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.
British Airways set to charge for seat reservations
In a move which many believe had been on the way for some time, British Airways has announced plans to charge customers up to £60 to reserve a seat. It is no secret that British Airways has been struggling with regards to the price of oil, reduced business levels and increased costs. Over the last few months we have seen a number of job cuts, staff encouraged to give "free time" to the business a...Read More
Could the credit crunch actually save Gordon Brown's political career?
As we head towards the UK general election, which many believe will be a landslide victory for the Conservative party, there is a chance that the UK economy could well recover prior to the election date. In a bizarre quirk of fate it may well be that the low points reached after the credit crunch and the UK recession may well give Gordon Brown his best chance of victory at the next election. If...Read More
Federal Reserve suggest crisis is worst since the 1930s
US Federal Reserve chairman Ben Bernanke has issued a damning verdict on the worldwide financial crisis suggesting it is by far and away the worst since the 1930s depression. While the vast majority of governments around the world are pointing the finger at the US for the ongoing economic crisis,
Ben Bernanke believes that the problems relate to imbalances in trade and capital flows during...
Lloyds bank set to confirm fund-raising details
Lloyds bank will this week confirm details of a record-breaking £13.5 billion fund-raising which will see UK taxpayers pumping in almost £6 billion of extra capital in exchange for shares. The additional funds in question will come from ordinary shareholders and bondholders who are also being brought into the fold with regards to this massive reorganisation of the Lloyds bank balance sheet. I...Read More
Alitalia airline moves one step closer to collapse
Despite the fact that investors were waiting in the wings for the go-ahead it seems as though a dispute with Unions has scuppered the final chance of saving the stricken airline Alitalia. It seems crazy that the Unions would rather reject the rescue package and see the airline go to the wall than agree to structured job loses and at least employment for some of the airlines employees. So what ne...Read More