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.
Are you ready to pay £200 a year extra for green energy?
The stark admission by Ed Miliband, the UK energy secretary, that UK energy bills will rise by an average of £200 a year as the UK looks to bring in more renewable energy is sure to catch the eye of many. Claiming that "no matter which route we go down" Mr Miliband has warned UK consumers and businesses that energy costs are certain to rise in the short to medium term.
The UK gover...
Is the UK government opening up the banking system to foreign participants?
The UK government's decision to force Lloyds bank and Royal Bank of Scotland to sell significant chunks of their assets and their branch networks could play into the hands of overseas financial companies who have long looked at the UK as a potentially lucrative market. The decision, which was effectively taken out of the hands of the UK government by the EU Commission, will see existing participan...Read More
More problems in the airline industry
Shares in Japan Airlines fell 11% overnight amid concerns that the company is on the verge of filing for bankruptcy with a £10 billion debt pile. Despite the fact that the company has offers from American Airlines and Delta to take a stake in the company, the Japanese finance minister has confirmed that no more state funding will be made available for the airline. This is just the latest in a len...Read More
UK insurance trap could hit 7 million people
It has been revealed that a number of UK insurance companies have small print built into their contracts, one of which demands that those acquiring policies need to reveal any past convictions or minor offences against their name. A recent case regarding a property which was the subject of an arson attack brought the small print to light when a £241,000 payment was paid back to Aviva after the co...Read More
How will new remuneration limits affect the UK banking sector?
As we reported in one of our earlier posts, the UK government has agreed a raft of changes within the UK banking system which will see remuneration and bonus packages limited in the UK. However, many people do not seem to realise that the UK banking industry is dominated by many overseas companies who will not necessarily agree to sign up to the remuneration limits and new regulations. There is a...Read More