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.
UK government announce £50 billion rescue package
It was probably the worst kept secret in the financial markets but today we have seen the announcement of a £50 billion rescue package for UK banks. But does it go far enough and will it see us through the crisis?
While the move today was announced in a blaze of glory it seems to many as though this is yet again only a half way house and not the final piece of the jigsaw for the U...
Barclays bank set to increase staff salaries
Barclays bank is headed for controversy as the UK government and regulators watch over the bank with news that staff salaries at Barclays Capital Investment will be increased across the board and backdated to June 2009. This is a direct response to the UK government's attempt to limit bonus payments in the short to medium term although this does not mean that Barclays Capital Investment will not b...Read More
Is internal government bickering hampering a recovery in the UK?
As the headlines with regards to the UK government continue to worsen, with rumours of infighting and leadership battles, many are now growing concerned about the short-term impact this may have on the UK economy. Despite assurances from those at the top of the UK government, there is no doubt that much time and effort is being spent discussing and countering claims of unrest within the government...Read More
National Sickie day to cost £30 million!
The number of people calling in sick today is expected to peak at 350,000 on what employers are calling National Sickie day. It is unclear exactly why so many people are expected to call in sick today for what is clear is that it is set to cost UK businesses around £30 million! The survey also found that many employers in the UK are now accepting communication via e-mail and text rather than t...Read More
US economic indicators turn upwards
News that the speed at which the US economy has been shrinking began to slow in April saw Wall Street surged by over 2% in early trading. This is the latest positive indicator from the US economy which has been very volatile over the last few months to say the least. However, investors should be wary of taking one figure in isolation as evidence that the economy is recovering because last week we...Read More