Consumer spending to slow in face of crunch
UK banks' adoption of more stringent lending criteria is set to significantly cut consumer spending levels this years, a member of the Bank of England's monetary policy committee has predicted. Tim Besley issued the warning today in a speech at the Institute of Fiscal Studies, in which he noted that even small increases to the cost of borrowing for consumers have significant repercussions on spending. He said: "With credit conditions tightening, we might expect a significant reduction in consumption growth over the coming months. "It seems like a fair judgment that a return to the conditions seen for secured lending in the first half of 2007 is not imminent."He added: "My time on the MPC, before and after the events of last summer, has reinforced my view that considerable weight should be placed on conditions in financial markets in understanding the transmission of monetary policy to the real economy."Mr Besley's comments are set to spur further speculation that the MPC will soon opt to cut the base rate of interest from its current level of 5.25 per cent.
Share this..
Related stories
Job losses at the London Stock Exchange
Despite the fact that the UK stock market has enjoyed a positive move over the last few weeks, the London Stock Exchange today announced redundancies totalling 133 employees who cost the company an average £83,000 a year in remuneration and benefits. This 12% reduction in the workforce has reduced costs by an estimated £11 million although the short-term situation will involve £14 million in pa...
Read MoreWho Will Be The Next BoE Deputy Governor?
As the Treasury and the Bank of England stumble from one difficult situation to the next, they will need to find a Deputy Governor as quickly as possible to take the place of Rachel Lomax. Despite a concerted effort to persuade Miss Lomax to take on the role for a second 5 year stint, she has remained true to her word that she would leave after her initial period was up and parts company in just...
Read MoreCadbury takeover turns nasty
This weekend has seen a stinging attack on Cadbury directors by the chairman and chief executive of Kraft Foods, Irene Rosenfeld. In a move which is almost certainly premeditated, she has accused the Cadbury board of directors of "not doing the maths" amid signs that this potential takeover is becoming more and more acrimonious. The fact that Cadbury directors appear more interested in keeping the...
Read MoreWhere next for UK inflation?
Over the last 20 years inflation has been the devil in the deep blue sea and something which all governments have attempted to control and avoid spiralling higher and higher. A quick look back over the last few years shows that in early 2008 the Consumer Price Index (the government's preferred measurement of inflation) stood at a reasonable 2.2%. However, as the credit crunch began to grab hold an...
Read MoreBanks 'will be part-nationalised'
The government is to part-nationalise large UK banks, in a bid to loosen up the money markets and avert a severe economic downturn.Alistair Darling announced the move this morning - saying that preferential stakes would be bought in eight firms.These are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered.It is hoped that this plan will lead to greate...
Read More