UK households grow less confident about their finances in October — IHS Markit

Expectations for personal finances over the next 12 months struck a five-month low in September. (File/AFP)
Updated 22 October 2018
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UK households grow less confident about their finances in October — IHS Markit

  • 23 percent of households expect their finances to weaken over the next year
  • The survey asked 1,500 respondents

LONDON: British households’ confidence in their finances worsened this month as their earnings from employment rose at the weakest rate since February, adding to growing signs of caution among consumers, a survey showed on Monday.
The IHS Markit Household Finance Index, watched by the Bank of England as a gauge of consumers’ financial health, cooled to a three-month low of 45.1 from 45.7 in September, though the reading is still one of the highest since the survey’s 2009 launch.
The survey’s findings may raise eyebrows among BoE officials who expect inflation pressure to pick up over the next couple of years, driven by a gradual pick-up in wage growth.
Data firm IHS Markit said the British public’s inflation expectations for the next 12 month fell this month to the lowest in two years, while optimism about house prices was the lowest since July 2016 — just after the Brexit vote.
“UK households cast their most downbeat assessment of current finances in three months in October as weaker earnings growth from employment limited cash availability,” IHS Markit economist Joe Hayes said.
“Looking ahead, households were more concerned about their future budgets.”
Other gauges of financial sentiment among households have also soured recently.
Expectations for personal finances over the next 12 months struck a five-month low in September, according to a closely-watched report from pollsters GfK.
And the latest Thomson Reuters/Ipsos Primary Consumer Sentiment Index showed 23 percent of households expect their finances to weaken over the next year — the biggest proportion since March 2013.
IHS Markit said households’ expectations for Bank of England interest rates were barely changed compared from a month ago, with half of households expecting another interest rate hike within the next six months.
The survey of 1,500 people was conducted between Oct. 11 and Oct. 16.


Lufthansa announces overhaul of budget carrier Eurowings

Updated 24 June 2019
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Lufthansa announces overhaul of budget carrier Eurowings

  • Lufthansa cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16
  • Eurowings’ long-haul business would be managed by Lufthansa in the future

BERLIN: Lufthansa on Monday announced a turnaround plan for Eurowings in which the budget carrier will focus on short-haul flights and seek a 15 percent cut in costs by 2022 in the hope of returning to profit.
The German airline cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Lufthansa said its Eurowings fleet would be standardized on the Airbus A320 family and it would seek to boost productivity at Eurowings by limiting itself in Germany to one air operator’s certificate.
Brussels Airlines — the Belgian national flag carrier which Lufthansa took control of in 2016 — would not be integrated into Eurowings, Lufthansa said. A turnaround plan for Brussels Airlines will be announced in the third quarter.
Lufthansa also said it would start pegging its dividend payout ratio to net profit in the future to give the group more flexibility. It would pay out a regular dividend of 20 percent-40 percent of net profit, adjusted for one-off gains and losses.
Lufthansa said Eurowings’ long-haul business would be managed by Lufthansa in the future.
Carsten Spohr, Chief Executive Officer of Lufthansa, said Monday’s announcements sent “a clear signal that this company cares about its shareholders and tries to create value for them.”
Lufthansa said its Network Airlines — made up of Lufthansa, Swiss and Austrian Airlines — would aim to use innovations in sales and distribution to make a contribution to increasing unit revenues by 3 percent by 2022.
Network Airlines will aim to reduce unit costs continuously by 1 to 2 percent annually, the airline said.