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UK inflation falls to 2.3%, raising questions over interest rate cuts

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UK inflation has dropped to 2.3% in April, marking its lowest level in nearly three years. However, the decline fell short of analysts’ expectations, dampening hopes for an imminent interest rate cut by the Bank of England.

City analysts had anticipated a reduction to 2.1%, closer to the Bank’s 2% target. This discrepancy led markets to adjust their forecasts, now predicting that the Bank’s current rate of 5.25% may not be reduced until August, rather than next month as previously speculated.

The Office for National Statistics (ONS) reported that the decrease from March’s 3.2% was primarily due to lower energy and food costs. The last time inflation was this low was in July 2021. Significant contributions to the drop included a record 27% fall in electricity and gas prices over the past year and a modest 2.9% annual rise in food and soft drink prices, the smallest increase since November 2021.

Illustrating the ongoing strain on household budgets, furniture retailers reduced prices by 0.9% between March and April, while overall goods prices dropped by 0.8% month-on-month. However, annual services inflation, reflecting inter-company charges, remained stubbornly high at 5.9%, only slightly down from March’s 6%.

Despite the overall fall in the consumer prices index (CPI), the ONS noted that higher property rents and mortgage costs kept the alternative CPIH measure, which includes housing costs, elevated at 3% year-on-year. Petrol and diesel prices rose last month, although the price of Brent crude has recently stabilised around $83 (£65) per barrel.

KPMG UK’s chief economist, Yael Selfin, suggested that the chance of an interest rate cut next month had diminished. “Falling inflation nears the Bank of England’s target but may not suffice for an early rate cut,” she stated. Echoing this sentiment, Paula Bejarano Carbo of the National Institute of Economic and Social Research noted that core inflation, which excludes volatile food and energy prices, remains high at 3.9%. Combined with robust wage growth, this persistence could compel the Bank’s monetary policy committee to maintain rates.

Prime Minister Rishi Sunak heralded April’s CPI figure as a “major moment for the economy, with inflation back to normal,” asserting that it validated the government’s economic strategy. Conversely, Shadow Chancellor Rachel Reeves argued that it was premature for the Conservatives to celebrate, highlighting the ongoing pressures of soaring prices, mortgage bills, and taxes.

In the eurozone, inflation held steady at 2.4% in April.

Separate ONS data indicated a larger-than-expected rise in public borrowing for April, with the monthly deficit reaching £20.5bn. Despite a decrease in debt payments, the high cost of servicing government debt exceeded expectations, potentially ruling out pre-election tax cuts.

Economic adviser Martin Beck from the EY Item Club described the public finance figures as disappointing, suggesting that continued higher borrowing costs would likely prevent any significant fiscal easing before the next general election.

Welsh Conservative Shadow Minister for Economy and Energy, Samuel Kurtz MS, praised the inflation drop, attributing it to the UK Conservative Government’s effective economic policies. He called on the Welsh Labour Government to support the economy by fully implementing business rates relief and reforming growth taxes.

Paul Butterworth, CEO of Chambers Wales South East, South West, and Mid, noted that while the reduction in inflation was significant, it remained above the Bank of England’s target. He expressed hope that the continued downward trend might prompt an interest rate cut soon.

Meanwhile, the British Association for Counselling and Psychotherapy (BACP) warned that despite the fall in inflation, the cost of living crisis continues to severely impact mental health. Their recent survey revealed that 74% of respondents felt their mental health was worsened by the crisis, with particularly high impacts on those with pre-existing conditions, women, ethnic minorities, and lower-income households.

BACP’s Director, Dr Lisa Morrison Coulthard, emphasised the need for government action to address these mental health challenges. The BACP has proposed a 13-point action plan to improve access to mental health services, stressing the importance of funding and support for vulnerable populations.

As the nation grapples with economic and mental health pressures, the government’s response to these intertwined issues will be crucial in the coming months.

Business

Legal challenge to £6m holiday park expansion

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A CAMPAIGN group which has launched a legal challenge against a recently-granted scheme for a £6m expansion of a south Pembrokeshire holiday park is appealing for financial support to cover its legal fees.

Back in February, Pembrokeshire planners heard a legal challenge to a granted application for works at Heritage Park, Pleasant Valley/Stepaside had been launched.

The holiday park scheme had previously been backed twice by county planners after a ‘minded to approve’ cooling-off period was invoked as it was against repeated officer recommendations to refuse.

The controversial scheme by Heritage Leisure Development (Wales) Ltd includes the installation of 48 bases for holiday lodges, a spa facility at a former pub, holiday apartments, a café and cycle hire, equestrian stables, a manège and associated office, and associated works.

It is said the scheme, next to the historic remains of the 19th century Stepaside ironworks and colliery, will create 44 jobs.

Officer grounds for refusal, based on the Local Development Plan, included the site being outside a settlement area.

Along with 245 objections to the current scheme, Stepaside & Pleasant Valley Residents’ Group (SPVRG Ltd) – formed to object to an earlier 2019 application – also raised a 38-page objection, with a long list of concerns, describing the current application as “a reincarnation of an earlier application, which first alerted the residents of Stepaside, Pleasant Valley and the surrounding villages of the applicant’s plans to implement a complex and sprawling development which would take over the whole valley”.

The 2019 application – which had been recommended for refusal – was later withdrawn.

Legal challenges have also been mounted in connection with applications on the site.

A legal challenge to try and overturn a council decision to approve three planning applications at Heritage Park was launched in 2021 by the Stepaside and Pleasant Valley Residents Group (SPVRG Ltd), which failed in early 2022.

Following that challenge failure, a question was submitted to full council last year after it was revealed the costs awarded to the council amounted to £10,000, despite the costs being higher.

Members heard that the external legal fees paid totalled £34,000 plus VAT.

In its latest legal challenge, and fundraising appeal, SPVRG Ltd has said: “Permission was granted, even though it was against the recommendation of the planning officers and despite the objections of the three community councils involved, the two local county councillors and 245 residents. It also went against the Local Development Plan.”

It added: “This has been a stark example of a majority of county councillors, first on the planning committee and then in the full council, failing to listen to those who know best – the people who live and work in the area, and their own expert officers.”

Legal fees for the first stage of a judicial review are expected to be at least £14,000, with £1,200 raised to date through SPVRG’s crowdfunding page.

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Business

Emergency work at Royal Lion Hotel given the go-ahead

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A PROMINENT Tenby hotel, which had an Urgent Works Notice served on it by the national park due to the unsafe condition of external windows, has been given the go-ahead for works.

The poor condition the Grade-II-listed Royal Lion Hotel has recently led to an Urgent Works Notice being served on it by the Pembrokeshire Coast National Park Authority.

Safety concerns have been raised in recent months by councillors and members of the public over the hotel, in the town’s conservation area, overlooking the North Beach.

A listed building planning application to reinstate the hotel’s windows was submitted to the authority by South Terrace Developments Ltd.

A spokesperson for Pembrokeshire Coast National Park Authority has previously said: “The Park Authority has served an Urgent Works Notice on the Royal Lion Hotel in Tenby.

“The owners acknowledge the risk posed by the windows and have proposed an alternative scheme to begin remedial works, having recently submitted a listed building application to reinstate the windows to the High Street and White Lion Street frontages.”

An Urgent Works Notice can be served by an authority which believes that a building is not being properly maintained. It gives the owner a specific time in which to carry out necessary works.

The plan for the hotel sought consent for replacement bays and windows, insertion of a new door replacing an existing window, and minor ancillary works.

As a consultee to the proposal, Tenby Town Council’s members sought more information as to the materials to be used for the replacement windows.

They were also concerned about the proposal to install a door opening on to White Lion Street.

It was pointed out: “The carriageway is narrow in this location and vehicles often mount the pavement to pass each other which could compromise safety of individuals using this door.”

A report for planners, recommending approval, said: “An Urgent Works Notice is in force with regards to the unsafe bay windows to the front elevation.

“The application relates only to the original hotel building with listed building consent sought for replacement bays and windows, insertion of a new door replacing an existing window and minor ancillary works.

“The proposed scheme is in keeping with the character of the listed building, and its setting in terms of design and form. As such, the application can be supported subject to conditions.”

The application was conditionally approved by officers under delegated powers.

The hotel was rebuilt in the late C18 and extensively altered 1853-4 when the façade was remodelled and raised a storey to four floors with two tiers of canted bay windows, the report for planners said.

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Business

Goodwick horse training school plans denied

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PLANS for a north Pembrokeshire equine training school for a business that doesn’t yet exist on some of the best agricultural land have been turned down by the national park.

In an application submitted to Pembrokeshire Coast National Park, Mr G W Richards sought permission for a 39-metre-long sand school for use in ‘breaking’ and training horses at Llanwnwr Farm, Trefasser, Goodwick.

An officer report, recommending refusal, said the proposed site was located “within an agricultural field which The Predictive Agricultural Land Classification Map identifies as Grade 3a land”.

It adds: “Best and most versatile agricultural land is defined in Planning Policy Wales as Grades 1, 2 and 3a. Land in grades 1, 2 and 3a should only be developed if there is an overriding need for the development. Officers consider that the applicant has not demonstrated an overriding need for the sand school to be located on agricultural land classified as best and most versatile. A recommendation to refuse planning permission is made.

“The proposal is to develop a sand school for use in ‘breaking’ and training horses. The Design and Access Statement states that this will allow the applicant’s son to stay within the area and develop a small business on the family farm. The business does not currently exist.

“The proposed use involving breaking and training horses is a use which typically requires a countryside location. In this particular case however, the proposal is for a business that does not yet exist and very limited information has been submitted to support the proposal.   In addition to the lack of justification for the use, Officers have significant concerns regarding the specific proposed location of the proposal. Planning Policy Wales Edition 12 section 3.58 states that agricultural land of grades 1, 2 and 3a is the best and most versatile, and should be conserved as a finite resource for the future.”

The application was refused on the grounds it would be “an unjustified development in the open countryside which would result in the loss of best and most versatile agricultural land (Grade 3A)” and “The proposed development is not considered to be well designed in terms of place as other land within the applicant’s control is available of a lower grade agricultural land value”.

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