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.
Lloyds bank finally reveals terms of rights issue
Lloyds bank has today revealed the terms of its record £13.5 billion rights issue with the new shares being offered a discount of 59.5% to the prevailing share price. The rights issue shares will be priced at 37p compared to a price of 91p in the marketplace. This is a reflection of the enormity of the rights issue and the concessions which the company has been forced to give in order to receive...Read More
JJB Sports looking to raise additional capital
Troubled sports retailer JJB Sports is rumoured to be looking at a number of fundraising activities to increase the company's working capital. This is a company which recently agreed a company voluntary arrangement (CVA) during which it creditors agreed to accept reduced payments in lieu of company debt. While this had appeared to secure the short to medium term future of the group there are growi...Read More
Dow rises as markets digest rescue plan's rejection
Stock markets staged a small recovery today, following the unprecedented events of last night.New York's Dow Jones fell a total of 777 points - its biggest one-day drop ever - on news that US lawmakers had voted against the government's rescue plan for the financial services sector.Investor's lack of confidence in the banking system, which was putting severe strain on credit markets, had led to th...Read More
What would be left for the Bank of England if stripped of power?
With the Labour government set to think the unthinkable and strip the Bank of England of key powers with regard to the regulation and operation of the financial sector, many are now asking what would be left for the Bank of England if this were to happen. This is a bank which has been central to the UK financial system and overall economy for hundreds of years and a bank which has a reputation unr...Read More
Do we depend on computers far too much?
This weekend's revelation that a number of major stores in the UK saw their electronic payment systems down for anywhere up to 3/4 of an hour is a major blow for those who have been pushing the electronic payment model of the future. It also shows that many of us in the UK depend wholly upon credit cards and debit cards to cover our everyday costs and if the systems are in any way compromised we a...Read More