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.
Benefits cuts cost poorer households significantly
23/01/2015 Changes to taxes and benefits that the current government brought in have cost the average UK household £1,127 a year, according to the Instituted of Fiscal Studies (IFS). Tax and benefit changes include increased in National Insurance Contributions, substantial cuts to benefits and an increase in the main rate of value added tax. Low income- working aged households were hardest...Read More
UK fraud costs £600 per member of the population!
Figures revealed by the National Fraud Authority suggest that fraudulent activity in UK is costing each and every person in the country around £600. It is estimated that fraud accounts for £30 billion of losses each and every year with the vast majority coming from tax scams while around £10 billion is lost in the private sector. But how accurate are these figures? Despite the fact that the...Read More
Interest rates held as expected
Borrowers are breathing a sigh of relief after the Bank of England voted to hold interest rates at their current level of 5.25 per cent.Today's decision from the Bank's monetary policy committee (MPC) had been widely predicted by economists as inflationary pressures in Britain subsided.Last month the MPC voted 7-2 to hold base rates following January's shock quarter of a per cent rise.But there we...Read More
Alistair Darling threatens pay freeze for public sector workers
At a time when public sector expenditure is very much in the headlines, Alistair Darling has certainly put the cat amongst the pigeons with a refusal to rule out a public sector pay freeze in the short term. This is despite the UK government's insistence that investment into the public sector will continue well into the future and not be impacted in the short term by the ever growing national debt...Read More
Lord Mandelson attacks Kraft Foods
Only a week after suggesting that he had negotiated some kind of long-term commitment to Cadbury from its new owner Kraft Foods, Lord Mandelson is today on the attack after the announcement of 400 job losses at a Bristol-based Cadbury factory. The operation will close next year with production transferred to Poland where the cost base is more attractive for Kraft Foods. So why were we given a diff...Read More