Is inflation a threat to the UK recovery?
This week sees a number of vital economic statistics in the UK with concerns that the rate of inflation is set to spike upwards in the early part of 2010. Recent figures have shown an increase in the cost of raw materials, much of which came from the upward movement in the price of oil, which will have an impact upon inflation. So what else do we need to monitor in the short term?
There is also concern that the government's refusal to maintain VAT at 15%, and instead return it to 17.5%, will also place further upward pressure on the cost of living in the UK. In what is becoming a more difficult scenario by the day, the Bank of England is also under pressure because of the strategy regarding UK base rates which have remained at 0.5% for some time. If inflation does begin to take off, and the Bank of England does not respond quickly enough, we could move towards a situation where the rate of inflation spirals out of control and we need to see a significant increase in base rates in a very short space of time.
The ability to increase base rates and make borrowing more expensive is a very basic tool in the economic UK government's toolbox but one which has proven very effective over the years.
Is the second rescue package vote in the US already doomed?
Despite putting itself forward as the saviour of the world it looks as though the second vote on the US rescue package may actually be a lot closer than many are suggesting. While many people are assuming that the vote will go in favour of the revised package there are already noises from the lower house suggesting that the changes have not gone far enough.
The next two hours will...
UK car industry in disarray
Figures showing a 51.3% slump in car manufacturing in the UK in the year to March 2009 have perfectly highlighted the ongoing difficulties being felt by the sector. Coming on the back of February figures which showed a 59% fall for the 12 month period it appears as though the UK car economy is in a dire situation but possibly showing signs of stabilisation.
Many car manufacturers ar...
What will happen if the quantitative easing program is dropped?
The quantitative easing program introduced by the UK government and the Bank of England saw £200 billion pumped into UK money markets allowing banks and other financial companies access to liquidity in exchange for assets. This has been a very successful program which has increased liquidity in the UK banking arena but as we approach the £200 billion limit placed upon the programme there are con...Read More
E-Clear instructed to hand over £35 million Flyglobespan money
PricewaterhouseCoopers, the administrators for fallen Scottish airline Flyglobespan, has today gone public with a demand that £35 million which has been withheld from the company is released immediately by credit firm E-Clear. It looks as though there will be a formal investigation by the UK government with regards to the relationship between Flyglobespan and E-Clear with many concerned that the...Read More
Petrol, milk and furniture cause MPC fears
Sharp increases in the cost of factory-gate goods have lead to a 3.1 per cent reading for the consumer price index in March, sparking concerns that the monetary policy committee (MPC) will be pressurised to rise the interest rate yet again. Prices which showed the biggest gains were petroleum products, milk and furniture, according to the Office for National Statistics (ONS), which pushed the over...Read More