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.
Recession Watch : Unemployment
In similar fashion to the UK base rate cycle, the ever increasing rate of unemployment in the UK will continue to give negative vibes even after the UK economy has turned. We saw a significant lag between the economic downturn we are currently enduring and an increase in unemployment and it will be the same when the economy starts to improve - with unemployment is set to rise for some time to come...Read More
Cutting back on the luxuries not the necessities
As the UK economic downturn continues to bite deeper and deeper into personal finances across the UK we are seeing more and more people cutting back on the necessities of life rather than give up their luxuries. One particular area is health insurance where more and more people are letting their policies lapse in the short term in order to retain additional capital within their monthly budget. But...Read More
Cost Of Living Has Risen By £700 Per Family In 12 Months!
News that the annual cost of living has increased by around £700 per family over the last year has caused dismay across the UK. While the vast majority of us have felt the pain in our pockets, to see the figure crystallised at around the £700 level seems to make it that little bit worse when you think what else you could spend it on!
It was also interesting to see the widening ga...
Rising Bank Penalties causes concern over Consumer Awareness
Customers of banks within the UK have seen a sharp rise in the amount they are paying out in penalties for accidental mistakes. The total figure over the past 12 months has risen to £650m paid in penalties, according to research conducted by finance management service, OnTrees. Almost two million consumers have incurred fees ‘accidentally’, by making late payments or using an unauthorised...Read More