UK base rates set to fall to 1%
As we await news of the MPC meeting on Thursday there is a general consensus across the board that UK base rates will fall by half a percent to 1%. However, on the eve of the MPC meeting a number of economists have come forward suggesting that interest-rate reductions will not stimulate the economy and it is consumer spending which needs to be addressed. The UK economy is forecast to fall by 2.7% in 2009 and overall consumer spending is expected to fall by over 4%.
The last few months have shown us that unless the banking system is able to increase liquidity then it does not matter about the level of UK base rates because many consumers will be unable to find suitable credit deals. Increasing liquidity together with a reduction in base rates could be the answer but the UK authorities are finding it very difficult to make the banking sector co-operate as they wish.
The situation is very similar in the mortgage market where headline rates have fallen but behind-the-scenes, unless you are able to put down a deposit of over 20%, these lucrative offers are generally not available. What will it take for the UK banks to react in a positive manner?
Share this..
Related stories
Will top bankers defect from the UK?
While Alistair Darling will today be appreciating the adulation of yesterday's announcement of an agreement between the U.K.'s top five banks to control remuneration and bonuses in the future, there is a feeling there could be a certain sting in the tail with regards to this story. There is even some debate as to whether the informal agreement between the government and the UK banking sector will...
Read MoreGerman government turns up the heat on GM Europe takeover
Despite taking the lead with regards to negotiations about the Magna takeover of GM Europe, the German authorities are now demanding that EU members such as UK contribute a significant amount of money to the proposed €4.5 billion loan which the German government promised Magna. This is a significant U-turn by the German authorities who had taken the lead due to the fact the GM Europe operati...
Read MoreInflation knocked off the news headlines by market turmoil
As stock markets in the Far East fell by around 5% overnight it seemed obvious that the headline inflation figure in the UK would not receive much attention today. The government will be thanking their lucky stars that this is the case because the rate of inflation in the UK has reached a new 16 year high of 4.7% and it is expected to go higher before succumbing to the crumbling oil price.
...
The Christmas Countdown
02/12/2103 The Christmas countdown has begun. Advent calendars have been opened, Christmas songs will be heard playing everywhere and slowly but surely everyone begins to dig out and put up their Christmas decorations in preparation for the big day. Christmas comes around so quickly each year yet so many seem so unprepared for the financial stress it can cause. It probably seemed like only...
Read MoreNational Savings and Investments set to shake up savings market
The National Savings and Investment body has launched a one-year 3.95% fixed-rate savings bond which has caught the attention of consumers and savers in the UK. This is significantly higher than the vast majority of savings accounts and savings bonds offered in the wider market and will no doubt put significant pressure upon other companies in the UK to follow suit. However, there may well be othe...
Read More