UK house prices flatline

Sterling recovered from an early slip to record marginal gains against the euro and the US dollar yesterday. The pound to euro rate remains near enough its best in a year this morning, with easing tensions in the Middle East relieving some of the pressure that had been piled on.

Britain’s house prices were sent into something of a spiral by the energy crisis. According to Nationwide’s survey, June was another tough month for the housing market, with the average sale price unchanged from May, although thanks to the arithmetic of long-term trends, the annualised rate of growth did pick up to 2.2% from 1.7%. Experts continued to point the blame for these numbers at higher mortgage rates, which are yet to return to their pre-war levels.

In what could be his last major moment as prime minister, Sir Keir Starmer unveiled the UK’s defence spending plans for the next four years yesterday. There was more money for drones and an additional £1.5bn to bring the scheme’s cost to £15bn, closing the funding gap that prompted former secretary John Healey’s resignation.

The controversial plan will see money diverted from infrastructure and energy projects in a bid to bring defence spending as a share of GDP up to 3.5% by the middle of the next decade. Still, even these large commitments mean Britain will spend 2.7% of its combined economic output on defence in 2027, meaning more tough decisions will have to be made.

Today marks the end of the European Central Bank’s annual conference in picturesque Sintra. Christine Lagarde and Kevin Warsh are due to give set-piece addresses to close out proceedings, so be ready for some sharp movements for the euro and the US dollar if they say anything that suggests interest rates might be on the move.

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