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.
The power of talk from Warren Buffett
There is no doubt that Warren Buffett carries a clout which few others in the financial industry can match but this week saw him appear on an anniversary video for Chinese suit maker Dalian. While the clothing manufacturer is perhaps little known outside of China it was the fact that Warren Buffett claimed he felt most comfortable in these particular suits that has caught the attention of many inv...Read More
Finally the government admit recession is likely
While the Bank of England had already softened the ground with suggestions that the UK is heading for a recession it was finally time for Gordon Brown to wake up and smell the coffee today as he agreed that a recession was a distinct possibility. However, he has admitted this at a time when the Tory Party is under severe pressure with regards to a suggestion that they attempted to arrange a party...Read More
Is Gordon Brown looking to control the financial sector?
In his days as Chancellor of the Exchequer Gordon Brown was renowned for his ruthless domination of the Department and his wish to have total control over even the smallest matters. There is now speculation that, in league with Alistair Darling, Gordon Brown is looking to take over the direct regulation of the UK financial sector and leave his mark when he finally leaves office. But is this the be...Read More
Police arrest five G20 demonstrators in terror probe
Just hours before the G20 Summit begins in London police have swooped on five alleged terrorists whom they believe were planning some form of attack on those attending the G20 Summit. The situation over the last few days has become critical for the Metropolitan police with all leave suspended and round-the-clock surveillance of would-be troublemakers and potential terror threats underway.
Is it fair to subsidise the energy industry?
After issuing a warning that UK consumers and businesses can expect to see energy costs increase because of the need to invest into a new breed of nuclear energy plants, the UK government has prompted the question - Is it fair to subsidise the energy sector?
The problem is, as we touched on in one of our earlier post, the vast majority of UK energy companies are owned by foreign par...