Time to recap….
The UK competition watchdog has opened an investigation into eight housebuilders following evidence they may be sharing commercially sensitive information.
The Competition and Markets Authority (CMA) launched the probe amid concerns it could be affecting the development of sites and prices of new homes.
The CMA also warned that homeowners are often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces, and that the planning system is hampering house-building.
Shares in major housebuilders have fallen following the CMA’s announcement this morning, with Taylor Wimpey down 2.6% in afternoon trading and Persimmon off 1.8%.
In other news….
Retail sales at UK shops fell at a slower rate this month, while a measure of inflation dropped to its weakest in nearly three years, according to industry figures from the CBI.
Microsoft has struck a deal with French artificial intelligence start-up Mistral; it will see the US tech giant help to bring Mistral’s AI models to market.
A Franco-US bidding war is breaking out over UK logistics company Wincanton. French shipping firm CEVA Logistice lifted its existing offer, after America’s GXO made an approach which could lead to a rival bid.
Updated
The latest episode of our excellent series into myths around electric cars is live:
Microsoft strikes deal with French AI firm Mistral
An important development in the artificial intelligence world has been announced.
Microsoft has cut a deal with French AI start-up Mistral, with the two companies agreeing a “strategic partnership” that will see Mistral’s AI models available to customers of Microsoft’s Azure cloud.
Mistral, which was founded in April 2023 develops algorithmic models similar to those from OpenAI – who count Microsoft as a major partner. Mistral models are open-source and shared openly.
Mistral was among the dozen French start-ups invited to last month’s World Economic Forum in Davos by French President Emmanuel Macron.
Mistral caused quite a stir at the gathering of global elite, with the Financia Times reporting that one major US tech executive said Mistral was doing “a great job” competing against sophisticated models made by large US companies like OpenAI and Google.
Microsoft’s ties with OpenAI have been under scrutiny since the ChatGPT creator fired, then rehired, CEO Sam Altman amid boardroom turbulence.
The UK’s CMA watchdog are now seeking comments on the arrangement between Microsoft and OpenAI, which could lead to a formal investigation into the partnership.
In New York, the stock market has opened calmly.
The Dow Jones industrial average of 30 leading stocks is up 105 points, or 0.27%, at 39,237.16 while the broader S&P 500 index is just 3 points higher at 5,092.11 points.
Both indices had ended Friday night at new record closing highs.
Shares in chipmaker Nvidia, which has surged on the back of the AI boom, are up 0.5%.
Traders are waiting for new economic data last thiis wek, including the core PCE index which tracks inflation pressures, and the ISM manufacturing PMI.
They will show if inflation is still cooling, and whether the US economy is performing well.
Britain’s builders are hailing the CMA’s conclusion that Britain’s flawed planning system is to blame for the shortage of new homes.
Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said today:
“Planning should be enabling homes, better places and competition which benefits not just Britain, but the British consumer.
The CMA has correctly identified that the UK planning system does the opposite.”
Israel leaves interest rates on hold
Newsflash: Israel’s central bank has left interest rates on hold, despite the economic damage caused by the war with Hamas.
The Bank of Israel’s Monetary Policy Committee decided today to leave its key interest rate unchanged at 4.5%.
Economists had been split between those who expected a hold, and those who suspected the Bank would cut rates.
Announcing the move, the Bank of Israel points out that the country’s economy shrank by over 5% in the final quarter of last year.
It says theres is a “great amount of uncertainty” with regard to the expected severity and duration of the war, which began over four months ago.
The Bank of Israel says:
There is a great amount of uncertainty with regard to the expected severity and duration of the war. The war is having significant economic consequences, both on real economic activity and on the financial markets, and the country’s risk premium remains high.
Inflation in the past 12 months has moderated, and is within the target range. Expectations and forecasts for the coming year increased slightly, and are around the upper bound of the target range. Expectations for the second year onward are within the target range.
Since the previous monetary policy decision, the shekel weakened by about 0.25 percent against the US dollar, with high volatility, and strengthened by about 1.9 percent against the euro and by 1.4 percent in terms of the nominal effective exchange rate.
GDP contracted by 5.2 percent in the fourth quarter of 2023, compared with the third quarter, due to the effects of the war. Over the year as a whole, GDP grew by 2 percent. The GDP growth was in line with the Research Department’s forecast from January 2024.
Indicators of economic activity and the state of employment point to a gradual recovery following the sharp decline that took place with the outbreak of the war, but there is variance between industries.
Activity in the housing market remained moderate, despite the increase in home prices in the past month. The constraints and activity difficulties in the construction industry in view of the war have moderated, but remain significant.
Economic activity in most countries remained moderate, while the relatively strong economic growth in the US is prominent. Inflation moderated in many countries, but in most it remains above the central bank targets.
The UK government has welcomed the CMA’s report into the UK housebuilding sector.
The Department for Levelling Up, Housing and Communities says the report will now be carefully considered.
A DLUHC spokesperson says:
“Despite the economic challenges, we remain on track to build one million homes this parliament, backed by £10bn investment in housing supply, while our long-term plan for housing will allow us to go even further to build the homes that local communities want and need.”
Logistics firm Wincanton have confirmed that their new mystery approach came from GXO Logistics, as Sky News reported (see 12.10pm).
Wincanton are advising shareholders not to take any action yet; it continues to support the takeover offer from France’s CEVA Logistics.
Wincanton says:
Although GXO has indicated that it is considering making a proposal for a cash offer, as of the date of this announcement, it has not provided the Board of Wincanton with any formal proposal relating to a possible offer, including as to terms or price.
If any such proposal is provided by GXO the Board of Wincanton will carefully consider its terms, in conjunction with its advisers.
A second warning about the risks from shadow banking has come from the Bank of England today.
BoE deputy governor Sarah Breeden told a research conference organised by the Bank today that more research into non-bank lenders is needed.
Otherwise, Breeden warned, there could be a “credit crunch” if hedge funds, pension funds, insurers and asset managers retreat frm the market.
Breeden said (via the FT):
“A shift in the willingness of market-based finance to lend to corporates, particularly those perhaps that are highly leveraged, would have significant implications for the real economy — a credit crunch sourced in market based finance rather than bank lending.”
With the FSB also warning about non-bank financial intermediation risks this morning (see 10.36am), concerns about shadow banking remain high.
Elsewhere in the City, shares in UK-based logistics group Wincanton have jumped 11% as a bidding war looms.
Wincanton agreed last month to be bought by French multinational CEVA Logistics in a deal worth £567m, or 450p per share.
This morning, CEVA hiked its offer to 480p, valuing Wincanton at £604m.
But Wincanton has revealed that it has also “received an approach from a potential competing bidder”, and is providing access to due diligence information as required under the takeover code.
Wincanton, which is still recommending the CEVA bid, says:
Although the potential competing bidder has indicated that it is considering making a proposal, as of the date of this announcement, it has not provided the Board of Wincanton with any formal proposal relating to a possible offer, including as to terms or price. If any such proposal is provided by the potential competing bidder, the Board of Wincanton will carefully consider its terms, in conjunction with its advisers.
Wincanton don’t name the mystery second bidder.
But Sky News’ Mark Kleinman can be relied on at such times.
He’s learned that it is GXO, the American global contract logistics company which acquired retail logistics company Clipper in 2022.
Exclusive: GXO Logistics, the US-based owner of Britain's Clipper Logistics, has approached London-listed Wincanton about a potential rival offer that would trump an agreed £600m takeover by CEVA Logistics, a French operator in the sector. https://t.co/SqBjXHlh60
— Mark Kleinman (@MarkKleinmanSky) February 26, 2024
Shares in Wincanton have gained 53p to 501p, above CEVA’s new offer, implying that traders anticipate further bidding action.
Wincanton employ over 20,000 people, with 7,400 vehicles operating from more than 160 sites across the country. It ships products for food and consumer goods firms; retail and manufacturing; eCommerce; the public sector; major infrastructure; building materials; fuel; and defence.
Updated
The CMA’s investigation into information sharing (see opening post) is more painful for housebuilding companies than its conclusion that the housing market needs reform (see 7.30am).
So says Oli Creasey, property analyst at Quilter Cheviot, who explains:
Up first is the conclusion from the CMA’s report that places the blame for slow house-building (the country habitually misses its target for new home deliveries) largely on the planning system that it describes as protracted and unpredictable, as well as under-resourced. That may not be a surprise for anyone who has tried to navigate the planning permission system in recent times, but is something of a vindication for housebuilding firms.
The original study was also looking into the industry’s use of landbanks, with early suggestions being whether builders were stockpiling land and artificially slowing delivery. The conclusion instead is that land-banking is a consequence of the slow planning process – i.e. it might make sense to carry multiple years’ worth of land on balance sheet if planning takes years to complete. Housebuilders will be relieved that their strategy has avoided this blame.
However, the other headline – that housebuilders may have shared information regarding pricing, incentives and sales rates – is more troubling. While it is not named as a primary factor in the under-delivery of new homes, it is still possible that firms are found to have broken the law, and fines may be levied as a result. It is difficult to judge the probability of this outcome.
While the property market does not have a reputation for arch-secrecy, it’s also unlikely that a series of “smoking gun” emails will be found in senior executives’ email accounts. How strong a conclusion the investigation comes to, and what the impact on the housebuilding firms will be, remains to be seen.
UK retail sales slump eases in February
Just in: the slump in UK retail sales has eased this month, which may lift hopes that the economy is escaping recession.
The CBI has reported that retail sales fell at a modest pace in the year to February, with a net balance of -7% of retailers reporting a fall in sales rather than a rise.
That is a pick-up on the “rapid decline” of -50% iin the year to January, and is the weakest fall since retail sales started sliding 10 months ago.
Martin Sartorius, CBI principal economist, explains:
“The slump in retail activity eased in February following an exceedingly dreary start to the year. Nevertheless, with sales expected to continue falling next month, retailers are still planning to reduce headcount and investment going forward.
Many retailers will expect to see further pressure on their margins due to the upcoming hikes in business rates and the National Living Wage. In the Spring Budget, the Chancellor should aim to cap the increase in the England business rates multiplier and work with the devolved administrations to do the same, which would help retailers return to a path to growth.”
Official retail sales data from the ONS has showed there was a slump in retail sales in December, followed by a bounceback in January.
In a boost to consumers, today’s CBI data shows that selling price inflation year-on-year in February was the weakest since the middle of 2021. A balance of 54% of retailers reported raising prices this month, down from 73% in November.
Similar annual growth in selling prices is expected next month (+54%), the CBI adds.
Back in the UK, household costs have jumped by almost a quarter since December 2019, new data from the Office for National Statistics shows.
The ONS has investigated the impact of higher mortgage interest rates on household costs. It found that average UK household costs, as measured by its Household Costs Indices (HCI), increased by 5.0% in the year to December 2023.
That followed a 12.4% increase over the same period in 2022.
On a cumulative basis, household costs are up 24.7% since December 2019, the ONS reports.
The data also shows that owner occupiers’ housing costs have overtaken food and energy as a leading driver of inflation.
The ONS says:
Households with the largest mortgages were most exposed to this increase in owner-occupiers’ housing costs, which most often include working-age households with children and above-average disposable income.
The contribution of owner occupiers' housing costs has become increasingly significant, overtaking food and energy as a leading driver of the annual increase in the Household Cost Indices.
— Office for National Statistics (ONS) (@ONS) February 26, 2024
Read our new article ➡️ https://t.co/YUFNaWiIDT pic.twitter.com/2qdxcicAk5
FSB chair warns of challenging outlook to global financial stability
The world’s most powerful financial watchdog has warned that the outlook for global financial stability is “challenging”.
In a letter to G20 finance ministers and central bank chiefs, Klaas Knot highlights debt servicing burdens, and stretched asset valuations in some key markets.
The FSB is also concerned about leverage and liquidity mismatch in the market for “non-bank financial intermediation (NBFI)”, more commonly known as “shadow banking”.
Ths FSB explains:
In his letter, he warns of the challenging outlook for global financial stability, despite steady economic growth and signs of easing global financial conditions.
Debt service challenges could increase, and exposures to sectors facing existing headwinds, like commercial real estate, bear close monitoring. Asset valuations are also stretched in some key markets. Abrupt shifts in market pricing could expose vulnerabilities in the financial system, including those related to leverage and liquidity mismatch in NBFI.
G20 finance chiefs are due to meet in Sao Paulo, Brazil this week, on 28th and 29th February.
A new report into Britain’s mental health crisis has found that young people are more likely to be out of work because of ill health than people in their early 40s.
The Resolution Foundation is warning that this will have large economic consequences, as that pattern of who is out of the labour market due to ill health changes.
Here’s the key points from their new report:
Over one-in-three (34 per cent) of young people aged 18-24 reported symptoms that indicated they were experiencing a common mental health disorder (CMD) like depression, anxiety or bipolar disorder – a big increase since 2000 when less one-in-four (24 per cent) reported these problems. As a result, more than half a million 18-24-year-olds were prescribed anti-depressants in 2021-22.
Young people with mental health problems are more likely to be out of work than their healthy peers. Between 2018 and 2022, one-in-five (21 per cent) 18-24-year-olds with mental health problems were workless, compared to 13 per cent of those without mental health problems.
Universities have become hotbeds for mental health problems: the share of young full-time students with a CMD has increased at a far faster rate than that of working or out-of-work young people (up 37 per cent, compared to 15 per cent and 23 per cent respectively).
Non-graduates with mental health problems are particularly disadvantaged in the labour market. One-in-three young non-graduates with a CMD were workless, compared to 19 per cent of non-graduates without mental health problems, and 17 per cent of graduates with a CMD.
A shocking four-in-five (79 per cent) 18-24-year-olds who are workless due to ill health only have qualifications at GCSE-level or below, compared to a one-third (34 per cent) of all people in that age group.
Mental health problems are blighting young people’s education. An estimated one-in-eight (12 per cent) of 11-16-year-olds with poor mental health problems missed more than 15 days of school in the autumn term of 2023 compared to just one-in-fifty (2 per cent) of their healthier classmates.
Kicking off our event @_louisemurphy says that Britain has a youth mental health crisis. One-in-three 18-24-year-olds report having a common mental disorder, rising two-in-five young women. pic.twitter.com/RGwOO4JkO3
— Resolution Foundation (@resfoundation) February 26, 2024
This is having real-world impacts.
— Resolution Foundation (@resfoundation) February 26, 2024
On health, more than half a million 18-24-year-olds were prescribed anti-depressants in 2021-22. pic.twitter.com/POTMhkv0Kj
And on the labour market, people in their early 20s are now more likely to be economically inactive due to ill-health than those in their early 40s. This is a big shift over the past 25 years... pic.twitter.com/GwV1yMbqyO
— Resolution Foundation (@resfoundation) February 26, 2024
The regulatory probe into possible anti-competitive information sharing is “the last thing” Britain’s housebuilding sector needs, says Russ Mould, investment director at AJ Bell:
“While they may all profess to want to help with the national mission of building more homes – and undoubtedly, they do help – there is also an advantage to housebuilders if the balance between supply and demand remains tight.
This helps sustain higher house prices and supports their margins. In this context, the competition authorities are taking a closer look to see if some of the big housebuilders – including Barratt, Berkeley, Persimmon, Redrow, Taylor Wimpey and Vistry – have been sharing commercially-sensitive information and using that knowledge to make decisions on build-out of sites and the price of new homes.
The CMA notes this is not a significant factor in the persistent under-delivery of homes, nonetheless it is sufficiently concerned that competition in the market has been undermined to take a closer look.
A regulatory probe is the last thing the sector needs. It is just finding its feet again after a tricky period for the property market as demand dried up thanks to higher borrowing costs.
Housebuilders may also argue the proposed introduction of more red tape, including the establishment of a New Homes Ombudsman, will clip the sector’s wings. However, previous issues around build quality and treatment of customers means they are reaping what they have sown.”
Where the CMA will be preaching to the converted when it comes to the industry is identifying problems in under-resourced local planning departments – a familiar grumble in the housebuilding space.”
The housebuilders are helping to drag the London stock market into the red this morning.
The blue-chip FTSE 100 index is down 27 points, or 0.35%, at 7679.
The top faller is Ocado, the grocery technology company, down 5.4% after Peel Hunt cut their price target on its stock, followed by Bunzl (4.8%), the distributor, which warned its operating margins will fall this year.
Bank of England to cut interest rates five times this year, Goldman Sachs predicts
Elsewhere this morning, Goldman Sachs have predicted the Bank of England will cut interest rates five times this year.
That would be a more aggressive easing programme than the financial markets expect.
Last week, Goldman pushed back its forecast for the first rate cut to June, from May, when it expects rates to be lowered from 5.25% to 5%.
And overall, Goldman then expects four more quarter-point rate cuts – while the money markets expect fewer than three this year.
Goldman’s team, led by Sharon Bell, told clients this morning:
The first rate cut has not always been received positively by the markets. Growing growth concerns in 2001 and 2007, for example, more than offset the support that rate cuts provided.
The CMA has the power to impose penalty fines of up to 10% of applicable turnover, if it concludes that a firm has broken competition law, points out Anthony Codling, analyst at RBC Europe Limited.
Codling suggests that. two or more housebuilders who operate in the same local market could potentially share information to ensure that they don’t both build all their 2 and 3 bed homes at the same time, for example.
But he argues that housebuilders are “price takers” rather than price makers – as the market for existing homes is so much larger than the new build market.
Codling told clients this morning:
The number of sites where more than one housebuilder operates in exactly the same local market will be in the minority in our view, and we do not believe that housebuilders can materially impact house prices in ways against the public interest.
In our view they have more power to cut rather than increase house prices. There may be a few cases where information about house mix phases have been shared in order to increase the choice of homes built in any one period, but site plans are documents of public record.
However, no system is perfect and there may be a small number of bad actors who have operated outside of their employer’s own policies and procedures and such instances if found may lead to a penalty fine.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, explains why shares in housebuilders are in the red this morning (see 8.03am):
“Housebuilder stocks have fallen as the CMA launches a probe into the sector. Concerns include poor customer outcomes from the quality of new homes, with faults on the rise over the last ten years.
A major trigger for the investigation is accusations that some major housebuilders are sharing confidential and commercially sensitive information relating to sales prices and sales rates.
Other criticism is levelled at the UK’s overly clunky planning processes, which are contributing to the under-supply of new homes. Seeing rules streamlined could help some of the big listed names shift more houses, but it could also increase competition.
The accusations of poor build quality and anti-competitive practice will be of more immediate importance, as findings against either strike could lead to margin degradation in the short term, but this is far from guaranteed.
The CMA’s new competition probe comes less than three weeks after the UK’s biggest housebuilder, Barratt, struck a deal to buy its smaller rival Redrow for more than £2.5bn.
The two companies reached an agreement over an all-share offer from Barratt, which will cement its position as the country’s largest housebuilder.
The merger between Redrow and Barrat will make this sector even more oligopolistic. Factor in the lack of quality of the product delivered, and the windfall from leasehold, as they retain and/or sell on the land and freeholds, it is high time someone took a closer look here. https://t.co/VmI1aDx2mH
— Claus Vistesen (@ClausVistesen) February 26, 2024
CMA list of housebuilding concerns:
— Emma Fildes (@emmafildes) February 26, 2024
- Planning system hold ups = too few homes built
- Producing houses at a rate they can be sold without need to reduce
-Estate Management charges
-Quality of some new homes
- Investigation into 8 developers info sharing https://t.co/Y4euisX1Os
Housebuilders' shares fall
Shares in housebuilders have fallen at the start of trading in London, after the CMA launched its investigation into the sharing of commercially sensitive information.
Persimmon are down 3% on the FTSE 100, followed by Taylor Wimpey (-2.2%). Barratt and Berkeley have both lost 1.5%.
On the smaller FTSE 250 index, Bellway are down 2.3%, Redrow has lost 2.2% and Vistry have lost 1.8%.
Richard Hunter, head of markets at interactive investor, says:
The announcement of a probe by the Competition & Markets Authority on the housebuilders weighed heavily on the likes of Persimmon, Taylor Wimpey, Barratt Developments and Berkeley Group.
Updated
You can read the CMA’s report into the UK housebuilding sector, here.
We’ve found fundamental concerns in the housebuilding market, following our market study in England, Scotland and Wales.
— Competition & Markets Authority (@CMAgovUK) February 26, 2024
Read more: https://t.co/NyhnvHYnfr#HousingSector #Housing
In it, the CMA points out that the profitability of the 11 largest housebuilders has been generally higher than we would expect in a well-functioning market, apart from during and after the financial crisis.
Profits in the period from 2013 to 2019 were particularly high, it says sternly.
However, the watchdog does not believe it should intervene, for three reasons:
The housing market is highly cyclical and impacted by external factors, including the wider economic climate.
Profitability during the 2010s is likely to have been boosted by supportive economic circumstances and temporary factors that are no longer in evidence, in particular a prolonged period of low interest rates and the Help to Buy schemes’ support for first-time buyers.
There was significant variation in the performance of individual large housebuilders in our sample.
The CMA has made several recommendations for how to improve the UK housing sector.
They are:
requiring councils to adopt amenities on all new housing estates.
introducing enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.
establishing a New Homes Ombudsman as soon as possible and setting a single mandatory consumer code so homeowners can better pursue homebuilders over any quality issues they face.
But, the CMA adds, policymakes could make “more fundamental interventions”, which would have a significant impact on the quality and affordability of new homes being built.
It adds:
These interventions would include a significant increase in non-speculative house building that has previously been led by local councils and housing associations.
CMA calls for substantial intervention in the housebuilding market
The Competition and Markets Authority are calling for a “significant intervention” from the government into the housing sector, so that enough good quality homes are delivered in the places that people need them in.
CMA chief executive Sarah Cardell has told Radio 4’s Today Programme that the regulator has three areas of concern.
First, the significant shortage of supply of new-build housing, partly because the planning process incredibly complex, long costly and unpredictable.
“That is a key contributor to the under-delivery of new-build housing across Great Britain,” Cardell says.
But there’s also too much reliance on speculative private development to provide the majority of new build homes the country needs
Secondly, the CMA is concerned about the “poor outcomes for new home owners”. Many face “high and unpredictable charges” for privately managed public amenities such as roads, sewers and green spaces.
Another poor outcome is the poor quality of some new homes, and the challenges faced by homeowners to get redress where quality issues arise.
And thirdly, the discovery that some major housebuilders are potentially exchanging confidential, commercially sensitive information relating to sales prices, sales rates. That finding has prompted today’s competition inquiry.
Cardell says:
It’s clearly critically important that all companies comply with competition law.
CMA highlights "fundamental concerns" over housebuilding market
The CMA’s final report into the UK housebuilding market – released alongside news of the competition probe – highlights a number of problems with the sector.
Having conducted a year-long study into the sector, the watchdog has identified several areas where it is failing:
Planning Rules: the planning systems in England, Scotland and Wales are producing unpredictable results and often take a protracted amount of time for builders to navigate before construction can start. The report highlights that many planning departments are under resourced, some do not have up to date local plans, and don’t have clear targets or strong incentives to deliver the numbers of homes needed in their area. They are also required to consult with a wide range of statutory stakeholders – these groups often holding up projects by submitting holding responses or late feedback to consultations on proposed developments.
Speculative Private Development: the report found another significant reason behind under delivery of homes are the limitations of private speculative development. The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than diversifying the types and numbers of homes they build to meet the needs of different communities (for example providing more affordable housing).
Land Banks: the CMA assessed over a million plots of land held by housebuilders and found the practice of banking land was more a symptom of the issues identified with the complex planning system and speculative private development, rather than it being a primary reason for the shortage of new homes.
Private Estate Management: the CMA found a growing trend by developers to build estates with privately managed public amenities – with 80% of new homes sold by the eleven biggest builders in 2021 to 2022 subject to estate management charges. These charges are often high and unclear to homeowners. Whilst the average charge was £350 – one-off, unplanned charges for significant repair work can cost thousands of pounds and cause considerable stress to homeowners. The report highlights concerns that many homeowners are unable to switch estate management providers, receive inadequate information upfront, have to deal with shoddy work or unsatisfactory maintenance, and face unclear administration or management charges which can often make up 50% or more of the total bill.
Quality: housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress. Analysis also suggests that a growing number of homeowners are reporting a higher number of snagging issues (at least 16). The CMA’s consumer research and other evidence revealed that a substantial minority also experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.
Updated
Introduction: CMA launches competition probe into UK housebuilders
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s competition watchdog has launched an investigation into Britain’s housebuilders, over concerns that they are sharing commercially sensitive information with each other.
The Competition and Markets Authority (CMA) had announced an investigation under the Competition Act 1998 into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry, having seen evidence that some housebuilders may be sharing information.
Such behaviour could influence the build-out of sites and the prices of new homes and weaken competition in the housing market – an area where too few houses are being build – the CMA fears.
🚨BREAKING: UK CMA STARTS COMPETITION ACT PROBE INTO EIGHT HOUSEBUILDERS $BWY.LN pic.twitter.com/iuP2Vq184o
— Smartkarma (@smartkarma) February 26, 2024
Sarah Cardell, chief executive of the CMA, says it is “important we tackle anti-competitive behaviour if we find it.”
News of the investigation comes as the CMA also publishes its final report on the housebuilding market in Great Britain.
The report blames the persistent under-delivery of new homes on the “complex and unpredictable planning system” and the “limitations of speculative private development” (where builders obtain land, secure planning permission, and construct homes without knowing in advance who will buy them or for how much).
Les than 250,000 new homes were built last year across Great Britain – well below the 300,000-target for England alone, the CMA points out.
The CMA also voices “substantial concerns” about estate management charges – where homeowners face high and unclear charges for the management of facilities such as roads, drainage, and green spaces.
The watchdog also found concerns over the quality of some new housing, an area where many owners have reported problems in the last decade.
More to follow….
Also coming up today
Trade ministers from around the world are gathering in Abu Dhabi for a World Trade Organization meeting.
The WTO hope to set new global commerce rules, but chief Ngozi Okonjo-Iweala struck a cautious tone ahead of the meeting, telling reporters:
“Politically it’s quite a tough time.
I’m hopeful we will still be able to pull out some of the deliverables.”
For the UK, Kemi Badenoch will be pushing for tariff-free trade, and holding talks with Gulf States to progress talks on a free-trade agreement, the Department for Business and Trade (DBT) says.
Israel’s central bank is setting interest rates, and is expected to cut borrowing costs as the war with Hamas hits its economy.
While in the US, Amazon is replaces Walgreens Boots Alliance in the Dow Jones Industrial Average share index.
The agenda
9am GMT: Bank of England holds its annual BEAR research conference:
11am GMT: CBI distributive trends survey of UK retail
2pm GMT: Bank of Israel interest rate decision
Updated
