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.
Fraud in Scotland soars to record levels
BDO Stoy Hayward has today revealed the massive cost of fraud to businesses in Scotland. The figures are astounding to say the least with fraud costing Scottish businesses £10 million in the first half of 2009 compared to just £1.8 million in the corresponding period last year. While instances of fraud are expected to rise during any recession, the 450% increase is staggering by any stretch of t...Read More
CBI demands introduction of a job suspension scheme
The Confederation of British Industry (CBI) has today stepped up its campaign for government assistance in the employment market. Introducing a potentially revolutionary idea to the UK employment market, the CBI wants an alternative to redundancy scheme introduced which would see companies are allowed to suspend employee's contracts for up to 6 months.
During this period, employees...
Scottish economy under serious threat
It has today been revealed that the Scottish economy is shedding jobs at the fastest pace in more than a decade with the situation said to be very much worse before it gets better. Employment positions are being lost in all areas of the economy but it is the private sector, as opposed to the public sector, which is most under severe pressure. Amid claims that the Scottish government has been slow...Read More
Bank Of England reduces base rate by 1%
This was perhaps the worst kept secret in the financial markets as the Bank of England reduced base rates by 1% to a 50 year low of 2%. This is a drastic step although it was flagged only a few days ago by Mervyn King, the Governor of the Bank of England, and was wholly expected by both the investment markets and the currency markets.
In traditional recessionary periods the change i...