Mervyn King plays down the threat of inflation
Mervyn King, the governor of the Bank of England, has this evening played down the threat of inflation in the UK suggesting that inflation is just as likely to under shoot its target as to overshoot. This is the first major speech from Mervyn King since August and would appear to suggest, just prior to the issue of October MPC minutes, that there is some debate within the committee as to the direction of the UK economy.
Mervyn King has many months suggested that UK inflation is not a reliable measure of economic activity and the underlying strength of the UK economy. He has for some time believed that inflation will fall back to within the banks 2% target rate in the short to medium term without any major action from the authorities. Indications that the UK economy is beginning to weaken, after a period of relative buoyancy, would seem to support this belief although so far the figures have refused to fall into place.
The Bank of England is beginning to give the impression of a body which is frustrated by the relative strength of inflation despite numerous attempts to talk down the threat of inflation in the UK.
UK construction sector still under pressure
A report today by the Chartered Institute of Purchasing and Supply's has confirmed that the UK construction sector is still under immense pressure and the workforce has reduced yet again for the 14th month in a row. While there is no doubt that business is still tough, the Chartered Institute of Purchasing and Supply's managers index showed that business levels are falling at their slowest rate fo...Read More
Youth unemployment figures are dire
Despite the fact that yesterday's headline employment figures were better than expected and showed an increase in employment numbers there are now grave concerns regarding youth employment in the UK. It was revealed last 72,000 people in the age range 18 to 24 had been unemployed for 24 months or longer in the three months to June 2010. This is an increase of 42% on the corresponding figure last y...Read More
Confidence in the UK economy has been hit
Even though there were signs that the UK retail sector was starting to improve at the end of 2009, today's news of a potential leadership challenge against Gordon Brown may well wipe away any goodwill and confidence built up over recent weeks. A government which is effectively out of control and a leader who would appear to be unwanted by a significant minority of MPs does not bode well for the sh...Read More
MPC considered a rate rise in August
The MPC minutes for August have been released and show that the members of the committee considered both an increase in UK base rates and a loosening of fiscal policy. Opinion is split within the MPC with regards to the future direction of the UK economy with a number of reports at the time suggesting the UK was picking up while consequently the opposite appears to be true. So what will happen in...Read More
What effect does rising unemployment have on an economy?
The effects of rising unemployment on the UK economy should not be underestimated as it will have significant consequences going forward. Not only does it place more pressure upon the benefit system, with more and more funding required, but it also reduces taxable income in the UK therefore reducing the overall pot from which the benefit system is funded.
Aside from purely financial...