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.
Have UK consumers lost confidence in the UK banking system?
The Bank of England today confirmed that demand for £50 notes in the UK has risen significantly since the recession began, with the number in circulation rising from a value of £7 billion up to £9 billion. It is believed that the troubles within the UK banking sector have prompted more and more consumers to "hoard" cash rather than hold it in savings accounts within the UK banking system. Th...Read More
Could UK base rates remain unchanged until 2012?
As the threat of inflation begins to recede, with evidence that factory prices are turning downwards, many people are now looking towards UK base rates and the next increase. A number of economists believe that there is no chance of the base rate rise within 2010 and indeed a number are now looking towards 2012 and beyond before UK base rates will increase. So could UK base rates remain unchanged...Read More
Irish authorities breathe a sigh of relief
The Irish authorities are today breathing a sigh of relief with news that the â‚¬1.5 billion bond auction has gone relatively well. There was enough demand to fulfil the total â‚¬1.5 billion auction and indeed in the secondary market there has been a reduction in the yield demanded by investors which effectively reflects the growing confidence that perhaps the Irish economy may not need an...Read More
One in five people will retire with debt
30/12/2014 Research from Key Retirement, the retirement specialists, shows that nearly one in five people over the age of 45 will retire in debt. The research shows that 9% of people over the age of 45 are unsure if they will be able to pay off all their debts before retirement, and 10% do not expect to clear them at all. Currently, 53% of over-45s owe money on credit cards, mortgages, pers...Read More
Takeover panel reviews Cadbury comments
As we mentioned yesterday, the chief executive of Cadbury, Todd Stitzer, has become embroiled in something of a slanging match with Merrill Lynch over reported comments made at a recent conference. Merrill Lynch seemed to suggest in a recent research note that the chief executive had indicated that a takeout price of 15 times profit, before tax and depreciation, would be a fair offer for the compa...Read More