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.
Is Alistair Darling the next Cabinet Minister to go?
It is common knowledge in political circles that the relationship between Gordon Brown and his Chancellor Alistair Darling has dropped to record lows of late. Amid suggestions that Gordon Brown is trying to dictate the policy and direction of the Treasury, Alistair Darling has recently hit back suggesting that yet more debt, bearing in mind the current situation in the UK, would be the wrong move....Read More
Was Lord Turner right to call the UK banks socially useless?
Amid signs that the UK property sector is starting to pick up, yet liquidity is still very hard to come by in the mortgage sector, Lord Turner's comments describing UK banks as being "socially useless" have grabbed headlines all around the world. As we have covered in some of our earlier posts, this goes way beyond the brief of Lord Turner as chairman of the FSA although his comments have attracte...Read More
Kingfisher forced to issue indicative trading report
The UK retail giant Kingfisher, which owns DIY chain B&Q, was today forced to release a highly unusual indicative trading update to the city. This came about after the head of the company's investor relations division accidentally e-mailed a spreadsheet to a number of city analysts which detailed the forthcoming figures. So what exactly happened?
In a fairly run-of-the-mill investor...
South West trains announces 480 job cuts
The unions are this evening outraged at plans to axe 480 jobs with South West trains only days after the company announced substantial fare increases for passengers. There is concern that the rail providers are using the current downturn as a way to trim their costs and trim their staff numbers when in reality they are faring better than average.
It is also worth reminding ourselves...
Yorkshire and Chelsea building societies in merger talks
It is believed, unofficially, that the Yorkshire building society and the Chelsea building society are in talks about a merger which would create a group to compete with the Nationwide building society. The two societies in question currently stand as the second and fifth largest in the UK and their amalgamation would bring together a group with the capital and the strength to take on the Nationwi...Read More