LONDON’S BUSINESS NEWSPAPER
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BANK: PRICE HIKES COULD HANG AROUND
RATE BUMPED UP BY 50 POINTS TO TACKLE INFLATION JACK BARNETT THE BANK of England yesterday sent interest rates to their highest level since October 2008, although it slowed the pace of increases to avoid unnecessarily intensifying a looming recession by heaping too much pressure on households and businesses. Threadneedle Street’s monetary policy committee (MPC) voted 6-3 in favour of a 50 basis point rise to 3.5 per cent, a climb down from last month’s 33-year high 75 point jump. The move was in line with market expectations and means the Bank has now kicked borrowing costs higher nine times in a row. The announcement also comes around a year after the Bank’s first rise in this hiking cycle –
a 15 point move from a record low 0.1 per cent. Governor Andrew Bailey (left), who voted for the 50 point rise, and the rest of the MPC have been forced to pivot from stimulative policy that has propped up the UK economy since the financial crisis to tightening aggressively to tame an inflation surge. Despite the rapid scaling in rates, the Bank said there is “evidence” of workers demanding big pay rises and businesses hiking prices rapidly which could lead to “greater persistence” in inflation. The Bank will “respond forcefully” if these upward price pressures stick around. Prices have climbed 10.7 per cent over the year to November, among the hottest rates in four decades, although that is down from 11.1
per cent in October. Economists now think the inflation surge has passed its peak. The Bank and other monetary authorities are now stepping back from aggressive rate rises to avoid heaping greater than necessary pressure on households and businesses. MPC members Dave Ramsden and Jonathan Haskel switched from voting for a 75 point rise last month to a smaller jump this month “point[ing] to an emerging broad-based consensus that the terminal rate is approaching,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said. Rate setters Swati Dhingra and Silvana Tenreyro wanted to keep borrowing costs unchanged, the first time any on the MPC have favoured sitting tight since the Bank’s first hike a year ago. The ECB followed the Bank and US Federal Reserve in climbing down to a 50 point rise, but told investors to expect more such hikes in 2023.
VALUE JUDGMENT Simpson’s gets new planning protection JACK MENDEL THE BATTLE to save Simpson’s Tavern took a step forward yesterday after the historic chophouse was granted new planning protections. The City of London’s Policy and Resource’s Committee designated the threatened lunchspot an ‘asset of community value,’ effectively making it harder for any new owner to turn the building into office or residential space. The bar and restaurant has been
shut since October as a result of a very public row between the building’s landlord and the tenant, Restaurant EC3 Limited, over rent arrears accrued during the pandemic. The City’s Policy Chairman Chris Hayward said Simpson’s is a “City institution.” “Its long history and deeply rooted status at the heart of the community means that it clearly meets the criteria for designation... something which must now be taken into account in any decision” on its future, he said.
Embattled Home REIT say they’re unclear on revenues on investor call EXCLUSIVE
CHARLIE CONCHIE BELEAGUERED property investor Home REIT has admitted it has no idea how much rent it receives through government housing benefit payments despite saying its business model ultimately relies on them, City A.M. can reveal. Home REIT, which invests in social housing for vulnerable
groups, has come under siege from investors over the financial health of its charity tenants, many of whom have signed 25 year leases with little financial track record. The former FTSE-250 firm recently defended the stability of its rental income against attacks from short sellers, claiming it is “ultimately supported by central government funding and Local Authorities' statutory duty to house
homeless people”. However, City A.M. can now reveal the firm keeps no record of how much of its rent is actually covered by exempt housing benefit payments and how much is received via short term support from property developers, raising major questions over Home REIT’s grasp of its revenue stream and the ability of its tenants to service long-term leases.
On a call with investors on 7th December, heard by City A.M., Home REIT bosses said they “can’t provide an exact figure” on the proportion of income received through government payments and how much was paid for by the charity themselves. In a separate call the following day, the firm was unable to clarify the source of its rent and how much came from “provisional rent cover”
provided by property vendors. “The lease agreement that we have with the tenant entitles us to rent from day one,” Home REIT bosses said. “And whether that rent is received from rent cover or whether that money is received from local authorities coming across to us, we don’t have more visibility than that.” £ CONTINUED ON PAGE 3
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