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.
Kraft Foods must make offer for Cadbury by 9 November
The Takeover Panel has today ruled that Kraft Foods, which has introduced an indicative takeover to the Cadbury board of directors, must either make a formal offer within 40 days or walk away for six months. As a consequence, the company will have to "put up or shut up" between now and 9 November as the uncertainty of the informal offer has created havoc in the marketplace and with Cadbury directo...Read More
Will The UK Bounce Back Before The Eurozone?
The ongoing reduction in economic activity in the UK is worrying but it seems as though the Eurozone is fairing worse with France and Germany seemingly in big trouble and heading for recession. It is very interesting to see that while the Eurozone had held up for so long it has now gone into something of a nosedive and is heading for a technical recession. So will the UK bounce before the Eurozo...Read More
Does the base rate reduction mask further troubles ahead?
Concerns are mounting that the 1.5% reduction in UK base rates was a knee-jerk reaction to figures which are not as yet available in the public domain. Many experts, who have years of experience in economic downturns, cannot recall the Bank of England being so radical and so aggressive with its base rate policy.
The MPC has historically been a very conservative group and the 1.5% re...
Co-op to lay off 1,000 workers
Co-operative Financial Services (CFS) has announced that it will lay off 1,000 employees this year in order to cut costs to fund a £250 million growth programme.The programme aims to expand the company's operations in retail, corporate banking and general insurance.CFS which consists of the Co-operative Bank and internet bank Smile, hopes to reduce its operating costs by £100 million by June 200...Read More
Who will fund the cost of change in UK banking sector?
The last 48 hours has seen a flurry of announcements from the UK government and UK regulators regarding the future structure of the UK banking system. Not only is the potential for UK banks to broken up and sold on, to increase competition in the market place, but indeed the European Commission is looking to force UK banks to withdraw from certain areas of the market due to the fact they receive s...Read More