Oil price up after Saudi Arabia cuts output; UK mortgage rates rising; car sales grow – business live

UK women have 35% lower pension pots when they hit retirement age compared to men, new government data shows.

The Department for Work and Pensions (DWP) has calculated Britain’s gender pension gap (GPeG) is 35%, based on the uncrystallised median private pension wealth for men and women approaching retirement ago.

The GPeG is smallest for those aged 35-39 (10%) and then increases to 47% for those aged 45-49. The GPeG then decreases again in the later years of working life, the DWP reports.

For those eligible to be automatically enrolled on workplace pensions, the gap is slightly smaller, at 32%.

Last week, the TUC warned that women are more than twice as likely as men to miss out on being automatically put into a workplace pension, because they earn less than the £10,000 threshold.

The GPeG is also caused by the gender pay gap – because men earn more, they pay more into their pensions – and by the unequal division of caring responsibilities. Women are much more likely to take time out of work or work part-time to look after children, meaning less opportunity to pay into private pensions.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, warns that the gender pension gap “looks set to remain with us for some time yet,” despite the governmnet’s childcare reforms.

Morrissey says:

“The gender private pension gap is 35% – less of a gap, more of a gaping chasm! It is shrinking – it was once as high as 42%, but it is still way too high.

There is room for optimism though – for the auto-enrolment eligible population the gap is slightly smaller at 32% so we can hope that gap continues to close as more women save into workplace pension schemes. Participation rates are also high – in some cases higher than men and the real term increase in total female pension savings is £4bn higher than for men since the introduction of auto-enrolment.

Kate Smith, Head of Pensions at life insurance, savings and pensions group Aegon hopes that regularly measuring the gender pensions gap will help set pensions policy:

“While it is widely recognised that there is a persistent gender pensions gap, until now there has been no official means of measuring this. We warmly welcome Pensions Minister Laura Trott’s initiative to create an official definition, which is based on pensions wealth built up by the 55-59 age group.

It’s just not acceptable that the gap sits at 35%, meaning many women are lagging far behind their male counterparts when it comes to retirement provision.

Bloomberg’s energy expert Javier Blas has written about how Saudi Arabia “threw away its own rule book” last weekend, by announcing a unilateral cut to oil output rather than a deal in concert with Opec members.

And so far…. the strategy may not have worked, as oil is only up around 2% despite Saudi Arabia pledging to cut its production by 10% in July.

He writes:

The cut is meant to be only for July, but the Saudis indicated it may be extended if needed. Oil traders reckon that’s likely. Prince Abudlaziz said the cut highlighted how the kingdom “will do whatever is necessary to bring stability to this market.” For stability, read higher oil prices.

Because Riyadh is forfeiting so much production, unless prices rally over the next few days it would end giving up an enormous amount of petroleum revenue. Everyone else inside the OPEC+ alliance would reap the benefits.

To keep earnings unchanged, Riyadh needs oil to surge by more than $10 a barrel to offset the drop in production from April to July. It’s impossible to know what would have happened to oil prices had the Saudis kept output unchanged. But for now, it doesn’t look like the strategy is paying off.

Despite angst about the damage caused by Brexit, the City of London is still managing to attract overseas investment.

The UK remains Europe’s most attractive destination for financial services investment, attracting a quarter of new projects last year, according to new data from EY published this morning.

EY reports that the UK attracted 76 financial services projects in 2022 – an increase of 13 projects from 2021. That helped Britain extend its lead over France, which secured 45 projects last year, a drop of 15.

Overall, there were 292 financial services foreign direct investment (FDI) projects across Europe last year, up 5%.

Germany and Spain were tied third with 31 projects each.

Anna Anthony, UK financial services managing partner at EY, explains:

“The strength of the UK financial market has meant that – even through challenging times – investors see it as the most attractive European financial services market. A lot has happened in the seven years since the EU referendum, and the UK has faced strong competition from its closest competitors. Our research shows that investors recognise the strength, gold-standard governance and resilience of the UK’s financial system and see it as the preferred destination for growth, innovation and access to top talent.

“Of course, we can’t be complacent. Industry and government focus on raising market attractiveness is key and should align with what matters to investors – such as levelling up, enhancing social infrastructure and upskilling local talent – to ensure UK financial services retains and continues to extend its leading role on the global stage.”

A White House official said overnight that the Biden administration is focused on oil prices and “not barrels” after Saudi Arabia announced its plans to make a deep cut to its crude output.

The official, who declined to be named, told Reuters:

“We are focused on prices for American consumers, not barrels, and prices have come down significantly since last year.

As we have said, we believe supply should meet demand and we will continue to work with all producers and consumers to ensure energy markets support economic growth and lower prices for American consumers.”

Last year the US was pushing oil producers to increase output, rather than cutting, to bring down gasoline prices.

Last October, the White House expressed disappointment when OPEC+ cut production quotas. But since then, US crude has dropped to around $73 today from almost $90 in early October.

Over in Moscow, the Kremlin has said that the Opec+ group is an important format for providing stability on global energy markets.

Russia are part of Opec+, which pumps around 40% of the world’s crude.

UK service sector firms lifted their prices again last month, as they tried to pass on higher wage costs, according to the latest survey of purchasing managers.

Data provider S&P Global reports that service sector cost inflation hit a three-month high in May, due to higher payroll costs.

This prompted a jump in output prices, as companies tried to recoup these higher wages – although some firms found their clients were reluctant to accept higher prices.

Tim Moore, economics director at S&P Global Market Intelligence, says there were “intense wage pressures” in the service economy last month, even though employment growth moderated.

Moore added:

Higher salary payments more than offset lower fuel costs, which meant that overall input price inflation edged up to its strongest for three months in May.

Average prices charged by service sector companies nonetheless increased at the second-weakest pace since August 2021 amid some reports of greater price resistance among clients.”

Purchasing managers also reported robust rises in output and incoming new work in May, which helped the sector keep growing.

The S&P Global / CIPS UK services PMI dipped to 55.2 in May, down from April’s 55.9, but still showing solid growth (any reading over 50 shows an expansion).