

Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

News you can use

Record fall in business confidence

Corporate confidence has seen its largest quarterly drop on record, with some of the UK’s biggest businesses anticipating that demand won’t fully recover for a year as a result of the pandemic. According to a regular CFO survey carried out by Deloitte, CFOs expect annual revenues to fall 22% below expected levels, with no hope of a swift economic recovery after the nation comes out of lockdown. 84% of respondents were less optimistic about their company’s prospects than the previous quarter, which saw Boris Johnson’s general election victory raise business sentiment at its fastest rate in more than a decade. (From The Times, 4 May 2020)

Coronavirus pandemic pushes environmental issues up the agenda

Research has highlighted how enhanced environmentally-focused investment could stimulate swifter economic recovery after the pandemic. Implementing more climate-friendly policies in economic recovery packages could contribute to quicker job creation and produce long-term cost savings, according to the analysis by Oxford Smith School of Enterprise and the Environment. Recovery programmes utilising synergies between climate and economic goals could increase national wealth, enhance productive capacities and improve human, social and natural capital levels. (From Pensions & Investments, 5 May 2020)

Empty stores: repurpose them

Savills has found that 40 per cent of UK retail space is currently surplus to requirement and unoccupied. With many businesses moving online, landlords are increasingly considering repurposing retail sites for residential use to address the housing shortage. However, it is believed the UK would need approximately 300,000 more houses a year, roughly equivalent to four times the retail space empty at the start of the year, to fully achieve this. Other issues to address include that many retail buildings are too rudimentary to be simply converted into residential use, and that the patchwork ownership of high streets may cause complications for expansive plans. (From Financial Times, 4 May 2020)

Buy-to-let market shrinks every year since 2015

The buy-to-let market has declined every year since 2015 according to Ome, a rental deposit replacement scheme. Ome found there was a gradual decline in the number of landlords entering the market, with its value now £35.6bn compared to £37.4bn in 2015. A further fall in rental stock during the Covid-19 lockdown could also lead to higher tenant costs, with rent and deposit rates already increasing at 4% and 3% respectively since 2015. Ome’s co-founder Matthew Hooker adds that the market had seen “a notable decline in appetite following increases to Stamp Duty and changes to tax relief”. (From FT Adviser, 4 May 2020)

CEOs challenged over salary cuts

Critics are warning that CEOs taking salary cuts during the pandemic may not lose out. Top execs’ salaries typically only represent a fraction of their overall renumeration package, with shares and bonuses often contributing the majority. Announcing salary cuts may help raise a company’s share price, partly due to improving goodwill among the public. This can result in CEOs’ personal wealth also increasing as their bonuses are often linked to the company’s share price. (From BBC News, 5 May 2020)