Eurozone falls into recession; US jobless claims jump; storm clouds over UK housing – business live

LIVE – Updated at 15:14

Eurozone economy shrank by 0.1% in the final quarter of last year, and the first three months of 2023, putting it into technical recession.

Afternoon summary

Royal Mail blow as government blocks plan to scrap Saturday deliveries

15:12Jasper Jolly

© Provided by The Guardian
A Royal Mail delivery worker in Ashford, Kent.

Royal Mail’s plan to stop delivering post on Saturdays has been blocked by the government in a blow to the company, which has claimed a six-day service is financially unsustainable.

The postal company had requested that the government change the universal service obligation (USO) – a condition of its privatisation in 2013.

However, the business department said it had no plans to adjust the requirement to deliver on Saturday as well as the five weekdays, in a response to a report by MPs on the business select committee. MPs would have to vote through any changes to the obligation.

Kevin Hollinrake, a minister at the Department for Business and Trade, wrote:

“We currently have no plans to change the minimum requirements of the universal postal service as set out in the Postal Services Act 2011 … including six-day letter deliveries.”

Related: UK government rejects Royal Mail request to end Saturday deliveries


The US stock market has opened a little lower, with the Dow Jones industrial average losing 32 points or 0.1% in early trading, to 33,632.

The London market is lower too, with the FTSE 100 down 33 points or 0.44% at 7,591 points.

Germany’s DAX is flat, though, while France’s CAC has gained 0.3%.


On today’s rise in US jobless claims, Ryan Brandham, head of Global Capital Markets for North America at Validus Risk Management, says

“Today’s figures came in higher than expected at 261k – the highest print in well over a year.

While it only represents a single data point, this could be signalling a softening in a labour market which has been very resilient to interest rate hikes to date. USD is at the margin bearish for today’s session, and overall this could dampen the probability of a hike for the June FOMC Meeting.”


Here’s some snap reaction to the jump in US jobless claims last week, reported today:


The broad picture from today’s eurozone GDP report is that the US has outpaced the eurozone since the start of the pandemic, with Germany lagging behind.

US jobless claims highest since October 2021

Over in the US, the number of people filing new claims for unemployment benefit has hit the highest in over 18 months.

There were 261,000 ‘initial claims’ filed across America last week, an increase of 28,000 from the previous week.

This is the highest number of people signing on for jobless support since October 30, 2021.

It suggests that the US labor market could be softening, which could possibly deter some Federal Reserve policymakers from voting for another rise in interest rates this month.

However, the number of people receiving at least two week’s of support dropped by 37,000 to 1,757,000, which may indicate people are managing to find new jobs and return to work.

More strikes at Amazon Coventry, as union recognition bid stumbles

13:33Heather Stewart

The GMB has reluctantly withdrawn its attempt to win formal union recognition at Amazon’s Coventry warehouse, accusing the firm of drafting in more than 1,000 extra workers to skew the decision.

GMB members at the site made a formal request for recognition to the independent central arbitration committee (CAC) last month after a concerted recruitment drive for members that it believed took it past the necessary threshold of support.

Workers at the vast depot, known as BHX4, have held a series of strike days since January – the first at a UK Amazon facility – and the GMB says membership has more than quadrupled to 800.

The union believed that comfortably represented more than half of the 1,400 staff it estimated to be working at the site, enough to prompt the CAC to grant statutory recognition.

On the basis of evidence submitted by the firm, however, the Guardian understands the CAC has endorsed Amazon’s statement that as many as 2,700 people are now employed there.

Here’s the full story, by my colleague Heather Stewart:

Related: GMB halts bid for official Amazon union claiming firm skewed staff numbers

Further strike action at Amazon Coventry will take place on 12, 13 and 14 of June, the GMB have announced.

Full story: Eurozone sinks into recession as cost of living crisis takes toll

13:09Richard Partington

The eurozone slipped into recession in the first three months of the year, after official figures were revised to show the bloc’s economy shrank as the rising cost of living weighed on consumer spending.

Figures from Eurostat, the EU’s statistical agency, showed gross domestic product (GDP) fell by 0.1% in the first quarter of 2023 and the final three months of 2022 after revisions to earlier estimates. A technical recession is generally defined as two consecutive quarters of negative growth.

Previous estimates suggested the single-currency bloc had narrowly avoided recession with zero growth in both quarters.

The updated figures showed the wider EU swerved a recession after GDP rose by 0.1% in the first three months of the year, after a contraction of 0.2% in the final quarter of 2022.

The UK avoided entering a recession at the start of the year, while growth in the US also remained positive. However, GDP volumes in the eurozone and the EU are more than 2% higher than the level recorded in the final quarter of 2019 before the Covid pandemic struck – unlike in the UK, where the economy remains 0.5% smaller.

More here.

Related: Eurozone sinks into recession as cost of living crisis takes toll


The wider European Union avoided falling into recession last winter.

GDP across the EU rose by 0.1% in January-March, after shrinking by 0.2% in October-December, meaning it avoided two consecutive quarterly falls in a row.

Poland was the fastest-growing EU member, with its GDP rising by 3.8% in Q1 2023.


The news that the eurozons has fallen into recession is “not a major surprise”, Holger Schmieding, chief economist at Berenberg, tells clients today:

He says:

When Putin started to close the Nord Stream 1 gas pipeline in stages last June, we had predicted that the spike in gas and electricity prices and gas shortage fears would likely push the Eurozone into recession over the winter.

Instead, two other aspects are noteworthy, Schmieding adds:

First, initial data had suggested that the Eurozone had avoided a recession, with stagnation in late 2022 and even slight growth in early 2023, causing observers like us to raise our calls.

Second, whereas the Eurozone had coped with the Putin shock rather well over the winter, two unrelated factors turned the underlying expansion in economic activity into a contraction in real GDP in early 2023. Without an Irish accounting quirk and a post-COVID-19 plunge in German government spending, the Eurozone economy would have printed growth of almost 0.4% qoq in Q1, in line with the solid PMI readings in early 2023 and a 0.23% qoq gain in gross value added in Q1.

UK spent £40bn on winter energy support

The cost of subsidising UK energy costs for households and businesses last winter hit almost £40bn.

New government figures show that protecting households and businesses from spiralling energy bills between October 2022 and March 2023 cost £39.3bn.

That is the most ever provided to subsidise household bills in UK history, and works out at £215m per day. It follows Liz Truss’s decision to cap typical bills at £2,500 per year.

Energy Security Secretary Grant Shapps said:

“Putin’s illegal invasion of Ukraine and his reckless attempts to hold the West to ransom sent energy prices spiralling around the world.

“We acted swiftly and decisively to protect families and businesses from the full impact of that shock – covering around half a typical energy bill over winter. This helped safeguard jobs and livelihoods, and enabled many families to heat their homes.”

“And we will not stop leading the world in standing up to Putin, helping countries around the world to move away from Russian fossil fuels – just as we have done having not used any Russian gas for the past 12 months.”

Sky: Telegraph owner tables last-ditch bid to keep control of newspapers

There is a twist in the battle over the future of the Daily Telegraph.

Sky News are reporting that the Barclay family, which lost control of their crown jewel media assets yesterday, have tabled a proposal to restructure its debt and regain control.

The move comes a day after the Bank of Scotland appointed receivers to seize the shares owned by the Barclay family in the holding company that ultimately controls the national newspapers and the Spectator magazine.

Related: Daily Telegraph and Sunday Telegraph newspapers to be put up for sale

Sky News’s Mark Kleinman explains:

Sky News has learnt that the Barclay family submitted an offer to Lloyds Banking Group on Wednesday that would have entailed the bank writing off a portion of the roughly-£1bn it is owed.

Further details of the proposal – which followed one last week and was the latest in a series made by the Barclays in recent months – were unclear, although sources said it had been rejected by Bank of Scotland, the Lloyds subsidiary which is owed the money.

Carlyle, the private equity firm which already holds a portion of debt attached to Barclay-backed companies including the online shopping business Very Group, is understood to be involved in the talks with the family.

He adds, though, that the prospects of a deal being reached by the two sides “appear remote”.


Back in the UK, retail chain Frasers has raised its stake in ASOS, again.

The online fashion chain has told the City that Frasers, the group behind Sports Direct, now owns 9.86% of ASOS’s stock, up from 8.8%.

Earlier this week, Frasers bumped up its stake from 7.4%.

Today’s move takes Frasers closes to owning a 10% stake which gives it the power to block a statutory compulsory share purchase after any takeover offer. It would give Mike Ashley, founder of Sports Direct, a seat at the table if a bid for ASOS does emerge.

My colleague Sarah Butler reported on Tuesday:

Asos is seen as a potential target after José Antonio Ramos Calamonte, the chief executive of Asos, who took over last summer, was forced to reveal a £291m loss in the six months to 28 February after sales fell by 8%, including a 10% drop in the UK amid what it called a “challenging trading backdrop”.

Povlsen and Camelot Capital Partners, a US hedge fund founded by young financier William Barker, who wants to emulate his hero Warren Buffett, both led the way in a recent £75m equity raise by Asos last month – part of refinancing package to replace a £350m loan, which was due to be repaid next year. Camelot, Asos’s second largest shareholder, has shown an interest in online fashion players, also snapping up a stake in the UK’s Boohoo in recent months.


Very weak domestic demand helped to push the eurozone into recession, says Daniel Kral, senior economist at Oxford Economics.

AP: Europe’s economy has shrunk. For households that are hurting, it’s just numbers

The eurozone’s winter contraction shows the impact of the loss of Russian natural gas and high inflation on consumer spending, reports Associated Press.

They say:

The economic growth figure for the 20 countries that use the euro currency was revised down from zero to minus 0.1% for the fourth quarter of 2022. The number for the first three months of this year also was downgraded from scant 0.1% growth to minus 0.1%.

That means the eurozone endured two consecutive quarters of declining output, which is one definition of recession often used in political and economic discussions, dubbed a “technical” recession.

The small shift in numbers doesn’t change what households already were experiencing: rising prices at the grocery store, paying more interest on their mortgages and struggling for wages that keep up with the rising cost of living.


Today’s news that the Eurozone fell into a (slight) recession should make the ECB’s policymakers pause a bit before pressing with higher interest rates, says Professor Costas Milas, of the University of Liverpool’s Management School.

Professor Milas tells us:

What worries me is Germany’s financial stress index which takes into account movements in interest rates and financial asset volatility such as the volatility of the stock market and/or the exchange rate.

Currently, the index is fairly elevated (in historical terms) which signals that Eurozone’s GDP will struggle 12 to 18 months into the future.

This is also bad news for the UK because Eurozone’s potential underperformance will also hit the UK economy on the top of current predictions that show anaemic UK growth….


As well as falling into recession, the eurozone is lagging behind major advanced economies.

The UK, for example, avoided recession last winter by growing 0.1% in October-December, and again in January-March.

The US grew faster – expanding by around 0.3% in Q1, and 0.6% in Q4 2022.

Japan’s economy made a decent start to the year, growing by 0.7% in the January-March quarter, new revised data today showed.


Dan O’Brien, chief economist of the Institute of International and European Affairs, says the eurozone would have avoided today’s technical recession if Ireland’s GDP was excluded.

Ireland’s GDP fell by 4.6% between January and the end of March, driven by a contraction in the multinational dominated industry sector.

Ireland’s Gross National Product (GNP) – a measure of economic activity that excludes the profits of multinationals – shrank by 8.0% in the quarter.

But a third measure called “Modified Domestic Demand”, that tracks underlying domestic activity, rose by 2.7% in the quarter.


Bert Colijn, ING’s senior economist for the eurozone, argues that the eurozone is in “broad stagnation” rather than a full-blown recessionary environment.

Colijn points out that the contractions in Q4 2022 and Q1 2023 are small (just 0.1%), and that eurozone employment has kept rising, saying:

The decline of 0.1% in both the fourth and first quarters is so minimal though, and the labour market is so strong that it’s hard to argue that this is a recessionary environment. The stagnation of the economy does mark a clear cut from the recent post-pandemic boom though.

The significant downward revision was mainly due to Germany revising down its numbers as new data came in. This fuels the idea that March activity was very weak, making a quick rebound in the second quarter unlikely. With May survey data being weak across the board, it is likely that we only get a modest uptick after the two quarters of downturn.

Overall, the eurozone economy is very much back to muddling through, as monetary policy starts to weigh more heavily on activity, post-pandemic spending fades and the energy crisis looms.


The good news for the eurozone is that energy prices are much, much lower than last summer.

Month-ahead European wholesale gas prices are trading around a two-year low, recovering from their surge after the Ukraine invasion.

Dutch front-month gas, Europe’s benchmark, is trading around €28 per megawatt-hour today, down from over €300/MwH last August. Last month it dropped to around €25/MwH, the lowest since May 2021.

This markets expert argues that, despite falling into recession, the eurozone has avoided a real calamity – the energy crisis didn’t lead to gas shortages, helped by a mild winter:


With the effect of higher interest rates still to be fully felt, economic activity in the eurozone will “remain sluggish during the rest of 2023.”, predicts Diego Iscaro, Head of European Economics at S&P Global Market Intelligence.

Iscaro adds:

We don’t expect the contraction in activity during the first quarter to dissuade the ECB (European Central Bank) from rising interest rates in next week’s meeting, when we see rates rising by 25 basis points.

However, the figures reinforce our view that, while policy rates will rise further in the short term, they are nearing their peak.”

Eurozone expected to “remain subdued in the second and third quarters”

News that the eurozone economy is shrinking will create a headache for the European Central Bank.

Euro area annual inflation is expected to be 6.1 % in May 2023, down from 7.0 % in April 2023, but still three-times higher than the ECB’s target.

But the weaker-than-expected economy complicates the decision facing the ECB as it weighs up whether to raise borrowing costs to cool demand.

Tom Hopkins, portfolio manager at BRI Wealth Management, says:

“The growth figure, coupled with data showing inflation remaining stubborn in several eurozone countries, complicates the challenge facing the region’s rate-setters, who must decide whether to continue raising borrowing costs.

We believe the eurozone’s performance will remain subdued in the second and third quarters as softer bank lending pulls down investment and consumer confidence remains fragile.”

Eurozone GDP: the details

Falling household and government spending helped to push the eurozone into recession.

Household final consumption expenditure decreased by 0.3% in the euro area during the first three months of this year, following a 1% drop in the fourth quarter of 2022.

Government final consumption expenditure (which tracks government spending on goods and services) decreased by 1.6% in the euro area in January-March.

Gross fixed capital formation, which tracks investment, increased by 0.6% in Q1.

But trade deteriorated. Exports decreased by 0.1% in the euro area while imports dropped by 1.3%, showing that demand was hit by the cost of living squeeze.

© Provided by The Guardian
A chart showing the breakdown of eurozone GDP Photograph: Eurostat


The eurozone recession will come as a blow after politicians and European Central Bank officials said repeatedly that a downturn could be averted even as inflation rocketed to its highest level since the euro was introduced, Bloomberg says.

But… this is the smallest possible recession – just two quarters of a modest contraction in economic output.

Bloomberg adds:

But policymakers will take heart that their billions of euros in aid for households across the bloc meant that fears of much more severe economic damage in the wake of Russia’s invasion didn’t come to pass.

Eurozone recession: instant reaction

Despite falling into recession, the eurozone economy “remains resilient thanks to strong services and labour market”, says Pictet Wealth Management’s Fred Ducrozet:

But ING’s Carsten Brzeski warns that the eurozone faces stagnation.

Eurozone falls into recession

Newsflash: the eurozone has fallen into recession, new data shows, as its economy contracted over the winter.

GDP across the euro area shrank by 0.1% in the first quarter of this year, downgraded from a previous estimate that the economy stagnated.

That follows a 0.1% contraction in GDP in the fourth quarter of last year, meaning the eurozone has shrunk for two quarters in a row – the standard definition of a recession.

It was dragged down by Ireland, where GDP fell by 4.6% in the first quarter of this year – although economists have questioned whether that really reflects the performance of the Irish economy.

Lithuania’s economy shrank by 2.1%, while the Netherlands contracted by 0.7%,

Germany, Europe’s largest economy, shrank by 0.3% and is also in recession.

Related: German economy in recession after high prices take toll

Poland (+3.8%) recorded the highest increase of GDP compared to the previous quarter, followed by Luxembourg (+2.0%) and Portugal (+1.6%).

Europe’s economy has been hit by the economic disruption caused by the Ukraine war, which has pushed up energy and food prices.

That had prompted a series of interest rate rises, as the European Central Bank tried to battle higher inflation.


In the City, shares in Vodafone have dropped 4.5% to the bottom of the FTSE 100 leaderboard, amid expectations that a merger with CK Hutchison could be announced imminently.

Vodafone and CK Hutchison, which owns Three, are reportedly in the final stage of agreeing to merge their British operations. An announcement could come as soon as Friday or early next week.

Reuters has reported that Vodafone will own 51% and Hutchison 49% of the combined group, which could be worth around £15bn including debt.

The two companies have been talking for months, with Hutchison’s chief financial officer Frank John Sixt saying last month that it was proving “extremely difficult” to get it over the line.


UK business conditions remain “challenging”, according to the latest realtime data from across the economy.

But there are some small signs of improvement last month, the Office for National Statistics reports. Fewer companies voiced concerns about their prospects, and around two-thirds were able to get the materials, goods and services they need from within the UK.

MPs: Banks must ‘up their game’ and pass on interest rate rises to savers

Parliament’s Treasury Committee are urging UK banks to pass on higher interest rates to savers.

The Treasury Committee has been investigating retail banks since February, when UK interest rates were 4%. At that stage, the big four banks offered between 0.5% and 0.65% on their easy access savings accounts.

Today, they’re offering between 0.7% and 1.35%, while Bank Rate has been raised to 4.5%.

Harriett Baldwin MP, chair of the Treasury Committee, said:

“With the Bank of England confirming the pass through of base rate increases to easy access savings accounts has been unusually weak, it’s clearer than ever that the nation’s biggest banks need to up their game and encourage saving. While other products are available to those who shop around, the measly easy access rates on offer lead us to conclude that loyal customers are being squeezed to bolster bank profit margins.

“We remain concerned that the loyalty penalty is especially prominent for elderly and vulnerable customers who may still rely on high street bank branches.”

© Provided by The Guardian
UK bank easy access saving rates


It would be a mistake for the government to heed calls from housebuilders to restart the Help To Buy scheme, argues Graham Cox, founder of the Bristol-based broker,

Help To Buy, introduced in 2013, provided government-backed loans to purchase a new-build home, and shut at the end of March.

Homebuilders benefitted from the pick-up in sales, so it’s not surprising that Crest Nicholson is today urging ministers to provide some form of assistance.

Cox says:

“Desperation emanates from every word of Crest Nicholson’s trading statement, as they implore the government to do something, anything, to stem the tide. No doubt they would love Help to Buy to make a comeback, as they’ve made huge profits off the back of it over the past decade.

It would, however, be a huge mistake, which is not to say the government won’t make it, particularly with the Tories languishing in the polls. What really helps people buy is cheaper house prices. Help to Buy only increases them.”

Former chancellor George Osborne has claimed that Help to Buy “helped hundreds of thousands of families buy their own home and supported thousands of construction jobs”.

Housing experts, though, warn that it inflated the housing market and swelled housebuilders’ profits.

Related: 10 years on, what did George Osborne’s Help to Buy scheme really achieve?


There are jitters in the bond markets this week, as traders recognise that global central banks are far from finished fighting inflation.

Bond prices have fallen, driving up the yield (or interest rate) on government borrowing, which is a sign that investors expect interest rates to keep rising.

Already this week, two central banks – in Australia and Canada – have surprised the markets by raising borrowing costs, when they were expected to hold them steady.

This morning, UK short-term borrowing costs have hit the highest level since the mini-budget turmoil last autumn. The yield (or interest rate) on UK two-year gilt yields has hit its highest level since late last September, at 4.6%.

© Provided by The Guardian
The yield on two-year UK government bonds Photograph: Refinitiv

Those gilts are used by banks and building societies when pricing mortgages, so rising yields will feed through to higher borrowing costs.


Shares in housebuilder Crest Nicholson have dropped almost 4% in early trading, after it flagged slowdown worries.

Investors are reacting to its 60% drop in profits and warned that rising interest rates would cool the markets (see early post).

UK jobs market shows signs of cooling

Britain’s labour market cooled last month, with the starting salaries paid to permanent staff rising at the weakest pace in over two years.

The latest Jobs Survey from KPMG and REC has found that economic uncertainty continued to dampen hiring activity in May.

Hiring in hospitality, healthcare and engineering remained strong, but demand is weakening in construction, IT and retail.

Permanent staff appointments fell for the eighth month in a row, as companies cut back on hiring, with vacancies expanding at the second-softest rate since early 2021.

Caution around the outlook and delayed decision-making led to a further marked fall in permanent staff appointments, while temp billings rose only slightly, recruitment consultants reported.

© Provided by The Guardian
KPMG and REC’s UK Report on Jobs

Neil Carberry, REC chief executive, said:

“Despite the overall temporary work market continuing to grow – and permanent hiring declining from the sugar rush of 2022 – the story can vary widely across different businesses as their economic outlook remains unclear.”


© Provided by The Guardian
Wizz Air aircraft at Ferenc Liszt International Airport in Budapest.

In the travel sector, budget airline Wizz Air is hopeful of returning to profit this year.

Wizz almost doubled its passenger numbers in the last financial year, to 31 March, carrying 51m (a company record), up from 27m the previous year when pandemic disruption hit demand.

That helped narow its losses by 16% in the last financial year, to €535m.

And it hopes to make a net profit this financial year of €350m-€450m, helped by increased demand. However, “adverse exogenous events” such as an incremental impact from the war in Ukraine or delays to deliveries of new planes could disrupt that.

Introduction: ‘Storm clouds are gathering’ for the property market, warn surveyors

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Storm clouds are gathering over the UK property market, according to the country’s surveyors.

The Royal Institution of Chartered Surveyors (RICS) is warning this morning that expectations of further interest rate rises from the Bank of England may put renewed downward pressure on the market in the months ahead.

RICS’s monthly healthcheck on the property sector has found some improvement in market conditions during May, with the first rise in new instructions since early 2022. House prices continue to fall in much of England, although Scotland and Northern Ireland have witnessed an uplift.

RICS Senior Economist, Tarrant Parsons, says there was a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.

But he warns that expectations of further interest rate hikes will hit demand and affordability.

“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.

The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.

Yesterday morning, Halifax reported that house prices experienced their first annual fall in more than a decade last month.

Related: UK house prices experience annual fall for first time in decade, data shows

The Bank of England has already raised interest rates 12 times in a row, and the City currently expects another rise this month, from 4.5% to 4.75%. They could hit 5.5% by the end of the year, the money markets indicate.

Interest rate rises are also impacting the rental sector, encouraging landlords to leave the sector and sell up property, Parsons adds.

Also coming up today

The UK’s financial regulator has unveiled a major shake-up of the rules around marketing of cryptoassets.

The crackdown from the Financial Conduct Authority will include banning the so-called “refer a friend” bonuses that are popular in the industry. Promoters must also ensure adverts are clear, fair and not misleading, and ensure people have the appropriate knowledge and experience to invest in crypto.

Sheldon Mills, executive director at Consumers and Competition, said:

“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.

“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.

“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”

Related: Crypto ads will need to carry risk warnings under new UK rules

The agenda

  • 9.30am BST: Latest UK economic activity and business insight data

  • 10am BST: Eurozone growth figures for Q1 2023 (third estimate)

  • 1.30pm BST: US weekly jobless data

Housebuilder Crest Nicholson warns higher interest rates will hit demand

One of the UK’s building firms is warning of a further slowdown in the housing market this morning too, and urging more action from the government.

Crest Nicholson has reported a fall in revenues in the six months to 30 April to £282.7m, down from £364m a year before. Adjusted pre-tax profits more than halved to £20.9m, from £52.5m.

Peter Truscott, chief executive, says the period began amid the worst of the economic uncertainty arising from the September 2022 mini-budget”.

Rapidly falling consumer confidence and rising interest rates immediately led to softer demand in the housing market, Truscott explains. And although confidence has returned, Crest Nicholson fears that rising interest rates will cool demand further.

Truscott says:

The economic case for buying a home therefore remains compelling, but for many first time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition.

If interest rates continue to rise, and remain elevated for a sustained period of time, this will undoubtedly exacerbate this issue even further and start to impact demand and confidence again. We continue to call on Government to recognise this challenge and provide further support to these potential homeowners.

Mortgage rates in the UK have been rising in recent weeks, and some lenders have also pulled deals from the market.

Related: UK banks pull hundreds more home loan deals as fixed mortgage rates rise

It emerged last month that Rishi Sunak was drawing up plans to boost support for first-time home buyers, as part of the next general election campaign.

Officials in Downing Street and the Treasury are looking at proposals to help thousands of renters who have been unable to get on the housing ladder in the face of high prices and rising interest rates, The Times reported at the start of May.