Dry July

23:42And we hadn't seen a number of major ship owners return to the region either. So it is a slow process of confidence building.

23:50Leanna Byrne:We just had a text in there just wondering which insurance companies are going to be paying out for all the cost of the war. I mean, are insurers even insuring a lot of these ships now? Yeah, I mean, they absolutely are. So, So, you know, we speak to the maritime insurance industry regularly about this. And, you know, there's obviously been a good amount of whiplash that, you know, during the MOU period, they brought rates down in, you know, reflecting the sort of the decreased risk. They've obviously come back up again. And the risk within the Baobo Mandeb Strait has increased as well. That was an area that had cooled off in recent weeks.

24:30the you know the insurers absolutely will be paying out the you know you know maritime insurance industry is one of the the oldest uh in in in the uk and and they have a long history of paying out through warfare the the issue is it's expensive um um and you know you can have cover for a transit um and if you actually get through safely you might sort of get a small percentage of that back but fundamentally um it's a very expensive business at the moment now another part

24:57Leanna Byrne:to this as Saudi Arabia has been moving more oil across the country by pipeline to the Red Sea to avoid Hormuz. But then you've got that Houthi threat now placed. Is that in jeopardy? Is that alternative route in jeopardy as well? Yeah, absolutely. And this is the big wrinkle that we've had in the last week or two compared with the first four months of this conflict. Saudi Arabia diverted this crude, as you said, and it comes out in the Red Sea. And then to get to Asia, which is where almost all of it is going, it needs to exit through the Baalbaal-Mandeb Strait east towards Asia. Unfortunately, this is where these attacks have taken place.

25:35The Houthis have attacked at least two vessels, which is just enough for deterrent over the weekend. That's a big problem. We've got about 4 million barrels a day of crude that would otherwise come out of the Strait of Hormuz is now coming out of this route. Now, this is another choke point for this oil. And to get to Asia, the voyage is double the length it would be if it needs to go north through the Suez Canal, all the way through the Med, and then back around Africa to Asia. That adds the cost of freight. It adds time. There's the risk for some buyers, such as Korea, Japan, that actually, the crude that they were expecting to receive in August may not arrive until September.

26:20Leanna Byrne:Charlotte, if energy prices remain elevated, does that make it harder for the Bank of England to cut interest rates, do you think? And does this feed into Skipton's thinking? Yeah, so, excuse me, I think if we see energy, well, we're expecting energy prices to increase, aren't we? So that's already factored into thinking. And I think that kind of forward-looking view in terms of where the market sees rates either increasing or settling will absolutely play through into mortgage interest rates. And what we will see within Skipton is we're always reactive to that market movement. So we're constantly repricing on a weekly basis.

26:58I think, though, some of the points that I think Anna was making earlier around what does that longer-term kind of inflationary impact look like? And as we've said, we have got a softer labour market. We're not seeing kind of the wage growth increasing as much as we have done slightly higher levels of unemployment. So at the moment, the kind of view is from a market's perspective is that we might see up to three rate rises, taking us up to 4.5 percent in terms of base rate. Personally, I'm not so convinced that that actually will transpire. And I think the point around those additional metrics around the labour market, around unemployment, etc.

27:41I think, you know, we will see inflation tick up slightly. That's expected. That's what the bank's forecasting. I'm not so sure that we'll see that translate through. And if that is the case, then that would be welcome news for borrowers. And we might see a bit of respite. But, I mean, I do not have a crystal ball, so who knows?

27:58Leanna Byrne:Well, Matthew, you're looking at the ships going through. I mean, supply has been affected. And it doesn't seem like you're thinking that this is going to change anytime soon. No, unfortunately not. I mean, we have seen before, both President Trump and the Iranians have shown that they can come together. I think the fact that we had that previous deal fail is a bit of a negative sign. It shows that there's still a couple of key points that they can't agree on. Obviously, Trump is still the rhetoric around actually further engagement, potentially attacking Karg Island, which is a key export. Oh, no.

28:37Leanna Byrne:I think we've lost Matthew. terminal for Iran, even over the weekend, signals that there's... Sorry, did you lose me there? Yeah, but you're actually, you're back. So, sorry, Carg Island, go ahead. Yeah, yeah, with Carg Island, potentially, you know, there's a lot of rhetoric around attacking of Carg Island, which, you know, is a big concern. So there's still a long, you know, things could get a lot worse before they get better. All right, Matthew Wright, Principal Freight Analyst at Kepler. Thank you so much for... This is summer at its peak. Whole Foods Market Summer Fruit Fest is your invitation to eat the season.

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29:33Leanna Byrne:Joining us. Wake up to money from BBC Radio 5 Live. Hello, you're listening to Wake Up To Money. It is 5.36. I'm Liana Byrne. We've got two fantastic guests with me this morning. Charlotte Harrison, Chief Executive of Financing at Skipton Building Society. Charlotte, thanks for sticking around. Thanks for having me. I can join it. Also, Anna McDonnell, Investment Strategy Director at Hargreaves Lansdowne. Thanks for sticking around, Anna. Oh, a pleasure, Liana. Well, so we've been talking about housing just in the first half of the programme. If you're only tuning in, you can listen back on BBC Sounds.

30:05Leanna Byrne:But I got a few texts in Charlotte. So one of them says, good morning, regarding affordable homes. It's a myth. There is no such place. Properties are overpriced and out of reach for the majority of first-time buyers. That is from Keith and Bradbury. Do you think that's true? If you're a first-time buyer, it's out of reach? I think so. Listen, it is challenging. Absolutely. Completely get that. And one of the things we've done within Skipton, Skipton Group, is a home affordability index, because one of the things that we look at is not just your ability to buy, but also what does living expenditure look like and how does that track?

30:39And I think, yeah, it is challenging to get onto the market. We have seen house prices accelerate beyond wage inflation, but it is possible. And I know that because 50 % of all of my lending went to first-time buyers last year. There you go. So I think, yes, it is hard, but there are products out there that can help. So one of the things that we launched a few years ago, in fact, we celebrated its third year birthday was the track record mortgage. That's a zero deposit. So if people are in rent and struggling to save, because how can you save and rent at the same time? We know it's more sometimes than a mortgage payment.

31:14We'll lend to people with no deposit. So yes, I hear it's challenging, but there are things out there that can help. And so anyone that's trying to do that, please, please, please do some research because you might be able to get on the property ladder sooner than you think.

31:28Leanna Byrne:If you've got no deposit, is that a higher interest rate? Is it longer term? How does that work? So it's no deposit. It's a slightly higher rate, but not hugely. And we just ask to make sure that you can evidence you've made 12 rental payments that are the same or similar to your mortgage payment. So we're trying. We want to help more people into homes. And my view is if you've been renting, well, how do you save? And clearly you can demonstrate good affordability. So let's help you. Well, speaking about rates, we've actually had another text in from Liz. It says, in the 1970s, I worked for a building society and as a massive perk of the job, we were allowed a mortgage of 4%.

32:05Leanna Byrne:Now rates are much lower in 1990 when we bought a house. I think it was around 16 plus percent. People moan about how awful things are today. The difference is we didn't expect all the material things people need, want. I think my mum makes that argument to me as well, that when she got her first mortgage, it was about 13%. And she said, actually, I was doing quite well. Yeah. So my mum does too as well. And then I do remind her that, yeah, but mum, how much did you buy your house for? Yeah. And I think one of the things that we do see in terms of the amount of cash leaving your bank every month that goes towards your debt and then household servicing your household is significant.

32:49And yeah, I completely get that. Interest rates have historically been much higher at points in time. I think we've been probably throughout COVID and post-COVID, we were in an ultra low rate environment. I don't think that was the norm. But, you know, house prices are a lot chunkier now. So, you know, you're not buying a house for 50K or 30K. I'm trying to think what my mother-in-law would have bought hers for. It was, I think she bought it for£3 ,000. So, but yeah, it's the debt servicing is high. And the debt servicing has also gone up a lot. as you say that we had that lovely long ultra low interest rate period and a lot of people myself included you come off you know a five-year deal that you maybe got in 2021 and my mortgage payments are significantly higher now so it is something that I think it's across the board that even if you are on the housing ladder and you've got a mortgage you're likely paying an awful lot more now than you were a few years ago.

33:49Leanna Byrne:What do you think about that Anna? Do you think that consumers' expectations have shifted to that? Or do you think now at this point they're saying, actually, that was a really ultra low period, that was not the norm, we're going to be paying higher? Yeah, I think there's an acknowledgement that you are going to be paying higher, although, you know, it is still a bit of a shock because that is just, it's not like you're getting more utility for that extra amount of money that you're having to pay. It is, you know, I have to say, I was getting rather annoyed about the increasing costs of, you know, you can actually, when you see something like a global conflict directly affect how much you're going to have to pay to service the loan on your house.

34:33I think that can be very frustrating for everyone, actually.

34:36Leanna Byrne:Yes, absolutely. All right. We're going to talk about the weather now. Official drought status has been declared in parts of Wales following recent wildfires and historically dry conditions. This month is currently on course to be Wales' driest July in nearly 200 years. Natural Resources Wales says the threshold has been reached across north and parts of mid Wales based on exceptionally low river and groundwater levels, dry soils, impacts on wildlife, farming and forestry. Sharno Goodhart manages a mixed farm in Denbyshire. Good morning, Charlotte. Good morning. Now, you had a little rain over the weekend, about two millimetres, but did that make any difference to you at all?

35:21No, not at all, really. We've had about two millimetres yesterday and a little bit more today, but probably about two millimetres again. I mean, no, it's not enough to make an impact whatsoever, really.

35:33Leanna Byrne:All right, Charlotte, can you just describe what the drought currently means for you on the farm? What are you having to do differently from a normal summer? Well, less grass growth primarily means less food. I mean, we're a mixed farm. We have 800 ewes and about 140 calves. We're on our fifth batch of calves and 50 ,000 hens. So, I mean, grass is really useful to have on the farm, but it just means that we have less, less food and we're having to, we will have to buy in food for winter because we're currently having to use our winter stock to feed the cows and the sheep that we've got at the moment.

36:22Day to day, though, I mean, we are having to check the water systems probably, you know, three times as much as we would. we would to make sure that all the the animals have water um so i mean labor wise it's a lot more uh intensive at the moment um we're having to sort of um change where we keep the livestock on the farm because we have natural um water sources so we've got um a lovely stream that runs through the farm that's dried out completely um we've got a lake um and that sort of um capacity is reduced dramatically so we're yeah really having to manage where we keep the livestock on the farm because the natural water sources that they would have they haven't got so you know we're we're having to put water in um so yeah it's having a major impact really um we probably won't see the true effects till um a bit later on in the year if not into next year um cost wise but But yeah, it's having a huge impact on us, really.

37:26Leanna Byrne:Have you ever known conditions to be this dry? Well, as you said, we had the drought of, well, it was 1976. And that was nearly 200 years ago. So, you know, a long, long time, really. I mean, you weren't around then. I wasn't, presumably. you know exactly how do you deal with something that you've never had to deal with before on the farm yeah exactly I mean um we can't really um the only thing we can do is manage it as best that we can and you know that we are um but we we are sort of coming to the conclusion that the winters are getting wetter and the summers are getting a lot drier so whether there's something we can do in the future to harvest, you know, or collect more water when it is wetter in the winter for use in the summer is something that we will have to look at.

38:27Yeah. But in terms of managing it, we just have to do the best that we can.

38:31Leanna Byrne:But presumably if you're going to make changes to a farm like yours, realistically, that's going to mean more costs, right? Exactly. Yeah. Yeah. So at what point do you feel as if it becomes too overwhelming? Would you ever leave the industry because of this? I don't think so. No, I think we just need we need to make some long term changes, really. And we need ideally we need, you know, it's a whole government movement, isn't it? really we need we need the help to be able to to be able to do this going forward because the farming industry can't just come to a halt because you know we the lack of rain and um it's unpredictable isn't it the weather i mean we we deal with the weather when we have a lot of water when we have floods and we kind of have to deal with it um when we have a lack of water so i think it's just adapting to it and um moving with the the times really in the climate well i'm going to bring in Charlotte Harrison from Skipton on this, a different Charlotte.

39:37Leanna Byrne:Charlotte, are lenders already seeing some more concern from agricultural customers about the cost of extreme weather? So it's not something that I've been seeing certainly but I can absolutely see that as we've got costs will play through so we know that that's going to be a trickle down effect and we know that actually some of the things that we said around earlier in terms of the straits of hormones and things being closed around fertilising, being able to get out and across. So I know that there's certainly challenges being felt by the farming industries. We just heard from Charlotte. So I think the broader term impact that I'd be looking at is what does that mean?

40:16Have we just said about cost, the impact in terms of food and inflation in terms of food prices and what it means from then end consumers to household expenditure.

40:28Leanna Byrne:Climate change has just changed your economy, hasn't it? And even if somebody's looking at a house, you might look at that house and say, actually, that's built near a floodplain or does climate change actually come into your business now and say, actually, I'm not going to lend to that person because I don't really like where that house is sitting. Yeah. So this is something that I'm quite passionate about, which is what we do not want to do is create any form of two tier housing market where you've got properties that are mortgageable and people will lend on and those that are not. So we really need to think about leaning into that.

41:02A, what do we do in terms of net zero and how do we combat the effects of climate change? But B, what other capabilities exist in terms of helping, i.e. flood defences? And we know that I think actually, if anything, with the energy prices and things that we're seeing come through, there's more of a focus actually on how do we make homes more energy efficient? So for existing housing stock, how can we retrofit and either whether it's solar or heat pumps, etc., to try and combat some of that crisis? So I think, if anything, there's been a positive there, which is we're starting to see some action, albeit we still clearly need a lot more.

41:41Yeah.

41:42Leanna Byrne:Sharna Goddard, that's interesting, isn't it, about a lot more environmentally friendly, I guess, things to bring into your farm to make your farm a lot more environmentally friendly and perhaps things like solar panels. You can reduce the cost of energy. Have you brought those things onto your farm? Is that even affordable for you? well we have a hydro plant on the farm which is really useful so there's a stream that runs through the farm at the bottom and we have a hydroelectric system so the water from the stream generates electricity for us to use on the farm and it does power the electricity for the whole farm so um we've implemented that which is um really useful um we've got boreholes on the farm so that we um we have those as a as a backup um so we're not fully reliant on the the mains water um and yeah we i mean definitely solar panels yeah i mean there are things there are more things that we can do definitely yeah if your crops are being affected how does that translate to the consumer are whoever's buying your crops are they going to have to pay more for what you are actually producing well yes unfortunately because the the yields um are a lot lower um we i mean we don't produce um crops on the farm other than you know we don't produce grain but we have planted 40 acres of kale to feed the sheep and that has completely failed.

43:21But for those farmers that are producing crops, you know, yeah, their yield is much, much less. You know, so, I mean, the farmers are at a loss. But I mean, yeah, those costs do translate further down the line to consumers.

43:38Leanna Byrne:Anna, when farmers are losing crops and facing higher feed and water costs, as we heard there, how much of that eventually is going to reach shoppers through higher food prices? Yeah, I mean, it will definitely feed through to higher food prices. And that's a significant part, a part of a weekly bill for all of us. Charlotte, how do you feel? You know, are you just hoping that rain is going to come in the next couple of weeks? And could that turn things around for you at all? or really is this it now for you for the for the year uh i to be honest i mean we are praying for rain we are praying for lots of rain however um the rain that we will get i think is just um it's not gonna make us a complete u-turn i mean no no way but um we need definitely need rain and rain will help rain will help grass and it will just make everything a lot easier um but no in terms of a full U-turn.

44:44I don't think so now. I mean, it depends on the weather if we, you know, warm and wet. But if we don't get that, then no.

44:53Leanna Byrne:All right. Yeah, I think we're all praying for rain. Definitely. All right. Really appreciate you coming on the show. Charlotte Gardard, managing a mixed farm in Denbyshire. Thank you so much for joining us. Now we're going to be talking about the Commonwealth Games. We got a text in about the Commonwealth Games says, it's past its best before date at Commonwealth Games. Without free to air, live coverage is a total waste of time. This must be the last one. Peter from Norfolk. Anna, do you watch the Commonwealth Games? I haven't watched any. I was actually trying to find it and it's not on the BBC like it used to be.

45:27Well, it's on Five Live. It's on Five Live. I mean TV. Fair enough.

45:34Leanna Byrne:Yeah, but you know, Five Live, always good to listen to. I do listen to quite a lot of sports actually on the radio. I find the commentary fantastic, but I haven't listened to much of the Commonwealth Games yet. Yeah. And have you been a fan in the past? Yeah, but it seems to be a smaller event than it used to be. I remember previous times that Glasgow has held it, you couldn't move for advertising and billboards and hoardings and things like that. But it seemed to be a much quieter event this time. All right. Well, the 23rd Commonwealth Games continued in Glasgow over the weekend. And Archie Goodburn has made that final.

46:17It's an extraordinary tale of tenacity and durability. Archie Goodburn qualifies for a final at a home Commonwealth Games.

46:29Leanna Byrne:Archie Goodburn there, the Edinburgh-born swimmer, qualifying last night for the final of the 50 metre breaststroke final alongside Great Britain's world record holder Adam Ramsey-Pete. You can listen to the final this evening on Radio 5 Live just after eight o 'clock. So do tune in. And the excitement is not confined to the track and the pool, of course. This year's games are projected to bring millions of pounds to hospitality venues in Glasgow. And that's after the city stepped in when the Australian state of Victoria pulled out of hosting the games in July 2023. Joining me now is Michael Bergson, owner of Books Bar in Glasgow.

47:06Leanna Byrne:Michael, good morning. Good morning. Can you just give us a sense of how busy it's been so far for you? I'll be honest, it's been fantastic. I mean, you just said there that it didn't seem as much promoted in Glasgow, in the areas around Glasgow. But the fact is it brings people from all over the world for the events. We've had the streets have been busy with the athletes from all over the world. there's been enthusiasts for these sports we'll travel from all over the planet to come and see the events as well and it's been really good it's been very very busy really we saw it kick in right after the opening event albeit I can remember back in 2014 when it was busy a couple of days before the opening event and we'd get hit from then it was a slightly later hit but it's been really busy and we've had a fantastic weekend with a great atmosphere.

48:01Leanna Byrne:And did a lot of preparation go into it for you? Have you had to up stocks? Have you had to take on more staff? Yeah, we were overprepared because quite honestly, I can remember we were open back when the Commonwealth Games last came to Glasgow. And the word on the street was the Olympics have just been in London. Bars and restaurants weren't too busy. We weren't expecting to get too badly hit. And we were underprepared last time, quite honestly, quite a lot of the bars and restaurants in Glasgow where, so we were over prepared this time, we were stocked up, staffed up you know, I still had PTSD from those first couple of days that we got an absolute onslaught I remember one day it was raining last time and people were sitting outside and outside tables with umbrellas, you know, having their dinner because there was just you know, there weren't enough restaurants for all the people in Glasgow, wasn't quite as crazy this time, but we weren't expecting we know that it's a smaller Commonwealth Games this time, but it was still exceptionally busy and an amazing atmosphere.

49:02Leanna Byrne:I think Glasgow last hosted the Games in 2014, correct me if I'm wrong, but if you can make a comparison between this year and then, would you be able to? Is it more or less? No, I would say it's less. It is less, but we knew that. We knew that. It's less events this time. It's not as busy, but it's still made the city centre much busier. Of course, being extremely busy also means the additional staff, the stocks, the other costs, as you were saying, and you're saying you're over prepared. So are you thinking you'd likely to deliver a meaningful increase in profits rather than just simply a lot more work, just being busier?

49:44No, absolutely. Well, and one of the things that happens when you get people from all over the world, eating habits are a bit different. So some people like to eat later. people from the continent for example they won't go out for their dinner until half 9, 10 o 'clock which we don't really do so we're also getting this later hit because our kitchens are open until half 10 and even on Saturday there I noticed we opened at 11 o 'clock and we were busy right from the get go that wouldn't normally happen it would probably be after 12 but you get some people their body clocks have travelled a long way their body clocks are still making the adjustment so it's been busy right through the day right late into the night So, yeah, it's been really, really good.

50:27Leanna Byrne:Listen, in the studio, our body clocks are all over the place. We've been up since 4am. You know what I'm talking about, yeah. Listen, I absolutely know. Actually, Charlotte, I'm going to bring you in on this. I mean, you know, businesses have had a difficult few years. You, you know, you're working for a bank. Do you see that consumer confidence is genuinely improving or how is it at the moment? So I think it's probably fair to say it's a bit of a mixed bag because there's a lot of uncertainty in the market, isn't there? But I do think that, like I said earlier, in terms of specifically for us, the housing market, there's still great signs of positivity.

51:04And I think, you know, in terms of Glasgow, that's going to be a huge benefit to kind of tourism and leisure, as we've just heard, which is much needed. So I think let's take some of the positivity when we see that. And then that helps with actually consumer confidence. Yeah, Michael, when the games finish next weekend, I guess what would persuade those visitors to come back to Glasgow again?

51:29Leanna Byrne:Do you think that they've said, oh, I'd definitely come back here just to see it, not when the games are on? Listen, I always say that Glasgow is one of the friendliest cities in the world, and people are always blown away with that. But the standard, Glasgow's had some tough times recently, but I must say the standards of bars, restaurants, hotels, etc. in Glasgow has never been higher. We've got some amazing places. We've got a brilliant global cuisine scene. We've got amazing pubs, fantastic nightclubs and late night venues as well. So, no, there's lots of reasons to come back to Glasgow. Yeah, it is the friendiest city in the world, I think.

52:12Oh, there you go, Anna. Anna's a big fan. Yeah, I absolutely adore it. Yeah, people are the biggest attraction because the Glaswegians are just amazing people. Anna, huge fan of Glasgow. What's behind that? Well, I was born there. I'm a big fan. But also, I think, seriously, I think, you know, we're seeing this big rise. There's so much hotter summers and everything like that. And I'm really noticing that, I mean, I'm in Edinburgh about to host the festival and the Fringe, which is a fantastic event. But I think a lot of people are coming here, actually, because it's not as hot. Well, that sounds great, Anna.

52:50Leanna Byrne:I'm going to have to cut you off there. Big fan of Glasgow, Anna MacDonald. Thank you so much for Michael Bergson. Also, our whole programme guest, Charlotte Harrison. And that's it from Wake Up To Money.

53:28Live Live Sport. Oh, I've lived every ball of this. Listen on BBC Sounds.

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