The week ended with some bad news for the government’s spending plans – and potentially our own wallets – as economic growth unexpectedly shrank for the second month in a row.
Figures released today showed GDP fell 0.1% in May, following a fall of 0.3% in April.
What does this mean for you? Well, it leaves the government with three options: cut spending, increase taxes or change its fiscal rules.
This is because the government vowed to cover day-to-day spending with tax receipts – a shrinking economy means fewer of them.
Coffee prices stabilise
From a wake-up call for the government to your own daily reviver – there was good news for coffee-lovers this week.
Droughts in Brazil and Vietnam and ongoing geopolitical disruption to transportation had driven prices to record highs over the last year, hitting £3.12 per pound in February.
But the market has now reached its peak, according to Italian coffee giant Lavazza, meaning the cost of a cuppa should stabilise.
‘AI bubble set to burst’
Wall Street AI darling Nvidia became the first company to be valued at $4trn – that’s £2.95trn in our money.
But seasoned investor Jeremy Grantham, who correctly predicted the four biggest bubbles of the past five decades, said it is “highly probable” the AI bubble will burst just like dot com did.
Nvidia is “the guy selling the shovels at the peak of the gold rush”, he told The Master Investor Podcast with Wilfred Frost.
“If you’re feeling up for taking risks, I would put a lot of money outside the US in equities.
“And if you’re feeling very nervous, I would have cash or some blend of those two.”
Doctors strikes announced
Back at home, resident doctors announced they will go on strike for five days at the end of July.
They will stage a full walkout from 7am on 25 July until 7am on 30 July.
The British Medical Association is calling for a pay rise of 29.2% to bring salaries back to “full pay restoration”.
Royal Mail to scrap second-class post on Saturdays
Also at the end of this month, the postal service will be allowed to scrap second-class post on Saturdays and deliver second-class letters on alternate weekdays.
The scale-back, starting on 28 July, was proposed after Royal Mail repeatedly failed to meet the universal service obligation to deliver post within set periods of time.
Boost for first-time buyers
Two decisions made this week should make it easier for first-time buyers to get on the housing ladder.
Britain’s banking watchdog permitted lenders to offer more risky mortgages, removing a 15% cap on the proportion of loans banks and building societies can offer at a high loan-to-income ratio.
Meanwhile, the chancellor is set to launch a permanent mortgage guarantee scheme to help first-time buyers with deposits as low as 5%, according to reports.
The government hopes Freedom to Buy will give lenders confidence to offer lower LTV mortgage products year-round.
The equivalent of one pub a day is set to close in Great Britain this year, costing 5,600 jobs, an industry body warned this week.
According to the British Beer and Pub Association, an estimated 378 venues will shut in England, Wales and Scotland.
But some analysts told Sky News money feature writer Brad Young that while the sector has faced wave after wave of challenges, it’s the best pubs that are surviving.
Check in tomorrow morning for Young’s latest Long Read, where he examines the rising number of adults spending thousands on toys – for themselves.
He explores the growing dent in toy sales left by declining birth rates and children seeking to grow up earlier, and speaks to the adults seeking comfort, nostalgia and escapism that are stepping in to plug the gap.
That’s all from us for now, but we’ll be back with our regular live coverage on Monday.
And don’t forget to sign up for our Money newsletter in time for next Friday’s edition.
