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 spending doubles expectations
In March, 32 per cent of UK retailers reported sales had increased over the last year, more than doubling market predictions of only a 15 per cent rise across the sector, according to research.The latest Confederation of British Industry (CBI) Distributive Trades Survey reported the highest increases in sales since December 2004.The survey showed good performance in all departments, with those lin...Read More
JJB fundraising receives support
A £94 million fund raising by UK sportswear company JJB sports has received the backing of the company's major shareholders and looks likely to be a success. The company has had something of a chequered past over the last 12 months but many believe that this fundraising will finally draw a line under past problems and allow the company to look ahead to the future.
However, in a rat...
UK Property Prices up 2.3pc on Average
The price of housing in the UK rose by 2.3pc from May 2011 to May 2012, figures from the Office of National Statistics showed. London experienced the largest hike in prices, rising 7.2pc, while improvements in the South East and East Midlands helped the UK reach the overall 2.3pc mark. This is in line with results seen in May 2010, with prices across the UK remaining fairly stable, apart from...Read More
Bank Of England jumps to the defence of Mervyn King
Mervyn King, the Gov of the Bank of England, has today received support from his employers with regards to suggestions he is "looking to talk down the pound". This is a subject we have covered over the last few days, with certain comments from Mervyn King appearing to have been interpreted by the currency markets in a rather depressing manner. However, Mervyn King believes that his comments had be...Read More
So did quantitative easing work?
Yesterday's news that the Bank of England will be suspending the quantitative easing program was very much expected by analysts but now a review of the quantitative easing program can begin in earnest. In simple terms, the quantitative easing program allowed financial institutions to use various assets to "borrow" liquidity from the Bank of England. This allowed financial institutions to use asset...Read More